UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2006
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OF 15(d) OF THE
EXCHANGE ACT OF 1934
From the transition period from __________ to ___________
PAIVIS, CORP.
(Exact name of registrant as specified in its charter)
Nevada | 00030074 | 86-0871787 |
(State or other Jurisdiction | (Commission File | (IRS Employer |
of Incorporation) | Number) | Identification No.) |
#400-3475 Lenox Road, Atlanta Georgia 30326
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (404) 601-2885
Indicate by check mark whether the registrant (1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period of time 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 is a large accelerated filer, or an accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [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]
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. As of January 31, 2007, 30,558,352 shares of Common Stock of the issuer were issued and outstanding.
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ITEM 1. FINANCIAL STATEMENTS.
PAIVIS, CORP.
(Formerly APO Health, Inc.)
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
(unaudited)
(Stated in U.S. Dollars)
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PAIVIS, CORP.
(Formerly APO Health, Inc.)
INTERIM CONSOLIDATED BALANCE SHEETS
(Stated in U.S. Dollars)
December 31 2006 | September 30 2006 | |||
ASSETS | ||||
Current | ||||
Cash | $ | 77,719 | $ | 88,678 |
Goods and Services Tax recoverable | 5,680 | 7,453 | ||
Accounts Receivable | 317,887 | 407,034 | ||
Prepaid expense, advances and other | 34,477 | 28,009 | ||
435,763 | 531,174 | |||
Capital Assets (Note 3) | 73,410 | 100,961 | ||
Goodwill | 6,249,955 | 6,249,955 | ||
Minority Interest in Subsidiaries | (7,147) | (7,147) | ||
$ | 6,751,981 | 6,874,943 | ||
LIABILITIES | ||||
Current | ||||
Accounts payable and accrued liabilities | $ | 4,736,910 | 4,960,011 | |
Loans and advances payable (Note 5) | 2,820,912 | 2,655,121 | ||
7,557,822 | 7,615,132 | |||
STOCKHOLDERS’ DEFICIENCY | ||||
Capital Stock (Notes 6 and 7) | ||||
Authorized: | ||||
125,000,000 common shares par value $0.0002 per share | ||||
15,000,000 preferred shares, par value $0.0001 per share | ||||
Issued and outstanding: | ||||
30,797,076 common shares at December 31, 2006 and 30,558,352 at September 30, 2006 | 6,159 | 6,111 | ||
792,592 Series A preferred shares at December 31, 2006, and at September 30, 2006 | 79 | 79 | ||
3,000,750 Series B preferred shares at December 31, 2006, and at September 30, 2006 | 300 | 300 | ||
Additional paid-in capital | 16,689,895 | 16,448,832 | ||
Accumulated Deficit | (17,502,274) | (17,195,512) | ||
(805,841) | (740,190) | |||
$ | 6,751,981 | 6,874,942 |
The accompanying notes are an integral part of these consolidated financial statements.
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PAIVIS, CORP.
(Formerly APO Health, Inc.)
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFECIT
(Stated in U.S. Dollars)
THREE MONTHS ENDED December 31 | |||||
2006 | 2005 | ||||
Revenue | $ | 1,785,638 | $ | 1,266,337 | |
Cost of Sales | 1,373,048 | 1,185,142 | |||
412,590 | 81,195 | ||||
Expenses | |||||
Administrative services | 15,669 | 23,760 | |||
Amortization | 27,552 | 44,475 | |||
Business development | - | 20,389 | |||
Consulting | 138,000 | 771,712 | |||
Debt Retirement Expense | 24,111 | 501,469 | |||
Foreign Exchange | (13,393) | 27,452 | |||
Interest Expense | 23,005 | 3,129 | |||
Investor relations | 1,923 | 1,524 | |||
Marketing | 15,195 | 2,626 | |||
Media design | 500 | 2,000 | |||
Office, rent and sundry | 174,418 | 75,567 | |||
Professional fees | 85,347 | 46,413 | |||
Travel | 30,472 | 28,864 | |||
Wages and benefits | 196,553 | 234,141 | |||
719,352 | 1,783,521 | ||||
Loss Before The Following | 306,762 | 1,702,326 | |||
Minority Interest In Loss Of Subsidiary | - | 54,379 | |||
Net Loss For The Period | $ | 306,762 | $ | 1,647,947 | |
Net Loss Per Share, Basic and diluted | $ | 0.01 | $ | 0.01 | |
Weighted Average Number Of Common Shares Outstanding | 30,768,219 | 9,536,233 |
The accompanying notes are an integral part of these consolidated financial statements.
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PAIVIS, CORP.
(Formerly APO Health, Inc.)
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(Stated in U.S. Dollars)
THREE MONTHS ENDED December 31 | ||||
2006 | 2005 | |||
Cash Flows From Operating Activities | ||||
Loss for the period from continuing operations | $ | (306,762) | $ | (1,647,947) |
Adjustments To Reconcile Net Loss To Net Cash Used By Operating Activities | ||||
Amortization | 27,552 | 44,474 | ||
Issue of common stock for services | 217,000 | 668,149 | ||
Debt Retirement Inducement Expense | 24,111 | - | ||
Change in working capital items: | ||||
Goods and Services Tax recoverable | 1,773 | (5,385) | ||
Accounts Receivable | 89,147 | (44,825) | ||
Prepaid expense | (6,468) | 22,755 | ||
Accounts payable and accrued liabilities | (223,102) | 648,017 | ||
Other Adjustments, net | (54,098) | |||
(176,749) | (368,860) | |||
Cash Flows From Investing Activities | ||||
- | - | |||
- | ||||
- | - | |||
Cash Flows From Financing Activities | ||||
Shares issued for cash | - | 419,980 | ||
Loans and advances payable | 165,791 | 31,289 | ||
165,791 | 451,269 | |||
(Decrease) Increase In Cash | (10,959) | 82,409 | ||
Cash, Beginning Of Period | 88,678 | 5,660 | ||
Cash, (Bank Indebtedness) End Of Period | $ | 77,719 | $ | 88,069 |
Supplemental Disclosure of Non Cash Financing and Investing Activities | ||||
Debt issued for acquisition of investments | - | - | ||
Shares issued for services | 217,000 | 668,149 | ||
Shares issued for debt | 241,111 | 481,469 | ||
Shares issued for acquisition of investments | - | - | ||
Shares issued for deposit towards acquisition of investment | - | - | ||
Supplemental Disclosure Of Cash Flow Financing and Investing Activities (Note 11) | ||||
Interest paid | $ | 231 | $ | - |
Income taxes paid | - | - |
The accompanying notes are an integral part of these consolidated financial statements.
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PAIVIS, CORP.
(Formerly APO Health, Inc.)
NOTES TO INERIM CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
(Unaudited)
(Stated in U.S. Dollars)
1. NATURE OF OPERATIONS
Organization
The Company was incorporated in the State of Nevada, U.S.A., on April 28, 1997.
On April 21, 2006, PAIVIS, Corp. (f/k/a APO Health, Inc)., a Nevada corporation (“APO”), entered into a definitive Agreement and Plan of Merger (the “Merger Agreement”) with APO Health Acquisition Corp, Inc., a Nevada corporation and wholly-owned subsidiary of APO (“APO Acquisition”), and Jupiter Global Holdings, Corp., a Nevada corporation (“Jupiter”). As per the Merger Agreement provided that upon the terms and subject to the conditions set forth in the Merger Agreement, APO Acquisition merged with and into Jupiter, with Jupiter being the surviving corporation and a wholly-owned subsidiary of APO. Historical Financial Statements presented are those of Jupiter Global Holdings Corp.
Business Activities
The Company’s business operations consist of telecommunications switching services. The Company is a facility-based wholesale telecommunications carrier that delivers many application/value-added services within the prepaid services space. The Company operates and maintains a robust switching facility, offering over 16,000 ports with connectivity to most of the tier 1 carriers in the US and manages an extensive international (A-Z) network. In addition to the wholesale business, The Company maintains a large retail distribution network for direct to consumer services. The Company’s products are sold through approximately 3,000 retail outlets in the United States and our distribution is rapidly expanding.
Going Concern
Since inception, the Company has suffered recurring losses, net cash outflows from operations and, at December 31, 2006, has accumulated a deficit of $17,502,274 and a working capital deficiency of $7,122,059. The Company expects to continue to incur substantial losses to continue the growth of its business. Since its inception, the Company has funded operations through common stock issuances and related party loans in order to meet its strategic objectives. Management believes that sufficient funding will be available to meet its business objectives, including anticipated cash needs for working capital, and is currently evaluating several financing options. However, there can be no assurance that the Company will be able to obtain sufficient funds to continue the business growth of and, if successful, to grow the sale of its products and services under development. As a result of the foregoing, there exists substantial doubt about the Company’s ability to continue as a going concern. These consolidated financial statements do not include any adjustments that might result if the Company is unable to realize its assets and settle its obligations in the normal course of business.
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PAIVIS, CORP.
(Formerly APO Health, Inc.)
NOTES TO INERIM CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
(Unaudited)
(Stated in U.S. Dollars)
1. NATURE OF OPERATIONS (continued)
The consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America. Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of consolidated financial statements for a period necessarily involves the use of estimates which have been made using careful judgment.
The consolidated financial statements have, in management’s opinion, been properly prepared within reasonable limits of materiality and within the framework of the significant accounting policies summarized below:
Consolidation
These consolidated financial statements include the accounts of the Company, its 100% owned subsidiaries, Jupiter Global Holdings, Corp., MACRO Communications, Inc., Trucall Solutions Inc., RRUN Labs Incorporated, LIVESTAR Entertainment Canada Inc., 1615496 Ontario Ltd., 1614718 Ontario Inc., LIVESTAR Entertainment Establishment Ltd., LIVESTAR Entertainment Events International Inc., its 67% owned subsidiary, RAHX, Inc., and its 51% owned subsidiary LIVE & Cool One, Inc..
2. SIGNIFICANT ACCOUNTING POLICIES
a) Income Taxes
The Company has adopted Statement of Financial Accounting Standards No. 109 - “Accounting for Income Taxes” (SFAS 109). This standard requires the use of an asset and liability approach for financial accounting and reporting on income taxes. If it is more likely than not that some portion or all of a deferred tax asset will not be realized, a valuation allowance is recognized.
b) | Amortization |
Capital assets are being amortized over their estimated useful lives on the straight-line basis at the following rates:
Computer equipment | 3 years |
Telecom Equipment | 5 years |
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PAIVIS, CORP.
(Formerly APO Health, Inc.)
NOTES TO INERIM CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
(Unaudited)
(Stated in U.S. Dollars)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
c) | Stock Based Compensation |
The Company accounts for stock based employee compensation arrangements in accordance with the provisions of the Statement of Financial Accounting Standards No. 123 - “Accounting for Stock Based Compensation” (SFAS No. 123). Under SFAS No.123, compensation expense is recognized based on the Fair Market Value of the options granted.
d) | Financial Instruments |
The Company’s financial instruments consist of cash, accounts receivable, Goods and Services Tax recoverable, accounts payable and accrued liabilities, and loans and advances payable.
Unless otherwise noted, it is management’s opinion that this Company is not exposed to significant interest or credit risks arising from these financial instruments. The fair value of these financial instruments approximate their carrying values, unless otherwise noted.
e) | Net Loss Per Share |
Basic earnings per share is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding in the period. Diluted earnings per share takes into consideration common shares outstanding (computed under basic earnings per share) and potentially dilutive common stock equivalents including warrants, options and convertible instruments. Diluted loss per share equals loss per share as the exercise of any common stock equivalents would be anti-dilutive.
f) | Foreign Currency Translation |
Transaction amounts denominated in foreign currencies are translated at exchange rates prevailing at transaction dates. Carrying values of monetary assets and liabilities are adjusted at each balance sheet date to reflect the exchange rate at that date. Non-monetary assets and liabilities are translated at the exchange rate on the original transaction date. Gains and losses from restatement of foreign currency monetary and non-monetary assets and liabilities are included in the statements of operations. Revenues and expenses are translated at the rates of exchange prevailing on the dates such items are recognized in the statements of operations.
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PAIVIS, CORP.
(Formerly APO Health, Inc.)
NOTES TO INERIM CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
(Unaudited)
(Stated in U.S. Dollars)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
g) | Revenue Recognition |
The Company recognizes revenue upon the sale and activation of a telephone calling card.
3. | CAPITAL ASSETS |
December 31, 2006 | ||||||
ACCUMULATED | NET BOOK | |||||
COST | AMORTIZATION | VALUE | ||||
Computer equipment | $ | 18,016 | $ | 17,508 | $ | 508 |
Telecom equipment | 1,063,065 | 990,163 | 72,902 | |||
$ | 1,081,081 | $ | 1,007,671 | $ | 73,410 | |
December 31, 2005 | ||||||
ACCUMULATED | NET BOOK | |||||
COST | AMORTIZATION | VALUE | ||||
Computer equipment | $ | 18,016 | $ | 16,161 | $ | 1,855 |
Telecom equipment | 1,063,065 | 806,456 | 256,609 | |||
$ | 1,081081 | 822,617 | 258,464 |
At December 31, 2006 (December 31, 2005) the net book value of equipment serving as collateral for equipment and bank borrowings is $72,902 ($256,609).
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PAIVIS, CORP.
(Formerly APO Health, Inc.)
NOTES TO INERIM CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
(Unaudited)
(Stated in U.S. Dollars)
4. OBLIGATIONS UNDER CAPITAL LEASES
Included within Loans & Advances Payables is equipment under capital leases at December 31, 2006 and 2005 as follows:
December 31 2006 | December 31 2005 | |||
Cost | $ | - | $ | 923,572 |
Less Accumulated Depreciation | - | (698,920) | ||
Net Book Value | - | 224,652 |
As at December 31, 2006, there are no more capital leases outstanding with the Company.
5. CONTINGENCIES
Litigation
The Company is in settlement negotiations with a telecom carrier who has filed proceedings for delinquent payments. Amounts payable to this vendor have been recorded in accounts payable as at December 31, 2006. Management believes the ultimate disposition of these matters will not have a material adverse impact on the operations or financial condition of the Company.
The Company is a defendant in a lawsuit filed by a former service provider. Management believes the claim is without merit and that any potential judgement against the Company would not have a material adverse impact on the operations or financial condition of the Company. Accordingly no contingent liability has been accrued.
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PAIVIS, CORP.
(Formerly APO Health, Inc.)
NOTES TO INERIM CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
(Unaudited)
(Stated in U.S. Dollars)
6. LOANS AND ADVANCES
All loans and advances payable are past due or are repayable within one year, unsecured, not convertible into the Company stock. At the period ending December 31, 2006, loans and advances consisted of:
December 31 2006 | September 30 2006 | |||
Loans & Advances | ||||
- past due | $ | 1,208,192 | $ | 1,208,192 |
- due within one year | 1,612,720 | 1,446,929 | ||
Total Loans & Advances Payable | $ | 2,820,912 | $ | 2,655,121 |
The past due loans and advances were issued in the period ended December 31, 2006, and the holders have not demanded payment.
Of the Loans and Advances, additional details have been listed below:
December 31 2006 | September 30 2006 | |||
Bears no interest | $ | 418,565 | $ | 418,565 |
Bears no interest, paid Loan fee of $153,857and $ 134,832 | 1,699,365 | 1,536,862 | ||
Bears an interest rate of 8 % | 114,970 | 112,953 | ||
Bears an interest rate of 5% | 116,320 | 115,049 | ||
Bears an interest rate 8.8% | 471,692 | 471,692 | ||
Total Loan & Advances Payable | $ | 2,820,912 | $ | 2,655,121 |
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PAIVIS, CORP.
(Formerly APO Health, Inc.)
NOTES TO INERIM CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
(Unaudited)
(Stated in U.S. Dollars)
7. WARRANTS OUTSTANDING
As at December 31, 2006, share purchase warrants were outstanding for the purchase of common shares as follows:
NUMBER OF SHARES | PRICE PER SHARE | EXPIRY DATE | ||
2,250,000 | $ | 1.50 | June 1, 2009 | |
200,000 | $ | 1.50 | June 1, 2009 | |
2,450,000 |
A summary of the changes in shares which may be purchased on exercise of warrants for the year ended December 31, 2006 is presented below:
NUMBER OF SHARES | WEIGHTED AVERAGE EXERCISE PRICE | ||
Balance, September 30, 2005 | 0 | ||
Granted | 2,450,000 | 1.50 | |
Balance, September 30, 2006 | 2,450,000 | $ | 1.50 |
No Warrant Activity | 0 | ||
Balance, December 31, 2006 | 2,450,000 | $ | 1.50 |
At December 31, 2006 a total of 2 warrants remain issued and outstanding, and underlie the shares listed in the table above.
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PAIVIS, CORP.
(Formerly APO Health, Inc.)
NOTES TO INERIM CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
(Unaudited)
(Stated in U.S. Dollars)
8. BUSINESS SEGMENTS
The Company currently operates in a single business segment, “Telephone Communications”, in a single geographic area, North America.
9. RELATED PARTY TRANSACTIONS
a) | Included in accounts payable at December 31, 2006 is $777,042.90 (2005 - $178,645.46) owing to directors or companies controlled by directors. |
b) | Included in loans and advances payable at December 31, 2006 is $104,013.82 (2005 - $142,830.83) owing to directors or a companies controlled by directors. |
c) | During the year ended December 31, 2006, the Company incurred $90,000.00 (2005- $76,700.00) in consulting |
d) | During the year ended December 31, 2006, the Company incurred $10,624.67 (2005 - $13,671.54) in administration, office, and equipment rental expenses with companies controlled by directors. |
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
FORWARD-LOOKING STATEMENTS
Except for the historical information and discussions contained herein, statements contained in this Form 10-QSB may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially, including any projections of earnings, revenues, or other financial items; any statements of the plans, strategies, and objectives of management for future operation; any statements concerning proposed new products, services, or developments, any statements regarding future economic conditions or performance, statements of belief, statements of assumptions underlying any of the foregoing and other risks, uncertainties and factors discussed elsewhere in this Form 10-QSB or in the Company’s other filings with the Securities and Exchange Commission
OVERVIEW
Paivis Corp.’s (“Paivis”, the “Company” or the “Registrant”) business operations commenced June 2000 and consist of telecommunications switching services. Paivis is facility-based wholesale telecommunications carrier that delivers many application/value-added services within the prepaid services space. The Company operates and maintains a robust switching facility, offering over 16,000 ports with connectivity to most of the tier 1 carriers in the US and manages an extensive international (A-Z) network. In addition to the wholesale business, Paivis maintains a large retail distribution network for direct to consumer services. Our products are sold through approximately 3,000 retail outlets in the United States and our distribution is rapidly expanding.
The future growth of the Company is focused on implementing a plan of growth of our current business operations, and also growth through acquisitions. The Company is currently in discussions with several acquisition candidates.
The following analysis discusses changes in the financial condition and results of operations at and for the three months periods ended on December 30, 2006 and 2005, and should be read in conjunction with our unaudited consolidated financial statements and the notes thereto. This subsection of MD&A is an overview of the important factors that management focuses on in evaluating our businesses, financial condition and operating performance, our overall business strategy and our earnings, if any, for the periods covered.
OUR COMPANY HISTORY
Paivis,Corp, (formerly known as APO Health, Inc., Internetfinancialcorp.com, Caribbean Ventures Inc., and Dom Caribe Ltd. was originally incorporated in the State of Nevada in April 1997. From mid 2001 until mid 2006, our predecessor, APO Health, Inc. was primarily engaged in the business of wholesale medical products. In May of 2006 the Registrant completed a Merger transaction (details below) where effectively Jupiter Global Holdings, Corp. became a wholly owned subsidiary of the Registrant. With completion of the Merger transaction the Registrant effected a sale of the APO Health subsidiary (“APO Health NY”) responsible for the business of wholesale medical products (details below). Furthermore, due to the Merger transaction and subsequent sale of APO Health NY the Registrants business will be primarily engaged in the core operating business of Jupiter, prepaid technologies and telecom-based services.
Headquartered in Atlanta, Georgia, the Company is publicly traded and Paivis, Corp. presently conducts its business operations through its operating subsidiaries located in the United States.
OUR BUSINESS OPERATIONS
Paivis’ present business operations commenced June 2000 and involve providing prepaid long distance services. We generate revenues through the domestic and foreign sale of a variety of telecommunications products and services, such as prepaid calling cards, prepaid wireless service and international wholesale termination. Our products are sold through approximately 3,000 retail outlets in the United States and our distribution is rapidly expanding.
The discussion below of our performance is based upon our consolidated financial statements as of and for the three months periods ended December30, 2006 and 2005.
.
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RESULTS OF OPERATIONS
FOR THE THREE MONTH PERIOD ENDED DECEMBER 31, 2006
For the three-month period ended December 31, 2006, the Company earned revenues of $1,785,638. The revenues were from sales of airtime related to telephone calling cards.
During the three month period ended December 31, 2006, the Company incurred operational expenses of $719,352. These operating expenses included: consulting fees of $138,000, wages and benefits of $196,553, and professional fees of $85.347 for the three month period ending December 31, 2006.
During the three month period ended December 31, 2006, the Company incurred a net loss from operations of $306,762.
FOR THE THREE MONTH PERIOD ENDED DECEMBER 31, 2006, COMPARED TO THE THREE MONTH PERIOD ENDED DECEMBER 31, 2005.
For the three month period ended December 31, 2006, the Company earned revenues of $1,785,638, as compared to revenues of $1,266,337 for the same period ended December 31, 2005. The revenues in 2006 are a result of the Company’s continued efforts to grow its customer base.
For the three month period ended December 31, 2006, the Company incurred operational expenses of $719,352 as compared to $1,783,521 during the same period in the previous year. These operating expenses included: consulting fees of $138,000 and $664,913; wages & benefits of $196,553 and $234,141, and professional fees of $85,347 and $46,413 for the three month period ended December 31, 2006 and 2005, respectively. The variation in expenses from December 31, 2006 as compared to the same period in the previous year is due to the efforts to re-organize its operations, and cut costs.
The Company incurred a net loss from operations of $306,762 for the fiscal quarter ended December 31, 2006, as compared to $1,647,947 for the same period in the previous year.
SIGNIFICANT ACCOUNTING POLICIES
Our significant accounting policies have been outlined in our 10KSB filing for the year ending September 30, 2006, and are thus incorporated by reference. We have had no significant changes to our accounting policies or assumptions in the 3 month period ending December 31, 2006.
Liquidity and Financial Condition As Of December 31, 2006
We had cash-on hand totaling $77,719 as of December 31, 2006.
We believe that our currently available working capital provided by operating activities may be insufficient to meet our operations at our current level and working capital and capital expenditure needs over the next 12 months. Our future capital requirements will depend on many factors, including our rate of revenue growth, the expansion of our marketing and sales activities, the timing and extent of spending to support product development efforts and expansion into new territories, the timing of introductions of new products or services, the timing of enhancements to existing products and services and the timing of capital expenditures. Also, we may make investments in, or acquisitions of, complementary businesses, services or technologies which could also require us to seek additional equity or debt financing. To the extent that available funds are insufficient to fund our future activities, we may need to raise additional funds through public or private equity or debt financing. Additional funds may not be available on terms favorable to us or at all.
Management plans on initiating a series of securities offerings to raise the investment capital needed to meet our acquisition and development plans. Paivis hopes to secure the financing to satisfy the capital needs through the execution of various funding methods, primarily financing through, private placement investments or debt financing. Paivis hopes to achieve this by securing relationships with accredited individual investors, investment bankers, venture capitalists, hedge funds and/or finance investment advisors that have the experience and relationships to aid Paivis with its capital raising efforts. The source of the capital may be comprised of a mix of principal shareholders, private investors and venture capital companies.
If needed capital investment for our acquisitions or developments is not available, in whole or in part, we intend to delay the implementation plan regarding our acquisitions or development plans until sufficient investment capital becomes available. We cannot give any assurances that we will raise sufficient investment capital to meet the business plan. In addition to delays to the implementation plan regarding our acquisition or development plans due to insufficiency of investment capital, we may suffer other consequences, including but not limited to the following: We may have to significantly alter the scope of our business plan and subsequent capital requirements; We may have to suspend or discontinue operations of one or more of our business units or; we may have to suspend or discontinue operations of the Company if we become insolvent as a result.
Until planned acquisitions and operating activities begin to produce significant revenues and subsequent positive cash flow, we will be reliant on capital received from private placements, loans, and the exercise of options and warrants.
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OFF-BALANCE SHEET ARRANGEMENTS
The Company does not have any off-balance sheet arrangements that are likely to have a current or future effect on the Company's financial condition, revenues or expenses, results of operations or capital resources.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
As of the end of the period covered by this report the Company conducted an evaluation, under the supervision and with the participation of its principal executive officer and principal financial officer, of the Company's disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act). Based upon this evaluation, the Company's principal executive officer and principal financial officer concluded that the Company's disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is: (1) accumulated and communicated to the Company's management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure; and (2) recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms. There was no change in the Company's internal controls or in other factors that could affect these controls during the Company's last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's s internal control over financial reporting.
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ITEM 1. LEGAL PROCEEDINGS.
During the period covered by this report, the Company was a party to the following legal proceedings, one of which has been fully resolved as of the date of this report.
Jenkins v. Macro Communications, Inc. Superior Court of Gwinnett County, Georgia, File No.: 06-C-03746-S5 was commenced March 14, 2006 and a full and final settlement agreement was entered shortly after the suit was filed. Of the total amount of the settlement amount of $23,788.70, we paid $5,000 on June 6, 2006 and the balance of the amount we agreed to pay to resolve this case was fully paid on March 2, 2007. This legal proceeding has been terminated.
iBasis, Inc. v. Macro Communications, Inc., Superior Court of Gwinnett County, Georgia, File No.: 06A-09136-8. iBasis, Inc. was a claim filed in Suffolk Superior Trial Court of the Commonwealth of Massachusetts, File No.: SUCV2004-04047-C, wherein a default judgment was entered against our subsidiary, Macro Communications, Inc. on September, 20, 2006 for the sum of $192,022.47 principal and 1.5% per month interest accruing as of September 30,2003, the sum of $5,351.99 principal and 1.5% per month interest accruing as of August 31, 2003, and costs of $514.05. This Massachusetts judgment remains unpaid. On October 4, 2006, iBasis filed suit in Georgia to domesticate the Massachusetts judgment. After a hearing to determine whether or note the Massachusetts judgment should be enforceable in Georgia as a domesticated judgment, the Superior Court of Gwinnett County, Georgia entered an order on March 5, 2007 granting enforcement to the judgment.
Lastly, On February, 15, 2007 the Company filed a lawsuit against John J. Donnelly and Executive Transfer & Registrar Inc. (“Executive Registrar”) in Colorado state court. The Company filed the lawsuit to obtain an emergency restraining order to compel Executive Registrar, the Company’s former stock transfer agent, as required by rules and procedures mandated by the U.S. Securities and Exchange Commission, to transfer the Company’s stock books and records to the Company’s newly appointed stock transfer agent and to compel Executive Registrar to file it’s notice of termination with the Depository Trust Company as required by rules of the U.S. Securities and Exchange Commission. On March 2, 2007, a consent order was entered into by the Company and Executive Registrar providing for the delivery of all of our stock transfer records to our newly appointed stock transfer agent. The finalization of the terms of this consent order is under way at the time of this report, but the Company is confident that legal proceedings we instituted to compel our former stock transfer agent to relinquish our stock transfer records, will be completed shortly. However, it is also our intention to seek monetary damages, including attorneys’ fees, costs of suit and punitive damages against both Mr. Donnelly and Executive Transfer for their unwarranted and tortious interference with the Company’s stock transfer and shareholder records, which aspect of this legal proceeding has not yet been commenced.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS.
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SIGNATURES
Pursuant to the requirements 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.
PAIVIS, CORP. | ||
| | |
Date: March 12, 2007 | By: | /s/ Gregory Bauer |
Gregory Bauer, Chief Executive Officer, Acting Principal Accounting Officer |
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