UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended June 30, 2009
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _________________ to __________________
Commission file number: 000-52278
SHADOW MARKETING INC.
(Exact name of registrant as specified in its charter)
Nevada 26-1281852
(State or other jurisdiction of I.R.S. Employer Identification No.)
incorporation or organization)
17365 S.W. 13th Street
Pembroke Pines, Florida, 33029
(Address of principal executive offices)
Registrant's telephone number, including area code: (954) 562-3017
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
- ------------------- -----------------------------------------
None None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock
(Title of Class)
Indicated 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) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the past 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-B (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.
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 [ ]
State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was sold, or the average bid and asked price of such common equity, as of the
last business day of the registrant's most recently completed second fiscal
quarter
$1,584,700 based on the last sale price of our common stock
State the number of shares outstanding of each of the registrant's classes of
common equity, as of the latest practicable date.
7,445,000 shares of common stock as at September 9, 2009
TABLE OF CONTENTS
Page
----
ITEM 1: BUSINESS .......................................................... 3
ITEM 1A: RISK FACTORS ...................................................... 3
ITEM 2: PROPERTIES ........................................................ 5
ITEM 3: LEGAL PROCEEDINGS ................................................. 5
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ............... 5
ITEM 5: MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS .......... 5
ITEM 6: SELECTED FINANCIAL DATA ........................................... 5
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION ......... 5
ITEM 7A: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK ........ 6
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA ....................... 7
ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES ............................................. 16
ITEM 9A: CONTROLS AND PROCEDURES ........................................... 16
ITEM 9B: OTHER INFORMATION ................................................. 17
ITEM 9: DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE ............ 17
ITEM 11: EXECUTIVE COMPENSATION ............................................ 18
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS ................................... 19
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE ...................................................... 19
ITEM 14: PRINCIPAL ACCOUNTANT FEES AND SERVICES ............................ 19
ITEM 15: EXHIBITS AND REPORTS ............................................. 20
2
PART I
ITEM 1: BUSINESS
We were incorporated pursuant to the laws of Nevada on September 19, 2003. We
commenced business operations in 2005 when we published the first issue of Up &
Over Magazine. Up & Over Magazine contained articles focusing on the purchase,
training and care of sports horses. It included training tips, riding
techniques, health concerns and horses for sale.
While we intended to publish three or four issues of Up & Over Magazine each
year, we were unable to publish any additional issues due to our inability to
raise additional funds to cover design, printing and publication costs.
Following publication of the first issue of our magazine, all administrative
costs and expenses incurred in connection with complying with our obligations as
a reporting issuer were covered by one of our directors.
Due to our difficulties in raising additional funds to cover our planned
operations in the publishing industry, we are currently reviewing other
potential asset acquisitions in various sectors. Currently, we are in the
process of completing a due diligence investigation of an opportunity in the
technology sector. However, there is no guarantee that we will be able to reach
any agreement to acquire such assets or any others.
EMPLOYEES
We currently have no employees.
RESEARCH AND DEVELOPMENT EXPENDITURES
We have not incurred any research or development expenditures since our
incorporation.
SUBSIDIARIES
We do not have any subsidiaries.
PATENTS AND TRADEMARKS
We do not own, either legally or beneficially, any patents or trademarks.
ITEM 1A: RISK FACTORS
An investment in our common stock involves a high degree of risk. You should
carefully consider the risks described below and the other information in this
annual report before investing in our common stock. These constitute all of the
material risks relating to our offering. If any of the following risks occur,
our business, operating results and financial condition could be seriously
harmed. The trading price of our common stock could decline due to any of these
risks, and you may lose all or part of your investment.
BECAUSE WE DO NOT HAVE ANY BUSINESS OPERATIONS, WE FACE A HIGH RISK OF BUSINESS
FAILURE
We were incorporated on September 19, 2003 and did not commence active business
operations until 2005 when we published our first and only issue of Up & Over
Magazine. We were unsuccessful in this initial business plan and are now seeking
to acquire an interest in alternative assets. We may not be able to identify and
acquire any interest in suitable business assets.
There is no history upon which to base any assumption as to the likelihood that
we will prove successful, and we can provide investors with no assurance that we
will generate any operating revenues or ever achieve profitable operations. If
we are unsuccessful in addressing these risks, our business will fail.
3
BECAUSE OUR CONTINUATION AS A GOING CONCERN IS IN DOUBT, WE WILL BE FORCED TO
CEASE BUSINESS OPERATIONS UNLESS WE CAN GENERATE PROFITABLE OPERATIONS IN THE
FUTURE.
We have incurred losses since our inception resulting in an accumulated deficit
of $80,387 at June 30, 2009. Further losses are anticipated in the acquisition
and development of a business. As a result, there is substantial doubt about our
ability to continue as a going concern. Our ability to continue as a going
concern is dependent upon our ability to generate profitable operations in the
future and/or to obtain the necessary financing to meet our obligations and
repay our liabilities arising from normal business operations when they come
due. If we cannot raise financing to meet our obligations, we will be insolvent
and will cease business operations.
OUR BUSINESS WILL FAIL UNLESS WE ARE ABLE TO RAISE ADDITIONAL FUNDS FOR AN ASSET
ACQUISITION AND FOR OPERATIONS.
Our current operating funds are less than necessary to complete any acquisition
of a business interest and fund its future development. As of June 30, 2009, we
had cash in the amount of $122. We currently do not have any operations and we
have no income. We will require additional funds to review, acquire and develop
business assets. We do not currently have any arrangements for financing and we
can provide no assurance to investors that we will be able to find such
financing if required.
UNLESS A PUBLIC MARKET DEVELOPS FOR OUR COMMON STOCK, OUR SHAREHOLDERS MAY NOT
BE ABLE TO SELL THEIR SHARES.
Although our shares of common stock are quoted for trading on the OTC Bulletin
Board, there is no established market for our common stock and we cannot assure
you that an active trading market will develop and be sustained. Without a
public market, it may be difficult for an investor to find a buyer for our
common stock.
BECAUSE OUR DIRECTORS AND OFFICERS OWN 53.73% OF OUR OUTSTANDING COMMON STOCK,
THEY COULD MAKE AND CONTROL CORPORATE DECISIONS THAT MAY BE DISADVANTAGEOUS TO
OTHER SHAREHOLDERS.
Greg Fedun and Christopher Paterson, our directors and officers, collectively
own 53.73% of the outstanding shares of our common stock. Accordingly, they will
have a significant influence in determining the outcome of all corporate
transactions or other matters, including mergers, consolidations, and the sale
of all or substantially all of our assets. They will also have the power to
prevent or cause a change in control. The interests of our directors may differ
from the interests of the other stockholders and thus result in corporate
decisions that are disadvantageous to other shareholders.
OUR COMMON SHARES ARE CONSIDERED PENNY STOCK, WHICH LIMITS AN INVESTOR'S ABILITY
TO SELL THE STOCK.
Our shares of common stock constitute penny stock under the Securities and
Exchange Act. The shares will remain penny stock for the foreseeable future. The
classification of penny stock makes it more difficult for a broker-dealer to
sell the stock into a secondary market, which makes it more difficult for a
purchaser to liquidate his or her investment. Any broker-dealer engaged by the
purchaser for the purpose of selling his or her shares in our company will be
subject to rules 15g-1 through 15g-10 of the Securities and Exchange Act. Rather
than creating a need to comply with those rules, some broker-dealers will refuse
to attempt to sell penny stock.
FORWARD-LOOKING STATEMENTS
This annual report contains forward-looking statements that involve risks and
uncertainties. We use words such as anticipate, believe, plan, expect, future,
4
intend and similar expressions to identify such forward-looking statements. You
should not place too much reliance on these forward-looking statements. Our
actual results are most likely to differ materially from those anticipated in
these forward-looking statements for many reasons, including the risks faced by
us described in the "Risk Factors" section and elsewhere in this annual report.
ITEM 2: PROPERTIES
We do not own an interest in any real property. Our secretary and treasurer,
Christopher Paterson, provides office space to us at 17365 S.W. 13th Street,
Pembroke Pines, Florida, 33029.
ITEM 3: LEGAL PROCEEDINGS
There are no legal proceedings pending or threatened against us. Our address for
service of process in Nevada is 1802 N Carson Street, Suite 212, Carson City,
Nevada, 89701.
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted during the fourth quarter of our fiscal year to a vote
of security holders, through the solicitation of proxies or otherwise.
PART II
ITEM 5: MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
MARKET INFORMATION
Our shares of common stock are quoted for trading on the OTC Bulletin Board
under the symbol SDWM. However, no trades of our shares of common stock occurred
through the facilities of the OTC Bulletin Board during the fiscal year ended
June 30, 2009.
We have 17 shareholders of record as at the date of this annual report.
DIVIDENDS
There are no restrictions in our articles of incorporation or bylaws that
prevent us from declaring dividends. The Nevada Revised Statutes, however, do
prohibit us from declaring dividends where, after giving effect to the
distribution of the dividend:
1. we would not be able to pay our debts as they become due in the usual
course of business; or
2. our total assets would be less than the sum of our total liabilities
plus the amount that would be needed to satisfy the rights of
shareholders who have preferential rights superior to those receiving
the distribution.
We have not declared any dividends, and we do not plan to declare any dividends
in the foreseeable future.
ITEM 6: SELECTED FINANCIAL DATA
Not applicable.
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
OVERVIEW AND CASH REQUIREMENTS
Our plan of operation for the twelve months following the date of this annual
report is to continue to review potential asset acquisitions in various sectors.
Currently, we are in the process of completing a due diligence investigation of
5
an opportunity in the technology sector. However, there is no guarantee that we
will be able to reach any agreement to acquire such assets or any others.
As well, in the next 12 months we anticipate spending an additional $15,000 on
administrative fees, including fees we will incur in complying with reporting
obligations.
SOURCES AND USES OF CASH
At June 30, 2009, our current assets consisted of $12 in cash. Accordingly, we
will have to raise additional funds in the next twelve months in order to cover
our anticipated administrative costs and any costs we incur in conducting due
diligence reviews of potential asset acquisitions. We currently do not have a
specific plan of how we will obtain such funding; however, we anticipate that
additional funding will be in the form of equity financing from the sale of our
common stock. We have and will continue to seek to obtain short-term loans from
our directors, although no future arrangements for additional loans have been
made. We do not have any agreements with our directors concerning these loans.
We do not have any arrangements in place for any future equity financing.
RESULTS OF OPERATIONS
We did not earn any revenues from operations in the fiscal year ended June 30,
2009. We incurred operating expenses in the amount of $13,856 during the fiscal
year. These operating expenses were comprised entirely of general and
administrative costs.
We have not attained profitable operations and are dependent upon obtaining
financing to pursue exploration activities. For these reasons, there is
substantial doubt that we will be able to continue as a going concern.
ITEM 7A: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
6
ITEM 8: FINANCIAL STATEMENTS
REPORT OF REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Shadow Marketing Inc.
I have audited the accompanying balance sheets of Shadow Marketing Inc. (the
Company), a development stage company, as of June 30, 2009 and 2008, and the
related statements of operations, stockholders' equity (deficiency), and cash
flows for the years ended June 30, 2009 and 2008 and for the period September
19, 2003 (date of inception) to June 30, 2009. These financial statements are
the responsibility of the Company's management. My responsibility is to express
an opinion on these financial statements based on my audit.
I conducted my audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that I plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. I believe that my audits provide a reasonable
basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Shadow Marketing Inc., a
development stage company, as of June 30, 2009 and 2008, and the results of its
operations and its cash flows for the years ended June 30, 2009 and 2008 and for
the period September 19, 2003 (date of inception) to June 30, 2009 in conformity
with accounting principles generally accepted in the United States.
The accompanying financial statements referred to above have been prepared
assuming that the Company will continue as a going concern. As discussed in Note
2 to the financial statements, the Company's present financial situation raises
substantial doubt about its ability to continue as a going concern. Management's
plans in regard to this matter are also described in Note 2. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
/s/ Michael T. Studer CPA P.C.
---------------------------------
Michael T. Studer CPA P.C.
Freeport, New York
September 9, 2009
7
Shadow Marketing Inc.
(A Development Stage Company)
Balance Sheets
(Expressed in US Dollars)
- --------------------------------------------------------------------------------
June 30, June 30,
2009 2008
-------- --------
ASSETS
CURRENT ASSETS
Cash $ 122 $ 558
-------- --------
TOTAL ASSETS $ 122 $ 558
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 13,150 $ 13,230
Due to related party 42,859 29,359
-------- --------
TOTAL CURRENT LIABILITIES 56,009 42,589
-------- --------
STOCKHOLDERS' EQUITY (DEFICIENCY)
Common stock, $0.001 par value
Authorized: 200,000,000 shares -- --
Issued and outstanding:
7,445,000 and 7,445,000 shares, respectively 7,445 7,445
Additional paid-in capital 17,055 17,055
Deficit accumulated during the development stage (80,387) (66,531)
-------- --------
TOTAL STOCKHOLDERS' EQUITY (DEFICIENCY) (55,887) (42,031)
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY) $ 122 $ 558
======== ========
See notes to financial statements.
8
Shadow Marketing Inc.
(A Development Stage Company)
Statements of Operations
(Expressed in US Dollars)
- --------------------------------------------------------------------------------
Cumulative
during the
development stage
Year ended June 30, (September 19, 2003 to
------------------------------- June 30,
2009 2008 2009)
---------- ---------- ----------
REVENUE
Advertising revenue $ -- $ -- $ 576
---------- ---------- ----------
Total Revenue -- -- 576
========== ========== ==========
EXPENSES
Magazine publication costs -- -- 16,755
General and administrative 13,856 20,795 64,208
---------- ---------- ----------
Total Costs and Expenses 13,856 20,795 80,963
---------- ---------- ----------
NET INCOME (LOSS) $ (13,856) $ (20,795) $ (80,387)
========== ========== ==========
NET INCOME (LOSS) PER SHARE
Basic and diluted $ (0.00) $ (0.00)
========== ==========
NUMBER OF COMMON SHARES USED TO
COMPUTE NET INCOME (LOSS) PER SHARE
Basic and Diluted 7,445,000 7,445,000
========== ==========
See notes to financial statements.
9
Shadow Marketing Inc.
(A Development Stage Company)
Statements of Stockholders' Equity (Deficiency)
For the period September 19, 2003 (inception) to June 30, 2009
(Expressed in US Dollars)
- --------------------------------------------------------------------------------
Deficit
Common Stock, Accumulated Total
$0.001 Par Value Additional During the Stockholders'
---------------------- Paid-in Development Equity
Shares Amount Capital Stage (Deficiency)
------ ------ ------- ----- ------------
Net loss for the Period
September 19, 2003 to
June 30, 2004 -- $ -- $ -- $ (12) $ (12)
--------- --------- --------- --------- ---------
Balance, June 30, 2004 -- -- -- (12) (12)
Shares sold at $0.001 per share
in December 2004 6,000,000 6,000 -- -- 6,000
Shares sold at $0.01 per share
in March 2005 1,400,000 1,400 12,600 -- 14,000
Shares sold at $0.10 per share
in April 2005 45,000 45 4,455 -- 4,500
Net loss for the year
ended June 30, 2005 -- -- -- (16,967) (16,967)
--------- --------- --------- --------- ---------
Balance, June 30, 2005 7,445,000 7,445 17,055 (16,979) 7,521
Net loss for the year
ended June 30, 2006 -- -- -- (20,385) (20,385)
--------- --------- --------- --------- ---------
Balance, June 30, 2006 7,445,000 7,445 17,055 (37,364) (12,864)
Net loss for the year
ended June 30, 2007 -- -- -- (8,372) (8,372)
--------- --------- --------- --------- ---------
Balance, June 30, 2007 7,445,000 7,445 17,055 (45,736) (21,236)
Net loss for the year
ended June 30, 2008 -- -- -- (20,795) (20,795)
--------- --------- --------- --------- ---------
Balance, June 30, 2008 7,445,000 7,445 17,055 (66,531) (42,031)
Net loss for the year
ended June 30, 2009 -- -- -- (13,856) (13,856)
--------- --------- --------- --------- ---------
Balance, June 30, 2009 7,445,000 $ 7,445 $ 17,055 $ (80,387) $ (55,887)
========= ========= ========= ========= =========
See notes to financial statements.
10
SHADOW MARKETING INC.
(A Development Stage Company)
Statements of Cash Flows
(Expressed in US Dollars)
- --------------------------------------------------------------------------------
Cumulative
during the
development stage
Year ended June 30, (September 19, 2003 to
--------------------------- June 30,
2009 2008 2009)
-------- -------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $(13,856) $(20,795) $(80,387)
Changes in operating assets and liabilities
Accounts payable and accrued liabilities (80) 4,580 13,150
-------- -------- --------
NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES (13,936) (16,215) (67,237)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Loans from related party 13,500 16,334 42,859
Proceeds from sales of common stock -- -- 24,500
-------- -------- --------
NET CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES 13,500 16,334 67,359
-------- -------- --------
INCREASE (DECREASE) IN CASH (436) 119 122
CASH, BEGINNING OF PERIOD 558 439 --
-------- -------- --------
CASH, END OF PERIOD $ 122 $ 558 $ 122
======== ======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid $ -- $ -- $ --
-------- -------- --------
Income taxes paid $ -- $ -- $ --
-------- -------- --------
See notes to financial statements.
11
SHADOW MARKETING INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 2009
- --------------------------------------------------------------------------------
1. ORGANIZATION AND BUSINESS OPERATIONS
Shadow Marketing, Inc. (the "Company") was incorporated in the State of Nevada
on September 19, 2003. The Company is a Development Stage Company as defined by
Statement of Financial Accounting Standards ("SFAS") No. 7. During the year
ended June 30, 2005, the Company started to publish "Up & Over", a magazine
planned to contain articles focusing on the purchase, training, and care of
sports horses. In the year ended June 30, 2006, the first issue was published
and distributed to outlets without charge. Although the Company plans to publish
three to four issues per year, it has not published and distributed a second
issue due to a lack of working capital.
On March 6, 2007, in connection with a then potential acquisition, the Company
changed its name to D2Fusion Corp. and increased its authorized common stock,
$0.001 par value, from 75,000,000 shares to 200,000,000 shares. Shortly
thereafter, the Company decided not to pursue this acquisition. On September 11,
2007, the name was changed back to Shadow Marketing Inc.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A) BASIS OF PRESENTATION
These financial statements have been prepared on a "going concern" basis, which
contemplates the realization of assets and liquidation of liabilities in the
normal course of business. However, as of June 30, 2009, the Company had cash of
$122 and a stockholders' deficiency of $55,887. Further, since inception, the
Company has had revenues of $576 and has incurred a net loss of $80,387. These
factors raise substantial doubt as to the Company's ability to continue as a
going concern. The Company plans to improve its financial condition by obtaining
new financing. However, there is no assurance that the Company will be
successful in accomplishing this objective. The financial statements do not
include any adjustments that might be necessary should the Company be unable to
continue as a going concern.
B) CASH AND CASH EQUIVALENTS
The Company considers all highly liquid instruments with a maturity of three
months or less at the time of issuance to be cash equivalents.
C) REVENUE RECOGNITION
Advertising revenue is recognized over the period which the related magazine
issue(s) are expected to be distributed. Magazine publication costs are expensed
as incurred.
D) USE OF ESTIMATES AND ASSUMPTIONS
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
12
SHADOW MARKETING INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 2009
- --------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
E) FOREIGN CURRENCY TRANSLATION
The Company's functional currency and its reporting currency is the United
States dollar.
F) FINANCIAL INSTRUMENTS
The carrying value of the Company's financial instruments, consisting of cash,
accounts payable and accrued liabilities, and due to related party, approximates
their fair value because of the short maturity of these instruments.
G) STOCK-BASED COMPENSATION
Stock-based compensation is accounted for at fair value in accordance with SFAS
Nos. 123 and 123 (R). To date, the company has not adopted a stock option plan
and has not granted any stock options.
H) INCOME TAXES
Income taxes are accounted for under the assets and liability method. Deferred
tax assets and liabilities are recognized for the estimated future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates in effect for the year in which
those temporary differences are expected to be recovered or settled.
I) BASIC AND DILUTED NET LOSS PER SHARE
The Company computes net loss per share in accordance with SFAS No. 128,
"Earnings per Share". SFAS No. 128 requires presentation of both basic and
diluted earnings per share (EPS) on the face of the income statement. Basic EPS
is computed by dividing net loss available to common shareholders (numerator) by
the weighted average number of shares outstanding (denominator) during the
period. Diluted EPS gives effect to all potentially dilutive common shares
outstanding during the period using the treasury stock method for options and
warrants and the if-converted method for convertible debt and convertible
preferred stock. In computing diluted EPS, the average stock price for the
period is used in determining the number of shares assumed to be purchased from
the exercise of stock options or warrants. Diluted EPS excludes all potentially
dilutive shares if their effect is anti dilutive.
3. DUE TO RELATED PARTY
The due to related party is due a Company officer and director, does not bear
interest, and is due on demand.
4. STOCKHOLDER'S EQUITY
At June 30, 2009, the Company had no stock option plan, warrants or other
dilutive securities outstanding.
13
SHADOW MARKETING INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 2009
- --------------------------------------------------------------------------------
5. INCOME TAXES
The provision for (benefit from) income taxes differs from the amount computed
by applying the statutory United States federal income tax rate of 35% to income
(loss) before income taxes. The sources of the difference follow:
Period from
September 19, 2003
(Date of
Year Ended Year Ended Inception) to
June 30, June 30, June 30,
2009 2008 2009
-------- -------- --------
Expected tax at 35% $ (4,850) $ (7,278) $(28,135)
Increase in valuation
allowance 4,850 7,278 28,135
-------- -------- --------
Income tax provision $ -- $ -- $ --
======== ======== ========
Significant components of the Company's deferred income tax assets are as
follows:
June 30, June 30,
2009 2008
-------- --------
Net operating loss carryforwords $ 28,135 $ 23,286
Valuation allowance (28,135) (23,286)
-------- --------
Net deferred tax assets $ -- $ --
======== ========
Based on management's present assessment, the Company has not yet determined it
to be more likely than not that a deferred tax asset of $28,135 at June 30, 2009
attributable to the future utilization of the net operating loss carryforwards
of $80,387 will be realized. Accordingly, the Company has provided a 100%
allowance against the deferred tax asset in the financial statements. The
Company will continue to review this valuation allowance and make adjustments as
appropriate. The $80,387 net operating loss carryforward expires $12 in year
2024, $16,967 in year 2025, $20,385 in year 2026, $8,372 in year 2027, $20,795
in year 2028, and $13,856 in year 2029.
Current United States income tax laws limit the amount of loss available to
offset against future taxable income when a substantial change in ownership
occurs. Therefore, the amount available to offset future taxable income may be
limited.
6. COMMITMENTS AND CONTINGENCIES
Rental agreement - The Company has been using office space provided by an
officer and director at no cost to the Company.
14
SHADOW MARKETING INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 2009
- --------------------------------------------------------------------------------
6. COMMITMENTS AND CONTINGENCIES (CONTINUED)
Conflicts of interest - 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,
they 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.
7. SUBSEQUENT EVENTS
The Company has evaluated subsequent events through the filing date of this Form
10-K and has determined that there were no subsequent events to recognize or
disclose in these financial statements.
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ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 9A: CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS
We evaluated the effectiveness of our disclosure controls and procedures as of
the end of the 2009 fiscal year. This evaluation was conducted with the
participation of our chief executive officer and our principal accounting
officer.
Disclosure controls are controls and other procedures that are designed to
ensure that information that we are required to be disclosed in the reports we
file pursuant to the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported.
LIMITATIONS ON THE EFFECTIVE OF CONTROLS
Our management does not expect that our disclosure controls or our internal
controls over financial reporting will prevent all error and fraud. A control
system, no matter how well conceived and operated, can provide only reasonable,
but no absolute, assurance that the objectives of a control system are met.
Further, any control system reflects limitations on resources, and the benefits
of a control system must be considered relative to its costs. These limitations
also include the realities that judgments in decision-making can be faulty and
that breakdowns can occur because of simple error or mistake.
Additionally, controls can be circumvented by the individual acts of some
persons, by collusion of two or more people or by management override of a
control. A design of a control system is also based upon certain assumptions
about potential future conditions; over time, controls may become inadequate
because of changes in conditions, or the degree of compliance with the policies
or procedures may deteriorate. Because of the inherent limitations in a
cost-effective control system, misstatements due to error or fraud may occur and
may not be detected.
ASSESSMENT OF EFFECTIVENESS OF CONTROLS
As of our fiscal year ended June 30, 2009, our management has concluded that our
internal control over financial reporting is effective. Our management is not
aware of any material weakness in our internal control over financial reporting.
LIMITATIONS OF REPORT
This annual report does not include an attestation report of our registered
public accounting firm regarding internal control over financial reporting.
Management's report was not subject to attestation by our registered public
accounting firm pursuant to temporary rules of the Securities and Exchange
Commission that permit us to provide only management's report in this annual
report.
CONCLUSIONS
Based on his evaluation of our controls, our chief executive officer and chief
accounting officer has concluded that, subject to the limitations noted above,
the disclosure controls are effective providing reasonable assurance that
material information relating to us is made known to management on a timely
basis during the period when our reports are being prepared. There were no
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changes in our internal controls that occurred during the period covered by this
report that have been materially affected, or are reasonably likely to affect
our internal controls.
ITEM 9B: OTHER INFORMATION
Not applicable.
PART III
ITEM 10: DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Our executive officers and directors and their respective ages as of the date of
this annual report are as follows:
DIRECTORS:
Name of Director Age
- ---------------- ---
Greg Fedun 41
Christopher Paterson 43
EXECUTIVE OFFICERS:
Name of Officer Age Office
- --------------- --- ------
Greg Fedun 41 President and C.E.O.
Christopher Paterson 43 Secretary and Treasurer
BIOGRAPHICAL INFORMATION
Set forth below is a brief description of the background and business experience
of each of our executive officers and directors for the past five years.
GREG FEDUN has acted as our president and as a director since our inception. He
acted as a director of Iciena Ventures Inc., a British Columbia and Alberta
reporting issuer involved in diamond property exploration from March 2002 to
March 2006. From August 2002 to September 2003, Mr. Fedun acted as a director of
Candorado Operating Company Ltd., a British Columbia and Alberta reporting
issuer involved in mineral property exploration.
Mr. Fedun intends to devote 20% of his business time to our affairs.
CHRISTOPHER PATERSON has acted as our Secretary, Treasurer and Director since
October 28, 2004. After receiving his degree in Marketing in 1987, Mr. Paterson
went on to work for John Tann Ltd. (UK), a security equipment manufacturer,
where he held various positions in sales and marketing until 1994. He then
worked for Honeywell Ltd., where he was responsible for the financial and large
commercial portfolios for the company until 1998. Since then, Mr. Paterson has
provided marketing, consulting services to private and public companies.
Mr. Paterson intends to devote 20% of his business time to our affairs.
TERM OF OFFICE
Our directors are appointed for a one-year term to hold office until the next
annual general meeting of our shareholders or until removed from office in
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accordance with our bylaws. Our officers are appointed by the board of directors
and will hold office until removed by the board.
SIGNIFICANT EMPLOYEES
We have no significant employees other than the officers and directors described
above.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our executive officers and directors,
and persons who beneficially own more than 10% of our equity securities, to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission. Officers, directors and greater than 10% shareholders are required
by SEC regulation to furnish us with copies of all Section 16(a) forms they
file. Based on our review of the copies of such forms we received, we believe
that during the fiscal year ended June 30, 2008 all such filing requirements
applicable to our officers and directors were complied with exception that
reports were filed late by the following persons:
Number Transactions Known Failures
Of late Not Timely To File a
Name and principal position Reports Reported Required Form
- --------------------------- ------- -------- -------------
Greg Fedun 0 0 0
(President CEO and director)
Christopher Paterson 0 0 0
(Secretary, treasurer and director)
ITEM 11: EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The table below summarizes all compensation awarded to, earned by, or
paid to our executive officers by any person for all services rendered in all
capacities to us for the fiscal years ended June 30, 2009, 2008 and 2007:
ANNUAL COMPENSATION
Restricted
Other Stock Options/ LTIP Other
Name Title Year Salary Bonus Comp. Awarded SARs(#) Payouts($) Comp.
- ---- ----- ---- ------ ----- ----- ------- ------- ---------- -----
Greg President 2009 $0 0 0 0 0 0 0
Fedun CEO & 2008 $0 0 0 0 0 0 0
Dir 2007 $0 0 0 0 0 0 0
Chris Sec. 2009 $0 0 0 0 0 0 0
Paterson Tres. & 2008 $0 0 0 0 0 0 0
Dir 2007 $0 0 0 0 0 0 0
STOCK OPTION GRANTS
We have not granted any stock options to the executive officer since our
inception.
CONSULTING AGREEMENTS
We do not have any employment or consulting agreement with Mr. Fedun or Mr.
Paterson. We do not pay them any amount for acting as directors.
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ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The following table provides the names and addresses of each person known to us
to own more than 5% of our outstanding common stock as of the date of this
annual report, and by the officers and directors, individually and as a group.
Except as otherwise indicated, all shares are owned directly.
Amount of
Title of Name and address beneficial Percent
Class of beneficial owner ownership of class
----- ------------------- --------- --------
Common Greg Fedun 2,000,000 26.86%
President and Director
Common Christopher Paterson 2,000,000 26.86%
Stock Director, Secretary
And Treasurer
Common All Officers and Directors 4,000,000 53.72%
Stock as a Group that consists of shares
two people
The percent of class is based on 7,445,000 shares of common stock issued and
outstanding as of the date of this annual report.
There are no arrangements that may result in our change in control of the
company.
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
None of the following parties has, since our date of incorporation, had any
material interest, direct or indirect, in any transaction with us or in any
presently proposed transaction that has or will materially affect us:
* Any of our directors or officers;
* Any person proposed as a nominee for election as a director;
* Any person who beneficially owns, directly or indirectly, shares
carrying more than 10% of the voting rights attached to our
outstanding shares of common stock;
* Either of our promoters, Greg Fedun and Christopher Paterson;
* Any relative or spouse of any of the foregoing persons who has the
same house as such person.
ITEM 14: PRINCIPAL ACCOUNTANT FEES AND SERVICES
Our principal accountant, Michael T. Studer, C.P.A., P.C., rendered invoices to
us during the fiscal periods indicated for the following fees and services:
Fiscal year ended Fiscal year ended
June 30, 2009 June 30, 2008
------------- -------------
Audit fees $10,500 $10,500
Audit-related fees 0 0
Tax fees 0 0
All other fees 0 0
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Audit fees consist of fees related to professional services rendered in
connection with the audit of our annual financial statements and the review of
the financial statements included in each of our quarterly reports on Form 10-Q.
Our policy is to pre-approve all audit and permissible non-audit services
performed by the independent accountants. These services may include audit
services, audit-related services, tax services and other services. Under our
audit committee's policy, pre-approval is generally provided for particular
services or categories of services, including planned services, project based
services and routine consultations. In addition, we may also pre-approve
particular services on a case-by-case basis. We approved all services that our
independent accountants provided to us in the past two fiscal years.
ITEM 15: EXHIBITS, FINANCIAL STATEMENTS SCHEDULES
Exhibits
Exhibit
Number Description
- ------ -----------
3.1* Articles of Incorporation
3.2* Bylaws
31.1 Certification pursuant to Rule 13a-14(a) under the Securities Exchange
Act of 1934
31.2 Certification pursuant to Rule 13a-14(a) under the Securities Exchange
Act of 1934
32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
32.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
- ----------
* filed as an exhibit to our SB-2 dated December 16, 2005
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SIGNATURES
Pursuant to the requirements of Section 13 and 15 (d) 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.
Shadow Marketing, Inc.
By /s/ Greg Fedun
-----------------------------------
Greg Fedun
President, CEO & Director
Date: September 9, 2009
In accordance with the Securities Exchange Act, this report has been signed
below by the following persons on behalf of the registrant and in the capacities
and on the dates indicated.
By /s/ Greg Fedun
-----------------------------------
Greg Fedun
President, CEO & Director
Date: September 9, 2009
By /s/ Christopher Paterson
-----------------------------------
Christopher Paterson
Secretary, Treasurer and Director
Date: September 9, 2009
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