UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
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FORM 10
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GENERAL FORM FOR REGISTRATION OF SECURITIES
Pursuant to Section 12(b) or (g) of The Securities Exchange Act of 1934
INFOSPI, INC.
(Exact name of registrant as specified in its charter)
Nevada 51-0668045
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6968 La Jolla Blvd. Ste 208
La Jolla, California 92037
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (858) 531-5723
Copies to:
Daniel C. Masters, Esq.
P. O. Box 66
La Jolla, CA 92038
(858) 459-1133
Securities to be registered pursuant to Section 12(b) of the Act:
None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock - $0.001 Par Value
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non accelerated filer, or a smaller reporting company.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
ITEM 1. DESCRIPTION OF BUSINESS
BACKGROUND AND PREDECESSOR
InfoSpi, Inc. ("the Company" or "the Issuer" or "InfoSpi") was organized
under the laws of the State of Nevada on December 31, 2007 as part of the
implementation of the Chapter 11 plan of reorganization of Arrin Systems, Inc.
("Arrin"). Arrin filed for Chapter 11 Bankruptcy in April 2007 in the U.S.
Bankruptcy Court for the Southern District of California. Arrin's plan of
reorganization was confirmed by the Court on December 12, 2007 and became
effective on December 30, 2007. The plan of reorganization provided for the
establishment of the Issuer and the sale to the Issuer of Arrin's proprietary
software (used in the employee background screening industry) in exchange for
567,324 shares of InfoSpi's common stock which were distributed to Arrin's
general unsecured creditors. The shares were distributed pursuant to section
1145 of the Bankruptcy code and are exempt from the registration requirements of
Section 5 of the Securities Act of 1933 and any state or local law requiring
registration for an offer or sale of securities.
DESCRIPTION OF CURRENT BUSINESS
InfoSpi's original business was to hold, develop and market software that
automates various business processes in the employee background screening
industry. Specifically, the InfoSpi software (On-Line(TM) and HireHelper(TM))
automates aspects of obtaining and archiving large databases of background
information from suppliers, of searching these large databases for information
pertaining to a specific individual, and of packaging search results from
several large databases into a single report covering one or more individuals.
The type of background information contemplated by the software is that used by
employers in evaluating potential employees. The rights in the aforementioned
software are the Company's only asset.
On January 22, 2008 management determined that the Company lacks the
resources to further develop the software and agreed to seek a licensing
agreement or a merger or an acquisition with a larger, better capitalized entity
which will bring greater value to our shareholders. Therefore, as of the date
hereof, the Company can be defined as a "shell" company, an entity which is
generally described as having no or nominal operations and with no or nominal
assets. As a shell company, our purpose at this time, described more fully
below, is to negotiate a business agreement or combination with a larger entity
which will bring greater value to our shareholders. We hope to consummate this
business combination with an entity engaged in a related business and thus
capable of utilizing the software currently owned by the Company, however we
will not limit our search for a business combination target to only businesses
engaged in the sale of background information.
Management of the Issuer believes that InfoSpi's software can be profitably
licensed or sold to others or, alternatively, the Company as a whole may be sold
to others. Potential users or buyers include employers interested in bringing
background searches in house, other information providers who are now
competitors of the Debtor, or an unrelated business which seeks the benefits of
our shareholder base or status as a reporting issuer. Management believes that
such an agreement or sale can provide an additional source of recovery for
Arrin's creditors, our shareholders. We will not limit our search for a business
combination target to the background screening industry, but rather will be
guided by the desire to bring greater value to our shareholders.
We will not restrict our search to any specific business or geographical
location. Potential business partners might be found within the background
screening industry, within the more general data solutions industry, or even
outside the data solutions industry. This discussion of the proposed business is
purposefully general and is not meant to be restrictive of our discretion to
search for and enter into potential business opportunities. Management
anticipates that it may be able to participate in only one potential business
venture because a business partner might require exclusivity. This lack of
diversification should be considered a substantial risk to our shareholders
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because it will not permit us to offset potential losses from one venture
against gains from another.
We may seek a business opportunity with entities which have recently
commenced operations, or which wish to expand into new products or markets, to
develop a new product, or to utilize the public marketplace in order to raise
additional capital.
We anticipate that the selection of a business opportunity in which to
participate will be complex and extremely risky. Due to general economic
conditions, rapid changes in the business environment, and shortages of
available capital, management believes that there are numerous firms seeking the
benefits of an issuer who has complied with the 1934 Act.
It is our present intent to continue to comply with all of the reporting
requirements under the 1934 Act. The officers and directors of the Company, have
agreed to provide the necessary funds, without interest, for the Company to
comply with the 1934 Act reporting requirements, provided that they are officers
and directors of the Company when the obligation is incurred.
It is anticipated that we will incur nominal expenses in the implementation
of the business plan described herein. Because we have no capital with which to
pay these anticipated expenses, present management of the Company will pay these
charges with their personal funds, as interest free loans to the Company or as
capital contributions. However, if loans, the only opportunity which management
has to have these loans repaid will be from a prospective licensee or merger or
acquisition candidate.
ACQUISITION OF OPPORTUNITIES
In implementing a structure for a particular business venture, we may
become a party to a merger, consolidation, reorganization, joint venture, or
licensing agreement with another corporation or entity. We may also acquire
stock or assets of an existing business. On the consummation of an agreement, it
is probable that the present management and shareholders of the Company will no
longer be in control of the Company. In addition, and especially if there is a
business combination, our directors may, as part of the terms of the acquisition
or merger, resign and be replaced by new directors without a vote of our
shareholders or may sell their stock in the Company.
It is anticipated that any securities issued by our Company in any such
reorganization would be issued in reliance upon exemption from registration
under applicable federal and state securities laws. It is anticipated that it
will also be a method of taking a private company public known as a "back door"
1934 Act registration procedure.
We will participate in a business opportunity only after the negotiation
and execution of appropriate written agreements. Although the terms of such
agreements cannot be predicted, generally such agreements will require some
specific representations and warranties by all of the parties thereto, will
specify certain events of default, will detail the terms of closing and the
conditions which must be satisfied by each of the parties prior to and after
such closing, will outline the manner of verifying revenue and bearing costs,
including costs associated with the Company's attorneys and accountants, will
set forth remedies on default and will include miscellaneous other terms.
Our present intent is that we will not enter into a licensing agreement
with an entity that will not agree to future independent audits of, at a
minimum, that portion of their books covering income and expenses related to the
licensed technology; nor will we enter into an agreement to acquire or merge
with any entity which cannot provide independent audited financial statements at
the time of closing of the proposed transaction and supply other information
that is normally disclosed in filings with the Securities and Exchange
Commission. We are subject to all of the reporting requirements included in the
1934 Act. These rules are intended to protect investors by deterring fraud and
abuse in the securities markets through the use of shell companies. Included in
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these requirements is the affirmative duty of the Company to file independent
audited financial statements as part of its Form 8-K to be filed with the
Securities and Exchange Commission upon consummation of a merger or acquisition,
as well as the Company's audited financial statements included in its annual
report on Form 10-KSB. In addition, in the filing of the Form 8-K that we file
to report an event that causes us to cease being a shell company, we are
required to include that information that is normally reported by a company in
its original Form 10 or Form 10-SB.
ACCOUNTING IN THE EVENT OF A BUSINESS COMBINATION
In July 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards "SFAS" No. 141, "Business Combinations" and SFAS
No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141 requires business
combinations initiated after June 30, 2001 to be accounted for using the
purchase method of accounting, and broadens the criteria for recording
intangible assets separate from goodwill. Recorded goodwill and intangibles will
be evaluated against these new criteria and may result in certain intangibles
being subsumed into goodwill, or alternatively, amounts initially recorded as
goodwill may be separately identified and recognized apart from goodwill. SFAS
No. 142 requires the use of a non-amortization approach to account for purchased
goodwill and certain intangibles. Under a non-amortization approach, goodwill
and certain intangibles is more than its fair value. Goodwill is the excess of
the acquisition costs of the acquired entity over the fair value of the
identifiable net assets acquired. The Company is required to test goodwill and
intangible assets that are determined to have an indefinite life for impairments
at least annually. The provisions of SFAS No. 142 require the completion of an
annual impairment test with any impairment recognized in current earnings. The
provisions of SFAS No. 141 and SFAS No. 142 may be applicable to any business
combination that we may enter into in the future.
We have also been informed that most business combinations will be
accounted for as a reverse acquisition with us being the surviving registrant.
As a result of any business combination, if the acquired entity's shareholders
will exercise control over us, the transaction will be deemed to be a capital
transaction where we are treated as a non-business entity. Therefore, the
accounting for the business combination is identical to that resulting from a
reverse merger, except no goodwill or other intangible assets will be recorded.
For accounting purposes, the acquired entity will be treated as the accounting
acquirer and, accordingly, will be presented as the continuing entity.
REPORTING ISSUER STATUS
The Company chose to become a reporting company on a voluntary basis
because one attraction of the Company as a merger partner or acquisition vehicle
will be its status as a public company. In addition, we became a reporting
company to enhance investor protection and to provide information if a trading
market commences. Only those companies that report their current financial
information to the Securities and Exchange Commission, banking, or insurance
regulators are permitted to be quoted on the OTC Bulletin Board System.
Based upon our proposed future business activities, it is possible that we
may be deemed a "blank check" company (see "Risk Factors"). The Securities and
Exchange Commission definition of such a company is a development stage company
that has no specific business plan or purpose, or has indicated that its
business plan is to engage in a merger or acquisition with an unidentified
company or companies, or other entity or person, and is issuing "penny stock."
A "penny stock" security is any equity security other than a security (i)
that is a reported security (ii) that is issued by an investment company (iii)
that is a put or call issued by the Option Clearing Corporation (iv) that has a
price of $5.00 or more (except for purposes of Rule 419 of the Securities Act of
1933, as amended) (v) that is registered on a national securities exchange (vi)
that is authorized for quotation on the NASDAQ Stock Market, unless other
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provisions of the defining rule are not satisfied, or (vii) that is issued by an
issuer with (a) net tangible assets in excess of $2,000,000, if in continuous
operation for more than three years or $5,000,000 if in operation for less than
three years or (b) average revenue of at least $6,000,000 for the last three
years.
ITEM 1A. RISK FACTORS
Our business is subject to numerous risk factors, including the following:
1. We have had little operating history and no revenues or earnings from
operations.
We have no assets other than our intellectual property. We will, in all
likelihood, sustain operating expenses without corresponding revenues, at least
until the consummation of a business combination. This may result in us
incurring a net operating loss that will increase continuously until we can
consummate a business combination with a profitable business entity. There is no
assurance that we can identify such a business entity and consummate such an
agreement or combination.
Our auditor's going concern opinion and the notation in the financial
statements indicate that we do not have significant cash or other material
assets and that we are relying on advances from stockholders, officers and
directors to meet our limited operating expenses. We may become insolvent if we
are unable to pay our debts in the ordinary course of business as they become
due.
2. Our proposed plan of operation is speculative.
The success of our proposed plan of operation will depend to a great extent
on the operations, financial condition and management of the business
opportunity which we identify, if any is identified. While management intends to
seek business agreement(s) or combination(s) with entities having established
operating histories, there can be no assurance that we will be successful in
locating candidates meeting such criteria. In the event we complete a business
agreement or combination, of which there can be no assurance, the success of our
operations may be dependent upon management of the successor firm or venture
partner firm and numerous other factors beyond our control.
3. We face intense competition in the software sales industry.
We are and will continue to be an insignificant participant in the business
of providing software to the background screening industry. A large number of
established and well-financed entities, many of which are more proven or famous
than ours, provide software that can be used to procure, archive, package, and
distribute data. Much of this software can be customized or adapted to various
kinds of business operation including the business operation of background
screening. Many such entities have significantly greater financial resources,
technical expertise and managerial capabilities than we have. Consequently, we
will be at a competitive disadvantage in identifying opportunities to sell our
software. Moreover, we will also compete with numerous other small start-up
software companies as well as individuals employed to customize or adapt
existing data processing software to the background check industry.
4. We face intense competition for business combination opportunities.
We are and will continue to be an insignificant participant in the business
of seeking mergers with, joint ventures with and acquisitions of small private
and public entities. A large number of established and well-financed entities,
including venture capital firms, are active in mergers and acquisitions of
companies that may be our desirable target candidates. Nearly all such entities
have significantly greater financial resources, technical expertise and
managerial capabilities than we have and, consequently, we will be at a
competitive disadvantage in identifying possible business opportunities and
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successfully completing a business combination. Moreover, we will also compete
in seeking merger or acquisition candidates with numerous other small public
companies.
5. We have no agreements for a business combination or licensing transaction
and have established no standards for such transactions.
We have no arrangement, agreement or understanding with respect to entering
into a software sales agreement or engaging in a merger with, joint venture with
or acquisition of, a private or public entity. There can be no assurance that we
will be successful in identifying and evaluating suitable business opportunities
or in concluding a business transaction. Management has not identified any
particular business for our evaluation. There is no assurance that we will be
able to negotiate either a software sales and/or support agreement, or a
business combination on terms favorable to us. We have not established a
specific length of operating history or a specified level of earnings, assets,
net worth or other criteria which we will require a target business opportunity
to have achieved, and without which we would not consider a business transaction
in any form with such business opportunity. Accordingly, we may enter into a
sales agreement or a business combination with a business having no significant
operating history, losses, limited potential or no potential for earnings,
limited assets, negative net worth or other negative characteristics.
6. Our success is dependent on management that has other full time employment,
has limited experience and will only devote limited time (part time) to
working for the Company, all of which makes our future even more uncertain.
Hal Hartley is the President and Chief Executive Officer of the Issuer, and
William Willard is the Secretary and Treasurer of the Issuer. Both Mr. Hartley
and Mr. Willard will serve without pay while maintaining other employment. Mr.
Hartley served as president and CEO of Arrin and oversaw the development of
InfoSpi's software. Although Mr. Hartley has considerable business and marketing
experience, he has no experience in the field of software marketing and sales.
Mr. Willard had no previous affiliation with Arrin. He too has considerable
business and marketing experience including experience in corporate
reorganizations but no experience in software sales. Notwithstanding the limited
experience and availability of management, loss of the services of either
officer would adversely affect development of our business and its likelihood of
continuing in operation.
7. The reporting requirements under federal securities law may delay or
prevent us from making certain acquisitions.
Sections 13 and 15(d) of the Securities Exchange Act of 1934, as amended,
(the "1934 Act"), require companies subject thereto to provide certain
information about significant acquisitions, including certified financial
statements for the company acquired, covering one, two, or three years,
depending on the relative size of the acquisition. The time and additional costs
that may be incurred by some target entities to prepare such statements may
significantly delay or essentially preclude consummation of an otherwise
desirable acquisition by the Company. Acquisition prospects that do not have or
are unable to obtain the required audited statements may not be appropriate for
acquisition so long as the reporting requirements of the 1934 Act are
applicable.
In addition to the audited financial statements, in the filing of the Form
8-K that we file to report an event that causes us to cease being a shell
company, we will be required to include that information that is normally
reported by a company in a Form 10 or Form 10-SB. The time and additional costs
that may be incurred by some target entities to prepare and disclose such
information may significantly delay or essentially preclude consummation of an
otherwise desirable acquisition by the Company.
8. An acquisition could create a situation wherein we would be required to
register under The Investment Company Act of 1940 and thus be required to
incur substantial additional costs and expenses.
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Although we will be subject to regulation under the 1934 Act, management
believes the Company will not be subject to regulation under the Investment
Company Act of 1940, insofar as we will not be engaged in the business of
investing or trading in securities. In the event we engage in a business
combination that results in us holding passive investment interests in a number
of entities, we could be subject to regulation under the Investment Company Act
of 1940. In such event, we would be required to register as an investment
company and could be expected to incur significant registration and compliance
costs. We have obtained no formal determination from the Securities and Exchange
Commission as to the status of our Company under the Investment Company Act of
1940 and, consequently, any violation of such Act would subject us to material
adverse consequences.
9. A merger, acquisition, or licensing agreement would most likely be
exclusive, resulting in a lack of diversification.
Management anticipates that it may be able to participate in only one
potential business venture because a business partner might require exclusivity.
This lack of diversification should be considered a substantial risk to our
shareholders because it will not permit us to offset potential losses from one
venture against gains from another.
10. Our present management most likely will not remain after we complete a
business combination or will have little power to influence the
development of our technology if we complete an exclusive software
licensing agreement.
An exclusive software licensing agreement will, in all likelihood, result
in management of the licensee determining the timing and funding of their
development of our sales. If an exclusive license is granted our management will
have little to do except monitor any income which may flow from the license. If
a non-exclusive license is granted they may continue to seek additional
licensees. A business combination involving the issuance of our Common Stock
will, in all likelihood, result in shareholders of a private company obtaining a
controlling interest in us. Any such business combination may require our
management to sell or transfer all or a portion of the Company's Common Stock
held by them, and/or resign as members of the Board of Directors. The resulting
change in our control could result in removal of one or both present officers
and directors and a corresponding reduction in or elimination of their
participation in our future affairs.
11. If we do any business combination, each shareholder will most likely hold
a substantially lesser percentage ownership in the Company.
If we enter a business combination with a private concern, that, in all
likelihood, would result in the Company issuing securities to shareholders of
any such private company. The issuance of our previously authorized and unissued
Common Stock would result in reduction in percentage of shares owned by our
present and prospective shareholders and may result in a change in our control
or in our management. However, if we enter a sales licensing agreement with a
public or private concern, we would not expect current shareholders to
experience a reduction in percentage interest in the Company.
12. As a shell company, we face substantial additional adverse business and
legal consequences if we enter a business combination.
We may enter into a business combination with an entity that desires to
establish a public trading market for its shares. A business opportunity may
attempt to avoid what it deems to be adverse consequences of undertaking its own
public offering by seeking a business combination with us. Such consequences may
include, but are not limited to, time delays of the registration process,
significant expenses to be incurred in such an offering, loss of voting control
to public shareholders and the inability or unwillingness to comply with various
federal and state laws enacted for the protection of investors.
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On June 29, 2005, the Securities and Exchange Commission adopted final
rules amending the Form S-8 and the Form 8-K for shell companies like us. The
amendments expand the definition of a shell company to be broader than a company
with no or nominal operations/assets or assets consisting of cash and cash
equivalents. The amendments prohibit the use of a Form S-8 (a form used by a
corporation to register securities issued to an employee, director, officer,
consultant or advisor), under certain circumstances, and revise the Form 8-K to
require a shell company to include current Form 10 or Form 10-SB information,
including audited financial statements, in the filing on Form 8-K that the shell
company files to report the acquisition of the business opportunity. This
initial filing must be made within four days of the acquisition. The Form 8-K
filing may be reviewed by the Securities and Exchange Commission and the
prospects of certain disclosures or review or the lack of the ability to issue
securities using a Form S-8 may delay the consummation of a business combination
because of the target entity's inability to comply with various federal and
state laws enacted for the protection of investors or the unwillingness to
assume the significant costs of compliance.
13. The requirement of audited financial statements may disqualify some
business opportunities seeking a business combination with us.
Our management believes that any potential business combination opportunity
must provide audited financial statements for review, for the protection of all
parties to the business combination. One or more attractive business
opportunities may choose to forego the possibility of a business combination
with us, rather than incur the expenses associated with preparing audited
financial statements.
14. Our officers and directors are the principal shareholders and will be able
to approve all corporate actions without shareholder consent and will
control our Company.
Our principal shareholder, William R. Willard, currently owns approximately
72% of our Common Stock. He will have significant influence over all matters
requiring approval by our shareholders, but not requiring the approval of the
minority shareholders. In addition, he is now an officer and director. Because
he is the majority shareholder, he will be able to elect all of the members of
our board of directors, allowing him to exercise significant control of our
affairs and management. In addition, he may transact most corporate matters
requiring shareholder approval by written consent, without a duly-noticed and
duly-held meeting of shareholders.
15. Our Common Stock may never be publicly traded and you may have no ability
to sell the shares.
There is no established public trading market for our shares of Common
Stock, and there is no assurance that our Common Stock will be accepted for
listing on the OTC Bulletin Board or in any other trading system in the future.
There can be no assurance that a market for our Common Stock will be
established or that, if established, a market will be sustained. Therefore, if
you purchase our Common Stock you may be unable to sell the shares. Accordingly,
you should be able to bear the financial risk of losing your entire investment.
Only market makers can apply to quote securities. A market maker who
desires to initiate quotations in the OTC Bulletin Board system must complete an
application (Form 211) (unless an exemption is applicable) and by doing so, will
have to represent that it has satisfied all applicable requirements of the
Securities and Exchange Commission Rule 15c2-11 and the filing and information
requirements promulgated under the National Association of Securities Dealers'
("NASD") Bylaws. The OTC Bulletin Board will not charge us a fee for being
quoted on the service. NASD rules prohibit market makers from accepting any
remuneration in return for quoting issuers' securities on the OTC Bulletin Board
or any similar medium. The NASD Regulation, Inc. will review the market maker's
application (unless an exemption is applicable) and if cleared, it cannot be
assumed by any investor that any federal, state or self-regulatory requirements
other than certain NASD rules and Rule 15c2-11 have been considered by the NASD
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Regulation, Inc. Furthermore, the clearance should not be construed by any
investor as indicating that the NASD Regulation, Inc., the Securities and
Exchange Commission, or any state securities commission has passed upon the
accuracy or adequacy of the documents contained in the submission.
The OTC Bulletin Board is a market maker or dealer-driven system offering
quotation and trading reporting capabilities - a regulated quotation service -
that displays real-time quotes, last-sale prices, and volume information in OTC
equity securities. The OTC Bulletin Board securities are not listed and traded
on the floor of an organized national or regional stock exchange. Instead, OTC
Bulletin Board securities transactions are conducted through a telephone and
computer network connecting market makers or dealers in stocks.
16. If our Common Stock does not meet blue sky resale requirements, certain
shareholders may be unable to resell our Common Stock.
The resale of Common Stock must meet the blue sky resale requirements in
the states in which the proposed purchasers reside. If we are unable to qualify
the Common Stock and there is no exemption from qualification in certain states,
the holders of the Common Stock or the purchasers of the Common Stock may be
unable to sell them.
17. Our shareholders may face significant restrictions on the resale of our
Common Stock due to state "blue sky" laws or if we are determined to be a
"blank check" company.
There are state regulations that may adversely affect the transferability
of our Common Stock. We have not registered our Common Stock for resale under
the securities or "blue sky" laws of any state. We may seek qualification or
advise our shareholders of the availability of an exemption. We are under no
obligation to register or qualify our Common Stock in any state or to advise the
shareholders of any exemptions.
Current shareholders, and persons who desire to purchase the Common Stock
in any trading market that may develop in the future, should be aware that there
might be significant state restrictions upon the ability of new investors to
purchase the Common Stock.
Blue sky laws, regulations, orders, or interpretations place limitations on
offerings or sales of securities by "blank check" companies or in "blind-pool"
offerings, or if such securities represent "cheap stock" previously issued to
promoters or others. Our majority shareholder, because he received stock at a
price of $.001 for each share, may be deemed to hold "cheap stock." These
limitations typically provide, in the form of one or more of the following
limitations, that such securities are:
(a) Not eligible for sale under exemption provisions permitting sales
without registration to accredited investors or qualified purchasers;
(b) Not eligible for the transaction exemption from registration for
non-issuer transactions by a registered broker-dealer;
(c) Not eligible for registration under the simplified small corporate
offering registration (SCOR) form available in many states;
(d) Not eligible for the "solicitations of interest" exception to
securities registration requirements available in many states;
(e) Not permitted to be registered or exempted from registration, and thus
not permitted to be sold in the state under any circumstances.
Virtually all 50 states have adopted one or more of these limitations, or
other limitations or restrictions affecting the sale or resale of stock of blank
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check companies or securities sold in "blind pool" offerings or "cheap stock"
issued to promoters or others. Specific limitations on such offerings have been
adopted in:
Alaska Nevada Tennessee
Arkansas New Mexico Texas
California Ohio Utah
Delaware Oklahoma Vermont
Florida Oregon Washington
Georgia Pennsylvania
Idaho Rhode Island
Indiana South Carolina
Nebraska South Dakota
Any secondary trading market which may develop, may only be conducted in
those jurisdictions where an applicable exemption is available or where the
shares have been registered.
We do not have any legal opinions as it relates to whether we are a blind
pool or blank-check company. The Securities and Exchange Commission have adopted
a rule (Rule 419) which defines a blank-check company as (i) a development stage
company, that is (ii) offering penny stock, as defined by Rule 3a51-1, and (iii)
that has no specific business plan or purpose or has indicated that its business
plan is to engage in a merger or acquisition with an unidentified company or
companies. Certain jurisdictions may have definitions that are more restrictive
than Rule 419. We have been informed that the Securities and Exchange Commission
has cautioned that "it will scrutinize registered offerings for attempts to
create the appearance that the registrant... has a specific business plan, in an
effort to avoid the application of Rule 419." Provisions of Rule 419 apply to
every registration statement filed under the Securities Act of 1933, as amended,
relating to an offering by a blank-check company. We have never filed a
registration statement under the Securities Act of 1933, as amended.
If we are later determined to be a so-called "blank check" company, our
shareholders will be required to file a registration statement under the
Securities Act of 1933, as amended, prior to the resale of the Common Stock,
unless there exists a transactional or security exemption for such sale under
the Securities Act of 1933, as amended or under Title 11 of the U.S. Code.
Current shareholders and persons who desire to purchase the Common Stock in any
trading market that may develop in the future, should be aware that we are under
no obligation to register the shares on behalf of our shareholders under the
Securities Act of 1933, as amended.
The Company's officers, directors and majority shareholders have expressed
their intentions not to engage in any transactions with respect to the Company's
Common Stock except in connection with or following a business combination
resulting in us no longer being defined as a blank check issuer. Any
transactions in our Common Stock by said shareholders will require compliance
with the registration requirements under the Securities Act of 1933, as amended.
18. Our Common Stock may be subject to significant restriction on resale due to
federal penny stock restrictions.
The Securities and Exchange Commission has adopted rules that regulate
broker or dealer practices in connection with transactions in penny stocks.
Penny stocks generally are equity securities with a price of less than $5.00
(other than securities registered on certain national securities exchanges or
quoted on the Nasdaq system, provided that current price and volume information
with respect to transactions in such securities is provided by the exchange
system). The penny stock rules require a broker or dealer, prior to a
transaction in a penny stock not otherwise exempt from the rules, to deliver a
standardized risk disclosure document prepared by the Securities and Exchange
Commission that provides information about penny stocks and the nature and level
of risks in the penny stock market. The broker or dealer also must provide the
customer with bid and offer quotations for the penny stock, the compensation of
the broker or dealer, and its salesperson in the transaction, and monthly
10
account statements showing the market value of each penny stock held in the
customer's account. The penny stock rules also require that prior to a
transaction in a penny stock not otherwise exempt from such rules, the broker or
dealer must make a special written determination that a penny stock is a
suitable investment for the purchaser and receive the purchaser's written
agreement to the transaction.
These disclosure requirements may have the effect of reducing the level of
trading activity in any secondary market for our stock that becomes subject to
the penny stock rules, and accordingly, shareholders of our Common Stock may
find it difficult to sell their securities, if at all.
ITEM 2. FINANCIAL INFORMATION
SELECTED FINANCIAL DATA
The Company was organized on December 31, 2007 and therefore no historical
financial information exists.
2007
----
Revenues 0
Expenses 225
Profit (Loss) (225)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
1) Liquidity: The Company had no cash and no liquid instruments at December
31, 2007. It is anticipated that we will incur nominal expenses in the
implementation of the business plan described herein. Because we have no capital
with which to pay these anticipated expenses, present management of the Company
will pay these charges with their personal funds, as interest free loans to the
Company or as capital contributions. However, if loans, the only opportunity
which management has to have these loans repaid will be from a prospective
licensee or merger or acquisition candidate.
2) Capital Resources: As noted above, the Company has no significant
capital resources but will rely upon interest free loans or capital
contributions from management to meet its needs.
3) Results of Operations: As noted above, the Company was recently
organized and has conducted no operations other than acquisition of its software
from its former affiliate, Arrin, and the preparation of the Form 10.
4) Off-Balance Sheet Arrangements: The Company has no off balance sheet
arrangements.
INFORMATION ABOUT MARKET RISK
The Company is not subject to fluctuations in interest rates, currency
exchange rates, or other financial market risks. Management of the Company has
agreed to extend loans to the Company as needed to meet obligations, however
these will be interest free. The Company has not made any sales, purchases, or
commitments with foreign entities which would expose it to currency risks.
ITEM 3. DESCRIPTION OF PROPERTY
We presently utilize office space at 6986 La Jolla Blvd., Suite 208, La
Jolla, California. This space is provided to the Company by our president on a
rent free basis, and it is anticipated that this arrangement will remain until
such time as the Company successfully consummates a sales license, merger or
acquisition. Management believes that this arrangement will meet the Company's
needs for the foreseeable future.
11
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) Security Ownership of Certain Beneficial Owners.
The following table sets forth the security and beneficial ownership for
each class of our equity securities for any person who is known to be the
beneficial owner of more than five (5%) percent of the Company.
Name and Amount and
Address of Nature of
Beneficial Beneficial Percent
Title of Class Owner Owner of Class
- -------------- ----- ----- --------
Common William R. Willard 4,000,000 71.85%
6968 La Jolla Blvd. Ste 208
La Jolla, CA 92037
The remaining 1,567,324 shares of the Company's outstanding common shares
are held by 77 persons, no one of which is known to be the beneficial owner of
five percent (5%) or more of the Company's common shares. There are, as of the
date hereof, a total of 5,567,324 common shares issued and outstanding.
(b) Security Ownership of Management.
The following table sets forth the ownership for each class of equity
securities of the Company owned beneficially and of record by all of our
directors and officers.
Name and Amount and
Address of Nature of
Beneficial Beneficial Percent
Title of Class Owner Owner of Class
- -------------- ----- ----- --------
Common William R. Willard 4,000,000 71.85%
6968 La Jolla Blvd. Ste 208
La Jolla, CA 92037
Common Harold Hartley 55,442 1.00%
6968 La Jolla Blvd. Ste 208
La Jolla, CA 92037
Common All Officers and 4,055,442 72.85%
Directors as a Group
(two [2] individuals)
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS
Our directors and officers (and promoters, affiliates and control persons)
are as follows:
Name Age Position
---- --- --------
Hal Hartley 67 President/Director
William Willard 65 Secretary/Treasurer/Director
12
The above listed officers and directors will serve until the next annual
meeting of the shareholders or until their death, resignation, retirement,
removal, or disqualification, or until their successors have been duly elected
and qualified. Vacancies in the existing Board of Directors are filled by
majority vote of the remaining Directors. Officers of the Company serve at the
will of the Board of Directors. There are no agreements or understandings for
any officer or director to resign at the request of another person and no
officer or director is acting on behalf of or will act at the direction of any
other person.
RESUMES
Harold Hartley, age 67, has been President and CEO of Arrin Systems and its
Affiliates including InfoSpi since 2002. Prior to that, he was a consultant to
the Debtor's predecessor from 2000 to 2002. Mr. Hartley started his business
career in the Life Insurance Industry, then moved into the Real Estate Industry.
He built a sizeable real estate investment company owning and managing
properties in nine western states. At the same time he provided management
consulting to companies in various industries including feeder airlines,
construction, furniture, and real estate investment. In 1992 he started Argus
Holdings, an international marketing and consulting company doing business in
nine Asian, Latin American, and European Countries, as well as in the United
States. Mr. Hartley still heads Argus today. Mr. Hartley received his B.S.
degree in Business Administration from Oregon State University.
William Willard, age 65, is the Secretary and Treasurer of InfoSpi. He is
also the Managing Principal of Bridgestream Partners, LLC which he founded in
1988. Bridgestream provides management consulting, corporate finance advice, and
restructuring services to a variety of corporate clients. Among the companies he
has assisted in restructuring were Bendix Corporation (prior to their takeover
by Allied Signal), Kaiser Engineers, and Everlast Filtration. Prior to forming
Bridgestream Mr. Willard was First Vice President of Corporate Finance for
Bateman, Eichler, Hill Richards and before that he served as Vice President of
Moseley, Hallgarten, Estabrook and Weeden and duPont Glore Forgan. It is hoped
that his many years of experience will help the Company in its restructuring and
the achievement of its business plan. Mr. Willard received his BS from the
University of Wisconsin and an MBA in finance from the University of Chicago.
OTHER OFFERINGS
Both of the directors and officers named above are also the directors and
officers of the other companies created from the Arrin Systems bankruptcy,
namely, Arrin Corporation and Arrin Background, Inc. Like the Issuer, both of
those companies also expect to seek business relationships or combinations with
larger businesses and both may presently be considered shell companies.
CONFLICTS OF INTEREST
As noted above, the two members of the Company's management are officers
and directors of the two other firms resulting from the Arrin Systems
bankruptcy, and those firms are also seeking business relationships or
combinations with larger businesses and both may presently be considered shell
companies. Consequently, there are potential inherent conflicts of interest in
their acting as our officers and directors and direct conflicts of interest may
arise in the future with respect to such individuals acting on behalf of the
Company or other entities. Moreover, additional conflicts of interest may arise
with respect to opportunities which come to the attention of such individuals in
the performance of their duties or otherwise. We do not currently have a right
of first refusal pertaining to opportunities that come to management's attention
insofar as such opportunities may relate to the Company's proposed business
operations.
The officers and directors are, so long as they are officers or directors
of the Company, subject to the restriction that all opportunities contemplated
by the Company's plan of operation which come to their attention, either in the
performance of their duties or in any other manner, will be considered
13
opportunities of, and be made available to the Company and the other companies
that they are affiliated with on an equal basis. A breach of this requirement
will be a breach of the fiduciary duties of the officer or director. If the
Company or the other companies in which the officers and directors are
affiliated both desire to take advantage of an opportunity, then said officers
and directors would abstain from negotiating and voting upon the opportunity.
However, all directors may still individually take advantage of opportunities if
the Company should decline to do so. Except as set forth above, we have not
adopted any other conflict of interest policy with respect to such transactions.
ITEM 6. EXECUTIVE COMPENSATION.
No officer/director has received any compensation for services rendered to
the Company since its inception, nor are there any agreements in place or
contemplated to provide compensation to any officer or director.
None of our directors or officers will receive any finders fee, either
directly or indirectly, as a result of their respective efforts to implement the
Company's business plan outlined herein and/or identify or negotiate a licensee,
merger, or acquisition for the Company.
We have no retirement, pension, profit sharing, stock option or insurance
programs or other similar programs for the benefit of our officers, directors,
or employees, and we have no employees.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
There have been no related party transactions, or any other transactions or
relationships required to be disclosed pursuant to Item 404 of Regulation S-B.
William R. Willard and Harold Hartley have agreed to provide the necessary
funds, without interest, for the Company to comply with the 1934 Act provided
that the lender is an officer and director of the Company when the obligation is
incurred. All advances are interest-free.
ITEM 8. LEGAL PROCEEDINGS.
There is no litigation pending or threatened by or against the Company.
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS.
(a) Market Price.
There is no trading market for our Common Stock at present and there has
been no trading market to date. We do not have a trading symbol. There is no
assurance that a trading market will ever develop or, if such a market does
develop, that it will continue. The Company intends to request a broker-dealer
to make application to the NASD to have the Company's securities traded on the
OTC Bulletin Board System or published, in print and electronic media, or
either, in the Pink Sheets, LLC ("Pink Sheets"), however there is no assurance
that a broker-dealer will agree to make such application or, if one does, that
the NASD will provide us with a symbol.
The Securities and Exchange Commission adopted Rule 15g-9, which
established the definition of a "penny stock," for purposes relevant to the
Company, as any equity security that has a market price of less than $5.00 per
share or with an exercise price of less than $5.00 per share, subject to certain
exceptions. For any transaction involving a penny stock, unless exempt, the
rules require: (i) that a broker or dealer approve a person's account for
transactions in penny stocks; and (ii) the broker or dealer receive from the
investor a written agreement to the transaction, setting forth the identity and
quantity of the penny stock to be purchased. In order to approve a person's
account for transactions in penny stocks, the broker or dealer must (i) obtain
14
financial information and investment experience and objectives of the person;
and (ii) make a reasonable determination that the transactions in penny stocks
are suitable for that person and that person has sufficient knowledge and
experience in financial matters to be capable of evaluating the risks of
transactions in penny stocks. The broker or dealer must also deliver, prior to
any transaction in a penny stock, a disclosure schedule prepared by the
Commission relating to the penny stock market, which, in highlight form, (i)
sets forth the basis on which the broker or dealer made the suitability
determination; and (ii) that the broker or dealer received a signed, written
agreement from the investor prior to the transaction. Disclosure also has to be
made about the risks of investing in penny stock in both public offering and in
secondary trading, and about commissions payable to both the broker-dealer and
the registered representative, current quotations for the securities and the
rights and remedies available to an investor in cases of fraud in penny stock
transactions. Finally, monthly statements have to be sent disclosing recent
price information for the penny stock held in the account and information on the
limited market in penny stocks.
For the initial listing in the NASDAQ SmallCap market, a company must have
net tangible assets of $4 million or market capitalization of $50 million or a
net income (in the latest fiscal year or two of the last fiscal years) of
$750,000, a public float of 1,000,000 shares with a market value of $5 million.
The minimum bid price must be $4.00 and there must be 3 market makers. In
addition, there must be 300 shareholders holding 100 shares or more, and the
company must have an operating history of at least one year or a market
capitalization of $50 million.
For continued listing in the NASDAQ SmallCap market, a company must have
net tangible assets of $2 million or market capitalization of $35 million or a
net income (in the latest fiscal year or two of the last fiscal years) of
$500,000, a public float of 500,000 shares with a market value of $1 million.
The minimum bid price must be $1.00 and there must be 2 market makers. In
addition, there must be 300 shareholders holding 100 shares or more.
Our management intends to strongly consider undertaking a transaction with
a merger or acquisition candidate that will allow the Company's securities to be
traded on NASDAQ or some other national market. However, there can be no
assurance that, upon a successful merger or acquisition, the Company will
qualify its securities for listing on NASDAQ or some other national exchange,
or, if it does, that it will be able to maintain the maintenance criteria
necessary to insure continued listing. The failure of the Company to qualify its
securities or to meet the relevant maintenance criteria after such qualification
in the future may result in the discontinuance of the inclusion of the Company's
securities on a national exchange. In such events, trading, if any, in the
Company's securities may then continue in the non-NASDAQ over-the-counter
market. As a result, a shareholder may find it more difficult to dispose of, or
to obtain accurate quotations as to the market value of, the Company's
securities.
(b) Holders.
There are seventy-eight (78) shareholders of record of the Company's Common
Stock. All but one of these shareholders received their shares as a result of
the bankruptcy of Arrin Systems, Inc. In that case the Bankruptcy Court for the
Southern District of California ordered certain shares of the Company's stock to
be distributed to the creditors of Arrin Systems, Inc. The shares were
distributed under an exemption from registration provided by Section 1145 of
Title 11 of the U.S. Code (the Bankruptcy Code).
(c) Dividends.
The Company has not paid any cash dividends to date, and has no plans to do
so in the immediate future.
15
(d) Securities authorized for issuance under equity compensation plans.
The Company has not authorized the issuance of any securities under any
compensation plan.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES.
(a) Securities issued in bankruptcy.
1,567,324 shares of our common stock were distributed to 77 shareholders by
order of the U.S. Bankruptcy Court for the Southern District of California as
part of the confirmed Plan of Reorganization of Arrin Systems, Inc. (the
"Debtor"), in bankruptcy case number 07-01926-JH11. Our software was developed
by the Debtor through one of its subsidiaries and it was an asset of the Debtor
in that case. The Court ordered the software to be assigned to the Issuer and
ordered the Issuer's securities to be distributed to creditors of the Debtor in
partial satisfaction of their claims against the Debtor.
The sale and issuance of the shares of stock issued in exchange for claims
against the estate of Arrin, Inc. was exempt from registration under the
Securities Act of 1933, as amended, because they were issued under section 1145
of the Bankruptcy Code (Title 11 of the U.S. Code). In addition, we may have
also relied upon section 3(a)(7) of the Securities Act of 1933 as a transaction
ordered by a court as part of a bankruptcy reorganization.
(b) Securities sold.
On February 5, 2008 the Company issued 4,000,000 restricted shares of its
common stock to William R. Willard at par value (0.001 per share) for total
consideration of $4,000. We relied upon Section 4(2) of the Securities Act of
1933, as amended for the above issuances. We believed that Section 4(2) was
available because:
- None of these issuances involved underwriters, underwriting discounts
or commissions;
- We placed restrictive legends on all certificates issued;
- No sales were made by general solicitation or advertising;
- Sales were made only to accredited investors
In connection with the above transactions, we provided the following to all
investors:
- Access to all our books and records.
- Access to all material contracts and documents relating to our
operations.
- The opportunity to obtain any additional information, to the extent we
possessed such information, necessary to verify the accuracy of the
information to which the investors were given access.
ITEM 11. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED.
The Company's authorized capital stock consists of 75,000,000 Common
Shares, par value $0.001 per share. We have no other class of equity securities
authorized, and we have no debt securities presently authorized. We have
5,567,324 Common Shares issued and outstanding as of the date of this filing. We
also have warrants outstanding which are convertible into an additional
5,000,000 Common Shares.
All shares of our Common Stock have equal voting rights and, when validly
issued and outstanding, are entitled to one vote per share in all matters to be
voted upon by shareholders. The shares of Common Stock have no preemptive,
subscription, conversion or redemption rights and may be issued only as
fully-paid and nonassessable shares. Cumulative voting in the election of
directors is not permitted, which means that the holders of a majority of the
issued and outstanding shares of Common Stock represented at any meeting at
which a quorum is present will be able to elect the entire Board of Directors if
16
they so choose and, in such event, the holders of the remaining shares of Common
Stock will not be able to elect any directors. In the event of liquidation of
the Company, each shareholder is entitled to receive a proportionate share of
the Company's assets available for distribution to shareholders after the
payment of liabilities and after distribution in full of preferential amounts,
if any. All shares of the Company's Common Stock issued and outstanding are
fully-paid and nonassessable. Holders of the Common Stock are entitled to share
pro rata in dividends and distributions with respect to the Common Stock, as may
be declared by the Board of Directors out of funds legally available therefor.
In addition to the 5,567,324 shares which we currently have outstanding
there are 5,000,000 warrants outstanding, each of which is convertible into one
share of our common stock. These consist of 1,000,000 "A Warrants" each
convertible in to one share of common stock at an exercise price of $1.00;
1,000,000 "B Warrants" each convertible in to one share of common stock at an
exercise price of $2.00; 1,000,000 "C Warrants" each convertible in to one share
of common stock at an exercise price of $3.00; 1,000,000 "D Warrants" each
convertible in to one share of common stock at an exercise price of $4.00; and
1,000,000 "E Warrants" each convertible in to one share of common stock at an
exercise price of $5.00. All of the warrants will expire if unexercised on
December 31, 2012 unless extended by vote of the Board of Directors. All of
these warrants were issued to creditors of Arrin Systems, Inc. by order of the
Bankruptcy Court as part of the Chapter 11 Plan of Reorganization of Arrin. The
warrants were distributed under an exemption from registration provided by
Section 1145 of Title 11 of the U.S. Code (the Bankruptcy Code).
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Except for acts or omissions which involve intentional misconduct, fraud or
known violation of law, there shall be no personal liability of a director or
officer to the Company, or its stockholders for damages for breach of fiduciary
duty as a director or officer. The Company may indemnify any person for expenses
incurred, including attorneys fees, in connection with their good faith acts if
they reasonably believe such acts are in and not opposed to the best interests
of the Company and for acts for which the person had no reason to believe his or
her conduct was unlawful. The Company may indemnify the officers and directors
for expenses incurred in defending a civil or criminal action, suit or
proceeding as they are incurred in advance of the final disposition of the
action, suit or proceeding, upon receipt of an undertaking by or on behalf of
the director or officer to repay the amount of such expenses if it is ultimately
determined by a court of competent jurisdiction in which the action or suit is
brought that such person is fairly and reasonably entitled to indemnification
for such expenses which the court deems proper.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be permitted to officers, directors or persons
controlling the Company pursuant to the foregoing, we have been informed that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act of 1933, as amended,
and is therefore unenforceable.
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The Company's audited financial statements are attached hereto.
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
There are no disagreements with the findings of our accountant.
17
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS.
The Company's audited financial statements as of December 31, 2007
(inception) are filed herewith.
Exhibit:
--------
3.1 Articles of Incorporation Filed herewith
3.2 Bylaws Filed herewith
23.1 Consent of Stan J.H. Lee, CPA Filed herewith
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the Registrant has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized.
Date: February 18, 2008 INFOSPI, INC.
By: /s/ Harold Hartley
---------------------------------
Harold Hartley
CEO and Director
By: /s/ William R. Willard
---------------------------------
William R. Willard
CFO, Secretary, and Director
18
INFOSPI, INC.
FINANCIAL REPORTS
DECEMBER 31, 2006 and 2005
CONTENTS
Independent Auditors' Report
Balance Sheet - Assets and Liabilities and Stockholders' Equity
Statement of Operations
Statement of Changes in Stockholders' Equity
Statement of Cash Flows
Notes to Financial Statements
19
Stan J.H. Lee, CPA
2160 North Central Rd. Suite 203 * Fort Lee * NJ 07024
794 Broadway * Chula Vista * CA 91910
619-623-7799 Fax 619-564-3408 E-mail) stan2u@gmail.com
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
INFOSPI, INC.
(A Development Stage Company)
We have audited the accompanying balance sheet of INFOSPI,INC.as at December 31,
2007 and the related statements of operation, shareholders' equity and cash
flows for the period from December 31, 2007 (inception) to December 31, 2007.
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 audit.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit 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 audit provides 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 INFOSPI, INC. as at December
31, 2007, and the results of its operation and its cash flows for the period
from December 31, 2007 (inception) to December 31, 2007 in conformity with U.S.
generally accepted accounting principles.
The financial statements have been prepared assuming that the Company will
continue as a going concern. As discussed in Note 3 to the financial statements,
the Company has not established any source of revenue to cover Its operating
costs and losses from operations raises substantial doubt about its ability to
continue as a going concern. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ Stan J.H. Lee, CPA
- ----------------------------------
Stan J.H. Lee, CPA
January 22, 2008
Chula Vista CA
F-1
InfoSpi, Inc.
Balance Sheet
(A Development Stage Company)
12/31/2007
- --------------------------------------------------------------------------------
ASSETS
Assets:
Cash $ --
Organization Costs 225
Software 567
--------
TOTAL ASSETS $ 792
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accrued Expense Payable $ 225
--------
225
Equity:
75,000,000 common shares authorized at $.001 par value:
567,324 shares issued and outstanding as of 12/31/07 567
Additional paid-in capital --
Deficit Accumulated During Developmental Stage (225)
--------
Total Stockholders' Equity (Deficit) 342
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 567
========
See accompanying notes to financial statements
F-2
InfoSpi, Inc.
(A Development Stage Company)
Statements of Operations
Inception (December 31, 2007) to 12/31/2007
- --------------------------------------------------------------------------------
Accumulated
From Inception Deficit During
to Dec 31, Developmental
2007 Stage
--------- ---------
Revenues $ -- $ --
Expenses
Legal Expense 225 225
--------- ---------
Income(Loss) from Operations (225) (225)
Provision for income taxes -- --
--------- ---------
Net income (Loss) $ (225) $ (225)
========= =========
Basic and diluted Income (loss) per share $ (0.00) $ (0.00)
========= =========
Weighted average shares outstanding 567,324 567,324
========= =========
See accompanying notes to financial statements
F-3
InfoSpi, Inc.
(A Development Stage Company)
Statements of Stockholders' Equity
12/31/2007
- --------------------------------------------------------------------------------
Accumulated
Common Stock Additional During the Total
--------------------- Paid-in Development Stockholders
Shares Amount Capital Stage Equity
------ ------ ------- ----- ------
Common stock issued for debt by
order of Bankruptcy Court 567,324 $ 567 $ -- $ 567
Net loss for the Year Ended
Dec. 31, 2007 $ (225) (225)
-------- ------- ------- -------- --------
Balance, December 31, 2007 567,324 $ 567 $ -- $ (225) $ 342
======== ======= ======= ======== ========
See accompanying notes to financial statements
F-4
InfoSpi, Inc.
(A Development Stage Company)
Statements of Cash Flows
12/31/2007
- --------------------------------------------------------------------------------
Accumulated
From Inception Deficit During
to Dec 31, Developmental
2007 Stage
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) for the period $ (225) $ (225)
Adjustments to reconcile net loss to net cash
provided (used in) by operating activities:
Changes in operating assets and liabilities:
-------- --------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (225) (225)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES -- --
-------- --------
Acquisition of software (567) (567)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Accrued Expenses 225 225
Common Stock Issuance 567 567
-------- --------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 792 792
-------- --------
NET INCREASE (DECREASE) IN CASH -- --
CASH AT BEGINNING OF YEAR -- --
-------- --------
CASH AT END OF YEAR $ -- $ --
======== ========
SUPPLEMENTAL DISCLOSURES OF INTEREST & INCOME TAXES PAID
Interest paid $ -- $ --
======== ========
Income taxes paid $ -- $ --
======== ========
See accompanying notes to financial statements
F-5
INFOSPI, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2007
NOTE 1. NATURE AND BACKGROUND OF BUSINESS
InfoSpi, Inc. ("the Company" or "the Issuer") was organized under the laws of
the State of Nevada on December 31, 2007. The Company was established as part of
the Chapter 11 reorganization of Arrin Systems, Inc. ("Arrin"). Under Arrin's
Plan of Reorganization, as confirmed by the U.S. Bankruptcy Court for the
Southern District of California, InfoSpi was organized to own, develop, and
market the proprietary software developed by Arrin to automate background checks
of prospective employees. Management believes the Company lacks the resources to
effectively market this software on its own and is therefore engaged in a search
for a merger or acquisition partner with the resources to use the software in
its own background search business or market it to others.
The Company has been in the development stage since its formation and has not
yet realized any revenues from its planned operations.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. BASIS OF ACCOUNTING
The Company's financial statements are prepared using the accrual method of
accounting. The Company has elected a December 31 year-end.
B. BASIC EARNINGS PER SHARE
In February 1997, the FASB issued SFAS No. 128, "Earnings Per Share", which
specifies the computation, presentation and disclosure requirements for earnings
(loss) per share for entities with publicly held common stock. SFAS No. 128
supersedes the provisions of APB No. 15, and requires the presentation of basic
earnings (loss) per share and diluted earnings (loss) per share.
Basic net loss per share amounts are computed by dividing the net loss by the
weighted average number of common shares outstanding. Diluted earnings per share
are the same as basic earnings per share due to the lack of dilutive items in
the Company.
C. ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
D. CASH AND CASH EQUIVALENT
For the Balance Sheet and Statements of Cash Flows, all highly liquid
investments with maturity of three months or less are considered to be cash
equivalents.
F-6
INFOSPI, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2007
E. GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill represents the excess of the cost of businesses acquired over the fair
value of the identifiable net assets at the date of acquisition. Goodwill and
intangible assets acquired in a purchase or business combination and determined
to have indefinite useful lives are not amortized, but instead are evaluated for
impairment annually and if events or changes in circumstances indicate, the
carrying amount may be impaired per Statement of Financial Accounting Standards,
No.142 ("SFAS 142"), "Goodwill and Other Intangible Assets". An impairment loss
would generally be recognized when the carrying amount of the reporting unit's
net assets exceeds the estimated fair value of the reporting unit. The estimated
fair value is determined using a discounted cash flow analysis. SFAS 142 also
requires that intangible assets with estimable useful lives be amortized over
their respective estimated useful lives to their estimated residual values, and
reviewed for impairment in accordance with SFAS No. 144, "Accounting for
Impairment or Disposal of Long-Lived Assets".
F. REVENUE RECOGNITION
The Company recognizes revenues and the related costs when persuasive evidence
of an arrangement exists, delivery and acceptance has occurred or service has
been rendered, the price is fixed or determinable, and collection of the
resulting receivable is reasonably assured. Amounts invoiced or collected in
advance of product delivery or providing services are recorded as deferred
revenue.
The Company accrues for warranty costs, sales returns, bad debts, and other
allowances based on its historical experience.
G. STOCK-BASED COMPENSATION
Statement of Financial Accounting Standards No. 123 ("SFAS 123"), "Accounting
for Stock-Based Compensation", provides for the use of a fair value based method
of accounting for stock-based compensation. However, SFAS 123 allows the
measurement of compensation cost for stock options granted to employees using
the intrinsic value method of accounting prescribed by Accounting Principles
Board Opinion No. 25 ("APB 25"), "Accounting for Stock Issued to Employees",
which only requires charges to compensation expense for the excess, if any, of
the fair value of the underlying stock at the date a stock option is granted (or
at an appropriate subsequent measurement date) over the amount the employee must
pay to acquire the stock. The Company has elected to account for employee stock
options using the intrinsic value method under APB 25. By making that election,
the Company is required by SFAS 123 to provide pro forma disclosures of net loss
as if a fair value based method of accounting had been applied.
H. INCOME TAXES
Income taxes are provided for using the liability method of accounting in
accordance with SFAS No. 109 "ACCOUNTING FOR INCOME TAXES." A deferred tax asset
or liability is recorded for all temporary differences between financial and tax
reporting. Temporary differences are the differences between the reported
amounts of assets and liabilities and their tax basis. Deferred tax assets are
reduced by a valuation allowance when, in the opinion of management, it is more
likely than not that some portion or all of the deferred tax assets will not be
realized. Deferred tax assets and liabilities are adjusted for the effect of
changes in tax laws and rates on the date of enactment.
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INFOSPI, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2007
I. IMPACT OF NEW ACCOUNTING STANDARDS
The Company does not expect the adoption of recently issued accounting
pronouncements to have a significant impact on the Company's results of
operations, financial position, or cash flow.
NOTE 3. GOING CONCERN
The Company's financial statements are prepared in accordance with generally
accepted accounting principles applicable to a going concern. This contemplates
the realization of assets and the liquidation of liabilities in the normal
course of business. Currently, the Company does not have significant cash or
other material assets, nor does it have operations or a source of revenue
sufficient to cover its operation costs and allow it to continue as a going
concern. The officers and directors have committed to advancing certain
operating costs of the company.
Management plans to seek a merger or acquisition target with adequate funds to
support operations. Management has yet to identify a merger or acquisition
target, and there is no guarantee that the Company will be able to identify such
a target business in the future.
NOTE 4. STOCKHOLDERS' EQUITY
COMMON STOCK
The authorized common stock of the Company consists of 75,000,000 shares with
$0.001 par value. No other class of stock is authorized. As of December 31,
2007, there were a total of 567,324 common shares issued and outstanding.
The Company's initial stock issuance took place pursuant to the Plan of
Reorganization confirmed by the Bankruptcy Court: On December 12, 2007, the
Court ordered the distribution of shares in InfoSpi, Inc. to all creditors of
Arrin, with Arrin's creditors to receive one share in InfoSpi for each $2.94 of
Arrin's debt which they held.
As a result of this issuance there were 567,324 common shares issued and
outstanding on December 31, 2007.
NOTE 5. INCOME TAXES
The Company had no business activity and made no U.S. federal income tax
provision for the year 2007.
NOTE 6. RELATED PARTY TRANSACTIONS
The Company neither owns nor leases any real or personal property. An officer of
the corporation provides office services without charge. Such costs are
immaterial to the financial statements and accordingly, have not been reflected
therein. The officers and directors for the Company are involved in other
business activities and may, in the future, become involved in other business
opportunities. If a specific business opportunity becomes available, such
persons may face a conflict in selecting between the Company and their other
business interest. The Company has not formulated a policy for the resolution of
such conflicts.
F-8
INFOSPI, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2007
NOTE 7. WARRANTS AND OPTIONS
There were no warrants or options outstanding to acquire any additional shares
of common stock of the Company as at December 31, 2007, however warrants have
subsequently been issued as set forth below.
NOTE 8. COMMITMENT AND CONTIGENTCY
There is no commitment or contingency to disclose during the year ended December
31, 2007.
NOTE 9. SUBSEQUENT EVENTS
On January 15, 2008, 1,000,000 common shares and 5,000,000 warrants were issued
to administrative lenders under Arrin's Bankruptcy Plan of Reorganization as
confirmed by the U.S. Bankruptcy Court.
These lenders held convertible notes which were, at the lenders' election,
convertible into 1,000,000 common shares in the Company; 1,000,000 "A Warrants"
each convertible in to one share of common stock at an exercise price of $1.00;
1,000,000 "B Warrants" each convertible in to one share of common stock at an
exercise price of $2.00; 1,000,000 "C Warrants" each convertible in to one share
of common stock at an exercise price of $3.00; 1,000,000 "D Warrants" each
convertible in to one share of common stock at an exercise price of $4.00; and
1,000,000 "E Warrants" each convertible in to one share of common stock at an
exercise price of $5.00. On January 15, 2008 the administrative lenders
converted their notes to these shares and warrants.
As a result of these issuances, at January 15, 2008 there were a total of
1,567,324 shares issued and outstanding and 5,000,000 warrants issued and
outstanding.
F-9