SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
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Quarterly Report Under Section 13 or 15(d)
Of the Securities and Exchange Act of 1934
For the Quarter Ended Commission File Number
- --------------------- ----------------------
June 30, 2005 000-29605
Appian, Inc.
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Former Name: Funnelcloud, Inc.
(Name of Small Business Issuer in Its Charter)
Nevada 88-0356052
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
4114 Splendor Way, Salt Lake City, Utah 84124
(Address of Principal Executive Offices) (Zip Code)
(801) 243-4498
(Issuer's Telephone Number, Including Area Code)
Securities registered under Section 12(b) of the Exchange Act:
Title of Each Class Name of each Exchange on Which Registered
- -------------------------------- ------------------------------------------
(Common Stock ($0.001 Par Value) None
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 [ ]
State the number of shares outstanding of each of the registrants classes of
common equity, as of the latest practicable date:
At June 30, 2005, the number of shares outstanding of the registrant's Common
Stock, $0.001 par value (the only class of voting stock), was 34,348,118.
TABLE OF CONTENTS
PART I
Page
Item 1. Description of Business......................................3
Item 2. Description of Property......................................5
Item 3. Legal Proceedings............................................5
Item 4. Submission of Matters to a Vote of Security-Holders..........5
PART II
Item 5. Market for Common Equity and Related Stockholder Matters.....6
Item 6. Management's Discussion and Analysis or Plan of Operation....7
Item 7. Financial Statements.........................................7
Item 8. Exhibits and Reports on Form 8-K............................ 9
Signatures.................................................. 9
PART I
ITEM 1. DESCRIPTION OF BUSINESS
History
Appian, Inc. formerly Funnlecloud, Inc. and Cyberexcellence, Inc. (the
"Company") was formed as a Nevada corporation on February 15, 1996, for the
purpose of specializing in Internet "virtual mall" development. The Company
changed its name to Funnelcloud, Inc. in April 2003 and to Appian, Inc. May 10,
2004. The Company was one of over 40 related companies whose plan was to create
a virtual mall with theme based stores to sell merchandise over the Internet.
The Company's former parent, Axia Group, Inc. (f/k/a CyberAmerica Corporation),
a fully reporting company under the Exchange Act of 1934, through its now
defunct subsidiary CyberMalls, Inc. was in the process of developing a
specialized search engine. This search engine was designed to assist consumers
in the purchase of products by narrowing the number of responses received when
searching for a specific product. However, due to a lack of necessary funding
CyberMalls, Inc.'s plans to create the search engine were dis continued.
Consequently, the plans to create a virtual mall with at least 40 theme based
stores with the 40 related companies including the Company's theme based virtual
store were abandoned. The Company became a "blank check" or "shell" company
during the last quarter of 1996 as a result of the inability of the Company's
then parent to sufficiently fund the Company's planned operations and is
currently seeking a business or businesses to acquire.
General
The Company is a "blank check" or "shell" corporation that seeks to identify and
complete a merger or acquisition with a private entity whose business presents
an opportunity for Company shareholders. The Company's management will review
and evaluate business ventures for possible mergers or acquisitions. The Company
has not yet entered into any agreement, nor does it have any commitment or
understanding to enter into or become engaged in a transaction, as of the date
of this filing. Further, the business objectives discussed herein are extremely
general and are not intended to restrict the discretion of the Company's
management.
3
A decision to participate in a specific business opportunity will be made based
upon a Company analysis of the quality of the prospective business opportunity's
management and personnel, asset base, the anticipated acceptability of business'
products or marketing concepts, the merit of a business plan, and numerous other
factors which are difficult, if not impossible, to analyze using any objective
criteria.
Selection of a Business
The Company anticipates that potential business opportunities will be referred
from various sources, including its officers and directors, professional
advisors, securities broker-dealers, venture capitalists, persons involved in
the financial community, and others who may present unsolicited proposals. The
Company will not engage in any general solicitation or advertising for a
business opportunity, and will rely on the personal contacts of Management and
their affiliates, as well as indirect associations with other business and
professional people.
On June 16, 2005, Appian, Inc. purchased all the stock of Tolga Media Group,
Inc., a Nevada corporation. There will be no impact on the financial statements
of Appian, Inc. as Tolga Media Group, Inc. has no operating history and
currently there are no operations in Tolga Media Group, Inc. This stock purchase
agreement brings the knowledge and experience of Tolga Katas and Christine Marie
to Appian, Inc. as they both will serve as directors of Appian, Inc.
Government Regulation
It is impossible to anticipate government regulations, if any, to which the
Company may be subject until it has acquired an interest in a business. The use
of assets to conduct a business which the Company may acquire could subject it
to environmental, public health and safety, land use, trade, or other
governmental regulations and state or local taxation. In selecting a business in
which to acquire an interest, management will endeavor to ascertain, to the
extent of the limited resources of the Company, the effects of such government
regulation on the prospective business of the Company. In certain circumstances,
however, such as the acquisition of an interest in a new or start-up business
activity, it may not be possible to predict with any degree of accuracy the
impact of government regulation. The inability to ascertain the effect of
government regulation on a prospective business activity will make the
acquisition of an interest in such business a higher risk.
4
Competition
The Company will be involved in intense competition with other business
entities, many of which will have a competitive edge over the Company by virtue
of their stronger financial resources and prior experience in business. There is
no assurance that the Company will be successful in obtaining suitable business
opportunities.
Employees
The Company is a development stage company and currently has no employees.
Executive officers will devote only such time to the affairs of the Company as
they deem appropriate, which is estimated to be approximately 5 hours per month.
Management of the Company expects to use consultants, attorneys, and accountants
as necessary, and does not anticipate a need to engage any full-time employees
so long as it is identifying and evaluating businesses. The need for employees
and their availability will be addressed in connection with a decision whether
or not to acquire or participate in a specific business venture.
ITEM 2. DESCRIPTION OF PROPERTY
The Company currently maintains its offices at the home of F. Briton McConkie, a
director of the Company, 4114 Splendor Way, Salt Lake City, Utah 84124. The
Company pays no rent for the use of this address. The Company does not believe
that it will need to maintain an office at any time in the foreseeable future in
order to carry out the plan of operation described herein.
ITEM 3. LEGAL PROCEEDINGS
The Company is currently not a party to any legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted during the fiscal year covered by this report to a vote
of security holders, therefore rendering this item inapplicable.
5
PART II
ITEM 5. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON
EQUITY AND OTHER SHAREHOLDER MATTERS
The Company currently has no public trading market. The Company intends to have
Form 15c-(2)(11) filed on its behalf once a suitable business acquisition or
merger has been completed in an effort to obtain a listing on the NASD over the
counter bulletin board and create a public market. Management believes that the
creation of a public trading market for the Company's securities would make the
Company a more attractive acquisition or merger candidate. However, there is no
guarantee that the Company will obtain a listing on the NASD over-the-counter
bulletin board or that a public market for the Company's securities will develop
or, if such a market does develop, that it will continue, even if a listing on
the NASD over the counter bulletin board is obtained.
Recent Sales of Unregistered Securities
There were no sales of unregistered securities during the quarter ended June 30,
2005.
Record Holders
As of June 30, 2005, there were eighty-one (83) shareholders of record holding a
total of 34,338,118 shares of Common Stock. The holders of the Common Stock are
entitled to one vote for each share held of record on all matters submitted to a
vote of stockholders. Holders of the Common Stock have no preemptive rights and
no right to convert their Common Stock into any other securities. There are no
redemption or sinking fund provisions applicable to the Common Stock.
Dividends
The Company has not declared any dividends since inception and does not
anticipate paying any dividends in the foreseeable future. The payment of
dividends is within the discretion of the Board of Directors and will depend on
the Company's earnings, capital requirements, financial condition, and other
relevant factors. There are no restrictions that currently limit the Company's
ability to pay dividends on its Common Stock other than those generally imposed
by applicable state law.
6
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Plan of Operations
The Company's plan of operation for the coming year, as discussed above, is to
identify and acquire a favorable business opportunity. The Company does not plan
to limit its options to any particular industry, but will evaluate each
opportunity on its merits. The Company anticipates that its owners, affiliates,
and consultants will provide it with sufficient capital to continue operations
until the end of the year 2005, but there can be no assurance that this
expectation will be fully realized.
Results of Operations
The Company's plan of operation for the coming year, is to identify and acquire
a favorable business opportunity. The Company does not plan to limit its options
to any particular industry, but will evaluate each opportunity on its merits.
The Company anticipates that its owners, affiliates, and consultants will
provide it with sufficient capital to continue operations until the end of the
year 2005, but there can be no assurance that this expectation will be fully
realized.
Liquidity and Capital Resources
As of June 30, 2005, the Company had no major assets. The Company is currently
authorized to issue 100,000,000 shares of common stock, of which 34,338,118
shares are issued and outstanding, and 5,000,000 shares of preferred stock, none
of which is outstanding as of June 30, 2005. Management is hopeful that becoming
a reporting company will increase the number of prospective business ventures
that may be available to the Company. Management believes that the Company has
sufficient resources to meet the anticipated needs of the Company's operations
through at least the calendar year ending December 31, 2005. The Company
anticipates that its major shareholders will contribute sufficient funds to
satisfy the cash needs of the Company through calendar year ending December 31,
2005. However, there can be no assurances to that effect, as the Company has no
revenues and the Company's need for capital may change dramatically if it
acquires an interest in a business opportunity during that period. Further, the
Company has no plans to raise additional capital through private placements or
public registration of its securities until a merger or acquisition candidate is
identified. Upon consummation of a merger, the Company may decide to file the
necessary and appropriate registration statements to register the affiliates'
shares. In addition, it is the position of the small business division the
securities and exchange commission that promoters or affiliates of blank check
companies, as well as their transferees, are deemed to be "underwriters" of the
securities issued both before and after any business combination. 7
The Company projects that its operating requirements will not exceed $15,000
over the next twelve months. If no acquisition candidate is found for the
Company during this time, Management will loan the Company sufficient funds to
cover these costs over the next twelve months. Management will
prepare the necessary documentation to keep the Company current with its
reporting requirements with the Securities & Exchange Commission and those costs
will accrue on the Company's balance sheet. In the event that a merger or
acquisition occurs over the next twelve months, the target company will be
responsible for paying these costs back to the major shareholders, or the major
shareholders may waive these costs depending on the nature of the acquisition or
merger transaction.
ITEM 7. FINANCIAL STATEMENTS
The Company's unaudited financial statements for the Quarter ended June 30,
2005 are attached hereto as F-1 through F-7.
7
Appian, Inc.
Unaudited Financial Statements
June 30, 2005
F-1
INDEX TO FINANCIAL STATEMENTS
Page
Balance Sheet as of June 30, 2005...........................................F-3
Statement of Operations for the Three Months ended June 30, 2005 and 2004
and February 15, 1996 (Date of Inception) to June 30, 2005..................F-4
Statement of Stockholder's Equity ..........................................F-5
Notes to Condensed Financial Statements.....................................F-6
F-2
Appian, Inc.
(A Development Stage Company)
Unaudited Balance Sheet
As of June 30, 2005
Assets
Current Assets:
Cash in bank $ 32
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Total Assets $ 32
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Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 6,904
Accounts payable - related parties 37,033
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Total Current Liabilities 43,937
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Stockholders' deficit
Preferred stock, $.001 par value; authorized 5,000,000 shares; -
no shares issued
Common stock, $.001 par value; authorized 100,000,000 shares; 34,348
shares issued and outstanding: 34,348,118
Additional paid-in capital 129,475
Deficit accumulated during development stage (207,728)
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Total Stockholders' Deficit (43,905)
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Total Liabilities and Stockholders' Deficit $ 32
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The accompanying notes are an integral part of these financial statements.
F-3
Appian Way, Inc.
(A Development Stage Company)
Unaudited Statement of Operations
For The Three Months ended June 30, 2005 and 2004 and Period
From February 15, 1996 (Date of Inception) to
June 30, 2005
Three months ended Six months ended Inception to
June 30 June 30 June 30, 2005
2005 2004 2005 2004
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Revenue:
None $ -- $ -- $ -- $ -- $ --
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Expenses:
General and Administrative Costs 22,089 2,786 26,231 3,561 142,228
Research and Development -- -- -- -- 65,500
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Operating Profit (Loss) (22,089) 2,786 (26,231) (3,561) (207,728)
----------- ----------- ----------- ----------- -----------
Provision for income taxes -- -- -- -- --
Net Loss $ (22,089) $ (2,786) $ (26,231) $ (3,561) $ (207,728)
=========== =========== =========== =========== ===========
Net loss per common share $ 0 $ 0 $ 0 $ 0
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Weighted average number of shares
outstanding - basic 15,348,118 11,313,118
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A
The accompanying notes are an integral part of these financial statements
F-4
Appian, INC.
(A Development Stage Company)
Statement of Cash Flows
For The Three Months ended June 30, 2005 and 2004 and Period
From February 15, 1996 (Date of Inception) to
June 30, 2005
Inception
June 30 June 30 through June
2005 2004 30, 2005
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Cash flows from operating activities:
Net loss $ (26,231) $ (3,561) $ (207,728)
Adjustments to reconcile net loss to net
cash used in operating activities:
Changes in accounts payable 26,231 (2,128) 43,937
Issuance common capital stock - expenses - - 9,935
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Net Change in Cash Flow From operations - (5,689) (153,856)
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Cash Flows From Investing Activities: - - -
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Cash Flow From Financing Activities:
Proceeds from issuance of common stock - 7,000 153,888
Net Change in Cash - 1,311 32
Cash at Beginning of Period 32 - -
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Cash at End of Period $ 32 1,311 32
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F-6
The accompany notes are an integral part of these financial statements
Appian, Inc.
(A Development Stage Company)
Notes to Financial Statements
1. Organization
The Company was incorporated under the laws of the State of Nevada on February
15, 1996 with the name of "Cyberexcellence, Inc." with authorized common stock
of 20,000,000 shares at $0.001 par value, and authorized preferred stock of
5,000,000 shares at $0.001 par value. The Company changed its name to
Funnelcloud, Inc. and on May 10, 2004 changed its name to Appian, Inc. On May
10, 2004 the authorized common capital stock was increased to 100,000,000 shares
with the same par value. Ther terms of the preferred capital stock has not been
determined by management.
The Company is in the development stage and has not commenced any significant
operations.
2. Summary of Significant Accounting Policies
Accounting Methods
The Company recognized income and expenses based on the accrual method of
accounting.
Dividend Policy
The Company has not adopted a policy regarding payment of dividends.
Income Taxes
The Company utilizes the liability method of accounting for income taxes. Under
the liability method, deferred tax assets and liabilities are determined based
on the differences between financial reporting and tax bases of the assets and
liabilities and are measured using the enacted tax rates and laws that will be
in effect when the differences are expected to reverse. An allowance against
deferred tax assets is recognized when it is more likely than not that such tax
benefits will not be realized.
On June 30, 2005, the Company had a net operating loss carryforward of $185,639.
The tax benefit of approximately $56,000 form the loss carryforward has been
fully offset by a valuation reserve because the use of the future tax benefit is
doubtful since the Company has no operations. The net operating loss will expire
starting in 2014through 2026. Earnings (Loss) Per Share
Basic and Diluted Net Income (Loss) Per Share
Basic net income (loss) per share amounts are computed based on the weighted
average number of shares actually outstanding. Diluted net income (loss) per
share amounts are computed using the weighted average number of common shares
and common equilivent shares outstanding as if shares had been issued on the
exercise of any common or preferred share rights unless the exercise becomes
antidilutive and then only the basic per share amounts are shown in the report.
Financial and Concentration Risk
The Company does not have any concentration or related financial credit risk.
Revenue Recognition
Revenue will be recognized on the sale and delivery of a product or the
completion of a service provided.
F-7
Appian, INC.
(A Development Stage Company)
Notes to Financial Statements
2. Summary of Significant Accounting Policies (continued)
Advertising and Market Development
The company will expense advertising and market development costs as incurred.
Estimates and Assumptions
Management uses estimates and assumptions in preparing financial statements in
accordance with accounting principles generally accepted in the United States of
America. Those estimates and assumptions affect the reported amounts of the
assets and liabilities and the disclosure of contingent assets and liabilities,
and the reported revenues and expenses. Acutal results could vary from the
estimates that were assumed in preparing those financial statements.
Financial Instruments
The carrying amounts of financial instruments are considered by management to be
their estimated fair values.
Recent Accounting Pronouncements
The Company does not expect that the adoption of other recent accounting
pronouncements will have a material impact on its financial statements.
F-8
Appian, INC.
(A Development Stage Company)
Notes to Financial Statements
3. CAPITAL STOCK
During 2003 then Company completed private placement offerings of after split
common shares of 831,168 for cash and 4,285,950 shares for services. During
November 2003 the Company received $7,000 for the purchase of 70,000 common
shares. The stock was issued in 2004. On May 5, 2004 the Company completed a
forward common stock split of one outstanding share for three shares. This
report has been prepared showing post split shares from inception. On June 16,
2005 the Company issued 22,750,000 shares in exchange for all of the stock
(10,000 shares) of Tolga Media, Inc., a Nevada Corporation.
4. SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES
Officers-directors have acquired 72% of the common capital stock issued and have
made no interest demand on loans to the Company of $14,944.
5. GOING CONCERN
The Company intends to acquire interests in various business opportunities
which, in the opinion of management, will provide a profit to the Company.
However there is sufficient working capital for any future planned activity and
to service its debt. Continuation of the Company as a going concern is dependent
upon obtaining working capital for any future planned activity and management of
the Company will be required to develop a strategy which will accomplish this
objective. There can be no assurance that the Company can be successful in this
effort.
F-9
ITEM 8. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits required to be attached by Item 601 of Regulation S-B are
listed in the Index to Exhibits on page 10 of this Form 10-QSB, and are
incorporated herein by this reference.
(b) Reports on Form 8-K. No reports on Form 8-K were filed during the
period covered by this Form 10-QSB.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized, this 20th day of August, 2005.
Appian, Inc.
/s/ F. Briton McConkie
---------------------------------------
F. Briton McConkie, President
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
Signature Title Date
- --------- ----- ----
/s/ F. Briton McConkie
- -----------------------------
F. Briton McConkie President August 20, 2005
/s/ Steven Fey
- -----------------------------
Steven Fey Secretary August 20, 2005
8
INDEX TO EXHIBITS
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Exhib. Page No. Description
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3(i) * Articles of Incorporation of Cyberexcellence, Inc.,
a Nevada corporation, filed with the State of Nevada
on February 15, 1996
3(ii) * By-laws of the Company adopted on December 31, 1999.
4 * Employee Benefit Plan adopted on December 14, 1999.
* Incorporated by reference from Form 10-SB filed February 18, 2000.
9