United States

Securities and Exchange Commission 

Washington, D.C. 20549

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 FORM 10-K

 

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[X]	Annual Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 for the Fiscal Year Ended February 28, 2014

 

[   ]

Transition Report Under Section 13 or 15(d) of The Securities Exchange Act of 1934 for the Transition Period from _______ to _______

 

Commission File Number: 0-55142 

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 EAST SHORE DISTRIBUTORS, INC.

(Exact name of registrant as specified in its charter)

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Nevada		27-2838091
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

 

8335 Sunset Blvd., Suite #238

West Hollywood, California 90069

Address of principal executive offices and zip code)

 

(323) 337-9086

(Registrant’s telephone number, including area code)

 

Securities registered under Section 12(g) of the Exchange Act: Common Stock, par value $0.0001 per share

 

Indicate by check mark if the registrant is a well-know seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [  ] No [x]

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [  ] No [x]

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [x]  No [  ]

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit and post such files). Yes [ ]      No [x]

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 if Regulation S-K (229.405 of this Chapter) is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy of information statements incorporated by reference in Part III of this Form 10-K or any amendments to this Form 10-K. Yes [x]   No [ ]

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer [ ]	Accelerated filer [ ]
Non-accelerated filer [ ] (Do not check if a smaller reporting company)	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]

 

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant on August 31, 2013, based on an offering price of $0.25 (at such time there was no market for the common stock) was approximately $938,750.  As of February 28, 2014, the registrant had 39,755,000 shares of its common stock, par value $0.0001 per share, outstanding.

 

DOCUMENTS INCORPORATED BY REFERENCE: None

 

 

TABLE OF CONTENTS

 

		Page
PART I:
Item 1.	Business	1
Item 1A.	Risk Factors	1
Item 1B.	Unresolved Staff Comments	4
Item 2.	Properties	4
Item 3.	Legal Proceedings	5
Item 4.	Mine Safety Disclosures	5
PART II:
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	6
Item 6.	Selected Financial Data	6
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	7
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	8
Item 8.	Financial Statements and Supplementary Data	8
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	9
Item 9A.	Controls and Procedures	9
Item 9B.	Other Information	10
PART III:
Item 10.	Directors, Executive Officers and Corporate Governance	11
Item 11.	Executive Compensation	13
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	13
Item 13.	Certain Relationships and Related Transactions, and Director Independence	14
Item 14.	Principal Accounting Fees and Services	14
PART IV:
Item 15.	Exhibits, Financial Statement Schedules	15
SIGNATURES		17
FINANCIAL STATEMENTS		F-1

 

CAUTIONARY STATEMENT REGARDING FORWARD LOOKING INFORMATION

 

The discussion contained in this 10-K under the Securities Exchange Act of 1934, as amended, contains forward-looking statements that involve risks and uncertainties. The issuer's actual results could differ significantly from those discussed herein. These include statements about our expectations, beliefs, intentions or strategies for the future, which we indicate by words or phrases such as "anticipate," "expect," "intend," "plan," "will," "we believe," "the Company believes," "management believes" and similar language, including those set forth in the discussions under "Notes to Financial Statements" and "Management's Discussion and Analysis or Plan of Operation" as well as those discussed elsewhere in this Form 10-K. We base our forward-looking statements on information currently available to us, and we assume no obligation to update them. Statements contained in this Form 10-K that are not historical facts are forward-looking statements that are subject to the "safe harbor" created by the Private Securities Litigation Reform Act of 1995.

 

 

 

PART I

 

ITEM 1. BUSINESS

 

The Company

 

East Shore Distributors, Inc. (referred to herein as “we”, “us”, “ESTI” or the “Company”) was organized under the laws of the State of Nevada on June 11, 2010, under the name Drive Assure, Inc.  On July 26, 2011, we changed our name to East Shore Distributors, Inc. Prior to February 2014, we pursued a business of distributing consumer products globally, including alcohol detection saliva strips, a facial anti-aging cream and a hand moisturizing cream.

 

In February 2014, our principal stockholder Alex Fridman sold 36,000,000 shares, comprising approximately 90.55% of our issued and outstanding stock, to Samcorp, and Mr. Fridman and Scott Carpenter resigned as directors and officers of the Company.

 

On February 10, 2014, Jonathan Lim and Justin Begnaud were appointed directors of the Company. Mr. Lim was also appointed the Chief Executive Officer and Treasurer of the Company, and Mr. Begnaud was appointed Vice President – Chief Operating Officer of the Company.

 

On March 3, 2014, the Company acquired Crimson Forest Entertainment (USA) LLC for a purchase price of $1,000, and our Board of Directors approved an amendment to the Company’s Articles of Incorporation to change our name to “Crimson Forest Entertainment Group Inc.”, which change will become effective in June 2014.

 

With our new management and ownership, we intend to build the Company into a global independent motion picture studio that finances, produces and acquires theatrical quality feature films and televisions series, with budgets up to $25 million, for worldwide distribution. We currently have offices in Los Angeles and Shanghai, and our management will play an integral role in all aspects of the film and television production process.

 

Each member of our senior management team has substantial experience in the filmed entertainment industry in the United States and China. We believe our management’s experience will allow the Company to successfully conceptualize, produce and distribute various film and television projects worldwide and in the local Chinese market, and position the Company as a valuable partner in the growing Chinese theatrical marketplace.

 

Our website is located at http://www.cff.tv.

 

Employees

 

As of February 28, 2014, the Company had two employees, Jonathan Lim and Justin Begnaud. As our business grows, we will need to hire additional employees and consultants in the United States and China to manage and grow our business and operations.

 

Available Information

 

We file electronically with the U.S. Securities and Exchange Commission (“SEC”) our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934. We will make available on our website at http://www.cff.tv/EN/investor.html, free of charge, copies of these reports as soon as reasonably practicable after filing these reports with, or furnishing them to, the SEC.  The public can also obtain materials that we file with the SEC through the SEC’s website at http://www.sec.gov or at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549.  

 

ITEM 1A.  RISK FACTORS.

 

You should carefully consider the risks described below, together with all of the other information included in this report, in considering our business and prospects.  The risks and uncertainties described below are not the only ones facing the Company.  Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations. The occurrence of any of the following risks could harm our business, financial condition or results of operations.

 

 

 

 

Risks Related to Our Business

 

We have a limited operating history and face many of the risks and difficulties frequently encountered by development stage company.

 

We have a limited operating history, and to date, our efforts have been focused primarily on the development and marketing of our business.  We have limited operating history for investors to evaluate the potential of our business development.  We have not extensively built our customer base or our brand name.  In addition, we also face many of the risks and difficulties inherent in building and establishing a new company. Our future will depend on our ability to produce and bring to market, within prescribed budgets, new film and television projects, and attract investors to our projects and the Company.

 

We need additional capital to develop our business.

 

The development, production and distribution of our film and television projects will require the commitment of substantial financial resources.  Currently, we have no established bank-financing arrangements.  Therefore, it is likely we would need to seek additional financing through subsequent future private offerings of our equity securities, debt financings, or strategic partnerships and other arrangements with corporate partners.

 

Our failure to manage growth will cause a disruption of our operations.

 

Our future growth will place a significant strain on our management and our operational, accounting, and information systems.  We expect that we will need to continue to improve our financial controls, operating procedures, and management information systems.  We will also need to effectively train, motivate, and manage our employees.  Our failure to manage our growth could disrupt our operations and ultimately prevent us from generating the revenues we expect.

 

We may incur significant costs to ensure compliance with corporate governance and accounting requirements.

 

We may incur significant costs associated with our public company reporting requirements, costs associated with corporate governance requirements, including under the Sarbanes-Oxley Act of 2002, and other rules implemented by the SEC.  We expect all of these applicable rules and regulations to significantly increase our legal and financial compliance costs and to make some activities more time consuming and costly.   We also expect that these applicable rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage.  As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our board of directors or as executive officers.

 

Our future success is substantially dependent on the performance and continued service of Jonathan Lim, our Chief Executive Officer.

 

We are presently substantially dependent on the experience, abilities and continued services of Jonathan Lim, our Chief Executive Officer. The loss of Mr. Lim’s services would be highly detrimental to our business and could force us to cease operations.

 

Our future growth will require the recruitment of additional qualified employees, and there is no assurance that we will be able to find such employees on acceptable terms.

 

To accommodate our future growth, we will need to increase the depth and experience of our employees and management team.  Our future success will depend to a large degree upon the active participation of our key officers and employees.  There is no assurance that we will be able to employ additional qualified persons on acceptable terms.  Lack of qualified employees will adversely affect our business development.

 

 

 

Systems failures and delays could harm our business.

 

We plan to receive, organize, and process product orders through a variety of electronic channels.  Systems and operations, and those of our third-party service providers are vulnerable to damage or interruption from human error, sabotage, encryption failures, break-ins, intentional acts of vandalism, earthquakes, terrorist attacks, floods, fires, power loss, telecommunications failures, computer viruses, computer denial of service attacks or other attempts to harm our systems and operations, and similar events.  Our disaster recovery planning cannot account for all eventualities.

 

Changes in legislation or regulations may affect our ability to conduct our business or reduce our profitability.

 

The regulatory environment in which we operate may change.  These changes may affect our ability to conduct our business or reduce our profitability.  Our activities may be affected not only by legislation or regulations of general applicability, but also by industry-specific legislation or regulations.  The SEC, other U.S. or foreign governmental authorities, FINRA or other SROs may adopt new or revised regulations which affect our business.  Changes in the interpretation or enforcement of existing laws and rules by those entities may also affect our business.

 

Risks Related to Our Common Stock

 

You may experience dilution of your ownership interest because of the future issuance of additional shares of our common stock and our preferred stock.

 

In the future, we may issue our authorized but previously unissued equity securities, resulting in the dilution of the ownership interests of our present stockholders.  We are currently authorized to issue an aggregate of 110,000,000 shares of capital stock, consisting of 100,000,000 shares of common stock, par value $0.0001 per share, and 10,000,000 shares of preferred stock, par value $0.0001 per share. We intend to increase our authorized share of common stock to 500,000,000 shares.

 

We may also issue additional shares of our common stock or other securities that are convertible into or exercisable for common stock in connection with hiring or retaining employees or consultants, future acquisitions, future sales of our securities for capital raising purposes or for other business purposes.  The future issuance of any such additional shares of our common stock or other securities may create downward pressure on the trading price of our common stock.  There can be no assurance that we will not be required to issue additional shares, warrants or other convertible securities in the future in conjunction with hiring or retaining employees or consultants, future acquisitions, future sales of our securities for capital raising purposes or for other business purposes, including at a price (or exercise prices) below the price at which shares of our common stock are then quoted on the OTCBB or other quotation system.

 

Our common stock is subject to the “penny stock” rules of the SEC and the trading market in our securities is, to date, non-existent, which makes transactions in our stock cumbersome and may reduce the value of an investment in our stock.

 

The SEC has adopted Rule 15g-9, which establishes the definition of a “penny stock,” for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions.  For any transaction involving a penny stock, unless exempt, the rules require: (i) that a broker or dealer approve a person’s account for transactions in penny stocks; and (ii) the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.  In order to approve a person’s account for transactions in penny stocks, the broker or dealer must: (i) obtain financial information and investment experience objectives of the person; and (ii) make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.

 

The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating to the penny stock market, which, in highlight form: (i) sets forth the basis on which the broker or dealer made the suitability determination; and (ii) that the broker or dealer received a signed, written agreement from the investor prior to the transaction.

 

 

 

Generally, brokers may be less willing to execute transactions in securities subject to the “penny stock” rules.  This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our stock.

 

Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions.  Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.

 

Our stock price may be highly volatile and subject to wide fluctuations due to many factors, including a substantial market overhang.

 

The market price of our common stock may be highly volatile and subject to wide fluctuations in response to quarterly variations in operating results, announcements of distribution agreements, new affiliations or new products and services by us or our competitors, changes in financial estimates by securities analysts, lack of market acceptance of our products, or other events or factors, including the risk factors described herein.  In addition, the stock market in general experiences significant price and volume fluctuations that are often unrelated to a company’s operating performance.  As with any public company, we may be subject to securities class action litigation following periods of volatility in the market price of our securities which could result in substantial costs and a diversion of management’s attention and resources.

 

Samcorp beneficially owns approximately 90.55% of the common stock of the company, which could have a material adverse effect on your rights as a shareholder, including the inability for you to have an impact on matters put to a vote of the company’s shareholders.

 

Samcorp controls approximately 90.55% of the Company’s common stock, which could negatively impact your right as a shareholder because he can effectively control all decisions of the Company with his vote.  Typically, any corporate decision that needs to be approved by the shareholders requires a majority of the outstanding shares to vote in favor of the corporate action.  Because Samcorp controls more than a majority of the outstanding shares, his vote will be able to dictate the actions of the shareholders which could affect your ability to have an impact on any decisions put to a vote of shareholders.

 

We do not expect to pay dividends for some time, which could result in no return on your investment.

 

We have never declared or paid cash dividends on our common stock.  We currently intend to retain our earnings, if any, to provide funds for the operation and expansion of our business and, therefore, do not anticipate declaring or paying cash dividends in the foreseeable future.  Any payment of future dividends will be at the discretion of the Company’s board of directors and will depend upon, among other things, our earnings, financial condition, capital requirements, level of indebtedness, contractual restrictions with respect to the payment of dividends and other relevant factors of our operations.

 

 

ITEM 1B. UNRESOLVED STAFF COMMENTS.

 

Not applicable.

 

 

ITEM 2. PROPERTY.

 

The Company currently leases an office suite located at 8335 Sunset Blvd., Suite 238, West Hollywood, CA. Our office facilities are suitable and adequate for our business as it is presently conducted.

 

 

 

ITEM 3. LEGAL PROCEEDINGS.

 

We are currently not involved in any litigation that we believe could have a materially adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our company’s or our company’s subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

 

 

ITEM 4. MINE SAFETY DISCLOSURES.

 

Not applicable.

  

 

 

 

PART II

 

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

 

Market Information

 

Our common stock is quoted on the Over-the-Counter Bulletin Board under the symbol "ESTI." However, there is no active market for our common stock and trading has been extremely limited. The last quoted price for our common stock was $0.25 for a trade on February 25, 2013, as reported on www.otcbb.com. As there is currently little to no market for our common stock, we believe that this last reported price does not accurately reflect the value of the common stock of the Company, and it may not be possible to sell our common stock at this price.

 

Holders

 

As of February 28, 2014, the Company had approximately 35 shareholders of its common stock. 

 

Dividends

 

We have not declared or paid any dividends on our common stock and intend to retain any future earnings to fund the development and growth of our business.  Therefore, we do not anticipate paying dividends on our common stock for the foreseeable future.  There are no restrictions on our present ability to pay dividends to stockholders of our common stock, other than those prescribed by Nevada law.

 

Equity Compensation Plan and Stock Option Plan Information

 

On March 31, 2014, the Company approved the form of 2014 Stock Incentive Plan, which provides for the grant of awards to purchase an aggregate of 20,000,000 shares of common stock.

 

Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities

 

During the period covered by this report (fiscal year ended February 28, 2014), the registrant has not issued any securities without registration under the Securities Act of 1933.

 

Purchases of Equity Securities

 

During the fourth quarter of the fiscal year ended February 28, 2014, there were no purchases of the registrant’s common stock by or on behalf of the registrant or any affiliated purchaser.

 

Transfer Agent

 

The Company’s transfer agent is Globex Transfer, LLC. located at 780 Deltona Blvd., Suite 202, Deltona, FL 32725.

 

 

ITEM 6. SELECTED FINANCIAL DATA

 

Not applicable.

 

 

 

 

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Forward Looking Statements

 

The following discussion of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes and other financial information appearing elsewhere in this Annual Report. Readers are also urged to carefully review and consider the various disclosures made by us which attempt to advise interested parties of the factors which affect our business, including without limitation the disclosures made in Item 1A of Part I of this Annual Report under the caption “Risk Factors.”

 

For the Year Ended February 28, 2014 Compared to the Year Ended February 28, 2013

 

Revenue

 

For the year ended February 28, 2014, revenue from operations was $0, compared to $151,380 for the year ended February 28, 2013, resulting in a decrease of $151,380. The decrease is related to decreased sales of our products to $0. The revenue from the prior period was primarily derived from the sale our prenatal DSS tablets. Since inception, our revenue from operations was $219,660.

 

Cost of Revenue

 

Our cost of revenue for the year ended February 28, 2014, was $0, compared to $125,526 for the year ended February 28, 2013. The $125,526 decrease is related to decreased sales of our products to $0. Since inception, our cost of revenue was $184,584.

 

Gross Profit

 

For the year ended February 28, 2014, gross profit from sales, before taking into account general and administrative expenses was zero, compared to $25,854 for the year ended February 28, 2013, resulting in a decrease of $25,854. The decrease in gross profit is related to a decrease in the sales of our products. Since inception, gross profit from sales was $35,076.

 

General and Administrative Expenses

 

General and administrative expenses for the year ended February 28, 2014, was $41,157, resulting in a net loss of $41,157, compared to general and administrative expenses of $45,838 for the year ended February 28, 2013, which resulted in a net loss of $19,984. This decrease in expense was primarily due to an decrease in operation expense related to sales of our products. Since inception, general and administrative expense were $115,256, resulting in a net loss since inception of $80,180.

 

Liquidity & Capital Resources

 

As of February 28, 2014, the Company had a cash balance of $9,500.  On July 29, 2011, the Company sold an aggregate of 3,600,000 shares of its common stock to three investors for a total consideration of $3,600.  On August 30, 2011, the Company commenced a private placement for up to 1,000,000 shares of its common stock, of which the Company sold 155,000 shares for total consideration of $15,500.

 

In November 2010, Mr. Fridman, the Company’s previous Chief Executive Officer, loaned the Company $3,000 cash in exchange for a promissory note.  In June 2012, Mr. Fridman loaned the Company an additional $9,000 cash in exchange for a promissory note. In October 2012, Mr. Fridman loaned the Company an additional $12,000 cash in exchange for a promissory note. In December 2013, Mr. Fridman, loaned the Company an additional $7,000 cash in exchange for a promissory note. These loans, which total $31,000, are non-interest bearing, unsecured and due on demand.  At this time, the Company has paid back all $31,000 to Mr. Fridman.

 

In January and February 2014, Mr. Lim, the Company’s new Chief Executive Officer, loaned the Company $25,000 cash for operations, and subsequently collected on the loan in the amount of $5,000. These loans are non-interest bearing, unsecured and due on demand.  

 

 

  

On March 3, 2014, the Company acquired a subsidiary company Crimson Forest Entertainment (USA) LLC from Namaskar Corporation.

 

On March 23, 2014, the Company entered into a financing agreement with Portnice Investment Limited for the amount of $2,000,000 to be used for operational and project development expenses. The financing agreement was executed as a convertible note purchase agreement with Portnice Investment Limited whereby under this agreement, the company may sell and issue up to an aggregate maximum of $2,000,000 in principal amount of Convertible Notes prior to March 3, 2019. The Notes bear an interest rate equal to 3.8% per annum, compounded annually, based on a 365 day year. On March 23, 2014, the Company issued a Convertible Promissory Note in principal amount of $250,000 under this agreement to Portnice Investment Limited.

 

Over the next 12 months, we will focus our activities on financing, producing and acquiring theatrical quality feature films & television series.

 

Critical Accounting Policies and Estimates

 

Our financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States (“GAAP”). GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenues and expense amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use if estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.

 

Our significant accounting policies are summarized in Note 1 of our financial statements. While all these significant accounting policies impact its financial condition and results of operations, we view certain of these policies as critical. Policies determined to be critical are those policies that have the most significant impact on our financial statements and require management to use a greater degree of judgment and estimates. Actual results may differ from those estimates. Our management believes that given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause effect on our results of operations, financial position or liquidity for the periods presented in this report.

 

Recent Accounting Pronouncements

 

There are no recent accounting pronouncements expected to affect the Company.

 

Off-Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as “special purpose entities” (SPEs).

 

 

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Not applicable.

 

 

ITEM 8. FINANCIAL STATEMENTS

 

Our consolidated financial statements appear in a separate section of this Annual Report on Form 10-K beginning on page F-1.

 

 

 

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 

None.

 

 

ITEM 9A. CONTROLS AND PROCEDURES

 

(a) Evaluation of Disclosure and Control Procedures

 

The Company’s disclosure controls and procedures are designed to ensure (i) that information required to be disclosed by the Company in the reports the Company files or submits under the Exchange Act are recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms; and (ii) that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

 

Our principal executive officer and principal financial officer evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of February 28, 2014, and concluded that the disclosure controls and procedures were not effective as a whole, and that the deficiency involving internal controls constituted a material weakness as discussed below.

 

(b) Management’s Assessment of Internal Control over Financial Reporting

 

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in the Exchange Act Rules 13a-15(f).  A system of internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

 

Under the supervision and with the participation of management, including the principal executive officer and the principal financial officer, the Company’s management has evaluated the effectiveness of its internal control over financial reporting as of February 28, 2014, based on the criteria established in a report entitled “Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission” and the interpretive guidance issued by the Commission in Release No. 34-55929.  Based on this evaluation, the Company’s management has evaluated and concluded that the Company’s internal control over financial reporting was ineffective as of February 28, 2014, and identified the following material weaknesses:

 

	●	There is a lack of accounting personnel with the requisite knowledge of Generally Accepted Accounting Principles in the United States (“GAAP”) and the financial reporting requirements of the U.S. Securities and Exchange Commission.
	●	There are insufficient written policies and procedures to insure the correct application of accounting and financial reporting with respect to the current requirements of GAAP and SEC disclosure requirements.
	●	There is a lack of segregation of duties, in that we only had one person performing all accounting-related duties.

 

Notwithstanding the existence of these material weaknesses in our internal control over financial reporting, our management believes that the financial statements included in its reports fairly present in all material respects the Company’s financial condition, results of operations and cash flows for the periods presented.

 

The Company will continue its assessment on a quarterly basis and as soon as we start operations we plan to hire personnel and resources to address these material weaknesses.  We believe these issues can be solved with hiring in-house accounting support and plan to do so as soon as we have funds available for this.

 

 

 

 

This annual report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting.  The Company’s registered public accounting firm was not required to issue an attestation on its internal controls over financial reporting pursuant to temporary rules of the SEC.  The Company will continue to evaluate the effectiveness of internal controls and procedures on an on-going basis.

 

(c) Changes in Internal Control over Financial Reporting

 

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

 

 

ITEM 9B. OTHER INFORMATION

 

None.

 

 

 

 

PART III 

 

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

 

Directors and Executive Officers

 

The following table and text sets forth the names and ages of all our directors and executive officers and our key management personnel as of February 28, 2014.  All of our directors serve until the next annual meeting of stockholders and until their successors are elected and qualified, or until their earlier death, retirement, resignation or removal.  Executive officers serve at the discretion of the board of directors, and are elected or appointed to serve until the next board of directors meeting following the annual meeting of stockholders.  Also provided is a brief description of the business experience of each director and executive officer and the key management personnel and an indication of directorships held by each director in other companies subject to the reporting requirements under the Federal securities laws. 

 

 

Name	Age	Title	Date of Appointment
Jonathan Lim	42	Director, Chief Executive Officer, and Treasurer	February 10, 2014
Justin Begnaud	35	Director and Vice President/COO	February 10, 2014

 

We do not have a standing audit committee or an audit committee financial expert. We do not have an audit committee financial expert because of the small size of our company and our board of directors at this time, and also because the cost related to retaining a financial expert at this time would be prohibitive.

 

Resignation of Former Directors and Chief Executive Officer

 

On February 10, 2014, Mr. Alex Fridman and Mr. Scott Carpenter, each a director serving on the Company’s Board of Directors, agreed to resign from the Board. Effective February 10, 2014, Mr. Alex Fridman resigned as Chief Executive Officer of the Company.

 

Appointment of New Directors and Executive Officers

 

Effective February 10, 2014, Mr. Jonathan Lim and Mr. Justin Begnaud were each appointed as members of the Board of Directors. Also on such date, Mr. Lim was appointed as the Chief Executive Officer and Treasurer of the Company and Mr. Begnaud was appointed Vice President – Chief Operating Officer of the Company.

 

The following description contains the relevant business experience of these new directors and executive officers:

 

Jonathan Lim - Director, Chief Executive Officer and Treasurer

  

Jonathan Lim, is our Chief Executive Officer and Chairman of our board of directors. Mr. Lim has over ten years’ experience in the entertainment business in China where he produced and managed over numerous Film & Television projects. Mr. Lim is graduate of both New York and Beijing Film Academy and first feature film “SLAM” was distributed by Sony Pictures Television International and CCTV. Other notable projects include Sony Pictures Television International China’s remake of Sofia’s Diary an interactive Web series which had over 100 million views and the localized launch for China of the Dr.Oz show. Mr. Lim was also the creator/producer of “Made in NBA” a weekly television show for the NBA for over 6 years that was broadcast over 40 channels in Mainland China.

 

Mr. Lim has over twenty years of business experience in brand development, strategic marketing and planning in the retail business.  From 2002 until February 2014, Mr. Lim has held various executive positions at Aussino Group Limited, an international retailer and wholesaler of home fashion textiles & licensed products.  Mr. Lim previously served as CEO and Managing Director of Aussino Group Limited, and was responsible for the establishment of new stores and franchising expansion activities throughout China and the other Asian markets.

 

 

 

  

Mr. Lim holds a Bachelor of Commerce in Marketing and Asian Studies from Murdoch University, Australia.

   

Justin Begnaud – Director and Vice President/COO 

 

Justin R. Begnaud is Vice President – Chief Operating Officer of the Company, and has over 15 years of entertainment experience in developing, financing and producing content for film, television and new media. Previously, Mr. Begnaud was the Head of International Business Development for the television & film financier, Grosvenor Park Media. Prior to joining Grosvenor Park, Mr. Begnaud was the Director of Production and a bond representative on over 30 independent feature films while working for the completion bond company, Film Finances, Inc. Independently, he produced the feature films A GIRL WALKS HOME ALONE AT NIGHT (2014), which premiered at the 2014 Sundance Film Festival, and SWEET LITTLE LIES (2011). He has also produced over a half dozen music videos for artists including Leon Timbo, Kill the Complex, The Visitors, Chief and White Arrows. He was a Showrunner for the online comedy series BEHIND THE BYTE, where he oversaw 60 episodes for AT&T U-Verse and produced over 300 news segments for AT&T's Tech Channel. He produced digital content for Legendary Pictures, Hearst Communications, AT&T, LXTV/NBC, MIT, UCLA, Viacom, MTVu, and History.com. Previously, Mr. Begnaud was a freelance television producer and worked on TV documentaries & non-fiction series for A&E, The History Channel, AMC Networks, AT&T U-Verse, MTV Networks and NBC Universal. Mr. Begnaud began his film career working for Scott Rudin Productions. Additionally, he wrote grants for the Museum of Modern Art and the Tribeca Film Institute in New York City. Mr. Begnaud holds a M.F.A. from the UCLA Graduate School of Theater, Film & Television, a M.S. in Fundraising Management & Nonprofit Administration from Columbia University in New York, and a B.F.A. in Advertising / B.I.D. in Industrial Design from Syracuse University. He is a member of the Producers Guild of America, Film Independent, the International Film & Television Alliance, and the Academy of Television Arts & Sciences.

   

Term of Office

 

Our directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws.  Our officers are appointed by our board of directors and hold office until removed by the board of directors.

 

There are no agreements or understandings for any director or officer to resign at the request of another person and none of the directors or officers is acting on behalf of or will act at the direction of any other person.  The activities of each director and officer are material to the operation of the Company.  No other person’s activities are material to the operation of the Company.

 

Code of Ethics

 

The Company has adopted a Code of Ethics applicable to its directors and officers (including its principal executive officer and principal financial officer).

 

 

ITEM 11. EXECUTIVE COMPENSATION.

 

The following summary compensation table sets forth all compensation awarded to, earned by, or paid to the named executive officers paid by us during the years ended February 28, 2014 and 2013.

 

Name and Principal Position	Year		Salary ($)				Bonus ($)				Stock Awards ($)				Option Awards ($)				All Other Compensation ($)				Total
Jonathan Lim, CEO	2014			0				0				0				0				0				0
Justin Begnaud, COO	2014			0				0				0				0				0				0
Alex Fridman, former CEO	2014			0				0				0				0				0				0
	2013			0				0				0				0				0				0

 

Option Grants

 

There were no individual grants of stock options to purchase our common stock made to the executive officers named in the Summary Compensation Table for the year ended February 28, 2014.

 

Long-Term Incentive Plan Awards

 

The Company does not currently have a long-term incentive plan.

 

Compensation of Directors

 

Directors are permitted to receive fixed fees and other compensation for their services as directors.  The Company’s board of directors has the authority to fix the compensation of directors.  No amounts have been paid to, or accrued to, directors in such capacity.

 

Employment Agreements

 

Currently, we do not have an employment agreement in place with any of our executive officers.

 

Compensation Committee

 

The Company’s board of directors does not currently have a Compensation Committee.  During the most recently completed fiscal year, Alex Fridman, the Company’s former Chairman, made all decisions concerning executive officer compensation.

 

  

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

 

The following table presents information concerning the beneficial ownership of the shares of our common stock as of February 28, 2014 by: (i) each of our named executive officers and current directors, (ii) all of our current executive officers and directors as a group and (iii) each person we know to be the beneficial owner of 5% of more of our outstanding shares of common stock. Unless otherwise specified, the address of each beneficial owner listed in the table is c/o East Shore Distributors, Inc., 8335 Sunset Blvd., Suite #238, West Hollywood, California 90069.

 

Title of Class	Name and Address Of Beneficial Owners	Amount and Nature Of Beneficial Ownership		Percent Of Class (1)
Common Stock	Samcorp Capital Corporation (2)	36,000,000		90.55%
Common Stock	All officers and directors as a group (two persons)	0		0%

 

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(1)	The number of outstanding shares of common stock of the Company for purposes of calculating the above percentages is 39,755,000.
(2)	The business address of Samcorp Capital Corporation is 278 Ocean Drive, #08-23 The Coast, Sentosa Cove, Singapore. The individual person who has the power to vote and/or dispose of their securities is Mr. Anthony Lim.

 

 

   

 

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

 

Transactions with Related Persons

 

None.

 

Director Independence

 

On an annual basis, each director and executive officer of the Company is obligated to disclose any transactions with the Company and any of its subsidiaries in which a director or executive officer, or any member of his or her immediate family, has a direct or indirect material interest.  Following completion of these disclosures, our Board of Directors will make an annual determination as to the independence of each director using the current standards for “independence” that satisfy the criteria for The NASDAQ Stock Market. As of February 28, 2014, none of our directors qualified as independent in accordance with Nasdaq Marketplace Rule 5605(a)(2).

 

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.

 

Audit Fees

 

Audit Fees consist of assurance and related services that are reasonably related to the performance of the audit or review of our financial statements. This category includes fees related to the performance of audits and attest services not required by statute or regulations, and accounts consultations regarding the application of GAAP to proposed transactions. The aggregate Audit Fees billed for the fiscal years ended February 28, 2014 and 2013, were $18,000 and $16,000, respectively.

 

Audit Related Fees

 

The aggregate fees billed for assurance and related services by our principal accountant that are reasonably related to the performance of the audit or review of our financial statements, other than those previously reported in this Item 14, for the fiscal years ended February 28, 2014 and 2013, were $0 and $0, respectively.

 

Tax Fees

 

Tax Fees consist of the aggregate fees billed for professional services rendered by our principal accounts for tax compliance, tax advice, and tax planning. These services include preparation for federal and state income tax returns. The aggregate Tax Fees billed for the fiscal years ended February 28, 2014 and 2013, were $0 and $1,000, respectively.

 

Audit Committee Pre-Approval Policies and Procedures

 

Effective May 6, 2003, the SEC adopted rules that require that before our auditor is engaged by us to render any auditing or permitted non-audit related service, the engagement be:

 

	●	approved by our audit committee; or
	●	entered into pursuant to pre-approval policies and procedures established by the audit committee, provided the policies and procedures are detailed as to the particular  service,  the  audit committee is informed of each service, and such policies and procedures do not include delegation of the audit committee's responsibilities to management.

 

We do not have an audit committee.  Our board of directors pre-approves all services provided by our independent auditors.

  

 

 

PART IV

 

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

 

(a)     Financial Statements

 

1. The following financial statements of are included in this Annual Report on Form 10-K:

 

Report of Independent Registered Public Accounting Firm Balance Sheet at February 28, 2014 and 2013

Statements of Operations - for the years ended February 28, 2014 and 2013

Statements of Cash Flows - for the years ended February 28, 2014 and 2013

Statements of Stockholders’ Equity - for the years ended February 28, 2014 and 2013

Notes to Financial Statements

 

(b)     Exhibits

 

Exhibit No.		Description
3.1		Articles of Incorporation (incorporated by reference from Exhibit 3.1 to the Company’s Registration Statement on Form S-1/A, filed with the SEC on December 22, 2011)
3.2		Certificate of Amendment to the Company’s Articles of Incorporation (incorporated by reference from Exhibit 3.2 to the Company’s Registration Statement on Form S-1/A, filed with the SEC on December 22, 2011)
3.3		Bylaws (incorporated by reference from Exhibit 3.3 to the Company’s Registration Statement on Form S-1/A, filed with the SEC on December 22, 2011)
10.1		Securities Purchase Agreement, dated February 7, 2014, by and among East Shore Distributors, Inc., Alex Fridman and Samcorp Capital Corporation (incorporated by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on February 20, 2014)
14.1		Code of Ethics (incorporated by reference from Exhibit 14.1 to the Company’s Registration Statement on Form S-1/A, filed with the SEC on December 22, 2011)
31.1		Certification by the Principal Executive Officer and Principal Financial Officer of Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a)) *
32.1		Certification by the Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 *
101.INS		INS XBRL Instance Document **

 

 

101.SCH		SCH XBRL Schema Document **
101.CAL		CAL XBRL Calculation Linkbase Document **
101.DEF		DEF XBRL Definition Linkbase Document **
101.LAB		LAB XBRL Label Linkbase Document **
101.PRE		PRE XBRL Presentation Linkbase Document **

 

* filed herewith

 

** Information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections. 

 

 

 

16

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SIGNATURES

 

Pursuant to the requirement of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

			East Shore Distributors, Inc.
	Date: June 13, 2014		By: /s/ Jonathan Lim
			Jonathan Lim
			Chief Executive Officer

  

 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 and on the dates indicated.

 

 

Signature	Title	Date
/s/ Jonathan Lim  Jonathan Lim	Chairman of the Board,  Chief Executive Officer and Treasurer  (Principal Executive Officer and Principal Financial Officer)	June 13, 2014
/s/ Justin Begnaud  Justin Begnaud	Director	June 13, 2014

 

 

 

 

EAST SHORE DISTRIBUTORS, INC.

(A Development Stage Company)

 

Financial Statements

February 28, 2014 and 2013

 

  

TABLE OF CONTENTS

 

		Page(s)
Reports of Independent Registered Public Accounting Firms		F-1 – F-2
Balance Sheets – February 28, 2014 and 2013		F-3
Statements of Operations – Years Ended February 28, 2014 and 2013, and from June 11, 2010 (Inception) to February 28, 2014		F-4
Statements of Cash Flows –Years Ended February 28, 2014 and 2013, and June 11, 2010 (Inception) to February 28, 2014		F-5
Statement of Stockholders’ Equity (Deficit) – June 11, 2010 (Inception) to February 28, 2014		F-6
Notes to Financial Statements		F-7 – F-11

 

 

 

 

 

 

18

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

b

 

 

Report of Independent Registered Public Accounting Firm

 

 

To the Board of Directors and Stockholders

East Shore Distributors, Inc.

 

We have audited the accompanying consolidated balance sheet of East Shore Distributors, Inc. (the “Company”) as of February 28, 2014 and the related statements of operations, changes in stockholders’ deficit, and cash flows for the year ended February 28, 2014. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

 

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated 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 also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.  We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company at February 28, 2014, and the results of its operations and its cash flows for the year ended February 28, 2014, in conformity with accounting principles generally accepted in the United States of America.

 

 

 

City of Industry, California

June 13, 2014

   

 

 

 

 

EAST SHORE DISTRIBUTORS, INC.

(a Development Stage Company)

  

BALANCE SHEETS

AS OF FEBRUARY 28, 2014 AND 2013

 

		February 28
		2014				2013
Assets
Current Assets
Cash		$	9,500			$	11,177
Total Current Assets			9,500				11,177
Total Assets		$	9,500			$	11,177
Liabilities and Stockholders' Equity (Deficit)
Current Liabilities
Accounts payable and accrued liabilities		$	100			$	3,500
Loans payable - related parties			20,000				24,000
Total Current Liabilities			20,100				27,500
Stockholders' Deficit
Preferred stock, $0.0001 par value; 10,000,000 shares authorized; none issued and outstanding			-				-
Common stock, $0.0001 par value, 100,000,000 shares authorized; 39,755,000 shares issued and outstanding			3,976				3,976
Additional paid-in capital			65,604				18,724
Deficit accumulated during the development stage			(80,180	)			(39,023	)
Total Stockholders' Deficit			(10,600	)			(16,323	)
Total Liabilities and Stockholders' Deficit		$	9,500			$	11,177

 

See accompanying notes to financial statements.

 

 

EAST SHORE DISTRIBUTORS, INC.

 (a Development Stage Company)

 

STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME FOR THE YEARS ENDED

FEBRUARY 28, 2014 AND 2013

 

 

		Years Ended February 28,								June 11, 2010 (Inception) to February 28,
		2014				2013				2014
Revenue		$	-			$	151,380			$	219,660
Cost of revenue			-				125,526				184,584
Gross profit			-				25,854				35,076
General and administrative expenses			41,157				45,838				115,256
Net loss		$	(41,157	)		$	(19,984	)		$	(80,180	)
Net loss per common share - basic and diluted		$	(0.00	)		$	(0.00	)		$	(0.00	)
Weighted average number of common shares outstanding during the year/period - basic and diluted			39,755,000				39,755,000				38,607,993

 

 

 

See accompanying notes to financial statements.

 

 

 

EAST SHORE DISTRIBUTORS, INC.

(a Development Stage Company)

 

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED FEBRUARY 28, 2014 AND 2013

 

		Years Ended February 28,								June 11, 2010 (Inception) to
		2014				2013				February 28, 2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$	(41,157	)		$	(19,984	)		$	(80,180	)
Adjustments to reconcile net loss to net cash (used in) operating activities:
Changes in operating assets and liabilities:
(Increase)/Decrease in:
Inventory			-				45,735				-
Accounts payable and accrued liabilities			12,480				(49,235	)			15,980
Net Cash (Used In) Operating Activities			(28,677	)			(23,484	)			(80,080	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from loans payable - related party			32,000				21,000				56,000
Repayment of loans payable-related party			(5,000	)			-				(5,000	)
Proceeds from issuance of common stock – founder			-				-				3,600
Proceeds from issuance of common stock			-				-				19,100
Net Cash Provided By Financing Activities			27,000				21,000				73,700
Net increase (decrease) in Cash			(1,677	)			(2,484	)			9,500
Cash - Beginning of Year/Period			11,177				13,661				-
Cash - End of Year/Period		$	9,500			$	11,177			$	9,500
SUPPLEMENTARY CASH FLOW INFORMATION:
Cash Paid During the Year/Period for:
Income Taxes		$	-			$	-			$	97
Interest		$	-			$	-			$	-
SUPPLEMENTARY DISCLOSURES OF NON-CASH FINANCING ACTIVITY:
Related-Party Debt Cancellation		$	46,880			$	-			$	46,880

 

 

 

See accompanying notes to financial statements.

 

 

EAST SHORE DISTRIBUTORS, INC.

(a Development Stage Company)

 

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FROM JUNE 11, 2010 (INCEPTION) TO FEBRUARY 28, 2014

 

										Additional				Deficit				Total
		Common Stock, $0.0001 Par Value								Paid In				Accumulated during				Stockholders'
		Shares				Amount				Capital				Development Stage				Equity (Deficit)
Issuance of common stock - founder ($0.0001/share)		$	36,000,000			$	3,600			$	-			$	-			$	3,600
Net income from June 11, 2010 (inception) to February 28, 2011			-				0				0				645				645
Balance - February 28, 2011			36,000,000				3,600				-				645				4,245
Issuance of common stock ($0.0001/share)			3,600,000				360				3,240				-				3,600
Issuance of common stock ($0.10/share)			155,000				16				15,484.00				-				15,500
Net loss - 2012			-				-				-				(19,684	)			(19,684	)
Balance - February 29, 2012			39,755,000				3,976				18,724				(19,039	)			3,661
Net loss - 2013			-				-				-				(19,984	)			(19,984	)
Balance - February 28, 2013		$	39,755,000			$	3,976			$	18,724			$	(39,023	)		$	(16,323	)
Related-Party Debt Cancellation			-				-				46,880				-				46,880
Net loss - 2014			-								-				(41,157	)			(41,157	)
Balance - February 28, 2014		$	39,755,000			$	3,976			$	65,604			$	(80,180	)		$	(10,600	)

 

See accompanying notes to financial statements.

 

 

 

 

EAST SHORE DISTRIBUTORS, INC.

(a Development Stage Company)

 

NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED FEBRUARY 28, 2014 AND 2013

 

1.	NATURE OF OPERATIONS

 

East Shore Distributors, Inc. (the “Company”), was incorporated in the State of Nevada on June 11, 2010. The Company was in the business of distributing a variety of consumer products until the execution of “Security Purchase Agreement” took place on February 7, 2014. Since then, the new management and board of directors are in the business of financing, producing and acquiring theatrical quality feature films and television series.

 

2.	DEVELOPMENT STAGE

 

The Company’s financial statements are presented as those of a development stage enterprise. Activities during the development stage primarily include debt and equity based financing and implementation of the business plan. The Company has not generated significant revenues from operations since inception. 

 

3.	RISKS AND UNCERTAINTIES

 

The Company’s operations will be subject to normal entertainment industry risk and uncertainties including financial, operational, technological, regulatory and other risks, including the potential risk of business failure. 

 

4.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Use of Estimates

 

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. 

 

Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from estimates. 

 

Revenue Recognition

 

Revenue from sales of products to customers is recognized when (1) persuasive evidence of an arrangement exists, (2) delivery of the product has occurred or the services have been performed, (3) the selling price is fixed or determinable, and (4) collectability of the resulting receivable is reasonably assured, net of returns, trade discounts and allowances. Depending on the relationship with the customer, the Company recognizes revenue upon shipment or arrival at destination. There is no stated right to return and there have been no returns.

 

 

 

EAST SHORE DISTRIBUTORS, INC.

(a Development Stage Company)

 

NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED FEBRUARY 28, 2014 AND 2013

 

The Company reported revenues from the following countries:

 

 

 

		Year Ended February 28, 2014		%		Year Ended February 28, 2013		%		June 11, 2010 (inception) to February 28, 2013		%
United States		-		-		$151,380		100 %		$198,660		90 %
Brazil		-		-		-		-		21,000		10 %
Total		-		-		$151,380		100 %		$ 219,660		100%

 

The Company’s sales concentrations for the years ended February 28, 2014 and February 29, 2013, respectively, is as follows:

 

Customer		Year Ended February 28, 2014		Year Ended February 28, 2013
A		-		86%
B		-		14%
Total		-		100%

 

 

Cost of Sales

 

Represents costs directly related to the purchase of the Company’s products and freight.

 

Earnings per Share

 

Basic earnings (loss) per share (“EPS”) is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted EPS gives effect to all dilutive potential of shares of common stock outstanding during the period including stock warrants, using the treasury stock method (by using the average stock price for the period determine the number of shares assumed to be purchased from the exercise of warrants), and convertible debt, using the if-converted method. Diluted EPS excludes all dilutive potential of shares of common stock if their effect is anti-dilutive. The Company had no common stock equivalents since inception.

 

Cash

 

The Company considers all highly liquid instruments purchased with a maturity of three months or less and money market accounts to be cash equivalents. At February 28, 2014 and February 28, 2013, the Company had no cash equivalents.

 

Inventory

 

At February 28, 2014 and February 28, 2013, the Company had no inventory.

 

Fair Value of Financial Instruments

 

The Company measures assets and liabilities at fair value based on an expected exit price as defined by the authoritative guidance on fair value measurements, which represents the amount that would be received on the sale of an asset or paid to transfer a liability, as the case may be, in an orderly transaction between market participants. As such, fair value may be based on assumptions that market participants would use in pricing an asset or liability. The authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs, used in valuation techniques, are assigned a hierarchical level.

 

 

 

EAST SHORE DISTRIBUTORS, INC.

(a Development Stage Company)

 

NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED FEBRUARY 28, 2014 AND 2013

 

The following are the hierarchical levels of inputs to measure fair value:

 

●

Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets;

 

	●	Level 2: Inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means; and
	●	Level 3: Unobservable inputs reflecting the Company’s assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.

 

   The Company’s financial instruments consisted primarily of cash, accounts payable, and loans payable – related party. The carrying amounts of the Company’s financial instruments generally approximate their fair values as of February 28, 2014 and February 28, 2013, respectively, due to the short-term nature of these instruments.

 

Income Taxes

 

Income taxes are accounted for under the asset and liability method. Deferred income tax assets and liabilities are established for temporary differences between the financial reporting basis and the tax basis of the Company’s assets and liabilities at tax rates expected to be in effect when such assets or liabilities are realized or settled. Deferred income tax assets are reduced by valuation allowances when necessary.

 

Assessing whether deferred tax assets are realizable requires significant judgment. The Company considers all available positive and negative evidence, including historical operating performance and expectations of future operating performance. The ultimate realization of deferred tax assets is often dependent upon future taxable income and therefore can be uncertain. To the extent the Company believes it is more likely than not that all or some portion of the asset will not be realized, valuation allowances are established against the Company’s deferred tax assets, which increase income tax expense in the period when such a determination is made.

 

Income taxes include the largest amount of tax benefit for an uncertain tax position that is more likely than not to be sustained upon audit based on the technical merits of the tax position. Settlements with tax authorities, the expiration of statutes of limitations for particular tax positions, or obtaining new information on particular tax positions may cause a change to the effective tax rate. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes on the statements of operations. There were no unrecognized tax benefits for the years ended February 28, 2014 and 2013.

 

None of the Company’s federal or state income tax returns are currently under examination by the Internal Revenue Service (“IRS”) or state authorities. However, fiscal years 2014, 2013, 2012 and 2011, remain subject to examination by the IRS and respective states.

 

Recent Accounting Pronouncements

 

There are no recent accounting pronouncements expected to affect the Company.

 

 

 

EAST SHORE DISTRIBUTORS, INC.

(a Development Stage Company)

 

NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED FEBRUARY 28, 2014 AND 2013

 

5.	INCOME TAX

 

The Company recognizes deferred tax assets and liabilities for both the expected impact of differences between the financial statements and the tax basis of assets and liabilities, and for the expected future tax benefit to be derived from tax losses and tax credit carryforwards. The Company has established a valuation allowance to reflect the likelihood of the realization of deferred tax assets.

 

The Company has a net operating loss carryforward for tax purposes totaling approximately $80,180 at February 28, 2014, expiring through 2034. U.S. Internal Revenue Code Section 382 places a limitation on the amount of taxable income that can be offset by carryforwards after a change in control (generally greater than a 50% change in ownership).

 

Significant deferred tax assets at February 28, 2014 and 2013 are approximately as follows:

 

		2014				2013
Gross deferred tax assets:
Net operating loss carryforwards		$	27,000			$	13,000
Total deferred tax assets			27,000				13,000
Less: valuation allowance			(27,000	)			(13,000	)
Net deferred tax asset recorded		$	-			$	-

 

The valuation allowance at February 28, 2013, was $13,000. The net change in valuation allowance during the year ended February 28, 2014 was an increase of approximately $14,000.

 

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred income tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based on consideration of these items, management has determined that enough uncertainty exists relative to the realization of the deferred income tax asset balances to warrant the application of a full valuation allowance as of February 28, 2014.

 

 

 

EAST SHORE DISTRIBUTORS, INC.

(a Development Stage Company)

 

NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED FEBRUARY 28, 2014 AND 2013

 

The actual tax benefit differs from the expected tax benefit for the period ended February 28, 2014 (computed by applying the U.S. Federal Corporate tax rate of 34% to income before taxes) approximately as follows:

 

		2014				2013
Expected tax expense (benefit)		$	(14,000	)		$	(7,000	)
Change in valuation allowance			14,000				7,000
Actual tax expense (benefit)		$	-			$	-

 

 

6. LOAN PAYABLE-RELATED PARTIES

 

The related parties listed below loaned money to the Company for working capital. As of February 28, 2014 and 2013 due to related party consisted of the following as of:

 

		2014				2013
Jonathan Lim (CEO)		$	(20,000	)		$	-
Alex Fridman (Previous CEO and majority shareholder)			-				(24,000	)
Total		$	20,000			$	(24,000	)

 

The amounts are interest –free, unsecured and repayable on demand.

 

7.	STOCKHOLDER’S EQUITY (DEFICIT)

 

In June 2010, the Company issued 36,000,000 shares of common stock to its founder for $3,600.

 

In July 2011, the Company issued 3,600,000 shares of common stock for $3,600 ($0.0001/share).

 

In August and September 2011, the Company issued 155,000 shares of common stock for $15,500 ($0.10/share).

 

In February 2014, the Company entered into a “Securities Purchase Agreement” (“Agreement”) by and among itself, Alex Fridman (“Fridman”), previous CEO and majority shareholder, and Samcorp Capital Corporation (“Samcorp”). Pursuant to the Agreement, Fridman sold and transferred 36,000,000 shares (approximately 90.55% of the issued and outstanding) of the Company’s common stock to Samcorp in consideration for $329,600. The consideration would be partially applied to pay off loan from Fridman to the Company in amount of $31,000 and certain outstanding professional liabilities in amount of $15,800.

 

According to ASC470-50-40, Debt Modification and Extinguishments, it states that 'extinguishment transaction between related entities may be in essence capital transactions'. Hence, Samcorp, upon the execution of the Agreement, had agreed to cancel the debt in amount of $46,880. As a result of the debt cancellation, the Company had recognized increase in addition-paid-in-capital for the year ended February 28, 2014.

 

8.	SUBSEQUENT EVENTS

 

On March 3, 2014, the Company acquired 100% ownership of Crimson Forest Entertainment (USA) LLC from Namaskar Corporation for a cash price of $1,000.

 

 

EAST SHORE DISTRIBUTORS, INC.

(a Development Stage Company)

 

NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED FEBRUARY 28, 2014 AND 2013

 

On March 10, 2014, the Company approved an amendment to Articles of Incorporation to change the name of the Company to “Crimson Forest Entertainment Group Inc.”

 

On March 10, 2014, the Company approved an increase of the Company’s authorized common stock from 100,000,000 to 500,000,000 shares.

 

On March 23, 2014, the Company entered a Convertible Notes Purchase Agreement with Portnice Investment Limited. Subject to the terms and conditions of this agreement, the Company may issue up to an aggregate maximum of $2,000,000 in principal amount of Convertible Notes prior to March, 2019. The Convertible Notes pay interest at a rate of 3.8 % per annum, compounded annually, based on a 365 day year. Principal and any accrued but unpaid interest under Convertible Notes is due and payable on the earlier of (a) the fifth year anniversary of the issuance date of Convertible Notes (b) the consummation of a Qualified Financing, which involves the issuance of capital stock and results in gross proceeds equal to or in excess of $3,000,000. The Convertible Notes are convertible at the holders’ option into shares of Company common stock at $0.008 per share or at the purchase price of the Capital Stock issued in the Qualified Financing. On March 23, 2014, the Company issued a Convertible Promissory Note in principal amount of $250,000 to Portnice Investment Limited.

 

On March 31, 2014, the Company approved 2014 Stock Incentive Plan which provides for the grant of awards to purchase an aggregate of 20,000,000 shares of the Company common stock.

 

The Company has evaluated subsequent events through the date the financial statements were issued. Management does not believe there were any other subsequent events have occurred that would require further disclosure or adjustment to the financial statements. 

 

 

 

 

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