UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the fiscal year ended June 30, 2010
[ ] Transition Report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
SYNC2 NETWORKS CORP.
(Exact name of small business issuer in its charter)
Nevada 333-152551 26-1754034
(State or other jurisdiction of (Commission (IRS Employer
incorporation or organization) File Number) Identification No.)
5836 South Pecos Road, Suite 112
Las Vegas, NV 89120
(Address of principal executive offices)
1-702-315-0521
(Issuer's telephone number)
Plethora Resources, Inc
204 West Spear Street
Carson City NV 89703
(Former name, former address and former fiscal year,
if changed since last report)
Securities registered under Section 12(b) of the Exchange Act:
None.
Securities registered under Section 12(g) of the Exchange Act:
Common Stock $0.001 par value.
Check whether the issuer is not required to file reports pursuant to Section 13
or 15(d) of the Exchange Act. [ ]
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. [X] Yes [ ]No
Check if there is no disclosure of delinquent filers in response to Item 405 or
Regulation S-B contained in this form, and no disclosure will 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-KSB or any
amendment to this Form 10-K [ ]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act) Yes [ ] No [X]
State issuer's revenues for its most recent fiscal year: $163,230
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date. As of September 28, 2010 the issuer
had 103,046,175 shares of common stock issued and outstanding.
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X}
CAUTIONARY STATEMENTS REGARDING FORWARD LOOKING INFORMATION
Except for statements of historical fact, certain information contained herein
constitutes `forward looking statements' within the meaning of Section 27A of
the securities Act and Section 21E of the Securities Exchange Act. Forward
looking statements address our current plans, intentions, beliefs and
expectations and are statements of our expected future economic performance.
Statements containing terms like `believes', `does not believe', `plans',
`expects', `intends', `estimates', `anticipates', and other phrases of similar
meaning or the negative or other variations of these words or other comparable
words or phrases are considered to imply uncertainty and are forward looking
statements.
Such forward looking statements involve known and unknown risks, uncertainties
and other factors which may cause the actual results or achievements of the
Company to be materially different from any future results or achievements of
the Company expressed or implied by such forward looking statements. Such
factors include, but are not limited to changes in economic conditions,
government regulations, contract requirements and abilities, behavior of
existing and new competitor companies and other risks and uncertainties
discussed in this annual report on Form 10-K.
We cannot guarantee our future results, level of activity, performance or
achievements. Neither we nor any other person assumes responsibility for the
accuracy and completeness of these forward looking statements. We are under no
duty to update any of the forward looking statements after the date of this
report.
RISK FACTORS
Investment in our common stock involves a high degree of risk. Prospective
investors should carefully consider the following risk factors in addition to
other information in this annual report before purchasing our common stock.
Because we have a net loss from operations of $ 1,219,296 for the year ended
June 30, 2010 and have accumulated losses of $1,698,811 from inception, we face
a risk of insolvency.
We have never earned substantial operating revenue. We have been dependent on
equity and debt financing to help pay operating costs and to help cover
operating losses.
Because we have a limited sales history our future is uncertain.
2
PART I
ITEM 1. DESCRIPTION OF BUSINESS
GENERAL INFORMATION
We were incorporated on January 16, 2008 under the laws of the state of Nevada
as Plethora Resources Inc. to commence operations in the business of consulting
to oil & gas exploration companies interested in obtaining exploration and
production licenses at auction for oil and gas properties in Russia. We were
unable to fund our intended business and, on May 28, 2009 but effective February
1, 2009, we acquired a wholly owned subsidiary, Sync2 International Ltd, for the
assumption of the debts of Sync2 Agency Ltd, a wholly owned subsidiary of Sync2
International Ltd. Sync2 Agency Ltd is an internet marketing and website
development company. On May 14, 2009 we changed our name to Sync2 Networks Corp.
(the `Company').
We have a total of 150,000,000 authorized common shares with a par value of
$0.001 per share. Of these, 103,046,175 common shares were issued and
outstanding as of June 30, 2010.
We completed a form S-1 Registration Statement under the Securities Act of 1933
with the U.S. Securities and Exchange Commission registering 34,850,000 shares
of our common stock on behalf of our selling shareholders.
BUSINESS DEVELOPMENT
We have sustained losses for the year ended June 30, 2010 of $384,426 and wrote
off the investment in Agency for $705,314
Effective February 1, 2009 the Company acquired Sync2 International Ltd, a Malta
Corporation ("INTL"). The Company owns all of the shares of INTL. INTL owns all
of the shares of Sync2 Agency Ltd ("Agency"), a Canadian company located in
Vancouver and specializing in the area of internet marketing and website
development, among other things. Under the terms of the acquisition of INTL the
Company acquired 100% of the issued and outstanding shares of INTL for the
assumption of Cdn$767,333 in debts of Agency.
The Company has never declared bankruptcy, been in receivership, or been
involved in any kind of legal proceeding.
At this time the Company, its directors, officers and affiliates have not
entered negotiations or discussions with representatives or owners of any other
businesses or companies regarding the possibility of an acquisition or merger.
3
BUSINESS OF ISSUER
The Company engages in the business of acquiring and developing internet
marketing and web site development entities and/or their individual software
programs to assist third-party clients in marketing their products and in
maximizing the use of the internet to achieve those third-party clients'
ultimate business objectives.
Prior to the Company's purchase of assets for the assumption of debts of
Cdn$767,333 it had limited operations in this area and has since abandoned its
original business endeavors.
More recently the Sync2 Group has expanded its on-line business consulting
activities, by entering into a strategic alliance with prominent systems and
infrastructure providers such as "IBM" (attaining IBM Business Partner Status),
"Apple" (a part of the I-phone Developer Program), and more complex tri-partite
business arrangements with Telus Communications Company and Cisco Systems
developing specialized industry-specific software applications.
This new orientation compliments its existing on-line asset management, on-going
maintenance and support endeavors, and on-line systems analysis business,
permitting Sync2 to broaden its business activities throughout Canada and the
rest of the world, in turn creating the potential for the development of a more
unique array of products and services in an industry with growth potential.
ITEM 2. DESCRIPTION OF PROPERTY
Sync2 Network's principal place of business and corporate offices is located at
5836 South Pecos Road, Suite 112, Las Vegas, NV 89120 and our phone number is
(702) 315-0521.
We do not have any investments or interests in any real estate. We do not invest
in real estate mortgages, nor do we invest in securities of, or interests in,
persons primarily engaged in real estate activities or any other securities.
ITEM 3. LEGAL PROCEEDINGS
We are not currently involved in any legal proceedings nor do we have any
knowledge of any threatened litigation.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
No change since previous filing.
The Company has filed with the SEC an S-1 registration statement July 25, 2008
and quarterly reports (form 10Q) for September and December 2008 and for March,
2009. This is the Company's first annual report (form 10K).
4
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND SMALL
BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES
SECURITIES
Our common stock is currently quoted on the OTC Bulletin Board under the symbol
"SYNW".
As of September 28, 2010 we have 103,465.275 shares of $0.001 par value common
stock issued and outstanding held by approximately 29 shareholders of record.
The stock transfer agent for our securities is:
Island Stock Transfer Company
100 Second Avenue South, Suite 705S, St. Petersburg, Florida 33701
Tel: (727) 289-0010
DIVIDENDS
On May 14, 2009 the Company forward split its issued shares of common stock on
the basis of 17 new shares for 1 old share by the issuance of 80,800,000 shares
pro rata to its existing shareholders as a stock dividend. At the same time the
Company changed its name from Plethora Resources Inc. to Sync2 Networks Corp and
increased its authorized share capital to 150,000,000 common shares.
There are no restrictions in our articles of incorporation or bylaws that
prevent us from declaring dividends. The Nevada Statutes, however, do prohibit
us from declaring cash dividends where, after giving effect to the distribution
of the dividend:
1. we would not be able to pay our debts as they become due in the usual
course of business; or
2. our total assets would be less than the sum of our total liabilities
plus the amount that would be needed to satisfy the rights of
shareholders who have preferential rights superior to those receiving
the distribution.
RECENT SALES OF UNREGISTERED SECURITIES
There were 17,196,175 share issuances during the year ended June 30, 2010 as
shares for debt for cash consideration of $17,196 and settlement of a debt of
$670,651.
On April 15, 2008 the Company issued 51,000,000 shares of common stock for cash
of $3,000 and on April 24, 2008 the Company issued 22,100,000 shares of common
stock for cash of $6,800 and additionally, on May 28, 2008 the Company issued
12,750,000 shares of common stock for cash of $15,000. No discounts or
5
commissions were paid in connection with these offerings. These offerings were
undertaken pursuant to the limited offering exemption from registration under
the Securities Act of 1933 as provided under Regulation D and Regulation S as
promulgated by the U.S. Securities and Exchange Commission. The offering was
made to "accredited investors." As a result, offers were made only to persons
that the Company believed, and had reasonable grounds to believe, either (a)
have such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of the proposed investment, or (b)
can bear the economic risks of the proposed investment (that is, at the time of
investment, could afford a complete loss) and (c) were non US residents.
ITEM 7. PLAN OF OPERATION
RESULTS OF OPERATIONS
We have generated $365,812 in revenues since inception ($nil for the period from
inception January 16, 2008 to June 30, 2008) and have incurred $993,497 in
expenses since inception through June 30, 2010.
The following table provides selected financial data about our company for the
year ended June 30, 2010.
Balance Sheet Data: June 30, 2010 June 30, 2009
- ------------------- ------------- -------------
Cash $ 0 $ 17,702
Total assets $ 36,500 $ 708,664
Total liabilities $ 745,118 $ 930,667
Shareholders' equity (deficit) $(1,697,811) $ (222,003)
PLAN OF OPERATION
Statements contained herein which are not historical facts are forward-looking
statements as that term is defined by the Private Securities Litigation Reform
Act of 1995. Although the Company believes that the expectations reflected in
such forward-looking statements are reasonable, forward-looking statements are
subject to risks and uncertainties that could cause actual results to differ
from those projected. The Company cautions investors that any forward-looking
statements made by the Company are not guarantees of future performance and
actual results may differ materially from those in the forward-looking
statements. Such risks and uncertainties include, without limitation:
established competitors who have substantially greater financial resources and
operating histories, regulatory delays or denials, ability to compete as a
start-up company in a highly competitive market, and access to sources of
capital.
The following discussion and analysis should be read in conjunction with our
financial statements and notes thereto included elsewhere in this Form 10-K.
With the exception of the historical information contained herein, the
discussion in this Form 10-K contains certain forward-looking statements that
involve risks and uncertainties, such as statements of our plans, objectives,
expectations and intentions. The cautionary statements made in this Form 10-K
6
should be read as being applicable to all related forward-looking statements
wherever they appear in this Form 10-K.
The Company's actual results could differ materially from those discussed here.
Over the course of the next twelve months Sync2 intends to continue with its
plan of business development and operations to assist companies, organizations
and individuals (collectively the "clients") in establishing, building,
maintaining and marketing the clients' online businesses.
If the Company is unable to meet its needs for cash it will be unable to
continue, develop, or expand its operations.
While the officers and directors have generally indicated a willingness to
provide services and financial contributions if necessary, there are presently
no agreements, arrangements, commitments, or specific understandings, either
verbally or in writing, between the officers and directors and Sync2.
If we are unable to pay for our expenses because we do not have enough money, we
may be forced to cease active operations until we are able to secure additional
financing. If we cannot or do not secure additional financing we may be forced
to cease active business operations.
LIMITED OPERATING HISTORY; NEED FOR ADDITIONAL CAPITAL
There is no historical financial information about us upon which to base an
evaluation of our performance. We cannot guarantee we will be successful in our
business operations. Our business is subject to risks inherent in the
establishment of a new business enterprise, including limited capital resources
and possible cost overruns due to price and cost increases in services,
supplies, and equipment.
We have no assurance that future financing will be available to us on acceptable
terms. If financing is not available on satisfactory terms, we may be unable to
continue, develop or expand our operations. Equity financing could result in
additional dilution to existing shareholders.
LIQUIDITY AND CAPITAL RESOURCES
We cannot guarantee that we will have enough funds to forward our business plan.
If that is the case, we will attempt to raise additional money by way of loans
from officers of the Company, loans from third-parties, and/or sale(s) of
additional securities. Additional equity financing would result in additional
dilution to our existing shareholders.
At the present time, we have not made any arrangements to raise additional cash.
If we need additional cash and cannot raise it, we will either have to suspend
operations until we do raise the cash, or cease operations entirely. Other than
as described in this paragraph, we have no other financing plans.
7
Since inception of the Company on January 16, 2008 to June 30, 2010 the Company
has issued shares for cash as follows:
* On April 15, 2010 the Company issued 17,196,175 shares of common stock for
cash of $17,916 and the forgiveness of debt of $670,651
* On April 15, 2008 the Company issued 51,000,000 shares of common stock for
cash of $3,000 and
* On April 24, 2008 the Company issued 22,100,000 shares of common stock for
cash of $6,800 and
* On May 28, 2008 the Company issued 12,750,000 shares of common stock for
cash of $15,000.
APPLICATION OF CRITICAL ACCOUNTING POLICIES
Our financial statements have been prepared on a going concern basis. We have
accumulated a deficit from operations of $1,697,811 as of June 30, 2010. Our
ability to continue as a going concern is dependent upon our ability to generate
profitable operations in the future and/or to obtain the necessary financing to
meet our obligations and repay our liabilities arising from normal business
operations when they come due. The outcome of these matters cannot be predicted
with any certainty at this time. We have historically satisfied our working
capital needs primarily by sales of securities and by loans from investors.
ITEM 8. FINANCIAL STATEMENTS
Sync2 Networks Corp
June 30, 2010
BALANCE SHEET
STATEMENTS OF OPERATIONS
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
STATEMENTS OF CASH FLOWS
NOTES TO THE FINANCIAL STATEMENTS
8
Sync2 Networks Corp
(formerly Plethora Resources, Inc.)
(A Development Stage Company)
Balance Sheets
June 30, 2009
ASSETS
2009 2008
---------- ----------
CURRENT ASSETS
Cash $ 17,702 $ 24,207
Accounts receivable 51,114 --
Work in process 17,650 --
---------- ----------
Total current assets 86,466 24,207
FIXED ASSETS 162,492 --
GOODWILL 459,706 --
---------- ----------
TOTAL ASSETS $ 708,664 $ 24,207
========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
CURRENT LIABILITES
Accounts payable $ 159,628 $ --
Deferred revenue 7,684 --
Due to related parties 763,355 990
---------- ----------
Total current liabilities 930,667 990
---------- ----------
TOTAL LIABILITIES 930,667 990
---------- ----------
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock
Authorized: 150,000,000 : par value $0.001 per share
Issued: 85,850,000 as of 2009 85,850 85,850
85,850,000 as of 2008
Additional paid-in capital (deficiency) (61,350) (61,350)
Deficit accumulated during exploration stage (246,503) (1,283)
---------- ----------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (222,003) 23,217
---------- ----------
TOTAL LIABILTIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 708,664 $ 24,207
========== ==========
The accompanying notes are an integral part of these financial statements
9
Sync2 Networks Corp
(formerly Plethora Resources, Inc.)
(A Development Stage Company)
Statements of Operations for the Year Ended June 30, 2009 and
Period Ended June 30, 2008 and for the period from January 16, 2008
(date of inception) to June 30, 2009
Cumulative results
of operations
from the date of
inception to
Year ended Period ended June 30,
2009 2008 2009
------------ ------------ ------------
Revenues $ 202,583 $ -- $ 202,583
------------ ------------ ------------
Salaries and benefits 169,682 -- 169,682
Rent 56,770 -- 56,770
Marketing 14,620 -- 14,620
Foreign exchange 5,908 -- 5,908
Amortization 56,298 -- 56,298
Transfer agent fees 1,808 -- 1,808
Professional fees 15,180 -- 15,180
Management fees 56,175 -- 56,175
Financial consulting 15,878 -- 15,878
Travel/Meals and Lodging 4,642 -- 4,642
General and Administration 50,842 1,283 52,125
------------ ------------ ------------
Total operating costs 447,803 1,283 449,086
============ ============ ============
Loss from operations before taxes (245,220) (1,283) (246,503)
Income tax expense -- -- --
------------ ------------ ------------
Net loss for the year $ (245,220) $ (1,283) $ (246,503)
============ ============ ============
Basic and diluted earnings (loss) per share $ (0.00) $ (0.00)
Weighted average number of common shares outstanding 85,850,000 38,829,802
The accompanying notes are an integral part of these financial statements
10
Sync2 Networks Corp
(formerly Plethora Resources, Inc.)
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit)
From Inception January 16, 2008 to June 30, 2009
Deficit
Common Stock Accumulated
-------------------------- Additional During the
Number of Paid-in Development Subscription
shares Amount Capital Stage (Receivable) Total
------ ------ ------- ----- ------------ -----
Balance at inception
January 16, 2008 -- $ -- $ -- $ -- $ -- $ --
Common stock issued for cash:
- April 15, 2008 51,000,000 51,000 (48,000) -- -- 3,000
- April 24, 2008 22,100,000 22,100 (15,600) -- -- 6,500
- May 28, 2008 12,750,000 12,750 2,250 -- -- 15,000
---------- ---------- ---------- ---------- ---- ----------
Net loss for the period ended
June 30, 2008 -- -- -- (1,283) -- (1,283)
---------- ---------- ---------- ---------- ---- ----------
Balance June 30, 2008 85,850,000 85,850 (61,350) (1,283) -- 23,217
Net loss for the year ended
June 30, 2009 -- -- -- (245,220) -- (245,220)
---------- ---------- ---------- ---------- ---- ----------
Balance June 30, 2009 85,850,000 85,850 (61,350) (246,503) -- (222,003)
========== ========== ========== ========== ==== ==========
The accompanying notes are an integral part of these financial statements
11
Sync2 Networks Corp
(formerly Plethora Resources, Inc.)
(A Development Stage Company)
Statements of Cash Flows for the Year Ended June 30, 2009 and
for the Period Ended June 30, 2008 and for the period from January 16, 2008
(date of inception) to June 30, 2009
Cumulative results
of operations
from the date
Year ended Period ended of inception to
June 30, June 30, June 30,
2009 2008 2009
---------- ---------- ----------
OPERATING ACTIVITIES
Net loss
Adjustments to reconcile net loss to net cash
used in operating activities: $ (245,220) $ (1,283) $ (246,503)
Non cash expense - Amortization 56,298 -- 56,298
- Foreign exchange 5,908 -- 5,908
Increase in deferred revenue 7,684 -- 7,684
Increase in accounts receivable (51,114) -- (51,114)
Increase in work in process (17,650) -- (17,650)
Increase (decrease) in accounts payable 159,628 -- 159,628
Increase in due to related parties 762,365 990 763,355
---------- ---------- ----------
NET CASH USED IN OPERATING ACTIVITIES 677,899 (293) 677,606
---------- ---------- ----------
INVESTING ACTIVITIES
Fixed assets (178,803) -- (178,803)
Goodwill (501,497) -- (501,497)
---------- ---------- ----------
NET CASH USED IN INVESTING ACTIVITIES (680,300) -- (680,300)
---------- ---------- ----------
FINANCING ACTIVITIES
Proceeds from sale of common stock -- 24,500 24,500
---------- ---------- ----------
NET CASH PROVIDED BY FINANCING ACTIVITIES -- 24,500 24,500
---------- ---------- ----------
EFFECT OF FOREIGN EXCHANGE ON CASH (4,104) -- (4,104)
---------- ---------- ----------
NET INCREASE (DECREASE) IN CASH (6,505) 24,207 17,702
CASH, BEGINNING OF PERIOD 24,207 -- --
---------- ---------- ----------
CASH, END OF PERIOD $ 17,702 $ 24,207 $ 17,702
========== ========== ==========
Supplemental cash flow information and noncash
financing activities:
Interest paid $ -- $ -- $ --
Income taxes paid $ -- $ -- $ --
Common stock issued for services $ -- $ -- $ --
The accompanying notes are an integral part of these financial statements
12
Sync2 Networks Corp
(formerly Plethora Resources, Inc.)
(A Development Stage Company)
Notes to the Financial Statements
June 30, 2009
NOTE 1 - BASIS OF PRESENTATION AND NATURE OF BUSINESS AND ORGANIZATION
Sync2 Networks Corp (the "Company") was formed on January 16, 2008 in the
State of Nevada under the name Plethora Resources, Inc. as a development
stage company. The Company was originally organized to engage in the
business of consulting to oil & gas exploration companies interested in
obtaining exploration and production licenses at auction for oil and gas
properties in Russia.
On June 25, 2009 the Company purchased the assets and business of Sync2
International Ltd. in exchange for the assumption of all outstanding debts
of Sync2 Agency Ltd. ("Agency". Agency is a wholly owned subsidiary of
Sync2 International Ltd., a web development and web property management
company. Effective May 14, 2009 the Company changed its name to Sync2
Networks Corp.
The Company's business plan is to be an interactive marketing firm that
designs, builds, implements and optimizes strategic interactive web
networks and internet marketing programs that acquire, convert and retain
customers for clients.
The Company is considered to be in the development stage as defined in
Statement of Financial Accounting Standards (SFAS) No. 7, "ACCOUNTING AND
REPORTING BY DEVELOPMENT STAGE ENTERPRISES". The Company has devoted
substantially all of its efforts to business planning and development, as
well as allocating a substantial portion of its time and investment in
bringing product(s)/services to the market, and the raising of capital.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
13
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
START-UP COSTS
In accordance with the American Institute of Certified Public Accountants
Statement of Position 98-5, "REPORTING ON THE COSTS OF START-UP
ACTIVITIES", the Company expenses all costs incurred in connection with the
start-up and organization of the Company.
INCOME TAXES
The Company follows the liability method of accounting for income taxes.
Under this method, deferred tax assets and liabilities are recognized for
deductible temporary differences. Temporary differences are the differences
between the reported amounts of assets and liabilities and their tax bases.
Deferred tax assets are reduced by a valuation allowance when, in the
opinion of management, it is more likely than not that some portion or all
of the deferred tax assets will not be realized. Deferred tax assets and
liabilities are adjusted for the effects of changes in tax laws and rates
on the date of enactment.
EARNINGS (LOSS) PER SHARE OF COMMON STOCK
Historical net loss per common share is computed using the weighted average
number of common shares outstanding. Diluted earnings (loss) per share
reflect the potential dilution of securities that could share in the
earnings of the Company. Because the Company does not have any potential
dilutive securities, the accompanying presentation reflects the basic loss
per share calculated as follows:
2009 2008
---------- ----------
Numerator: Net loss $ (245,220) $ (1,283)
---------- ----------
Denominator: Weighted average number of shares issued 85,850,000 38,829,802
Earnings (loss) per share $ (0.00) $ (0.00)
=========== ===========
RECENT ACCOUNTING PRONOUNCEMENTS
In March, 2008, the FASB issued SFAS No. 161, "DISCLOSURES ABOUT DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES", as an amendment of FASB Statement No.
133. SFAS 161 requires entities utilizing derivative instruments to provide
qualitative disclosures about their objectives and strategies for using
such instruments, as well as details of credit-risk-related contingent
features contained within derivatives. SFAS 161 also requires entities to
disclose additional information about the amounts and location of
derivatives located within the financial statements, how the provisions of
SFAS No. 133 have been applied and the impact that hedges have on an
entity's financial position, financial performance and cash flows. SFAS No.
161 is effective for fiscal years and interim periods beginning after
November 15, 2008. Early application is encouraged. The Company does not
have or utilize any derivative instruments and/or hedging activities and
therefore SFAS 161 is not expected to have an impact on the Company's
financial statements.
14
RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED)
In May 2008, the FASB issued Statement of Financial Accounting Standard
("SFAS") No. 162, "THE HIERARCHY OF GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES". SFAS 162 identifies the sources of accounting principles and
the framework for selecting the principles used in the preparation of
financial statements of nongovernmental entities that are presented in
conformity with generally accepted accounting principles (GAAP) in the
United States. SFAS 162 is effective 60 days following the SEC's approval
of the Public Company Accounting Oversight Board amendments to AU Section
411, `The Meaning of Present Fairly in Conformity With Generally Accepted
Accounting Principles'. The Company is currently evaluating the impact of
SFAS 162 on its financial statements but does not expect it to have a
material effect.
In May 2008, the FASB issued Statement of Financial Accounting Standard
("SFAS") No. 163, "ACCOUNTING FOR FINANCIAL GUARANTEE INSURANCE CONTRACTS -
AN INTERPRETATION OF FASB STATEMENT NO. 60" ("SFAS 163"). SFAS 163
interprets Statement 60 and amends existing accounting pronouncements to
clarify their application to the financial guarantee insurance contracts
included within the scope of that Statement. SFAS 163 is effective for
financial statements issued for fiscal years beginning after December 15,
2008, and all interim periods within those fiscal years. As such, the
Company is required to adopt these provisions at the beginning of the
fiscal year ended June 30, 2010. The Company is currently evaluating the
impact of SFAS 162 on its financial statements but does not expect it to
have a material effect.
In June 2008, the FASB issued FASB Staff Position EITF 03-6-1, DETERMINING
WHETHER INSTRUMENTS GRANTED IN SHARE-BASED PAYMENT TRANSACTIONS ARE
PARTICIPATING SECURITIES, ("FSP EITF 03-6-1"). FSP EITF 03-6-1 addresses
whether instruments granted in share-based payment transactions are
participating securities prior to vesting, and therefore need to be
included in the computation of earnings per share under the two-class
method as described in FASB Statement of Financial Accounting Standards No.
128, "Earnings per Share." FSP EITF 03-6-1 is effective for financial
statements issued for fiscal years beginning on or after December 15, 2008
and earlier adoption is prohibited. We are not required to adopt FSP EITF
03-6-1; neither do we believe that FSP EITF 03-6-1 would have a material
effect on our consolidated financial position and results of operations if
adopted.
In September 2008, the FASB issued exposure drafts that eliminate
qualifying special purpose entities from the guidance of SFAS No. 140,
"Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities," and FASB Interpretation 46 (revised
December 2003), "Consolidation of Variable Interest Entities - an
interpretation of ARB No. 51," as well as other modifications. While the
proposed revised pronouncements have not been finalized and the proposals
are subject to further public comment, the Company anticipates the changes
will not have a significant impact on the Company's financial statements.
The changes would be effective March 1, 2010, on a prospective basis.
In October 2008, the FASB issued FSP No. FAS 157-3, "Determining the Fair
Value of a Financial Asset When the Market for That Asset is Not Active,"
("FSP FAS 157-3"), which clarifies application of SFAS 157 in a market that
is not active. FSP FAS 157-3 was effective upon issuance, including prior
periods for which financial statements have not been issued. The adoption
of FSP FAS 157-3 had no impact on the Company's results of operations,
financial condition or cash flows.
15
RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED)
In December 2008 the FASB issued FSP FAS 140-4 and FIN 46(R)-8,
"Disclosures by Public Entities (Enterprises) about Transfers of Financial
Assets and Interests in Variable Interest Entities." This disclosure-only
FSP improves the transparency of transfers of financial assets and an
enterprise's involvement with variable interest entities, including
qualifying special-purpose entities. This FSP is effective for the first
reporting period (interim or annual) ending after December 15, 2008, with
earlier application encouraged. The Company adopted this FSP effective
January 1, 2009. The adoption of the FSP had no impact on the Company's
results of operations, financial condition or cash flows.
In December 2008 the FASB issued FSP No. FAS 132(R)-1, "Employers'
Disclosures about Postretirement Benefit Plan Assets" ("FSP FAS 132(R)-1").
FSP FAS 132(R)-1 requires additional fair value disclosures about
employers' pension and postretirement benefit plan assets consistent with
guidance contained in SFAS 157. Specifically, employers will be required to
disclose information about how investment allocation decisions are made,
the fair value of each major category of plan assets, and information about
the inputs and valuation techniques used to develop the fair value
measurements of plan assets. This FSP is effective for fiscal years ending
after December 15, 2009. The Company does not expect the adoption of FSP
FAS 132(R)-1 will have a material impact on its financial condition or
results of operation.
In April 2009, the FASB issued FSP No. FAS 157-4, "Determining Fair Value
When the Volume and Level of Activity for the Asset or Liability Have
Significantly Decreased and Identifying Transactions That Are Not Orderly"
("FSP FAS 157-4"). FSP FAS 157-4 provides guidance on estimating fair value
when market activity has decreased and on identifying transactions that are
not orderly. Additionally, entities are required to disclose in interim and
annual periods the inputs and valuation techniques used to measure fair
value. This FSP is effective for interim and annual periods ending after
June 15, 2009. The Company does not expect the adoption of FSP FAS 157-4
will have a material impact on its financial condition or results of
operation.
The implementation of these new standards is not expected to have a
material effect on the Company's financial statements.
NOTE 3 - PROVISION FOR INCOME TAXES
Deferred income taxes will be determined using the liability method for the
temporary differences between the financial reporting basis and income tax
basis of the Company's assets and liabilities. Deferred income taxes will
be measured based on the tax rates expected to be in effect when the
temporary differences are included in the Company's tax return. Deferred
tax assets and liabilities are recognized based on anticipated future tax
consequences attributable to differences between financial statement
carrying amounts of assets and liabilities and their respective tax bases.
For the year ended June 30, 2009 the provision for income taxes was $0.00.
16
NOTE 4 - GOING CONCERN
As shown in the accompanying financial statements, the Company incurred
substantial net losses for the year ended June 30, 2010 and has no revenue
stream to support itself. This raises doubt about the Company's ability to
continue as a going concern.
The Company's future success is dependent upon its ability to raise
additional capital to fund its business plan and ultimately to attain
profitable operations. There is no guarantee that the Company will be able
to raise enough capital or generate sufficient revenues to sustain its
operations. Management believes they can raise the appropriate funds needed
to support their business plan.
The financial statements do not include any adjustments relating to the
recoverability or classification of recorded assets and liabilities that
might result should the Company be unable to continue as a going concern.
NOTE 5 - FIXED ASSETS
2009 Accumulated
Cost Amortization Net
---- ------------ ---
Computer equipment $ 33,859 $ 4,232 $ 29,627
Leasehold improvements 144,944 12,079 132,865
-------- -------- --------
$178,803 $ 16,311 $162,492
======== ======== ========
2008 Accumulated
Cost Amortization Net
---- ------------ ---
Computer equipment $ -- $ -- $ --
Leasehold improvements -- -- --
-------- -------- --------
$ -- $ -- $ --
======== ======== ========
INTANGIBLE ASSET - GOODWILL
Effective February 1, 2009 the Company acquired the equipment and business of
eDevlin Architects at a cost of $643,585. Identifiable assets were valued at
their book value of $142,088 resulting in an excess cost over book value of
$501,497 recorded as goodwill with amortization of $41,791 claimed to June 30,
2009. The goodwill is being amortized over five years and is tested for
impairment annually. The Company recorded amortization of $41,791 during the
year ended June 30, 2009 (for the five months commencing February 1, 2009).
17
NOTE 6 - STOCKHOLDERS' EQUITY
COMMON STOCK
On April 15,2010 the Company issued 17,969,175 shares of common stock for
cash of $17,916 and the forgiveness of debt of $670,651 On April 15, 2008
the Company issued 51,000,000 shares of common stock for cash of $3,000;
and On April 24, 2008 the Company issued 22,100,000 shares of common stock
for cash of $6,800; and On May 28, 2008 the Company issued 12,750,000
shares of common stock for cash of $15,000.
Effective May 14, 2009 the Company forward split its issued shares of
common stock on the basis of seventeen new shares for one old share (17:1).
All share issuances referred to in these financial statements are post
forward split.
NOTE 7 - DUE TO RELATED PARTIES
The Company owes $444,723 to a company with a shareholder who is also a
shareholder of the Company. The loan is unsecured, does not bear interest
and has no fixed terms of repayment.
The Company owes $198,862 to a company controlled by a former officer of
the Company. The outstanding amount bears interest at 5% per annum secured
by a General Security Agreement and is due in two equal installments
September 30, 2009 and December 31, 2009.
18
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There are no reportable disagreements on accounting or financial disclosure
issues.
In June 2008 the Company engaged George Stewart, CPA to audit the Company's
financial statements for the period ended June 30, 2008. Prior to its
engagement, the Company had not consulted with George Stewart with respect to:
(i) the application of accounting principles to a specified transaction, either
completed or proposed; (ii) the type of audit opinion that might be rendered on
the Company's financial statements; or (iii) any matter that was either the
subject of disagreement (as defined in Item 304(a)(1)(iv) of Regulation S-K) or
a reportable event (as described in Item 304(a)(1)(iv) of Regulation S-K).
ITEM 9A. EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
We carried out an evaluation of the effectiveness of the design and operation of
our disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) as of June 30, 2009. This evaluation was carried out
under the supervision and with the participation of our Chief Executive Officer
and Chief Financial Officer. Based upon that evaluation, our Chief Executive
Officer and Chief Financial Officer concluded that, as of June 30, 2009 our
disclosure controls and procedures are effective. There have been no significant
changes in our internal controls over financial reporting during the quarter
ended June 30, 2009 that have materially affected or are reasonably likely to
materially affect such controls.
Disclosure controls and procedures are controls and other procedures that are
designed to ensure that information required to be disclosed in our reports
filed or submitted under the Exchange Act are recorded, processed, summarized
and reported, within the time periods specified in the SEC's rules and forms.
Disclosure controls and procedures include, without limitation, controls and
procedures designed to ensure that information required to be disclosed in our
reports filed under the Exchange Act is accumulated and communicated to
management, including our Chief Executive Officer and Chief Financial Officer,
to allow timely decisions regarding required disclosure.
LIMITATIONS ON THE EFFECTIVENESS OF INTERNAL CONTROLS
Our management does not expect that our disclosure controls and procedures or
our internal control over financial reporting will necessarily prevent all fraud
and material error. Our disclosure controls and procedures are designed to
provide reasonable assurance of achieving our objectives and our Chief Executive
Officer and Chief Financial Officer concluded that our disclosure controls and
procedures are effective at that reasonable assurance level. Further, the design
of a control system must reflect the fact that there are resource constraints,
and the benefits of controls must be considered relative to their costs. Because
of the inherent limitations in all control systems, no evaluation of controls
can provide absolute assurance that all control issues and instances of fraud,
if any, within the Company have been detected. These inherent limitations
include the realities that judgments in decision-making can be faulty, and that
breakdowns can occur because of simple error or mistake. Additionally, controls
19
can be circumvented by the individual acts of some persons, by collusion of two
or more people, or by management override of the internal control. The design of
any system of controls also is based in part upon certain assumptions about the
likelihood of future events, and there can be no assurance that any design will
succeed in achieving its stated goals under all potential future conditions.
Over time, control may become inadequate because of changes in conditions, or
the degree of compliance with the policies or procedures may deteriorate.
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Internal control over financial reporting refers to the process designed by, or
under the supervision of, our Chief Executive Officer and effected by our 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 generally accepted
accounting principles, 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 our
assets;
* Provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that our receipts
and expenditures are being made only in accordance with authorization
of our management and directors; and
* Provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisitions, use or disposition of our assets that
could have a material effect on the financial statements.
Internal control over financial reporting cannot provide absolute assurance of
achieving financial reporting objectives because of its inherent limitations. It
is a process that involves human diligence and compliance and is subject to
lapses in judgment and breakdowns resulting from human failures. It also can be
circumvented by collusion or improper management override.
Because of such limitations, 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 certain safeguards to reduce, though not eliminate, this risk.
Management is responsible for establishing and maintaining adequate internal
control over our financial reporting.
Based upon their assessment, management has concluded that our internal control
over financial reporting was effective as of and for the year ended June 30,
2009.
ITEM 9B. OTHER INFORMATION
No items required to be reported on Form 8-K during the fourth quarter of the
year covered by this report were not previously reported.
20
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS AND
CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Directors are elected by the stockholders to a term of one year and serve until
their successor is elected and qualified. Officers are elected by the Board of
Directors to a term of one year and serve until their successor is duly elected
and qualified, or until they are removed from office. The Board of Directors has
no nominating, auditing or compensation committees.
The name, address, age and position of our officers and director is set forth
below:
Name and Address Age Position(s)
- ---------------- --- -----------
Helen Siwak* 43 CEO, Director, acting CFO
Artur Etezov** 39 (former) CFO, CEO, Director
- ----------
* Ms. Siwak has held her offices/positions since May 18, 2009 and is expected
to hold said offices/positions until the next annual meeting of our
stockholders.
** Mr. Etezov held his offices/positions since January 16, 2008 and resigned
May 18, 2009.
BACKGROUND INFORMATION ABOUT OUR OFFICERS AND DIRECTORS
Helen Siwak has over twenty years management experience, with a principal
emphasis on the entertainment industry. Ms. Siwak was the founder and President
of Realia Music Ltd., an early innovator in the area of the digital production
and delivery of music for use in film and television synchronization licensing,
and was principally responsible for the development of Realia's delivery
software. Prior to her work with Realia, Ms. Siwak worked for a number of years
in film, television and music where she was involved in virtually all areas of
production and management. Ms. Siwak's corporate work includes having worked
with a leading Canadian law firm in the areas of corporate finance and licensing
law. Ms. Siwak presently resides in Athens, Greece.
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
To our knowledge, during the past five years, no present or former director or
executive officer of our company: (1) filed a petition under the federal
bankruptcy laws or any state insolvency law, nor had a receiver, fiscal agent or
similar officer appointed by a court for the business or present of such a
person, or any partnership in which he was a general partner at or within two
years before the time of such filing, or any corporation or business association
of which he was an executive officer within two years before the time of such
filing; (2) was convicted in a criminal proceeding or named subject of a pending
criminal proceeding (excluding traffic violations and other minor offenses); (3)
was the subject of any order, judgment or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction, permanently or
temporarily enjoining him from or otherwise limiting the following activities:
(i) acting as a futures commission merchant, introducing broker, commodity
trading advisor, commodity pool operator, floor broker, leverage transaction
merchant, associated person of any of the foregoing, or as an investment
advisor, underwriter, broker or dealer in securities, or as an affiliated
person, director of any investment company, or engaging in or continuing any
conduct or practice in connection with such activity; (ii) engaging in any type
21
of business practice; (iii) engaging in any activity in connection with the
purchase or sale of any security or commodity or in connection with any
violation of federal or state securities laws or federal commodity laws; (4) was
the subject of any order, judgment or decree, not subsequently reversed,
suspended or vacated, of any federal or state authority barring, suspending or
otherwise limiting for more than 60 days the right of such person to engage in
any activity described above under this Item, or to be associated with persons
engaged in any such activity; (5) was found by a court of competent jurisdiction
in a civil action or by the Securities and Exchange Commission to have violated
any federal or state securities law and the judgment in subsequently reversed,
suspended or vacate; (6) was found by a court of competent jurisdiction in a
civil action or by the Commodity Futures Trading Commission to have violated any
federal commodities law, and the judgment in such civil action or finding by the
Commodity Futures Trading Commission has not been subsequently reversed,
suspended or vacated.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Because we do not have a class of equity securities registered pursuant to
Section 12 of the Exchange Act, our executive officers, directors and persons
who beneficially own more than 10% of our common stock are not required to file
initial reports of ownership and reports of changes in ownership with the SEC
under Section 16(a) of the Exchange Act.
CODE OF ETHICS
We have not adopted a corporate code of ethics.
22
ITEM 11. EXECUTIVE COMPENSATION
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
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
- ---- ----------- ------------- ----------- ----- ---- --------- ------ ------ ------
Helen Siwak 0 0 0 0 0 0 0 0 0
Artur Etezov** 0 0 0 0 0 0 0 0 0
- ----------
** Mr. Artur Etezov resigned his positions as officer and director of the
Company on May 18, 2009.
SUMMARY COMPENSATION TABLE
Change in
Pension
Value and
Non-Equity Nonqualified
Incentive Deferred All
Name and Plan Compen- Other
Principal Stock Option Compen- sation Compen-
Position Year Salary Bonus Awards Awards sation Earnings sation
- ------------ ---- ------ ----- ------ ------ ------ -------- ------
Helen Siwak 2009 0 0 0 0 0 0 0
2008 0 0 0 0 0 0 0
Artur Etezov** 2009 0 0 0 0 0 0 0
2008 0 0 0 0 0 0 0
- ----------
** Mr. Artur Etezov resigned his positions as officer and director of the
Company on May 18, 2009.
23
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The following table sets forth, as of the date of this report, the total number
of shares owned beneficially by each of our directors, officers and key
employees, individually and as a group, and the present owners of 5% or more of
our total outstanding shares. The stockholders listed below have direct
ownership of their shares and possess sole voting and dispositive power with
respect to the shares.
Title of Name and address of Amount of Percent of
Class beneficial owner beneficial ownership class
- ----- ---------------- -------------------- -----
Common Artur Etezov* 51,000,000 59.41%
Common All directors and executive
officers as a group 51,000,000 59.41%
Mr. Artur Etezov resigned his positions as officer and director of the Company
on May 18, 2009.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None of the following parties has, since our date of incorporation, had any
material interest, direct or indirect, in any transaction with us or in any
presently proposed transaction that has or will materially affect us:
1. Any of our directors or officers;
2. Any person proposed as a nominee for election as a director; Any
person who beneficially owns, directly or indirectly, shares carrying
more than 10% of the voting
3. rights attached to our outstanding shares of common stock;
4. Any member of the immediate family of any of the foregoing persons.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Audit Fees: All fees billed for each of the last two fiscal years for
professional services rendered by the principal accountant for the audit of the
registrant's annual financial statements and the review of financial statements
included in the registrant's Form 10-Q or services that are normally provided by
the accountant in connection with statutory and regulatory filings or
engagements for those fiscal years.
2008: $ 5,100
2009: $ 10,000
Audit-Related Fees: All fees billed in each of the last two fiscal years for
assurance and related services by the principal accountant that are reasonably
related to the performance of the audit or review of the registrant's financial
statements and are not reported under Item 9(e)(f1) of Schedule 14A.
2008: $ 0
2009: $ 0
24
Tax Fees: The aggregate fees billed in each of the last two fiscal years for
professional services rendered by the principal accountant for tax compliance,
tax advice, and tax planning:
2008: $ 0
2009: $ 0
All Other Fees:
2008: $ 0
2009: $ 0
The Company has not yet appointed an audit committee
The percentage of hours expended on the principal accountant's engagement to
audit our financial statements for the most recent fiscal year that were
attributed to work performed by persons other than the principal accountant's
full time, permanent employees was 0%.
ITEM 15. EXHIBITS
The following exhibits are included with this filing:
3(i) Articles of Incorporation*
3(ii) Bylaws*
31.1 Rule 13a-14(a)/15d-14(a) Certification
32.1 Section 1350 Certification
- ----------
* Included in our SB-2 filing under Commission File Number 333-136134
25
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
October 12, 2010
By: /s/ Helen Siwak
-------------------------------
Helen Siwak,
Chief Executive Officer and
acting Chief Financial Officer
26