UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For quarterly period ended June 30, 2009
or
[ ] 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 000-53640
SEAOSPA, INC.
(Exact name of registrant as specified in its charter)
Nevada 26-1548693
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3 Ha'hishtadrut St. Suite #6, Kiryat Yam, Israel 29056
(Address of principal executive offices) (Zip Code)
Telephone: +1 (877) 841-5343
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address, and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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 checkmark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company. See
definition of "large accelerated filer," "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]
(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 [X ] No [ ]
There were 4,869,918 shares of common stock $0.0001 par value per share,
outstanding on August 11, 2009.
TABLE OF CONTENTS
Page
----
PART I. Financial Information:
Item 1. Financial Statements 3
Balance Sheets
Statement of Operations
Statement of Stockholder's Equity
Statement of Cash Flows
Notes to Financial Statements June 30, 2009
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 12
Item 3. Quantitative and Qualitative Disclosures About Market Risk 14
Item 4/4T. Controls and Procedures 14
PART II. Other Information:
Item 1. Legal Proceedings 15
Item 1A. Risk Factors 15
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 15
Item 3. Defaults Upon Senior Securities 15
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 5. Other Information 15
Item 6. Exhibits 15
Signatures 16
2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SEAOSPA INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
June 30, 2009
June 30, December 31,
2009 2008
-------- --------
(Unaudited) (Audited)
ASSETS
Current Assets
Cash in bank $ 39,241 $ 49,228
-------- --------
Total current assets 39,241 49,228
-------- --------
Total Assets $ 39,241 $ 49,228
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 160 $ --
-------- --------
Total current liabilities 160 --
-------- --------
Stockholders' Equity
Preferred Stock, par value $0.0001 per share,
50,000,000 shares authorized, none outstanding
Common Stock, par value $0.0001 per share,
100,000,000 shares authorized, 4,869,918 shares
issued and outstanding 487 487
Additional paid-in capital 56,511 56,511
(Deficit) accumulated during the development stage (17,917) (7,770)
-------- --------
Total stockholders' equity 39,081 49,228
-------- --------
Total Liabilities and Stockholders' Equity $ 39,241 $ 49,228
======== ========
The Accompanying Notes Are an Integral Part of these Financial Statements
3
SEAOSPA, INC.
(A DEVELOPMENT STAEGE COMPANY)
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended November 2, 2007
June 30, June 30, (Inception) To
------------------------- ------------------------- June 30,
2009 2008 2009 2008 2009
---------- ---------- ---------- ---------- ----------
Sales $ -- $ -- $ -- $ -- $ 2,476
Cost of Goods Sold -- -- -- -- 1775
---------- ---------- ---------- ---------- ----------
Gross Profit -- -- -- -- 701
Operating Expenses
Legal fees 1,000 808 3,500 1,587 10,629
Filing Fees 1,070 -- 1,704 -- 1,994
General and Administrative 211 49 443 62 595
Organization Cost -- -- -- -- 900
Accounting Cost 2,500 -- 4,500 -- 4,500
---------- ---------- ---------- ---------- ----------
Total Operating Expenses 4,781 857 10,147 1,649 18,618
---------- ---------- ---------- ---------- ----------
Loss before income taxes $ (4,781) $ (857) $ (10,147) $ (1,649) $ (17,917)
---------- ---------- ---------- ---------- ----------
Provision for Income Taxes -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Net (Loss) $ (4,781) $ (857) $ (10,147 $ (1,649) $ (17,917)
========== ========== ========== ========== ==========
Basic and Diluted
(Loss) per Common Shares a a a a
---------- ---------- ---------- ----------
Weighted Average Number
of Common shares 4,869,918 3,000,000 4,869,918 3,000,000
---------- ---------- ---------- ----------
- ----------
a = Less than ($0.01) per share
The Accompanying Notes Are an Integral Part of these Financial Statements
4
SEAOSPA, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY
(Unaudited)
Common Stock
--------------------- Paid in Accumulated Total
Shares Amount Capital Deficit Equity
------ ------ ------- ------- ------
# $ $ $ $
Inception November 2, 2007
Common stock issued to Directors 3,000,000 300 600 900
for cash November 2, 2007
@ $0.0003 per share
Net loss for the year (900) (900)
---------- ------ ------- -------- --------
Balance, December 31, 2007 3,000,000 300 600 (900) --
Private placement closed on 1,869,918 187 55,911 56,098
November 20, 2008 @ 0.03 per share
Net loss for the year (6,870) (6,870)
---------- ------ ------- -------- --------
Balance, December 31, 2008 4,869,918 487 56,511 (7,770) 49,228
Net loss for the period (10,147) (10,147)
---------- ------ ------- -------- --------
BALANCE, JUNE 30, 2009 4,869,918 487 56,511 (17,917) 39,081
========== ====== ======= ======== ========
The Accompanying Notes Are an Integral Part of these Financial Statements
5
SEAOSPA, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
(Unaudited)
Six Months Ended November 2, 2007
June 30, (Inception) To
-------------------- June 30,
2009 2008 2009
-------- -------- --------
OPERATING ACTIVITIES
Net (Loss) $(10,147) $ (1,649) $(17,917)
Adjustments to Reconcile Net Loss to
Net Cash Used by Operating Activities -- -- --
Accounts payable and accrued liabilities 160 -- 160
-------- -------- --------
Net Cash (Used) by Operating Activities (9,987) (1,649) (17,757)
-------- -------- --------
FINANCING ACTIVITIES
Proceeds from issuance of common stock -- 11,063 56,998
-------- -------- --------
Cash Provided by Financing Activities -- 11,063 56,998
-------- -------- --------
Net Increase (Decrease) in Cash (9,987) 9,414 39,241
Cash, Beginning of Period 49,228 -- --
-------- -------- --------
Cash, End of Period $ 39,241 $ 9,414 $ 39,241
======== ======== ========
The Accompanying Notes Are an Integral Part of these Financial Statements
6
SEAOSPA, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2009
NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS
The Company was incorporated under the laws of the state of Nevada on November
2, 2007. 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.
The business plan of the Company is to purchase and distribute Dead Sea skin and
hair care products from Israel. At this stage, the only operations are the
development of our website and business plan.
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
UNAUDITED INTERIM FINANCIAL STATEMENTS
The interim financial statements of the Company as of June 30, 2009, and for the
periods ended, and cumulative from inception, are unaudited. However, in the
opinion of management, the interim financial statements include all adjustments,
consisting of only normal recurring adjustments, necessary to present fairly the
Company's financial position as of June 30, 2009, and the results of its
operations and its cash flows for the periods ended June 30, 2009, and
cumulative from inception. These results are not necessarily indicative of the
results expected for the calendar year ending December 31, 2009. The
accompanying financial statements and notes thereto do not reflect all
disclosures required under accounting principles generally accepted in the
United States. Refer to the Company's audited financial statements as of
December 31, 2008, filed with the SEC, for additional information, including
significant accounting policies.
BASIS OF ACCOUNTING
The Company's financial statements are prepared using the accrual method of
accounting. The Company has elected a December 31 fiscal year end.
EARNINGS PER SHARE
In February 1997, the FASB issued SFAS No. 128, "Earnings Per Share" ("SFAS No.
128"), 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 November 2, 2007
(inception).
Basic earnings (loss) per share amounts are computed by dividing the net income
(loss) by the weighted average number of common shares outstanding. Diluted
earnings (loss) per share are the same as basic earnings (loss) per share due to
the lack of dilutive items in the Company.
CASH EQUIVALENTS
The Company considers all highly liquid investments with maturity of three
months or less when purchased to be cash equivalents.
ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying value of the Company's financial instruments, consisting of
accounts payable and accrued liabilities, approximates their fair value due to
the 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.
7
REVENUE RECOGNITION
The Company recognizes revenues when delivery of goods or completion of services
has occurred provided there is persuasive evidence of an agreement, acceptance
has been approved by its customers, the fee is fixed or determinable based on
the completion of stated terms and conditions, and collection of any related
receivable is probable.
COST OF SALES
Cost of sales consists of merchandise and shipping costs,
INCOME TAXES
Income taxes are provided in accordance with Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" ("SFAS 109"). 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 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.
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.
SOFTWARE DEVELOPMENT COSTS
Software development costs represent 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.
RECENT 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 that the adoption of FSP FAS 157-4 will have a material impact
on its financial condition or results of operation.
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 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.
8
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.
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 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. SFAS No. 161 has no effect
on the Company's financial position, statements of operations, or cash flows at
this time.
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
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 behavior (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 behavior 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. It is not believed that this will
have an impact on the Company's financial position, results of operations or
cash flows.
9
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). It is not
believed that this will have an impact on the Company's 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. It is not believed that this will have an impact on the Company's
financial position, results of operations or cash flows.
NOTE 3. ADVERTISING
The Company's policy regarding advertising is to expense advertising when
incurred. The Company had not incurred any advertising expense as of June 30,
2009.
NOTE 4. 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 November 2, 2007 (inception) to June 30, 2009 of $17,917. 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 can be no assurance that debt or equity financing will be
available to the Company on acceptable terms or at all, and there is no
guarantee that the Company will be successful in these efforts.
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.
As described in Note 8, on November 2, 2007, the Company issued 3,000,000 common
shares to its directors for cash, valued at $0.0003 per share or $900.
NOTE 6. 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. During fiscal 2008, 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 $17,917 at June 30, 2009, and will expire in the
year 2028.
10
As at June 30, 2009, deferred tax assets consisted of the following:
Net operating losses $ 4,120
Less: valuation allowance (4,120)
-------
Net deferred tax asset $ --
=======
NOTE 7. NET OPERATING LOSSES
As of June 30, 2009, the Company has a net operating loss carry-forward of
approximately $17,917, which will expire 20 years from the date the loss was
incurred.
NOTE 8. STOCKHOLDERS' 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 other than those involving 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 November 2, 2007, the Company issued 3,000,000 common shares to its directors
for cash, valued at $0.0003 per share or $900.
From inception (November 2, 2007) until the year ended December 31, 2008, the
Company accepted subscriptions for 1,869,918 shares of common stock from 40
investors pursuant to a series of private placement transactions which closed on
November 20, 2008. The private placements were not subject to any minimum
investment, and were priced at $0.03 per share, for aggregate gross proceeds of
approximately $56,098. The Company accepted the subscriptions on November 20,
2008.
The Company has commenced an activity to submit a Registration Statement on Form
S-1 to the Securities and Exchange Commission ("SEC") to register 1,869,918 of
its outstanding shares of common stock on behalf of selling stockholders. The
Company will not receive any of the proceeds of this registration activity once
the shares of common stock are sold. The Registration Statement was declared
effective April 20, 2009.
NOTE 9. CONCENTRATION OF CREDIT RISK
The Company's cash and cash equivalents are invested in a major bank in Israel
and are not insured. Management believes that the financial institution that
holds the Company's investments are financially sound and accordingly, minimal
credit risk exists with respect to these investments.
NOTE 10. COMMITMENTS
On January 22, 2009, the Company entered into a Transfer Agent Agreement with
Island Capital Management, LLC dba Island Stock Transfer for services. Under the
Agreement, the Company agreed to pay to Island Stock Transfer fees amounting to
$10,000 for a 12 months Premier Services Plan.
11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FORWARD LOOKING STATEMENTS
This quarterly report on Form 10-Q contains certain forward-looking statements.
Forward-looking statements may include our statements regarding our goals,
beliefs, strategies, objectives, plans, including product and service
developments, future financial conditions, results or projections or current
expectations. In some cases, you can identify forward-looking statements by
terminology such as "may," "will," "should," "expect," "plan," "anticipate,"
"believe," "estimate," "predict," "potential" or "continue," the negative of
such terms, or other comparable terminology. Such forward-looking statements
appear in this Item 2 - "Management's Discussion and Analysis of Financial
Condition and Results of Operations," and include statements regarding our
expectations regarding our short - and long-term capital requirements and our
business plan and estimated expenses for the coming 12 months. These statements
are subject to known and unknown risks, uncertainties, assumptions and other
factors that may cause actual results to be materially different from those
contemplated by the forward-looking statements. The business and operations of
SeaOspa, Inc. are subject to substantial risks, which increase the uncertainty
inherent in the forward-looking statements contained in this report. We
undertake no obligation to release publicly the result of any revision to these
forward-looking statements that may be made to reflect events or circumstances
after the date hereof or to reflect the occurrence of unanticipated events.
Further information on potential factors that could affect our business is
described under the heading "Risks Related To Our Business" in "Risk Factors" in
our registration statement on Form S-1 (File no. 333-157175), which was declared
effective on April 20, 2009. Readers are also urged to carefully review and
consider the various disclosures we have made in this report.
OVERVIEW
We are an early stage company with limited operations and no, or minimal,
revenues from our business operations. We were incorporated under the laws of
the state of Nevada on November 2, 2007. We are engaged in the marketing of skin
care, hair care and body treatment products. Currently we are focusing on
marketing of Dead Sea products from Israel. The Company operates its own retail
online store where we sell our products direct to consumers at www.seaospa.com.
We intend to open and operate an eBay store in addition to our own online store
within the next twelve months. Our target market is adults of 18 years of age
and up.
We have two executive officers who also serve as our directors. Mr. Terner, our
President, Treasurer and a Director, resides in Israel. He has fourteen years of
experience marketing and distributing Dead Sea products from Israel in Romania.
Mr. Yossi Benitah, our Secretary and a Director, resides in Israel. He has
thirty years of experience as an entrepreneur operating an electrical services
company in Israel. Neither of our officers lives in Nevada, the state of our
incorporation, or the United States.
From November 2, 2007 (inception) to December 31, 2008, we have incurred
accumulated net losses of $17,917. Our auditors have issued a going concern
opinion. This means that our auditors believe there is substantial doubt as to
whether we can continue as an ongoing business for the next twelve months.
On March 25, 2008, we entered into a service agreement with Yahoo!(R) and we
launched our ecommerce online store. Yahoo!(R) provides us with the ecommerce
online store, web hosting and our business mail at a cost of $39.95 a month. Our
service agreement with Yahoo!(R) can be terminated at any time and is on a month
to month basis.
PLAN OF OPERATIONS
Our officers and directors, are responsible for all planning, developing and
operational duties, and will continue to do so throughout the early stages of
our growth. We have no intention of hiring employees until the business has been
successfully launched and we have sufficient, reliable revenue from operations.
Our officers and directors are planning to do whatever work is required until
our business to the point of having positive cash flow.
Our main objectives:
* Continue to promote our online retail store. This process is expected
to be an ongoing process.
* Set up an eBay Store:
- Building and customizing the store
- Managing sales
- Promoting the store.
- Tracking store traffic and sales
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In order to attract more traffic to our online store we are in the process of
setting up an additional online store on eBay, we hope to gain more exposure to
our Dead Sea products. This process is expected to be finish on September 2009.
We expect to be in a position to generate revenue by October 2009 in order to
fund all expenditures under our 12 month budget.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2009 COMPARED TO THE THREE MONTHS ENDED JUNE 30,
2008 AND SIX MONTHS ENDED JUNE 30, 2009 COMPARED TO THE SIX MONTHS ENDED JUNE
30, 2008 AND CUMULATIVE FROM INCEPTION (NOVEMBER 2, 2007) TO JUNE 30, 2009
During the three months ended June 30, 2009, we incurred operating expenses of
$4,781, an increase of $3,924 from the period three months ended June 30, 2008.
Operating expenses increased during the period ended June 30, 2009 from the
comparative period due to an overall increase in our activity and increased
expenses as a result of being a reporting company. Significant elements include:
* Legal fees of $1,000, which is an increase from $808 during the three
months ended June 30, 2008. The fees are associated with the S1
Registration Statement.
* Accounting cost of $2,500, which is an increase from $0 during the
three months ended June 30, 2008. The cost is associated with review
of financial statements for the period ended June 30, 2009.
* Filing fees of $1,070, which is an increase from $0 during the three
month ended June 30, 2008. The fees are associated with Edgarizing and
filing the reports with the SEC.
During the six months ended June 30, 2009, we incurred operating expenses of
$10,147, an increase of $8,498 from the period six months ended June 30, 2008.
Significant elements include:
* Legal fees of $3,500, which is an increase from $1,587 during the six
months ended June 30, 2008. The fees are associated with the S1
Registration Statement.
* Accounting costs of $4,500, which is an increase from $0 during the
six months ended June 30, 2008. The cost is associated with audit and
review of financial statements.
* Filing fees of $1,704, which is an increase from $0 during the six
months ended June 30, 2008. The fees are associated with Edgarizing
and filing the reports with the SEC.
NET LOSS
We incurred a net loss of $4,781 for the three months ended June 30, 2009,
compared to a net loss of $857 for the three months ended June 30, 2008, $10,147
for the six months ended June 30, 2009, compared to a net loss of $1,649 for the
six months ended June 30, 2008. During the period from November 2, 2007 (date of
inception) through June 30, 2009, we incurred a net loss of $17,917. This loss
consisted primarily of professional fees and administrative expenses.
Since inception, we have sold 4,869,918 shares of common stock.
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 to continue for the foreseeable future. We anticipate that we will
have negative cash flows from operations in the next twelve month period.
As of June 30, 2009, we had cash of $39,241, representing a net decrease in cash
of $9,987 since December 31, 2008.
Cash generated by financing activities during the six months ended June 30, 2009
amounted to $0. Cash used in operating activities amounted to $9,987, mainly
resulting from a net loss of $10,147 and adjusted by accounts payable of $160.
Cash generated by financing activities during the six months ended June 30, 2008
amounted to $11,063 and related to proceeds from issuance of common stock. Cash
used in operating activities during the six months ended June 30, 2008 amounted
to $1,649, resulting from a net loss of $1,649.
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How long SeaOspa will be able to satisfy its cash requirements depends on how
quickly our company can generate revenue and how much revenue can be generated.
We estimate that our current cash balances will be extinguished prior to the end
of October 2009, provided we do not have any unanticipated expenses. Although
there can be no assurance at present, we plan to be in a position to generate
revenues prior to the end of the year. We must generate at least $16,439 in
revenues in order to fund all expenditures under our 12-months budget.
If we fail to generate sufficient revenues, we will need to raise additional
funds for the future development of our business, or to respond to unanticipated
requirements or expenses. We do not currently have any arrangements for
financing and we can provide no assurance to investors we will be able to find
such financing. There can be no assurance that additional financing will be
available to us, or on terms that are acceptable. Consequently, we may not be
able to proceed with our intended business plans or complete the development and
commercialization of our product.
There are also no plans or expectations to purchase or sell any significant
equipment in the first year of operations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 4T. CONTROLS AND PROCEDURES
As required by Rule 13a-15 under the Securities Exchange Act of 1934, as
amended, (the "1934 Act") as of the end of the period covered by this quarterly
report, being the fiscal quarter ended June 30, 2009, we have carried out an
evaluation of the effectiveness of the design and operation of our disclosure
controls and procedures.
This evaluation was carried out under the supervision and with the participation
of our management, including our Chief Executive Officer and Chief Financial
Officer. Based upon the results of that evaluation, our Chief Executive Officer
and Chief Financial Officer have concluded that, as of the end of the period
covered by this quarterly report, our disclosure controls and procedures were
ineffective, as they did not provide reasonable assurance that material
information related to our company is recorded, processed and reported in a
timely manner.
The small size of our company makes the proper identification and authorization
of transactions difficult, as the company has essentially only two individuals
overseeing this process. Given our company's small size, we also have
difficulties with separation of duties for handling, approving and coding
invoices, entering transactions into the accounts, writing checks and requests
for wire transfers. Additionally, the Company's officers are also its sole board
members. This does not provide an adequate level of layers of internal controls,
which in turn make it difficult to accumulate information required to be
disclosed by our company in the reports that it files or submits under the 1934
Act. Based on the foregoing, our Chief Executive Officer and Chief Financial
Officer concluded that our disclosure controls and procedures were ineffective
as of June 30, 2009.
There was no change to our internal control over financial reporting that
occurred during the quarter ended June 30, 2009 that has materially affected, or
is reasonably likely to materially affect the Company's internal control over
financial reporting.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 1A. RISK FACTORS
Not applicable.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS
Pursuant to Item 601 of Regulation S-K, the following exhibits are included
herein.
Exhibit Description
- ------- -----------
31.1 Certification of Principal Executive Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.
31.2 Certification of Principal Financial Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.
32.1 Certification of Principal Executive Officer Pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
32.2 Certification of Principal Financial Officer Pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SEAOSPA, INC.
(the Registrant)
Date: August 11, 2009 By: /s/ Yakov Terner
----------------------------------------
Name: Yakov Terner
Title: President, Treasurer and Director
Date: August 11, 2009 By: /s/ Yossi Benitah
----------------------------------------
Name: Yossi Benitah
Title: Secretary and Director
16