WASHINGTON, D.C. 20549
TIA IV, INC.
Check 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.
Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act).
: As of April 29, 2009 registrant had 17,392,483 shares of Common Stock, outstanding,
Item 1. FINANCIAL STATEMENTS AND NOTES TO FINANCIAL STATEMENTS
TIA IV, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - Organization, Business and Operations
Tia IV, Inc. (the “Company”) was incorporated in Delaware on August 17, 2006, with an objective to acquire, or merge with, an operating business. On August 20, 2008 we entered into and consummated a Securities Purchase Agreement. Under the terms of the Purchase Agreement, Ralph Porretti, Jim McAlinden and Peter Ng acquired 13,500,000 common shares of the Company at $.0001 per share Our certificate of incorporation and bylaws will continue to be those of the Company. We will be governed by the corporate law of the State of Delaware. In October 2008 the Company commenced operations in Staten Island, New York using the DBA “National Mitigation Specialists”. The Company is a financial advisory firm dedicated to assisting both homeowners and financial mortgage Institutions in preventing foreclosures, and is doing business as National Mitigation Specialists.
NOTE 2 Going Concern
As of and prior to September 30, 2008 the Company did not generate any revenues; accordingly, the Company was considered a development stage enterprise as defined in Financial Accounting Standards Board No. 7, "Accounting and Reporting for Development Stage Companies." In October 2008 the Company emerged from a development stage company by commencing operations.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As of March 31, 2009 the Company has not generated positive cash flow from operations, and was until then, totally dependent upon debt and equity funding to finance operations. Although the Company believes that it will have sufficient liquidity to sustain its operations for the next twelve months based on its current revenue projections and its ability to manage costs, there is no assurance that such projections will be met and will be sufficient. These factors raise substantial doubt about the Company’s continued existence as a going concern. The accompanying financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.
The management plans on using cash flow from operations activities to fund the Company. However management believes the Company will still be dependent upon debt and equity funding to finance operations for at least the next twelve months. There can be no assurances that the Company will be able to reverse its operating losses or cash flow deficiencies.
NOTE 3 - Summary of Significant Accounting Policies
The condensed financial statements included herein have been prepared by registrant without audit pursuant to the rules and regulation of the Securities and Exchange Commission. Although the registrant believes that the disclosures are adequate to make the information presented not misleading, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. It is suggested that these financial statements be read in conjunction with the audited financial statements and the notes thereto included in the registrant’s report on Form 10-KSB for the year ended September 30, 2008 as filed with the Securities and Exchange Commission
Effective October 1, 2007, the Company adopted the provisions of FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109” (“FIN No. 48”). FIN No. 48 clarifies the accounting for uncertainty in income taxes recognized in a company’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities.
Income Taxes
In accordance with FIN 48, interest costs related to unrecognized tax benefits are required to be calculated (if applicable) and would be classified as “Interest Expense” in the Statements of Operations. Penalties would be recognized as component of “General and Administrative expenses”.
The Company files income tax returns in the United States, State of Delaware, State of New York, and The City of New York.
The Adoption of the provision of FIN 48 did not have a material impact on the Company’s financial position and results of operations. As of March 31, 2009 no liability for unrecognized tax benefits was required to be recorded.
The Company utilizes the liability method of accounting for income taxes. Under the liability method, deferred income taxes are determined based on the differences between the bases of assets and liabilities for financial reporting and income tax purposes. The Company recognized a deferred tax asset of approximately $34,000 as of March 31, 2009, primarily relating to costs incurred during as a development stage company. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences become deductible. The Company considers projected future taxable income and tax planning strategies in making this assessment. At present, the Company does not have a history of income to conclude that is more likely than not that the Company will be able to realize its tax benefits; therefore, a valuation allowance of $34,000 was established for the full value of the deferred tax asset. For the year ended September 30, 2008, the valuation allowance increased by approximately $15,000. A valuation allowance will be maintained until sufficient positive evidence exists to support the reversal of any portion or all of the valuation allowance net of appropriate reserves. Should the Company be profitable in the future periods with supportable trends, the valuation allowance will be reversed accordingly.
A reconciliation of the expected federal statutory rate of 34% to the Company’s actual rate as reported for each of the periods presented is as follows:
| | | Three Months Ended March 31, 2009 | | | Three Months Ended March 31, 2008 | |
| Expected Statutory Rate | | | 34.0 | % | | | 34.0 | % |
| State income tax rate, net of federal benefit | | | 7.1 | % | | | 7.1 | % |
| City income tax rate, net of federal benefit | | | 8.5 | % | | | 8.5 | % |
| | | | 49.6 | % | | | 49.6 | % |
| Valuation Allowance | | | -49.6 | % | | | -49.6 | % |
| Net Actual Rate | | | 0.0 | % | | | 0.0 | % |
TIA IV, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 3 - Summary of Significant Accounting Policies (Continued)
Net Loss Per Share of Common Stock
Basic and diluted net loss per common share is computed by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period.
Use of Estimates
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 and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Recent Accounting Standards
On October, 2008, the FASB issued Staff Position No. 157-3, “Determining the Fair Value of a Financial Asset When Market for that Asset is not Active”, Effective upon issuance, including prior periods for which financial statements have not been issued. The Company is currently evaluating the effect that the adoption of FSP of 157-3 will have on its results of operations and financial condition, but does not expect it to have a material impact.
In February 2008, the FASB issued Staff Position No. 157-2, Effective Date of FASB Statement No. 157 (“FSP 157-2”) that defers the effective date of applying the provisions of SFAS 157 to the fair value measurement of non-financial assets and non-financial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (or at least annually), until fiscal years beginning after November 15, 2008. The Company is currently evaluating the effect that the adoption of FSP 157-2 will have on its results of operations and financial condition, but does not expect it to have a material impact.
In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51, (“SFAS 160”), which amends Accounting Research Bulletin No. 51, Consolidated Financial Statements (“ARB No. 51”) , to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. This standard defines a noncontrolling interest, previously referred to as minority interest, as the portion of equity in a subsidiary not attributable, directly or indirectly, to a parent. SFAS 160 requires, among other items, that a noncontrolling interest be included in the consolidated balance sheet within equity separate from the parent’s equity; consolidated net income to be reported at amounts inclusive of both the parent’s and noncontrolling interest’s shares and, separately, the amounts of consolidated net income attributable to the parent and noncontrolling interest all on the consolidated statement of income; and if a subsidiary is deconsolidated, any retained noncontrolling equity investment in the former subsidiary be measured at fair value and a gain or loss be recognized in net income based on such fair value. SFAS 160 is effective for fiscal years beginning after December 15, 2008, which corresponds to the Company’s calendar year beginning January 1, 2009. The Company is currently evaluating the effect that the adoption of SFAS 160 will have on its results of operations and financial condition, but does not expect it to have a material impact.
In December 2007, the FASB issued SFAS No. 141(R), “Business Combinations” (“SFAS No. 141R”). SFAS 141R retains the fundamental requirements in SFAS 141 that the acquisition method of accounting (which SFAS 141 called the purchase method ) be used for all business combinations and for an acquirer to be identified for each business combination. SFAS 141R also establishes principles and requirements for how the acquirer: (a) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree; (b) improves the completeness of the information reported about a business combination by changing the requirements for recognizing assets acquired and liabilities assumed arising from contingencies; (c) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase; and (d) determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS No. 141R applies 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, 2008 (for acquisitions closed on or after January 1, 2009 for the Company). Early application is not permitted. The Company is currently evaluating the potential impact of adopting SFAS 141(R) on its financial statements.
TIA IV, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 3 - Summary of Significant Accounting Policies (Continued)
Recent Accounting Standards (Continued)
In February 2007, the FASB issued SFAS 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS 159”). SFAS 159 provides companies with an option to report selected financial assets and liabilities at fair value and establishes presentation and disclosure requirements designed to facilitate comparisons between companies that choose different measurement attributes for similar types of assets and liabilities. SFAS 159 is effective for fiscal years beginning after November 15, 2007. The Company is in the process of evaluating the impact of the adoption of this statement on the Company’s results of operations and financial condition.
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. The new FASB rule defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, or GAAP, and expands disclosures about fair value measurements. The statement is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. Management is currently evaluating the impact, if any, to the financial condition or results of operations from the adoption of SFAS No. 157.
NOTE 4 – Related Party
In October and November 2008 the Company received loans from its Secretary totaling $4,000. The loan is due on demand and has no stated interest rate. These loans were repaid in March 2009.
NOTE 5 – Note Payable
During October through December 2008 the Company received an unsecured note from an unrelated party totaling $27,000. The Company is to pay $35,000, including simple interest at the rate of 28% per annum on the unpaid balance, as follows: $12,000 on or before April 1, 2009, $4000 of which was paid in March, 2009, with the remaining $8000 paid in April, 2009, and $23,000 on or before April 1, 2010 and issued 540,000 shares of common stock. The stock was issued on December 23, 2008.
NOTE 6 – Stockholders Equity
Preferred Stock
The Company is authorized to issue 10,000,000 shares of preferred stock with such designations, voting and other rights and preferences as may be determined from time to time by the Board of Directors.
Common Stock
During January 2009, the Company issued 105,500 shares of common stock at $0.03 per share totaling $3165 for services rendered.
During March 2009, the Company issued 30,000 shares of common stock at $0.03 per share totaling $900 for services rendered.
Organization and Basis of Presentation
We are currently a provider of debt mitigation services. The Company will receive revenues from the collection of consulting fees paid by the clients for mortgage and unsecured debt mitigation.
Information Regarding Forward-Looking Statements
A number of statements contained in this report are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the applicable statements. You can identify forward-looking statements by our use of the words such as “may”, “will”, ”should”, “could”, “expects”, “plans”, “intends” “anticipates”, believes”, ‘estimates”, “predicts”, “potential”, or “continue” or the negative or other variations of these words. Or other comparable words or phrases. These statements include, but are not limited to, statements regarding our ability to complete our business objectives. These risks and uncertainties, but are not limited to:
| | · | Our potential inability to obtain additional financing |
| | · | Our public securities’ limited liquidity and trading |
| | · | Our ongoing financial performance |
| | · | Our success in retaining or recruiting, or changes required in, our officers or directors. |
Unless otherwise required by applicable law, the Company assumes no obligation to update any such forward-looking statements, or to update the reasons shy actual results could differ from those projected in the forward-looking statements. These risk factors are further described in our annual report Form 10-KSB for the fiscal year ended September 30, 2008.
Critical Accounting Policies
Use of Estimates
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make judgments, assumptions and estimates that affect the amounts reported in our financial statements and accompanying notes. We base our estimates and judgments on historical experience and on various other assumptions that we believe are reasonable under the circumstances. However, future events are subject to change, and the best estimates and judgments routinely require adjustment. The amounts of assets and liabilities reported in our balance sheet, and the amounts of revenues and expenses reported for each of our fiscal periods, are affected by estimates and assumptions which are used for, but not limited to income taxes. Actual results could differ from these estimates.
Revenue Recognition Policies
The Company will derive its primary revenue from performing client services. Which include mortgage mitigation and unsecured debt mitigation sources. Revenue is recognized at the time the services to the client have been completed. Until the services are completed, any funds received are held as Unrecognized Revenues.
Comparison of Results of Operations for the Three Months Ended March 31, 2009 and 2008
Revenues
Revenues for the three months ended March 31, 2009 were $18,883 compared to $0 revenues for the same period in 2008.
Operating Expenses
General and Administrative expenses increased for the three months ended March 31, 2009 by $54,220 when compared to the three months ended March 31, 2008. This increase in our overall general and administrative expenses was primarily due to office expenses, advertising expenses, contracting expenses and consulting fees
Net Loss from Operations
We incurred a net loss of $89,938 for the three months ended March 31, 2009 as compared to a net loss of $4924 for the three months ended March 31, 2008. This increase was due to an increase in costs .primarily relating to general and administrative expenses for the three months ended March 31, 2009.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk is the risk of loss from adverse changes in housing foreclosures and government regulation. The Company’s market risk arises primarily from the fact that the area in which we do business is highly competitive. We face competition from the larger and more established companies.
We face competition from the larger and more established companies, as well as the many smaller companies throughout the country.
ITEM 4. CONTROLS AND PROCEDURES
The Company's Chief Executive Officer is responsible for establishing and maintaining disclosure controls and procedures for the Company.
Evaluation of Disclosure Controls and Procedures
Our disclosure controls and procedures are designed to ensure that information required to be disclosed in reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the United States Securities and Exchange Commission. Our Chief Executive Officer and Chief Financial Officer have reviewed the effectiveness of our “disclosure controls and procedures” (as defined in the Securities Exchange Act of 1934 Rules 13a-15(f) and 15d-15(f) as of the end of the period covered by this report and have concluded that the disclosure controls and procedures are effective to ensure that material information relating to the Company is recorded, processed, summarized, and reported in a timely manner. There were no significant changes or material weaknesses in our internal controls or in other factors that could significantly affect these controls subsequent to the last day they were evaluated by our Chief Executive Officer and Chief Financial Officer.
Changes in Internal Controls over Financial Reporting
There have been no changes in the Company’s internal control over financial reporting during the last quarterly period covered by this report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 1A. RISK FACTORS
None.
UNLESS WE CAN REVERSE OUR HISTORY OF LOSSES, WE MAY HAVE TO DISCONTINUE OPERATIONS.
If we are unable to achieve or sustain profitability, or if operating losses increase in the future, we may not be able to remain a viable company and may have to discontinue operations. Our expenses have historically exceeded our revenues and we have had losses from inception, August 17, 2006, to March 31, 2009 totaling $201,659. Our net losses were $89,938 and $4924 for the three months ended March 31, 2009 and 2008 respectively.
WE MAY NOT SUCCEED OR BECOME PROFITABLE.
We will need to generate significant revenues to achieve profitability and we may be unable to do so. Even if we do achieve profitability, we may not be able to sustain or increase profitability in the future. We expect that our expenses will continue to increase and there is no guarantee that we will not experience operating losses and negative cash flow from operations for this fiscal year or for the foreseeable future. If we do not achieve or sustain profitability, then we may be unable to continue our operations.
WE WILL NEED ADDITIONAL CAPITAL FINANCING IN THE FUTURE.
We may be required to seek additional financing in the future to respond to increased expenses or shortfalls in anticipated revenues, product response to competitive pressures, develop new or enhanced products, or take advantage of unanticipated acquisition opportunities. We cannot be certain we will be able to find such additional financing on reasonable terms, or at all. If we are unable to obtain additional financing when needed, we could be required to modify our business plan in accordance with the extent of available financing.
BECAUSE OUR OFFICERS AND DIRECTORS ARE INDEMNIFIED AGAINST CERTAIN LOSSES, WE MAY BE EXPOSED TO COSTS ASSOCIATED WITH LITIGATION.
If our directors or officers become exposed to liabilities invoking the indemnification provisions, we could be exposed to additional unreimbursable costs, including legal fees. Our articles of incorporation and bylaws provide that our directors and officers will not be liable to us or to any shareholder and will be indemnified and held harmless for any consequences of any act or omission by the directors and officers unless the act or omission constitutes gross negligence or willful misconduct. Extended or protracted litigation could have a material adverse effect on our cash flow.
THE REPORT OF OUR INDEPENDENT AUDITORS INDICATES UNCERTAINTY CONCERNING OUR ABILITY TO CONTINUE AS A GOING CONCERN .
Our independent auditors report indicates that there is substantial doubt about our ability to continue as a going concern. This may impair our ability to implement our business plan, and we may never achieve significant revenues and therefore remain a going concern.
POSSIBLE ISSUANCE OF ADDITIONAL SHARES COULD DILUTE STOCKHOLDERS’ OWNERSHIP PERCENTAGE
We currently have 17,392,483 Shares of common stock outstanding. There are currently no other material plans, agreements, commitments or undertakings with respect to the issuance of additional shares of common stock or securities convertible into shares of our common stock. Additional shares could be issued in the future, and the result of the issuance of additional shares would be to further dilute the percentage ownership of our common stock held by our stockholders.
IF A MARKET FOR OUR COMMON STOCK DOES NOT DEVELOP, SHAREHOLDERS MAY BE UNABLE TO SELL THEIR SHARES.
There is currently no market for our common stock and no market may develop. We currently plan to apply for listing of our common stock on the OTC Bulletin Board. However, our shares may not be traded on the bulletin board or, if traded, a public market may not materialize. If no market is ever developed for our shares, it will be difficult for shareholders to sell their stock. In such a case, shareholders may find that they are unable to achieve benefits from their investment.
THE BOARD OF DIRECTORS POWER TO ISSUE PREFERRED STOCK, COULD DILUTE THE OWNERSHIP OF EXISTING SHAREHOLDERS AND THIS MAY INHIBIT POTENTIAL ACQUIRES OF THE COMPANY.
Our articles of organization grant the board of directors the power to issue preferred stock with terms and conditions, including voting rights that they deem appropriate. The exercise of the discretion of the board to issue preferred stock and/or common stock could dilute the ownership rights and the voting rights of current shareholders. In addition, this power could be used by the Board to inhibit potential acquisitions by a third party.
THERE IS NO PUBLIC MARKET FOR OUR COMMON STOCK.
Our common stock currently is not publicly traded. However, a trading market for the shares may develop in the future. If a public market does develop the public market will establish trading prices for our common stock. An active public market for our common stock may not develop or be sustained.
WE DO NOT INTEND TO PAY DIVIDENDS ON OUR COMMON STOCK.
We have never declared or paid any cash dividend on our capital stock. We currently intend to retain any future earnings and do not expect to pay any dividends in the foreseeable future. Any determination to pay dividends in the future will be made at the discretion of our board of directors and will depend on our results of operations, financial conditions, contractual restrictions, restrictions imposed by applicable law and other factors our board deems relevant. Shareholders must be prepared to rely on sales of their common stock after price appreciation to earn an investment return, which may never occur. If our common stock does not appreciate in value, or if our common stock loses value, our stockholder may lose some or all of their investment in our shares.
An investment in the Company is highly speculative in nature and involves an extremely high degree of risk.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION
None.
PART III EXHIBITS.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
The following exhibits required by Item 601 of Regulation S-B are attached.
Exhibit No. | | Description |
| 3 | | Certificate of Incorporation* |
| 3.1 | | By-laws* |
| 4.1 | | Form of Common Stock Certificate* |
| 31.1 | | Certification of the Principal Executive Officer and Principal Financial Officer of Registrant pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended |
| 32.1 | | Certification of the Principal Executive Officer and Principal Financial Officer of Registrant pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
*Previously Submitted and incorporated by reference herein.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| | TIA IV, INC. |
| | |
| Date: October 12, 2009 | | |
| | | /s/ Ralph Porretti |
| | | Name: Ralph Porretti |
| | | Title: Chief Executive Officer and Director |
| | | ) |
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| | TIA IV, INC. |
| | |
| Date: October 12, 2009 | | |
| | | |
| | | /s/ Jim McAlinden |
| | | Name: Jim McAlinden |
| | | Title: President, Chief Financial Officer and Director |
| | | |
| | | ) |
