UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: September 30, 2010
or
[ ] TRANSITION REPORT PURSUANT TO SEC TION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 000-49652
ZALDIVA, INC.
(Exact Name of registrant as specified in its charter)
Florida | 65-0773383 |
(State or other Jurisdiction of Incorporation or organization) | (I.R.S. Employer Identification No.) |
331 East Commercial Blvd.
Ft. Lauderdale, Florida 33334
(Address of Principal Executive Offices)
(954) 938-4133
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $0.001
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [X]
Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes [ ] No [X]
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the Registrant was required to file such repor ts), and (2) has been subject to such filing requirements for the past 90 days.
(1) Yes [X] No [ ] (2) Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company:
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Large accelerated filer [ ] | Accelerated filer [ ] |
Non-accelerated filer [ ] | Smaller reporting company [X] |
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes [ ] No [X]
State the aggregate market value of the voting and non-voting common stock held by non-affiliates computed by reference to the price at which the common stock was last sold, or the average bid and asked price of such common stock, as of the last business day of the Registrant's most recently completed second fiscal quarter.
December 16, 2010 - $990,593.84. There are approximately 12,382,423 shares of common voting stock of the Registrant beneficially owned by non-affiliates. There is a limited public market for the common stock of the Registrant, so this computation is based upon the closing sale price of $0.08 per share of the Registrant's common stock on the OTC Bulletin Board on December 16, 2010.
APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Not applicable.
Indicate the number of shares outstanding of each of the registrant’s classes of common equity, as of the latest practicable date:
December 16, 201 0: Common – 16,590,852
December 16, 2010: Preferred – 500,000
Documents incorporated by reference: See Item 15.
PART I
ITEM 1. BUSINESS
Description of Business
Zaldiva, Inc., a Florida corporation (the "Company," "we" or "us"), is in the business of selling comic books, toys and collectible items at our retail location at 331 East Commercial Blvd., Ft. Lauderdale, Florida, and through our web site, Zaldiva.com. We held the grand opening of our "brick-and-mortar" retail location in December, 2006. In the future, we may also acquire other small companies offering similar products and services to those that we currently offer. At such time as we enter into a definitive transaction, we will file a Current Report on Form 8-K disclosing its terms.
Our retail location at 331 E Commercial Blvd, Ft. Lauderdale, FL 33334 officially opened for business on November 24, 2006.
Comic Books and Related Collectibles.
Comic books have been around at least as long as movies have. According to The Overstreet Comic Book Price Guide’s regular publication The Golden Age Quarterly, 1933 saw the publication of the first comic book in the size that would subsequently define the format. Credit for the first comic book ever created typically goes to Richard Fenton Outcalt's creation, "The Yellow Kid," in 1896. Outcalt essentially synthesized what had been made befor e him and introduced a new element, the balloon, a space where he wrote what the characters said, and that pointed to their mouth with a kind of tail.
From that point, the basis for a brand-new kind of art was set, and the adventure began. In the first decades of their life, comic books were primarily for children’s amusement, and this explains the name they carry today in the English language.
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Presently, the comic book industry is still going strong more than 100 years after its birth. With advances like computer generated images (CGI), today's movie screens are filled with stories from comic books. In recent t imes, we have experienced such blockbuster movie hits as the "Batman" saga; "Spawn," which had its own animated series on HBO; "Spider-Man"; "X-Men" and "X-Men 2"; "The Hulk"; "The League of Extraordinary Gentlemen"; "DareDevil"; "Hellboy," "The Punisher" and "Electra". Many television shows have also sprung from the pages of comic books, most notably, "Smallville."
This unlimited market transcends all barriers, including age, race and gender, and also language, since most shows and movies are released in dubbed versions world-wide. Movies are released twice, first at the theater and then again in DVD and/or VHS format. The comic books themselves create a demand for collectible items; and the movies and televisions shows create even more of a demand. A popular comic book can, and often does, spawn hundreds of items to be collected and adored by its fans. We are engaged in the business of selling those items – ever ything from the comic book to the movie adaptation softcover book, and from the t-shirt to the prop replicas for the die-hard fans.
Traditional Marketing.
Since the grand opening of our brick-and-mortar retail location in December, 2006, our operations have taken a more traditional marketing approach. The Company has taken out advertisements in local papers read by our target audience and we have also purchased radio spots on high-school and college radio stations. Flyers have been passed out as well as cooperatively placed in local businesses and restaurants. A costumed character has also been hired to wave to the traffic passing by in front of the store. More than 65,000 cars pass the location each day on their way to the highway entrance, so the sign on the building itself is a huge and effective form of advertisement.
Zaldiva.com
Advertisement for our web site is done through search engines, banner exchange programs and opt-in e-mail activities – all designed to drive traffic to our site. Weekly specials and featured items are regularly created to increase return traffic.
Principal Products or Services and Their Markets
Our principal products are the comic books, toys and collectibles that we sell from our store in Ft. Lauderdale, Florida and through our web site (www.zaldiva.com). Zaldiva has maintained an e-commerce web presence through Zaldiva.com since July of 1997. Experience and a very low overhead are Zaldiva's principal advantages in this area.
In our comic books business, we sell pop-culture comic book related collectibles, that primarily include action figures, dolls, statues, die-cast vehicles, T-shirts, books, magazines, posters and lithographs, household decor and decorative items, board and card games, caps and hats, licensed advertisements, plush toys, and some sports memorabilia.
The only services related to our comic book and related collectibles business provided by us are those services regarding newsletter subscriptions and/or free email accounts.
Distribution Methods of the Products or Services
All items sold in our comic book and related collectibles business are sold on our online stores at Zaldiva.com and ZaldivaComics.com and, since December, 2006, in our retail store in Ft. Lauderdale, Florida.
In November, 2003, we began accepting PayPal as payment for our products (in addition to traditional credit card payments). This has allowed us to make non-U.S. sales with ease, and these payment methods have proven beneficial to us.
Status of any Publicly Announced New Product or Service
Zaldiva does not currently have any new product/service that has been publicly announced.
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Competitive Business Conditions and Smaller Reporting Company's Competitive Position in the Industry and Methods of Competi tion
The comic book and collectible retailing industry is no more or less competitive than any other mainstream retail business. Our competitors include other brick-and-mortar and online retailers of comics, toys and collectibles. Zaldiva.com Comics & Collectibles does however have several advantages in the current market.
No. 1: Location
Zaldiva.com Comics & Collectibles is located on the east side of the Greater Ft. Lauderdale area where there are few current competitors.
No. 2: Location/Heavy Traffic
Commercial Blvd. is a heavily traveled road which runs east and west through Ft. Lauderdale and the surrounding cities. There is no highway to take travelers eas t and west in this section of the city, so Commercial Blvd. is most often used. The store is located about one-half mile east of the extremely busy Commercial Blvd. entrances and exits to I95. This location puts at least 65,000 cars in front of the store each day. Zaldiva’s largest competitor is about eight miles west of our store. Many people who live on the east side of Ft. Lauderdale and surrounding cities have had to travel through heavy traffic to this competitor for the past decade – simply because there was no choice. Our store makes it easy not only for those living on the East side to get their collectibles, but for people to the south (the Hollywood/Miami areas) and to the north (the Boca Raton/Palm Beach areas) because of our proximity to the highway (I95).
No. 3: Knowledge and Attitude
We KNOW and love comics and collecti bles. Other stores hire cheap labor to put behind the counter – and it shows. Zaldiva’s customers receive a warm and genuinely friendly greeting when they arrive. All of their questions are answered. We can find a common interest with anyone that walks in and run with it. We can recommend comics books based upon their interests. If they haven’t read a comic in years, we can get them up to speed. All of these things result in return customers. Many customers fly through our recommended books and return within days to get the next issue/volume or to get yet another recommendation.
No. 4: Our Online Store
No other local shops currently provide an online purchase/in-store pick up option. No other local shops even offer their full line of products both online and in-store – so we are unique in that area. The web-site is maintained by Zaldiva, so the overhead is next to nothing.
Sources and Availability of Raw Materials and Names of Principal Suppliers
Zaldiva does not use any raw materials in its operations.
Dependence on One or a Few Major Customers
None; not applicable.
Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements or Labor Contracts, including Duration
We have obtained a trademark with the Florida Department of State for our logo, the word "Zaldiva" and a design of a crest in an oval shape with two birds, a star, leaves and a sunburst. Under Florida law, the knowing or willful forgery or counterfeiting of a Florida trademark constitutes the crime of counterfeiting, which may be a felony or a misdemeanor, depending on the circumstances. Our trademark will expire on November 27, 2011, but it may be renewed for a fee of $87.50. (This trademarked logo is used expressly for Zaldiva Cigars). We have not applied for a registered trademark with the U.S. Patent and Trademark Office. We have also copyrighted our Z-Man and Diva characters with the U. S. Copyright Office.
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Need for any Governmental Approval of Principal Products or Services
None; no t applicable. However, see the caption "Effect of Existing or Probable Governmental Regulations on Business," below.
Effect of Existing or Probable Governmental Regulations on the Business
Zaldiva is subject to general business laws, rules and regulations, as well as laws, rules and regulations relating to the Internet and e-commerce. These regulations may cover issues such as privacy, taxation, intellectual property, content, consumer protection and products liability. Compliance with these regulations may be expensive and time consuming and may impact our profitability in the future.
Smaller Reporting Company
We are subject to the reporting requirements of Section 13 of the Exchange Act, and we are subject to the disclosure requirements of Regulation S-K of the SEC, as a “smaller reporting company.” That designation relieves us of some of the informational requirements of Regulation S-K.
Sarbanes/Oxley Act
We are also subject to the Sarbanes-Oxley Act of 2002. The Sarbanes/Oxley Act created a strong and independent accounting oversight board to oversee the conduct of auditors of public companies and strengthens auditor independence. It also requires steps to enhance the direct responsibility of senior members of management for financial reporting and for the quality of financial disclosures made by public companies; establishes clear statutory rules to limit, and to expose to public view, possible conflicts of interest affecting securities analysts; creates guidelines for audit committee members ’ appointment, compensation and oversight of the work of public companies’ auditors; management assessment of our internal controls; prohibits certain insider trading during pension fund blackout periods; requires companies and auditors to evaluate internal controls and procedures; and establishes a federal crime of securities fraud, among other provisions. Compliance with the requirements of the Sarbanes/Oxley Act will substantially increase our legal and accounting costs.
Securities Exchange Act of 1934, as amended (the “Exchange Act”) Reporting Requirements
Section 14(a) of the Exchange Act requires all companies with securities registered pursuant to Section 12(g) of the Exchange Act to comply with the rules and regulations of the SEC regarding proxy solicitations, as outlined in Regulation 14A. Matters submitted to shareholders of the Company at a special or annual meeting thereof or pursuant to a written consent will require the Company to provide the Company’s shareholders with the information outlined in Schedules 14A or 14C of Regulation 14; preliminary copies of this information must be submitted to the SEC at least 10 days prior to the date that definitive copies of this information are forwarded to the Company’s shareholders.
We are required to file annual reports on Form 10-K and quarterly reports on Form 10-Q with the Securities Exchange Commission on a regular basis, and are required to timely disclose certain material events (e.g., changes in corporate control; acquisitions or dispositions of a significant amount of assets other than in the ordinary course of business; and bankruptcy) in a Current Report on Form 8-K.
Research and Development Costs During the Last T wo Fiscal Years
Zaldiva has not spent any money on research and development and we do not anticipate any need in the foreseeable future to spend resources on research and development.
Cost and Effects of Compliance with Environmental Laws
Since the nature of its business is retail sales and marketing, Zaldiva does not believe that it will have any environmental compliance concerns.
Number of Total Employees and Number of Full Time Employees
As of December 17, 2010, Zaldiva had six full-time and two part-time employees. They are not part of any union,
and we believe that our relationships with them are good.
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Additional Information
You may read and copy any materials that we file with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may also find all of the reports or registration statements that we have filed electronically with the SEC at its web site at www.sec.gov. Please call the SEC at 1-202-551-8090 for further information on this or other Public Reference Rooms. The Company’s SEC Reports are also available from commercial document retrieval services, such as Corporation Service Company, whose telephone number is 1-800-222-2122.
ITEM 1A. RISK FACTORS
Not required for smaller reporting companies.
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not required for smaller reporting companies.
ITEM 2: PROPERTIES
In September, 2004, we purchased a property located at 331 East Commercial Boulevard in Fort Lauderdale, Florida. The property is situated in a high-traffic commercial residential area. We have renovated and expanded the property, which is now being used as a retail location for higher-end collectibles. We opened the property for business on November 24, 2006, and had our grand open ing on December 16, 2006.
The property consists of approximately 1600 to 1700 square feet. We purchased the property for approximately $239,000 cash, using the proceeds from a private placement of preferred stock. The total cost of renovation was approximately $415,000.
ITEM 3: LEGAL PROCEEDINGS
Zaldiva is not a party to any pending legal proceeding. To the best of our knowledge, no federal, state or local governmental agency is presently contemplating any proceeding against us. No director, executive officer or affiliate of Zaldiva or owner of record or beneficially of more than five percent of our common stock is a party adverse to Zaldiva or has a material interest adverse to us in any proceeding.
ITEM 4: & nbsp;(REMOVED AND RESERVED)
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 OTC Bulletin Board of the National Association of Securities Dealers, Inc. (the "NASD") under the symbol "ZLDV", with quotations that commenced in April, 2003; however, the market for shares of our common stock is extremely limited. No assurance can be given that the present limited market for our common stock will continue or will be maintained.
For any market that develops for our Company’ ;s common stock, the sale of “restricted securities” (common stock) pursuant to Rule 144 of the SEC by members of management or any other person to whom any such securities may be issued in the future may have a substantial adverse impact on any such public market. Present members of management have already satisfied the six month holding period of Rule 144 for public sales of their respective holdings in our Company in accordance with Rule 144.
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A minimum holding period of six months is required for resales under Rule 144. In addition, affiliates of the Company must comply with certain other requirements, including publicly available information concerning our Company; limitations on the volu me of “restricted securities” which can be sold in any ninety (90) day period; the requirement of unsolicited broker’s transactions; and the filing of a Notice of Sale on Form 144.
The high and low closing bid prices for shares of our common stock of for each quarter within the last two fiscal years, or the applicable period when there were quotations are as follows:
Period | High | Low |
October 1, 2008 through December 31, 2008 | $0.25 | $0.08 |
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January 1, 2009 through March 31, 2009 | $0.30 | $0.12 |
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April 1, 2009 through June 30, 2009 | $0.20 | $0.11 |
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July 1, 2009 through September 30, 2009 | $0.11 | $0.05 |
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October 1, 2009 through December 31, 2009 | $0.085 | $0.03 |
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January 1, 2010 through March 31, 2010 | $0.09 | $0.04 |
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April 1, 2010 through June 30, 2010 | $0.055 | $0.04 |
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July 1, 2010 through September 30, 2010 | $0.22 | $0.01 |
These bid prices were obtained from the Pink OTC Markets, Inc. and do not necessarily reflect actual transactions, retail markups, mark downs or commissions.
No assurance can be given that any "established public market" will develop in the common stock of the Company, or if any such market does develop, that it will continue or be sustained for any period of time.
Holders
The number of record holders of the Company’s common stock as of the date of this Report is approximately 158, not including an indeterminate number who may hold shares in “street name.”
Dividends
Zaldiva has not declared any cash dividends with respect to its common stock, and does not intend to declare dividends in the foreseeable future. There are no material restrictions limiting, or that are likely to limit, our ability to pay dividends on our securities.
Our Preferred Stock holders are entitled to receive dividends at a rate to 4% of the Liquidation Preference per share per annum, payable quarterly on January 1, April 1, July 1, and October 1. Any dividends that are not paid within three trading days following the date payable, shall continue to accrue and shall entail a late fee at t he rate of 18% per annum. During the year ended September 30, 2010 and 2009, we paid all dividends in cash of $20,000, with none in arrears.
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Securities Authorized for Issuance under Equity Compensation Plans
Plan Category | Number of Securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans excluding securities reflected in column (a) |
| (a) | (b) | (c) |
Equity compensation plans approved by security holders | -0- | -0- | -0- |
Equity compensation plans not approved by security holders | 1,810,000 | $0.25 | 190,000 |
Total | 1,810,000 | $0.25 | 190,000 |
Recent Sales of Unregistered Securities
During the fiscal year ended September 30, 2010, we issued the following unregistered securities that have not already been disclosed in a Quarterly Report on Form 10-Q or a Current Report on Form 8-K:
To whom | Date | Number of shares | Consideration* |
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Charles Morgan Securities | 2/10 | 150,000 | Compensation under Investment Banking and Advisory Agreement |
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Summit Group of Companies, LLC | 9/10 | 2,500,000 | $250,000 |
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Pedrams LLC | 9/10 | 293,333 | Web site development |
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Jude Coelho | 9/10 | 40,000 | Web site development |
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We believe that the offer and sale of these securities was exempt from the registration requirements of the Securities Act, pursuant to Sections 4(2) and 4(6) thereof, and Regulation D of the Securities and Exchange Commission.
Purchases of Equity Securities by Us and Affiliated Purchasers
ISSUER PURCHASES OF EQUITY SECURITIES
Period | (a) Total Number of Shares (or Units) Purchased | (b) Average Price Paid per Share (or Unit) | (c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs | (d) Maximum Number (or Approximate Dollar Value) of Shares (or Un its) that may yet be Purchased Under the Plans or Programs |
Month #1 July 1, 2010 through July 31, 2010 | -0- | -0- | -0- | -0- |
Month #2 August 1, 2010 through August 31, 2010 | -0- | -0- | -0- | -0- |
Month #3 September 1, 2010 through September 30, 2010 | -0- | -0- | -0- | -0- |
Total | -0- | -0- | -0- | -0- |
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ITEM 6: SELECTED FINANCIAL DATA
Not required for smaller reporting companies.
ITEM 7: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-looking Statements
Statements made in this Annual Report which are not purely historical are forward-looking statements with re spect to the goals, plan objectives, intentions, expectations, financial condition, results of operations, future performance and business of our Company, including, without limitation, (i) our ability to raise capital, and (ii) statements preceded by, followed by or that include the words “may”, “would”, “could”, “should”, “expects”, “projects”, “anticipates”, “believes”, “estimates”, “plans”, “intends”, “targets” or similar expressions.
Forward-looking statements involve inherent risks and uncertainties, and important factors (many of which are beyond our Company’s control) that could cause actual results to differ materially from those set forth in the forward-looking statements, including the following, general economic or industry conditions, nationally and/or in the communities in which our Company c onducts business, changes in the interest rate environment, legislation or regulatory requirements, conditions of the securities markets, our ability to raise capital, changes in accounting principles, policies or guidelines, financial or political instability, acts of war or terrorism, other economic, competitive, governmental, regulatory and technical factors affecting our Company’s operations, products, services and prices.
Accordingly, results actually achieved may differ materially from expected results in these statements. Forward-looking statements speak only as of the date they are made. Our Company does not undertake, and specifically disclaims, any obligation to update any forward-looking statements to reflect events or circumstances occurring after the date of such statements.
Liquidity and Capital Resources
Zaldiva had cash and cash equivalents of $170,177 as of September 30, 2010, and total current assets of $262,091; total current liabilities of $649,725; and a total stockholders’ equity of $231,713. We used cash of $192,759 and $80,281 for our operating activities during the years ended September 30, 2010 and 2009, respectively. We provided cash from investing activities of $350,000 and $76,250 in proceeds from convertible notes payable and the issuance of common stock during those periods. We expect that our cash on hand of $170,177 at September 30, 2010, will be sufficient to fund our operations through the end of our 2011 fiscal year.
Results of Operations
For the years ended September 30, 2010 and 2009, we had total revenues of $230,599, and $294,160, respectively. All of our revenues during these periods were derived from retail sales of comics and collectibles. The items that we sell are considered to be discretionary purchases. As a result, the number of such purchases during a given time period is very dependent upon the general state of the economy. In the negative economic environment of 2009 and 2010, we saw our sales decline by approximately 22 percent.
Cost of goods sold decreased to $114,769 in the fiscal year ended September 30, 2010, from $187,594 in the prior fiscal year. This decrease largely reflects our declining sales figures in the 2010 fiscal year. However, we were also able to decrease cost of goods sold as a percentage of revenue from product sales. Cost of goods sold decreased to 50% in 2010, from 64% of product sales in 2009.
Our o perating expenses decreased to $476,261 in fiscal 2010, from $1,015,359, in fiscal 2009. This decrease stems
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largely from a substantial reduction in profession fees to $272,725 in 2010, from $872,048 in the year-ago period. Net loss totaled $374,968 ($0.03 per share) for the fiscal year ended September 30, 2010, as compared to a net loss of $927,056 ($0.11 per share) for the fiscal year ended September 30, 2009.
Off-Balance Sheet Arrangements
Zaldiva had no off-balance sheet arrangements during any of the period covered by this Annual Report or the consolidated financial statements tha t accompany this Annual Report.
ITEM 7A: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not required for smaller reporting companies.
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ZALDIVA, INC.
FINANCIAL STATEMENTS
September 30, 2010 and 2009
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C O N T E N T S
Report of Independent Registered Public Accounting Firm..…….………………………..12
Balance Sheets…………………………………………………….…………………….13
Statements of Operations……………….………….…………….………………………14
Statement s of Stockholders’ Equity (Deficit)…….…………….………………………….15
Statements of Cash Flows…………………………………………………….………….16
Notes to the Financial Statements…………………..…………………………………….17
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Report of Independent Registered Public Accounting Firm
Board of Directors and Stockholders
Zaldiva, Inc.
Ft. Lauderdale, Florida
We have audited the accompanying balance sheets of Zaldiva, Inc. as of September 30, 2010 and 2009 and the related statements of operations, stockholders' equity, and cash flows for the years ended September 30, 2010 and 2009. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (Uni ted States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for o ur opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Zaldiva, Inc. as of September 30, 2010 and 2009, and the results of operations and cash flows for the years ended September 30, 2010 and 2009, in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that Zaldiva, Inc. will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has experienced recurring losses. These issues raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustment tha t might result from the outcome of this uncertainty.
/s/Mantyla, McReynolds, LLC
Mantyla, McReynolds, LLC
December 22, 2010
Salt Lake City, Utah
12
ZALDIVA, INC.
BALANCE SHEETS
| September 30, 2010 |
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| September 30, 2009 | ||||
CURRENT ASSETS |
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| Cash and cash equivalents | $ | 170,177 |
| $ | 12,936 | ||
| Deposits |
| 23,214 |
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| - | ||
| Inventories |
| 68,700 |
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| 68,979 | ||
&nb sp; |
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| Total Current Assets |
| 262,091 |
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| 81,915 | |
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PROPERTY & EQUIPMENT, Net |
| 619,347 |
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| 634,723 | |||
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| TOTAL ASSETS | $ | 881,438 |
| $ | 716,638 | |
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LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
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CURRENT LIABILITIES |
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& nbsp; | Accounts payable and accrued expenses | $ | 23,264 |
| $ | 8,612 | ||
| Convertible notes payable, net |
| 38,226 |
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| - | ||
| Convertible preferred stock; $0.001 par value, |
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| 20,000,000 shares authorized, 500,000 shares |
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| issued and outstanding, respectively |
| 588,235 |
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| 588,235 | ||
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| Total Current Liabilities |
| 649,725 |
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| 596,847 | |
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|
|
STOCKHOLDERS' EQUITY |
|
|
|
|
| |||
|
|
|
|
|
|
|
|
|
| Common stock; $0.001 par value, 2,000,000,000 |
|
|
|
|
| ||
| shares authorized, 15,193,332 and 9,018,332 shares |
|
|
|
|
| ||
| issued and outstanding, respectively |
| 15,194 |
|
| 9,018 | ||
| Additional paid-in capital |
| 3,114,666 |
|
| 2,633,952 | ||
| Accumulated deficit |
| (2,898,147) |
|
| (2,523,179) | ||
|
|
|
|
|
|
|
|
|
|
| Total Stockholders' Equity |
| 231,713 |
|
| 119,791 | |
|
|
|
|
|
|
|
|
|
|
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 881,438 |
| $ | 716,638 | |
The accompanying notes are an integral part of these financial statements.
13
ZALDIVA, INC.
ST ATEMENTS OF OPERATIONS
|
|
| For the Years Ended | ||||
|
|
| September 30, | ||||
|
| & nbsp; | 2010 |
| 2009 | ||
|
|
|
|
|
|
|
|
REVENUES | $ | 230,599 |
| $ | 294,160 | ||
COST OF SALES |
| 114,769 |
|
| 187,594 | ||
GROSS PROFIT |
| 115,830 |
|
| 106,566 | ||
|
|
|
|
|
|
|
|
OPERATING EXPENSES |
|
|
|
|
| ||
|
|
|
|
|
|
|
|
| General and administrative expenses |
| 188,161 |
|
| 127,341 | |
| Professional fees |
| 272,725 |
|
| 872,048 | |
| Depreciation expense |
| 15,375 |
|
| 15,970 | |
|
|
|
|
|
|
|
|
|
| Total Operating Expenses |
| 476,261 |
|
| 1,015,359 |
|
|
|
|
|
|
|
|
OPERATING LOSS |
| (360,431) |
|
| (908,793) | ||
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE) |
|
|
|
|
| ||
|
|
|
|
|
|
|
|
| Interest income |
| 159 |
|
| 528 | |
| Interest expense |
| (70,946) |
|
| (18,791) | |
| Gain on settlement of liability |
| 56,250 |
|
| - | |
|
|
|
|
|
|
|
|
|
| Total Other Income (Expense) |
|
|
| (18,263) | |
|
|
|
|
|
|
|
|
LOSS BEFORE INCOME TAXES |
| (374,968) |
|
| (927,056) | ||
PROVISION FOR INCOME TAXES |
| - |
|
| - | ||
NET LOSS | $ | (374,968) | & nbsp; | $ | (927,056) | ||
|
|
|
|
|
|
|
|
BASIC AND DILUTED LOSS PER SHARE | $ | (0.03) |
| $ | (0.11) | ||
|
|
|
|
|
|
|
|
WEIGTHED AVERAGE NUMBER OF SHARES |
|
|
|
|
| ||
| OUTSTANDING |
| 11,853,173 |
|
| 8,612,990 | |
The accompanying notes are an integral part of these financial statements.
14
ZALDIVA, INC.
STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)
|
|
|
|
|
| Additional |
|
|
|
| Total | ||
| Common Stock |
| Paid-In |
| Accumulated |
| Stockholders' | ||||||
| Shares |
| Amount |
| Capital |
| Deficit |
| Equity | ||||
|
|
|
|
|
| &nb sp; |
|
|
|
|
|
|
|
Balance, September 30, 2008 | 8,213,332 |
| $ | 8,213 |
| $ | &nbs p; 1,730,771 |
| $ | (1,596,123) |
| $ | 142,861 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for cash | 305,000 |
|
| 305 |
|
| 75,945 |
|
| - |
|
| 76,250 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for services | 500,000 |
|
| 500 |
|
| 74,500 |
|
| - |
|
| 75,000 |
|
|
| &nbs p; |
|
|
|
|
|
|
|
|
|
|
Fair value of warrants granted | - |
|
| - |
|
| 305,565 |
|
| - |
|
| 305,565 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of options granted | - |
|
| - |
|
| 447,171 |
|
| - |
|
| 447,171 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the year |
|
|
|
|
|
|
|
|
|
|
|
|
|
ended September 30, 2009 | - |
|
| - |
|
| - |
|
| (927,056) |
|
| (927,056) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, September 30, 2009 | 9,018,332 |
|
| 9,018 |
|
| 2,633,952 |
|
| (2,523,179) |
|
| 119,791 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise of cashless warrants | 1,191,667 |
|
| 1,192 |
|
| 4,766 |
|
| - |
|
| 5,958 |
|
|
|
|
|
|
|
|
|
|
| &nbs p; |
|
|
Common stock issued for services | 1,233,333 |
|
| 1,234 |
|
| 91,517 |
|
| - |
|
| 92,751 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of options granted | - |
|
| - |
|
| 38,181 |
|
| - |
|
| 38,181 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for cash | 3,750,000 |
|
| 3,750 |
|
| 271,250 |
|
| - |
|
| &nbs p; 275,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beneficial conversion feature | - |
|
| - |
|
| 75,000 |
|
| - |
|
| 75,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the year |
|
|
|
|
|
|
|
|
|
|
|
|
|
ended September 30, 2010 | - |
|
| - |
|
| &nb sp; - |
|
| (374,968) |
|
| (374,968) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, September 30, 2010 | 15,193,332 |
| $ | 15,194 |
| $ | 3,114,666 |
| $ | (2,898,147) |
| $ | 231,713 |
The accompanying notes are an integral part of these financial statements.
15
ZALDIVA, INC.
STATEMENTS OF CASH FLOWS
|
|
|
| For the Year Ended | ||||
|
|
|
| September 30, | ||||
|
|
|
| 2010 |
| 2009 | ||
OPERATING ACTIVITIES |
|
|
|
| ||||
| Net loss | $ | (374,968) |
| $ | (927,056) | ||
| Adjustments to reconcile net loss to net cash |
|
|
|
|
| ||
| used by operating activit ies: |
|
|
|
|
| ||
|
| Depreciation expense |
| 15,375 |
|
| 15,970 | |
|
| Common stock issued for services |
| 92,750 |
|
| 75,000 | |
|
| Exercise of cashless warrants |
| 5,958 |
|
| - | |
|
| Fair value of warrant and options |
| 38,182 |
|
| 752,736 | |
|
| Amortization of beneficial co nversion feature |
| 38,226 |
|
| - | |
|
| Gain on settlement of liability |
| (56,250) |
|
| - | |
| Changes in operating assets and liabilities |
|
|
|
|
| ||
|
| Inventory |
| 279 | & nbsp; |
| 11,550 | |
|
| Deposits |
| &nbs p; (23,214) |
|
| - | |
|
| Current liabilities |
| 70,903 |
|
| (8,481) | |
|
|
|
|
|
|
|
|
|
|
|
| Net Cash Used in Operating Activities |
| (192,759) |
|
| (80,281) |
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES |
| - |
|
| - | |||
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES |
|
|
|
|
| |||
|
|
|
|
|
|
|
|
|
| Proceeds from related party payable |
| 66,000 |
|
| - | ||
| Repayments of related party payable |
| (66,000) |
|
| - | ||
| Proceeds from convertible note payable |
| 75,000 |
|
| - | ||
| Common stock issued for cash |
| 275,000 |
|
| 76,250 | ||
|
|
|
|
|
|
|
|
|
|
| Net Cash Provided by Financing Activities |
| 350,000 |
|
| 76,250 | |
|
|
|
|
|
|
|
|
|
NET INCREASE (DECREASE) IN CASH |
| 157,241 |
|
| (4,031) | |||
CASH AT BEGINNING OF YEAR |
| 12,936 |
|
| 16,967 | |||
|
|
|
|
|
|
|
|
|
CASH AT END OF YEAR | $ | 170,177 |
| $ | 12,936 | |||
| & nbsp; |
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURES OF |
|
|
|
|
| |||
| CASH FLOW INFORMATION |
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
| CASH PAID FOR: |
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
| Interest | $ | 30,375 |
| $ | 20,000 | |
|
| Income Taxes | $ | - |
| $ | ; - | |
The accompanying notes are an integral part of these financial statements.
16
ZALDIVA, INC.
Notes to Financial Statements
September 30, 2010 and 2009
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Compan y Background
The Company incorporated under the laws of the State of Florida on August 11, 1997 as Zaldiva Cigarz & Newz. In October 2001 the Company amended its Articles of Incorporation to change its name to Zaldiva, Inc.
The Company is in the principal business of selling comic books, toys and collectible items at its retail location in Ft. Lauderdale, Florida, and through the web sites, Zaldiva.com and Zaldivacomics.com. The Company also has performed services such as web design, hosting and IT services. The Company has featured products from wholesalers through the Internet since July of 1997. The majority of customer service issues are handled through individual affiliate partners, who are large online retailers with links from the Company's website to their own. These affiliates use Zaldiva.com as a marketing source. As customers purchase p roducts as a result of a referral, the Company earns a commission on the sale.
The financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles. The following summarizes the Company’s significant accounting policies:
Use of Estimates and Accounting Basis
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 dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates.
Concentration of Credit Risk
Financial instruments, which potentially subject us to concentrations of credit risk, consist principally of cash. The Company’s cash balances are maintained in accounts held by major banks and financial institutions located in the United States. The Company seldom maintains amounts on deposit with a financial institution that are in excess of the federally insured limit of $250,000. The risk is managed by maintaining all deposits in high quality financial institutions. The Company had approximately $-0- of cash balances in excess of federally insured limits at September 30, 2010 and 2009, respectively.
Cash and Cash Equivalents
Cash is comprised of cash on hand or on deposit in banks. The Company considers highly liquid investments with insignific ant interest rate risk and original maturities to the Company of three months or less to be cash equivalents. The Company had cash of $170,177 and $12,936 as of September 30, 2010 and 2009 respectively.
Inventory
Inventory is recorded at the lower of cost or market (net realizable value) using the first-in, first-out (FIFO) method. The inventory on hand as of September 30, 2010 and 2009 consists of collectibles and memorabilia recorded at a cost of $68,700 and $68,979, respectively. This inventory is listed and described on the Company's web site where it is available for sale.
Property and Equipment
Property and equipment are stated at cost. Depreciation is provided using the straight-line methods over the useful lives of the related assets a s detailed in the table below. Expenditures for maintenance and repairs are charged to expense as incurred. The Company currently leases two servers under an operating lease. The Company pays $400 on a month-to-month basis.
| Life |
Equipment | 3-7 Years |
Building Improvements | 5 Years |
Building | 39 Years |
17
ZALDIVA, INC.
Notes to Financial Statements
September 30, 2010 and 2009
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Fair Value of Financial Instruments
FASB ASC 820 defines fair value, establishes a framework for measuri ng fair value under generally accepted accounting principles and enhances disclosures about fair value measurements. Fair value is defined under FASB ASC 820 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value under FASB ASC 820-10-55 must maximize the use of observable inputs and minimize the use of unobservable inputs. In accordance with ASC 820, the carrying value of cash, cash equivalents and accounts payable approximates fair value due to the short-term maturity of these instruments. The standard also describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value which are the following:
Level 1-Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.
Level 2-Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other then quoted prices that are observable, and inputs derived from or corroborated by observable market data.
Level 3-Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information.
The carrying amounts reported in the balance sheet s for cash, accounts payable, accrued expenses and notes payable approximate their fair market value based on the short-term maturity of these instruments.
Valuation of Long-Lived Assets
Long-lived tangible assets and definite-lived intangible assets are reviewed for possible impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. The Company uses an estimate of undiscounted future net cash flows of the assets over the remaining useful lives in determining whether the carrying value of the assets is recoverable. If the carrying values of the assets exceed the expected future cash flows of the assets, the Company recognizes an impairment loss equal to the difference between the carrying values of the assets and their estimated fair values.
Impairment of long-lived assets is assessed at the lowest levels for which there are identifiable cash flows that are independent from other groups of assets. The evaluation of long-lived assets requires the Company to use estimates of future cash flows. However, actual cash flows may differ from the estimated future cash flows used in these impairment tests. As of September 30, 2010, management does not believe any of the Company’s assets were impaired.
Revenue Recognition
The Company applies the provisions of FASB ASC 605, "Revenue Recognition in Financial Statements", and SEC Staff Accounting Bulletin (SAB) Number 104, “Revenue Reconition,” which provides guidance on the recognition, presentation and disclosure of revenue in financial statements. ASC 605 outlines the basic criteria that must be met to recognize revenue and provides guidance for dis closure related to revenue recognition policies. The Company recognizes revenue related to goods and services provided when (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or services have been rendered, (iii) the fee is fixed or determinable, and (iv) collectability is reasonably assured.
18
ZALDIVA, INC.
Notes to Financial Statements
September 30, 2010 and 2009
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOU NTING POLICIES (CONTINUED)
Revenue on memorabilia sales is recognized as products are delivered to the customer or retailer. The Company records accounts receivable for sales which have been delivered but for which money has not been collected. As most sales are internet based sales or cash sales at the retail store where payment is collected at the time of sales, the balance uncollected as of September 30, 2010 and 2009 was $-0-.
The Company established and published a policy which allows customers to return most purchased items within 15 days of order for a full refund. All returns or exchanges must be accompanied by an original invoice or sales receipt. The Company will pay for return shipping costs if the return is a result of Company error. As of September 30, 2010 and 2009, the Company had return transactions totaling $220 and $-0- within the 15 day return period. No allowance for returns has been recorded as of September 30, 2010 and 2009.
Software/Web Site Costs
Costs incurred in the development of software products for in-house use are to be capitalized and amortized over its useful life. Costs related to planning, implementation or operating activities are expensed as incurred. The cost of web site development and maintenance has been expensed as incurred as part of the Company's ongoing operations.
Share-based Compensation
The Company follows the provisions of ASC 718, “Share-Based Payment.” which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement ba sed on their fair values. The Company uses the Black-Scholes pricing model for determining the fair value of stock based compensation.
Equity instruments issued to non-employees for goods or services are accounted for at either the fair market value of the goods and services rendered or on the instruments issued in exchange for such services, whichever is more readily determinable, using the measurement date guidelines enumerated in ASC 505-50-30.
Income Taxes
The Company accounts for income taxes under the asset and liability method. The asset and liability method requires that the current or deferred tax consequences of all events recognized in the financial statements are measured by applying the provisions of enacted tax laws to determine the amount of taxes payable or refundab le currently or in future years. Deferred tax assets are reviewed for recoverability and the Company records a valuation allowance to reduce its deferred tax assets when it is more likely than not that all or some portion of the deferred tax assets will not be recovered.
In July, 2006, the FASB issued ASC 740, Accounting for Uncertainty in Income Taxes, which clarifies the accounting for uncertainty in tax positions taken or expected to be taken in a return. ASC 740 provides guidance on the measurement, recognition, classification and disclosure of tax positions, along with accounting for the related interest and penalties. ASC 740 became effective as of January 1, 2007 and had no impact on the Company’s financial statements.
Basic Earnings (Loss) Per Common Share
Basic (loss) per commo n share is based on the net loss divided by weighted average number of common shares outstanding.
Diluted earnings per share is computed using the weighted average number of common shares plus dilutive common share equivalents outstanding during the period using the treasury stock method. As the Company has a loss for the years ended September 30, 2010 and 2009 the potentially dilutive shares are anti-dilutive and are thus not added into the earnings per share calculation.
19
ZALDIVA, INC.
Notes to Financial Statements
September 30, 2010 and 2009
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
As of the years ended September 30, 2010 and 2009 there were 5,310,000 and 3,160,000 potentially dilutive shares resulting from the issuances of warrants and the granting of options.
Recent Accounting Pronouncements
Below is a listing of the most recent accounting pronouncements issued since through May 27, 2010. The Company has evaluated these pronouncements and their adoption has not had or is not expected to have a material impact on the Company’s financial position, or statements.
In January 2010, the FASB issued Accounting Standards Update 2010-02, Consolidation (Topic 810): Accounting and Reporting for Decreases in Ownership of a Subsidiary. This amendment to Topic 810 clarifies, but does not change, the scope of current US GAAP. It clarifies the decrease in ownership provisions of Subtopic 810-10 and removes the potential conflict between guidance in that Subtopic and asset derecognition and gain or loss recognition guidance that may exist in other US GAAP. An entity will be required to follow the amended guidance beginning in the period that it first adopts FAS 160 (now included in Subtopic 810-10). For those entities that have already adopted FAS 160, the amendments are effective at the beginning of the first interim or annual reporting period ending on or after December 15, 2009. The amendments should be applied retrospectively to the first period that an entity adopted FAS 160.
In January 2010, the FASB issued Accounting Standards Update 2010-01, Equity (Topic 505): Accounting for Distributions to Shareholders with Components of Stock and Cash (A Consensus of the FASB Emerging Issues Task Force). This amendment to Topic 505 clarifies the stock portion of a distribution to shareholders that allows them to elect to receive cash or stock with a limit on the amount of cash that will be distributed is not a stock dividend for purposes of applying Topics 505 and 260. Effective for interim and annual periods ending on or after December 15, 2009, and would be applied on a retrospective basis.
In December 2009, the FASB issued Accounting Standards Update 2009-17, Consolidations (Topic 810): Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities. This Accounting Standards Update amends the FASB Accounting Standards Codification for Sta tement 167.
In December 2009, the FASB issued Accounting Standards Update 2009-16, Transfers and Servicing (Topic 860): Accounting for Transfers of Financial Assets. This Accounting Standards Update amends the FASB Accounting Standards Codification for Statement 166.
In October 2009, the FASB issued Accounting Standards Update 2009-15, Accounting for Own-Share Lending Arrangements in Contemplation of Convertible Debt Issuance or Other Financing. This Accounting Standards Update amends the FASB Accounting Standard Codification for EITF 09-1.
In October 2009, the FASB issued Accounting Standards Update 2009-14, Software (Topic 985): Certain Revenue Arrangements That Include Software Elements. This update changed the accounting model for revenue arrangements that includ e both tangible products and software elements. Effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. Early adoption is permitted.
In October 2009, the FASB issued Accounting Standards Update 2009-13, Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements. This update addressed the accounting for multiple-deliverable arrangements to enable vendors to account for products or services (deliverables) separately rather than a combined unit and will be separated in more circumstances that under existing US GAAP. This amendment has eliminated that residual method of allocation. Effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. Early adoption is permitted.
20
ZALDIVA, INC.
Notes to Financial Statements
September 30, 2010 and 2009
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Recent Accounting Pronouncements (continued)
In September 2009, the FASB issued Accounting Standards Update 2009-12, Fair Value Measurements and Disclosures (Topic 820): Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent). This update provides amendments to Topic 820 for the fair value measurement of investments in certain entities that calculate net asset value per share (or its equivalent). It is effective for interim and annual periods ending after December 15, 2009. Early application is permitted in financial statements for earlier interim and annual periods that have not been issued.
In July 2009, the FASB ratified the consensus reached by EITF (Emerging Issues Task Force) issued EITF No. 09-1, (ASC Topic 470) "Accounting for Own-Share Lending Arrangements in Contemplation of Convertible Debt Issuance" ("EITF 09-1"). The provisions of EITF 09-1, clarifies the accounting treatment and disclosure of share-lending arrangements that are classified as equity in the financial statements of the share lender. An example of a share-lending arrangement is an agreement between the Company (share lender) and an investment bank (share borrower) which allows the inv estment bank to use the loaned shares to enter into equity derivative contracts with investors. EITF 09-1 is effective for fiscal years that beginning on or after December 15, 2009 and requires retrospective application for all arrangements outstanding as of the beginning of fiscal years beginning on or after December 15, 2009. Share-lending arrangements that have been terminated as a result of counterparty default prior to December 15, 2009, but for which the entity has not reached a final settlement as of December 15, 2009 are within the scope. Effective for share-lending arrangements entered into on or after the beginning of the first reporting period that begins on or after June 15, 2009.
NOTE 2 - GOING CONCERN
The Company's financial statements are prepared using generally accepted accounting principles in the United States of America a pplicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. During the year ended September 30, 2010 the Company realized a net loss of $374,968 and has incurred an accumulated deficit of $2,898,147. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.
In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management's plan is to obtain such resources for the Company by obtaining capital from management and significant shareholder s sufficient to meet its minimal operating expenses and seeking equity and/or debt financing. However management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.
The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
21
ZALDIVA, INC.
Notes to Financial Statements
September 30, 2010 and 2009
NOTE 3 – PROPERTY AND EQUIPMENT
The major classes of assets as of September 30 are as follows:
| 2010 |
| 2009 | ||
Display System | $ | 19,995 |
| $ | 19,995 |
Computer Equipment |
| 5,355 |
|
| 5,355 |
Display Equipment |
| 17,634 |
|
| 17,634 |
Building and Improvements |
| 425,450 |
|
| 425,450 |
Land |
| 239,117 |
|
| 239,117 |
Sub Total |
| 707,551 |
|
| 707,551 |
Accumulated Depreciation |
| (88,203) |
|
| (74,828) |
Total | $ | 619,348 |
| $ | 632,723 |
Depreciation expense was $15,375 and $15,970, for the years ended September 30, 2010 and 2009, respectively.
NOTE 4 50; ACCOUNTS PAYABLE AND ACCRUED EXPENSES
A summary of Accounts Payable and Accrued Expenses Follows:
| September 30, | ||||
| 2010 |
| 2009 | ||
Accounts Payable | $ | 16,535 |
| $ | 8,612 |
Accrued Interest |
| 2,345 |
|
| - |
Total | $ | 18,880 |
| $ | 8,612 |
NOTE 5 –RELATED PARTY PAYABLES
On November 13, 2009 a principle shareholder lent the Company $16,000 on a short-term basis. The note accrued interest at $1,500 per month, was non-collateralized and was repaid, including accrued interest of $9,000, on May 10, 2010.
On March 30, 2010, the shareholder lent an additional $50,000 to the Company. The $50,000 note payable is unsecured, accrued interest at 6% per annum and was due upon demand.
As of September 30, 2010 the Company had repaid all related party loans in full. Total interest expense on related party loans for the years ended September 30, 2010 and 2009 was $10,375 and $-0-, respectively.
NOTE 6 – NOTES PAYABLES
On November 16, 2009, the Company entered into an Investment Banking and Advisory Agreement for general business advice and assistance to be provided and to use its best efforts with respect to an initial private placement of $250,000 at a price of $0.02 per share of the Company 46;s common stock and an additional private placement of up to $750,000 of convertible debt in or around February, 2010.
22
ZALDIVA, INC.
Notes to Financial Statements
September 30, 2010 and 2009
NOTE 6 – NOTES PAYABLES (CONTINUED)
As compensation, the Company agreed to pay a fee of $120,000, payable in 12 monthly installments of $10,000 each, or an amount in common stock having a value of 125% of the cash payment alternative. In addition, the Company was to issue a total of 650,000 unregistered and restricted shares of common stock, with 350,000 such shares payable at the time of the execution of the Agreement, 150,000 such shares payable on February 16, 2010, and 150,000 such shares payable on May 16, 2010. The Company also agreed to pay an engagement fee of $30,000 payable at signing of the Agreement, and to offer a cash option to purchase up to 1,000,000 unregistered and restricted shares of the Company’s common stock at a price of $0.005 per share.
In conjunction with this agreement, the Company paid a total of $30,000 in cash and accrued an additional $56,250 in unpaid fees through May 4, 2010. On May 4, 2010, Charles Morgan resigned as the Company’s consultant and terminated the agreement. As such, all amounts owed to Charles Morgan have been waived as part of the resignation. The Company recognized a gain on the settlement of the liability of $56,250.
On April 28, 2010 the Company signed a $50,000 convertible promissory note with a third party. The note bears interest at 8% per annum and is due on January 31, 2011. The note has conversion rights that allow the holder of the note at any time to convert all or any part of the remaining principle balance into the Company’s common stock at a price equal to 50% of the average of the lowest three trading prices for the Common Stock during the most recent ten day period.
On June 4, 2010 the Company signed a $25,000 convertible promissory note with a third party. The note bears interest at 8% per annum and is due on March 9, 2011. The note had original conversion rights that allowed the holder of the no te at any time to convert all or any part of the remaining principle balance into the Company’s common stock at a price equal to the lower of $0.0035 per share or 50% of the average of the lowest three trading prices for the Common Stock during the most recent ten day period. On September 8, 2010 the Company signed Amendment No. 1 to this convertible note which increased the discount from 50% to 59% and removed the ceiling of $0.0035 per share conversion price.
In accordance with ASC 470, the Company has analyzed the beneficial nature of the conversion terms or the above mentioned notes and determined that a beneficial conversion feature (BCF) exists. The Company calculated the value of the BCF using the intrinsic method as stipulated in ASC 470. The value of the BCF was determined based on the stock price on the day of commitments, the discounts as agreed to in the notes, the number of convertible shares, and the difference between the effective conversion price and the fair value of the common stock. The value of the BCF of the two notes has been calculated at $75,000. The BCF has been recorded as a discount to the note payable and to Additional Paid-in Capital.
As of September 30, 2010 the Company has recognized $2,435 in interest expense related to this note and has amortized $38,226 of the beneficial conversion feature which has been recorded as interest expense.
Below is a table detailing all required payments on outstanding debt over the next five years:
Year | Amount of Principal Payments Due | |
2011 | $ | 75,000 |
2012 |
| - |
2013 |
| - |
Total | $ | 75,000 |
23
ZALD IVA, INC.
Notes to Financial Statements
September 30, 2010 and 2009
NOTE 7 – PREFERRED STOCK
The Company is authorized to issue 20,000,000 shares of convertible preferred stock with a par value of $0.001 per share. As of September 30, 2010 there were 500,000 issued and outstanding.
On September 22, 2004, the Company issued 500,000 shares of Series A 4% Preferred Stock having a par value of $0.001 per share, in consideration of gross proceeds of $500,000. On August 24, 2005 the Company issued 300,000 shares of Series A 4% Preferred Stock having a par value of one mill ($0.001) per share, in consideration of gross proceeds of $30 0,000 which were converted to 357,142 common shares during the year ended September 30, 2007. The preferred shares are being recorded as a liability, and the dividends are being accounted for as interest expense. The shares have the following rights:
·
Voting rights: The holders of the Series A Preferred Stock shall not be entitled to vote separately on any matter submitted to a vote of the stockholders of the Company.
·
Liquidation: Upon any liquation, Series A Preferred Stockholders are entitled to distribution or payment before any other class of stock. The per share liquidation value on any date is equal to $1.00.
·
Dividends: The holders are entitled to receive dividends at a rate equal to 4% of the Liquidation Preference per share per annum, payable quarterly on January 1, April 1, July 1, and October 1. Any dividends that are not paid within three trading days following the date payable, shall continue to accrue and shall entail a late fee at the rate of 18% per annum.
·
Conversion: Subject to the passage of 12 months from stock issuance, the holder may convert the preferred shares into the Company's c ommon shares at a price equal to 85% of the average closing bid price of the common shares for the five trading days immediately preceding the conversion date. Consequently the liability has been recorded at $588,235 on the balance sheet. The difference between the face value and the carrying value has been recognized as interest expense.
·
Redemption: The Company is permitted to redeem any and all shares of the Series A Preferred Stock at a price of $1.00 per share. In addition to the redemption price of $1.00, the Company shall issue one warrant to purchase one share of common stock at a price of $0.50 per share, exercisable for a period of five years.
According to the dividend ri ghts, the Company paid dividends of $20,000, which are included in interest expense during the years ended September 30, 2010 and 2009. No dividends are in arrears as of the balance sheet dates.
NOTE 8 – COMMON STOCK
Effective as of July 1, 2010, the Board of Directors of the Company resolved to file a Certificate of Amendment amending the Company’s Articles of Incorporation to increase its authorized common stock from 50,000,000 shares to 2,000,000,000 shares, while retaining the par value of such common stock at $0.001 per share. As of September 30, 2010 there were 15,193,332 shares issued and outstanding.
On October 2, 2009 the owners of cashless warrants exercised a total of 1,191,667 shares of common stock for which the Company r ecognized an expense of $5,958.
On November 16, 2009 the Company entered into a consulting agreement and issued 350,000 shares of common stock valued at $14,875 as part of that contract. In conjunction with this agreement the Company also issued 1,000,000 options valued at $38,181. This agreement was cancelled on May 4, 2010, however all common stock and options had vested and remained outstanding and thus all costs associated with these issuances are reflected in the Company’s statements of operations.
On November 18, 2009 the Company issued 100,000 shares of common stock valued at $5,000 to an employee.
On January 27, 2010 the Company issued 1,250,000 shares of common stock for cash at $0.02 per share.
24
ZALDIVA, INC.
Notes to Financial Statements
September 30, 2010 and 2009
NOTE 8 – COMMON STOCK (CONTINUED)
On February 16, 2010 the Company issued an additional 150,000 shares, under the terms of the consulting agreement mentioned previously, valued at $6,375. This agreement was cancelled on May 4, 2010, however all options had vested and remained outstanding and thus all costs associated with these issuances are reflected in the Company’s statements of operations.
On June 17, 2010 the Company issued 300,000 shares of common stock valued at $16,500 based on the market price of the shares to a consultant for services performed. The Company records the stock-based compensation awards issued to non-employees for goods and services at either the fair market value of the goods received or services rendered or the instruments issued in exchange for such services, whichever is more readily determinable, using the measurement date guidelines enumerated in FASB ASC 505-50-30.
On August 30, 2010, the Company sold 2,500,000 units consisting of one “unregistered” and “restricted” share of the Company’s common stock and one warrant to purchase one share of the Company’s common stock at a price of $0.25 per share, exercisable for one year. Each unit sold for $0.10 for total proceeds of $250,000.
The Company attributed $36,849 of the total $247,500 of Additional Paid-in Capital associated with the transaction to the warrants based on the relative fair value of the warrants. The warrants were valued using the Black Scholes model using the following assumptions: stock price at valuation, $0.03; strike price, $0.25; risk free rate 0.26%; 1 year term; and volatility of 246%.
On September 22, 2010, the Company entered into a web design contract wherein the Company agreed to pay $10,000 plus 333,333 shares of its common stock to the redesign and redevelopment of Zaldiva.com. The shares were valued based on the market price on the date of issuance of $0.15 per share for total web development fees paid in stock of $50,000.
NOTE 9 – COMMON STOCK WARRANTS AND OPTIONS
The following table summarizes the stock warrant activity as of and for the years ended September 30, 2010 and 2009:
| WARRANTS | |||||||||
| Date |
| Number of Warrants |
| Weighted Average Exercise Price |
| Value if Exercised |
| Weighted Average Remaining Contractual Term | |
Outstanding as of September 30, 2008 |
|
| 1,655,000 |
|
| 0.27 |
| 451,250 |
| 3.43 |
Granted | - |
| - |
|
| - |
| - |
| - |
Exercised | - |
| - |
|
| - |
| - |
| - |
Cancelled | - |
| - |
|
| - |
| - |
| - |
Outstanding as of September 30, 2009 |
|
| 1,655,000 |
| $ | 0.27 |
| 451,250 |
| 2.43 |
Granted | 08/30/10 |
| 2,500,000 |
|
| 0.25 |
| 625,000 |
| 0.92 |
Granted | 10/01/09 |
| 1,300,000 |
|
| 0.01 |
| 6,500 |
| - |
Granted | 11/16/09 |
| 1,000,000 |
|
| 0.01 |
| 5,000 |
| 4.13 |
Exercised | 10/02/09 |
| (1,191,667) |
|
| 0.01 |
| (11,917) |
| - |
Cancelled | 10/01/09 |
| (1,763,333) |
|
| 0.27 |
| (480,788) |
| - |
Outstanding as of September 30, 2009 |
|
| 3,500,000 |
| $ | 0.17 |
| 595,045 |
| 1.83 |
25
ZALDIVA, INC.
Notes to Financial Statements
September 30, 2010 and 2009
NOTE 9 – COMMON STOCK WARRANTS AND OPTIONS (CONTINUED)
| OPTIONS | |||||||||
| Date |
| Number of Warrants |
| Weighted Average Exercise Price |
| Value if Exercised |
| Weighted Average Remaining Contractual Term | |
Outstanding as of September 30, 2008 |
|
| - |
|
| - |
| - |
| - |
Granted | 04/21/09 |
| 1,810,000 |
|
| 0.25 |
| 452,500 |
| 8.01 |
Exercised |
|
| - |
|
| - |
| - |
| - |
Cancelled |
|
| - |
|
| - |
| - |
| - |
Outstanding as of September 30, 2009 |
|
| 1,810,000 |
| $ | 0.25 |
| 452,500 |
| 7.56 |
Granted |
|
| - |
|
| - |
| - |
| - |
Exercised |
|
| - |
|
| - |
| - |
| - |
Cancelled |
|
| - |
|
| - |
| - |
| - |
Outstanding as of September 30, 2010 |
|
| 1,810,000 |
| $ | 0.25 |
| 452,500 |
| 6.56 |
Exercisable at September 30, 2010 |
|
| 1,810,000 |
| $ | 0.25 |
| 452,500 |
| 6.56 |
Common Stock Purchase Options
On April 21, 2009 the Company granted 1,810,000 options to its officers and directors as compensation for services. These options vest immediately and are exercisable over eight (8) years. Under ASC 718, the Company estimates the fair value of each stock award at the grant date by using the Black-Scholes option pricing model with the following weighted average assumptions used for the grant of these warrants: dividend yield of zero percent; expected volatility of 251%; risk-free interest rates of 1.24 percent and expected lives of 4.0. The Company recorded an expense of $447,171 during the year ended September 30, 2009 for the value of the options.
NOTE 10 – INCOME TAXES
The Company’s provision for income taxes was $0 for the years ended September 30, 2010 and 2009 respectively since the Company incurred net operating losses which have a full valuation allowance through September 30, 2010.
ASC 740 requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. In the Company’s opinion, it is uncertain whether they will generate sufficient taxable income in the future to fully utilize the net deferred tax asset. Accordingly, a full valuation allowance equal to the deferred tax asset has been recorded. The total deferred tax asset is calculate d by multiplying a 35% marginal tax rate by the cumulative Net Operating Loss (“NOL”) of $914,523. The total valuation allowance is equal to the total deferred tax asset. The valuation allowance increased by $55,581 from $799,562 to $855,143 for the year ended September 30, 2010.
26
ZALDIVA, INC.
Notes to Financial Statements
September 30, 2010 and 2009
NOTE 10 – INCOME TAXES (CONTINUED)
The tax effects of significant items comprising the Company's net deferred taxes as of September 30, 2010 and 2009 were as follows:
| Years Ended September 30, | |||
| 2010 |
| 2009 | |
Deferred Tax Assets |
|
|
|
|
Loss Carryforwards (expire through 2030) |
| $ 320,476 |
| $ ; 276,575 |
Fixed Assets |
| 1,323 |
| 1,535 |
Common Stock Warrants |
| 376,835 |
| 364,942 |
Stock Compensation Expense |
| 156,510 |
| 156,510 |
Total Gross Deferred Tax Asset |
| 855,144 |
| 799,562 |
Valuation Allowance |
| (855,144) |
| (799,562) |
Net Deferred Taxes |
| - |
| - |
Deferred Tax Liabilities |
| - |
| - |
|
| $ - |
| $ - |
The income tax provision differs from the amount of income tax determined by applying the U.S. federal and state income tax rates of 35% to pretax income from continuing operations for the years ended September 30, 2010 and 2009 due to the following:
| 2010 |
| 2009 | ||
Income tax benefit at U. S. federal statutory rates Effect of : | $ | (131,239) |
| $ | (324,470) |
Stock, options and warrants issued for services |
| 58,713 |
|
| - |
Amortization of beneficial conversion feature |
| 13,732 |
|
| - |
Other permanent differences, net |
| 3,213 |
|
| (395) |
Change in valuation allowance |
| 55,581 |
|
| 324,865 |
| $ | - |
| $ | - |
The Company adopted the provisions of ASC 740 at the beginning of fiscal year 2008. As a result of this adoption, the Company has not made any adjustments to deferred tax assets or lia bilities. The Company did not identify any material uncertain tax positions on returns that have been filed or that will be filed. The Company did not recognize any interest or penalties for unrecognized tax benefits during the years ended September 30, 2010 and 2009, nor were any interest or penalties accrued as of September 30, 2010.
The Company has filed income tax returns in the United States and Florida. All tax years prior to 2007 are closed by expiration of the statute of limitations. The years ended September 30, 2010, 2009, and 2008 are open for examination.
The Company’s deferred tax assets and liabilities were as follows as of September 30, 2010 and 2009:
| 2010 |
| 2009 | ||
Deferred tax assets: |
|
|
|
|
|
Net operating loss carry forwards |
| 870,345 |
|
| 799,562 |
Valuation allowance |
| (870,345) |
|
| (799,562) |
Net deferred tax asset reported | $ | - |
| $ | - |
Name | Positions Held | Date of Election or Designation | Date of Termination or Resignation |
Robert B. Lees | President | 12/24/97 | 4/19/07 |
| Chairman | 12/24/97 | * |
| CFO | 7/10/08 | * |
| Director | 12/24/97 | * |
Nicole Leigh | President | 4/19/07 | * |
| Director | 6/4/07 | * |
John A. Palmer, Jr. | Secretary | 2/15/98 | * |
| Director | 12/24/97 | * |
Jeremy I. Van Coller | Secretary | 12/24/97 | 2/15/98 |
| Director | 12/24/97 | * |
| C OO | 6/2/07 | * |
* These persons presently serve in the capacities indicated.
Business Experience
Robert B. Lees. Mr. Lees, age 63, is a graduate of the U.S. Naval Academy. He served as an Officer in the Marine Corps, both overseas and domestically. After transferring to the active Reserves, he joined the DuPont Company, where he managed the Southeastern Region. He took the region from last to first in the acrylic sheet division for sales and service. He then became part owner and general manager of a wood laminating operation in Orlando, Florida. Upon the sale of the business, he joined Merril l Lynch in the Private Client Group and became an assistant Vice President. He has since consulted to a Florida-based investor relations firm, and served as President and Chief Operating Officer of two start-up companies, as well as his current position.
Ms. Leigh is 39 years of age. She is a 1989 graduate of Washington High School in Phoenix, Arizona. For the past six years, she has been significantly involved in the Company’s operations, including web site design and maintenance, inventory and shipping, online sales fulfillment and general operations.
John A. Palmer, Jr. Mr. Palmer is 72 years old. He is a graduate of the University of Wisconsin, where he received a BS in Mathematics and Physics and an MS in Education and Counseling. He has continued his educat ion throughout his life and has completed multiple workshops in Electromechanical Automation, Electromechanical Systems, Vacuum Technology, Vacuum and RF Power and Semiconductor Manufacturing Processes. He was a presenter for Basic Troubleshooting and Electromechanical Devices at the Intel/MATEC Summer Institute, Arizona as well as for the transducers Workshop in Orlando, Florida and the Rockwell automation PLC Workshop in Michigan. Since 1969, Mr. Palmer has served as a Professor of Electricity, Industrial Electronics, Manufacturing Electronics and Mathematics at the Central Arizona College in Coolidge, Arizona. In addition, he has been involved in Summer Faculty Internships at Motorola and Intel, both in Phoenix, Arizona.
Jeremy I. van Coller. Mr. Van Coller, age 31, is a graduate of Kloof High School (Kwa Zulu Natal, Kloof, South Africa) where his line of studies included Technical Drawing (archi tectural renderings), Biology, Advanced Mathematics, English and Afrikaans. He continued his education by attending the Academy of Learning (Kwa Zulu Natal, Pinetown, South Africa) where he studied Marketing, Management and Computer Science for approximately
30
one year prior to moving to the United States. Mr. Van Coller worked as a computer sales person in South Africa during and after attending the Academy. Over the past two years, he served as an Assistant to the Network Administrator for various South Florida Internet service providers, where he handled domain name servers, mail servers, BSDI and Cobalt servers. Mr. van Coller currently serves as a Computer Technician Consultant handling personal computer repair and constru ction, hardware and software troubleshooting and some web design, in addition to being the current Network Administrator for Zaldiva, Inc. Mr. van Coller is a collector and as such, has an extensive knowledge of comic books and related movies and merchandise.
Significant Employees
Zaldiva has no significant employees who are not executive officers.
Family Relationships
None; not applicable.
Directorships
None of the Company’s directors holds a directorship in any other company with a class of securities registered pursuant to Section12 of the Exchange Act or subject to the requirements of Section 15(d) of such Act or any company registe red as an investment company under the Investment Company Act of 1940.
Involvement in Certain Legal Proceedings
During the past five years, no director, promoter or control person:
·
has filed a petition under federal bankruptcy laws or any state insolvency laws, nor had a receiver, fiscal agent or similar officer appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing;
·
was convicted in a criminal proceeding or named subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
·
was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him or her from or otherwise limiting his/her involvement in any type of business, securities or banking activities; or
·
was found by a court of competent jurisdiction in a civil action, by the SEC or the Commodity Futures Trading Commission to have violated any federal or state securities law, and the judgment in such civil action or finding by the SEC has not been subsequently reversed, suspended, or vacated.
Promoters and control person.
Not applicable.
Compliance With Section 16(a) of the Exchange Act
To our knowledge, during our past fiscal year and since then, all filings required to be made by members of management or others pursuant to Section 16(a) of the Exchange Act have been duly filed with the Securities and Exchange Co mmission.
Code of Ethics
The Company adopted a Code of Ethics that was filed as an exhibit 14 to our Annual Report on Form 10-KSB-A1 for the year ended September 30, 2002. The Company undertakes to provide to any person, without charge, upon request, a copy of such Code of Ethics. Requests may be made by contacting the Company at 877-925-3482.
31
Corporate Governance
Nominating Committee
During the annual period ended September 30, 2010, there were no changes in the procedures by which security holders may recommend nominees to Zaldiva’s Board of Directors; and Zaldiva does not presently have a Nominating Committee for members of its Board of Directors. Nominations are considered by the entire Board.
Audit Committee
Zaldiva does not have an Audit Committee, and it is not required to have an Audit Committee; Zaldiva does not believe that the lack of an Audit Committee will have any adverse effect on its financial statements, based upon current operations. Management will assess whether an Audit Committee may be necessary in the future.
ITEM 11: EXECUTIVE COMPENSATION
All Compensation
SUMMARY COMPENSATION TABLE
Name and Principal Position (a) | Year (b) | Salary ($) (c) | Bonus ($) (d) | Stock Awards ($) (e) | Option Awards ($) (f) | Non-Equity Incentive Plan Compensation ($) (g) | Nonqualified Deferred Compensation ($) (h) | All Other Compensation ($) (i) | Total Earnings ($) (j) |
Robert B. Lees Chairman, CFO and Former President | 9/30/10 9/30/09 9/30/08 | 0 0 0 | 0 0 0 | 0 0 0 | 0 24,000(1) 0 | 0 0 0 | 0 0 0 | 0 0 0 | 0 0 0 |
John A. Palmer, Jr. Secretary and Director | 9/30/10 9/30/09 9/30/08 | 0 0 0 | 0 0 0 | 0 0 0 | 0 24,000(1) 0 | 0 0 0 | 0 0 0 | 0 0 0 | 0 0 0 |
Jeremy Van Coller COO Director | 9/30/10 9/30/09 9/30/08 | 0 0 0 | 0 0 0 | 0 0 0 | 0 24,000(1) 0 | 0 0 0 | 0 0 0 | 0 0 0 | 0 0 0 |
Nicole Leigh, President and Director | 9/30/10 9/30/09 9/30/08 | 0 0 0 | 0 0 0 | 0 0 0 | 0 120,000(2) 0 | 0 0 0 | 0 0 0 | 0 0 0 | 0 0 0 |
(1) During the third quarter of our 2009 fiscal year, the Company granted to each of these persons the option to purchase 100,000 shares of its common stock at an exercise price of $0.25 per share.
(2) During the third quarter of our 2009 fiscal year, the Company granted to Ms. Leigh an option to purchase 500,000 shares of its common stock at an exercise price of $0.25 per share.
Except as indicated above, no cash compensation, deferred compensation or long-term incentive plan awards were issued or granted to Zaldiva's m anagement during the fiscal years indicated above. Further, no member of management has been granted any option or stock appreciation rights; accordingly, no tables relating to such items have been included within this Item.
32
Outstanding Equity Awards at Fiscal Year-End
None; not applicable.
Compensation of Directors
None; not applicable.
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Security Ownership of Certain Beneficial Owners
The following tables set forth the share holdings of those persons who are principal shareholders of the Company’s common stock as of December 16, 2010.
Ownership of Principal Shareholders
Title Of Class | Name and Address of Beneficial Own er | Amount and Nature of Beneficial Owner | Percent of Class |
Common Stock | Summit Group of Companies LLC | 2,500,000 | 15% |
Security Ownership of Management
The following table sets forth the share holdings of the Company’s directors and executive officers as of December 16, 2010:
Ownership of Officers and Directors
Title Of Class | Name and Address of Beneficial Owner | Amount and Nature of Beneficial Owner | Percent of Class |
Common Stock | Robert B. Lees | 500,000 | 3.0% |
Common Stock | John A. Palmer, Jr. | 607,000 | 3.7% |
Common Stock | Jeremy I. Van Coller | -0- | -0- |
Common Stock | Nicole Leigh | 601,429 | 3.6% |
In addition, Nicole Leigh is the beneficial owner of 75,000 shares of our Series A 4% Preferred Stock, representing 15% of the outstanding shares of that class.
Changes in Control
There are no present arrangements or pledges of our securities which may result in a change in control of Zaldiva.
33
Securities Authorized for Issuance under Equity Compensation Plans
Plan Category | Number of Securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, w arrants and rights | Number of securities remaining available for future issuance under equity compensation plans excluding securities reflected in column (a) |
| (a) | (b) | (c) |
Equity compensation plans approved by security holders | -0- | -0- | -0- |
Equity compensation plans not approved by security holders | 1,810,000 | $0.25 | 190,000 |
Total | 1,810,000 | $0.25 | 190,000 |
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTORS INDEPENDENCE
Transactions with Related Persons
There were no material transactions, or series of similar transactions, during our Company’s last two fiscal years, or any currently proposed transactions, or series of similar transactions, to which our Company or any of our subsidiaries was or is to be a party, in which the amount involved exceeded the lesser of $120,000 or one percent of the average of the smaller reporting company's total assets at year-end for the last two completed fiscal years and in which any director, executive officer or any security holder who is known to us to own of record or beneficially more than five percent of any class of our common stock, or any mem ber of the immediate family of any of the foregoing persons, had an interest.
Promoters and Certain Control Persons
There have been no transactions since the beginning of our last fiscal year, or any currently proposed transaction in which the Company was or is to be a participant and the amount involved exceeds the lesser of $120,000 or one percent of the average of our total assets at year end for the last three completed fiscal years.
Parents of the Smaller Reporting Company
Zaldiva has no parents.
Director Independence
The Company does not have any independent directors serving on its board of dir ectors.
ITEM 14: PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following is a summary of the fees billed to the Company by its principal accountants during the fiscal years ended September 30, 2009, and 2008:
Fee category | 2010 |
| 2009 | ||
|
|
|
|
|
|
Audit fees | $ | 31,684 |
| $ | 31,106 |
Audit-related fees | $ | 0 | &nb sp; | $ | 0 |
Tax fees | $ | 0 |
| $ | 0 |
All other fees | $ | 0 |
| $ | 0 |
|
|
|
|
|
|
Total fees | $ | 31,684 |
| $ | 31,106 |
Audit Fees - Consists of fees for professional services rendered by our principal accountants for the audit of the Company’s annual financial statements and review of the financial statements included in the Company’s Forms 10-Q or services that are normally provided by our principal accountants in connection with statutory and regulatory filings or engagements.
Audit-related Fees - Consists of fees for assurance and related services by our principal accountants that are reasonably related to the performance of the audit or review of the Company’s financial statements and are not reported under “Audit fees.”
Tax Fees - Con sists of fees for professional services rendered by our principal accountants for tax compliance, tax advice and tax planning.
All Other Fees - Consists of fees for products and services provided by our principal accountants, other than the services reported under “Audit fees,” “Audit-related fees,” and “Tax fees” above.
Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors
The Company has not adopted an Audit Committee, therefore, there is no Audit Committee policy in this regard. However, the Company does not require approval in advance of the performance of professional services to be provided to the Company by its principal accountant. Additionally, all services rendered by our principal accountant are performed pursuant to a written engagement letter between us and the principal accountant.
PART IV
ITEM 15: EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)(1)(2) Financial Statements. See the audited financial statements for the year ended September 30, 2010 contained in Item 8 above which are incorporated herein by this reference.
(a)(3) Exhibits. The following exhibits are filed as part of this Annual Report:
No. Description
Exhibit 31.1 Certification of Nicole Leigh, the Company’s President, pursuant to section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 31.2 Certification of Robert B. Lees, the Company’s CFO, pursuant to section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 32 Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002
*Incorporated herein by reference.
35
SIGNATURES
Pursuant to the requirements 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.
ZALDIVA, INC.
Date: | December 28, 2010 |
| By: | /s/Nicole Leigh |
|
|
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| Nicole Leigh |
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|
|
| President and Director |
Pursuant to the requirements of the Securities Exchange Act of 1934 this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
ZALDIVA, INC.
Date: | December 28, 2010 |
| By: | /s/Nicole Leigh |
|
|
|
| Nicole Leigh |
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|
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| President and Director |
|
|
|
|
|
Date: | December 28, 2009 |
| By: | /s/Robert B. Lees |
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|
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| Robert B. Lees |
|
|
|
| Chief Financial Officer and Director |
|
|
|
|
|
Date: | December 28, 2010 |
| By: | /s/Jeremy I. Van Coller |
|
|
|
| Jeremy I. Van Coller |
|
|
|
| Director |
36
