UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended May 31, 2009
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _______________ to _________________
Commission File Number: 000-53448
EASY CD YEARBOOK, INC.
(Exact name of registrant as specified in its charter)
Nevada 98-0507524
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Suite 112 - 5348 Vegas Dr., Las Vegas, NV USA 89108
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: +1 (702) 441-0703
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to section 12(g) of the Act:
Common Stock, $0.0001 par value
Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes [ ] No [X]
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X]
Indicate by check mark whether the registrant (1) filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act during the preceding 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 past 90
days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (ss.229.405 of this chapter) is not contained herein, and will
not be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [ ]
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" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [] No [X]
The issuer's revenues for its most recent fiscal year were $-0-
The aggregate market value of the voting and non-voting common equity held by
non-affiliates could not be computed by reference to the price at which the
common equity was last sold, or the average bid and asked price of such common
equity, as of the last business day of the registrant's most recently computed
second fiscal quarter as there was no average bid or ask price for the
registrant's common equity, as of the last business day of the registrant's most
recent second fiscal quarter.
The number of shares of the issuer's common stock issued and outstanding as of
July 28, 2009 was 7,635,700 shares.
Documents Incorporated By Reference: None
TABLE OF CONTENTS
Page
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PART I
Item 1 Business 3
Item 1A Risk Factors 6
Item 1B Unresolved Staff Comments 6
Item 2 Properties 6
Item 3 Legal Proceedings 6
Item 4 Submission of Matters to a Vote of Security Holders 6
PART II
Item 5 Market for Registrant's Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities 7
Item 6 Selected Financial Data 7
Item 7 Management's Discussion and Analysis of Financial Condition
and Results of Operation 7
Item 7A Quantitative and Qualitative Disclosures About Market Risk 10
Item 8 Financial Statements and Supplementary Data 11
Item 9 Changes in and Disagreements With Accountants on Accounting
and Financial Disclosure 23
Item 9A(T) Controls and Procedures 23
Item 9B Other Information 23
PART III
Item 10 Directors, Executive Officers and Corporate Governance 24
Item 11 Executive Compensation 25
Item 12 Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters 26
Item 13 Certain Relationships and Related Transactions, and Director
Independence 27
Item 14 Principal Accountant Fees and Services 28
PART IV
Item 15 Exhibits, Financial Statement Schedules 29
SIGNATURES 30
2
PART I
ITEM 1. BUSINESS.
As used in this Annual Report on Form 10-K (this "Report"), references to the
"Company," the "Registrant," "we," "our" or "us" refer to Easy CD Yearbook,
Inc., unless the context otherwise indicates.
FORWARD-LOOKING STATEMENTS
This Report contains forward-looking statements. For this purpose, any
statements contained in this Report that are not statements of historical fact
may be deemed to be forward-looking statements. Forward-looking information
includes statements relating to future actions, prospective products, future
performance or results of current or anticipated products, sales and marketing
efforts, costs and expenses, interest rates, outcome of contingencies, financial
condition, and results of operations, liquidity, business strategies, cost
savings, objectives of management, and other matters. You can identify
forward-looking statements by those that are not historical in nature,
particularly those that use terminology such as "may," "will," "should,"
"expects," "anticipates," "contemplates," "estimates," "believes," "plans,"
"projected," "predicts," "potential," or "continue" or the negative of these
similar terms. The Private Securities Litigation Reform Act of 1995 provides a
"safe harbor" for forward-looking information to encourage companies to provide
prospective information about themselves without fear of litigation so long as
that information is identified as forward-looking and is accompanied by
meaningful cautionary statements identifying important factors that could cause
actual results to differ materially from those projected in the information.
These forward-looking statements are not guarantees of future performance and
involve risks, uncertainties and assumptions that we cannot predict. In
evaluating these forward-looking statements, you should consider various
factors, including the following: (a) those risks and uncertainties related to
general economic conditions, (b) whether we are able to manage our planned
growth efficiently and operate profitable operations, (c) whether we are able to
generate sufficient revenues or obtain financing to sustain and grow our
operations, (d) whether we are able to successfully fulfill our primary
requirements for cash, which are explained below under "Liquidity and Capital
Resources". We assume no obligation to update forward-looking statements, except
as otherwise required under the applicable federal securities laws.
CORPORATE BACKGROUND
We were incorporated in the state of Nevada on June 27, 2006. Our offices are
currently located at 5348 Vegas Dr., Suite 112, Las Vegas, NV 89108 USA. Our
telephone number is (702) 441-0703. We have a website at
http://www.easycdyearbook.com. The information contained in our website does not
form part of this Annual Report in any way. Our common stock is quoted on the
OTC Bulletin Board under the symbol "EZCD".
We have two executive officers who also serve as our directors. Mr. Almaymoon
Mawji, our President, Treasurer and a Director, resides in Calgary, Alberta,
Canada. He has nine years of experience as vice president of sales and enrolment
for a child learning center in Calgary. He also serves as a director for a
Calgary company that owns the rights to sell services of a broadband Internet
phone company. Mr. Zahirali Kaba, our Secretary and a Director, resides in
Tanzania. For the last eight years, Mr. Kaba has served as a partner of a mining
company of gemstones and other precious stones located in Tanzania
We are a development stage company that has no revenue and has had limited
operations to date. From June 27, 2006 (inception) to May 31, 2009, we have
incurred accumulated net losses of $50,138. Based on our financial history since
inception, our independent auditor has expressed doubt as to our ability to
continue as a going concern.
PRINCIPAL PRODUCT
We are marketing software that enables schools, clubs and organizations to
produce their own multimedia yearbook. A multimedia yearbook is a CD/DVD that
contains video, photos, audio and text that is PC and Mac compatible, which we
believe can serve as an inexpensive replacement or supplement to a traditional
printed yearbook.
We have entered into an agreement with third party firm to develop the site
framework that will be implemented in our website. Total cost for the web
development is $5,500 of which we paid in full. On July 7, 2009 the third party
contractor finished developing our website and it is now ready for commercial
use and available at ww.easycdyearbook.com.
3
We expect that we will be in a position to begin generating revenues
approximately three months after we launched our website, or in October 2009.
THE MARKET OPPORTUNITY
Virtually all North American high schools and colleges, and many elementary and
middle schools, publish yearbooks.
UNITED STATES
According to statistics made available by the Institute of Education Sciences of
the U.S. Department of Education - National Center for Education Statistics,
there were 97,000 public elementary and secondary schools in the United States
during 2005-2006, and an estimated 49.6 million students enrolled in public
elementary and secondary schools during 2007-2008. In the private segment there
were an estimated 6.1 million students enrolled in private elementary and
secondary schools during 2007-2008.
CANADA
According to a Canada e-Book made available by Statistics Canada, Canada's
National Statistical Agency, in 1999-2000, there were 16,024 elementary and
secondary schools in Canada, only 4% of which had enrolments of 1,000 students
or more (we do not currently have up to date information regarding the current
number of schools in Canada).
We plan to concentrate our marketing efforts primarily to elementary and high
schools. These marketing efforts will be geared toward attracting elementary
schools seeking an inexpensive substitute to the printed yearbook, and to high
schools seeking an inexpensive multimedia supplement to their traditional
yearbook. See "Marketing and Sales Strategy" below.
COMPETITION AND COMPETITIVE STRATEGY
We are aware of approximately 12 companies that sell proprietary designated
software to publish a multimedia yearbook in North America, such as Yeardisk
Creator by Yeardisk, Digital Journey by Digital Journey LLC, and Dynamic
Memories by Interactive Software Designs. These companies currently dominate the
online multimedia yearbook market and we expect them to remain the dominant
market participants for the foreseeable future. Generally, these types of
software programs offered by our competitors automatically create yearbook
templates that can be tailored to each school's project.
Purchasers are asked to complete a questionnaire to define basic parameters for
their yearbook, such as the name of the school, number of grades, classes and
students, faculty, etc. The software then creates an automatic template into
which users upload images, videos and text, and choose a yearbook theme from a
list of prepaid themes. Once completed, the software automatically creates the
multimedia yearbook that may be burned onto CD/DVDs. The cost for these types of
software programs can range from approximately $300 to $500.
We could also face competition in the future from publishers of printed
yearbook, in the event that they begin to offer multimedia yearbook products in
addition to or in conjunction with their printed products to their existing
customer base.
We believe our primary competitive advantage is that our product will enable
schools and clubs to produce a low-budget multimedia yearbook as a replacement
or supplement to their printed yearbook, because the multimedia yearbook could
be developed easily through the use of free software and computer and video
equipment that would likely be found at any school.
MARKETING & SALES STRATEGY
Once we complete the development and production of our product, we plan to focus
our marketing efforts in North America. Our management, particularly our
President, Almaymoon Mawji, who has nine years of experience as vice president
of sales and enrollment with a child learning center in Calgary, will be
responsible for executing our marketing plan. Our target market is K-12 schools
in North America.
Our marketing efforts will be directed toward building a network of
relationships with schools and clubs in North America. We will emphasize how our
video program can be an inexpensive replacement or supplemental to the
traditional printed yearbook, as well as a "green," or environmentally-friendly,
alternative to the printed yearbook.
4
Initially, we plan to gain a customer base through a targeted web campaign. We
intend to employ the following techniques:
Search Engines: Once our video program is ready for commercial use, we plan to
submit our website to search engines that robotically index the Web. Such search
engines include Google, Yahoo, MSN, AOL Search, and Ask.com. Some of these feed
search content to the other main search engines and portal sites.
Reciprocal Links: We plan to find complementary websites and request a
reciprocal link to our website.
Internet Marketing: We plan to conduct Internet marketing such as advertising on
news forums, web seminars, email campaigns, web advertising, e-newsletters,
online public relations and issuing press releases.
Branding: While it may initially be difficult for a start-up company to
establish a consumer brand name, we realize the critical importance of making
"POWERED BY EASY CD YEARBOOK" a symbol of quality in the marketplace. We will
insure wherever possible that this critical "branding experience" will appear on
all of our services and web pages.
We plan to price our product at $499 initially when downloaded or viewed online.
We also plan to offer a discount to those schools and clubs that agree to link
their website to our website.
DISTRIBUTION
Our product is available as a direct download/view from our website.
SOURCES AND AVAILABILITY OF PRODUCTS AND SUPPLIES
We believe there are no constraints on the sources or availability of products
and supplies related to our business. We will be producing our own product, and
the distribution of our product will be over the Internet.
DEPENDENCE ON ONE OR A FEW MAJOR CUSTOMERS
We plan on selling our product directly to schools or clubs over the Internet.
Our product is priced for mass market consumption. Therefore, we do not
anticipate dependence on one or a few major customers for at least the next 12
months or the foreseeable future.
PATENTS, TRADEMARKS, LICENSES, FRANCHISE RESTRICTIONS AND CONTRACTUAL
OBLIGATIONS & CONCESSIONS
We have not entered into any franchise agreements or other contracts that have
given, or could give rise to, obligations or concessions. We do not hold any
other intellectual property.
Easy CD Yearbook is planning to develop all of its own video and software
content for the foreseeable future and intends to copyright or obtain other
protection over these assets if and when it has the cash resources to do so. We
do not hold any other intellectual property and we do not anticipate any
additions in the foreseeable future.
DOMAIN NAME
We own and operate the following registered internet domain name:
www.easycdyearbook.com and have launched our website. The information contained
in our website does not form part of this Annual Report in any way.
EFFECT OF EXISTING OR PROBABLE GOVERNMENT REGULATION
We do not believe that government regulation will have a material impact on the
way we conduct our business.
FACILITIES
We currently maintain our corporate office at 5348 Vegas Dr., Suite 112, Las
Vegas, NV 89108 USA. This is the same address that our agent for service of
process, EastBiz.com, Inc., uses. This location is a virtual office that we
maintain for $75 per month pursuant to a lease with INC Management, a company
affiliated with EastBiz.com, Inc., which provides us with a mailing address for
5
communications, a contact phone number as well as secretarial and administrative
services should we need it. We may terminate the lease arrangement upon 30-days'
written notice to INC Management. Our executive officers, Mr. Mawji and Mr.
Kaba, do not work from this location, but operate from their respective
residences in Canada and Tanzania at no charge to us. We have designated the
virtual office as our corporate office in order to establish a business presence
in North America, where we plan to offer our products, and to provide our future
customers with a convenient way to communicate with us. We believe that this
virtual office space is currently sufficient for our purposes and we expect it
to be sufficient until we commence full operations.
EMPLOYEES
We have commenced only limited operations, and therefore currently have no
employees other than our executive officers, who spend up to approximately 20
hours a week on our business. When we commence full operations, we expect to
hire full-time management and administrative support staff.
REPORTS TO SECURITY HOLDERS
We will voluntarily make available to our stockholders an annual report,
including audited financials, on Form 10-K.
We are not currently a reporting company, but upon effectiveness of the
registration statement of which this prospectus forms a part, we will be
required to file reports with the SEC pursuant to the Securities Exchange Act of
1934, as amended. These reports include annual reports on Form 10-K, quarterly
reports on Form 10-Q and current reports on Form 8-K. You may obtain copies of
these reports from the SEC's Public Reference Room at 100 F Street, NE.,
Washington, DC 20549, on official business days during the hours of 10 a.m. to
3p.m. or on the SEC's website, at www.sec.gov. You may obtain information on the
operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
We will also make these reports available on our website.
ITEM 1A. RISK FACTORS.
Not applicable.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
None.
ITEM 2. PROPERTIES.
We currently maintain our corporate offices c/o INC Management, 5348 Vegas Dr.,
Suite 112, Las Vegas, NV 89108.
ITEM 3. LEGAL PROCEEDINGS.
There are no pending legal proceedings to which the Company is a party or in
which any director, officer or affiliate of the Company, any owner of record or
beneficially of more than 5% of any class of voting securities of the Company,
or security holder is a party adverse to the Company or has a material interest
adverse to the Company. The Company's property is not the subject of any pending
legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
During the period ending May 31, 2009, there has not been any matter which was
submitted to a vote of the Company's shareholders through the solicitation of
proxies or otherwise.
6
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES.
MARKET INFORMATION
Our common stock has been eligible to be traded on the Over-The-Counter Bulletin
Board since October 28, 2008 under the ticker symbol EZCD.OB. There has been no
active trading in the Company's securities and there have been no high or low
bid prices quoted.
HOLDERS
We had 38 holders of record of our common stock as of July 22, 2009.
DIVIDENDS
We have not paid any cash dividends to stockholders. The declaration of any
future cash dividend will be at the discretion of our Board of Directors and
will depend upon our earnings, if any, our capital requirements and financial
position, our general economic and other pertinent conditions. It is our present
intention not to pay any cash dividends in the foreseeable future, but rather to
reinvest earnings, if any, into our business.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
We do not have any compensation plan under which equity securities are
authorized for issuance.
RECENT SALES OF UNREGISTERED SECURITIES; USE OF PROCEEDS FROM REGISTERED
SECURITIES
Following is certain information concerning certain securities which we sold or
issued in a month within the fourth quarter of the fiscal year covered by the
report without registration under the Securities Act of 1933, as amended (the
"Securities Act"), in reliance on exemption(s) from such registration
requirements, which was not previously included in reports we filed with the
SEC.
On May 22, 2009, we issued and sold 249,300 restricted shares of our common
stock for a gross purchase price of US $9,972, or a purchase price of $0.04 per
share.
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
We have not repurchased any shares of our common stock during the fiscal year
ended May 31, 2009.
ITEM 6. SELECTED FINANCIAL DATA.
Not applicable.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION.
Certain statements contained in this Report, including statements regarding the
anticipated development and expansion of our business, our intent, belief or
current expectations, primarily with respect to the future operating performance
of Easy CD Yearbook, Inc. And the services we expect to offer and other
statements contained herein regarding matters that are not historical facts, are
"forward-looking" statements. Future filings with the Securities and Exchange
Commission, future press releases and future oral or written statements made by
us or with our approval, which are not statements of historical fact, may
contain forward-looking statements, because such statements include risks and
uncertainties, actual results may differ materially from those expressed or
implied by such forward-looking statements.
All forward-looking statements speak only as of the date on which they are made.
We undertake no obligation to update such statements to reflect events that
occur or circumstances that exist after the date on which they are made.
7
PLAN OF OPERATION
The following discussion of the plan of operation, financial condition, results
of operations, cash flows and changes in financial position of our Company
should be read in conjunction with our most recent financial statements and
notes appearing elsewhere in this Form 10-K; and our registration statement on
Form S-1/A (File no. 333-151931), which was declared effective on September 30,
2008.
We are a development stage company with very limited operations to date, no
revenue, very limited financial backing and few assets. We have established the
following goals over the next 12 months:
* drive traffic to our website through marketing efforts, where customers will
be able to purchase our product; * collect information and create customer lists
from our website and email campaigns; * generate revenue by October of 2009
through the sale of our product; and * achieve break-even results of operations.
During the forth quarter of our fiscal year we have completed the development of
our product and it is ready for sale. We purchased a hosting account and SSL
certificate from Host Gator to host our website. We have entered into an
agreement with third party firm to develop the site framework that will be
implemented in our website. Total cost for the web development is $5,500 of
which we paid in full. On July 7, 2009 the third party contractor finished
developing our website and it is ready for commercial use and now available at
www.easycdyearbook.com.
We entered into an agreement with PayPal to act as our online credit card
gateway, PayPal has no monthly, set-up or cancellation fees. PayPal fees are as
follow:
Monthly Income Per Transaction
-------------- ---------------
$0.00 USD - $3,000.00 USD 2.9% + $0.30 USD
$3,000.01 USD -$10,000.00 USD 2.5% + $0.30 USD
$10,000.01 USD -$100,000.00 USD 2.2% + $0.30 USD
> $100,000.00 USD 1.9% + $0.30 USD
ANTICIPATED CASH REQUIREMENTS
Over the next 12 months, we have estimated our minimum cash requirements to be
as follows:
Cash Operating Expenses
Website and software maintenance $15,000
Legal and accounting 20,000
Marketing Camping 8,000
General and Administrative 15,000
-------
Total $58,000
=======
8
RESULTS OF OPERATIONS
For the year ended May 31, 2009, we posted losses of $45,443 compared to $3,031
for the year ended May 31, 2008. The principal components of the losses for the
year ended May 31, 2009 were website development of $2,750, professional fees of
$35,858, filing fees of $2,871, depreciation and amortization of $1,690 and
general and administrative fees of $2,274.
From inception to May 31, 2009 we incurred losses of $50,138.
At May 31, 2009, our net cash balance is approximately $7,925. Cash on hand is
currently our only source of liquidity. We do not have any lending arrangements
in place with banking or financial institutions and we do not anticipate that we
will be able to secure these funding arrangements in the near future.
Since inception, we have sold 7,635,700 shares of common stock to our
stockholders.
LIQUIDITY AND CAPITAL RESOURCES
To date, we have had negative cash flows from operations and we have been
dependent on sales of our equity securities to meet our cash requirements. We
expect this continue for the foreseeable future. At May 31, 2009, we had working
capital of $5175 compared to $46,705 at May 31, 2008. We opened the first fiscal
quarter of 2008 with approximately $46,705 in cash. As of the date hereof, we
have approximately $7,925.
Because we have not generated any revenue from our business, and currently have
a budgeted shortfall of approximately $50,000, we will need to raise
significant, additional funds for the future development of our business and to
respond to unanticipated requirements or expenses. Our current cash balances
will be extinguished within the next quarter provided we do not have any
unanticipated expenses. Our ability to successfully develop our product and to
eventually produce and sell it to generate operating revenues also depends on
our ability to obtain the necessary financing to implement our business plan.
Given that we have no operating history, no revenues and only losses to date, we
may not be able to achieve this goal, and if this occurs we will not be able to
pay our development and marketing costs and we may go out of business. We may
need to issue additional equity securities in the future to raise the necessary
funds. We do not currently have any arrangements for additional financing and we
can provide no assurance to investors we will be able to find such financing if
further funding is required. Obtaining additional financing would be subject to
a number of factors, including investor acceptance of our planned video program
and our business model. The issuance of additional equity securities by us would
result in a significant dilution in the equity interests of our current
stockholders. The resale of shares by our existing shareholders pursuant to this
prospectus may result in significant downward pressure on the price of our
common stock and cause negative impact on our ability to sell additional equity
securities. Obtaining loans will increase our liabilities and future cash
commitments, and there can be no assurance that we will even have sufficient
funds to repay our future indebtedness or that we will not default on our future
debts if we were able to even obtain loans.
There can be no assurance that capital will continue to be available if
necessary to meet future funding needs or, if the capital is available, that it
will be on terms acceptable to us. If we are unable to obtain financing in the
amounts and on terms deemed acceptable to us, we may be forced to scale back or
cease operations, which might result in the loss of some or all of your
investment in our common stock.
GOING CONCERN CONSIDERATION
Our independent auditors included an explanatory paragraph in their report on
the accompanying financial statements regarding concerns about our ability to
continue as a going concern. Our financial statements contain additional note
disclosures describing the circumstances that lead to this disclosure by our
independent auditors.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
We do not expect the adoption of any recently issued accounting pronouncements
to have a significant impact on our net results of operations, financial
position, or cash flows.
SEASONALITY
We expect that our future sales will be impacted by seasonal demands, as we
expect that sales will be tied to the school-year calendar, and concentrated
during the spring semesters or the months closest to the ends of the traditional
school year.
9
OFF-BALANCE SHEET ARRANGEMENTS
We have no off-balance sheet arrangements.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable.
10
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
MOORE & ASSOCIATES, CHARTERED
ACCOUNTANTS AND ADVISORS
PCAOB REGISTERED
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Easy CD Yearbook, Inc.
(A Development Stage Company)
We have audited the accompanying balance sheets of Easy CD Yearbook, Inc. (A
Development Stage Company) as of May 31, 2009 and 2008, and the related
statements of operations, stockholders' equity (deficit) and cash flows for the
years then ended, and from inception on June 27, 2006 through May 31, 2009.
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 audits.
We conduct our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits 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
audits provide 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 Easy CD Yearbook, Inc. (A
Development Stage Company) as of May 31, 2009 and 2008, and the related
statements of operations, stockholders' equity and cash flows for the years then
ended, and from inception on June 27, 2006 through May 31, 2009, in conformity
with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 6 to the
financial statements, the Company has an accumulated deficit of $50,138, which
raises substantial doubt about its ability to continue as a going concern.
Management's plans concerning these matters are also described in Note 6. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
/s/ Moore & Associates, Chartered
- ------------------------------------------
Moore & Associates, Chartered
Las Vegas, Nevada
July 21, 2009
6490 West Desert Inn Rd, Las Vegas, NV 89146 (702) 253-7499 Fax (702) 253-7501
11
EASY CD YEARBOOK, INC.
(A Development Stage Company)
BALANCE SHEETS
May 31, May 31,
2009 2008
-------- --------
(audited) (audited)
(restated)
ASSETS
Current Assets
Cash $ 7,925 $ 46,705
-------- --------
Total Current Assets $ 7,925 $ 46,705
======== ========
Fixed Assets
Website, net of accumulated amortization (Note 9.) $ 7,300 $ 1,241
-------- --------
Total Assets $ 15,225 $ 47,946
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses $ 2,750 $ --
-------- --------
Total Current Liabilities 2,750 --
-------- --------
Total Liabilities 2,750 --
-------- --------
Stockholders' Equity
Preferred Stock, authorized
50,000,000 shares, par value $0.0001
Preferred Stock, issued and outstanding is 0
Common Stock, authorized
100,000,000 shares, par value $0.0001
Issued and outstanding on
May 29, 2009 is 7,635,700 (May 31, 2008: 7,386,400) 764 739
Additional Paid in Capital 61,849 51,902
Deficit Accumulated During the Development Stage (50,138) (4,695)
-------- --------
Total Stockholders' Equity 12,475 47,946
-------- --------
Total Liabilities and Stockholders' Equity $ 15,225 $ 47,946
======== ========
The accompanying notes are an integral part of these financial statements.
12
EASY CD YEARBOOK, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
Year Ended June 27, 2006
May 31, (Inception) To
------------------------- May 31,
2009 2008 2009
---------- ---------- ----------
Revenue $ -- $ -- $ --
Expenses
Website Development 2,750 -- 2,750
Depreciation and amortization 1,690 35 1,725
Organization Cost -- -- 187
General and Administrative 2,274 811 3,231
Filing Fees 2,871 185 3,346
Professional Fees 35,858 2,000 38,900
Loss before income taxes 45,443 3,031 50,138
---------- ---------- ----------
Provision for Income Taxes -- -- --
---------- ---------- ----------
Net (Loss) $ (45,443) $ (3,031) $ (50,138)
========== ========== ==========
Basic and Diluted
(Loss) per Common Shares a (0.01)
---------- ----------
Weighted Average Number of Common Shares 7,392,547 5,814,400
---------- ----------
- ----------
a = Less than ($0.01) per share
The accompanying notes are an integral part of these financial statements.
13
EASY CD YEARBOOK, INC.
(A Development Stage Company)
STATEMENTS OF STOCKHOLDER'S EQUITY (DEFICIT)
Deficit
Accumulated
Common Stock During the
------------------ Paid in Development Total
Shares Amount Capital Stage Equity
------ ------ ------- ------- ------
# $ $ $ $
INCEPTION JUNE 27, 2006
Common stock issued to Directors 5,500,000 550 4,931 5,481
for cash June 27, 2006 @$0.001 --
per share
Net loss for the period from Inception
(June 27, 2006) to May 31, 2007 (1,664) (1,664)
---------- ------ ------- -------- --------
BALANCE MAY 31, 2007 5,500,000 550 4,931 (1,664) 3,817
Common stock issued for cash on
March 31, 2008 @ $0.025 per share
(par value $0.0001) 1,886,400 189 46,971 47,160
Net loss for the year ended May 31, 2008 (3,031) (3,031)
---------- ------ ------- -------- --------
BALANCE MAY 31, 2008 7,386,400 739 51,902 (4,695) 47,946
Common stock issued for cash on
May 22, 2009@ $0.04 per share
(par value $0.0001) 249,300 25 9,947 9,972
Net loss for the year ended May 31, 2009 (45,443) (45,443)
---------- ------ ------- -------- --------
BALANCE MAY 31, 2009 7,635,700 764 61,849 (50,138) 12,475
========== ====== ======= ======== ========
The accompanying notes are an integral part of these financial statements.
14
EASY CD YEARBOOK, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
Year Ended June 27, 2006
May 31, (Inception) To
------------------------ May 31,
2009 2008 2009
-------- -------- --------
OPERATING ACTIVITIES
Net (Loss) $(45,443) $ (3,031) $(50,138)
Adjustments to Reconcile Net Loss to
Net Cash Used by Operating Activities
Depreciation and amortization expense 1,690 35 1,725
Accrued Liability 2,750 -- 2,750
-------- -------- --------
Net Cash (Used) by Operating Activities (41,002) (2,996) (45,663)
-------- -------- --------
FINANCING ACTIVITIES
Proceeds from issuance of common stock $ 9,972 $ 37,160 $ 57,132
-------- -------- --------
Cash Provided by Financing Activities 9,972 37,160 57,132
-------- -------- --------
INVESTING ACTIVITIES
Video Production (4,500) -- (4,500)
Web site Construction (3,250) (1,276) (4,526)
-------- -------- --------
Net cash used by investing activities (7,750) (1,276) (9,026)
-------- -------- --------
Net Increase in Cash (38,780) 32,888 2,444
Cash, Beginning of Period 46,705 13,817 5,481
-------- -------- --------
Cash, End of Period $ 7,925 $ 46,705 $ 7,925
======== ======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ -- $ -- $ --
======== ======== ========
Income taxes $ -- $ -- $ --
======== ======== ========
The accompanying notes are an integral part of these financial statements.
15
EASY CD YEARBOOK, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
May 31, 2009
NOTE 1. GENERAL ORGANIZATION AND BUSINESS
The Company was incorporated under the laws of the state of Nevada on June 27,
2006. The Company has limited operations and in accordance with SFAS #7, is
considered a development stage company and has not yet realized any revenues
from its planned operations.
We are focused on developing and offering a video program called "How to publish
a Multimedia Yearbook" that teaches users how to publish a multimedia yearbook
for a school or club, using existing computer equipment and open source
software. A multimedia yearbook is a CD/DVD that contains video, photos, audio
and text that is PC and Mac compatible. Our video will provide instruction on
various areas of multimedia including, among others, downloading & installing
free image manipulation software, collecting and editing digital photos,
installing a free video editing tool, recording audio and creating interactive
menus.
Our vision is to offer schools and clubs an electronic yearbook as an
alternative to their traditional printed yearbook. Our target market is K-12
schools in North America.
As a development stage enterprise, the Company discloses the deficit accumulated
during the development stage and the cumulative statements of operations and
cash flows from inception to the current balance sheet date.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES
BASIS OF ACCOUNTING
The Company's financial statements are prepared using the accrual method of
accounting. The Company has elected a May 31 fiscal year end.
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 June 27, 2006 (inception).
The basic earnings (loss) per share is calculated by dividing our net income
available to common shareholders by the weighted average number of common shares
during the year. The diluted earnings (loss) per share is calculated by dividing
our net income (loss) available to common shareholders by the diluted weighted
average number of shares outstanding during the year. The diluted weighted
average number of shares outstanding is the basic weighted number of shares
adjusted as of the first of the year for any potentially dilutive debt or
equity.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America 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 revenue and expenses during
the reporting period. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with maturity of three
months or less when purchased to be cash equivalents.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying value of the Company's financial instruments, consisting of
accounts payable and accrued liabilities approximate their fair value due to the
16
EASY CD YEARBOOK, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
May 31, 2009
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES (CONTINUED)
short-term maturity of such instruments. Unless otherwise noted, it is
management's opinion that the Company is not exposed to significant interest,
currency or credit risks arising from these financial statements.
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 carry forwards. 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 of all of the deferred
tax assets will be realized. Deferred tax assets and liabilities are adjusted
for the effects of changes in tax laws and rates on the date of enactment.
SOFTWARE DEVELOPMENT COSTS
Software development costs representing capitalized costs of design,
configuration, coding, installation and testing of the Company's website up to
its initial implementation. Upon implementation, the asset will be amortized to
expense over its estimated useful life of three years using the straight-line
method. Ongoing website post-implementation costs of operation, including
training and application maintenance, will be charged to expense as incurred.
See Note 5.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In April 2009, the FASB issued FSP No. FAS 157-4, "Determining Fair Value When
the Volume and Level of Activity for the Asset or Liability Have Significantly
Decreased and Identifying Transactions That Are Not Orderly" ("FSP FAS 157-4").
FSP FAS 157-4 provides guidance on estimating fair value when market activity
has decreased and on identifying transactions that are not orderly.
Additionally, entities are required to disclose in interim and annual periods
the inputs and valuation techniques used to measure fair value. This FSP is
effective for interim and annual periods ending after June 15, 2009. The Company
does not expect the adoption of FSP FAS 157-4 will have a material impact on its
financial condition or results of operation.
In December 2008, the FASB issued FSP No. FAS 140-4 and FIN 46(R)-8,
"Disclosures by Public Entities (Enterprises) about Transfers of Financial
Assets and Interests in Variable Interest Entities." This disclosure-only FSP
improves the transparency of transfers of financial assets and an enterprise's
involvement with variable interest entities, including qualifying
special-purpose entities. This FSP is effective for the first reporting period
(interim or annual) ending after December 15, 2008, with earlier application
encouraged. The Company adopted this FSP effective January 1, 2009. The adoption
of the FSP had no impact on the Company's results of operations, financial
condition or cash flows.
In December 2008, the FASB issued FSP No. FAS 132(R)-1, "Employers' Disclosures
about Postretirement Benefit Plan Assets" ("FSP FAS 132(R)-1"). FSP FAS 132(R)-1
requires additional fair value disclosures about employers' pension and
postretirement benefit plan assets consistent with guidance contained in SFAS
157. Specifically, employers will be required to disclose information about how
investment allocation decisions are made, the fair value of each major category
of plan assets and information about the inputs and valuation techniques used to
develop the fair value measurements of plan assets. This FSP is effective for
fiscal years ending after December 15, 2009. The Company does not expect the
adoption of FSP FAS 132(R)-1 will have a material impact on its financial
condition or results of operation.
17
EASY CD YEARBOOK, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
May 31, 2009
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES (CONTINUED)
In October 2008, the FASB issued FSP No. FAS 157-3, "Determining the Fair Value
of a Financial Asset When the Market for That Asset is Not Active," ("FSP FAS
157-3"), which clarifies application of SFAS 157 in a market that is not active.
FSP FAS 157-3 was effective upon issuance, including prior periods for which
financial statements have not been issued. The adoption of FSP FAS 157-3 had no
impact on the Company's results of operations, financial condition or cash
flows.
In September 2008, the FASB issued exposure drafts that eliminate qualifying
special purpose entities from the guidance of SFAS No. 140, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,"
and FASB Interpretation 46 (revised December 2003), "Consolidation of Variable
Interest Entities - an interpretation of ARB No. 51," as well as other
modifications. While the proposed revised pronouncements have not been finalized
and the proposals are subject to further public comment, the Company anticipates
the changes will not have a significant impact on the Company's financial
statements. The changes would be effective March 1, 2010, on a prospective
basis.
In June 2008, the FASB issued FASB Staff Position EITF 03-6-1, DETERMINING
WHETHER INSTRUMENTS GRANTED IN SHARE-BASED PAYMENT TRANSACTIONS ARE
PARTICIPATING SECURITIES, ("FSP EITF 03-6-1"). FSP EITF 03-6-1 addresses whether
instruments granted in share-based payment transactions are participating
securities prior to vesting, and therefore need to be included in the
computation of earnings per share under the two-class method as described in
FASB Statement of Financial Accounting Standards No. 128, "Earnings per Share."
FSP EITF 03-6-1 is effective for financial statements issued for fiscal years
beginning on or after December 15, 2008 and earlier adoption is prohibited. We
are not required to adopt FSP EITF 03-6-1; neither do we believe that FSP EITF
03-6-1 would have material effect on our consolidated financial position and
results of operations if adopted.
In May 2008, the Financial Accounting Standards Board ("FASB") issued SFAS No.
163, "Accounting for Financial Guarantee Insurance Contracts-and interpretation
of FASB Statement No. 60". SFAS No. 163 clarifies how Statement 60 applies to
financial guarantee insurance contracts, including the recognition and
measurement of premium revenue and claims liabilities. This statement also
requires expanded disclosures about financial guarantee insurance contracts.
SFAS No. 163 is effective for fiscal years beginning on or after December 15,
2008, and interim periods within those years. SFAS No. 163 has no effect on the
Company's financial position, statements of operations, or cash flows at this
time.
In May 2008, the Financial Accounting Standards Board ("FASB") issued SFAS No.
162, "The Hierarchy of Generally Accepted Accounting Principles". SFAS No. 162
sets forth the level of authority to a given accounting pronouncement or
document by category. Where there might be conflicting guidance between two
categories, the more authoritative category will prevail. SFAS No. 162 will
become effective 60 days after the SEC approves the PCAOB's amendments to AU
Section 411 of the AICPA Professional Standards. SFAS No. 162 has no effect on
the Company's financial position, statements of operations, or cash flows at
this time.
In March 2008, the Financial Accounting Standards Board, or FASB, issued SFAS
No. 161, Disclosures about Derivative Instruments and Hedging Activities--an
amendment of FASB Statement No. 133. This standard requires companies 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. This Statement is effective for
financial statements issued for fiscal years and interim periods beginning after
November 15, 2008, with early application encouraged. The Company has not yet
adopted the provisions of SFAS No. 161, but does not expect it to have a
material impact on its consolidated financial position, results of operations or
cash flows.
In December 2007, the SEC issued Staff Accounting Bulletin (SAB) No. 110
regarding the use of a "simplified" method, as discussed in SAB No. 107 (SAB
107), in developing an estimate of expected term of "plain vanilla" share
18
EASY CD YEARBOOK, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
May 31, 2009
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES (CONTINUED)
options in accordance with SFAS No. 123 (R), Share-Based Payment. In particular,
the staff indicated in SAB 107 that it will accept a company's election to use
the simplified method, regardless of whether the company has sufficient
information to make more refined estimates of expected term. At the time SAB 107
was issued, the staff believed that more detailed external information about
employee exercise behaviour (e.g., employee exercise patterns by industry and/or
other categories of companies) would, over time, become readily available to
companies. Therefore, the staff stated in SAB 107 that it would not expect a
company to use the simplified method for share option grants after December 31,
2007. The staff understands that such detailed information about employee
exercise behaviour may not be widely available by December 31, 2007.
Accordingly, the staff will continue to accept, under certain circumstances, the
use of the simplified method beyond December 31, 2007. The Company currently
uses the simplified method for "plain vanilla" share options and warrants, and
will assess the impact of SAB 110 for fiscal year 2009. It is not believed that
this will have an impact on the Company's consolidated financial position,
results of operations or cash flows.
In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements--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. It clarifies that a noncontrolling interest in a subsidiary is an
ownership interest in the consolidated entity that should be reported as equity
in the consolidated financial statements. Before this statement was issued,
limited guidance existed for reporting noncontrolling interests. As a result,
considerable diversity in practice existed. So-called minority interests were
reported in the consolidated statement of financial position as liabilities or
in the mezzanine section between liabilities and equity. This statement improves
comparability by eliminating that diversity. This statement is effective for
fiscal years, and interim periods within those fiscal years, beginning on or
after December 15, 2008 (that is, January 1, 2009, for entities with calendar
year-ends). Earlier adoption is prohibited. The effective date of this statement
is the same as that of the related Statement 141 (revised 2007). The Company
will adopt this Statement beginning March 1, 2009. It is not believed that this
will have an impact on the Company's consolidated financial position, results of
operations or cash flows.
In December 2007, the FASB, issued FAS No. 141 (revised 2007), Business
Combinations'. This Statement replaces FASB Statement No. 141, Business
Combinations, but retains the fundamental requirements in Statement 141. This
Statement establishes principles and requirements for how the acquirer: (a)
recognizes and measures in its financial statements the identifiable assets
acquired, the liabilities assumed, and any noncontrolling interest in the
acquiree; (b) recognizes and measures the goodwill acquired in the business
combination or a gain from a bargain purchase; and (c) determines what
information to disclose to enable users of the financial statements to evaluate
the nature and financial effects of the business combination. This statement
applies prospectively to business combinations for which the acquisition date is
on or after the beginning of the first annual reporting period beginning on or
after December 15, 2008. An entity may not apply it before that date. The
effective date of this statement is the same as that of the related FASB
Statement No. 160, Noncontrolling Interests in Consolidated Financial
Statements. The Company will adopt this statement beginning March 1, 2009. It is
not believed that this will have an impact on the Company's consolidated
financial position, results of operations or cash flows.
In February 2007, the FASB, issued SFAS No. 159, The Fair Value Option for
Financial Assets and Liabilities--Including an Amendment of FASB Statement No.
115. This standard permits an entity to choose to measure many financial
instruments and certain other items at fair value. This option is available to
all entities. Most of the provisions in FAS 159 are elective; however, an
amendment to FAS 115 Accounting for Certain Investments in Debt and Equity
Securities applies to all entities with available for sale or trading
securities. Some requirements apply differently to entities that do not report
net income. SFAS No. 159 is effective as of the beginning of an entity's first
fiscal year that begins after November 15, 2007. Early adoption is permitted as
of the beginning of the previous fiscal year provided that the entity makes that
choice in the first 120 days of that fiscal year and also elects to apply the
provisions of SFAS No. 157 Fair Value Measurements. The Company will adopt SFAS
No. 159 beginning March 1, 2008 and is currently evaluating the potential impact
the adoption of this pronouncement will have on its consolidated financial
statements.
19
EASY CD YEARBOOK, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
May 31, 2009
NOTE 3. INCOME TAXES
The Company uses the liability method , where deferred tax assets and
liabilities are determined based on the expected future tax consequences of
temporary differences between the carrying amounts of assets and liabilities for
financial and income tax reporting purposes. As of May 31, 2009, the Company
incurred net losses and, therefore, has no tax liability. The net deferred tax
asset generated by the loss carry-forward has been fully reserved. The
cumulative net operating loss carry-forward is $50,138 and will expire 20 years
from the date the loss was incurred.
As at May 31, 2009, deferred tax assets consisted of the following:
Net operating losses $ 7,521
Less: valuation allowance (7,521)
-------
Net deferred tax asset $ --
=======
NOTE 4. STOCKHOLDER'S EQUITY
AUTHORIZED
The Company is authorized to issue 100,000,000 shares of $0.0001 par value
common stock and 50,000,000 shares of preferred stock, par value $0.0001. All
common stock shares have equal voting rights, are non-assessable and have one
vote per share. Voting rights are not cumulative and, therefore, the holders of
more than 50% of the common stock could, if they choose to do so, elect all of
the directors of the Company.
ISSUED AND OUTSTANDING
For transactions with other than employee's stock, issuances are in accordance
with paragraph 8 of SFAS 123, where issuances shall be accounted for based on
the fair value of the consideration received. Transactions with employee's stock
issuance are in accordance with paragraphs (16-44) of SFAS 123, where issuances
shall be accounted for based on the fair value of the consideration received or
the fair value of the equity instruments issued, whichever is the more reliable
measure.
On June 27, 2006, the Company issued 5,500,000 common shares to its Directors
for cash, valued at $ 0.001 per share or $5,500.
Since inception (June 27, 2006) to the year ended May 31, 2008, the Company
accepted subscriptions for 1,886,400 common shares from 37 investors under a
private placement scheduled to close on March 31, 2008. The private placement
was not subject to any minimum investment and was priced at $0.025 per share.
The Company accepted the subscriptions on various dates throughout the year.
On May 22, 2009, we issued and sold 249,300 restricted shares of our common
stock for a gross purchase price of US $9,972, or a purchase price of $0.04 per
share.
NOTE 5. RELATED PARTY TRANSACTIONS
The officers and directors of 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 interests. The Company has not formulated a policy for the resolution
of such conflicts.
20
EASY CD YEARBOOK, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
May 31, 2009
NOTE 5. RELATED PARTY TRANSACTIONS (CONTINUED)
On May 14, 2009, we have entered into an agreement with third party firm to
develop the site framework that will be implemented in our website. Total cost
for the web development is $5,500 of which we paid in full. On July 7, 2009 the
third party contractor finished developing our website and it is now ready for
commercial use and available at ww.easycdyearbook.com.
NOTE 6. GOING CONCERN
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company has net losses for the
period from inception (June 27, 2006) to May 31, 2009 of 50,138. 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 financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
Management is planning to raise additional funds through debt or equity
offerings. There is no guarantee that the Company will be successful in these
efforts.
NOTE 7. OPERATING LEASES AND OTHER COMMITMENTS
The Company currently has no operating lease commitments or any other
commitments.
NOTE 8. ADVERTISING COSTS
The Company's policy regarding advertising is to expense advertising when
incurred. The Company had not incurred any advertising expense as of May 31,
2009
NOTE 9. WEBSITE
2008
Accumulated
Cost Amortization Net Book Value
---- ------------ --------------
Website $1,276 $ 35 $1,241
2009
Accumulated
Cost Amortization Net Book Value
---- ------------ --------------
Website $4,526 $ 599 $3,927
Video Production $4,500 $1,126 $3,374
------ ------ ------
$9,026 $1,725 $7,301
====== ====== ======
NOTE 10. CONCENTRATIONS OF RISKS
CASH BALANCES
The Company maintains its cash in institutions insured by the Federal Deposit
Insurance Corporation (FDIC). This government corporation insured balances up to
$100,000 through October 13, 2008. As of October 14, 2008 all non-interest
bearing transaction deposit accounts at an FDIC-insured institution, including
all personal and business checking deposit accounts that do not earn interest,
are fully insured for the entire amount in the deposit account. This unlimited
insurance coverage is temporary and will remain in effect for participating
institutions until December 31, 2009.
All other deposit accounts at FDIC-insured institutions are insured up to at
least $250,000 per depositor until December 31, 2009. On January 1, 2010, FDIC
deposit insurance for all deposit accounts, except for certain retirement
accounts, will return to at least $100,000 per depositor. Insurance coverage for
certain retirement accounts, which include all IRA deposit accounts, will remain
at $250,000 per depositor.
21
EASY CD YEARBOOK, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
May 31, 2009
NOTE 11. PROPERTY
The Company does not own or rent any property. We currently maintain our
corporate office at 5348 Vegas Dr., Suite 112, Las Vegas, NV 89108 USA. This
location is a virtual office that we maintain for $75 per month pursuant to a
lease with INC Management, a company affiliated with EastBiz.com, Inc., which
provides us with a mailing address for communications, a contact phone number as
well as secretarial and administrative services should we need it. We may
terminate the lease arrangement upon 30-days' written notice to INC Management.
Our executive officers, Mr. Mawji and Mr. Kaba, do not work from this location,
but operate from their respective residences in Canada and Tanzania at no charge
to us.
22
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Moore & Associates, Chartered are our principal independent accountants. There
have not been any changes in or disagreements with accountants on accounting and
financial disclosure or any other matter.
ITEM 9A(T). CONTROLS AND PROCEDURES.
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
As required by Rule 13a-15/15d-15 under the Securities and Exchange Act of 1934,
as amended (the "Exchange Act"), as of May 31, 2009, we have carried out an
evaluation of the effectiveness of the design and operation of our Company's
disclosure controls and procedures. This evaluation was carried out under the
supervision and with the participation of our Company's management, our
President (Principal Executive Officer) and Treasurer (Principal Accounting
Officer). Based upon the results of that evaluation, our management has
concluded that, as of May 31, 2009, our Company's disclosure controls and
procedures were not effective and provide reasonable assurance that material
information related to our Company required to be disclosed in the reports that
we file or submit under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the SEC's rules and forms, and
that such information is accumulated and communicated to management to allow
timely decisions on required disclosure.
There were no changes in our internal control over financial reporting
identified in connection with the evaluation described above during the period
covered by this report that has materially affected or is reasonably likely to
materially affect our internal controls over financial reporting.
MANAGEMENT'S REPORT ON INTERNAL CONTROLS OVER FINANCIAL REPORTING
Management is responsible for establishing and maintaining adequate internal
control over our financial reporting. Our system of internal control over
financial reporting is designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with the U.S. GAAP.
Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
INHERENT LIMITATIONS OF INTERNAL CONTROLS
Our internal control over financial reporting is designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with the U.S. GAAP.
Our internal control over financial reporting includes those policies and
procedures that:
* pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of our
assets;
* provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance
with the U.S. GAAP, and that our receipts and expenditures are being
made only in accordance with authorizations of our management and
directors; and
* provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use, or disposition of our assets that
could have a material effect on the financial statements.
Management does not expect that our internal controls will prevent or detect all
errors and all fraud. A control system, no matter how well designed and
operated, can provide only reasonable, not absolute, assurance that the
objectives of the control system are met. Further, the design of a control
system must reflect the fact that there are resource constraints, and the
benefits of controls must be considered relative to their costs. Because of the
inherent limitations in all control systems, no evaluation of internal controls
can provide absolute assurance that all control issues and instances of fraud,
if any, have been detected. Also, any evaluation of the effectiveness of
controls in future periods are subject to the risk that those internal controls
may become inadequate because of changes in business conditions, or that the
degree of compliance with the policies or procedures may deteriorate.
ITEM 9B. OTHER INFORMATION.
None.
23
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE.
DIRECTORS AND EXECUTIVE OFFICERS
Set forth below is the name, age and present principal occupation or employment,
and material occupations, positions, offices or employments for the past five
years of our current directors and executive officers:
Name Age Position
---- --- --------
Almaymoon Mawji 32 President, Treasurer, and Director
Zahirali Kaba 43 Secretary and Director
The business address of our sole officer and director is c/o INC Management,
5348 Vegas Dr., Las Vegas, NV 89108.
BUSINESS EXPERIENCE:
The following is a brief account of the education and business experience of our
directors and executive officers during at least the past five years, indicating
his business experience, principal occupation during the period, and the name
and principal business of the organization by which they where employed.
MR. ALMAYMOON MAWJI
Mr. Mawji is our President, Treasurer and a Director. He has served in these
capacities since we were incorporated on June 27, 2006. From mid 1999 until
February 2008, Mr. Mawji was the vice president of sales and enrolment for the
Sunridge Child Learning Center in Calgary, Alberta, Canada. Since February 2006,
Mr. Mawji has served as a director of 1221668 Alberta Ltd., which owns the
rights to sell services of TakeOnVoip Communications, Inc., a broadband Internet
phone company, in Calgary. He holds a BSc in Biological Sciences from the
University of Calgary with a minor in business management.
MR. ZAHIRALI KABA
Mr. Kaba is our Secretary and a Director, and has served in these capacities
since we were incorporated on June 27, 2006. Mr. Kaba resides in Tanzania. From
March 2000 to the present, Mr. Kaba has served as a partner of Amazon Trading
Co. Ltd., a mining company of gemstones and other precious stones located in Dar
es Salaam region, Tanzania. From February 2004 to April 2006 he served as
director of Nterfreight Ltd., a cargo clearing and forwarding company.
BOARD COMPOSITION
Our Bylaws provide that the Board of Directors shall consist of one or more
members, but not more than nine, and that our shareholders shall determine the
number of directors at each regular meeting. Each director serves for a term
that expires at the next regular meeting of the shareholders or until his
successor is elected and qualified.
COMMITTEES OF THE BOARD OF DIRECTORS
We do not presently have a separately constituted audit committee, compensation
committee, nominating committee, executive committee or any other committees of
our Board of Directors. Nor do we have an audit committee "financial expert." As
such, our entire Board of Directors acts as our audit committee and handles
matters related to compensation and nominations of directors.
POTENTIAL CONFLICTS OF INTEREST
Since we do not have an audit or compensation committee comprised of independent
directors, the functions that would have been performed by such committees are
performed by our directors. Thus, there is a potential conflict of interest in
that our directors and officers have the authority to determine issues
concerning management compensation and audit issues that may affect management
decisions. We are not aware of any other conflicts of interest with any of our
executives or directors.
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DIRECTOR INDEPENDENCE
We are not subject to listing requirements of any national securities exchange
or national securities association and, as a result, we are not at this time
required to have our board comprised of a majority of "independent directors."
Our determination of independence of directors is made using the definition of
"independent director" contained in Rule 4200(a)(15) of the Marketplace Rules of
the NASDAQ Stock Market ("NASDAQ") , even though such definitions do not
currently apply to us because we are not listed on NASDAQ. We have determined
that none of our directors currently meet the definition of "independent" as
within the meaning of such rules as a result of their current positions as our
executive officers.
SIGNIFICANT EMPLOYEES
We have no significant employees other than the executive officers described
above.
FAMILY RELATIONSHIPS
There are no familial relationships among any of our officers and directors.
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
No director, person nominated to become a director, executive officer, promoter
or control person of our company has, during the last five years: (i) been
convicted in or is currently subject to a pending a criminal proceeding
(excluding traffic violations and other minor offenses); (ii) been a party to a
civil proceeding of a judicial or administrative body of competent jurisdiction
and as a result of such proceeding was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting or mandating
activities subject to any federal or state securities or banking or commodities
laws including, without limitation, in any way limiting involvement in any
business activity, or finding any violation with respect to such law, nor (iii)
any bankruptcy petition been filed by or against the business of which such
person was an executive officer or a general partner, whether at the time of the
bankruptcy or for the two years prior thereto.
STOCKHOLDER COMMUNICATIONS WITH THE BOARD
We have not implemented a formal policy or procedure by which our stockholders
can communicate directly with our Board of Directors. Nevertheless, every effort
has been made to ensure that the views of stockholders are heard by the Board of
Directors or individual directors, as applicable, and that appropriate responses
are provided to stockholders in a timely manner. We believe that we are
responsive to stockholder communications, and therefore have not considered it
necessary to adopt a formal process for stockholder communications with our
Board. During the upcoming year, our Board will continue to monitor whether it
would be appropriate to adopt such a process.
EXECUTIVE COMPENSATION
We have not paid since our inception, nor do we owe, any compensation to our
executive officers, Mr. Almaymoon Mawji and Mr. Zahirali Kaba. There are no
arrangements pursuant to which our executive officers will be compensated in the
future for any services provided as executive officers. We have no employment
agreements with either of our executive officers. We do not intend to compensate
our executive officers for the foreseeable future. We may compensate them after
that time if we have the financial resources to do so.
OUTSTANDING EQUITY AWARDS AT 2009 FISCAL YEAR-END
We do not currently have a stock option plan nor any long-term incentive plans
that provide compensation intended to serve as incentive for performance. No
individual grants of stock options or other equity incentive awards have been
made to any executive officer or any director since our inception; accordingly,
none were outstanding at May 31, 2009.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT, CHANGE-IN-CONTROL ARRANGEMENTS
There are currently no employment or other contracts or arrangements with our
executive officers. There are no compensation plans or arrangements, including
payments to be made by us, with respect to our officers, directors or
consultants that would result from the resignation, retirement or any other
termination of such directors, officers or consultants from us. There are no
arrangements for directors, officers, employees or consultants that would result
from a change-in-control.
ITEM 11. EXECUTIVE COMPENSATION
We have not compensated our directors for their service on our Board of
Directors since our inception. There are no arrangements pursuant to which
directors will be compensated in the future for any services provided as a
Director.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Other than the transactions discussed below, we have not entered into any
transaction nor are there any proposed transactions in which any of our
directors, executive officers, stockholders or any member of the immediate
family of any of the foregoing had or is to have a direct or indirect material
interest.
On June 27, 2006, pursuant to the terms of a subscription agreement, we sold
2,500,000 shares of our common stock to Mr. Almaymoon Mawji, our President,
Treasurer and Director, for cash payment to us of $0.001 per share, or $2,500 in
the aggregate.
On June 27, 2006 pursuant to the terms of a subscription agreement, we sold
3,000,000 shares of our common stock to Mr. Zahirali Kaba, our Secretary and
Director, for cash payment to us of $0.001 per share, or $3,000 in the
aggregate.
Our officers and directors may be considered promoters of the Company due to
their participation in and management of the business since its incorporation.
OUTSTANDING EQUITY AWARDS
As of May 31, 2009 no executive officer or director, or any former executive
officer or director held unexercised options, stock that had not vested, or
equity incentive plan awards.
GRANTS OF STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
No stock options or stock appreciation rights were granted to any executive
officer, or any former executive officer and none hold unexercised options,
stock that had not vested, or equity incentive plan awards.
OPTIONS/SAR EXERCISE
None of our directors, executive officers, or former directors or executive
officers were issued any stock options or stock appreciation rights during the
during the period from June 27, 2006 (inception) until May 31, 2009, and none of
them holds unexercised stock options held as of such date.
LONG TERM INCENTIVE PLAN AWARDS
We have no long-term incentive plans.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS
We have not entered into any employment agreement or consulting agreements with
our directors and executive officers. There are no arrangements or plans in
which we provide pension, retirement or similar benefits for directors or
executive officers. Our directors and executive officers may receive stock
options at the discretion of our board of directors in the future. We do not
have any material bonus or profit sharing plans pursuant to which cash or
non-cash compensation is or may be paid to our directors or executive officers,
except that stock options may be granted at the discretion of our board of
directors.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS.
The following table sets forth information regarding the beneficial ownership of
our common stock as of May 31, 2009 for:
* each person, or group of affiliated persons, known by us to
beneficially own more than 5% of our common stock;
* each of our executive officers;
* each of our directors; and
* all of our executive officers and directors as a group.
We have determined beneficial ownership in accordance with the rules of the
Securities and Exchange Commission. These rules generally attribute beneficial
ownership of securities to persons who possess sole or shared voting power or
investment power with respect to those securities. The person is also deemed to
be a beneficial owner of any security of which that person has a right to
acquire beneficial ownership within 60 days. Unless otherwise indicated, the
persons or entities identified in this table have sole voting and investment
power with respect to all shares shown as beneficially owned by them, subject to
applicable community property laws, and the address for each person listed in
the table is c/o Easy Cd Yearbook Inc., 5348 Vegas Dr., Suite 112, Las Vegas, NV
89108 USA.
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The percentage ownership information shown in the table below is calculated
based on 7,635,700 shares of our common stock issued and outstanding as of May
31, 2009 We do not have any outstanding options, warrants or other securities
exercisable for or convertible into shares of our common stock.
Name of Amount and Nature of Percentage
Title of Class Beneficial Owner Beneficial Ownership of Class
- -------------- ---------------- -------------------- --------
Common Stock Almaymoon Mawji 2,500,000 32.74%
President,
Treasurer and
Director
Common Stock Zahirali Kaba 3,000,000 39.28%
Secretary and
Director
All directors and officers as a Group 5,500,000 72%
We are unaware of any contract or other arrangement the operation of which may
at a subsequent date result in a change in control of our Company.
We do not have any issued and outstanding securities that are convertible into
common stock. Other than the shares covered by the registration statement of
which this prospectus is a part, we have not registered any shares for sale by
security holders under the Securities Act. None of our stockholders are entitled
to registration rights.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities Act of
1933, as amended, may be permitted to our directors, officers or persons
controlling us, we have been advised that it is the Securities and Exchange
Commission's opinion that such indemnification is against public policy as
expressed in such act and is, therefore, unenforceable.
CHANGES IN CONTROL
There are no present arrangements or pledges of the Company's securities, known
to management, which may result in a change in control of the Company.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE.
Other than the transactions discussed below, we have not entered into any
transaction nor are there any proposed transactions in which any of our
directors, executive officers, stockholders or any member of the immediate
family of any of the foregoing had or is to have a direct or indirect material
interest.
On June 27, 2006, pursuant to the terms of a subscription agreement, we sold
2,500,000 shares of our common stock to Mr. Almaymoon Mawji, our President,
Treasurer and Director, for cash payment to us of $0.001 per share, or $2,500 in
the aggregate.
On June 27, 2006 pursuant to the terms of a subscription agreement, we sold
3,000,000 shares of our common stock to Mr. Zahirali Kaba, our Secretary and
Director, for cash payment to us of $0.001 per share, or $3,000 in the
aggregate.
Our officers and directors may be considered promoters of the Company due to
their participation in and management of the business since its incorporation.
DIRECTOR INDEPENDENCE
We are not subject to listing requirements of any national securities exchange
or national securities association and, as a result, we are not at this time
required to have our board comprised of a majority of "independent directors."
Nevertheless, we believe that Almyamoon Mawji and Zahirali Kaba currently meet
the definition of "independent" as promulgated by the rules and regulations of
the American Stock Exchange.
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ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
AUDIT FEES
The following is a summary of the fees billed to us by Moore & Associates for
professional services rendered for the past two fiscal years:
Fee Category Fiscal 2009 Fees Fiscal 2008 Fees
------------ ---------------- ----------------
Audit Fees $3,750 $3,750
Audit-Related Fees
Tax Fees $ 0 $ 0
All Other Fees
Audit Fees consist of fees billed for professional services rendered for the
audit of our financial statements and review of the interim financial statements
included in quarterly reports and services that are normally provided by Moore &
Associates in connection with statutory and regulatory filings or engagements.
POLICY ON PRE-APPROVAL OF AUDIT AND PERMISSIBLE NON-AUDIT SERVICES OF
INDEPENDENT AUDITORS
We do not have an Audit Committee. Nevertheless, the Company's policy is to
pre-approve all audit and permissible non-audit services provided by the
independent auditors. These services may include audit services, audit-related
services, tax services, and other services. Pre-approval is generally provided
for up to one year, and any pre-approval is detailed as to the particular
service or category of services and is generally subject to a specific budget.
The independent auditors and management are required to periodically report to
the Audit Committee regarding the extent of services provided by the independent
auditors in accordance with this pre-approval and the fees for the services
performed to date. The Audit Committee may also pre-approve particular services
on a case-by-case basis.
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PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
Exhibit No. Exhibit Description
- ----------- -------------------
3.1 Certificate of Incorporation of the Company (annexed as Exhibit
3.1 to our Registration Statement on Form SB-2, filed with the
Securities and Exchange Commission on August 6, 2007).
3.2 Bylaws of Company (annexed as Exhibit 3.2 to our Registration
Statement on Form SB-2, filed with the Securities and Exchange
Commission on August 6, 2007).
31.1 Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.
31.1 Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.
32.1 Section 1350 Certification of Chief Executive and Financial Officer.
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SIGNATURES
In accordance with the Exchange Act, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
EASY CD YEARBOOK, INC.
Date: July 28, 2009 By /s/ Almaymoon Mawji
--------------------------------------
Almaymoon Mawji,
President, Treasurer and Director
(Principal Executive and Principal
Financial and Accounting Officer)
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