UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended July 31, 2011
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ______________ to________________
Commission file number 333-147250
ERE MANAGEMENT, INC.
(Exact name of registrant as specified in its charter)
Nevada 98-0540833
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
8275 Southern Eastern Avenue, Suite 200, Las Vegas, NV 89123
(Address of principal executive offices) (Zip Code)
(702) 990-8402
(Registrant's telephone number, including area code)
Securities registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
None N/A
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 [ ]
The aggregate market value of voting and non-voting common equity held by
non-affiliates as of November 15, 2010 was approximately $42,000 based upon
840,000 shares held by non-affiliates and a closing market price of $0.05 per
share on January 31, 2010.
As of November 14, 2011, there were 2,440,000 shares of common stock issued and
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Exhibits incorporated by reference are referred to in Part IV.
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
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PART I
ITEM 1. Business 4
ITEM 1A. Risk Factors 6
ITEM 2. Properties 9
ITEM 3. Legal Proceedings 9
ITEM 4. Submission of Matters to a Vote of Security Holders 9
PART II
ITEM 5. Market for Registrant's Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities 9
ITEM 6. Selected Financial Data 10
ITEM 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations 10
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk 14
ITEM 8. Financial Statements and Supplementary Data 15
ITEM 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure 28
ITEM 9A. Controls and Procedures 28
ITEM 9B. Other Information 29
PART III
ITEM 10. Directors, Executive Officers and Corporate Governance 30
ITEM 11. Executive Compensation 30
Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder 32
ITEM 12. Matters 33
ITEM 13. Certain Relationships and Related Transactions, and Director
Independence 33
ITEM 14. Principal Accountant Fees and Services
ITEM 15. Exhibits Financial Statement Schedules 34
Signatures 35
2
PART I
FORWARD LOOKING STATEMENTS
This annual report contains forward-looking statements. 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 manage or achieve growth
of a new business opportunity; and o 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.
The safe harbors of forward-looking statements provided by Section 21E of the
Exchange Act are unavailable to issuers of penny stock. As we issued securities
at a price below $5.00 per share, our shares are considered penny stock and such
safe harbors set forth under the Private Securities Litigation Reform Act of
1995 are unavailable to us.
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 "ERE" mean ERE
Management, Inc., unless otherwise indicated.
3
ITEM 1. BUSINESS
ERE Management, Inc. (the "Company" or "ERE") is a development stage company
that was incorporated on May 29, 2007. We have commenced only limited
operations, primarily focused on developing our CMS software product. We have
not generated any revenue to date. Our Director has reserved a domain name for
us and has also acquired web and email hosting. We have developed a website for
our services. We have also developed a basic version of our software.
We have developed our initial CMS software product (basic version) that enables
real estate agents with no technical knowledge to easily build a website to
showcase their listings. There is a demo version available online. However, we
do not currently have sufficient capital to operate our business, and we will
require additional funding in the future to sustain our operations. There is no
assurance that we will have revenue in the future or that we will be able to
secure the necessary funding to develop our business. Currently, our Directors
are operating the business without remuneration. They intend to continue to try
to develop the business.
Our software product is designed to enable real estate agents to build and
maintain websites without the need to employ a full-time web developer to create
and maintain the website. In contrast to traditional methods of operation, we
believe that our software product provides real estate agents with the ability
to bring real estate listings to the market faster, to reach larger audiences,
and to track and follow up with leads generated by their websites.
Our software product is designed to include an administration page that allows
the entry of mega tags and keywords to enhance search engine hits, and a set of
tools to enhance websites by enabling the creation of various website sections,
such as a "contact us" contact information page, an "our team" description of
agents page, and a mortgage calculator.
We will initially focus our marketing and sales efforts in North America, since
this market represents a significant opportunity in terms of sales potential.
The North American market is sophisticated, software savvy, and educated in
terms of the need to increase productivity and time efficiency.
Our offices are currently located at 8275 Southern Eastern Avenue, Suite 200,
Las Vegas, Nevada, 89123. Our telephone number is (702) 990-8402. Our website is
www.eremanagement.com.
OUR CMS SOFTWARE PRODUCT
Our CMS software product will be available for download over the internet. The
CMS software product will also include ASP source code and MySql database so it
can be integrated with other products, such as customer relationship management
databases. By following the easy-to-use installation guide, the user will be
able to install and copy the application files to the web hosting server. Our
CMS software program requires very limited time and technical expertise, while
maintaining a high level of presentation. We plan to offer additional
installation services for an additional fee to customers to assist with the
installation of the our CMS software program on their web hosting server if they
are unable to do so on their own after reading the installation guide. Our goal
is to enable real-estate agents using our CMS software product to
add/edit/delete property listings, including images, on their websites
independently, without the need for technical assistance.
MARKETING & SALES STRATEGY
We plan to implement an aggressive marketing strategy. We intend to focus on
real estate agents in North America who do not have a website, or who are
outsourcing their current web needs. The target audience is comprised of
independent and company real estate agents. Our strategy consists of building
strategic alliances with complementary products and industry alliances, a strong
web presence, targeted e-mail campaigns, and cold calls by a knowledgeable sales
force. We expect that this strategy will build revenues and establish our brand
and our CMS software product.
SALES AND DISTRIBUTION
Our website will be an important factor in driving sales. We also plan to
conduct e-mail campaigns and distribute our software through third party
websites of complementary software programs. Marketing affiliates will be
compensated via a commission for their sales.
4
OUR COMPETITION
There are currently other providers of similar CMS software products for real
estate agents. Content management systems, include those to build websites, is a
large and growing industry in North America. Competitive pressures and customer
demand fuel the growth in this industry.
Many of the 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 significant and growing. We see this competition as a benefit to
us, as we have analyzed our competitors' products and have looked for ways to
improve and distinguish our product from the competition.
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 product will be over the internet.
DEPENDENCE ON ONE OR A FEW MAJOR CUSTOMERS
The nature of our software product does not mandate any dependence on one or a
few major customers.
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 have developed a
software product and intend to protect our software product with copyright and
trade secrecy laws. Beyond our trade name and our software product, we do not
hold any other intellectual property.
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/or
* Other claims based on the nature and content of internet materials.
These new laws may have an impact on our ability to market our products and
services in accordance with our business plan.
5
RESEARCH AND DEVELOPMENT ACTIVITIES AND COSTS
We have incurred costs to date and, subject to obtaining financing, have plans
to undertake additional research and development activities during the next 12
months of operation. For a detailed description of our plans, see "Plan of
Operation" in Item 7 below.
EMPLOYEES
As of November 15, 2010, we have no employees as we have been unable to secure
sufficient financing to hire full time or part time staff. Our sole officer and
Director provides services to us on an as-needed basis.
ITEM 1A. RISK FACTORS
RISK FACTORS RELATED TO OUR BUSINESS
1. WE HAVE A GOING CONCERN OPINION FROM OUR AUDITORS, INDICATING THE POSSIBILITY
THAT WE MAY NOT BE ABLE TO CONTINUE TO OPERATE.
The Company has incurred a net loss of $93,949 for the period from May 29, 2007
(date of inception) through July 31, 2011. We anticipate generating losses for
the next 12 months. Therefore, we may be unable to continue operations in the
future as a going concern. 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. If we
cannot continue as a viable entity, our stockholders may lose some or all of
their investment in the Company.
In addition, our independent auditors included an explanatory paragraph in their
report on the accompanying financial statements regarding concerns about our
ability to continue as a going concern. As a result, we may not be able to
obtain additional necessary funding. 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 are unproven, and the lack of operating history
makes it difficult to evaluate the future prospects of our business.
2. OUR BUSINESS PLAN MAY BE UNSUCCESSFUL.
The success of our business plan is dependent on our marketing our CMS software
product to real estate agents and on our continuously upgrading our product and
developing new products. Our ability to market and sell our products is
unproven, and the lack of an operating history makes it difficult to validate
our business plan. In addition, the success of our business plan is dependent
upon the market acceptance of our CMS software product. Should our product be
too narrowly focused or should real estate agents not be as responsive as we
anticipate, we will not have in place alternate products or services that we may
offer to ensure our continuing as a going concern.
3. WE HAVE NO OPERATING HISTORY AND HAVE MAINTAINED LOSSES SINCE INCEPTION,
WHICH WE EXPECT TO CONTINUE IN THE FUTURE.
We expect to continue to incur operating losses in future periods. These losses
will occur because we do not yet have any revenues to offset the expenses
associated with the continuing development of our CMS software product and with
the marketing and sale of our CMS software product. 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. If
we are unsuccessful in addressing these risks, our business will most likely
fail.
4. OUR SOLE EXECUTIVE OFFICER AND DIRECTOR HAS SIGNIFICANT VOTING POWER AND MAY
TAKE ACTIONS THAT MAY BE DIFFERENT THAN ACTIONS SOUGHT BY OUR OTHER
STOCKHOLDERS.
Our sole officer and Director is able to exercise significant influence over all
matters requiring stockholder approval. This influence over our affairs might be
adverse to the interest of our other stockholders. In addition, this
concentration of ownership could delay or prevent a change in control and might
have an adverse effect on the market price of our common stock.
6
5. 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 10 to 15 hours a week. Therefore, it is
possible that his pursuit of other activities may slow our operations and reduce
our financial results because of the slow down in operations.
6. 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 United States securities
and bankruptcy laws may be difficult.
7. INTERNET BASED SOFTWARE PRODUCTS ARE SUBJECT TO RAPID TECHNOLOGICAL CHANGE.
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 internet software product market, we must continue to
design, develop, and sell new and enhanced products and services that provide
increasingly higher levels of performance and reliability at lower cost. These
new and enhanced products and services must take advantage of technological
advancements and changes, and respond to new customer requirements. Our success
in designing, developing, and selling such products and services will depend on
a variety of factors, including:
* Identifying and responding to real estate agents' demands for new
products and services;
* Keeping abreast of technological changes;
* Timely developing and implementing new product offerings and features;
* Maintaining performance quality;
* Providing cost-effective service and support; and
* Promoting our products and services 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 products or services in a timely
manner, if such new or enhanced products or services do not achieve sufficient
market acceptance, or if such new or enhanced product introductions decrease
demand for our existing products or services, our operating results would
decline and our business would not grow.
8. WE ARE A SMALL COMPANY WITH LIMITED RESOURCES COMPARED TO SOME OF OUR CURRENT
AND POTENTIAL COMPETITORS AND WE MAY NOT BE ABLE TO COMPETE EFFECTIVELY AND
INCREASE MARKET SHARE.
Most of our current and potential competitors, such as Moneymaker4agents.com,
and Realtystar.com, have longer operating histories, significantly greater
resources and name recognition, and a larger base of customers than we have. As
a result, these competitors have greater name credibility with our potential
customers. Our competitors also may be able to adopt more aggressive pricing
policies and devote greater resources to the development, promotion, and sale of
their products and services than we can to ours. To be competitive, we must
continue to invest significant resources in research and development, sales and
marketing, and customer support. We may not have sufficient resources to make
these investments or to develop the technological advances necessary to be
competitive, which in turn will cause our business to suffer and restrict our
profitability potential
7
9. WE NEED TO RETAIN KEY PERSONNEL TO SUPPORT OUR PRODUCTS AND ONGOING
OPERATIONS.
The development and marketing of our products 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 sole officer and
Director and other key employees and contractors who have critical technological
knowledge, industry experience, and relationships that we rely on to implement
our business plan. The loss of the services of our sole officer and Director or
the lack of availability of other skilled personnel would negatively impact our
ability to develop, market, and sell our products, which could adversely affect
our financial results and impair our growth.
10. OUR SUCCESS DEPENDS ON THIRD PARTY DISTRIBUTION CHANNELS.
We intend to sell our products ourselves and through a series of resellers and
distributors. Our future revenue growth will depend in large part on sales of
our products through these relationships. We may not be successful in developing
distribution relationships. Entities that distribute our products may compete
with us. In addition, these distributors may not dedicate sufficient resources
or give sufficient priority to selling our products. Our failure to develop
distribution channels, the loss of a distribution relationship, or a decline in
the efforts of a material reseller or distributor could prevent us from
generating sufficient revenues to become profitable.
11. FUTURE REGULATION OF THE INTERNET AND/OR OF USE OF THE INTERNET BY REAL
ESTATE AGENTS COULD RESTRICT OUR BUSINESS, PREVENT US FROM OFFERING OUR
PRODUCTS, OR INCREASE OUR COST OF DOING BUSINESS.
At present there are few laws, regulations or rulings that specifically address
access to or commerce on the internet, including the posting of real estate
listings on the internet. We are unable to predict the impact, if any, that
future legislation, legal decisions, 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 heightens 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.
12. WE MAY LOSE CUSTOMERS IF WE EXPERIENCE SYSTEM FAILURES THAT SIGNIFICANTLY
DISRUPT THE AVAILABILITY AND QUALITY OF THE PRODUCTS AND SERVICES THAT WE
PROVIDE.
Our ability to provide support services will depend on our ability to avoid and
mitigate any interruptions in service or loss of data that we may face.
Interruptions in service or performance problems, for whatever reason, including
interruptions resulting from of our systems and data centers being vulnerable to
natural disasters and other unexpected problems may hinder our ability to
respond to customer needs and cause us to lose customers or make it more
difficult to attract new ones.
13. IF A THIRD PARTY ASSERTS THAT WE INFRINGE UPON 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 markets
increases and the functionality of these software products further overlap, we
believe that infringement claims may 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 products that rely on the challenged
intellectual property;
* Require us to redesign our software products;
* Divert management's attention and our other resources; and/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.
8
In addition, 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 decrease our revenues and result in
possible losses to our business.
ITEM 2. PROPERTIES
EXECUTIVE OFFICES
At present, we do not own any property. We currently maintain our corporate
office at 8275 Southern Eastern Avenue, Suite 200, Las Vegas, Nevada, 89123. We
pay monthly rent for use of this space of $150. We believe that the condition of
our lease property is satisfactory, suitable and adequate for our current needs.
ITEM 3. LEGAL PROCEEDINGS
We know of no material, active or pending legal proceedings against our Company,
nor of any proceedings that a governmental authority is contemplating against
us.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders through the
solicitation of proxies or otherwise during the fourth quarter of the fiscal
year ended July 31, 2011.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
MARKET FOR SECURITIES
Our Common Stock is traded on the over-the-counter market and quoted on the
OTCBB under the symbol "EREM." As of July 31, 2011, the closing price for our
Common Stock as reported on the OTCBB was unavailable as our Common Stock has
not traded.
The high and the low bid prices for our Common Stock is based on inter-dealer
prices, without retail mark-up, markdown or commission, and may not represent
actual transactions.
The table below sets forth the range of high and low bid information for our
Common Shares as quoted on the OTCBB for each of the quarters during the fiscal
year ended July 31, 2011(no quotes are available for the previous fiscal year as
our stock has not traded):
For the Fiscal Year Ended July 31, 2011
For the Quarter ended High Low
--------------------- ---- ---
October 31 N/A N/A
January 31 $ 0.21 $ 0.21
April 30 $ 0.23 $ 0.23
July 31 N/A N/A
HOLDERS OF OUR COMMON STOCK
On November 15, 2010 the shareholders' list of our common stock showed 39
registered shareholder and 2,440,000 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.
9
Securities Authorized for Issuance under Equity Compensation Plans
As of July 31, 2011, we had not adopted an equity compensation plan and had not
granted any stock options.
Recent Sales of Unregistered Securities
During the fiscal year ended July 31, 2011 we have not sold any equity
securities not registered under the Securities Act.
Purchases of Equity Securities by the Issuer and Affiliated Purchases
During each month within the fourth quarter of the fiscal year ended July 31,
2011, neither we nor any "affiliated purchaser," as that term is defined in Rule
10b-18(a)(3) under the Exchange Act, repurchased any of our Common Stock or
other securities.
ITEM 6. SELECTED FINANCIAL DATA
Not Applicable.
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.
GENERAL ORGANIZATION AND BUSINESS
ERE Management Inc. ("ERE" or the "Company") is a Nevada corporation in the
development stage. The Company was incorporated under the laws of the State of
Nevada on May 29, 2007. The business plan of ERE is to develop software,
specializing in providing sales tool solutions for the real estate industry.
More specifically, ERE has developed an online Content Management System ("CMS")
that enables real estate agents to easily build a website to showcase their
listings. In addition, there are several opportunities ERE plans to consider for
future developments to enhance the Real Estate CMS. The accompanying financial
statements of ERE Management Inc. were prepared from the accounts of the Company
under the accrual basis of accounting.
In 2007, ERE commenced a capital formation activity to effect a Registration
Statement on Form SB-2 with the Securities and Exchange Commission, and raise
capital of up to $60,000 from a self-underwritten offering of 1,200,000 shares
of newly issued common stock in the public markets. The Registration Statement
on Form SB-2 was filed with the SEC on November 9, 2007, and declared effective
on November 21, 2007. On January 24, 2008, the Company completed an offering of
its registered common stock as explained in Note 3.
10
CASH AND CASH EQUIVALENTS
For purposes of reporting within the statements of cash flows, the Company
considers all cash on hand, cash accounts not subject to withdrawal restrictions
or penalties, and all highly liquid investments instruments purchased with a
maturity of three months or less to be cash and cash equivalents.
REVENUE RECOGNITION
The Company is in the development stage and has yet to realize revenues from
operations. It plans to realize revenues from product sales when the products
are delivered to customers, and collection is reasonably assured. For product
support and product software updates, ERE plans to realize revenues when
completion of services have occurred, provided there is persuasive evidence of
an agreement, acceptance has been approved by its customers, the fee is fixed or
determinable based on the completion of stated terms and conditions, and
collection of any related receivable is probable.
INTERNAL WEBSITE DEVELOPMENT COSTS
Under FASB ASC 350-50, WEBSITE DEVELOPMENT COSTS, costs and expenses incurred
during the planning and operating stages of the Company's website are expensed
as incurred. Under ASC 350-50, costs incurred in the website application and
infrastructure development stages are capitalized by the Company and amortized
to expense over the website's estimated useful life or period of benefit. As of
July 31, 2011, the Company had capitalized $5,950 (July 31, 2010- $5,950)
related to its website cost and recorded $5,950 (July 31, 2010 - $5,455) in
accumulated amortization.
COSTS OF COMPUTER SOFTWARE DEVELOPED OR OBTAINED FOR INTERNAL USE
Under ASC 350-40, INTERNAL USE SOFTWARE, the Company capitalizes external direct
costs of materials and services consumed in developing or obtained internal-use
computer software, payroll, and payroll-related costs for employees who are
directly associated with and who devote time to internal-use computer software
project; and, interest costs related to loans incurred for the development of
internal-use software. As of July 31, 2011, and 2010, the Company had not
undertaken any project related to the development of internal-use software.
COSTS OF COMPUTER SOFTWARE TO BE SOLD OR OTHERWISE MARKETED
Under ASC 985-20, COST OF SOFTWARE TO BE SOLD, LEASED OR MARKETED, the Company
capitalizes costs associated with the development of certain software products
held for sale when technological feasibility is established. Capitalized
computer software costs of products held for sale are amortized over the useful
life of the products from the software release date.
IMPAIRMENT OF LONG-LIVED ASSETS
The Company evaluates the recoverability of long-lived assets and the related
estimated remaining lives at each balance sheet date. ERE records an impairment
or change in useful life whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable or the useful life has changed.
For the years ended July 31, 2011, and 2010, no events or circumstances occurred
for which an evaluation of the recoverability of long-lived assets was required.
LOSS PER COMMON SHARE
Basic loss per share is computed by dividing the net loss attributable to the
common stockholders by the weighted average number of shares of common stock
outstanding during the period. Diluted loss per share is computed similar to
basic loss per share except that the denominator is increased to include the
number of additional common shares that would have been outstanding if the
potential common shares had been issued and if the additional common shares were
dilutive. There were no dilutive financial instruments issued or outstanding for
the years ended July 31, 2011, and 2010.
DEFERRED OFFERING COSTS
The Company defers as other assets the direct incremental costs of raising
capital until such time as the offering is completed. At the time of the
completion of the offering, the costs are charged against the capital raised.
Should the offering be terminated, deferred offering costs are charged to
operations during the period in which the offering is terminated. As of July 31,
2008, ERE reclassified deferred offering costs of $13,500 to additional paid-in
capital.
11
INCOME TAXES
Income taxes are provided in accordance with FASB ASC 740, INCOME TAXES. Under
FASB ASC 740-10-25, deferred tax assets and liabilities are determined based on
temporary differences between the bases of certain assets and liabilities for
income tax and financial reporting purposes. The deferred tax assets and
liabilities are classified according to the financial statement classification
of the assets and liabilities generating the differences.
The Company maintains a valuation allowance with respect to deferred tax assets.
ERE establishes a valuation allowance based upon the potential likelihood of
realizing the deferred tax asset and taking into consideration the Company's
financial position and results of operations for the current period. Future
realization of the deferred tax benefit depends on the existence of sufficient
taxable income within the carryforward period under the Federal tax laws.
Changes in circumstances, such as the Company generating taxable income, could
cause a change in judgment about the realizability of the related deferred tax
asset. Any change in the valuation allowance will be included in income in the
year of the change in estimate.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company estimates the fair value of financial instruments using the
available market information and valuation methods. Considerable judgment is
required in estimating fair value. Accordingly, the estimates of fair value may
not be indicative of the amounts ERE could realize in a current market exchange.
As of July 31, 2011, and 2010, the carrying value of financial instruments
approximated fair value due to the short-term nature and maturity of these
instruments.
CONCENTRATION OF RISK
As of July 31, 2011, and 2010, the Company maintained its cash account at one
commercial bank. The balance in the account was subject to FDIC coverage.
ESTIMATES
The financial statements are prepared on the basis of accounting principles
generally accepted in the United States of America. The preparation of financial
statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities as of July 31, 2011, and 2010, and expenses for the years
ended July 31, 2011, and 2010, and cumulative from inception. Actual results
could differ from those estimates made by management.
EXECUTIVE OVERVIEW
We are a development stage company with limited operations and no revenues from
our business operations. Our registered independent auditors have issued a going
concern opinion. This means that our registered independent auditors believe
there is substantial doubt that we can continue as an on-going business for the
next 12 months. We do not anticipate that we will generate significant revenues
until we have implemented our marketing plan to generate customers. Accordingly,
we must raise cash from sources other than our operations in order to implement
our marketing plan.
In our management's opinion, there is a need for software that allows real
estate agents with no technical knowledge to build websites and post their
listings and to maintain and update the websites with new product listings
easily and quickly. We are focused on developing such CMS software products and
offering them to independent and non-independent real estate agents.
As of January 24, 2008, we completed the sale of 840,000 shares of our common
stock pursuant to the terms of the SB-2 Registration Statement that went
effective on November 21, 2007, and we generated $42,000 in gross proceeds. We
used these proceeds to fund our operations in our last fiscal year. If we are
unable to generate revenues going forward , or if we are unable to make a
reasonable profit , we may have to suspend or cease operations. At the present
time, we have not made any arrangements to raise additional cash. We may seek to
obtain additional funds through a second public offering, private placement of
securities, or loans. Other than as described in this paragraph, we have no
other financing plans at this time.
RECENT DEVELOPMENTS
During the previous twelve months, the company completed the development of its
website.
12
PLAN OF OPERATION
Over the next twelve months, subject to obtain financing, we plan to:
* Commence marketing of our software product via direct distribution
channels;
* Generate sales of our product;
* If we commence a successful sales campaign, we will continue to
develop and update the website and we will hire a sales and marketing
person to increase our sales;
* Initiate discussions with third party websites to sell complementary
software programs; and
* If we are unable to raise additional financing through a private
placement, we will approach our Directors to provide us with a loan.
Due to a lack of financing, the Company has not been able continue with any
research and product development activities.
OFF BALANCE SHEET TRANSACTIONS
We have had no off balance sheet transactions.
SIGNIFICANT EQUIPMENT
We do not intend to purchase any significant equipment for the next twelve
months.
RESULTS OF OPERATIONS
REVENUES
We had no revenues for the period from May 29, 2007 (date of inception), through
July 31, 2011.
EXPENSES
Our expenses for the twelve month period ended July 31, 2011 and 2010 were
$16,690 and $10,046, respectively. During the period from May 29, 2007 (date of
inception), through July 31, 2011, we incurred expenses of $93,949.
These expenses were comprised primarily of office rent, legal expenses,
accounting expenses, SEC filing fees, transfer agent fees, as well as bank fees.
NET INCOME (LOSS)
Our net loss for the twelve-month period ended July 31, 2011 and 2010 was
$16,690 and $10,046, respectively. During the period from May 29, 2007 (date of
inception), through July 31, 2011, we incurred a net loss of $93,949. This loss
consisted of office rent, legal expenses, accounting expenses, SEC filing fees,
transfer agent fees, as well as bank fees. Since inception, we have sold
2,440,000 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 July 31, 2011 reflects assets of $2,426 in the form of
cash and cash equivalents. Since inception, we have sold 2,440,000 shares of
common stock with gross proceeds of $48,500. 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. We require additional capital, and we may
have to issue debt or equity or enter into a strategic arrangement with a third
party to obtain such capital. 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.
13
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 ERE Management, Inc. In the past, 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 unless we locate
a prospective new business opportunity through which we can pursue a new plan of
operation. If we are unable to secure adequate capital to implement our current
business plan or to continue our efforts to acquire a new business opportunity,
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.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
14
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ERE Management, Inc.
July 31, 2011 and 2010
Index to Consolidated Financial Statements
Contents Page
-------- ----
Report of Independent Registered Public Accounting Firm.......................16
Balance Sheets at July 31, 2011 and 2010 .....................................17
Statements of Operations for the Years Ended July 31, 2011 and 2010 and for
the Period from May 29, 2007 (inception) through July 31, 2011 ..............18
Statement of Stockholders' Equity (Deficit) for the Period from May 29, 2007
(inception) through July 31, 2011 ...........................................19
Statements of Cash Flows for the Period from May 29, 2007 (inception)
through July 31, 2011........................................................20
Notes to the Financial Statements.............................................21
15
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
ERE Management, Inc.
(A Development Stage Company)
Las Vegas, Nevada
We have audited the accompanying balance sheets of ERE Management, Inc., a
development stage company, (the "Company") as of July 31, 2011, 2010 and the
related statements of operations, stockholders' equity (deficit) and cash flows
for the fiscal years then ended and for the period from May 29, 2007 (inception)
through July 31, 2011. 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 audit 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 audit 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 includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Company as of July 31,
2011, 2010 and the results of its operations and its cash flows for the fiscal
years then ended and for the period from May 29, 2007 (inception) through July
31, 2011 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 3 to the
financial statements, the Company had a deficit accumulated during the
development stage at July 31, 2011 and had a net loss and net cash used in
operating activities for the fiscal year then ended, with no revenues earned
since inception. These factors raise substantial doubt about the Company's
ability to continue as a going concern. Management's plans in regards to these
matters are also described in Note 3. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
/s/Li & Company, PC
-------------------------------------
Li & Company, PC
Skillman, New Jersey
November 14, 2011
16
ERE MANAGEMENT, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
July 31, July 31,
2011 2010
-------- --------
ASSETS
CURRENT ASSETS
Cash $ 2,426 $ 308
-------- --------
TOTAL CURRENT ASSETS 2,426 308
-------- --------
WEBSITE DEVELOPMENT COSTS
Website development costs 5,950 5,950
Less - accumulated amortization (5,950) (5,455)
-------- --------
WEBSITE DEVELOPMENT COSTS, NET -- 495
-------- --------
TOTAL ASSETS $ 2,426 $ 803
======== ========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable $ 823 $ 1,510
Accrued expenses 10,217 6,217
Advances from related party 36,835 21,835
-------- --------
TOTAL CURRENT LIABILITIES 47,875 29,562
-------- --------
TOTAL LIABILITIES 4,875 29,562
-------- --------
STOCKHOLDERS' DEFICIT
Common stock: $0.001 par value;
20,000,000 shares authorized;
2,440,000 shares issued and outstanding 2,440 2,440
Additional paid-in capital 46,060 46,060
Deficit accumulated during the development stage (93,949) (77,259)
-------- --------
TOTAL STOCKHOLDERS' DEFICIT (45,449) (28,759)
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 2,426 $ 803
======== ========
See accompanying notes to the financial statements.
17
ERE MANAGEMENT, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
For the
Period from
For the For the May 29, 2007
Fiscal Year Fiscal Year (Inception)
Ended Ended through
July 31, July 31, July 31,
2011 2010 2011
---------- ---------- ----------
REVENUE $ -- $ -- $ --
---------- ---------- ----------
OPERATING EXPENSES
Accounting 9,250 9,750 36,450
Legal 2,325 1,710 19,795
Transfer agent fees 900 1,277 15,750
Filing fees 1,952 485 8,536
Rent 1,768 1,851 7,609
Amortization 495 1,984 5,950
General and administrative -- 439 7,309
---------- ---------- ----------
TOTAL OPERATING EXPENSES 16,690 17,496 100,399
---------- ---------- ----------
Loss from operations (16,690) (17,496) (101,399)
Other income (expense) -- (7,450) 7,450
---------- ---------- ----------
Loss before income taxes (16,690) (10,046) (93,949)
Income tax provision -- -- --
---------- ---------- ----------
NET LOSS $ (16,690) $ (10,046) $ (93,949)
========== ========== ==========
Net loss per common share - basic and diluted $ (0.01) $ (0.00)
========== ==========
Weighted Average Common Shares Outstanding
- basic and diluted 2,440,000 2,440,000
========== ==========
See accompanying notes to the financial statements.
18
ERE MANAGEMENT, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
For the period from May 29, 2007 (Inception) through July 31, 2011
Deficit
Accumulated Total
Common Stock Additional During the Stockholders'
---------------------- Paid in Development Equity
Shares Amount Capital Stage (Deficit)
------ ------ ------- ----- ---------
Inception, May 29, 2007 -- $ -- $ -- $ -- $ --
Common stock issued on July 16, 2007
at $0.0125 per share to the
Company's President 1,600,000 1,600 18,400 20,000
Net loss (1,999) (1,999)
---------- ---------- ---------- ---------- ----------
Balance, July 31, 2007 1,600,000 1,600 18,400 (1,999) 18,001
Shares issued at $0.05 per share on
January 24, 2008, net of costs
($13,500) 840,000 840 27,660 28,500
Net loss (43,401) (43,401)
---------- ---------- ---------- ---------- ----------
Balance, July 31, 2008 2,440,000 2,440 46,060 (45,400) 3,100
Net loss (21,813) (21,813)
---------- ---------- ---------- ---------- ----------
Balance, July 31, 2009 2,440,000 2,440 46,060 (67,213) (18,713)
Net loss (10,046) (10,046)
---------- ---------- ---------- ---------- ----------
Balance, July 31, 2010 2,440,000 2,440 46,060 (77,259) (28,759)
Net loss (16,690) (16,690)
---------- ---------- ---------- ---------- ----------
Balance, July 31, 2011 2,440,000 $ 2,440 $ 46,060 $ (93,949) $ (45,449)
========== ========== ========== ========== ==========
See accompanying notes to the financial statements.
19
ERE MANAGEMENT, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
For the
Period from
May 29, 2007
For the Fiscal For the Fiscal (Inception)
Year ended Year ended through
July 31, July 31, July 31,
2011 2010 2011
-------- -------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(16,690) $(10,046) $(93,949)
Adjustments to reconcile net loss to net
cash used in operating activities:
Amortization 495 1,984 5,950
Changes in operating assets and liabilities:
Accounts payable (687) (5,940) 823
Accrued expenses 4,000 1,199 10,217
-------- -------- --------
NET CASH USED IN OPERATING ACTIVITIES (12,882) (12,803) (76,959)
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Website development costs -- -- (5,950)
-------- -------- --------
NET CASH USED IN INVESTING ACTIVITIES -- -- (5,950)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Advances from related party 15,000 11,850 36,835
Proceeds from sale of common stock -- -- 48,500
-------- -------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES 15,000 11,850 85,335
-------- -------- --------
Net change in cash 2,118 (953) 2,426
Cash, beginning of the period 308 1,261 --
-------- -------- --------
Cash, end of the period $ 2,426 $ 308 $ 2,426
======== ======== ========
Supplemental disclosure of cash flows information:
Cash paid for income taxes $ -- $ -- $ --
======== ======== ========
Cash paid for interest $ -- $ -- $ --
======== ======== ========
See accompanying notes to the financial statements.
20
ERE MANAGEMENT, INC.
(A Development Stage Company)
July 31, 2011 and 2010
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1 - NATURE OF OPERATIONS
ERE Management, Inc. (a development stage company) ("ERE" or the "Company") was
incorporated under the laws of the State of Nevada on May 29, 2007. Initial
operations have included organization and incorporation, target market
identification, marketing plans, and capital formation. A substantial portion of
the Company's activities has involved developing a business plan and
establishing contacts and visibility in the marketplace. The Company has
generated no revenues since inception. The business plan of ERE is to develop
software, specializing in providing sales tool solutions for the real estate
industry. More specifically, ERE has developed an online Content Management
System ("CMS") that enables real estate agents to build a website to showcase
their listings.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The Company's financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America ("U.S.
GAAP").
DEVELOPMENT STAGE COMPANY
The Company is a development stage company as defined by section 915-10-20 of
the FASB Accounting Standards Codification. The Company is still devoting
substantially all of its efforts on establishing the business and its planned
principal operations have not commenced. All losses accumulated since inception
have been considered as part of the Company's exploration stage activities.
USE OF ESTIMATES AND ASSUMPTIONS
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.
The Company's significant estimates and assumptions include the fair value of
financial instruments, the carrying value, recoverability and impairment of
long-lived assets, including the values assigned to and the estimated useful
lives of website development costs, income tax rate, related income tax
provision and valuation allowance of deferred tax assets, and the assumption
that the Company will continue as a going concern. Those significant accounting
estimates or assumptions bear the risk of change due to the fact that there are
uncertainties attached to those estimates or assumptions, and certain estimates
or assumptions are difficult to measure or value.
Management bases its estimates on historical experience and on various
assumptions that are believed to be reasonable under the circumstances, the
results of which form the basis for making judgments about the carrying values
of assets and liabilities that are not readily apparent from other sources.
Management regularly reviews its estimates utilizing currently available
information, changes in facts and circumstances, historical experience and
reasonable assumptions. After such reviews, and if deemed appropriate, those
estimates are adjusted accordingly. Actual results could differ from those
estimates. Actual results could differ from those estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards
Codification for disclosures about fair value of its financial instruments and
paragraph 820-10-35-37 of the FASB Accounting Standards Codification ("Paragraph
21
820-10-35-37") to measure the fair value of its financial instruments. Paragraph
820-10-35-37 establishes a framework for measuring fair value in generally
accepted accounting principles (U.S. GAAP), and expands disclosures about fair
value measurements. To increase consistency and comparability in fair value
measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair
value hierarchy which prioritizes the inputs to valuation techniques used to
measure fair value into three (3) broad levels. The fair value hierarchy gives
the highest priority to quoted prices (unadjusted) in active markets for
identical assets or liabilities and the lowest priority to unobservable inputs.
The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37
are described below:
Level 1 Quoted market prices available in active markets for identical
assets or liabilities as of the reporting date.
Level 2 Pricing inputs other than quoted prices in active markets included
in Level 1, which are either directly or indirectly observable as
of the reporting date.
Level 3 Pricing inputs that are generally observable inputs and not
corroborated by market data.
Financial assets are considered Level 3 when their fair values are determined
using pricing models, discounted cash flow methodologies or similar techniques
and at least one significant model assumption or input is unobservable.
The fair value hierarchy gives the highest priority to quoted prices
(unadjusted) in active markets for identical assets or liabilities and the
lowest priority to unobservable inputs. If the inputs used to measure the
financial assets and liabilities fall within more than one level described
above, the categorization is based on the lowest level input that is significant
to the fair value measurement of the instrument.
The carrying amounts of the Company's financial assets and liabilities, such as
cash, accounts payable and accrued expenses, approximate their fair values
because of the short maturity of these instruments.
Transactions involving related parties cannot be presumed to be carried out on
an arm's-length basis, as the requisite conditions of competitive, free-market
dealings may not exist. Representations about transactions with related parties,
if made, shall not imply that the related party transactions were consummated on
terms equivalent to those that prevail in arm's-length transactions unless such
representations can be substantiated.
It is not however, practical to determine the fair value of advances from
stockholders due to their related party nature.
CARRYING VALUE, RECOVERABILITY AND IMPAIRMENT OF LONG-LIVED ASSETS
The Company has adopted paragraph 360-10-35-17 of the FASB Accounting Standards
Codification for its long-lived assets. The Company's long-lived assets, which
include website development costs, are reviewed for impairment whenever events
or changes in circumstances indicate that the carrying amount of an asset may
not be recoverable.
The Company assesses the recoverability of its long-lived assets by comparing
the projected undiscounted net cash flows associated with the related long-lived
asset or group of long-lived assets over their remaining estimated useful lives
against their respective carrying amounts. Impairment, if any, is based on the
excess of the carrying amount over the fair value of those assets. Fair value is
generally determined using the asset's expected future discounted cash flows or
market value, if readily determinable. If long-lived assets are determined to be
recoverable, but the newly determined remaining estimated useful lives are
shorter than originally estimated, the net book values of the long-lived assets
are depreciated over the newly determined remaining estimated useful lives.
The impairment charges, if any, is included in operating expenses in the
accompanying statements of operations.
FISCAL YEAR END
The Company elected July 31 as its fiscal year ending date.
22
CASH EQUIVALENTS
The Company considers all highly liquid investments with maturities of three
months or less at the time of purchase to be cash equivalents.
WEBSITE DEVELOPMENT COSTS
Under FASB ASC350-50, WEBSITE DEVELOPMENT COSTS, costs and expenses incurred
during the planning and operating stages of the Company's website are expensed
as incurred. Under ASC 350-50, costs incurred in the website application and
infrastructure development stages are capitalized by the Company and amortized
to expense over the website's estimated useful life or period of benefit of
three (3) years. Upon becoming fully amortized, the related cost and accumulated
amortization are removed from the accounts.
As of July 31, 2011, the Company had capitalized $5,950 related to its website
cost.
RELATED PARTIES
The Company follows subtopic 850-10 of the FASB Accounting Standards
Codification for the identification of related parties and disclosure of related
party transactions.
Pursuant to Section 850-10-20 the related parties include a. affiliates of the
Company; b. entities for which investments in their equity securities would be
required, absent the election of the fair value option under the Fair Value
Option Subsection of Section 825-10-15, to be accounted for by the equity method
by the investing entity; c. trusts for the benefit of employees, such as pension
and profit-sharing trusts that are managed by or under the trusteeship of
management; d.principal owners of the Company; e. management of the Company; f.
other parties with which the Company may deal if one party controls or can
significantly influence the management or operating policies of the other to an
extent that one of the transacting parties might be prevented from fully
pursuing its own separate interests; and g. other parties that can significantly
influence the management or operating policies of the transacting parties or
that have an ownership interest in one of the transacting parties and can
significantly influence the other to an extent that one or more of the
transacting parties might be prevented from fully pursuing its own separate
interests.
The financial statements shall include disclosures of material related party
transactions, other than compensation arrangements, expense allowances, and
other similar items in the ordinary course of business. However, disclosure of
transactions that are eliminated in the preparation of consolidated or combined
financial statements is not required in those statements. The disclosures shall
include: a. the nature of the relationship(s) involvedb. description of the
transactions, including transactions to which no amounts or nominal amounts were
ascribed, for each of the periods for which income statements are presented, and
such other information deemed necessary to an understanding of the effects of
the transactions on the financial statements; c. the dollar amounts of
transactions for each of the periods for which income statements are presented
and the effects of any change in the method of establishing the terms from that
used in the preceding period; and d. mounts due from or to related parties as of
the date of each balance sheet presented and, if not otherwise apparent, the
terms and manner of settlement.
COMMITMENT AND CONTINGENCIES
The Company follows subtopic 450-20 of the FASB Accounting Standards
Codification to report accounting for contingencies. Certain conditions may
exist as of the date the consolidated financial statements are issued, which may
result in a loss to the Company but which will only be resolved when one or more
future events occur or fail to occur. The Company assesses such contingent
liabilities, and such assessment inherently involves an exercise of judgment. In
assessing loss contingencies related to legal proceedings that are pending
against the Company or unasserted claims that may result in such proceedings,
the Company evaluates the perceived merits of any legal proceedings or
unasserted claims as well as the perceived merits of the amount of relief sought
or expected to be sought therein.
If the assessment of a contingency indicates that it is probable that a material
loss has been incurred and the amount of the liability can be estimated, then
the estimated liability would be accrued in the Company's consolidated financial
statements. If the assessment indicates that a potential material loss
contingency is not probable but is reasonably possible, or is probable but
cannot be estimated, then the nature of the contingent liability, and an
23
estimate of the range of possible losses, if determinable and material, would be
disclosed.
Loss contingencies considered remote are generally not disclosed unless they
involve guarantees, in which case the guarantees would be disclosed. Management
does not believe, based upon information available at this time, that these
matters will have a material adverse effect on the Company's consolidated
financial position, results of operations or cash flows. However, there is no
assurance that such matters will not materially and adversely affect the
Company's business, financial position, and results of operations or cash flows.
REVENUE RECOGNITION
The Company follows paragraph 605-10-S99-1 of the FASB Accounting Standards
Codification for revenue recognition. The Company will recognize revenue when it
is realized or realizable and earned. The Company considers revenue realized or
realizable and earned when it has persuasive evidence of an arrangement that the
services have been rendered to the customer, the sales price is fixed or
determinable, and collectability is reasonably assured.
INCOME TAXES
The Company accounts for income taxes under Section 740-10-30 of the FASB
Accounting Standards Codification. Deferred income tax assets and liabilities
are determined based upon differences between the financial reporting and tax
bases of assets and liabilities and are measured using the enacted tax rates and
laws that will be in effect when the differences are expected to reverse.
Deferred tax assets are reduced by a valuation allowance to the extent
management concludes it is more likely than not that the assets will not be
realized. Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in the statements
of operations in the period that includes the enactment date.
The Company adopted section 740-10-25 of the FASB Accounting Standards
Codification ("Section 740-10-25"). Section 740-10-25 addresses the
determination of whether tax benefits claimed or expected to be claimed on a tax
return should be recorded in the financial statements. Under Section 740-10-25,
the Company may recognize the tax benefit from an uncertain tax position only if
it is more likely than not that the tax position will be sustained on
examination by the taxing authorities, based on the technical merits of the
position. The tax benefits recognized in the financial statements from such a
position should be measured based on the largest benefit that has a greater than
fifty percent (50%) likelihood of being realized upon ultimate settlement.
Section 740-10-25 also provides guidance on de-recognition, classification,
interest and penalties on income taxes, accounting in interim periods and
requires increased disclosures.
The estimated future tax effects of temporary differences between the tax basis
of assets and liabilities are reported in the accompanying consolidated balance
sheets, as well as tax credit carry-backs and carry-forwards. The Company
periodically reviews the recoverability of deferred tax assets recorded on its
consolidated balance sheets and provides valuation allowances as management
deems necessary.
Management makes judgments as to the interpretation of the tax laws that might
be challenged upon an audit and cause changes to previous estimates of tax
liability. In addition, the Company operates within multiple taxing
jurisdictions and is subject to audit in these jurisdictions. In management's
opinion, adequate provisions for income taxes have been made for all years. If
actual taxable income by tax jurisdiction varies from estimates, additional
allowances or reversals of reserves may be necessary.
The Company had no material adjustments to its liabilities for unrecognized
income tax benefits according to the provisions of Section 740-10-25.
NET LOSS PER COMMON SHARE
Net loss per common share is computed pursuant to section 260-10-45 of the FASB
Accounting Standards Codification. Basic net loss per common share is computed
by dividing net loss by the weighted average number of shares of common stock
outstanding during the period. Diluted net loss per common share is computed by
dividing net loss by the weighted average number of shares of common stock and
potentially outstanding shares of common stock during the period.
24
There were no potentially dilutive common shares outstanding for the interim
period ended July 31, 2011 or 2010.
CASH FLOWS REPORTING
The Company adopted paragraph 230-10-45-24 of the FASB Accounting Standards
Codification for cash flows reporting, classifies cash receipts and payments
according to whether they stem from operating, investing, or financing
activities and provides definitions of each category, and uses the indirect or
reconciliation method ("Indirect method") as defined by paragraph 230-10-45-25
of the FASB Accounting Standards Codification to report net cash flow from
operating activities by adjusting net income to reconcile it to net cash flow
from operating activities by removing the effects of (a) all deferrals of past
operating cash receipts and payments and all accruals of expected future
operating cash receipts and payments and (b) all items that are included in net
income that do not affect operating cash receipts and payments.
SUBSEQUENT EVENTS
The Company follows the guidance in Section 855-10-50 of the FASB Accounting
Standards Codification for the disclosure of subsequent events. The Company will
disclose the date through which subsequent events have been evaluated and that
date is the date when the financial statements were issued.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In May 2011, the FASB issued the FASB Accounting Standards Update No. 2011-04
"FAIR VALUE MEASUREMENT" ("ASU 2011-04"). This amendment and guidance are the
result of the work by the FASB and the IASB to develop common requirements for
measuring fair value and for disclosing information about fair value
measurements in accordance with U.S. GAAP and International Financial Reporting
Standards (IFRSs).
This update does not modify the requirements for when fair value measurements
apply; rather, they generally represent clarifications on how to measure and
disclose fair value under ASC 820, FAIR VALUE MEASUREMENT, including the
following revisions:
* An entity that holds a group of financial assets and financial
liabilities whose market risk (that is, interest rate risk, currency
risk, or other price risk) and credit risk are managed on the basis of
the entity's net risk exposure may apply an exception to the fair
value requirements in ASC 820 if certain criteria are met. The
exception allows such financial instruments to be measured on the
basis of the reporting entity's net, rather than gross, exposure to
those risks.
* In the absence of a Level 1 input, a reporting entity should apply
premiums or discounts when market participants would do so when
pricing the asset or liability consistent with the unit of account.
* Additional disclosures about fair value measurements.
The amendments in this Update are to be applied prospectively and are effective
for public entity during interim and annual periods beginning after December 15,
2011.
In June 2011, the FASB issued the FASB Accounting Standards Update No. 2011-05
"COMPREHENSIVE INCOME ("ASU 2011-05"), which was the result of a joint project
with the IASB and amends the guidance in ASC 220, COMPREHENSIVE INCOME, by
eliminating the option to present components of other comprehensive income (OCI)
in the statement of stockholders' equity. Instead, the new guidance now gives
entities the option to present all nonowner changes in stockholders' equity
either as a single continuous statement of comprehensive income or as two
separate but consecutive statements. Regardless of whether an entity chooses to
present comprehensive income in a single continuous statement or in two separate
but consecutive statements, the amendments require entities to present all
reclassification adjustments from OCI to net income on the face of the statement
of comprehensive income.
The amendments in this Update should be applied retrospectively and are
effective for public entity for fiscal years, and interim periods within those
years, beginning after December 15, 2011.
25
Management does not believe that any other recently issued, but not yet
effective accounting pronouncements, if adopted, would have a material effect on
the accompanying consolidated financial statements.
NOTE 3 - GOING CONCERN
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As reflected in the accompanying
financial statements, the Company had a deficit accumulated during the
development stage at July 31, 2011, a net loss and net cash used in operating
activities for the fiscal year then ended with no revenues earned since
inception.
While the Company is attempting to generate sufficient revenues, the Company's
cash position may not be enough to support the Company's daily operations.
Management intends to raise additional funds by way of a public or private
offering. Management believes that the actions presently being taken to further
implement its business plan and generate sufficient revenues provide the
opportunity for the Company to continue as a going concern. While the Company
believes in the viability of its strategy to generate sufficient revenues and in
its ability to raise additional funds, there can be no assurances to that
effect. The ability of the Company to continue as a going concern is dependent
upon the Company's ability to further implement its business plan and generate
sufficient revenues.
The financial statements do not include any adjustments that might be necessary
if the Company is unable to continue as a going concern.
NOTE 4 - RELATED PARTY TRANSACTIONS
FREE OFFICE SPACE
The Company has been provided office space by its Chief Executive Officer at no
cost. The management determined that such cost is nominal and did not recognize
the rent expense in its financial statements.
ADVANCES FROM STOCKHOLDER
The amount owing to a stockholder is unsecured, non-interest bearing and is due
on demand.
NOTE 5 - STOCKHOLDERS' DEFICIT
SHARES AUTHORIZED
The Company is authorized to issue 20,000,000 shares of $0.001 par value common
stock.
COMMON STOCK
On July 16, 2007, the Company issued 1,600,000 shares of its common stock to Mr.
Imperial for cash proceeds of $20,000. On July 17, 2007, Mr. Imperial was
elected to the Board of Directors, and became the President, Secretary, and
Treasurer of the Company.
On January 24, 2008, the Company completed and closed an offering by selling
840,000 shares, of the 1,200,000 registered shares, of its common stock, par
value of $0.001 per share, at an offering price of $0.05 per share for gross
proceeds of $42,000. Costs associated with this offering were $13,500.
26
NOTE 6 - INCOME TAXES
DEFERRED TAX ASSETS
At July 31, 2011, the Company had net operating loss ("NOL") carry-forwards for
Federal income tax purposes of $93,949 that may be offset against future taxable
income through 2031. No tax benefit has been reported with respect to these net
operating loss carry-forwards in the accompanying financial statements because
the Company believes that the realization of the Company's net deferred tax
assets of approximately $31,943 was not considered more likely than not and
accordingly, the potential tax benefits of the net loss carry-forwards are fully
offset by a valuation allowance of $31,943.
Deferred tax assets consist primarily of the tax effect of NOL carry-forwards.
The Company has provided a full valuation allowance on the deferred tax assets
because of the uncertainty regarding its realizability. The valuation allowance
increased approximately $5,675 and $3,416 for the fiscal years ended July 31,
2011 and 2010, respectively.
Components of deferred tax assets at July 31, 2011 and 2010 are as follows:
July 31, 2011 July 31, 2010
------------- -------------
Net deferred tax assets - Non-current:
Expected income tax benefit from NOL
carry-forwards $ 31,943 $ 26,268
Less valuation allowance (31,943) (26,268)
-------- --------
Deferred tax assets, net of valuation allowance $ -- $ --
======== ========
INCOME TAXES IN THE STATEMENTS OF OPERATIONS
A reconciliation of the federal statutory income tax rate and the effective
income tax rate as a percentage of income before income taxes is as follows:
For the For the
Fiscal Year Fiscal Year
Ended Ended
July 31, July 31,
2011 2010
-------- --------
Federal statutory income tax rate 34.0% 34.0%
Change in valuation allowance on net operating
loss carry-forwards (34.0)% (34.0)%
-------- --------
Effective income tax rate 0.0% 0.0%
======== ========
NOTE 7 - SUBSEQUENT EVENTS
The Company has evaluated all events that occurred after the balance sheet
through the date when the financial statements were issued to determine if they
must be reported. The Management of the Company determined that there were no
reportable subsequent events to be disclosed.
27
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 July 31, 2011, our principal executive officer and principal financial
officer 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, he
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 principal
executive officer and principal financial officer 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 principal executive
officer and principal financial officer in connection with the audit of our
financial statements as of July 31, 2011.
Our principal executive officer and principal financial officer believes that
the material weaknesses set forth in items (2) and (3) above did not have an
effect on our financial results. However, our principal executive officer and
28
principal financial officer 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 Company's
registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by the Company's
registered public accounting firm pursuant to temporary rules of the SEC that
permit the Company 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 July 31, 2011.
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.
29
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
---- --- --------
Joselito Christopher G. Imperial 43 President, Secretary, Treasurer and
Director
Mr. Joselito Christopher G. Imperial has served as our President, Secretary and
Treasurer as well as our sole Director since July 17, 2007. He has four years of
experience in asset management, working with leading companies in the
Philippines. Since 2003, Mr. Imperial has been the business and asset manager
for the Sterling Group of Companies in Makita City. Prior to this, he was the
real estate asset manager for McDonald's in the Philippines. Mr. Imperial's past
work experience includes service as the business development officer for Kenny
Rogers, Roasters Philippines Incorporated, and the co-brand of Seattle's Best
Coffee, Coffee Masters Incorporated.
COMMITTEES OF THE BOARD OF DIRECTORS
To date, our Board of Directors has not established a nominating and governance
committee, a compensation committee, nor an audit committee
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 period ended July 31, 2009, 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.
ITEM 11. EXECUTIVE COMPENSATION
The particulars of compensation paid to the following persons during the fiscal
period ended July 31, 2009 are set out in the summary compensation table below:
* our Chief Executive Officer (Principal Executive Officer);
* our Chief Financial Officer (Principal Financial Officer);
* each of our three most highly compensated executive officers, other
than the Principal Executive Officer and the Principal Financial
Officer, who were serving as executive officers at the end of the
fiscal year ended July 31, 2009; and
* up to two additional individuals for whom disclosure would have been
provided under the item above but for the fact that the individual was
not serving as our executive officer at the end of the fiscal year
ended July 31, 2009;
(collectively, the "Named Executive Officers"):
30
SUMMARY COMPENSATION TABLE
Non-Equity Nonqualified
Incentive Deferred
Fiscal Year Stock Option Plan Compensation All Other
Ended Salary Bonus Awards Awards Compensation Earnings Compensation Total
Name July 31, ($) ($) ($) ($) ($) ($) ($) ($)
---- ----- ------ ----- ------ ------ ------------ -------- ------------ -----
Joselito Christopher 2011 0 0 0 0 0 0 0 0
G. Imperial (1) 2010 0 0 0 0 0 0 0 0
----------
(1) Mr. Imperial has been our President, Secretary, and Treasurer (Principal
Executive Officer and Principal Financial Officer), and Director since July
17, 2007
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($)
(a) (b) (c) (d) (e) (f) (g) (h) (i) (j)
---- -------------- ---------------- ---------- ----- ---- --------- --------- --------- ---------
Joselito -- -- -- -- -- -- -- -- --
Christopher
G. Imperial,
PEO
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.
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 July 31, 2009.
31
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 October 26, 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 Joselito Christopher G. 1,600,000 65.5%
Imperial, PEO
All officers as
a Group 2,440,000 65.5%
----------
(1) Based on 2,440,000 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 Securities to be Number of Securities
Issued Upon Exercise of Weighted-Average Exercise Remaining Available for
Outstanding Options, Price of Outstanding Options, Future Issuance Under
Warrants and Rights Warrants and Rights Equity Compensation Plans
Plan Category (a) (b) (excluding column (a))
------------- ------------------- ------------------- -------------------------
Equity Compensation Plans -- -- --
Approved by Security
Holders
Equity Compensation Plans Not -- -- --
Approved by Security Holders
Total -- -- --
32
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
Other than the transactions discussed below, we have not entered into any
transaction since the last fiscal year nor are there any proposed transactions
that exceed one percent of the average of our total assets at year end for the
last three completed fiscal years in which any of our Directors, executive
officers, stockholders or any member of the immediate family of any of the
foregoing had or is to have a direct or indirect material interest.
On July 16, 2007, we sold 1,600,000 shares of our common stock to Mr. Joselito
Christopher G. Imperial, our President, Secretary, Treasurer and sole Director,
for cash payment to us of $20,000. We believe this issuance was exempt under
Regulation S of the Securities Act. No advertising or general solicitation was
employed in offering the securities. The offering and sale were made only to Mr.
Joselito Christopher G. Imperial who is a non-U.S. citizen, and transfer was
restricted by us in accordance with the requirements of the Securities Act of
1933.
On September 26, 2007, intellectual property rights were received from Mr.
Joselito Christopher G. Imperial, our President, Secretary, Treasurer and sole
Director, for nil value. ERE received intellectual property rights relating to
the development of an online CMS software product for the real estate industry.
On March 13, 2009, Mr. Joselito Christopher G. Imperial, our President,
Secretary, Treasurer and sole Director, provided the Company with a working
capital loan in the amount of $9,985 (2008-$0). The loan is non-interest
bearing, unsecured, and has no specific terms of repayment.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
AUDIT FEES
For the year ended July 31, 2011, Li & Company, PC billed us for $5,250 in audit
fees.
REVIEW FEES
Li & Company, PC, billed us $4,500 for reviews of our quarterly financial
statements in 2011 that are not reported under Audit Fees above.
TAX AND ALL OTHER FEES
We did not pay any fees to Davis Li & Company, PC for tax compliance, tax
advice, tax planning or other work during our fiscal year ended July 31, 2011.
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.
33
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Exhibit Description
------- -----------
3.1 Articles of Incorporation. (Attached as an exhibit to our Registration
Statement on Form SB-2 originally filed with the SEC on November 9,
2007 and incorporated herein by reference.)
3.2 Bylaws. (Attached as an exhibit to our Registration Statement on Form
SB-2 originally filed with the SEC on November 13, 2007 and
incorporated herein by reference.)
31.1 Certification of Joselito Christopher G. Imperial pursuant to Rule
13a-14(a).
32.1 Certification of Joselito Christopher G. Imperial pursuant to 18 U.S.C
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
34
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.
ERE MANAGEMENT, INC.
By: /s/ Joselito Christopher G. Imperial
-----------------------------------------
Joselito Christopher G. Imperial
President, Treasurer, Secretary and
Director (Principal Executive and
Principal Financial Officer)
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/ Joselito Christopher G. Imperial President, Treasurer, Secretary, and November 14, 2011
-------------------------------------------- Director
Joselito Christopher G. Imperial
35