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 September 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 November 9, 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 September 30, 2006, and the results of its
operations and changes in its financial position from November 17, 1999,
through September 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
september December
30, 2006 31, 2005
----------- ------------
(Unaudited)
Assets
Current Assets $ - $ -
---------- ----------
Total Assets $ - $ -
========== ==========
Liabilities and Stockholders' Equity
Current Liabilities
Accounts Payable $ 35,097 $ 25,499
Interest Payable 15,110 12,743
Note Payable - Related Party 31,563 31,563
---------- ----------
Total Current Liabilities 81,770 69,805
---------- ----------
Total Liabilities 81,770 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 (91,770) (79,805)
---------- ----------
Total Stockholders' Equity (Deficit) (81,770) (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 Nine Months Ended (Inception)
Sept. 30, Sept. 30, Sept. 30, Sept. 30, to Sept. 30,
2006 2005 2006 2005 2006
---------- ---------- ---------- ---------- ----------
Revenue $ - $ - $ - $ - $ -
Expenses
General & Administrative 4,314 790 9,598 10,915 76,411
--------- --------- --------- --------- ---------
Total Expenses 4,314 790 9,598 10,915 76,411
--------- --------- --------- --------- ---------
Income (Loss) from Operations (4,314) (790) (9,598) (10,125) (76,411)
Other Income (Expenses)
Interest Expense (789) (789) (2,367) (2,365) (15,359)
--------- --------- --------- --------- ---------
Total Other Income (Expenses) (789) (789) (2,367) (2,365) (15,359)
--------- --------- --------- --------- ---------
Net Income (Loss)
Before Taxes (5,103) (1,579) (11,965) (13,280) (91,770)
Taxes - - - - -
--------- --------- --------- --------- ---------
Net Income (Loss) $ (5,103) $ (1,579) $ (11,965) $ (13,280) $ (91,770)
========= ========= ========= ========= =========
Loss per Common Share $ (.00) $ (.02) $ (.02) $ (.03)
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 Nine Months Ended (Inception)
September September to September
30, 2006 30, 2005 30, 2006
---------- ---------- ----------
Cash Flows from Operating Activities
Net Income (Loss) $ (11,861) $ (13,280) $ (91,770)
Adjustments to Reconcile Net Income
(Loss) to Net Cash Provided by
Operating Activities:
Stock Issued for Services - - 2,285
Increase in Accounts Payable 9,598 10,915 35,097
Increase in Interest Payable 2,367 2,365 15,110
--------- --------- ---------
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
september 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
September 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 Nine Months Ended
September 30,
2006 2005
Basic Earnings per share: -------- --------
Income (loss) (numerator) $ (11,965) $ (13,280)
Shares (demoninator) 500,001 500,001
Per share amount $ (.02) $ (.03)
NOTE 3 - NEW TECHNICAL PRONOUNCEMENTS
SFAS No. 155, "Accounting for Certain Hybrid Financial Instruments"
In February 2006, the FASB issued SFAS No. 155, "Accounting for Certain
Hybrid Financial Instruments", which amends SFAS No. 133, "Accounting for
Derivatives Instruments and Hedging Activities" and SFAS No. 140, "Accounting
for Transfers and Servicing of Financial Assets and Extinguishment of
Liabilities." SFAS No. 155 amends SFAS No. 133 to narrow the scope exception
for interest-only and principal-only strips on debt instruments to include
only such strips representing rights to receive a specified portion of the
contractual interest or principle cash flows. SFAS No. 155 also amends SFAS
No. 140 to allow qualifying special-purpose entities to hold a passive
derivative financial instrument pertaining to beneficial interests that
itself is a derivative instrument. We do not anticipate that the adoption of
this standard will have a material impact on our financial statements.
SFAS No. 156, "Accounting for Servicing of Financial Assets"
In March 2006, the FASB issued SFAS No. 156, "Accounting for Servicing of
Financial Assets", which provides an approach to simplify efforts to obtain
hedge-like (offset) accounting. This Statement amends FASB Statement No. 140,
"Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities", with respect to the accounting for
separately recognized servicing assets and servicing liabilities. The
Statement (1) requires an entity to recognize a servicing asset or servicing
liability each time it undertakes an obligation to service a financial asset
by entering into a servicing contract in certain situations; (2) requires
that a separately recognized servicing asset or servicing liability be
initially measured at fair value, if practicable; (3) permits an entity to
choose either the amortization method or the fair value method for subsequent
measurement for each class of separately recognized servicing assets or
servicing liabilities; (4) permits at initial adoption a one-time
reclassification of available-for-sale securities to trading securities by an
entity with recognized servicing rights, provided the securities reclassified
offset the entity's exposure to changes in the fair value of the
7
Cygni Investments, Inc.
(A Development Stage Company)
Notes to the Financial Statements
September 30, 2006
NOTE 3 - NEW TECHNICAL PRONOUNCEMENTS (continued)
servicing assets or liabilities; and (5) requires separate presentation of
servicing assets and servicing liabilities subsequently measured at fair value
in the balance sheet and additional disclosures for all separately recognized
servicing assets and servicing liabilities. SFAS No. 156 is effective for all
separately recognized servicing assets and liabilities as of the beginning of
an entity's fiscal year that begins after September 15, 2006, with earlier
adoption permitted in certain circumstances. The Statement also describes the
manner in which it should be initially applied. The Company does not believe
that SFAS No. 156 will have a material impact on its financial statements.
FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes"
(FIN 48)
In July 2006, the FASB issued FASB Interpretation No. 48, "Accounting for
Uncertainty in Income Taxes" (FIN 48). FIN 48 clarifies the accounting and
reporting for income taxes recognized in accordance with SFAS No. 109,
"Accounting for Income Taxes." This Interpretation prescribes a comprehensive
model for the financial statement recognition, measurement, presentation and
disclosure of uncertain tax positions taken or expected to be taken in income
tax returns. This interpretation is effective for the Corporation's fiscal
year beginning January 1, 2007. The Corporation does not expect the
Interpretation will have a material impact on our financial position, results
of operations or liquidity.
SFAS No. 157, "Fair Value Measurements"
In September 2006, the FASB issued Statement of Financial Accounting
Standards No. 157, Fair Value Measurements (FAS 157) to clarify how to
measure fair value and to expand disclosures about fair value measurements.
The expanded disclosures include the extent to which companies measure assets
and liabilities at fair value, the information used to measure fair value,
and the effect of fair value on earnings and is applicable whenever other
standards require (or permit) assets and liabilities to be measured at fair
value. FAS 157 is effective for financial statements issued for fiscal years
beginning after November 15, 2007 and interim periods within those fiscal
years. The Company believes this Statement will not have a material impact on
the Company's 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 September 30, 2006, and earlier years;
accordingly, no deferred tax liabilities have been recognized for all years.
8
Cygni Investments, Inc.
(A Development Stage Company)
Notes to the Financial Statements
September 30, 2006
NOTE 4 - INCOME TAXES (continued)
The Company has cumulative net operating loss carryforwards of $91,770 at
September 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 September 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 September 30,
2006, and December 31, 2005:
September 30, December 31,
2006 2005
------------ ------------
Deferred tax asset:
Deferred noncurrent tax asset $ 13,765 $ 11,971
Valuation allowance (13,765) (11,971)
-------- --------
Total - -
======== ========
The components of Income Tax expense are as follows:
September 30,
2006 2005
-------- --------
Current Federal Tax - -
Current State Tax - -
Change in NOL benefit (1,794) (1,992)
Change in Allowance 1,794 1,992
------- -------
$ - $ -
======= =======
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 September 30, 2006, the accrued interest associated with the various
notes was $15,110.
9
Cygni Investments, Inc.
(A Development Stage Company)
Notes to the Financial Statements
September 30, 2006
NOTE 5 - NOTE PAYABLE RELATED PARTY (continued)
Setpember 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.
10
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
11
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 September 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.
12
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: November 9, 2006 By: /s/ Carl Suter
Carl Suter, President and
Treasurer (Principal Executive
Officer and Principal Financial
and Accounting Officer)
13