U.S. SECURITIES AND EXCHANGE
COMMISSION Washington,
D.C. 20549
FORM 10-K
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 2009
Commission File Number: 0-53436
Forex365, Inc.
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(Exact Name of Registrant as Specified in its Charter)
Nevada 85-0290243
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(State or Other Jurisdiction (I.R.S. Employer Identification No.)
of Incorporation or Organization)
190 Lakeview Way
Vero Beach, FL 32963
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(Address of Principal Executive Offices and Zip Code)
(772) 231-7544
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(Registrant's Telephone Number, including Area Code)
Indicate by check mark if the registrant is a well-known seasoned issuer as
defined in Rule 405 of the Securities Act. Yes | | No |X|
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. Yes | | No |X|
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes |X| No | |
Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, or a smaller reporting company.
See the definitions of "large accelerated filer," "accelerated filer" and
"smaller reporting company" in Rule 12b-2 of the Exchange Act (check one):
Large accelerated filer | | Accelerated filer | |
Non-accelerated filer | | Smaller reporting company |X|
(do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as
defined by Rule 12b-2 of the Act). Yes |X| No | |
As of August 11, 2009, there were 1,027,647 shares of stock held by
non-affiliates. As of August 11, 2009, 24,857,647 shares of the common stock of
the registrant were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None.
TABLE OF CONTENTS
Page
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PART I
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Item 1. Business 1
Item 1A. Risk Factors 4
Item 1B. Unresolved Staff Comments 10
Item 2. Properties 10
Item 3. Legal Proceedings 10
Item 4. Submission of Matters to a Vote of Security Holders 10
PART II
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Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity 10
Securities
Item 6. Selected Financial Data 14
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 15
Item 7A. Quantitative and Qualitative Disclosures about Market Risk 18
Item 8. Financial Statements and Supplementary Data 18
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures 34
Item 9A. Controls and Procedures 34
Item 9B. Other Information 34
PART III
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Item 10. Directors, Executive Officers and Corporate Governance 35
Item 11. Executive Compensation 37
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 39
Item 13. Certain Relationships and Related Transactions, Director Independence 40
Item 14. Principal Accounting Fees and Services 41
PART IV
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Item 15. Exhibits and Financial Statement Schedules 42
Signatures 44
Exhibits
Certifications
FORWARD LOOKING STATEMENTS
Statements made in this Form 10-K (the "Annual Report") that are not historical
or current facts are "forward-looking statements" made pursuant to the safe
harbor provisions of Section 27A of the Securities Act of 1933, as amended (the
"Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). These statements often can be identified by the
use of terms such as "may", "will", "expect", "believe", "anticipate",
"estimate", "approximate", or "continue", or the negative thereof. Forex365,
Inc. ("we", "us", "our" or the "Company") intends that such forward-looking
statements be subject to the safe harbors for such statements. The Company
wishes to caution readers not to place undue reliance on any such
forward-looking statements, which speak only as of the date made. Any
forward-looking statements represent management's best judgment as to what may
occur in the future. However, forward-looking statements are subject to risks,
uncertainties and important factors beyond the control of the Company that could
cause actual results and events to differ materially from historical results of
operations and events and those presently anticipated or projected. These
factors include adverse economic conditions, entry of new and stronger
competitors, inadequate capital and unexpected costs. The Company disclaims any
obligation subsequently to revise any forward-looking statements to reflect
events or circumstances after the date of such statement or to reflect the
occurrence of anticipated or unanticipated events.
PART I
Item 1. Business
Business History and Background
We were incorporated under the laws of the State of Nevada on February 8,
1984 under the name Solar Age Industries, Inc. The Company's principal business
activity was the manufacture and sale of solar air and water heating devices. As
of January 1986, the federal energy credits and most state energy credits
expired which severely impacted our ability to market our products, resulting in
a substantial loss for the first two calendar quarters of 1986. We attempted to
diversify our operation, but because of the continuing substantial financial
loses sustained by us, we were forced to file a Chapter 11 petition under the
Bankruptcy Code District of New Mexico. In late 1987, we filed our plan of
reorganization, which was approved by the Bankruptcy Court. Following
distribution to our creditors under the terms of the plan and consummation of
the plan, the bankruptcy case was subsequently closed. Although we continued to
market our products, we did not attain the commercial success for our products
and, subsequently, ceased operations.
In July 1998, pursuant to an Agreement and Plan of Reorganization and, as a
result of a reverse merger, we acquired through our wholly owned subsidiary, SGI
Capital, Inc., an Illinois corporation, a ninety percent interest in JSC NBM
Stroyservice ("NBM"), Russian limited liability company, which was a real estate
development and construction company based in Moscow, Russia. Shortly after the
merger, the Company was unable to develop its operations, due to deteriorating
economic conditions in Russia and the inability of NBM to provide audited
financial statements for the fiscal year ended as of June 30, 1999 in accordance
with the U.S. Generally Accepted Accounting Principles, and we were forced to
rescind the Agreement and Plan of Reorganization.
Reorganization and Change of Control
On November 14, 2007, we entered into a securities purchase agreement
("Purchase Agreement") with KIG Investors II, LLC ("KIG") pursuant to which KIG
agreed to purchase, subject to the satisfaction of certain conditions precedent,
newly issued shares of common stock from the Company for cash consideration.
Effective November 15, 2007, in accordance with the terms of the Purchase
Agreement, our then existing officers and directors resigned, and Kevin R.
Keating became our sole director. Kevin R. Keating appointed two additional
directors, Margie Blackwell and Jeff Andrews, to fill the vacancies on our board
of directors ("Board"). The Board then appointed Kevin R. Keating as our Chief
Executive Officer, Chief Financial Officer, President, Secretary and Treasurer.
Effective June 19, 2008, the Purchase Agreement was amended by the parties
and KIG thereafter assigned its rights thereunder to Kevin R. Keating and
Lionsridge Capital, LLC ("Lionsridge"), a limited liability company controlled
by Fredric M. Schweiger. Pursuant to the amended Purchase Agreement, on June 25,
2008, we issued 16,000,000 shares of common stock to Kevin R. Keating and
5,000,000 shares of common stock to Lionsridge. These shares were sold by us for
an aggregate purchase price of $210,000, or $0.01 per share. We also granted
Kevin R. Keating and Lionsridge certain demand and piggyback registration rights
with respect to these shares. The proceeds from the sale of these shares were
used by us to pay certain of our liabilities and obligations.
Effective August 14, 2008, we filed amended and restated articles of
incorporation ("Restated Articles of Incorporation") with the Nevada Scretary of
State. The Restated Articles of Incorporation amended our then current articles
of incorporation to, among other things, increase the number of authorized
shares of common stock from 50,000,000 to 200,000,000 and to reduce the par
value per share of our common and preferred stock from $0.01 to $0.001. The
amended and restated articles of incorporation were approved by the written
consent of the directors and a majoirty of the stockholders.
On August 20, 2008, Margie Blackwell and Jeff Andrews resigned as directors
of the Company. The resignation of these directors was not the result of any
disagreement with us on any matters relating to our operations, policies or
practices. Following these resignations, Kevin R. Keating, our sole remaining
director reduced the size of the Board to one director.
1
Our principal place of business is located at 190 Lakeview Way, Vero Beach,
FL 32963. Our telephone number is (772) 231-7544.
Current Business of Issuer
We currently have no operations but are seeking to acquire an ongoing
business. Our principal business objective for the next 12 months and beyond
such time will be to achieve long-term growth potential through a combination
with an operating business rather than immediate, short-term earnings. We will
not restrict our potential candidate target companies to any specific business,
industry or geographical location and, thus, may acquire any type of business.
No assurance can be given that we will ever complete a business combination with
an operating company.
Under SEC Rule 12b-2 under the Securities Act of 1933, as amended (the
"Securities Act"), we qualify as a "shell company," because we have no or
nominal assets (other than cash) and no or nominal operations. We intend to
comply with the periodic reporting requirements of the Exchange Act for so long
as we are subject to those requirements.
The analysis of new business opportunities will be undertaken by or under
the supervision of Kevin R. Keating, our sole officer and director. As of this
date, we have not entered into any definitive agreement with any party, nor have
there been any specific discussions with any potential business combination
candidate regarding business opportunities for us. We have unrestricted
flexibility in seeking, analyzing and participating in potential business
opportunities. In our efforts to analyze potential acquisition targets, we will
consider the following kinds of factors:
(i) Potential for growth, indicated by new technology, anticipated
market expansion or new products;
(ii) Competitive position as compared to other firms of similar size
and experience within the industry segment as well as within the industry
as a whole;
(iii) Strength and diversity of management, either in place or
scheduled for recruitment;
(iv) Capital requirements and anticipated availability of required
funds, to be provided by the Company or from operations, through the sale
of additional securities, through joint ventures or similar arrangements or
from other sources;
(v) The cost of participation by the Company as compared to the
perceived tangible and intangible values and potentials;
(vi) The extent to which the business opportunity can be advanced;
(vii) The accessibility of required management expertise, personnel,
raw materials, services, professional assistance and other required items;
and
(viii) Other relevant factors.
In applying the foregoing criteria, no one of which will be controlling,
our management will attempt to analyze all factors and circumstances and make a
determination based upon reasonable investigative measures and available data.
Potentially available business opportunities may occur in many different
industries, and at various stages of development, all of which will make the
task of comparative investigation and analysis of such business opportunities
extremely difficult and complex. Due to our limited capital available for
investigation, we may not discover or adequately evaluate adverse facts about
the opportunity to be acquired.
2
Form of Potential Business Combination
The manner in which we participate in an opportunity will depend upon the
nature of the opportunity, the respective needs and desires of the Company and
the promoters of the opportunity, and the relative negotiating strength of the
Company and such promoters.
It is likely that the Company will acquire its participation in a business
opportunity through the issuance of common stock or other securities of the
Company. Although the terms of any such transaction cannot be predicted, it
should be noted that in certain circumstances the criteria for determining
whether or not an acquisition is a so-called "tax free" reorganization under
Section 368(a)(1) of the Internal Revenue Code of 1986, as amended (the "Code")
depends upon whether the owners of the acquired business own 80% or more of the
voting stock of the surviving entity. If a transaction were structured to take
advantage of these provisions rather than other "tax free" provisions provided
under the Code, all prior stockholders of the Company would in such
circumstances retain 20% or less of the total issued and outstanding shares of
the surviving entity. Under other circumstances, depending upon the relative
negotiating strength of the parties, prior stockholders of the Company may
retain substantially less than 20% of the total issued and outstanding shares of
the surviving entity. This could result in substantial additional dilution to
the equity of those who were stockholders of the Company prior to a business
combination with an operating entity.
The present stockholders of the Company will likely not have control of a
majority of the voting securities of the Company following a reorganization
transaction. As part of such a transaction, the Company's sole director may
resign and one or more new directors may be appointed without any vote by
stockholders.
In the case of a business combination, the transaction may be accomplished
upon the sole determination of management without any vote or approval by
stockholders. In the case of a statutory merger or consolidation directly
involving the Company, it will likely be necessary to call a stockholders'
meeting and obtain the approval of the holders of a majority of the outstanding
securities. The necessity to obtain such stockholder approval may result in
delay and additional expense in the consummation of any proposed transaction and
will also give rise to certain appraisal rights to dissenting stockholders. Most
likely, management will seek to structure any such transaction so as not to
require stockholder approval.
It is anticipated that the investigation of specific business opportunities
and the negotiation, drafting and execution of relevant agreements, disclosure
documents and other instruments will require substantial management time and
attention and substantial cost for accountants, attorneys and others. If a
decision is made not to participate in a specific business opportunity, the
costs theretofore incurred in the related investigation might not be
recoverable. Furthermore, even if an agreement is reached for the participation
in a specific business opportunity, the failure to consummate that transaction
may result in the loss to the Company of the related costs incurred.
We presently have no employees. Our sole officer and director is engaged in
outside business activities and anticipates that he will devote to our business
very limited time until the acquisition of a successful business opportunity has
been identified. We expect no significant changes in the number of our employees
other than such changes, if any, incident to a business combination.
Reports to Security Holders
The Company is not required to deliver an annual report to security holders
and at this time does not anticipate the distribution of such a report. The
Company intends to file reports with the SEC as long as it is required to do so.
The Company will be a reporting company and intends to comply with the
requirements of the Exchange Act as long as it is required to do so.
The public may read and copy any materials the Company files with the SEC
in the SEC's Public Reference Section, Room 1580, 100 F Street N.E., Washington,
D.C. 20549. The public may obtain information on the operation of the Public
Reference Section by calling the SEC at 1-800-SEC-0330. Additionally, the SEC
maintains an Internet site that contains reports, proxy and information
statements, and other information regarding issuers that file electronically
with the SEC, which can be found at http://www.sec.gov.
3
Competition
The Company will face vast competition from other shell companies that
desire to seek a potential business combination with a private company seeking
the perceived advantages of being a publicly held corporation. The Company will
be in a highly competitive market for a small number of business opportunities
which could reduce the likelihood of consummating a successful business
combination. A large number of established and well-financed entities, including
small public companies and venture capital firms, are active in mergers and
acquisitions of companies that may be desirable target candidates for us. Nearly
all these entities have significantly greater financial resources, technical
expertise and managerial capabilities than we do; consequently, we will be at a
competitive disadvantage in identifying possible business opportunities and
successfully completing a business combination. These competitive factors may
reduce the likelihood of our identifying and consummating a successful business
combination.
Employees
We presently have no employees. Our sole officer and director is engaged in
outside business activities and anticipates that he will devote to our business
very limited time until the acquisition of a successful business opportunity has
been identified. We expect no significant changes in the number of our employees
other than such changes, if any, in connection with a business combination.
Item 1A. Risk Factors
An investment in the Company is highly speculative in nature and involves an
extremely high degree of risk. A prospective investor should consider the
possibility of the loss of the investor's entire investment and evaluate all
information about us and the risk factors discussed below in relation to his
financial circumstances before investing in us
There may be conflicts of interest between our management and the stockholders
of the Company.
Conflicts of interest create the risk that management may have an incentive
to act adversely to the interests of the stockholders of the Company. A conflict
of interest may arise between our management's personal pecuniary interest and
its fiduciary duty to our stockholders. In addition, Kevin R. Keating, our sole
officer and director, is currently involved with other public shell companies
and conflicts in the pursuit of business combinations with such other public
shell companies with which he is, and may in the future be, affiliated with may
arise. If we and the other public shell companies that management is affiliated
with desire to take advantage of the same opportunity, then members of
management that are affiliated with both companies would abstain from voting
upon the opportunity. In the event of identical officers and directors, or
members of management, such individuals will arbitrarily determine the company
that will be entitled to proceed with the proposed transaction.
We have no current operating business or sources of revenue, and we have nominal
assets.
We currently have no relevant operating business, revenues from operations
or assets. Our business plan is to seek a merger or business combination with an
operating business. We may not realize any revenue unless and until we
successfully combine with an operating business. We face all of the risks
inherent in the investigation, acquisition, or involvement in a new business
opportunity. An investor's purchase of any of our securities must be regarded as
placing funds at a high risk in a new or "start-up" venture with all of the
unforeseen costs, expenses, problems, and difficulties to which such ventures
are subject. We will, in all likelihood, sustain operating expenses without
corresponding revenues, at least until the consummation of a business
combination. This may result in our incurring a net operating loss that will
increase continuously until we can consummate a business combination with a
profitable business opportunity. We cannot assure you that we can identify a
suitable business opportunity and consummate a business combination. We are also
dependent upon the receipt of capital investment or other financing to fund our
ongoing operations and to execute our business plan of seeking a combination
with a private operating company. In addition, we are dependent upon certain
related parties to provide continued funding and capital resources. If continued
funding and capital resources are unavailable at reasonable terms, we may not be
able to implement our plan of operations. Our financial statements indicate that
without additional capital, there is substantial doubt as to our ability to
continue as a going concern.
4
There is competition for those private companies suitable for a business
combination of the type contemplated by management.
We are in a highly competitive market for a small number of business
opportunities which could reduce the likelihood of consummating a successful
business combination. We are and will continue to be an insignificant
participant in the business of seeking business combinations with operating
entities that desire to become public companies. A large number of established
and well-financed entities, including small public companies and venture capital
firms, are active in mergers and acquisitions of companies that may be desirable
target candidates for us. Nearly all these entities have significantly greater
financial resources, technical expertise and managerial capabilities than we do;
consequently, we will be at a competitive disadvantage in identifying possible
business opportunities and successfully completing a business combination. These
competitive factors may reduce the likelihood of our identifying and
consummating a successful business combination.
Our future success is highly dependent on the ability of management to locate
and attract a suitable acquisition.
The nature of our operations is highly speculative, and there is a
consequent risk of loss of your investment. The success of our plan of
operations will depend to a great extent on the operations, financial condition
and management of the identified business opportunity. While management intends
to seek business combination(s) with entities having established operating
histories, we cannot assure you that we will be successful in locating
candidates meeting that criterion. In the event we complete a business
combination, the success of our operations may be dependent upon management of
the successor firm or venture partner firm and numerous other factors beyond our
control. In addition, even if we complete a business combination, there is no
assurance that the business we acquire will generate revenues or profits, or
that the value of our common stock will increase as a result of the acquired
business opportunity.
We only intend to acquire a single business opportunity and thus your investment
will lack diversification.
Because of our limited financial resources, it is unlikely that we will be
able to diversify our acquisitions or operations. The inability to diversify our
activities into more than one area will subject our investors and stockholders
to economic fluctuations within a particular business or industry and therefore
increase the risks associated with the investment. We only intend to engage in a
business combination with one operating entity.
We have no existing agreement for a business combination or other transaction.
We have no arrangement, agreement or understanding with respect to engaging
in a business combination with an operating business. No assurances can be given
that we will successfully identify and evaluate suitable business opportunities
or that we will conclude a business combination. Management has not identified
any particular industry or specific business within an industry for evaluation.
We cannot guarantee that we will be able to negotiate a business combination on
favorable terms, and there is consequently a risk that funds allocated to the
purchase of our shares will not be invested in a company with active business
operations. Further, management will seek to structure any such business
combination so as not to require stockholder approval.
Management intends to devote only a limited amount of time to seeking a target
company which may adversely impact our ability to identify a suitable
acquisition candidate.
While seeking a business combination, management anticipates devoting very
limited time to the Company's affairs. Our sole officer has not entered into a
written employment agreement with us and is not expected to do so in the
foreseeable future. This limited commitment may adversely impact our ability to
identify and consummate a successful business combination. To supplement our
search activities, we may be required to employ accountants, technical experts,
appraisers, attorneys, or other consultants or advisors. Some of these outside
advisors may be our affiliates or their affiliated entities. The selection of
any such advisors will be made by our management without any input from
stockholders, and the engagement of such persons may reduce the value of your
investment.
5
The time and cost of preparing a private company to become a public reporting
company may preclude us from entering into a merger or acquisition with the most
attractive private companies.
Target companies that fail to comply with SEC reporting requirements may
delay or preclude acquisition. Sections 13 and 15(d) of the Exchange Act require
reporting companies to provide certain information about significant
acquisitions, including certified financial statements for the company acquired,
covering one, two, or three years, depending on the relative size of the
acquisition. The time and additional costs that may be incurred by some target
entities to prepare these statements may significantly delay or essentially
preclude consummation of an acquisition. Otherwise suitable acquisition
prospects that do not have or are unable to obtain the required audited
statements may be inappropriate for acquisition so long as the reporting
requirements of the Exchange Act are applicable. Further, the internal control
management assessment and auditor attestation requirements under Section 404 of
the Sarbanes-Oxley Act of 2002 may limit the number of suitable acquisition
prospects if they cannot, or are unwilling to, comply with these requirements.
The Company may be subject to further government regulation which would
adversely affect our operations.
Although we will be subject to the reporting requirements under the
Exchange Act, management believes we will not be subject to regulation under the
Investment Company Act of 1940, as amended (the "Investment Company Act"), since
we will not be engaged in the business of investing or trading in securities. If
we engage in business combinations which result in our holding passive
investment interests in a number of entities, we could be subject to regulation
under the Investment Company Act. If so, we would be required to register as an
investment company and could be expected to incur significant registration and
compliance costs. We have obtained no formal determination from the SEC as to
our status under the Investment Company Act and, consequently, violation of the
Investment Company Act could subject us to material adverse consequences.
Any potential acquisition or merger with a foreign company may subject us to
additional risks.
If we enter into a business combination with a foreign company, we will be
subject to risks inherent in business operations outside of the United States.
These risks include, for example, currency fluctuations, regulatory problems,
punitive tariffs, unstable local tax policies, trade embargoes, risks related to
shipment of raw materials and finished goods across national borders and
cultural and language differences. Foreign economies may differ favorably or
unfavorably from the United States economy in growth of gross national product,
rate of inflation, market development, rate of savings, and capital investment,
resource self-sufficiency and balance of payments positions, and in other
respects.
Shares of our common stock are currently very thinly traded, and liquidity of
shares of our common stock is limited.
Shares of our common stock are, and we expect will continue to be, very
thinly traded, and the price if traded may not reflect the value of the Company.
In connection with a future business combination, we may have to undertake a
reverse split of our shares, which split may not reflect the value of the
Company at that time. There can be no assurance that there will be an active
market for our shares either now or after we complete the business combination.
The market liquidity will be dependant on the perception of the operating
business and any steps that its management might take to bring the company to
the awareness of investors. There can be no assurance given that there will be
any awareness generated. Consequently investors may not be able to liquidate
their investment or liquidate it at a price that reflects the value of the
business. If a more active market should develop, the price of common stock may
be highly volatile.
Because there may be a low price for our securities, many brokerage firms
may not be willing to effect transactions in the securities. Even if an investor
finds a broker willing to effect a transaction in the securities, the
combination of brokerage commissions, transfer fees, taxes, if any, and any
other selling costs may exceed the selling price. Further, many lending
institutions will not permit the use of such securities as collateral for any
loans.
6
Our shares of common stock are currently quoted on the Over-the Counter
Bulletin Board ("OTC BB"). Management intends to strongly consider undertaking a
business transaction with a private operating company which will allow our
shares to be quoted and traded on the NASDAQ Global Market, NASDAQ Capital
Market or a national exchange. However, there can be no assurance that, upon a
business combination, we will qualify our shares for quotation or listing on
NASDAQ or a national exchange, or be able to maintain the criteria necessary to
insure continued quotation or listing.
We are not certain that any trading market for our shares will develop or,
if it develops, whether such trading market will be sustained. Investors should
understand that there may be no alternative exit strategy for them to recover or
liquidate their investments in our common stock. Accordingly, investors must be
prepared to bear the entire economic risk of an investment in our common stock
for an indefinite period of time.
In addition, we will be subject to an SEC rule (Rule 15c2-11) that imposes
various requirements on broker-dealers who sell securities governed by the rule
to persons other than established customers and accredited investors. The
requirement that broker-dealers comply with this rule will deter broker-dealers
from recommending or selling our common stock, thus further adversely affecting
the liquidity and share price of our common stock, as well as our ability to
raise additional capital.
The majority of our shares currently outstanding are "restricted
securities" within the meaning of Rule 144 under the Securities Act. As
restricted shares, these shares may be resold only pursuant to an effective
registration statement or under the requirements of Rule 144 or other applicable
exemption from registration under the Securities Act and as required under
applicable state securities laws. Rule 144 currently provides that a
non-affiliated person (and who has not been an affiliate during the prior three
months) may sell all of his restricted securities in a reporting company
beginning six months after purchase, provided the issuer remains current in its
reporting obligations during the next six months. However, an affiliated person
may sell his restricted securities beginning six months after purchase, provided
the following conditions are met: (i) the issuer is current in its reporting
obligations, (ii) all sales are in brokerage transactions, (iii) a Form 144 is
filed, and (iv) during every three months the number of shares sold that does
not exceed 1.0% of a company's outstanding common stock. A sale under Rule 144
or under any other exemption from the Securities Act, if available, or pursuant
to subsequent registrations of our shares, may have a depressive effect upon the
price of our shares in any market that may develop.
The availability of the exemption from registration provided by Rule 144
is, however, limited in the case of the resale of shares initially acquired when
the issuer was a shell company or former shell company. Rule 144(i) provides
that shares initially acquired when the issuer was a shell company or former
shell company may not be resold under Rule 144 until the following conditions
are satisfied: (i) the issuer has ceased to be a shell company, (ii) the issuer
is subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act, (iii) the issuer has filed all reports required under the Exchange Act
(other than Form 8-K reports) during the preceding 12 months, and (iv) one year
has elapsed since the issuer filed Form 10 information reflecting it is no
longer a shell company. The Company currently has 24,857,647 shares of common
stock outstanding, of which 23,830,000 shares are subject to the limitation
under Rule 144(i).
Compliance with the criteria for securing exemptions under federal
securities laws and the securities laws of the various states is extremely
complex, especially in respect of those exemptions affording flexibility and the
elimination of trading restrictions in respect of securities received in exempt
transactions and subsequently disposed of without registration under the
Securities Act or state securities laws.
There are issues impacting liquidity of our securities with respect to the SEC's
review of a future resale registration statement.
A majority of our shares of common stock currently outstanding are
"restricted securities," and the holders thereof have certain registration
rights. As such, following the business combination, we will likely file a
resale registration statement on Form S-1, or some other available form, to
register for resale such shares of common stock. In some cases, we are obligated
to file a registration statement for certain restricted shares pursuant to
certain registration rights agreements. We cannot control this future
registration process in all respects as some matters are outside our control.
Even if we are successful in causing the effectiveness of the resale
registration statement, there can be no assurances that the occurrence of
7
subsequent events may not preclude our ability to maintain the effectiveness of
the registration statement. Any of the foregoing items could have adverse
effects on the liquidity of our shares of common stock. Further, a sale of our
shares pursuant to an effective registration may have a depressive effect upon
the price of our shares in any market that may develop.
In addition, the SEC has recently disclosed that it has developed internal
guidelines concerning the use of a resale registration statement to register the
securities issued to certain investors in private investment in public equity
(PIPE) transactions, where the issuer has a market capitalization of less than
$75 million and, in general, does not qualify to file a registration statement
on Form S-3 to register its securities. The SEC has taken the position that
these smaller issuers may not be able to rely on Rule 415 under the Securities
Act ("Rule 415"), which generally permits the offer and sale of securities on a
continued or delayed basis over a period of time, but instead would require that
the issuer offer and sell such securities in a direct or "primary" public
offering, at a fixed price, if the facts and circumstances are such that the SEC
believes the investors seeking to have their shares registered are underwriters
and/or affiliates of the issuer. It appears that the SEC in most cases will
permit a registration for resale of up to one third of the total number of
shares of common stock then currently owned by persons who are not affiliates of
such issuer and, in some cases, a larger percentage depending on the facts and
circumstances. Staff members also have indicated that an issuer in most cases
will have to wait until the later of six months after effectiveness of the first
registration or such time as substantially all securities registered in the
first registration are sold before filing a subsequent registration on behalf of
the same investors. Since, following a reverse merger or business combination,
we may have only a limited number of tradable shares of common stock, it is
unclear as to how many, if any, shares of common stock the SEC will permit us to
register for resale, but SEC staff members have indicated a willingness to
consider a higher percentage in connection with registrations following reverse
mergers with shell companies such as the Company. The SEC may require as a
condition to the declaration of effectiveness of a resale registration statement
that we reduce or "cut back" the number of shares of common stock to be
registered in such registration statement. The result of the foregoing is that a
stockholder's liquidity in our common stock may be adversely affected in the
event the SEC requires a cut back of the securities as a condition to allow the
Company to rely on Rule 415 with respect to a resale registration statement, or,
if the SEC requires us to file a primary registration statement.
We have never paid dividends on our common stock.
We have never paid dividends on our common stock and do not presently
intend to pay any dividends in the foreseeable future. We anticipate that any
funds available for payment of dividends will be re-invested into the Company to
further its business strategy.
The Company may be subject to certain tax consequences in our business, which
may increase our cost of doing business.
We may not be able to structure our acquisition to result in tax-free
treatment for the companies or their stockholders, which could deter third
parties from entering into certain business combinations with us or result in
being taxed on consideration received in a transaction. Currently, a transaction
may be structured so as to result in tax-free treatment to both companies, as
prescribed by various federal and state tax provisions. We intend to structure
any business combination so as to minimize the federal and state tax
consequences to both us and the target entity; however, we cannot guarantee that
the business combination will meet the statutory requirements of a tax-free
reorganization or that the parties will obtain the intended tax-free treatment
upon a transfer of stock or assets. A non-qualifying reorganization could result
in the imposition of both federal and state taxes that may have an adverse
effect on both parties to the transaction.
The Company intends to issue more shares in a business combination, which will
result in substantial dilution.
Our Restated Articles of Incorporation authorizes the issuance of a maximum
of 200,000,000 shares of common stock and a maximum of 10,000,000 shares of
preferred stock. Any business combination effected by us may result in the
issuance of additional securities without stockholder approval and may result in
substantial dilution in the percentage of our common stock held by our then
existing stockholders. Moreover, the common stock issued in any such business
8
combination transaction may be valued on an arbitrary or non-arm's-length basis
by our management, resulting in an additional reduction in the percentage of
common stock held by our then existing stockholders. Our Board of Directors has
the power to issue any or all of such authorized but unissued shares without
stockholder approval. To the extent that additional shares of common stock or
preferred stock are issued in connection with a business combination or
otherwise, dilution to the interests of our stockholders will occur and the
rights of the holders of common stock may be materially adversely affected.
Our principal stockholders may engage in a transaction to cause the Company to
repurchase its shares of common stock.
In order to provide an interest in the Company to third parties, our
principal stockholders may choose to cause the Company to sell Company
securities to one or more third parties, with the proceeds of such sale(s) being
utilized by the Company to repurchase shares of common stock held by them. As a
result of such transaction, our management, principal stockholder(s) and Board
of Directors may change.
The Company has conducted no market research or identification of business
opportunities, which may affect our ability to identify a business to merge with
or acquire.
The Company has not conducted market research concerning prospective
business opportunities, nor have others made the results of such market research
available to the Company. Therefore, we have no assurances that market demand
exists for a merger or acquisition as contemplated by us. Our management has not
identified any specific business combination or other transactions for formal
evaluation by us, such that it may be expected that any such target business or
transaction will present such a level of risk that conventional private or
public offerings of securities or conventional bank financing will not be
available. There is no assurance that we will be able to acquire a business
opportunity on terms favorable to us. Decisions as to which business opportunity
to participate in will be unilaterally made by our management, which may act
without the consent, vote or approval of our stockholders.
Because we may seek to complete a business combination through a "reverse
merger," following such a transaction we may not be able to attract the
attention of major brokerage firms.
Additional risks may exist since we will assist a privately held business
to become public through a "reverse merger." Securities analysts of major
brokerage firms may not provide coverage of our Company since there is no
incentive to brokerage firms to recommend the purchase of our common stock. No
assurance can be given that brokerage firms will want to conduct any secondary
offerings on behalf of our post-merger company in the future.
We cannot assure you that following a business combination with an operating
business, our common stock will be listed on NASDAQ or any other securities
exchange.
Following a business combination, we may seek the listing of our common
stock on NASDAQ or the American Stock Exchange. However, we cannot assure you
that following such a transaction, we will be able to meet the initial listing
standards of either of those or any other stock exchange, or that we will be
able to maintain a listing of our common stock on either of those or any other
stock exchange. After completing a business combination, until our common stock
is listed on the NASDAQ or another stock exchange, we expect that our common
stock would continue to be eligible to trade on the OTC Bulletin Board, where
our stockholders may find it more difficult to dispose of shares or obtain
accurate quotations as to the market value of our common stock. In addition, we
would be subject to an SEC rule that, if it failed to meet the criteria set
forth in such rule, imposes various practice requirements on broker-dealers who
sell securities governed by the rule to persons other than established customers
and accredited investors. Consequently, such rule may deter broker-dealers from
recommending or selling our common stock, which may further affect its
liquidity. This would also make it more difficult for us to raise additional
capital following a business combination.
Our Restated Articles of Incorporation authorizes the issuance of preferred
stock by our Board of Directors.
Our Restated Articles of Incorporation authorizes the issuance of up to
10,000,000 shares of preferred stock with designations, rights and preferences
determined from time to time by our Board of Directors. Accordingly, our Board
of Directors is empowered, without stockholder approval, to issue preferred
stock with dividend, liquidation, conversion, voting, or other rights which
9
could adversely affect the voting power or other rights of the holders of the
common stock. In the event of issuance, the preferred stock could be utilized,
under certain circumstances, as a method of discouraging, delaying or preventing
a change in control of the Company. Although we have no present intention to
issue any shares of its authorized preferred stock, there can be no assurance
that the Company will not do so in the future.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
The Company neither rents nor owns any properties. The Company utilizes the
office space and equipment of its sole officer and director at no cost.
Management estimates such amounts to be immaterial. The Company currently has no
policy with respect to investments or interests in real estate, real estate
mortgages or securities of, or interests in, persons primarily engaged in real
estate activities.
Item 3. Legal Proceedings
Presently, there are not any material pending legal proceedings to which
the Company is a party or as to which any of its property is subject, and no
such proceedings are known to the Company to be threatened or contemplated
against it.
Item 4. Submission of Matters to a Vote of Security Holders
None.
PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities
Market Information
Our Common Stock traded on the OTC BB from January 4, 1999 through April 6,
2000 under the symbol "SLGK." From April 6, 2000 through December 24, 2008, we
traded on the Pink Sheets. We initially traded on the Pink Sheets under the
symbol "SLGK." On June 18, 2001, our symbol was changed to "SLRG." Effective
August 28, 2008, our symbol on the Pink Sheets was changed to "FRXT." Effective
December 24, 2008, we began trading on the OTC BB under the symbol "FRXT." Our
Common Stock is currently quoted on the OTC BB under the symbol "FRXT."
The table below sets forth the reported high and low bid prices for the
periods indicated. The bid prices shown reflect quotations between dealers,
without adjustment for markups, markdowns or commissions, and may not represent
actual transactions in our securities. Shares of our common stock are very
thinly traded, and the price if traded may be highly volatile and may not
reflect the value of the Company.
Per Share Common Stock Bid Prices by Quarter*
For the Fiscal Year Ended on June 30, 2008
- ------------------------------------------
High Low
---- ---
Quarter Ended September 30, 2007 $0.250 $0.085
Quarter Ended December 31, 2007 $0.160 $0.090
Quarter Ended March 31, 2008 $0.450 $0.130
Quarter Ended June 30, 2008 $0.450 $0.200
10
For the Fiscal Year Ended on June 30, 2009
- ------------------------------------------
High Low
---- ---
Quarter Ended September 30, 2008 $0.450 $0.200
Quarter Ended December 31, 2008 $0.450 $0.150
Quarter Ended March 31, 2009 $0.300 $0.050
Quarter Ended June 30, 2009 n/a n/a
* Prices obtained from www.bigcharts.com, a service of Market Watch, Inc.
Holders
As of August 11, 2009, there were approximately 539 record holders of our
common stock and an unknown number of beneficial holders who held our common
stock in street name.
Dividends
The Company has not paid any cash dividends to date and does not anticipate
or contemplate paying dividends in the foreseeable future. It is the present
intention of management to utilize all available funds to complete a business
combination with an operating entity.
Penny Stock Regulations
Our securities are subject to the SEC's "penny stock" rules. The penny
stock rules may affect the ability of owners of our shares to sell them. There
may be a limited market for penny stocks due to the regulatory burdens on
broker-dealers. The market among dealers may not be active. Investments in penny
stocks often are unable to sell stock back to the dealer that sold them the
stock. The mark-ups or commissions charged by the broker-dealers might be
greater than any profit an investor may make. Because of large spreads that
market makers quote, investors may be unable to sell the stock immediately back
to the dealer at the same price the dealer sold the stock to the investor.
Our securities are also subject to the SEC's rule that imposes special
sales practice requirements upon broker-dealers that sell such securities to
other than established customers or accredited investors. For purposes of the
rule, the phrase "accredited investor" means, in general terms, institutions
with assets exceeding $5,000,000 or individuals having net worth in excess of
$1,000,000 or having an annual income that exceeds $200,000 (or that, combined
with a spouse's income, exceeds $300,000). For transactions covered by the rule,
the broker-dealer must make a special suitability determination for the
purchaser and receive the purchaser's written agreement to the transaction prior
to the sale. Consequently, the rule may affect the ability of purchasers of our
securities to buy or sell in any market.
Recent Sales of Unregistered Securities
On November 14, 2007, we entered into a securities purchase agreement
("Purchase Agreement") with KIG Investors II, LLC ("KIG") pursuant to which KIG
agreed to purchase, subject to the satisfaction of certain conditions precedent,
newly issued shares of common stock from the Company for cash consideration.
Effective June 19, 2008, the Purchase Agreement was amended by the parties and
KIG thereafter assigned its rights thereunder to Kevin R. Keating and
Lionsridge. Pursuant to the amended Purchase Agreement, on June 25, 2008, we
issued 16,000,000 shares of common stock to Kevin R. Keating and 5,000,000
shares of common stock to Lionsridge. These shares were sold by us for an
aggregate purchase price of $210,000, or $0.01 per share.
On June 26, 2008, the Company issued 630,000 shares of common stock to
Kevin R. Keating for consulting services rendered to the Company, which services
were valued at $6,300, or $0.01 per share.
11
On June 26, 2008, the Company issued 2,200,000 shares of common stock to
Garisch Financial, Inc. ("GFI"), a consulting firm controlled by Frederic M.
Schweiger, for consulting services rendered to the Company, which services were
valued at $22,000, or $0.01 per share. The payment of these shares for
consulting services was made pursuant to an agreement between the Company and
GFI.
In consideration of the above stock issuances, the Company granted certain
registration rights to the holders thereof.
In connection with the above stock issuance, we did not pay any
underwriting discounts or commissions. None of the sales of securities described
or referred to above was registered under the Securities Act. Each of the
purchasers fell into one or more of the categories that follow: an existing
shareholder, a creditor, a current or former officer or director, a service
provider, or an accredited investor with whom we or an affiliate of ours had a
prior business relationship. As a result, no general solicitation or advertising
was used in connection with the sales. In making the sales without registration
under the Securities Act, we relied upon one or more of the exemptions from
registration including those contained in Sections 4(2) of the Securities Act.
The purchasers represented in writing that they acquired the securities for
their own accounts. A legend was placed on the stock certificates stating that
the securities have not been registered under the Securities Act and cannot be
sold or otherwise transferred without an effective registration or an exemption
therefrom.
Description of Registrant's Securities
The following description is based on relevant portions of the Nevada
General Corporation Law and on our charter and bylaws. This summary is not
necessarily complete, and we refer you to the Nevada General Corporation Law and
our charter and bylaws for a more detailed description of the provisions
summarized below.
The Company is authorized by its articles of incorporation, as amended and
restated, to issue an aggregate of 210,000,000 shares of capital stock, of which
200,000,000 are shares of common stock, par value $0.001 per share (the "Common
Stock") and 10,000,000 are shares of preferred stock, par value $0.001 per share
(the "Preferred Stock").
As of August 11, 2009, there are 24,857,647 shares of common stock
outstanding. There are no outstanding shares of preferred stock, and there are
no outstanding options or warrants to purchase our stock. No stock has been
authorized for issuance under any equity compensation plans.
Common Stock
------------
All shares of our common stock have equal rights as to earnings, assets,
dividends and voting privileges and, when they are issued, will be duly
authorized, validly issued, fully paid and nonassessable. Distributions may be
paid to the holders of our common stock if, as and when authorized by our Board
of Directors and declared by us out of assets legally available therefor. Shares
of our common stock have no preemptive, conversion or redemption rights and are
freely transferable, except where their transfer is restricted by federal and
state securities laws or by contract. In the event of a liquidation, dissolution
or winding up of us, each share of our common stock would be entitled to share
ratably in all of our assets that are legally available for distribution after
we pay all debts and other liabilities and subject to any preferential rights of
holders of our preferred stock, if any preferred stock is outstanding at such
time. Each share of our common stock is entitled to one vote on all matters
submitted to a vote of stockholders, including the election of directors. Except
as provided with respect to any other class or series of stock, the holders of
our common stock will possess exclusive voting power. There is no cumulative
voting in the election of directors, which means that holders of a majority of
the outstanding shares of common stock will be able to elect all of our
directors, and holders of less than a majority of such shares will be unable to
elect any director.
Preferred Stock
---------------
Our articles of incorporation authorize the issuance of up to 10,000,000
shares of Preferred Stock with designations, rights and preferences determined
from time to time by our Board of Directors. Accordingly, our Board of Directors
is empowered, without stockholder approval, to issue Preferred Stock with
dividend, liquidation, conversion, voting, or other rights which could adversely
affect the voting power or other rights of the holders of the Common Stock. In
12
the event of issuance, the Preferred Stock could be utilized, under certain
circumstances, as a method of discouraging, delaying or preventing a change in
control of the Company. Although we have no present intention to issue any
shares of our authorized Preferred Stock, there can be no assurance that the
Company will not do so in the future.
Registration Rights
The Company granted certain registration rights to Kevin R. Keating,
Garisch Financial, Inc. and Lionsridge Capital, LLC in connection with the
issuance to each of them of shares of the Company's common stock, pursuant to
the terms and conditions contained in certain registration rights agreements
("Registration Rights Agreements"). The terms and conditions of the each of the
Registration Rights Agreements are substantially similar. The number of shares
subject to registration rights for each of the above holders is as follows:
Number of Shares Subject to Registration
Stockholder Rights
----------------------- ----------------------------------------
Kevin R. Keating 16,630,000
Lionsridge Capital, LLC 5,000,000
Garisch Financial, Inc. 2,200,000
Pursuant to the Registration Rights Agreements, commencing on the date that
is thirty (30) days after the date the Company completes a business combination
with a private company in a reverse merger or reverse take-over transaction (a
"Reverse Merger"), the stockholders shall each have a separate one-time right to
request the Company to register for resale the shares of Common Stock held by
such persons. The Company is required to cause the registration statement filed
as a result of such requests to be declared effective under the Securities Act
as promptly as possible after the filing thereof and shall keep the demand
registration statement continuously effective under the Securities Act until the
earlier of (i) two years after its effective date, (ii) such time as all of the
shares of Common Stock covered by such registration statement have been publicly
sold by the stockholders, or (iii) such time as all of the shares of Common
Stock covered by such registration statement may be sold by the stockholders
pursuant to Rule 144. Further, if all of the shares of Common Stock to be
included in the registration statement filed cannot be so included due to
certain comments from the SEC, and there is not an effective registration
statement otherwise covering the shares of Common Stock, then the Company is
obligated to prepare and file such registration statement(s) for such number of
additional registration statements as may be necessary in order to ensure that
all shares of Common Stock are covered by an existing and effective registration
statement.
Additionally, the Registration Rights Agreement provides the stockholders
with "piggyback" registration rights such that at any time there is not an
effective registration statement covering the shares of Common Stock, and the
Company files a registration statement relating to an offering for its own
account or the account of others under the Securities Act of any of its equity
securities, other than on Form S-4 or Form S-8 (each as promulgated under the
Securities Act) or their then equivalents relating to equity securities to be
issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with stock option or other employee
benefit plans, then the Company is required to send written notice to the
stockholders of such intended filings at least twenty (20) days prior thereto
and is required to automatically include in such registration statement all
shares of Common Stock held by the stockholders for resale and offer on a
continuous basis pursuant to Rule 415; provided, however, that (i) if, at any
time after giving written notice of its intention to register any securities and
prior to the effective date of the registration statement filed in connection
with such registration, the Company determines for any reason not to proceed
with such registration, the Company will be relieved of its obligation to
register any shares of Common Stock in connection with such registration, (ii)
in case of a determination by the Company to delay registration of its
securities, the Company will be permitted to delay the registration of shares of
Common Stock for the same period as the delay in registering such other
securities, (iii) each stockholder is subject to confidentiality obligations
with respect to any information gained in this process or any other material
non-public information he, she or it obtains, (iv) each stockholder is subject
to all applicable laws relating to insider trading or similar restrictions; and
(v) if all of the shares of Common Stock of the stockholders cannot be so
included due to certain comments from the SEC, then the Company may reduce the
number of each stockholders' shares of Common Stock covered by such registration
statement to the maximum number which would enable the Company to conduct such
offering in accordance with the provisions of Rule 415.
13
The stockholders shall be entitled to include all shares of Common Stock
for resale in the registration statement filed by the Company in connection with
a public offering of equity securities by the Company, pursuant to Rule 415, so
long as (1) such shares shall not be included as part of the underwritten
offering of primary shares by the Company, unless the Company and underwriter
agree to allow the inclusion of such shares of Common Stock as part of the
underwritten offering and, in such event, the stockholders elect to include the
shares of Common Stock in the underwriting subject to an allocation among all
stockholders of registration rights in the manner set forth in the Registration
Rights Agreement, (2) the underwriter approves the inclusion of such shares of
Common Stock in such registration statement, subject to customary underwriter
cutbacks applicable to all stockholders of registration rights, (3) the
stockholders shall enter into the underwriters' form of lockup agreement as and
to the extent requested by the underwriters, which may require that all of the
shares of Common Stock held by the stockholders not be sold or otherwise
transferred without the consent of the underwriters for a period not to exceed
180 days from the closing of the offering contemplated by the registration
statement, and (4) if all of the shares of Common Stock of the stockholders
cannot be so included due to certain comments from the SEC, then the Company may
reduce the number of each stockholders' shares of Common Stock covered by such
registration statement to the maximum number which would enable the Company to
conduct such offering in accordance with the provisions of Rule 415.
The Registration Rights Agreement contains a cut-back provision, whereby,
in the event all of the all of the shares of Common Stock held by the
stockholders cannot be included in a registration statement due to certain
comments by the SEC or underwriter cutbacks, then the Company, unless otherwise
prohibited by the SEC, shall cause the shares of Common Stock of the
stockholders to be included in such registration statement to be reduced pro
rata based on the number of shares of Common Stock held by all holders of
registration rights as of the date preceding the Reverse Merger.
The registration rights afforded to the stockholders shall terminate on the
earliest date when all shares of Common Stock of the stockholders either: (i)
have been publicly sold by the stockholders pursuant to a registration
statement, (ii) have been covered by an effective registration statement which
has been effective for an aggregate period of twelve (12) months (whether or not
consecutive), or (iii) may be sold by the stockholders pursuant to Rule 144
without regard to the volume limitations for sales as provided in that
regulation, as determined by the counsel to the Company pursuant to a written
opinion letter to such effect, addressed and acceptable to the Company's
transfer agent and the affected stockholders.
Each stockholder shall also indemnify the Company, each of its directors,
each of its officers who signs the Registration Statement and each person, if
any, who controls the Company within the meaning of the Securities Act or the
Exchange Act against damages arising out of or based upon: (i) such
stockholder's provision of any untrue or alleged untrue statement of a material
fact to be contained in any registration statement or prospectus or in
connection with the qualification of the offering under the securities or other
"blue sky" laws of any jurisdiction, or arising out of or relating to any such
stockholder's omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements contained in such
registration statement or prospectus not misleading or (ii) such stockholder's
violation or alleged violation by the Company of the Securities Act or the
Exchange Act, any other law, including, without limitation, any state securities
law, or any rule or regulation thereunder relating to the offer or sale of the
shares of Common Stock pursuant to a registration statement or (iii) such
stockholder's violation of the Registration Rights Agreement.
Item 6. Selected Financial Data
As a "smaller reporting company" as defined by Item 10 of Regulation S-K,
the Company is not required to provide information required by this Item.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Forward-Looking Statements
Statements made in this Annual Report that are not historical or current
facts are "forward-looking statements" made pursuant to the safe harbor
provisions of Section 27A of the Securities Act, and Section 21E of the Exchange
Act. These statements often can be identified by the use of terms such as "may",
"will", "expect", "believe", "anticipate", "estimate", "approximate", or
14
"continue", or the negative thereof. The Company intends that such
forward-looking statements be subject to the safe harbors for such statements.
The Company wishes to caution readers not to place undue reliance on any such
forward-looking statements, which speak only as of the date made. Any
forward-looking statements represent management's best judgment as to what may
occur in the future. However, forward-looking statements are subject to risks,
uncertainties and important factors beyond the control of the Company that could
cause actual results and events to differ materially from historical results of
operations and events and those presently anticipated or projected. These
factors include adverse economic conditions, entry of new and stronger
competitors, inadequate capital and unexpected costs. The Company disclaims any
obligation subsequently to revise any forward-looking statements to reflect
events or circumstances after the date of such statement or to reflect the
occurrence of anticipated or unanticipated events.
Reorganization and Change of Control
On November 14, 2007, we entered into a securities purchase agreement
("Purchase Agreement") with KIG Investors II, LLC ("KIG") pursuant to which KIG
agreed to purchase, subject to the satisfaction of certain conditions precedent,
newly issued shares of common stock from the Company for cash consideration.
Effective November 15, 2007, in accordance with the terms of the Purchase
Agreement, our then existing officers and directors resigned, and Kevin R.
Keating became our sole director. Kevin R. Keating appointed two additional
directors, Margie Blackwell and Jeff Andrews, to fill the vacancies on our board
of directors ("Board"). The Board then appointed Kevin R. Keating as our Chief
Executive Officer, Chief Financial Officer, President, Secretary and Treasurer.
Effective June 19, 2008, the Purchase Agreement was amended by the parties
and KIG thereafter assigned its rights thereunder to Kevin R. Keating and
Lionsridge Capital, LLC ("Lionsridge"), a limited liability company controlled
by Fredric M. Schweiger. Pursuant to the amended Purchase Agreement, on June 25,
2008, we issued 16,000,000 shares of common stock to Kevin R. Keating and
5,000,000 shares of common stock to Lionsridge. These shares were sold by us for
an aggregate purchase price of $210,000, or $0.01 per share. We also granted
Kevin R. Keating and Lionsridge certain demand and piggyback registration rights
with respect to these shares. The proceeds from the sale of these shares under
the amended Purchase Agreement were used by us to pay certain of our liabilities
and obligations as described below.
On November 14, 2007, the Company entered into a Settlement and Release
Agreement ("Settlement Agreement") with Leon Leibovich, the former CEO and
director of the Company, which provided that for the partial payment, at the
closing of the sale of the shares by the Company under the Purchase Agreement,
of certain consulting fees earned by Leon Leibovich for consulting services
rendered to the Company from July 2004 to October 2007. As part of the
settlement of such consulting fees, Leon Leibovich agreed to accept $68,542
("Settlement Amount") in full and complete payment of $140,000 of unpaid
consulting fees. As part of the Settlement Agreement, Leon Leibovich also agreed
to release the Company from all claims and to indemnify the Company from any
loss, cost or expense incurred by the Company up to a maximum of $12,500 for a
period of 4 months following the closing of the sale of shares under the amended
Purchase Agreement. In accordance with the Settlement Agreement, the Company
paid $56,042 to Leon Leibovich at the closing of the sale of shares under the
amended Purchase Agreement and withheld $12,500 from the Settlement Amount
payable to Leon Leibovich, which withheld amount will be paid to Leon Leibovich
at the end of the 4-month period, subject to any claims for indemnity. On
October 23, 2008, in accordance with the terms of the Settlement Agreement, the
Company paid $12,500 to Leon Leibovich in full payment of the amount that had
been withheld from the initial payment of the Settlement Amount to satisfy
potential claims for indemnity.
On November 17, 2007, the Company entered into a revolving loan agreement
with Keating Investments, LLC ("KI"). Pursuant to this agreement, the Company
borrowed $5,000 from KI on November 17, 2005. The Company was required to repay
the outstanding advances in full on or before June 30, 2008. The loan carried
interest at a rate of 6% per annum. The loan was used by the Company to pay
attorneys in connection with the Benchmark Action, more fully described in the
following paragraph. The Company paid KI $5,000 in full payment of the loan on
June 27, 2008 from the proceeds of the sale of shares under the amended Purchase
Agreement. KI waived any payment of accrued interest on the loan. KI was the
managing member of KIG. KIG assigned its rights to purchase shares under the
Purchase Agreement on June 20, 2008.
15
On March 10, 2008, Benchmark Capital, LLC ("Benchmark") agreed to settle a
civil action filed in Nevada District Court, Clark County on August 7, 2007
captioned Benchmark Capital, LLC vs. Forex365, Inc., formerly known as Solar
Group, Inc., Leon Leibovich and Does I-XV (the "Benchmark Action"). The lawsuit
alleged a number of causes of action related to Benchmark's attempts to acquire
a controlling interest in the Company from certain stockholders ("Controlling
Interest") during the period from April 2005 to May 2007. During this time
period, Benchmark alleged it advanced monies to the Company to pay certain
expenses and costs of the Company. Benchmark alleged certain other defendants
breached a verbal agreement to sell it the Controlling Interest. Generally,
Benchmark demanded that the Company repay these advances in and/or to issue its
common stock to Benchmark in lieu of cash repayment of the advances. Benchmark
also sought specific performance to have the Controlling Interest transferred to
it. Pursuant to the settlement, Benchmark agreed to release the Company and
other defendants from all claims (including a $2,000 advance made in June 2006
by Benchmark to pay the Company's corporate filing fees to the State of Nevada)
in exchange for a cash payment of $65,000 ("Benchmark Settlement Amount"). On
June 25, 2008, the Company paid the Benchmark Settlement Amount in full from the
proceeds of the sale of shares under the amended Purchase Agreement. On June 30,
2008, the Benchmark Action was dismissed with prejudice.
On May 5, 2008, the Company entered into a revolving loan agreement with
Vero Management, L.L.C. ("Vero"). Pursuant to this agreement, the Company
borrowed $10,500 from Vero on May 5, 2008. The Company was required to repay the
outstanding advances in full on or before June 30, 2008. The loan carried
interest at a rate of 6% per annum. The loan was used by the Company to pay
professional fees. Kevin R. Keating, the Company's sole officer and director, is
the sole member and manager of Vero. The Company paid Vero $10,500 in full
payment of the loan on or about June 27, 2008 from the proceeds of the sale of
shares under the amended Purchase Agreement. Vero waived any payment of accrued
interest on the loan.
In connection with the closing of the transactions under the amended
Purchase Agreement, proceeds from the sale of shares thereunder were used by the
Company to pay transfer agent fees ($16,800), auditor fees ($3,600), legal fees
($30,000) and miscellaneous expenses ($2,129).
On August 20, 2008, Margie Blackwell and Jeff Andrews resigned as directors
of the Company. The resignation of these directors was not the result of any
disagreement with us on any matters relating to our operations, policies or
practices. Following these resignations, Kevin R. Keating, our sole remaining
director reduced the size of the Board to one director.
Results of Operations
For the twelve months ended June 30, 2008 and 2009, the Company had no
revenues from continuing operations. It is unlikely the Company will have any
revenues unless it is able to effect an acquisition or merger with an operating
company, of which there can be no assurance. It is management's assertion that
these circumstances may hinder the Company's ability to continue as a going
concern.
For the twelve months ended June 30, 2009, the Company had a net loss from
operations of $51,752, comprised of (a) audit and accounting fees of $7,054, (b)
management fees of $36,000 incurred in relation to a broad range of managerial
and administrative services provided by Vero Management, LLC, (c) transfer agent
fees of $2,525, (d) tax preparation services related to filing of income tax
returns of $2,000, (e) Edgar filing fees of $3,328, and (e) corporate filing
fees and miscellaneous expenses of $845. This compares with a net loss from
operations of $55,394 for the twelve months ended June 30, 2008, comprised of
(a) fees of $14,000 payable to the Company's former director and Chief Executive
Officer, Leon Leibovich, for consulting services rendered to the Company for
financial and administrative matters and for assisting the Company in
identifying an operating company for a potential business combination, (b)
consulting services of $28,300 paid to our sole officer and director and a
consultant in the form of the Company's common stock, (c) legal fees of $5,000
related to the settlement of litigation, (d) transfer agent fees of $2,365, (e)
audit and accounting services of $3,600, and (f) corporate filings and
miscellaneous expenses of $2,129.
For the twelve months ended June 30, 2008, the Company had other income of
$71,731 consisting of income on discharge of indebtedness, primarily related to
the settlement made with Leon Leibovich for consulting fees owed to him. For the
16
twelve months ended June 30, 2008, the Company had other expense of $273
consisting of interest expense on indebtedness arising from certain revolving
loans.
For the twelve months ended June 30, 2008, the Company had net income of
$16,064, primarily related to discharge income of $71,731 for the period, as
compared with a net loss of $51,752 for the twelve months ended June 30, 2009.
Liquidity and Capital Resources
As of June 30, 2009, the Company had assets equal to $2,912, comprised
exclusively of cash. The Company's current liabilities as of June 30, 2009
included: (a) $36,000 owed to Vero for management services, and (b) $10,000 owed
to certain related parties under revolving loan agreements.
The following is a summary of the Company's cash flows provided by (used
in) operating, investing, and financing activities for the twelve months ended
June 30, 2009 and 2008:
Twelve months ended June 30,
2009 2008
--------- ---------
Operating activities $ (28,517) $(186,571)
Investing activities -- --
Financing activities 10,000 208,000
--------- ---------
Net effect on cash $ (18,517) $ 21,429
========= =========
On January 9, 2009, Vero entered into a revolving loan agreement with the
Company under which Vero has agreed to loan the Company up to $14,000 to provide
the Company with working capital. Vero is owned and controlled by Kevin R.
Keating, the Company's sole officer and director and a principal stockholder of
the Company.
On January 9, 2009, Lionsridge Capital, LLC ("Lionsridge") also entered
into a revolving loan agreement with the Company under which Lionsridge has
agreed to loan the Company up to $6,000 to provide the Company with working
capital. Lionsridge is a principal stockholder of the Company. Lionsridge is
owned and controlled by Frederic M. Schweiger.
As of June 30, 2009, the Company has received aggregate advances of $10,000
($7,000 from Vero and $3,000 from Lionsridge) under the revolving loan
agreements. The revolving loan agreements provide that: (i) all advances are due
and payable in full on the earlier of June 30, 2009, or the occurrence of a
change of control of the Company, and (ii) interest will accrue on outstanding
advances at a rate of 6% per annum commencing July 1, 2009. However, on June 30,
2009, the parties to the revolving loan agreements agreed to extend the maturity
date until the occurrence of a change of control of the Company pursuant to
certain letter agreements dated as of June 30, 2009, which are attached hereto
as Exhibits 4.3 and 4.4. On or about August 13, 2009, the Company received
additional advances totaling $4,000 ($2,500 from Vero and $1,500 from
Lionsridge) under the revolving loan agreements.
The Company currently has nominal assets, no active business operations and
no sources of revenues. The Company is dependent upon the receipt of capital
investment or other financing to fund its ongoing operations and to execute its
business plan of seeking a combination with a private operating company. In
addition, the Company is dependent upon certain related parties to provide
continued funding and capital resources. If continued funding and capital
resources are unavailable at reasonable terms, the Company may not be able to
implement its plan of operations. Our financial statements indicate that without
additional capital, there is substantial doubt as to our ability to continue as
a going concern.
Going Concern
We currently have no source of operating revenue, and have only limited
working capital with which to pursue our business plan, which contemplates the
completion of a business combination with an operating company. The amount of
17
capital required to sustain operations until the successful completion of a
business combination is subject to future events and uncertainties. It may be
necessary for us to secure additional working capital through loans or sales of
common stock, and there can be no assurance that such funding will be available
in the future. These conditions raise substantial doubt about our ability to
continue as a going concern. Our auditor has issued a "going concern"
qualification as part of his opinion in the Audit Report for the year ended June
30, 2009.
Critical Accounting Policies
The preparation of financial statements and related disclosures in
conformity with accounting principles generally accepted in the United States
requires estimates and assumptions that affect the reported amounts of assets
and liabilities, revenues and expenses and related disclosures of contingent
assets and liabilities in the financial statements and accompanying notes. The
SEC has defined a company's critical accounting policies as the ones that are
most important to the portrayal of the company's financial condition and results
of operations, and which require the company to make its most difficult and
subjective judgments, often as a result of the need to make estimates of matters
that are inherently uncertain. We believe that our estimates and assumptions are
reasonable under the circumstances; however, actual results may vary from these
estimates and assumptions. We have identified in Note 2 - "Summary of Accounting
Policies" to the Financial Statements contained in this quarterly report certain
critical accounting policies that affect the more significant judgments and
estimates used in the preparation of the financial statements.
Off-Balance Sheet Arrangements
We have not entered into any off-balance sheet arrangements that have or
are reasonably likely to have a current or future effect on our financial
condition, changes in financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources and would be
considered material to investors.
Contractual Obligations
As a "smaller reporting company" as defined by Item 10 of Regulation S-K,
the Company is not required to provide this information.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
As a "smaller reporting company" as defined by Item 10 of Regulation S-K,
the Company is not required to provide this information.
Item 8. Financial Statements and Supplementary Data
Forex365, Inc.
Index to Financial Statements
Report of Independent Registered Public Accounting Firm...............................................19
Balance Sheets - As of June 30, 2009 and 2008.........................................................20
Statements of Operations - For the Twelve Months Ended June 30, 2009 and 2008.........................21
Statements of Stockholders' Equity (Deficit) - For the Period July 1, 2007 through June 30, 2009......22
Statements of Cash Flows - For the Twelve Months Ended June 30, 2009 and 2008.........................23
Notes to Financial Statements......................................................................24-33
18
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Shareholders
Forex365, Inc. f/k/a Solar Group, Inc
Vero Beach, FL 32963
We have audited the accompanying consolidated balance sheets of FOREX365, INC.
(the Company) as of June 30, 2009 and 2008, and the related statements of
operations, stockholders' deficit and cash flows for the years then ended. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
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
consolidated financial statements are free of material misstatement. The Company
is not required to have, nor were we engaged to perform, audits of its internal
control over financial reporting. Our audits included 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 also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the consolidated financial statements, assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
FOREX365, INC. as of June 30, 2009 and 2008, and the consolidated results of
their operations and their cash flows for the years then ended in conformity
with accounting principles generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming
the Company will continue as a going concern. As discussed in Note 1 to the
consolidated financial statements, the Company has a working capital deficit and
has suffered recurring operating losses, which raises substantial doubt about
its ability to continue as a going concern. Management's plans in regard to
these matters are also described in Note 1. The consolidated financial
statements do not include any adjustments that might result from the outcome of
these uncertainties.
/s/Chisholm, Bierwolf, Nilson & Morrill
- ---------------------------------------
Chisholm, Bierwolf, Nilson & Morrill, LLC
Bountiful, Utah
July 25, 2009
19
FOREX365, INC.
(formerly known as Solar Group, Inc.)
BALANCE SHEETS
June 30, 2009 June 30, 2008
------------- -------------
ASSETS
------
Current Assets:
Cash $ 2,912 $ 21,429
----------- -----------
Total current assets 2,912 21,429
----------- -----------
Total assets $ 2,912 $ 21,429
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
----------------------------------------------
Current liabilities:
Accrued liabilities and payables $ -- $ 265
Accrued liabilities and payables - related parties 36,000 12,500
Revolving loans payable - related parties 10,000 --
----------- -----------
Total current liabilities 46,000 12,765
----------- -----------
Total liabilities 46,000 12,765
----------- -----------
Commitments and contingencies -- --
Stockholders' equity (deficit):
Preferred stock - $.001 par value; authorized
10,000,000 shares, none issued -- --
Common stock - $.001 par value; authorized
200,000,000 shares, 24,857,647 shares issued
and outstanding 24,858 24,858
Additional paid-in capital 1,891,315 1,891,315
Accumulated (deficit) (1,959,261) (1,907,509)
----------- -----------
Total stockholders' equity (deficit) (43,088) 8,664
----------- -----------
Total liabilities and stockholders' equity (deficit) $ 2,912 $ 21,429
=========== ===========
The accompanying notes are an integral part of these financial statements.
20
FOREX365, INC.
(formerly known as Solar Group, Inc.)
STATEMENTS OF OPERATIONS
For the Twelve Months
Ended June 30,
-------------------------
2009 2008
---------- -----------
Revenues $ -- $ --
General and administrative expenses 51,752 55,394
---------- -----------
Loss from operations (51,752) (55,394)
Other income (expense):
Income on discharge of indebtedness -- 71,731
Interest expense -- (273)
---------- -----------
Loss before provision for income taxes (51,752) 16,064
Income tax expense -- --
---------- -----------
Net income (loss) $ (51,752) $ 16,064
========== ===========
Net income (loss) per common share:
Basic * $ 0.01
========== ===========
Diluted * $ 0.01
========== ===========
Weighted average number of shares outstanding:
Basic 24,857,647 1,403,866
========== ===========
Diluted 24,857,647 1,403,866
========== ===========
* less than $0.01
The accompanying notes are an integral part of these financial statements.
21
FOREX365, INC.
(formerly known as Solar Group, Inc.)
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE PERIOD JULY 1, 2007 THROUGH JUNE 30, 2009
Preferred Stock Common Stock Additional Stockholders'
------------------------- ------------------------- Paid-In Accumulated Equity
Shares Amount Shares Amount Capital Deficit (Deficit)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Balance July 1, 2007 -- $ -- 1,027,647 $ 1,028 $ 1,676,845 $(1,923,573) $ (245,700)
Issuance of common stock for
cash -- -- 21,000,000 21,000 189,000 -- 210,000
Issuance of common stock for
services -- -- 2,830,000 2,830 25,470 -- 28,300
Net income -- -- -- -- -- 16,064 16,064
----------- ----------- ----------- ----------- ----------- ----------- -----------
Balance June 30, 2008 -- -- 24,857,647 24,858 1,891,315 (1,907,509) 8,664
Net (loss) -- -- -- -- -- (51,752) (51,752)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Balance June 30, 2009 -- $ -- 24,857,647 $ 24,858 $ 1,891,315 $(1,959,261) $ (43,088)
=========== =========== =========== =========== =========== =========== ===========
*after giving retroactive effect to the reduction in par value from $0.01 to
$0.001 per share effective August 14, 2008
The accompanying notes are an integral part of these financial statements.
22
FOREX365, INC.
(formerly known as Solar Group, Inc.)
STATEMENTS OF CASH FLOWS
For the Twelve Months
Ended June 30,
----------------------
2009 2008
--------- ---------
Cash Flows from Operating Activities:
Net income (loss) $ (51,752) $ 16,064
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Income on discharge of indebtedness -- (71,731)
Common stock issued for services -- 28,300
Change in operating assets and liabilities:
Accrued liabilities and payables (265) (54,162)
Accrued liabilities and payables - related parties 23,500 (42,042)
Litigation obligation -- (63,000)
--------- ---------
Net cash used in operating activities (28,517) (186,571)
--------- ---------
Cash Flows from Investing Activities:
--------- ---------
Net cash provided by (used in) investing activities -- --
--------- ---------
Cash Flows from Financing Activities:
Payments on advances -- (2,000)
Common stock issuance for cash -- 210,000
Net proceeds from revolving loans 10,000 --
--------- ---------
Net cash provided by (used in) financing activities 10,000 208,000
--------- ---------
Net Change in Cash (18,517) 21,429
Cash, at beginning of period 21,429 --
--------- ---------
Cash, at end of period $ 2,912 $ 21,429
========= =========
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest $ -- $ --
========= =========
Cash paid during the period for taxes $ -- $ --
========= =========
The accompanying notes are an integral part of these financial statements.
23
FOREX365, INC.
(formerly known as Solar Group, Inc.)
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND BASIS OF PRESENTATION:
Organization and Business
Forex365, Inc. (the "Company") was incorporated under the laws of the State
of Nevada on February 8, 1984 under the name Solar Age Industries, Inc. The
Company's principal business activity was the manufacture and sale of solar
air and water heating devices. As of January 1986, the federal energy
credits and most state energy credits expired which severely impacted on
the Company's ability to market its products, resulting in a substantial
loss to the Company for the first two calendar quarters of 1986. The
Company attempted to diversify its operation, but because of the continuing
substantial financial loses sustained by the Company, it was forced to file
a Chapter 11 petition under the Bankruptcy Code District of New Mexico. In
late 1987, the Company filed its plan of reorganization, which was approved
by the Bankruptcy Court. Following distribution to its creditors under the
terms of the plan and consummation of the plan, the bankruptcy case was
subsequently closed. Although the Company continued to market its products,
the Company did not attain the commercial success for its products and,
subsequently, ceased operations.
In July 1998, pursuant to an Agreement and Plan of Reorganization and, as a
result of a reverse merger, the Company acquired through its wholly owned
subsidiary, SGI Capital, Inc., an Illinois corporation, a ninety percent
interest in JSC NBM Stroyservice ("NBM"), Russian limited liability
company, which was a real estate development and construction company based
in Moscow, Russia. Shortly after the merger, the Company was unable to
develop its operations, due to deteriorating economic conditions in Russia
and the inability of NBM to provide audited financial statements for the
fiscal year ended as of June 30, 1999 in accordance with the U.S. General
Accepted Accounting Principles, and the Company was forced to rescind the
Agreement and Plan of Reorganization.
Effective November 15, 2007, the then existing officers and directors of
the Company resigned, and Kevin R. Keating became the sole director. Kevin
R. Keating appointed two additional directors to fill the vacancies on the
Company's board of directors ("Board"). The Board then appointed Kevin R.
Keating as the Chief Executive Officer, Chief Financial Officer, President,
Secretary and Treasurer of the Company.
On June 25, 2008, the Company issued an aggregate of 21,000,000 shares of
common stock (the "Shares") to Kevin R. Keating and an investor controlled
by Fredric M. Schweiger ("Investor"). The Shares were sold by the Company
for an aggregate purchase price of $210,000, or $0.01 per share. The Shares
have certain registration rights. Immediately following the issuance of the
Shares, Kevin R. Keating and the Investor owned approximately 95.3% of the
Company's outstanding common stock. The proceeds from the sale of the
Shares were used by the Company to pay certain liabilities and obligations
of the Company.
The Company currently has no operations but is seeking to acquire an
ongoing business. The Company's principal business objective for the next
12 months and beyond such time will be to achieve long-term growth
potential through a combination with an operating business rather than
immediate, short-term earnings. The Company will not restrict its potential
candidate target companies to any specific business, industry or
24
FOREX365, INC.
(formerly known as Solar Group, Inc.)
NOTES TO FINANCIAL STATEMENTS
geographical location and, thus, may acquire any type of business. No
assurance can be given that the Company will ever complete a business
combination with an operating company.
Basis of Presentation
The accompanying financial statements include the accounts of the Company.
The Company has no subsidiaries.
Going Concern
Since inception, the Company had a cumulative net loss of $1,959,261 and
$1,907,509 as of June 30, 2009 and June 30, 2008, respectively. Since
inception, the Company has been dependent upon the receipt of capital
investment or other financing to fund its operations. The Company currently
has no source of operating revenue, and has only limited working capital
with which to pursue its business plan, which contemplates the completion
of a business combination with an operating company. The amount of capital
required to sustain operations until the successful completion of a
business combination is subject to future events and uncertainties. It may
be necessary for the Company to secure additional working capital through
loans or sales of common stock, and there can be no assurance that such
funding will be available in the future. These conditions raise substantial
doubt about the Company's ability to continue as a going concern.
The accompanying financial statements have been presented on the basis of
the continuation of the Company as a going concern and do not include any
adjustments relating to the recoverability and classification of recorded
asset amounts or the amounts and classifications of liabilities that might
be necessary should the Company be unable to continue as a going concern.
2. SUMMARY OF ACCOUNTING POLICIES:
Income Taxes
The Company accounts for income taxes in accordance with the Statement of
Financial Accounting Standards No. 109, Accounting for Income Taxes ("SFAS
109"), which requires the recognition of deferred tax liabilities and
assets at currently enacted tax rates for the expected future tax
consequences of events that have been included in the financial statements
or tax returns. A valuation allowance is recognized to reduce the net
deferred tax asset to an amount that is more likely than not to be
realized.
The Financial Accounting Standards Board ("FASB") has issued Financial
Interpretation No. 48, "Accounting for Uncertainty in Income Taxes-An
Interpretation of FASB Statement No. 109 ("FIN 48"). FIN 48 clarifies the
accounting for uncertainty in income taxes recognized in a company's
financial statements in accordance with SFAS 109. FIN 48 requires a company
to determine whether it is more likely than not that a tax position will be
sustained upon examination based upon the technical merits of the position.
If the more-likely-than-not threshold is met, a company must measure the
tax position to determine the amount to recognize in the financial
statements.
As a result of the implementation of FIN 48, the Company performed a review
of its material tax positions. At the adoption date of July 1, 2007, the
Company had no unrecognized tax benefits as a result of tax positions taken
in a prior period. During the fiscal years ended June 30, 2008 and 2009,
there were no increases or decreases in unrecognized tax benefits as a
25
FOREX365, INC.
(formerly known as Solar Group, Inc.)
NOTES TO FINANCIAL STATEMENTS
result of tax positions taken during those fiscal years, there were no
decreases in unrecognized tax benefits relating to settlements with taxing
authorities, and there were no reductions to unrecognized tax benefits as a
result of a lapse of the applicable statute of limitations. As of June 30,
2008 and 2009, the Company had no unrecognized tax benefits that, if
recognized, would affect the effective tax rate. As of June 30, 2009, the
Company has no tax positions for which it is reasonably possible that the
total amounts of unrecognized tax benefits will significantly increase or
decrease within 12 months of the reporting date. Generally, the Company's
tax years ended June 30, 1999 and after remain subject to examination by
major taxing jurisdictions.
The Company has elected to classify any interest or penalties recognized
with respect to any unrecognized tax benefits as income taxes. During the
fiscal years ended June 30, 2008 and 2009, the Company did not recognize
any amounts for interest or penalties with respect to any unrecognized tax
benefits. As of June 30, 2008 and 2009, no amounts for interest or
penalties with respect to any unrecognized tax benefits have been accrued.
Use of Estimates
In preparing financial statements in conformity with accounting principles
generally accepted in the United States of America, management is required
to make estimates and assumptions that affect the reported amounts of
assets and liabilities, the disclosure of contingent assets and liabilities
at the date of the financial statements, and the reported amounts of
revenue and expenses during the reporting period. Actual results could
differ from these estimates.
Cash and Cash Equivalents
For purposes of the statements of cash flows, the Company considers all
highly liquid investments with a maturity of three months or less to be
cash equivalents. There were no cash equivalents at June 30, 2009 or June
30, 2008.
Fair Value of Financial Instruments
On July 1, 2008, the Company adopted Statement of Financial Accounting
Standards No. 157, Fair Value Measurements ("SFAS 157"). SFAS 157 defines
fair value, establishes a three-level valuation hierarchy for disclosures
of fair value measurement and enhances disclosure requirements for fair
value measures. The three levels are defined as follows:
o Level 1 inputs to the valuation methodology are quoted prices
(unadjusted) for identical assets or liabilities in active
markets.
o Level 2 inputs to the valuation methodology include quoted prices
for similar assets and liabilities in active markets, and inputs
that are observable for the asset or liability, either directly
or indirectly, for substantially the full term of the financial
instrument.
o Level 3 inputs to valuation methodology are unobservable and
significant to the fair measurement.
The fair value of the Company's cash and cash equivalents, accrued
liabilities and payables and revolving loans payable approximate
carrying value because of the short-term nature of these items.
26
FOREX365, INC.
(formerly known as Solar Group, Inc.)
NOTES TO FINANCIAL STATEMENTS
Stock Compensation for Services Rendered
The Company accounts for equity instruments issued to non-employees in
accordance with the provisions of Statement of Financial Accounting
Standards No. 123R, Share-Based Payment, and Emerging Issues Task Force
("EITF") Issue No. 96-18, Accounting for Equity Instruments That Are Issued
to Other Than Employees for Acquiring, or in Conjunction with Selling,
Goods or Services. All transactions in which goods or services are the
consideration received for the issuance of equity instruments are accounted
for based on the fair value of the consideration received or the fair value
of the equity instrument issued, whichever is more reliably measurable. The
measurement date of the fair value of the equity instrument issued is the
earlier of the date on which the counterparty's performance is complete or
the date on which it is probable that performance will occur. The Company
had no common stock options or warrants outstanding at June 30, 2009 and
2008.
Revenue Recognition
The Company recognizes revenue in accordance with SEC Staff Accounting
Bulletin No. 101, Revenue Recognition in Financial Statements ("SAB 101"),
as amended by SAB 101A and 101B. SAB 101 requires that four basic criteria
must be met before revenue can be recognized: (1) persuasive evidence of an
arrangement exists; (2) delivery has occurred or services rendered; (3) the
fee is fixed and determinable; and (4) collectibility is reasonably
assured. The Company had no operations and no revenue for the years ended
June 30, 2009 and June 30, 2008.
Earnings (Loss) per Share
Basic earnings per (loss) share (EPS) is calculated by dividing the income
or loss available to common shareholders by the weighted average number of
common shares outstanding for the period. Diluted EPS reflects the
potential dilution that could occur if securities or other contracts to
issue common stock were exercised or converted into common stock. Since
there are no potentially dilutive securities for the years ended June 30,
2009 and 2008, dilutive EPS calculations are not included.
Recent Pronouncements
In December 2007, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 141(R), Business
Combinations ("SFAS 141(R)"). SFAS 141(R) establishes principles and
requirements for how an acquirer recognizes and measures in its financial
statements the identifiable assets acquired, the liabilities assumed, and
any non-controlling interest in the acquiree and recognizes and measures
the goodwill acquired in the business combination or a gain from a bargain
purchase. SFAS 141(R) also sets forth the disclosures required to be made
in the financial statements to evaluate the nature and financial effects of
the business combination. SFAS 141(R) applies prospectively to business
combinations for which the acquisition date is on or after the beginning of
the first annual reporting period beginning on or after December 15, 2008.
The provisions of SFAS 141(R) will become effective as of the beginning of
our 2009 fiscal year.
In December 2007, the FASB issued Statement of Financial Accounting
Standards No. 160, Non-controlling Interests in Consolidated Financial
Statements, an amendment of ARB No. 51 ("SFAS 160"). SFAS 160 will change
the accounting and reporting for minority interests, which will be
recharacterized as non-controlling interests (NCI) and classified as a
27
FOREX365, INC.
(formerly known as Solar Group, Inc.)
NOTES TO FINANCIAL STATEMENTS
component of equity. This new consolidation method will significantly
change the accounting for transactions with minority interest holders. SFAS
160 requires retroactive adoption of the presentation and disclosure
requirements for existing minority interests. All other requirements of
SFAS 160 shall be applied prospectively. SFAS 160 is effective for fiscal
years beginning after December 15, 2008 and, as such, the Company will
adopt this standard in fiscal 2009.
In March 2008, the FASB issued Statement of Financial Accounting Standards
No. 161, Disclosures about Derivative Instruments and Hedging Activities
("SFAS 161"). SFAS 161 is intended to improve financial reporting about
derivative instruments and hedging activities by requiring enhanced
disclosures to enable investors to better understand their effects on an
entity's financial position, financial performance, and cash flows. The
provisions of SFAS 161 are effective for the quarter ending March 31, 2009.
In June 2008, the FASB issued FSP EITF 03-6-1, "Determining Whether
Instruments Granted in Share-Based Payment Transactions Are Participating
Securities" (FSP EITF 03-6-1). FSP EITF 03-6-1 clarified that all
outstanding unvested share-based payment awards that contain rights to
nonforfeitable dividends participate in undistributed earnings with common
shareholders. Awards of this nature are considered participating securities
and the two-class method of computing basic and diluted earnings per share
must be applied. FSP EITF 03-6-1 is effective for fiscal years beginning
after December 15, 2008.
In June 2008, the FASB ratified EITF Issue No. 07-5, "Determining Whether
an Instrument (or an Embedded Feature) Is Indexed to an Entity's Own Stock"
(EITF 07-5). EITF 07-5 provides that an entity should use a two step
approach to evaluate whether an equity-linked financial instrument (or
embedded feature) is indexed to its own stock, including evaluating the
instrument's contingent exercise and settlement provisions. It also
clarifies on the impact of foreign currency denominated strike prices and
market-based employee stock option valuation instruments on the evaluation.
EITF 07-5 is effective for fiscal years beginning after December 15, 2008.
In June 2008, the FASB ratified EITF Issue No. 08-3, "Accounting for
Lessees for Maintenance Deposits Under Lease Arrangements" (EITF 08-3).
EITF 08-3 provides guidance for accounting for nonrefundable maintenance
deposits. It also provides revenue recognition accounting guidance for the
lessor. EITF 08-3 is effective for fiscal years beginning after December
15, 2008.
In May 2009, the FASB issued Statement of Financial Accounting Standards
No. 165, "Subsequent Events" ("SFAS 165"). SFAS 165 establishes the general
standards of accounting for and disclosure of events that occur after the
balance sheet date but before financial statements are issued or available
to be issued. SFAS 165 is effective for interim and fiscal periods ending
after June 15, 2009.
In June 2009, the FASB issued Statement of Financial Accounting Standards
No. 168, "The FASB Accounting Standards Codification and the Hierarchy of
Generally Accepted Accounting Principles" ("SFAS 168"). SFAS 168 replaces
SFAS 162, "The Hierarchy of Generally Accepted Accounting Principles." SFAS
168 identifies the sources of accounting principles and the framework for
selecting the principles used in the preparation of financial statements.
SFAS 168 is effective for interim and fiscal periods ending after September
15, 2009.
28
FOREX365, INC.
(formerly known as Solar Group, Inc.)
NOTES TO FINANCIAL STATEMENTS
The implementation and adoption of these new Statements is not expected to
have a material effect on the Company's financial position, results of
operations, or cash flows.
3. STOCKHOLDERS' EQUITY:
As of June 30, 2007, the Company had 1,027,647 shares of common stock,
$0.01 par value per share, outstanding.
On June 25, 2008, the Company issued 16,000,000 shares of common stock to
Kevin R. Keating, a director of the Company and the Company's sole officer,
for a purchase price of $160,000, or $0.01 per share.
On June 25, 2008, the Company issued 5,000,000 shares of common stock to
the Investor for a purchase price of $50,000, or $0.01 per share.
On June 26, 2008, the Company issued 630,000 shares of common stock to
Kevin R. Keating for services rendered as a director of the Company, which
services were valued at $6,300, or $0.01 per share.
On June 26, 2008, the Company issued 2,200,000 shares of common stock to a
consulting firm controlled Frederic M. Schweiger ("Consultant"), which
consulting services were valued at $22,000, or $0.01 per share.
Effective August 14, 2008, the Company filed amended and restated articles
of incorporation ("Restated Articles of Incorporation") with the Nevada
Scretary of State. The Restated Articles of Incorporation amended the
Company's then current articles of incorporation to, among other things,
increase the number of authorized shares of common stock from 50,000,000 to
200,000,000, increase the number of authorized shares of preferred stock
from 1,000,000 to 10,000,000, and reduce the par value per share of the
common and preferred stock from $0.01 to $0.001. The financial statements
have been adjusted to give retroactive effect to the reduction in the par
value per share of the common stock.
As of June 30, 2009, the Company had 24,857,647 shares of common stock,
$0.001 par value per share, outstanding. As of June 30, 2009, there were no
outstanding options or warrants to purchase shares of the Company's common
stock.
4. RELATED PARTY TRANSACTIONS:
Commencing July 1, 2004, the Company's Board of Directors approved a
consulting fee of $3,500 per month payable to its former director and Chief
Executive Officer, Leon Leibovich, for consulting services rendered to the
Company for financial and administrative matters and for assisting the
Company in identifying an operating company for a potential business
combination. The Company recorded expenses for these consulting services of
$13,500 and $42,000 during the fiscal years ended June 30, 2008 and 2007,
respectively. On November 14, 2007, the Company entered into a Settlement
and Release Agreement with Leon Leibovich, which provided that for the
partial payment, at the closing of the sale of the Shares by the Company,
29
FOREX365, INC.
(formerly known as Solar Group, Inc.)
NOTES TO FINANCIAL STATEMENTS
of certain consulting fees earned by Leon Leibovich for consulting services
rendered to the Company from July 2004 to October 2007. As part of the
settlement of such consulting fees, Leon Leibovich agreed to accept $68,542
("Settlement Amount") in full and complete payment of $140,000 of unpaid
consulting fees. As part of the Settlement Agreement, Leon Leibovich also
agreed to release the Company from all claims and to indemnify the Company
from any loss, cost or expense incurred by the Company up to a maximum of
$12,500 for a period of 4 months following the closing of the sale of the
Shares. In accordance with the Settlement Agreement, the Company paid
$56,042 to Leon Leibovich at the closing of the sale of the Shares and
withheld $12,500 from the Settlement Amount payable to Leon Leibovich,
which withheld amount will be paid to Leon Leibovich at the end of the
4-month period, subject to any claims for indemnity. On October 22, 2008,
in accordance with the terms of the Settlement Agreement, the Company paid
$12,500 to Leon Leibovich in full payment of the amount that had been
withheld from the initial payment of the Settlement Amount to satisfy
potential claims for indemnity. As of the June 30, 2009 and 2008, the
Company had unpaid consulting fees owed to Leon Leibovich of $0 and
$12,500, respectively, which have been recorded as accrued liabilities and
payables - related parties.
On May 5, 2008, the Company entered into a revolving loan agreement with
Vero Management, L.L.C. ("Vero"). Pursuant to this agreement, the Company
borrowed $10,500 from Vero on May 5, 2008. The Company is required to repay
the outstanding advances in full on or before June 30, 2008. The loan bears
interest at a rate of 6% per annum. The loan was used by the Company to pay
professional fees. Kevin R. Keating, the Company's Chief Executive Officer,
Chief Financial Officer, President, Secretary and Treasurer and a director
is the sole member and manager of Vero. The Company paid the Vero loan on
June 27, 2008 from the proceeds of the sale of Shares. Vero waived any
payment of accrued interest on the loan.
On June 25, 2008, the Company issued 16,000,000 shares of common stock to
Kevin R. Keating, a director of the Company and the Company's sole officer,
for a purchase price of $160,000, or $0.01 per share. On June 26, 2008, the
Company issued 630,000 shares of common stock to Kevin R. Keating for
services rendered as a director of the Company, which services were valued
at $6,300, or $0.01 per share.
Effective July 1, 2008, the Company entered into a management agreement
("Management Agreement") with Vero Management, LLC ("Vero") under which
Vero has agreed to provide a broad range of managerial and administrative
services to the Company including, but not limited to, assistance in the
preparation and maintenance of the Company's financial books and records,
the filing of various reports with the appropriate regulatory agencies as
are required by State and Federal rules and regulations, the administration
of matters relating to the Company's shareholders including responding to
various information requests from shareholders as well as the preparation
and distribution to shareholders of relevant Company materials, and to
provide office space, corporate identity, telephone and fax services,
mailing, postage and courier services for a fixed fee of $3,000 per month,
for an initial period of twelve months. The agreement may be terminated by
either party in writing during the initial twelve months. At the end of the
initial twelve month term, the agreement will continue to remain in effect
until terminated in writing by either party. Kevin R. Keating, the
Company's Chief Executive Officer, Chief Financial Officer, President,
Secretary and Treasurer and sole director is the sole member and manager of
Vero. The Company recorded expenses for these services of $36,000 during
30
FOREX365, INC.
(formerly known as Solar Group, Inc.)
NOTES TO FINANCIAL STATEMENTS
the year ended June 30, 2009. As of June 30, 2009, the Company had unpaid
fees owed to Vero of $36,000, which have been recorded as accrued
liabilities and payables - related parties.
On January 9, 2009, Vero entered into a revolving loan agreement with the
Company under which Vero has agreed to loan the Company up to $14,000 to
provide the Company with working capital. Vero is owned and controlled by
Kevin R. Keating, the Company's sole officer and director and a principal
stockholder of the Company.
On January 9, 2009, Lionsridge Capital, LLC ("Lionsridge") entered into a
revolving loan agreement with the Company under which Lionsridge has agreed
to loan the Company up to $6,000 to provide the Company with working
capital. Lionsridge is a principal stockholder of the Company. Lionsridge
is owned and controlled by Frederic M. Schweiger.
As of June 30, 2009, the Company has received aggregate advances of $7,000
from Vero and $3,000 from Lionsridge under the revolving loan agreements.
The revolving loan agreements provide that: (i) all advances are due and
payable in full on the earlier of June 30, 2009, or the occurrence of a
change of control of the Company, and (ii) interest will accrue on
outstanding advances at a rate of 6% per annum commencing July 1, 2009.
Vero and Lionsridge have waived any payment under the revolving loans until
the occurrence of a change of control. The Company has recorded these
advances as revolving loans payable - related parties.
5. REVOLVING LOAN
On November 17, 2007, the Company entered into a revolving loan agreement
with Keating Investments, LLC ("Lender"). Pursuant to this agreement, the
Company borrowed $5,000 from the Lender on November 17, 2005. The Company
is required to repay the outstanding advances in full on or before June 30,
2008. The loan bears interest at a rate of 6% per annum. The loan was used
by the Company to pay attorneys in connection with certain litigation. See
note 6. The Company paid the Keating Investments loan on June 27, 2008 from
the proceeds of the sale of Shares. Keating Investments waived any payment
of accrued interest on the loan. Keating Investments, LLC is the managing
member of KIG Investors II, LLC ("KIG"). KIG assigned its rights to
purchase the Shares to Kevin R. Keating and the Investor on June 20, 2008.
See note 4 above for revolving loan agreements between the Company and
certain related parties.
6. LITIGATION
The Company was named in a civil action filed in Nevada District Court,
Clark County on August 7, 2007 captioned Benchmark Capital, LLC vs.
Forex365, Inc., formerly known as Solar Group, Inc., Leon Leibovich and
Does I-XV (the "Benchmark Action"). The lawsuit alleges a number of causes
of action related to Benchmark's attempts to acquire a controlling interest
in the Company from certain stockholders ("Controlling Interest") during
the period from April 2005 to May 2007. During this time period, Benchmark
alleges it advanced monies to the Company to pay certain expenses and costs
of the Company. Benchmark alleges certain other defendants breached a
verbal agreement to sell it the Controlling Interest. Generally, Benchmark
is demanding the Company to repay these advances in and/or to issue its
31
FOREX365, INC.
(formerly known as Solar Group, Inc.)
NOTES TO FINANCIAL STATEMENTS
common stock to Benchmark in lieu of cash repayment of the advances.
Benchmark is also seeking specific performance to have the Controlling
Interest transferred to it.
On November 1, 2007, the Company was advised that a default judgment had
been entered against the Company on October 31, 2007. The default judgment
provides that the Company pay Benchmark the sum of $41,670.88 plus interest
at 10.25% per annum from August 7, 2007 until paid, plus costs of $447.98
and attorney fees of $5,420. On January 8, 2008, the Court vacated the
default judgment against the Company. The Company has timely filed its
answer to complaint.
On March 10, 2008, Benchmark agreed to settle the Benchmark Action and to
release the Company and other defendants from all claims (including a
$2,000 advance made in June 2006 by Benchmark to pay the Company's
corporate filing fees to the State of Nevada) in exchange for a cash
payment of $65,000 ("Benchmark Settlement Amount"). Pursuant to AICPA
Statement on Auditing Standards No. 1, Subsequent Events ("SAS 1"), the
Company recorded a litigation loss for $63,000 related to the settlement of
the Benchmark Action in fiscal year ended June 30, 2007 since the events
that gave raise to the claim occurred during the fiscal year ended June 30,
2007.
On June 25, 2008, the Company paid the Benchmark Settlement Amount in full
from the proceeds of the sale of the Shares. On June 30, 2008, the
Benchmark Action was dismissed with prejudice.
7. INCOME TAXES:
The Company recognizes the amount of income taxes payable or refundable for
the current year and recognizes deferred tax assets and liabilities for the
future tax consequences attributable to differences between the financial
statement amounts of certain assets and liabilities and their respective
tax bases. Deferred tax assets and deferred liabilities are measured using
enacted tax rates expected to apply to taxable income in the years those
temporary differences are expected to be recovered or settled. Deferred tax
assets are reduced by a valuation allowance to the extent that uncertainty
exists as to whether the deferred tax assets will ultimately be realized.
As of June 30, 2009, the Company had net operating loss carryovers of
approximately $980,573 which will expire through the year 2029. Since the
Company has yet to prove the ability to generate taxable income, a
valuation account has been recognized to eliminate the deferred tax asset.
Deferred tax assets and the valuation account are as follows at June 30,
2009 and 2008:
2009 2008
--------- ---------
Deferred tax asset
NOL Carryforward $ 301,500 $ 286,100
Valuation Allowance (301,500) (286,100)
--------- ---------
$ -- $ --
========= =========
32
FOREX365, INC.
(formerly known as Solar Group, Inc.)
NOTES TO FINANCIAL STATEMENTS
The components of income tax expense are as follows:
For the Twelve Months Ended June 30,
------------------------------------
2009 2008
-------- --------
Current federal tax $ -- $ --
Current state tax -- --
Change in NOL benefit 15,400 2,500
Change in valuation allowance (15,400) (2,500)
-------- --------
$ -- $ --
======== ========
The Company has no unrecognized tax benefits as a result of tax positions
taken with respect to the fiscal year ended June 30, 2009 or prior fiscal
years. See Note 2.
8. BASIC AND FULLY DILUTED INCOME (LOSS) PER SHARE
The following data show the amounts used in computing basic income (loss)
per share:
For the Twelve Months Ended June 30,
------------------------------------
2009 2008
------------ ------------
Income (loss) from operations available to
common stockholders (numerator) $ (51,752) $ 16,064
------------ ------------
Weighted average number of common shares
outstanding used in income (loss) per share during
the period (denominator) 24,857,647 1,403,866
------------ ------------
Basic income (loss) per common share * $ 0.01
* Less than $0.01 per share.
Fully Diluted income (loss) per share were not presented, as the Company
had no common equivalent shares for all periods presented that would effect
the computation of fully diluted income (loss) per share.
9. SUBSEQUENT EVENTS
On or about August 13, 2009, the Company received additional advances
totaling $4,000 ($2,500 from Vero and $1,500 from Lionsridge) under certain
revolving loan agreements. See Note 4 - Related Party Transactions.
33
Item 9. Changes in and Disagreements with Accountants on Financial Disclosure
None.
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure
that information required to be disclosed in our reports filed pursuant to the
Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the SEC's rules, regulations and related forms, and that
such information is accumulated and communicated to our principal executive
officer and principal financial officer, as appropriate, to allow timely
decisions regarding required disclosure.
Our management is also responsible for establishing and maintaining
adequate internal control over financial reporting. The Company's internal
control over financial reporting is designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted
accounting principles.
Our internal control over financial reporting includes those policies and
procedures that: (i) pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and dispositions of the
assets of the Company; (ii) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that our receipts
and expenditures are being made only in accordance with authorizations of the
Company's management and directors; and (iii) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use or
disposition of our assets that could have a material effect on the financial
statements.
As of June 30, 2009, we carried out an evaluation, under the supervision
and with the participation of our principal executive officer and our principal
financial officer of the effectiveness of the design and operation of our
disclosure controls and procedures. Based on this evaluation, our principal
executive officer and our principal financial officer concluded that our
disclosure controls and procedures were effective as of the end of the period
covered by this report.
Change in Internal Control over Financial Reporting
There were no changes in the Company's internal control over financial
reporting that occurred during the quarter ended June 30, 2009 that have
materially affected, or that are reasonably likely to materially affect, the
Company's internal control over financial reporting.
Item 9B. Other Information.
None.
34
PART III
Item 10. Directors, Executive Officers and Corporate Governance.
Directors and Executive Officers
Our sole officer and director and additional information concerning him is
as follows:
Name Age Position
- -------------------- ------------ -------------------------------------------
Kevin R. Keating 69 Chief Executive Officer, Chief Financial
Officer, President, Secretary and Treasurer
and Director
The term of office of each director expires at our annual meeting of
stockholders or until their successors are duly elected and qualified. Except as
set forth in Item 11 of this Annual Report, the Directors are not compensated
for serving as such. Officers serve at the discretion of the Board of Directors.
Kevin R. Keating has served as a director of the Company since November 15,
2007. Mr. Keating was appointed Chief Executive Officer, Chief Financial
Officer, President, Secretary and Treasurer effective November 16, 2007. Mr.
Keating is the Managing Member of Vero Management, LLC, which provides
managerial, administrative, and financial consulting services for micro-cap
public companies, including the Company.
For more than 40 years he has been engaged in various aspects of the
investment business. Mr. Keating began his Wall Street career with the First
Boston Corporation in New York in 1965. From 1967 through 1974, he was employed
by several institutional research boutiques where he functioned as Vice
President Institutional Equity Sales. From 1974 until 1982, Mr. Keating was the
President and Chief Executive Officer of Douglas Stewart, Inc., a New York Stock
Exchange member firm. From 1982 through 2006, he was associated with a variety
of securities firms as a registered representative servicing the investment
needs of high net worth individual investors.
Additionally, Mr. Keating currently serves as the sole officer and director
of Catalyst Lighting Group, Inc., a public shell company that is quoted on the
OTC BB. Also, he is the sole officer and director of Wentworth IV, Inc.,
Wentworth V, Inc., Wentworth VI, Inc., Wentworth VII, Inc., and Wentworth VIII,
Inc., all of which are publicly-reporting, non-trading, blank check, shell
companies.
Audit Committee and Audit Committee Financial Expert
The Company is not a "listed company" under SEC rules and is therefore not
required to have an audit committee comprised of independent directors. The
Company does not currently have an audit committee, however, for certain
purposes of the rules and regulations of the SEC and in accordance with the
Sarbanes-Oxley Act of 2002, the Company's board of directors is deemed to be its
audit committee and as such functions as an audit committee and performs some of
the same functions as an audit committee including: (i) selection and oversight
of the Company's independent accountant; (ii) establishing procedures for the
receipt, retention and treatment of complaints regarding accounting, internal
controls and auditing matters; and (iii) engaging outside advisors. The
Company's board of directors has determined that its members do not include a
person who is an "audit committee financial expert" within the meaning of the
rules and regulations of the SEC. The board of directors has determined that
each of its members is able to read and understand fundamental financial
statements and has substantial business experience that results in that member's
financial sophistication. Accordingly, the board of directors believes that each
of its members have the sufficient knowledge and experience necessary to fulfill
the duties and obligations that an audit committee would have.
35
Code of Ethics
A code of ethics relates to written standards that are reasonably designed
to deter wrongdoing and to promote:
o Honest and ethical conduct, including the ethical handling of actual
or apparent conflicts of interest between personal and professional
relationships;
o Full, fair, accurate, timely and understandable disclosure in reports
and documents that are filed with, or submitted to, the SEC and in
other public communications made by an issuer;
o Compliance with applicable governmental laws, rules and regulations;
o The prompt internal reporting of violations of the code to an
appropriate person or persons identified in the code; and
o Accountability for adherence to the code.
Due to the limited scope of the Company's current operations, the Company
has not adopted a corporate code of ethics that applies to its executive
officers.
Conflicts of Interest
Certain conflicts of interest exist and may continue to exist between the
Company and its officers and directors due to the fact that each has other
business interests to which they devote their primary attention. Each officer
and director may continue to do so notwithstanding the fact that management time
should be devoted to the business of the Company.
Certain conflicts of interest may exist between the Company and its
management, and conflicts may develop in the future. The Company has not
established policies or procedures for the resolution of current or potential
conflicts of interest between the Company, its officers and directors or
affiliated entities. There can be no assurance that management will resolve all
conflicts of interest in favor of the Company, and conflicts of interest may
arise that can be resolved only through the exercise by management their best
judgment as may be consistent with their fiduciary duties. Management will try
to resolve conflicts to the best advantage of all concerned.
Board Meetings; Nominating and Compensation Committees
The Board of Directors took a number of actions by written consent of all
of the directors during the fiscal year ended June 30, 2009. Such actions by the
written consent of all directors are, according to Nevada corporate law and the
Company's bylaws, as valid and effective as if they had been passed at a meeting
of the directors duly called and held. The Company's directors and officers do
not receive remuneration from the Company unless approved by the Board of
Directors or pursuant to an employment contract. No compensation has been paid
to the Company's directors for attendance at any meetings during the last fiscal
year.
The Company does not have standing nominating or compensation committees,
or committees performing similar functions. The Company's board of directors
believes that it is not necessary to have a compensation committee at this time
because the functions of such committee are adequately performed by the board of
directors. The board of directors also is of the view that it is appropriate for
the Company not to have a standing nominating committee because the board of
directors has performed and will perform adequately the functions of a
nominating committee. The Company is not a "listed company" under SEC rules and
is therefore not required to have a compensation committee or a nominating
committee.
36
Shareholder Communications
There has not been any defined policy or procedure requirements for
stockholders to submit recommendations or nomination for directors. The board of
directors does not believe that a defined policy with regard to the
consideration of candidates recommended by stockholders is necessary at this
time because it believes that, given the limited scope of the Company's
operations, a specific nominating policy would be premature and of little
assistance until the Company's business operations are at a more advanced level.
There are no specific, minimum qualifications that the board of directors
believes must be met by a candidate recommended by the board of directors.
Currently, the entire board of directors decides on nominees, on the
recommendation of any member of the board of directors followed by the board's
review of the candidates' resumes and interview of candidates. Based on the
information gathered, the board of directors then makes a decision on whether to
recommend the candidates as nominees for director. The Company does not pay any
fee to any third party or parties to identify or evaluate or assist in
identifying or evaluating potential nominee.
The Company does not have any restrictions on shareholder nominations under
its certificate of incorporation or bylaws. The only restrictions are those
applicable generally under Nevada corporate law and the federal proxy rules, to
the extent such rules are or become applicable. The board of directors will
consider suggestions from individual shareholders, subject to evaluation of the
person's merits. Stockholders may communicate nominee suggestions directly to
the board of directors, accompanied by biographical details and a statement of
support for the nominees. The suggested nominee must also provide a statement of
consent to being considered for nomination. There are no formal criteria for
nominees.
Because the management and directors of the Company are the same persons,
the Board of Directors has determined not to adopt a formal methodology for
communications from shareholders on the belief that any communication would be
brought to the board of directors' attention by virtue of the co-extensive
capacities served by Kevin R. Keating.
Indemnification
Under Nevada corporate law and pursuant to our restated articles of
incorporation and bylaws, the Company may indemnify its officers and directors
for various expenses and damages resulting from their acting in these
capacities. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to the Company's officers or directors pursuant
to the foregoing provisions, the Company has been informed that, in the opinion
of the SEC, this indemnification is against public policy as expressed in the
Securities Act, and is therefore unenforceable.
Involvement in Certain Legal Proceedings
There have been no events under any bankruptcy act, no criminal proceedings
and no judgments, injunctions, orders or decrees material to the evaluation of
the ability and integrity of our sole officer and director, Kevin R. Keating,
during the past five years.
Item 11. Executive Compensation
Compensation Discussion and Analysis
The Company currently is a shell company with nominal assets, no employees
and no active business operations. The Company's business plans are to identify
an operating company with which to merge or to complete a business combination
in a reverse merger transaction. As such, the Company currently has no formal
compensation program for its executive officers, directors or employees.
The Company is not a "listed company" under SEC rules and is therefore not
required to have a compensation committee. Accordingly, the Company has no
compensation committee.
37
Except as set forth in the summary compensation table below, during the
fiscal years ended June 30, 2007, 2008 and 2009, the Company has not provided
any salary, bonus, annual or long-term equity or non-equity based incentive
programs, health benefits, life insurance, tax-qualified savings plans, special
employee benefits or perquisites, supplemental life insurance benefits, pension
or other retirement benefits or any type of nonqualified deferred compensation
programs for its executive officers or employees.
On June 26, 2008, the Company issued Kevin R. Keating 630,000 shares of the
Company's common stock valued at $6,300 for consulting services provided by Mr.
Keating. Please see Item 13, Certain Relationships and Related Transactions, and
Director Independence, below for a full discussion of a certain agreement
between the Company and Vero Management, L.L.C., a limited liability company for
which Mr. Keating is the sole member and manager. Mr. Keating intends to devote
very limited time to our affairs.
It is possible that, after the Company successfully consummates a business
combination with an unaffiliated entity, that entity may desire to employ or
retain Mr. Keating for the purposes of providing services to the surviving
entity. However, the Company has adopted a policy whereby the offer of any
post-transaction employment or services to members of management will not be a
consideration in our decision whether to undertake any proposed transaction.
No retirement, pension, profit sharing, stock option or insurance programs
or other similar programs are currently in place for the benefit of the
Company's employees.
As of August 11, 2009, there were no outstanding shares of preferred stock,
no outstanding securities convertible into our common stock and no outstanding
options or warrants to acquire our common stock.
There are no understandings or agreements regarding compensation our
management will receive after a business combination that is required to be
included in this table, or otherwise.
Summary Compensation Table
The following table summarizes the total compensation paid to or earned by
each of the Company's named executive officers who served as executive officers
during all or a portion of the fiscal years ended June 30, 2007, 2008 and 2009.
- -------------- ------- -------- -------- --------- -------- ------------ ------------ ------------ -------------
(a) (b) (c) (d) (e) (f) (g) (h) (i) (j)
- -------------- ------- -------- -------- --------- -------- ------------ ------------ ------------ -------------
Non-equity Non-qualified
Incentive Deferred
Name and Stock Option Plan Compensation All Other Total
Principal Salary Bonus Awards Awards Compensation Earnings Compensation Compensation
Position Year ($) ($) ($) ($) ($) ($) ($) ($)
- -------------- ------- -------- -------- --------- -------- ------------ ------------ ------------ -------------
Leon 2009 $0 $0 $0 $0 $0 $0 $0 $0
Leibovich 2008 $0 $0 $0 $0 $0 $0 $13,500 $13,500
(former 2007 $0 $0 $0 $0 $0 $0 $42,000 $42,000
CEO)(1)
- -------------- ------- -------- -------- --------- -------- ------------ ------------ ------------ --------------
Kevin R. 2009 $0 $0 $0 $0 $0 $0 $0 $0
Keating 2008 $0 $0 $6,300 $0 $0 $0 $0 $6,300
(CEO, Pres., 2007 $0 $0 $0 $0 $0 $0 $0 $0
CFO, Tres.
and
Secry.)(2)
- -------------- ------- -------- -------- --------- -------- ------------ ------------ ------------ --------------
38
(1) Commencing July 1, 2004, the Company's Board of Directors approved a
consulting fee of $3,500 per month payable to its former director and Chief
Executive Officer, Leon Leibovich, for consulting services rendered to the
Company for financial and administrative matters and for assisting the Company
in identifying an operating company for a potential business combination. The
Company recorded expenses for these consulting services of $13,500 and $42,000
during the fiscal years ended June 30, 2008 and 2007, respectively. On November
14, 2007, the Company entered into a Settlement and Release Agreement with Leon
Leibovich, which provided for the partial payment of certain consulting fees
earned by Leon Leibovich for consulting services rendered to the Company from
July 2004 to October 2007. As part of the settlement of such consulting fees,
Leon Leibovich agreed to accept $68,542 in full and complete payment of $140,000
of unpaid consulting fees.
(2) On June 26, 2008, the Company issued Kevin R. Keating 630,000 shares of
the Company's common stock valued at $6,300 for consulting services provided by
Mr. Keating.
Employment and Other Agreements
The Company has no employment agreements or other agreements with any of
its executive officers. The Company currently has no employees.
Compensation of Directors
During the fiscal years ended June 30, 2007, 2008 and 2009, Messrs.
Leibovich and Keating did not receive separate compensation for their services
as a director.
Item 12. Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters.
The following table sets forth certain information regarding the Company's
common stock beneficially owned on August 11, 2009, for (i) each shareholder the
Company knows to be the beneficial owner of 5% or more of its outstanding common
stock, (ii) each of the Company's executive officers and directors, and (iii)
all executive officers and directors as a group. In general, a person is deemed
to be a "beneficial owner" of a security if that person has or shares the power
to vote or direct the voting of such security, or the power to dispose or to
direct the disposition of such security. A person is also deemed to be a
beneficial owner of any securities of which the person has the right to acquire
beneficial ownership within 60 days. To the best of the Company's knowledge, all
persons named have sole voting and investment power with respect to such shares,
except as otherwise noted. At August 11, 2009, 24,857,647 shares of the
Company's common stock were outstanding.
Number of Shares
Name and Address Beneficially Owned Percent of Shares
---------------- ------------------ -----------------
Kevin R. Keating 16,630,000 66.90%
190 Lakeview Way
Vero Beach, Florida 32963
Frederic M. Schweiger (1) 7,200,000 28.96%
2395 Woodglen Drive
Aurora, Illinois 60502
Lionsridge Capital, LLC 5,000,000 20.11%
c/o Frederic M. Schweiger
2395 Woodglen Drive
Aurora, Illinois 60502
Garisch Financial, Inc. 2,200,000 8.85%
c/o Frederic M. Schweiger
2395 Woodglen Drive
Aurora, Illinois 60502
All Executive Officers and 16,630,000 66.90%
Directors as a group
39
(1) Represents 2,200,000 shares of common stock held directly by Garisch
Financial, Inc. over which Frederic M. Schweiger has voting and
investment control and therefore may be deemed a beneficial owner of
such shares. Represents 5,000,000 shares of common stock held directly
by Lionsridge Capital, LLC over which Frederic M. Schweiger has voting
and investment control and therefore may be deemed a beneficial owner
of such shares.
Item 13. Certain Relationships and Related Transactions, Director Independence.
Commencing July 1, 2004, the Company's Board of Directors approved a
consulting fee of $3,500 per month payable to its former director and Chief
Executive Officer, Leon Leibovich, for consulting services rendered to the
Company for financial and administrative matters and for assisting the Company
in identifying an operating company for a potential business combination. The
Company recorded expenses for these consulting services of $13,500 and $42,000
during the fiscal years ended June 30, 2008 and 2007, respectively. On November
14, 2007, the Company entered into a Settlement and Release Agreement with Leon
Leibovich, which provided that for the partial payment, at the closing of the
sale of the Shares by the Company, of certain consulting fees earned by Leon
Leibovich for consulting services rendered to the Company from July 2004 to
October 2007. As part of the settlement of such consulting fees, Leon Leibovich
agreed to accept $68,542 ("Settlement Amount") in full and complete payment of
$140,000 of unpaid consulting fees. As part of the Settlement Agreement, Leon
Leibovich also agreed to release the Company from all claims and to indemnify
the Company from any loss, cost or expense incurred by the Company up to a
maximum of $12,500 for a period of 4 months following the closing of the sale of
the Shares. In accordance with the Settlement Agreement, the Company paid
$56,042 to Leon Leibovich at the closing of the sale of the Shares and withheld
$12,500 from the Settlement Amount payable to Leon Leibovich, which withheld
amount will be paid to Leon Leibovich at the end of the 4-month period, subject
to any claims for indemnity. On October 22, 2008, in accordance with the terms
of the Settlement Agreement, the Company paid $12,500 to Leon Leibovich in full
payment of the amount that had been withheld from the initial payment of the
Settlement Amount to satisfy potential claims for indemnity. As of the June 30,
2009 and 2008, the Company had unpaid consulting fees owed to Leon Leibovich of
$0 and $12,500, respectively.
On May 5, 2008, the Company entered into a revolving loan agreement with
Vero Management, L.L.C. ("Vero"). Pursuant to this agreement, the Company
borrowed $10,500 from Vero on May 5, 2008. The Company is required to repay the
outstanding advances in full on or before June 30, 2008. The loan bears interest
at a rate of 6% per annum. The loan was used by the Company to pay professional
fees. Kevin R. Keating, the Company's Chief Executive Officer, Chief Financial
Officer, President, Secretary and Treasurer and a director is the sole member
and manager of Vero. The Company paid the Vero loan on June 27, 2008 from the
proceeds of the sale of Shares. Vero waived any payment of accrued interest on
the loan.
On June 25, 2008, the Company issued 16,000,000 shares of common stock to
Kevin R. Keating, a director of the Company and the Company's sole officer, for
a purchase price of $160,000, or $0.01 per share. On June 26, 2008, the Company
issued 630,000 shares of common stock to Kevin R. Keating for services rendered
as a director of the Company, which services were valued at $6,300, or $0.01 per
share.
On June 26, 2008, the Company issued 2,200,000 shares of common stock to
Garisch Financial, Inc. ("GFI"), a consulting firm controlled by Frederic M.
Schweiger, for consulting services rendered to the Company, which services were
valued at $22,000, or $0.01 per share. The payment of these shares for
consulting services was made pursuant to an agreement between the Company and
GFI. Mr. Schweiger also controls Lionsridge which purchased 5,000,000 shares of
common stock for $50,000 on June 25, 2008 pursuant to the amended Purchase
Agreement.
40
Effective July 1, 2008, the Company entered into a management agreement
("Management Agreement") with Vero Management, LLC ("Vero") under which Vero has
agreed to provide a broad range of managerial and administrative services to the
Company including, but not limited to, assistance in the preparation and
maintenance of the Company's financial books and records, the filing of various
reports with the appropriate regulatory agencies as are required by State and
Federal rules and regulations, the administration of matters relating to the
Company's shareholders including responding to various information requests from
shareholders as well as the preparation and distribution to shareholders of
relevant Company materials, and to provide office space, corporate identity,
telephone and fax services, mailing, postage and courier services for a fixed
fee of $3,000 per month, for an initial period of twelve months. The agreement
may be terminated by either party in writing during the initial twelve months.
At the end of the initial twelve month term, the agreement will continue to
remain in effect until terminated in writing by either party. Kevin R. Keating,
the Company's Chief Executive Officer, Chief Financial Officer, President,
Secretary and Treasurer and sole director is the sole member and manager of
Vero. The Company recorded expenses for these services of $36,000 during the
year ended June 30, 2009. As of June 30, 2009, the Company had unpaid fees owed
to Vero of $36,000.
On January 9, 2009, Vero entered into a revolving loan agreement with the
Company under which Vero has agreed to loan the Company up to $14,000 to provide
the Company with working capital. Vero is owned and controlled by Kevin R.
Keating, the Company's sole officer and director and a principal stockholder of
the Company.
On January 9, 2009, Lionsridge Capital, LLC ("Lionsridge") entered into a
revolving loan agreement with the Company under which Lionsridge has agreed to
loan the Company up to $6,000 to provide the Company with working capital.
Lionsridge is a principal stockholder of the Company. Lionsridge is owned and
controlled by Frederic M. Schweiger.
As of June 30, 2009, the Company has received aggregate advances of $7,000
from Vero and $3,000 from Lionsridge under the revolving loan agreements. The
revolving loan agreements provide that: (i) all advances are due and payable in
full on the earlier of June 30, 2009, or the occurrence of a change of control
of the Company, and (ii) interest will accrue on outstanding advances at a rate
of 6% per annum commencing July 1, 2009. However, on June 30, 2009, the parties
to the revolving loan agreements agreed to extend the maturity date until the
occurrence of a change of control of the Company pursuant to certain letter
agreements dated as of June 30, 2009, which are attached hereto as Exhibits 4.3
and 4.4. On or about August 13, 2009, the Company received additional advances
totaling $4,000 ($2,500 from Vero and $1,500 from Lionsridge) under the
revolving loan agreements.
Except as otherwise indicated herein, there have been no related party
transactions, or any other transactions or relationships required to be
disclosed pursuant to Item 404 of Regulation S-B.
Director Independence
The Company is not a "listed company" under SEC rules and is therefore not
required to have independent directors.
Item 14. Principal Accountant Fees and Services
Chisholm, Bierwolf, Nilson & Morrill, LLC ("CBNM") is the Company's
independent registered public accounting firm.
Audit Fees
The aggregate fees billed by CBNM for professional services rendered for
the audit of our annual financial statements and review of financial statements
included in our quarterly reports or services that are normally provided in
connection with statutory and regulatory filings were $3,600 for the fiscal year
ended June 30, 2008 and $7,054 for the fiscal year ended June 30, 2009.
41
Audit-Related Fees
There were no fees billed by CBNM for assurance and related services that
are reasonably related to the performance of the audit or review of the
Company's financial statements for the fiscal years ended June 30, 2008 and
2009.
Tax Fees
There were $2,000 in fees billed by CBNM for professional services for tax
compliance, tax advice, and tax planning for the fiscal year ended June 30, 2009
and $0 for the fiscal year ended June 30, 2008.
All Other Fees
There were no fees billed by CBNM for other products and services for the
fiscal years ended June 30, 2008 and 2009.
Audit Committee's Pre-Approval Process
The Board of Directors acts as the audit committee of the Company, and
accordingly, all services are approved by all the members of the Board of
Directors.
PART IV
Item 15. Exhibits and Financial Statement Schedules
Financial Statements
The Company's financial statements are included in Item 8 of this Annual
Report.
Financial Statement Schedules
All schedules are omitted because they are not applicable or have been
provided in Item 8 of this Annual Report.
Exhibits
Exhibit Number Exhibit Description
- -------------- -------------------
3.1* Amended and Restated Articles of Incorporation filed with
the State of Nevada on August 14, 2008
3.2* Amended and Restated By-laws adopted August 12, 2008
4.1** Revolving Loan Agreement by and between the Company and Vero
Management, L.L.C. dated January 9, 2009
4.2** Revolving Loan Agreement by and between the Company and
Lionsridge Capital, LLC dated January 9, 2009
4.3 Amendment to Revolving Loan Agreement by and between the
Company and Vero Management, L.L.C. dated June 30, 2009
4.4 Amendment to Revolving Loan Agreement by and between the
Company and Lionsridge Capital, LLC dated June 30, 2009
10.1* Securities Purchase Agreement between KIG Investors II, LLC
and the Company dated November 14, 2007
42
10.2* First Amendment to Securities Purchase Agreement between KIG
Investors II, LLC and the Company dated June 19, 2008
10.3* Assignment of Amended Securities Purchase Agreement by KIG
Investors II, LLC to Lionsridge Capital, LLC dated June 20,
2008
10.4* Assignment of Amended Securities Purchase Agreement by KIG
Investors II, LLC to Kevin R. Keating dated June 20, 2008
10.5* Registration Rights Agreement between Kevin R. Keating and
the Company dated June 23, 2008
10.6* Registration Rights Agreement between Lionsridge Capital,
LLC and the Company dated June 23, 2008
10.7* Registration Rights Agreement between Garisch Financial,
Inc. and the Company dated June 26, 2008
10.8* Settlement and Release Agreement between Leon Leibovich and
the Company dated November 14, 2007
10.9* Revolving Loan Agreement between Keating Investments, LLC
and the Company dated November 17, 2007
10.10* Revolving Loan Agreement between Vero Management L.L.C. and
the Company dated May 5, 2008
10.11* Consulting Agreement between Garisch Financial, Inc. and the
Company dated June 26, 2008
10.12* Agreement between the Company and Vero Management, L.L.C.,
dated as of July 1, 2008
31.1 Certification of the Company's Principal Executive Officer
and Principal Financial Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002, with respect to the
registrant's Quarterly Report on Form 10-Q for the fiscal
ended June 30, 2009
32.1 Certification of the Company's Principal Executive Officer
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
* Filed as an exhibit to the Company's Registration Statement on Form 10,
as filed with the Securities and Exchange Commission on September 22, 2008
and incorporated herein by this reference.
** Filed as an exhibit to the Company's Form 8-K, as filed with the
Securities and Exchange Commission on January 12, 2009 and incorporated
herein by this reference.
Exhibits 4.3, 4.4, 31.1 and 32.1 are attached hereto.
43
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: August 19, 2009 Forex365, Inc.
By: /s/ Kevin R. Keating
------------------------
Kevin R. Keating
Chief Executive Officer
In accordance with the requirements of the Securities Exchange Act of 1934,
this annual report has been signed below by the following persons on behalf of
the registrant and in the following capacities on August 19, 2009.
Signatures Title
- ---------- -----
/s/ Kevin R. Keating Chief Executive Officer, Chief Financial
- --------------------- Officer, President, Treasurer, Secretary
and Sole Director
44