SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Amendment No. 1)
x ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: January 31, 2010
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ____________
Commission file number: 333-152355
FUSIONTECH, INC.
(Exact name of registrant as specified in its charter)
| Nevada | 26-1250093 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
No. 8 Mingshui Road Changchun, Jilin Province, China 130000
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code) | 86-431-8885-7725 | |
Securities registered pursuant to Section 12(b) of the Act:
None.
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.001 per share
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined by Rule 405 of the Securities Act.
Yes ¨ | No x
Indicate by 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 | ¨ |
Indicate by check mark if disclosure of delinquent filers in response to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
| ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
Large accelerated filer ¨ | Accelerated filer ¨ |
Non-accelerated filer ¨ (Do not check if a smaller reporting company) | Smaller reporting company x |
Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act).
Yes x No ¨
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and ask price of such common equity: As of January 31, 2010, the aggregate value of voting and non-voting common equity held by non-affiliates was $23,350.
EXPLANATORY NOTE
This Amendment No. 1 to FusionTech, Inc. (F.K.A. Zapnaps, Inc.) Form 10-K, originally filed on April 1, 2010, is being filed solely to amend Item 9A(T), Controls and Procedures, and to file updated and amended certifications (Exhibits 31.1 and 32.1)
TABLE OF CONTENTS
| | | | |
| | | | Page Number |
| | PART I | | |
| | | | |
| Item 1. | Business | | 3 |
| Item 1A. | Risk Factors | | 4 |
| Item 1B | Unresolved Staff Comments | | 4 |
| Item 2 | Properties | | 4 |
| Item 3 | Legal Proceedings | | 5 |
| Item 4 | Submission of Matters to a Vote of Security Holders | | 5 |
| | | | |
| | PART II | | |
| | | | |
| Item 5 | Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | | 5 |
| Item 6 | Selected Financial Data | | 5 |
| Item 7 | Management’s Discussion and Analysis of Financial Condition and Results of Operation | | 5 |
| Item 7A | Quantitative and Qualitative Disclosure about Market Risk | | 6 |
| Item 8 | Financial Statements and Supplementary Data | | 6 |
| Item 9 | Changes an Disagreements With Accountants on Accounting and Financial Disclosure | | 17 |
| Item 9A | Controls and Procedures | | 17 |
| Item 9A(T) | Controls and Procedures | | 17 |
| Item 9B | Other Information | | 18 |
| | | | |
| | PART III | | |
| | | | |
| Item 10 | Directors, Executive Officers and Corporate Governance | | 19 |
| Item 11 | Executive Compensation | | 21 |
| Item 12 | Security Ownership of Certain Beneficial Owners and Management | | 21 |
| Item 13 | Certain Relationships and Related Transactions and Director Independence | | 22 |
| Item 14 | Principal Accounting Fees and Services | | 22 |
| | | | |
| | PART IV | | |
| | | | |
| Item 15 | Exhibits and Financial Statement Schedules | | 22 |
PART 1
Item 1: Business
Overview
ZAPNAPS, INC. (“ZapNaps”, "the Company", “our” or "we") was incorporated in the State of Nevada as a for-profit company on October 10, 2007. ZapNaps is a development-stage company organized to produce and distribute a mini paper towel that Velcro into cars and small spaces. Our product will be convenient, accessible and will present a unique wet/dry cleaning combination because it will come with a scented mini spray cleaning solution, designed to keep the inside of the vehicles clean and with a long-lasting perfume.
The Company has not been involved in any bankruptcy, receivership or similar proceedings since its incorporation nor has it been involved in any reclassification, merger or consolidation. We have no plans to change our business activities.
General
ZAPNAPS, INC.’s intend to produce a product called ZapNaps, which is a multi-purpose mini paper towel specially designed to be used inside the vehicles and small spaces. Because of its reduced size and the fact that it can be fixed anywhere with a Velcro system, it is always accessible whenever needed, even while driving. ZapNaps can be used either dry or wet in any cleaning need. It will come with a mini spray that contains a very powerful scented cleaning solution which also acts as an air purifier with its long-lasting perfume.
Our marketing campaign will include: ZapNaps Exposition in Auto Trade Shows, where we will distribute some samples and do demonstrations; advertisement in television and marketing online through our website.
We have not yet entered into any agreements to manufacture our products yet.
Our president and director has invested $10,000 in the Company. A total of 32 other investors have invested a further $13,750 in the Company through the purchase of common shares. At the present time, we have not made any arrangements to raise additional cash. We will need additional cash and if we are unable to raise it, we will either suspend marketing operations until we do raise the cash necessary to continue our business plan, or we cease operations entirely.
If we are unable to complete any phase of our business plan or marketing efforts because we don’t have enough money, we will cease our development and/or marketing activities until we raise money. Attempting to raise capital after failing in any phase of our business plan would be difficult. As such, if we cannot secure additional funds we will have to cease operations and investors will lose their entire investment.
Plan of Operation
To date, we have not generated enough funds to implement our business plan. Over the next 12 month period, we expect to raise enough capital in order to successfully complete the following Plan of Operations to start our business activities. The first stage of our operations over this period will be the production of samples. We expect to complete this step within 75 days after we raise enough capital.
The second stage will be dedicated to the development of our company’s website and start the research of auto trade shows events. We expect to completely develop the website in 120 days after we raise enough capital.
The third stage will be our Marketing and Sales campaign: the exposition in Auto Trade Shows and TV Advertisement. We expect to complete this stage within 270 days after we raise enough capital.
The last stage consists in the initial mass production and distribution of our products. We expect to be fully operational within 360 days after raising enough capital to complete this Plan of Operations.
We do not currently have any employees and management does not plan to hire employees at this time. We do not expect the purchase or sale of any significant equipment and the Company has no current material commitments.
The Company has raised $13,350 in cash to initiate its business plan through the sale of its common stock. The amount raised from our stock offering is insufficient and we will need additional cash to continue to implement our business plan. If we are unable to raise it, we will either suspend marketing operations until we do raise the cash, or cease operations entirely. Other than as described in this paragraph, we have no other financing plans.
If we are unable to complete any aspect of our development or marketing efforts because we don’t have enough money, we will cease our development and/or marketing operations until we raise money. Attempting to raise capital after failing in any phase of our business plan would be difficult. As such, if we cannot secure additional proceeds we will have to cease operations and investors would lose their entire investment.
Management does not plan to hire additional employees at this time. Our President will be responsible for the initial product sourcing. We intend to hire sales representatives initially on a commission only basis to keep administrative overhead to a minimum. We will use third party web designers to build and maintain our website.
We do not expect to be purchasing or selling plant or significant equipment during the next twelve months.
Item 1A. Risk Factors
We are a smaller reporting company as defined in Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
Item 1B. Unresolved Staff Comments
We are a smaller reporting company as defined in Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
Item 2. Properties
We do not own any real estate or other properties. The Company’s office is located at 112 North Curry Street, Carson City, 89703.
Item 3. Legal Proceedings
The Company is not a party to any pending legal proceedings, and no such proceedings are known to be contemplated.
No director, officer, or affiliate of the issuer and no owner of record or beneficiary of more than 5% of the securities of the issuer, or any security holder is a party adverse to the small business issuer or has a material interest adverse to the small business issuer.
Item 4. Submission of Matters to a Vote of Security Holders
None
PART II
Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchase of Equity Securities
As of January 31, 2010 the Company had thirty-two (32) active shareholders of record. The company has not paid cash dividends and has no outstanding options.
Item 6. Selected Financial Data
We are a smaller reporting company as defined in Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
Item 7. Management Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and related notes included elsewhere in this report.
This interim report contains forward looking statements relating to our Company's future economic performance, plans and objectives of management for future operations, projections of revenue mix and other financial items that are based on the beliefs of, as well as assumptions made by and information currently known to, our management. The words "expects”, “intends”, “believes”, “anticipates”, “may”, “could”, “should" and similar expressions and variations thereof are intended to identify forward-looking statements. The cautionary statements set forth in this section are intended to emphasize that actual results may differ materially from those contained in any forward looking statement.
Our auditor’s report on our January 31, 2010 financial statements expresses an opinion that substantial doubt exists as to whether we can continue as an ongoing business. Since our officer and director may be unwilling or unable to loan or advance us additional capital, we believe that if we do not raise additional capital over the next 12 months, we may be required to suspend or cease the implementation of our business plans. See “January 31, 2010 Audited Financial Statements - Auditors Report.”
As of January 31, 2010, ZapNaps had $196 cash on hand and in the bank. Management believes this amount will not satisfy our cash requirements for the next twelve months or until such time that additional proceeds are raised. We plan to satisfy our future cash requirements - primarily the working capital required for the development of our course guides and marketing campaign and to offset legal and accounting fees - by additional equity financing. This will likely be in the form of private placements of common stock.
Management believes that if subsequent private placements are successful, we will be able to generate sales revenue within the following twelve months thereof. However, additional equity financing may not be available to us on acceptable terms or at all, and thus we could fail to satisfy our future cash requirements.
If ZapNaps is unsuccessful in raising the additional proceeds through a private placement offering it will then have to seek additional funds through debt financing, which would be highly difficult for a new development stage company to secure. Therefore, the company is highly dependent upon the success of the anticipated private placement offering and failure thereof would result in ZapNaps having to seek capital from other sources such as debt financing, which may not even be available to the company. However, if such financing were available, because ZapNaps is a development stage company with no operations to date, it would likely have to pay additional costs associated with high risk loans and be subject to an above market interest rate. At such time these funds are required, management would evaluate the terms of such debt financing and determine whether the business could sustain operations and growth and manage the debt load. If ZapNaps cannot raise additional proceeds via a private placement of its common stock or secure debt financing it would be required to cease business operations. As a result, investors in ZapNaps common stock would lose all of their investment.
ZapNaps does not anticipate obtaining any further products or services.
Results of Operations
We did not generate any revenue during the fiscal year ended January 31, 2010 and 2009. We incurred operating expenses in the amount of $14,940 and $18,914 in the fiscal year ended January 31, 2010 and 2009. These operating expenses were comprised of professional fees and office and general expenses. Expense decreased $3,974 due to the decrease in professional fee.
Since inception we have incurred operating expenses of $38,267.
ZapNaps has no current plans, preliminary or otherwise, to merge with any other entity.
Off Balance Sheet Arrangements.
As of the date of this Annual Report, the current funds available to the Company will not be sufficient to continue operations. The cost to establish the Company and begin operations is estimated to be approximately $70,000 over the next twelve months and the cost of maintaining our reporting status is estimated to be $12,000 over this same period. The officer and director, Peggy Irene Lalor has undertaken to provide the Company with operating capital to sustain our business over the next twelve month period as the expenses are incurred in the form of a non-secured loan. However, there is no contract in place or written agreement securing this agreement. Management believes that if the Company cannot raise sufficient revenues or maintain its reporting status with the SEC it will have to cease all efforts directed towards the Company. As such, any investment previously made would be lost in its entirety.
Other than the above described situation the Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company's financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
We are a smaller reporting company as defined in Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
Item 8. Financial Statements and Supplementary Data
ZAPNAPS, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
January 31, 2010
| BALANCE SHEETS | |
| | |
| STATEMENTS OF OPERATIONS | |
| | |
| STATEMENTS OF CHANGE IN STOCKHOLDERS’ EQUITY (DEFICIT) | |
| | |
| STATEMENTS OF CASH FLOWS | |
| | |
| NOTES TO FINANCIAL STATEMENTS | |
Chang G. Park, CPA, Ph. D.
• 2667 CAMINO DEL RIO S. PLAZA B • SAN DIEGO • CALIFORNIA 92108-3707 •
• TELEPHONE (858)722-5953 • FAX (858) 761-0341 • FAX (858) 433-2979
• E-MAIL changgpark@gmail[dot]com •
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders
Zapnaps, Inc.
We have audited the accompanying balance sheets of Zapnaps, Inc. (A Development Stage “Company”) as of January 31, 2010 and 2009 and the related statements of operations, changes in shareholders’ equity and cash flows for the year ended January 31, 2010 and 2009, and for the period from October 10, 2007 (inception) to January 31, 2010. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our 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 Zapnaps, Inc. as of January 31, 2010 and 2009 , and the result of its operations and its cash flows for the year ended and for the period from October 10, 2007 (inception) to January 31, 2010 in conformity with U.S. generally accepted accounting principles.
The financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company’s losses from operations 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.
| /s/Chang Park | |
| CHANG G. PARK, CPA | |
April 1, 2010
San Diego, CA.
Member of the California Society of Certified Public Accountants
Registered with the Public Company Accounting Oversight Board
ZAPNAPS, INC.
(A Development Stage Company)
BALANCE SHEETS
Audited
| | | January 31, 2010 | | | January 31, 2009 | |
| | | | | | | |
| ASSETS | | | | | | |
| | | | | | | |
| CURRENT ASSETS | | | | | | |
| Cash | | $ 196 | | | $ 8,636 | |
| Total current assets | | 196 | | | 8,636 | |
| | | | | | | |
| Total Assets | | $ 196 | | | $ 8,636 | |
| | | | | | | |
| LIABILITIES AND STOCKHOLDER’S EQUITY (DEFICIT) | | | | | | |
| | | | | | | |
| CURRENT LIABILITIES | | | | | | |
| Accounts payable and accrued liabilities | | $ 10,500 | | | $ 7,000 | |
| Due to related party | | 4,213 | | | 1,213 | |
| Total current liabilities | | 14,713 | | | 8,213 | |
| Total Liabilities | | $ 14,713 | | | $ 8,213 | |
| | | | | | | |
| STOCKHOLDER’S EQUITY (DEFICIT) | | | | | | |
| Capital stock | | | | | | |
Authorized 75,000,000 shares of common stock, $0.001 par value, Issued and outstanding 10,550,000 shares of common stock as of January 31, 2010 and January 31, 2009 | | 10,550 | | | 10,550 | |
| Additional Paid-in Capital | | 13,200 | | | 13,200 | |
| Deficit accumulated during the development stage | | (38,267 | ) | | (23,327 | ) |
| | | | | | | |
| Total stockholder’s equity (deficit) | | (14,517 | ) | | 423 | |
| | | | | | | |
| Total liabilities and stockholder’s equity (deficit) | | $ 196 | | | $ 8,636 | |
See accompanying Notes to Financial Statements
ZAPNAPS, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
Audited
| | | Year Ended January 31, 2010 | | | Year Ended January 31, 2009 | | | October 10, 2007 (inception) to January 31, 2010 | |
| REVENUE | | | | | | | | | |
| Revenue | | $ - | | | $ - | | | $ - | |
| | | | | | | | | | |
| EXPENSES | | | | | | | | | |
| | | | | | | | | | |
| Office and general | | $ 1,299 | | | $ 1,155 | | | $ 3,867 | |
| Professional fees | | 13,641 | | | 17,759 | | | 34,400 | |
| Total General & Admin. Expenses | | 14,940 | | | 18,914 | | | 38,267 | |
| | | | | | | | | | |
| NET LOSS | | $ (14,940) | | | $ (18,914) | | | $ (38,267) | |
| | | | | | | | | | |
| BASIC NET LOSS PER SHARE | | $ (0.00) | | | $ (0.00) | | | | |
| | | | | | | | | | |
| WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING | | 10,550,000 | | | 10,158,432 | | | | |
See accompanying Notes to Financial Statement
ZAPNAPS, INC.
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDER’S EQUITY (DEFICIT)
FROM OCTOBER 10, 2007 (Inception) TO JANUARY 31, 2010
| | | Common Stock | | | Additional Paid-in Capital | | | Deficit Accumulated During the Development Stage | | | Total | |
| | | Number of shares | | | Amount | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| Balance, October 10, 2007 | | | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | |
| | | | | | | | | | | | | | | | | | | | | |
| Common stock issued for cash at $0.001 | | | | | | | | | | | | | | | | | | | | |
| per share December 3, 2007 | | | 10,000,000 | | | | 10,000 | | | | - | | | | - | | | | 10,000 | |
| Net loss year ended January 31, 2008 | | | | | | | | | | | | | | | (4,413 | ) | | | (4,413 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Balance, January 31, 2008 | | | 10,000,000 | | | $ | 10,000 | | | $ | - | | | $ | (4,413 | ) | | $ | 5,587 | |
| | | | | | | | | | | | | | | | | | | | | |
| Common stock issued for cash at $0.025 | | | 550,000 | | | | 550 | | | | 13,200 | | | | - | | | | 13,750 | |
| Net loss, year ended January 31, 2009 | | | | | | | | | | | | | | | (18,914 | ) | | | (18,914 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Balance, January 31, 2009 | | | 10,550,000 | | | $ | 10,550 | | | $ | 13,200 | | | $ | (23,327 | ) | | $ | 423 | |
| | | | | | | | | | | | | | | | | | | | | |
| Net loss, year ended January 31, 2010 | | | | | | | | | | | | | | | (14,940 | ) | | | (14,940 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Balance, January 31, 2010 (Audited) | | | 10,550,000 | | | $ | 10,550 | | | $ | 13,200 | | | $ | (38,267 | ) | | $ | (14,517 | ) |
See accompanying Notes to Financial Statement
ZAPNAPS, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Audited)
| | | Year ended January 31, 2010 | | | Year ended January 31, 2009 | | | October 10, 2007 (date of inception) to January 31, 2010 | |
| | | | | | | | | | |
| CASH FLOWS FROM OPERATING ACTIVITIES | | | | | | | | | |
| Net loss | | $ | ( 14,940 | ) | | $ | (18,914 | ) | | $ | (38,267 | ) |
Adjustment to reconcile net loss to net cash used in operating activities | | | | | | | | | | | | |
| Changes in operating assets and liabilities | | | | | | | | | | | | |
| Increase (decrease) in accrued expenses | | | 3,500 | | | | 4,000 | | | | 10,500 | |
| | | | | | | | | | | | | |
| NET CASH USED IN OPERATING ACTIVITIES | | | (11,440 | ) | | | (14,914 | ) | | | (27,767 | ) |
| | | | | | | | | | | | | |
| CASH FLOWS FROM INVESTING ACTIVITIES | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Net cash provided by (used in) investing activities | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | |
| CASH PROVIDED BY FINANCING ACTIVITIES | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Increase in shareholder loan | | | 3,000 | | | | - | | | | 4,213 | |
| Proceeds from sale of common stock | | | - | | | | 13,750 | | | | 23,750 | |
| | | | | | | | | | | | | |
| NET CASH PROVIDED BY FINANCING ACTIVITIES | | | 3,000 | | | | 13,750 | | | | 27,963 | |
| | | | | | | | | | | | | |
| NET INCREASE (DECREASE) IN CASH | | | (8,440 | ) | | | (1,164 | ) | | | 196 | |
| | | | | | | | | | | | | |
| CASH, BEGINNING OF YEAR | | | 8,636 | | | | 9,800 | | | | - | |
| | | | | | | | | | | | | |
| CASH, END OF YEAR | | $ | 196 | | | $ | 8,636 | | | $ | 196 | |
| | | | | | | | | | | | | |
| Supplemental cash flow information and non-cash financing activities: | | | | | | | | | | | | |
| Cash paid for: | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Interest | | $ | - | | | $ | - | | | $ | - | |
| | | | | | | | | | | | | |
| Income taxes | | $ | - | | | $ | - | | | $ | - | |
See accompanying Notes to Financial Statement
ZAPNAPS, INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
(Audited)
January 31, 2010
NOTE 1 – NATURE OF OPERATIONS AND BASIS OF PRESENTATION
Zapnaps, Inc. (“Company”) is in the initial development stage and has incurred losses since inception totalling $38,267. The Company was incorporated on October 10, 2007 in the State of Nevada and established a fiscal year end of January 31. The Company is a development stage enterprise organized to produce and distribute mini paper towels for use in the automotive industry.
The financial information is unaudited. In the opinion of management, all adjustments necessary to present fairly the financial position as of January 31, 2010 and the results of operations, stockholders' equity and cash flows presented herein have been included in the financial statements.
Going concern
The ability of the Company to continue as a going concern is dependent on raising capital to fund its business plan and ultimately to attain profitable operations. Accordingly, these factors raise substantial doubt as to the Company’s ability to continue as a going concern. The Company is funding its initial operations by way of issuing Founder’s shares. As of January 31, 2010, the Company had issued 10,000,000 Founder’s shares at $0.001 per share and 550,000 common shares @$0.025 for net funds to the Company of $23,750.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The financial statements present the balance sheet, statements of operations, stockholders' equity (deficit) and cash flows of the Company. These financial statements are presented in United States dollars and have been prepared in accordance with accounting principles generally accepted in the United States.
Use of Estimates and Assumptions
Preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
Income Taxes
The Company follows the liability method of accounting for income taxes in accordance with ASC 740. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax balances. Deferred tax assets and liabilities are measured using enacted or substantially enacted tax rates expected to apply to the taxable income in the years in which those 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. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the date of enactment or substantive enactment.
ZAPNAPS, INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
(Audited)
January 31, 2010
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Net Loss per Share
Basic loss per share includes no dilution and is computed by dividing loss available to common stockholders by the weighted average number of common shares outstanding for the period. Dilutive loss per share reflects the potential dilution of securities that could share in the losses of the Company. Because the Company does not have any potentially dilutive securities, the accompanying presentation is only of basic loss per share. Diluted earnings (loss) per share are the same as basic earnings (loss) per share due to the lack of dilutive items in the Company.
Foreign Currency Translation
The financial statements are presented in United States dollars. In accordance with ASC 830, "Foreign Currency Translation", foreign denominated monetary assets and liabilities are translated to their United States dollar equivalents using foreign exchange rates which prevailed at the balance sheet date. Non-monetary assets and liabilities are translated at exchange rates prevailing at the transaction date. Revenue and expenses are translated at average rates of exchange during the periods presented. Related translation adjustments are reported as a separate component of stockholder’s equity (deficit), whereas gains or losses resulting from foreign currency transactions are included in results of operations
Stock-based Compensation
The Company has not adopted a stock option plan and has not granted any stock options. Accordingly no stock-based compensation has been recorded to date.
Share Based Expenses
In December 2004, the Financial Accounting Standards Board (“FASB”) issued ASC 718 and 505 “Share Based Payment.” This statement requires a public entity to expense the cost of employee services received in exchange for an award of equity instruments. This statement also provides guidance on valuing and expensing these awards, as well as disclosure requirements of these equity arrangements. The Company adopted ASC 718 and 505 upon creation of the company and expenses share based costs in the period incurred.
Recent Accounting Pronouncements
In May 2009, FASB issued ASC 855, Subsequent Events , which establishes general standards of for the evaluation, recognition and disclosure of events and transactions that occur after the balance sheet date. Although there is new terminology, the standard is based on the same principles as those that currently exist in the auditing standards. The standard, which includes a new required disclosure of the date through which an entity has evaluated subsequent events, is effective for interim or annual periods ending after June 15, 2009. The adoption of ASC 855 did not have a material effect on the Company’s financial statements.
In June 2009, the FASB issued guidance now codified as ASC 105, Generally Accepted Accounting Principles as the single source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with U.S. GAAP, aside
ZAPNAPS, INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
(Audited)
January 31, 2010
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
from those issued by the SEC. ASC 105 does not change current U.S. GAAP, but is intended to simplify user access to all authoritative U.S. GAAP by providing all authoritative literature related to a particular topic in one place. The adoption of ASC 105 did not have a material impact on the Company’s financial statements, but did eliminate all references to pre-codification standards.
The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
The Company’s financial statements are prepared in accordance with generally accepted accounting principles applicable to a going concern. This contemplates the realization of assets and the liquidation of liabilities in the normal course of business. Currently, the Company does not have cash nor material assets, nor does it have operations or a source of revenue sufficient to cover its operation costs and allow it to continue as a going concern. The Company will be dependent upon the raising of additional capital through placement of our common stock in order to implement its business plan, or merge with an operating company. There can be no assurance that the Company will be successful in either situation in order to continue as a going concern. The officers and directors have committed to advancing certain operating costs of the Company.
NOTE 3 - FAIR VALUE OF FINANCIAL INSTRUMENTS
In accordance with the requirements of ASC 825 and ASC 820, the Company has determined the estimated fair value of financial instruments using available market information and appropriate valuation methodologies. The fair value of financial instruments classified as current assets or liabilities approximate their carrying value due to the short-term maturity of the instruments.
The Company has adopted ASC 740 for reporting purposes. As of January 31, 2010 the Company had net operating loss carry forwards of approximately $38,267 that may be available to reduce future years’ taxable income and will expire beginning in 2028. Availability of loss usage is subject to change of ownership limitations under Internal Revenue Code 382. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the future tax loss carryforwards.
ZAPNAPS, INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
(Audited)
NOTE 5 – STOCK TRANSACTIONS
The Company’s capitalization is 75,000,000 common shares with a par value of $0.001 per share. No preferred shares have been authorized or issued.
As of January 31, 2010, the Company has not granted any stock options and has not recorded any stock-based compensation.
On December 3, 2007, the sole Director purchased 10,000,000 shares of the common stock in the Company at $0.001 per share for $10,000.
From September to December, 2008, the Company issued 550,000 shares of the common stock at $0.025 per share for $13,750
NOTE 6 – RELATED PARTY TRANSACTIONS
As of January 31, 2010, the balance of the Company received advances from a Director in the amount of $4,213 to pay for incorporation costs and filing fees. The amounts due to the related party are unsecured and non-interest bearing with no set terms of repayment.
NOTE 7– STOCKHOLDERS’ EQUITY
The stockholders’ equity section of the Company contains the following classes of Capital Stock as of January 31, 2010:
| | • | Common stock, $0.001 par value: 75,000,000 shares authorized: 10,550,000 shares issued and outstanding |
The Company has evaluated subsequent events through the date the financial statements were issued and filed with the Securities and Exchange Commission. The Company has determined that there were no such events that warrant disclosure or recognition in the financial statements.
Item 9. Changes and Disagreements with Accounts on Accounting and Financial Disclosure
Our auditors are Chang G. Park, CPA – PCAOB Practice, operating from their offices in San Diego, CA. There have not been any changes in or disagreements with our accountants on accounting, financial disclosure or any other matter.
Item 9A(T). Controls and Procedures
Disclosure Controls and Procedures
We carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer (“CEO”), who is also our Chief Financial Officer (“CFO”), the Company’s principal executive officer and principal financial officer, of the design and effectiveness of our “disclosure controls and procedures” (as defined under Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based on this evaluation, our CEO/CFO concluded that as of the end of the period covered by this report, these disclosure controls and procedures were not effective. The conclusion that our disclosure controls and procedures were not effective was due to the presence of the following material weaknesses in disclosure controls and procedures which are indicative of many small companies with small staff: (i) inadequate segregation of duties and effective risk assessment as the Company had only one officer and director (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC Guidelines; and (iii) inadequate security and restricted access to computer systems including insufficient disaster recovery plans; and (iv) no written whistleblower policy. Our CEO/CFO plans to implement appropriate disclosure controls and procedures to remediate these material weaknesses, including (i) appointing additional qualified personnel to address inadequate segregation of duties and ineffective risk management; (ii) adopt sufficient written policies and procedures for accounting and financial reporting and a whistle blower policy; and (iii) implement sufficient security and restricted access measures regarding our computer systems and implement a disaster recovery plan.
Internal Control over Financial Reporting
Our Chief Executive Officer, who is also our Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting as defined under Rule 13a-15(f) and Rule 15d-15(f) under the Securities Exchange Act of 1934. As of January 31, 2010 our CEO/CFO assessed the effectiveness of the Company’s internal control over financial reporting based on the criteria for effective internal control set forth in the report entitled “Internal Control — Integrated Framework” published by the Committee of Sponsoring Organizations (“COSO”) of the Treadway Commission. Based on that evaluation, our CEO/CFO concluded that, during the period covered by this report, such internal controls and procedures were not effective to detect the inappropriate application of US GAAP rules as more fully described below. This was due to deficiencies that existed in the design or operation of our internal control over financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses.
The matters involving internal controls and procedures that the Company’s CEO/CFO considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: (1) lack of a functioning audit committee and lack of a majority of outside directors on the Company's board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; (2) inadequate segregation of duties consistent with control objectives; (3) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements; and (4) ineffective controls over period end financial disclosure and reporting processes. The aforementioned material weaknesses were identified by the Company's CEO/CFO in connection with his review of our financial statements as of January 31, 2010.
Our CEO/CFO believes that the material weaknesses set forth in items (2), (3) and (4) above did not have an effect on the Company's financial results. However, our CEO/CFO believes that the lack of a functioning audit committee and lack of a majority of outside directors on the Company's board of directors, results in ineffective oversight of the establishment and monitoring of required internal controls and procedures.
We are committed to improving our financial organization. As part of this commitment, we will create a position to segregate duties consistent with control objectives and will increase our personnel resources and technical accounting expertise within the accounting function when funds are available to the Company: i) Appointing one or more outside directors to our board of directors who shall be appointed to the audit committee of the Company resulting in a fully functioning audit committee who will undertake the oversight in the establishment and monitoring of required internal controls and procedures; and ii) Preparing and implementing sufficient written policies and checklists which will set forth procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements.
Our CEO/CFO believes that the appointment of more outside directors, who shall be appointed to a fully functioning audit committee, will remedy the lack of a functioning audit committee and a lack of a majority of outside directors on the Company's Board. In addition, our CEO/CFO believes that preparing and implementing sufficient written policies and checklists will remedy the following material weaknesses (i) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements; and (ii) ineffective controls over period end financial close and reporting processes. Further, our CEO/CFO believes that the hiring of additional personnel who have the technical expertise and knowledge will result proper segregation of duties and provide more checks and balances within the Company. Additional personnel will also provide the cross training needed to support the Company if personnel turn over issues within the Company occur. This coupled with the appointment of additional outside directors will greatly decrease any control and procedure issues the company may encounter in the future.
We will continue to monitor and evaluate the effectiveness of our internal controls and procedures and our internal controls over financial reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow.
There have been no significant changes in our internal controls over financial reporting that occurred during the quarter ended January 31, 2010 that have materially affected or are reasonably likely to materially affect, our internal controls over financial reporting.
This annual report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide its management report in the Annual Report.
Part 9B. Other Information
None
PART III
Item 10. Directors, Executive Officers and Corporate Governance
Our sole director serves until her successor is elected and qualified. Our sole officer is elected by the Board of Directors to a term of one (1) year and serves until her successor is duly elected and qualified, or until she is removed from office. The Board of Directors has no nominating or compensation committees. The company’s current Audit Committee consists of our sole officer and director.
The names, addresses, ages and positions of our present sole officer and our directors are set forth below:
| Name | Age | | Position(s) |
| | | | |
| Peggy Irene Lalor | 51 | | President, Secretary/ Treasurer, Chief Financial Officer and Chairman of the Board of Directors. |
The person named above has held her offices/positions since inception of our company and is expected to hold her offices/positions at least until the next annual meeting of our stockholders. Directors receive no compensation for serving on the Board of Directors
Background of officers and Directors
Peggy Irene Lalor
Peggy Irene Lalor is a leader who quickly gains respect and confidence of people allowing her to generate enthusiasm, motivate, communicate, persuade as well as be persuaded. She is independent, a self starter, who enjoys being part of a team, can delegate, make decisions, is receptive to change, questions the status quo and able to see the big picture with a fresh perspective to find innovative solutions. She is a visionary who has the unique ability to pull the required resources together to bring a vision to life. She is an entrepreneur who is attracted to challenging assignments in expanding new markets and would like work in Sales/Marketing/ Business Development.
Business Development/Sales & Marketing Experience
2004 - - Present
Marketing Director for United Equities in Calgary, AB. Plan and oversee marketing & sales management for several companies including: ALW Canada/hotelwaterparks.com - a manufacturer and designer of Waterslides & Waterparks for hotels and amusement parks, Talent Rock Holdings – an internet based business attracting actors, singers, dancers & models to connect with agents, managers & recording studios through web hosting sites and events in world class resorts. Peggy is a partner in the creation, development and funding of a new style destination resort “ Xventure Resorts ” offering the thrill and adrenaline rush of extreme adventure sports in a safe and controlled environment, combined with an extreme "X2O" water park and surrounded by healthy lifestyle choices.
1995 - - 2004
Developed and owned the largest outdoor sports and music festival in the U.S. which was created to promote the Columbia River Gorge, Oregon. This 8 day event began in 1996 and ran
for 7 years attracting world class athletes and media from around the world. The Gorge Games grew to a $2.7 million annual budget (sponsor generated), $200,000 prize money, aired nationally on NBC Sports, Outdoor Life Network and in 20+ countries worldwide. As visionary/owner/developer, Peggy Lalor created partnerships, hired & managed staff, built a brand through broad marketing initiatives in a variety of media partnerships, sold million dollar sponsorships, managed legal issues, financial budgets, community and industry relations.
Other Entrepreneurial Pursuits from 1986 - Present
Created concept, built prototype and established manufacturing, of a miniature paper towel roll and spray cleaner that Velcro into cars and small spaces called ZapNaps.
Designed and manufactured a line of unique floatable swimsuits for children called Float-eez . Trademarked, created packaging and sold to major department store before abandoning project because of liability issues.
Designed small boat that worked in five different modes; windsurfer, sailing dingy, rowing shell, paddle and motor boat called “Take-5”. Now marketed by Dreams Away Leisure Products, Vancouver BC. 1990
Created and marketed a unique style ofbeach shorts made of soft cotton flannel named “ Fresh Bags ”. The brand was a hot selling item in windsurfing community and the rights were sold to Bare Wetsuits of Vancouver BC in 1988.
Designed, sewed and marketed Windsurfing accessories for Dakine Hawaii – inventing the most widely used harness today – the waist harness.
Education
| | • | Georges Vanier Secondary School, Willowdale Ontario – graduated Grade 13 |
| | • | University of Waterloo, Studied economics 2.0 years, Waterloo Ontario |
| | • | University of Oregon, lectured MBA & exec MBA Students on Sports Marketing |
Other Affiliations & Awards
| | • | Gene Leo Memorial Award – Oregon’s Governor’s Award for Tourism (2000) |
| | • | Earth Service Award – Presented by Claes Nobel of the Nobel Prize Family (1998) |
| | • | Created Columbia Gorge Windsurfing Assoc. – served as executive director (’92-96) |
| | • | Elected representative of Hood River Port Commission 1999 |
| | • | Driving force behind building 2 BMX courses & Skate Park for kids in HR community |
| | • | Coach of Cooper Spur Ski Race Club (5 years) |
| | • | Cellist in the Columbia Gorge Symphony (6 years) |
| | • | Ranked in the top 5 pro women wave sailors in the world (Windsurfing in surf) (1983-86) |
Mrs. Lalor is not director of any other reporting company.
Significant Employees
The Company does not, at present, have any employees other than the current officer and director. We have not entered into any employment agreements, as we currently do not have any employees other than the current officer and director.
Family Relations
There are no family relationships among the Directors and Officers of Zapnaps, Inc.
Involvement in Legal Proceedings
No executive Officer or Director of the Company has been convicted in any criminal proceeding (excluding traffic violations) or is the subject of a criminal proceeding that is currently pending.
No executive Officer or Director of the Company is the subject of any pending legal proceedings.
No Executive Officer or Director of the Company is involved in any bankruptcy petition by or against any business in which they are a general partner or executive officer at this time or within two years of any involvement as a general partner, executive officer, or Director of any business.
Item 11. Executive Compensation.
Our current executive officer and director has not and does not receive any compensation and has not received any restricted shares awards, options or any other payouts. As such, we have not included a Summary Compensation Table.
There are no current employment agreements between the Company and its executive officer or director. Our executive officer and director has agreed to work without remuneration until such time as we receive revenues that are sufficiently necessary to provide proper salaries to the officer and compensate the director for participation. Our executive officer and director has the responsibility of determining the timing of remuneration programs for key personnel based upon such factors as positive cash flow, shares sales, product sales, estimated cash expenditures, accounts receivable, accounts payable, notes payable, and a cash balances. At this time, management cannot accurately estimate when sufficient revenues will occur to implement this compensation, or the exact amount of compensation.
There are no annuity, pension or retirement benefits proposed to be paid to officers, directors or employees of the corporation in the event of retirement at normal retirement date pursuant to any presently existing plan provided or contributed to by Company.
Item 12. Security Ownership of Certain Beneficial Owners and Management and related Stockholder Matters
| Title of Class | Name and Address of Beneficial Owner [1] | Amount and Nature of Beneficial Owner | Percent of Class |
| Common Stock | Peggy Irene Lalor, #80-2256 29th ST NE Calgary, AB CANADA T1Y 7G4 | 10,000,000 | 94.78% |
| | All Beneficial Owners as a Group (1 person) | 10,000,000 | 94.78% |
Item 13. Certain Relationships and Related Transactions, and Director Independence
Currently, there are no contemplated transactions that the Company may enter into with our officers, directors or affiliates. If any such transactions are contemplated we will file such disclosure in a timely manner with the Commission on the proper form making such transaction available for the public to view.
The Company has no formal written employment agreement or other contracts with our current officer and director and there is no assurance that the services to be provided by her will be available for any specific length of time in the future. Mrs. Lalor anticipates devoting at a minimum of ten to fifteen percent of her available time to the Company’s affairs. The amounts of compensation and other terms of any full time employment arrangements would be determined, if and when, such arrangements become necessary.
Item 14. Principal Accountant Fees and Services.
Audit Fees
The audit fees paid to our accounting firm, Chang G. Park, CPA, for the fiscal years ended January 31, 2010 and 2009 were $10,000 and $10,000, respectively.
Audit-Related Fees
The fees of our accounting firm, Chang G. Park, CPA, for providing audit-related services such as reviewing our quarterly reports on Form 10-Q for the fiscal year ended February 28, 2009 was approximately $5,400.
Tax Fees
Chang G. Park, CPA, does not provide us with tax compliance, tax advice or tax planning services.
All Other Fees
None.
PART IV
ITEM 15. EXHIBITS
| 31.1 | Certification of Principal Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| 32.1 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as signed by the Chief Executive Officer and Chief Financial Officer. |
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.
| | FUSIONTECH, INC. (Registrant) | |
| | | | |
| Dated: November 19, 2010 | By: | /s/ David Lu | |
| | Name | David Lu | |
| | Title: | President, Chief Executive Officer, Chief Financial Officer, | |
| | | Treasurer and Secretary | |
