UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
(Mark One)
[x] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 For the fiscal year ended March 31, 2008
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
Commission file number 0-14869
KOMODO, INC.
--------------------------------------------
(Name of small business issuer in its charter)
Nevada not applicable
------------------------------ ----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Suite 116
930 West 1st Street
North Vancouver, BC Canada V7P 3N4
------------------------------------- --------
(address of principal executive office) (zip code)
(604) 689-9417
---------------------------------------------
(Issuer's telephone number including area code)
Securities registered pursuant to Section 12 (b) of the Act: None
Securities registered pursuant to Section 12 (g) of the Act: Common Shares,
$0.001 par value
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 ____
Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure will be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. ___
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The Issuer's revenue for its most recent fiscal year: nil
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 sold, or the average bid and asked price of such common equity, as of a
specified date within 60 days.
As of July 28, 2008, the aggregate market value of the registrant's common stock
held by non-affiliates of the registrant was approximately $22,227 based on
approximately 11,113,428 shares held by non-affiliates at a price of $0.002.
The number of shares of common stock outstanding as of July 28, 2008 was
25,926,247.
Documents incorporated by reference: A description of "Documents Incorporated by
Reference" is contained in Part III, Item 14.
2
Komodo, Inc.
FORM 10-KSB ANNUAL REPORT
TABLE OF CONTENTS
Page No.
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PART I
Item 1. Description of Business..................................... 4
Item 2. Description of Property .................................... 8
Item 3. Legal Proceedings........................................... 8
Item 4. Submission of Matters to a Vote of Security Holders......... 8
PART II
Item 5. Market for Common Equity and Related Stockholder Matters.... 8
Item 6. Management's Discussion and Analysis or Plan of Operations.. 10
Item 7. Financial Statements 12
Item 8. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.................................... 12
Item 8A. Controls and Procedures .................................... 12
Item 8B. Other Information .......................................... 13
PART III
Item 9. Directors and Executive Officers, Promoters and Control Persons:
Compliance with Section 16(a) of the Exchange Act........... 13
Item 10. Executive Compensation...................................... 14
Item 11. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters.................. 15
Item 12. Certain Relationships and Related Transactions.............. 16
Item 14. Exhibits ................................................... 16
Signatures.................................................. 18
Certifications ............................................ 18
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ITEM 1. DESCRIPTION OF BUSINESS
Business Overview
- -----------------
Prior to March, 2007 Komodo was developing, selling and supporting
personal internet privacy products. Due to the Company's inability to raise
additional working capital to launch it's mass scale release in 2007 all further
development and marketing of it's products including the SPC 1 secure private
computing laptop were stopped and the company became a blank check company
seeking to either (a) secure a financing to support a it's existing business or
(b) seek a new business direction, effect a merger, capital stock exchange,
asset acquisition or similar business combination.
We are not presently engaged in, and we will not engage in, any
substantive commercial business until we consummate a financing or a business
acquisition. This could involve the acquisition of, or merger with, a company
which desires to establish a public trading market for its shares.
Business Development
- --------------------
The current activities conducted by the Company are to manage its limited assets
and to seek out and secure a financing or investigate the acquisition of any
viable business opportunity by purchase and exchange for securities of the
Company or pursuant to a reorganization or merger through which securities of
the Company will be issued or exchanged.
Management will seek out and investigate a financing or business opportunities
through every reasonable means, including personal contacts, through referrals
from professionals, securities broker dealers, venture capital personnel,
members of the financial community and others who may present unsolicited
proposals.
Other than seeking and investigating potential capital raising activities the
Company has had no material business operations for the past four months. The
Company has limited assets and conducts no material business, management
anticipates that both a financing or an acquisition would require it to issue
shares of its common stock. This would result in substantial dilution of the
shares of current stockholders. The Company's Board of Directors shall make the
final determination whether to complete any acquisition; the approval of
stockholders will not be sought unless required by applicable laws, rules and
regulations, its Articles of Incorporation or Bylaws, or contract. The Company
makes no assurance that any future enterprise will be profitable or successful.
In the event that the Company engages in any transaction resulting in a change
of control of the Company and/or the acquisition of a business, the Company will
be required to file with the Commission a Current Report on Form 8-K within 15
days of such transaction. A filing on Form 8-K also requires the filing of
audited financial statements of the business acquired, as well as pro forma
financial information consisting of a pro forma condensed balance sheet, pro
forma statements of income and accompanying explanatory notes.
Management intends to consider a number of factors prior to making any decision
as to whether to participate in any specific business endeavor, none of which
may be determinative or provide any assurance of success. These may include, but
will not be limited to an analysis of the quality of the entity's management
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personnel; the anticipated acceptability of any new products or marketing
concepts; the merit of technological changes; its present financial condition,
projected growth potential and available technical, financial and managerial
resources; its working capital, history of operations and future prospects; the
nature of its present and expected competition; the quality and experience of
its management services and the depth of its management; its potential for
further research, development or exploration; risk factors specifically related
to its business operations; its potential for growth, expansion and profit; the
perceived public recognition or acceptance of its products, services, trademarks
and name identification; and numerous other factors which are difficult, if not
impossible, to properly or accurately analyze, let alone describe or identify,
without referring to specific objective criteria.
Regardless, the results of operations of any specific entity may not necessarily
be indicative of what may occur in the future, by reason of changing market
strategies, plant or product expansion, changes in product emphasis, future
management personnel and changes in innumerable other factors. Further, in the
case of a new business venture or one that is in a research and development
mode, the risks will be substantial, and there will be no objective criteria to
examine the effectiveness or the abilities of its management or its business
objectives. Also, a firm market for its products or services may yet need to be
established, and with no past track record, the profitability of any such entity
will be unproven and cannot be predicted with any certainty.
Management will attempt to meet personally with directors, executive officers
and key personnel of the entity sponsoring any business opportunity afforded to
the Company, visit and inspect material facilities, obtain independent analysis
or verification of information provided and gathered,
check references of management and key personnel and conduct other reasonably
prudent measures calculated to ensure a reasonably thorough review of any
particular business opportunity; however, due to time constraints of management,
these activities may be limited.
The Company is unable to predict the time as to when and if it may actually
participate in any specific business endeavor. The Company anticipates that
proposed business ventures will be made available to it through personal
contacts of directors, executive officers and principal stockholders,
professional advisors, broker dealers in securities, venture capital personnel,
members of the financial community and others who may present unsolicited
proposals. In certain cases, the Company may agree to pay a finder's fee or to
otherwise compensate the persons who submit a potential business endeavor in
which the Company eventually participates. Such persons may include the
Company's directors, executive officers, beneficial owners or their affiliates.
In this event, such fees may become a factor in negotiations regarding a
potential acquisition and, accordingly, may present a conflict of interest for
such individuals.
Further, substantial fees are often paid in connection with the completion of
these types of acquisitions, reorganizations or mergers, ranging from a small
amount to as much as $250,000. These fees are usually divided among promoters or
founders, after deduction of legal, accounting and other related expenses, and
it is not unusual for a portion of these fees to be paid to members of
management or to principal stockholders as consideration for their agreement to
retire a portion of the shares of common stock owned by them. In the event that
5
such fees are paid, they may become a factor in negotiations regarding any
potential acquisition by the Company and, accordingly, may present a conflict of
interest for such individuals.
Competitors also include thousands of other publicly-held companies whose
business operations have proven unsuccessful, and whose only viable business
opportunity is that of providing a publicly-held vehicle through which a private
entity may have access to the public capital markets. There is no reasonable way
to predict the competitive position of the Company or any other entity in the
strata of these endeavors; however, the Company, having limited assets and cash
reserves, will no doubt be at a competitive disadvantage in competing with
entities which have recently completed IPO's, have significant cash resources
and have recent operating histories when compared with the complete lack of any
substantive operations by the Company for the past several years.
The integrated disclosure system for small business issuers adopted by the
Commission in Release No. 34-30968 and effective as of August 13, 1992,
substantially modified the information and financial requirements of a "Small
Business Issuer," defined to be an issuer that has revenues of less than $25
million; is a U.S. or Canadian issuer; is not an investment company; and if a
majority-owned subsidiary, the parent is also a small business issuer; provided,
however, an entity is not a small business issuer if it has a public float (the
aggregate market value of the issuer's outstanding securities held by
non-affiliates) of $25 million or more.
The Commission, state securities commissions and the North American Securities
Administrators Association, Inc. ("NASAA") have expressed an interest in
adopting policies that will streamline the registration process and make it
easier for a small business issuer to have access to the public capital markets.
The present laws, rules and regulations designed to promote availability to the
small business issuer of these capital markets and similar laws, rules and
regulations that may be adopted in the future will substantially limit the
demand for companies like the Company, and may make the use of these companies
obsolete.
Environmental laws, rules and regulations may have an adverse effect on any
business venture viewed by the Company as an attractive acquisition,
reorganization or merger candidate, and these factors may further limit the
number of potential candidates available to the Company for acquisition,
reorganization or merger.
Prior History
- -------------
Komodo, Inc. was originally incorporated in the State of Nevada on September 21,
1984 as Thermacor Technology Inc. The name was changed to Applied Technology,
Inc. on May 16, 1994. The name was changed to Golden Panther Resources, Ltd. on
March 17, 1997. The name was changed to Panther Resources Ltd. on March 10,
1998. The name was changed to PhantomFilm.com on June 15, 1999. The name was
changed to Komodo, Inc. on October 2, 2001. The current share prices reflect the
1 for 10 reverse stock split that occurred on March 1, 1997, the 1 for 20
reverse stock split that occurred on March 22, 1997, the 1 for 10 reverse stock
split that occurred in June, 1999, the 1 for 30 reverse stock split that
occurred in September, 2001 and the 4 for 1 forward stock split that occurred in
May, 2002.
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From 2001 to March, 2007, Komodo was a development stage software company in the
soft launch process of refining a secure email messaging and operating
environment that would eliminate viruses, spam, and other potential online
threats. From March, 2007 to date the company has not been engaged in any
substantive business
EMPLOYEES/CONSULTANTS
We currently retain, through contracts with corporations, the services of two
directors. The company has no employees at this time.
RISK FACTORS
Going concern issue
Our independent auditors have expressed a going concern issue. Our ability to
continue as a going concern is dependant upon our ability to attain profitable
operations. We do not have an established source of funds sufficient to cover
operating costs and accordingly there is substantial doubt about our ability to
continue as a going concern.
Our extremely limited operating history makes it difficult to evaluate our
business and prospects. We commenced operations in September, 2003 and have
conducted limited business operations since that time. As a result of our short
operating history, we have only limited financial data and business information
with which to evaluate our business strategies, past performance and an
investment in our common stock.
If we lose key personnel, we may be unable to successfully operate our business.
We depend on the continued contributions of our executive officers to work
effectively as a team, to execute our business strategy and to manage our
business. The loss of key personnel or their failure to work effectively could
have a material adverse effect on our business, financial condition and results
of operations.
Risks relating to ownership of our common stock
The price of our common stock is extremely volatile and investors may not be
able to sell their shares at or above their purchase price, or at all. Our stock
is presently traded on the OTC Bulletin Board, although there is no assurance
that a viable market will continue. The price of our common stock in the public
market is highly volatile and may fluctuate substantially because of:
* actual or anticipated fluctuations in our future business and
operating results;
* changes in or failure to meet market expectations;
* fluctuations in stock market price and volume, which are
particularly common among securities of technology companies,
particularly new start-up companies.
We do not intend to pay dividends
To date, we have never declared or paid any cash dividends on shares of our
common stock. We currently intend to retain our future earnings for growth and
development of our business and, therefore, we do not anticipate paying any
dividends in the foreseeable future.
7
Possible "Penny Stock" Regulation
Trading of our common stock on the OTC Bulletin Board may be subject to certain
provisions of the Securities Exchange Act of 1934, commonly referred to as the
"penny stock" rule. A penny stock is generally defined to be any equity security
that has a market price less than $5.00 per share, subject to certain
exceptions. If our stock is deemed to be a penny stock, trading in our stock
will be subject to additional sales practice requirements on broker-dealers.
These may require a broker dealer to:
* make a special suitability determination for purchasers of penny stocks;
* receive the purchaser's written consent to the transaction prior to
the purchase; and
* deliver to a prospective purchaser of a penny stock, prior to the first
transaction, a risk disclosure document relating to the penny stock
market.
Consequently, penny stock rules may restrict the ability of broker-dealers to
trade and/or maintain a market in our common stock. Also, many prospective
investors may not want to get involved with the additional administrative
requirements, which may have a material adverse effect on the trading of our
shares.
ITEM 2. DESCRIPTION OF PROPERTY
Our executive offices are located in North Vancouver, B.C., Canada in an 8,200
square foot facility. There is currently no monthly rent payable. We do not own
any real estate.
ITEM 3. LEGAL PROCEEDINGS
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS.
Market Information
- ------------------
Currently, our common stock is traded over-the-counter and quoted on the OTC
Bulletin Board under the symbol "KMDO". The high and low bid prices for our
shares are listed below for the periods depicted. The prices in the table
reflect inter-dealer prices, without retail mark-up, mark-down or commission and
may not represent actual transactions.
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The reported bid prices reflect the 1 for 10 reverse stock split that occurred
on March 1, 1997, the 1 for 20 reverse stock split that occurred on March 22,
1997, the 1 for 10 reverse stock split that occurred in June, 1999, the 1 for 30
reverse stock split that occurred in September, 2001 and the 4 for 1 forward
stock split that occurred in May, 2002.
PRICE RANGE
YEAR ENDED MARCH 31, 2008: HIGH LOW
1st Quarter ...................... $ 0.08 $ 0.023
2nd Quarter ...................... 0.05 0.011
3rd Quarter ...................... 0.01 0.005
4th Quarter ...................... 0.01 0.002
YEAR ENDED MARCH 31, 2007:
1st Quarter ...................... $ 0.80 $ 0.44
2nd Quarter ...................... 0.24 0.10
3rd Quarter ...................... 0.10 0.06
4th Quarter ...................... 0.06 0.03
---------------
As of March 31, 2008 there were 771 stockholders of record of our common stock.
This does not include an indeterminate number of shareholders who may hold their
shares in "street name".
Dividends
- ---------
We have never declared any cash dividends and do not anticipate paying such
dividends in the near future. We anticipate all earnings, if any, over the next
12 to 24 months will be retained for future investments in business. Any future
determination to pay cash dividends will be at the discretion of the Board of
Directors and will be dependent upon our results of operations, financial
conditions, contractual restrictions, and other factors deemed relevant by the
Board of Directors. We are under no contractual restrictions in declaring or
paying dividends to our common or preferred shareholders.
The future sale of presently outstanding "unregistered" and "restricted" common
stock by present members of management and persons who own more than five
percent of the outstanding voting securities may have an adverse effect on any
market that may develop in our common shares.
All common shares and preferred shares rank equally for the payment of
dividends. If a dividend was to be paid all issued shares would be eligible.
Recent Sales of "Unregistered" Securities
- -----------------------------------------
The following unregistered securities have been issued since April 1st, 2007 and
are previously disclosed in our quarterly reports on Form 10-QSB's unless
otherwise noted:
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Valued
Date No. of Shares Title At Reason
- ----- ------------- ------ ------ --------
None
The above noted shares were issued without registration under the Securities Act
in reliance on the exemption provided by Rule 506 and/or Section 4(2) of the
Securities Act as a transaction by an issuer not involving a public offering.
Proceeds from the sale of stock were used for development of the Company's
product and for general working capital.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS and PLAN OF OPERATION
Results of Operations
Year Ended March 31, 2008 Compared to Year Ended March 31, 2007
Revenues. We realized our first revenues of $10,724 during the fiscal year
ended March 31, 2007. We were unsuccessful in securing additional financing to
continue with the beta testing of our products and services and did not record
additional revenues in the fiscal year ended March 31, 2008.
General and administrative expenses. General and administrative expense
decreased to $33,124 for the year ended March 31, 2008 from $896,772 for the
year ended March 31, 2007. The decrease was primarily due to a reduction in
marketing expense and consulting fees which were paid in shares of the Company's
common stock as well as in common stock purchase options and warrants. The value
of these shares, warrants and options was $881,492 in 2007 compared to $-0- in
2008. We also incurred approximately $231,761 in research and development costs
in the year ended March 31, 2007 compared to $-0- in the current year. We
incurred these research and development costs as we worked to prepare our
product and service for beta testing. Management fees-related parties decreased
from $480,000 in 2007 to $-0- in 2008. The contracts with our executive officers
were terminated in 2008.
Losses from Continuing Operations. Losses from continuing operations
totaled $1,648,511 for the year ended March 31, 2007 as compared to losses of
$170,067, for the year ended March 31, 2008.
Losses from Discontinued Operations. In 1999 our Board of Directors voted
to discontinue the mining operations due to a lack of funding and low precious
metal prices. Losses from discontinued operations totaled $10,704,054. During
the year ended March 31, 2006, the statute of limitations expired for $205,676
of debts incurred in connection with our discontinued operations. We recorded a
gain on discharge of debt as a result of the statute of limitations expiration.
For the years ended March 31, 2008 and 2007 we had no gains or losses from
discontinued mining operations.
Liquidity and Capital Resources
During the year ended March 31, 2008 we used cash of $143,376 for our
operations compared to $265,434 in the prior year. The decrease was due to our
decision to begin the development of our new products and services.
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We also used $-0- and $3,975 of our cash to purchase computer equipment to
be used in developing and operating our new products and services, in 2008 and
2007 respectively.
We raised the cash for these purposes by selling shares of our common stock
in private placements. In 2008 we raised $4,991 through these private
placements. No commission was paid to the individuals who raised the
funds for us compared to $285,000 raised in private placements 2007 for which
$16,000 in fees were paid. In 2008, we also received $137,800 in related party
loans.
Plan of Operations
Going Concern Issue. Our independent auditors have expressed a going
concern issue. Our ability to continue as a going concern is dependent upon our
ability to successfully attain profitable operations or to locate financing for
our continued maintenance and operations. We currently do not have an
established source of funds sufficient to cover our operating costs and
accordingly there is substantial doubt about our ability to continue as a going
concern. We are in the process of developing new products and services which we
believe will be profitable and allow us to continue as a going concern. The
development of these products is expected to require approximately $4,000,000
after which we expect to need approximately $5,000,000 for infrastructure
creation and market introduction. We have raised approximately $2,250,000 of
these funds through March 31, 2008. We are in the process of seeking the
additional capital needed to meet these needs. There is no assurance that such
funds will be available to us or that if they are available will be under terms
which we can accept.
Certain Factors Affecting Future Operating Results
This report on Form 10-KSB includes "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the
Securities Exchange Act of 1934. These forward-looking statements may relate to
such matters as anticipated financial performance, future revenues or earnings,
business prospects, projected ventures, new products and services, anticipated
market performance and similar matters. When used in this report, the words
"may," "will," expect," anticipate," "continue," "estimate," "project,"
"intend," and similar expressions are intended to identify forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934 regarding events, conditions,
and financial trends that may affect our future plans of operations, business
strategy, operating results, and financial position. We caution readers that a
variety of factors could cause our actual results to differ materially from the
anticipated results or other matters expressed in forward-looking statements.
Recent Accounting Pronouncements
During the year ended March 31, 2008, the Company adopted the following
accounting pronouncements:
In December 2007, the FASB issued SFAS 160, "Noncontrolling interests in
Consolidated Financial Statements - an amendment of ARB No. 51". This Statement
amends ARB 51 to establish accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the deconsolidation of a
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subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an
ownership interest in the consolidated entity that should be reported as equity
in the consolidated financial statements. This Statement is effective for fiscal
years beginning on or after December 15, 2008. Early adoption is not permitted.
Management is currently evaluating the effects of this statement, but it is not
expected to have any impact on the Company's financial statements.
In February 2007 , the FASB issued SFAS 159, "The Fair Value Option for
Financial Assets and Financial Liabilities. SFAS 159 creates a fair value option
allowing an entity to irrevocably elect fair value as the initial and subsequent
measurement attribute for certain financial assets and financial liabilities,
with changes in fair value recognized in earnings as they occur. SFAS 159 also
requires an entity to report those financial assets and financial liabilities
measured at fair value in a manner that separates those reported fair values
from the carrying amounts of assets and liabilities measured using another
measurement attribute on the face of the statement of financial position.
Lastly, SFAS 159 requires an entity to provide information that would allow
users to understand the effect on earnings of changes in the fair value on those
instruments selected for the fair value election. SFAS 159 is effective for
fiscal years beginning after November 15, 2007 with early adoption permitted.
The Company is continuing to evaluate SFAS159 and to assess the impact on its
results of operations and financial condition if an election is made to adopt
the standard.
In June 2007, the Financial Accounting Standards Board issued FAS No. 141R,
Business Combinations - This Statement implements certain revisions to SFAS 141,
including changes to the measurement of purchase consideration, measurement of
goodwill, capitalization of in-process research and development, and definition
of the acquisition date. This statement is effective for fiscal years, and
interim periods within those fiscal years, beginning on or after December 15,
2008. The implementation of this pronouncement had no effect on the Company's
consolidated financial statements.
ITEM 7. FINANCIAL STATEMENTS
Financial statements as of and for the fiscal year ended March 31, 2008 have
been examined to the extent indicated in their report by Chisholm, Bierwolf &
Nilson, LLC, independent certified public accountants, and has been prepared in
accordance with generally accepted accounting principles and pursuant to
Regulation S-B as promulgated by the SEC. The aforementioned financial
statements are included herein under Item 14.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
ITEM 8A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures. Based on an evaluation under
the supervision and with the participation of the our management as of a date
within 90 days of the filing date of this Annual Report on Form 10-KSB, our
principal executive officer and principal financial officer have concluded that
our disclosure controls and procedures (as defined in Rules 13a-14(c) and
15d-14(c) under the Securities Exchange Act of 1934, are effective to ensure
12
that information required to be disclosed in reports that we file or submit
under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in SEC rules and forms.
Changes in Internal Controls. There were no significant changes in our internal
controls or in other factors that could significantly affect these controls
subsequent to the date of their evaluation. There were no significant
deficiencies or material weaknesses, and therefore there were no corrective
actions taken. However, the design of any system of controls is based in part
upon certain assumptions about the likelihood of future events and there is no
certainty that any design will succeed in achieving its stated goal under all
potential future considerations, regardless of how remote.
ITEM 8B. OTHER INFORMATION
None.
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information regarding our executive
officers and directors:
Name Age Position
Gordon Muir 55 Chief Executive Officer, Chairman of the Board,
Director
Penny Perfect* 55 President, Director
* Member of the audit committee
The Directors and Officers are elected and will serve until the next annual
general meeting of the shareholders or until their death, resignation,
retirement, removal, disqualification, or until their successors have been duly
elected and qualified. All Officers serve at the will of the Board of Directors.
GORDON MUIR is a founding Director and has served as Chief Executive Officer
since January, 2002. Mr. Muir has over twenty years experience in upper level
management in a variety of industries particularly in technology development and
software design and implementation fields. He currently is the Chief Technology
Officer of AlphaTrade.com
PENNY PERFECT has served as a Director since June 27, 2003 and was appointed as
President on May 1, 2005. Ms. Perfect has an established career in the financial
industry. She is currently the CEO, President and Chairman of the Board of
AlphaTrade.com.
Compliance with Section 16 of the Exchange Act.
Section 16(a) of the Exchange Act requires directors, officers and persons who
own more than 5% of a registered class of our equity securities to file reports
of ownership and changes in ownership with the Securities and Exchange
Commission. Directors, officers and greater than 5% shareholders are required by
SEC regulations to furnish us with copies of all Section 16(a) forms they file.
Based solely upon our review of the copies of such forms that we received during
the fiscal year ended March 31, 2006, we believe that each person who at any
time during the fiscal year was a director, officer or beneficial owner of more
than 5% of our common stock complied with all Section 16(a) filing requirements
during such fiscal year.
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ITEM 10. EXECUTIVE COMPENSATION
The following table shows compensation earned during fiscal 2007 and 2008 by the
Chief Executive Officer and President. Titles shown on the table are titles held
at March 31, 2008. The information in the table includes salaries, bonuses,
stock options granted, restricted stock awards granted and other miscellaneous
compensation. We have no long term compensation benefits other than stock
options.
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term and Other
------------------- Compensation
-----------------------
Number of
Name and Securities All Other
Principal Fiscal Other Annual Underlying Compensation
Positions Year Salary(1)Bonus Compensation(3) Options (2)
- --------------- ------ -------- ----- --------------- ---------- ------------
Gordon J. Muir 2007 $240,000 ----- ----- 500,000 -----
Chief Executive 2008 nil
Officer
Penny Perfect 2007 $240,000 ----- ----- 500,000
President 2008 nil
(1) Salaries for 2007 were accrued and paid in shares of the Company's
common stock to companies in which the executive officers may have a residual
interest. There were no salaries paid or accrued in 2008.
Bonuses and Deferred Compensation
None of the Directors or executive officers received a bonus or deferred
compensation other than as noted above.
Other compensation: none
Other Director Compensation
Directors receive no cash compensation for their services as directors, other
than reimbursement for certain expenses in connection with attendance at board
meetings.
Stock Incentive Plans
Stock Incentive Plans were adopted in 2004, 2005 and 2006 authorizing the
issuance of the following shares to the Directors, Employees and Consultants of
which the unexercised balances are as follows:
Exercise Number Number
Price Authorized Outstanding
2004 Plan $0.77 1,300,000 1,300,000
2005 Plan $0.72 2,200,000 2,200,000
2006 Plan $1.00 2,200,000 2,200,000
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All directors, employees and consultants are eligible to participate in the
above noted Stock Option Plans. The options vest over a five year period. The
Plan is administered by the Board of Directors.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The following table sets forth certain information concerning the stock
ownership as of March 31, 2008, of: (i) each person who is known to us to be the
beneficial owner of more than 5 percent of our common stock; and (ii) directly
or indirectly by each director, by each person who was an executive officer
during the fiscal year ending March 31, 2008 and by directors and executive
officers as a group:
Shares
Beneficially
Name of Beneficial Owner Owned(1)(2) Percent (2)
- ------------------------ ----------- -------
Gordon Muir 11,722,051(3) 39%
Suite 116C
930 West 1st Street
North Vancouver, B.C.
Penny Perfect 11,840,768(4) 39%
Suite 116C
930 West 1st Street
North Vancouver, B.C.
Ms. Perfect and Mr. Muir are spouses. Accordingly, each spouse's holdings may
also be deemed to be beneficially owned by the other.
All executive officers and directors
as a group (two persons)(5) 23,562,819 78%
Class A Preferred
All executive officers and directors
as a group 1,750,000 88%
(1) The above noted disclosure should not be construed as an admission that
each executive officer or director is the beneficial owner of these
shares of common stock and is calculated separately for each person on
the basis of the actual number of outstanding shares beneficially owed
as of March 31, 2008 and assumes the conversion of preferred shares
held by such person (but not by anyone else).
(2) The percentages shown are calculated based upon 25,926,247 shares of
common stock outstanding on March 31, 2008 plus that number of
preferred shares that may be converted by a particular person or
persons, but not anyone else.
(3) Includes direct and indirect ownership and includes 4,375,000 shares to
be issued upon the conversion of preferred shares.
(4) Includes direct and indirect ownership and includes 4,375,000 shares to
issued upon the conversion of preferred shares.
(5) Includes 8,750,000 shares to be issued upon the conversion of preferred
shares.
15
PREFERRED SHARES
We have authorized 10,000,000 shares of preferred stock with a par value of
$0.001 per share. 2,000,000 shares of the preferred stock have been issued as a
Class "A" issuance. Each share is convertible into 5 shares of common stock at
$0.01 per share.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transaction with Management and Others
During the past two years, there have been no material transactions, series of
similar transactions or currently proposed transactions, to which we or any of
our subsidiaries were or are to be a party, in which the amount involved exceeds
$60,000 and in which any director or executive officer, or any security holder
who is known to us to own of record or beneficially more than five percent of
the our common stock, or any member of the immediate family of any of the
foregoing persons, had a material interest.
Certain Business Relationships
During the past two years, there have been no material transactions, series of
similar transactions, currently proposed transactions, or series of similar
transactions, currently proposed transactions, or series of similar
transactions, to which we or any of our subsidiaries was or is to be a party, in
which the amount involved exceeds $60,000 an in which any promoter or founder,
or any member of the immediate family of any of the foregoing persons, had a
material interest.
ITEM 14. EXHIBITS
The following exhibits are included herein, except for the exhibits
marked with a footnote, which are incorporated herein by reference
and can be found in the appropriate document referenced.
(a) Exhibits
Exhibit No. Exhibit Name
----------- ------------
3.1(1) Initial Articles of Incorporation dated September 20, 1984
3.2(1) By-laws
3.3(1) Certificate of Amendment changing the name of the company to
"Thermacor Technology Inc." (10/15/85)
3.4(1) Certificate of Amendment authorizing the number of shares to
vote on an Amendment to the Articles of Incorporation as
891,000 (12/6/85)
3.5(1) Certificate of Amendment changing the name of the company to
Applied Technology, Inc, effecting a one for fifty reverse
split, and thereafter increasing the authorized capital to
15,000,000 shares of common stock (05/16/94)
3.6(1) Certificate of Amendment changing the name of the company to
Golden Panther Resources, Ltd., and increasing the authorized
capital to 50,000,000 shares of common stock (03/17/97)
3.7(1) Certificate of Amendment increasing the authorized capital to
100,000,000 shares of common stock, par value $0.001;
10,000,000 shares of preferred stock, par value $0.10
(11/19/97)
16
3.8(1) Certificate of Amendment changing the name of the company to
"Panther Resources Ltd." (03/10/98)
3.9(1) Certificate of Amendment changing the name of the company to
Applied Technology, Inc, effecting a one for ten reverse
split, the authorized capital and preferred stock were not
subject to the reverse split (06/15/99)
3.10(1) Certificate of Amendment changing the name of the company to
"PhantomFilm.com" (06/15/99)
3.11(1) Certificate of Amendment changing the name of the company to
"Komodo, Inc." (10/02/01)
31.1 Certification of C.E.O. and Principal Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 Certification of C.E.O. and Principal Financial Officer
Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
-----------------------
(b) Reports on Form 8-K
None
Item 14. Principal Accountant Fees and Services
The following is a summary of the fees billed to us by Chisholm, Bierwolf
& Nilson, LLC, independent certified public accountants, for professional
services rendered for the fiscal years ended March 31,2007 and March 31, 2008:
Fee Category Fiscal 2008 Fees Fiscal 2007 Fees
------------------------- ---------------- ----------------
Audit Fees .............. $7,000.00 $13,250.00
Audit-Related Fees ...... -- --
Tax Fees ................ -- --
All Other Fees .......... -- --
---------- ----------
Total Fees .............. $7,000.00 $13,250.00
Audit Fees. Consists of fees billed for professional services rendered
for the audit of our financial statements and review of the interim financial
statements included in quarterly reports and services that are normally provided
by Chisholm, Bierwolf & Nilson, LLC, independent certified public accountants,
in connection with statutory and regulatory filings or engagements.
Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit
Services of Independent Auditors
The Audit Committee's policy is to pre-approve all audit and permissible
non-audit services provided by the independent auditors. These services may
include audit services, audit-related services, tax services, and other
services. Pre-approval is generally provided for up to one year, and any
pre-approval is detailed as to the particular service or category of services
and is generally subject to a specific budget. The independent auditors and
management are required to periodically report to the Audit Committee regarding
the extent of services provided by the independent auditors in accordance with
this pre-approval and the fees for the services performed to date. The Audit
Committee may also pre-approve particular services on a case-by-case basis.
17
KOMODO, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
March 31, 2008 and 2007
1
C O N T E N T S
Report of Independent Registered Public Accounting Firm.................. 3
Balance Sheets........................................................... 4
Statements of Operations................................................. 5
Statements of Stockholders' Deficit...................................... 6
Statements of Cash Flows................................................ 16
Notes to the Financial Statements....................................... 17
2
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
-------------------------------------------------------
Board of Directors
Komodo, Inc.
We have audited the accompanying balance sheet of Komodo, Inc. (a development
stage company), as of March 31, 2008 and 2007, and the related statements of
operations, stockholders' deficit, and cash flows for the years ended March 31,
2008, 2007 and 2006 and the amounts included in the cumulative column in the
statements of operations, stockholders' deficit equity and cash flows for the
period from April 1, 2005 through March 31, 2008. 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 audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform, an audit of its internal
controls over financial reporting. Our audit includes consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. 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 audits provide 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 Komodo, Inc. (a development
stage company) as of March 31, 2008 and 2007 and the results of operations and
cash flows for the years ended March 31, 2008, 2007 and 2006 and the amounts
included in the cumulative column in the statements of operations, stockholders'
deficit and cash flows for the period from April 1, 2005 through March 31, 2008
in conformity with United States generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 3 to the
financial statements, the Company is a development stage company with no
significant operating results to date, a working capital deficiency and a
stockholders' deficiency which 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 3. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
CHISHOLM, BIERWOLF & NILSON LLC
Bountiful, Utah
July 28, 2008
3
KOMODO, INC.
(A Development Stage Company)
Balance Sheets
ASSETS
------
March 31, March 31,
2008 2007
------------- -------------
CURRENT ASSETS
Cash and cash equivalents $ 102 $ 687
------------ ------------
Total Current Assets 102 687
------------ ------------
EQUIPMENT, NET - 136,943
------------ ------------
TOTAL ASSETS $ 102 $ 137,630
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 71,918 $ 182,170
Related party payable 200,695 62,895
------------ ------------
Total Current Liabilities 272,613 245,065
------------ ------------
STOCKHOLDERS' DEFICIT
Preferred stock; 10,000,000 shares
authorized at $0.001 par value, 2,000,000
shares issued and outstanding 2,000 2,000
Common stock; 100,000,000 shares
authorized at $0.001 par value, 25,926,247
shares issued and outstanding 25,926 25,926
Additional paid-in capital 17,987,173 17,982,182
Deficit accumulated during the development stage (18,287,610) (18,117,543)
------------ ------------
Total Stockholders' Deficit (272,511) (107,435)
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 102 $ 137,630
============ ============
The accompanying notes are an integral part of these financial statements.
4
KOMODO, INC.
(A Development Stage Company)
Statements of Operations
From Inception on
November 10,
For the For the For the 1995
Year Ended Year Ended Year Ended Through
March 31, March 31, March 31, March 31,
2008 2007 2006 2008
------------- ------------ ------------- -------------
REVENUES $ - $ 10,724 $ - $ 10,724
COST OF SALES - - - -
GROSS MARGIN - 10,724 - 10,724
------------ ----------- ------------ ------------
OPERATING EXPENSES
Impairment of asset 136,943 - - 136,993
Research and development - 231,761 300,379 647,390
Depreciation and amortization - 50,702 46,689 290,323
Management fees-related parties - 480,000 480,000 1,297,500
General and administrative 33,124 896,772 1,637,984 5,216,610
------------ ----------- ------------ ------------
Total Operating Expenses 170,067 1,659,235 2,465,052 7,588,816
------------ ----------- ------------ ------------
INCOME FROM OPERATIONS (170,067) (1,648,511) (2,465,052) (7,578,092)
OTHER INCOME (EXPENSE)
Interest expense - - - (5,464)
Total Other Income (Expense) - - - (5,464)
LOSS BEFORE DISCONTINUED OPERATIONS (170,067) (1,648,511) (2,465,052) (7,583,556)
GAIN (LOSS) FROM DISCONTINUED
OPERATIONS - - 205,676 (10,704,054)
------------
NET LOSS $ (170,067) $(1,648,511) $ (2,259,376) $(18,287,610)
============ =========== ============ ============
BASIC AND DILUTED LOSS PER SHARE $ (0.01) $ (0.08) $ (0.16)
============ =========== ============
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 25,926,247 21,145,495 14,355,741
============ =========== ============
The accompanying notes are an integral part of these financial statements
5
KOMODO, INC.
(A Development Stage Company)
Statements of Stockholders' Deficit
Deficit
Accumulated
Preferred Stock Common Stock Additional Stock Other During the Total
---------------- --------------- Paid-In Subscriptions Deferred Comprehensive Development Stockholders'
Shares Amount Shares Amount Capital Receivable Compensation Income(Loss) Stage Deficit
--------- -------- ------- ------ ----------- ---------- ------------ ------------ ------------ ------------
Balance at
November
10, 1995- - - - - - $ - $ - $ - $ - $ -
(inception)
Issuance of
common stock
for cash at
$0.00 per share - - - - - - - - - -
Currency
translation
adjustment - - - - - - (1,230) - - (1,230)
Net loss for
the year ended
March 31, 1996 - - - - - - - - (157,549) (157,549)
--------- -------- ------- ------ ----------- --------- ----------- ---------- ----------- -----------
Balance,
March 31, 1996 - - - - - - - (1,230) (157,549) (158,779)
Issuance of
common stock
for cash at
$28.32 per share - - 38,467 39 1,089,448 - - - - 1,089,487
Issuance of
common stock for
services at
$57.08 per share - - 1,534 2 87,554 - - 8,542 - 96,098
Net loss for the
year ended March
31, 1997 - - - - - - - - (157,549) (157,549)
--------- -------- ------- ------ ----------- --------- ----------- ---------- ----------- -----------
Balance,
March 31, 1997 - - 40,001 41 1,177,002 - - 7,312 (1,545,938) (361,583)
Recapitalization
(Note 1) - - 164,120 164 393,898 - - - - 394,062
The accompanying notes are an integral part of these financial statements.
6
KOMODO, INC.
(A Development Stage Company)
Statements of Stockholders' Deficit
Deficit
Accumulated
Preferred Stock Common Stock Additional Stock Other During the Total
---------------- --------------- Paid-In Subscriptions Deferred Comprehensive Development Stockholders'
Shares Amount Shares Amount Capital Receivable Compensation Income(Loss) Stage Deficit
--------- -------- ------- ------ ----------- ---------- ------------ ------------ ------------ ------------
Issuance of common
stock for cash at
$34.65 per share - - 81,435 82 2,822,045 (100,000) - - - 2,722,127
Issuance of common
stock for services
at $26.28 per share - - 44,887 45 1,179,581 (154,281) - - - 1,025,345
Issuance of
warrants - - - - 17,220 - - - - 17,220
Issuance of
common stock for
debt at $19.51
per share - - 51,040 51 995,668 - - - - 995,719
Issuance of
common stock for
properties at
$74.99 per share - - 7,334 7 549,993 - - - - 550,000
Issuance of
preferred
stock for
services at
$0.18
per share 2,000,000 200,000 - - 160,000 - - - - 360,000
Currency
translation
adjustment - - - - - - 260,719 - - 260,719
Net loss for
the year
ended March
31, 1998 - - - - - - - - (3,332,577) (3,332,577)
--------- ------- ------- ------ ----------- --------- ----------- ---------- ----------- -----------
Balance,
March
31, 1998 2,000,000 200,000 388,817 390 7,295,407 (254,281) - 268,031 (4,878,515) 2,631,032
The accompanying notes are an integral part of these financial statements.
7
KOMODO, INC.
(A Development Stage Company)
Statements of Stockholders' Deficit
Deficit
Accumulated
Preferred Stock Common Stock Additional Stock Other During the Total
---------------- --------------- Paid-In Subscriptions Deferred Comprehensive Development Stockholders'
Shares Amount Shares Amount Capital Receivable Compensation Income(Loss) Stage Deficit
--------- -------- ------- ------ ----------- ---------- ------------ ------------ ------------ ------------
Issuance of
common stock
for cash at
$10.72 per
share - - 114,178 114 1,224,166 - - - - 1,224,280
Issuance of
common stock
for services
at $10.97 per
share - - 136,363 137 1,495,085 - - - - 1,495,222
Receipt of
subscriptions
receivable - - - - 254,281 - - - - 254,281
Issuance of
common stock
for debt at
$15.00 per
share - - 1,600 2 23,998 - - - - 24,000
Currency
translation
adjustm-nt - - - - - - (268,031) - - (268,031)
Net loss for
the year
ended March 31,
1999 - - - - - - - - (6,031,215) (6,031,215)
--------- ------- ------- ------ ----------- --------- ----------- ---------- ------------ -----------
Balance,
March 31,
1999 2,000,000 200,000 640,958 643 10,038,656 - - - (10,909,730) (670,431)
Issuance of
common stock
for debt at
$5.31 per
share - - 98,160 98 520,848 - - - - 520,946
The accompanying notes are an integral part of these financial statements.
8
KOMODO, INC.
(A Development Stage Company)
Statements of Stockholders' Deficit
Deficit
Accumulated
Preferred Stock Common Stock Additional Stock Other During the Total
---------------- --------------- Paid-In Subscriptions Deferred Comprehensive Development Stockholders'
Shares Amount Shares Amount Capital Receivable Compensation Income(Loss) Stage Deficit
--------- -------- ------- ------ ----------- ---------- ------------ ------------ ------------ ------------
Issuance of
common stock
for cash at
$3.75 per
share - 13,334 13 49,987 - - - - - 50,000
Issuance of
common stock
for services
at $3.48 per
share - 158,972 159 553,732 - - - - - 553,891
Issuance of
common stock
for license
at $3.75 per
share - 33,334 33 124,967 - - - - - 125,000
Cancellation
of common
stock - - (334) (1) (3,749) - - - - (3,750)
Change in par
value of
preferred stock - (198,000) - - 198,000 - - - - -
Net loss for
the year
ended March
31, 2000 - - - - - - - - (796,123) (796,123)
--------- ------- ------- ------ ----------- ---------- ----------- ---------- ------------ -----------
Balance,
March 31,
2000 2,000,000 $ 2,000 944,424 $ 945 $11,482,441 $ - $ - $ - $(11,705,853) $ (220,467)
========= ======= ======= ====== =========== ========== =========== ========== ============ ===========
The accompanying notes are an integral part of these financial statements.
9
KOMODO, INC.
(A Development Stage Company)
Statements of Stockholders' Deficit
Deficit
Accumulated
Preferred Stock Common Stock Additional Stock Other During the Total
---------------- -------------- Paid-In Subscriptions Deferred Comprehensive Development Stockholders'
Shares Amount Shares Amount Capital Receivable Compensation Income(Loss) Stage Deficit
--------- -------- ------- ------ ----------- ---------- ------------ ------------ ------------ ------------
Balance,
March 31,
2000 2,000,000 2,000 944,424 945 11,482,441 - $ - - $(11,705,853) $ (220,467)
Issuance of
common stock
for services at
$0.60 per share - - 13,334 13 7,987 - - - - 8,000
Issuance of
common stock
for cash at
$0.04 per share - - 649,233 649 23,697 (24,346) - - - -
Additional expense
through extension
and revaluation of
warrants - - - - 51,761 - - - - 51,761
Net loss for the
year ended March
31, 2001 - - - - - - - - (75,091) (75,091)
--------- ------- ------- ------ ----------- ---------- ----------- ---------- ------------ -----------
Balance,
March 31,
2001 2,000,000 2,000 1,606,991 1,607 11,565,886 (24,346) - - (11,780,944) (235,797)
Issuance of
common stock
for cash at
$0.20 per share - - 1,206,668 1,207 236,543 (237,750) - - - -
Payables for
subscriptions
receivable - - - - - 11,510 - - - 11,510
Receipt of
subscriptions
receivable - - - - - 3,575 - - - 3,575
Write off of
subscriptions
receivable - - - - - 250 - - - 250
Issuance of
common stock
for services at
$0.07 per share - - 2,271,671 2,272 150,978 - - - - 153,250
Issuance of
common stock
for deferred
services at
$0.07 per share - - 1,359,000 1,359 338,391 - (339,750) - - -
Receipt of
deferred services - - - - - - 110,000 - - 110,000
Issuance of
common stock
for debt at
$0.02 per share - - 469,333 469 8,331 - - - - 8,800
Issuance of
common stock
for technology at
$0.00 per share - - 200,000 200 (150) - - - - 50
Additional expense
through issuance
of warrants - - - - 428,600 - - - - 428,600
The accompanying notes are an integral part of these financial statements.
10
KOMODO, INC.
(A Development Stage Company)
Statements of Stockholders' Deficit
Deficit
Accumulated
Preferred Stock Common Stock Additional Stock Other During the Total
---------------- -------------- Paid-In Subscriptions Deferred Comprehensive Development Stockholders'
Shares Amount Shares Amount Capital Receivable Compensation Income(Loss) Stage Deficit
--------- -------- ------- ------ ----------- ---------- ------------ ------------ ------------ ------------
Fractional shares
issued - - 7,937 8 (8) - - - - -
Net loss for the
year ended March
31, 2002 - - - - - - - - (720,206) (720,206)
Balance,
March 31,
2002 2,000,000 2,000 7,121,600 7,122 12,728,571 (246,761) (229,750) - (12,501,150 (239,968)
Issuance of
common stock
for services at
$0.60 per share - - 20,000 20 11,980 - - - - 12,000
Issuance of
common stock
for services at
$0.21 per share - - 400,000 400 83,600 - - - - 84,000
Receipt of
deferred services - - - - - - 229,750 - - 229,750
Fractional shares
corrected - - (3,140) (3) 3 - - - - -
Related party
services received
for stock
subscription
receivable - - - - - 10,250 - - - 10,250
Net loss for the
year ended March
31, 2003 - - - - - - - - (362,640) (362,640)
--------- ------- ------- ------ ----------- ---------- ----------- ---------- ------------ -----------
Balance,
March 31,
2003 2,000,000 2,000 7,538,460 7,539 12,824,154 (236,511) - - (12,863,790) (266,608)
Additional
expense
through issuance
of options - - - - 15,750 - - - - 15,750
Issuance of
common stock
for cash at
$0.01 per share - - 1,500,000 1,500 148,500 (150,000) - - - -
Issuance of
common stock
for cash at
$0.50 per share - - 450,000 450 224,550 - - - - 225,000
Issuance of
common stock
for cash at
$0.75 per share - - 373,333 373 279,626 - - - - 279,999
Debt forgiven
by a shareholder - - - - 90,705 - - - - 90,705
Receipt of
deferred services - - - - - 49,011 - - - 49,011
Write off of
subscriptions
receivable - - - - - 187,500 - - - 187,500
The accompanying notes are an integral part of these financial statements.
11
KOMODO, INC.
(A Development Stage Company)
Statements of Stockholders' Deficit
Deficit
Accumulated
Preferred Stock Common Stock Additional Stock Other During the Total
---------------- -------------- Paid-In Subscriptions Deferred Comprehensive Development Stockholders'
Shares Amount Shares Amount Capital Receivable Compensation Income(Loss) Stage Deficit
--------- -------- ------- ------ ----------- ---------- ------------ ------------ ------------ ------------
Stock offering costs - - - - (55,500) - - - - (55,500)
Net loss for
the year ended
March 31, 2004 - - - - - - - - (533,608) (533,608)
--------- ------- ------- ------ ----------- ---------- ----------- ---------- ------------ -----------
Balance,
March 31,
2004 2,000,000 $ 2,000 9,861,793 $9,862 $13,527,785 $(150,000) $ - $ - $(13,397,398) $ (7,751)
========= ======= ======= ====== =========== ========== =========== ========== ============ ===========
The accompanying notes are an integral part of these financial statements.
12
KOMODO, INC.
(A Development Stage Company)
Statements of Stockholders' Deficit
Deficit
Accumulated
Preferred Stock Common Stock Additional Stock Other During the Total
---------------- -------------- Paid-In Subscriptions Deferred Comprehensive Development Stockholders'
Shares Amount Shares Amount Capital Receivable Compensation Income(Loss) Stage Deficit
--------- -------- ------- ------ ----------- ---------- ------------ ------------ ------------ ------------
Balance,
March 31,
2004 2,000,000 $ 2,000 9,861,793 $9,862 $13,527,785 $(150,000) $ - $ - $(13,397,398) $ (7,751)
Issuance of
common stock
for cash at
$1.00 per share - - 147,000 147 146,853 - - - - 147,000
Issuance of
common stock
for cash at
$1.50 per share - - 35,000 35 52,465 - - - - 52,500
Issuance of
common stock
for cash at
$0.35 per share - - 500,000 500 174,500 (175,000) - - - -
Issuance of
common stock
for cash at
$0.78 per share - - 500,000 500 389,500 (390,000) - - - -
Issuance of
common stock
for services at
$1.10 per share - - 5,000 5 5,495 - - - - 5,500
Issuance of
common stock
for cash at
$0.90 per share - - 375,000 375 337,125 - - - - 337,500
Issuance of
common stock
for cash at
$1.00 per share - - 50,000 50 49,950 - - - - 50,000
Issuance of
common stock
for services at
$0.83 per share - - 1,700,000 1,700 1,409,300 - - - - 1,411,000
Issuance of
common stock
for cash at
$0.90 per share - - 750,000 750 674,250 - - - - 675,000
Receipt of
subscriptions
receivable - - - - - 150,000 - - - 150,000
Issuance of
common stock
for cash at
$1.00 per share - - 170,000 170 169,830 - - - - 170,000
Stock offering
costs - - - - (1,574,750) - - - - (1,574,750)
Net loss for
the year ended
March 31, 2005 - - - - - - - - (812,258) (812,258)
--------- ------- ------- ------ ----------- ---------- ----------- ---------- ------------ -----------
Balance,
March 31,
2005 2,000,000 2,000 14,093,793 14,094 15,362,303 (565,000) - - (14,209,656) 603,741
The accompanying notes are an integral part of these financial statements.
13
KOMODO, INC.
(A Development Stage Company)
Statements of Stockholders' Deficit
Deficit
Accumulated
Preferred Stock Common Stock Additional Stock Other During the Total
---------------- -------------- Paid-In Subscriptions Deferred Comprehensive Development Stockholders'
Shares Amount Shares Amount Capital Receivable Compensation Income(Loss) Stage Deficit
--------- -------- ------- ------ ----------- ---------- ------------ ------------ ------------ ------------
Issuance of
common stock
for cash at
$0.88 per share - - 300,000 300 263,700 - - - - 264,000
Issuance of
common stock
for cash at
$1.00 per share - - 25,000 25 24,975 - - - - 25,000
Issuance of
common stock
for cash at
$1.00 per share - - 320,000 320 319,680 (40,000) - - - 280,000
Issuance of
common stock
for services at
$0.71 per share - - 150,000 150 106,350 - - - - 106,500
Additional
expense through
issuance of
warrants and
options - - - - 808,719 - - - - 808,719
Receipt of
subscriptions
receivable - - - - - 109,500 - - - 109,500
Stock offering
costs - - - - (23,000) - - - - (23,000)
Net loss for
the year ended
March 31, 2006 - - - - - - - - (2,259,376) (2,259,376)
--------- ------- ------- ------ ----------- ---------- ----------- ---------- ------------ -----------
Balance,
March 31,
2006 2,000,000 2,000 14,888,793 14,889 16,862,727 (495,500) - - (16,469,032) (84,916)
Issuance of
common stock
for services at
$0.58 per share - - 171,000 171 99,009 - - - - 99,180
Issuance of
common stock
for cash at
$0.80 per share - - 25,000 25 19,975 - - - - 20,000
Issuance of
common stock
for cash at
$0.75 per share - - 13,333 13 9,987 - - - - 10,000
Issuance of
common stock
for cash at
$0.50 per share - - 60,000 60 29,940 - - - - 30,000
Issuance of
common stock
for cash at
$0.44 per share - - 50,000 50 21,950 - - - - 22,000
The accompanying notes are an integral part of these financial statements.
14
KOMODO, INC.
(A Development Stage Company)
Statements of Stockholders' Deficit
Deficit
Accumulated
Preferred Stock Common Stock Additional Stock Other During the Total
---------------- -------------- Paid-In Subscriptions Deferred Comprehensive Development Stockholders'
Shares Amount Shares Amount Capital Receivable Compensation Income(Loss) Stage Deficit
--------- -------- ------- ------ ----------- ---------- ------------ ------------ ------------ ------------
Issuance of
common stock
for cash at
$0.75 per share - - 313,333 313 234,687 - - - - 235,000
Issuance of
common stock
for cash at
$0.50 per share - - 40,000 40 19,960 - - - - 20,000
Issuance of
common stock
for services at
$0.40 per share - - 150,000 150 59,850 - - - - 60,000
Issuance of
common stock
for services at
$0.33 per share - - 27,500 28 9,047 - - - - 9,075
Issuance of
common stock
for services at
$0.15 per share - - 333,334 333 49,667 - - - - 50,000
Issuance of
common stock
for debt at
$0.06 per share - - 9,853,954 9,854 581,383 - - - - 591,237
Receipt of
subscriptions
receivable - - - - - 495,500 - - - 495,500
Stock offering
costs - - - - (16,000) - - - - (16,000)
Net loss for
the year ended
March 31, 2007 - - - - - - - - (1,648,511) (1,648,511)
Balance,
March 31,
2007 2,000,000 2,000 25,926,247 25,926 17,982,182 - - - (18,117,543) (107,435)
Contributed
capital - - - - 4,991 - - - - 4,991
Net loss for
the year ended
March 31, 2008 - - - - - - - - (170,067) (170,067)
--------- ------- ------- ------ ----------- ---------- ----------- ---------- ------------ -----------
Balance,
March 31,
2008 2,000,000 $ 2,000 25,926,247 $25,926 $17,987,173 $ - $ - $ - $(18,287,610) $ (272,511)
========= ======= ======= ====== =========== ========== =========== ========== ============ ===========
The accompanying notes are an integral part of these financial statements.
15
KOMODO, INC.
(A Development Stage Company)
Statements of Cash Flows
For the For the For the From Inception
Year Ended Year Ended Year Ended Through
March 31, March 31, March 31, March 31,
2008 2007 2006 2008
------------- ------------- -------------- --------------
OPERATING ACTIVITIES
Net loss $ (170,067) $ (1,648,511) $ (2,259,376) $ (18,287,610)
Adjustments to reconcile net
loss to net cash used by
operating activities:
Depreciation and amortization - 50,702 46,689 313,806
Stock issued for services - 765,755 106,500 5,240,039
Stock issued for accounts payable - 591,237 - 600,037
Bad debt expense - - - 224,941
Impairment of assets 136,943 - - 4,051,427
Warrants and options issued for services - - 808,719 1,322,050
Currency translation - - - (168,626)
Forgiveness of debt by shareholder - - - 90,705
Changes in operating assets and liabilities:
Change in accounts receivable - - 51,559 (213,312)
Change in prepaid expenses - 9,160 60,840 (85,365)
Change in reserve for discontinued operations - (205,676) 64,042
Change in accounts payable 7,838 (33,777) 198,476 438,041
------------ ------------ ------------- -------------
Net Cash Used by Operating Activities (25,286) (265,434) (1,192,269) (6,409,825)
------------ ------------ ------------- -------------
INVESTING ACTIVITIES
Purchase of property and equipment - (3,975) (45,744) (3,168,281)
Net Cash Used by Investing Activities - (3,975) (45,744) (3,168,281)
FINANCING ACTIVITIES
Stock offering costs - (16,000) (23,000) (248,249)
Contributed capital 4,991 - - 4,991
Proceeds from common stock issued - 285,000 678,500 8,392,184
Proceeds from notes payable 19,710 - - 1,429,282
Net Cash Used by Financing Activities 24,701 269,000 655,500 9,578,208
NET DECREASE IN CASH (585) (409) (582,513) 102
CASH AT BEGINNING OF PERIOD 687 1,096 583,609 -
CASH AT END OF PERIOD $ 102 $ 687 $ 1,096 $ 102
============ ============ ============= =============
SUPPLIMENTAL DISCLOSURES OF
CASH FLOW INFORMATION
CASH PAID FOR:
Interest $ - $ - $ - $ 114
Income Taxes $ - $ - $ - $ -
NON-CASH FINANCING ACTIVITIES:
Common stock issued for acquisition $ - $ - $ - $ 394,062
Common stock issued for debt $ - $ 591,237 $ - $ 1,810,756
Common stock issued for assets $ - $ - $ - $ 675,000
Common stock issued for services $ - $ 765,755 $ 106,500 $ 5,240,039
The accompanying notes are an integral part of these financial statements.
16
KOMODO, INC.
(A Development Stage Company)
Notes to the Financial Statements
March 31, 2008 and 2007
NOTE 1 - ORGANIZATION AND HISTORY
The financial statements presented are those of Komodo, Inc. ("the
Company"). The Company was originally incorporated as Thermacor
Technology, Inc. on September 21, 1984 under the laws of the State of
Nevada and as a result of a transaction with a British Columbia
corporation, Golden Panther Resources Ltd. ("GPR") effectively became
acquired by because the shareholders of GPR controlled the Company
after the acquisition. All companies that had been merged into the
Company have been dissolved and are no longer considered to be
subsidiaries. The only surviving entity is Komodo, Inc. On March 31,
1999, the Board of Directors of the Company decided to discontinue its
mining operations and to focus on software development.
The Company is in the development stage and has generated no revenue.
It has been funded primarily through stock sales and loans from
officers and shareholders. The Company's prospects are subject to the
risks, expenses, and uncertainties frequently encountered in the
software development industry. During 2007, the Company was
unsuccessful in raising additional capital for the development of its
software and accordingly closed its office and abandoned its equipment.
The Company is currently seeking new business opportunities.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
a. Accounting Method
The Company's financial statements are prepared using the accrual
method of accounting. The Company has elected a March 31 year-end.
b. Basic Loss Per Share
Year Ended
March 31, 2008
-------------------------------------------------------------------
Loss Shares Per Share
(Numerator) (Denominator) Amount
----------------- ------------- ------------------
$ (170,067) 25,926,247 $ (0.01)
================= ================= ================
Year Ended
March 31, 2007
----------------------------------------------------------------
Loss Shares Per Share
(Numerator) (Denominator) Amount
----------------- ------------- ------------------
$ (1,648,511) 21,145,495 $ (0.08)
================== ================= =================
17
KOMODO, INC.
(A Development Stage Company)
Notes to the Financial Statements
March 31, 2008 and 2007
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Continued)
Year Ended
March 31, 2006
----------------------------------------------------------------
Loss Shares Per Share
(Numerator) (Denominator) Amount
----------------- ------------- ------------------
$ (2,259,376) 14,355,741 $ (0.16)
================== ================= =================
The computations of basic loss per share of common stock are based on
the weighted average number of shares outstanding at the date of the
financial statements. Common stock equivalents are not included in the
computation of basic loss per share because they are anti-dilutive. The
Company had 7,550,000 in warrants as common stock equivalents
outstanding at March 31, 2008, 2007 and 2006, respectively. The Company
also had 1,000,000, 1,805,000 and 2,805,000 in options as common stock
equivalents outstanding at March 31, 2008, 2007 and 2006, respectively.
c. Provision for Taxes
Deferred taxes are provided on a liability method whereby deferred tax
assets are recognized for deductible temporary differences and
operating loss and tax credit carry forwards and deferred tax
liabilities are recognized for taxable temporary differences. Temporary
differences are the differences between the reported amounts of assets
and liabilities and their tax bases. Deferred tax assets are reduced by
a valuation allowance when, in the opinion of management, it is more
likely that not that some portion or all of the deferred tax assets
will not be realized. Deferred tax assets and liabilities are adjusted
for the effects of changes in tax laws and rates on the date of
enactment.
Net deferred tax assets consist of the following components as of March
31, 2008 and 2007:
2008 2007
--------------- ---------------
Deferred tax assets
NOL Carryover $ 2,619,117 $ 2,554,152
Related Party Liabilities - -
Deferred tax liabilities:
Depreciation (41,076) (41,076)
Valuation allowance (2,578,041) (2,513,076)
--------------- ---------------
Net deferred tax asset $ - $ -
=============== ===============
18
KOMODO, INC.
(A Development Stage Company)
Notes to the Financial Statements
March 31, 2008 and 2007
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Continued)
The income tax provision differs from the amount of income tax
determined by applying the U.S. federal income tax rate of 39% to
pretax income from continuing operations for the years ended March 31,
2008, 2007 and 2006 due to the following:
2008 2007 2006 .
------------ ------------ ------------
Book loss $ (64,965) $ (642,919) $ (881,157)
Related party services - (70,019) 70,019
Meals and entertainment - 2,567 3,568
Stock for services/options - 537,027 315,401
Valuation allowance 64,965 173,344 492,169
----------- ----------- -----------
$ - $ - $ -
=========== =========== ===========
At March 31, 2008, the Company had net operating loss carryforwards of
approximately $6,773,000 that may be offset against future taxable
income from the year 2007 through 2028. No tax benefit has been
reported in the March 31, 2008 financial statements since the potential
tax benefit is offset by a valuation allowance of the same amount.
Due to the change in ownership provisions of the Tax Reform Act of
1986, net operating loss carryforwards for Federal income tax reporting
purposes are subject to annual limitations. Should a change in
ownership occur, net operating loss carryforwards may be limited as to
use in the future.
d. Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
e. Preferred Stock
The Company has authorized 10,000,000 shares of preferred stock, par
value $0.001 per share.
2,000,000 shares of the Company's preferred stock have been designated
as a Class A issuance. Each share is convertible into 5 shares of
common stock at $0.01 per share.
19
KOMODO, INC.
(A Development Stage Company)
Notes to the Financial Statements
March 31, 2008 and 2007
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Continued)
f. Foreign Currency Translation
Monetary assets and liabilities denominated in foreign currencies are
translated into United States dollars at the period and exchange rate.
Non-monetary assets are translated at the historical exchange rate and
all income and expenses are translated at the exchange rates prevailing
during the period. Foreign exchange currency translation adjustments
are included in the stockholders' equity section.
g. Fair Value of Financial Instruments
As at March 31, 2008, the fair value of cash and accounts and advances
payable, including amounts due to and from related parties, approximate
carrying values because of the short-term maturity of these
instruments.
h. Newly Issued Accounting Pronouncements
During the year ended March 31, 2008, the Company adopted the following
accounting pronouncements:
In December 2007, the FASB issued SFAS 160, "Noncontrolling interests
in Consolidated Financial Statements - an amendment of ARB No. 51".
This Statement amends ARB 51 to establish accounting and reporting
standards for the noncontrolling interest in a subsidiary and for the
deconsolidation of a subsidiary. It clarifies that a noncontrolling
interest in a subsidiary is an ownership interest in the consolidated
entity that should be reported as equity in the consolidated financial
statements. This Statement is effective for fiscal years beginning on
or after December 15, 2008. Early adoption is not permitted. Management
is currently evaluating the effects of this statement, but it is not
expected to have any impact on the Company's financial statements.
In February 2007 , the FASB issued SFAS 159, "The Fair Value Option for
Financial Assets and Financial Liabilities. SFAS 159 creates a fair
value option allowing an entity to irrevocably elect fair value as the
initial and subsequent measurement
h. Newly Issued Accounting Pronouncements (Continued) attribute for
certain financial assets and financial liabilities, with changes in
fair value recognized in earnings as they occur. SFAS 159 also requires
an entity to report those financial assets and financial liabilities
measured at fair value in a manner that separates those reported fair
values from the carrying amounts of assets and liabilities measured
using another measurement attribute on the face of the statement of
financial position. Lastly, SFAS 159 requires an entity to provide
information that would allow users to understand the effect on earnings
of changes in the fair value on those instruments selected for the fair
20
KOMODO, INC.
(A Development Stage Company)
Notes to the Financial Statements
March 31, 2008 and 2007
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Continued)
value election. SFAS 159 is effective for fiscal years beginning after
November 15, 2007 with early adoption permitted. The Company is
continuing to evaluate SFAS159 and to assess the impact on its results
of operations and financial condition if an election is made to adopt
the standard.
In June 2007, the Financial Accounting Standards Board issued FAS No.
141R, Business Combinations - This Statement implements certain
revisions to SFAS 141, including changes to the measurement of purchase
consideration, measurement of goodwill, capitalization of in-process
research and development, and definition of the acquisition date. This
statement is effective for fiscal years, and interim periods within
those fiscal years, beginning on or after December 15, 2008. The
implementation of this pronouncement had no effect on the Company's
consolidated financial statements.
In September 2006, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 157, "Fair Value
Measurements" which defines fair value, establishes a framework for
measuring fair value in generally accepted accounting principles
(GAAP), and expands disclosures about fair value measurements. Where
applicable, SFAS No. 157 simplifies and codifies related guidance
within GAAP and does not require any new fair value measurements. SFAS
No. 157 is effective for financial statements issued for fiscal years
beginning after November 15, 2007, and interim periods within those
fiscal years. Earlier adoption is encouraged. The Company does not
expect the adoption of SFAS No. 157 to have a significant effect on its
financial position or results of operation.
i. Fixed Assets
Fixed assets are recorded as cost. Major additions and improvements are
capitalized. Minor replacements, maintenance and repairs that do not
extend the useful life of the assets are expensed as incurred.
Depreciation of property and equipment is determined using the
straight-line method over their useful lives, primarily 5 years. During
the year ended March 31, 2008, the Company recorded an impairment of
$136,943 for the remaining book value of the fixed assets due to the
abandonment of its offices.
Depreciation expense from continuing operations for the years ended
March 31, 2008, 2007 and 2006 was $0, $50,702 and $46,689,
respectively.
j. Concentration of Risk
Financial instruments which potentially subject the Company to credit
risk consist primarily of cash in bank accounts. The Company maintains
21
KOMODO, INC.
(A Development Stage Company)
Notes to the Financial Statements
March 31, 2008 and 2007
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Continued)
its cash in a bank deposit account insured by the Federal Deposit
Insurance Corporation (FDIC) up to $100,000. The Company's accounts, at
times, may exceed federally insured limits.
k. Share Based Payments
The Company has adopted the fair value based method of accounting for
stock-based employee compensation in accordance with Statement of
Financial Accounting Standards Number 123 (REVISED 2004), "Share-Based
Payment" (SFAS 123[R]). In accordance with SFAS 123[R], option expense
of $-0-, $756,755 and $915,219 was recognized for the years ended March
31, 2008, 2007 and 2006, respectively. The expense was calculated using
the Black-Scholes valuation model.
NOTE 3 - GOING CONCERN
The Company's financial statements are prepared using United States
generally accepted accounting principles applicable to a going concern
which contemplates the realization of assets and liquidation of
liabilities in the normal course of business. However, the Company has
not an established a reliable source of revenues sufficient to cover
its operating costs and to allow it to continue as a going concern
which raises substantial doubt about its ability to continue as a going
concern. The Company has abandoned the development of its secure e-mail
service and is seeking new business opportunities. In the interim the
Company's management has committed to meeting its minimal operating
costs.
The ability of the Company to continue as a going concern is dependent
upon its ability to successfully accomplish the plan described in the
preceding paragraph and eventually attain profitable operations. The
accompanying financial statements do not include any adjustments that
may be necessary if the Company is unable to continue as a going
concern.
NOTE 4 - OPTIONS AND WARRANTS
On September 27, 2002, the Company established the 2002 stock option
plan. The Board of Directors of the Company has sole and complete
authority to determine the employees to whom options shall be granted,
the number of each grant and any additional conditions and limitations.
The total number of shares of common stock subject to outstanding
options shall be 1,000,000 shares. The exercise price shall not be less
than the fair market value of the underlying shares.
On August 8, 2003, the Company established the 2003 stock option plan.
The Board of Directors of the Company has sole and complete authority
to determine the employees and/or consultants to who options shall be
22
KOMODO, INC.
(A Development Stage Company)
Notes to the Financial Statements
March 31, 2008 and 2007
NOTE 4 - OPTIONS AND WARRANTS (Continued)
granted, the number of each grant and any additional conditions and
limitations. The total number of shares of common stock subject to
outstanding options shall be 1,150,000 shares. The exercise price shall
not be less than the fair market value of the underlying shares.
On February 12, 2004, the Company established the 2004 stock option
plan. The Board of Directors of the Company has sole and complete
authority to determine the employees and/or consultants to who options
shall be granted, the number of each grant and any additional
conditions and limitations. The total number of shares of common stock
subject to outstanding options shall be 1,000,000 shares. The exercise
price at the date of grant shall not be less than the fair market value
of the underlying shares.
On December 1, 2004, in connection with the private placement of its
common stock, the Company granted options to purchase 500,000 shares of
its common stock at $1.50 per share, 500,000 shares of its common stock
at $3.00 per share and 500,000 shares of its common stock at $5.00 per
share.
On November 11, 2005, the Company established the 2005 stock option
plan to promote the interests of the Company. The Board of Directors of
the Company has sole and complete authority to determine the employees
and/or consultants to who options shall be granted, the number of each
grant and any additional conditions and limitations. The total number
of shares of common stock subject to outstanding options shall be
2,200,000 shares. The exercise price is $0.72 per share. On the same
date 2,200,000 options were granted to various consultants. The
grantees vested for 25% of the options with additional vesting to be
determined by the board of directors. The Company recognized an expense
of $310,214 for the value of the options vested using the Black-Scholes
formula and assumes a 10 year maturity, a risk free interest rate of
2.81% and a volatility of 73%.
On December 9, 2005, the Company established the 2005 stock option plan
to promote the interests of the Company. The Board of Directors of the
Company has sole and complete authority to determine the employees
and/or consultants to who options shall be granted, the number of each
grant and any additional conditions and limitations. The total number
of shares of common stock subject to outstanding options shall be
2,200,000 shares. The exercise price is $1.00 per share. On the same
date 2,200,000 options were granted to various consultants.
The grantees vested for 25% of the options with additional vesting to
be determined by the board of directors. The Company recognized an
expense of $406,205 for the value of the options vested using the
Black-Scholes formula and assumes a 10 year maturity, a risk free
interest rate of 4.54% and a volatility of 60%.
23
KOMODO, INC.
(A Development Stage Company)
Notes to the Financial Statements
March 31, 2008 and 2007
NOTE 4 - OPTIONS AND WARRANTS (Continued)
A summary of the status of the Company's outstanding stock options and
warrants as of March 31, 2008 and 2007 and changes during the years
ended March 31, 2008 and 2007 is presented below:
OPTIONS
-------
2008 2007
---------------- ------------------
Weighted Weighted
Average Average
Exercise Exercise
Shares Price Shares Price
--------- ------ --------- -------
Outstanding, beginning of
year 7,550,000 $ 0.65 7,550,000 $ 0.65
Granted - - - -
Expired/Cancelled - - - -
Exercised - - - -
--------- ------ --------- -------
Outstanding end of year 7,550,000 $ 0.65 7,550,000 $ 0.65
========= ====== ========= =======
Exercisable 3,175,000 $ 0.51 3,175,000 $ 0.51
========= ====== ========= =======
Outstanding Exercisable
------------------------------- --------------------
Number Weighted Number
Outstanding Average Weighted Exercisable Weighted
Range of at Remaining Average at Average
Exercise March 31, Contractual Exercise March 31, Exercise
Prices 2008/2007 Life Price 2008/2007 Price
-------------- --------- ----------- -------- --------- ----------
$ 0.21 to 1.00 7,550,000 6.65 $ 0.65 3,175,000 $ 0.51
============== ========= =========== ======== ========= ==========
$ 0.21 to 1.00 7,550,000 7.65 $ 0.65 3,175,000 $ 0.51
============== ========= =========== ======== ========= ==========
24
KOMODO, INC.
(A Development Stage Company)
Notes to the Financial Statements
March 31, 2008 and 2007
NOTE 4 - OPTIONS AND WARRANTS (Continued)
WARRANTS
--------
2008 2007
---------------- ------------------
Weighted Weighted
Average Average
Exercise Exercise
Shares Price Shares Price
--------- ------ --------- -------
Outstanding, beginning of
year 1,805,000 $ 2.07 2,805,000 $ 2.13
Granted - - - -
Expired/Cancelled (805,000) 1.50 (1,000,000) 2.13
Exercised - - - -
--------- ------ ---------- -------
Outstanding end of year 1,000,000 $ 0.77 1,805,000 $ 2.07
========= ====== ========== =======
Exercisable 1,000,000 $ 0.77 1,805,000 $ 2.07
========= ====== ========== =======
Outstanding Exercisable
------------------------------- --------------------
Number Weighted Number
Outstanding Average Weighted Exercisable Weighted
Range of at Remaining Average at Average
Exercise March 31, Contractual Exercise March 31, Exercise
Prices 2008/2007 Life Price 2008/2007 Price
-------------- --------- ----------- ------------- --------- ----------
$ 0.77 to 1.50 1,000,000 5.87 $0.77 to 1.50 1,000,000 $ 0.77
============== ========= =========== ============= ========= ======
$ 0.77 to 5.00 1,805,000 6.68 $0.77 to 1.50 1,805,000 $ 2.10
============== ========= =========== ============= ========= ======
In December 2006, the Company issued 305,000 warrants in connection
with the private placement of its common stock. Accordingly, a
compensation expense $92,300 was recorded as per the Black-Scholes
calculation and assumes a 10 year maturity, a risk free interest rate
of 2.81% and a volatility of 73%.
NOTE 5 - RELATED PARTIES TRANSACTIONS
The Company contracts with a Canadian company, Real Time, to pay its
expenses in Canada. At March 31, 2008, the Company had a payable to
Real Time for funds advanced for costs incurred totaling $73,852. The
Company also received a cash advance of $1,100 from a shareholder. The
related party payables are non interest bearing, unsecured and due upon
demand. The Company owes $125,743 in accrued compensation and expense
reimbursements to its management. During the year ended March 31, 2008,
shareholders of the Company contributed $4,991 to capital.
25
KOMODO, INC.
(A Development Stage Company)
Notes to the Financial Statements
March 31, 2008 and 2007
NOTE 6 - COMMON STOCK
On September 28, 2005, the Company authorized the issuance of 300,000
shares of common stock at $0.88 per share. The 1,500,000 shares were
issued for advertising services of $264,000.
In November 2005, the Company received payment of $2,000 related to the
subscription receivable.
On November 1, 2005, the Company authorized the issuance of 25,000
shares of common stock at $1.00 per share. The 25,000 shares were
issued for cash.
On December 31, 2005, the Company authorized the issuance of 320,000
shares of common stock at $1.00 per share. The 320,000 shares were
issued for cash of $320,000.
On February 28, 2006, the Company authorized the issuance of 150,000
shares of common stock at $0.71 per share. The 150,000 shares were
issued for advertising services of $80,036.
In March 2006, the Company received payment of $89,500 related to the
subscription receivable.
In April 2006, the Company authorized the issuance of 171,000 shares of
common stock at $0.35 per share for services. The Company also issued
25,000 shares were issued for cash of $20,000.
In June 2006, the Company authorized the issuance of 190,000 shares of
common stock for services valued at $80,000. The Company also issued
326,666 shares for cash of $244,687.
In July 2006, the Company authorized the issuance of 27,500 shares of
common stock for services valued at $4,125.
In August 2006, the Company authorized the issuance of 180,000 shares
of common stock for services valued at $27,000.
In September 2006, the Company authorized the issuance of 153,334
shares of common stock for services valued at $23,000.
In November 2006, the Company authorized the issuance of 9,853,954
shares of common stock for related party debt of $591,237.
26
SIGNATURES
In accordance with the Exchange Act, the Registrant has duly caused this Report
to be signed on its behalf by the undersigned, thereunto duly authorized.
KOMODO, INC.
Dated: July 31, 2008 By: /s/Gordon Muir
------------------
Gordon Muir
President
In accordance with the Exchange Act, this Report has been signed below by the
following persons on behalf of the Registrant, in the capacities, and on the
dates, indicated.
Signature Title Date
/s/ Gordon Muir Director July 31,2008
- ------------------ Chief Executive Officer and
Gordon J. Muir Principal Financial Officer
/s/ Penny Perfect Director July 31,2008
- ------------------- President
Penny Perfect
Certifications
- --------------
17