UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended March 31, 2010
Or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________ to _____________
Commission file number: 333-156637
FIREFISH, INC.
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(Exact name of registrant as specified in its charter)
Nevada 26-2515882
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State or other jurisdiction of I.R.S. Employer
incorporation or organization Identification No.
533 47th Road, 2nd Floor, Long Island City, NY 11101
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(718) 395-2606
Securities registered pursuant to Section 12(b) of the Act:
Title of each class registered Name of each exchange
on which registered
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Not Applicable Not Applicable
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK
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(Title of class)
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. |_|
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 has submitted electronically and
posted on its corporate Website, if any, every Interactive Data file required to
be submitted and posted pursuant to Rule 405 of Regulation S-T (section 232.405
of this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files)
Yes |_| No |_|
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (ss. 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K.
|X|
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
definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check One).
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Large accelerated filer [___] Accelerated filer [___]
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Non-accelerated filer [___] Smaller reporting company [_X_]
(Do not check if a smaller
reporting company)
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Indicate by check mark whether the Registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes |_| No |X|
The aggregate market value of voting stock held by non-affiliates of the
registrant does not have an aggregate market value, since the common stock of
the registrant does not trade on any market, at the time of this filing.
There were 9,866,665 shares outstanding of the registrant's Common Stock as of
November 30, 2010.
TABLE OF CONTENTS
PART I
ITEM 1 Business..........................................................1
ITEM 1 A. Risk Factors......................................................5
ITEM 1 B. Unresolved Staff Comments.........................................15
ITEM 2 Properties........................................................15
ITEM 3 Legal Proceedings.................................................15
ITEM 4 Removed and Reserved..............................................15
PART II
ITEM 5 Market for Registrant's Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities.................16
ITEM 6 Selected Financial Data...........................................16
ITEM 7 Management's Discussion and Analysis of Financial Condition
and Results of Operations.........................................17
ITEM 7 A. Quantitative and Qualitative Disclosures About Market Risk........19
ITEM 8 Financial Statements and Supplementary Data.......................19
ITEM 9 Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure..........................................19
ITEM 9 A. Controls and Procedures...........................................19
ITEM 9 A(T) Controls and Procedures...........................................20
ITEM 9B Other Information.................................................21
PART III
ITEM 10 Directors, Executive Officers, and Corporate Governance...........21
ITEM 11 Executive Compensation............................................22
ITEM 12 Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters...................................23
ITEM 13 Certain Relationships and Related Transactions, and Director
Independence......................................................24
ITEM 14 Principal Accounting Fees and Services............................25
PART IV
ITEM 15 Exhibits, Financial Statement Schedules...........................26
SIGNATURES....................................................................27
NOTE ABOUT FORWARD-LOOKING STATEMENTS
THIS FROM 10-K CONTAINS FORWARD-LOOKING STATEMENTS, SUCH AS STATEMENTS RELATING
TO OUR FINANCIAL CONDITION, RESULTS OF OPERATIONS, PLANS, OBJECTIVES, FUTURE
PERFORMANCE AND BUSINESS OPERATIONS. THESE STATEMENTS RELATE TO EXPECTATIONS
CONCERNING MATTERS THAT ARE NOT HISTORICAL FACTS. THESE FORWARD-LOOKING
STATEMENTS REFLECT OUR CURRENT VIEWS AND EXPECTATIONS BASED LARGELY UPON THE
INFORMATION CURRENTLY AVAILABLE TO US AND ARE SUBJECT TO INHERENT RISKS AND
UNCERTAINTIES. ALTHOUGH WE BELIEVE OUR EXPECTATIONS ARE BASED ON REASONABLE
ASSUMPTIONS, THEY ARE NOT GUARANTEES OF FUTURE PERFORMANCE AND THERE ARE A
NUMBER OF IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY
FROM THOSE EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. BY MAKING
THESE FORWARD-LOOKING STATEMENTS, WE DO NOT UNDERTAKE TO UPDATE THEM IN ANY
MANNER EXCEPT AS MAY BE REQUIRED BY OUR DISCLOSURE OBLIGATIONS IN FILINGS WE
MAKE WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE FEDERAL SECURITIES
LAWS. OUR ACTUAL RESULTS MAY DIFFER MATERIALLY FROM OUR FORWARD-LOOKING
STATEMENTS.
PART I
ITEM 1. BUSINESS
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GENERAL
THE FOLLOWING IS A SUMMARY OF SOME OF THE INFORMATION CONTAINED IN THIS
DOCUMENT. UNLESS THE CONTEXT REQUIRES OTHERWISE, REFERENCES IN THIS DOCUMENT TO
"FIREFISH," OR THE "COMPANY" ARE TO FIREFISH, INC.
OVERVIEW
Firefish was incorporated in the State of Nevada on April 29, 2008. Our
principal offices are currently located at 533 47th Road, 2nd Floor, Long Island
City, NY 11101. We occupy this office, which is leased by an officer and
director of Firefish, Harshawardhan Shetty, on a rent free basis. Our current
telephone number is (415) 359-5695. We have established a web site to test
certain potential Internet offerings, including potential tutoring adjunct to
our social networking platform (WWW.FIREFISH.CO.IN), which is not incorporated
in and is not a part of this Annual Report on Form 10-K.
We are a start up education venture that intends to develop an online social
networking portal with associated mobile device functionality targeted to young,
lower middle class residents of India. We were originally started by an Indian
engineer, our CEO Harshawardhan Shetty, to offer social networking services to
young engineering professionals and engineering students in India, including
connecting our network members with potential tutoring clients, job placements
and professional development resources. We quickly realized that social
networking, job placement and tutoring for engineers were barely scratching the
surface of the underserved demographic in India in need of social networking
services. We discovered that the need for social networking services and
ancillary offerings was much bigger than just engineers and included virtually
everyone in the 18-24 year old, lower-middle class demographic. Although we are
still evaluating whether to offer job placement and tutoring services via our
social networking portal, we intend for the bulk of the revenue and the bulk of
the web development to be focused on developing a wide-ranging, robust social
networking platform for our core demographic. Initially this portal will attract
members through the educational offerings and partnerships we intend to develop
with educational institutions, colleges and education NGOs (non-governmental
organizations). The portal represents an opportunity for users to practice their
English in a compelling social environment and to access the powerful features
of social networking platforms via their mobile device. We intend to develop
proprietary technology which will enhance the quality of community interaction
amongst users of the portal and provide an expanding universe of social
networking applications on the portal which will attract and delight users. We
also intend to develop ancillary lines of business which will leverage our user
base and/or developed expertise within our target market. We believe that there
are a number of underserved communities in India who would be attracted to the
types of services we are offering. This includes members of the large call
center and business process outsourcing (BPO) community and younger engineering
professionals and engineering students in India.
-1-
We anticipate that our revenues will be chiefly derived from sales of
advertising and sponsorships of our Internet website, fees for premium services
paid by our users and revenue sharing of fees from mobile telephone carriers for
mobile users of our social networking portal.
We have developed a test website to help test certain of our concept services to
the engineering community (WWW.FIREFISH.CO.IN). On this site, we have been
testing one of our original concepts related to possible revenue streams from
our social networking community on our website with an idea to: (1) connect US
engineering students with qualified Indian engineering tutors; (2) provide
India's leading companies with high-quality engineers; (3) provide a location
for social networking within the engineering community; and (4) offer continuing
education and certification for engineers; and (5) provide a host of social
networking services to an expanded target audience within the same income
demographic. We have not decided whether or not to continue with this particular
feature of our website. A beta version of our social networking platform that
forms the core of our service offering was made available in the Winter of 2009.
We also have explored an English certification program to offer to members of
our social networking community.
INDUSTRY BACKGROUND
Internet based social networking is a complex and evolving industry. Because
this industry is relatively new, revenue models continue to evolve and the
definition of what constitutes an Internet based social network continues to
change and grow over time. The primary revenue source currently for social
networking sites is sponsorship and advertising. We are pursuing a number of
ancillary businesses to compliment the core revenue from our social networking
business. As the social networking business model continues to develop across
the Internet, we may add ancillary or complimentary offerings.
SOCIAL NETWORKING
Online social networking has matured as an industry in recent years. On a
typical social networking site, users create a profile and can search for and
add contacts from the pool of other users with profiles. Some sites focus on a
certain type of connection (such as classmates.com which focuses on connecting
people who attended school together) or a certain interest (such as
TheSocialGolfer.com) while others (such as Facebook) are more generalist.
Popular players like MySpace and Facebook have made social networking
commonplace among Americans. BeBo, MySpace, Facebook and Hi5 are the most
popular sites in Europe, Orkut and Hi5 dominate in South and Central America and
Friendster, Orkut and Cyworld are most popular in Asia. Advertising revenues on
social networking sites have gone from essentially nothing to roughly $835
million over the course of 4 years. Social networking sites are particularly
attractive places for web advertising since users post many details about
themselves allowing advertising to be targeted at a carefully selected
demographic.
MySpace currently has well over 100 million users with profiles and attracts
230,000 new users per day. MySpace was bought by News Corporation for $580
million in 2005. Facebook on the other hand remains a private company despite
interest from Yahoo!, Google and others. In October 2006, Microsoft purchased a
1.6% stake in Facebook for $246 million.
FIREFISH OVERVIEW
We intend to develop an on-line social networking platform that appeals to our
target demographic. Our target demographic consists of students, college
graduates and career oriented members of the aspiring lower middle class who are
18-24 years old. Because our founder and CEO, Harshawardhan Shetty, an Indian
engineer and MBA, has deep roots in the engineering, MBA and educational NGO
space, we believe we will be able to recruit initial users for our social
networking platform from these communities. We intend to offer all of the
traditional features of social networking, including a mobile component, plus
additional ancillary services that appeal to our specialized demographic. These
ancillary services include English certification, job placement, placement as
tutors and other services as they become practical.
-2-
SOCIAL NETWORKING
Social networking is the core of the Firefish community. This service will allow
anyone in the world to create a profile and search for contacts. Planned
features include chat, messaging, and picture upload. Users will be able to
search for contacts by profession, school, and company. Although our social
network will eventually be open to everyone, we intend to focus on Indian
college students, engineering students, educational professionals and others
within our core demographic of 18-24 year olds from the lower middle class. This
demographic is highly desirable to advertisers and the costs to reach customers
within this demographic, using traditional media, is high. Users include a great
deal of personal information on their profiles, we hope to be able to attract a
large amount of highly targeted web advertising. We believe that our focus on
the 18-24 lower middle class professional demographic is what will distinguish
us from other websites in India that all focus heavily on courting the upper
middle class.
We expect the social networking aspect of Firefish to grow primarily by
word-of-mouth as other social networking sites have. However, we intend to seed
the Firefish community through planned partnerships with Indian Education
Non-Governmental Organizations and with partnerships with schools, universities,
corporations and other entities who we believe will assist us in signing up
their constituents on to the Firefish platform.
COMPETITION
As Firefish's model of a demographically targeted social networking website with
ancillary business lines in education is, to the best of our knowledge, unique,
the Firefish business does not fit into one single industry. However, Firefish's
chief competition comes from the social networking industry, which is rapidly
growing. As a result, the number and sophistication of competitors are also
rapidly growing. We hope to distinguish ourselves from these competitors by the
combination of services we offer, the high quality of our website and
technology, and our focus on our core demographic.
SOCIAL NETWORKING
Popular players like MySpace and Facebook have made social networking
commonplace among Americans. BeBo, MySpace, Facebook and Hi5 are the most
popular sites in Europe; Orkut and Hi5 dominate in South and Central America;
and Friendster, Orkut and Cyworld are most popular in Asia.
MySpace was founded in 2003 and currently has well over 100 million users with
profiles and attracts 230,000 new users per day. MySpace was bought by News
Corporation for $580 million in 2005. In June 2006, MySpace was the most popular
social networking site in the United States. According to comScore, MySpace was
overtaken in April 2008 by its main competitor Facebook, based on monthly unique
visitors. ComScore reports that Facebook attracted 132.1 million unique visitors
in June 2008, compared to MySpace, which attracted 117.6 million.
Facebook on the other hand remains a private company despite interest from
Yahoo!, Google and others. In October 2006, Microsoft purchased a 1.6% stake in
Facebook for $246 million. Facebook was launched in 2004 and was initially
available only to students at Harvard and then to students at any Ivy League
school. It continued to expand its user base to any college student and now is
available to anyone over the age of 13.
Bebo was founded in 2005 and is available in many countries including Ireland,
Canada, the United States, the United Kingdom, New Zealand and Australia. Bebo
was purchased (March 2008) by AOL for $850 million. Bebo has more than 40
million members worldwide and is the 3rd largest social networking site in the
US after MySpace and Facebook.
Launched in 2003, hi5 is now one of the world's largest social networks --
ranked as a top 20 website globally and the #1 social network in 25 countries
across Latin America, Europe, Asia and Africa. According to comScore, more than
56 million individuals every month visit hi5, which is currently available in 27
language options. Hi5 is a privately-held company, headquartered in San
Francisco, California.
-3-
Orkut was developed by a Google employee and targeted at the US market but grew
rapidly in popularity in India and Brazil. Today Orkut has around 120 million
users and is based in Brazil. 53% of Orkut's users are in Brazil and 17% are in
India. Orkut also gained popularity in the Middle East but has largely been
blocked by the governments in this region.
Friendster was founded in 2002 in California. While initially popular in the US,
its user base now is primarily in Asia with 39% of the site's traffic coming
from the Philippines. It's estimated that 90% of internet users in the
Philippines have a Friendster account. Friendster has more than 70 million users
worldwide. Friendster was funded by Kleiner Perkins Caufield & Byers and
Benchmark Capital in October 2003 with a reported valuation of $53 million.
Cyworld is a South Korean website founded in 1999 and purchased by SK
Communications in 2003 for $8.5 million. Cyworld is popular in Asia generally
but particularly in Korea. It's estimated that 90% of South Koreans between the
ages of 20 and 29 have a Cyworld account. Overall, about 33% of the South Korean
population has a Cyworld account. Cyworld launched its US version in August,
2006. One year after their US launch, Cyworld had about 250,000 American users.
INTELLECTUAL PROPERTY
We have not filed for any patent and/or copyright protection for our website,
proprietary technologies and/or planned products. Presently we intend to rely on
trade secret protection and/or confidentiality agreements with our employees,
customers, business partners and others to protect our intellectual property
rights. Despite certain precautions taken by us, it may be possible for third
parties to obtain and use our intellectual property without authorization. This
risk may be increased due to the lack of any patent and/or copyright protection.
If any of our proprietary rights are misappropriated or we are forced to defend
our intellectual property rights, we will have to incur substantial costs. Such
litigation could result in substantial costs and diversion of our resources,
including diverting the time and effort of our senior management, and could
disrupt our business, as well as have a material adverse effect on our business,
prospects, financial condition and results of operations. Management will from
time to time determine whether applying for patent and copyright protection is
appropriate for us. We have no guarantee that, if filed, any applications will
be granted or, if awarded, whether they will offer us any meaningful protection
from other companies in our business. Furthermore, any patent or copyrights that
we may be granted may be held by a court to infringe on the intellectual
property rights of others and subject us to awards for damages.
We cannot be certain that the website and our proprietary technologies will not
infringe upon patents, copyrights or other intellectual property rights held by
third parties. While we know of no basis for any claims of this type, the
existence of and ownership of intellectual property can be difficult to verify
and we have not made an exhaustive search of all patent filings. Additionally,
most patent applications are kept confidential for twelve to eighteen months, or
longer, and we would not be able to be aware of potentially conflicting claims
that they make. We may become subject to legal proceedings and claims from time
to time relating to the intellectual property of others in the ordinary course
of our business. If we are found to have violated the intellectual property
rights of others, we may be enjoined from using such intellectual property, and
we may incur licensing fees or be forced to develop alternative technology or
obtain other licenses. In addition, we may incur substantial expenses in
defending against these third party infringement claims and be diverted from
devoting time to our business and operational issues, regardless of the merits
of any such claim.
GOVERNMENT REGULATION
Our business, the website and our proprietary technologies may be subject to
increasing regulation of content, consumer privacy, distribution and online
hosting and delivery in the key territories in which we desire to conduct
business. If we do not successfully respond to these regulations, our business
may suffer. Legislation is continually being introduced that may affect both the
content of proprietary technologies and their distribution as well as
utilization of online game platforms. For example, data and consumer protection
-4-
laws in the United States and Europe impose various restrictions on web sites.
Those rules vary by territory although the Internet recognizes no geographical
boundaries. Any one or more of these factors could harm our business by limiting
the proposed features we plan on incorporating into the website and proprietary
technologies, by limiting the size of the potential market for our products, and
by requiring costly additional differentiation in the website and proprietary
technologies for different territories to address varying regulations.
INTERNET WEBSITES
We have secured the rights to the Internet domain name WWW.FIREFISH.CO.IN. We do
not have the financial resources to fully deploy and market this website at this
time. We intend to more fully develop and market a fully functional, e-commerce
website with the proceeds of this offering. Information on our website is not a
part of this prospectus.
EMPLOYEES
We have no other employees other than our sole officer and director,
Harshawardhan Shetty. Upon the successful completion of this offering, we intend
to expand our current management to retain skilled directors, officers, and
employees with experience relevant to our business focus. In order to develop
and create our website, and the technology and software needed to meet the
features and goal we have set for the website, we will need to hire an in house
development team. We intend to hire these employees with the proceeds of this
offering. We may also seek to rely on third party work for developers and other
personnel to supplement and support the in-house team that we will hire. We plan
to use Indian independent contract developers to address different technologies,
languages and cultures and to provide the broadest based expertise for our
markets. Management shall make the decision as to whether to use in-house or
third party development resources based upon the creative and technical
challenges of the area of development. We may also seek to evaluate any number
of pre-market technologies that would allow Firefish to rapidly develop its main
website technology and accelerate our time to market. If we believe such
technologies would assist us in achieving our business plan we may acquire
and/or license such technologies.
ITEM 1A. RISK FACTORS
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FORWARD LOOKING STATEMENTS
THIS DOCUMENT INCLUDES FORWARD-LOOKING STATEMENTS, INCLUDING, WITHOUT
LIMITATION, STATEMENTS RELATING TO FIREFISH PLANS, STRATEGIES, OBJECTIVES,
EXPECTATIONS, INTENTIONS AND ADEQUACY OF RESOURCES. THESE FORWARD-LOOKING
STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES, AND OTHER FACTORS
THAT MAY CAUSE FIREFISH ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS TO BE
MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS
EXPRESSED OR IMPLIED BY THE FORWARD-LOOKING STATEMENTS. THESE FACTORS INCLUDE,
AMONG OTHERS, THE FOLLOWING: ABILITY OF FIREFISH TO IMPLEMENT ITS BUSINESS
STRATEGY; ABILITY TO OBTAIN ADDITIONAL FINANCING; FIREFISH LIMITED OPERATING
HISTORY; UNKNOWN LIABILITIES ASSOCIATED WITH FUTURE ACQUISITIONS; ABILITY TO
MANAGE GROWTH; SIGNIFICANT COMPETITION; ABILITY TO ATTRACT AND RETAIN TALENTED
EMPLOYEES; AND FUTURE GOVERNMENT REGULATIONS; AND OTHER FACTORS DESCRIBED IN
THIS REGISTRATION STATEMENT OR IN OTHER OF FIREFISH FILINGS WITH THE SECURITIES
AND EXCHANGE COMMISSION. FIREFISH IS UNDER NO OBLIGATION, TO PUBLICLY UPDATE OR
REVISE ANY FORWARD-LOOKING STATEMENTS, WHETHER AS A RESULT OF NEW INFORMATION,
FUTURE EVENTS OR OTHERWISE.
OUR ABSENCE OF OPERATING HISTORY AND EARLY DEVELOPMENT STAGE OF OUR COMPANY
POSSESS SIGNIFICANT RISKS TO OUR ABILITY TO GENERATE REVENUE AND OPERATE
SUCCESSFULLY
We have not generated any revenue from the products and services which we intend
to develop and, if developed, market. We expect to generate all of our future
revenues from the development and marketing of on-line social networking
services, anciallary service offerings, sponsorships and advertising.
-5-
Accordingly, we have no operating history in implementing our business model
upon which an evaluation of the Company and our prospects can be based and it is
difficult or impossible for the Company to predict future results of operations.
Our prospects must be considered in light of the risks, expenses, and
difficulties frequently encountered by companies in the early stages of a new
business enterprise, particularly companies in highly competitive markets. Since
the Company is among many that have entered the social networking market, it
faces competition. It also faces many risks specific to its business, which
include those related to successfully developing the website and proprietary
technology, successfully commercializing the website and proprietary technology,
the need to manage existing and expanding operations, the continuing need to
raise additional capital, the dependence upon and need to hire key personnel,
and the need to increase spending to adequately market our social networking
services. To address these risks, we must, among other things, respond to
competitive developments, continue to attract, retain and motivate qualified
persons, and continue to upgrade our technologies. We cannot provide any
assurances that we will be successful in addressing such risks. The Company's
failure to do so could have a material adverse effect on its business,
prospects, financial condition and results of operations.
OUR PLANS ARE DEPENDENT UPON KEY INDIVIDUALS AND THE ABILITY TO ATTRACT
QUALIFIED PERSONNEL TO BE SUCCESSFUL
In order to successfully develop the website, the Company will be dependent upon
Harshawardhan Shetty. The loss of the foregoing individual could have a material
adverse effect upon the Company's business prospects and prohibit the Company
from successfully achieving its goals. Moreover our success continues to depend
to a significant extent on our ability to identify, attract, hire, train and
retain qualified professional, creative, technical and managerial personnel.
Competition for such personnel is intense, and there can be no assurance that we
will be successful in identifying, attracting, hiring, training and retaining
such personnel in the future. The competition for web developers, creative
personnel and technical directors is especially intense because of the high
demand for such individuals. If we are unable to hire, assimilate and retain
such qualified personnel in the future, such inability would have a material
adverse effect on our business, operating results and financial condition. The
Company may also depend on Third party contractors and other partners to develop
its website and proprietary technologies as well as any future enhancements
thereto, if initially developed. There can be no assurance that we will be
successful in either attracting and retaining qualified personnel, or creating
arrangements with such Third parties. The failure to succeed in these endeavors
will have a material adverse effect on the Company and its ability to consummate
its business plans.
IF THE WEBSITE FAILS TO GAIN MARKET ACCEPTANCE, WE MAY NOT HAVE SUFFICIENT
CAPITAL TO PAY OUR EXPENSES AND TO CONTINUE TO OPERATE
In the event that the Company successfully completes the development of the
website, our ultimate success will depend on generating revenues from the
advertisement placements on the website and sale of services through the
website. The market for social networking services is subject to continually
changing consumer and industry preferences and the frequent introduction of new
websites. As a result, the website and proprietary technologies, even if
developed, may not achieve and sustain market acceptance sufficient to generate
revenues to cover our costs and allow us to become profitable or even continue
to operate.
WEBSITE DEVELOPMENT SCHEDULES ARE LONG AND FREQUENTLY UNPREDICTABLE, AND WE MAY
EXPERIENCE DELAYS IN INTRODUCING THE WEBSITE, WHICH MAY ADVERSELY AFFECT OUR
ABILITY TO CONTINUE OUR OPERATIONS.
We have projected that the development cycle for version 1.0 of our website will
be between 6 months and 1 year. If any unanticipated delay affects the release
of version 1.0 of the website or any subsequent versions, we may not achieve
anticipated revenues and may not have the capital necessary to continue
operations.
-6-
WE MAY BE DEPENDENT ON THIRD PARTIES TO COMPLETE THE DEVELOPMENT OF THE WEBSITE
AND PROPRIETARY TECHNOLOGIES, AND ANY INCREASED COSTS ASSOCIATED WITH THIRD
PARTY DEVELOPERS OR ANY DELAY OR INTERRUPTION IN PRODUCTION WOULD NEGATIVELY
AFFECT BOTH OUR ABILITY TO DEVELOP THE WEBSITE AND PROPRIETARY TECHNOLOGIES AND
OUR ABILITY TO CONTINUE OUR OPERATIONS.
We may need to rely on third parties to complete the development of portions of
the website and proprietary technologies. The costs associated with relying on
third parties may increase our development costs and negatively affect our
ability to operate. Since we have less control over a third party because we
cannot control the developer's personnel, schedule or resources we may
experience delays in finalizing the website. In addition aspects of the website
and proprietary technologies may not match our expectations. If this happens we
could lose anticipated revenues from the website and may not have the capital
necessary to continue our operations. In addition we may be required to rely on
certain technology that we will license from third parties, including technology
that we integrate and use with our internally developed technology. We cannot
provide any assurances that these third party technology licenses will be
available to us on commercially reasonable terms. The inability to establish any
of these technology licenses, or the loss of such licenses if established, could
result in delays in completing our website and proprietary technologies until
equivalent technology could be identified, licensed and integrated. Any such
delays could materially adversely affect our business, operating results and
financial condition.
WE FACE THE RISKS OF CHANGING CONSUMER AND INDUSTRY PREFERENCES AND UNCERTAINTY
OF MARKET ACCEPTANCE OF OUR WEBSITE AND SERVICES.
Our social networking and ancillary services are new and evolving concepts. The
level of demand and market acceptance of online tutoring, social networking and
job placement in general, and of any one website in particular, are subject to a
high degree of uncertainty. As consumer and industry preferences and trends
evolve, there is a high degree of uncertainty about whether users will continue
to value some or all of the key features which we intend to incorporate into the
website. The failure of the marketplace to deem our features desirable may
discourage use of our website and limit the ability of the Company to generate
revenues. Further, tutoring and job placement from other sources, including
phone tutoring and employment recruiters, among others, could erode the growth
of the online tutoring and job placement industries. Furthermore, it is unclear
whether the marketplace will accept a website which combines tutoring and job
placement services as this model has not yet been attempted to the best of our
knowledge. A decline in the popularity of online tutoring and job placement in
general or a lack of marketplace acceptance of our model will likely have a
materially adverse affect on our business and prospects.
WE OPERATE IN A HIGHLY COMPETITIVE INDUSTRY AND COMPETE AGAINST MANY LARGE
COMPANIES
Many companies worldwide are dedicated to social networking and ancillary
services related to social networking. We expect more companies to enter both
industries. Our competitors in both industries vary in size from small companies
to very large companies with dominant market shares and substantial financial
resources. The Company's website will be in competition with these companies and
others. Many of our competitors have significantly greater financial, marketing
and development resources than we have. As a result, we may not be able to
devote adequate resources to develop, acquire or license new technologies,
undertake extensive marketing campaigns, adopt aggressive pricing policies or
adequately compensate our developers to the same degree as certain of our
competitors.
As the social networking and ancillary industries in many of our proposed
markets are relatively new and rapidly evolving, our current or future
competitors may compete more successfully as the industry matures. In
particular, any of our competitors may offer products and services that have
significant performance, price, creativity and/or other advantages over our
website and technologies. These products and services may significantly affect
the demand for our services, assuming we are successful in developing our
website. In addition, any of our current or future competitors may be acquired
by, receive investments from or enter into other strategic relationships with
larger, longer-established and better-financed companies and therefore obtain
significantly greater financial, marketing and technology licensing and
-7-
development resources than we have. If we are unable to compete effectively in
our principal markets, our business, financial condition and results of
operations could be materially and adversely affected.
OUR MANAGEMENT HAS NO EXPERIENCE IN OUR RELATIVELY NEW INDUSTRY, WHICH MAY MAKE
IT DIFFICULT FOR YOU TO EVALUATE OUR BUSINESS PROSPECTS
Our senior management and employees do not have any direct experience in the
social networking and ancillary businesses. There can be no assurance that such
employees will be successful in working together to develop the website and
proprietary technologies. In addition, the social networking and ancillary
industries are relatively new. Only a limited number of companies have
successfully commercialized such services on an international scale. You must
consider our business prospects in light of the risks and difficulties we will
encounter in the future in a new and rapidly evolving industry. We may not be
able to successfully address these risks and difficulties, which could
materially harm our proposed business prospects, financial condition and results
of operations.
UNDETECTED PROGRAMMING ERRORS OR FLAWS IN OUR WEBSITE AND PROPRIETARY
TECHNOLOGIES COULD HARM OUR REPUTATION OR DECREASE MARKET ACCEPTANCE OF THE
WEBSITE AND SERVICES OFFERED, WHICH WOULD MATERIALLY AND ADVERSELY AFFECT OUR
BUSINESS PROSPECTS, REPUTATION, FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The website and proprietary technologies may contain programming errors or
flaws, which may become apparent only after its release. In addition, the
website and proprietary technologies may be developed using programs and engines
developed by and/or licensed from third party vendors, which may include
programming errors or flaws over which we have no control. If our users have a
negative experience with the website and proprietary technologies related to or
caused by undetected programming errors or flaws, they may be less inclined to
continue or resume use of our services or recommend our services to other
potential users. This could materially and adversely affect our business,
financial condition and results of operations.
UNEXPECTED NETWORK INTERRUPTIONS, SECURITY BREACHES OR COMPUTER VIRUS ATTACKS
COULD HARM OUR BUSINESS
Should the website and proprietary technologies be successfully developed, the
Company will be required to develop, and maintain a substantial computer network
infrastructure. Any failure to maintain satisfactory performance, reliability,
security and availability of such network infrastructure, whether maintained by
us or by third parties, may cause significant harm to our ability to attract and
maintain users for our services. Major risks relating to any such future network
infrastructure include:
o any breakdowns or system failures, including from fire, flood,
earthquake, typhoon or other natural disasters, power loss or
telecommunications failure, resulting in a sustained shutdown of all
or a material portion of our servers; and
o any security breach caused by hacking, loss or corruption of data or
malfunctions of software, hardware or other computer equipment, and
the inadvertent transmission of computer viruses.
Any of the foregoing factors could reduce a future users' satisfaction, harm our
business and reputation, have a material adverse effect on our financial
condition and results of operations.
OUR LACK OF PATENT AND/OR COPYRIGHT PROTECTION AND ANY UNAUTHORIZED USE OF THE
WEBSITE AND/OR PROPRIETARY TECHNOLOGIES BY THIRD PARTIES, MAY ADVERSELY AFFECT
OUR BUSINESS
We have not filed for any patent and/or copyright protection for our website,
planned proprietary technologies and/or planned products. Presently we intend to
rely on trade secret protection and/or confidentiality agreements with our
employees, customers, business partners and others to protect our intellectual
-8-
property rights. Despite certain precautions taken by us, it may be possible for
third parties to obtain and use our intellectual property without authorization.
This risk may be increased due to the lack of any patent and/or copyright
protection. If any of our proprietary rights are misappropriated or we are
forced to defend our intellectual property rights, we will have to incur
substantial costs. Such litigation could result in substantial costs and
diversion of our resources, including diverting the time and effort of our
senior management, and could disrupt our business, as well as have a material
adverse effect on our business, prospects, financial condition and results of
operations. Management will from time to time determine whether applying for
patent and copyright protection is appropriate for us. We have no guarantee
that, if filed, any applications will be granted or, if awarded, whether they
will offer us any meaningful protection from other companies in our business.
Furthermore, any patent or copyrights that we may be granted may be held by a
court to infringe on the intellectual property rights of others and subject us
to awards for damages.
WE MAY BE SUBJECT TO CLAIMS WITH RESPECT TO THE INFRINGEMENT OF INTELLECTUAL
PROPERTY RIGHTS OF OTHERS, WHICH COULD RESULT IN SUBSTANTIAL COSTS AND DIVERSION
OF OUR FINANCIAL AND MANAGEMENT RESOURCES
We cannot be certain that the website and proprietary technologies will not
infringe upon patents, copyrights or other intellectual property rights held by
third parties. While we know of no basis for any claims of this type, the
existence of and ownership of intellectual property can be difficult to verify
and we have not made an exhaustive search of all patent filings. Additionally,
most patent applications are kept confidential for twelve to eighteen months, or
longer, and we would not be able to be aware of potentially conflicting claims
that they make. We may become subject to legal proceedings and claims from time
to time relating to the intellectual property of others in the ordinary course
of our business. If we are found to have violated the intellectual property
rights of others, we may be enjoined from using such intellectual property, and
we may incur licensing fees or be forced to develop alternative technology or
obtain other licenses. In addition, we may incur substantial expenses in
defending against these third party infringement claims and be diverted from
devoting time to our business and operational issues, regardless of the merits
of any such claim. Successful infringement or licensing claims against us may
result in substantial monetary damages, which may materially disrupt the conduct
of our business and have a material adverse effect on our reputation, business,
financial condition and results of operations.
OUR BUSINESSES MAY BE ADVERSELY AFFECTED BY DEVELOPMENTS IN THE INDIAN ECONOMY.
Even if the website and proprietary technologies are successfully developed and
obtain market acceptance, of which there can be no assurance, our future
performance will depend in large part on the future economic conditions in
India. Accordingly, our business, financial condition, results of operations and
prospects are subject to the economic, political, legal and regulatory
conditions and developments in India. Any decline in the general economy of
India or concern about an imminent decline could delay decisions by prospective
customers to make initial evaluations of, or purchases of, our products. Any
reduction of or delays in expenditures would harm our business. Adverse
developments in the Indian markets may have an adverse effect on the number of
our subscribers and results of operations, which could have a material adverse
effect on our business.
BECAUSE OUR WEBSITE, PRODUCTS AND SERVICES HAVE NOT YET BEEN CREATED WE HAVE NO
NAME RECOGNITION, WHICH MAY PREVENT US FROM GENERATING REVENUES, WHICH WILL
REDUCE THE VALUE OF YOUR INVESTMENT.
Because we are a new company with new products and we have not conducted any
significant advertising, there is little or no recognition of the Firefish brand
name. However, substantially all of the company's future revenues are expected
to be derived from our website. Accordingly, broad acceptance by customers of
the Company's website, services and proprietary technologies are critical to the
Company's future success. Because our lack of name recognition, potential users
of our products or joint venture partners may purchase products other than ours
that have brand recognition in the market and we may be unable to generate
sufficient revenues to meet our expenses or meet our business plan objectives,
which will reduce the value of your investment.
-9-
IF WE ARE UNABLE SUCCESSFULLY TO MANAGE GROWTH, OUR OPERATIONS COULD BE
ADVERSELY AFFECTED.
Our progress is expected to require the full utilization of our management,
financial and other resources, which to date has occurred with limited working
capital. Our ability to manage growth effectively will depend on our ability to
raise funds, to improve and expand operations, including our financial and
management information systems, and to recruit, train and manage sales
personnel. There can be no absolute assurance that management will be able to
manage growth effectively.
If we do not properly manage the growth of our business, we may experience
significant strains on our management and operations and disruptions in our
business. Various risks arise when companies and industries grow quickly. If our
business or industry grows too quickly, our ability to meet customer demand in a
timely and efficient manner could be challenged. We may also experience
development or production delays as we seek to meet increased demand for our
products. Our failure to properly manage the growth that we or our industry
might experience could negatively impact our ability to execute on our operating
plan and, accordingly, could have an adverse impact on our business, our cash
flow and results of operations, and our reputation with our current or potential
customers.
OUR FUTURE GROWTH IS LARGELY DEPENDENT UPON OUR ABILITY TO DEVELOP TECHNOLOGIES
THAT ACHIEVE MARKET ACCEPTANCE WITH ACCEPTABLE MARGINS.
Our future growth rate depends upon a number of factors, including our ability
to: identify emerging technological trends in our target end-markets; develop
and maintain competitive products; create our website and proprietary
technologies with innovative features that differentiate our products from those
of our competitors; and develop, manufacture and bring products to market
quickly and cost-effectively. Our ability to develop the website and proprietary
technologies will require substantial technological innovation and requires the
investment of significant resources. These development efforts may not lead to
the development of the website and/or proprietary technologies on a timely basis
or that meet the needs of our customers as fully as competitive offerings. In
addition, the markets for our products may not develop or grow as we anticipate.
The failure of our products to gain market acceptance or their obsolescence due
to more attractive offerings by competitors could significantly reduce our
revenues and adversely affect our business, operations and financial results.
WE WILL BE DEPENDENT UPON ADVERTISING REVENUE AS THE INITIAL SOURCE OUR REVENUE.
We expect that advertising revenue will be a significant source of revenue in
the foreseeable future, although we intend to reduce our dependence on it by
attempting to develop ancillary business offerings to our core social networking
services. Advertising contracts are often short-term and/or terminable by the
advertiser at any time with little notice. Thus, we have no assurance that we
will be able to obtain, and if obtained, retain advertising contracts. Our
ability to generate advertising revenue will, in addition to the successful
completion of our website and proprietary technologies, depend on several
factors, including:
The continued development of the Internet as an advertising medium;
The pricing of advertising on other Internet sites;
The amount of traffic;
Pricing pressures, delays and new product launches;
Our ability to achieve, demonstrate and maintain attractive user
demographics;
Our ability to develop and retain a skilled advertising sales force.
-10-
WE MAY INCUR SUBSTANTIAL UNANTICIPATED COSTS RELATED TO OUR WEBSITE AND
PROPRIETARY TECHNOLOGIES
Due to changes in technology, new product announcements, competitive pressures,
system design and/or other specifications we may be required to change the
current plans for our website and proprietary technologies. Therefore, we cannot
provide any assurances that the website and proprietary technologies can be
completed within our projections. In case of budget over-runs and additional
expansions, we may choose to finance such capital expenditures through the
issuance of additional equity or debt securities, by obtaining a credit facility
or by some other financing mechanism. If we choose to seek financing for such
expenditures, we cannot provide any assurances that such financing will be
available on terms reasonably acceptable to us or at all.
ANY CAPACITY CONSTRAINTS OR SYSTEM DISRUPTIONS COULD HAVE A MATERIAL ADVERSE
EFFECT
Our business will rely significantly on Internet technologies and
infrastructure. Therefore, the performance and reliability of our Internet sites
and network infrastructure will be critical to our ability to attract and retain
users, advertisers, merchants and strategic partners. Any system error or
failure, or a sudden and significant increase in traffic, may result in the
unavailability of sites and significantly delay response times. Individual,
sustained or repeated occurrences could result in a loss of potential or
existing users, advertisers or strategic partners. In addition, because our
advertising revenue is expected to be directly related to the number of
advertisements it delivers to users, system interruptions or delays would reduce
the number of impressions delivered and thereby reduce its revenue. Our systems
and operations will be vulnerable to interruption or malfunction due to certain
events beyond our control, including natural disasters, telecommunications
failures and computer hacking. We will also rely on Web browsers and online
service providers to provide Internet access to its sites. There can be no
assurance that we will be able to expand its network infrastructure, either
itself or through use of third-party hosting systems or service providers, on a
timely basis sufficient to meet demand. We may also have to build redundant
facilities or systems, produce a formal disaster recovery plan and possibly
obtain sufficient business interruption insurance to compensate for losses that
may occur. Any interruption to its systems or operations could have a material
adverse effect on company's business and its ability to retain users,
advertisers and strategic partners. Currently, the Company does not have the
above-stated plans in place.
NATURAL DISASTERS CAN AFFECT OUR BUSINESS IN A NEGATIVE MANNER
The Company's operations and services depend on the extent to which its computer
equipment and the computer equipment of its third-party network providers is
protected against damage from fire, earthquakes, power loss, telecommunications
failures, and similar events.
Despite precautions taken by the Company and its third-party network providers,
over which it has no control, a natural disaster or other unanticipated problems
at its headquarters or a third-party provider could cause interruptions in the
services that it provides. If disruptions occur, the Company may have no means
of replacing these network elements on a timely basis or at all. The Company
does not currently maintain fully redundant or back-up Internet services or
backbone facilities or other fully redundant computing and telecommunications
facilities. Any accident, incident, system failure, or discontinuance of
operations involving our network or a third-party network that causes
interruptions in our operations could have a material adverse effect on its
ability to provide services to its customers and, in turn, on its business,
financial condition, and results of operations.
OUR BUSINESS WILL BE DEPENDENT UPON BROADBAND CARRIERS
The Company will rely on broadband providers to provide high speed data
communications capacity to our customer. The Company may experience disruptions
or capacity constraints in these Broadband services. If disruptions or capacity
constraints occur, the Company may have no means of replacing these services, on
a timely basis or at all. In addition, broadband access may be limited or
unavailable in certain areas, thereby reducing our potential market.
-11-
RISKS OF INTERNATIONAL OPERATIONS
The Company intends to develop and market its products in India. India has
technology and online industries that are less well developed than in the United
States.
There are certain risks inherent in doing business in international markets,
which apply to India, such as the following:
Uncertainty of product acceptance by different cultures;
Unforeseen changes in regulatory requirements;
Difficulties in staffing and managing multinational operations;
State-imposed restrictions on the repatriation of funds;
Currency fluctuations;
Difficulties in finding appropriate foreign licensees or joint venture
partners;
Potentially adverse tax consequences;
Less stringent and/or narrower intellectual property protection.
There is a risk that these factors will have an adverse effect on our ability
successfully to operate internationally and on our results of operations and
financial condition.
ACQUISITION AND INVESTMENT STRATEGY MAY NOT BE SUCCESSFUL AND COULD ADVERSELY
AFFECT ITS BUSINESS
In the future, the Company may acquire additional products, technologies or
businesses, or enter into joint venture arrangements for the purpose of
complementing or expanding our business or we may make investments in a new
unrelated businesses, products, services or technologies. There can be no
assurance that it will be able to identify suitable acquisition or investment
candidates. Even if it does identify suitable candidates, there can be no
assurance that it will be able to make such acquisitions or investments on
reasonable commercial terms or successfully assimilate personnel, operations,
products, services or technologies into its operations. This could disrupt its
ongoing business, distract the management and employees, increase its expenses,
including amortization of goodwill, and materially and adversely affect its
financial condition and results of operations. Furthermore, the incurrence or
issuance of debt or equity securities may be attributed to the Company to fund
any future acquisitions.
THE OWNERSHIP BY THE COMPANY'S OFFICERS AND DIRECTORS OF A LARGE AMOUNT OF OUR
COMMON STOCK MAY LIMIT MINORITY SHAREHOLDERS' ABILITY TO INFLUENCE CORPORATE
AFFAIRS.
Our officers and directors and their affiliates currently own an aggregate of
6,666,666 shares. Assuming that no options and warrants are exercised the
Company would have outstanding 9,822,221 shares of common stock. In such event
our officers and directors would own approximately 67.9% of our outstanding
common stock and be in a position to significantly affect all matters requiring
shareholder approval, including the election of directors. The interests of our
officers and directors may differ from the interests of other shareholders with
respect to the issuance of shares, business transactions with or sales to other
companies, selection of officers and directors and other business decisions. The
minority shareholders would have no way of overriding their decisions. This
level of control may also have an adverse impact on the market value of our
shares because they may institute or undertake transactions, policies or
programs that result in losses, may not take steps to increase our visibility in
the financial community and/ or may sell sufficient numbers of shares to
significantly decrease our price per share.
-12-
AS A PUBLIC COMPANY, WE WILL INCUR SUBSTANTIAL EXPENSES.
If we are able to have our shares quoted on the Over the Counter Bulletin Board,
we will then become subject to the information and reporting requirements of the
U.S. securities laws. The U.S. securities laws require, among other things,
review, audit, and public reporting of our financial results, business
activities, and other matters. Recent SEC regulation, including regulation
enacted as a result of the Sarbanes-Oxley Act of 2002, has also substantially
increased the accounting, legal, and other costs related to becoming and
remaining an SEC reporting company. If we do not have current information about
our company available to market makers, they will not be able to trade our
stock. The public company costs of preparing and filing annual and quarterly
reports, and other information with the SEC and furnishing audited reports to
stockholders, will cause our expenses to be higher than they would be if we were
privately-held. These increased costs may be material and may include the hiring
of additional employees and/or the retention of additional advisors and
professionals. Our failure to comply with the federal securities laws could
result in private or governmental legal action against us and/or our officers
and directors, which could have a detrimental effect on our business and
finances, the value of our stock, and the ability of stockholders to resell
their stock.
WE MAY BE EXPOSED TO POTENTIAL RISKS RESULTING FROM NEW REQUIREMENTS UNDER THE
SARBANES-OXLEY ACT OF 2002.
In addition to the costs of compliance with having our Shares listed on the
OTCBB, there are substantial penalties that could be imposed upon us if we fail
to comply with all of regulatory requirements. In particular, under the
Sarbanes-Oxley Act of 2002 we may be required to include in our annual report
our assessment of the effectiveness of our internal control over financial
reporting as of the end of our fiscal year. Furthermore, our independent
registered public accounting firm may be required to attest to whether our
assessment of the effectiveness of our internal control over financial reporting
is fairly stated in all material respects and separately report on whether it
believes we have maintained, in all material respects, effective internal
control over financial reporting. We have not yet completed our assessment of
the effectiveness of our internal control over financial reporting. We expect to
incur additional expenses and diversion of management's time as a result of
performing the system and process evaluation, testing and remediation required
in order to comply with the management certification and auditor attestation
requirements.
IF A MARKET FOR OUR SHARES DOES NOT DEVELOP, SHAREHOLDERS MAY BE UNABLE TO SELL
THEIR SHARES.
A market for our shares may never develop. We intend to contact an authorized
OTC Bulletin Board market-maker for sponsorship of our securities on the OTC
Bulletin Board, upon the raising of additional funds. However, our shares may
never be traded on the bulletin board, or, if traded, a public market may not
materialize. If our shares are not traded on the bulletin board or if a public
market for our shares does not develop, shareholders may not be able to re-sell
the shares of our shares that they have purchased and may lose all of their
investment.
BECAUSE WE DO NOT EXPECT TO PAY DIVIDENDS FOR THE FORESEEABLE FUTURE.
We have never declared or paid any cash dividends on our Common Stock. We
currently intend to retain future earnings, if any, to finance the expansion of
our business. As a result, we do not anticipate paying any cash dividends in the
foreseeable future. Our payment of any future dividends will be at the
discretion of our board of directors after taking into account various factors,
including but not limited to our financial condition, operating results, cash
needs, growth plans and the terms of any credit agreements that we may be a
party to at the time.
BECAUSE WE WILL BE SUBJECT TO THE "PENNY STOCK" RULES IF THE SHARES ARE QUOTED
ON THE OVER-THE-COUNTER BULLETIN BOARD, THE LEVEL OF TRADING ACTIVITY IN THE
SHARES MAY BE REDUCED.
Broker-dealer practices in connection with transactions in "penny stocks" are
regulated by penny stock rules adopted by the Securities and Exchange
Commission. Penny stocks generally are equity securities with a price of less
-13-
than $5.00 (other than securities registered on some national securities
exchanges or quoted on FINRA). The penny stock rules require a broker-dealer,
prior to a transaction in a penny stock not otherwise exempt from the rules, to
deliver a standardized risk disclosure document that provides information about
penny stocks and the nature and level of risks in the penny stock market. The
broker-dealer also must provide the customer with current bid and offer
quotations for the penny stock, the compensation of the broker-dealer and its
salesperson in the transaction, and, if the broker-dealer is the sole market
maker, the broker-dealer must disclose this fact and the broker-dealer's
presumed control over the market, and monthly account statements showing the
market value of each penny stock held in the customer's account. In addition,
broker-dealers who sell these securities to persons other than established
customers and "accredited investors" must make a special written determination
that the penny stock is a suitable investment for the purchaser and receive the
purchaser's written agreement to the transaction. Consequently, these
requirements may have the effect of reducing the level of trading activity, if
any, in the secondary market for a security subject to the penny stock rules,
and shareholders may find it difficult to sell their shares.
ANY TRADING MARKET THAT MAY DEVELOP MAY BE RESTRICTED BY VIRTUE OF STATE
SECURITIES "BLUE SKY" LAWS TO THE EXTENT THEY PROHIBIT TRADING ABSENT COMPLIANCE
WITH INDIVIDUAL STATE LAWS.
These restrictions may make it difficult or impossible to sell Shares in those
states. There is no public market for the Shares, and there can be no assurance
that any public market will develop in the foreseeable future. Transfer of the
Shares may also be restricted under the securities or securities regulations
laws promulgated by various states and foreign jurisdictions, commonly referred
to as "BLUE SKY" laws. Absent compliance with such individual state laws, the
Shares may not be traded in such jurisdictions. Because the securities
registered hereunder have not been registered for resale under the "BLUE SKY"
laws of any state, the holders of such shares and persons who desire to purchase
them in any trading market that might develop in the future, should be aware
that there may be significant state "BLUE SKY" law restrictions upon the ability
of investors to sell the securities and of purchasers to purchase the
securities. These restrictions prohibit the secondary trading of the Shares. We
may not be able to qualify securities for resale in states that do not offer
manual exemptions and require shares to be qualified before they can be resold
by our shareholders. Accordingly, shareholders should consider the secondary
market for our securities to be a limited one.
OUR ARTICLES OF INCORPORATION PROVIDE FOR INDEMNIFICATION OF OFFICERS AND
DIRECTORS AT OUR EXPENSE AND LIMIT THEIR LIABILITY, WHICH MAY RESULT IN A MAJOR
COST TO US AND HURT THE INTERESTS OF OUR SHAREHOLDERS BECAUSE CORPORATE
RESOURCES MAY BE EXPENDED FOR THE BENEFIT OF OFFICERS AND/OR DIRECTORS.
Our articles of incorporation and applicable Nevada law provide for the
indemnification of our directors, officers, employees, and agents, under certain
circumstances, against attorney's fees and other expenses incurred by them in
any litigation to which they become a party arising from their association with
or activities on our behalf. We will also bear the expenses of such litigation
for any of our directors, officers, employees, or agents, upon such person's
promise to repay us, therefore if it is ultimately determined that any such
person shall not have been entitled to indemnification. This indemnification
policy could result in substantial expenditures by us, which we will be unable
to recoup.
We have been advised that, in the opinion of the SEC, indemnification for
liabilities arising under federal securities laws is against public policy as
expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the
event that a claim for indemnification against these types of liabilities, other
than the payment by us of expenses incurred or paid by a director, officer or
controlling person in the successful defense of any action, suit or proceeding,
is asserted by a director, officer or controlling person in connection with the
securities being registered, we will (unless in the opinion of our counsel, the
matter has been settled by controlling precedent) submit to a court of
appropriate jurisdiction, the question whether indemnification by us is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue. The legal process relating to this matter if
it were to occur is likely to be very costly and may result in us receiving
negative publicity, either of which factors is are likely to materially reduce
the market and price for our shares, if such a market ever develops.
-14-
IF A MARKET DEVELOPS FOR OUR SHARES, SALES OF OUR SHARES RELYING UPON RULE 144
MAY DEPRESS PRICES IN THAT MARKET BY A MATERIAL AMOUNT.
All of the currently outstanding shares of our Common Stock are "RESTRICTED
SECURITIES" within the meaning of Rule 144 under the Securities Act of 1933, as
amended. 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 exemptions from registration under the Act and as required under
applicable state securities laws. Rule 144 provides in essence that a person who
has held restricted securities for a prescribed period may, under certain
conditions, sell every three months, in brokerage transactions, a number of
shares that does not exceed 1.0% of a company's outstanding Common Stock. The
alternative average weekly trading volume during the four calendar weeks prior
to the sale is not available to our shareholders being that the OTCBB (if and
when listed thereon) is not an "AUTOMATED QUOTATION system" and, accordingly,
market based volume limitations are not available for securities quoted only
over the OTCBB. As a result of revisions to Rule 144 which became effective on
or about April 29, 1997, there is no limit on the amount of restricted
securities that may be sold by a non-affiliate (i.e., a stockholder who has not
been an officer, director or control person for at least 90 consecutive days)
after the restricted securities have been held by the owner for a period of two
years. Presently shares of restricted Common Stock held by non-affiliates of the
Company may be sold, subject to compliance with Rule 144 six months after
issuance. Sales under Rule 144 or under any other exemption from the Act, if
available, or pursuant to registration of shares of Common Stock of present
stockholders, may have a depressive effect upon the price of the Common Stock in
any market that may develop. We cannot predict whether the proposed rule will be
adopted, and if adopted, what its final provisions will be and how it will
affect our securities.
ITEM 1B. UNRESOLVED STAFF COMMENTS
- ----------------------------------
Not Applicable.
ITEM 2. PROPERTIES
- -------------------
We do not own any property, real or otherwise. Our principal offices are
currently located at 533 47th Road, 2nd Floor, Long Island City, NY, 11101. We
occupy this office, which is leased by an associate of Harshawardhan Shetty, on
a rent free basis. Upon successful completion of this offering we intend to
secure our own space.
We do not have any investments or interests in any real estate. Our company does
not invest in real estate mortgages, nor does it invest in securities of, or
interests in, persons primarily engaged in real estate activities.
ITEM 3. LEGAL PROCEEDINGS
- --------------------------
LEGAL PROCEEDINGS
We are not a party to any pending legal proceedings, nor are we aware of any
governmental authority contemplating any legal proceeding against us.
ITEM 4. REMOVED AND RESERVED.
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-15-
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
- --------------------------------------------------------------------------------
MARKET INFORMATION
There is no public trading market for the common stock.
HOLDERS
There are approximately 40 holders of record of Firefish's common stock as of
March 31, 2010.
TRANSFER AGENT
Our transfer agent is Pacific Stock Transfer of 500 E. Warm Springs Road, Suite
240, Las Vegas, NV 89119.
DIVIDEND POLICY
Holders of Firefish's common stock are entitled to receive such dividends as may
be declared by the Company's board of directors. The Company has not declared or
paid any dividends on the Company's common shares and it does not plan on
declaring any dividends in the near future. The Company currently intends to use
all available funds to finance the operation and expansion of its business.
RECENT SALES OF UNREGISTERED SECURITIES
Since our inception in April 2008, the Registrant has issued the following
shares of Common Stock, Common Stock purchase Warrants and Options to purchase
our Common Stock:
On April 30, 2008 the Company issued 6,666,666 shares of Common Stock to
Harshawardhan Shetty for an aggregate purchase price of $6,667.
On June 30, 2008 the Company issued 3,155,555 shares of Common Stock in a
private placement for an aggregate purchase price of $160,000 or $0.05 per
share.
On June 30, 2008 the Company issued Warrants to purchase an additional 1,000,000
shares of Common Stock exercisable at $.45 per share to Genesis Venture Fund
India I, LP for an aggregate purchase price of $10,000.00.
All of the above offerings and sales were deemed to be exempt under Section
3(b), 4(2) and/or rule 506 of Regulation D of the Securities Act of 1933, as
amended. No advertising or general solicitation was employed in offering the
securities. The offerings and sales were made to a limited number of persons,
all of whom were accredited investors, business associates of the Company and/
or its executive officers or directors, and transfer was restricted by the
Company in accordance with the requirements of the Securities Act of 1933. In
addition to representations by the above-referenced persons, we have made
independent determinations that all of the above-referenced persons were capable
of analyzing the merits and risks of their investment, and that they understood
the speculative nature of their investment. No underwriting discounts or
commissions were paid in connection with the sale of such securities.
ITEM 6. SELECTED FINANCIAL DATA
- --------------------------------
Not applicable.
-16-
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
- --------------------------------------------------------------------------------
THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH OUR UNAUDITED
FINANCIAL STATEMENTS AND NOTES THERETO INCLUDED HEREIN. IN CONNECTION WITH, AND
BECAUSE WE DESIRE TO TAKE ADVANTAGE OF, THE "SAFE HARBOR" PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995, WE CAUTION READERS REGARDING
CERTAIN FORWARD LOOKING STATEMENTS IN THE FOLLOWING DISCUSSION AND ELSEWHERE IN
THIS REPORT AND IN ANY OTHER STATEMENT MADE BY, OR ON OUR BEHALF, WHETHER OR NOT
IN FUTURE FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION. FORWARD-LOOKING
STATEMENTS ARE STATEMENTS NOT BASED ON HISTORICAL INFORMATION AND WHICH RELATE
TO FUTURE OPERATIONS, STRATEGIES, FINANCIAL RESULTS OR OTHER DEVELOPMENTS.
FORWARD LOOKING STATEMENTS ARE NECESSARILY BASED UPON ESTIMATES AND ASSUMPTIONS
THAT ARE INHERENTLY SUBJECT TO SIGNIFICANT BUSINESS, ECONOMIC AND COMPETITIVE
UNCERTAINTIES AND CONTINGENCIES, MANY OF WHICH ARE BEYOND OUR CONTROL AND MANY
OF WHICH, WITH RESPECT TO FUTURE BUSINESS DECISIONS, ARE SUBJECT TO CHANGE.
THESE UNCERTAINTIES AND CONTINGENCIES CAN AFFECT ACTUAL RESULTS AND COULD CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN ANY FORWARD LOOKING
STATEMENTS MADE BY, OR ON OUR BEHALF. WE DISCLAIM ANY OBLIGATION TO UPDATE
FORWARD-LOOKING STATEMENTS.
THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM'S REPORT ON THE COMPANY'S
FINANCIAL STATEMENTS AS OF MARCH 31, 2010, AND FOR EACH OF THE YEARS IN THE
TWO-YEAR PERIOD THEN ENDED, INCLUDES A "GOING CONCERN" EXPLANATORY PARAGRAPH,
THAT DESCRIBES SUBSTANTIAL DOUBT ABOUT THE COMPANY'S ABILITY TO CONTINUE AS A
GOING CONCERN.
PLAN OF OPERATIONS
We were incorporated in Nevada in April 2008. We are a development stage company
and have had limited business operations. For the period from inception through
March 31, 2010, we have concentrated our efforts on developing a business plan
which is designed to allow us to create our website and proprietary technologies
for use on our website. Those activities included, but were not limited to,
securing initial capital in order to fund the development of the pilot version
of our website, developing our business plan, and other pre-marketing
activities.
We will need substantial additional capital to support our proposed operations.
We have had only minimal revenues. We have NO committed source for any funds as
of date here. No representation is made that any funds will be available when
needed. In the event funds cannot be raised when needed, we may not be able to
carry out our business plan, may never achieve revenue, and could fail in
business as a result of these uncertainties.
RESULTS OF OPERATIONS
FOR THE YEAR ENDED MARCH 31, 2010 COMPARED TO THE YEAR ENDED MARCH 31, 2009
During the year ended March 31, 2010 we recognized revenues of $42,787 from our
operational activities which included consulting engagements under contractual
agreements during its development stage that may not be directly related to the
projected on-going business of the Company. During the year ended March 31,
2009, we recognized $9,000 in revenue from these activities.
During the year ended March 31, 2010, we incurred an operational loss of $98,437
compared to an operational loss of $65,968 during the year ended March 31, 2009.
During the year ended March 31, 2010, we incurred total operating expenses of
$141,224 compared to $74,968 during the year ended March 31, 2009. The increase
of $66,256 was a result of the $27,398 increase in software development costs
combined with a $38,858 in general and administrative expenses.
-17-
During the year ended March 31, 2010, we incurred a net loss of $98,437 compared
to $65,968 during the year ended March 31, 2009. The increase of $32,469 was a
result of the $66,256 in operational expenses offset by a $33,787 increase in
revenues.
LIQUIDITY
At March 31, 2010, the Company has total current assets of $58,697, consisting
of $49,697 in cash and $9,000 in accounts receivable. At March 31, 2010, the
Company has current total liabilities of $9,866 consisting of $9,866 in accounts
payable and accrued expenses of which $8,900 is owed to related parties.
During the year ended March 31, 2010, the Company recognized a net loss of
$98,437, which was adjusted for non-cash items of $21,000 in contributed capital
expenses paid by Zoma Ventures, LLC and $5,557 in foreign currency translation
expenses. During the year ended March 31, 2010, the Company used $74,521 in its
operational activities.
During the year ended March 31, 2009, the Company used $52,449 in its
operational activities. During the year ended March 31, 2010, the Company
recognized a net loss of $65,968, which was adjusted for non-cash items of
$15,000 in contributed capital expenses paid by Zoma Ventures, LLC and $4,988 in
foreign currency translation expenses.
During the years ended March 31, 2010 and 2009, the Company did not use nor
receive funds from its investing activities.
During the year ended March 31, 2010, the Company did not use or receive funds
from its financing activities compared to year ended March 31, 2009, in which
the Company received $176,667 from its financing activities.
During the year ended March 31, 2009, the Company received $6,667 from one of
its executive officers for purchase of 6,666,666 founder shares.
During the year ended March 31, 2009, the Company received $160,000 from an
entity owned by one of the Company's officers for the purchase of 3,155,555
common shares plus $10,000 for a warrant to purchase 1,000,000 common shares at
an exercise price of $0.45 per share with a 24 month term.
SHORT TERM.
On a short-term basis, the Company has not generated any revenue or revenues
sufficient to cover operations. Based on prior history, the Company will
continue to have insufficient revenue to satisfy current and recurring
liabilities as it continues exploration activities. For short term needs the
Company will be dependent on receipt, if any, of offering proceeds.
CAPITAL RESOURCES
The Company has only common stock as its capital resource.
Firefish has no material commitments for capital expenditures within the next
year, however if operations are commenced, substantial capital will be needed to
pay for advertising and website development.
NEED FOR ADDITIONAL FINANCING
The Company does not have capital sufficient to meet its cash needs. The Company
will have to seek loans or equity placements to cover such cash needs.
-18-
No commitments to provide additional funds have been made by the Company's
management or other stockholders. Accordingly, there can be no assurance that
any additional funds will be available to Firefish to allow it to cover the
Company's expenses as they may be incurred.
The Company will need substantial additional capital to support its proposed
operations. The Company has HAD minimal revenues and has a short history of
generating revenues. The Company has NO committed source for any funds as of the
date hereof. No representation is made that any funds will be available when
needed. In the event funds cannot be raised when needed, the Company may not be
able to carry out its business plan, may never achieve revenues, and could fail
in business as a result of these uncertainties.
There is no assurance that the Company will achieve additional monies or
financing will be available in the future or, if available, will be at favorable
terms. In the event that the Company is unable to raise funds through the sale
of its shares, the Company will have substantially less funds available to
engage in its operational activities.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
- -------------------------------------------------------------------
The Company operations do not employ financial instruments or derivatives which
are market sensitive. Short term funds are held in non-interest bearing accounts
and funds held for longer periods are placed in interest bearing accounts. Large
amounts of funds, if available, will be distributed among multiple financial
institutions to reduce risk of loss. The Company's cash holdings do not generate
interest income.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- ----------------------------------------------------
The audited financial statements of Firefish, Inc. for the years ended March 31,
2010 and 2009, and the period from April 29, 2008 (inception) through March 31,
2010, appear as pages F-1 through F-13, at the end of the document.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
- --------------------------------------------------------------------------------
On August 17, 2009, Board of Directors of the Registrant dismissed Moore &
Associates Chartered, its independent registered public account firm, due to the
revocation of their registration with the Public Accounting Oversight Board
("PCOAB".) On the same date, August 17, 2009, the accounting firm of Seale and
Beers, CPAs was engaged as the Registrant's new independent registered public
account firm. The Board of Directors of the Registrant and the Registrant's
Audit Committee approved of the dismissal of Moore & Associates Chartered and
the engagement of Seale and Beers, CPAs as its independent auditor. None of the
reports of Moore & Associates Chartered on the Company's financial statements
for either of the past two years or subsequent interim period contained an
adverse opinion or disclaimer of opinion, or was qualified or modified as to
uncertainty, audit scope or accounting principles, except that the Registrant's
audited financial statements contained in its Form 10-K for the fiscal year
ended December 31, 2008, a going concern qualification in the registrant's
audited financial statements.
During the registrant's two most recent fiscal years and the subsequent interim
periods thereto, there were no disagreements with Moore and Associates,
Chartered whether or not resolved, on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure,
which, if not resolved to Moore and Associates Chartered's satisfaction, would
have caused it to make reference to the subject matter of the disagreement in
connection with its report on the registrant's financial statements.
ITEM 9A. CONTROLS AND PROCEDURES
- --------------------------------
The Company maintains a system of disclosure controls and procedures that are
designed for the purposes of ensuring that information required to be disclosed
in the Company's SEC reports is recorded, processed, summarized, and reported
-19-
within the time periods specified in the SEC rules and forms, and that such
information is accumulated and communicated to the Company's management,
including the Chief Executive Officer as appropriate to allow timely decisions
regarding required disclosure.
Management, after evaluating the effectiveness of the Company's disclosure
controls and procedures as defined in Exchange Act Rules 13a-14(c) as of March
31, 2010 (the "Evaluation Date") concluded that as of the Evaluation Date, the
Company's disclosure controls and procedures were ineffective to ensure that
material information relating to the Company would be made known to them by
individuals within those entities, particularly during the period in which this
annual report was being prepared and that information required to be disclosed
in the Company's SEC reports is recorded, processed, summarized, and reported
within the time periods specified in the SEC's rules and forms.
ITEM 9A(T). CONTROLS AND PROCEDURES
- -----------------------------------
MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING.
Firefish's management is responsible for establishing and maintaining adequate
internal control over financial reporting for the company in accordance with as
defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. 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. The Company's internal control over financial
reporting includes those policies and procedures that:
(1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the
Company's assets;
(2) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that the Company's
receipts and expenditures are being made only in accordance with
authorizations of the Company's management and directors; and
(3) provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use or disposition of the Company's
assets that could have a material effect on the Company's financial
statements.
Management's assessment of the effectiveness of the registrant's internal
control over financial reporting is as of the year ended March 31, 2010. The
Company believes that internal control over financial reporting is effective.
The Company has not identified any current material weaknesses considering the
nature and extent of its current operations and any risks or errors in financial
reporting under current operations.
Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
This annual report does not include an attestation report of the Company's
registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by the Company's
registered public accounting firm pursuant to temporary rules of the Securities
and Exchange Commission that permit the Company to provide only management's
report in this annual report.
There was no change in the Company's internal control over financial reporting
that occurred during the fiscal quarter ended March 31, 2010, that has
materially affected, or is reasonably likely to materially affect, its internal
control over financial reporting.
-20-
ITEM 9B. OTHER INFORMATION
- ---------------------------
Not applicable.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
- ----------------------------------------------------------------
The following table sets forth information as to persons who currently serve as
FireFish, Inc. directors or executive officers, including their ages as of March
31, 2010.
NAME AGE POSITION
- --------------------------------- ---------- ----------------------------------
Harshawardhan Shetty 35 President, Chief Executive Officer,
Principal Financial and Accounting
Officer and Director
TERM OF OFFICE
Our Directors are appointed for an initial term of one year or until removed
from office in accordance with our bylaws. Our officers are appointed by our
board of directors and hold office until removed by the board or the
Shareholders of the Company. We may have staggered terms when the number of
directors increase to seven or more.
SIGNIFICANT EMPLOYEES
We have one significant employee: Harshawardhan Shetty, who serves as our
President and CEO. We have a written employment agreement with Mr. Shetty.
BIOGRAPHICAL INFORMATION
HARSHAWARDHAN SHETTY, SOLE OFFICER AND DIRECTOR SINCE 2008
Presently, Mr. Shetty is the full-time sole officer and director of Firefish.
Prior to his founding Firefish in April of 2008, Mr. Shetty was employed as an
Investment Banker in the Media and Telecommunications franchise of Citigroup
Global Markets in New York, NY from August 2007 until May of 2008. From August
2005 until May 2007, Mr. Shetty was a student at the Tuck Business School at
Dartmouth, where he received his MBA. Prior to attending Tuck, Mr. Shetty was
employed as a manager in strategy and business development at a large Indian
based NGO, Pratham, based in Mumbai India, where he served from December of 2003
until June of 2005. Mr. Shetty was also previously employed at i2 Technologies,
based in Dallas, Texas, in business development and at Infosys, in Bangalore,
India, as a computer programmer. Mr. Shetty has a bachelor of technology degree
in Mechanical Engineering from IIT Madras and a Master of Science degree in
Mechanical Engineering from the University of Maryland, College Park.
NUMBER OF DIRECTORS. Our board of directors currently consists of one person.
Our bylaws provide that the board of directors may consist of such number of
directors as determined by the Board of Directors from time to time.
We may seek to add to our board independent directors, at a future date, who are
qualified and willing to serve on our board. Once we add a sufficient number of
independent directors into our board, we intend to comply with Securities &
Exchange Commission, stock exchange, and FINRA rules regarding board members,
committees and other corporate governance standards. There can be no assurance
that we will be successful in attracting independent directors.
-21-
INDEPENDENT DIRECTORS. None of our current Directors are "independent," as
defined in rules promulgated by the Securities & Exchange Commission, NASDAQ, or
various stock exchanges.
COMMITTEES. Our board of directors currently does not have an audit committee,
compensation committee or any other committee. We are looking for a suitable
candidate who meets the definition of "financial expert" and would be
independent, to join our board of directors and chair our audit committee. We
intend to form an audit committee, compensation committee and other committees
of our Board when we recruit additional independent directors, including a
financial expert and other directors with the experience necessary for audit
committee membership.
CODE OF ETHICS. We have not adopted a code of ethics applicable to our
executives, as defined by applicable rules of the SEC. We intend to adopt a code
of ethics after we recruit independent directors and when we do, the code will
be publicly available on our web site at www.firefish.co.in. If we make any
amendments to our code of ethics other than technical, administrative, or other
non-substantive amendments, or grant any waivers, including implicit waivers,
from a provision of our code of ethics to our chief executive officer, chief
financial officer, or certain other finance executives, we will disclose the
nature of the amendment or waiver, its effective date and to whom it applies on
our web site at WWW.FIREFISH.CO.IN and/or in a report on Form 8-K filed with the
SEC.
ITEM 11. EXECUTIVE COMPENSATION
- --------------------------------
The following table sets forth the compensation paid to officers and board
members during the fiscal years ended March 31, 2010 and 2009. The table sets
forth this information for Firefish Inc., including salary, bonus, and certain
other compensation to the Board members and named executive officers for the
past three fiscal years and includes all Board Members and Officers as of March
31, 2010.
SUMMARY EXECUTIVES COMPENSATION TABLE
- -------------------- ------ ----------- ------ -------- -------- ------------ -------------- ------------- --------
Non-equity Non-qualified
incentive deferred
Stock Option plan compensation All other
Salary Bonus awards awards compensation earnings compensation Total
Name & Position Year ($) ($) ($) ($) ($) ($) ($) ($)
- -------------------- ------ ----------- ------ -------- -------- ------------ -------------- ------------- --------
Harshawardhan 2010 $63,900 0 0 0 0 0 0 $63,900
Shetty, President,
CEO and Principal
Financial &
Accounting Officer 2009 $40,000 0 0 0 0 0 0 $40,000
(1)
- -------------------- ------ ----------- ------ -------- -------- ------------ -------------- ------------- --------
(1) Harshawardhan Shetty has received no compensation for services in the
period from April 29, 2008 (inception) to March 31, 2009. The Company
has entered into an Employment Agreement with Harshawardhan Shetty
dated November 12, 2008.
On November 12, 2008, Mr. Shetty entered into an Employment Agreement with the
Company. The Employment Agreement provides that Mr. Shetty may receive a monthly
salary of $5,000, which he has begun to draw as of August 1, 2008. The
Employment Agreement provides that Mr. Shetty's 6,666,666 common shares of the
Company are subject to repurchase by the Company at $0.001 per share until the
second anniversary of the Employment Agreement, but only in the event his
services to the Company are terminated voluntarily or with Cause, as defined in
the Employment Agreement. The Employment Agreement provides that our sole
executive officer is eligible to participate in our equity incentive plans and
other employee benefit programs, if any. However, there can be no assurance that
we will adopt such plans.
Mr. Shetty's employment is "at will" and therefore his Employment Agreement does
not have a date of termination. Mr. Shetty's employment can be terminated with
-22-
or without cause. As Mr. Shetty is the sole director and officer of the Company
and as such the terms of his employment agreement have not been negotiated with
or approved by a disinterested third party.
DIRECTOR COMPENSATION
Currently members of the Board of Directors do not receive compensation for
their services as Board members. The Company may adopt a policy which will
compensate existing and/or new board members. Board members may receive
additional compensation for participating in the Committees. The amount of any
compensation paid to board members and/or committee members will be set and
approved by the board based on the Board's review of compensation paid by
companies which are similarly situated to the Company.
The following table sets forth certain information concerning compensation paid
to the Company's directors during the year ended March 31, 2010:
- ------------------ ------------ ------------ ----------- ---------------- ---------------- --------------- -----------
Non-qualified
Non-equity deferred
Fees incentive plan compensation All other
earned or Stock Option compensation earnings compensation Total
Name paid in awards ($) awards ($) ($) ($) ($) ($)
cash
($)
- ------------------ ------------ ------------ ----------- ---------------- ---------------- --------------- -----------
Harshawardhan $ -0- $ -0- $ -0- $ -0- $ -0- $63,900 $63,900
Shetty (1)
- ------------------ ------------ ------------ ----------- ---------------- ---------------- --------------- -----------
(1) Mr. Shetty is the sole officer of Firefish and pursuant to the terms
of his employment agreement, received a salary of $63,900 during the
year ended March 31, 2010.
All of the Company's officers and/or directors will continue to be active in
other companies. All officers and directors have retained the right to conduct
their own independent business interests.
EQUITY COMPENSATION PLAN INFORMATION
The Company has not established an equity compensation plan or Incentive Stock
Option Plan.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS.
- --------------------------------------------------------------------------------
The following table sets forth information with respect to the beneficial
ownership of Firefish, Inc. outstanding common stock by:
o each person who is known by the Company to be the beneficial owner of
five percent (5%) or more of the Company's common stock;
o all of the Company's directors and executive officers as a group.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. Shares of common stock and options, warrants
and convertible securities that are currently exercisable or convertible within
60 days of the date of this document into shares of the Company's common stock
are deemed to be outstanding and to be beneficially owned by the person holding
the options, warrants or convertible securities for the purpose of computing the
percentage ownership of the person, but are not treated as outstanding for the
purpose of computing the percentage ownership of any other person.
-23-
The information below is based on the number of shares of the Company's common
stock that the Company believes was beneficially owned by each person or entity
as of March 31, 2010.
TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL AMOUNT AND NATURE OF PERCENT OF CLASS (1)
OWNER BENEFICIAL OWNER*
- ------------------------ -------------------------------- ----------------------- -------------------------
Common shares Harshawardhan Shetty, 6,666,666 67.9%%
President, CEO and Principal
Financial & Accounting Officer
& Director
Common shares Genesis Venture Fund India I, LP 1,852,500 17.1%
12707 High Bluff Drive, Suite 140
San Diego, CA 92130 (2)
Common shares James Price 644,442 6.6%
PO Box 5005 3103
Rancho Santa Fe, CA 92067(3)
- ------------------------ -------------------------------- ----------------------- -------------------------
Common shares All Directors and Executive
Officers as a Group (1 person) 6,666,666 67.9%
----------------------- -------------------------
- -------------
(1) At March 31, 2010, the Company had 9,822,221 shares of its common
stock issued and outstanding.
(2) Includes 1,000,000 shares of common stock underlying warrants
exercisable at $0.45 per share. Mr. Price has the sole voting and
dispositive control over the shares held by Genesis Venture Fund India
I, LP.
(3) Includes shares held by Aero Financial, Inc., a corporation owned and
controlled by James Price, which is not a broker dealer or an
affiliate of a broker-dealer. Mr. Price has sole voting and
dispositive control over the shares held by Aero Financial, Inc.
Rule 13d-3 under the Securities Exchange Act of 1934 governs the determination
of beneficial ownership of securities. That rule provides that a beneficial
owner of a security includes any person who directly or indirectly has or shares
voting power and/or investment power with respect to such security. Rule 13d-3
also provides that a beneficial owner of a security includes any person who has
the right to acquire beneficial ownership of such security within sixty days,
including through the exercise of any option, warrant or conversion of a
security. Any securities not outstanding which are subject to such options,
warrants or conversion privileges are deemed to be outstanding for the purpose
of computing the percentage of outstanding securities of the class owned by such
person. Those securities are not deemed to be outstanding for the purpose of
computing the percentage of the class owned by any other person.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- -------------------------------------------------------
OFFICERS AND DIRECTORS
Our sole officer and director, Harshawardhan Shetty purchased 6,666,666, of our
common shares at a purchase price of $0.001 per share for a total purchase price
of $6,666.66 on April 30, 2008.
The Company has utilized offices leased from associates of Harshawardhan Shetty
without charge. There are no commitments for any operating or capital leases for
any Company offices.
-24-
On November 12, 2008, Mr. Shetty entered into an Employment Agreement with the
Company. The Employment Agreement provides that Mr. Shetty may receive a monthly
salary of $5,000, which he has begun to draw as of August 1, 2008. The
Employment Agreement provides that Mr. Shetty's 6,666,666 common shares of the
Company are subject to repurchase by the Company at $0.001 per share until the
second anniversary of the Employment Agreement, but only in the event his
services to the Company are terminated voluntarily or with Cause, as defined in
the Employment Agreement. The Employment Agreement provides that our sole
executive officer is eligible to participate in our equity incentive plans and
other employee benefit programs, if any. However, there can be no assurance that
we will adopt such plans.
Mr. Shetty's employment is "at will" and therefore his Employment Agreement does
not have a date of termination. Mr. Shetty's employment can be terminated with
or without cause. As Mr. Shetty is the sole director and officer of the Company
and as such the terms of his employment agreement have not been negotiated with
or approved by a disinterested third party.
AFFILIATES
The Company conducted a private placement in June of 2008, in which it sold
3,155,555 shares of the Company's common stock for an aggregate price of
$160,000. It also sold warrants to purchase 1,000,000 shares at an exercise
price of $0.45 to Genesis Venture Fund India I, LP. Genesis paid $10,000 for
these warrants. Genesis currently owns 852,500 shares of the Company's common
stock, which it purchased in the June 2008 private placement. Affiliates of
Genesis, James Price and Jonathan Dariyanani, own 644,444 and 335,000 shares of
the Company's common stock, respectively. Messrs. Price and Dariyanani do not
have any beneficial ownership of the shares owned by Genesis, but they do have
the right, as principals of Genesis, to vote the Genesis shares until those
shares are distributed to Genesis limited partners in accordance with the
applicable limited partnership agreement.
The Company has also entered into an agreement with Zoma Ventures, LLC. Zoma
Ventures, LLC has agreed to manage the public offering process for Firefish
including hiring additional service providers and making disbursements to the
Company's independent auditors, legal counsel and other service providers.
Firefish has expensed $36,000 in services contributed by Zoma Ventures through
March 31, 2010. Zoma Ventures is controlled by Jonathan Dariyanani.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
- -----------------------------------------------
GENERAL. On August 17, 2009, Board of Directors of the Registrant dismissed
Moore & Associates Chartered, its independent registered public account firm,
due to the revocation of their registration with the Public Accounting Oversight
Board ("PCOAB".) On the same date, August 17, 2009, the accounting firm of Seale
and Beers, CPAs was engaged as the Registrant's new independent registered
public account firm. Seale and Beers is the Company's principal auditing
accountant firm. The Company's Board of Directors has considered whether the
provisions of audit services is compatible with maintaining Seale and Beers,
CPAs independence.
-25-
The following table represents aggregate fees billed to the Company for the
years ended March 31, 2010 by Seales and Beers CPAs and March 31, 2009 by Moore
& Associates, Chartered.
Year Ended March 31,
2010 2009
---------------------- ----------------------
Audit Fees $21,000* $10,000*
Audit-related Fees $0 $0
Tax Fees $0 $0
All Other Fees $0 $0
---------------------- ----------------------
Total Fees $21,000 $10,000
*The audit fees for both the years ended March 31, 2010 and 2009 were paid on
the Company's behalf by Zoma Ventures, LLC.
All audit work was performed by the auditors' full time employees.
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
- -------------------------------------------------
The following is a complete list of exhibits filed as part of this Form 10K.
Exhibit number corresponds to the numbers in the Exhibit table of Item 601 of
Regulation S-K.
(a) Audited financial statements for years ended March 31, 2010 and 2009
EXHIBIT DESCRIPTION
NUMBER
------- ------------------------------------------------------------
3.1 Articles of Incorporation*
3.2 Bylaws*
4.1 Specimen Common Stock Certificate*
4.2 Subscription Agreement between the Company and Genesis
Venture Fund India I, LP on June 30, 2008*
5.1 Opinion of Zoma Law Group, LLC.
10.1 Employment Agreement between the Company and Harshawardhan
Shetty on November 12, 2008*
10.2 Form of Common Stock Subscription Agreement between the
Company and Investors dated June 20, 2008*
10.3 Services Agreement between the Company, Zoma Ventures, LLC
and Genesis Venture Fund India I, LP dated June 30, 2008*
23.1 Consent of Independent Registered Public Accounting Firm**
31.1 Certification of Chief Executive Officer and Principal
Accounting Officer pursuant to Section 302 of the
Sarbanes-Oxley Act**
32.1 Certification of Principal Executive and Financial Officer
pursuant to Section 906 of the Sarbanes-Oxley Act**
*Previously Filed
** Filed herewith
-26-
FIREFISH, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2010 AND 2009
SEALE AND BEERS, CPAS
PCAOB & CPAB REGISTERED AUDITORS
www.sealebeers.com
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE BOARD OF DIRECTORS
FIREFISH, INC.
(A DEVELOPMENT STAGE COMPANY)
We have audited the accompanying balance sheets of Firefish, Inc. (A Development
Stage Company) as of March 31, 2010, and the related statements of operations,
stockholders' equity (deficit) and cash flows for the years ended March 31, 2010
and since inception on April 29, 2008 through March 31, 2010. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conduct our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Firefish, Inc. (A Development
Stage Company) as of March 31, 2010, and the related statements of operations,
stockholders' equity (deficit) and cash flows for the years ended March 31, 2010
and since inception on April 29, 2008 through March 31, 2010, in conformity with
accounting principles generally accepted in the United States of America.
As discussed in Note 6 to the accompanying financial statements, the Company has
restated its 2009 financial statements, which were previously audited by other
independent auditors who have ceased operations.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has not recognized significant revenues and
has an accumulated deficit of $164,059, which raises substantial doubt about its
ability to continue as a going concern. Management's plans concerning these
matters are also described in Note 2. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
/s/ Seale and Beers, CPAS
Seale and Beers, CPAs
Las Vegas, Nevada
October 4, 2010
50 S. JONES BLVD. SUITE 202 LAS VEGAS, NV 89107
PHONE: (888)727-8251 FAX: (888)782-2351
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F-1
FIREFISH, INC.
(A Development Stage Company)
Consolidated Balance Sheets
RESTATED
MARCH 31, MARCH 31,
2010 2009
-----------------------------------
ASSETS
CURRENT ASSETS
Cash in bank $ 49,697 $ 124,218
Accounts receivable - customers 9,000 9,000
-----------------------------------
TOTAL CURRENT ASSETS 58,697 133,218
-----------------------------------
TOTAL ASSETS $ 58,697 $ 133,218
===================================
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 966 $ 2,507
Accounts payable and accrued expenses -related parties 8,900 10,000
-----------------------------------
TOTAL CURRENT LIABILITIES 9,866 12,507
LONG-TERM DEBT - -
-----------------------------------
TOTAL LIABILITIES 9,866 12,507
-----------------------------------
STOCKHOLDERS' EQUITY
Common stock: $0.001 par value;
100,000,000 shares authorized, 9,822,221
shares issued and outstanding 9,822 9,822
Additional paid in capital 202,845 181,845
Accumulated other comprehensive income (loss) 569 (4,988)
Accumulated deficit during development stage (164,405) (65,968)
-----------------------------------
TOTAL STOCKHOLDERS' EQUITY 48,831 120,711
-----------------------------------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 58,697 $ 133,218
===================================
The accompanying notes are an intergral part of these financial statements.
F-2
FIREFISH, INC.
(A Development Stage Company)
Consolidated Statement of Operations
FROM INCEPTION -
APRIL 29, 2008
THROUGH
FOR THE YEAR ENDED MARCH 31, MARCH 31,
2010 2009 2010
(RESTATED)
---------------------------------------------------------------
REVENUES $ 42,787 $ 9,000 $ 51,787
COST OF SALES - - -
---------------------------------------------------------------
GROSS MARGIN 42,787 9,000 51,787
---------------------------------------------------------------
OPERATING EXPENSES
Software development 46,870 19,472 66,342
General and administrative 6,563 496 7,059
General and administrative - related party 87,791 55,000 142,791
---------------------------------------------------------------
TOTAL OPERATING EXPENSES 141,224 74,968 216,192
---------------------------------------------------------------
LOSS FROM OPERATIONS (98,437) (65,968) (164,405)
INCOME TAX EXPENSE - - -
---------------------------------------------------------------
NET LOSS (98,437) (65,968) (164,405)
OTHER COMPREHENSIVE INCOME
Foreign currency translation
adjustment gain (loss) 5,557 (4,988) 569
---------------------------------------------------------------
COMPREHENSIVE LOSS $ (92,880) $ (70,956) $ (163,836)
===============================================================
BASIC AND DILUTED COMPREHENSIVE
LOSS PER SHARE $ (0.01) $ (0.01) $ (0.02)
===============================================================
Weighted Average Common Shares
Outstanding 9,822,221 9,241,674 9,543,525
===============================================================
The accompanying notes are an integral part of these financial statements.
F-3
FIREFISH, INC.
(A Development Stage Company)
Consolidated Statement of Changes in Stockholders' Equity For the
period April 29, 2008 (Date of Inception) to March 31, 2009
ACCUMULATED ACCUMULATED
DEFICIT DURING OTHER TOTAL
COMMON STOCK ADDITIONAL PAID DEVELOPMENT COMPREHENSIVE STOCKHOLDERS'
SHARES AMOUNT IN CAPITAL STAGE GAIN (LOSS) EQUITY
-----------------------------------------------------------------------------------------------
Balance April 29, 2008 - $ - $ - $ - $ $ -
Shares issued for cash
at $0.001 per share
on April 30, 2008 6,666,666 6,667 - - 6,667
Shares issued for cash
at $0.05 per share
on June 30, 2008 3,155,555 3,155 156,845 - 160,000
Contributed capital - related party 15,000 15,000
Warrants issued - - 10,000 - 10,000
Other comprehensive loss (4,988) (4,988)
Net loss for the period
ended March 31, 2009, as restated - - - (65,968) (65,968)
-----------------------------------------------------------------------------------------------
Balance March 31, 2009, as restated 9,822,221 $ 9,822 $ 181,845 $ (65,968) $ (4,988) $ 120,711
Contributed capital - related party 21,000 21,000
Other comprehensive income 5,557 5,557
Net loss for the period
ended March 31, 2010 (98,437) (98,437)
-----------------------------------------------------------------------------------------------
Balance March 31, 2010 9,822,221 $ 9,822 $ 202,845 $ (164,405) $ 569 $ 48,831
===============================================================================================
The accompanying notes are an integral part of these financial statements.
F-4
FIREFISH, INC.
(A Development Stage Company)
Consolidated Statement of Cash Flows
FROM INCEPTION -
APRIL 29, 2008
THROUGH
FOR THE YEAR ENDED MARCH 31, MARCH 31,
2010 2009 2010
(RESTATED)
-------------------------------------------------------
OPERATING ACTIVITIES
Net Loss $ (98,437) $ (65,968) $ (164,059)
Adjustments to reconcile net income to net cash
provided by operating activities:
Contributed capital-expenses paid by related party 21,000 15,000 36,000
Other comprehensive income (loss) 5,557 (4,988) 569
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable - (9,000) (9,000)
Increase (decrease) in accounts payable (2,641) 12,507 9,520
-------------------------------------------------------
NET CASH USED IN OPERATING ACTIVITES (74,521) (52,449) (126,970)
-------------------------------------------------------
INVESTING ACTIVITIES
Property and equipment purchased - - -
-------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES - - -
-------------------------------------------------------
FINANCING ACTIVITIES
Proceeds from common stock issued - 166,667 166,667
Proceeds from warrants - 10,000 10,000
-------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES - 176,667 176,667
-------------------------------------------------------
NET INCREASE IN CASH (74,521) 124,218 49,697
CASH - Beginning of period 124,218 - -
-------------------------------------------------------
CASH - End of period $ 49,697 $ 124,218 $ 49,697
=======================================================
SUPPLEMENTAL CASH FLOW DISCLOSURE:
CASH PAID FOR:
Interest $ - $ - $ -
=======================================================
Income taxes $ - $ - $ -
=======================================================
NON CASH OPERATING ACTIVITIES:
Contributed capital - related party $ 21,000 $ 15,000 $ 36,000
=======================================================
The accompanying notes are an integral part of these
consolidated financial statements.
F-5
FIREFISH, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2010
1. NATURE OF BUSINESS AND DEVELOPMENT STAGE ACTIVITIES
Firefish, Inc. (the "Company") was incorporated in the State of Nevada
on April 29, 2008. The Company's primary operations are in India and
has incurred net losses since inception of $164,405. The Company has
not realized significant revenues to date and therefore is classified
as a development stage company.
The Company's goal is to operate a website for students, college
graduates and career oriented individuals in India that posts jobs and
resumes, as well as a social networking forum for people looking for an
engineering, math or science tutor or willing to be one.
2. GOING CONCERN
The accompanying financial statements have been prepared in conformity
with generally accepted accounting principles in the United States of
America, which contemplate continuation of the Company as a going
concern. The Company, however, has not realized significant revenues as
of March 31, 2010, and has incurred net losses of $164,405 since
inception. The Company currently has limited liquidity, and has not
completed its efforts to establish a stabilized source of revenues
sufficient to cover operating costs over an extended period of time. If
the Company is unable to obtain adequate capital, it could be forced to
cease operations.
Management anticipates that the Company will be dependent, for the
foreseeable future, on additional investment capital to fund operating
expenses. The Company intends to position itself so that it may be able
to raise additional funds through the capital markets. In light of
management's efforts, there are no assurances that the Company will be
successful in this or any of its endeavors or become financially viable
and continue as a going concern.
The ability of the Company to continue as a going concern is dependent
upon its ability to successfully accomplish the plans described in the
preceding paragraph and eventually secure other sources of financing
and attain profitable operations. The accompanying financial statements
do not include any adjustments that might be necessary if the Company
is unable to continue as a going concern.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting policies of the Company are in accordance with the
accounting principles generally accepted in the United States of
America and are presented in United States dollars ("USD"). Outlined
below are those policies considered particularly significant.
F-6
FIREFISH, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2010
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CASH AND CASH EQUIVALENTS
For purposes of the Statement of Cash Flows, the Company considers all
highly liquid instruments purchased with a maturity of three months or
less to be cash equivalents to the extent the funds are not being held
for investment purposes.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those estimates.
FAIR VALUE OF FINANCIAL STATEMENTS
The carrying amounts reported in the accompanying consolidated
financial statements for current assets and current liabilities
approximate the fair value because of the immediate or short-term
maturities of the financial instruments.
PRINCIPLES OF CONSOLIDATION
The financial statements include the accounts of the Company and its
wholly owned subsidiary Firefish Networks Private Limited, an entity
formed under the laws of the nation of India. All significant
intercompany transactions have been eliminated in the consolidation.
BASIC (LOSS) PER COMMON SHARE
Basic (loss) per share is calculated by dividing the Company's net loss
applicable to common shareholders by the weighted average number of
common shares during the period. Diluted earnings per share is
calculated by dividing the Company's net income available to common
shareholders by the diluted weighted average number of shares
outstanding during the year. The diluted weighted average number of
shares outstanding is the basic weighted number of shares adjusted for
any potentially dilutive debt or equity. There are 1,000,000 common
stock equivalents outstanding as of March 31, 2010, which are excluded
because they are considered anti-dilutive.
F-7
FIREFISH, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2010
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
REVENUE RECOGNITION
The Company performs consulting engagements under contractual
agreements during its development stage that may not be directly
related to the projected on-going business of the Company. The Company
recognizes revenue when the contracted services have been completed and
collection is reasonably assured.
COMPREHENSIVE INCOME
The Company recorded Other Comprehensive Income for the year ended
March 31, 2010 of $5,557 and Other Comprehensive Loss of $4,988 for the
period ended March 31, 2009, as the result of currency translation
adjustments.
ADVERTISING COSTS
The Company's policy regarding advertising is to expense advertising
when incurred. The Company has incurred $485 in advertising expense for
the year ended March 31, 2010. No advertising expense was incurred
during the year ended March 31, 2009.
INCOME TAXES
The Company provides for income taxes under ASC 740 Income Taxes. ASC
740 requires the use of an asset and liability approach in accounting
for income taxes. Deferred tax assets and liabilities are recorded
based on the differences between the financial statement and tax bases
of assets and liabilities and the tax rates in effect when these
differences are expected to reverse.
ASC 740 requires the reduction of deferred tax assets by a valuation
allowance if, based on the weight of available evidence, it is more
likely than not that some or all of the deferred tax assets will not be
realized.
The provision for income taxes differs from the amounts which would be
provided by applying the statutory federal income tax rate of 39% to
the net loss before provision for income taxes for the following
reasons:
F-8
FIREFISH, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2010
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
March 31,
-----------------------------
2010 2009
(restated)
-------------- --------------
Income tax expense at statutory rate $ (38,390) $ (25,728)
Common stock issued for services - -
Valuation allowance 38,390 25,728
-------------- --------------
Income tax expense per books $ - $ -
============== ==============
Net deferred tax assets consist of the following components as of:
March 31,
----------------------------
2010 2009
(restated)
-------------- -------------
NOL Carryover $ 38,390 $ 25,728
Valuation allowance (38,390) (25,728)
-------------- -------------
Net deferred tax asset
$ - $ -
============== =============
Due to the change in ownership provisions of the Tax Reform Act of
1986, net operating loss carry forwards of $164,405 for federal income
tax reporting purposes are subject to annual limitations. Should a
change in ownership occur net operating loss carry forwards may be
limited as to use in future years.
IMPAIRMENT OF LONG-LIVED ASSETS
The Company continually monitors events and changes in circumstances
that could indicate carrying amounts of long-lived assets may not be
recoverable. When such events or changes in circumstances are present,
the Company assesses the recoverability of long-lived assets by
determining whether the carrying value of such assets will be recovered
through undiscounted expected future cash flows. If the total of the
future cash flows is less than the carrying amount of those assets, the
Company recognizes an impairment loss based on the excess of the
F-9
FIREFISH, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2010
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
carrying amount over the fair value of the assets. Assets to be
disposed of are reported at the lower of the carrying amount or the
fair value less costs to sell.
STOCK-BASED COMPENSATION.
As of March 31, 2010, the Company has not issued any share-based
payments to its employees.
The Company adopted ASC 718 Compensation-Stock Compensation effective
January 1, 2006 using the modified prospective method. Under this
transition method, stock compensation expense includes compensation
expense for all stock-based compensation awards granted on or after
January 1, 2006, based on the grant-date fair value estimated in
accordance with the provisions of ASC 718.
CONCENTRATION OF RISKS
During the development stage activities of the Company, revenues are
generated by personal consulting services of the Company's Chief
Executive Officer. These consulting services may not be related to the
projected on-going services of the Company.
At March 31, 2010, the Company had Cash in the Bank of $49,697, of
which $15,132 related to its Indian subsidiary bank account. Deposit
Insurance and Credit Guarantee Corporation of India provides insurance
on the Indian funds up to $2,000. The Company regularly maintains a
balance in excess of the maximum insured.
For the years ended March 31, 2010 and 2009, respectively, 84% and 100%
of the Company's revenues were from one customer.
NEW ACCOUNTING PRONOUNCEMENTS
The Company has implemented all new accounting pronouncements that are
in effect and that may impact its financial statements and does not
believe that there are any other new accounting pronouncements that
have been issued that might have a material impact on its financial
position or results of operations.
FOREIGN EXCHANGE
The financial statements are presented in USD, the reporting currency.
The functional currency for the financial statements is Indian rupees
and in accordance with ASC Topic 830, "Foreign Currency Translation",
foreign denominated
F-10
FIREFISH, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2010
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
monetary assets and liabilities are translated to their USD equivalents
using foreign exchange rates which prevailed at the balance sheet date.
Non-monetary assets and liabilities are translated at exchange rates
prevailing at the transaction date. Revenue and expenses were
translated at the prevailing rate of exchange at the date of the
transaction. Related translation adjustments are reported as a separate
component of stockholder's equity (deficit), whereas gains or losses
resulting from foreign currency transactions are included in results of
operations.
4. COMMON STOCK
On April 30, 2008, the Company received $6,667 from its founders for
6,666,666 shares of its common stock.
On June 30, 2008 the Company issued 3,155,555 common shares of its
common stock at a price per share of $0.05 for a total purchase price
of $160,000. The Company also issued warrants to purchase an aggregate
of 1,000,000 shares of the Company's common stock at an exercise price
of $0.45 per share for a term of 24 months in exchange for a payment of
a fee of $10,000.
In May 2010, Genesis Venture Fund India, LLP ("Genesis") completed a
partial exercise of its warrants to purchase 1,000,000 common shares of
the Company at $0.45 per share by tendering $10,000 for the purchase of
22,222 shares. In June 2010, Genesis purchased 22,222 additional shares
at $.45 per share for $10,000.
5. RELATED PARTY TRANSACTIONS
During the period ended March 31, 2009, the Company entered into the
following transactions with shareholders:
On April 30, 2008, the Company received $6,667 from one of its
executive officers for purchase of 6,666,666 founder shares.
On June 30, 2008, the Company received $160,000 from an entity owned by
one of the Company's officers for the purchase of 3,155,555 common
shares plus $10,000 for a warrant to purchase 1,000,000 common shares
at an exercise price of $0.45 per share with a 24 month term.
A Company officer has agreed to perform through an entity he controls
consulting services relating to the preparation and filing of the
Company's S-1 at a value that cannot be determined. As of March 31,
2010, the Company has expensed $36,000 of consulting services provided
on its behalf.
F-11
FIREFISH, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2010
5. RELATED PARTY TRANSACTIONS (CONTINUED)
No additional shares of the Company have been issued subsequent to the
issuances described above.
6. CORRECTION OF ERRORS IN COMPARATIVE FINANCIAL STATEMENTS - ERRORS
RELATE TO FIRST YEAR PRESENTED IN THE COMPARATIVE FINANCIAL STATEMENTS
The Company has restated its previously issued consolidated financial
statements for the year ended March 31, 2009 for matters related to the
following previously reported items: revenues and general and
administrative expenses, and software development expenses and general
and administrative expenses - related party not previously reported.
The accompanying financial statements for the year ended March 31, 2009
have been restated to reflect the corrections.
The following is a summary of the restatement for the year ended March
31, 2009:
Increase of previously reported revenues $ (9,000)
Increase of software development expenses 19,472
Decrease of previously reported general and
administrative expenses (145,960)
Increase of general and administrative expenses -
related party 55,000
----------
Total decrease in loss for year ended March 31, 2009 $ (80,488)
==========
Balance Sheet as of March 31, 2009:
Previously Increase
Reported (Decrease) Restated
------------------ ---------------- ----------------
Total Assets $ 290,266 $ (157,048) $ 133,218
Total Liabilities 10,055 2,453 12,508
Stockholders' Equity:
Additional Paid in Capital 416,845 (235,000) 181,845
Cumulative Translation
Adjustment - (4,988) (4,988)
Accumulated Deficit during
Development Stage (146,456) 80,488 (65,968)
------------------ ---------------- ----------------
Total Liabilities and Stockholders'
Equity 290,266 (157,047) 133,218
F-12
FIREFISH, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2010
6. CORRECTION OF ERRORS IN COMPARATIVE FINANCIAL STATEMENTS - ERRORS
RELATE TO FIRST YEAR PRESENTED IN THE COMPARATIVE FINANCIAL STATEMENTS
(CONTINUED)
Statement of Operations for the year ended March 31, 2009:
Previously Increase
Reported (Decrease) Restated
------------ ------------- ------------
Revenues $ - $ 9,000 $ 9,000
Software development - 19,472 19,472
General and administrative 146,456 (146,960) 496
General and administrative -
related party - 55,000 55,000
Net Loss (146,456) (80,488) (65,968)
7. SUBSEQUENT EVENTS
The Company has evaluated events subsequent to March 31, 2010 and has
determined that no events, other than those disclosed above, have
occurred that would materially affect the financial statements above.
F-13
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
FIREFISH, INC.
Dated: December 7, 2010
By: /s/ Harshawardhan Shetty
----------------------------------------------
Harshawardhan Shetty,
President, CEO and Principal Financial &
Accounting Officer & Director
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