UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) [ ] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended April 30, 2010 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________ to________________ Commission file number 333-152798 DIGITAL VALLEYS CORP. (Exact name of registrant as specified in its charter) Nevada 98-0537383 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) Suite 100, 1100 Dexter Ave. North, Seattle, Washington 98109 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (206) 273-7892 Securities registered under Section 12(b) of the Act: None N/A Title of each class Name of each exchange on which registered Securities registered under Section 12(g) of the Act: Common Stock, $0.001 par value (Title of class) Indicate by checkmark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [X] Indicate by checkmark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes [ ] No [X] Indicate by checkmark whether the registrant has (1) 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 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 checkmark 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 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 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 completed second fiscal quarter: N/A - no common stock traded during period APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes [ ] No [ ] N/A APPLICABLE ONLY TO CORPORATE REGISTRANTS Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. 2,300,000 shares of common stock as of June 15, 2010. DOCUMENTS INCORPORATED BY REFERENCE List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) any annual report to security holders; (2) any proxy or information statement; and (3) any prospectus filed pursuant to Rule 424(b) or (c) of the Securities Act of 1933. The listed documents should be clearly described for identification purposes (e.g., annual report to security holders for fiscal year ended December 24, 1980). Not Applicable AVAILABLE INFORMATION Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to those reports that we file with the Securities and Exchange Commission, or SEC, are available at the SEC's public reference room at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information on the operation of the public reference room by calling the SEC at 1-800-SEC-0330. The SEC also maintains a website at www.sec.gov that contains reports, proxy and information statements and other information regarding reporting companies. TABLE OF CONTENTS Page ---- PART I ITEM 1. Description of Business 3 ITEM 1A. Risk Factors 12 ITEM 2. Description of Property 19 ITEM 3. Legal Proceedings 19 ITEM 4. Submission of Matters to a Vote of Security Holders 19 PART II ITEM 5. Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 19 ITEM 6. Selected Financial Data 19 ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 20 ITEM 8. Financial Statements 23 ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 32 ITEM 9A. Controls and Procedures 32 ITEM 9B. Other Information 33 PART III ITEM 10. Directors, Executive Officers and Corporate Governance 34 ITEM 11. Executive Compensation 35 ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 36 ITEM 13. Certain Relationships and Related Transactions, and Director Independence 37 ITEM 14. Principal Accountant Fees and Services 37 PART IV ITEM 15. Exhibits 37 Signatures 38 2 PART I FORWARD LOOKING STATEMENTS. This annual report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled "Risk Factors" and the risks set out below, any of which may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. These risks include, by way of example and not in limitation: * the uncertainty that we will not be able to successfully identify and evaluate a suitable business opportunity; * risks related to the large number of established and well-financed entities that are actively seeking suitable business opportunities; * risks related to the failure to successfully management or achieve growth of a new business opportunity; and * other risks and uncertainties related to our business strategy. This list is not an exhaustive list of the factors that may affect any of our forward-looking statements. These and other factors should be considered carefully and readers should not place undue reliance on our forward-looking statements. Forward looking statements are made based on management's beliefs, estimates and opinions on the date the statements are made and we undertake no obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results. Our financial statements are stated in United States dollars and are prepared in accordance with United States generally accepted accounting principles. In this annual report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to "common stock" refer to the common shares in our capital stock. As used in this annual report, the terms "we", "us", "our" and "Digital Valleys" mean Digital Valleys Corp., unless otherwise indicated. ITEM 1. BUSINESS OVERVIEW OF THE COMPANY We are a development stage company that was incorporated on May 21, 2007. We have commenced only limited operations, primarily focused on organizational matters in connection with this offering. We have never declared bankruptcy, have never been in receivership, and have never been involved in any legal action or proceedings. We have not made any significant purchase or sale of assets, nor has the Company been involved in any mergers, acquisitions or consolidations. We are not a blank check registrant as that term is defined in Rule 419(a)(2) of Regulation C of the Securities Act of 1933, because we have a specific business plan and purpose. Neither the Company nor its sole officer, Director, promoter or his affiliates, has had preliminary contact or discussions with, nor do we have any present plans, proposals, arrangements or understandings with any representatives of the owners of any business or company regarding the possibility of an acquisition or merger. 3 We have not generated any revenue to date and we do not expect to generate any revenues during the first 12 months following this offering. We are developing an online help desk customer support system to assist service companies in improving their customer relationship management. We expect our system to be used by organizations interested in improving their customer relationship management by automating their customer support and by establishing a centralized help desk. We plan for our software product to be capable of providing a generic solution across a broad range of industries. Our offices are currently located at 1100 Dexter Ave. North, Suite 100, Seattle, Washington 98109. We do not currently have a website; however, we have reserved a domain name. THE MARKET OPPORTUNITY The customer relationship management ("CRM") market is experiencing explosive growth. In 2002, the U.S. accounted for $7.14 billion of the world-wide CRM market, and the U.S. market is expected to swell to $9.19 billion by 2006. ("Moderate, Steady CRM Growth through 2006" by Robyn Greenspan (July 3, 2003)). The U.S is expected to maintain approximately 52 percent of the total market through 2006. The concept of a single point of contact for customers to refer questions and seek assistance to solve problems has become a ubiquitous feature of modern business. ("Delivering High Value in Service and Support," by Rhion H Jones and FrontRange Solutions UK Ltd.). Help desks reduce downtime and reduce the time to fix errors based on previous learning history. Help desks ensure better use of resources, improved procurement decisions, higher customer satisfaction and retention, and increases in profitability, as customers will spend more with a firm that provides superior service. We expect corporations to continue to make efforts to please their customers. Research from the Aberdeen Group forecasts worldwide CRM spending to exhibit moderate, yet steady, growth in the coming years. Aberdeen estimates that 2002's spending of $13.7 billion will swell to $17.7 billion in 2006, resulting in a 6.7 percent compound annual growth rate. Hosted, subscription-based CRM software offerings from independent software vendors and systems integrators will drive growth, with revenues expected to soar from $246 million to $2.8 billion through 2006. (Moderate, Steady CRM Growth through 2006 by Robyn Greenspan | July 3, 2003.) Historically help desk software has been used by IT professionals and high tech firms. Now, help desk software is used in a broad range of industries including; healthcare, finance, telecommunications, oil and gas industries, government, banking, utilities, insurance and retail. The importance of customer relationship management is highlighted by two recent market studies. The "Research Store - The Danger of Defection" study by ecustomerserviceworld.com concluded that companies need to improve their retention strategies to stem customer defection rates. According to this study: * Customer defection rates in UK consumer studies have increased since 2003. * Average customer defection rate is 19.1% in the UK. * Internet service providers have one of the highest defection rates at 24%. * Data driven marketing techniques are successful in retaining customers. * Over half of top UK companies are now able to translate sophisticated database analysis into highly personalized and segmented campaigns, where creative, message, and enclosures are varied for different types of recipients. * A 5% increase in customer loyalty can lead to a 25-85% increase in profitability. The "Delivering High Value in Service and Support" study by Rhion H Jones and FrontRange Solutions UK Ltd. concluded that help desks increase overall efficiency and customer satisfaction, thus leading to increased retention rates. According to this study: 4 * Whether or not the term "help desk" is used, the concept of a single point of contact for customers to refer questions and seek assistance to solve problems has become a ubiquitous feature of modern businesses. * There are an estimated 150,000 to 200,000 help desks in operation throughout the world. This is a sub-set of the wider call center phenomenon, which is estimated to employ 5 million people worldwide (source: IHA Ltd). * The term "help desk" is now used to describe any call center or part of a call center which handles complex problem-solving and associated processes. * By the year 2000, the help desk model has become firmly established for IT support in most advanced western-style countries, though with different market penetration levels. * Despite the range and variety of help desks, they all share the characteristic of being an investment (approved and implemented in the last 10 years or so) which was prompted by perceptions of value. * Help desks reduce downtime not only by ensuring a faster fix for problems affecting system performance, but also by providing essential information which managers can use to reduce the likely recurrence of such problems. * In a typical help desk, the cost of fixing a single problem depends partly on the level of skill required. First-line staff can be trained far quicker than more technically proficient Second-line personnel; the real experts who act as third-line staff are often among the most valuable people in an organization. The cost of resolution at second-level is frequently up to ten times the cost of a similar fix at first level; for third-line resolutions the cost multiplier can be another 10 times (source: Fry Consulting, 1999). Utilization of staff is therefore an important driver of overall efficiency * Customers spend more with product and service providers who use help desk technology to provide customer service. TARGET MARKET The customer base for our proposed system includes: * Small and medium sized businesses that provide services to their clients and are looking for a help desk solution to support their products and services. * Small and medium sized businesses that provide services to their clients and want to enhance their customer support image and provide faster customer support via email and internet forms. We will initially focus our sales in the United States as we know this market and it represents a significant opportunity in terms of sales potential. The market is sophisticated, software savvy and educated in terms of the need to improve customer support and customer relationship management. OUR COMPETITION * There are currently other providers of similar software programs providing customer support help desks. Customer relationship management is a large and growing industry in the United States. Competitive pressures and customer demands fuel the growth in the industry. * Many of our competitors in this industry are located in the United States. While there are many competitors, the industry supports a large number of competitors as demand is huge and growing. Most software packages are generic, using a cookie cutter approach to software design and implementation. Our initial product will be generic as it can be used in a wide range of businesses. Nevertheless, our future goal will be differentiate our product from the competition by tailoring our software to niche markets. * The competition's pricing ranges from $300 to several thousand dollars. Pricing is based on a selling price, an initial fee, and monthly maintenance. To compete with our competition, we plan to devise an aggressive sales strategy, including competitive pricing, to support growth. 5 OUR SOFTWARE PRODUCT Our software product will address: * Problem Management and Workflow, * Knowledge Management, and * Data Analysis and Reporting. Our proposed solution will be comprised of a number of integrated modules that we expect will enable organizations to solve their customer's issues quickly and reliably. We intend for our system to be web-based which will allow our customers to access the system from their intranet or from the internet. The Intranet mode will allow internal users of a customer's organization to access the system via the customer's intranet. The Internet mode will allow off-site employees to access the system via the internet. We plan for customers to be able to access our software product via two different means, Email and Web forms. Organizations will still be able to use the systems to manage issues for customers that have no internet connection by enabling customer support representatives to enter the customers' issues on user friendly screens/web forms. THE SYSTEM MODULES Our system will be comprised of the following four modules: * Support Ticket Module * Emailing Module * Reporting Module * System Administration Module SUPPORT TICKET MODULE The purpose of this module is to efficiently track, route, and resolve issues. We intend for the support ticket module to be able to be customized to the unique needs of the organization. System administrators will be able to add and customize ticket fields as needed. The following diagram summaries the flow of the ticket support process. 6 [GRAPHIC DIAGRAM OF THE FLOW OF THE TICKET SUPPORT PROCESS] - ----------------------------> Customer ---------------------------- | ^ | | | | | | | | | \ / Email, | Web Form & Email, Notification to | Tickets customer | | ^ | | | | | | | | | Obtain more info | | | | | | | | | Ticket/Issue is | \ / Solved | Tickets Engine ^ | | | | | | | | | | | | | | \ / | - ---------------------------- Process Tickets <--------------------------- 7 The support ticket module can be used to support two main functions: * To enable customer support representatives to track the status of tickets and manage the progress of each ticket. * To enable end customers to submit and track their own support requests. GOALS: * Standardize complex processes to resolve issues quickly * Ensure issues are resolved in the appropriate amount of time * Improve communication with end users including staff and customers KEY FEATURES * Manage ticket workflow * Automate ticket routing to speed up the business processes in the organization * Automate notifications to inform managers when cases are not resolved within the defined limits * Obtain detailed summaries of tickets handled by teams and individuals * Customize ticket structure and forms, customize dynamic ticket forms to tailor the trouble ticket software to the needs of end users * Attach links, screen shots, and files to tickets to assist in explanations of trouble tickets * Submit and track complex problems and the progress of tickets from the web without having to contact the support desk * Allow users to add comments and responses to tickets * Provide a complete ticket history for end users to store, reopen, or post comments to resolved tickets EMAILING MODULE The purpose of this module is to automate the response to the customer by sending an email automatically notifying the end user about the status of tickets. This module will also enable the system to receive tickets via an email address. GOALS: * Receive tickets via email, and auto respond to customer * Send Email notifications to customers regarding the status of tickets * Notify support staff of urgent issues via email KEY FEATURES: * Integrate system with 3rd party Pop3 Email server/accounts to receive emails with tickets * Convert support emails to tickets and use the email details in the tickets * Auto respond to newly created tickets * Track email communication between the help desk and the customer REPORTING MODULE The purpose of the reporting module is to query the system on multi user levels about the status of tickets and to generate management reports to evaluate the performance of the helpdesk system. GOALS: * Produce reports related to tickets * Report on tickets processed per user * Statistics regarding tickets processing and performance 8 KEY FEATURES: * Reports related to the status of tickets and a breakdown of ticket history * Report to customers on the current status of their tickets * Report to the admin on the status of tickets by dates and status * Report on the tickets assigned to users * Report on the average time and statistical details on tickets or group of tickets * Report on Ticket Analytics; metrics track average time-to-resolution and end user satisfaction SYSTEM ADMINISTRATION MODULE The system administration module consists of a control panel. GOALS: * Enable the system administrator to setup the application on the server * Customize the ticketing system to suit the organization's needs * Maintain user accounts * Filter email originating tickets before presenting them to the help desk team * Assign pending tickets to specific personnel KEY FEATURES: * Create user accounts and add contact information * Add/Edit the Database server settings * Set users and access levels * Monitor tickets and archive closed records TECHNICAL SPECIFICATIONS The system will be a web-based application running on a Microsoft server-based operating system. * Platform: Web Server: Microsoft Windows Server 2000 and above, Or Windows XP professional, with IIS server installed. .NET frame version 2.0 and above. * Database: Microsoft SQL Server 2000 or Microsoft SQL Server Desktop Engine MSDE 2000. * Development Language: ASP.NET, Microsoft SQL Server 2000 and above. * Installation: User friendly installation software. The software will be installed as a server, and will be able to be accessed from PCs on the same network or through the internet. THE DEVELOPMENT PROCESS The development process will commence with designing a system prototype to encompass the above proposed system; once the system prototype has been completed the implementation stage will start. 9 FUTURE SOFTWARE DEVELOPMENTS There are several opportunities for future developments to enhance the product line of our software product. Our software product is generic in that it will be able to be used in almost any type of service business that requires a customer support system. However, in the future we envision customizing the software to industry specific sectors. Some of these opportunities include: * System upgrades to enhance the user's functionality. * Customization options for industry specific applications. * Communication enhancements including linking and archiving customer's voice messages, voice conversations, and fax messages into the software which will enable firms to keep records of their customers inquires and enhance the management of customer issues. * E-commerce and client management to track client accounts, sales, service history and all details of the client database. * Provide self serve sections, where software users (customers) can enter their text based search to locate solutions for their issues without having to wait for a customer support representative, allowing companies to provide 24 hour customer support to their customers. These are just some of the options available for future development of the Company's software product which will enhance the user's experience. MARKETING & SALES STRATEGY We plan to implement an aggressive marketing strategy. We intend to market our software product as a customer support system that empowers businesses to service their clients' needs. The target audience will be small and medium sized businesses that will benefit from a customer support and help desk system. The Company plans to partition the market into industry specific components, familiarize itself with detailed industry demands, and design materials that address each customer's needs. Our strategy will consist of building strategic alliances with complementary products, a strong web presence, targeted e-mail campaigns, news releases through industry professionals, print distribution and cold calls by a knowledgeable sales force. * Strategic Alliances: We intend to advertise on third party websites of complementary products and services. Alliances will be formed to co-operatively market our product and hedge saturation through mutual leveraging. * Web Presence: We plan to market our software product through our web site. A trial version of the software will be available for download encouraging potential clients to test the software, and an e-commerce platform will be incorporated into our web site to allow for easy purchase. We intend for our web presence to feature the benefits of the system, customer testimonials, and management features, including significant ROI and ease of installation. * Targeted e-mail campaigns:We intend to engage in e-mail campaigns that will target industry specific small and medium sized businesses outlining the benefits of the software. We will make every effort to ensure lists are pre-qualified. * News Releases & Public Relations: We plan to distribute news releases to industry professionals and send complimentary versions to select professionals to gain market exposure and publicity. * Print Distribution: We intend to design a targeted print campaign to target industry specific potential clients. * Cold Calls: We plan to make cold calls to potential clients outlining the benefits of this product. 10 In addition, we intend to engage in the following additional marketing activities: * Trade shows * Business newspaper inserts and advertising * Trade publications * Conferences, productivity seminars, guest speakers, etc. DISTRIBUTION We plan to distribute our software product via direct channels. We will distribute our software product through our website and through third party websites that distribute complementary software programs. Third party websites will be compensated by commission. PRICING MODEL We intend to sell our software product with the following pricing structure: $300 for 50 licensed users. EXPENDITURES The following chart provides an overview of our budgeted expenditures by significant area of activity over the next 12 months: Research and Development 15,000 Legal and Accounting 9,000 Transfer Agent 1,000 Marketing and Corporate Collateral 1,500 Travel 500 Telephone and Web Hosting 1,000 Office Equipment and Software Tools 3,000 Office Supplies 1,000 Misc. Administrative Expenses 1,000 Office Rent 2,000 ------ EXPENSES 35,000 ====== SOURCES AND AVAILABILITY OF PRODUCTS AND SUPPLIES 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 services will be over the internet. DEPENDENCE ON ONE OR A FEW MAJOR CUSTOMERS Our business plan and the nature of our service offering does not hinge on one or a few major customers; however, if we obtain one or more large corporate accounts, then we may end up being dependent on one or a few major customers. 11 PATENT, TRADEMARK, LICENSE & 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 are planning to develop a software product and intend to protect our software product with copyright and trade secrecy laws. EXISTING OR PROBABLE GOVERNMENT REGULATIONS There are no existing government regulations, nor are we aware of any regulations being contemplated that would adversely affect our ability to operate. Due to the increasing popularity and use of the internet, it is possible that a number of laws and regulations may be adopted with respect to the internet generally, covering issues such as user privacy, pricing, and characteristics and quality of products and services. Similarly, the growth and development of the market for internet commerce may prompt calls for more stringent consumer protection laws that may impose additional burdens on those companies conducting business over the internet. The adoption of any such laws or regulations may decrease the growth of commerce over the internet, increase our cost of doing business, or otherwise have a harmful effect on our business. To date, governmental regulations have not materially restricted the use or expansion of the internet. However, the legal and regulatory environment that pertains to the Internet is uncertain and may change. New laws may cover issues that include: * Sales and other taxes; * User privacy; * Pricing controls; * Characteristics and quality of products and services; * Consumer protection; * Libel and defamation; * Copyright, trademark and patent infringement; and * Other claims based on the nature and content of internet materials. These new laws may have an impact on our ability to market our services in accordance with our business plan. RESEARCH AND DEVELOPMENT ACTIVITIES AND COSTS We have not incurred any costs to date and have plans to undertake certain research and development activities during the first year of operation. For a detailed description see "Plan of Operation". EMPLOYEES We have commenced only limited operations; therefore, we have no employees. Our sole officer and Director provides service to us on an as-needed basis. When we commence full operations, we will need to hire full-time management and administrative support staff. REPORTS TO STOCKHOLDERS We will voluntarily make available to stockholders an annual report, including audited financials, on Form 10-K. We are not currently a fully reporting company, but upon effectiveness of this registration statement, we will be required to file reports with the SEC pursuant to the Securities Exchange Act of 1934; such as quarterly reports on Form 10-Q and current reports on Form 8-K. ITEM 1A. RISK FACTORS Much of the information included in this annual report includes or is based upon estimates, projections or other "forward looking statements". Such forward looking statements include any projections or estimates made by us and our management in connection with our business operations. While these forward-looking statements, and any assumptions upon which they are based, are 12 made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. Such estimates, projections or other "forward looking statements" involve various risks and uncertainties as outlined below. We caution the reader that important factors in some cases have affected, and in the future could materially affect, actual results and cause actual results to differ materially from the results expressed in any such estimates, projections or other "forward looking statements". RISK FACTORS RELATING TO OUR COMPANY 1. WE ARE A DEVELOPMENT STAGE COMPANY WITH NO OPERATING HISTORY AND MAY NEVER BE ABLE TO EFFECTUATE OUR BUSINESS PLAN OR ACHIEVE ANY REVENUES OR PROFITABILITY; AT THIS STAGE OF OUR BUSINESS, EVEN WITH OUR GOOD FAITH EFFORTS, POTENTIAL INVESTORS HAVE A HIGH PROBABILITY OF LOSING THEIR ENTIRE INVESTMENT. We are subject to all of the risks inherent in the establishment of a new business enterprise. Our Company was established on May 21, 2007. We currently have no products, sales, customers, or revenues. Although we have begun initial investigations into the customer relationship management industry, we may not be able to successfully implement our business objectives. There can be no assurance that we will ever achieve any revenues or profitability. The revenue and income potential of our proposed business and operations is unproven, and the lack of operating history makes it difficult to evaluate the future prospects of our BUSINESS. We have not generated any revenues to date. Accordingly, our prospects must be considered in light of the risks, expenses and difficulties frequently encountered in establishing a new business, and our Company is a highly speculative venture involving a high degree of financial risk. 2. WE EXPECT LOSSES IN THE FUTURE BECAUSE WE HAVE NO REVENUE TO OFFSET LOSSES. As we have no current revenue, we are expecting losses over the next 12 months because we do not yet have any revenues to offset the expenses associated with the development and implementation of our business plan. We cannot guarantee that we will ever be successful in generating revenues in the future. We recognize that if we are unable to generate revenues, we will not be able to earn profits or continue operations. 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. 3. WE HAVE A GOING CONCERN OPINION FROM OUR AUDITORS, INDICATING THE POSSIBILITY THAT WE MAY NOT BE ABLE TO CONTINUE TO OPERATE. We have not yet established an ongoing source of revenues. Furthermore, we anticipate generating losses for the next 12 months. These factors raise substantial doubt that we will be able to continue operations as a going concern, and our independent auditors included an explanatory paragraph regarding this uncertainty in their report on our financial statements for the period May 21, 2007 (inception) to April 30, 2010. No adjustment has been made in the accompanying financial statements to the amounts and classification of assets and liabilities which could result should we be unable to continue as a going concern. Our ability to continue as a going concern is dependent upon our generating cash flow sufficient to fund operations and reducing operating expenses. Our business strategy may not be successful in addressing these issues. If we cannot continue as a going concern, our stockholders may lose their entire investment in us. 4. WE WILL NEED SIGNIFICANT ADDITIONAL CAPITAL, WHICH WE MAY BE UNABLE TO OBTAIN. Our capital requirements in connection with our development activities and transition to commercial operations have been and will continue to be significant. We will require additional funds to continue research, development and testing of our technologies and product and to market and sell our product. There can be no assurance that financing will be available in amounts or on terms acceptable to us, if at all. There is no assurance additional funds will be available from any source; or, if available, such funds may not be on terms acceptable to the Company. In either of the aforementioned situations, the 13 Company may not be able to fully implement its growth plans. Moreover, we will not receive any proceeds from the sale of stock by our selling stockholders, and thus this offering will not affect our ability to meet capital requirements 5. WE WILL RELY ON THIRD PARTIES TO DEVELOP OUR PRODUCT. We intend to retain third party firms for software development, database design, and other development functions. We also plan to locate and enter into an agreement with a web developer for the purpose of developing our website for direct sales of our products to consumers. As a result, we expect to be dependent on those third party firms that we engage. There is no assurance that we will be able to enter into contracts with any such third parties on terms that are favorable to us. If any of our third party contractors breaches the contract or does not have the ability, for financial or other reasons, to perform its obligations, we may not be able to implement our business plan. In addition, our reliance on third parties may place us at a competitive disadvantage. If we are unsuccessful in addressing these risks, our business will most likely fail. 6. THE USE OF INDEPENDENT SALES REPRESENTATIVES OR DISTRIBUTORS WILL SUBJECT US TO CERTAIN RISKS. We expect to generate a substantial portion of our revenue from independent sales representatives or distributors. Such representatives and distributors may not be required to meet sales quotas and our ability to manage independent sales representatives or distributors to performance standards is unknown. Failure to generate revenue from these sales representatives or distributors would have a negative impact on our business. 7. WE MAY NOT BE ABLE TO COMPETE WITH CURRENT AND POTENTIAL COMPETITORS, SOME OF WHOM HAVE GREATER RESOURCES AND EXPERIENCE THAN WE DO. We may not have the resources to compete with our existing competitors or with any new competitors. We intend to compete with many providers of customer relations software, as well as with providers of help desk services, all of which may have significantly greater personnel, financial, and managerial resources than we do. This competition from other companies with greater resources and reputations may result in our failure to maintain or expand our business. Moreover, as the demand for virtual customer support increases, new companies may enter the market and the influx of added competition will pose an increased risk to our Company. Increased competition may lead to price wars, which may harm us since we would be unable to compete with companies with greater resources. 8. SINCE OUR SOLE OFFICER AND DIRECTOR MAY CONTINUE TO WORK OR CONSULT FOR OTHER COMPANIES, HIS OTHER ACTIVITIES COULD SLOW DOWN OUR OPERATIONS. Our sole officer and Director is not required to work exclusively for us and does not devote all of his time to our operations. Presently, our sole officer and Director allocates only a portion of his time to the operation our business. Since our sole officer and Director is currently employed full-time elsewhere, he is able to commit to us only up to 20 to 25 hours a week. Therefore, his pursuit of other activities may slow our operations and reduce our financial results because of the slow-down in operations. 9. OUR SOLE OFFICER AND DIRECTOR IS LOCATED IN THE PHILIPPINES. Since our sole officer and Director is located in the Philippines, any attempts to enforce liabilities upon such individual under the U.S. securities and bankruptcy laws may be difficult. 10. WE NEED TO RETAIN KEY PERSONNEL TO SUPPORT OUR BUSINESS AND ONGOING OPERATIONS. The development of our business and the marketing and sale of our intended product will continue to place a significant strain on our limited personnel, management, and other resources. Our future success depends upon the continued services of our executive officer and the engagement of key employees and contractors who have critical industry experience and relationships that we will rely on to implement our business plan. The loss of the services of our sole officer or the lack of availability of other skilled personnel would negatively impact our ability to develop our company and to market and sell our intended product, which could adversely affect our financial results and impair our growth. 14 11. AS A DEVELOPMENT STAGE COMPANY, WE MAY EXPERIENCE SUBSTANTIAL COST OVERRUNS IN DEVELOPING AND MARKETING OUR PRODUCT, AND WE MAY NOT HAVE SUFFICIENT CAPITAL TO SUCCESSFULLY COMPLETE THE DEVELOPMENT AND MARKETING OF OUR PRODUCT. We may experience substantial cost overruns in developing and marketing our product, and may not have sufficient capital to successfully complete our project. We may not be able to market our product because of industry conditions, general economic conditions, and/or competition from potential developers and distributors. In addition, the commercial success of any product is often dependent upon factors beyond the control of the company attempting to market the product, including, but not limited to, market acceptance of the product and whether or not third parties promote the product through prominent marketing channels and/or other methods of promotion. 12. IF OUR SOFTWARE PRODUCT CONTAINS UNDETECTED SOFTWARE ERRORS, WE COULD INCUR SIGNIFICANT UNEXPECTED EXPENSES AND LOSE SALES. Software products frequently contain undetected errors, failures or bugs when new products or new versions or updates of existing products are first released to the marketplace. As with any new product introduction, previously unaddressed errors or issues with our product's performance may arise. We expect that such errors will be found in the future from time to time in our product. These problems may have a material adverse effect on our business by causing us to incur significant QA and bug-fix costs, diverting the attention of our development personnel from new product development efforts, delaying the recognition of revenue, and causing significant customer relations problems. Further, if our product is not accepted by customers due to defects, our operating results would be adversely affected. Furthermore, our product must properly interface with products from other vendors. As a result, when problems occur in the operation of our product, it may be difficult to identify the source of these problems. The occurrence of software errors, even if not caused by our product, could result in the delay or loss of market acceptance of our product and any necessary revisions to improve interoperability may cause us to incur significant expenses. The occurrence of any such problems would likely have a material adverse effect on our business, operating results and financial condition. 13. OUR INABILITY TO ATTAIN AND PROTECT INTELLECTUAL PROPERTY RIGHTS COULD REDUCE THE VALUE OF OUR PRODUCTS, SERVICES AND BRAND. Potential trademarks, trade secrets, copyrights and other intellectual property rights may be important assets for us. Various events outside of our control pose a threat to our ability to attain or protect the intellectual property rights associated with our product. For example, effective intellectual property protection may not be available in every country in which our product will be distributed or made available through the internet. Also, the efforts we have taken to protect our proprietary rights may not be sufficient or effective. Any significant impairment of our ability to attain or protect our intellectual property rights could harm our business or our ability to compete. Also, protecting intellectual property rights is costly and time consuming. Any increase in the unauthorized use of our intellectual property by others could make it more expensive to do business and harm our operating results. 14. OUR EXECUTIVE OFFICER OWNS A MAJORITY OF THE OUTSTANDING SHARES OF OUR COMMON STOCK, AND OTHER STOCKHOLDERS MAY NOT BE ABLE TO INFLUENCE CONTROL OF THE COMPANY OR DECISION MAKING BY MANAGEMENT OF THE COMPANY. Our sole officer and Director presently owns 69.56% of our outstanding common stock. As a result, our executive officer has substantial control over all matters submitted to our stockholders for approval including the following matters: election of our Board of Directors; removal of any of our Directors; amendment of our Articles of Incorporation or bylaws; and adoption of measures that could delay or prevent a change in control or impede a merger, takeover or other business combination involving us. Other stockholders may consider the corporate decisions made by our executive officer to be inconsistent with the interests of these stockholders. In addition, other stockholders may not be able to change the Directors and officers, and are accordingly subject to the risk that management cannot or will not manage the affairs of the Company in accordance with such stockholders' wishes. 15. CUSTOMER RELATIONSHIP MANAGEMENT SYSTEMS ARE SUBJECT TO RAPID TECHNOLOGICAL CHANGE. 15 Our business is in an emerging market that is characterized by rapid changes in customer requirements, frequent introductions of new and enhanced products and services, and continuing and rapid technological advancement. To compete successfully in the customer support systems market, we must continue to design, develop and sell new and enhanced systems that provide increasingly higher levels of performance and reliability at lower cost. These new and enhanced systems must take advantage of technological advancements and changes, and respond to new customer requirements. Our success in designing, developing, and selling such systems will depend on a variety of factors, including: * Identifying and responding to market demand for new customer support systems; * The scalability of our equipment platforms to efficiently deliver our product; * Keeping abreast of technological changes; * Timely developing and implementing new and enhanced features; * Maintaining quality of performance; * Providing cost-effective support services; and * Promoting our customer support system and expanding our market share. If we are unable, due to resource constraints or technological or other reasons, to develop and introduce new or enhanced customer support systems in a timely manner, if such new or enhanced systems do not achieve sufficient market acceptance, or if such new systems decrease demand for our existing customer support systems, our operating results would decline and our business would not grow. 16. BECAUSE MR. PATI HAS NO EXPERIENCE IN RUNNING A COMPANY THAT DEVELOPS AND SELLS CUSTOMER RELATIONSHIP MANAGEMENT SYSTEMS, HE MAY NOT BE ABLE TO SUCCESSFULLY OPERATE SUCH A BUSINESS, WHICH COULD CAUSE YOU TO LOSE YOUR INVESTMENT. We are a start-up company and we intend to market and sell our customer support system. Mr. Pati, our Director and President, has control over all decisions regarding both the policy and the operations of our company. Our success is contingent upon his ability to make appropriate business decisions in these areas. It is possible that his lack of relevant operational experience could prevent us from becoming a profitable business and prevent an investor from obtaining a return on his investment in us. 17. FUTURE REGULATION OF THE INTERNET COULD RESTRICT OUR BUSINESS, PREVENT US FROM OFFERING SERVICES, AND/OR INCREASE OUR COST OF DOING BUSINESS. The laws, regulations or rulings that specifically address access to or commerce on the internet are subject to change. We are unable to predict the impact, if any, that future legislation, judicial precedents, or regulations concerning the internet may have on our business, financial condition, and results of operations. Regulation may be targeted towards, among other things, assessing access or settlement charges, imposing taxes related to internet communications, restricting content, imposing tariffs, or regulations based on encryption concerns or the characteristics and quality of products and services, any of which could restrict our business or increase our cost of doing business. The increasing growth of the internet and popularity of broadband video products and services heighten the risk that governments or other legislative bodies will seek to regulate internet services, which could have a material adverse effect on our business, financial condition, and operating results. 18. WE MAY LOSE CUSTOMERS IF WE EXPERIENCE SYSTEM FAILURES THAT SIGNIFICANTLY DISRUPT THE AVAILABILITY AND QUALITY OF THE SUPPORT SERVICES THAT WE PLAN TO PROVIDE. The operation of our support services will depend on our ability to avoid and mitigate any interruptions in service or reduced capacity for customers. Interruptions in service or software performance problems, for whatever reason, could undermine confidence in our ability to provide service to our customers, and could cause us to lose customers or make it more difficult to attract new 16 ones. In addition, because our support services may be critical to the businesses of our customers, any significant interruption in the provision of service could result in lost profits or other losses to our customers. 19. IF A THIRD PARTY ASSERTS THAT WE INFRINGE ITS PROPRIETARY RIGHTS, WE COULD BE REQUIRED TO REDESIGN OUR SOFTWARE, PAY SIGNIFICANT ROYALTIES, OR ENTER INTO LICENSE AGREEMENTS. Although presently we are not aware of any such claims, a third party may assert that our technology or third party technologies that we license violate its intellectual property rights. As the number of software products in our market increases and the functionality of these software products further overlap, we believe that infringement claims will become more common. Any claims against us, regardless of their merit, could: * Be expensive and time-consuming to defend; * Result in negative publicity; * Force us to stop selling our services that rely on the challenged intellectual property; * Require us to redesign our software products; * Divert management's attention and our other resources; or * Require us to enter into royalty or licensing agreements in order to obtain the right to use necessary technologies, which may not be available on terms acceptable to us, if at all. We believe that any successful challenge to our use of a trademark or domain name could substantially diminish our ability to conduct business in a particular market or jurisdiction and thus could decrease our revenues and/or result in losses to our business. RISKS RELATING TO OUR COMMON STOCK 20. WE MAY, IN THE FUTURE, ISSUE ADDITIONAL COMMON SHARES, WHICH WOULD REDUCE INVESTORS' PERCENT OF OWNERSHIP AND MAY DILUTE OUR SHARE VALUE. Our Articles of Incorporation authorizes the issuance of 100,000,000 shares of common stock, par value $0.001 per share, of which 2,300,000 shares are issued and outstanding. The future issuance of common stock may result in substantial dilution in the percentage of our common stock held by our then existing stockholders. We may value any common stock issued in the future on an arbitrary basis. The issuance of common stock for future services or acquisitions or other corporate actions may have the effect of diluting the value of the shares held by our investors, and might have an adverse effect on any trading market for our common stock. 21. OUR COMMON SHARES ARE SUBJECT TO THE "PENNY STOCK" RULES OF THE SEC AND THE TRADING MARKET IN OUR SECURITIES IS LIMITED, WHICH MAKES TRANSACTIONS IN OUR STOCK CUMBERSOME AND MAY REDUCE THE VALUE OF AN INVESTMENT IN OUR STOCK. The Securities and Exchange Commission has adopted Rule 15g-9 which establishes the definition of a "penny stock," for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require: * that a broker or dealer approve a person's account for transactions in penny stocks; and * the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased. In order to approve a person's account for transactions in penny stocks, the broker or dealer must: * obtain financial information and investment experience objectives of the person; and * make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks. 17 The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the Commission relating to the penny stock market, which, in highlight form: * sets forth the basis on which the broker or dealer made the suitability determination; and * that the broker or dealer received a signed, written agreement from the investor prior to the transaction. Generally, brokers may be less willing to execute transactions in securities subject to the "penny stock" rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our stock. Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. 22. THERE IS NO CURRENT TRADING MARKET FOR OUR SECURITIES AND IF A TRADING MARKET DOES NOT DEVELOP, PURCHASERS OF OUR SECURITIES MAY HAVE DIFFICULTY SELLING THEIR SHARES. There is currently no established public trading market for our securities and an active trading market in our securities may not develop or, if developed, may not be sustained. We intend to have a market maker apply for admission to quotation of our securities on the Over The Counter Bulletin Board after the registration statement relating to this prospectus is declared effective by the SEC. We do not yet have a market maker who has agreed to file such application. If for any reason our common stock is not quoted on the Over The Counter Bulletin Board or a public trading market does not otherwise develop, purchasers of the shares may have difficulty selling their common stock should they desire to do so. No market makers have committed to becoming market makers for our common stock and none may do so. 23. STATE SECURITIES LAWS MAY LIMIT SECONDARY TRADING, WHICH MAY RESTRICT THE STATES IN WHICH AND CONDITIONS UNDER WHICH YOU CAN SELL THE SHARES OFFERED BY THIS PROSPECTUS. Secondary trading in common stock sold in this offering will not be possible in any state until the common stock is qualified for sale under the applicable securities laws of the state or there is confirmation that an exemption, such as listing in certain recognized securities manuals, is available for secondary trading in the state. If we fail to register or qualify, or to obtain or verify an exemption for the secondary trading of, the common stock in any particular state, the common stock could not be offered or sold to, or purchased by, a resident of that state. In the event that a significant number of states refuse to permit secondary trading in our common stock, the liquidity for the common stock could be significantly impacted thus causing you to realize a loss on your investment. 24. BECAUSE WE DO NOT INTEND TO PAY ANY CASH DIVIDENDS ON OUR COMMON STOCK, OUR STOCKHOLDERS WILL NOT BE ABLE TO RECEIVE A RETURN ON THEIR SHARES UNLESS THEY SELL THEM. We intend to retain any future earnings to finance the development and expansion of our business. We do not anticipate paying any cash dividends on our common stock in the foreseeable future. Unless we pay dividends, our stockholders will not be able to receive a return on their shares unless the value of such shares appreciates and they sell them. There is no assurance that stockholders will be able to sell shares when desired. RISKS RELATING TO DOING BUSINESS IN THE PHILIPPINES 25. THE PHILIPPINES PERIODICALLY EXPERIENCES POLITICAL OR ECONOMIC INSTABILITY, WHICH COULD DISRUPT OUR OPERATIONS, INCREASE OUR COSTS AND HARM OUR BUSINESS. The Philippines continues to experience low growth in its gross domestic product, significant inflation and a shortages of foreign exchange. We are exposed to the risk of rental and other cost increases due to inflation in the Philippines, which has historically been at a much higher rate than in the United States. These conditions could create political or economic instability that could harm businesses operating in the Philippines. 18 In addition, the Philippines has and may continue to experience political instability, including strikes, demonstrations, protests, marches, coups d'etat, guerilla activity or other types of civil disorder. These instabilities and adverse changes in the political environment in the Philippines could increase our operational costs, increase our exposure to legal and business risks and make it more difficult for us to operate our business in the Philippines. ITEM 2. PROPERTIES EXECUTIVE OFFICES We do not own any real property. We currently maintain our corporate office at 1100 Dexter Ave. North, Suite 100, Seattle, Washington 98109. We pay monthly rent of $200 for use of this space. This space is sufficient until we commence full operations. ITEM 3. LEGAL PROCEEDINGS We know of no material, active, or pending legal proceeding against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation there such claim or action involves damages for more than 10% of our current assets. There are no proceedings in which any of our company's directors, officers, or affiliates, or any registered or beneficial shareholders, is an adverse party or has a material interest adverse to our company's interest. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matters were submitted to a vote of our security holders during the fourth quarter of fiscal 2010. PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES MARKET FOR SECURITIES As at the date of this document, the Company has not received its trading symbol and has yet to develop a market for its securities. HOLDERS OF OUR COMMON STOCK On June 15, 2010 the shareholders' list of our common stock showed 36 registered shareholder and 2,300,000 shares outstanding. DIVIDEND POLICY We have not paid any cash dividends on our common stock and have no present intention of paying any dividends on the shares of our common stock. Our future dividend policy will be determined from time to time by our board of directors. ITEM 6. SELECTED FINANCIAL DATA Not Applicable. 19 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION The following discussion should be read in conjunction with our audited financial statements and the related notes that appear elsewhere in this annual report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Factors that could cause or contribute to such differences include those discussed below and elsewhere in this annual report. Our consolidated financial statements are stated in United States dollars and are prepared in accordance with United States generally accepted accounting principles. APPLICATION OF CRITICAL ACCOUNTING ESTIMATES The preparation of financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the year. The more significant areas requiring the use of estimates include asset impairment, stock-based compensation, and future income tax amounts. Management bases its estimates on historical experience and on other assumptions considered to be reasonable under the circumstances. However, actual results may differ from the estimates. OVERVIEW We have not generated any revenue since our inception. We are a development stage company with limited operations. Our auditors have issued a going concern opinion. This means that our auditors believe there is substantial doubt that we can continue as an ongoing business for the next twelve months. PLAN OF OPERATION We are developing an online help desk customer support system to assist service companies in improving their customer relationship management. We expect our system to be used by organizations interested in improving their customer relationship management by automating their customer support and by establishing a centralized help desk. We plan for our software product to be capable of providing a generic solution across a broad range of industries. During the next twelve months following the effectiveness of this Registration Statement, we expect to take the following steps in connection with the further development of our business and the implementation of our plan of operation: FIRST QUARTER - 2011: During the first three months, we plan to: * Initiate our software development activities * Initiate the development of our corporate and marketing collateral Software development: We will search for the services of a third party independent software developer. We intend for the software developer to supply his or her own computer, software and high-speed Internet connection. During months 1 and 2, we intend to coordinate with the software contractor on the development of the software specifications and on a high level design. The specifications will be in the form of a document that will describe the product, the way the product interacts with the customers, and the company's database. High-level design will include identifying the different components of the software and how they interact with each other. Marketing activities: By the end of month 1, we plan to hire an independent graphic and web designer. We expect that such independent contractor will finish developing our corporate collateral (including logo, business cards, 20 letterheads, stationeries, e-mail forms) by the end of month 2. We also plan to develop and complete the information only website, which we expect to be completed by the end of the first quarter. SECOND QUARTER - 2011: During this quarter, we expect to focus on the development of our software product. Software development: During this period the actual software development will start to take place. By the end of the quarter we expect to have a beta version complete for testing. Marketing activities: During this quarter we plan to start researching ways to market our website and product. We will also identify third party websites that will sell our software. We will also plan our online marketing plan. THIRD QUARTER - 2011: Software development: During this period we will test the beta version of the software and tweak to finalize development. We expect the final version of the software to be finalized by end of this quarter. At this point we will also put a trial version of the software online for download. Marketing activities: During this quarter we plan to finalize agreements with third party websites for the sale of our software. We expect to implement our online marketing plan by conducting keyword searches on Yahoo and Google. We will also place online banner ads on various strategic websites. FOURTH QUARTER - 2011: Software development: We intend to complete the development of our software product by the end of the Fourth Quarter. Initially we plan to sell the software as a download only product since this will minimize our costs. Potential customers will be able to purchase the software directly from our website. Marketing activities: We plan to circulate news releases to industry professionals and distribute complimentary versions sent to select professionals to gain market exposure and publicity. We will also start a targeted email campaign. ACTIVITIES TO DATE We were incorporated under the laws of the State of Nevada on May 21, 2007. We are a development stage company. From our inception to date, we have not generated any revenues, and our operations have been limited to organizational, start-up, and capital formation activities. We currently have no employees. To date, we have conducted market research, started work on a corporate information-only website, and researched third party software development firms. RESULTS OF OPERATIONS REVENUES We had no revenues for the period from May 21, 2007 (date of inception), through April 30, 2010. EXPENSES Our expenses for the twelve month period ended April 30, 2010 and 2009, were $13,475 and $45,240. During the period from May 21, 2007 (date of inception), through April 30, 2010, we incurred expenses of $66,082. These expenses were comprised primarily of general and administrative, and legal and accounting expenses, as well as banking fees. NET INCOME (LOSS) Our net loss for the twelve-month period ended April 30, 2010 and 2009 was $13,475 and $45,240. During the period from May 21, 2007 (date of inception), through April 30, 2010, we incurred a net loss of $66,082. This loss consisted 21 primarily of incorporation costs, legal and accounting fees, consulting fees, website hosting costs, and administrative expenses. Since inception, we have sold 2,300,000 shares of common stock. PURCHASE OR SALE OF EQUIPMENT We do not expect to purchase or sell any plant or significant equipment. LIQUIDITY AND CAPITAL RESOURCES Our balance sheet as of April 30, 2010 reflects assets of $3,090 in the form of cash and cash equivalents and prepaid expenses. Since inception, we have sold 2,300,000 shares of common stock with gross proceeds of $55,000. However, cash resources provided from our capital formation activities have, from inception, been insufficient to provide the working capital necessary to operate our Company. We anticipate generating losses in the near term, and therefore, may be unable to continue operations in the future. If we require additional capital, we would have to issue debt or equity or enter into a strategic arrangement with a third party. There can be no assurance that additional capital will be available to us. We currently have no agreements, arrangements, or understandings with any person to obtain funds through bank loans, lines of credit, or any other sources. GOING CONCERN CONSIDERATION Our registered 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 registered independent auditors. Due to this doubt about our ability to continue as a going concern, management is open to new business opportunities which may prove more profitable to the shareholders of Digital Valleys Corp. Historically, we have been able to raise a limited amount of capital through private placements of our equity stock, but we are uncertain about our continued ability to raise funds privately. Further, we believe that our company may have difficulties raising capital until we locate a prospective business opportunity through which we can pursue our plan of operation. If we are unable to secure adequate capital to continue our acquisition efforts, our business may fail and our stockholders may lose some or all of their investment. Should our original business plan fail, we anticipate that the selection of a business opportunity in which to participate will be complex and without certainty of success. Management believes that there are numerous firms in various industries seeking the perceived benefits of being a publicly registered corporation. Business opportunities may be available in many different industries and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex. We can provide no assurance that we will be able to locate compatible business opportunities. 22 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. DIGITAL VALLEYS CORP. (A DEVELOPMENT STAGE COMPANY) FINANCIAL STATEMENTS APRIL 30, 2010 AND 2009 Report of Independent Registered Public Accounting Firm 24 Balance Sheets as of April 30, 2010 and 2009 25 Statements of Operations for the years ended April 30, 2010 and 2009 and for the period from May 21, 2007 (Date of Inception) to April 30, 2010 26 Statement of Stockholders' Equity (Deficit) as of April 30, 2010 27 Statements of Cash Flows for the years ended April 30, 2010 and 2009 and for the period from May 21, 2007 (Date of Inception) to April 30, 2010 28 Notes to the Financial Statements 29 23 Silberstein Ungar, PLLC CPAs and Business Advisors - -------------------------------------------------------------------------------- Phone (248) 203-0080 Fax (248) 281-0940 30600 Telegraph Road, Suite 2175 Bingham Farms, MI 48025-4586 www.sucpas.com REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors of Digital Valleys Corp. Reno, Nevada We have audited the accompanying balance sheets of Digital Valleys Corp. (the "Company") as of April 30, 2010 and 2009, and the related statements of operations, stockholders' equity (deficit), and cash flows for the years then ended and for the period from May 21, 2007 (inception) to April 30, 2010. 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 conducted our audits in accordance with the 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. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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 Digital Valleys Corp. as of April 30, 2010 and 2009, and the results of its operations and its cash flows for the years then ended and for the period from May 21, 2007 (inception) to April 30, 2010 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 2 to the financial statements, the Company has negative working capital, has received no revenue from sales of products or services, and has incurred losses from operations. These factors raise substantial doubt about the Company's ability to continue as a going concern. Management's plans with regard to these matters are described in Note 2. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty. /s/ Silberstein Ungar, PLLC - ---------------------------------- Bingham Farms, Michigan June 8, 2010 24 DIGITAL VALLEYS CORP. (A DEVELOPMENT STAGE COMPANY) BALANCE SHEETS APRIL 30, 2010 AND 2009 April 30, April 30, 2010 2009 -------- -------- ASSETS Current Assets Cash $ 2,840 $ 32,403 Prepaid expenses 250 586 -------- -------- Total Current Assets 3,090 32,989 -------- -------- Total Assets $ 3,090 $ 32,989 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Liabilities Current Liabilities Accounts payable and accrued liabilities $ 11,501 $ 27,925 Due to related party 2,671 2,671 -------- -------- Total Current Liabilities 14,172 30,596 Total Liabilities 14,172 30,596 -------- -------- Stockholders' Equity (Deficit) Common stock, 100,000,000, par value $0.001 shares authorized; 2,300,000 common shares issued and outstanding 2,300 2,300 Additional paid in capital 52,700 52,700 Deficit accumulated during the development stage (66,082) (52,607) -------- -------- Total Stockholders' Equity (Deficit) (11,082) 2,393 -------- -------- Total Liabilities and Stockholders' Equity (Deficit) $ 3,090 $ 32,989 ======== ======== The accompanying notes are an integral part of these financial statements. 25 DIGITAL VALLEYS CORP. (A DEVELOPMENT STAGE COMPANY) STATEMENTS OF OPERATIONS FOR THE YEARS ENDED APRIL 30, 2010 AND 2009 FOR THE PERIOD FROM MAY 21, 2007 (INCEPTION) TO APRIL 30, 2010 From May 21, 2007 Year Ended Year Ended (Inception) to April 30, April 30, April 30, 2010 2009 2010 ---------- ---------- ---------- REVENUE $ -- $ -- $ -- ---------- ---------- ---------- OPERATING EXPENSES Accounting and legal 8,750 34,233 45,985 General & Administrative 4,725 9,442 17,006 Bank Fees -- 65 91 Consulting Fees -- 1,500 3,000 ---------- ---------- ---------- TOTAL OPERATING EXPENSES 13,475 45,240 66,082 LOSS FROM OPERATIONS (13,475) (45,240) (66,082) PROVISION FOR INCOME TAXES -- -- -- ---------- ---------- ---------- NET LOSS $ (13,475) $ (45,240) $ (66,082) ========== ========== ========== NET LOSS PER SHARE: BASIC AND DILUTED $ (0.01) $ (0.02) ========== ========== WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: BASIC AND DILUTED 2,300,000 2,300,000 ========== ========== The accompanying notes are an integral part of these financial statements. 26 DIGITAL VALLEYS CORP. (A DEVELOPMENT STAGE COMPANY) STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT) FOR THE PERIOD FROM MAY 21, 2007 (INCEPTION) TO APRIL 30, 2010 Deficit Accumulated Additional During the Common Stock Paid in Development Shares Amount Capital Stage Total ------ ------ ------- ----- ----- Balance, May 21, 2007 (date of inception) -- $ -- $ -- $ -- $ -- Shares issued to founder on at $0.0115 per share 1,600,000 1,600 18,400 -- 20,000 Private placement at $0.05 per share 700,000 700 34,300 -- 35,000 Net loss for the period ended April 30, 2008 -- -- -- (7,367) (7,367) --------- ------- -------- --------- --------- Balance, April 30, 2008 2,300,000 2,300 52,700 (7,367) 47,633 Net loss for the year ended April 30, 2009 -- -- -- (45,240) (45,240) --------- ------- -------- --------- --------- Balance, April 30, 2009 2,300,000 2,300 52,700 (52,607) 2,393 Net loss for the year ended April 30, 2010 -- -- -- (13,475) (13,475) --------- ------- -------- --------- --------- Balance, April 30, 2010 2,300,000 $ 2,300 $ 52,700 $ (66,082) $ (11,082) ========= ======= ======== ========= ========= The accompanying notes are an integral part of these financial statements. 27 DIGITAL VALLEYS CORP. (A DEVELOPMENT STAGE COMPANY) STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED APRIL 30, 2010 AND 2009 FOR THE PERIOD FROM MAY 21, 2007 (INCEPTION) TO APRIL 30, 2010 From May 21, 2007 Year Ended Year Ended (Inception) to April 30, April 30, April 30, 2010 2009 2010 -------- -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES Net loss for the period $(13,475) $(45,240) $(66,082) Adjustments to reconcile net (loss) to net cash (used in) operating activities: (Increase) decrease in prepaid rent 336 (586) (250) Increase (decrease) in accounts payable and accrued liabilities (16,424) 23,425 11,501 -------- -------- -------- Net cash Used in Operating Activities (29,563) (22,669) (54,831) -------- -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issuance of common stock -- -- 55,000 Proceeds from loan from stockholder -- -- 2,939 Payments on loan from stockholder -- (268) (268) -------- -------- -------- Net Cash Provided by Financing Activities -- (268) 57,671 -------- -------- -------- Net Increase (Decrease) in Cash (29,563) (22,669) 2,840 Cash, beginning of the period 32,403 55,072 -- -------- -------- -------- Cash, end of the period $ 2,840 $ 32,403 $ 2,840 ======== ======== ======== SUPPLEMENTAL NON-CASH DISCLOSURES Cash paid for income taxes $ -- $ -- $ -- ======== ======== ======== Cash paid for interest $ -- $ -- $ -- ======== ======== ======== The accompanying notes are an integral part of these financial statements. 28 DIGITAL VALLEYS CORP. (A DEVELOPMENT STAGE COMPANY) NOTES TO THE FINANCIAL STATEMENTS APRIL 30, 2010 NOTE 1 - NATURE OF OPERATIONS Digital Valleys Corp. ("the Company"), incorporated in the state of Nevada on May 21, 2007, is a company with business activities in online customer support / help desk system. The company has limited operations and is considered to be in the development stage. NOTE 2 - GOING CONCERN The accompanying financial statements have been prepared assuming that the company will continue as a going concern. As discussed in the notes to the financial statements, the Company has no established source of revenue. This raises substantial doubt about the Company's ability to continue as a going concern. Without realization of additional capital, it would be unlikely for the Company to continue as a going concern. The financial statements do not include any adjustments that might result from this uncertainty. The Company's activities to date have been supported by equity financing. It has sustained losses in all previous reporting periods with an inception to date loss of $66,082 as of April 30, 2010. Management continues to seek funding from its shareholders and other qualified investors to pursue its business plan. In the alternative, the Company may be amenable to a sale, merger or other acquisition in the event such transaction is deemed by management to be in the best interests of the shareholders. NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES Accounting Basis These financial statements are prepared on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America. Financial Instruments The Company's financial instruments consist of cash, prepaid expenses, accounts payable and accrued liabilities, and an amount due to stockholder. The amount due to stockholder is non interest-bearing. It is management's opinion that the Company is not exposed to significant interest, currency or credit risks arising from its other financial instruments and that their fair values approximate their carrying values except where separately disclosed. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles of 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 year. The more significant areas requiring the use of estimates include asset impairment, stock-based compensation, and future income tax amounts. Management bases its estimates on historical experience and on other assumptions considered to be reasonable under the circumstances. However, actual results may differ from the estimates. Property The Company does not own any property. Our office space is leased to us on a month to month basis for approximately $200 per month. 29 DIGITAL VALLEYS CORP. (A DEVELOPMENT STAGE COMPANY) NOTES TO THE FINANCIAL STATEMENTS APRIL 30, 2010 NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Advertising The Company expenses advertising costs as incurred. The Company has had no advertising activity since inception. Loss Per Share Basic loss per share is calculated using the weighted average number of common shares outstanding and the treasury stock method is used to calculate diluted earnings per share. For the years presented, this calculation proved to be anti-dilutive. Dividends The Company has not adopted any policy regarding payment of dividends. No dividends have been paid during the period shown. Income Taxes The Company provides for income taxes using an asset and liability approach. Deferred tax assets are reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. No provision for income taxes is included in the statement due to its immaterial amount, net of the allowance account, based on the likelihood of the Company to utilize the loss carry-forward. Net Income Per Common Share Net income (loss) per common share is computed based on the weighted average number of common shares outstanding and common stock equivalents, if not anti-dilutive. The Company has not issued any potentially dilutive common shares. Recent Accounting Pronouncements Digital Valleys does not expect the adoption of any recently issued accounting pronouncements to have a significant impact on the Company's results of operations, financial position or cash flow. NOTE 4 - DUE TO STOCKHOLDER The amount owing to stockholder is unsecured, non-interest bearing and has no specific terms of repayment. NOTE 5 - CAPITAL STOCK The company has 100,000,000 common shares authorized at a par value of $0.001 per share. During the year ended April 30, 2008, the company issued 2,300,000 common shares for total proceeds of $55,000. As of April 30, 2010, the Company had 2,300,000 common shares issued and outstanding, and the Company has no warrants or options outstanding. 30 DIGITAL VALLEYS CORP. (A DEVELOPMENT STAGE COMPANY) NOTES TO THE FINANCIAL STATEMENTS APRIL 30, 2010 NOTE 6 - INCOME TAXES The Company provides for income using an asset and liability approach. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect currently. Deferred tax assets are reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. In the Company's opinion, it is uncertain whether they will generate sufficient taxable income in the future to fully utilize the net deferred tax asset. Accordingly, a valuation allowance equal to the deferred tax asset has been recorded. The total gross deferred tax asset at April 30, 2010 is $14,538, which is calculated by multiplying a 22% estimated tax rate by the cumulative NOL of $66,082. The valuation allowance at April 30, 2010 is $(14,538). The company has non-capital losses of $66,082. NOTE 7 - RELATED PARTY TRANSACTIONS As at April 30, 2010, there is a balance owing to a stockholder of the Company in the amount of $2,671. The officers and directors of the Company are involved in other business activities and may, in the future, become involved in other business opportunities that become available. They may face a conflict in selecting between the Company and other business interests. The Company has not formulated a policy for the resolution of such conflicts. NOTE 8 - CONCENTRATIONS OF RISKS 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 remained 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. NOTE 9 - SUBSEQUENT EVENTS The Company has analyzed its operations subsequent to April 30, 2010 and has determined that it does not have any material subsequent events to disclose in the financial statements. 31 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. ITEM 9A. CONTROLS AND PROCEDURES DISCLOSURE CONTROLS AND PROCEDURES MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the company's principal executive and principal financial officers and effected by the company's board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America and 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 the assets of the company; - Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and - Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company's assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. 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. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Because of the inherent limitations of internal control, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk. As of April 30, 2010 management assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established in Internal Control--Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") and SEC guidance on conducting such assessments. Based on that evaluation, they concluded that, during the period covered by this report, such internal controls and procedures were not effective to detect the inappropriate application of US GAAP rules as more fully described below. This was due to deficiencies that existed in the design or operation of our internal controls over financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses. The matters involving internal controls and procedures that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: (1) lack of a functioning audit committee due to a lack of a majority of independent members and a lack of a majority of outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; (2) inadequate segregation of duties consistent with control objectives; and (3) ineffective controls over period end financial disclosure and reporting processes. The aforementioned material weaknesses were identified by our Chief Executive Officer in connection with the audit of our financial statements as of April 30, 2010. 32 Management believes that the material weaknesses set forth in items (2) and (3) above did not have an effect on our financial results. However, management believes that the lack of a functioning audit committee and the lack of a majority of outside directors on our board of directors results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods. This annual report does not include an attestation report of the Corporation's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Corporation's registered public accounting firm pursuant to temporary rules of the SEC that permit the Corporation to provide only the management's report in this annual report. MANAGEMENT'S REMEDIATION INITIATIVES In an effort to remediate the identified material weaknesses and other deficiencies and enhance our internal controls, we have initiated, or plan to initiate, the following series of measures: We will create a position to segregate duties consistent with control objectives and will increase our personnel resources and technical accounting expertise within the accounting function when funds are available to us. And, we plan to appoint one or more outside directors to our board of directors who shall be appointed to an audit committee resulting in a fully functioning audit committee who will undertake the oversight in the establishment and monitoring of required internal controls and procedures such as reviewing and approving estimates and assumptions made by management when funds are available to us. Management believes that the appointment of one or more outside directors, who shall be appointed to a fully functioning audit committee, will remedy the lack of a functioning audit committee and a lack of a majority of outside directors on our Board. We anticipate that these initiatives will be at least partially, if not fully, implemented by December 31, 2010. Additionally, we plan to test our updated controls and remediate our deficiencies by December 31, 2010. CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING There was no change in our internal controls over financial reporting that occurred during the period covered by this report, which has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting. ITEM 9B. OTHER INFORMATION None. 33 PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE EXECUTIVE OFFICER AND DIRECTORS Our officers and directors and their ages and positions are as follows: Name Age Position ---- --- -------- Felipe A. Pati 40 President, Treasurer, Secretary and Director MR. FELIPE A PATI joined our company in May 2007. Mr. Pati is serving as the President, Treasurer, Secretary and sole Director of the Company. Mr. Pati received his Masters in Computer Science in 2001 from De La Salle University in Manila Philippines, and a Ph.D in Philosophy in Management in 2006 from University of the Cordilleras, Baguio City, Philippines. Currently Mr. Pati is a professor at Saint Louis University in Baguio City, Philippines. He teaches in the Information and Computer Science Department in both Graduate and Undergraduate programs. Before that, from 2001 to 2006, he was Department Head and Associate Professor of Computer Science at the University of the Cordilleras in Bagio City, Philippines. AUDIT COMMITTEE We do not have an audit committee at this time. CODE OF ETHICS We currently do not have a Code of Ethics. SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors, executive officers, and stockholders holding more than 10% of our outstanding common stock, to file with the Securities and Exchange Commission initial reports of ownership and reports of changes in beneficial ownership of our common stock. Executive officers, directors and greater-than-10% stockholders are required by SEC regulations to furnish us with copies of all Section 16(a) reports they file. To our knowledge, based solely on review of the copies of such reports furnished to us for the year ended April 30, 2010, no Section 16(a) reports required to be filed by our executive officers, directors and greater-than-10% stockholders were not filed on a timely basis. 34 ITEM 11. EXECUTIVE COMPENSATION The following table sets forth the cash compensation paid to the Chief Executive Officer and to all other executive officers for services rendered during the fiscal year ended April 30, 2010. SUMMARY COMPENSATION TABLE Annual Compensation Long Term Compensation ------------------------- --------------------------------------------------- Awards Payouts ------------------------- ------- Securities Restricted Underlying Shares or Options/ Restricted Name and SARs Share LTIP Principal Position Year Salary Bonus Other Granted Units Payouts All Other - ------------------ ---- ------ ----- ----- ------- ----- ------- --------- Mr. Felipe A. Pati 2009 Nil Nil Nil Nil Nil Nil Nil President, 2010 Nil Nil Nil Nil Nil Nil Nil Treasurer Secretary and Director Option Awards Stock Awards ----------------------------------------------------------------- ---------------------------------------------- Equity Incentive Equity Plan Incentive Awards: Plan Market or Awards: Payout Equity Number of Value of Incentive Number Unearned Unearned Plan Awards; of Market Shares, Shares, Number of Number of Number of Shares Value of Units or Units or Securities Securities Securities or Units Shares or Other Other Underlying Underlying Underlying of Stock Units of Rights Rights Unexercised Unexercised Unexercised Option Option That Stock That That That Options (#) Options (#) Unearned Exercise Expiration Have Not Have Not Have Not Have Not Name Exercisable Unexercisable Options (#) Price Date Vested(#) Vested Vested Vested - ---- ----------- ------------- ----------- ----- ---- --------- ------ ------ ------ Mr. Felipe A. Pati -- -- -- -- -- -- -- -- -- OPTION GRANTS AND EXERCISES There were no option grants or exercises by any of the executive officers named in the Summary Compensation Table above. EMPLOYMENT AGREEMENTS We have not entered into employment and/or consultant agreements with our Directors and officers. 35 COMPENSATION OF DIRECTORS All directors receive reimbursement for reasonable out-of-pocket expenses in attending board of directors meetings and for promoting our business. From time to time we may engage certain members of the board of directors to perform services on our behalf. In such cases, we compensate the members for their services at rates no more favorable than could be obtained from unaffiliated parties. Our directors have not received any compensation for the fiscal year ended April 30, 2010. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The table below sets forth the number and percentage of shares of our common stock owned as of July 27, 2009, by the following persons: (i) stockholders known to us who own 5% or more of our outstanding shares, (ii) each of our Directors, and (iii) our officers and Directors as a group. Unless otherwise indicated, each of the stockholders has sole voting and investment power with respect to the shares beneficially owned. Name and Address of Amount and Nature Percentage of Title of Class Beneficial Owner(2) of Beneficial Ownership Class(1) - -------------- ------------------- ----------------------- -------- Common Stock Mr. Pati 1,600,000 69.56% All Officers as a Group 1,600,000 69.56% - ---------- (1) Based on 2,300,000 shares of our common stock outstanding. CHANGES IN CONTROL There are no existing arrangements that may result in a change in control of the Company. SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS. The following table sets forth information regarding our equity compensation plans. Number of Number of securities securities to be issued Weighted-average remaining available for future upon exercise of exercise price of issuance under equity outstanding options, outstanding options, compensation plans (excluding Plan category warrants and rights warrants and rights securities reflected in column (a) - ------------- ------------------- ------------------- ---------------------------------- Equity compensation plans approved by security holders -- -- -- Equity compensation plans not approved by security holders -- -- -- Total -- -- -- 36 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. As of April 30, 2010, there is a balance owing to one of our stockholders in the amount of $2,671. This balance is unsecured, non-interest bearing and has no specific terms of repayment. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES AUDIT FEES For the year ended April 30, 2010, Silberstein Ungar, PLLC billed us for $4,500 in audit fees. REVIEW FEES Silberstein Ungar PLLC, billed us $4,500 for reviews of our quarterly financial statements in fiscal 2010 and are not reported under Audit Fees above. TAX AND ALL OTHER FEES We did not pay any fees to Silberstein Ungar, PLLC for tax compliance, tax advice, tax planning or other work during our fiscal year ended April 30, 2010 PRE-APPROVAL POLICIES AND PROCEDURES We have implemented pre-approval policies and procedures related to the provision of audit and non-audit services. Under these procedures, our board of directors pre-approves all services to be provided by Moore and Associates, Chartered and the estimated fees related to these services. PART IV ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES Exhibit Description - ------- ----------- 3.1 Articles of Incorporation (included as Exhibit 3.1 to the Form S-1 filed August 6, 2008, and incorporated by reference) 3.2 Bylaws (included as Exhibit 3.1 to the Form S-1 filed August 6, 2008, and incorporated by reference) 31 Certification of Felipe A. Pati 32 Certification of Felipe A. Pati 37 SIGNATURES In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. DIGITAL VALLEYS CORP. June 17, 2010 By: /s/ Felipe A. Pati -------------------------------------- Felipe A. Pati President, Treasurer, and Director Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated. Signatures Title Date ---------- ----- ---- /s/ Felipe A. Pati President, Treasurer, Secretary, June 17, 2010 - --------------------------- and Director Felipe A. Pati 38