SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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 December 31, 2009
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from __________ to ___________
SILVER PEARL ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)
| Nevada | 000-51750 | 45-0538522 |
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
| 1541 E Interstate 30, Rockwall, Texas | 75087 | |||
| (Address of Principal Executive Offices) | (Zip Code) |
(Registrant’s telephone number, including area code): 972-722-4411
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: Common Stock
Indicate by a check mark if the registrant is a well-known seasoned issuer, as defined by Rule 405 of the Securities Act. Yes [ ] No [X]
Indicate by a check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Act. Yes [ ] No [X]
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Act of 1934 during the past 12 months and (2) has been subject to such filing requirement for the past 90days. Yes [X] No [ ].
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (s229.405 of this chapter) 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 (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:. Yes [ X ] No [ ].
| Large Accelerated Filer [ ] | Accelerated Filer [ ] | |
| Non-Accelerated Filer [ ] | Smaller Reporting Company [ X ] |
Indicate by a check mark whether the company is a shell company (as defined by Rule 12b-2 of the Exchange Act: Yes [X] No [ ].
Indicate the number of Shares outstanding of each of the Registrant’s classes of common stock, as of the latest practicable date. As of February 26, 2010, the Registrant had 5,696,800 shares of common stock outstanding.
TABLE OF CONTENTS
| PART I | |
| ITEM 1 | Description of Business |
| ITEM 2. | Description of Property |
| ITEM 3. | Legal Proceedings |
| ITEM 4. | Submission of Matters to a Vote of Security Holders |
| PART II | |
| ITEM 5. | Market for Registrant’s Common Equity and Related Stockholders Matters |
| ITEM 6. | Selected Financial Data |
| ITEM 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operation |
| ITEM 8. | Financial Statements and Supplementary Data |
| ITEM 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure |
| ITEM 9A. | Controls and Procedures |
| ITEM 9B. | Other Information |
| PART III | |
| ITEM 10. | Directors, Executive Officers and Corporate Government |
| ITEM 11. | Executive Compensation |
| ITEM 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
| ITEM 13. | Certain Relationships and Related Transactions, and Director Independence |
| ITEM 14. | Principal Accounting Fees and Services |
| PART IV | |
| ITEM 15. | Exhibits and Financial Statement Schedules |
| EXHIBIT INDEX | |
| Exhibit 31.1 | Certification of Chief Executive Officer, pursuant to Rule 13a-14(a) of the Exchange Act, as enacted by Section 302 of the Sarbanes-Oxley Act of 2002 |
| Exhibit 31.2 | Certification of Chief Financial Officer, pursuant to Rule 13a-14(a) of the Exchange Act, as enacted by Section 302 of the Sarbanes-Oxley Act of 2002 |
| Exhibit 32.1 | Certification of Chief Executive Officer and Chief Financial Officer, pursuant to 18 United States Code Section 1350, as enacted by Section 906 of the Sarbanes-Oxley Act of 2002 |
SIGNATURES
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PART I.
FORWARD-LOOKING STATEMENTS
This annual report on Form 10-K includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, which we refer to in this annual report as the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, which we refer to in this annual report as the Exchange Act. Forward-looking statements are not statements of historical fact but rather reflect our current expectations, estimates and predictions about future results and events. These statements may use words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “predict,” “project” and similar expressions as they relate to us or our management. When we make forward-looking statements, we are basing them on our management’s beliefs and assumptions, using information currently available to us. These forward-looking statements are subject to risks, uncertainties and assumptions, including but not limited to, risks, uncertainties and assumptions discussed in this annual report. Factors that can cause or contribute to these differences include those described under the headings “Risk Factors” and “Management Discussion and Analysis and Plan of Operation.”
If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may vary materially from what we projected. Any forward-looking statement you read in this annual report reflects our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. All subsequent written and oral forward-looking statements attributable to us or individuals acting on our behalf are expressly qualified in their entirety by this paragraph. You should specifically consider the factors identified in this annual report which would cause actual results to differ before making an investment decision. We are under no duty to update any of the forward-looking statements after the date of this annual report or to conform these statements to actual results.
| ITEM 1. | DESCRIPTION OF BUSINESS |
We were incorporated on May 4, 2004 in the State of Texas as Silver Pearl Enterprises, Inc. in order to sell furniture and decorating accessories for both residential and commercial uses. For the first part of the 2007, we purchased our furniture through companies that import directly from manufacturers in China, and some decorating items from local importers and distributors. We ceased operations at the end of August 2007 and sold substantially all our assets.
Sales in 2008 and 2009 were $0 and $0, respectively.
| ITEM 2. | DESCRIPTION OF PROPERTY |
We share an office with the President, at no charge to the Company, since we have no operations.
| ITEM 3. | LEGAL PROCEEDINGS |
The company is not involved in any legal proceedings.
| ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS |
The Company did not submit any matters to a vote to the security holders during 2009.
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PART II
| ITEM 5. | MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDERS’ MATTERS |
The common stock is currently quoted on the NASDAQ bulletin board under the symbol “SVPE.”
The following table sets forth the quarterly high and low bid prices for the Common Stock for 2009. The prices set forth below represent interdealer quotations, without retail markup, markdown or commission and may not be reflective of actual transactions.
| Fiscal 2009 | High | Low | ||||||
| First Quarter | $ | 0.15 | $ | 0.15 | ||||
| Second Quarter | $ | 0.15 | $ | 0.15 | ||||
| Third Quarter | $ | 0.15 | $ | 0.15 | ||||
| Fourth Quarter | $ | 0.15 | $ | 0.15 | ||||
Shareholders
As of December 31, 2009, there were approximately 89 record holders of the Common Stock. This number excludes any estimate by the Company of the number of beneficial owners of shares held in street name, the accuracy of which cannot be guaranteed.
Dividends
The Company has not paid cash dividends on any class of common equity since formation and the Company does not anticipate paying any dividends on its outstanding common stock in the foreseeable future.
Warrants
The Company has no warrants outstanding.
| ITEM 6 | SELECTED FINANCIAL DATA |
Not required.
| ITEM 7 | MANAGEMENT DISCUSSIONS AND ANALYSIS OR PLAN OF OPERATION |
EXECUTIVE SUMMARY
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The Company sold its operating assets in 2007 and did not generative any revenue in 2009 or 2008. We are currently focused on finding an acquisition candidate. The Company’s operating expenses relate primarily to compliance with maintaining our listing.
SUMMARY OF 2009
In 2009 and in 2008, we were focused on finding an acquisition candidate.
Results for the Period Ended December 31, 2009
Revenues for the twelve months ended December 31, 2009 were $-0- compared to $-0- for the twelve months ended December 31, 2008.
Cost of goods sold were $-0- for 2009 and $-0- for 2008, thus giving us a gross profit of $-0- for both 2009 and 2008.
Total operating expenses for the period were $15,492 for 2009 and $14,113 for 2008. The expenses were to maintain the corporation which almost wholly relates to audits and compliance with maintaining our listing.
Total other income/expense included interest expense, loss from write off of note receivable, dividend income and interest income.
We incurred interest expense on our line of credit which was $2,473 in 2009 and $1,768 in 2008.
In 2007 we sold substantially all our assets and took a note for that sale. In 2007 we recorded a $46,384 loss on that sale. In 2008, we wrote off the note due to the uncertainty of collection and recorded a loss on the write off of $48,672.
Net loss for the twelve months ended December 31, 2009 was $17,652 compared to the loss for 2008 of $61,841. The loss in 2008 included the write off of the note receivable of $48,672.
The Company is now focused on finding an acceptable acquisition or merger candidate. As of the date of this 10-K, we have not entered into any discussions or negotiations with any company, whether formal or informal.
Future Financial Condition
As discussed above in the Executive Overview the Company is seeking merger candidates, as the Company has sold all of its operating assets.
| ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
Not applicable
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| ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
Incorporated in this filing are the following financial statements:
Report of Independent Registered Public Accounting Firm
Balance Sheets as of December 31, 2009 and 2008
Statements of Operations for the Years Ended December 31, 2009 and 2008
Statement of Changes in Stockholders’ Equity For the Years Ended December 31, 2009 and 2008
Statements of Cash Flows For the Years Ended December 31, 2009 and 2008
Notes to the Financial Statements
| ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANICAL DISCLOSURES |
None.
| ITEM 9A. | CONTROLS AND PROCEDURES |
Evaluation of Disclosure Controls and Procedures
We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of December 31, 2009. This evaluation was accomplished under the supervision and with the participation of our chief executive officer / principal executive officer, and chief financial officer / principal financial officer who concluded that our disclosure controls and procedures are not effective to ensure that all material information required to be filed in the annual report on Form 10-K has been made known to them.
For purposes of this section, the term disclosure controls and procedures means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Act (15 U.S.C. 78a et seg.) is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure, controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by in our reports filed under the Securities Exchange Act of 1934, as amended (the "Act") is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
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Based upon an evaluation conducted for the period ended December 31, 2009, our Chief Executive and Chief Financial Officer as of December 31, 2009 and as of the date of this report, has concluded that as of the end of the periods covered by this report, we have identified the following material weaknesses in our internal controls:
| · | Reliance upon financial reporting consultants for review of critical accounting areas and disclosures and material non-standard transactions. |
| · | Lack of sufficient accounting staff which results in a lack of segregation of duties necessary for a good system of internal control. |
In order to remedy our existing internal control deficiencies, as our finances allow, we will hire additional accounting staff.
Management’s Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Our internal control system was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes, in accordance with generally accepted accounting principles in the United States of America. Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.
Because of inherent limitations, a system of internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate due to change in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our management conducted an evaluation of the effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework at December 31, 2009. Based on its evaluation, our management concluded that, as of December 31, 2009, our internal control over financial reporting was not effective because of: 1) Our reliance upon independent financial reporting consultants for review of critical accounting areas and disclosures and material non-standard transaction; and 2) a lack of sufficient accounting staff which results in a lack of segregation of duties necessary for a good system of internal control. A material weakness is a deficiency, or a combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.
This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to the attestation by the Company’s registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only management’s report in this annual report.
Changes in Internal Controls over Financial Reporting
We have not yet made any changes in our internal controls over financial reporting that occurred during the period covered by this report on Form 10-K that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART III.
| ITEM 10. | DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT |
As of December 31, 2009, the following persons or entities serve as directors and officers of the Company.
| Denise D. Smith | 53 | Chief Executive Officer, President, Chief Financial Officer and Director |
Denise D. Smith. Ms. Smith graduated from Oklahoma State University with a degree in Advertising and Public Relations. She held various sales positions selling advertising for brochures, magazines and a television station. These positions required her to interact with business owners and help them develop an advertising and marketing plan for their business and working with local and national advertising agencies in selling advertising for their clients. This entailed describing the different advertising avenues which gave her an expertise in the advertising and marketing area. She also was required to develop territories and generate new business for her employers. After working successfully in these sales positions she took time to raise a family. Since June 4, 2004, she has been the sole officer and director of Silver Pearl Enterprises, Inc.
| ITEM 11. | EXECUTIVE COMPENSATION |
Our executive officer received $-0- in 2009 and $-0- in 2008 in cash and non-cash compensation and benefits.
| ITEM 12. | SECURITY OWNERSHIP OF MANANGEMENT AND BENEFICIAL OWNERS |
As of December 31, 2009 the following persons are known to the Company to own 5% or more of the Company's voting stock:
Title / relationship to Issuer | Name of Owner | Amount owned before offering | Percent | ||||||
President, Secretary and Director | Denise D. Smith | 4,000,000 | 70.22 | % | |||||
| Shareholder | Art Xpectations, LLC | 400,000 | 7.02 | % | |||||
| Shareholder | VMP Enterprises, LLC | 360,000 | 6.32 | % | |||||
| Shareholder | TriPoint Capital Advisors, LLC | 480,000 | 8.43 | % | |||||
| All officers, directors and 5% shareholders as a group | 5,240,000 | 91.99 | % | ||||||
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| ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE |
There were no related transactions, with the exception of amounts owed to entities controlled by the Company’s spouse, as discussed in Notes 3 and 4 in our audited financial statements.
As of the date of this filing, there are no agreements or proposed transactions, whether direct or indirect, with anyone, but more particularly with any of the following:
A director or officer of the issuer;
Any principal security holder;
Any promoter of the issuer; or
Any relative or spouse, or relative of such spouse, of the above referenced persons.
| ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES |
(1) AUDIT FEES
The aggregate fees billed for professional services rendered by our auditors, for the audit of the registrant's annual financial statements of the financial statements included in the registrant's Form 10-K and review of the financials included in the Form 10-Q’s or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for fiscal years 2009 and 2008 was $11,075 and $9,500 respectively.
(2) AUDIT-RELATED FEES
NONE
(3) TAX FEES
NONE
(4) ALL OTHER FEES
NONE
(5) AUDIT COMMITTEE POLICIES AND PROCEDURES
The Securities and Exchange Commission has adopted rules implementing Section 407 of the Sarbanes-Oxley Act of 2002 requiring public companies to disclose information about “audit committee financial experts.” As of the date of this Annual report, we do not have a standing Audit Committee. The functions of the Audit Committee are currently assumed by our Board of Directors. Additionally, we do not have a member of our Board of Directors that qualifies as an “audit committee financial expert.” For that reason, we do not have an audit committee financial expert.
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(6) If greater than 50 percent, disclose the percentage of hours expended on the principal accountant's engagement to audit the registrant's financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant's full-time, permanent employees.
Not applicable.
| ITEM 15. | EXHIBITS, FINANICAL STATEMENT SCHEDULES |
(a) None.
(b) The company filed the following Form 8-K’s in 2009.
None.
(c) Exhibits
| No. | Description |
| 31.1 | Certification of the Company’s Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| 31.2 | Certification of the Company’s Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| 32.1 | Certification of the Company’s Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted to Section 906 of the Sarbanes-Oxley Act of 2002. |
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Management of
Silver Pearl Enterprises, Inc.
Rockwall, Texas
We have audited the accompanying balance sheets of Silver Pearl Enterprises, Inc. as of December 31, 2009 and 2008, and the related statements of operations, cash flows and stockholders’ equity for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
We were not engaged to examine management’s assertion about the effectiveness of Silver Pearl Enterprises, Inc.’s internal control over financial reporting as of December 31, 2009 and 2008 and, accordingly, we do not express an opinion thereon.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Silver Pearl Enterprises, Inc. as of December 31, 2009 and 2008 and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 8 to the financial statements, the Company has sold all of their assets, suffered significant losses and will require additional capital to develop its business until the Company either (1) achieves a level of revenues adequate to generate sufficient cash flows from operations; or (2) obtains additional financing necessary to support its working capital requirements. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 8. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ The Hall Group
The Hall Group, CPAs
Dallas, Texas
February 24, 2010
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| SILVER PEARL ENTERPRISES, INC. Balance Sheets December 31, 2009 and 2008 |
| 2009 | 2008 | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash and Cash Equivalents | $ | 454 | $ | 150 | ||||
| Total Current Assets | 454 | 150 | ||||||
| TOTAL ASSETS | $ | 454 | $ | 150 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current Liabilities | ||||||||
| Accounts Payable | $ | 25,950 | $ | 25,732 | ||||
| Due to Related Parties | 16,500 | 16,500 | ||||||
| Revolving Line of Credit – Related Party | 0 | 40,979 | ||||||
| Total Current Liabilities | 42,450 | 83,211 | ||||||
| Long Term Liabilities | ||||||||
| Revolving Line of Credit – Related Party | 58,717 | 0 | ||||||
| Total Long Term Liabilities | 58,717 | 0 | ||||||
| Total Liabilities | $ | 101,167 | $ | 83,211 | ||||
| Stockholders' Equity (Deficit) | ||||||||
Preferred Stock, $.001 par value, 20,000,000 shares authorized, -0- and -0- shares issued and outstanding | 0 | 0 | ||||||
Common stock, $.001 par value, 50,000,000 shares authorized, 5,696,800 and 5,696,800 shares issued and outstanding | 5,697 | 5,697 | ||||||
| Additional Paid-In Capital | 555,453 | 555,453 | ||||||
| Retained Earnings (Deficit) | (661,863 | ) | (644,211 | ) | ||||
| Total Stockholders’ Equity (Deficit) | (100,713 | ) | (83,061 | ) | ||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 454 | $ | 150 | ||||
The accompanying notes are an integral part of these financial statements.
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| SILVER PEARL ENTERPRISES, INC. Statements of Operations For the Years Ended December 31, 2009 and 2008 |
| 2009 | 2008 | |||||||
| REVENUES | $ | 0 | $ | 0 | ||||
| COST OF SALES | 0 | 0 | ||||||
| GROSS PROFIT | 0 | 0 | ||||||
| OPERATING EXPENSES | ||||||||
| General and Administrative | 15,492 | 14,113 | ||||||
| TOTAL OPERATING EXPENSES | 15,492 | 14,113 | ||||||
| NET OPERATING INCOME (LOSS) | (15,492 | ) | (14,113 | ) | ||||
| OTHER INCOME (EXPENSE) | ||||||||
| Interest Income | 0 | 2,877 | ||||||
| Dividend Income | 8 | 0 | ||||||
| Interest Expense | (2,473 | ) | (1,768 | ) | ||||
| Unrealized Gain (Loss) on Marketable Securities | 305 | (165 | ) | |||||
| Loss on Write-Off of Note Receivable | 0 | (48,672 | ) | |||||
| TOTAL OTHER INCOME (EXPENSE) | (2,160 | ) | (47,728 | ) | ||||
NET INCOME (LOSS) BEFORE INCOME TAXES | (17,652 | ) | (61,841 | ) | ||||
Provision for Income Taxes (Expense) Benefit | 0 | 0 | ||||||
| NET INCOME (LOSS) | $ | (17,652 | ) | $ | (61,841 | ) | ||
| EARNINGS PER SHARE, Basic and Diluted | ||||||||
| Weighted Average of Outstanding Shares | 5,696,800 | 5,696,800 | ||||||
| Income (Loss) for Common Stockholders | $ | (0.00 | ) | $ | (0.01 | ) | ||
The accompanying notes are an integral part of these financial statements.
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| SILVER PEARL ENTERPRISES, INC. Statement of Changes in Stockholders’ Equity For the Years Ended December 31, 2009 and 2008 |
| Common | Additional Paid-In | Retained Earnigns | ||||||||||||||||||
| Shares | Amount | Capital | (Deficit) | Totals | ||||||||||||||||
| Stockholders’ Equity (Deficit) at January 1, 2008 | 5,696,800 | $ | 5,697 | $ | 555,453 | $ | (582,370 | ) | $ | (21,220 | ) | |||||||||
| 2008 Net Loss | (61,841 | ) | (61,841 | ) | ||||||||||||||||
| Stockholders’ Equity (Deficit) at December 31, 2008 | 5,696,800 | 5,697 | 555,453 | (644,211 | ) | (83,061 | ) | |||||||||||||
| 2009 Net Loss | (17,652 | ) | (17,652 | ) | ||||||||||||||||
| Stockholders’ Equity (Deficit) at December 31, 2009 | 5,696,800 | $ | 5,697 | $ | 555,453 | $ | (661,863 | ) | $ | (100,713 | ) | |||||||||
The accompanying notes are an integral part of these financial statements.
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| SILVER PEARL ENTERPRISES, INC. Statements of Cash Flows For the Years Ended December 31, 2009 and 2008 |
| 2009 | 2008 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net Income (Loss) | $ | (17,652 | ) | $ | (61,841 | ) | ||
Adjustments to reconcile net loss to net cash used by operating activities: | ||||||||
| Loss on Write-Off of Note Receivable | 0 | 48,672 | ||||||
| (Decrease) Increase in Accounts Payable | 218 | 398 | ||||||
| Net Cash (Used) by Operating Activities | (17,434 | ) | (12,771 | ) | ||||
| CASH FLOWS USED FROM INVESTING ACTIVITIES | ||||||||
| Net Cash Provided by (Used) in Investing Activities | 0 | 0 | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Proceeds from Line of Credit | 17,738 | 12,777 | ||||||
| Payments on Note Payable | 0 | (719 | ) | |||||
| Net Cash Provided by Financing Activities | 17,738 | 12,058 | ||||||
| INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 304 | (713 | ) | |||||
| CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR | 150 | 863 | ||||||
| CASH AND CASH EQUIVALENTS AT END OF YEAR | $ | 454 | $ | 150 | ||||
SUPPLEMENTAL DISCLOSURES | ||||||||
| Cash Paid During the Year for Interest Expense | $ | 0 | $ | 0 | ||||
The accompanying notes are an integral part of these financial statements.
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| SILVER PEARL ENTERPRISES, INC. Notes to the Financial Statements December 31, 2009 and 2008 |
NOTE 1 – NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES
Nature of Activities, History and Organization
Silver Pearl Enterprises, Inc. (the “Company”) operated as a retailer of furniture and framed art until August of 2007 when it sold its assets due to continuing losses. The Company is now looking for an acquisition candidate. The Company is located in Rockwall, Texas and was incorporated on May 4, 2004, under the laws of the State of Texas.
As discussed in Note 2, the Company sold all of their operating assets during 2007 in exchange for a note receivable.
Significant Accounting Policies
The Company’s management selects accounting principles generally accepted in the United States of America and adopts methods for their application. The application of accounting principles requires the estimating, matching and timing of revenue and expense. The accounting policies used conform to generally accepted accounting principles which have been consistently applied in the preparation of these financial statements.
The financial statements and notes are representations of the Company’s management which is responsible for their integrity and objectivity. Management further acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud. The Company's system of internal accounting control is designed to assure, among other items, that 1) recorded transactions are valid; 2) valid transactions are recorded; and 3) transactions are recorded in the proper period in a timely manner to produce financial statements which present fairly the financial condition, results of operations and cash flows of the Company for the respective periods being presented.
FASB Accounting Standards Codification
In June 2009, the Financial Accounting Standards Board (“FASB”) issued new guidance concerning the organization of authoritative guidance under U.S. Generally Accepted Accounting Principles (“GAAP”). This new guidance created the FASB Accounting Standards Codification (“Codification”). The Codification has become the source of authoritative U.S. GAAP recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative U.S. GAAP for SEC registrants. The Codification became effective for the Company in its quarter ended September 30, 2009. As the Codification is not intended to change or alter existing U.S. GAAP, it did not have any impact on the Company’s consolidated financial statements. On its effective date, the Codification superseded all then-existing non-SEC accounting and reporting standards. All other nongrandfathered non-SEC accounting literature not included in the Codification will become nonauthoritative.
Basis of Presentation
The Company prepares its financial statements on the accrual basis of accounting.
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Cash and Cash Equivalents
Cash and cash equivalents includes cash in bank with original maturities of three months or less are stated at cost which approximates market value, which in the opinion of management, are subject to an insignificant risk of loss in value.
Fair Value of Financial Instruments
In accordance with the reporting requirements of Accounting Standards Codification (“ASC”) 820, “Fair Value Measurements” (formerly Statement of Financial Accounting Standards (“SFAS”) No. 157, “Disclosures About Fair Value of Financial Instruments”), the Company calculates the fair value of its assets and liabilities which qualify as financial instruments under this statement and includes this additional information in the notes to the financial statements when the fair value is different than the carrying value of those financial instruments. At December 31, 2009, the Company did not have any financial instruments other than cash and cash equivalents.
Inventory
Inventory was comprised of goods purchased for resale; therefore, the Company had no raw materials or work in process. The Company uses the specific identification and FIFO (“First In, First Out”) methods for inventory tracking and valuation. Inventory is stated at the lower of cost or market value.
Revenue Recognition
The Company recognizes revenue from the sale of products in accordance with ASC 605-15 “Revenue Recognition”, (formerly Staff Accounting Bulletin No. 104 (“SAB 104”), "Revenue Recognition in Financial Statements”). Revenue will be recognized only when all of the following criteria have been met:
| ● | Persuasive evidence of an arrangement exists; | ||
| ● | Ownership and all risks of loss have been transferred to buyer, which is generally upon shipment; | ||
| ● | The price is fixed and determinable; and | ||
| ● | Collectability is reasonably assured. |
All inventory is picked up by the customer or shipped to customers FOB shipping point. The risk of loss transfers to the customer at the time of pick up or shipment. Currently all revenue is generated from the sale of products and no revenue is earned from services rendered.
Revenue is recorded net any of sales taxes charged to customers.
Cost of Goods Sold
Cost of Goods Sold includes direct material costs and incoming and outgoing freight.
Advertising Costs
The Company incurred $0 and $0 advertising costs for the years ended December 31, 2009 and 2008, respectively.
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Concentrations of Credit Risk
The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents. The Company places its cash and cash equivalents with highly-rated financial institutions, limits the amount of credit exposure with any one financial institution and conducts ongoing evaluation of the credit worthiness of the financial institutions with which it does business.
Income Taxes
Income from the corporation is taxed at regular corporate rates per the Internal Revenue Code. There are no provisions for current taxes due to net available operating losses.
Earnings Per Share
Earnings (loss) per share (EPS) (basic) is calculated by dividing the net income (loss) by the weighted average number of common shares outstanding for the period covered. As the Company has no potentially dilutive securities, diluted earnings (loss) per share (diluted) is equal to earnings (loss) per share (basic).
Recent Accounting Pronouncements
The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position or cash flow.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
| NOTE 2 – SALE OF ASSETS |
On August 31, 2007, the Company sold all of their operating assets, including all inventory and fixed assets. The purchaser also assumed certain operating liabilities. A loss of $46,384 was recognized on the sale.
The Company received a $47,953 note receivable in exchange for the assets. During 2008, the Company determined that the note was uncollectible, and was written off. A loss of $48,672 was recognized on the write-off, which included accrued interest of $719. Interest income of $2,877 was recognized in 2008 before the note was written off.
NOTE 3 – DUE TO RELATED PARTY
At December 31, 2009 and 2008, the Company owed $16,500 in rent to Dynacap Holdings Ltd., LLC (“Dynacap”). A shareholder who is also the spouse of the Company’s Chief Executive Officer, is also a member of Dynacap.
The Company’s Line of Credit is held by an entity controlled by the Chief Executive Officer’s spouse.
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| NOTE 4 – LINE OF CREDIT-RELATED PARTY |
The Company entered into an amended and restated revolving credit arrangement on March 1, 2005 with a credit limit of $50,000, which was payable on demand. The line of credit was extended by an entity that is controlled by the CEO’s spouse. In 2009, the credit limit was increased to $75,000 and is now due on April 1, 2011. Collateral for the loan includes all of the assets and business interests, as well as all of the common stock that the Chief Executive Officer and Chief Financial Officer own (4,000,000 shares). The loan has an interest rate of 5% per annum. Upon the occurrence of an event of default, Lender may attach and apply any profits accrued by the Company, to cure the default or to apply on account of any indebtedness under the revolving credit arrangement due and owing. At December 31, 2009, the balance owed on the revolving credit arrangement was $58,717, of which $2,473 is interest accrued during the year ended December 31, 2009.
| NOTE 5 – EQUITY |
The Company is authorized to issue 20,000,000 preferred shares at a par value of $0.001 per share. At December 31, 2009, no shares were outstanding.
The Company is authorized to issue 50,000,000 common shares at a par value of $0.001 per share. These shares have full voting rights. At December 31, 2009, there were 5,696,800 shares outstanding.
The Company does not have any stock option plans or stock warrants.
| NOTE 6 – INCOME TAXES |
The Company has adopted ASC 740-10 “Income Taxes”, (formerly FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”), which supplemented SFAS No. 109, “Accounting for Income Taxes” (“SFAS No. 109”)), by defining the confidence level that a tax position must meet in order to be recognized in the financial statements. The Interpretation requires that the tax effects of a position be recognized only it if is “more-likely-than-not” to be sustained based solely on its technical merits as of the reporting date. The more-likely-than-not threshold represents a positive assertion by management that a company is entitled to the economic benefits of a tax position. If a tax position is not considered more-likely-than-not to be sustained based solely on its technical merits, no benefits of the tax position are to be recognized. Moreover, the more-likely-than-not threshold must continue to be met in each reporting period to support continued recognition of a benefit. With the adoption of FIN 48, companies are required to adjust their financial statements to reflect only those tax positions that are more-likely-than-not to be sustained. Any necessary adjustment would be recorded directly to retained earnings and reported as a change in accounting principle.
The Company’s deferred income taxes reflect the net tax effects of (a) temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax reporting purposes, and (b) net operating loss carry forwards. For Federal income tax purposes, the Company uses the cash basis of accounting, whereas the accrual basis is used for financial reporting purposes. In addition, certain assets are charged to expense when acquired under Section 179 of the Internal Revenue Code for income tax purposes.
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The Company provided a full valuation allowance on the net deferred tax asset, consisting primarily of net operating loss carryforwards, because management has determined that it is more-likely-than-not that the Company will not earn income sufficient to realize the deferred tax assets during the carry forward period. The cumulative tax effect at the expected tax rate of 25% of significant items comprising the Company’s net deferred tax amounts as of December 31, 2009 and 2008 are as follows:
| 2009 | 2008 | |||||||
| Deferred tax assets attributable to: | ||||||||
| Prior years | $ | 164,651 | $ | 149,191 | ||||
| Tax benefit (liability) for current year | 4,413 | 15,460 | ||||||
| Total Deferred Tax Benefit | $ | 169,064 | $ | 164,651 | ||||
| Valuation Allowance | (169,064 | ) | (164,651 | ) | ||||
| Net Deferred Tax Benefit | $ | 0 | $ | 0 | ||||
The realization of deferred tax benefits is contingent upon future earnings and is fully reserved at December 31, 2009.
NOTE 7 – COMMITMENTS AND CONTINGENCIES
The lease for the Company’s retail space expired in July 2007 and was not renewed. The Company does not have any future minimum rental obligations or any other commitments as of December 31, 2009.
Rent expense was $0 for both years ended December 31, 2009 and 2008.
NOTE 8 – FINANCIAL CONDITION AND GOING CONCERN
The Company has an accumulated deficit through December 31, 2009 totaling $661,863 and had negative working capital of $100,714. Because of this accumulated deficit, the Company will require additional working capital to develop its business operations. The Company intends to raise additional working capital either through private placements, public offerings and/or bank financing. There are no assurances that the Company will be able to either (1) achieve a level of revenues adequate to generate sufficient cash flow from operations; or (2) obtain additional financing through either private placement, public offerings and/or bank financing necessary to support the Company’s working capital requirements. To the extent that funds generated from any private placements, public offerings and/or bank financing are insufficient, the Company will have to raise additional working capital. No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to the Company. If adequate working capital is not available, the Company may not be able to continue its operations.
The Company sold all of its operating assets during 2007, and is not generating any revenue to offset continuing expenses to operate the Company. The Company is currently seeking an acquisition candidate. These conditions raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
NOTE 9 – RECENT ACCOUNTING PRONOUNCEMENTS
In 2009, the FASB issued the following guidance:
SFAS No. 166: "Accounting for Transfers of Financial Assets—an amendment of FASB Statement No. 140", which was codified into ASC 860, which be effective for the Company as of January 1, 2010.
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SFAS No. 167: "Accounting for Transfers of Financial Assets", which was codified into ASC 810-10, which will be effective for the Company as of January 1, 2010.
FSP No. FAS 107-1 and APB 28-1: “Interim Disclosures about Fair Value of Financial Instruments”, which was codified into ASC 825.
FSP No. FAS 115-2 and FAS 124-2: “Recognition and Presentation of Other-Than-Temporary Impairments”, which was codified into ASC 320-10-65-4.
FSP No. FAS 157-4: “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly”, which was codified into ASC 820-10-65-4.
Management has reviewed these new standards and believes they will have no material impact on the financial statements of the Company.
NOTE 10 – SUBSEQUENT EVENTS
The FASB issued ASC 855-10 “Subsequent Events”, (formerly SFAS No. 165, “Subsequent Events,”) which establishes general standards for accounting for and disclosure of events that occur after the balance sheet date but before the financial statements are issued or are available to be issued. The pronouncement requires the disclosure of the date through which an entity has evaluated subsequent events and the basis for that date, whether that date represents the date the financial statements were issued or were available to be issued. In conjunction with the preparation of these financial statements, an evaluation of subsequent events was performed through March 2, 2010, which is the date the financial statements were issued. No reportable subsequent events were noted.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned hereunto duly authorized.
SILVER PEARL ENTERPRISES, INC.
| By: | /s/ Denise D. Smith |
| Denise D.Smith | |
| Chief Executive Officer and Chief Financial Officer | |
| Dated: March 3, 2010 | |
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