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 June 30, 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 August 14, 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 June 30, 2006, and the results of its
operations and changes in its financial position from November 17, 1999,
through June 30, 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.
2
Cygni Investments, Inc.
(A Development Stage Company)
Balance Sheet
June December
30, 2006 31, 2005
----------- ------------
(Unaudited)
Assets
Current Assets $ - $ -
---------- ----------
Total Assets $ - $ -
========== ==========
Liabilities and Stockholders' Equity
Current Liabilities
Accounts Payable $ 30,782 $ 25,499
Interest Payable 14,321 12,743
Note Payable - Related Party 31,563 31,563
---------- ----------
Total Current Liabilities 76,666 69,805
---------- ----------
Total Liabilities 76,666 69,805
Stockholders' Equity
Common Stock 100,000,000 Shares
Authorized at $.001 Par Value;
500,001 Shares Issued and Outstanding,
retroactively restated 500 500
Additional Paid in Capital 9,500 9,500
Accumulated Deficit During Development Stage (86,666) (79,805)
---------- ----------
Total Stockholders' Equity (Deficit) (76,666) (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 For the Six Months Ended (Inception)
June 30, June 30, June 30, June 30, to June 30,
2006 2005 2006 2005 2006
---------- ---------- ---------- ---------- ----------
Revenue $ - $ - $ - $ - $ -
Expenses
General & Administrative 1,928 8,002 5,283 10,125 72,096
--------- --------- --------- --------- ---------
Total Expenses 1,928 8,002 5,283 10,125 72,096
--------- --------- --------- --------- ---------
Income (Loss) from Operations (1,928) (8,002) (5,283) (10,125) (72,096)
Other Income (Expenses)
Interest Expense (789) (789) (1,578) (1,577) (14,570)
--------- --------- --------- --------- ---------
Total Other Income (Expenses) (789) (789) (1,578) (1,577) (14,570)
--------- --------- --------- --------- ---------
Net Income (Loss)
Before Taxes (2,717) (8,791) (6,861) (11,702) (86,666)
Taxes - - - - -
--------- --------- --------- --------- ---------
Net Income (Loss) $ (2,717) $ (8,791) $ (6,861) $ (11,702) $ (86,666)
========= ========= ========= ========= =========
Loss per Common Share $ (.01) $ (.02) $ (.01) $ (.02)
Weighted Average
Outstanding Shares 500,001 500,001 500,001 500,001
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
17, 1999
For the Six Months Ended (Inception)
June June to June
30, 2006 30, 2005 30, 2006
---------- ---------- ----------
Cash Flows from Operating Activities
Net Income (Loss) $ (6,861) $ (11,702) $ (86,666)
Adjustments to Reconcile Net Income
(Loss) to Net Cash Provided by
Operating Activities:
Stock Issued for Services - - 2,285
Increase in Accounts Payable 5,283 10,126 30,782
Increase in Interest Payable 1,578 1,576 14,321
--------- --------- ---------
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
June 30, 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
June 30, 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 6 Months Ended
June 30,
2006 2005
Basic Earnings per share: -------- --------
Income (loss) (numerator) $ (6,861) $ (11,702)
Shares (demoninator) 500,001 500,001
Per share amount $ (.01) $ (.02)
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 June 30, 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
June 30, 2006
NOTE 4 - INCOME TAXES (continued)
The Company has cumulative net operating loss carryforwards of $86,666 at
June 30, 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 June 30, 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 June 30,
2006, and December 31, 2005:
June 30, December 31,
2006 2005
-------- -----------
Deferred tax asset:
Deferred noncurrent tax asset $ 13,000 $ 11,971
Valuation allowance (13,000) (11,971)
------- --------
Total - -
======= ========
The components of Income Tax expense are as follows:
June 30,
2006 2005
-------- --------
Current Federal Tax - -
Current State Tax - -
Change in NOL benefit (1,029) (1,755)
Change in Allowance 1,029 1,755
------- -------
$ - $ -
======= =======
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 June 30, 2006, the accrued interest associated with the various
notes was $14,321.
8
Cygni Investments, Inc.
(A Development Stage Company)
Notes to the Financial Statements
June 30, 2006
NOTE 5 - NOTE PAYABLE RELATED PARTY (continued)
June 30, 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.
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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 Company would
consummate such an acquisition. Potential business opportunities, no matter
10
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
The principal executive officer and principal financial officer, Carl
Suter, has concluded, based on his evaluation, as of the end of the period
covered by this report, that the Company's disclosure controls and procedures
(as defined in Rule 13a-15(e) under the Exchange Act) are (1) effective to
ensure that material information required to be disclosed by us in reports
filed or submitted by us under the Exchange Act is recorded, processed,
summarized, and reported within the time periods specified in the rules and
forms of the Securities and Exchange Commission, and (2) effective to ensure
that information required to be disclosed by us in such reports filed or
submitted by the Company under the Exchange Act is accumulated and
communicated to management of the Company, including the principal executive
officer, to allow timely decisions regarding required disclosure.
Changes in internal controls
During the last quarter ended June 30, 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.
11
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: August 21, 2006 By: /s/ Carl Suter
Carl Suter, President and
Treasurer (Principal Executive
Officer and Principal Financial
and Accounting Officer)
12