UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[x] | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year endedDecember 31, 2009
[ ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934 For the transition period from _____________ to _____________ |
Commission file number:000-53559
KENSINGTON LEASING, LTD.
(Exact name of registrant as specified in its charter)
Nevada (State or other jurisdiction of incorporation or organization) | 000-53559 Commission File No. | 80-0214025 (I.R.S. Employer Identification No.) |
565 Walnut Avenue Redlands, CA (Address of principal executive offices) | 92373 (Zip Code) |
Registrant’s telephone number, including area code909-708-4303
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Name of each exchange on which registered
None
None
Securities registered pursuant to Section 12(g) of the Act:
Common stock, $0.001 par value
(Title of class)
Indicate by check mark is the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes X No
1
Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934during 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 checkmark if disclosure of delinquent filers pursuant to item 405 of Regulation S-K(section 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporate by reference in Part III of this From 10-K or any amendment to this Form 10-K.
Yes No
Indicate by checkmark wither the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ____ | 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 Act.)
Yes X No
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 asked price of such common equity, as of the last business day of the registrant’s most recently completed fourth fiscal quarter was: $5,691,000
The number of shares outstanding of each of the registrant’s classes of common stock, as of March 31, 2010 was 1,313,000 shares.
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Table of Contents | |||
Part 1 | PAGE | ||
Item 1. | 4 | ||
Item 1A. | 6 | ||
Item 2. | 9 | ||
Item 3. | 9 | ||
Item 4. | 9 | ||
Part II | Item 5. | 9 | |
Item 6. | 11 | ||
Item 7. | 11 | ||
Item 7A. | 13 | ||
Item 8. | 13 | ||
Item 9. | Changes In And Disagreements With Accountants On Accounting And Financial Disclosure | 13 | |
Item 9A. | 13 | ||
Item 9A(T). | 14 | ||
Item 9B. | 14 | ||
Part III | |||
Item 10. | 15 | ||
Item 11. | 15 | ||
Item 12. | Securities Ownership Of Certain Beneficial Owners And Management And Related Stockholder Matters | 16 | |
Item 13. | Certain Relationships And Related Transactions, And Director Independence | 17 | |
Item 14. | 17 | ||
Item 15. | 18 | ||
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PART I
Item
1.
BUSINESS
Business Development
The Company was incorporated in Nevada on June 27, 2008. The Company’s fiscal year end is December 31. The Company has never been in bankruptcy, receivership or any similar proceeding.
Business
The company plans to specialize in leasing equipment to a select clientele. The company has chosen to support the legal, medical and real estate professional with high quality computer hardware and software so they can forget about shopping, understanding and buying the latest version of computer peripherals and concentrate on their business. The company plans to keep its future customers abreast of the latest changes and support them with their hardware needs. The Company will also perform training and on-site maintenance through its hardware and software affiliates. In short, the Company takes the hardware burden from these professionals and supports them with one stop shopping and support for all their electronic and computer equipment.
The Company specializes in leasing information processing and communications equipment, principally to established, creditworthy customers, primarily in the real estate profession. The Company's leasing activities will be conducted primarily through equipment wholesalers.
Leasing Procedures
A typical transaction for the Company would take place, as follows:
The customer would receive an informational brochure from the Company outlining the leasing programs in place and would contact the Company who would discuss the program and refer the customer to a computer technical specialist for consultation on obtaining a custom package and eventual installation. The Company will include the fees of the specialist for consultation and installation with the lease program. Once the package is agreed upon and a price established, the specialist would have the customer complete a lease application and submit to the Company for a credit check. On obtaining a satisfactory credit report, the Company would prepare a lease contract, contact the individual for completion and order the required equipment.
The Company would pay the wholesaler on delivery to the customer at an agreed upon wholesale price. The Company's intentions are to hold the leases for their full terms and then to either sell the equipment to the customer at the price agreed upon in the original lease documents or to resell the equipment and enter into a new lease agreement on new state of the art equipment with the customer.
Equipment
The Company believes that the value of its equipment, and particularly equipment used in client/server network environments, is important to the original customer because the equipment often becomes "embedded" in the customer's mission critical operations. Therefore, the Company seeks to maximize the amount of equipment that is remarketed in place to the original customer, in order to realize the higher residual values that may result from such remarketing, compared to equipment sold or leased to a third party.
4
The information processing and communications equipment the Company will purchase for lease includes servers, desktop and laptop computers, display stations, file servers, printers, digital cameras, scanners, and palm computers. It provides personalized leasing options, fashioned to meet the needs of the professionals which it serves.
Lease Terms and Conditions
A majority of the Company's lease transactions will be net leases with a specified non-cancelable lease term. These non-cancelable leases have a "hell-or-high-water" provision which requires the lessee to make all lease payments under all circumstances. A net lease requires the lessee to make the full lease payment and pay any other expenses associated with the use of equipment, such as maintenance, casualty and liability insurance, sales or use taxes and personal property taxes. The lessee also has the responsibility of obtaining the additional items required under a net lease, such as maintenance and insurance. However, many of the Company's more creditworthy customers will be permitted to self insure against equipment losses.
Remarketing
The results of the remarketing process ultimately determine the degree of profitability of a lease transaction. The Company's remarketing strategy is to keep its equipment installed in place at the end of the initial lease term. Typically, remarketing equipment in place produces substantially better residual returns than equipment sold or leased to a third party at the end of the term of the original lease. Prior to the expiration of the original lease term, The Company initiates the remarketing process for the related equipment.
The Company attempts to maximize its revenues and residual return by focusing its efforts on keeping the equipment in place at the end of the initial lease term by:
•
Re-leasing it to the initial lessee for a specified term;
•
renting the equipment to the initial lessee on a month-to-month basis; or
•
selling the equipment to the initial lessee.
If the Company is unsuccessful in keeping the equipment in place, it will attempt to sell or lease the equipment to a different customer, or sell the equipment to equipment brokers or dealers. Although, the Company should be able to remarket in place a majority of its equipment coming off lease, no assurances can be given that this will be the case.
Marketing
The Company is founded on the idea that the customer will continue to lease from the Company over and over again. We will use a 14 and 16 percent lease rate, which is somewhat lower than other leasing companies, but we also count on the resale of used equipment and believe that our customers will return leased equipment after the lease period and in fact it is not unlikely that a customer could lease equipment over a thirty-year period through ten to fifteen leasing cycles. Another fact that will maintain our customer base is the training and support that will be offered by technical specialists as part of each lease.
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Employees
We currently employ two management level employees. The Company may require additional employees in the future. There is intense competition for capable, experienced personnel and there is no assurance the Company will be able to obtain new qualified employees when required.
The Company believes its relations with its employees are good.
Patents
The Company holds no patents for its products.
Government Regulation
Government approval is not necessary for the Company’s business and government regulations have a negligible effect on its business.
Competition
The Company will compete in the information processing and communications equipment leasing marketplaces with other independent leasing companies, captive lessors and bank affiliated lessors. Our business will be highly competitive, both with respect to obtaining and maintaining vendor program arrangements and providing lease financing to end-user customers.
The Company will compete with various independent leasing companies, such as Comdisco, Newcourt Financial and G.E. Capital, certain bank affiliated lessors, such as Leastec, and certain captive or "semi-captive" leasing companies, such as IBM Credit Corporation, Dell Financial Services and Compaq Capital. All of our competitors have greater financial resources than Kensington Leasing, which has generated no revenue, and has limited assets and experience.
FORWARD LOOKING STATEMENTS
This annual report contains forward-looking statements. The Company’s expectation of results and other forward-looking statements contained in this registration statement involve a number of risks and uncertainties. Among the factors that could cause actual results to differ materially from those expected are the following: business conditions and general economic conditions, competitive factors, such as pricing and marketing efforts, and the pace and success of product research and development. These and other factors may cause expectations to differ.
Item
1A.
RISK FACTORS
We are subject to various risks which may materially harm our business, financial condition and results of operations. You should carefully consider the risks and uncertainties described below and the other information in this filing before deciding to purchase our common stock. If any of these risks or uncertainties actually occurs, our business, financial condition or operating results could be materially harmed. In that case, the trading price of our common stock could decline and you could lose all or part of your investment.
6
We are a relatively young company with no operating history.
Since we are a young company, it is difficult to evaluate our business and prospects. At this stage of our business operations, even with our good faith efforts, potential investors have a high probability of losing their investment. Our future operating results will depend on many factors, including the ability to generate sustained and increased demand and acceptance of our products, the level of our competition, and our ability to attract and maintain key management and employees. While management believes their estimates of projected occurrences and events are within the timetable of their business plan, there can be no guarantees or assurances that the results anticipated will occur.
We expect to incur net losses in future quarters.
If we do not achieve profitability, our business may not grow or operate. We may not achieve sufficient revenues or profitability in any future period. We will need to generate revenues from the sales of our products or take steps to reduce operating costs to achieve and maintain profitability. Even if we are able to generate revenues, we may experience price competition that will lower our gross margins and our profitability. If we do achieve profitability, we cannot be certain that we can sustain or increase profitability on a quarterly or annual basis.
We may require additional funds to operate in accordance with our business plan.
We may not be able to obtain additional funds that we may require. We do not presently have adequate cash from operations or financing activities to meet our long-term needs. If unanticipated expenses, problems, and unforeseen business difficulties occur, which result in material delays, we will not be able to operate within our budget. If we do not achieve our internally projected sales revenues and earnings, we will not be able to operate within our budget. If we do not operate within our budget, we will require additional funds to continue our business. If we are unsuccessful in obtaining those funds, we cannot assure you of our ability to generate positive returns to the Company. Further, we may not be able to obtain the additional funds that we require on terms acceptable to us, if at all. We do not currently have any established third-party bank credit arrangements. If the additional funds that we may require are not available to us, we may be required to curtail significantly or to eliminate some or all of our development, manufacturing, or sales and marketing programs.
If we need additional funds, we may seek to obtain them primarily through equity or debt financings. Such additional financing, if available on terms and schedules acceptable to us, if available at all, could result in dilution to our current stockholders and to you. We may also attempt to obtain funds through arrangement with corporate partners or others. Those types of arrangements may require us to relinquish certain rights to our intellectual property or resulting products.
We are highly dependent on Angelique de Maison, our President and CEO. The loss of Ms. de Maison, whose knowledge, leadership, and technical expertise upon which we rely, would harm our ability to execute our business plan.
We are largely dependent on Angelique de Maison, our President and CEO, for specific proprietary technical knowledge and the Company market knowledge. Our ability to successfully market and distribute our products may be at risk from an unanticipated accident, injury, illness, incapacitation, or death of Ms. de Maison. Upon such occurrence, unforeseen expenses, delays, losses and/or difficulties may be encountered. Our success may also depend on our ability to attract and retain other qualified management and sales and marketing personnel.
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We compete for such persons with other companies and other organizations, some of which have substantially greater capital resources than we do. We cannot give you any assurance that we will be successful in recruiting or retaining personnel of the requisite caliber or in adequate numbers to enable us to conduct our business.
Our management has no experience in the leasing business, which may affect our ability to operate successfully.
Our management has no prior experience in the leasing business. This lack of experience may affect our ability to operate successfully and compete with our competitors.
Our Common Stock May Be Affected By Limited Trading Volume and May Fluctuate Significantly
Our common stock has recently been approved for quotation on the over the counter bulletin board. However, it is thinly traded and the market is volatile and may be subject to penny stock rules. Our common stock is likely to experience in the future, significant price and volume fluctuations which could adversely affect the market price of our common stock without regard to our operating performance. In addition, we believe that factors such as quarterly fluctuations in our financial results and changes in the overall economy or the condition of the financial markets could cause the price of our common stock to fluctuate substantially. Substantial fluctuations in our stock price could significantly reduce the price of our stock.
Our Directors and Executive Officers beneficially own a substantial amount of our common stock.
Accordingly, these persons will be able to exert significant influence over the direction of our affairs and business, including any determination with respect to our acquisition or disposition of assets, future issuances of common stock or other securities, and the election or removal of Directors. Such a concentration of ownership may also have the effect of delaying, deferring, or preventing a change in control of the Company or cause the market price of our stock to decline. Notwithstanding the exercise of their fiduciary duties by the Directors and Executive Officers and any duties that such other stockholder may have to us or our other stockholders in general, these persons may have interests different than yours.
We do not expect to pay dividends for the foreseeable future.
For the foreseeable future, it is anticipated that earnings, if any, that may be generated from our operations will be used to finance our operations and that cash dividends will not be paid to holders of our common stock.
We expect to be subject to SEC regulations and changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002, new SEC regulations and other trading market rules, are creating uncertainty for public companies.
We are committed to maintaining high standards of corporate governance and public disclosure. As a result, we intend to invest appropriate resources to comply with evolving standards, and this investment may result in increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities.
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There is substantial doubt about our ability to continue as a going concern, which means that we may not be able to continue operations unless we obtain additional funding.
The report of our independent accountants on our December 31, 2009 financial statements included an explanatory paragraph indicating that there is substantial doubt about our ability to continue as a going concern due to recurring losses and working capital shortages. Our ability to continue as a going concern will be determined by our ability to obtain additional funding. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Our common stock may be affected by limited trading volume and may fluctuate significantly.
Our common stock has experienced, and is likely to experience in the future, significant price and volume fluctuations which could adversely affect the market price of our common stock without regard to our operating performance. In addition, we believe that factors such as quarterly fluctuations in our financial results and changes in the overall economy or the condition of the financial markets could cause the price of our common stock to fluctuate substantially. Substantial fluctuations in our stock price could significantly reduce the price of our stock.
The Company’s properties are limited at the present time to its offices in Redlands, California. The Company considers its existing facilities to be adequate for its current needs.
We are not a party to any material pending legal proceedings and, to the best of our knowledge, no such action by or against the Company has been threatened.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted during the fourth quarter of the fiscal year covered by this report to a vote of security holders through the solicitation of proxies or otherwise.
PART II
Item
5.
MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED
STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Our common stock trades publicly on the over the counter bulletin board under the symbol "KNSL." The over the counter bulletin board is a regulated quotation service that displays real-time quotes, last-sale prices and volume information in over-the-counter equity securities. The over the counter Bulletin Board securities are traded by a community of market makers that enter quotes and trade reports. This market is extremely limited and any prices quoted may not be a reliable indication of the value of our common stock.
9
The following table sets forth the high and low bid prices per share of our common stock for the periods indicated as reported on the over the counter bulletin board.
|
| High |
|
| Low |
| ||
FISCAL YEAR ENDED DECEMBER 31, 2009 |
|
|
|
|
|
| ||
Fourth Quarter |
| $ | 7 |
|
| $ | 7 |
|
Third Quarter |
|
| 7 |
|
|
| 5 |
|
Second Quarter-Stock unavailable for trading |
|
| 0 |
|
|
| 0 |
|
First Quarter-Stock unavailable for trading |
|
| 0 |
|
|
| 0 |
|
|
|
|
|
|
|
|
|
|
The quotes represent inter-dealer prices, without adjustment for retail mark-up, mark-down or commission and may not necessarily represent actual transactions. The trading volume of our securities fluctuates and may be limited during certain periods. As a result of these volume fluctuations, the liquidity of an investment in our securities may be adversely affected.
Holders
As of December 31, 2009, there were 1,313,000 shares of common stock outstanding held by approximately 33 holders of record.
Dividends
Our board of directors has not declared a dividend on our common stock during the last two fiscal years or the subsequent interim period and we do not anticipate the payments of dividends in the near future as we intend to reinvest our profits to grow our business.
Penny Stock Status
The Company’s common stock is a "penny stock," as the term is defined by Rule 3a51-1 of the Securities Exchange Act of 1934. This makes it subject to reporting, disclosure and other rules imposed on broker-dealers by the Securities and Exchange Commission requiring brokers and dealers to do the following in connection with transactions in penny stocks:
1.
Prior to the transaction, to approve the person's account for transactions in penny stocks by obtaining information from the person regarding his or her financial situation, investment experience and objectives, to reasonably determine based on that information that transactions in penny stocks are suitable for the person, and that the person has sufficient knowledge and experience in financial matters that the person or his or her independent advisor reasonably may be expected to be capable of evaluating the risks of transactions in penny stocks. In addition, the broker or dealer must deliver to the person a written statement setting forth the basis for the determination and advising in highlighted format that it is unlawful for the broker or dealer to effect a transaction in a penny stock unless the broker or dealer has received, prior t o the transaction, a written agreement from the person. Further, the broker or dealer must receive a manually signed and dated written agreement from the person in order to effectuate any transactions is a penny stock.
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2.
Prior to the transaction, the broker or dealer must disclose to the customer the inside bid quotation for the penny stock and, if there is no inside bid quotation or inside offer quotation, he or she must disclose the offer price for the security transacted for a customer on a principal basis unless exempt from doing so under the rules.
3.
Prior to the transaction, the broker or dealer must disclose the aggregate amount of compensation received or to be received by the broker or dealer in connection with the transaction, and the aggregate amount of cash compensation received or to be received by any associated person of the broker dealer, other than a person whose function in solely clerical or ministerial.
4.
The broker or dealer who has effected sales of penny stock to a customer, unless exempted by the rules, is required to send to the customer a written statement containing the identity and number of shares or units of each such security and the estimated market value of the security. The imposition of these reporting and disclosure requirements on a broker or dealer would make it unlawful for the broker or dealer to effect transactions in penny stocks on behalf of customers. Brokers or dealers may be discouraged from dealing in penny stocks, due to the additional time, responsibility involved, and, as a result, this may have a deleterious effect on the market for the Company's stock.
Unregistered Sales of Securities
The following securities were sold by the registrant during the past two fiscal years, that were not registered under the Securities Act:
On June 27, 2008, 20,000 shares of common stock were issued to Officer and Director Angelique de Maison, pursuant to Section 4(2) of the Securities Act of 1933.
In January through February 2009, 12,825 shares of common stock (pre-split) were sold to investors pursuant to Regulation D, Rule 504, registered in the State of Illinois as a Small Corporate Offering, in New York pursuant to Form M-11, and in California, pursuant to Section 25102(n) of the Corporations Code.
On November 29, 2009, Angelique de Maison and the Company entered into an asset purchase agreement, whereby Ms. de Maison gifted the URL, sendaprayer.com to the Company.
Item
6.
The registrant is a Smaller Reporting Company, pursuant to Rule 229.10(f)(1), and is not required to report this information. The financial statements of the issuer are attached.
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The Company has focused since its inception on forming its corporate structure, developing its business plan and raising capital. The Company is a development stage Company with a plan of operations as set forth below.
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The Company plans to specialize in leasing equipment to a select clientele. The Company has chosen to support the legal, medical and real estate professional with high quality computer hardware and software so they can forget about shopping, understanding and buying the latest version of computer peripherals and concentrate on their business. The Company plans to keep its future customers abreast of the latest changes and support them with their hardware needs. The Company will also perform training and on-site maintenance through its hardware and software affiliates. In short, The Company Leasing, Inc. takes the hardware burden from these professionals and supports them with one stop shopping and support for all their electronic and computer equipment.
The Company specializes in leasing information processing and communications equipment, principally to established, creditworthy customers, primarily in the real estate profession. The Company's leasing activities will be conducted primarily through equipment wholesalers.
Critical Accounting Estimates and Policies
Stock Based Compensation
Shares of the Company’s common stock may be issued for services. These issuances are valued at the fair market value of the services provided and the number of shares issued is determined based upon what the price of the common stock is on the date of each respective transaction.
Estimates
The presentation 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 disclosures 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 these estimates.
Fair Value of Financial Instruments
The carrying amounts for the Company’s cash, accounts payable, accrued liabilities and current portion of long term debt approximate fair value due to the short-term maturity of these instruments.
Income Taxes
In February 1992, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 109, “Accounting for Income Taxes.” SFAS No. 109 required a change from the deferred method of accounting for income taxes of Accounting Principles Board (“APB”) Opinion No. 11 to the asset and liability method of accounting for income taxes. Under the asset and liability method of SFAS No. 109, 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 bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected t o be recovered or settled. Under SFAS No. 109, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
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Earnings (Loss) Per Share
In February 1997, the FASB issued SFAS No. 128, “Earnings per Share.” SFAS No. 128 simplifies the standards for computing earnings per share (“EPS”) and was effective for financial statements issued for periods ending after December 15, 1997, with earlier application not permitted. Upon adoption, all prior EPS data was restated.
Basic EPS is determined using net income divided by the weighted average shares outstanding during the period. Diluted EPS is computed by dividing net income by the weighted average shares outstanding, assuming all dilutive potential common shares were issued.
Item
7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company’s business activities contain elements of risk. The Company considers a principal type of market risk to be a valuation risk. All assets are valued at fair value as determined in good faith by or under the direction of the Board of Directors.
Item
8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements of the company are attached as Exhibits to Item 15 and are hereby incorporated by reference
.
Item
9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
Since inception, there have been no changes of or disagreements with our independent accountants.
Item
9A.
As required by Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Company carried out an evaluation under the supervision and with the participation of the Company’s management, including the Chief Executive Officer/Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures as of December 31, 2009. In designing and evaluating the Company’s disclosure controls and procedures, the Company recognizes that there are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their desired control objectiv es. Additionally, in evaluating and implementing possible controls and procedures, the Company’s management was required to apply its reasonable judgment. Furthermore, management considered certain matters deemed by the Company’s independent auditors to constitute a material weakness in the Company’s internal control over financial reporting described below. Based upon the required evaluation, the Chief Executive Officer and Chief Financial Officer concluded that as of December 31, 2009, the Company has determined that its system of controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.
13
Item
9A(T).
Management is responsible for establishing and maintaining adequate internal control over financial reporting of the Company.
In order to satisfy its responsibilities, management has instituted a procedure, whereby financial statements are prepared by the Company’s outside accountant, reviewed by the Chief Financial Officer and Chief Executive Officer, distributed to the Board of Directors for review and comment, along with the Company’s books and records for the periods covered in the financial statements. The financial statements are then presented to the Company’s independent registered public accounting firm for an independent review prior to the filing and disclosure of any financial information.
As required by Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Company carried out an evaluation under the supervision and with the participation of the Company’s management, including the Chief Executive Officer/Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures as of December 31, 2009. In designing and evaluating the Company’s disclosure controls and procedures, the Company recognizes that there are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their desired control objectiv es. Additionally, in evaluating and implementing possible controls and procedures, the Company’s management was required to apply its reasonable judgment. Furthermore, management considered certain matters deemed by the Company’s independent auditors to constitute a material weakness in the Company’s internal control over financial reporting described below. Based upon the required evaluation, the Chief Executive Officer and Chief Financial Officer concluded that as of December 31, 2009, the Company has determined that its system of controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.
This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the company to provide only management’s report in this annual report.
Management had determined during the last fiscal year, that there were material weaknesses in its internal control over financial reporting procedures, and developed the current procedure to improve the internal procedures.
Item
9B.
On May 1, 2009, the Company effected a 40-1 forward split of its common share capital.
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PART III
Item
10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Name | Age | Position |
Angelique de Maison | 38 | CEO, Director |
Michael T. Ryan | 49 | CFO, Director |
Angelique de Maison. Ms. de Maison has been the Chief Executive Officer and Director and Officer of the Company since inception. From November 2006 through 2007 she served as Director of CIC Holding Company, Inc., a company whose securities trade on the Pink Sheets. Ms. de Maison is an accomplished Real Estate Investor, Mortgage Banker, and a California Real Estate Licensee.
Michael T. Ryan. On June 19, 2009, Mr. Ryan was appointed Chief Financial Officer of the Company. On March 30, 2010 Mr. Ryan was also appointed to the Board of Directors of the Company. Since 1999, Mr. Ryan has been a partner at EHG Financial Planning Services, running a financial planning practice catering to the needs of small business owners and affluent individuals. Mr. Ryan holds a Bachelor’s Degree in Human Resource Development with a minor in Business Management from Brigham Young University-Hawaii. He is a Certified Financial Planner, and holds a Series 7 and California State securities license, and California life, health and disability insurance licenses.
Item
11.
The following table provides information as to cash compensation of all Officers of the Company, for each of the Company’s last two fiscal years.
SUMMARY COMPENSATION TABLE
Name and principalposition | Year | Salary | StockAwards | OptionAwards | Non-Equity Incentive Plan CompensationEarnings | Nonqualified Deferred CompensationEarnings | All OtherCompensation | Total |
Angelique de Maison, CEO | 2008 2009 | $ 0 $ 0 | $ 0 $ 0 | $ 0 $ 0 | $ 0 $ 0 | $ 0 $ 0 | $ 0 $ 0 | $ 0 $ 0 |
Michael Ryan, CFO | 2008 2009 | $ 0 $ 0 | $ 0 $ 0 | $ 0 $ 0 | $ 0 $ 0 | $ 0 $ 0 | $ 0 $ 0 | $ 0 $ 0 |
The Company has not entered into employment contracts with its Executive Officers. There are no outstanding equity awards or options to Officers issued or outstanding, other than a purchase agreement in favor of Angelique de Maison to purchase up to 6,000,000 shares of common stock at the purchase price of $0.08 per share dated March 31, 2010.
15
The following table provides information concerning the compensation of the Directors of the Company for the past fiscal year:
DIRECTOR COMPENSATION
Name | Fees Earned or Paid in Cash | Stock Awards | Option Awards | Non-Equity Incentive Plan Compensation | Non-Qualified Deferred Compensation Earnings | All Other Compensation | Total |
Angelique de Maison | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
There are no outstanding equity awards or options to Directors issued or outstanding.
Corporate Governance
The Board of Directors is committed to maintaining strong corporate governance principles and practices. The Board periodically reviews evolving legal, regulatory, and best practice developments to determine those that will best serve the interests of our shareholders.
Meetings and Attendance
Our Board of Directors is required by our by-laws to hold regularly scheduled annual meetings. In addition to the annual meetings, it has the authority to call regularly scheduled meetings and special meetings by resolution. Our Board met 1 time during the past fiscal year. All incumbent Directors attended 100% or more of the Board meetings during the last fiscal year.
Nominations of Directors
There are no material changes to the procedures by which security holders may recommend nominees to the registrant’s Board of Directors.
Audit Committee
The Company does not have a standing audit committee, pursuant to section 3(a)(58)(A) of the Securities Exchange Act of 1934. The entire Board of Directors serves the function of the audit committee.
Item
12.
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
The following table sets forth information furnished to us with respect to the beneficial ownership of our common stock by (i) each Executive Officer, Director and nominee, and by all Directors and Executive Officers as a group, and (ii) each beneficial owner of more than five percent of our outstanding common stock, in each case as of December 31, 2009. Unless otherwise indicated, each of the persons listed has sole voting and dispositive power with respect to the shares shown as beneficially owned.
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Title of Class | Name and Address of Beneficial Owner | Amount of Beneficial Ownership | Percent of Class |
Common Stock | Angelique de Maison 565 Walnut Avenue, Redlands, CA Beverly Hills, CA 90210 | 500,000 | 38.08% |
The issuer is not aware of any person who owns of record, or is known to own beneficially, five percent or more of the outstanding securities of any class of the issuer, other than as set forth above.
Item
13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE.
On June 27, 2008, 20,000 shares of common stock were issued to Officer and Director Angelique de Maison, pursuant to Section 4(2) of the Securities Act of 1933.
On November 29, 2009, Angelique de Maison gifted the URL, sendaprayer.com to the Company.
Item
14.
PRINCIPAL ACCOUNTING FEES AND SERVICES
We have not changed our independent accountants since inception. Our independent accountant’s reports on the financial statements for the Registrant for the last two years of financial statements reported has not contained an adverse opinion or a disclaimer of opinion, nor was it qualified or modified as to uncertainty, audit scope, or accounting principles, except for the fact that the accountant included an opinion that, due to the Registrant’s significant losses from operations and dependence on financing to continue its operations, there is doubt about the Registrant’s ability to continue as a going concern.
During the two most recent fiscal years, there have been no disagreements with the former accountant on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of the accountant, would have caused it to make reference to the subject matter of the disagreements in connection with the reports.
The Company does not have an audit committee. The audit committee’s function is performed by the full Board of Directors. The Board of Directors verified the following with respect to our independent accountants:
1.
The accountant is and has been in good standing within the jurisdiction of its practice.
2.
The accountant is a member in good standing of the Public Accountancy Oversight Board
(PAOB).
3.
The accountant is capable of exercising objective and impartial judgment on all issues
encompassed within its potential engagement, and that no member of the firm had any interest or
relationship with any officer, director or principal shareholder.
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Audit Fees
The aggregate fees billed since inception and related services by the principal accountant that are reasonably related to the performance of the audit or review of the registrant’s financial statements is approximately the sum of $4,000 which all related to the review and audit of Company financial statements.
Tax Fees
No fees were paid to the former accountant for professional services rendered by the principal accountant for tax compliance, tax advice and tax planning.
All Other Fees
No other fees were paid to the former accountant for any other services.
Item
15.
EXHIBITS, FINANCIAL STATEMENTS SCHEDULES.
(a)
The following financial statements are filed as part of this Registration statement:
Report of Independent Registered Certified Public Accountant
Financial Statements
Balance Sheet
Statement of Operations
Statement of Stockholders’ Equity
Statement of Cash Flows
Notes to Financial Statements
(b)
The following exhibits are filed as part of this Registration Statement:
None
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors
Kensington Leasing, Ltd..
We have audited the accompanying balance sheet of Kensington Leasing, Ltd., a development stage company, as of December 31, 2008 and 2009 and the related statements of operations, stockholders' equity (deficit) and cash flows for the period from June 27, 2008 (inception) through December 31, 2009. 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 audit.
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 Kensington Leasing, Ltd. as of December 31, 2008 and 2009 and the related statements of operations, stockholders' equity (deficit) and cash flows for the period from June 27, 2008 (inception) through December 31, 2009 in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements the Company has suffered losses from operations and has no sources of revenue that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/Gruber & Company, LLC
Gruber & Company, LLC
Lake Saint Louis, Missouri
April 14, 2010
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Kensington Leasing, Ltd (An Development Stage Company) Balance Sheet | ||
December 31, 2009 | December 31, 2008 | |
ASSETS | ||
Cash | $ -- | $ -- |
Intangible assets | 5,000 | -- |
Total Non-current Assets | 5,000 | -- |
TOTAL ASSETS | 5,000 | -- |
LIABILITIES AND STOCKHOLDER’S EQUITY (DEFICIT) | ||
Liabilities | ||
Notes payable | 14,250 | -- |
Accrued interest | 327 | -- |
Due to related parties | 5,000 | 5,000 |
Total Liabilities | 19,577 | 5,000 |
Stockholders’ Equity (Deficit) | ||
Common stock, $.001 par value, | ||
100,000,000 shares authorized, 1,313,000 and 800,000 shares | ||
issued and outstanding at December 31, 2009 and December 31, 2008 respectively | 1,313 | 800 |
Paid in capital | 21,512 | (800) |
Deficit accumulated during development stage | (32,402) | (5,000) |
Total Stockholders Equity (Deficit) | ||
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT) | $ 10,000 | -- |
See notes to financial statements | ||
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Kensington Leasing, Ltd. (An Development Stage Company) Statement of Operations | |||
For the three months ended December 31, 2009 | For the year ended December 31, 2009 | From June 27, 2008 (Inception) to December 31, 2009 | |
Income | $ - | $ - | $ - |
Operating expenses | |||
General and administrative | 600 | 2,045 | 2,045 |
Legal and accounting | 8,050 | 25,030 | 30,030 |
Total expenses | 8,650 | 27,075 | 32,075 |
Ordinary income (loss) | (8,650) | (27,075) | (32,075) |
Interest income (expense) | (250) | (327) | (327) |
Net income (loss) | $ (8,900) | $ (27,402) | $ (32,402) |
Loss per share | $ (0.01) | $ (0.02) | $ (0.03) |
Weighted average common shares | 1,313,000 | 1,237,104 | 1,088,505 |
See notes to financial statements | |||
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Kensington Leasing, Ltd. (An Development Stage Company) Statement of Cash Flows | |||
For the three months ended December 31, 2009 | For the year ended December 31, 2009 | 2008 (inception) to December 31, 2009 | |
Net Loss | $ (8,900) | $ (27,402) | $ (32,402) |
Total cash used in operations | |||
Cash from financing activities | |||
Stock offering | - | 12,825 | 12,825 |
Notes payable | - | - | - |
Accrued interest | 250 | 327 | 327 |
Loans from related parties | 8,650 | 14,250 | 19,250 |
Total cash from financing activities | 8,900 | 27,402 | 32,402 |
INCREASE (DECREASE) IN CASH | - | - | - |
BEGINNING CASH | - | - | - |
ENDING CASH | $ - | $ - | $ - |
See notes to financial statements | |||
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Kensington Leasing, Ltd. (An Development Stage Company) Statement of Stockholders Equity (Deficit) For the period from June 27, 2008 (inception) to December 31, 2009 | |||||
Number of SharesOutstanding | Common Stock at Par Value | Paid in Capital | Deficit Accumulated During Development Stage | Total Stockholders Deficit | |
Beginning balance | - | - | - | - | - |
Stocks issued | 800,000 | 800 | (800) | - | |
Net loss December 31, 2008 |
|
|
| (5,000) | (5,000) |
Balance at December 31, 2008 | 800,000 | 800 | (800) | (5,000) | (5,000) |
Stocks issued for cash February 2009 | 513,000 | 513 | 12,312 | 12,825 | |
Gift of intangible asset | 5,000 | 5,000 | |||
Net loss December 31, 2009 | (27,402) | (27,402) | |||
Balance at December 31, 2009 | 1,313,000 | 1,313 | 16,512 | (32,402) | (14,577) |
See notes to financial statements | |||||
Kensington Leasing, Ltd.
(An Development Stage Company)
Notes to Financial Statements
For the period ended December 31, 2009
NOTE 1: HISTORY OF OPERATIONS
Kensington Leasing, Ltd. was incorporated on June 27, 2008 in the State of Nevada. The Company has a plan of operations to lease specialized computer equipment and provide support services for professionals.
NOTE 2: CONTINUED EXISTENCE
The Company has not generated any significant revenue during the period ended December 31, 2009 and has funded its operations primarily through the issuance of equity. Accordingly, the Company’s ability to accomplish its business strategy and to ultimately achieve profitable operations is dependent upon its ability to obtain additional debt or equity financing.
These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.
The Company, as described above, is in the business of leasing specialized equipment. There can be no assurance that the Company will be successful in its endeavor.
NOTE 3: SIGNIFICANT ACCOUNTING POLICIES
Stock Based Compensation
Shares of the Company’s common stock may be issued for services. These issuances are valued at the fair market value of the services provided and the number of shares issued is determined based upon what the price of the common stock is on the date of each respective transaction.
Estimates
The presentation 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 disclosures 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 these estimates.
Fair Value of Financial Instruments
The carrying amounts for the Company’s cash, accounts payable, accrued liabilities and current portion of long term debt approximate fair value due to the short-term maturity of these instruments.
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Income Taxes
Accounting Standards Codification Topic No. 740 “Income Taxes” (ASC 740) requires the asset and liability method of accounting be used for income taxes. Under the asset and liability 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 bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
Earnings (Loss) Per Share
Per Accounting Standards Codification Topic 260 “Earnings Per Share” (ASC 260), basic EPS is determined using net income divided by the weighted average shares outstanding during the period. Diluted EPS is computed by dividing net income by the weighted average shares outstanding, assuming all dilutive potential common shares were issued.
Basic EPS is determined using net income divided by the weighted average shares outstanding during the period. Diluted EPS is computed by dividing net income by the weighted average shares outstanding, assuming all dilutive potential common shares were issued.
NOTE 4: INTANGIBLES
The domain name sendaprayer.com is deemed to have an indefinite life and no amortization has been recorded. The asset was received as a gift and was recorded at the cost paid by the giftor which was deemed to be fair value.
NOTE 5: RELATED PARTY TRANSACTIONS
On June 27, 2008, 20,000 shares of common stock were issued to Officer/Director Angelique de Maison, pursuant to Section 4(2) of the Securities Act of 1933, in exchange for setup costs and the Company’s business plan.
On November 29, 2009, Angelique de Maison gifted the URL, sendaprayer.com to the Company. This asset has been recorded at the cost incurred by Ms. De Maison.
During the year ended December 31, 2009 Ms. de Maison loaned the Company a total of $14,250 for operating expenses at an interest rate of 10% per year. She has loaned the Company a total of $19,250 since inception.
NOTE 6: STOCK OFFERING
In January through February 2009, 12,825 shares of common stock (513,000 shares as split) were offered to investors pursuant to the company’s Regulation D, Rule 504 small corporate offering registered in the State of Illinois.
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NOTE 7: FORWARD SPLIT
Effective May 1, 2009 the Company effected a 40-1 forward split of its common share capital.
NOTE 8: NEW ACCOUNTING PRONOUNCEMENTS
In 2009, the FASB issued Statement 165, “Subsequent Events” (“SFAS 165”) [ASC 855], which defines the period after the balance sheet date that subsequent events should be evaluated and provides guidance in determining if the event should be reflected in the current financial statements. Statement 165 also requires disclosure regarding the date through which subsequent events have been evaluated. The Company adopted the provisions of Statement 165 as of December 31, 2009. The Company has evaluated subsequent events through the time this Form 10-K was filed with the Securities and Exchange Commission. Events that occurred subsequent to December 31, 2009 that require disclosure or recognition in these financial statements are included it Note 9: SUBSEQUENT EVENTS.
In June 2009, the FASB issued SFAS No. 166, “Accounting For Transfers of Financial Assets -- An Amendment Of FASB Statement No. 140” ("SFAS 166") [ASC860], which requires entities to provide more information regarding sales of securitized financial assets and similar transactions, particularly if the entity has continuing exposure to the risks related to transferred financial assets. SFAS 166 eliminates the concept of a "qualifying special-purpose entity", changes the requirements for derecognizing financial assets and requires additional disclosures. SFAS 166 is effective for fiscal years beginning after November 15, 2009. The Company has not completed its assessment of the impact SFAS 166 will have on its financial condition, results of operations or cash flows.
In June 2009, the FASB issued SFAS No. 167, “Amendments to FASB Interpretation No. 46(R)” ("SFAS 167") [ASC 810-10], which modifies how a company determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. SFAS 167 clarifies that the determination of whether a company is required to consolidate an entity is based on, among other things, an entity's purpose and design and a company's ability to direct the activities of the entity that most significantly impact the entity's economic performance. SFAS 167 requires an ongoing reassessment of whether a company is the primary beneficiary of a variable interest entity. SFAS 167 also requires additional disclosures about a company's involvement in variable interest entities and any significant changes in risk exposu re due to that involvement. SFAS 167 is effective for fiscal years beginning after November 15, 2009. The Company has not completed its assessment of the impact SFAS 167 will have on its financial condition, results of operations or cash flows.
In June 2009, the FASB issued Accounting Standards Update (“ASU”) No. 2009-01, Topic 105 — Generally Accepted Accounting Principles — amendments based on Statement of Financial Accounting Standards No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles. This Accounting Standards Update includes Statement 168 in its entirety, including the accounting standards update instructions contained in Appendix B of the Statement. The Codification does not change current U.S. GAAP, but is intended to simplify user access to all authoritative U.S. GAAP by providing all the authoritative literature related to a particular topic in one place. The Codification is effective for interim and annual periods ending after December 15, 2009, and as of the effective date, all e xisting accounting standard documents will be superseded. The Codification is effective for us in the second quarter of fiscal 2010, and accordingly, this Form 10-K for the year ended December 31, 2009 and all subsequent public filings will reference the Codification as the sole source of authoritative literature.
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NOTE 9: SUBSEQUENT EVENTS
In accordance with Accounting Standards Codification Topic No. 855 “Subsequent Events” (ASC 855), the Company has evaluated subsequent events through the time between the end of the reporting period and the time the December 31, 2009 Form 10K and has found the following events to report:
On March 30, 2010, the Company’s CFO, Michael T. Ryan, was appointed as a Director of the Company.
On March 31, 2010, the Company entered into a Securities Purchase Agreement, whereby it issued 6,000,000 shares of its common stock to officer and director Angelique de Maison, in a transaction not involving a public offering, in reliance on the exemption from registration contained in Section 4(2) of the Securities Act of 1933. The shares were sold to Ms. de Maison at the price of $0.08 per share, for a total of $480,000 in cash. There was no underwriter involved. The Securities Purchase Agreement gives Ms. de Maison demand registration rights requiring the Company to file a registration statement to register the common stock under the Securities Act of 1933 upon 60 days notice to the Company and piggyback registration rights in the event the Company effects a public offering of its common stock for cash.
As part of the same transaction, the Company issued a promissory note to Ms. de Maison in exchange for a $520,000 loan to the Company, pursuant to Section 4(2) of the Securities Act of 1933. The note bears interest at the rate of 10% per annum. There was no underwriter involved. There are no terms of conversion on the face of the note into any other securities of the company.
On April 9, 2010, the Company entered into an Option Purchase Agreement with Merrimen Investments, Inc. pursuant to which the Company concurrently sold to Merrimen for $200,000 an option to purchase up to 24,000,000 shares of our common stock. The option has an exercise price of $0.08 per share, expires on April 8, 2011, and may be exercised on or after October 1, 2010. Under the Option Purchase Agreement, Merrimen received demand registration rights and piggyback registration rights with respect to the shares it may acquire upon exercise of the option.
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SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: April 14, 2010 | KENSINGTON LEASING, LTD. |
__/s/ Angelique de Maison_______ Angelique de Maison Chief Executive Officer |
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