UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
| [X] | Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended April 30, 2009 | |
| [ ] | Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934 |
For the transition period to __________ | |
Commission File Number: 333-145794 |
Aviation Surveillance Systems, Inc.
(Exact name of small business issuer as specified in its charter)
| Nevada | 26-0164981 | |
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) | |
| 7437 S. Eastern Ave., #307, Las Vegas, Nevada 89123-1538 |
| (Address of principal executive offices) |
| 702-885-3072 |
| (Issuer’s telephone number) |
_____________________________________________________________________ |
| (Former name, former address and former fiscal year, if changed since last report) |
Check whether the issuer (1) 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 issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days [X] Yes [ ] No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). [ ] Yes [X] No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
[ ] Large accelerated filer [ ] Non-accelerated filer | [ ] Accelerated filer [X] Smaller reporting company |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [X] Yes [ ] No
State the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 16,488,825 common shares as of May 29, 2009.
Page | ||
PART I – FINANCIAL INFORMATION | ||
PART II – OTHER INFORMATION | ||
PART I - FINANCIAL INFORMATION
| Our financial statements included in this Form 10-Q are as follows: | |
| F-4 | |
These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the SEC instructions to Form 10-Q. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the interim period ended April 30, 2009 are not necessarily indicative of the results that can be expected for the full year.
3
AVIATION SURVEILLANCE SYSTEMS, INC
(Formerly Fairytale Ventures Inc.)
(A Development Stage Company)
| ASSETS | |||||
April 30, 2009 | July 31, 2008 | ||||
| (unaudited) | |||||
| CURRENT ASSETS | |||||
| Cash | $ | 1,638 | $ | 9,075 | |
| Total Current Assets | 1,638 | 9,075 | |||
| TOTAL ASSETS | $ | 1,638 | $ | 9,075 | |
| LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | |||||
| CURRENT LIABILITIES | |||||
| Notes payable - related party | $ | 1,000 | $ | 1,000 | |
| Accounts payable and accrued expenses | 4,759 | 493 | |||
| Total Current Liabilities | 5,759 | 1,493 | |||
| STOCKHOLDERS' EQUITY (DEFICIT) | |||||
Preferred stock - $0.001 par value; 10,000,000 shares authorized; no shares issued and outstanding | - | - | |||
Common stock - $0.001 par value; 90,000,000 shares authorized; 16,488,827 shares issued and outstanding | 16,489 | 16,489 | |||
| Additional paid-in capital | (264) | (264) | |||
| Deficit accumulated during the development stage | (20,346) | (8,643) | |||
| Total Stockholders' Equity (Deficit) | (4,121) | 7,582 | |||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | $ | 1,638 | $ | 9,075 | |
The accompanying notes are an integral part of these financial statements.
AVIATION SURVEILLANCE SYSTEMS, INC
(Formerly Fairytale Ventures, Inc.)
(A Development Stage Company)
For the Three Months Ended | For the Three Months Ended | For the Nine Months Ended | For the Nine Months Ended | From Inception on May 1, | ||||||||||
| REVENUES | $ | - | $ | - | $ | - | $ | - | $ | 200 | ||||
| COST OF GOODS SOLD | - | - | - | |||||||||||
| GROSS MARGIN | - | - | - | - | 200 | |||||||||
| OPERATING EXPENSES | ||||||||||||||
| General and administrative | 4,623 | 2,547 | 11,643 | 4,697 | 20,406 | |||||||||
| Total Operating Expenses | 4,623 | 2,547 | 11,643 | 4,697 | 20,406 | |||||||||
| OTHER EXPENSES | ||||||||||||||
| Interest Expense | 20 | 20 | 60 | 60 | 140 | |||||||||
| NET LOSS BEFORE INCOME TAXES | (4,643) | (2,567) | (11,703) | (4,757) | (20,346) | |||||||||
| INCOME TAX EXPENSE | - | - | - | - | - | |||||||||
| NET LOSS | $ | (4,643) | $ | (2,567) | $ | (11,703) | $ | (4,757) | $ | (20,346) | ||||
| BASIC LOSS PER SHARE | $ | (0.00) | $ | (0.00) | $ | (0.00) | $ | (0.00) | ||||||
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING | 16,488,827 | 8,944,000 | 16,488,827 | 8,944,000 | ||||||||||
The accompanying notes are an integral part of these financial statements.
AVIATION SURVEILLANCE SYSTEMS, INC
(Formerly Fairytale Ventures, Inc.)
(A Development Stage Company)
| Common Stock | Additional Paid-In | Deficit Accumulated | |||||||||||
| Shares | Amount | Capital | Stage | Total | |||||||||
| Balance May 1, 2007 | - | $ | - | $ | - | $ | - | $ | - | ||||
| Contributed capital | - | - | 300 | - | 300 | ||||||||
Shares issued for cash at $0.001 per share on May 14, 2007 | 11,798,803 | 11,799 | (7,799) | - | 4,000 | ||||||||
Shares issued for cash at $0.004 per shareon June 22, 2007 | 4,690,024 | 4,690 | 7,235 | - | 11,925 | ||||||||
Net loss from inception through July 31, 2007 | - | - | - | (153) | (153) | ||||||||
| Balance, July 31, 2007 | 16,488,827 | 16,489 | (264) | (153) | 16,072 | ||||||||
Net loss for the year ended July 31, 2008 | - | - | - | (8,490) | (8,490) | ||||||||
| Balance, July 31, 2008 | 16,488,827 | 16,489 | (264) | (8,643) | 7,582 | ||||||||
Net loss for nine months ended April 30, 2009 | - | - | - | (11,703) | (11,703) | ||||||||
| Balance, April 30, 2009 | 16,488,827 | $ | 16,489 | $ | (264) | $ | (20,346) | $ | (4,121) | ||||
The accompanying notes are an integral part of these financial statements.
AVIATION SURVEILLANCE SYSTEMS, INC
(Formerly Fairytale Ventures, Inc).
(A Development Stage Company)
For the Nine Months Ended | From Inception on May 1, | From Inception on May 1, | ||||||
| OPERATING ACTIVITIES | ||||||||
| Net loss | $ | (11,703) | $ | (4,757) | $ | (20,346) | ||
Adjustments to reconcile net loss to net cash used by operating activities: | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Increase (decrease) in accounts payable | ||||||||
| and accrued expenses | 4,266 | 60 | 4,759 | |||||
| Net Cash Used in | ||||||||
| Operating Activities | (7,437) | (4,697) | (15,587) | |||||
| INVESTING ACTIVITIES | - | - | - | |||||
| FINANCING ACTIVITIES | ||||||||
| Proceeds from common stock issued | - | - | 16,225 | |||||
| Increase in notes payable-related parties | - | - | 1,000 | |||||
| Net Cash Provided by | ||||||||
| Financing Activities | - | - | 17,225 | |||||
| NET INCREASE (DECREASE) IN CASH | (7,437) | (4,697) | 1,638 | |||||
| CASH AT BEGINNING OF PERIOD | 9,075 | 17,072 | - | |||||
| CASH AT END OF PERIOD | $ | 1,638 | $ | 12,375 | $ | 1,638 | ||
| SUPPLEMENTAL DISCLOSURES OF | ||||||||
| CASH FLOW INFORMATION | ||||||||
| CASH PAID FOR: | ||||||||
| Interest | $ | - | $ | - | $ | - | ||
| Income Taxes | $ | - | $ | - | $ | - | ||
The accompanying notes are an integral part of these financial statements.
AVIATION SURVEILLANCE SYSTEMS, INC.
(Formerly Fairytale Ventures, Inc.)
(A Development Stage Company)
April 30, 2009 and July 31, 2008
NOTE 1 - CONDENSED FINANCIAL STATEMENTS
The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at April 30, 2009, and for all periods presented herein, have been made.
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. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s July 31, 2008 audited financial statements. The results of operations for the periods ended April 30, 2009 and 2008 are not necessarily indicative of the operating results for a full year.
NOTE 2 - GOING CONCERN
The Company’s financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.
In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses and seeking equity and/or debt financing. However management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.
The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
AVIATION SURVEILLANCE SYSTEMS, INC.
(Formerly Fairytale Ventures, Inc.)
(A Development Stage Company)
Notes to Financial Statements
April 30, 2009 and July 31, 2008
NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Recent Accounting Pronouncements
In April 2009, the FASB issued FSP No. FAS 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”). FSP FAS 157-4 provides guidance on estimating fair value when market activity has decreased and on identifying transactions that are not orderly. Additionally, entities are required to disclose in interim and annual periods the inputs and valuation techniques used to measure fair value. This FSP is effective for interim and annual periods ending after June 15, 2009. The Company does not expect the adoption of FSP FAS 157-4 will have a material impact on its financial condition or results of operation.
In December 2008, the FASB issued FSP No. FAS 140-4 and FIN 46(R)-8, “Disclosures by Public Entities (Enterprises) about Transfers of Financial Assets and Interests in Variable Interest Entities.” This disclosure-only FSP improves the transparency of transfers of financial assets and an enterprise’s involvement with variable interest entities, including qualifying special-purpose entities. This FSP is effective for the first reporting period (interim or annual) ending after December 15, 2008, with earlier application encouraged. The Company adopted this FSP effective January 1, 2009. The adoption of the FSP had no impact on the Company’s results of operations, financial condition or cash flows.
In December 2008, the FASB issued FSP No. FAS 132(R)-1, “Employers’ Disclosures about Postretirement Benefit Plan Assets” (“FSP FAS 132(R)-1”). FSP FAS 132(R)-1 requires additional fair value disclosures about employers’ pension and postretirement benefit plan assets consistent with guidance contained in SFAS 157. Specifically, employers will be required to disclose information about how investment allocation decisions are made, the fair value of each major category of plan assets and information about the inputs and valuation techniques used to develop the fair value measurements of plan assets. This FSP is effective for fiscal years ending after December 15, 2009. The Company does not expect the adoption of FSP FAS 132(R)-1 will have a material impact on its financial condition or results of operation.
AVIATION SURVEILLANCE SYSTEMS, INC.
(Formerly Fairytale Ventures, Inc.)
(A Development Stage Company)
Notes to Financial Statements
April 30, 2009 and July 31, 2008
NOTE 4 – SIGNIFICANT EVENT
Effective May 11, 2009, pursuant to the approval of its shareholders and board of directors, the Company changed its name to Aviation Surveillance Systems, Inc. The Company’s shareholders and board of directors
also approved a forward stock split, effective May 11, 2009, of the Company’s common stock on the basis of 1.6 shares for each share issued and outstanding. The total number of authorized shares is 90,000,000 with a
par value of $0.001 per common share. After the split, the Company had a total of 16,488,827 of common shares issued and outstanding. The Company’s financial statements have been retroactively adjusted to reflect
the stock split and the name change.
Forward-Looking Statements
Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of complying with those safe-harbor provisions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse affect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Further information concerning our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC.
Company Overview and Plan of Operation
We are a Nevada corporation, formed May 1, 2007.
Our original plan of operations was to offer unique “princess” tea parties and other themed birthday parties and special event parties for children. The development of our planned operations was severely delayed, however, by certain unexpected personal and professional constraints on the time of our sole officer, Anusha Kumar. Due to our continuing difficulties in this regard, we eventually determined that our original plan of operations was no longer workable as a practical and logistical matter.
Subsequent to the end of the reporting period, on May 11, 2009, we changed our name to Aviation Surveillance Systems, Inc. Concurrently with our name change, we suspended pursuit of our former plan of operations and began investigating new business opportunities.
Expected Changes In Number of Employees, Plant, and Equipment
We currently do not have plans to purchase any physical plant or any significant equipment or to change the number of our employees during the next twelve months.
Results of Operations for the three and nine months ended April 30, 2009
We have earned only $200 in revenues from inception through the period ending April 30, 2009. We are presently in the development stage of our business and we can provide no assurance that we will produce significant revenues from the sale of our services or if revenues are earned, that we will be profitable.
We incurred expenses in the amount of $20,406 and net losses in the amount of $20,346 from our inception on May 1, 2007 through the period ending April 30, 2009. We incurred operating expenses in the amount of $4,623 and net losses in the amount of $4,643 during the three months ended April 30, 2009, compared to operating expenses in the amount of $2,547 and net losses in the amount of $2,567 during the three months ended April 30, 2008. We incurred operating expenses in the amount of $11,643 and net losses in the amount of $11,703 during the nine months ended April 30, 2009, compared to operating expenses in the amount of $4,697 and net losses in the amount of $4,757 during the nine months ended April 30, 2008. Our operating expenses from inception through April 30, 2009 consisted of general and administrative expenses. Our losses are attributable to our operating expenses combined with a lack of significant revenues during our current stage of development.
Liquidity and Capital Resources
As of April 30, 2009, we had current assets in the amount of $1,638, consisting entirely of cash. Our current liabilities as of April 30, 2009, were $5,759. Thus, we had a working capital deficit of $4,121 as of April 30, 2009.
We have not attained profitable operations and may be dependent upon obtaining financing to pursue a long-term business plan. We currently do not have any arrangements for financing and we may not be able to obtain financing when required. For these reasons our auditors stated in their report that they have substantial doubt we will be able to continue as a going concern.
Off Balance Sheet Arrangements
As of April 30, 2009, there were no off balance sheet arrangements.
Going Concern
Our financial statements have been prepared on a going concern basis. We had a working capital deficit of $4,121 as of April 30, 2009 and have an accumulated deficit of $20,346 since inception. Our ability to continue as a going concern is dependent upon our ability to generate profitable operations in the future and/or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come
due. The outcome of these matters cannot be predicted with any certainty at this time. These factors raise substantial doubt that we will be able to continue as a going concern. Management plans to continue to provide for our capital needs by the issuance of common stock and related party advances.
Critical Accounting Policies
In December 2001, the SEC requested that all registrants list their most “critical accounting polices” in the Management Discussion and Analysis. The SEC indicated that a “critical accounting policy” is one which is both important to the portrayal of a company’s financial condition and results, and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. We do not believe that any accounting policies currently fit this definition.
Recently Issued Accounting Pronouncements
In April 2009, the FASB issued FSP No. FAS 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”). FSP FAS 157-4 provides guidance on estimating fair value when market activity has decreased and on identifying transactions that are not orderly. Additionally, entities are required to disclose in interim and annual periods the inputs and valuation techniques used to measure fair value. This FSP is effective for interim and annual periods ending after June 15, 2009. The Company does not expect the adoption of FSP FAS 157-4 will have a material impact on its financial condition or results of operation.
In December 2008, the FASB issued FSP No. FAS 140-4 and FIN 46(R)-8, “Disclosures by Public Entities (Enterprises) about Transfers of Financial Assets and Interests in Variable Interest Entities.” This disclosure-only FSP improves the transparency of transfers of financial assets and an enterprise’s involvement with variable interest entities, including qualifying special-purpose entities. This FSP is effective for the first reporting period (interim or annual) ending after December 15, 2008, with earlier application encouraged. The Company adopted this FSP effective January 1, 2009. The adoption of the FSP had no impact on the Company’s results of operations, financial condition or cash flows.
In December 2008, the FASB issued FSP No. FAS 132(R)-1, “Employers’ Disclosures about Postretirement Benefit Plan Assets” (“FSP FAS 132(R)-1”). FSP FAS 132(R)-1 requires additional fair value disclosures about employers’ pension and postretirement benefit plan assets consistent with guidance contained in SFAS 157. Specifically, employers will be required to disclose information about how investment allocation decisions are made, the fair value of each major category of plan assets and information about the inputs and valuation techniques used to develop the fair value measurements of plan assets. This FSP is effective for fiscal years ending after December 15, 2009. The Company does not expect the adoption of FSP FAS 132(R)-1 will have a material impact on its financial condition or results of operation.
A smaller reporting company is not required to provide the information required by this Item.
We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of April 30, 2009. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer, Ms. Anusha Kumar. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of April 30, 2009, our disclosure controls and procedures are effective. There have been no changes in our internal controls over financial reporting during the quarter ended April 30, 2009.
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act are recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
Limitations on the Effectiveness of Internal Controls
Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material error. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving our objectives and our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective at that reasonable assurance level. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the internal control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.
PART II – OTHER INFORMATION
We are not a party to any pending legal proceeding. We are not aware of any pending legal proceeding to which any of our officers, directors, or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse to us.
A smaller reporting company is not required to provide the information required by this Item.
None
None
No matters have been submitted to our security holders for a vote, through the solicitation of proxies or otherwise, during the quarterly period ended April 30, 2009.
None
Exhibit Number | Description of Exhibit |
| 3.1 | Articles of Incorporation (1) |
| 3.2 | Bylaws (1) |
| 1 | Incorporated by reference to Registration Statement on Form SB-2 filed August 30, 2007. |
SIGNATURES
In accordance with the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Aviation Surveillance Systems, Inc. | |
| Date: | June 15, 2009 |
By: /s/Anusha Kumar Anusha Kumar Title: Chief Executive Officer and Director |