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, 2007
[ ] 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 14, 2007, there were
500,001 shares of the Registrant's Common Stock outstanding.
Transitional Small Business Disclosure Format (Check One) Yes [ ] No [X]
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, 2007, and the results of its
operations and changes in its financial position from November 17, 1999,
through March 31, 2007, 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,
2006.
2
Cygni Investments, Inc.
(A Development Stage Company)
Balance Sheets
(Unaudited)
March December
31, 2007 31, 2006
----------- -----------
Assets
Current Assets
Cash $ - -
---------- ----------
Total Current Assets $ - $ -
========== ==========
Liabilities and Stockholders' Equity
Current Liabilities
Accounts Payable $ 37,830 $ 35,847
Interest Payable 16,688 15,899
Note Payable - Related Party 31,563 31,563
---------- ----------
Total Current Liabilities 86,081 83,309
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 (96,081) (93,309)
---------- ----------
Total Stockholders' Equity (Deficit) (86,081) (83,309)
---------- ----------
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, 2007 31, 2006 31, 2007
----------- ----------- -----------
Revenue $ - $ - $ -
---------- ---------- ----------
Expenses
General & Administrative 1,983 3,355 79,144
---------- ---------- ----------
Total Expenses 1,983 3,355 79,144
---------- ---------- ----------
Income (Loss)
from Operations (1,983) 3,355 (79,144)
Other Income (Expenses)
Interest Expense (789) (789) (16,937)
---------- ---------- ----------
Total Other Income (Expenses) (789) (789) (16,937)
---------- ---------- ----------
Income (Loss) Before Taxes (2,772) (4,144) (96,081)
Taxes - - -
---------- ---------- ----------
Net Income (Loss) $ (2,772) $ (4,144) $ (96,081)
========== ========== ==========
Basic Earnings PerShare
(Loss) Per Common Share $ (0.01) $ (0.01)
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, 2007 31, 2006 31, 2007
---------- ---------- ----------
Cash Flows from Operating Activities
Net Income (Loss) $ (2,772) $ (4,144) $ (96,081)
Adjustments to Reconcile Net Income
to Net Cash Provided by
Operating Activities:
Stock Issued for Services - - 2,285
Increase (Decrease) in Accounts Payable 1,983 3,355 37,830
Increase (Decrease) in Interest Payable 789 789 16,688
--------- --------- ---------
Net Cash Provided by
Operating Activities - - (39,278)
Cash Flows from Investing Activities - - -
--------- --------- ---------
Net Cash Provided by
Investing Activities - - -
Cash Flows from Financing Activities
Issuance of Common Stock for Cash - - 7,715
Proceeds from Notes Payable - - 31,563
--------- --------- ---------
Net Cash Provided by
Financing Activities - - 39,278
--------- --------- ---------
Net 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, 2007
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.
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 Three Months Ended
March 31,
2007 2006
Basic Earnings per share: -------- --------
Income (loss) (numerator) $ (2,772) $ (4,144)
Shares (demoninator) 500,001 500,001
Per share amount $ (.01) $ (.02)
6
Cygni Investments, Inc.
(A Development Stage Company)
Notes to the Financial Statements
March 31, 2007
NOTE 3 - NEW TECHNICAL PRONOUNCEMENTS
- -------------------------------------
In February 2006, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 155, "Accounting for Certain Hybrid Financial Instruments an
amendment of FASB Statements No. 133 and 140" ("SFAS No. 155"). This
Statement permits fair value of remeasurement for any hybrid financial
instrument that contains an embedded derivative that otherwise would require
bifurcation; clarifies which interest-only strips and principal-only strips
are not subject to the requirements of SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities"; establishes a requirement to
evaluate interests in securitized financial assets to identify interests that
are freestanding derivatives or that are hybrid financial instruments that
contain an embedded derivative requiring bifurcation; clarifies that
concentrations of credit risk in the form of subordination are not embedded
derivatives; and amended SFAS No. 140, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities," to
eliminate the prohibition on a qualifying special-purpose entity from holding
a derivative financial instrument that pertains to a beneficial interest
other than another derivative financial instrument. SFAS No. 155 is effective
for all financial instruments acquired, issued, or subject to a remeasurement
(new basis) event occurring after the beginning of an entity's first fiscal
year that begins after September 15, 2006. The Company believes the adoption
of the provisions of SFAS No. 154 will not have a material impact on the
financial statements.
In March 2006, FASB issued SFAS No. 156, "Accounting for Servicing of
Financial Assets which amends FAS No. 140, Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities" ("SFAS No.
156"). In a significant change to current guidance, SFAS No. 156 permits an
entity to choose either of the following subsequent measurement methods for
each class of separately recognized servicing assets and servicing
liabilities: (1) Amortization Method or (2) Fair Value Measurement Method.
SFAS No. 156 is effective as of the beginning of an entity's first fiscal
year that begins after September 15, 2006. The Company believes the adoption
of the provisions of SFAS No. 154 will not have a material impact on the
financial statements.
In June 2006 FASB issued Financial Accounting Standards Interpretation
No. 48, "Accounting for Uncertainty in Income Taxes" ("FIN 48"). FIN 48
clarifies the accounting for uncertainty in income taxes recognized in an
enterprises' financial statements in accordance with SFAS No. 109,
"Accounting for Income Taxes" ("SFAS No. 109"). FIN 48 prescribes a
recognition threshold and measurement attributable for the financial statement
recognition and measurement of a tax position taken or expected to be taken
in a tax return. FIN 48 also provides guidance on derecognition,
classification, interest and penalties, accounting in interim periods,
disclosures and transitions. FIN 48 is effective for fiscal years beginning
after December 15, 2006. The Company is currently reviewing the effect, if
any, FIN 48 will have on its financial position.
7
Cygni Investments, Inc.
(A Development Stage Company)
Notes to the Financial Statements
March 31, 2007
NOTE 3 - NEW TECHNICAL PRONOUNCEMENTS (continued)
- -------------------------------------------------
In September 2006, the Securities and Exchange Commission ("SEC") staff
issued Staff Accounting Bulletin No. 108, "Considering the Effects of Prior
Year Misstatements when Quantifying Misstatements in Current Year Financial
Statements" ("SAB No. 108"). SAB No. 108 was issued to provide consistency in
how registrants quantify financial statement misstatements. The Company is
required to and has applied SAB No. 108 in connection with the preparation of
its annual financial statements for the year ending December 31, 2006. The
Company does not expect the application of SAB No. 108 to have a material
effect on its financial position and results of operations.
In September 2006, FASB issued SFAS No. 157, "Fair Value Measurements," which
is effective for calendar year companies on January 1, 2008. The statement
defines fair value, establishes a framework for measuring fair value in
accordance with generally accepted accounting principles, and expands
disclosures about fair value measurements. The statement codifies the
definition of fair value as the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. The standard clarifies the principle
that fair value should be based on the assumptions market participants would
use when pricing the asset or liability and establishes a fair value
hierarchy that prioritizes the information used to develop those assumptions.
The Company is currently assessing the potential impacts of implementing this
standard.
In September 2006, the FASB issued SFAS No. 158, "Employers' Accounting for
Defined Benefit Pension and Other Postretirement Plans an amendment of FASB
Statements No. 87, 88, 106 and 132 (R)" ("SFAS No. 158"). SFAS 158 requires
an employer to recognize the funded status of a defined benefit
postretirement plan as an asset or liability in its statement of financial
position and to recognize changes in that funded status in the year in which
the changes occur through comprehensive income. The funded status of a
benefit plan is defined as the difference between the fair value of the plan
assets and the plans benefit obligation. For a pension plan the benefit
obligation is the projected benefit obligation and for any other
postretirement benefit plan, such as a retiree health care plan, the benefit
obligation is the accumulated postretirement benefit obligation. SFAS No. 158
requires an employer to recognize as a component of other comprehensive
income, net of tax, the gains and losses and prior service costs or credits
that arise during the period but that are not recognized as components of net
periodic benefit costs pursuant to SFAS No. 87. SFAS No. 158 also requires an
employer to measure the funded status of a plan as of the date of its
year-end. Additional footnote disclosure is also required about certain
effects on net periodic benefit cost for the next year that arise from the
delayed recognition of gains or losses, prior service costs or credits, and
transition asset or obligation. Except for the year-end measurement
requirement, SFAS No. 158 is effective for the year ending December 31, 2006.
The Company does not anticipate that the adoption of this statement will have
a material effect on its financial condition or operations.
8
Cygni Investments, Inc.
(A Development Stage Company)
Notes to the Financial Statements
March 31, 2007
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, 2007, and earlier years;
accordingly, no deferred tax liabilities have been recognized for all years.
The Company has cumulative net operating loss carryforwards of approximately
$96,000 at March 31, 2007. 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, 2007 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,
2007 and December 31, 2006:
March 31, December 31,
2007 2006
---------- ------------
Deferred tax asset:
Deferred noncurrent tax asset $ 13,008 $ 12,592
--------- ---------
Valuation allowance (13,008) (12,592)
--------- ---------
Total $ - $ -
========= =========
The components of Income Tax expense are as follows:
March 31, March 31,
2007 2006
---------- ----------
Current Federal Tax - -
Current State Tax - -
Change in NOL benefit (416) (621)
Change in Allowance 416 621
$ - $ -
======== ========
9
Cygni Investments, Inc.
(A Development Stage Company)
Notes to the Financial Statements
March 31, 2007
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, 2007, the accrued interest associated with the various
notes was $16,688.
March 31, December 31,
The Company has the following note payable obligations: 2007 2006
---------- ------------
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
---------- --------
2007 $ 31,563
2008 -
2009 -
2010 -
2011 -
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, 2007, will be approximately $5,000, 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 March 31, 2007, 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: May 15, 2007 By: /s/ Carl Suter
Carl Suter, President and Treasurer
(Principal Executive Officer and
Principal Financial and Accounting
Officer)
13