Attached files
file | filename |
---|---|
EX-32 - CERTIFICATION - Occidental Development Group, Inc. | ex32.htm |
EX-31 - CERTIFICATION - Occidental Development Group, Inc. | ex31.htm |
EXCEL - IDEA: XBRL DOCUMENT - Occidental Development Group, Inc. | Financial_Report.xls |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended May 31, 2013
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 000-25335
OCCIDENTAL DEVELOPMENT GROUP, INC.
(Exact Name of Registrant as Specified in Its Charter)
Nevada | 88-0409024 |
(State or other jurisdiction of incorporation) | (IRS Employer Identification No.) |
256 S. Robertson Blvd, Beverly Hills CA | 90211 | ||
(Address of principal executive offices) |
| (Zip Code) |
310-358-3323
Issuers telephone number, including area code
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, $.001 par value per share
(Title of Class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes o No x
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes o No x
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by checkmark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to the Form 10-K. x
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “Accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act (Check one):
Large Accelerated Filer o | Accelerated Filer o | Non-Accelerated Filer o | Smaller Reporting Company x |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o 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 last sold, or the average bid and asked price of such common equity, as of the last business day of the registrants most recently completed second fiscal quarter: $80,919.
The number of shares of the Registrants Common Stock outstanding as of September 13, 2013: 54,517,442.
Documents incorporated by reference: None.
1
Table of Contents
MARKET FOR THE REGISTRANT'S COMMON EQUITY RELATED
STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND
PRINCIPAL ACCOUNTANT FEES AND SERVICES
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
2
FORWARD LOOKING STATEMENTS
This annual report on Form 10-K and the exhibits attached hereto contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements concern the Companys anticipated results and developments in the Companys operations in future periods, planned exploration and development of its properties, plans related to its business and other matters that may occur in the future. These statements relate to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management.
Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as expects or does not expect, is expected, anticipates or does not anticipate, plans, estimates or intends, or stating that certain actions, events or results may, could, would, might or will be taken, occur or be achieved) are not statements of historical fact and may be forward-looking statements. Forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors which could cause actual events or results to differ from those expressed or implied by the forward-looking statements, including, without limitation:
·
the ability of the Company to earn revenues sufficient to pay its expenses;
·
prevailing economic conditions which may significantly deteriorate, thereby reducing the demand for the Companys products and services;
·
regulatory or legal changes affecting the Companys business; and the Companys ability to secure necessary capital for general operating or expansion purposes;
This list is not exhaustive of the factors that may affect our forward-looking statements. Some of the important risks and uncertainties that could affect forward-looking statements are described further under the sections titled Risk Factors and Uncertainties, Description of the Business and Managements Discussion and Analysis of this annual report. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, believed, estimated or expected. Furthermore, there is no assurance that the Companys line of business will be successful or profitable since it depends, among other things, on (a) the ability of the Company to raise funds, (b) the successful development of our products, and (c) the success of the Companys products and opportunities in the marketplace. We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events, except as required by law.
We qualify all the forward-looking statements contained in this annual report by the foregoing cautionary statements.
3
PART I
ITEM 1.
DESCRIPTION OF BUSINESS
General
Occidental Development Group, Inc. (ODG, the Company, we, us) was incorporated in the State of Nevada in 1998. Through its subsidiary MCM Integrated Technologies, Ltd. (MCM) the Company operates in the green building sector and has historically offered automation technology for single and multi unit new construction and existing buildings. The Company specialized in designing, supplying, installing, upgrading and servicing control and automation solutions including: energy use monitoring and conservation systems, security and access control systems, lighting control systems, HVAC and environmental controls, and distributed audio/video systems. Incorporated in 1994, MCM has supplied home automation and energy management solutions since 2003. The Company maintains its corporate office in Beverly Hills California and has project offices in Vancouver, British Columbia and Phoenix, Arizona. Income is derived from both equipment sales and the provision of installation, repair and maintenance services. Customers include residential home owners, developers and builders of single family and multi-unit developments and commercial businesses.
The market opportunities for the Companys control and automation services and products and associated project margins are enhanced when combined with overall building design and construction. Over several quarters the Company actively evaluated and pursued opportunities to expand its business activities vertically within the Companys current green building, home automation and energy conservation sectors and horizontally within the construction and renovation sectors. During FY 2012 the Company began planning the expansion of its activities to include: design build services targeting small footprint energy efficient housing and multi-strata property renovation and development. These areas of business capitalize on the Companys in-house engineering, design and project management capabilities and leverage the Companys automation and control capability. Early in the planning process it became clear that significant restructuring would be required in order for the Company to attract the working capital financing required to support expansion. The Company began begin implementation of its diversification strategy in FY 2012 and expects to complete in FY 2014.
Initial stages of restructuring were completed during FY 2012. On October 31, 2011 the Companys board of directors approved a Consent Resolution amending the Companys Articles of Incorporation to affect a one for one hundred and fifty reverse split of the Companys common stock, and adjustment of the Companys authorized capital to eight hundred million common shares and five million preferred shares. The proposed amendments were approved by a majority of shareholders on November 1, 2011. The Company filed a preliminary Schedule 14C Information Statement outlining proposed amendments to the Companys Articles of Incorporation on November 9, 2011 and a definitive Schedule 14C Information Statement on November 25, 2011. The Company set November 25, 2011 as the record date for notification to shareholders. The Company filed the amended Articles of Incorporation with the Nevada Secretary of State on December 12, 2011, with an effective posting date of December 22, 2012. The reverse split was approved for trading purposes by the Financial Industry Regulatory Authority [FINRA] on January 18, 2012.
Through FY 2013 the Company actively pursued design build and renovation opportunities within the British Columbia and Greater Vancouver markets and solicited project financing from commercial lenders and private equity. The Company structured a joint venture proposal with a prominent First Nations forestry company targeting housing needs within First Nations communities and undertook an extensive evaluation of renovation opportunities within the Greater Vancouver condominium market. The Company also responded to an invitation to provide engineering project management services, in concert with First Nations communities, to the early stage LNG development underway in British Columbia. During this period, the Company scaled back its marketing efforts within the Companys traditional home automation sector in
4
favor of pursuing future market opportunities. Through this process it became apparent that the Companys financial resources were not sufficient to support available diversification opportunities and that further balance sheet and equity restructuring would be required in order to attract and qualify for conventional project financing support and/or equity funding sufficient to grow the business. Management reached this conclusion concurrent with the close of FY 2013.
In subsequent events, the Company undertook further restructuring. On June 25, 2013 Murat Erbatur resigned as director and COO and on June 26, 2013 the Board of Directors appointed Mr. Ian Gilbey as a director. On July 17, 2013, the Board of Directors authorized the merger with the Companys wholly-owned subsidiary, Occidental Development Group Inc., and in the merger the name of the company was changed to Occidental Development Group Inc. (the changes to take effect upon approval for trading purposes by FINRA). On July 17, 2013, the Board also approved the filing with the Secretary of State of Nevada a Certificate of Change that effected a 1:10 reverse split in our outstanding common stock and a reduction of our authorized common stock in the same 1:10 ratio, from 800,000,000 shares to 80,000,000 shares. Both of these corporate actions were permitted to be taken by the Companys Board of Directors without stockholder approval under Nevada NRS 92A.180 (for the merger with the subsidiary and name change) and NRS 78.207 (for the change in authorized and outstanding stock).
The change of the Companys name to Occidental Development Group, Inc. and the 1:10 reverse split with the concurrent reduction of our authorized common stock in the same ratio were approved by FINRA and became effective for trading purposes on August 19, 2013.
Employees
As of May 31, 2013, we had a staff of four consisting of three employees: COO, technical applications specialist, administrative assistant, and one contractor: the Company President.
ITEM 1A
RISK FACTORS
Readers should carefully consider the risks and uncertainties described below before deciding whether to invest in shares of our common stock.
Our failure to successfully address the risks and uncertainties described below would have a material adverse effect on our business, financial condition and/or results of operations, and the price of our common stock may decline and investors may lose all or part of their investment. There is no assurance that we will successfully address these risks or other unknown risks that may affect our business.
Risks Relating to our Company
Our independent auditor has issued an audit opinion which includes a statement describing our going concern status. Our financial status creates a doubt whether we will continue as a going concern.
As described in Note 2 of our accompanying financial statements, our limited revenues and our lack of any guaranteed sources of future capital create substantial doubt as to our ability to continue as a going concern. The Company had a working capital deficit of ($1,446,096) at May 31, 2013 and a consolidated net loss of $(620,694) for the twelve months then ended. If the Company does not raise a sufficient amount of capital, it may not have the ability to remain in business until such time, if ever, when it becomes profitable.
Although the Company has continued to restructure its balance sheet and operations, the Companys operating income is not yet adequate to offset the Companys aggregate overhead expenses. To rectify this shortfall, on an operating basis the Company needs to find further ways to reduce overhead expenses and increase its operating revenue sufficient to offset the Companys overhead expense. There is no assurance that the Company will be able to do so.
5
Until such time as the Company becomes sustainable profitable it will be necessary to raise additional capital to support operations. There is no assurance that the Company will be able to raise the required capital under terms acceptable to management, or on a schedule and in amounts required to support continued operations if at all. Our failure to achieve or maintain profitability could negatively impact the value of our stock.
We have not operated profitably and have a limited operating history that you can use to evaluate us; therefore, we may not survive if we meet some of the problems, expenses, difficulties, complications and delays frequently encountered by a company in the early stages of shifting its business activities.
We have a limited operating history on which to base an evaluation of our current business and prospects. Potential investors must consider our business and prospects in light of the risks and difficulties frequently encountered by companies in the early stages of shifting activities to include new areas of business. These risks and difficulties include, but are not limited to, lack of sufficient customer base, revenue, cash flow and working capital for marketing, product development, sub-contracting, supplies and inventory. We cannot be certain that our business strategy will be successful or that we will successfully address these and other risks. Our failure to address and mitigate these risks could harm our ability to operate profitably.
We may change our business plan.
Based on the results of our efforts to develop our current operating concept, we are re-evaluating our business plan and our board of directors may determine that it is in the best interests of the shareholders to change our business plan through vertical diversification within the Companys current business sector and/or horizontal diversification into related sectors. Any such expansion of operations will entail risks, and such actions may involve specific operational activities which may negatively affect the profitability of the Company. Consequently, shareholders must assume the risk that (i) such expansion may ultimately involve expenditures of funds beyond the resources available to the Company at that time, and (ii) management of such expanded operations may divert managements attention and resources away from its existing operations, all of which factors may have a material adverse effect on the Companys present and prospective business activities. In addition, we may need to bring in new investors or raise additional capital, all of which could result in dilution of current shareholders. There is no guarantee that our efforts to diversify will be successful.
We require additional funds to achieve our current business strategy and our inability to obtain additional financing would inhibit our ability to expand or even maintain our business operations.
We need to raise additional funds through public or private debt or sale of equity to achieve our current business strategy and capitalize on available opportunities. This financing may not be available when needed. Even if this financing is available, it may be on terms that we deem unacceptable or are materially adverse to shareholder interests with respect to dilution of book value, dividend preferences, liquidation preferences, or other terms. Our inability to obtain financing would inhibit our ability to implement our development strategy, and as a result, could require us or diminish or suspend our development strategy and possibly cease our operations. If we are unable to obtain financing on reasonable terms, we could be forced to delay, scale back or eliminate planned expansion and or introduction of new products and services. In addition, such inability to obtain financing on reasonable terms could have a negative effect on our business, operating results, or financial condition to such extent that we are forced to restructure, file for bankruptcy, sell assets or cease operations.
We currently have outstanding debt that is convertible into shares of our common stock at below market pricing resulting in significant dilution to our current stockholders.
At May 31, 2013 we had a total of $1,308,329 in debt and accrued interest that is convertible into shares of our common stock at discounts ranging from 0% to 42% of the market price. The conversion of all of this debt could result in significant dilution to our stockholders.
6
We rely heavily on our management, and the loss of their services could materially and adversely affect our business.
The Companys business is significantly dependent on the Companys management team and Board of Directors. The unscheduled loss of these individuals would have a material adverse effect on the Company.
The Company may not be able to sustain and develop its customer base and sustain market acceptance of its products and services
Although the Company believes it can continue to develop home automation equipment and technology packages that will maintain and attract a customer base sufficient to support the Companys activities, the inability of the Company to sustain and develop such a customer base could have a material adverse effect on the Company. There is the possibility that competitors could seize on the Companys ideas and business model and produce competing product matrices and installations. There is the possibility that the competitors could capture significant market share of the Companys intended market. No assurance can be given that the Companys, products and solutions will generate market acceptance and revenues sufficient to achieve and sustain profitable operations.
Recent market events and conditions, including disruptions in the U.S. and international credit markets and other financial systems and the deterioration of the U.S. and global economic conditions, could, among other things, impede access to capital or increase the cost of capital, which would have an adverse effect on our ability to fund our working capital and other capital requirements.
Beginning in 2007 the U.S. credit markets experienced serious disruption due to a deterioration in residential property values, defaults and delinquencies in the residential mortgage market and a decline in the credit quality of banks and borrowers. These problems led to a substantial and ongoing slow-down in residential housing market construction and sales, declining housing prices, delinquencies in non-mortgage consumer credit and a general decline in consumer confidence. These conditions resulted in a loss of confidence in the broader U.S. and global credit and financial markets and have resulted in the collapse of, and government intervention in, major banks, financial institutions and insurers, and have created a climate of volatility, reduced liquidity, widening of credit spreads, increased credit losses, tighter credit conditions and most recently the downgrading of US credit rating. Notwithstanding various actions by the U.S. and foreign governments, concerns about the general condition of the capital markets, financial instruments, banks, investment banks, insurers and other financial institutions remain fragile and there is resulting volatility in world stock markets. In addition, general economic indicators have been slow to recover. These include consumer sentiment, unemployment and economic growth and uncertainty about corporate earnings. These disruptions in the credit and financial markets have had a significant material adverse impact on a number of financial institutions and have limited access to capital and credit. Recent quarters have seen improvement in the US economy and increased positive consumer sentiment. However the overall situation remains fragile and could, among other things, continue to make it difficult for us to obtain working capital, or increase our cost of obtaining capital for our operations. Our access to additional capital and project financing may not be available on terms acceptable to us or at all.
The Companys operating results may vary and may not support ongoing development of the business
The Companys operating results may fluctuate significantly from period to period as a result of a variety of factors including but not limited to: purchasing patterns of customers, competitive pricing and margins, debt service and principal reduction payments, and general economic conditions. There is no assurance that the Company will be successful in marketing its products and services or that the revenues from the sale of such products and services will be sufficient to offset costs and support ongoing development of the business.
7
Unanticipated Obstacles to Execution of the Business Plan
The Companys business plans may change significantly. Many of the Companys potential business endeavors are capital intensive and may be subject to statutory or regulatory requirements. Management believes that the Companys goals and strategies are achievable in light of current economic conditions and regulatory environments with the skills, background, and knowledge of the Companys principals and advisors. Management reserves the right to make significant modifications to the Companys stated strategies depending on current and anticipated future events.
Our success in the future may depend on our ability to establish and maintain strategic alliances, and any failure on our part to establish and maintain such relationships would adversely affect our market penetration and revenue growth.
We may be required to establish strategic relationships with third parties in both domestic and international markets. Our ability to establish strategic relationships will depend on a number of factors, many of which are outside our control. We can provide no assurance that we will be able to establish and maintain strategic relationships in the future.
In addition, any strategic relationships that we establish, will subject us to a number of risks, including risks associated with sharing and potentially losing control over committed assets and financial resources, technical information and know-how, loss of control of operations that are material to our business. Moreover, strategic alliances may be expensive to implement and subject us to the risk that the third party will not perform its obligations under the relationship, which may subject us to losses over which we have no control or expensive termination arrangements. As a result, even if our strategic alliances with third parties are successful, our business may be adversely affected by our exposure to a number of factors that are outside of our control.
No Assurances of Protection for Non-Proprietary Know-How; Reliance on Trade Secrets
In certain cases, the Company may rely on trade secrets to protect the Companys technology know-how which the Company has developed or may develop in the future and which do not have intellectual property protection. There can be no assurances that others will not independently develop similar or superior technology know-how. The protection of trade secret status has been the subject of increasing claims and litigation by various companies both in order to protect trade secrets as well as for competitive reasons even where claims are unsubstantiated. The prosecution of claims or the defense of such claims is costly and uncertain given the uncertainty and rapid development of the principles of law pertaining to this area. The Company, in common with other firms, may also be subject to claims by other parties with regard to the use of technology information and data which may be deemed proprietary to others.
Risks Related to Our Common Shares
Dividend Record
We have no dividend record. We have not paid dividends on our common shares since incorporation and do not anticipate doing so in the foreseeable future.
The trading market for our common stock is limited.
We are quoted on the OTC Markets Groups OTCQB Over-the-Counter Bulletin Board under the trading symbol ILVC. The OTCQB is regarded as a junior trading venue. This may result in limited shareholder interest and hence lower prices for our common stock than might otherwise be obtained.
8
The market price of our common stock may fluctuate significantly.
The market price of our common shares may fluctuate significantly in response to factors, some of which are beyond our control, such as:
·
the announcement of new products or product enhancements by us or our competitors;
·
developments concerning intellectual property rights and regulatory approvals;
·
quarterly variations in our and our competitors results of operations;
·
changes in earnings estimates or recommendations by securities analysts;
·
developments in our industry; and
·
general economic and market conditions, and other factors, including factors unrelated to our own operating performance.
Further, the stock market in general has recently experienced price and volume fluctuations. Continued market fluctuations could result in extreme volatility in the price of our common shares, which could cause a decline in the value of our common shares. You should also be aware that price volatility might be worse if the trading volume of our common shares is low.
Our stock is a penny stock. Trading of our stock may be restricted by the SECs penny stock regulations, which may limit a stockholders ability to buy and sell our stock.
Our stock is a penny stock. Broker-dealer practices in connection with transactions in penny stocks are regulated by certain penny stock rules adopted by the Securities and Exchange Commission. Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system), in companies continuously in existence for at least three years with net tangible assets of less than $2,000,000. Penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customers account. The broker-dealer must also make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchasers written agreement to the transaction. These requirements may have the effect of reducing the level of trading activity, if any, in the secondary market for a security that becomes subject to the penny stock rules. The additional burdens imposed upon broker-dealers by such requirements may discourage broker-dealers from effecting transactions in our securities, which could severely limit their market price and liquidity of our securities.
These requirements may restrict the ability of broker-dealers to sell our common stock and may affect your ability to resell our common stock.
FINRA sales practice requirements may also limit a stockholders ability to buy and sell our stock.
In addition to the penny stock rules promulgated by the Securities and Exchange Commission (see above for discussions of penny stock rules), the FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customers financial status, tax status, investment objectives and other information. Under interpretations of these rules, the FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.
9
ITEM 1B
UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 2.
PROPERTIES
We maintain our statutory registered agents office in Reno, Nevada and our principal executive office is located at 256 Robertson Blvd, Beverly Hills California 90211. We currently occupy approximately 1,800 square feet of office and technology demonstration space in Vancouver Canada, and a small marketing office in Phoenix Arizona. We do not have leases and are renting all space on a month-to-month basis. The total monthly rent obligation for all space used by the Company is approximately $1,600.
ITEM 3.
LEGAL PROCEEDINGS
We are not currently involved in any litigation, nor do we know of any threatened litigation against us that would have a material effect on our financial condition.
ITEM 4.
MINE SAFETY DISCLOSURES
Not applicable.
10
PART II
ITEM 5.
MARKET FOR THE REGISTRANT'S COMMON EQUITY RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Our Common Stock is currently quoted in the OTC Markets Groups OTCQB Over-the-Counter Bulletin Board market as a "penny stock" under the symbol ILVC (OXDG post September 18, 2013). The following sets forth the range of high and low closing share price information for the quarterly periods indicated of our last two fiscal years as reported by the National Quotation Bureau:
| CLOSING PRICE ($/SHARE)1 | |
| LOW | HIGH |
2012 |
|
|
First Quarter | 0.18 | 0.88 |
Second Quarter | 0.08 | 0.34 |
Third Quarter | 0.03 | 1.02 |
Fourth Quarter | 0.03 | 0.78 |
|
|
|
2013 |
|
|
First Quarter | 0.01 | 0.17 |
Second Quarter | 0.005 | 0.05 |
Third Quarter | 0.02 | 0.04 |
Fourth Quarter | 0.003 | 0.07 |
Note 1: Closing prices reflect market pricing prior to the August 19, 2013 effective date for the Company's 1:10 reverse split of authorized and outstanding common shares.
Securities Authorized for Issuance under Equity Compensation Plans
The following table sets forth information with respect to our common stock issued and available to be issued under outstanding options, warrants and rights as of May 31, 2013.
| A | B | C |
| Number of securities | Weighted-average | Number of securities |
| to be issued upon | exercise price of | remaining available |
| exercise of outstanding | outstanding | for future issuance |
| options, warrants | options, warrants | under equity |
| and rights | and rights | compensation plans |
Plan category |
|
|
|
Equity compensation plans | NA | NA | NA |
approved by security holders |
|
|
|
|
|
|
|
Equity compensation plans not | NA | NA | 13 |
approved by security holders |
|
|
|
Total | NA | NA | 13 |
11
2007 OPTION PLAN
The 2007 Option Plan was adopted by the board with 200,000 shares reserved. The Plan is administered by the Board of Directors of the Company. Subject to the express limitations of the Plan, the Board has authority in its discretion to determine the eligible persons to whom, and the time or times at which, restricted stock awards may be granted, the number of shares subject to each award, the time or times at which an award will become vested, the performance criteria, business or performance goals or other conditions of an award, and all other terms of the award. The Board also has discretionary authority to interpret the Plan, to make all factual determinations under the Plan, and to make all other determinations necessary or advisable for Plan administration. The Board may prescribe, amend, and rescind rules and regulations relating to the Plan. All interpretations, determinations, and actions by the Board are final, conclusive, and binding upon all parties.
HOLDERS
As of August 29, 2013, the number of holders of record of shares of common stock, excluding the number of beneficial owners, whose securities are held in street name, was approximately 180.
DIVIDEND POLICY
We do not anticipate paying any cash dividends on our common stock in the foreseeable future because we intend to retain any positive earnings to finance the expansion of our business. Thereafter, declaration of dividends will be determined by the Board of Directors in light of conditions then existing, including without limitation our financial condition, capital requirements and business condition.
RECENT SALES OF UNREGISTERED SECURITIES
The following table sets for the information with respect to all securities of the Company sold in its fiscal years ended May 31, 2011, 2012 and 2013, and subscription amounts of outstanding debentures, without registration of the securities under the Securities Act of 1933. The securities so sold are believed by the Company to be exempt from registration under either Regulation S or Rule 506 under the Securities Act of 1933.
If we indicate in the following table that we relied on Section 4(2) of the Securities Act, we relied on the following factors in determining the availability of the exemption: (a) the issuance was an isolated private transaction by us which did not involve a public offering; (b) there were only a very limited number of offerees; (c) there were no subsequent or contemporaneous public offerings of the stock; (d) the stock was not broken down into smaller denominations; and (e) the negotiations for the sale of the stock took place directly between the offerees and us.
If we indicate in the following table that we relied on Regulation S, (a) the subscriber was neither a U.S. person nor acquiring the shares for the account or benefit of any U.S. person, (b) the subscriber agreed not to offer or sell the shares (including any pre-arrangement for a purchase by a U.S. person or other person in the U.S.) directly or indirectly, in the United States or to any natural person who is a resident of the United States or to any other U.S. person as defined in Regulation S unless registered under the Securities Act and all applicable state laws or an exemption from the registration requirements of the Securities Act and similar state laws is available, (c) the subscriber made his, her or its subscription from the subscriber's residence or offices at an address outside of the U.S. and (d) the subscriber or the subscriber's advisor has such knowledge and experience in financial and business matters that the subscriber is capable of evaluating the merits and risks of, and protecting his interests in connection with an investment in the Company.
12
If we indicate in the following table that we relied on Regulation D, we relied upon Rule 506 and (a) the subscriber was an Accredited Investor (as defined in Regulation D), (b) the subscriber invested in the Company for his own account for investment and not for the account of any other person and not with a view to or for distribution, assignment or resale in connection with any distribution within the meaning of the Securities Act, (c) the subscriber agreed not to sell or otherwise transfer the purchased shares unless they are registered under the Securities Act and any applicable state securities laws, or an exemption or exemptions from such registration are available, (d) the subscriber represented that he had knowledge and experience in financial and business matters such that he is capable of evaluating the merits and risks of an investment in the Company, (e) the subscriber had access to all documents, records, and books of the Company pertaining to the investment and was provided the opportunity ask questions and receive answers regarding the terms and conditions of the offering and to obtain any additional information which the Company possessed or was able to acquire without unreasonable effort and expense, and (f) the subscriber had no need for the liquidity in his investment in the Company and could afford the complete loss of the investment.
|
|
|
| Number of |
|
|
|
|
|
| Shares |
|
|
|
|
| Purchase or | Purchased or | Expiration |
|
|
|
| Exercise Price | Purchasable | Date (WTS) or |
|
| Date of | Type of | (USD | Upon Exercise | Due date |
|
Name | Issue | Security1 | Per Share) | or Conversion2 | (DEB) | Exemption |
Private Investors | 3/11 | CS | 0.88 | 79,096 |
| 506 |
Private Investors | 10/11 | CS | 0.09 | 100,000 |
| S |
Private Investors | 1/12 | CS | 0.03 | 11,701,000 |
| S, 506 |
Private Investors | 6/12 | CS | 0.03 | 300,000 |
| 506 |
Private Investors | 12/12 | CS | 0.01 | 24,622,667 |
| S, 506 |
Private Investors | 3/13-5/13 | CS | 0.01 | 5,808,339 |
| S, 506 |
Private Investor | 2/02 | DEB |
| $35,000 | 2/08 | S |
Private Investors | 11/05-2/06 | DEB |
| $555,000 | 2/14 | 506 |
Private Investors | 5/06 | DEB |
| $50,000 | 6/09 | 506 |
Private Investor | 2/08 | DEB |
| $460,000 | 6/13 | S |
Private Investor | 6/08 | DEB |
| $326,773 | 6/13 | S |
Private Investors | 9/12 | DEB |
| $42,500 | 6/13 | 506 |
Private Investor | 12/12 | DEB |
| $32,500 | 9/13 | 506 |
Private Investor | 4/13 | DEB |
| $42,500 | 12/13 | 506 |
|
|
|
|
|
|
|
(1)
CS Common Stock, WAR Warrant, DEB Debenture; (2) DEB dollar amount convertible
ITEM 6.
SELECTED FINANCIAL DATA
Not applicable.
ITEM 7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Cautionary Statement Regarding Forward-Looking Statements
This annual report contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements relate to future events or our future financial performance. Some discussions in this report may contain forward-looking statements that involve risk and uncertainty. A number of important factors could cause our actual results to differ materially from those expressed in any forward-looking statements made by us in this report. 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.
13
In some cases, you can also identify forward-looking statements by terminology such as "may", "will", "should", "plans", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
RESULTS OF OPERATIONS
Overview
Occidental Development Group, Inc. (ODG, the Company, we, us) was incorporated in the State of Nevada in 1998. Through its subsidiary MCM Integrated Technologies, Ltd. (MCM) the Company operates in the green building sector and has historically offered automation technology for single and multi unit new construction and existing buildings. The Company specialized in designing, supplying, installing, upgrading and servicing control and automation solutions including: energy use monitoring and conservation systems, security and access control systems, lighting control systems, HVAC and environmental controls, and distributed audio/video systems. Incorporated in 1994, MCM has supplied home automation and energy management solutions since 2003. The Company maintains its corporate office in Beverly Hills California and has project offices in Vancouver, British Columbia and Phoenix, Arizona. Income is derived from both equipment sales and the provision of installation, repair and maintenance services. Customers include residential home owners, developers and builders of single family and multi-unit developments and commercial businesses.
The market opportunities for the Companys control and automation services and products and associated project margins are enhanced when combined with overall building design and construction. Over several quarters the Company actively evaluated and pursued opportunities to expand its business activities vertically within the Companys current green building, home automation and energy conservation sectors and horizontally within the construction and renovation sectors. During FY 2012 the Company began planning the expansion of its activities to include: design build services targeting small footprint energy efficient housing and multi-strata property renovation and development. These areas of business capitalize on the Companys in-house engineering, design and project management capabilities and leverage the Companys automation and control capability. Early in the planning process it became clear that significant restructuring would be required in order for the Company to attract the working capital financing required to support expansion. The Company began begin implementation of its diversification strategy in FY 2012 and expects to complete in FY 2014.
Initial stages of restructuring were completed during FY 2012. On October 31, 2011 the Companys board of directors approved a Consent Resolution amending the Companys Articles of Incorporation to affect a one for one hundred and fifty reverse split of the Companys common stock, and adjustment of the Companys authorized capital to eight hundred million common shares and five million preferred shares. The proposed amendments were approved by a majority of shareholders on November 1, 2011. The Company filed a preliminary Schedule 14C Information Statement outlining proposed amendments to the Companys Articles of Incorporation on November 9, 2011 and a definitive Schedule 14C Information Statement on November 25, 2011. The Company set November 25, 2011 as the record date for notification to shareholders. The Company filed the amended Articles of Incorporation with the Nevada Secretary of State on December 12, 2011, with an effective posting date of December 22, 2012. The reverse split was approved for trading purposes by the Financial Industry Regulatory Authority [FINRA] on January 18, 2012.
14
Through FY 2013 the Company actively pursued design build and renovation opportunities within the British Columbia and Greater Vancouver markets and solicited project financing from commercial lenders and private equity. The Company undertook extensive pro-forma analysis of multi-strata development opportunities within greater Vancouver communities and the Company structured a joint venture proposal and entered into a non-binding letter of intent with a prominent First Nations forestry company targeting housing needs within First Nations communities. The Company also responded to an invitation to provide engineering project management services, in concert with First Nations communities, to the early stage LNG development underway in British Columbia. During the 2013 FY the Company scaled back its marketing efforts within the Companys traditional home automation sector in favor of pursuing higher margin and larger revenue market opportunities. Lack of funding prevented the Company from moving ahead with the First Nations and condominium renovation initiatives, and through this process it became apparent that the Companys financial resources were not sufficient to support available diversification opportunities and that further balance sheet and equity restructuring would be required in order to attract and qualify for conventional project financing support and/or equity funding sufficient to grow the business. Management reached this conclusion concurrent with the close of FY 2013.
In subsequent events, the Company has begun further restructuring. On June 25, 2013 Murat Erbatur resigned as director and COO and on June 26, 2013 the Board of Directors appointed Mr. Ian Gilbey as a director. On July 17, 2013, the Board of Directors authorized the merger with the Companys wholly-owned subsidiary, Occidental Development Group Inc., and in the merger the name of the company was changed to Occidental Development Group Inc. (the changes to take effect upon approval for trading purposes by FINRA). On July 17, 2013, the Board also approved the filing with the Secretary of State of Nevada a Certificate of Change that effected a 1:10 reverse split in our outstanding common stock and a reduction of our authorized common stock in the same 1:10 ratio, from 800,000,000 shares to 80,000,000 shares. Both of these corporate actions were permitted to be taken by the Companys Board of Directors without stockholder approval under Nevada NRS 92A.180 (for the merger with the subsidiary and name change) and NRS 78.207 (for the change in authorized and outstanding stock).
The change of the Companys name to Occidental Development Group, Inc. and the 1:10 reverse split with the concurrent reduction of our authorized common stock in the same ratio were approved by FINRA and became effective for trading purposes on August 19, 2013.
Results from ongoing operations reported for the year ending May 31, 2013 and 2012 relate to sales of home automation and energy efficiency products and services including system design, equipment supply, installation and support. Results from discontinued operations relate to the Companys phase out activities in the home décor sector and include costs of third party legal and professional time related to eliminating and reducing liabilities and pursuing legal recourse against the Companys home décor supplier.
Foreign currency translation
MCM Integrated Technologies, Ltd. and Cardinal Points Trading, Corp. both use the Canadian Dollar as their functional currency. Transactions denominated in currencies other than the entitys functional currency are translated into the entitys functional currency at the exchange rate ruling on the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the exchange rate ruling on the balance sheet date. Currency translation differences are recognized in the statement of income for the period.
On consolidation, the results of operations and cash flows whose functional currency is other than the US dollar are translated into US dollars at the average exchange rate for the period and their assets and liabilities are translated into US dollars at the exchange rate ruling on the balance sheet date. Currency translation differences are recognized within other comprehensive income as a separate component of shareholders equity. In the event that such an operation is sold, the cumulative currency translation differences that are attributable to the operation are reclassified to income.
15
During the 12 month period June 1, 2012 through May 31, 2013, the US dollar to Canadian Dollar exchange rate has varied from a low of 0.9601on June 3, 2012 to a high of 1.0334 on September 15, 2012. The closing exchange rate was 0.9671 and the average exchange rate over the year ended May 31, 2013 was 0.9959 resulting in a comprehensive gain of $1,372 for the year ended May 31, 2013.
Comparison of the Years Ended May 31, 2013 and May 31, 2012.
For the year ended May 31, 2013, revenues from continuing operations were $33,219 compared to $291,954 in the same period ending last year. These revenues are a result of the sale of smart home products and services. The 89% revenue decrease is due to wind down of four longer term projects, reduced business development in the Companys traditional business sector and a slowdown in real estate new builds and renovations in the greater Vancouver market.
For the year ended May 31, 2013, gross profit from continuing operations was $16,051 compared to $130,061, a decrease of 88% compared to the same period in the prior year. Gross margin (gross profit as a percent of revenue) was 48% for the year ended May 31, 2013, 8% higher than the prior year. The decreased gross profit reflects the net of a substantially reduced cost of revenue per unit of revenue due to an increase in professional time per unit of sales and an overall reduction in revenue. The increase in gross margin reflects higher proportion of labor and reduced cost of goods per unit of sales in the year ended May 31, 2013 compared to the prior year.
Operating expenses associated with ongoing operations for the year ended May 31, 2013, were 475,245 versus $338,717 for the same period in the prior year. The increase in operating expenses reflects the net of increased consulting fees, decreased salary and depreciation expense and increased office and administration costs.
The Company recorded an operating loss from continuing operations of ($459,194) for the year ended May 31, 2013 compared to an operating loss of ($208,656) for the same period in the prior year. This represents a year-on-year 120% increase in operating loss.
Total other expenses for the year ended May 31, 2013 were $161,500 compared to $349,305 for the comparable period in the prior year. The 54% year-on-year decrease reflects a decrease in inventory reserve expense, increased amortization expenses associated with beneficial conversion and fee discounts, decreased interest expenses and recognition of a one-time goodwill impairment expense in the prior year.
The net loss from continuing operations for the year ended May 31, 2013 was ($620,694) compared to a net loss of ($557,961) for the comparable period in the prior year. This is a 11% increase in the year-on-year net loss from continuing operations.
During the year ended May 31, 2013 the Company incurred no expenses associated with its discontinued operations. The net loss from discontinued operations was ($nil) compared to a net loss of ($1,938) for the comparable period in the prior year. The decreased expense was due to the elimination of expenses associated with the Companys effort to recover costs associated with the closure of the Companys home décor operations.
The consolidated net loss for the year ended May 31, 2013 was ($620,694) compared to ($559,899) for the comparable period in the prior year. A gain of $1,372 was realized due as a result of foreign currency translation compared to a gain of $21,204 in the comparable period of the prior year. The resulting comprehensive loss for the period ending May 31, 2013 was ($619,322) compared to ($538,695) for the corresponding period in the prior year, an increase of 15%.
16
LIQUIDITY AND CAPITAL RESOURCES
Liquidity
As of May 31, 2012, our principal sources of liquidity included cash and cash equivalents, cash flow from our operating subsidiaries, and loans from related parties. At May 31, 2013, cash and cash equivalents totaled $23,041 compared to $2,685 at May 31, 2012.
Our business continues in transition and our liquidity must be considered in light of the risks, expenses and difficulties frequently encountered by companies in our stage of re-development. The ongoing impairment in the U.S. and Canadian economies and financial markets has and will continue to impact the Companys sales and liquidity for the foreseeable future. Risk factors relevant to these events and management decisions include, but are not limited to: the Companys ability to secure ongoing product supply, foreign exchange fluctuations, continued acceptance of the Companys traditional products and services, success of the Companys efforts to diversify its products and services changes in technology and consumer adoption of technology, the strength of the North American housing market and consumer economy in general, and cannot be credibly quantified by the Company at this time.
Internal and External Sources of Capital
For the year ending May 31, 2013 the Company realized a loss on operations of ($620,694) and a net loss of ($620,694). As of May 31, 2013 the Company had a working capital deficit of $1,446,096 and limited assets to sell in order to create short or long term liquidity. Therefore, we are dependent on external sources for funding until such time as the Company develops positive net cash flow to maintain liquidity. Until such time as we have positive cash flow on a sustained basis, the dependence on external capital will remain. There are no guarantees that we will be able to raise external capital in sufficient amounts or on terms acceptable to us.
Investing Activities
There were no investing activities during the fiscal year ended May 31, 2013.
Financing Activities
Since inception, we financed operations through proceeds from the issuance of equity and debt securities and loans from shareholders and others. To date, we raised approximately $13.80 million from the sale of common stock and as at May 31, 2013 we have borrowings of approximately $1.33 million from investors and shareholders. Funds from these sources were used as working capital to fund the development of the Company.
The Company executed a securities purchase agreement dated as of December 7, 2005 (the "Purchase Agreement") with certain accredited investors under which we agreed to sell to these investors our convertible Debentures due three years from the final Closing Date under the Purchase Agreement in the aggregate principal amount of up to $600,000 bearing interest at the rate of 6% per annum and convertible into restricted shares of our Common Stock at a conversion price for each share of Common Stock equal to 75% of the lowest closing bid price per share (as reported by Bloomberg, LP) of our Common Stock for the fifteen trading days immediately preceding the date of conversion. At any time, the total number of shares held by each debenture holder is not to exceed 4.99% of the issued and outstanding shares. At the close of the offering the company the company completed the sale of an aggregate of $555,000 in Debentures under the Purchase Agreement which resulted in net proceeds of $424,850. In February 2011 the debenture holders extended the maturity date of the debentures to February 28, 2014. In 2006 the Company secured additional debenture financing from an accredited investor in the amount of $50,000 under terms similar to the December 7, 2005 purchase agreement.
17
The Company executed a series of three securities purchase agreements, dated September 6, 2012, December 5, 2012 and April 25, 2013, with a certain accredited investor under which we agreed to sell to the investor convertible Debentures due 8 months from the Closing Dates under the Purchase Agreements in the aggregate principal amount of $117,500, bearing interest at the rate of 8% per annum and convertible into restricted shares of our Common Stock at a conversion price for each share of Common Stock equal to 58% of the lowest closing bid price per share (as reported by Bloomberg, LP) of our Common Stock for the ten trading days immediately preceding the date of conversion. At any time, the total number of shares held by the debenture holder is not to exceed 4.99% of the issued and outstanding shares.
For the fiscal year ended May 31, 2013 the net change in related party loans totaled $45,990.
FUTURE PLAN OF OPERATIONS
Beginning in 2008 the Company shifted its focus to the western Canadian housing market. The western Canadian housing market, and in particular the greater Vancouver housing market, has remained strong through the US housing downturn with new construction and renovation projects, and momentum in home sales and re-sales. The US housing market when viewed nationally reached a bottom in 2011-2012 and through 2013 has generally shown an increase in year-on-year resale pricing and an upswing in new construction. The Canadian, and in particular the Greater Vancouver housing market, cooled throughout 2013 with some analysts predicting a protracted downturn. The US market appears to be gaining upward momentum and the Company is actively looking at opportunities within the US market.
The Company is actively pursuing expansion both vertically within the Companys current green building, home automation and energy conservation sectors and horizontally within related sectors including home construction and development. The Company is pursuing expansion opportunities in parallel with a shift in the Company's focus from supplier/sub-contractor to prime contractor/developer. This shift in focus will allow the Company to gain greater financial and market leverage from its knowhow and engineering and project management capabilities. This shift will also increase the Company's flexibility to pursue project and development opportunities. However, the shift of focus is expected to result in a short term impact on revenue, which is evident in the Company's FY 2013 operating results, and will necessitate further restructuring to support equity and debt financing.
The rebound in the US housing market has created development opportunities and expressions of interest to become involved in the US market. The Company is re-structuring its Board and has moved its corporate office to the US in anticipation of moving ahead with opportunities in the US market. This is expected to gain momentum in FY 2014. The Company is targeting completion its re-structuring, secure funding and having development project(s) underway during FY 2014. Markets of interest include south Florida, New York and the SW US.
Cash flow from ongoing business activities combined with the availability of loans from related parties are estimated to be sufficient to sustain the current level of operations and planned activities through to the end of the 2014 fiscal year.
OFF BALANCE-SHEET ARRANGEMENTS
During the year ended May 31, 2013 the Company did not engage in any off-balance sheet arrangements as defined in Item 303(a) of the SEC's Regulation S-K.
18
ITEM 7A
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rate Risk
Our exposure to market risk for changes in interest rates relates primarily to our bank credit facility because borrowings under the facility are variable rate borrowings. At the current time all of the borrowings under our credit agreements accrue interest at bank prime rate plus applicable margins. Assuming that the balance on our line of credit as of May 31, 2013, was the same throughout the entire year, each 1.0% increase in the prime interest rate on our variable rate borrowings would result in an increase in annual interest expense and a decrease in our cash flows and income before taxes of approximately $3,955 per year.
Foreign Currency Exchange Risks
Our Canadian subsidiaries (MCM and Cardinal Points) both have assets and liabilities in Canadian dollars and both use the Canadian Dollar as their functional currency. Each financial period, all assets and liabilities of MCM and Cardinal Points are translated into U.S. Dollars, our reporting currency, using the closing rate method. In addition, we occasionally purchase goods in Canadian dollars for resale in US dollars and routinely purchase goods in US dollars for resale in Canadian dollars.
There are principally two types of foreign exchange risk: transaction risks and translation risks. Transaction risks may impact the results of operations and translation risks may impact comprehensive income. These are discussed more fully below.
Transaction risks
Transactions in currencies other than the functional currency are translated at either an average exchange rate used for the reporting period in which the transaction took place (to approximate to the exchange rate at the date of transactions for that period) or in some cases the rate in effect at the date of the transaction. Differences in exchange rates during the period between the date a transaction denominated in a foreign currency is consummated and the date on which it is settled or translated, are recognized in the consolidated statements of operations as foreign exchange transaction gains and losses.
MCMs and Cardinal Points cash balances consist of Canadian Dollars and U.S. Dollars. This exposes us to foreign currency exchange rate risk in the Statement of Operations. The change in exposure from period to period is related to the change in the balance of the bank accounts based on timing of event receipts and payments. For the period ended May 31, 2013, the Company purchased goods and services of approximately $15,000 for sale in Canadian dollars. During the 12 month period June 1, 2012 through May 31, 2013, the US dollar to Canadian dollar exchange rate has varied from a low of 0.9601 on June 3, 2012 to a high of 1.0334 on September 15, 2012. Assuming that the majority of the goods and services were priced in U.S. dollars at their point of origin and that the goods and services were purchased at the extremes of the observed swing in the U.S. Dollar exchange rate against the Canadian Dollar, with all other variables held constant a shift of approximately CAD 1,100 in the cost of goods and services would be realized.
Translation risks
The financial statements of MCM and Cardinal Points, with a functional currency of Canadian dollars, are translated into U.S. dollars using the current rate method. Accordingly, assets and liabilities are translated at period-end exchange rates while revenue, expenses and cash flows are translated at reporting period weighted average exchange rates. Adjustments resulting from these translations are accumulated and reported as the principal component of other comprehensive loss in stockholders equity. The magnitude of the adjustment resulting from application of the current rate method is directly related to the difference between the average exchange rate and closing exchange rate for the period.
19
The fluctuation in the exchange rates resulted in foreign currency translation gains reflected in comprehensive gain in stockholders equity of $1,372 for the year ended May 31, 2013. Future changes in the value of the U.S. dollar to Canadian dollar could have a material impact on our financial position.
ITEM 8.
FINANCIAL STATEMENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
THE BOARD OF DIRECTORS AND SHAREHOLDERS OF OCCIDENTAL DEVELOPMENT GROUP, INC.. AND SUBSIDIARIES
BEVERLY HILLS CALIFORNIA
We have audited the accompanying consolidated balance sheet of Occidental Development Group, Inc. and Subsidiaries as of May 31, 2013 and 2012, and the related consolidated statements of operations and comprehensive loss, stockholders' equity (deficit), and cash flows for the years then ended. 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 audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion. An audit 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 audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Occidental Development Group, Inc. and Subsidiaries as of May 31, 2013 and 2012, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has suffered recurring losses from operations. This raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are described in Note 2. These consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ M&K CPAS, PLLC
September 13, 2013
Houston, TX
www.mkacpas.com
20
OCCIDENTAL DEVELOPMENT GROUP, INC. [formerly Intelligent Living Corp] CONSOLIDATED BALANCE SHEETS | ||||||
|
|
|
| May 31, |
| May, 31 |
|
|
|
| 2013 |
| 2012 |
|
|
|
|
|
|
|
CURRENT ASSETS |
|
|
|
| ||
| Cash and cash equivalents | $ | 23,041 | $ | 2,685 | |
| Accounts receivable, net |
| 132 |
| 6,937 | |
| Prepaid expenses |
| 294 |
| 3,441 | |
| Inventory, net |
| 1,939 |
| 1,952 | |
| Employee expense advances |
| 70 |
| - | |
| GST/PST tax refundable |
| 381 |
| 156 | |
| TOTAL CURRENT ASSETS |
| 25,857 |
| 15,171 | |
|
|
|
|
|
|
|
| PROPERTY & EQUIPMENT, NET |
| 5,239 |
| 10,263 | |
|
|
|
|
|
|
|
OTHER ASSETS |
|
|
|
| ||
| Other Assets, net |
| - |
| - | |
| TOTAL ASSETS | $ | 31,096 | $ | 25,434 | |
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' (DEFICIT) |
|
|
|
| ||
CURRENT LIABILITIES |
|
|
|
| ||
| Line of credit | $ | 39,551 | $ | 43,437 | |
| Accounts payable |
| 85,226 |
| 91,290 | |
| Accrued liabilities |
| 188,920 |
| 156,779 | |
| Accrued liabilities related party |
| 150,000 |
| 122,000 | |
| Accrued interest |
| 322,876 |
| 272,673 | |
| Accrued interest related party |
| 1,507 |
| 785 | |
| Short term notes |
| 27,876 |
| 27,489 | |
| Short term notes convertible, net |
| 335,961 |
| 75,000 | |
| Short term loans - related party |
| 320,036 |
| 350,232 | |
| Current liabilities related to discontinued operations |
|
|
|
| |
|
| Short term note convertible |
| - |
| 61,250 |
| TOTAL CURRENT LIABILITIES |
| 1,471,953 |
| 1,200,935 | |
|
|
|
|
|
|
|
LONG-TERM LIABILITIES |
|
|
|
| ||
| Debentures |
| 619,753 |
| 655,753 | |
|
|
|
|
|
| |
| TOTAL LONG TERM LIABILITIES |
| 619,753 |
| 655,753 | |
| TOTAL LIABILITIES |
| 2,091,706 |
| 1,856,688 | |
|
|
|
|
|
|
|
| COMMITMENTS & CONTINGENCIES |
| - |
| - | |
|
|
|
|
|
|
|
STOCKHOLDERS' (DEFICIT) |
|
|
|
| ||
| Preferred stock, 5,000,000 shares authorized, $0.001 par value, 0 issued and outstanding |
| - |
| - | |
| Common stock, 80,000,000 shares authorized, $0.001 par value; 4,324,110 and 1,251,008 issued and outstanding respectively |
| 4,324 |
| 1,251 | |
| Additional paid in capital |
| 13,893,363 |
| 13,506,470 | |
| Accumulated deficit |
| (15,872,094) |
| (15,251,400) | |
| Accumulated other comprehensive (loss) |
| (86,203) |
| (87,575) | |
| TOTAL STOCKHOLDERS' (DEFICIT) |
| (2,060,610) |
| (1,831,254) | |
| TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) | $ | 31,096 | $ | 25,434 |
The accompanying notes are an integral part of these consolidated financial statements.
21
OCCIDENTAL DEVELOPMENT GROUP, INC. | |||||
[formerly Intelligent Living Corp] | |||||
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS | |||||
| |||||
|
|
| For the 12 month period ended | ||
|
|
| May 31 |
| May 31 |
|
|
| 2013 |
| 2012 |
|
|
|
|
|
|
REVENUES |
|
|
|
| |
| Intelligent Home: Equipment & Services | $ | 33,219 | $ | 291,954 |
COST OF REVENUES |
|
|
|
| |
| Intelligent Home: Equipment & Services |
| 17,168 |
| 161,893 |
GROSS PROFIT |
| 16,051 |
| 130,061 | |
|
|
|
|
|
|
EXPENSES |
|
|
|
| |
| Consulting fees |
| 150,000 |
| 122,000 |
| Selling expense |
| 826 |
| 3,853 |
| Salaries |
| 5,519 |
| 71,378 |
| Depreciation |
| 5,098 |
| 8,324 |
| Office & Administrative |
| 313,802 |
| 133,162 |
| TOTAL OPERATING EXPENSES |
| 475,245 |
| 338,717 |
|
|
|
|
|
|
GAIN (LOSS) FROM OPERATIONS |
| (459,194) |
| (208,656) | |
|
|
|
|
|
|
OTHER INCOME (EXPENSE) |
|
|
|
| |
| Inventory reserve expense |
| - |
| (3,425) |
| Interest income |
| - |
| 81 |
| Interest, Beneficial conversion and fee discount expense |
| (141,500) |
| (82,762) |
| Tax foreign filing reserve expense |
| (20,000) |
| (20,000) |
| Goodwill Impairment |
| - |
| (243,199) |
| TOTAL OTHER INCOME (EXPENSE) |
| (161,500) |
| (349,305) |
|
|
|
|
|
|
INCOME (LOSS) FROM CONTINUING OPERATIONS |
| (620,694) |
| (557,961) | |
|
|
|
|
|
|
(LOSS) FROM DISCONTINUED OPERATIONS |
| - |
| (1,938) | |
|
|
|
|
|
|
CONSOLIDATED NET (LOSS) BEFORE INCOME TAX |
| (620,694) |
| (559,899) | |
| Income Tax Expense |
| - |
| - |
NET (LOSS) |
| (620,694) |
| (559,899) | |
| EARNINGS PER SHARE BASIC AND DILUTED |
|
|
|
|
| (Loss) income per share from continuing operations |
| (0.31) |
| (2.36) |
| (Loss) per share from discontinued operations |
| - |
| (0.01) |
| Net (Loss) per share |
| (0.31) |
| (2.37) |
| Weighted average number of common stock shares outstanding, basic and diluted |
| 1,994,768 |
| 236,306 |
|
|
|
|
|
|
OTHER COMPREHENSIVE GAIN (LOSS) |
|
|
|
| |
| Foreign currency translation gain (loss) |
| 1,372 |
| 21,204 |
|
|
|
|
|
|
COMPREHENSIVE (LOSS) | $ | (619,322) | $ | (538,695) |
The accompanying notes are an integral part of these consolidated financial statements.
22
OCCIDENTAL DEVELOPMENT GROUP, INC. [formerly Intelligent Living Corp] CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT | |||||||||||||
|
|
|
|
|
|
|
|
|
| Accumulated |
|
| |
|
|
| Common Stock |
|
|
|
|
| Other | Total | |||
|
|
| Number |
|
| Additional |
| Accumulated | Comprehensive | Stockholders' | |||
|
|
| of Shares | Amount |
| Paid-in Capital |
| Deficit | Income (Loss) | Deficit | |||
Balance May 31, 2010 |
| 41,332 | $ | 41 | $ | 12,816,653 | $ | (14,113,322) | $ | (63,099) | $ | (1,359,728) | |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Stock issued for conversion of debt |
| 29,577 |
| 30 |
| 330,968 |
|
|
|
|
| 330,998 | |
Net loss for the 12 months ended May 31, 2011 |
|
|
|
|
|
|
| (578,179) |
|
|
| (578,179) | |
Foreign currency translation gain (loss) |
|
|
|
|
|
|
|
|
| (45,680) |
| (45,680) | |
Balance, May 31, 2011 |
| 70,909 | $ | 71 | $ | 13,147,621 | $ | (14,691,501) | $ | (108,779) | $ | (1,652,589) | |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Stock issued for conversion of debt |
| 10,000 |
| 10 |
| 8,990 |
|
|
|
|
| 9,000 | |
Stock issued for conversion of debt |
| 1,170,100 |
| 1,170 |
| 349,860 |
|
|
|
|
| 351,030 | |
Net loss for the 12 months ended May 31, 2012 |
|
|
|
|
|
|
| (559,899) |
|
|
| (559,899) | |
Foreign currency translation gain (loss) |
|
|
|
|
|
|
|
|
| 21,204 |
| 21,204 | |
Balance, May 31, 2012 |
| 1,251,009 | $ | 1,251 | $ | 13,506,471 | $ | (15,251,400) | $ | (87,575) | $ | (1,831,254) | |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Stock issued for conversion of debt |
| 3,073,101 |
| 3,073 |
| 236,398 |
| - |
| - |
| 239,471 | |
Recording Beneficial Conversion Feature |
| - |
| - |
| 90,741 |
| - |
| - |
| 90,741 | |
Recording Contributed Capital |
| - |
| - |
| 59,754 |
| - |
| - |
| 59,754 | |
Net loss for the 12 months ended May 31, 2013 |
|
|
|
|
|
|
| (620,694) |
|
|
| (620,694) | |
Foreign currency translation gain (loss) |
|
|
|
|
|
|
|
|
| 1,372 |
| 1,372 | |
Balance May 31, 2013 |
| 4,324,110 | $ | 4,324 | $ | 13,893,363 | $ | (15,872,094) | $ | (86,203) | $ | (2,060,610) |
The accompanying notes are an integral part of these consolidated financial statements.
23
OCCIDENTAL DEVELOPMENT GROUP, INC. | |||||||
[formerly Intelligent Living Corp] | |||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
| |||||||
|
|
|
|
| For the 12 month period ended | ||
|
|
|
|
| May 31, |
| May 31, |
|
|
|
|
| 2013 |
| 2012 |
|
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
| |||
| Net loss | $ | (620,694) | $ | (559,899) | ||
| Adjustments to reconcile net loss |
|
|
|
| ||
|
| to net cash used in operating activities: |
|
|
|
| |
|
|
| Amortization of debt discount |
| 61,002 |
| - |
|
|
| Depreciation / Amortization |
| 5,098 |
| 8,324 |
|
|
| Inventory reserve |
| - |
| 3,338 |
|
|
|
|
|
|
|
|
|
| Decrease (increase), net of acquisition, in: |
|
|
|
| |
|
|
| Accounts receivable |
| 6,805 |
| 9,997 |
|
|
| Accounts receivable related party |
| - |
| 20,078 |
|
|
| Prepaid expenses |
| 3,147 |
| 176 |
|
|
| Inventory |
| - |
| 4,292 |
|
| Increase (decrease), net of acquisition, in: |
|
|
|
| |
|
|
| Services converted to note payable |
| 125,000 |
| - |
|
|
| Accrued liabilities and interest |
| 84,498 |
| 216,396 |
|
|
| Accrued liabilities and interest related party |
| 150,722 |
| - |
|
|
| Employee advance receivable |
| (70) |
| - |
|
|
| Accounts payable |
| 78,936 |
| (1,081) |
|
|
| GST tax refundable |
| (225) |
| 626 |
| Net cash used in operating activities |
| (105,781) |
| (297,753) | ||
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
| |||
| Good Will |
| - |
| 243,701 | ||
| Net cash used in investing activities |
| - |
| 243,701 | ||
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
| |||
| Contributed Capital |
| 59,754 |
| - | ||
| Bank Line of Credit |
| (3,886) |
| (4,816) | ||
| Proceeds of loans |
| 117,500 |
| - | ||
| Proceeds of loans, related party net |
|
|
| 52,175 | ||
| Repayment of loans, related party net |
| (45,990) |
|
| ||
| Net cash provided by financing activities |
| 127,378 |
| 47,359 | ||
|
|
|
|
|
|
|
|
Net increase (decrease) in cash |
| 21,597 |
| (6,693) | |||
|
|
|
|
|
|
|
|
| Effect of foreign exchange on cash |
| (1,241) |
| 5,903 | ||
|
|
|
|
|
|
|
|
Cash, beginning of period |
| 2,685 |
| 3,475 | |||
|
|
|
|
|
|
|
|
Cash, end of period | $ | 23,041 | $ | 2,685 | |||
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURES: |
|
|
|
| |||
| Cash paid for interest and income taxes: |
|
|
|
| ||
|
| Interest | $ | 27,413 | $ | 25,828 | |
|
| Income taxes | $ | - | $ | - | |
|
|
|
|
|
|
|
|
NON-CASH INVESTING AND FINANCING ACTIVITIES: |
|
|
|
| |||
| Common stock issued for accounts payable | $ |
| $ | 360,030 | ||
| Common stock issued for related party debt and interest | $ | 105,421 | $ | - | ||
| Accounts payable converted to third party debt | $ | 85,000 | $ | - | ||
| Common stock issued for third party debt and interest | $ | 134,050 | $ | - | ||
| Accrued liabilities converted to related party debt | $ | 122,000 | $ | 180,000 | ||
| Beneficial conversion feature on third party debt | $ | 90,741 | $ | - | ||
| Accrued liabilities converted to note payable | $ | - | $ | 80,000 |
The accompanying notes are an integral part of these consolidated financial statements.
24
OCCIDENTAL DEVELOPMENT GROUP, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2013
NOTE 1 ORGANIZATION AND DESCRIPTION OF BUSINESS
Occidental Development Group, Inc. (ODG, the Company, we, us) was incorporated in the State of Nevada in 1998. Through its subsidiary MCM Integrated Technologies, Ltd. (MCM) the Company operates in the green building sector and has historically offered automation technology for single and multi unit new construction and existing buildings. The Company specialized in designing, supplying, installing, upgrading and servicing control and automation solutions including: energy use monitoring and conservation systems, security and access control systems, lighting control systems, HVAC and environmental controls, and distributed audio/video systems. Incorporated in 1994, MCM has supplied home automation and energy management solutions since 2003. The Company maintains its corporate office in Beverly Hills California and has project offices in Vancouver, British Columbia and Phoenix, Arizona. Income is derived from both equipment sales and the provision of installation, repair and maintenance services. Customers include residential home owners, developers and builders of single family and multi-unit developments and commercial businesses.
The Company previously engaged in the import and distribution of home décor products for the North American market. This activity was pursued through its wholly owned subsidiary Cardinal Points Trading Corp. In December 2006 the Company discontinued its activity in the home décor sector and began a process to dispose of assets and obligations and evaluate ways and means to recover costs related to the home décor import and distribution business. This process concluded during the current year and future impact on operations is expected to be de minimis as of May 31, 2013.
Results from ongoing operations reported for the year ending May 31, 2013 and 2012 relate to sales of home automation and energy efficiency products and services including system design, equipment supply, installation and support. Results from discontinued operations relate to the Companys phase out activities in the home décor sector and include the cost of third party legal and professional time related to eliminating and reducing liabilities, and pursuing legal recourse against the Companys home décor supplier.
The Companys year-end is May 31.
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies of Occidental Development Group, Inc. is presented to assist in understanding the Companys financial statements. The financial statements and notes are representations of the Companys management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements.
Accounting Method
The Companys financial statements are prepared using the accrual method of accounting.
Accounts Receivable
The Company carries its accounts receivable at net realizable value. Because of the small customer base, direct contact with customers and relatively small number of transactions, the Company uses the direct write off method to account for doubtful accounts. The Company estimates bad debt based on managements ongoing review and assessment of accounts and creation of reserves for the full amount of doubtful accounts. At May 31, 2013 and 2012, there were accounts receivable allowances of NIL.
25
OCCIDENTAL DEVELOPMENT GROUP, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2013
Advertising and Marketing Expenses
Advertising expenses consist primarily of costs incurred in the design, development, and printing of Company literature and marketing materials. The Company expenses all advertising expenditures as incurred. The Company incurred advertising and marketing expenses of $826 and $3,853 for the years ending May 31, 2013 and 2012 respectively.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all short-term debt securities purchased with a maturity of three months or less to be cash equivalents. At May 31, 2013 and 2012, the Company did not have cash equivalents.
Commitments and Contingencies
We record estimated commitments for future obligations and estimate contingencies when information is available that indicates that it is probable that an asset has been impaired or a liability has been incurred and the amount can be reasonably estimated. When no accrual is made for a loss contingency because one or both of these conditions are not met, or if an exposure to loss exists in excess of the amount accrued, we disclose such contingencies when there is at least a reasonable possibility that a loss or an additional loss may have been incurred. Determining the likelihood of incurring a liability and estimating the amount of the liability involves significant judgment. If the outcome of the liability is more adverse to us than management currently expects, then we may have to record additional charges in the future. See Note 6 for details on commitments and contingencies.
Comprehensive Income
The Company accounts for Comprehensive Income in accordance with ASC Topic 220. ASC Topic 220 establishes standards for reporting and displaying comprehensive income, its components and accumulated balances. For the year ending May 31, 2013 the Company reported a comprehensive gain of $1,372 resulting from the conversion of Canadian dollar subsidiaries into US dollars. For the year ending May 31, 2013 the accumulated comprehensive loss due to the conversion of Canadian dollar subsidiaries into US dollars was $86,203.
Costs Associated with Exit or Disposal Activities
The Company accounts for exit or disposal activities in accordance with ASC Topic 220, Accounting for Costs Associated with Exit or Disposal Activities ASC 220 establishes standards for the recognition, measurement, and reporting of costs associated with exit and disposal activities, including restructuring activities. There has been no impact on the Companys financial position or results of operations from adopting ASC 220.
Earnings per Share
The Company has adopted ASC 260 Earnings Per Share. Basic loss per share is computed using the weighted average number of common shares outstanding. Diluted net loss per share is the same as basic net loss per share, as the inclusion of common stock equivalents would be antidilutive.
26
OCCIDENTAL DEVELOPMENT GROUP, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2013
|
| For the Year Ended | ||||
(in thousands) |
| 2013 |
| 2012 | ||
(Loss) from continuing operations |
| $ | (620.6) |
| $ | (558.0) |
(Loss) from discontinued operations |
| - |
| (1.9) | ||
Net (loss) income |
| $ | (620.6) |
| $ | (559.9) |
|
|
|
|
| ||
Weighted average shares outstanding: |
|
|
|
| ||
Basic |
| 1,994,768 |
| 491,314 | ||
Effect of dilutive securities: |
|
|
|
| ||
Stock options and warrants |
| |
| | ||
Convertible loans |
| |
| | ||
Basic and diluted |
| 1,994,768 |
| 491,314 | ||
|
|
|
|
| ||
Gain (Loss) per share from continuing operations: basic and diluted |
| $ | (0.31) |
| $ | (2.36) |
Gain (Loss) per share from discontinued operations: basic and diluted |
| $ | (0.00) |
| $ | (0.01) |
Net (loss) income per share: basic and diluted |
| $ | (0.31) |
| $ | (2.37) |
The following potential common shares have been excluded from the computation of diluted net income per share for the years ended May 31, 2013 and 2012 because their inclusion would have been antidilutive:
| For the Year Ended May 31, 2013 | For the Year Ended |
Outstanding common stock options and warrants | Nil | Nil |
Convertible loans | 52,520,928 | 2,184,086 |
Fair Value of Financial Instruments
On July 1, 2008, the Company adopted Accounting Standards Codification Topic 820, Fair Value Measurements and Disclosures (Topic 820). Topic 820 defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures. The three levels are defined as follows:
·
Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
·
Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
·
Level 3 inputs to valuation methodology are unobservable and significant to the fair measurement.
The following table represents our assets and liabilities by level measured at fair value on a recurring basis at May 31, 2013
|
|
|
|
|
|
|
|
| Total |
| |||||
|
|
|
|
|
|
|
|
| Realized |
| |||||
Description | Level 1 |
|
| Level 2 |
| Level 3 |
|
| Loss |
| |||||
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
Totals | $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
27
OCCIDENTAL DEVELOPMENT GROUP, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2013
The following table represents our assets and liabilities by level measured at fair value on a recurring basis at May 31, 2012:
|
|
|
|
|
|
|
|
| Total |
| |||||
|
|
|
|
|
|
|
|
| Realized |
| |||||
Description | Level 1 |
|
| Level 2 |
| Level 3 |
|
| Loss |
| |||||
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
Totals | $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
The adoption of this standard did not have a material effect on the Companys financial position, results of operations or cash flows.
Software Development Costs
Software development costs include direct costs incurred for internally developed products classified under Other Assets. We account for software development costs in accordance with ASC 350-40. All capitalized software costs are amortized on a straight line basis over an estimated useful life and are reviewed for impairment annually. As of May 31, 2013, all software costs were fully amortized.
Foreign Currency Translation
MCM Integrated Technologies, Ltd. and Cardinal Points Trading, Corp. both use the Canadian Dollar as their functional currency. Transactions denominated in currencies other than the entitys functional currency are translated into the entitys functional currency at the exchange rate ruling on the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the exchange rate ruling on the balance sheet date. Currency translation differences are recognized in the statement of income for the period.
On consolidation, the results of operations and cash flows whose functional currency is other than the US dollar are translated into US dollars at the average exchange rate for the period and their assets and liabilities are translated into US dollars at the exchange rate ruling on the balance sheet date. Currency translation differences are recognized within other comprehensive income as a separate component of shareholders equity. In the event that such an operation is sold, the cumulative currency translation differences that are attributable to the operation are reclassified to income.
Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.
As shown in the accompanying financial statements, at May 31, 2013 the Company has an accumulated deficit of $15,872,094, and current liabilities in excess of current assets by $1,446,096. These circumstances raise substantial doubt about the Companys ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the Company cannot continue in existence.
Commencing in July 2006 and continuing through the year ended May 31, 2012 management has systematically continued to phase out of the home décor sector. Commencing in Q3 2007 the Company began reporting all home décor activity under the category of discontinued operations. This transition was completed as of May 31, 2012. In December 2006 the Company moved into the home automation sector with the acquisition of MCM Integrated Technologies. The transition has substantially reduced the Companys financial obligations with respect to overheads, cost of inventory, cost of sales and need for support services. The Company recorded positive operating income for the year ended May 31, 2007 and loss on operations for the years ended May 31, 2008 through 2013.
28
OCCIDENTAL DEVELOPMENT GROUP, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2013
Goodwill
Goodwill is calculated as the excess of the fair value of consideration paid over the fair value of tangible and intangible assets acquired and liabilities assumed. Goodwill is tested for impairment annually according to ASC 350-20. An impairment test would also be performed in any period in which events or changes in circumstances indicate that the carrying amount may not be recoverable. Impairment would be recognized at that time, to the extent that the carrying amount exceeds the undiscounted future net cash flows expected from its use. For the year ended May 31, 2012 the Company recorded goodwill in the amount of $243,199 related to the acquisition of MCM Integrated Technologies, Ltd. Management reviewed Goodwill and found that there was impairment for the year ended May 31, 2012 and an expense for the full value of goodwill was recognized.
Impairment of long-lived assets
We have adopted ASC 350 for the assessment of impairment of goodwill and indefinite life intangibles on an annual basis. The potential impairment of finite life intangibles is assessed whenever events or a change in circumstances indicate the carrying value may not be recoverable. Factors we consider important which could trigger an impairment review include the following:
·
significant underperformance relative to historical or expected projected future operating results;
·
significant changes in the manner of our use of the acquired assets or the strategy for our overall business;
·
significant negative industry or economic trends;
·
significant decline in our stock price for a sustained period of time; and
·
our market capitalization relative to net book value.
When we determine that the carrying value of goodwill and indefinite life intangibles may not be recoverable based upon the existence of one or more of the above indicators of impairment, we measure any potential impairment based on a projected discounted cash flow method using a discount rate determined by our management to be commensurate with the risk inherent in our current business model.
Inventory
The Company has adopted ASC 330: Inventory at May 31, 2013 and 2012 consisted of a variety of home automation equipment. Inventories are recorded using the specific identification method and valued at the lower of recorded cost or market value. The recorded cost of inventory was $53,701 at May 31, 2013, and $53,701 at May 31, 2012. Reserves of $51,749 at May 31, 2013 and $51,749 at May 31, 2012 were recorded for home automation inventory.
Inventory | May 31 2013 | May 31 2012 |
| Recorded Cost | |
Home automation equipment | $53,321 | $53,701 |
Total Recorded Cost | $53,321 | $53,701 |
| Reserve | |
Home automation equipment | $51,382 | $51,749 |
| Net of Reserve | |
Total Inventory net of reserve | $1,939 | $1,952 |
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant inter-company transactions and balances have been eliminated in consolidation. References herein to the Company include the Company and its subsidiaries, unless the context otherwise requires.
29
OCCIDENTAL DEVELOPMENT GROUP, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2013
Property and Equipment
Property and equipment are stated at cost. Depreciation of property and equipment is calculated using the straight-line method over the estimated useful lives of the assets, which range from three to seven years (see note 3). Property and Equipment held by MCM are pledged as security for the Companys line of credit.
Provision for Taxes
We account for income taxes in accordance with accounting guidance now codified as FASB ASC Topic 740, Income Taxes, which requires that we recognize deferred tax liabilities and assets based on the differences between the financial statement carrying amounts and the tax bases of assets and liabilities, using enacted tax rates in effect in the years the differences are expected to reverse. Deferred income tax benefit (expense) results from the change in net deferred tax assets or deferred tax liabilities. A valuation allowance is recorded when it is more likely than not that some or all deferred tax assets will not be realized.
Accounting guidance now codified as FASB ASC Topic 740-20, Income Taxes Intra-period Tax Allocation, clarifies the accounting for uncertainties in income taxes recognized in accordance with FASB ASC Topic 740-20 by prescribing guidance for the recognition, de-recognition and measurement in financial statements of income tax positions taken in previously filed tax returns or tax positions expected to be taken in tax returns, including a decision whether to file or not to file in a particular jurisdiction. FASB ASC Topic 740-20 requires that any liability created for unrecognized tax benefits is disclosed. The application of FASB ASC Topic 740-20 may also affect the tax bases of assets and liabilities and therefore may change or create deferred tax liabilities or assets. We would recognize interest and penalties related to unrecognized tax benefits in income tax expense.
At May 31, 2013, the Company had net deferred tax asset calculated at an expected rate of 34% of approximately $4,257,000 principally arising from net operating loss carryforwards for income tax purposes. As management of the Company cannot determine that it is more likely than not that the Company will realize the benefit of the net deferred tax asset, a valuation allowance equal to the net deferred tax asset has been established at May 31, 2013. The significant components of the deferred tax asset at May 31, 2013 and May 31, 2012 were as follows:
|
| May 31, 2013 |
|
| May 31, 2012 |
Net operating loss carryforward | $ | 13,076,828 |
| $ | 12,522,234 |
Deferred tax asset - NOL | $ | 4,446,162 |
| $ | 4,257,600 |
Deferred tax asset valuation allowance | $ | (4,446,828) |
| $ | (4,257,600) |
Net deferred tax asset | $ | - |
| $ | - |
At May 31, 2013, the Company had net operating loss carryforwards of approximately $13,017,074 which expire in the years 2020 through 2031. The change in the allowance account from May 31, 2012 to May 31, 2013 was $168,246.
The components of current income tax expense as of May 31, 2013 and 2012 respectively are as follows:
| As of May 31, | |||
| 2013 |
| 2012 | |
Current federal tax expense | $ | - | $ | - |
Current state tax expense | $ | - | $ | - |
Change in NOL benefits | $ | 188,562 | $ | 98,048 |
Change in valuation allowance | $ | (188,562) | $ | (98,048) |
Income tax expense | $ | - | $ | - |
OCCIDENTAL DEVELOPMENT GROUP, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2013
For the period ended May 31, 2013, other than a reserve of $170,000 for potential federal tax penalties associated with late filing of foreign subsidiary disclosures, the Company did not record any liabilities for uncertain tax positions.
Revenue Recognition
The Company generates revenues designing and installing, integrating and servicing automation solutions and energy use monitoring and conservation systems for commercial and residential new construction and renovation projects. The Company generates revenues in three primary ways: first, the Company offers a complete turnkey solution with products and services to contractors and end users; second, the Company sells only products to its contractors and end users; and third, the Company sells only services to its contractors and end users. Revenue on product sales, service agreements and turnkey contracts is recognized using the completed contract method in accordance with ASC Topic 605 Revenue Recognition in Financial Statements.
Use of Estimates
The process of preparing financial statements in conformity with accounting principles generally accepted in the United States of America requires the use of estimates and assumptions regarding certain types of assets, liabilities, revenues, and expenses. Such estimates primarily relate to unsettled transactions and events as of the date of the financial statements. Accordingly, upon settlement, actual results may differ from estimated amounts.
NOTE 3 PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is provided using the straight-line method over the estimated useful lives of the assets. The useful lives of property and equipment for purposes of computing depreciation are three to seven years. The following is a summary of property, equipment, and accumulated depreciation:
Property and Equipment |
| May 31, 2013 |
| May 31, 2012 |
Computer hardware and software | $ | 811,741 | $ | 815,287 |
Furniture, fixtures, vehicles, leaseholds |
| 342,754 |
| 345,199 |
Book value of property and equipment |
| 1,154,495 |
| 1,160,486 |
Less accumulated depreciation |
| (1,149,256) |
| (1,150,223) |
Property and equipment - net | $ | 5,239 | $ | 10,263 |
For the years ended May 31, 2013 and 2012 depreciation expenses were $5,098 and $8,324. The Company evaluates the recoverability of property and equipment when events and circumstances indicate that such assets might be impaired. The Company determines impairment by comparing the undiscounted future cash flows estimated to be generated by these assets to their respective carrying amounts. Maintenance and repairs are expensed as incurred. Replacements and betterments are capitalized. The cost and related reserves of assets sold or retired are removed from the accounts, and any resulting gain or loss is reflected in results of operations.
NOTE 4 COMMON STOCK
During the year ended May 31, 2012 the Company issued 1,180,100 shares of common stock for conversion of debt valued at $360,030.
31
OCCIDENTAL DEVELOPMENT GROUP, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2013
During the year ended May 31, 2013 the Company issued 3,073,101 shares of common stock for conversion of debt valued at $239,471.
All stock issued was within terms of the underlying agreements.
NOTE 5 RELATED PARTIES (NOTES PAYABLE RELATED PARTY)
During the year ended May 31, 2012 $180,000 of accrued liabilities, $115,388 of short term note payable and $2,612 of accrued interest due the Companys CEO was consolidated into a debenture bearing interest at a rate of 6% convertible into shares of the Companys common stock at a conversion price not less than the greater of $0.0005 per share or the lowest closing price of the Companys Common Stock for any trading day on which a Notice of Conversion is received, or for any of the 20 consecutive days on which shares of the Company traded immediately preceding the date of receipt of each Notice of Conversion. The Company determined that there was no derivative liability or beneficial conversion associated with the note. The debenture and $5,780 of accrued interest were converted into 992,600 shares of common stock of the Company at an average price of $0.30 per share. The conversion was made in accordance with the underlying debt agreement.
During the year ended May 31, 2012 new loans and accounts payable due to the Companys officers totaled $52,175. The Company had short-term loans and accounts payable outstanding to corporate officers at May 31, 2012 in the amount of $350,232. They are unsecured, due on demand and bear interest at an average rate of 9.7%. Accrued interest on May 31, 2012 was $785. The total outstanding related party debt [principal plus accrued interest] for the period ended May 31, 2012 was $351,017.
During the year ended May 31, 2013, the Company converted $122,000 of accrued liabilities, into a new related party debenture in the same amount and re-classified and converted a $30,267 short term non-interest bearing note into a new related party debenture. The debentures bear interest at 6% and mature on June 1, 2014. The debentures are convertible into shares of common stock at a conversion price equal to the lowest closing price per share of the Companys common stock for the 20 days on which the Company's shares traded immediately preceding the date of conversion or at a price of $0.0005 per share whichever is greater. The Company determined that there was no derivative liability or beneficial conversion associated with the new debentures.
During the year ended May 31, 2013 the Company converted $103,267 of related party debenture principal and $2,154 of related party debenture interest into 1,405,600 shares of common stock at a share price of $0.10 per share. All conversions were made in accordance with the underlying debt agreement.
During the year ended May 31, 2013, the balance sheet liability associated with related party loans, debentures and accrued liabilities decreased by $30,196. Related party loans outstanding as of May 31, 2013 totaled $320,036 are uncollateralized and due on demand. The Company paid the Companys officers $245,848 of loan principal and $27,413 of interest in cash and accrued related party interest of $722. Total outstanding related party debt [principal plus accrued interest] for the periods ended May 31, 2013 and May 31, 2012 was respectively $321,543 and $351,017.
32
OCCIDENTAL DEVELOPMENT GROUP, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2013
The Company shares office space and administrative costs in Vancouver with ScanTech Imaging Corp. (ScanTech), a company controlled by Murat Erbatur the Companys former COO. The Company provides technical consulting services to ScanTech and Scan Techs clients on an as needed basis.
The following table summarizes the position of notes, and amounts due to related parties at May 31, 2013 and May 31, 2012:
Related Parties |
| Principal Outstanding on May 31, 2013 | Interest Accrued to May 31, 2013 | Principal Outstanding on May 31, 2012 | Interest Accrued to May 31, 2012 |
Short term notes | $ | 320,036 | 1,507 | 350,232 | 785 |
Total | $ | 320,036 | 1,507 | 350,232 | 785 |
NOTE 6 COMMITMENTS AND CONTINGENCIES
Lease Commitments
For the year ending May 31, 2013 the Company did not have any lease or other long term commitments and management was not aware of any contingencies not already provided for. The Company rents office, warehouse, and storage space on a month-to-month basis. This arrangement is expected to continue for the foreseeable future.
NOTE 7 CONCENTRATION OF CREDIT RISK
Cash
The Company maintains cash balances at two banks. Accounts at each institution are insured by the Canadian Depository Insurance up to $60,000 in Canadian funds. At May 31, 2013 and 2012, no account exceeded this limit.
NOTE 8 THIRD PARTY NOTES AND DEBENTURES PAYABLE
During the 12 months ended May 31, 2012 the Company reclassified $80,000 of accrued liability into a non interest bearing convertible note maturing on June 1, 2012. The accrued liability resulted from professional fees payable under a consulting contract dated July 2010. Pursuant to terms of the consulting contract, the note formalizes the Companys option to settle the outstanding liability through issuance of common stock and the effective date of the note tacks back to December 2010 reflecting the period in which the Company realized the benefit of the services. The note is convertible into shares of the Companys common stock at a conversion price not less than the greater of $0.0005 per share or the lowest closing price of the Companys Common Stock for any trading day on which a Notice of Conversion is received, or for any of the 20 consecutive days on which shares of the Company traded immediately preceding the date of receipt of each Notice of Conversion. The Company determined that there was no derivative liability or beneficial conversion associated with the note.
33
OCCIDENTAL DEVELOPMENT GROUP, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2013
During the quarter ended November 30, 2012 the Company negotiated an 8% convertible debenture, principal amount of $42,500, (First Asher Note) with Asher Enterprises, Inc. The debenture, due in June 2013, is convertible into shares of the Companys common stock, at the discretion of the holder, commencing 180 days following the date of the debenture at a conversion price per share equal to a discount of 42% from the average of the lowest three closing prices for the Companys stock during the ten days prior to conversion or $0.00009 per share whichever is greater.
The Company evaluated the First Asher Note and determined that the shares issuable pursuant to the conversion option were determinate due to the Fixed Floor Conversion Price and, as such, does not constitute a derivative liability as the Company has obtained authorization from a majority of shareholders such that should conversion occur at the Fixed Conversion Price the appropriate number of shares will be available or issuable for settlement to occur. The beneficial conversion feature discount resulting from the conversion price of $0.03, below the market price on September 6, 2012 of $0.038, resulted in a discount of $42,500 of which $42,294 was amortized during the 12 months ended May 31, 2013.
During the quarter ended February 28, 2013 the Company negotiated a second 8% convertible debenture, principal amount of $32,500 (Second Asher Note), with Asher Enterprises, Inc. The debenture, due in September 2013, is convertible into shares of the Companys common stock, at the discretion of the holder, commencing 180 days following the date of the debenture at a conversion price per share equal to a discount of 42% from the average of the lowest three closing prices for the Companys stock during the ten days prior to conversion or $0.00009 per share whichever is greater.
The Company evaluated the Second Asher Note and determined that the shares issuable pursuant to the conversion option were determinate due to the Fixed Floor Conversion Price and, as such, does not constitute a derivative liability as the Company has obtained authorization from a majority of shareholders such that should conversion occur at the Fixed Conversion Price the appropriate number of shares will be available or issuable for settlement to occur. The beneficial conversion feature discount resulting from the conversion price of $0.007 below the market price on December 5, 2012 of $0.020 resulted in a discount of $16,226 of which $10,406 was amortized during the 12 months ended May 31, 2013.
During the quarter ended February 28, 2013, the Company converted a third party accounts payable of $85,000 to a short term non-interest bearing convertible note due June 2013. The principal is convertible into shares of common stock at a conversion price equal to the lowest closing price per share of the Companys common stock for the 20 days on which the Company's shares traded immediately preceding the date of conversion or at a price of $0.0005 per share whichever is greater. The Company evaluated the $85,000 convertible note and determined that the shares issuable pursuant to the conversion option were determinate due to the Fixed Floor Conversion Price and, as such, does not constitute a derivative liability as the Company has obtained authorization from a majority of shareholders such that should conversion occur at the Fixed Conversion Price the appropriate number of shares will be available or issuable for settlement to occur. The beneficial conversion feature discount resulting from the conversion price of $0.001 below the market price on December 31, 2012 of $0.021 resulted in a discount of $4,250 of which $4,222 was amortized during the 5 months ended May 31, 2013.
During the quarter ended May 31, 2013 the Company negotiated an 8% convertible debenture, principal amount of $42,500, (Third Asher Note) with Asher Enterprises, Inc. The debenture, due in December 2013, is convertible into shares of the Companys common stock, at the discretion of the holder, commencing 180 days following the date of the debenture at a conversion price per share equal to a discount of 42% from the average of the lowest three closing prices for the Companys stock during the ten days prior to conversion or $0.00009 per share whichever is greater.
34
OCCIDENTAL DEVELOPMENT GROUP, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2013
The Company evaluated the Third Asher Note and determined that the shares issuable pursuant to the conversion option were determinate due to the Fixed Floor Conversion Price and, as such, does not constitute a derivative liability as the Company has obtained authorization from a majority of shareholders such that should conversion occur at the Fixed Conversion Price the appropriate number of shares will be available or issuable for settlement to occur. The beneficial conversion feature discount resulting from the conversion price of $0.004, below the market price on September 6, 2012 of $0.007, resulted in a discount of $27,765 of which $4,080 was amortized during the 12 months ended May 31, 2013.
Pursuant to the terms of the Asher debentures, and by agreement with Asher, the Company has instructed its stock transfer agent to reserve an agreed upon number of shares of the Companys common stock to be issued if the debenture is converted. As of May 31, 2013, 3,000,000 shares have been reserved, but are not considered as issued and outstanding.
All outstanding notes and debentures were evaluated for embedded derivatives in accordance with ASC 815 and were found to not include any embedded derivatives.
During the 12 months ended May 31, 2013 the Company converted $9,000 of short term note principal into 30,000 shares of the Companys common stock and $36,800 of First Asher Note principal into 580,834 shares of the Companys common stock. All conversions were within the terms of the underlying agreements.
During the 12 month period ended May 31, 2013 the Company recorded expenses of $50,201 for accrued interest and $61,002 related to amortization of debenture discounts.
Third party short term principal outstanding on May 31, 2013 was $393,576, consisting of note principal $237,876 and debenture principal $155,700. Total third party long term principal outstanding on May 31, 2013 consisted of debenture principal of $619,753. Total outstanding third party principal outstanding on May 31, 2013 was $1,013,329.
The following tables summarize the outstanding principal and discounts associated with debentures and notes outstanding at May 31, 2012 and May 31, 2013.
May 31, 2012 | ||||
Long and Short Term Debentures | Notes | Total | ||
Principal at end of period | Remaining Discounts | Balance Sheet Amount net of discounts | Principal at end of period | End of Period Balance Sheet Amount |
$730,753 | $ - | $730,753 | $88,739 | $819,492 |
May 31, 2013 | ||||||
Long and Short Term Debentures | Notes | Total | ||||
Principal at end of period | Remaining Discounts | Balance Sheet Amount net of discounts | Principal at end of period | Remaining Discounts | Balance Sheet Amount net of discounts | End of Period Balance Sheet Amount |
$775,453 | $29,711 | $745,742 | $237,876 | $28 | $237,848 | $983,590 |
35
OCCIDENTAL DEVELOPMENT GROUP, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2013
The principal and accrued interest on notes and debentures as of May 31, 2012 and May 31, 2013 are summarized in the following tables:
Notes and Debentures |
| Principal Amount at May 31, 2012 | Weighted Average Interest Rate |
| Accrued Interest May 31, 2012 |
Third Party Notes | $ | 88,739 | NIL | $ | NIL |
Third Party Debentures |
| 730,753 | 6.5% |
| 272,672 |
Total | $ | 819,492 | 5.8% | $ | 272,672 |
Notes and Debentures |
| Principal Amount at May 31, 2013 | Weighted Average Interest Rate |
| Accrued Interest May 31, 2013 |
Third Party Notes | $ | 237,876 | - | $ | - |
Third Party Debentures |
| 775,453 | 6.7% |
| 322,876 |
Total | $ | 1,013,329 | 5.1% | $ | 322,876 |
Principal payments on loans and debentures payable in the years ending May 31, 2013 through 2017 are as follows:
Fiscal Year | Principal |
2013 | $102,876 |
2014 | $523,180 |
2015 | $387,273 |
2016 | - |
2017 | - |
Total | $1,013,329 |
NOTE 9 DISCONTINUED OPERATIONS
At May 31, 2012, the Company had disposed of all discontinued inventory and fully depreciated all plant and equipment assets. At May 31, 2013, assets from discontinued operations were de minimis.
At May 31, 2013, the Company had no liabilities from discontinued operations. The following table summarizes the liabilities from discontinued operations at May 31, 2013 and May 31, 2012:
Description |
| May 31, 2013 | May 31, 2012 | |
Note Payable | $ | - | $ | 61,250 |
Total liabilities related to discontinued operations | $ | - | $ | 61,250 |
The Company did not record a loss from discontinued operations for the 12 months ended May 31, 2013. The loss from discontinued operations ($1,938), recorded for the 12 months ended May 31, 2012, was a result of miscellaneous charges related pursuing legal recourse against the Companys home décor supplier.
36
OCCIDENTAL DEVELOPMENT GROUP, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2013
NOTE 10 - NEW ACCOUNTING PRONOUNCEMENTS
In February 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income, to improve the transparency of reporting these reclassifications. Other comprehensive income includes gains and losses that are initially excluded from net income for an accounting period. Those gains and losses are later reclassified out of accumulated other comprehensive income into net income. The amendments in the ASU do not change the current requirements for reporting net income or other comprehensive income in financial statements. All of the information that this ASU requires already is required to be disclosed elsewhere in the financial statements under U.S. GAAP. The new amendments will require an organization to:
-
Present (either on the face of the statement where net income is presented or in the notes) the effects on the line items of net income of significant amounts reclassified out of accumulated other comprehensive income - but only if the item reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period; and
-
Cross-reference to other disclosures currently required under U.S. GAAP for other reclassification items (that are not required under U.S. GAAP) to be reclassified directly to net income in their entirety in the same reporting period. This would be the case when a portion of the amount reclassified out of accumulated other comprehensive income is initially transferred to a balance sheet account (e.g., inventory for pension-related amounts) instead of directly to income or expense.
The amendments apply to all public and private companies that report items of other comprehensive income. Public companies are required to comply with these amendments for all reporting periods (interim and annual). The amendments are effective for reporting periods beginning after December 15, 2012, for public companies. Early adoption is permitted. The adoption of ASU No. 2013-02 is not expected to have a material impact on our financial position or results of operations.
In January 2013, the FASB issued ASU No. 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities, which clarifies which instruments and transactions are subject to the offsetting disclosure requirements originally established by ASU 2011-11. The new ASU addresses preparer concerns that the scope of the disclosure requirements under ASU 2011-11 was overly broad and imposed unintended costs that were not commensurate with estimated benefits to financial statement users. In choosing to narrow the scope of the offsetting disclosures, the Board determined that it could make them more operable and cost effective for preparers while still giving financial statement users sufficient information to analyze the most significant presentation differences between financial statements prepared in accordance with U.S. GAAP and those prepared under IFRSs. Like ASU 2011-11, the amendments in this update will be effective for fiscal periods beginning on, or after January 1, 2013. The adoption of ASU 2013-01 is not expected to have a material impact on our financial position or results of operations.
In October 2012, the FASB issued Accounting Standards Update ASU 2012-04, Technical Corrections and Improvements in Accounting Standards Update No. 2012-04. The amendments in this update cover a wide range of Topics in the Accounting Standards Codification. These amendments include technical corrections and improvements to the Accounting Standards Codification and conforming amendments related to fair value measurements. The amendments in this update will be effective for fiscal periods beginning after December 15, 2012. The adoption of ASU 2012-04 is not expected to have a material impact on our financial position or results of operations.
37
OCCIDENTAL DEVELOPMENT GROUP, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2013
In August 2012, the FASB issued ASU 2012-03, Technical Amendments and Corrections to SEC Sections: Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin (SAB) No. 114, Technical Amendments Pursuant to SEC Release No. 33-9250, and Corrections Related to FASB Accounting Standards Update 2010-22 (SEC Update) in Accounting Standards Update No. 2012-03. This update amends various SEC paragraphs pursuant to the issuance of SAB No. 114. The adoption of ASU 2012-03 is not expected to have a material impact on our financial position or results of operations.
In July 2012, the FASB issued ASU 2012-02, Intangibles Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment in Accounting Standards Update No. 2012-02. This update amends ASU 2011-08, Intangibles Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment and permits an entity first to assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test in accordance with Subtopic 350-30, Intangibles - Goodwill and Other - General Intangibles Other than Goodwill. The amendments are effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted, including for annual and interim impairment tests performed as of a date before July 27, 2012, if a public entitys financial statements for the most recent annual or interim period have not yet been issued or, for nonpublic entities, have not yet been made available for issuance. The adoption of ASU 2012-02 has not had a material impact on our financial position or results of operations.
In December 2011, the FASB issued ASU 2011-12, Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05. This update defers the requirement to present items that are reclassified from accumulated other comprehensive income to net income in both the statement of income where net income is presented and the statement where other comprehensive income is presented. The adoption of ASU 2011-12 has not had a material impact on our financial position or results of operations.
In December 2011, the FASB issued ASU No. 2011-11 Balance Sheet: Disclosures about Offsetting Assets and Liabilities (ASU 2011-11). This Update requires an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. The objective of this disclosure is to facilitate comparison between those entities that prepare their financial statements on the basis of U.S. GAAP and those entities that prepare their financial statements on the basis of IFRS. The amended guidance is effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. The Company is currently evaluating the impact, if any, that the adoption of this pronouncement may have on its results of operations or financial position.
The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations, or cash flows.
NOTE 11 CHANGES IN PRESENTATION OF COMPARATIVE STATEMENTS
The presentation of certain amounts for previous periods has been reclassified to conform to the presentation adopted for the current period.
38
OCCIDENTAL DEVELOPMENT GROUP, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2013
NOTE 12 SUBSEQUENT EVENTS
On June 25, 2013 Murat Erbatur resigned as director and COO and on June 26, 2013 the Board of Directors appointed Mr. Ian Gilbey as a director. On July 17, 2013, the Board of Directors authorized the merger with the Companys wholly-owned subsidiary, Occidental Development Group Inc., and in the merger the name of the company was changed to Occidental Development Group Inc. (the changes to take effect upon approval for trading purposes by FINRA). On July 17, 2013, the Board also approved the filing with the Secretary of State of Nevada a Certificate of Change that effected a 1:10 reverse split in our outstanding common stock and a reduction of our authorized common stock in the same 1:10 ratio, from 800,000,000 shares to 80,000,000 shares. Both of these corporate actions were permitted to be taken by the Companys Board of Directors without stockholder approval under Nevada NRS 92A.180 (for the merger with the subsidiary and name change) and NRS 78.207 (for the change in authorized and outstanding stock).
The change of the Companys name to Occidental Development Group, Inc. and the 1:10 reverse split with the concurrent reduction of our authorized common stock in the same ratio were approved by FINRA and became effective for trading purposes on August 19, 2013.
39
ITEM 9
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES
None.
ITEM 9A.
CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
In connection with the preparation of this annual report on Form 10-K, an evaluation was carried out by our management, with the participation of the Chief Executive and Principal Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 ("Exchange Act")) as of May 31, 2013. The evaluation concluded that there was a material weakness in our internal control over financial reporting as of May 31, 2013. A material weakness is a deficiency, or a combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the issuers annual or interim financial statements will not be prevented or detected on a timely basis. The material weakness related to the lack of monitoring or review of work performed by our management and lack of segregation of duties. As of May 31, 2012, in the preparation of audited financial statements, footnotes and financial data, all of our financial reporting was carried out solely by our chief financial and accounting officer and we did not have an audit committee to monitor and review the work performed. The lack of segregation of duties resulted from lack of accounting staff with accounting technical expertise necessary for an effective system of internal control. Based on this evaluation the Chief Executive and Principal Financial Officer has concluded that as of the end of the period covered by this report, the Companys disclosure controls and procedures were not effective for the reasons stated below.
Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error or 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. Due to 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, have been detected. To address the material weaknesses, we performed additional analysis and other post-closing procedures in an effort to ensure our consolidated financial statements included in this report have been prepared in accordance with generally accepted accounting principles. Accordingly, management believes that the financial statements included in this report fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented.
Management's Report on Internal Control Over Financial Reporting
The Companys management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation and fair presentation of financial statements for external purposes in accordance with generally accepted accounting principles.
40
Internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the interim or annual consolidated financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness in future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management conducted an evaluation of the design and operation of the Companys internal control over financial reporting as of May 31, 2013 based on the criteria set forth by the Committee of Sponsor Organizations of the Treadway Commission (COSO) in the Internal Control-Integrated Framework.
Based upon its evaluation, our management concluded that there was a material weakness in our internal control over financial reporting as of May 31, 2013. A material weakness is a deficiency, or a combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the issuers annual or interim financial statements will not be prevented or detected on a timely basis.
The material weakness related to the lack of monitoring or review of work performed by our management and lack of segregation of duties. As of May 31, 2013, in the preparation of audited financial statements, footnotes and financial data, all of our financial reporting was carried out solely by our chief financial and accounting officer and we did not have an audit committee to monitor and review the work performed. The lack of segregation of duties resulted from lack of accounting staff with accounting technical expertise necessary for an effective system of internal control.
Changes in Internal Controls over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rule 13(a)-15(f) or 15(d)-15(f)) that occurred during fourth quarter of the period covered by this yearly report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitations on the Effectiveness of Internal Controls
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
This annual report does not include an attestation report of the Companys registered public accounting firm regarding internal control over financial reporting. Managements report was not subject to attestation by the Companys registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only managements report in this annual report.
ITEM 9B.
OTHER INFORMATION.
Not applicable.
41
PART III
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Our executive officers and directors and their ages as of August 29, 2013 are as follows:
NAME | AGE | POSITION |
Michael F. Holloran | 65 | President, CEO and Director |
Ian Gilbey | 45 | Director |
MICHAEL F. HOLLORAN, PRESIDENT AND CEO
Michael Holloran was elected a director and accepted the position of President & CEO of ODG in 2000. He brings to ODG a wealth of senior management experience spanning 39 years, including 22 years with the Beak International Group and long-term involvement spearheading strategic corporate expansion into international markets, primarily within Southeast Asia. He has been senior consultant to several international engineering companies including: Simons International Inc., AMEC Inc., and Klohn Crippen Berger. He has served as advisor to several multi-national companies and held advisory board and committee memberships including the University of Guelph School of Engineering and the Canadian Pulp and Paper Association. He holds a Masters Degree in Chemical and Environmental Engineering from McMaster University, a Bachelor of Science (Honors) degree in Applied Mathematics and Physical Chemistry from the University of Waterloo and a Management Studies diploma from Sheridan College.
IAN GILBEY, DIRECTOR
Mr. Gilbey, age 45, is an accomplished senior financial consultant with a background that includes over 18 years in the financial markets where he has developed extensive industry relationships in the origination and execution of a broad range of strategic transactions including: handling domestic mergers and acquisitions, raising venture capital, public offerings and the raising of capital for publicly traded, sponsor owned and private corporations. Mr. Gilbey started his financial career in May 1994 as an account executive with Sutro, where he became licensed for both Series 7 and Series 63. In July 1995 he joined The Boston Group, where he was involved in raising capital for initial public offerings (IPO's). In 1997 he developed a team for managing multi-million dollar portfolios in equity funds, bonds and IPO's. In 1997 Mr. Gilbey moved his team to Prudential Securities and in September 2002, Mr. Gilbey joined Noble Capital in Florida, where he was responsible for raising investment capital for managed portfolios by developing network television financial infomercials and radio talk show news programming. In May 2003 he joined Tide Water Capital, a market neutral hedge fund, where he was responsible for the trading desk, raising capital and product review. In 2006 Mr. Gilbey established an independent consultant practice assisting companies achieve their corporate goals including: corporate structuring for public markets, establishing share structures for internal ownership and public equity, and general corporate development. He has worked with company boards, CEO's, legal departments, corporate investor relations and corporate marketing teams. Mr. Gilbey graduated from Thomas Bennett Community College, Crawley, England in 1986 and during 1991 attended Santa Monica Community College, Business Program.
Directors are elected by the stockholders at annual meetings. Between annual meetings vacancies in our board of directors may be filled by the board itself. There are currently two vacancies on our board of directors. Directors hold office until the next annual meeting of stockholders and until their successors are elected and qualified. Officers are appointed by our board of directors and hold office until their successors are appointed and qualified. Neither of our current directors would qualify as independent under NASDAQ rules.
42
Except as disclosed under Item 12, the Registrant knows of no transactions involving the Registrant during the last two years in which our directors had a direct or indirect interest.
None of our executive officers or key employees is related by blood, marriage or adoption to any other director or executive officer.
To our knowledge, there is no arrangement or understanding between any of our officers and any other person pursuant to which the officer was selected to serve as an officer.
Nominating Committee
We do not have a separate Nominating Committee. Our full Board of Directors performs the functions usually designated to a Nominating Committee.
There have been no changes to the procedures by which security holders may recommend nominees to the board of directors.
Audit Committee
We do not have a separate Audit Committee. Our full Board of Directors performs the functions usually designated to an Audit Committee. We do not have an Audit Committee financial expert.
Corporate Code of Conduct
In June 2007 we adopted a Code of Ethics for senior financial management to promote honest and ethical conduct and to deter wrongdoing. This Code applies to our President, Chief Executive Officer and Principal Financial Officer, COO, Directors, and other employees performing similar functions. The obligations of the Code of Ethics supplement, but do not replace, any other code of conduct or ethics policy applicable to our employees generally.
Under the Code of Ethics, all members of the senior financial management shall:
·
Act honestly and ethically in the performance of their duties at our company,
·
Avoid actual or apparent conflicts of interest between personal and professional relationships,
·
Provide full, fair, accurate, timely and understandable disclosure in reports and documents that we file with, or submits to, the SEC and in other public communications by our company,
·
Comply with rules and regulations of federal, state and local governments and other private and public regulatory agencies that affect the conduct of our business and our financial reporting,
·
Act in good faith, responsibly, with due care, competence and diligence, without misrepresenting material facts or allowing the members independent judgment to be subordinated,
·
Respect the confidentiality of information acquired in the course of work, except when authorized or legally obtained to disclosure such information,
·
Share knowledge and maintain skills relevant to carrying out the members duties within our company,
·
Proactively promote ethical behavior as a responsible partner among peers and colleagues in the work environment and community,
·
Achieve responsible use of and control over all assets and resources of our company entrusted to the member, and Promptly bring to the attention of the Chief Executive Officer any information concerning:
I.
significant deficiencies in the design or operating of internal controls which could adversely to record, process, summarize and report financial date or
II.
any fraud, whether or not material, that involves management or other employees who have a significant role in our financial reporting or internal controls.
We will provide a copy of the Code of to any person without charge, upon request. Requests can be sent to Occidental Development Group, Inc. 256 S. Robertson Blvd, Beverly Hills Ca 90211.
43
There are no family relationships between any of our executive officers and/or directors.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
We believe that during the fiscal year ended May 31, 2013, Section 16(a) filing requirements applicable to our officers, directors and greater than 10% beneficial owners were satisfied.
| Number | Transactions | Known Failures |
| Of late | Not Timely | To File a |
Name and principal position | Reports | Reported | Required Form |
Michael F. Holloran, President & CEO and Principal Accounting & Financial Officer | 0 | 0 | 0 |
Ian Gilbey, Director | 0 | 0 | 0 |
Tom Simons | 0 | 0 | 0 |
ITEM 11.
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding the annual compensation for services in all capacities to us for the years ended May 31, 2013 and 2012:
SUMMARY COMPENSATION TABLE
Name and Principal Position (a) | Year (b) | Salary ($) (c) | Bonus ($) (d) | Stock Awards [issued and pending] ($) (e) | Option Awards ($) (f) | Non-Equity Incentive Plan Compensation ($) (g) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) (h) | All Other Compen- sation (s) (i) | Total ($) (j) |
M Holloran CEO | 2013 | $0 | $0 | $150,000 | $0 | $0 | $0 | $0 | $150,000 |
2012 | $0 | $0 | $122,000 | $0 | $0 | $0 | $0 | $122,000 | |
I Gilbey Director | 2013 | $0 | $0 | $125,000 | $0 | $0 | $0 | $0 | $125,000 |
2012 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
OPTION/SAR GRANTS IN LAST FISCAL YEAR
No options/SARs were granted in the fiscal year ended May 31, 2013.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
No officer or Director hold or exercised any options in the fiscal year ended May 31, 2013.
LONG TERM INCENTIVE PLANS - AWARDS IN LAST FISCAL YEAR
We have not awarded any stock options, stock appreciation rights or other form of derivative security or common stock or cash bonuses to our executive officers and directors.
COMPENSATION OF DIRECTORS
The members of our Board of Directors are reimbursed for actual expenses incurred in attending Board meetings.
44
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth, as of September 13, 2013, information concerning the beneficial ownership of the our Common Stock by (i) each person who is known by us to own beneficially more than 5% of our Common Stock, (ii) each of our directors and officers, and (iii) all of our directors and executive officers as a group.
|
| Amount and Nature of Beneficial Ownership(1) |
| |
|
|
| ||
Title of | Name and Address | % of | ||
Class | of Beneficial Owner | No of Shares Held |
| Class(1) |
|
|
|
|
|
Common | Michael F. Holloran | 18,171,259 | Direct | 33% |
Stock | c/o 256 S. Robertson Blvd |
|
|
|
| Beverly Hills, CA 90211 |
|
|
|
|
|
|
|
|
Common | Thomas A. Simons | 915,360 | Direct | 2% |
Stock | c/o 256 S. Robertson Blvd |
|
|
|
| Beverly Hills, CA 90211 |
|
|
|
|
|
|
|
|
Common | Ian E. Gilbey | 16,666,667 | Direct - | 31% |
Stock | c/o 256 S. Robertson Blvd |
|
|
|
| Beverly Hills, CA 90211 |
|
|
|
Common | Steven H. Levenson | 16,666,667 | Direct | 31% |
Stock | c/o 256 S. Robertson Blvd |
|
|
|
| Beverly Hills, CA 90211 |
|
|
|
|
|
|
|
|
| All officers and directors |
|
|
|
| as a Group (2 persons) | 34,837,926 |
| 64% |
(1)
Beneficial ownership and percentage ownership based on 54,517,442 shares issued and outstanding on September 13, 2013.
Changes in Control
There are no arrangements that may result in a change in control of the Registrant.
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
Our By-Laws include a provision regarding related party transactions which requires that each participant to such transaction identify all direct and indirect interests to be derived as a result of the Company's entering into the related transaction. A majority of the disinterested members of the board of directors must approve any related party transaction.
Except for the transactions described below, none of our directors, senior officers or principal shareholders, nor any associate or affiliate of the foregoing have any interest, direct or indirect, in any transaction, during the fiscal periods ended May 31, 2012 and 2013, or in any proposed transactions, in which such person had or is to have a direct or indirect material interest.
During the year ended May 31, 2012, the Companys CEO loaned the Company $42,645 and the Companys former COO loaned the Company $9,530. These amounts are uncollateralized and due on demand. The Company paid $25,828 in interest to its former COO in cash and accrued $7,868 in interest due the Companys CEO.
45
During the year ended May 31, 2012 $180,000 of accrued liabilities, $115,388 of short term note payable and $2,612 of accrued interest due the Companys CEO was consolidated into a debenture bearing interest at a rate of 6% annum. The debenture and $5,780 of accrued interest were converted into 992,600 shares of common stock of the Company at an average price of $0.30 per share. The conversion was made in accordance with the underlying debt agreement.
During the year ended May 31, 2013 the Companys CEO loaned the Company $38,631, the Company repaid the CEO $109,010 in cash, the Companys former COO loaned the Company $77,174, the Company repaid the former COO $73,478 in cash and a related party, Tom Simons loaned the Company $30,267. During the year ended May 31, 2013, The Company paid $27,413 in interest to its former COO in cash and accrued $722 in interest due the Companys CEO.
During the year ended May 31, 2013 $122,000 of accrued liabilities due the Companys CEO was converted into a debenture bearing interest at a rate of 6% per annum and a $30,267 short term related party note was converted into a debenture bearing interest at a rate of 6% per annum. During the year ended May 31, 2013 the $122,000 debenture due the Companys CEO was retired as follows: $13,000 cash principal payment, $36,000 principal transferred to short term note, $73,000 principal plus $1,700 accrued interest converted to 996,000 shares of common stock of the Company at $0.05 per share. During the same period the Company converted $30,267 of related party debenture principal and $454 of accrued interest into 409,600 shares of common stock of the Company at $0.05 per share. The conversions were made in accordance with the underlying debt agreements.
The Company shares office space and administrative costs in Vancouver with ScanTech Imaging Corp. (ScanTech), a company controlled by the Companys former COO Murat Erbatur. The Company provides technical consulting services to ScanTech on an as required basis.
Director Independence
The Companys Board of Directors has determined that none of its directors are independent based on the standards for director independence for the NYSE Amex Equities.
ITEM 14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
(1)
Audit related fees for audit Year ended May 31, 2012: $25,000
(2)
Audit related fees for audit Year ended May 31, 2011: $25,000
(3)
All other fees: N/A
(4)
Audit committee pre-approval processes, percentages of services approved by audit committee, percentage of hours spent on audit engagement by persons other than principal accountants full time employees: N/A.
46
PART IV
ITEM 15.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) The following financial statements have been filed with this Annual Report on Form 10-K and are presented in Item 8, herein.
1. Report of Independent Registered Public Accounting Firm
2. Consolidated Balance Sheets
3. Consolidated Statements of Operations and Other Comprehensive Loss
4. Consolidated Statements of Cash Flows
5. Condensed Notes to the Consolidated Financial Statements
(b) The following Exhibits are filed by attachment to this Annual Report on Form 10-K:
EXHIBIT NUMBER | DESCRIPTION |
31(2) | Certification of Michael F. Holloran Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith. |
32(2) | Certification of Michael F. Holloran Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith. |
|
|
101.INS(1)(2) | XBRL Instance Document |
101.SCH(1)(2) | XBRL Taxonomy Extension Schema Document |
101.CAL(1)(2) | XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF(1)(2) | XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB(1)(2) | XBRL Taxonomy Extension Label Linkbase Document |
101.PRE(1)(2) | XBRL Taxonomy Extension Presentation Linkbase Document |
(1)
Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Act of 1934 and otherwise are not subject to liability.
(2)
Filed herewith.
In addition to those Exhibits shown above, the Company incorporates the following Exhibits by reference to the filings set forth below:
47
EXHIBIT |
|
|
NUMBER | DESCRIPTION |
|
3.1 | Articles of Incorporation | 3.1 in Form 10-SB dated Feb 2, 1999 |
3.11 | By-Laws | 3.11 in Form 10-SB dated Feb 2, 1999 |
3.2 | Certificate of Amendment | 3.2 in Form 10K/A dated August 18, 2010 |
3.3 | Certificate of Merger, filed effective August 19, 2013 | 3.3 in Form 8-K dated August 21, 2013 |
3.4 | Certificate of Change, filed effective August 19, 2013 | 3.4 in Form 8-K dated August 21, 2013 |
4.2 | Form of 12% Convertible debenture | 4.2 in Form 10-KSB dated Aug 21, 2001 |
4.3 | Form of Stock Purchase Warrant | 4.3 in Form 10-KSB dated Aug 21, 2001 |
4.4 | Stock Purchase Agreement, between | 4.4 in Form SB-2 dated May 17, 2002 |
| Company and IFG Private Equity LLC |
|
4.5 | Commitment Warrant to IFG | 4.5 in Form SB-2 dated May 17, 2002 |
| Private Equity LLC |
|
4.6 | Registration Rights Agreement, between | 4.6 in Form SB-2 dated May 17, 2002 |
| Company and IFG Private Equity LLC |
|
4.7 | 1998 Directors' & Officers' Stock Option Plan | 99.1 in Form S-8 dated Feb 29, 1999 |
4.8 | 1999 Stock Option Plan | 99.2 in Form S-8 dated Feb 29, 1999 |
4.9 | 2001 Stock Option Plan | 4.7 in Form S-8 filed November 27, 2001 |
4.10 | 2003 Stock Option Plan | 4.8 in Form S-8 filed October 25, 2002 |
4.11 | 2005 Stock Option Plan | 4.8 in Form S-8 filed July 28, 2005 |
4.12 | 2006 Stock Option Plan | 4.8 in Form S-8 filed April 28, 2006 |
4.13 | 2007 Stock Option Plan | 4.8 in Form S-8 filed April 13, 2007 |
10.3 | M. Page-Consulting Agreement | 10.3 in Form 10-SB dated Feb 2, 1999 |
10.4 | C. Parfitt-Consulting Agreement | 10.4 in Form 10-SB dated Feb 2, 1999 |
10.6 | Office lease dated Aug 27, 1998 | 10.6 in Form 10-SB dated Apr 21, 1999 |
10.7 | Office lease dated Dec 22, 1998 | 10.7 in Form 10-SB dated Apr 21, 1999 |
10.8 | Wolnosc International-Consulting Agreement | 10.8 in Form 10-SB dated Aug 29, 2000 |
10.9 | Office lease dated Jan 1, 2000 | 10.9 in Form 10-SB dated Aug 29, 2000 |
10.10 | Capital Lease Agreement | 10.10 in Form 10-SB dated Aug 29, 2000 |
10.11 | Michael F. Holloran - Consulting Agreement | 10.11 in Form 10-KSB dated Aug 21, 2001 |
10.12 | Sublease Agreement of Company's offices dated August 7, 2001 | 10.12 in Form 10-QSB dated Oct 15, 2001 |
10.13 | Addendum to the Sublease dated August 22, 2001 | 10.13 in Form 10-QSB dated Oct 15, 2001 |
10.14 | Paul Morford Consulting Agreement | 10.14 in Form 10-QSB dated Oct 15, |
|
| 2001 |
10.15 | 8% Secured Convertible Promissory | 4.7 in Form 8-K dated January 4, |
| Note due December 31, 2006 | 2005 |
10.16 | Securities Purchase Agreement, dated | 10.15 in Form 8-K dated January 13, |
| December 7, 2005, by and among the | 2006 |
| Company and the holders of the Companys |
|
| 6% Convertible Debentures, with the form |
|
| of Debenture attached |
|
10.17 | Registration Rights Agreement, dated | 10.16 in Form 8-K dated January 13, 2006 |
| December 7, 2005, by and among the |
|
| Company and the Holders of the 6% |
|
| Convertible Debentures |
|
10.18 | Walther-Glas Investment Agreement | 10.16 Form 10-KSB/A2 dated July 18, 2008 |
10.19 | Agreement and Plan of Reorganization | 10.18 in Form 8-K dated Dec 15, 2006 |
21 | List of Subsidiaries | 21 in Form 10-SB dated Aug 29, 2000 |
48
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf the undersigned, thereto duly authorized.
Dated: September 13, 2013
Occidental Development Group, Inc.
By: /s/ Michael F. Holloran
________________________
Michael F. Holloran,
President, Chief Executive Officer, Principal Financial and Accounting Officer and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on September 13, 2013.
SIGNATURE CAPACITY
________________________________________________________________________
/s/ Michael F. Holloran
President, Chief Executive Officer, Principal Financial and Accounting Officer and Director
_____________________
Michael F. Holloran
/s/ Ian Gilbey
_____________________
Director
Ian Gilbey
49