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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTIONS 13 OR 15 (d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the fiscal year ended February 28, 2014
Commission file number: 333-187855
CME Realty, Inc.
(Exact Name of Registrant as Specified in its Charter)
Nevada 46-2084743
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
10300 W. Charleston Blvd. Suite 213
Las Vegas, Nevada 89135
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (702) 683-3334
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to section 12(g) of the Act:
Common Stock, $0.001 par value
(Title of class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined by Rule 405 of the Securities Act. Yes [ ] No [X]
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes [ ] No [X]
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
Large Accelerated Filer [ ] Accelerated Filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
For the year ended February 28, 2013, the issuer had no revenues.
As of June 4, 2014 the company was traded on the OTCBB under the symbol CMRL.
The number of shares outstanding of the issuer's common stock, $.001 par value,
as of June 6, 2014 was 14,000,000 shares.
CME Realty, Inc.
Form 10-K Annual Report
Table of Contents
PART I
Item 1. Business 3
Item 1A. Risk Factors 4
Item 1B. Unresolved Staff Comments 6
Item 2. Properties 6
Item 3. Legal Proceedings 7
Item 4. Mine Safety Disclosures 7
PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities 7
Item 6. Selected Financial Data 7
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations 7
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 10
Item 8. Financial Statements and Supplementary Data 10
Item 9. Change in and Disagreements with Accountants on Accounting and
Financial Disclosure 10
Item 9A Controls And Procedures 11
Item 9B. Other Information 12
PART III
Item 10. Directors, Executive Officers, and Corporate Governance 12
Item 11. Executive Compensation 13
Item 12. Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters 14
Item 13. Certain Relationships and Related Transactions, and Director
Independence 14
Item 14. Principal Accounting Fees and Services 14
PART IV
Item 15. Exhibits and Financial Statement Schedules 15
Signatures 16
2
FORWARD LOOKING STATEMENT INFORMATION
Certain statements made in this Annual Report on Form 10-K are "forward-looking
statements" regarding the plans and objectives of management for future
operations. Such statements involve known and unknown risks, uncertainties and
other factors that may cause our actual results, performance or achievements to
be materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. The forward-looking
statements included herein are based on current expectations that involve
numerous risks and uncertainties. Our plans and objectives are based, in part,
on assumptions involving judgments with respect to, among other things, future
economic, competitive and market conditions and future business decisions, all
of which are difficult or impossible to predict accurately and many of which are
beyond our control. Although we believe that our assumptions underlying the
forward-looking statements are reasonable, any of the assumptions could prove
inaccurate and, therefore, there can be no assurance that the forward-looking
statements included in this report will prove to be accurate. In light of the
significant uncertainties inherent in the forward-looking statements included
herein particularly in view of the current state of our operations, the
inclusion of such information should not be regarded as a statement by us or any
other person that our objectives and plans will be achieved. Factors that could
cause actual results to differ materially from those expressed or implied by
such forward-looking statements include, but are not limited to, the factors set
forth herein under the headings "Business," "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Risk Factors".
We undertake no obligation to revise or update publicly any forward-looking
statements for any reason. The terms "we", "our", "us", or any derivative
thereof, as used herein refer to CME Realty, Inc.
PART 1
ITEM 1. BUSINESS.
CORPORATE BACKGROUND
CME Realty, Inc. was incorporated in the State of Nevada on August 10, 2012
under the same name. Since inception, CME Realty, Inc. has not generated
revenues and has accumulated losses from inception (August 10, 2012) in the
amount of $60,207 as of audit date February 28, 2014. CME Realty, Inc. has never
been party to any bankruptcy, receivership or similar proceeding, nor has it
undergone any material reclassification, merger, consolidation, purchase or sale
of a significant amount of assets not in the ordinary course of business.
CME Realty, Inc. has yet to commence principle planned operations; CME Realty,
Inc. has commenced only minimal operations and has not generated revenues. The
Company will not be profitable until it derives sufficient revenues and cash
flows from services.
CME Realty, Inc.'s administrative office is located at 10300 W. Charleston,
Blvd., Suite 213, Las Vegas, Nevada 89135.
CME Realty, Inc.'s fiscal year end is February 28.
BUSINESS OVERVIEW
CME Realty, Inc. was formed in the state of Nevada on August 10, 2012. We are a
development stage company with a plan of operation to provide real estate
services for the Las Vegas residential market. We plan to hire a team of
professionals that will individually specialize in each of our services. The
services we initially plan to offer include listing and sales of residential
properties, short sales and foreclosures. Our goal is to become a partner with
our clients in their decision making process. We plan to provide all our
professionals with the latest market knowledge utilizing demographic and mapping
technologies and micro and macro real estate statistics.
3
By incorporating the latest technology and statistics we plan to attract buyers,
sellers, banks and lending institutions in an effort to help them make
well-informed decisions by providing them with up-front factual information and
statistics. Providing the potential client with comprehensive information and
documentation up-front will make the client feel that they are working with a
competent company who is providing a service in their best interest. The
comprehensive information and documentation we plan to provide we believe will
make the decision making process easier and less stressful for the client. The
decision making process includes providing detailed documentation so the
decision to list their home for sale is achieved at a factually proven and
realistic dollar amount. Therefore, this should make the decision making process
less stressful for the client and leave them feeling confident and satisfied
with their decision. This in turn should make them feel content and more
informed on realistically how long the property may stay on the market. Overall,
we plan to incorporate the latest technology and keep the client continuously
updated and informed during the entire process.
Current management is comprised of Carlos Espinosa, CEO and President. Due to
the development stage of the Company, Mr. Espinosa distributes part of his time
toward the everyday operations and forward movement of the corporation. Mr.
Espinosa's responsibilities include acting as the company's director of
operations, as well as determining the overall planning and direction of our
Company. Mr. Espinosa has over 11 years of experience in commercial real estate
where he has cultivated relationships with banks and lending institutions which
we believe will be a valuable asset to further the development of operations
during the development stage of the Company.
ITEM 1A. RISK FACTORS.
RISKS ASSOCIATED WITH OUR COMPANY:
CARLOS ESPINOSA, THE SOLE OFFICER AND DIRECTOR OF THE COMPANY, CURRENTLY DEVOTES
APPROXIMATELY 15 HOURS PER WEEK TO COMPANY MATTERS.
Our business plan does not provide for the hiring of any additional employees on
a full-time basis until revenue will support the expense. Until that time, the
responsibility of developing and furthering the company's business, offering and
selling of the shares through this prospectus, and fulfilling the reporting
requirements of a public company all fall upon Carlos Espinosa. Once the public
offering is closed, Mr. Espinosa plans to spend the necessary time to finalize
business development, direct the sales and marketing campaign, and direct to
primary operations of the business.
MR. ESPINOSA DOES NOT HAVE ANY PUBLIC COMPANY EXPERIENCE AND IS INVOLVED IN
OTHER BUSINESS ACTIVITIES.
While Mr. Espinosa has business experience including management, he does not
have experience in a public company setting, including not having serves as a
principal accounting officer or principal financial officer. The Company's needs
could exceed the amount of time or level of experience he may have. This could
result in his inability to properly manage company affairs, resulting in our
remaining a start-up company with no revenues or profits. We have not formulated
a plan to resolve any possible conflict of interest with his other business
activities. In the event he is unable to fulfill any aspect of his duties to the
company we may experience a shortfall or complete lack of revenue resulting in
little or no profits and eventual closure of the business.
MR. ESPINOSA DOES NOT HAVE EXTENSIVE RESIDENTIAL REAL ESTATE EXPERIENCE.
While Mr. Espinosa has eleven years' experience in the real estate industry; he
has limited experience listing and selling of residential real estate as his
primary area of concentration during this timeframe has been in commercial real
estate.
SINCE WE ARE A DEVELOPMENT STAGE COMPANY, THE COMPANY HAS GENERATED NO REVENUES
AND DOES NOT HAVE AN OPERATING HISTORY; AN INVESTMENT IN THE SHARES OFFERED
HEREIN IS HIGHLY RISKY AND COULD RESULT IN A COMPLETE LOSS OF YOUR INVESTMENT IF
WE ARE UNSUCCESSFUL IN OUR BUSINESS PLAN.
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The Company was incorporated on August 10, 2012; we have not yet commenced our
full-scale business operations and we have not yet realized any revenues. We
have minimal operating history upon which an evaluation of our future prospects
can be made. Based upon current plans, we expect to incur operating losses in
future periods as we incurred significant expenses associated with the initial
startup of our business. Further, we cannot guarantee that we will be successful
in realizing revenues or in achieving or sustaining positive cash flow at any
time in the future. Any such failure could result in the possible closure of our
business or force us to seek additional capital through loans or additional
sales of our equity securities to continue business operations, which would
dilute the value of any shares you purchase in this offering.
OUR PRINCIPAL SHAREHOLDERS MAY CAUSE CME REALTY TO ISSUE ADDITIONAL SHARES AFTER
THE OFFERING IN ORDER TO FUND THE BUSINESS AND THEREBY FURTHER DILUTE THE
HOLDINGS OF ANY PURCHASERS SHARES IN THIS OFFERING.
Our principal shareholders may cause CME Realty to issue additional shares after
the offering in order to fund the business and thereby further dilute the
holdings of any purchasers in this offering.
RISKS RELATED TO OUR FINANCIAL CONDITION AND CAPITAL REQUIREMENTS
AUDITOR'S GOING CONCERN
As shown in the financial statements accompanying this prospectus, CME Realty
has had no revenues to date and has incurred only losses since its inception.
The Company has had no operations and has been issued a "going concern" opinion
from our Independent Auditors, based upon the Company's reliance upon the sale
of our common stock as the sole source of funds for our future operations.
WE DO NOT YET HAVE ANY SUBSTANTIAL ASSETS AND ARE TOTALLY DEPENDENT UPON THE
PROCEEDS OF THIS OFFERING TO FULLY FUND OUR BUSINESS. IF WE DO NOT SELL THE
SHARES IN THIS OFFERING WE WILL HAVE TO SEEK ALTERNATIVE FINANCING TO COMPLETE
OUR BUSINESS PLANS OR ABANDON THEM.
CME Realty has limited capital resources. To date, the Company has funded its
operations from limited funding and has not generated sufficient cash from
operations to be profitable. Unless CME Realty begins to generate sufficient
revenues to finance operations as a going concern, CME Realty may experience
liquidity and solvency problems. Such liquidity and solvency problems may force
CME Realty to cease operations if additional financing is not available. No
known alternative resources of funds are available to CME Realty in the event it
does not have adequate proceeds from this offering. However, CME Realty believes
that the net proceeds of the Offering will be sufficient to satisfy the launch
and operating requirements for the next twelve months.
WE CANNOT PREDICT WHEN OR IF WE WILL PRODUCE REVENUES, WHICH COULD RESULT IN A
TOTAL LOSS OF YOUR INVESTMENT IF WE ARE UNSUCCESSFUL IN OUR BUSINESS PLANS.
We have not generated any revenue to date from operations. In order for us to
continue with our plans and operating our business, we must raise our initial
capital through this offering. The timing of the completion of the milestones
needed to commence operations and generate revenues is contingent on the success
of this offering. There can be no assurance that we will generate revenues or
that revenues will be sufficient to maintain our business. As a result, you
could lose all of your investment if you decide to purchase shares in this
offering and we are not successful in our proposed business plans.
OUR CONTINUED OPERATIONS DEPEND ON THE MARKET'S ACCEPTANCE OF OUR PLANNED
SERVICES. IF THE REAL ESTATE MARKET DOES NOT FIND OUR SERVICES DESIRABLE AND WE
CANNOT ATTRACT CUSTOMERS, WE MAY NOT BE ABLE TO GENERATE ANY REVENUES, WHICH
COULD RESULT IN A FAILURE OF OUR BUSINESS AND A LOSS OF ANY INVESTMENT YOU MAKE
IN OUR SHARES.
The ability to offer real estate services that the market accepts and willing to
utilize is critically important to our success. We cannot be certain that the
services we offer will be accepted by the marketplace. As a result, there may
not be any demand and our revenue stream could be limited and we may never
5
realize any revenues. In addition, there are no assurances that the Company will
generate revenues in the future even if we offer alternative services or alter
our products and marketing efforts and pursue alternative or complementing
revenue generating services.
THE LOSS OF THE SERVICES OF CARLOS ESPINOSA COULD SEVERELY IMPACT OUR BUSINESS
OPERATIONS AND FUTURE DEVELOPMENT OF OUR BUSINESS MODEL, WHICH COULD RESULT IN A
LOSS OF REVENUES AND YOUR INABILITY TO EVER SELL ANY SHARES YOU PURCHASE IN THIS
OFFERING.
Our performance is substantially dependent upon the professional expertise of
our President, Carlos Espinosa. If he were unable to perform his services, this
loss of the services could have an adverse effect on our business operations,
financial condition and operating results if we are unable to replace him with
another individual qualified to develop and market our products. The loss of his
services could result in a loss of revenues, which could result in a reduction
of the value of any shares you purchase in this offering.
THE REAL ESTATE MARKET IS HIGHLY COMPETITIVE. IF WE CAN NOT DEVELOP AND PROMOTE
CONFIDENCE IN OUR COMPANY THAT THE MARKET AND INDIVIDUALS ARE WILLING TO
ACCEPT., WE WILL NOT BE ABLE TO COMPETE SUCCESSFULLY AND OUR BUSINESS MAY BE
ADVERSELY AFFECTED AND WE MAY NEVER BE ABLE TO GENERATE ANY REVENUES.
CME Realty, Inc. has many potential competitors in the real estate market. We
acknowledge that our competition is competent, experienced, and they have
greater financial, and marketing resources than we do at the present. Our
ability to compete may be adversely affected by the ability of these competitors
to devote greater resources to the development, promotion, and marketing of
their services than are available to us.
Some of CME Realty's competitors may also offer a wider range of services and
have greater name recognition. They have greater customer loyalty bases and
these competitors may be able to respond more quickly to new or changing
opportunities. In addition, our competitors may be able to undertake more
extensive promotional activities, and adopt more aggressive advertising
campaigns than CME Realty at the present.
CME REALTY MAY NOT BE ABLE TO ATTAIN PROFITABILITY WITHOUT ADDITIONAL FUNDING,
WHICH MAY BE UNAVAILABLE.
CME Realty has limited capital resources. Unless CME Realty begins to generate
sufficient revenues to finance operations as a going concern, CME Realty may
experience liquidity and solvency problems. Such liquidity and solvency problems
may force CME Realty to cease operations if additional financing is not
available. No known alternative resources of funds are available to CME Realty
in the event it does not have adequate proceeds from this offering. However, CME
Realty believes that the net proceeds of the Offering will be sufficient to
satisfy the start-up and operating requirements for the next twelve months.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
None.
ITEM 2. PROPERTIES.
The Company does not own any property at the present time and has no agreements
to acquire any property. Our executive offices are located at 10300 W.
Charleston Blvd., Las Vegas, Nevada 89135 (The space is approximately 150 square
feet total) and is provided by a shareholder at no cost. We believe that this
space is adequate for our needs at this time, and we believe that we will be
able to locate additional space in the future, if needed, on commercially
reasonable terms.
6
ITEM 3. LEGAL PROCEEDINGS.
None.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
PART II
ITEM 5. MARKET FOR OUR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES.
(A) MARKET INFORMATION. As of June 4, 2014 the company was traded on the OTCBB
under the symbol CMRL.
(B) HOLDERS. As of June 6, 2014, there were 33 record holders of all of our
issued and outstanding shares of Common Stock.
(C) DIVIDEND POLICY
We have not declared or paid any cash dividends on our Common Stock and do not
intend to declare or pay any cash dividend in the foreseeable future. The
payment of dividends, if any, is within the discretion of the Board of Directors
and will depend on our earnings, if any, our capital requirements and financial
condition and such other factors as the Board of Directors may consider.
ITEM 6. SELECTED FINANCIAL DATA.
As a smaller reporting company, as defined in Rule 12b-2 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), we are not required to
provide the information required by this item.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Certain statements in this report and elsewhere (such as in other filings by the
Company with the Securities and Exchange Commission ("SEC"), press releases,
presentations by the Company of its management and oral statements) may
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Words such as "expects,"
"anticipates," "intends," "plans," "believes," "seeks," "estimates," and
"should," and variations of these words and similar expressions, are intended to
identify these forward-looking statements. Actual results may materially differ
from any forward-looking statements. Factors that might cause or contribute to
such differences include, among others, competitive pressures and constantly
changing technology and market acceptance of the Company's products and
services. The Company undertakes no obligation to publicly release the result of
any revisions to these forward-looking statements, which may be made to reflect
events or circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
PLAN OF OPERATION FOR THE NEXT TWELVE MONTHS
CME Realty, Inc. closed its offering on January 10, 2014 and raised $40,000 by
placing 4,000,000 through its offering. If we begin to generate profits, we will
increase our marketing and sales activity accordingly. CME Realty's primary
business is real estate services for the Las Vegas residential market. We plan
to hire a team of professionals that will individually specialize in each of our
services. The services we initially plan to offer include listing and sales of
residential properties, short sales and foreclosures. The Company plans to
generate revenues by charging industry standard commissions and transaction fees
when we list a property. Additional services we plan to generate revenues from
include commissions and transaction fees from short sales and foreclosures. CME
shall receive commissions immediately upon the close of escrow from residential
properties, short sales and foreclosures. Our goal is to become a partner with
7
our clients in the decision making process. We plan to provide all our
professionals with the latest market knowledge utilizing demographic and mapping
technologies and micro and macro real estate statistics.
We plan to differentiate ourselves from a more traditional real estate agency by
utilizing the strengths of our President and his eleven years of experience in
the real estate industry. While Mr. Espinosa has a comprehensive background in
commercial real estate and commercial real estate investments; he plans to model
CME Realty utilizing the efforts which made him successful in the commercial
market. CME Realty's emphasis will be on relationships with our clients. This
includes establishing relationships, maturing the relationship and nurturing the
relationship. Bank short sales and foreclosures is a sector of the real estate
market we plan to aggressively pursue and Mr. Espinosa has extensive contacts
within the banking industry.
By incorporating the latest technology and statistics we plan to attract buyers,
sellers, banks and lending institutions in an effort to help them make
well-informed decisions by providing them with up-front factual information and
statistics. Providing the potential client with comprehensive information and
documentation up-front will make the client feel that they are working with a
competent company who is providing a service in their best interest. The
comprehensive information and documentation we plan to provide we believe will
make the decision making process easier and less stressful for the client. The
decision making process includes providing detailed documentation so the
decision to list their home for sale is achieved at a factually proven and
realistic dollar amount. Therefore, this should make the decision making process
less stressful for the client and leave them feeling confident and satisfied
with their decision. This in turn should make them feel content and more
informed on realistically how long the property may stay on the market. Overall,
we plan to incorporate the latest technology and keep the client continuously
updated and informed during the entire process.
0-3 MONTHS
Management plans to complete due diligence and finalize the corporate planned
structure. Securing a web domain and initiating a web presence are key factors
in our start-up efforts. We have budgeted $1,000 in the Sales and Marketing line
item in the "Use of Proceeds" section to secure a web domain and place an
initial deposit with a web designer. We have not yet identified a web designer
for the development and implementation of our site, but we expect to complete
our due diligence and place a deposit with a web designer within this timeframe.
The Company has budgeted $2,000 as a deposit for Sales and Marketing material
including brochures and flyers that we plan to initiate during this timeframe.
We have budgeted $1,800 in Brokerage, Licensing, Dues, Fees and Insurance line
item in the "Use of Proceeds" section for licenses, dues, fees and insurance
associated with our start-up efforts and in an effort to gain a presence in the
marketplace. The balance of the proceeds budgeted for this timeframe amounts to
$250 is allocated for office supplies and recruitment efforts. The cost for the
Company to keep in compliance is budgeted in the Accounting line item for
$1,000.. Our overall goal for this timeframe is to finalize our corporate
planned structure. This includes finalizing the practices and procedures manual
including industry competitive commission splits and incentives to attract
talented and seasoned agents for each service sector.
4-6 MONTHS
The Company plans to finalize the web site development and implementation at an
additional cost of $1,000. This amount is allocated for in the Sales and
Marketing line item in the "Use of Proceeds" section. The Company also plans to
finalize the marketing and promotional material and we have budgeted $3,000 in
the Sales and Marketing line item for this cost. Based on planned operations and
a successful hiring campaign; the Company anticipates acquiring office space
towards at the end of this quarter and we have budgeted $1,000 for this expense
in the Rent line item of the "Use of Proceeds". Equipment purchases/leases are
expected to cost $1,800 and is budgeted for in the "Use of Proceeds" section.
During this period we expect to incur $1,000 in accounting and audit fees to
remain in compliance with governmental and regulatory agencies. In addition, we
have budgeted $750 in the Legal and Professional line item for any legal issues
we may incur. We have budgeted $250 in the Office and Supplies line item for
office supplies and recruitment efforts. In addition, we plan to further our
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efforts to hire experienced agents with five or more commercial real estate
experience in the Las Vegas market. Our overall goal for this timeframe is to
hire agents, finalize our marketing campaign, acquire office space, and prepare
for full operations to start the beginning of next quarter.
7-9 MONTHS
The Company plans to engage our marketing campaign to increase our exposure in
the marketplace. We believe this campaign will support our agents' efforts to
attract customers looking for homes and increase our share of listings. We have
budgeted $2,500 in the Sales and Marketing line item in the "Use of Proceeds"
section towards these efforts during this timeframe. Towards the end of this
quarter, we plan to start generating revenue from our service. The company
anticipates a delay in payment for services rendered and we have planned for
this potential situation in advance. We have budgeted $1,500 in the
Salaries/Contractors line item pay our employees/contractors. An amount of $500
is budgeted in the Sales and Marketing line item in the "Use of Proceeds"
section for lunches and entertainment expenses related to nurturing additional
relationships with banks and lending institutions. The Company has budgeted $250
in the Office and Supplies line item for office supplies and recruitment
efforts. The Company has budgeted $3,000 toward rent for this timeframe. During
this period we expect to incur $1,000 in accounting and audit fees to remain in
compliance with governmental and regulatory agencies. Additional planned
responsibilities include initiating the drafting of a two-year overall business
plan utilizing a commissioned sales force.
10-12 MONTHS
By the fourth quarter of operations, we hope to have a base of clients to
sustain operations. During this timeframe, we plan to analyze our past nine
months of operations including our web sites lead/revenue generating
effectiveness. This review of our operations to date will allow the Company to
make the necessary adjustments and changes to further the growth of the Company.
In addition, this review will provide valuable information for finalizing our
two-year overall business plan with emphasis on expanding into other markets.
The Company has budgeted $2,000 in the Sales and Marketing line item for
continuing our marketing and promoting efforts. We have budgeted an additional
$1,500 for Salaries/Contractors expenses. Rent is budgeted at $3,000 for the
period and we have budged $250 in the Office and Supplies line item. During this
period we expect to incur $3,200 in accounting and audit fees to remain in
compliance with governmental and regulatory agencies. In addition, we have
budgeted $750 in the Legal and Professional line item for any legal expense we
may incur.
NOTE: The Company's planned milestones are based on quarters following the
closing of the offering.
(II) RESULTS OF OPERATIONS
The Company has earned no revenue or profits to date, and the Company
anticipates that it will continue to incur net losses for the foreseeable
future. The Company incurred a net loss of $60,207 from the date of inception
(August 10, 2012) until the year end February 28, 2014.
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its expenses and costs thus far utilizing the proceeds
raised in our offering which we closed on January 10, 2014 by placing 4,000,000
through our offering.
CME Realty, Inc.'s received a Notice of Effectiveness on its filing Form S-1
from the Securities and Exchange Commission on October 2, 2013 to offer on a
best-efforts basis 4,000,000 shares of its common stock at a fixed price of
$0.01 per share.
As of February 28, 2014, the Company incurred a loss in the amount of $60,207.
The loss is a result of organizational expenses and expenses associated with
implementing our business plan. The Company as a whole may continue to operate
at a loss for an indeterminate period thereafter, depending upon the performance
of its business. In the process of carrying out its business plan, the Company
9
will continue to identify new financial partners and investors. However, it may
determine that it cannot raise sufficient capital in the future to support its
business on acceptable terms, or at all. Accordingly, there can be no assurance
that any additional funds will be available on terms acceptable to the Company
or at all. The company is authorized to issue 75,000,000 shares of common stock.
We have no known demands or commitments and are not aware of any events or
uncertainties as of February 28, 2014 that will result in or that are reasonably
likely to materially increase or decrease our current liquidity.
CAPITAL RESOURCES
We had no material commitments for capital expenditures as of February 28, 2014.
OFF-BALANCE SHEET ARRANGEMENTS
As of February 28, 2014, we have no off-balance sheet arrangements such as
guarantees, retained or contingent interest in assets transferred, obligation
under a derivative instrument and obligation arising out of or a variable
interest in an unconsolidated entity.
CRITICAL ACCOUNTING POLICIES
We prepare our financial statements in conformity with GAAP, which requires
management to make certain estimates and assumptions and apply judgments. We
base our estimates and judgments on historical experience, current trends and
other factors that management believes to be important at the time the financial
statements are prepared and actual results could differ from our estimates and
such differences could be material. We have identified below the critical
accounting policies which are assumptions made by management about matters that
are highly uncertain and that are of critical importance in the presentation of
our financial position, results of operations and cash flows. Due to the need to
make estimates about the effect of matters that are inherently uncertain,
materially different amounts could be reported under different conditions or
using different assumptions. On a regular basis, we review our critical
accounting policies and how they are applied in the preparation our financial
statements.
FINANCIAL INSTRUMENTS
The Company's balance sheet includes certain financial instruments, in this case
cash. The carrying amount of current assets approximate their fair value because
of the relatively short period of time between the origination of these
instruments and their expected realization and do not require management to make
an estimate as of February 28, 2014.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
As a smaller reporting company, as defined in Rule 12b-2 of the Exchange Act, we
are not required to provide the information required by this item.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
See the index to the Financial Statements below, beginning on page F-1.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
On May 21, 2013 we were notified that the partner, Peter Messineo, of DKM
Certified Public Accountants, was terminating his merger agreement. On that date
we filed form 8-K, with the Securities and Exchange Commission notifying we
engaged the firm of Messineo & Co., CPAs, LLC as our independent registered
accounting firm.
10
The report of DKM Certified Public Accountants as of and for the period ended
February 28, 2013 contained no adverse opinion or disclaimer of opinion and were
not qualified or modified as to uncertainty, audit scope or accounting principle
except to indicate that there was substantial doubt about the Company's ability
to continue as a going concern. There have been no disagreements with DKM on any
matters.
Messineo & Co., CPAs, LLC have issued report, including re-audit of prior year
information. Their report is contained in this filing.
DISAGREEMENTS.
None.
ITEM 9A. CONTROLS AND PROCEDURES.
(A) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Our management, with the participation of our president and chief financial
officer, carried out an evaluation of the effectiveness of our "disclosure
controls and procedures" (as defined in the Exchange Act Rules 13a-15(e) and
15-d-15(e)) as of the end of the period covered by this report (the "Evaluation
Date"). Based upon that evaluation, the chief executive and chief financial
officer concluded that as of the Evaluation Date, our disclosure controls and
procedures are ineffective to ensure that information required to be disclosed
by us in the reports that we file or submit under the Exchange Act (i) is
recorded, processed, summarized and reported, within the time periods specified
in the SEC's rules and forms and (ii) is accumulated and communicated to our
management, including our chief executive and chief financial officer, as
appropriate to allow timely decisions regarding required disclosure.
(B) MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Our management is responsible for establishing and maintaining adequate internal
control over financial reporting (as defined in Rule 13a-15(f) under the
Exchange Act). Our management assessed the effectiveness of our internal control
over financial reporting as of February 28, 2014. In making this assessment, our
management used the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission in Internal Control-Integrated
Framework. Our management has concluded that, as of February 28, 2014, our
internal control over financial reporting is not effective based on these
criteria. Material weaknesses noted by our management include lack of a
functioning audit committee; lack of a majority of outside directors on our
board of directors, resulting in ineffective oversight in the establishment and
monitoring of required internal controls and procedures; inadequate segregation
of duties consistent with control objectives and affecting the functions of
authorization, recordkeeping, custody of assets, and reconciliation; and,
management dominated by a single individual/small group without adequate
compensating controls.
This annual report does not include an attestation report of our registered
public accounting firm regarding internal control over financial reporting.
Management's report was not subject to attestation by our registered public
accounting firm pursuant to temporary rules of the SEC that permit us to provide
only management's report in this annual report."
(C) LIMITATIONS ON SYSTEMS OF CONTROLS
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
11
fraud, if any, have been detected. To address the material weaknesses identified
in our evaluation, we performed additional analysis and other post-closing
procedures in an effort to ensure our financial statements included in this
annual 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.
(D) MANAGEMENT'S REMEDIATION INITIATIVES
In an effort to remediate the identified material weaknesses and other
deficiencies and enhance our internal controls, we plan to initiate, the
following series of measures:
We will create a position to segregate duties consistent with control objectives
and will increase our personnel resources and technical accounting expertise
within the accounting function when funds are available to us. And, we plan to
appoint one or more outside directors to our board of directors who shall be
appointed to an audit committee resulting in a fully functioning audit committee
who will undertake oversight in the establishment and monitoring of required
internal controls and procedures such as reviewing and approving estimates and
assumptions made by management when funds are available to us.
Management believes that the appointment of one or more outside directors, who
shall be appointed to a fully functioning audit committee, will remedy the lack
of a functioning audit committee and a lack of a majority of outside directors
on our Board.
We will work as quickly as possible to implement these initiatives; however, the
lack of adequate working capital and positive cash flow from operations will
likely slow these implementations.
(E) CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There were no changes in our internal controls over financial reporting that
occurred during the last fiscal quarter covered by this report that has
materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.
ITEM 9B. OTHER INFORMATION.
None.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
The following table sets forth information concerning our officers and directors
as of February 28, 2014:
Name Age Title
---- --- -----
Carlos Espinosa 38 President, Chief Executive Officer, Chief
Financial Officer, Secretary, Treasurer, and
Director
Our officers and directors are elected to hold office until the next annual
meeting of shareholders and until their respective successors have been elected
and qualified, or until prior resignation or removal.
12
BUSINESS EXPERIENCE
CARLOS ESPINOSA - PRESIDENT, CHIEF EXECUTIVE OFFICER, CHIEF FINANCIAL OFFICER,
SECRETARY, TREASURER, AND DIRECTOR
From March of 2004 through Present, Mr. Espinosa has been the Manager of Plush
Properties, LLC, Las Vegas, Nevada. Plush Properties primary business activity
is commercial real estate investments and Mr. Espinosa responsibilities include
management oversight of the commercial real estate investment activities. From
October of 2002 to April of 2004, Mr. Espinosa was the Land Acquisition Manager
at Delta Realty & Investments, Las Vegas, Nevada. Delta Realty is a land
investment company and his responsibilities included researching parcels of
commercial and residential land and preparing offer and acceptance agreements.
Prior to 2002, Mr. Espinosa worked in Las Vegas, Nevada as a Real Estate Sales
Associate in landscape development. Mr. Espinosa graduated from the Southern
Nevada School of Real Estate in December of 2001. Mr. Espinosa is also bilingual
in English and Spanish.
Mr. Espinosa has not held any previous directorships in the past five years.
Mr. Espinosa has not been involved in any legal proceedings in the past ten
years.
COMPENSATION AND AUDIT COMMITTEES
As we only have one board member and given our limited operations, we do not
have separate or independent audit or compensation committees. Our Board of
Directors has determined that it does not have an "audit committee financial
expert," as that term is defined in Item 407(d)(5) of Regulation S-K. In
addition, we have not adopted any procedures by which our shareholders may
recommend nominees to our Board of Directors.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our directors and executive officers
and persons who beneficially own more than ten percent of our Common Stock
(collectively, the "Reporting Persons") to report their ownership of and
transactions in our Common Stock to the SEC. Copies of these reports are also
required to be supplied to us. To our knowledge, during the fiscal year ended
February 28, 2014 the Reporting Persons complied with all applicable Section
16(a) reporting requirements.
CODE OF ETHICS
We have not adopted a Code of Ethics given our limited operations. We expect
that our Board of Directors following a merger or other acquisition transaction
will adopt a Code of Ethics.
ITEM 11. EXECUTIVE COMPENSATION.
Carlos Espinosa is an officer and a director. Mr. Espinosa does not receive any
regular compensation for his services rendered on our behalf. Mr. Espinosa did
not receive any compensation during the year ended February 28, 2014.
No officer or director is required to make any specific amount or percentage of
her business time available to us.
DIRECTOR COMPENSATION
We do not currently pay any cash fees to our directors, nor do we pay director's
expenses in attending board meetings.
EMPLOYMENT AGREEMENTS
We are not a party to any employment agreements.
13
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS.
The following table sets forth certain information as of February 28, 2014
regarding the number and percentage of our Common Stock (being our only voting
securities) beneficially owned by each officer, director, each person (including
any "group" as that term is used in Section 13(d)(3) of the Exchange Act) known
by us to own 5% or more of our Common Stock, and all officers and directors as a
group.
Amount of
Title of Name, Title and Address of Beneficial Currently
Class Beneficial Owner of Shares (1) Ownership (2) Outstanding
----- ------------------------------ ------------- -----------
Common Carlos Espinosa (1) 10,000,000 71.4%
President, Chief Executive Officer,
Chief Financial Officer, Secretary,
Treasurer, and Director
All officers and Directors as a Group 10,000,000 71.4%
----------
1. The address of our executive officer, director and beneficial owner c/o CME
Realty, Inc. 10300 W. Charleston Blvd, Suite 213, Las Vegas, Nevada 89135.
2. As used in this table, "beneficial ownership" means the sole or shared
power to vote, or to direct the voting of, a security, or the sole or share
investment power with respect to a security (i.e., the power to dispose of,
or to direct the disposition of a security).
Unless otherwise indicated, we have been advised that all individuals or
entities listed have the sole power to vote and dispose of the number of shares
set forth opposite their names. For purposes of computing the number and
percentage of shares beneficially owned by a security holder, any shares which
such person has the right to acquire within 60 days of February 28, 2014 are
deemed to be outstanding, but those shares are not deemed to be outstanding for
the purpose of computing the percentage ownership of any other security holder.
We currently do not maintain any equity compensation plans.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE.
Our Board of Directors consists of Carlos Espinosa. He is not independent as
such term is defined by a national securities exchange or an inter-dealer
quotation system.
Various related party transactions are reported throughout the notes to our
financial statements and should be considered incorporated by reference herein.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
Messineo & Co., CPAs, LLC ("M&Co") are our current independent registered public
accounting firm. DKM Certified Public Accountants ("DKM") provided audit of our
initial filing for the year ended February 28, 2013.
AUDIT FEES
Aggregate audit fees billed by M&Co for the year ended February 28, 2014,
including quarterly reviews was $8,000. DKM fees totaled $2,500 for the February
28, 2013 audit.
AUDIT-RELATED FEES
Aggregate audit-related fees billed by M&Co and DKM totaled $0 and $0, for the
years ending February 28, 2014 and 2013, respectively.
14
TAX FEES
Aggregate tax fees billed by M&Co and DKM totaled $0 and $0, for the years
ending February 28, 2014 and 2013, respectively.
PRE-APPROVAL POLICY
We do not currently have a standing audit committee. The above services were
approved by our Board of Directors.
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) The following documents are filed as part of this Report:
1. FINANCIAL STATEMENTS. The following financial statements and the report of
our independent registered public accounting firm, are filed herewith.
* Report of Independent Registered Public Accounting Firm
* Balance Sheets at February 28, 2014 and February 28, 2013
* Statements of Operations for the year ended February 28, 2014,
February 28, 2013 and for the cumulative period from August 10, 2012
(Inception) to February 28, 2014
* Statements of Changes in Shareholders' Deficiency for the period from
August 10. 2012 (Date of Inception) to February 28, 2014
* Statements of Cash Flows for the year ended February 28, 2014,
February 28, 2013 and for the cumulative period from August 10, 2012
(Date of Inception) to February 28, 2014
* Notes to Financial Statements
2. FINANCIAL STATEMENT SCHEDULES.
Schedules are omitted because the information required is not applicable or the
required information is shown in the financial statements or notes thereto.
3. EXHIBITS INCORPORATED BY REFERENCE OR FILED WITH THIS REPORT.
Exhibit No. Description
----------- -----------
31.1 Chief Executive Officer Certification pursuant to section 302 of
the Sarbanes-Oxley Act of 2002*
31.2 Chief Financial Officer Certification pursuant to section 302 of
the Sarbanes-Oxley Act of 2002*
32.1 Chief Executive Officer Certification pursuant to section 906 of
the Sarbanes-Oxley Act of 2002.*
32.2 Chief Financial Officer Certification pursuant to section 906 of
the Sarbanes-Oxley Act of 2002.*
101 Interactive Data files pursuant to Regulation S-T.*
----------
* Included herewith
15
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
CME Realty, Inc.
Date: June 6, 2014 By: /s/ Carlos Espinosa
--------------------------------------------
Carlos Espinosa, President
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
Date: June 6, 2014 By: /s/ Carlos Espinosa
--------------------------------------------
Carlos Espinosa, Chief Executive Officer,
President and Director
(Principal Executive Officer)
Date: June 6, 2014 By: /s/ Carlos Espinosa
--------------------------------------------
Carlos Espinosa, Chief Financial Officer
Principal Accounting Officer, Secretary,
Treasurer and Director
(Principal Financial and Accounting Officer)
16
--------------------------------------------------------------------------------
MESSINEO & CO., CPAS LLC
2471 N MCMULLEN BOOTH ROAD, SUITE 302
CLEARWATER, FL 33759-1362 [LOGO]
T: (518) 530-1122
F: (727) 674-0511
================================================================================
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Stockholders
CME Realty Inc.
Las Vegas, Nevada
We have audited the accompanying balance sheet of CME Realty Inc. (the
"Company") as of February 28, 2014 and 2013 and the related statement of
operations, stockholders' deficit and cash flows for the year ending February
28, 2014 and the period from August 10, 2012 (date of inception) through
February 28, 2013 and 2014. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of CME Realty Inc. as of February
28, 2014 and 2013 and the results of its operations and its cash flows for the
year ending February 28, 2014 and the period from August 10, 2012 (date of
inception) through February 28, 2013 and 2014, in conformity with accounting
principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has incurred a losses, has not generated
revenue, has not emerged from the development stage, and may be unable to raise
further equity. These factors raise substantial doubt about its ability to
continue as a going concern. Management's plans regarding those matters are also
described in Note 2. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
/s/ Messineo & Co., CPAs, LLC
----------------------------------------
Messineo & Co., CPAs, LLC
Clearwater, Florida
May 22, 2014
F-1
CME REALTY INC.
(A Development Stage Company)
BALANCE SHEETS
February 28, February 28,
2014 2013
-------- --------
ASSETS
CURRENT ASSETS
Cash $ 9,404 $ 5,000
-------- --------
TOTAL CURRENT ASSETS $ 9,404 $ 5,000
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 13,551 $ 3,250
Due to related party 6,060 306
-------- --------
TOTAL CURRENT LIABILITIES 19,611 3,556
-------- --------
STOCKHOLDERS' EQUITY (DEFICIT)
Capital stock
Authorized
75,000,000 shares of common stock, $0.001 par value,
Issued and outstanding
14,000,000 and 10,000,000 shares at February 28, 2014
& February 28, 2013, respectively 14,000 10,000
Additional Paid in Capital 36,000 --
Deficit accumulated during the development stage (60,207) (8,556)
-------- --------
TOTAL STOCKHOLDERS' EQUITY/(DEFICIT) (10,207) 1,444
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY/(DEFICIT) $ 9,404 $ 5,000
======== ========
The auditors' report and accompanying notes are an
integral part of these financial statements
F-2
CME REALTY INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
Cumulative results
Inception from inception
Year ended (August 10, 2012) to (August 10, 2012) to
February 28, February 28, February 28,
2014 2013 2014
------------ ------------ ------------
REVENUE
Revenues $ -- $ -- $ --
------------ ------------ ------------
TOTAL REVENUES -- -- --
------------ ------------ ------------
EXPENSES
General & Administration 6,376 306 6,682
Professional Fees 45,275 8,250 53,525
------------ ------------ ------------
TOTAL EXPENSES 51,651 8,556 60,207
------------ ------------ ------------
Provision for Income Taxes -- -- --
------------ ------------ ------------
NET LOSS $ (51,651) $ (8,556) $ (60,207)
============ ============ ============
BASIC AND DILUTED LOSS PER
COMMON SHARE
$ (0.00) $ (0.03)
============ ============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 10,504,110 295,567
============ ============
The auditors' report and accompanying notes are an
integral part of these financial statements
F-3
CME REALTY INC.
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
Deficit
Common Stock Accumulated
----------------------- Additional During the
Number of Paid-in Development
Shares Amount Capital Stage Total
------ ------ ------- ----- -----
Balance at inception on
August 10, 2012 -- $ -- $ -- $ -- $ --
Founder's shares issued for
cash at $0.001 per share
on February 21, 2013 5,000,000 5,000 -- -- 5,000
Shares issued for Services
at $0.001 per share
February 25, 2013 5,000,000 5,000 -- -- 5,000
Net loss for the period from
inception through February 28, 2013 -- -- -- (8,556) (8,556)
---------- -------- -------- --------- ---------
BALANCE, FEBRUARY 28, 2013 10,000,000 10,000 -- (8,556) 1,444
---------- -------- -------- --------- ---------
Net loss for the year ended
February 28, 2014 -- -- -- (51,651) (51,651)
---------- -------- -------- --------- ---------
BALANCE, FEBRUARY 28, 2014 14,000,000 $ 14,000 $ 36,000 $ (60,207) $ (10,207)
========== ======== ======== ========= =========
The auditors' report and accompanying notes are an
integral part of these financial statements.
F-4
CME REALTY INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
Inception Inception
Year ended (August 10, 2012) to (August 10, 2012) to
February 28, February 28, February 28,
2014 2013 2014
-------- -------- --------
OPERATING ACTIVITIES
Net loss $(51,651) $ (8,556) $(60,207)
Adjustment to reconcile net loss to net
cash used in operating activities:
Shares issued for services -- 5,000 5,000
Increase (decrease) in A/P and accrued expenses 10,301 3,250 13,551
Expenses paid on company's behalf by shareholder (306) 306 --
-------- -------- --------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (41,656) -- (41,656)
-------- -------- --------
FINANCING ACTIVITIES
Proceeds from sale of common stock 40,000 5,000 45,000
Shareholder loan 6,060 -- 6,060
-------- -------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES 46,060 5,000 51,060
-------- -------- --------
NET INCREASE (DECREASE) IN CASH 4,404 5,000 9,404
CASH, BEGINNING OF PERIOD 5,000 -- --
-------- -------- --------
CASH, END OF PERIOD $ 9,404 $ 5,000 $ 9,404
======== ======== ========
Supplemental cash flow information and
noncash financing activities:
Cash paid for:
Interest $ -- $ -- $ --
======== ======== ========
Taxes $ -- $ -- $ --
======== ======== ========
The auditors' report and accompanying notes are an
integral part of these financial statements.
F-5
CME REALTY INC.
(A Development Stage Company)
NOTES TO THE AUDITED FINANCIAL STATEMENTS
February 28, 2014 and 2013
NOTE 1 - NATURE OF OPERATIONS AND BASIS OF PRESENTATION
CME Realty, Inc. was formed in the state of Nevada on August 10, 2012 and its
year-end is February 28. We are a development stage company with a principle
business of real estate services for the residential market. We plan to hire a
team of professionals that will individually specialize in each of our services.
The services we initially plan to offer include listing and sales of residential
properties, short sales and foreclosures. Our goal is to become a partner with
our clients in the decision making process. We plan to provide all our
professionals with the latest market knowledge utilizing demographic and mapping
technology and micro and macro real estate statistics.
NOTE 2 - GOING CONCERN
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. From inception through February 28,
2014, the Company had no revenue producing operations and has not emerged from
the development stage. In view of these matters, the Company's ability to
continue as a going concern is dependent upon the Company's ability to begin
operations and to achieve a level of profitability. The Company intends on
financing its future development activities and its working capital needs
largely from the sale of public equity securities with some additional funding
from other traditional financing sources, including term notes until such time
that funds provided by operations are sufficient to fund working capital
requirements. The financial statements of the Company do not include any
adjustments relating to the recoverability and classification of recorded
assets, or the amounts and classifications of liabilities that might be
necessary should the Company be unable to continue as a going concern.
The sole officer/director has agreed to advance funds to the Company to meet its
obligations at his discretion.
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The financial statements present the balance sheet, statement of operations,
stockholders' equity (deficit) and cash flows of the Company. These financial
statements are presented in United States dollars and have been prepared in
accordance with accounting principles generally accepted in the United States.
CASH AND CASH EQUIVALENTS
For the purposes of the statement of cash flows, the Company considers highly
liquid financial instruments purchased with a maturity of three months or less
to be cash equivalent. At February 28, 2014 and 2013, the Company had $9,404 and
$5,000, respectively, in cash.
ADVERTISING
Advertising costs are expensed as incurred. As of February 28, 2014 and 2013, no
advertising costs have been incurred.
F-6
PROPERTY
The Company does not own or rent any property. The office space is provided by
the CEO at no charge.
USE OF ESTIMATES AND ASSUMPTIONS
Preparation of the financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
REVENUE AND COST RECOGNITION
The Company has no current source of revenue; therefore the Company has not yet
adopted any policy regarding the recognition of revenue or cost.
INCOME TAXES
The Company follows the liability method of accounting for income taxes.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
balances. Deferred tax assets and liabilities are measured using enacted or
substantially enacted tax rates expected to apply to the taxable income in the
years in which those differences are expected to be recovered or settled.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion or all of the deferred
tax assets will not be realized. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period that
includes the date of enactment or substantive enactment.
NET LOSS PER SHARE
Basic loss per share includes no dilution and is computed by dividing loss
available to common stockholders by the weighted average number of common shares
outstanding for the period. Dilutive loss per share reflects the potential
dilution of securities that could share in the losses of the Company. Because
the Company does not have any potentially dilutive securities, the accompanying
presentation is only of basic loss per share.
RECENT ACCOUNTING PRONOUNCEMENTS
The company has evaluated all the recent accounting pronouncements and believes
that none of them will have a material effect on the company's financial
statement.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company's balance sheet includes certain financial instruments, including
cash, accounts payable, accrued expenses and amounts payable to related party.
The carrying amounts of current assets and current liabilities approximate their
fair value because of the relatively short period of time between the
origination of these instruments and their expected realization.
ASC 820, FAIR VALUE MEASUREMENTS AND DISCLOSURES, defines fair value as the
exchange price that would be received for an asset or paid to transfer a
liability (an exit price) in the principal or most advantageous market for the
asset or liability in an orderly transaction between market participants on the
measurement date. ASC 820 also establishes a fair value hierarchy that
distinguishes between (1) market participant assumptions developed based on
F-7
market data obtained from independent sources (observable inputs) and (2) an
entity's own assumptions about market participant assumptions developed based on
the best information available in the circumstances (unobservable inputs). The
fair value hierarchy consists of three broad levels, which gives the highest
priority to unadjusted quoted prices in active markets for identical assets or
liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).
The three levels of the fair value hierarchy are described below:
Level 1 quoted prices in active markets that are accessible at the
measurement date for identical, unrestricted assets or liabilities
Level 2 Inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly or indirectly,
including quoted prices for similar assets or liabilities in active
markets; quoted prices for identical or similar assets or liabilities
in markets that are not active; inputs other than quoted prices that
are observable for the asset or liability (e.g., interest rates); and
inputs that are derived principally from or corroborated by
observable market data by correlation or other means.
Level 3 Inputs that are both significant to the fair value measurement and
unobservable.
Fair value estimates discussed herein are based upon certain market assumptions
and pertinent information available to management as of February 28, 2014. The
respective carrying value of certain on-balance-sheet financial instruments
approximated their fair values due to the short-term nature of these
instruments.
NOTE 4 - RELATED PARTY
In support of the Company's efforts and cash requirements, it has relied on
advances from the controlling shareholder, an officer and director, until such
time that the Company can support its operations through generating revenue or
attains adequate financing through sales of its equity or traditional debt
financing. The controlling shareholder has pledged his support to fund
continuing operations, however, there is no formal written commitment. Amounts
represent advances or amounts paid in satisfaction of liabilities. The advances
are considered temporary in nature and therefore are considered payable on
demand and non-interest bearing. At February 28, 2014 and 2013, the President
has paid expenses on behalf of the Company in the amount of $6,060 and $306,
respectively.
During the year ending February 28, 2914 the Company paid consulting fees to the
Chief Operating Officer, in the amount of $20,000.
The Company does not own or lease property or lease office space. The office
space used by the Company was arranged by the founder of the Company to use at
no charge.
The Company does not have employment contracts with its key employees, including
the controlling shareholder who is an officer of the Company.
The amounts and terms of the above transactions may not necessarily be
indicative of the amounts and terms that would have been incurred had comparable
transactions been entered into with independent third parties.
F-8
NOTE 5 - CAPITAL STOCK
The Company is authorized to issue an aggregate of 75,000,000 common shares with
a par value of $0.001 per share. No preferred shares have been authorized or
issued. At February 28, 2014 and 2013, 14,000,000 and 10,000,000 common shares
are issued and outstanding, respectively.
On February 21, 2013, the Company issued 5,000,000 Founder's shares at $0.001
per share (par value) for total cash of $5,000.
On February 25, 2013, the Company issued 5,000,000 shares for services provided
since inception. These shares were issued at par value ($0.001 per share) for
services valued at $5,000.
On January 14, 2014, the Company issued 4,000,000 shares for cash to multiple
investors. These shares were issued at $0.01 per share for total cash of
$40,000.
As of February 28, 2014, there are no warrants or options outstanding to acquire
any additional shares of common stock of the Company.
NOTE 6 - INCOME TAXES
We did not provide any current or deferred U.S. federal income tax provision or
benefit for any of the periods presented because we have experienced operating
losses since inception. Accounting for Uncertainty in Income Taxes when it is
more likely than not that a tax asset cannot be realized through future income
the Company must allow for this future tax benefit. We provided a full valuation
allowance on the net deferred tax asset, consisting of net operating loss carry
forwards, because management has determined that it is more likely than not that
we will not earn income sufficient to realize the deferred tax assets during the
carry forward period.
The components of the Company's deferred tax asset and reconciliation of income
taxes computed at the statutory rate to the income tax amount recorded as of
2013 is as follows:
February 28, February 28,
2014 2013
-------- --------
Net operating loss carry forward $ 60,207 $ 8,556
Effective Tax rate 34% 34%
-------- --------
Deferred Tax Assets 20,470 2,909
Less: Valuation Allowance (20,470) (2,909)
-------- --------
Net deferred tax asset $ 0 $ 0
======== ========
The net federal operating loss carry forward will expire in 2034. This carry
forward may be limited upon the consummation of a business combination under IRC
Section 381.
NOTE 7 - COMMITMENTS AND CONTINGENCIES
From time to time the Company may be a party to litigation matters involving
claims against the Company. Management believes that there are no current
matters that would have a material effect on the Company's financial position or
results of operations.
NOTE 8 - SUBSEQUENT EVENTS
Management has evaluated subsequent events through the date the financial
statements were available to be issued. Management is not aware of any
significant events that occurred subsequent to the balance sheet date that would
have a material effect on the financial statements thereby requiring adjustment
or disclosure.
F-