UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K/A
(Mark One)
| x | ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended September 30, 2009
| ¨ | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ______________to ____________
Commission File Number 333-127597
THRIVE WORLD WIDE, INC.
(Name of small business issuer in its charter)
| Nevada | 20-2725030 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| | |
| 638 Main Street, Lake Geneva, Wisconsin | 53147 |
| (Address of principal executive offices) | (Zip Code) |
Issuer’s telephone number (262) 749-0373
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act: Yes
Check whether the issuer is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. ¨
Check whether the issuer (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 ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
The issuer’s revenue for the most recent fiscal year ended September 30, 2009 was $ -0- .
The aggregate market value of the voting and non-voting common equity held by non-affiliates was $2,800,000 as of September 30, 2009, based upon the per share closing sale price of $0.40 on such date.
As of December 31, 2009, there were outstanding 27,050,000 shares of the registrant’s common stock, $.001 par value per share.
Form 10-K/A
For the Fiscal Year Ended September 30, 2009
TABLE OF CONTENTS
| | Page |
| PART I | | |
Item 1. Description of Business | | 3 |
| | | |
Item 2 Description of Property | | 4 |
| | | |
Item 3. Legal Proceedings | | 4 |
Item 4. Submission of Matters to a Vote of Security Holders | | 4 |
| | | |
| PART II | | |
Item 5. Market for Common Equity and Related Stockholder Matters | | 5 |
Item 6. Management’s Discussion and Analysis | | 6 |
Item 7. Financial Statements | | 11 |
Item 8. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure | | 23 |
Item 8A.Controls and Procedures | | 23 |
| | | |
| PART III | | |
Item 9. Directors, Executive Officers, Promoters, Control Persons and Corporate Governance; Compliance With Section 16(a) of the Exchange Act | | 23 |
Item 10. Executive Compensation | | 24 |
Item 11. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | | 25 |
Item 12. Certain Relationships and Related Transactions, and Director Independence | | 26 |
Item 13. Exhibits | | 26 |
Item 14. Principal Accountant Fees and Services | | 27 |
Form 10-K/A
For the Fiscal Year Ended September 30, 2009
PART I
Forward Looking Statement
This Annual Report on Form 10-K/A contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including, without limitation, statements regarding our expectations, beliefs, intentions or future strategies that are signified by the words “expects,” “anticipates,” “intends,” “believes,” “estimates” or similar language. All forward-looking statements included in this document are based on information available to us on the date hereof. We caution investors that our business and financial performance and the matters described in these forward-looking statements are subject to substantial risks and uncertainties. For further information regarding these risks and uncertainties, please refer to publicly available documents that we have filed with the Securities and Exchange Commission (the “SEC”). Because of these risks and uncertainties, some of which may not be currently ascertainable and many of which are beyond our control, actual results could differ materially from those projected in the forward-looking statements. Deviations between actual future events and our estimates and assumptions could lead to results that are materially different from those expressed in or implied by the forward looking statements. We do not intend to update these forward looking statements to reflect actual future events. The terms “Thrive,” “Thrive World Wide,” “we,” “us,” “our,” and the “Company” refer to Thrive World Wide, Inc.
Description of Business.
Prior to July 26, 2008, the Company was known as Z Yachts, Inc., the successor of a limited liability company founded in December 2002 in the state of Georgia which then became a corporation on April 8, 2005 in the State of Nevada. Z Yachts, Inc. was a full-service brokerage company that served both recreational boaters and the marine industry and had as its primary business the brokerage sale of new and previously-owned recreational vessels.
On July 26, 2008, the Company determined that it would no longer operate as a broker for the sale of new and previously owned recreational vessels. Instead, from and after July 26, 2008, the Company’s board of directors agreed to adopt a business plan of developing cancer detection technologies and to change its name to Boveran Diagnostics, Inc. in light of its new change in business. Although it had not yet done so, the Company’s strategy had since been to acquire established pathology laboratories and medical diagnostic companies and introduce new automation and cancer detection technologies to the marketplace. The Company believed that it was not going to be able to raise sufficient capital to make the cancer detection business self-sustaining in a meaningful manner which would significantly add to shareholder value. The Company's board of directors then decided in the latter part of May of 2009 to wind down the cancer research operation and terminate its letter of intent to acquire the operations of one or more pathology labs. In late May of 2009, the Company entered into a binding letter of intent with STB Telemedia, Inc., its successors and assign, to acquire the business of STB Telemedia, Inc. and to operate a joint venture with the Company for a period which would allow management and the operational teams to become acquainted and comfortable with each other and to determine the fit and focus of their operations and to provide sufficient time to conduct due diligence by each party. The joint venture has been ongoing through the end of the period covered by this report.
In furtherance of the new business plan, the Company’s board of directors, on July 16, 2009, approved the resignations of Anthony Welch as Chief Executive Officer, President, Chief Financial Officer, Treasurer, Secretary and director of the Company, effective on July 16, 2009.
The Company also accepted the resignation of Jason C. Eck and Regina Weller as directors on July 26, 2009. On this same date, the Company’s board of directors appointed Andrew J. Schenker, as Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer, President, Secretary, Treasurer and director of the Company to be effective immediately upon the aforementioned resignations, which were presented and accepted by the Company on July 16, 2009.
Description of Property.
Our corporate office is maintained at 638 Main Street, Lake Geneva, Wisconsin 53147. Our corporate office is in good condition, and we believe that this facility is adequate to meet our current needs and is sufficient to conduct our operations.
Legal Proceedings.
We are not a party to any proceedings or threatened proceedings as of the date of this filing.
Submission of Matters to a Vote of Security Holders.
The following matters were submitted to a vote of security holders during the fourth quarter of the fiscal year covered by this report:
On August 10, 2009, the Company’s board of directors believed it was in the best interest of the Company to issue shares of the Company's common stock to the following individuals in consideration of the conversion into stock of certain notes payable by the Company (as more fully described in Note 9 to the financial statements, common stock in consideration for such debt cancellation was as follows: One Million Shares (1,000,000) to Waters Edge Advisors; Eight Hundred Thousand Shares (800,000) to John Burke; and Five Hundred Thousand Shares (500,000) to Anthony Finn; Seven Hundred and Fifty Thousand Shares (750,000) to Steven A Horowitz; and a corresponding charge was made to common stock.
On July 26, 2009, the Company’s majority stockholders executed a formal joint venture limited liability company operating with STB Telemedia, Inc., and a letter of intent to merge the companies together. As of the date of the end of the period reported herein, the merger had not yet closed despite the fact that the companies had operated together for a period of time which was believed to be sufficient to complete the due diligence. As a result of the illness of one of the principals of the joint venture company, due diligence was suspended until the date hereof. It had been anticipated that the time was going to be sufficient to perform adequate due diligence, however, the merger has not yet occurred as of the date of the end of the period covered by this report and the joint venture has been accounted for herein.. The original term sheet ("Term Sheet”) with STB Telemedia, Inc., with respect to a proposed transaction, was to close at a time to be determined in the future whereby certain selling shareholders of the Company would sell a controlling interest in the Company to STB Telemedia, Inc., and STB Telemedia, Inc., would merge with the Company. Pursuant to such Term Sheet, STB Telemedia, Inc., would assume certain accounts payable and shareholder loans of the Company and certain principals of the Company would exchange the principal amount of loans they have made to the Company for an aggregate of 591,000 shares of the Company’s common stock. Pursuant to such Term Sheet, STB Telemedia, Inc., would purchase 18,400,000 shares of common stock for a total purchase price of $792,510 with cash and assets. Further, other than the shares proposed to be sold to STB Telemedia, Inc., no more than 9,200,000 shares of the Company’s common stock would be outstanding at the time of the closing of the proposed transaction. The proposed transaction is subject to the negotiation and execution of a Stock Purchase Agreement and related documentation and satisfaction of all terms and conditions to be detailed therein.
On July 31, 2009, in support of its new business plan, the Company’s directors and the majority stockholders approved to amend the Company’s certificate of incorporation to change the name of the Company to Thrive World Wide, Inc. The certificate of amendment was filed with the Nevada Secretary of State on September 2, 2009, with an effective date of September 28, 2009 granted Financial Industry Regulatory Authority ("FINRA").
On July 31, 2009, the Company’s directors and the majority stockholders approved to amend the Company’s certificate of incorporation to change the name of the Company to Thrive World Wide, Inc., to reauthorize Two Hundred Million (200,000,000) shares of common stock, $.001 par value per share of common stock, and to authorize Ten Million (10,000,000) shares of preferred stock, $.001 par value per share of preferred stock.
PART II
Market for Common Equity and Related Stockholder Matters.
Market Information
On September 28, 2009, our symbol was changed from “BOVD” to “TWWI", in conjunction with our change of name from Boveran Diagnostics, Inc. to Thrive World Wide, Inc. Our common stock was first cleared for quotation on the OTCBB under the symbol “ZYAT” on December 6, 2007. Prior to that, there was no market for our common stock.
Holders of Record
As of September 30, 2009 we had forty-Eight (48) registered holders of our common stock.
Dividend Policy
There are no restrictions in our articles of incorporation or bylaws that prevent us from declaring dividends. The Nevada Revised Statutes, however, do prohibit us from declaring dividends where, after giving effect to the distribution of the dividend:
1. We would not be able to pay our debts as they become due in the usual course of business; or
2. Our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the rights of shareholders who have preferential rights superior to those receiving the distribution.
We have not declared any cash dividends on our common stock since our inception and do not anticipate paying such dividends in the foreseeable future. We plan to retain any future earnings for use in our business. Any decisions as to future payments of dividends will depend on our earnings and financial position and such other facts, as our board of directors deems relevant. There are no present loan agreements or other agreements that impose any restrictions on the payment of dividends.
Unregistered Sales of Equity Securities
On January 1, 2009, the Company’s board of directors agreed that certain debt holders of the Company were holding debt of the Company for such a prolonged period of time, with very little, if any prospect for the repayment thereof and therefore, agreed that such debt would be convertible to equity as of January 2, 2009 and thereafter. We have claimed an exemption from registration afforded by Section 4(2) of the Securities Act because of the limited number of persons involved in each transaction, our previous relationship with the recipients, the access of such person to information about us that would have been available in a public offering and the absence of any public solicitation or advertising. Also, the recipients took the securities for investment and not resale and we took appropriate measures to restrict transfer.
Management’s Discussion and Analysis.
You should read the following Management’s Discussion and Analysis together with our financial statements and notes to those financial statements included elsewhere in this report. This discussion contains forward-looking statements that are based on our management’s current expectations, estimates and projections about our business and operations. Our actual results may differ from those currently anticipated and expressed in such forward-looking statements. The terms “Thrive” “we,” “us,” “our,” and the “Company” refer to Thrive World Wide, Inc.
Overview
Prior to July 26, 2008, the Company was known as Z Yachts, Inc., the successor of a limited liability company founded in December 2002 in the state of Georgia which then became a corporation on April 8, 2005 in the State of Nevada. Z Yachts, Inc. was a full-service brokerage company that served both recreational boaters and the marine industry and had as its primary business the brokerage sale of new and previously-owned recreational vessels.
On July 26, 2008, the Company determined that it would no longer operate as a broker for the sale of new and previously owned recreational vessels. Instead, from and after July 26, 2008, the Company’s board of directors agreed to adopt a business plan of developing cancer detection technologies and to change its name to Boveran Diagnostics, Inc in light of its new change in business. The Company’s board of directors then abandoned those operations and subsequently established a new line of business for the Company and then formulated a new business model of creating, marketing and licensing new media technologies. Along those lines, the Company has entered into the letter of intent and the joint venture agreement set forth below to accomplish that objective.
On May 18, 2009, the Company entered into a Binding Letter of Intent to acquire 100% of the stock of STB Telemedia and we intend to grow our existing organization by obtaining financing and acquiring new technologies in the Multi-media sector and to develop them and to bring them to the marketplace. On July 16th, the Company, in furtherance of their Letter of Intent “LOI” to merge with STB Telemedia, Inc., entered into a joint venture agreement (the “Joint Venture LLC”). The joint venture was created by means of the formation of an LLC to operate the business of STB Telemedia under the auspices of the Company as a co-owner thereof. It is the intention of both the Company and STB Telemedia, Inc., to complete the merger transaction as set forth in the LOI . There has been an extension to the merger and the LOI which will allow the merger to take place in the second quarter.
Results of Operations For The Year Ended September 30, 2009 Compared to the Year Ended September 30, 2008
The income from our business of cancer development technologies for the twelve months ended September 30, 2009 was $0. This was a decrease of $247,023 or 100%, as compared to brokerage income of $247,023 for the twelve months ended September 30, 2008. The decrease in income was due to the disposition of the brokerage business and also from a change in our business model from that of a full-service brokerage company to a cancer detection technology company and the subsequent conversion to a joint venture partner in the multimedia, marketing and communications sector.
General and administrative expenses for the twelve months ended September 30, 2009 were $154,985. This was a decrease of $320,996, or 73%, as compared to general and administrative expenses of $575,981 for the twelve months ended September 30, 2008. This decrease was primarily attributable to a decrease in professional fees.
Depreciation expense for the twelve months ended September 30, 2009 was $0. This is a decrease of $3,653, or 100%, as compared to depreciation expense of $3,653 for the twelve months ended September 30, 2008. The decrease in depreciation expense was due to a reduction in fixed assets.
Interest expense for the twelve months ended September 30, 2009 was $34,181. This is a decrease of $2,573, or 7%, as compared to interest expense of $36,754 for the twelve months ended September 30, 2008. The decrease in interest expense is due to a decrease in outstanding bank debt.
Other income for the twelve months ended September 30, 2009 was $67,144. This was an increase of $10,541, or 18.6%, as compared to other income of $56,603 for the twelve months ended September 30, 2008. The increase is primarily attributable to the receipt of debt forgiveness income.
We had net loss of $121,222 (or basic and diluted loss per share of $0.00) for the twelve months ended September 30, 2009, as compared to net loss of $451,593 (or basic and diluted loss per share of $0.03) for the twelve months ended September 30, 2008. The decrease in net loss was primarily due to the decrease in general and administrative expenses, primarily professional fees.
Liquidity and Capital Resources
As of September 30, 2009, we had total current assets of $9,752 consisting of amounts due to the Company from its joint venture partner.
As of September 30, 2009, we had total current liabilities of $1,040,121 consisting of loans from stockholders of $745,376, bank lines of credit of $95,636, accrued expenses of $25,422, a note payable of $30,000 which is in default (discussed below), accounts payable of $143,687. Accrued expenses consisted of credit card liabilities and accrued interest. See “Item 12, entitled, Certain Relationships and Related Transactions” for a discussion regarding the loans from stockholders and accounts payable to related parties.
We had negative working capital of $1,030,369 as of September 30, 2009. The ratio of current assets to current liabilities was 0.9% as of September 30, 2009.
Cash flows from operations were not sufficient to fund our requirements during the twelve months ended September 30, 2009. Our current cash requirements are approximately $6,500 per month. To make up the short fall, we were advanced monies from shareholders and a third party.
In December 2008 we renegotiated and settled the outstanding balance on our line of credit with Washington Mutual. As a result, Washington Mutual has agreed to reduce the line of credit from $22,632 to $4,429 which has been paid in full.
On July 6, 2007, we issued a promissory note in the amount of $42,430 to PCMS’ parent company for PCMS to provide us with six months of regulatory compliance services regarding periodic and other reports that we are required to file with the SEC. The note payable matured on January 6, 2008, and is currently in default, in which event, we have agreed to confess or stipulate judgment against us for all outstanding principal, unpaid interest and all other amounts due under the note in any lawsuit filed by the holder, and the amount of the judgment will be immediately due and payable. On July 6, 2009, we renegotiated the balance due to PCMS and once payment was made they were to return 586,000 shares of issued stock to the Company’s treasury.
We are having difficulty meeting our current cash requirements as discussed above regarding a note payable which is in default. We estimate that we will need to raise $100,000 of additional capital during the next twelve months in order to meet our cash requirements and fund our operations. To conserve cash we do not pay salaries and benefits for management and have not yet incurred any marketing or technology expenditures.
We plan to obtain additional capital from the sale of our common stock or through additional loans from our stockholders and if we are unsuccessful in such efforts we will delay or curtail the new business direction of information technology or seek a business combination or merger transaction. At this time, we have not secured or identified any additional financing. We do not have any firm commitments or other identified sources of additional capital from third parties or from our officers or directors or from shareholders. There can be no assurance that additional capital will be available to us, or that, if available, it will be on terms satisfactory to us. Any additional financing may involve dilution to our shareholders. In the alternative, additional funds may be provided from cash flow in excess of that needed to finance our day-to-day operations, although we may never generate this excess cash flow. If we do not raise additional capital or generate additional funds on terms satisfactory to us, or at all, it could cause us to further delay, curtail, scale back or forgo some or all of our operations such as withdrawing from the information technology market or we could cease to exist.
Critical Accounting Policies
Our discussion and analysis of our financial condition and results of operations is based upon our financial statements, which have been prepared in accordance with accounting principals generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of any contingent assets and liabilities. On an on-going basis, we evaluate our estimates. We base our estimates on various assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our financial statements:
Revenue Recognition
We recognize revenue when persuasive evidence of an arrangement exists, services have been rendered, the sales price is fixed or determinable, and collectability is reasonably assured.
Income Taxes
We recognize deferred tax assets and liabilities based on differences between the financial reporting and tax bases of assets and liabilities using the enacted tax rates and laws that are expected to be in effect when the differences are expected to be recovered. We provide a valuation allowance for deferred tax assets for which we do not consider realization of such assets to be more likely than not. During fiscal 2009, we incurred net losses and, therefore, had no tax liability. The net deferred tax asset generated by the loss carry-forward has been fully reserved for.
Plan of Operations for the Year Ending September 30, 2010
We intend to move forward with our due diligence and concluded the merger with STB Telemedia Inc. We will develop the technological market that they have already are involved in and will also be working hard on developing new technologies and markets for similar products.
Risk Factors
Our financial condition and results of operations raise substantial doubt about our ability to continue as a going concern.
As of September 30, 2009, we had total stockholders’ deficit of $1,030,369, including an accumulated operating deficit of $2,596,408. In addition, we incurred net losses of $121,222 and $451,593 for the twelve months ended September 30, 2009 and 2008, respectively. Our ability to continue as a going concern is dependent upon our ability secure additional funding and attaining profitable operations.
We do not have any commitments and have not identified sources of additional funding and we cannot assure you that we will be able to attain or maintain profitable operation. These conditions raise substantial doubt as to our ability to continue as a going concern.
We have losses which we expect to continue into the future and there is no assurance our future operations will result in profitable revenues. If we cannot generate sufficient revenues to operate profitably or we are unable to raise additional funds, we may enter into a business combination which may ultimately decrease shareholder value or cause us to cease operations.
We expect to incur operating losses in future periods due to the change in our business of information technologies from cancer detection technology. We cannot be sure that we will be successful in generating revenues in the future and in the event we are unable to generate sufficient revenues or raise additional funds we will analyze all avenues of business opportunities. Management may consider a merger, acquisition, joint venture, strategic alliance, a roll-up, or other business combination to increase business and potentially increase the liquidity of the Company. Such a business combination may ultimately fail, decreasing the liquidity of the Company and shareholder value or cause us to cease operations, and investors would be at risk to lose all or part of their investment in us.
We may incur debt to finance continued operation.
We may borrow money from our executive management or third persons to fund our operations. If indebtedness is incurred, a portion of our cash flow from operations will be dedicated to the payment of interest and principal payments on our indebtedness and the lenders may be granted a security interest in our assets. There is no assurance that our cash flows will be sufficient to fund total debt service requirements in the future.
We have a short operating history from which to evaluate our prospects.
On July 26, 2009, the Company determined that it would no longer operate its business as cancer detection technology company. Instead, from and after July 26, 2009, the Company’s board of directors agreed to adopt a business plan of marketing multimedia, marketing and web based telecommunications technologies. Our new planned operations are subject to the risks inherent in the establishment of a new business enterprise including the ability to attract and retain management and operating personnel, availability of adequate financing, management of daily operations, implementation of communication and control systems, and acceptance of new business methods. We do not have an adequate history of operations from which to evaluate our performance.
We are dependent upon certain key officers and employees.
Our success is dependent upon the expertise and management decisions of Andrew J. Schenker as Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer, President, Secretary, Treasurer and a director of the Company. The loss of services of Mr. Schenker could adversely affect our financial condition and results of operations.
Our Board of Directors is not independent.
We do not have independent members of our Board of Directors or an Audit Committee or Compensation Committee of our Board of Directors. There is a potential conflict in that the members of the Board of Directors will be solely responsible for establishing the compensation paid to themselves as officers and will be responsible for selecting and compensating the auditor that will review our financial records, which they are responsible for preparing.
The market for our common stock is highly sporadic, illiquid and volatile.
On September 28, 2009, our symbol was changed from “BOVD” to "TWWI" in conjunction with our change of name from Boveran Diagnostics, Inc. to Thrive World Wide, Inc. Our common stock was first cleared for quotation on the OTCBB under the symbol “ZYAT” on December 6, 2007. Prior to that, there was no market for the trading of our common stock.
The trading price of our common stock has been volatile since it began trading and will likely continue to be volatile. The trading price of our common stock may fluctuate widely in response to various factors, some of which are beyond our control. These factors include:
Quarterly variations in our results of operations or those of our competitors;
Announcements by us or others about our business, development, significant contracts or results of operations or other matters;
The volume of shares of common stock available for public sale;
Sales of stock by our stockholders; and
Additionally, at present, we have a very limited number of shares in our public float, and as a result, there could be extreme fluctuations in the price of our common stock and the ability to buy and sell our shares could be impaired.
The application of the “Penny Stock Regulations” could adversely affect the price of our common stock.
Our common stock is deemed a penny stock. Penny stocks generally are equity securities with a price of less than $5.00 per share other than securities registered on certain national securities exchanges or quoted on the NASDAQ Stock Market. The “penny stock rules” impose additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and accredited investors (generally those with assets in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 together with their spouse). For transactions covered by these rules, the broker-dealer must make a special suitability determination for the purchase of such securities and have received the purchaser’s written consent to the transaction prior to the purchase. Additionally, the “penny stock rules” require the delivery prior to the transaction, of a disclosure schedule prescribed by the United States Securities and Exchange Commission relating to the penny stock market. The broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Finally, monthly statements must be sent disclosing recent price information on the limited market in penny stocks. Consequently, the “penny stock rules” may restrict the ability of broker-dealers to sell our securities and may have the effect of reducing the level of trading activity of our Common Stock in the secondary market.
Financial Statements.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Thrive World Wide, Inc.
Lake Geneva, WI
We have audited the balance sheets of Thrive World Wide, Inc. as of September 30, 2009 and 2008 and the related statements of operations, changes in stockholders’ deficit and cash flows for each of the years in the two-year period ended September 30, 2009 and 2008. Thrive World Wide, Inc.’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Thrive World Wide, Inc. as of September 30, 2009 and 2008 and the results of its operations and its cash flows for each of the years in the two-year period ended September 30, 2009 in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that Thrive World Wide, Inc. will continue as a going concern. As discussed in Note 2 to the financial statements, Thrive World Wide, Inc. has suffered recurring losses from operations and has a working capital deficit of $1,030,369, which raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters are described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ D’Arcangelo & Co., LLP
January 19, 2010
Poughkeepsie, New York
Thrive World Wide, Inc.
Balance Sheet
September 30, 2009 and 2008
| | | September 30, 2009 | | | September 30, 2008 | |
| | | | | | | |
| Assets | | | | | | |
| Due from STB Telemedia, Inc. | | $ | 9,752 | | | $ | - | |
| Escrow deposit | | | - | | | | 4,245 | |
| Other current asset | | | - | | | | 50 | |
| Total current assets | | $ | 9,752 | | | $ | 4,295 | |
| | | | | | | | | |
| Liabilities and Stockholders’ Deficit | | | | | | | | |
| Bank overdraft | | $ | - | | | $ | 535 | |
| Accounts payable | | | 143,687 | | | | 51,537 | |
| Accounts payable- related parties | | | - | | | | 73,846 | |
| Accrued expenses | | | 25,422 | | | | 55,271 | |
| Loans from stockholders | | | 745,376 | | | | 451,652 | |
| Note payable | | | 30,000 | | | | 40,430 | |
| Bank line of credit | | | 95,636 | | | | 243,221 | |
| Total current liabilities | | | 1,040,121 | | | | 916,492 | |
| | | | | | | | | |
| Stockholders' deficit | | | | | | | | |
| Preferred stock, $.001 par value, 10,000,000 shares authorized, 0 issued and outstanding | | | - | | | | - | |
Common stock, $.001 par value, 200,000,000 shares authorized, 27,050,000 and 24,000,000 issued and outstanding, respectively | | | 27,050 | | | | 24,000 | |
| Additional paid in capital | | | 1,538,989 | | | | 1,538,989 | |
| Accumulated deficit | | | (2,596,408 | ) | | | (2,475,186 | ) |
| Total stockholders' deficit | | | (1,030,369 | ) | | | (912,197 | ) |
| | | | | | | | | |
| Total liabilities and stockholders' deficit | | $ | 9,752 | | | $ | 4,295 | |
The accompanying notes are an integral part of these financial statements.
Thrive World Wide, Inc.
Statements of Operations
Years Ended September 30, 2009 and 2008
| | | 2009 | | | 2008 | |
| | | | | | | |
| Revenue | | $ | - | | | $ | - | |
| | | | | | | | | |
| Operating expenses | | | | | | | | |
| General and administrative | | | 154,985 | | | | 575,981 | |
| Depreciation expense | | | | | | | 3,653 | |
| Total operating expenses | | | 154,985 | | | | 579,634 | |
| | | | | | | | | |
| Loss from operations | | | (154,985 | ) | | | (579,634 | ) |
| | | | | | | | | |
| Other income/(expense) | | | | | | | | |
| Interest expense | | | (34,181 | ) | | | (36,754 | ) |
| Other income | | | 67,144 | | | | 56,603 | |
| Total other income/(expense) | | | 32,963 | | | | 19,849 | |
| | | | | | | | | |
| Loss from continuing operations before benefit from income taxes | | | (120,022 | ) | | | (559,785 | ) |
| | | | | | | | | |
| Benefit from income taxes | | | - | | | | 37,867 | |
| | | | | | | | | |
| Total loss from continuing operations | | | (521,918 | ) | | | (502,107 | ) |
| | | | | | | | | |
| Discontinued operations | | | | | | | | |
| Income/(loss) from operations of discontinued brokerage business, net of income tax expense | | | (1,200 | ) | | | 70,325 | |
| | | | | | | | | |
| Net loss | | $ | (121,222 | ) | | $ | (451,593 | ) |
| | | | | | | | | |
| Basic and diluted loss per share from continuing operations | | $ | (0.00 | ) | | $ | (0.03 | ) |
| | | | | | | | | |
| Basic and diluted income/(loss) per share from discontinued operations | | $ | (0.00 | ) | | $ | 0.00 | |
| | | | | | | | | |
| Net basic and diluted loss per share | | $ | (0.00 | ) | | $ | (0.02 | ) |
| | | | | | | | | |
| Weighted average shares outstanding | | | 24,469,589 | | | | 20,409,096 | |
The accompanying notes are an integral part of these financial statements.
Thrive World Wide, Inc.
Statements of Cash Flows
Years Ended September 30, 2009 and 2008
| | | 2009 | | | 2008 | |
| Cash Flows From Operating Activities | | | | | | |
| Net loss | | $ | (121,222 | ) | | $ | (451,593 | ) |
| Adjustments to reconcile net loss to net cash provided by operating activities: | | | | | | | | |
| Depreciation expense | | | - | | | | 3,653 | |
| Debt forgiveness | | | (67,144 | ) | | | - | |
| Non-cash services paid with equity interest | | | - | | | | 30,966 | |
| Bills paid directly with debt issuance | | | 89,531 | | | | - | |
| Gain on sale of assets | | | - | | | | (10,000 | ) |
| Changes in: | | | | | | | | |
| Cash, escrow | | | - | | | | (11,500 | ) |
| Escrow deposit | | | 4,245 | | | | (4,245 | ) |
| Other current asset | | | 50 | | | | 390,535 | |
| Due From Thrive World Wide, LLC | | | (9,752 | ) | | | - | |
| Accounts payable | | | 92,150 | | | | (2,111 | ) |
| Accounts payable - related parties | | | (38,907 | ) | | | 12,851 | |
| Accrued expenses | | | 51,584 | | | | 23,451 | |
| Net cash provided by operating activities | | | 535 | | | | 15,572 | |
| | | | | | | | | |
| Cash Flows From Investing Activities | | | | | | | | |
| Change in cash, escrow | | | - | | | | (11,500 | ) |
| Net cash used in investing activities | | | | | | | (11,500 | ) |
| | | | | | | | | |
| Cash Flows From Financing Activities | | | | | | | | |
| Bank Overdraft | | | (535 | ) | | | 535 | |
| Proceeds from stockholders ' loans | | | - | | | | 1,500 | |
| Payments on note payable | | | - | | | | (1,000 | ) |
| Net change in lines of credit | | | - | | | | (4,747 | ) |
| Proceeds from sale of stock | | | - | | | | 11,064 | |
| Net cash provided by/(used in) financing activities | | | (535 | ) | | | 47,030 | |
| | | | | | | | | |
| Net change in cash | | | - | | | | (175 | ) |
| | | | | | | | | |
| Cash at beginning of period | | | - | | | | 175 | |
| | | | | | | | | |
| Cash at end of period | | $ | - | | | $ | - | |
| | | | | | | | | |
| Supplemental Disclosure of Cash Flow Information | | | | | | | | |
| Income taxes | | $ | - | | | $ | - | |
| Interest | | | - | | | | 32,370 | |
Supplemental Disclosure of Cash Flow Information
During the fiscal year ended September 30, 2009, outstanding debt of $38,511, $10,430, and $18,203 was forgiven on the Company's accounts payable/accrued expenses, note payable, and Washington Mutual line of credit, respectively. These amounts have been excluded from the statements of cash flows presented.
During the fiscal year ended September 30, 2009, an outside third party purchased the notes payable of two stockholders. Accordingly, loans/related party balances in the amount of $228,257 including capitalized interest of $23,257 have been reclassified to “Notes Payable” and the third party was issued a new Note Payable for payment of other expenses on behalf of the Company in the amount of $41,718. This third party became a shareholder subsequent to these transaction, thus the balances have been further reclassified to shareholder notes payable. These amounts have been excluded from the statements of cash flows presented.
During the fiscal year ended September 30, 2009, a stockholder of the Company personally assumed the outstanding debt and interest on a line of credit held by the Company. The total amount assumed on the line of credit was $124,953 and interest of $3,264 was also assumed. These amounts have been excluded from the statements of cash flows presented.
During the fiscal year ended September 30, 2009, a stockholder of the Company personally assumed two stockholders loans/related party balances in the amount of $200,947. Additionally, this stockholder personally assumed $10,429 of credit card debt held by the Company, a related party payable was converted to a shareholder loan in the amount of $34,939 and personally paid $47,813 of bills incurred by the Company. These amounts have been excluded from the statements of cash flows presented.
During the fiscal year ended September 30, 2009, debt in the amount of $3,050 was converted at par value to 3,050,000 shares of common stock. These amounts have been excluded from the statements of cash flows presented.
During the fiscal year ended September 30, 2008, the Company sold all of its fixed assets to a stockholder of the Company for $6,927. Consideration was received through assumption of liabilities by the stockholder of $3,581 and $3,346 through a partial release of the respective stockholder loan. These amounts have been excluded from the statements of cash flows presented.
The accompanying notes are an integral part of these financial statements.
Thrive World Wide, Inc.
Statements of Changes in Stockholders’ Deficit
Years Ended September 30, 2009 and 2008
| | | Common Stock | | | | | | | | | | |
| | | Shares | | | Amount | | | Additional Paid-In Capital | | | Accumulated Deficit | | | Total | |
| Balances @ October 1, 2007 | | | 19,572,027 | | | $ | 19,572 | | | $ | 1,508,840 | | | $ | (2,023,593 | ) | | $ | (495,181 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Shares issued for services | | | 4,427,973 | | | | 4,428 | | | | 26,568 | | | | - | | | | 30,996 | |
| Assumption of liability by a shareholder | | | | | | | | | | | 3,581 | | | | | | | | 3,581 | |
| Net loss | | | | | | | | | | | | | | | (451,593 | ) | | | (451,593 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Balances @ September 30, 2008 | | | 24,000,000 | | | $ | 24,000 | | | $ | 1,538,989 | | | $ | (2,475,186 | ) | | $ | (912,197 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Shares issued for in debt conversion | | | 3,050,000 | | | | 3,050 | | | | - | | | | - | | | | 3,050 | |
| Net loss | | | - | | | | - | | | | - | | | | (121,222 | ) | | | (121,222 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Balances @ September 30, 2009 | | | 27,050,000 | | | $ | 27,050 | | | $ | 1,538,989 | | | $ | (2,596,408 | ) | | $ | (1,030,369 | ) |
The accompanying notes are an integral part of these financial statements.
Thrive World Wide, Inc.
Notes to Financial Statements
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
From and after July 26, 2009, the Company’s board of directors adopted a business plan of information technologies and to change its name to Thrive World Wide, Inc. The Company has entered into a LOI and plans to merge with STB Telemedia once proper due diligence has been completed. Prior to July 26, 2009, the Company was known as Bovern Diagnostics Inc,. From July 2008 to July 2009 it was in the business of developing cancer detection technologies and treatments. Before July of 2008, Z Yachts, Inc., the successor of a limited liability company founded in December 2002 in the state of Florida and became a corporation on April 8, 2005 in the State of Nevada.. Z Yachts, Inc. was a full-service brokerage company that served both recreational boaters and the marine industry and had as its primary business the brokerage sale of new and previously-owned recreational vessels.
Reclassifications
Certain prior year amounts have been reclassified to confirm with the current year presentation.
Use of Estimates in Financial Statement Preparation
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
For purposes of the statement of cash flows, Thrive World Wide, Inc. considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. There were no cash equivalents as of September 30, 2009.
Allowance for Doubtful Accounts
Bad debt expense is recognized based on management’s estimate of likely losses per year, based on past experience and an estimate of current year uncollectible amounts. There was no allowance for doubtful accounts as of September 30, 2009.
Property and Equipment
Property and equipment are valued at cost. Additions are capitalized and maintenance and repairs are charged to expense as incurred. Gains and losses on dispositions of equipment are reflected in operations. Depreciation is provided using the straight-line method over the estimated useful lives of the assets, which are three to seven years. As of September 30 2009 the Company has no property and equipment.
Income Taxes
Thrive World Wide, Inc. recognizes deferred tax assets and liabilities based on differences between the financial reporting and tax bases of assets and liabilities using the enacted tax rates and laws that are expected to be in effect when the differences are expected to be recovered. Thrive World Wide, Inc. provides a valuation allowance for deferred tax assets for which it does not consider realization of such assets to be more likely than not.
Revenue Recognition
Thrive World Wide, Inc. recognizes revenue when persuasive evidence of an arrangement exists, services have been rendered, the sales price is fixed or determinable, and collectability is reasonably assured.
Impairment of Long-Lived Assets
Thrive World Wide, Inc. reviews the carrying value of its long-lived assets annually or whenever events or changes in circumstances indicate that the historical cost-carrying value of an asset may no longer be appropriate. Thrive World Wide, Inc. assesses recoverability of the carrying value of the asset by estimating the future net cash flows expected to result from the asset, including eventual disposition. If the future net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset’s carrying value and fair value. No impairment loss has been recognized for each of the years presented.
Advertising Costs
Advertising Costs are expensed as incurred. Advertising costs were $0 and $19,304 for the years ended September 2009 and 2008, respectively.
Basic and Diluted Net Income (Loss) per Share
The basic net income (loss) per common share is computed by dividing the net income (loss) by the weighted average number of common shares outstanding. Diluted net income (loss) per common share is computed by dividing the net income (loss) adjusted on an “as if converted” basis, by the weighted average number of common shares outstanding plus potential dilutive securities. For the years ended September 30, 2009 and 2008, there were no dilutive securities.
Recently issued accounting pronouncements
On July 1, 2009, the Financial Accounting Standards Board (FASB) issued FASB Statement of Financial Accounting Standards (SFAS) No. 168, “FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles,” which is included in FASB Accounting Standards Codification (ASC) 105 “Generally Accepted Accounting Principles.” This new guidance approved the FASB ASC as the single source of authoritative nongovernmental GAAP. The FASB ASC is effective for interim or annual periods ending after September 15, 2009. All existing accounting standards have been superseded and all other accounting literature not included in the FASB ASC will be considered nonauthoritative. The ASC is a restructuring of GAAP designed to simplify access to all authoritative literature by providing a topically organized structure. The adoption of FASB ASC did not impact the Company’s financial statements. Technical references to GAAP included in these Notes to the Financial Statements are provided under the new FASB ASC structure.
In May 2009 the Financial Accounting Standards Board (“FASB”) issued a new standard pertaining to subsequent events that defined the period after the balance sheet date during which a reporting entity shall evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements and the circumstances under which a company shall recognize events or transactions occurring after the balance sheet date in its financial statements. This standard also requires a company to disclose the date through which subsequent events have been evaluated for recognition or disclosure in the financial statements. We have reflected the recognition and disclosure requirements of this standard in this Form 10-K/A.
In February 2007, the FASB issued FASB ASC 825-10, “The Fair Value Option for Financial Assets and Financial Liabilities.” The statement permits entities to choose to measure many financial instruments and certain other items at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. The statement is effective for fiscal years beginning after November 15, 2007.
In December 2007, the FASB issued FASB ASC 805-10, "Business Combinations." FASB ASC 805-10 will significantly change the accounting for business combinations. Under FASB ASC 805-10), an acquiring entity will be required to recognize, with limited exceptions, all the assets acquired and liabilities assumed in a transaction at the acquisition-date fair value. FASB ASC 805-10 will change the accounting treatment for certain specific acquisition-related items including, among other items: (1) expensing acquisition-related costs as incurred, (2) valuing noncontrolling interests at fair value at the acquisition date, and (3) expensing restructuring costs associated with an acquired business. FASB ASC 805-10 also includes a substantial number of new disclosure requirements. FASB ASC 805-10 is to be applied prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2009.
Thrive World Wide, Inc. does not expect the adoption of recently issued accounting pronouncements to have a significant impact on Thrive World Wide, Inc. results of operations, financial position or cash flows.
NOTE 2 - GOING CONCERN
As shown in the accompanying financial statements, Thrive World Wide, Inc. has a working capital deficit and a stockholders’ deficit of $1,030,369 as of September 30, 2009. The Company has also suffered recurring losses from operations. These conditions raise substantial doubt as to Thrive World Wide, Inc.’s ability to continue as a going concern. Management has plans to raise additional capital through sales of its common stock and financial loans. The financial statements do not include any adjustments that might be necessary if Thrive World Wide, Inc. is unable to continue as a going concern.
NOTE 3 – DISCONTINUED OPERATIONS
As discussed in Note 1, prior to July 26, 2008, the Company’s primary business was the brokerage sale of new and previously-owned recreational vessels. As of the aforementioned date the Company sold all of its brokerage business assets and no longer has any involvement in the brokerage business. Accordingly the results of operations of the brokerage business are reported as income from discontinued operations in the statements of operations. Prior to the sale, the brokerage business represented substantially all of the Company’s operating revenue.
Results for discontinued operations were as follows for the years ended September 30:
| | | 2009 | | | 2008 | |
| | | | | | | |
| Revenue | | $ | - | | | $ | 247,023 | |
| Expenses | | | 1,200 | | | | 138,831 | |
| Income/ (loss) from discontinued operations before income taxes | | | (1,200 | ) | | | 108,192 | |
| Income tax expense | | | - | | | | 37,867 | |
| Net income/ (loss) from discontinued operations | | $ | (1,200 | ) | | $ | 70,325 | |
NOTE 4 – ACCRUED EXPENSES
Accrued expenses consist of the following:
| Credit cards payable | | $ | 4,123 | |
| Accrued interest payable | | | 21,299 | |
| Total | | $ | 25,422 | |
NOTE 5- LOANS FROM STOCKHOLDERS
The stockholders have and will advance money to Thrive World Wide, Inc. on an as-needed basis. At September 30, 2009, there are two outstanding stockholder loans. A former note payable was classified as a loan from stockholder during 2009, see Note 6.
The second loan is from a former director and officer. At one time during this period the three original officers had three separate loans. All of these notes were combined and signed over to one party in exchange for the complete independent absorption of the Company’s 1st Banking Center line of credit that was guaranteed by the other two parties. The notes assumed by this stockholder totaled $200,947 including accrued interest. During the twelve months ended September 30, 2009 this stockholder also personally assumed the outstanding debt and interest on the 1st Banking Center line of credit held by the Company. The total amount assumed on the line of credit was $124,953 with interest of $3,264 also assumed. Additionally, this stockholder assumed $10,429 of credit card liability, converted payables due him in the amount of $34,939 and personally paid bills incurred by the Company in the amount of $47,813.
As of September 30, 2009, this shareholder was due $478,451. A convertible promissory note was executed on August 17, 2009 for this amount bearing interest at 12%, and are convertible by lenders at the conversion price equal to the par value of our common shares (at present $0.001/share). As such, the holder could convert into a total of 479,000,000 shares of common stock of the Company, if the full conversion privilege were to be exercised. Notwithstanding the foregoing, the Notes contain a provision limiting the conversion thereof by any party to not more that 4.99% ownership of the stock of the Company at any time after taking into account all of the holdings of the converting party. This note is due on demand and matures on February 15, 2010. All interest has been waived from the date of the note until September 30, 2009. There was no beneficial conversion feature associated with these securities as per FASB ASC 470-20-25. The conversion can be made at the option of the holder, the conversion price was greater than the perceived market value of the stock, the debt was originally sold at the face amount, the interest rate is lower than the Company would pay for non-convertible debt and the conversion price does not decrease. As per FASB ASC 470-20-25-12, no portion of the proceeds from issuance shall be accounted for as attributable to the conversion feature. In addition, the restrictions on the conversion and the limits on the authorized shares prevent the holders from fully exercising the conversion. The perceived market value of the stock was less than par value due to the highly illiquid nature of the stock and the Company's lack of revenue generating activities as of the date of the issuance of these debentures.
Total interest expense on loans from stockholders amounted to $15,057 and $11,250 for the year ended September 30, 2009 and 2008, respectively.
NOTE 6 – NOTE PAYABLE
On July 6, 2007, we issued a promissory note in the amount of $42,430, which bears interest at a rate of 12% per annum. The note required five monthly payments of $500 with the remainder due on January 6, 2010. The note was issued in lieu of payment for prior services rendered. The note has been renegotiated to provide for a reduction of the principal balance to $30,000 payable in six equal installments of $5,000 (with interest at 0%), as follows: One payment of $5,000 on completion of the merger transaction with STB followed by five equal monthly payments of $5,000 commencing one month after the closing of the merger transaction.
On January 2, 2009, we revised and re-issued certain promissory notes in the face amount of $173,257 and $55,000 to Collette Eck Szczesny and Marilyn Eck, respectively. These notes represent amounts due and in default from December 31, 2007 and on which no interest or principal has been paid by the Company in over three (3) years. In consideration of the lenders’ Agreement to extend these notes, the Company agreed to cause the notes to be revised and re-issued as convertible debentures which would pay 7.5% interest and be convertible by lenders at the conversion price equal to the par value of our common shares (at present $0.001/share). As such, the holders could convert into a total of 237,000,000 shares of common stock of the Company, if the full conversion privilege were to be exercised. Notwithstanding the foregoing, the Notes contain a provision limiting the conversion thereof by any party to not more that 4.99% ownership of the stock of the Company at any time after taking into account all of the holdings of the converting party. The lenders have agreed that they will enter into such lock-up and/or leak-out agreements as may be required by any successor management and/or entity which may acquire control of the Company in a change of control transaction. On June 1, 2009, the notes were assigned to Horowitz Consulting Group, LLC and the principals thereof have agreed to limit the conversion right under the notes based on the fact that Company did not at the time have sufficient authorized shares to allow for the conversion of the note beyond 26,000,000 shares and the fact that the Company will need to issue shares in order to raise other operating capital as set forth herein. Subsequent to this note assumption, the principle of Horowitz Consulting Group, LLC exercised the option to convert 3,050,000 shares at par value, which resulted in debt reduction in the amount of $3,050 for the year ended September 30, 2009. Amounts from Horowitz were advanced directly to pay bills of the Company in the amount of $41,718 for the year ended September 30, 2009. These amounts have been reclassified to loans from stockholders and total $266,925 as of September 30, 2009. There was no beneficial conversion feature associated with these securities as per FASB ASC 470-20-25. The conversion can be made at the option of the holder, the conversion price was greater than the perceived market value of the stock, the debt was originally sold at the face amount, the interest rate is lower than the Company would pay for non-convertible debt and the conversion price does not decrease. As per FASB ASC 470-20-25-12, no portion of the proceeds from issuance shall be accounted for as attributable to the conversion feature. In addition, the restrictions on the conversion and the limits on the authorized shares prevent the holders from fully exercising the conversion. The perceived market value of the stock was less than par value due to the highly illiquid nature of the stock and the Company's lack of revenue generating activities as of the date of the issuance of these debentures.
NOTE 7 – BANK LINE OF CREDIT
Bank line of credit consist of the following: $100,000 revolving line of credit with Bank of America, with a balance of $95,636 and an interest rate of 7.75% at September 30, 2009; secured by the personal guarantees of former officers. This is in default and in collection as of September 30, 2009.
NOTE 8 – INCOME TAXES
The Company recognizes deferred tax assets and liabilities based on differences between the financial reporting and tax bases of assets and liabilities using the enacted tax rates and laws that are expected to be in effect when the differences are expected to be recovered. Thrive World Wide, Inc. provides a valuation allowance for deferred tax assets for which it does not consider realization of such assets to be more likely than not.
Thrive World Wide, Inc. uses the asset and liability method, where deferred tax assets and liabilities are determined based on the expected future tax consequences of temporary differences between the carrying amounts of assets and liabilities for financial and income tax reporting purposes. During fiscal 2009, Thrive World Wide, Inc. incurred net losses and, therefore, has no tax liability. The net deferred tax asset generated by the loss carry-forward has been fully reserved. The cumulative net operating loss carry-forward is approximately $2,150,000 at September 30, 2009, and will begin to expire in 2025. The increase in the valuation allowance for the deferred tax asset increased by $32,500 for the year ended 2009.
At September 30, 2009, deferred tax asset consists of the following:
| Deferred tax asset | | | |
| Net operating losses | | $ | 750,000 | |
| Less valuation allowance | | | (750,000 | ) |
| Net deferred tax asset | | $ | - | |
NOTE 9 – COMMON STOCK
On August 10, 2009, the Company’s board of directors believed it was in the best interest of the Company to issue shares of the Company's common stock to the following individuals in consideration of the conversion into stock of certain notes payable by the Company (as more fully described in Note 9 to the financial statements, common stock in consideration for such debt cancellation was as follows: One Million Shares (1,000,000) to Waters Edge Advisors; Eight Hundred Thousand Shares (800,000) to John Burke; and Five Hundred Thousand Shares (500,000) to Anthony Finn; Seven Hundred and Fifty Thousand Shares (750,000) to Steven A Horowitz; and a corresponding charge was made to common stock.
During fiscal 2008, the Company issued a total of 4,427,973 shares to the following entity and individuals: Weller Enterprises on behalf of James Weller and Gina Weller, Jason Eck, Sandy Martini, Kellie Saragusa, Epi Almodovar and Kwajo Sarfoh in consideration for services rendered on behalf of the Company valued at $.007 per share, $.001 par value per share of common stock, or $30,996. The value of the stock was calculated based on the fair value of the services received as it was deemed a more reliable measure of the fair value of the transaction than the fair value of the equity as per FASB ASC 505-50-30-2.
During fiscal 2007, Z Yachts sold 7,376 shares of its common stock to several investors at $1.50 per share for total cash proceeds of $11,064.
During fiscal 2007, Z Yachts issued 475,000 shares of its common stock in exchange for six months of regulatory compliance services. These services have been valued at $1.50 per share or $712,500. Professional fees of $377,664 and $334,836 have been recognized for the year ended September 30, 2008 and 2007, respectively.
NOTE 10 – AMENDED TERM SHEET
On July 11, 2008, the Company’s majority stockholders executed a non-binding Amended Term Sheet (“Term Sheet”) with Boveran,Inc., an unrelated third party cancer detection technology company, with respect to a proposed transaction at a time to be determined in the future whereby certain selling shareholders of the Company would sell a controlling interest in the Company to Boveran, Inc. and Boveran, Inc. would merge with the Company (“Proposed Transaction”). Pursuant to such Term Sheet, Boveran, Inc. would assume certain accounts payable and shareholder loans of the Company and certain principals of the Company would exchange the principal amount of loans they have made to the Company for an aggregate of 591,000 shares of the Company’s common stock.
Further, pursuant to the Term Sheet a non-refundable $50,000 deposit against the estimated purchase price of $692,510 was made by Boveran, Inc. to the Company. The balance was due as follows: approximately $350,000 payable within 90 days of closing, or September 30, 2008 (accounting for all allowable extensions) with the remaining balance of approximately $292,000 consisting of certain accounts payable and shareholder loans, together with interest, to be paid within 180 days from September 30, 2008.
To date, the only amount received by the Company was the $50,000 non-refundable deposit which has been included in other income for the year ended September 30, 2008. The Proposed Transaction has not occurred as of the date of this filing and the Company has abandoned these merger plans.
Pursuant to the Term Sheet, the Company issued an aggregate of 4,000,000 shares of the Company’s common stock to Mssrs. Almodovar and Sarfoh who provided advisory services to the Company in connection with the Proposed Transaction. Further, other than the shares proposed to be sold to Thrive World Wide, Inc., no more than 7,092,000 shares of the Company’s common stock would be outstanding at the time of the closing of the Proposed Transaction. Refer to Note 9.
NOTE 11 – RELATED PARTY TRANSACTIONS
On July 26 2008, Z Yachts completed an Asset Purchase Agreement (the “Asset Purchase Agreement”) with Speedy X Change., a Wisconsin corporation (“Purchaser”), which is controlled by Jason Eck (“Eck”), a director of Z Yachts. On July 26, 2008, the Company’s board of directors approved the sale of assets subject to the terms of the Asset Purchase Agreement and determined that such transaction was in the best interests of the Company and its stockholders. Pursuant to the Asset Purchase Agreement, the Company agreed to sell to Purchaser, on an “AS IS” “WHERE IS” basis, certain assets consisting of the Company’s furniture, trade exposition booth and website and certain Escrow Deposits relating to pending boat sales (“Purchased Assets”). The purchase price for the Purchased Assets was $6,927. Of this amount, $3,581 comprised certain assumed liabilities and the remaining $3,346 was paid in lieu of a partial release of amounts loaned by Eck to the Company, with the remaining outstanding amount still owed to Eck to remain due and payable (“Eck Partial Release”). The Purchase Price was determined based on the carrying value of the Purchased Assets on the books of the Company.
For the years ended September 30, 2009 and 2008, Thrive World Wide, Inc. occupied office space owned by a stockholder on a rent-free basis. The fair market value of the rent is $6,000 for each of the years presented.
For the years ended September 30, 2009 and 2008, a stockholder and former officer of the Company provided professional services related to closings in the amount of $0 and $10,500, respectively. These amounts have been recorded as general and administrative expenses.
NOTE 12 – SUBSEQUENT EVENTS
We have evaluated subsequent events through January 19, 2010, the filing date of this Form 10-K/A. In preparing these financial statements, we evaluated the events and transactions that occurred from September 30, 2009 to January 19, 2010, the date these financial statements were issued.
Item 8.
Changes In and Disagreements With Accountants on Accounting and Financial Disclosure.
None.
Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our Chief Executive Officer and our Chief Financial Officer, after evaluating the effectiveness of our “disclosure controls and procedures” (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this report (the “Evaluation Date”), have concluded that as of the Evaluation Date, our disclosure controls and procedures were not effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act (i) is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure, and (ii) is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms.
We are in the process of improving our internal control over financial reporting in an effort to remediate these deficiencies through improved supervision and training of our accounting staff. These deficiencies have been disclosed to our board of directors. We believe that this effort is sufficient to fully remedy these deficiencies and we are continuing our efforts to improve and strengthen our control processes and procedures. Our Chief Executive Officer, Chief Financial Officer and directors will continue to work with our auditors and other outside advisors to ensure that our controls and procedures are adequate and effective.
Management's Report on Internal Control Over Financial Reporting
Our Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such terms defined in Rules13a-15(f) and 15d-15(f) of the exchange act. Under the supervision and with the participation of management we conducted an evaluation of the effective of our internal controls over financial reporting as of May 10, 2009 based on the framework in Internal Control- Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation our management concluded that our internal controls over financial reporting were effective as of September 30, 2009.
This Annual Report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Security and Exchange Commission that permit us to provide only management's report in this annual report.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART III
Directors, Executive Officers, Promoters, Control Persons and Corporate Governance; Compliance With Section 16(a) of the Exchange Act.
Executive Officers and Directors
Our executive officers and directors, and their ages and positions are as follows:
| | | | | |
| Name | | Age | | Position |
| Andrew J. Schenker | | 49 | | Chief Executive Officer &President |
Andrew J. Schenker, 49 – Has been the Chief Executive Officer &President of Thrive World Wide Inc [formerly Boveran Diagnostics/Inc] since July 2009. Since October 2007 Mr. Schenker has served as the COO and CFO for Global Warranty Group, LLC a third party administration and extended service contract company. From July 2006 to October 2007, Mr. Schenker served as Chief Financial Officer of Vein Associates of America, Inc. a publically listed ompany. From October 2005 to July 2006, he was the Chief Financial Officer of Kurent Holdings, Inc., a retail specialty coffee and tea company. From 2003 to 2005, he was Chief Financial Officer of Genio Group, Inc. a toy company listed on the OTC Bulletin Board. In 2002, he was the President, Chief Operating Officer of CDKnet.com, a public company, and a Director of CDKnet.com since May 1998. In addition from 1986 to 2001, while at Symbol Technologies, Inc., a bar code scanner and mobile data management systems and services company, he also served as the General Manager - Worldwide Education Marketing Division and prior to that as Senior Director of Finance for the North American Sales and Services Division.
Committees of the Board of Directors
We do not have a standing audit, nominating, or compensation committee, or any other committees of our board of directors performing similar functions. We do not have an audit committee financial expert. We do not anticipate implementing any of these committees or seek an individual to serve as an audit committee financial expert until we are required to do so under federal or state corporate or securities laws or the rules of any stock exchange or inter-dealer quotation system on which our securities may be listed or cleared for quotation
Code of Ethics
Our board of directors adopted a code of ethics meeting the requirements of Section 406 of the Sarbanes-Oxley Act of 2002. We will provide to any person without charge, upon request, a copy of our code of ethics. Persons wishing to make such a request should contact Secretary, Thrive World Wide, Inc., 638 Main Street, Lake Geneva, Wisconsin 53147.
The following table sets forth summary information concerning the compensation received for services rendered to us during the two fiscal years ended by our Chief Executive Officer. None of our other executive officers received $100,000 or more of compensation in any fiscal year represented in the table.
SUMMARY COMPENSATION TABLE (1)
Name and Principal Position | | Year | | Salary ($) (2) | | | Stock Awards ($) (3) | | | All Other Compensation ($) | | | Total ($) | |
| | | | | | | | | | | | | | | |
| Andrew Schenker | | 2009 | | $ | - | | | $ | - | | | $ | - | | | $ | - | |
| President & CEO | | | | | | | | | | | | | | | | | | |
| Anthony Welch | | 2008 | | $ | - | | | $ | - | | | $ | - | | | $ | - | |
| President & CEO | | | | | | | | | | | | | | | | | | |
Does not include perquisites and other personal benefits or property unless the aggregate amount of such compensation is $10,000 or more.
Employment Contracts
There is an oral contract with Andrew Schenker to be compensated $25,000 per year along with 20,000 shares of common stock. If he is terminated other than for cause, he will receive 100,000 shares of common stock. Salary shall commence once the company begins to generate revenue.
Compensation of Directors
Members of our board of directors do not receive cash compensation for their services as directors but are reimbursed for their expenses incurred in connection with their attendance at any meeting.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The following table set forth information as of December 31, 2009, with respect to the beneficial ownership of our common stock by each person known by us to be the beneficial owner of more than 5% of our outstanding common stock, each of our directors and Named Executive Officers, and our directors and Named Executive Officers as a group.
| | | Common Stock | |
Name of Beneficial Owner (2) | | | | | | |
| | | | | | | |
| James G. Weller | | | 12,091,657 | (3) | | | 50.0 | % |
| | | | | | | | | |
| Regina F. Weller | | | 12,091,657 | (3) | | | 50.0 | % |
| | | | | | | | | |
| Jason C. Eck | | | 6,091,657 | | | | 25.0 | % |
| | | | | | | | | |
| All directors and Named Executive Officers as a group (3 people) | | | 18,183,314 | | | | 76.0 | % |
The number of shares of common stock owned are those "beneficially owned" as determined under the rules of the SEC, including any shares of common stock as to which a person has sole or shared voting or investment power and any shares of common stock which the person has the right to acquire within 60 days through the exercise of any option, warrant or right. More than one person may be deemed to be a beneficial owner of the same securities. The percentage of beneficial ownership by any person as of a particular date is calculated by dividing the number of shares beneficially owned by such person, which includes the number of shares as to which such person has the right to acquire voting or investment power within 60 days, by the sum of the number of shares outstanding as of such date plus the number of shares as to which such person has the right to acquire voting or investment power within 60 days. Consequently, the denominator used for calculating such percentage may be different for each beneficial owner. This table is based upon information derived from our stock records. Unless otherwise indicated in the footnotes to this table and subject to community property laws where applicable, each of the shareholders named in this table has sole or shared voting and investment power with respect to the shares indicated as beneficially owned. Applicable percentages are based upon 27,050,000 shares of our common stock which were outstanding as of December 31, 2009.
The address is 638 Main Street, Lake Geneva, Wisconsin 53147.
James G. Weller and Regina F. Weller are husband and wife, and the amount of shares set forth above for each includes 6,091,657 shares owned by the other. The 12,183,314 shares are held in the name of Weller Consulting Enterprises, Inc. of which James G. Weller and Regina F. Weller are 100% owners.
Item 12. Certain Relationships and Related Transactions, and Director Independence.
Our corporate office is maintained at 638 Main St., Lake Geneva, WI 53147. The office building, owned by REMJAK, whose principal owner is Mr. Eck’s mother, is provided to us on a rent-free basis. The fair market value of the rent was $6,000 for each of the fiscal years ended September 30, 2009 and 2008.
For the years ended September 30, 2009 and 2008, a stockholder and former officer of the Company provided professional services related to closings in the amount of $0 and $10,500, respectively. These amounts have been recorded as general and administrative expenses.
At September 30, 2009, shareholder Steve Horowitz, has loaned us $266,925. The loan bears interest of 7.5% and is due on demand.
| | | |
| Exhibit No. | | Description of Exhibit |
| | | |
2.1(1) | | Conversion Agreement dated April 8, 2005 between Z Yachts, LLC, a Florida limited liability company and Z Yachts, Inc., a Nevada corporation |
3.1(1) | | Articles of Incorporation |
3.2(1) | | Bylaws |
4.1(1) | | Form of certificate representing the Common Stock, $.001 par value per share, of Z Yachts, Inc., a Nevada corporation |
10.1(1) | | Amended and Restated Service Contract, dated January 3, 2006 |
10.2(2) | | Amendment to Amended and Restated Service Contract, dated July 6, 2007 |
10.3(2) | | Credit Agreement, dated July 6, 2007 |
10.4(2) | | Commercial Promissory Note, dated July 6, 2007 |
10.5(3) | | Asset Purchase Agreement between Z Yachts, Inc. and Speedy X Change, dated July 26, 2008 |
10.6(3) | | Partial Release of Claims between Z Yachts, Inc. and Jason Eck, dated July 26, 2008. |
10.7(3) | | Certificate of Amendment to Articles of Incorporation |
14* | | Code of Ethics |
| 31.1* | | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| 31.2* | | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| 32.1* | | Certifications of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
| (1) | Filed as Exhibits 2.1, 3.1, 3.2, 4.1 and 10.7, respectively to the to the registrant’s Form SB-2 filed with the SEC on August 16, 2005, and incorporated herein by reference. |
| (2) | Filed as Exhibits 10.2, 10.3 and 10.4, respectively, to the to the registrant’s Form 8-K filed with the SEC on September 28, 2007, and incorporated herein by reference. |
| (3) | Filed as Exhibits 10.1, 10.2 and 10.3, respectively, to the to the registrant’s Form 8-K filed with the SEC on July 31, 2008, and incorporated herein by reference. |
Principal Accountant Fees and Services.
The following table sets forth the aggregate fees incurred by us for the audit and other services provided by our principal account during the fiscal years ended September 30, 2009 and 2008:
| | | 2009 | | | 2008 | |
| | | | | | | |
| Audit Fees | | $ | 21,000 | | | $ | 24,000 | |
| Audit-Related Fees | | $ | - | | | $ | - | |
| Tax Fees | | $ | - | | | $ | - | |
| All Other Fees | | $ | - | | | $ | - | |
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| | |
| | THRIVE WORLD WIDE, INC. |
| | |
| Date: January __19_, 2010 | By: | /s/ Andrew Schenker |
| | Name: Andrew Schenker |
| | Title: President and Chief Executive Officer |
In accordance with the requirements of the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| Signature | | Title | | Date |
| | | | | |
| /s/ Andrew Schenker | | President, Chief Executive Office, Chief Financial Officer and Director | | January _19__, 2010 |
| Andrew Schenker | | (Principal Executive Officer and Principal Financial Officer and Principal Accounting Officer ) | | |
