UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
| x | ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2008
| o | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ___________ to ___________
Commission File No. 000-51885
4309, INC.
(Name of small business issuer in its charter)
| DELAWARE | | |
(State or other jurisdiction of incorporation or organization) | | (IRS Employer Identification No.) |
| | | |
3707 E. Southern Ave. Suite 1087-Box 1080 Mesa, AZ | | 85206 |
| (Address of principal executive offices) | | (Zip Code) |
(480) 246-8030
(Registrant’s telephone number, including area code)
Securities registered under Section 12(b) of the Exchange Act:
| Title of each class registered: | Name of each exchange on which registered: |
| None | None |
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, par value $0.001
(Title of class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes o No x
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes o 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 Exchange Act of 1934 during the preceding 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 o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 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 Part III of this Form 10-K or any amendment to this Form 10-K. x
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | o | | Accelerated filer | o |
| | | | | |
Non-accelerated filer (Do not check if a smaller reporting company) | o | | Smaller reporting company | x |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x
Revenues for year ended December 31, 2008: $0
The aggregate market value of the registrant’s voting common stock held by non-affiliates as of June 30, 2008 based upon the closing price reported for such date on the OTC Bulletin Board was US$0.
As of May 22, 2009, the registrant had 100,000 shares of its common stock outstanding.
Documents Incorporated by Reference: None.
TABLE OF CONTENTS
| | | | | PAGE |
| | | PART I | | |
| ITEM 1. | | Business | | 2 |
| ITEM 1A. | | Risk Factors | | 3 |
| ITEM 2. | | Properties | | 3 |
| ITEM 3. | | Legal Proceedings | | 3 |
| ITEM 4. | | Submission of Matters to a Vote of Security Holders | | 3 |
| | | | | |
| | | PART II | | |
| ITEM 5. | | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | | 3 |
| ITEM 6. | | Selected Financial Data | | 4 |
| ITEM 7. | | Management’s Discussion and Analysis of Financial Condition and Results of Operation | | 4 |
| ITEM 7A. | | Quantitative and Qualitative Disclosures About Market Risk | | 6 |
| ITEM 8. | | Financial Statements and Supplementary Data | | 7 |
| ITEM 9. | | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | | 8 |
| ITEM 9A(T). | | Controls and Procedures | | 8 |
| | | | | |
| | | PART III | | |
| ITEM 10. | | Directors, Executive Officers and Corporate Governance | | 9 |
| ITEM 11. | | Executive Compensation | | 11 |
| ITEM 12. | | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | | 11 |
| ITEM 13. | | Certain Relationships and Related Transactions, and Director Independence | | 11 |
| ITEM 14. | | Principal Accounting Fees and Services | | 12 |
| | | | | |
| | | PART IV | | |
| ITEM 15. | | Exhibits, Financial Statement Schedules | | 12 |
| | | | |
| SIGNATURES | | | | 13 |
PART I
General
4309, Inc. was incorporated on December 9, 2005 under the laws of the State of Delaware to engage in any lawful corporate undertaking, including, but not limited to, selected mergers and acquisitions. We have been in the developmental stage since inception and have no operations to date other than issuing shares to our original shareholder.
We will attempt to locate and negotiate with a business entity for the combination of that target company with us. The combination will normally take the form of a merger, stock- for-stock exchange or stock-for-assets exchange. In most instances the target company will wish to structure the business combination to be within the definition of a tax-free reorganization under Section 351 or Section 368 of the Internal Revenue Code of 1986, as amended. No assurances can be given that we will be successful in locating or negotiating with any target company.
We have been formed to provide a method for a foreign or domestic private company to become a reporting (“public”) company whose securities are qualified for trading in the United States secondary market.
Perceived Benefits
There are certain perceived benefits to being a reporting company with a class of publicly- traded securities. These are commonly thought to include the following:
| the ability to use registered securities to make acquisitions of assets or businesses; |
| | |
| increased visibility in the financial community; |
| | |
| the facilitation of borrowing from financial institutions; |
| | |
| · | improved trading efficiency; |
| | |
| shareholder liquidity; |
| | |
| greater ease in subsequently raising capital; |
| | |
| compensation of key employees through stock options for which there may be a market valuation; |
| | |
| enhanced corporate image; |
| | |
| a presence in the United States capital market. |
Potential Target Companies
A business entity, if any, which may be interested in a business combination with us, may include the following:
| a company for which a primary purpose of becoming public is the use of its securities for the acquisition of assets or businesses; |
| | |
| a company which is unable to find an underwriter of its securities or is unable to find an underwriter of securities on terms acceptable to it; |
| | |
| a company which wishes to become public with less dilution of its common stock than would occur upon an underwriting; |
| | |
| a company which believes that it will be able to obtain investment capital on more favorable terms after it has become public; |
| | |
| a foreign company which may wish an initial entry into the United States securities market; |
| | |
| a special situation company, such as a company seeking a public market to satisfy redemption requirements under a qualified Employee Stock Option Plan; |
| | |
| a company seeking one or more of the other perceived benefits of becoming a public company. |
No assurances can be given that we will be able to enter into a business combination, as to the terms of a business combination, or as to the nature of the target company.
Employees
As of May 22, 2009, we have one part-time employee. Our president allocates a portion of his time to the activities of the Company.
Not applicable because we are a smaller reporting company.
We have no properties and at this time have no agreements to acquire any properties. We currently use the offices of management at no cost to us. Management has agreed to continue this arrangement until we complete an acquisition or merger.
There are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company. The Company’s property is not the subject of any pending legal proceedings.
None.
PART II
No Public Market for Common Stock
There is no trading market for our Common Stock at present and there has been no trading market to date. There is no assurance that a trading market will ever develop or, if such a market does develop, that it will continue.
The Securities and Exchange Commission has adopted Rule 15g-9 which establishes the definition of a “penny stock,” for purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require: (i) that a broker or dealer approve a person’s account for transactions in penny stocks and (ii) the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased. In order to approve a person’s account for transactions in penny stocks, the broker or dealer must (i) obtain financial information and investment experience and objectives of the person; and (ii) make a reasonable determination that the transactions in penny stocks are suitable for that person and that person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks. The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the Commission relating to the penny stock market, which, in highlight form, (i) sets forth the basis on which the broker or dealer made the suitability determination and (ii) that the broker or dealer received a signed, written agreement from the investor prior to the transaction. Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading, and about commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.
There is no holder of our Common Stock. The issued and outstanding shares of our Common Stock were issued in accordance with the exemptions from registration afforded by Section 4(2) of the Securities Act of 1933.
Dividends
Since inception we have not paid any dividends on our common stock. We currently do not anticipate paying any cash dividends in the foreseeable future on our common stock, when issued pursuant to this offering. Although we intend to retain our earnings, if any, to finance the exploration and growth of our business, our Board of Directors will have the discretion to declare and pay dividends in the future.
Payment of dividends in the future will depend upon our earnings, capital requirements, and other factors, which our Board of Directors may deem relevant.
Recent Sales of Unregistered Securities
None.
Equity Compensation Plan Information
The following table sets forth certain information as of May 22, 2009, with respect to compensation plans under which our equity securities are authorized for issuance:
| | | (a) | | (b) | | (c) |
| | | Number of securities to be issued upon exercise of outstanding options, warrants and rights | | Weighted-average exercise price of outstanding options, warrants and rights | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) |
| | | | | | | |
| Equity compensation | | None | | | | |
| Plans approved by | | | | | | |
| Security holders | | | | | | |
| | | | | | | |
| Equity compensation | | None | | | | |
| Plans not approved | | | | | | |
| By security holders | | | | | | |
| Total | | | | | | |
Not applicable because we are a smaller reporting company.
The following discussion should be read in conjunction with the Consolidated Financial Statements and Notes thereto appearing elsewhere in this Form 10-K. The following discussion 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 relating to future events or our future performance. Actual results may materially differ from those projected in the forward-looking statements as a result of certain risks and uncertainties set forth in this prospectus. Although management believes that the assumptions made and expectations reflected in the forward-looking statements are reasonable, there is no assurance that the underlying assumptions will, in fact, prove to be correct or that actual results will not be different from expectations expressed in this report.
Plan of Operation
The Registrant is continuing its efforts to locate a merger Candidate for the purpose of a merger. It is possible that the registrant will be successful in locating such a merger candidate and closing such merger. However, if the registrant cannot effect a non-cash acquisition, the registrant may have to raise funds from a private offering of its securities under Rule 506 of Regulation D. There is no assurance the registrant would obtain any such equity funding.
Results of Operation
The Company did not have any operating income from inception (December 9, 2005) through December 31, 2008, the registrant recognized a net loss of $1,450 in 2006; $63,409 in 2007 and $(148,265) in 2008. Some general and administrative expenses from inception were accrued. Expenses from inception were comprised of costs mainly associated with legal, accounting and office.
Liquidity and Capital Resources
At December 31, 2008 the Company had no capital resources and will rely upon the issuance of common stock, loans and additional capital contributions from shareholders to fund administrative expenses pending acquisition of an operating company.
Management anticipates seeking out a target company through solicitation. Such solicitation may include newspaper or magazine advertisements, mailings and other distributions to law firms, accounting firms, investment bankers, financial advisors and similar persons, the use of one or more World Wide Web sites and similar methods. No estimate can be made as to the number of persons who will be contacted or solicited. Management may engage in such solicitation directly or may employ one or more other entities to conduct or assist in such solicitation. Management and its affiliates will pay referral fees to consultants and others who refer target businesses for mergers into public companies in which management and its affiliates have an interest. Payments are made if a business combination occurs, and may consist of cash or a portion of the stock in the Company retained by management and its affiliates, or both.
Paul Poetter will supervise the search for target companies as potential candidates for a business combination. Paul Poetter will pay, as his own expenses, any costs he incurs in supervising the search for a target company. Paul Poetter may enter into agreements with other consultants to assist in locating a target company and may share stock received by it or cash resulting from the sale of its securities with such other consultants. Paul Poetter controls us and therefore has the authority to enter into any agreement binding us. Paul Poetter as our sole officer, director and only shareholder can authorize any such agreement binding us.
Critical Accounting Policies
Our significant accounting policies are summarized in Note 1 of our financial statements included in this annual report on Form 10-K for the year ended December 31, 2008. Our financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States (“GAAP”). GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenues and expense amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.
Recent Accounting Pronouncements
In December 2007, the Financial Accounting Standards Board (FASB) issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements – an amendment of ARB No. 51”. This statement improves the relevance, comparability, and transparency of the financial information that a reporting entity provides in its consolidated financial statements by establishing accounting and reporting standards that require; the ownership interests in subsidiaries held by parties other than the parent and the amount of consolidated net income attributable to the parent and to the noncontrolling interest be clearly identified and presented on the face of the consolidated statement of income, changes in a parent’s ownership interest while the parent retains its controlling financial interest in its subsidiary be accounted for consistently, when a subsidiary is deconsolidated, any retained noncontrolling equity investment in the former subsidiary be initially measured at fair value, entities provide sufficient disclosures that clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. SFAS No. 160 affects those entities that have an outstanding noncontrolling interest in one or more subsidiaries or that deconsolidate a subsidiary. SFAS No. 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. Early adoption is prohibited. The adoption of this statement is not expected to have a material effect on the Company's financial statements.
In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133” (SFAS 161). This statement is intended to improve transparency in financial reporting by requiring enhanced disclosures of an entity’s derivative instruments and hedging activities and their effects on the entity’s financial position, financial performance, and cash flows. SFAS 161 applies to all derivative instruments within the scope of SFAS 133, “Accounting for Derivative Instruments and Hedging Activities” (SFAS 133) as well as related hedged items, bifurcated derivatives, and nonderivative instruments that are designated and qualify as hedging instruments. Entities with instruments subject to SFAS 161 must provide more robust qualitative disclosures and expanded quantitative disclosures. SFAS 161 is effective prospectively for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application permitted. We are currently evaluating the disclosure implications of this statement.
In April 2008, the FASB issued FASB Staff Position (“FSP”) SFAS No. 142-3, “Determination of the Useful Life of Intangible Assets”. This FSP amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FASB Statement No. 142, “Goodwill and Other Intangible Assets” (“SFAS 142”). The intent of this FSP is to improve the consistency between the useful life of a recognized intangible asset under SFAS 142 and the period of expected cash flows used to measure the fair value of the asset under SFAS 141R, and other GAAP. This FSP is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. Early adoption is prohibited. The Company is currently evaluating the impact of SFAS FSP 142-3, but does not expect the adoption of this pronouncement will have a material impact on its financial position, results of operations or cash flows.
In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles” (SFAS 162”). SFAS 162 identifies the sources of accounting principles and the framework for selecting principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles in the United States. This statement shall be effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board’s amendments to AU section 411, The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles. The Company is currently evaluating the impact of SFAS 162, but does not expect the adoption of this pronouncement will have a material impact on its financial position, results of operations or cash flows.
In May 2008, the FASB issued SFAS No. 163, “Accounting for Financial Guarantee Insurance Contracts-an interpretation of FASB Statement No. 60.” Diversity exists in practice in accounting for financial guarantee insurance contracts by insurance enterprises under FASB Statement No. 60, Accounting and Reporting by Insurance Enterprises. This results in inconsistencies in the recognition and measurement of claim liabilities. This Statement requires that an insurance enterprise recognize a claim liability prior to an event of default (insured event) when there is evidence that credit deterioration has occurred in an insured financial obligation. This Statement requires expanded disclosures about financial guarantee insurance contracts. The accounting and disclosure requirements of the Statement will improve the quality of information provided to users of financial statements. The adoption of FASB 163 is not expected to have a material impact on the Company’s financial position.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as “special purpose entities” (SPEs).
Not applicable because we are a smaller reporting company.
4309, Inc.
(a development stage company)
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2008
4309, Inc.
(a development stage company)
Financial Statements Table of Contents
| Page # |
| | |
| Registered Accountants Audit opinion Letter | F-1 |
| | |
| Balance Sheet | F-2 |
| | |
| Statement of Operations and Retained Deficit | F-3 |
| | |
| Statement of Stockholders Equity | F-4 |
| | |
| Cash Flow Statement | F-5 |
| | |
| Notes to the Financial Statements | F-6 |
Report of Independent Registered Public Accounting Firm
To the Board of Director and shareholders
We have audited the accompanying balance sheet of 4309, Inc. as of December 31, 2008 and 2007 and the related statement of operations, stockholders’ equity, and cash flows for the twelve months ended December 31, 2008 and 2007 and from inception (December 9, 2005) through the year then ended December 31, 2008. These financial statements are the responsibility of company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with 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. 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 statements presentation. We believe that our audit provides 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 4309, Inc. at December 31, 2008 and 2007 and the results of its operations and its cash flows for the twelve months ended December 31, 2008 and 2007 and from inception (December 9, 2005) through December 31, 2008 in conformity with U.S. Generally Accepted Accounting Principles.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has suffered losses from operations and has a net capital deficiency that raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Gately & Associates, L.L.C.
Lake Mary, FL
January 14, 2009
4309, Inc.
(a development stage company)
BALANCE SHEET
As of December 31, 2008 and December 31, 2007
| | 12/31/2008 | | | 12/31/2007 | |
| | | | | | | |
| ASSETS | | | | | | |
| | | | | | | |
| CURRENT ASSETS | | | | | | |
| | | | | | | |
| Cash | | $ | 8,245 | | | $ | 8,437 | |
| | | | | | | | | |
| Total Current Assets | | | 8,245 | | | | 8,437 | |
| | | | | | | | | |
| TOTAL ASSETS | | $ | 8,245 | | | $ | 8,437 | |
| | | | | | | | | |
| LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | | | | |
| | | | | | | | | |
| CURRENT LIABILITIES | | | | | | | | |
| | | | | | | | | |
| Shareholder Loan | | | 19,131 | | | | 2,500 | |
| Accrued Expenses | | $ | 2,579 | | | $ | 3,793 | |
| | | | | | | | | |
| Total Current Liabilities | | | 21,710 | | | | 6,293 | |
| | | | | | | | | |
| LONG-TERM LIABILITIES | | | | | | | | |
| | | | | | | | | |
| Accrued Interest | | | 9,959 | | | | 5,303 | |
| Note Payable | | | 190,000 | | | | 62,000 | |
| | | | | | | | | |
| Total Long-term Liabilities | | | 199,959 | | | | 67,303 | |
| | | | | | | | | |
| TOTAL LIABILITIES | | $ | 221,669 | | | $ | 73,596 | |
| | | | | | | | | |
| STOCKHOLDERS' EQUITY | | | | | | | | |
| | | | | | | | | |
| Preferred Stock - Par value $0.001; Authorized: 10,000,000 None issues and outstanding | | $ | - | | | $ | - | |
| | | | | | | | | |
| Common Stock - Par value $0.001; Authorized: 100,000,000 Issued and Outstanding: 100,000 | | | 100 | | | | 100 | |
| | | | | | | | | |
| Additional Paid-In Capital | | | | | | | - | |
| Accumulated Deficit | | | (213,524 | ) | | | (65,259 | ) |
| | | | | | | | | |
| Total Stockholders' Equity | | | (213,424 | ) | | | (65,159 | ) |
| | | | | | | | | |
| TOTAL LIABILITIES AND EQUITY | | $ | 8,245 | | | $ | 8,437 | |
The accompanying notes are an integral part of these financial statements.
4309, Inc.
(a development stage company)
STATEMENT OF OPERATIONS
For the twelve months ending December 31, 2008 and 2007
from inception (December 9, 2005) through December 31, 2008
| | | 12 MONTHS | | | 12 MONTHS | | | FROM | |
| | | ENDING | | | ENDING | | | INCEPTION | |
| | | 12/31/2008 | | | 12/31/2007 | | | TO 12/31/2008 | |
| | | | | | | | | | |
| REVENUE | | $ | - | | | $ | - | | | $ | - | |
| | | | | | | | | | | | | |
| COST OF SERVICES | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | |
| GROSS PROFIT OR (LOSS) | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | |
| GENERAL AND ADMINISTRATIVE EXPENSES | | | 144,962 | | | | 63,409 | | | | 210,221 | |
| | | | | | | | | | | | | |
| INTEREST EXPENSES | | | 3,303 | | | | - | | | | | |
| | | | | | | | | | | | | |
| NET INCOME (LOSS) | | | (148,265 | ) | | | (63,409 | ) | | | (210,221 | ) |
| | | | | | | | | | | | | |
| ACCUMULATED DEFICIT, BEGINNING BALANCE | | | (65,259 | ) | | | (1,850 | ) | | | - | |
| | | | | | | | | | | | | |
| ACCUMULATED DEFICIT, ENDING BALANCE | | $ | (213,524 | ) | | $ | (65,259 | ) | | $ | (210,221 | ) |
| | | | | | | | | | | | | |
| Earnings (loss) per share | | | (1.48 | ) | | | (0.63 | ) | | | | |
| | | | | | | | | | | | | |
| Weighted average number of common shares | | | 100,000 | | | | 100,000 | | | | | |
The accompanying notes are an integral part of these financial statements.
4309, Inc.
(a development stage company)
STATEMENT OF STOCKHOLDERS' EQUITY
From inception (December 9, 2005) through December 31, 2008
| | | | | | COMMON | | | ACCUM. | | | TOTAL | |
| | | SHARES | | | STOCK | | | DEFICIT | | | EQUITY | |
| | | | | | | | | | | | | |
| Stock issued on acceptance of incorporation expenses December 9, 2005 | | | 100,000 | | | $ | 100 | | | | | | $ | 100 | |
| | | | | | | | | | | | | | | | |
| Net Income (Loss) | | | | | | | | | | | (400 | ) | | | (400 | ) |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Total, December 31, 2005 | | | 100,000 | | | $ | 100 | | | $ | (400 | ) | | $ | (300 | ) |
| | | | | | | | | | | | | | | | | |
| Net Income (Loss) | | | | | | | | | | | (1,450 | ) | | | (1,450 | ) |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Total, December 31, 2006 | | | 100,000 | | | $ | 100 | | | $ | (1,850 | ) | | $ | (1,750 | ) |
| | | | | | | | | | | | | | | | | |
| Net Income (Loss) | | | | | | | | | | | (63,409 | ) | | | (63,409 | ) |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Total, December 31, 2007 | | | 100,000 | | | | 100 | | | $ | (65,259 | ) | | $ | (65,159 | ) |
| | | | | | | | | | | | | | | | | |
| Net Income (Loss) | | | | | | | | | | | (148,265 | ) | | | (148,265 | ) |
| | | | | | | | | | | | | | | | | |
| Total, December 31, 2008 | | | 100,000 | | | | 100 | | | $ | (213,524 | ) | | $ | (213,424 | ) |
The accompanying notes are an integral part of these financial statements.
4309, Inc.
(a development stage company)
STATEMENTS OF CASH FLOWS
For the twelve months ending December 31, 2008 and 2007
from inception (December 9, 2005) through December 31, 2008
| | | 12 MONTHS | | | 12 MONTHS | | | FROM | |
| | | ENDING | | | ENDING | | | INCEPTION | |
| | 12/31/2008 | | | 12/31/2007 | | | TO 12/31/2008 | |
| | | | | | | | | | |
| CASH FLOWS FROM OPERATING ACTIVITIES | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Net income (loss) | | $ | (148,265 | ) | | $ | (63,409 | ) | | $ | (213,524 | ) |
| | | | | | | | | | | | | |
| Stock issued as compensation | | | | | | | | | | | 100 | |
| Increase (Decrease) in Accrued Expenses | | | 4,656 | | | | 7,346 | | | | 12,681 | |
| | | | | | | | | | | | | |
| Total adjustments to net income | | | 4,656 | | | | 7,346 | | | | 12,781 | |
| | | | | | | | | | | | | |
| Net cash provided by (used in) operating activities | | | (143,609 | ) | | | (56,063 | ) | | | (200,743 | ) |
| | | | | | | | | | | | | |
| CASH FLOWS FROM INVESTING ACTIVITIES | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| None | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | |
| Net cash flows provided by (used in) investing activities | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | |
| CASH FLOWS FROM FINANCING ACTIVITIES | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Shareholder Loan | | | 16,631 | | | | - | | | | 19,131 | |
| Proceeds from Note Payable | | | 128,000 | | | | 64,500 | | | | 190,000 | |
| | | | | | | | | | | | | |
| Net cash flows provided by (used in) financing activities | | | 144,631 | | | | 64,500 | | | | 209,131 | |
| | | | | | | | | | | | | |
| CASH RECONCILIATION | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Net increase (decrease) in cash | | | (192 | ) | | | 8,437 | | | | 8,388 | |
| Cash - beginning balance | | | 8,437 | | | | - | | | | - | |
| | | | | | | | | | | | | |
| CASH BALANCE - END OF PERIOD | | $ | 8,245 | | | $ | 8,437 | | | $ | 8,388 | |
The accompanying notes are an integral part of these financial statements.
4309, Inc.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
1. Summary of significant accounting policies:
Industry:
4309, Inc. (the Company), a Company incorporated in the state of Delaware as of December 9, 2005 plans to locate and negotiate with a business entity for the combination of that target company with The Company. The combination will normally take the form of a merger, stock-for-stock exchange or stock- for-assets exchange. In most instances the target company will wish to structure the business combination to be within the definition of a tax-free reorganization under Section 351 or Section 368 of the Internal Revenue Code of 1986, as amended. No assurances can be given that The Company will be successful in locating or negotiating with any target company.
The Company has been formed to provide a method for a foreign or domestic private company to become a reporting ("public") company whose securities are qualified for trading in the United States secondary market.
The Company has adopted its fiscal year end to be December 31.
Results of Operations and Ongoing Entity:
The Company is considered to be an ongoing entity for accounting purposes; however, there is substantial doubt as to the Company's ability to continue as a going concern. The Company borrows funds and relies on its shareholders to fund any shortfalls in The Company's cash flow on a day to day basis during the time period that The Company is in the development stage.
Liquidity and Capital Resources:
In addition to debt and stockholder funding of capital shortfalls; The Company anticipates interested investors that intend to fund the Company's growth once a business is located.
Cash and Cash Equivalents:
The Company considers cash on hand and amounts on deposit with financial institutions which have original maturities of three months or less to be cash and cash equivalents.
Basis of Accounting:
The Company's financial statements are prepared in accordance with U.S. generally accepted accounting principles.
Income Taxes:
The Company utilizes the asset and liability method to measure and record deferred income tax assets and liabilities. Deferred tax assets and liabilities reflect the future income tax effects of temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and are measured using enacted tax rates that apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Deferred tax assets are reduced by a valuation allowance when in the opinion of management; it is more likely than not that some portion or all of the deferred tax assets will not be realized. At this time, The Company has set up an allowance for deferred taxes but there is no company history to indicate the usage of deferred tax assets and liabilities.
Fair Value of Financial Instruments:
The Company's financial instruments may include cash and cash equivalents, short-term investments, accounts receivable, accounts payable and liabilities to banks and shareholders. The carrying amount of long-term debt to banks and others approximates fair value based on interest rates that are currently available to The Company for issuance of debt with similar terms and remaining maturities. The carrying amounts of other financial instruments approximate their fair value because of short-term maturities.
Concentrations of Credit Risk:
Financial instruments which potentially expose The Company to concentrations of credit risk consist principally of operating demand deposit accounts. The Company's policy is to place its operating demand deposit accounts with high credit quality financial institutions. At this time The Company has no deposits that are at risk.
2. Related Party Transactions and Going Concern:
The Company's financial statements have been presented on the basis that it is a going concern in the development stage, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. There can be no assurance these activities will be successful. At this time The Company has not identified the business in which it wishes to engage.
The Company's shareholder has provided some funds for The Company's activities while The Company takes steps to locate and negotiate with a business entity for combination. As of December 31, 2008 $19,131 in stockholder loans payable was used as operating expenses and recorded in accounts payable and expenses.
3. Accounts Receivable and Customer Deposits:
Accounts receivable and Customer deposits do not exist at this time and therefore have no allowances accounted for or disclosures made.
4. Use of Estimates:
Management uses estimates and assumptions in preparing these financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenue and expenses. Management has no reason to make estimates at this time.
5. Revenue and Cost Recognition:
The Company uses the accrual basis of accounting in accordance with generally accepted accounting principles for financial statement reporting.
6. Accrued Expenses:
Accrued expenses consist of accrued tax, professional and office costs during this stage of the business.
7. Operating Lease Agreements:
The Company has no agreements at this time.
8. Demand Note Payable:
On August 1, 2007 the Company entered into a multiple advance note with 4309 Acquisition Trust whereby the Company may borrow up to $500,000. The terms allow interest set to be accrued at the applicable federal rate as given by the Internal Revenue Service. At December 31, 2008 the Company had a principal balance owed in the amount of $198,000 plus accrued interest.
9. Stockholder's Equity:
Preferred stock includes 10,000,000 shares authorized at a par value of $0.001, of which none are issued or outstanding.
Common Stock includes 100,000,000 shares authorized at a par value of $0.001, of which 100,000 have been issued for the amount of $100 on December 31, 2005 in acceptance of the incorporation expenses for the Company.
10. Required Cash Flow Disclosure for Interest and Taxes Paid:
The company has paid no amounts for federal income taxes and interest. The Company issued 100,000 common shares of stock to its sole shareholder in acceptance of the incorporation expenses for The Company.
11. Earnings Per Share:
Basic earnings per share ("EPS") is computed by dividing earnings available to common shareholders by the weighted-average number of common shares outstanding for the period as required by the Financial Accounting Standards Board (FASB) under Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings per Shares". Diluted EPS reflects the potential dilution of securities that could share in the earnings.
12. Income Taxes:
The Company has available net operating loss carryforwards for financial statement and federal income tax purposes. These loss carryforwards expire if not used within 20 years from the year generated.
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial statement purposes and the amounts used for income tax purposes. These losses may be limited by the Internal Revenue Service when there is a change of control of the Company. Significant components of the Company's deferred tax liabilities and assets as of December 31, 2008 are as follows:
| Deferred tax assets: | | | |
| Federal net operating loss | | $ | 32,466 | |
| State net operating loss | | | 10,822 | |
| | | | | |
| Total deferred tax assets | | | 43,288 | |
| Less valuation allowance | | | (43,288 | ) |
| | | | | |
| | | $ | — | |
The Company has provided a 100% valuation allowance on the deferred tax assets at December 31, 2008 to reduce such asset to zero, since there is no assurance that the Company will generate future taxable income to utilize such asset. Management will review this valuation allowance requirement periodically and make adjustments as warranted.
The reconciliation of the effective income tax rate to the federal statutory rate for the periods ended December 31, 2008 and December 31, 2007 is as follows:
| | | 2008 | | | 2007 | |
| Federal income tax rate | | | (15.0 | )% | | | (15.0 | )% |
| State tax, net of federal benefit | | | (5.0 | )% | | | (5.0 | )% |
| Increase in valuation allowance | | | 20.0 | % | | | 20.0 | % |
| | | | | | | | | |
| Effective income tax rate | | | 0.0 | % | | | 0.0 | % |
13. Changes in Control of Registrant:
On July 24, 2007 (the "Effective Date"), a total of 100,000 shares, or 100%, of the issued and outstanding common stock of the Company changed hands in a personal transaction. In a change of control of a Company with net operating loss carryforwards there may be limitations in the amounts the Company can carryforward.
Our accountant is Gately & Associates, LLC, CPAs, an independent certified public accountants. We do not presently intend to change accountant. At no time have there been any disagreements with such accountants regarding any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure.
ITEM 9A(T). CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”), the Company carried out an evaluation, with the participation of the Company’s management, including the Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) (the Company’s principal financial and accounting officer), of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.
Management's Annual Report on Internal Control Over Financial Reporting.
The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Our internal control system was designed to, in general, provide reasonable assurance to the Company’s management and board regarding the preparation and fair presentation of published financial statements, but because of its inherent limitations, 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 because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2008. The framework used by management in making that assessment was the criteria set forth in the document entitled “ Internal Control – Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that assessment, our management has determined that as of December 31, 2008, the Company’s internal control over financial reporting was effective for the purposes for which it is intended.
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 attestation by the Company's registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management's report in this annual report.
Changes in Internal Control over Financial Reporting
No change in our system of internal control over financial reporting occurred during the period covered by this report, fourth quarter of the fiscal year ended December 31, 2008 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART III
As of May 22, 2009, we have one Director and two Officers, a President/Assistant Secretary and Vice President/Secretary as follows:
| Name | | Age | | Positions and Offices Held |
| Paul D. Poetter | | 55 | | President/Assistant Secretary/Director |
| | | | | |
| Richard V. Savchenko | | 65 | | Vice President/Secretary |
There are no agreements or understandings for the officers or director to resign at the request of another person and the above-named officers and director is not acting on behalf of nor will act at the direction of any other person.
Our director and officers held no positions and offices with the Company held during the last five years.
Mr. Paul D. Poetter, a native Arizonian, has participated in many types of management genres from 6 SIGNA to Critical Path to Lean Cell in relation to construction, insurance, Government subcontracting, international monetary transactions and has proven himself as a problem solver. Over the years, Mr. Poetter has worked with many, intelligent, out-of-the-box thinkers and combined with his ability to access a situation, quickly deduce a remedy, he has envisioned and consulted on many large multi hundred-million dollar projects and programs here in the USA and China.
Mr. Richard Savchenko retired after 28 years with Marathon Oil Company of Texas City, Texas in 1996. Prior to that, he had served six years in the United States Navy, with two tours in Vietnam. Mr. Savchenko was first employed by Marathon Oil as a field hand and he work his way up the ladder to retire as Chief Operator. Since his retirement, he has had the opportunity to work on the design and development of several large public works projects with Mr. Paul D. Poetter and others. Mr. Savchenko is accredited in oil refinery management and maintenance, including chemical and steam engineering, as they relate to oil refining operations, by Texas A & M University, and accredited in refinery and oil field fire resolution by Texas A & M University, under the direction of the United States Navy Dept.
Our directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until removed by the board.
All officers and directors listed above will remain in office until the next annual meeting of our stockholders, and until their successors have been duly elected and qualified. There are no agreements with respect to the election of Directors. We have not compensated our Directors for service on our Board of Directors, any committee thereof, or reimbursed for expenses incurred for attendance at meetings of our Board of Directors and/or any committee of our Board of Directors. Officers are appointed annually by our Board of Directors and each Executive Officer serves at the discretion of our Board of Directors. We do not have any standing committees. Our Board of Directors may in the future determine to pay Directors’ fees and reimburse Directors for expenses related to their activities.
None of our Officers and/or Directors have filed any bankruptcy petition, been convicted of or been the subject of any criminal proceedings or the subject of any order, judgment or decree involving the violation of any state or federal securities laws within the past five (5) years.
Audit Committee
We do not have a standing audit committee of the Board of Directors. Management has determined not to establish an audit committee at present because of our limited resources and limited operating activities do not warrant the formation of an audit committee or the expense of doing so. We do not have a financial expert serving on the Board of Directors or employed as an officer based on management’s belief that the cost of obtaining the services of a person who meets the criteria for a financial expert under Item 401(e) of Regulation S-B is beyond its limited financial resources and the financial skills of such an expert are simply not required or necessary for us to maintain effective internal controls and procedures for financial reporting in light of the limited scope and simplicity of accounting issues raised in its financial statements at this stage of its development.
Certain Legal Proceedings
No director, nominee for director, or executive officer of the Company has appeared as a party in any legal proceeding material to an evaluation of his ability or integrity during the past five years.
Significant Employees
None.
Family Relationships
No family relationships exist among our directors, executive officers, or persons nominated or chosen by us to become directors or executive officers.
Involvement in Certain Legal Proceedings
To our knowledge, during the past five (5) years, none of our directors, executive officers, promoters, control persons, or nominees has been:
| the subject of any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; |
| convicted in a criminal proceeding or is subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); |
| subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or |
| found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law. |
Auditors; Code of Ethics; Financial Expert
We do not have an audit committee financial expert. We do not have an audit committee financial expert because we believe the cost related to retaining a financial expert at this time is prohibitive. Furthermore, because we are only beginning our commercial operations, at the present time, we believe the services of a financial expert are not warranted.
Potential Conflicts of Interest
We are not aware of any current or potential conflicts of interest with any of our executives or directors.
Compensation of Executive Officers
The following summary compensation table sets forth all compensation awarded to, earned by, or paid to the named executive officers paid by us during the fiscal years ended December 31, 2008 and 2007 in all capacities for the accounts of our executives, including the Chief Executive Officer (CEO) and Chief Financial Officer (CFO):
SUMMARY COMPENSATION TABLE
| Name and Principal Position | | Year | | Salary ($) | | | Bonus ($) | | | Stock Awards ($) | | | Option Awards ($) | | | Non-Equity Incentive Plan Compensation ($) | | | Non-Qualified Deferred Compensation Earnings ($) | | | All Other Compensation ($) | | | Totals ($) | |
| Paul Poetter President, Chief | | 2008 | | $ | 84,000 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 84,000 | |
| Executive Officer, | | 2007 | | $ | 41,583 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | $ | 41,583 | |
| Chief Financial Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Richard Savchenko Vice | | 2008 | | $ | 29,000 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 29,000 | |
| President, Secretary | | 2007 | | $ | 6,913 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | $ | 6,913 | |
Employment Agreements
We do not have any employment agreements in place with our sole officer and director.
The following table sets forth each person known by us to be the beneficial owner of five percent or more of the Company's Common Stock, all directors individually and all directors and officers of the Company as a group. Except as noted, each person has sole voting and investment power with respect to the shares shown.
Name and Address of Beneficial Owner | | Amount of Beneficial Ownership | | Percentage of Class | |
| Paul Poetter | | | 100,000 | | | 100 | % |
| 3707 E. Southern Ave. | | | | | | | |
| Suite 1087, Box 1080 | | | | | | | |
| Mesa, AZ, 85206 | | | | | | | |
| | | | | | | | |
| All Executive Officers | | | | | | | |
| and Directors as a Group | | | 100,000 | | | 100 | % |
| (2 Person) | | | | | | | |
We currently use the offices of management at no cost to us. Management has agreed to continue this arrangement until we complete an acquisition or merger.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
(1) Audit Fees
For the Company’s fiscal year ended December 31, 2008, we were billed approximately $3,200 for professional services rendered for the audit of our financial statements. We were not billed for the review of financial statements included in our periodic and other reports filed with the Securities and Exchange Commission for our year ended December 31, 2008.
Audit Related Fees
There were no fees for audit related services for the years ended December 31, 2008 and 2007.
Tax Fees
For the Company’s fiscal year ended December 31, 2008, we were not billed by our principle accountant for professional services rendered for tax compliance, tax advice, and tax planning.
All Other Fees
The Company did not incur any other fees related to services rendered by our principal accountant for the fiscal years ended December 31, 2008 and 2007.
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Effective May 6, 2003, the Securities and Exchange Commission adopted rules that require that before our auditor is engaged by us to render any auditing or permitted non-audit related service, the engagement be:
| approved by our audit committee; or |
| entered into pursuant to pre-approval policies and procedures established by the audit committee, provided the policies and procedures are detailed as to the particular service, the audit committee is informed of each service, and such policies and procedures do not include delegation of the audit committee's responsibilities to management. |
We do not have an audit committee. Our entire board of directors pre-approves all services provided by our independent auditors. The pre-approval process has just been implemented in response to the new rules. Therefore, our board of directors does not have records of what percentage of the above fees were pre-approved. However, all of the above services and fees were reviewed and approved by the entire board of directors either before or after the respective services were rendered.
PART IV
a) Documents filed as part of this Annual Report
1. Financial Statements
2. Financial Statement Schedules
3. Exhibits
| Exhibit No. | | Title of Document |
| 31.1 | | Rule 13a-14(a)/ 15d-14(a) Certification of Chief Executive Officer |
| | | |
| 31.2 | | Rule 13a-14(a)/ 15d-14(a) Certification of Chief Financial Officer |
| | | |
| 32.1 | | Section 1350 Certification of Chief Executive Officer |
| | | |
| 32.2 | | Section 1350 Certification of Chief Financial Officer |
SIGNATURES
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.
| | 4309, Inc. | |
| | | | |
| By: | /s/ Paul Poetter | |
| | | Paul Poetter | |
| | | President/Director | |
| | | | |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
