U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED NOVEMBER 30, 2008
Commission File Number 333-142037
Golden Key International Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
119 11th Street
Fort McLeod, Alberta, Canada T0L 0Z0
(Address of principal executive offices, including zip code)
(403)553-2840
(Telephone number, including area code)
Karen Batcher
Batcher, Zarcone & Baker LLP
4190 Bonita Road
Bonita, CA 91902
(619) 475-7882
(Name, Address and Telephone Number of Agent for Service)
Check whether the issuer (1) 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 filing requirements for the last 90 days. YES [X] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer,"
"non-accelerated filer," and "smaller reporting company" in Rule 12b-2 of the
Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 or 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: 4,451,667 shares of common stock
issued and outstanding as of January 6, 2009.
ITEM 1. FINANCIAL STATEMENTS
The quarterly financial statements for the 3 months ended November 30, 2008,
prepared by the company, immediately follow.
2
GOLDEN KEY INTERNATIONAL, INC.
(A Development Stage Company)
Consolidated Balance Sheets
- --------------------------------------------------------------------------------
(Unaudited)
As of As of
November 30, May 31,
2008 2008
-------- --------
ASSETS
CURRENT ASSETS
Cash $ 5,270 $ 3,320
-------- --------
TOTAL CURRENT ASSETS 5,270 3,320
-------- --------
TOTAL ASSETS $ 5,270 $ 3,320
======== ========
LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Loan from director $ 31,900 $ 17,700
-------- --------
TOTAL CURRENT LIABILITIES 31,900 17,700
-------- --------
TOTAL LIABILITIES 31,900 17,700
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred Stock, ($0.0001 par value, 20,000,000 shares
authorized: -0- shares issued and outstanding as of
November 30, 2008 and May 31, 2008 , respectively) -- --
Common stock, ($0.0001 par value, 80,000,000 shares
authorized; 4,451,667 shares issued and outstanding
as of November 30, 2008 and May 31, 2008, respectively.) 445 445
Additional paid-in capital 49,205 49,205
Deficit accumulated during development stage (76,280) (64,030)
-------- --------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (26,630) (14,380)
-------- --------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT) $ 5,270 $ 3,320
======== ========
See Notes to the Consolidated Financial Statements
3
GOLDEN KEY INTERNATIONAL, INC.
(A Development Stage Company)
Consolidated Statements of Operations (unaudited)
- --------------------------------------------------------------------------------
February 18, 1999
Six Months Six Months Three Months Three Months (inception)
Ended Ended Ended Ended through
November 30, November 30, November 30, November 30, November 30,
2008 2007 2008 2007 2008
---------- ---------- ---------- ---------- ----------
REVENUES $ -- $ -- $ -- $ -- $ --
GENERAL & ADMINISTRATIVE EXPENSES 12,250 9,728 3,021 4,299 76,280
---------- ---------- ---------- ---------- ----------
TOTAL GENERAL & ADMINISTRATIVE EXPENSES 12,250 9,728 3,021 4,299 76,280
---------- ---------- ---------- ---------- ----------
NET INCOME (LOSS) $ (12,250) $ (9,728) $ (3,021) $ (4,299) $ (76,280)
========== ========== ========== ========== ==========
BASIC EARNINGS (LOSS) PER SHARE $ (0.00) $ (0.00) $ (0.00) $ (0.00)
========== ========== ========== ==========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 4,451,667 4,387,404 4,451,667 4,405,000
========== ========== ========== ==========
See Notes to the Consolidated Financial Statements
4
GOLDEN KEY INTERNATIONAL, INC.
(A Development Stage Company)
Consolidated Statement of Changes in Stockholders' Equity From
February 18, 1999 (inception) through November 30, 2008 (unaudited)
- --------------------------------------------------------------------------------
Deficit
Accumulated
Common Additional During
Common Stock Paid-in Development
Stock Amount Capital Stage Total
----- ------ ------- ----- -----
Beginning balance 2/18/1999 -- $ -- $ -- $ -- $ --
Net lncome, May 31, 1999 -- --
---------- -------- ------- -------- --------
BALANCE, MAY 31, 1999 -- -- -- -- --
---------- -------- ------- -------- --------
Net lncome, May 31, 2000 -- --
---------- -------- ------- -------- --------
BALANCE, MAY 31, 2000 -- -- -- -- --
---------- -------- ------- -------- --------
Stock issued for cash on November 30,
2000 @ $0.0001 per share 4,000,000 400 -- 400
Stock issued for cash on January 30,
2001 @ $0.10 per share 240,000 24 23,976 24,000
Net loss, May 31, 2001 (7,165) (7,165)
---------- -------- ------- -------- --------
BALANCE, MAY 31, 2001 4,240,000 424 23,976 (7,165) 17,235
---------- -------- ------- -------- --------
Net loss, May 31, 2002 (10,020) (10,020)
---------- -------- ------- -------- --------
BALANCE, MAY 31, 2002 4,240,000 424 23,976 (17,185) 7,215
---------- -------- ------- -------- --------
Net loss, May 31, 2003 (2,070) (2,070)
---------- -------- ------- -------- --------
BALANCE, MAY 31, 2003 4,240,000 424 23,976 (19,255) 5,145
---------- -------- ------- -------- --------
Net loss, May 31, 2004 (3,777) (3,777)
---------- -------- ------- -------- --------
BALANCE, MAY 31, 2004 4,240,000 424 23,976 (23,032) 1,368
---------- -------- ------- -------- --------
Net loss, May 31, 2005 (6,420) (6,420)
---------- -------- ------- -------- --------
BALANCE, MAY 31, 2005 4,240,000 424 23,976 (29,452) (5,052)
---------- -------- ------- -------- --------
Stock issued for cash on July 22,
2005 @ $0.10 per share 80,000 8 7,992 8,000
Stock issued for cash on September 8,
2005 @ $0.10 per share 50,000 5 4,995 5,000
Net loss, May 31, 2006 (10,440) (10,440)
---------- -------- ------- -------- --------
BALANCE, MAY 31, 2006 4,370,000 437 36,963 (39,892) (2,492)
---------- -------- ------- -------- --------
Net loss, May 31, 2007 (8,780) (8,780)
---------- -------- ------- -------- --------
BALANCE, MAY 31, 2007 4,370,000 437 36,963 (48,672) (11,272)
---------- -------- ------- -------- --------
Stock issued for cash on October 23,
2007 @ $0.15 per share 81,667 8 12,242 12,250
Net loss, May 31, 2008 (15,358) (15,358)
---------- -------- ------- -------- --------
BALANCE, MAY 31, 2008 4,451,667 445 49,205 (64,030) (14,380)
---------- -------- ------- -------- --------
Net loss six months ended, November 30, 2008 (12,250) (12,250)
---------- -------- ------- -------- --------
BALANCE, NOVEMBER 30, 2008 4,451,667 $ 445 $49,205 $(76,280) $(26,630)
========== ======== ======= ======== ========
See Notes to the Consolidated Financial Statements
5
GOLDEN KEY INTERNATIONAL, INC.
(A Development Stage Company)
Consolidated Statements of Cash Flows (unaudited)
- --------------------------------------------------------------------------------
February 18, 1999
Six Months Six Months Three Months Three Months (inception)
Ended Ended Ended Ended through
November 30, November 30, November 30, November 30, November 30,
2008 2007 2008 2007 2008
-------- -------- -------- -------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $(12,250) $ (9,728) $ (3,021) $ (4,299) $(76,280)
Increase (decrease) in accounts payable -- -- -- -- --
-------- -------- -------- -------- --------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES (12,250) (9,728) (3,021) (4,299) (76,280)
CASH FLOWS FROM INVESTING ACTIVITIES
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES -- -- -- -- --
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in loan from director 14,200 -- 8,000 -- 31,900
Issuance of common stock -- 8 -- 8 445
Additional paid in capital -- 12,242 -- 12,242 49,205
-------- -------- -------- -------- --------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES 14,200 12,250 8,000 12,250 81,550
-------- -------- -------- -------- --------
NET INCREASE (DECREASE) IN CASH 1,950 2,522 4,979 7,951 5,270
CASH AT THE BEGINNING OF PERIOD 3,320 6,428 291 999 --
-------- -------- -------- -------- --------
CASH AT THE END OF PERIOD 5,270 8,950 5,270 8,950 $ 5,270
======== ======== ======== ======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Interest paid $ -- $ -- $ -- $ -- $ --
======== ======== ======== ======== ========
Income taxes paid $ -- $ -- $ -- $ -- $ --
======== ======== ======== ======== ========
See Notes to the Consolidated Financial Statements
6
GOLDEN KEY INTERNATIONAL, INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
As of November 30, 2008 (unaudited)
- --------------------------------------------------------------------------------
NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS
Golden Key International, Inc. (the "Company") was incorporated under the laws
of the State of Delaware on February 18, 1999. The Company has minimal
operations and in accordance with SFAS #7, the Company is considered a
development stage company.
The Company has issued 4,451,667 shares of $0.0001 par value common stock.
The Company operates through its wholly owned subsidiary: Deep Rooted, Inc. a
Delaware corporation.
The Company through its subsidiary Deep Rooted, Inc. plans to build an internet
business that caters to travelers by allowing them to plan their own trips. This
includes things like booking accommodation, activities and transportation as
well as obtaining general information about the area of choice. The Companies
activities to date have been limited to capital formation, organization, set-up
of a website, and development of its business plan and a target customer market.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ACCOUNTING METHOD
The Company's consolidated financial statements are prepared using the accrual
method of accounting. The Company has elected a May 31, year-end.
BASIS OF CONSOLIDATION
The consolidated financial statements include the accounts of Golden Key
International, Inc., the parent Company, and it's wholly owned subsidiary Deep
Rooted, Inc., a Delaware corporation. All subsidiaries are wholly owned
subsidiaries. All significant inter-company balances and transactions have been
eliminated in consolidation.
CASH EQUIVALENTS
The Company considers all highly liquid investments purchased with an original
maturity of three months or less to be cash equivalents.
ACCOUNTS RECEIVABLE
The Company considers accounts receivable to be fully collectible; accordingly,
no allowances for doubtful accounts are required. If amounts become
non-collectible, they will be charged to operations when that determination is
made.
7
GOLDEN KEY INTERNATIONAL, INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
As of November 30, 2008 (unaudited)
- --------------------------------------------------------------------------------
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
ESTIMATES AND ADJUSTMENTS
The preparation of consolidated 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. In
accordance with FASB 16 all adjustments are normal and recurring.
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. The Company has
adopted the provisions of SFAS No. 128 effective February 18, 1999 (inception).
Basic net loss per share amounts is 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.
INCOME TAXES
Income taxes are provided in accordance with Statement of Financial Accounting
Standards No. 109 (SFAS 109), Accounting for Income Taxes. A deferred tax asset
or liability is recorded for all temporary differences between financial and tax
reporting and net operating loss carryforwards. Deferred tax expense (benefit)
results from the net change during the year of deferred tax assets and
liabilities.
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 effects of changes in tax laws and rates on the date of
enactment.
8
GOLDEN KEY INTERNATIONAL, INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
As of November 30, 2008 (unaudited)
- --------------------------------------------------------------------------------
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In May 2008, the Financial Accounting Standards Board ("FASB") issued SFAS No.
163, "ACCOUNTING FOR FINANCIAL GUARANTEE INSURANCE CONTRACTS - AN INTERPRETATION
OF FASB STATEMENT NO. 60". SFAS 163 requires that an insurance enterprise
recognize a claim liability prior to an event of default when there is evidence
that credit deterioration has occurred in an insured financial obligation. It
also clarifies how Statement 60 applies to financial guarantee insurance
contracts, including the recognition and measurement to be used to account for
premium revenue and claim liabilities, and requires expanded disclosures about
financial guarantee insurance contracts. It is effective for financial
statements issued for fiscal years beginning after December 15, 2008, except for
some disclosures about the insurance enterprise's risk-management activities.
SFAS 163 requires that disclosures about the risk-management activities of the
insurance enterprise be effective for the first period beginning after issuance.
Except for those disclosures, earlier application is not permitted. The adoption
of this statement is not expected to have a material effect on the Company's
financial statements.
In May 2008, the FASB issued SFAS No. 162, "The HIERARCHY OF GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES". SFAS 162 identifies the sources of accounting principles
and the framework for selecting the principles to be used in the preparation of
financial statements of nongovernmental entities that are presented in
conformity with generally accepted accounting principles in the United States.
It is effective 60 days following the SEC's approval of the Public Company
Accounting Oversight Board amendments to AU Section 411, "THE MEANING OF PRESENT
FAIRLY IN CONFORMITY WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES". The
adoption of this statement is not expected to have a material effect on the
Company's financial statements.
In March 2008, FASB issued SFAS No. 161, "DISCLOSURES ABOUT DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES - AN AMENDMENT TO FASB STATEMENT NO. 133".
SFAS No. 161 is intended to improve financial standards for derivative
instruments and hedging activities by requiring enhanced disclosures to enable
investors to better understand their effects on an entity's financial position,
financial performance, and cash flows. Entities are required to provide enhanced
disclosures about: (a) how and why an entity uses derivative instruments; (b)
how derivative instruments and related hedged items are accounted for under
Statement 133 and its related interpretations; and (c) how derivative
instruments and related hedged items affect an entity's financial position,
financial performance, and cash flows. It is effective for financial statements
issued for fiscal years beginning after November 15, 2008, with early adoption
encouraged. The Company is currently evaluating the impact of SFAS No. 161 on
its financial statements, and the adoption of this statement is not expected to
have a material effect on the Company's financial statements.
9
GOLDEN KEY INTERNATIONAL, INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
As of November 30, 2008 (unaudited)
- --------------------------------------------------------------------------------
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
In December 2007, the FASB issued SFAS No. 141R, "BUSINESS COMBINATIONS". This
statement replaces SFAS 141 and defines the acquirer in a business combination
as the entity that obtains control of one or more businesses in a business
combination and establishes the acquisition date as the date that the acquirer
achieves control. SFAS 141R requires an acquirer to recognize the assets
acquired, the liabilities assumed, and any noncontrolling interest in the
acquiree at the acquisition date, measured at their fair values as of that date.
SFAS 141R also requires the acquirer to recognize contingent consideration at
the acquisition date, measured at its fair value at that date. This statement is
effective for fiscal years, and interim periods within those fiscal years,
beginning on or after December 15, 2008. Earlier adoption is prohibited. The
adoption of this statement is not expected to have a material effect on the
Company's financial statements.
In December 2007, the FASB issued SFAS No. 160, "NONCONTROLLING INTERESTS IN
CONSOLIDATED FINANCIAL STATEMENTS LIABILITIES -AN AMENDMENT OF ARB NO. 51". This
statement amends ARB 51 to establish accounting and reporting standards for the
Noncontrolling interest in a subsidiary and for the deconsolidation of a
subsidiary. This statement is effective for fiscal years, and interim periods
within those fiscal years, beginning on or after December 15, 2008. Earlier
adoption is prohibited. The adoption of this statement is not expected to have a
material effect on the Company's financial statements.
In June 2008, the FASB issued FASB Staff Position ("FSP") No. EITF 03-6-1,
"Determining Whether Instruments Granted in Share-Based Payment Transactions Are
Participating Securities" ("FSP EITF 03-6-1"). FSP No. EITF 03-6-1 provides that
unvested share-based payment awards that contain nonforfeitable rights to
dividends or dividend equivalents (whether paid or unpaid) are participating
securities and shall be included in the computation of earnings per share
pursuant to the two-class method. FSP No. EITF 03-6-1 is effective for financial
statements issued for fiscal years beginning after December 15, 2008, and
interim periods within those years. Upon adoption, a company is required to
retrospectively adjust its earnings per share data (including any amounts
related to interim periods, summaries of earnings and selected financial data)
to conform with the provisions of FSP EITF 03-6-1. The Company is currently
evaluating the impact adoption of this statement could have on its financial
statements.
10
GOLDEN KEY INTERNATIONAL, INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
As of November 30, 2008 (unaudited)
- --------------------------------------------------------------------------------
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
In May 2008, the FASB issued FSP No. APB 14-1, "Accounting for Convertible Debt
Instruments that May be Settled in Cash Upon Conversion (Including Partial Cash
Settlement)" ("FSP No. APB 14-1"). FSP No. APB 14-1 requires that the liability
and equity components of convertible debt instruments that may be settled in
cash (or other assets) upon conversion (including partial cash settlement) be
separately accounted for in a manner that reflects an issuer's nonconvertible
debt borrowing rate. The resulting debt discount is amortized over the period
the convertible debt is expected to be outstanding as additional non-cash
interest expense. FSP No. APB 14-1 is effective for fiscal years beginning after
December 15, 2008 and early adoption is not permitted. Retrospective application
to all periods presented is required except for instruments that were not
outstanding during any of the periods that will be presented in the annual
financial statements for the period of adoption but were outstanding during an
earlier period. The Company is currently evaluating the impact adoption of this
statement could have on its financial statements.
In April 2008, the FASB issued FSP No. FAS 142-3, "Determination of the Useful
Life of Intangible Assets" ("FSP No. FAS 142-3"). FSP No. FAS 142-3 amends the
factors that should be considered in developing renewal or extension assumptions
used to determine the useful life of a recognized intangible asset under SFAS
No. 142, "Goodwill and Other Intangible Assets." FSP No. FAS 142-3 is effective
for financial statements issued for fiscal years beginning after December 15,
2008, and interim periods within those fiscal years. Early adoption is
prohibited. The Company is currently evaluating the impact adoption of this
statement could have on its financial statements.
NOTE 3. GOING CONCERN
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. The Company generated net
losses of $76,280 during the period from February 18, 1999 (inception) to
November 30, 2008. This condition raises substantial doubt about the Company's
ability to continue as a going concern. The Company's continuation as a going
concern is dependent on its ability to meet its obligations, to obtain
additional financing as may be required and ultimately to attain profitability.
The consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
11
GOLDEN KEY INTERNATIONAL, INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
As of November 30, 2008 (unaudited)
- --------------------------------------------------------------------------------
NOTE 4. RELATED PARTY TRANSACTIONS
Norm Blair, the sole officer and director of the Company may, in the future
become involved in other business opportunities as they become available; thus,
he may face a conflict in selecting between the Company and his other business
opportunities. The Company has not formulated a policy for the resolution of
such conflicts.
While the Company is seeking additional capital, Mr. Blair has advanced funds to
the Company to pay for any costs incurred by it. These funds are interest free
and there is no maturity date. The balance due to Mr. Blair was $31,900 on
November 30, 2008.
NOTE 5. INCOME TAXES
As of November 30, 2008
-----------------------
Deferred tax assets:
Net operating tax carryforwards $25,935
Other 0
-------
Gross deferred tax assets 25,935
Valuation allowance 25,935
-------
Net deferred tax assets $ 0
=======
Realization of deferred tax assets is dependent upon sufficient future taxable
income during the period that deductible temporary differences and carryforwards
are expected to be available to reduce taxable income. As the achievement of
required future taxable income is uncertain, the Company recorded a valuation
allowance.
NOTE 6. SCHEDULE OF NET OPERATING LOSSES
1999 Net Operating Income $ 0
2000 Net Operating Loss (7,165)
2001 Net Operating Loss (10,020)
2002 Net Operating Loss (2,070)
2003 Net Operating Loss (3,777)
2004 Net Operating Loss (6,420)
2005 Net Operating Loss (10,440)
2006 Net Operating Loss (8,780)
2007 Net Operating Loss (15,358)
2008 Net Operating Loss (12,250)
--------
$(76,280)
========
As of November 30, 2008 the Company has net operating loss carryforwards of
approximately $76,280. Net operating loss carryforward expires twenty years from
the date the loss was incurred.
12
GOLDEN KEY INTERNATIONAL, INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
As of November 30, 2008 (unaudited)
- --------------------------------------------------------------------------------
NOTE 7. STOCK TRANSACTIONS
Transactions, other than employees' stock issuance, are in accordance with
paragraph 8 of SFAS 123. Thus issuances shall be accounted for based on the fair
value of the consideration given up or received; whichever is more readily
determinable. Transactions with employees' stock issuance are in accordance with
paragraphs (16-44) of SFAS 123. These issuances shall be accounted for based on
the fair value of the consideration received or the fair value of the equity
instruments issued, or whichever measure is deemed more reliable.
On November 30, 2000, the Company issued 4,000,000 shares of common stock at
$.0001 per share for cash valued at $400.
In January 30, 2001, the Company issued 240,000 shares of common stock at $.10
per share for cash valued at $24,000.
On July 22, 2005, the Company issued 80,000 shares of common stock at $.10 per
share for cash valued at $8,000.
On September 8, 2005, the Company issued 50,000 shares of common stock at $.10
per share for cash valued at $5,000.
On October 23, 2007 the Company issued 81,667 shares of common stock at $.15 per
share for cash valued at $12,250.
As of November 30, 2008, the Company had 4,451,667 shares of common stock issued
and outstanding.
NOTE 8. STOCKHOLDERS EQUITY
The stockholders' equity section of the Company contains the following class of
capital stock as of November 30, 2008:
* Preferred Stock, $0.0001 per share: 20,000,000 shares authorized: -0-
shares issued and outstanding.
* Common stock, $0.0001 par value: 80,000,000 shares authorized:
4,451,667 shares issued and outstanding.
13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Certain statements in this annual report on Form 10-Q contain or may contain
forward-looking statements that are subject to known and unknown risks,
uncertainties and other factors which may cause actual results, performance or
achievements to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. These
forward-looking statements were based on various factors and were derived
utilizing numerous assumptions and other factors that could cause our actual
results to differ materially from those in the forward-looking statements. These
factors include, but are not limited to, our ability to consummate a merger or
business combination, economic, political and market conditions and
fluctuations, government and industry regulation, interest rate risk, U.S. and
global competition, and other factors. Most of these factors are difficult to
predict accurately and are generally beyond our control. You should consider the
areas of risk described in connection with any forward-looking statements that
may be made herein. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this report.
Readers should carefully review this annual report in its entirety, including
but not limited to our financial statements and the notes thereto. Except for
our ongoing obligations to disclose material information under the Federal
securities laws, we undertake no obligation to release publicly any revisions to
any forward-looking statements, to report events or to report the occurrence of
unanticipated events. For any forward-looking statements contained in any
document, we claim the protection of the safe harbor for forward-looking
statements contained in the Private Securities Litigation Reform Act of 1995.
GENERAL INFORMATION
Golden Key International, Inc. was incorporated on February 18, 1999 in the
State of Delaware. Through its wholly-owned subsidiary, Deep Rooted, Inc., a
Delaware corporation, the company intends to become a leading cross-platform
community portal provider. The company will target communities 5,000 and larger
in population and is developing a platform for uniting organizations,
government, chambers of commerce, corporate enterprises and non-profit groups
through "community-based" sites. Deep Rooted community portal applications can
be deployed as business to employee, business to business or city to city. We
are a development stage company with no revenues or profits.
Our principal executive office address is 119 11th Street, Fort McLeod, Alberta,
Canada T0L 0Z0. The principal executive office and telephone number are provided
by the officer of the corporation. Our fiscal year end is May 31st.
We have a total of 20,000,000 authorized preferred shares with a par value of
$0.0001 per share with none of those shares issued and outstanding as of
November 30, 2008. We have a total of 80,000,000 authorized common shares with a
par value of $0.0001 per share with 4,451,667 common shares issued and
outstanding as of November 30, 2008.
We completed a form SB-2 Registration Statement under the Securities Act of 1933
with the U.S. Securities and Exchange Commission registering 870,000 shares of
our common stock in connection with an offering of the 870,000 shares at a price
of $0.15 per share. Of the shares registered, 370,000 were registered for sale
by existing shareholders, and 500,000 were registered for sale by the Company to
raise funds to pursue our business plan. The offering expired on October 23,
2007 and we had sold 81,667 of the shares offered by the Company for funds of
$12,250.
RESULTS OF OPERATIONS
We have generated no revenues since inception and have incurred $76,280 in
expenses through November 30, 2008.
The following table provides selected financial data about our company for the
period ended November 30, 2008.
14
Balance Sheet Data: 11/30/08
------------------- --------
Cash $ 5,270
Total assets $ 5,270
Total liabilities $ 31,900
Shareholders' equity $(26,630)
Cash provided by financing since inception was $400 from the sale of shares to
our officer and director, $37,000 resulting from the sale of our common stock to
46 independent investors pursuant to Regulation S, category 3 of Rule 903 of the
Securities Act of 1933, as amended (the "Act") and $12,250 from the sale of our
common stock to 4 independent investors pursuant to the shares registered by the
Form SB-2 Registration Statement.
We incurred operating expenses of $3,021 and $4,299 for the three months ended
November 30, 2008 and 2007, respectively. These expenses consisted of general
operating expenses incurred in connection with the day to day operation of our
business and the preparation and filing of our registration statement and
required reports.
LIQUIDITY AND CAPITAL RESOURCES
Our cash in the bank at November 30, 2008 was $5,270, total assets were $5,270
and outstanding liabilities were $31,900. Our director has agreed to provide
additional funding that will enable us to maintain a positive cash flow needed
to pay for our current level of operating expenses over the next twelve months,
which would include miscellaneous office expenses, bookkeeping and audit fees
and website costs. There are no formal commitments or arrangements with our
director to advance or loan funds. There are no terms regarding repayment of any
loan or capital contribution. We are a development stage company and have
generated no revenue to date. We estimate our current cash balance of $5,270,
along with loans from our director, will be sufficient for office expenses and
fees. We anticipate that we will need approximately $5,000 through the first
quarter 2009 or until we are able to receive additional funding or generate
revenues. These fees are estimated to be $3,000 for accounting and legal fees
and $2,000 for website development costs.
BUSINESS OPERATIONS OVERVIEW
As of the date of this filing, we have taken the following steps: developed our
business plan, researched community portals and e-commerce templates, developed
system for gathering community data, secured the Internet domain name
www.deeprooted.ca and initiated the first phase of our online community portal.
We were able to raise minimal funding of $12,250 in our recent offering, far
less than our projected budget of $75,000. Our director has verbally agreed to
loan the company funds to continue operations in this limited scenario until
sales will support operations or until we receive additional funding. Our
director will implement the website as well as conduct sales and marketing on a
limited scale. If we have not yet generated revenues sufficient to sustain
modified business operations, we may have to raise additional monies through
sales of our equity securities or through loans from banks or third parties to
continue our business plans, however, no such plans are currently anticipated.
There is no guarantee we will be successful in implementing our modified
business plan.
PROPOSED MILESTONES TO IMPLEMENT MODIFIED BUSINESS OPERATIONS
3RD QUARTER, 2008
Begin build out of our dedicated web based system. The build-out will consist of
completing database programs.
Begin initial contact for partner/banner ads to be included on the website
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Contact several ad sponsors for the ad sponsor sections of the web portal to
increase traffic to site as well as achieve advertising revenue.
Orchestrate minimum marketing and sales to community portal markets.
4TH QUARTER, 2008
Continue to contact several ad sponsors for the ad sponsor sections of the web
portal to increase traffic to site as well as achieve advertising revenue.
Beta test with several affiliates in a real world scenario. The Company plans to
work with community affiliates to establish a formal focus group on how to
improve the services and products of Deep Rooted. We plan to offer our services
to a select group to test market our web portal services. We will offer the
services for free at no risk for a period of 6 months, and will demonstrate to
the clients how to upload their community advertising and listings.
In order to meet all of our business plan goals, we need to receive funding or
generate revenue. We will face considerable risk in each of our business plan
steps, such as longer than anticipated lead time necessary for us to complete
our website and marketing plan, and a shortfall of funding due to our inability
to raise capital. If no funding is received during the next twelve months, we
may utilize one or more options such as use existing cash in the bank, funds
loaned by our director, or we might ask our shareholders for funds. Neither our
director nor our shareholders have any formal commitments, arrangements or legal
obligations to advance or loan funds to Golden Key. To date, there has been
$31,900 in loans from the director, with no specific terms of repayment.
OFF-BALANCE SHEET ARRANGEMENTS
We have no off-balance sheet arrangements.
GOING CONCERN
As of November 30, 2008 we had generated no revenues. We have been issued an
opinion by our auditor that raises substantial doubt about our ability to
continue as a going concern based on our current financial position.
ITEM 4. CONTROLS AND PROCEDURES
Under the supervision and with the participation of our management, including
our principal executive officer and the principal financial officer, we have
conducted an evaluation of the effectiveness of the design and operation of our
disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e)
under the Securities Exchange Act of 1934, as of the end of the period covered
by this report. Based on this evaluation, our principal executive officer and
principal financial officer concluded as of the evaluation date that our
disclosure controls and procedures were effective such that the material
information required to be included in our Securities and Exchange Commission
reports is recorded, processed, summarized and reported within the time periods
specified in SEC rules and forms relating to our company, including any
consolidating subsidiaries, and was made known to us by others within those
entities, particularly during the period when this report was being prepared.
Additionally, there were no significant changes in our internal controls or in
other factors that could significantly affect these controls subsequent to the
evaluation date. We have not identified any significant deficiencies or material
weaknesses in our internal controls, and therefore there were no corrective
actions taken.
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ITEM 5. OTHER INFORMATION
On September 10, 2008, we received the resignation of Norm Blair, our sole
officer and director.
On September 10, 2008, the company announced that its Board of Directors (the
"Board") has appointed Robert Blair as president, secretary, treasurer, chief
executive officer, chief financial officer and sole director of our company. Mr.
Blair will hold his positions until a successor is appointed or until his
earlier resignation or removal.
From 1998 to current date, Mr. Robert Blair is retired. From 1972 to 1998, Mr.
Blair served as direct representative for 26 years with Hostess Foods Ltd., a
division of Kraft Foods Ltd, where he built the sales and shipping divisions of
Hostess Foods in the provinces of Newfoundland and British Columbia, Canada.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS
The following exhibits are included with this filing:
Exhibit
Number Description
------ -----------
3(i) Articles of Incorporation*
3(ii) Bylaws*
31 Sec. 302 Certification of CEO/CFO
32 Sec. 906 Certification of CEO/CFO
- ----------
* Included in our SB-2 filing under Commission File Number 333-142037.
SIGNATURES
Pursuant to the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf in Fort McLeod, Alberta, by the undersigned, thereunto duly
authorized.
January 6, 2009 Golden Key International, Inc, Registrant
By: /s/ Robert Blair
---------------------------------------
Robert Blair, Sole Director, President,
Chief Executive Officer,
Principal Accounting Officer,
Chief Financial Officer
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