UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter ended March 31, 2006
[ ] 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: 000-31165
CYGNI INVESTMENTS, INC.
(Exact name of Registrant as specified in charter)
NEVADA 88-0442584
State or other jurisdiction of I.R.S. Employer I.D. No.
incorporation or organization
3857 BIRCH STREET, #606, NEWPORT BEACH, CA 92660
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (949) 644-0095
Check whether the Issuer (1) has filed all reports required to be filed
by section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such fling requirements for the
past 90 days. (1) Yes [X] No [ ] (2) Yes [X] No [ ]
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act). Yes [X] No [ ]
State the number of shares outstanding of each of the Issuer's classes
of common equity as of the latest practicable date: At May 12, 2006,
there were 500,001 shares of the Registrant's Common Stock outstanding.
PART I
ITEM 1. FINANCIAL STATEMENTS
The condensed financial statements included herein have been
prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures are
adequate to make the information presented not misleading.
In the opinion of the Company, all adjustments, consisting of only
normal recurring adjustments, necessary to present fairly the financial
position of the Company as of March 31, 2006, and the results of its
operations and changes in its financial position from November 17, 1999,
through March 31, 2006, have been made. The results of its operations
for such interim period is not necessarily indicative of the results to
be expected for the entire year. These condensed financial statements
should be read in conjunction with the financial statements and notes
thereto included in the Company's annual report on Form 10-KSB for the
year ended December 31, 2005.
Cygni Investments, Inc.
(A Development Stage Company)
Balance Sheets
March December
31, 2006 31, 2005
----------- -----------
(Unaudited)
Assets
Current Assets
Total Current Assets $ - $ -
========== ==========
Liabilities and Stockholders' Equity
Current Liabilities
Accounts Payable $ 28,854 $ 25,499
Interest Payable 13,532 12,743
Note Payable - Related Party 31,563 31,563
---------- ----------
Total Current Liabilities 73,949 69,805
---------- ----------
Total Liabilities 73,949 69,805
Stockholders' Equity
Common Stock 100,000,000 Shares
Authorized at $.001 Par Value;
500,001 Shares Issued and Outstanding 500 500
Additional Paid in Capital 9,500 9,500
Accumulated Deficit During Development Stage (83,949) (79,805)
---------- ----------
Total Stockholders' Equity (Deficit) (73,949) (69,805)
---------- ----------
Total Liabilities and Stockholders' Equity $ - $ -
========== ==========
The accompanying notes are an integral part of these financial statements.
3
Cygni Investments, Inc.
(A Development Stage Company)
Statements of Operations
(Unaudited)
For the Period
November
17, 1999
For the Three Months Ended (Inception)
March March to March
31, 2006 31, 2005 31, 2006
----------- ----------- -----------
Revenue $ - $ - $ -
---------- ---------- ----------
Expenses
General & Administrative 3,355 - 70,168
---------- ---------- ----------
Total Expenses 3,355 - 70,168
---------- ---------- ----------
Income (Loss)
from Operations (3,355) - (70,168)
Other Income (Expenses)
Interest Expense (789) (787) (13,781)
---------- ---------- ----------
Total Other Income (Expenses) (789) (787) (13,781)
---------- ---------- ----------
Income (Loss) Before Taxes (4,144) (787) (83,949)
Taxes - - -
---------- ---------- ----------
Net Income (Loss) $ (4,144) $ (787) $ (83,949)
========== ========== ==========
Loss Per
Common Share $ (0.01) $ (0.00)
Weighted Average
Outstanding Shares 500,001 500,001
The accompanying notes are an integral part of these financial statements.
4
Cygni Investments, Inc.
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
For the Period
November
For the Three Months Ended 17, 1999
March March (Inception)
31, 2006 31, 2005 31, 2006
---------- ---------- ----------
Cash Flows from Operating Activities
Net Income (Loss) $ (4,144) $ (787) $ (83,949)
Adjustments to Reconcile Net Income
(Loss) to Net Cash Provided by
Operating Activities:
Stock Issued for Services - - 2,285
Increase in Accounts Payable 3,355 - 28,854
Increase in Interest Payable 789 787 13,532
--------- --------- ---------
Net Cash Provided (Used) by
Operating Activities - - (39,278)
Cash Flows from Investing Activities - - -
--------- --------- ---------
Cash Flows from Financing Activities
Issuance of Common Stock for Cash - - 7,715
Issuance of Note Payable for Cash - - 31,563
--------- --------- ---------
Net Cash Provided (Used) by
Financing Activities - - 39,278
--------- --------- ---------
Increase (Decrease) in Cash - - -
Cash, Beginning of Period - - -
--------- --------- ---------
Cash, End of Period $ - $ - $ -
========= ========= =========
Supplemental Cash Flow Information
Interest $ - $ - $ -
Income Taxes - - -
The accompanying notes are an integral part of these financial statements.
5
Cygni Investments, Inc.
(A Development Stage Company)
Notes to the Financial Statements
March 31, 2006
NOTE 1 - CORPORATE HISTORY
Cygni Investments, Inc. (the "Company") was incorporated in Nevada on
November 17, 1999, as Cygni Investments, Inc. for the purpose of seeking and
consummating a merger or acquisition with a business entity organized as a
private corporation, partnership, or sole proprietorship as defined by
Statement of Financial Accounting Standards (SFAS) No. 7.
The Company has yet to fully develop any material income from its stated
primary objective and it is classified as a development stage company. All
income, expenses, cash flows and stock transactions are reported since the
beginning of development stage.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
Cash and Cash Equivalents - The Company considers all highly liquid
investments with maturities of three months or less to be cash equivalents.
Earnings (Loss) Per Share - The computation of earnings per share of common
stock is based on the weighted average number of shares outstanding at the
date of the financial statements.
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities at the date of
the financial statements and revenues and expenses during the reporting
period. In these financial statements, assets, liabilities and earnings
involve extensive reliance on management's estimates. Actual results could
differ from those estimates.
Fair Value of Financial Instruments- The fair value of the Company's cash and
cash equivalents, accounts payable and accrued liabilities approximate
carrying value based on their effective interest rates compared to current
market prices.
6
Cygni Investments, Inc.
(A Development Stage Company)
Notes to the Financial Statements
March 31, 2006
Net Earnings (Loss) Per Share of Common Stock - The computation of earning
(loss) per share of common stock is based on the weighted average number of
shares outstanding at the date of the financial statements.
For the Quarters Ended
March 31,
2006 2005
Basic Earnings per share: -------- --------
Income (loss) (numerator) $ (4,144) $ (787)
Shares (demoninator) 500,001 500,001
Per share amount $ (.01) $ (.00)
NOTE 3 - NEW TECHNICAL PRONOUNCEMENTS
In May 2005, the FASB issued SFAS No. 154, ACCOUNTING CHANGES AND ERROR
CORRECTIONS. This Statement replaces APB No. 20, ACCOUNTING CHANGES and FASB
No. 3, REPORTING ACCOUNTING CHANGES IN INTERIM FINANCIAL STATEMENTS, and
changes the requirements for the accounting for and reporting of a change in
accounting principle. This Statement applies it all voluntary changes in
accounting principle. It also applies to changes required by an accounting
pronouncement in the unusual instance that the pronouncement include specific
transition provisions. When a pronouncement includes specific transition
provisions, those provisions should be followed. This Statement requires
retrospective application to prior periods' financial statements of changes
in accounting principle, unless it is impracticable to determine either the
period-specific effects or the cumulative effect of the change. The adoption
of SFAS No. 154 did not have an impact on the Company's consolidated
financial statements.
NOTE 4 - INCOME TAXES
The Company adopted Statement of Financial Accounting Standards No. 109
"Accounting for Income Taxes" in the fiscal year ended December 31, 2000 and
has applied the provisions of the statement to the current year which
resulted in no significant adjustment.
Statement of Financial Accounting Standards No. 109 "Accounting for Income
Taxes" requires an asset and liability approach for financial accounting and
reporting for income tax purposes. This statement recognizes (a) the amount
of taxes payable or refundable for the current year and (b) deferred tax
liabilities and assets for future tax consequences of events that have been
recognized in the financial statements or tax returns.
Deferred income taxes result from temporary differences in the recognition of
accounting transactions for tax and financial reporting purposes. There
were no temporary differences at March 31, 2006 and earlier years;
accordingly, no deferred tax liabilities have been recognized for all years.
7
Cygni Investments, Inc.
(A Development Stage Company)
Notes to the Financial Statements
March 31, 2006
NOTE 4 - INCOME TAXES (continued)
The Company has cumulative net operating loss carryforwards of $83,949 at
March 31, 2006. No effect has been shown in the financial statements for the
net operating loss carryforwards as the likelihood of future tax benefit from
such net operating loss carryforwards is not presently determinable.
Accordingly, the potential tax benefits of the net operating loss
carryforwards, estimated based upon current tax rates at March 31, 2006 have
been offset by valuation reserves in the same amount. The net operating
losses begin to expire in 2019.
The deferred tax asset and the valuation account is as follows at March 31,
2006 and December 31, 2005:
March 31, December 31,
2006 2005
-------- -----------
Deferred tax asset:
Deferred noncurrent tax asset $ 12,592 $ 11,971
Valuation allowance (12,592) (11,971)
------- --------
Total - -
======= ========
The components of Income Tax expense are as follows:
March 31,
2006 2005
-------- --------
Current Federal Tax - -
Current State Tax - -
Change in NOL benefit (621) (118)
Change in Allowance 621 118
------- -------
$ - $ -
======= =======
NOTE 5 - NOTE PAYABLE RELATED PARTY
The Company has issued several promissory notes to various corporations whose
officers and/or directors are shareholders of the Company. The notes are
unsecured, bear an interest rate of 10% per annum and are due and payable on
demand. At March 31, 2006, the accrued interest associated with the various
notes was $13,532.
8
Cygni Investments, Inc.
(A Development Stage Company)
Notes to the Financial Statements
March 31, 2006
NOTE 5 - NOTE PAYABLE RELATED PARTY (continued)
March 31, December 31,
The Company has the following note payable obligations: 2006 2005
------------ ------------
Related party notes payable due on demand,
accruing interest at a rate of 10% per annum $ 31,563 $ 31,563
--------- ---------
Totals $ 31,563 $ 31,563
Less Current Maturities (31,563) (31,563)
--------- ---------
Total Long-Term Notes Payable $ - $ -
========= =========
Following are maturities of long-term debt for each of the next five
years:
Year Amount
---------- --------
2006 $ 31,563
2007 -
2008 -
2009 -
2010 -
Thereafter -
-------
Total $ 31,563
=======
NOTE 6 - GOING CONCERN
The Company's financial statements are prepared using generally accepted
accounting principles applicable to a going concern which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. Currently, the Company has no cash or other material assets, nor
does it have an established source of revenues sufficient to cover any
anticipated operating costs to allow it to continue as a going concern. It
is the intent of the Company to find additional capital funding and/or a
profitable business venture to acquire or merge.
9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATION
The Company is a development stage company. Since its inception,
the Company has had no operations. The Company was organized for the
purpose of engaging in any lawful activity permitted under Nevada state
law; however, the Company does not have any significant cash or other
material assets, nor does it have an established source of revenues
sufficient to cover operating costs and to allow it to continue as a
going concern. The Company intends to take advantage of any reasonable
business proposal presented which management believes will provide the
Company and its stockholders with a viable business opportunity. The
board of directors will make the final approval in determining whether
to complete any acquisition, but may submit the proposal to the
shareholders for final approval.
The original shareholders contributed a total of $7,715 in cash and
$2,285 in services as capital contributions for stock of the Company.
Since inception the Company has borrowed funds from corporations related
to the Company for operating expenses.
Management estimates that the cash requirements for the year ending
December 31, 2006, will be approximately $10,000, if no change in
operations occurs during the year. Management anticipates that any
additional needed funds will be loaned to the Company on the same or
similar terms as those of other loans to the Company. There are no
agreements with any of the companies and no assurance that all or a
portion of these funds will be loaned to the Company. If the Company is
unable to borrow such funds, management will seek other sources of
funding which are currently unknown to management. There is no
assurance that such funding would be available or that if it is made
available, it could be obtained on terms favorable to the Company.
The investigation of specific business opportunities and the
negotiation, drafting, and execution of relevant agreements, disclosure
documents, and other instruments will require substantial management
time and attention and will require the Company to incur costs for
payment of accountants, attorneys, and others. If a decision is made
not to participate in or complete the acquisition of a specific business
opportunity, the costs incurred in a related investigation will not be
recoverable. Further, even if an agreement is reached for the
participation in a specific business opportunity by way of investment or
otherwise, the failure to consummate the particular transaction may
result in a loss to the Company of all related costs incurred.
Currently, management is not able to determine the time or
resources that will be necessary to locate and acquire or merge with a
business prospect. There is no assurance that the Company will be able
to acquire an interest in any such prospects, products, or opportunities
that may exist or that any activity of the Company, regardless of the
completion of any transaction, will be profitable. If and when the
Company locates a business opportunity, management of the Company will
give consideration to the dollar amount of that entity's profitable
operations and the adequacy of its working capital in determining the
terms and conditions under which the
9
Company would consummate such an acquisition. Potential business
opportunities, no matter which form they may take, will most likely
result in substantial dilution for the Company's shareholders due to
the likely issuance of stock to acquire such an opportunity.
Off-Balance Sheet Arrangements
Management does not believe the Company has any off-balance sheet
arrangements that have, or are reasonable likely to have, a current or
future effect on our financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity,
capital expenditures, or capital resources which would be material to
investors.
ITEM 3. CONTROLS AND PROCEDURES
Evaluation of disclosure and controls and procedure
Carl Suter, the Company's chief executive officer and principal
financial officer, has evaluated the effectiveness of the design and
operation of the Company's disclosure controls and procedures (as
defined in Rules 13a-15(e) under the Securities Exchange Act of 1934, as
amended) as of the end of the period covered by this quarterly report.
Based on that evaluation the he has concluded that the Company's
disclosure controls and procedures are designed to ensure that
information required to be disclosed by the Company in the reports that
it files or submits under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the SEC's
rules and forms, and are operating in an effective manner.
Changes in internal controls
During the last quarter ended March 31, 2006, there were no changes
in the Company's internal control over financial reporting that have
materially affected, or are reasonably likely to materially affect, the
Company's internal control over financial reporting.
It should be noted that any system of controls, however well
designed and operated, can provide only reasonable and not absolute
assurance that the objectives of the system will be met. In addition,
the design of any control system is based in part upon certain
assumptions about the likelihood of future events. Because of these and
other inherent limitations of control systems, there is only reasonable
assurance that our controls will succeed in achieving their stated goals
under all potential future conditions.
10
PART II
OTHER INFORMATION
ITEM 6. EXHIBITS
Exhibits.
31.1 Rule 13a-14(a) Certification by Principal Executive Officer
31.2 Rule 13a-14(a) Certification by Principal Financial Officer
32 Section 1350 Certification of Principal Executive Officer and
Principal Financial Officer
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, the registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly authorized.
Cygni Investments, Inc.
Date: May 15, 2006 By: /s/ Carl Suter
Carl Suter, President and
Treasurer (Principal Executive
Officer and Principal Financial
and Accounting Officer)
11