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 August 31, 2012
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from ___________________ to __________________
Commission file number: 000-53910
VUMEE, INC.
(Exact Name of Registrant as Specified in its Charter)
NEVADA 35-2340897
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
50 E. SAMPLE RD.
SUITE 301
POMPANO BEACH, FLORIDA 33064
(Address of principal executive offices) (Zip Code)
Registrant's telephone number (800) 854-0654
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, par value $.001
Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes [ ] No [X]
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act Yes [ ] No [X]
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the 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 check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K 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. Yes [ ] No [X]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
As of September 21, 2012, the Registrant had 60,001,000 shares of common stock
issued and outstanding. No market value had been computed based upon the fact
that no active trading market had been established as of September 21, 2012.
The number of shares of Common Stock issued and outstanding as of August 31,
2012 was 60,001,000.
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the following documents if incorporated by reference and the Part
of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is
incorporated: (1) Any annual report to security holders; (2) Any proxy or
information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or
(c) under the Securities Act of 1933. The listed documents should be clearly
described for identification purposes (e.g., annual report to security holders
for fiscal year ended August 24, 1980).
VuMEE, Inc.
FORM 10-K INDEX
10-K - YEAR END REPORT PAGE
----
PART I
ITEM 1 BUSINESS 4
ITEM 1A RISK FACTORS 5
ITEM 1B UNRESOLVED STAFF COMMENTS 5
ITEM 2 PROPERTIES 5
ITEM 3 LEGAL PROCEEDINGS 5
ITEM 4 MINE SAFETY DISCLOSURES 5
PART II
ITEM 5 MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITES 6
ITEM 6 SELECTED FINANCIAL DATA 8
ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS 8
ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS 15
ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA 15
ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE 15
ITEM 9A CONTROLS AND PROCEDURES 15
ITEM 9B OTHER INFORMATION 16
PART III
ITEM 10 DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 16
ITEM 11 EXECUTIVE COMPENSATION 18
ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS 19
ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTORS
INDEPENDENCE 21
ITEM 14 PRINCIPAL ACCOUNTANT FEES AND SERVICES 21
PART IV
ITEM 15 EXHIBITS, FINANCIAL STATEMENT SCHEDULES 22
SIGNATURES 23
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FORWARD-LOOKING STATEMENTS
Some of the statements contained in this Form 10-K that are not historical facts
are "forward-looking statements" which can be identified by the use of
terminology such as "estimates," "projects," "plans," "believes," "expects,"
"anticipates," "intends," or the negative or other variations, or by discussions
of strategy that involve risks and uncertainties. We urge you to be cautious of
the forward-looking statements, that such statements, which are contained in
this Form 10-K, reflect our current beliefs with respect to future events and
involve known and unknown risks, uncertainties and other factors affecting our
operations, market growth, services, products and licenses. No assurances can be
given regarding the achievement of future results, as actual results may differ
materially as a result of the risks we face, and actual events may differ from
the assumptions underlying the statements that have been made regarding
anticipated events.
All written forward-looking statements made in connection with this Form 10-K
that are attributable to us or persons acting on our behalf are expressly
qualified in their entirety by these cautionary statements. Given the
uncertainties that surround such statements, you are cautioned not to place
undue reliance on such forward-looking statements.
Our audited financial statements are stated in United States Dollars (US$) and
are prepared in accordance with United States Generally Accepted Accounting
Principles. The following discussion should be read in conjunction with our
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, but are not limited to,
those discussed below and elsewhere in this annual report.
Unless otherwise specified in this annual report, all dollar amounts are
expressed in United States dollars and all references to "common stock" refer to
shares of our common stock.
Our company undertakes no obligation to update or revise publicly any
forward-looking statements, whether as a result of new information, future
events or otherwise.
As used in this annual report, the terms "we", "us", "our" and "our company"
mean VuMee, Inc. unless otherwise indicated.
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PART I
ITEM 1. BUSINESS
HISTORY OF VUMEE, INC.
Our company was incorporated under the laws of State of Nevada on April 30, 2008
under the name PaperWorks, Inc., with an authorized capital of 75,000,000 common
shares with a par value of $0.001.
On May 2, 2012, we filed Articles of Merger with the Nevada Secretary of State
to change the name of our company to "VuMee Inc.", to be effected by way of a
merger with our wholly-owned subsidiary VuMee Inc., which was created solely for
the name change.
Also on May 2, 2012, we filed a Certificate of Change with the Nevada Secretary
of State to give effect to a forward split of our authorized and issued and
outstanding shares of common stock on a 10 new for one (1) old basis and,
consequently, our company's authorized capital increased from 75,000,000 to
750,000,000 shares of common stock and our issued and outstanding shares of
common stock shall increased from 6,000,000 to 60,000,000 shares of common
stock, all with a par value of $0.001.
These amendments became effective on May 8, 2012 upon approval from the
Financial Industry Regulatory Authority ("FINRA").
The forward split and name change became effective with the Over-the-Counter
Bulletin Board at the opening of trading on May 8, 2012. Our new symbol is
"VUME". Our CUSIP number is 92922C105.
RECENT ACTIVITIES; STATUS OF THE COMPANY
On May 17, 2012, the Company closed a share exchange agreement with Data Pangea,
LLC, a Florida Limited Liability Company ("Data Pangea"), in exchange for
30,001,000 shares of its common stock. Concurrently a former director and
officer cancelled 30,000,000 shares previously held.
This transaction was accounted for as a reverse merger. These statements contain
the balance sheet and operations of Data Pangea before and after the merger.
Since, Data Pangea was started in March 2012, there is no audited balance sheet
at August 31, 2011.
Data Pangea, LLC.is a limited liability company organized on March 22, 2012
under the laws of Florida. Data Pangea, LLC d/b/a VuMee was founded on the
principle that celebrities should be monetized for video content that they
publish to their social networks. Data Pangea is a development stage entity that
was organized to purchase and utilize the intangible assets of a company related
by certain common owners.
VuMee allows celebrities with a social network fan base ("Celebrities") the
ability to generate revenue by simply uploading video content to their social
networks. The VuMee platform allows Celebrities the ability to share in the
advertising revenues with the Company.
VuMee is a fully functional celebrity video sharing platform via a mobile
experience. VuMee has developed an automated mobile video content distribution
network for distributing video content with paid advertising over mobile
networks. VuMee's proprietary business model harnesses the global power of
existing social networks, by providing a way to monetize Celebrities' friends
and fans. VuMee provides the ability for anyone or any brand with a fan base, to
upload video via the VuMee App on their mobile device or PC, and seamlessly
share that content with their fan base. VuMee's proprietary business methodology
4
and software provides the method of coupling paid advertising with video content
which allows the Celebrity to generate revenue through the VuMee platform.
On June 29, 2012, our subsidiary, Data Pangea LLC, entered into a loan agreement
with MLJP LLC, whereby MLJP has agreed to lend $350,000 to Data Pangea. This
loan is evidenced by a promissory note pursuant to which the principal amount
will be due and payable on the earlier of September 1, 2013. The loan bears
interest at the rate of 12% per annum, payable in quarterly, in arrears,
commencing August 29, 2012, and quarterly thereafter.
EMPLOYEES
Currently, we have 9 employees. We do not foresee any significant changes in the
number of employees we will have over the next twelve months.
ITEM 1A. RISK FACTORS
As a "smaller reporting company," as defined by Securities and Exchange
Commission ("SEC") regulations promulgated under the Securities Exchange Act of
1934, the Company is not required to provide the information required by this
item.
ITEM 1B. UNRESOLVED STAFF COMMENTS
As a "smaller reporting company," as defined by SEC regulations promulgated
under the Securities Exchange Act of 1934, the Company is not required to
provide the information required by this item.
ITEM 2. PROPERTIES
VuMEE is leasing corporate office space located in Pompano Beach, Florida from
an unrelated third party. The lease was effective May 4, 2012, and provides for
a term of three years and two months with monthly rental payments of
approximately $2,700 with 3% annual increases. The lease provides for a one,
three year renewal unless either party provides at least 30 days' prior written
notice to the other of its intent to terminate the lease upon expiration of the
then-current term. The total rents paid 2012 were approximately $7,800.
ITEM 3. LEGAL PROCEEDINGS
As of August 31, 2012, the Company is not involved in any material claim,
lawsuit or legal proceeding. From time to time, the Company is a party to
disputes and claims arising in the normal course of its business. The Company's
management believes that none of these actions, standing alone or in the
aggregate, is currently material to the Company's operations or financial
condition.
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
MARKET INFORMATION
Our common stock is currently listed for quotation on the Over-the-Counter
Bulletin Board ("OTCBB"), under the symbol " VUME".
The following table sets forth the range of high and low bid prices per share of
the Company's Common Stock for each of the quarters, as reported on the OTCBB
system. The quotations reflect inter-dealer prices, without retail mark-up,
mark-down or commission and may not represent actual transactions.
PRICE PERIOD HIGH LOW
------------- ---- ---
Fiscal Year Ended August 31, 2012
First Quarter $ .01 $ .01
Second Quarter .01 .01
Third Quarter .01 .01
Fourth Quarter .01 .01
PENNY STOCK RULES
The Securities and Exchange Commission has also adopted rules that regulate
broker-dealer practices in connection with transactions in penny stocks. Penny
stocks are generally equity securities with a price of less than $5.00 (other
than securities registered on certain national securities exchanges or quoted on
the Nasdaq system, provided that current price and volume information with
respect to transactions in such securities is provided by the exchange or
system).
A purchaser is purchasing penny stock which limits the ability to sell the
stock. Our shares will remain penny stocks for the foreseeable future. The
classification of penny stock makes it more difficult for a broker-dealer to
sell the stock into a secondary market, which makes it more difficult for a
purchaser to liquidate his/her investment. Any broker-dealer engaged by the
purchaser for the purpose of selling his or her shares in us will be subject to
Rules 15g-1 through 15g-10 of the Securities and Exchange Act. Rather than
creating a need to comply with those rules, some broker-dealers will refuse to
attempt to sell penny stock.
The penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from those rules, to deliver a standardized risk
disclosure document, which:
a. contains a description of the nature and level of risk in the market for
penny stock in both public offerings and secondary trading;
b. contains a description of the broker's or dealer's duties to the
customer and of the rights and remedies available to the customer with respect
to a violation of such duties or other requirements of the Securities Act of
1934, as amended;
c. contains a brief, clear, narrative description of a dealer market,
including "bid" and "ask" price for the penny stock and the significance of the
spread between the bid and ask price;
6
d. contains a toll-free telephone number for inquiries on disciplinary
actions;
e. defines significant terms in the disclosure document or in the conduct
of trading penny stocks; and
f. contains such other information and is in such form (including language,
type, size and format) as the Securities and Exchange Commission shall require
by rule or regulation;
The broker-dealer also must provide, prior to effecting any transaction in a
penny stock, to the customer:
a. the bid and offer quotations for the penny stock;
b. the compensation of the broker-dealer and its salesperson in the
transaction;
c. the number of shares to which such bid and ask prices apply, or other
comparable information relating to the depth and liquidity of the market for
such stock; and
d. monthly account statements showing the market value of each penny stock
held in the customer's account.
In addition, the penny stock rules require that prior to a transaction in a
penny stock not otherwise exempt from those rules; the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written acknowledgment of the receipt
of a risk disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and dated copy of a written suitability statement.
These disclosure requirements will have the effect of reducing the trading
activity in the secondary market for our stock because it will be subject to
these penny stock rules. Therefore, stockholders may have difficulty selling
their securities.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
We do not have any equity compensation plans.
SECTION 16(a)
Based solely upon a review of Form 3 and 4 furnished by us under Rule 16a-3(d)
of the Securities Exchange Act of 1934, we are not aware of any individual who
failed to file a required report on a timely basis required by Section 16(a) of
the Securities Exchange Act of 1934.
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
Other than as previously disclosed, there were no purchases of shares of our
common stock by us or any affiliated purchasers during the year ended August 31,
2012.
HOLDERS
Based on information provided by the Company's registrar and transfer agent, the
Company had 26 holders of Common Stock of record as of August 31, 2012.
DIVIDENDS
The Company did not pay dividends on its common stock in fiscal 2012, and has no
present plans or intention (and not present ability) to pay dividends in the
future. The payment of cash dividends is a matter within the discretion of the
7
Board, and will depend upon the Company's earnings, cash on hand, financial and
legal requirements and restrictions and other relevant factors.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
The following table sets forth summary information regarding options granted and
outstanding under equity compensation plans previously approved and not
previously approved by the Company's stockholders. As of August 31, 2012, there
were no outstanding or exercisable options, warrants, or rights to purchase
shares of the Company's Common Stock.
Number of Securities
Remaining Available for
Number of Securities to be Future Issuance Under
Issued Upon Exercise of Weighted-Average Exercise Equity Compensation Plans
Outstanding Options, Price of Outstanding Options, (excluding securities
Plan Category Warrants and Rights Warrants and Rights reflected in column (a))
------------- ------------------- ------------------- ------------------------
Equity Compensation Plans -0- n/a -0-
Approved by Security
Holders
Equity Compensation Plans Not -- -- --
Approved by Security Holders
TOTAL -0- n/a -0-
UNREGISTERED SALES AND REPURCHASES BY THE COMPANY
During the fiscal year ended August 31, 2012, there were no equity securities
issued or sold by the Company that were not registered under the Securities Act
of 1933, as amended. During the fiscal year ended August 31, 2012, there were no
repurchases of securities by the Company.
ITEM 6. SELECTED FINANCIAL DATA
As a "smaller reporting company," as defined by SEC regulations promulgated
under the Securities Exchange Act of 1934, the Company is not required to
provide the information required by this Item.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
CORPORATE OVERVIEW
Our company was incorporated under the laws of State of Nevada on April 30, 2008
under the name PaperWorks, Inc., with an authorized capital of 75,000,000 common
shares with a par value of $0.001.
On May 2, 2012, we filed Articles of Merger with the Nevada Secretary of State
to change the name of our company to "VuMee Inc.", to be effected by way of a
merger with our wholly-owned subsidiary VuMee Inc., which was created solely for
the name change.
Also on May 2, 2012, we filed a Certificate of Change with the Nevada Secretary
of State to give effect to a forward split of our authorized and issued and
outstanding shares of common stock on a 10 new for one (1) old basis and,
consequently, our company's authorized capital increased from 75,000,000 to
8
750,000,000 shares of common stock and our issued and outstanding shares of
common stock shall increased from 6,000,000 to 60,000,000 shares of common
stock, all with a par value of $0.001.
These amendments became effective on May 8, 2012 upon approval from the
Financial Industry Regulatory Authority ("FINRA").
The forward split and name change became effective with the Over-the-Counter
Bulletin Board at the opening of trading on May 8, 2012. Our new symbol is
"VUME". Our CUSIP number is 92922C105.
CURRENT BUSINESS
On May 17, 2012, our company closed a share exchange agreement with Data Pangea,
LLC, a Florida limited liability company, in exchange for 30,001,000 shares of
its common stock. Concurrently a former director and officer of our company
cancelled 30,000,000 shares previously held.
This transaction was accounted for as a reverse merger.
Data is a limited liability company, organized on March 22, 2012 under the laws
of Florida. Data d/b/a VuMee was founded on the principle that celebrities
should be monetized for video content that they publish to their social
networks. Our company is a development stage entity that was organized to
purchase and utilize the intangible assets of a company related by certain
common owners.
VuMee allows celebrities with a social network fan base ("Celebrities") the
ability to generate revenue by simply uploading video content to their social
networks. The VuMee platform allows Celebrities the ability to share in the
advertising revenues with our company.
VuMee is a fully functional celebrity video sharing platform via a mobile
experience. VuMee has developed an automated mobile video content distribution
network for distributing video content with paid advertising over mobile
networks. VuMee's proprietary business model harnesses the global power of
existing social networks, by providing a way to monetize Celebrities' friends
and fans. VuMee provides the ability for anyone or any brand with a fan base, to
upload video via the VuMee App on their mobile device or PC, and seamlessly
share that content with their fan base. VuMee's proprietary business methodology
and software provides the method of coupling paid advertising with video content
which allows the Celebrity to generate revenue through the VuMee platform.
On June 29, 2012, our subsidiary Data Pangea LLC entered into a loan agreement
with MLJP LLC, whereby MLJP has agreed to lend US$350,000 to Data Pangea. This
loan is evidenced by a promissory note pursuant to which the principal amount
will be due and payable on September 1, 2013. The loan will bear interest at the
rate of 12% per annum, payable in quarterly, in arrears, commencing August 29,
2012, and quarterly thereafter.
RESULTS OF OPERATIONS
The following summary of our results of operations should be read in conjunction
with our financial statements for the fiscal year ended August 31, 2012 which
are included herein.
9
FOR THE PERIOD FROM MARCH 22, 2012(INCEPTION) THROUGH AUGUST 31, 2012.
Cumulative From
March 22, 2012
(Inception) to
August 31,
2012
----------
Revenues $ Nil
Expenses $ 591,994
Net Loss $ (591,994)
EXPENSES
Our operating expenses for the period from March 22, 2012 (inception) to August
31, 2012 are outlined in the table below:
Cumulative From
March 22, 2012
(Inception) to
August 31,
2012
----------
Computer and internet expenses $ 171,373
Marketing and related expenses $ 141,373
Salary expenses $ 80,818
Professional fees $ 54,228
Travel and related expenses $ 40,338
Contract labor $ 38,400
Amortization and depreciation
expenses $ 15,034
Other general and administrative $ 50,671
NET LOSS
For the period from March 22, 2012 (inception) to August 31, 2012 we incurred a
net loss of $591,994. Most of the expenses were due to marketing and computer
expenses in an effort to realize our new business strategy.
10
LIQUIDITY AND CASH REQUIREMENTS
WORKING CAPITAL
At
August 31,
2012
----------
Current Assets $ 33,157
Current Liabilities $ 238,316
Working Capital $ (205,159)
CASH FLOWS
Cumulative From
March 22, 2012
(Inception) to
August 31,
2012
----------
Net Cash (Used in) Operating Activities $ (502,016)
Net Cash (Used In) Investing Activities $ (527,687)
Net Cash Provided by Financing Activities $1,060,000
NET INCREASE IN CASH DURING THE PERIOD $ 30,297
As of August 31, 2012 we had $30,297 in cash, current assets of $33,157, current
liabilities of $238,316 and working capital of ($205,159).
We currently have $30,297 cash in the bank. We do not expect to satisfy our cash
requirements for business operations for the next 12 months with our current
cash in the bank.
We had working capital of ($205,159) at August 31, 2012. Our operating and
capital requirements in connection with supporting our expanding operations and
introducing new products have been and will continue to be significant to us.
Since inception, our losses from operations along with the increased costs and
working capital required to grow our business were satisfied through the initial
contribution.
CASH FLOWS FROM MARCH 22, 2012 (INCEPTION) THROUGH AUGUST 31, 2012
CASH FLOWS USED IN OPERATING ACTIVITIES
Operating activities used net cash from March 22, 2012 (inception) through
August 31, 2012 of ($502,016). Net cash used reflects an adjusted net loss for
the year ended of $591,994, as adjusted for various items which impact net loss
but do not impact cash during the period, such as changes in prepaid expenses
($2,860), security deposits ($10,512) and accounts payable $88,316 and
adjustments for depreciation and amortization $15,034.
CASH FLOWS USED IN INVESTING ACTIVITIES
Our investing activities used $527,687 in net cash from March 22, 2012
(inception) through August 31, 2012. Net cash used is composed primarily of
purchases of furniture and equipment, website development costs and purchase of
intangibles.
11
CASH FLOWS FROM FINANCING ACTIVITIES
Our financing activities provided cash in the amount $1,060,000 from March 22,
2012 (inception) through August 31, 2012. Net cash provided was composed
primarily of related party loans in the amount of $410,000, proceeds received on
notes payable in the amount of $150,000, and initial contributions of capital of
$500,000.
FUTURE FINANCING
If we do not generate substantial revenue from operations we will require
additional financing to fund our planned operations. We currently do not have
committed sources of additional financing and may not be able to obtain
additional financing, particularly, if the volatile conditions in the stock and
financial markets, and more particularly the market for an early development
stage company stocks persist.
There can be no assurance that additional financing will be available to us when
needed or, if available, that it can be obtained on commercially reasonable
terms. If we are not able to obtain the additional financing on a timely basis,
if and when it is needed, we will be forced to delay or scale down some or all
of our development activities or perhaps even cease the operation of our
business.
Since inception we have funded our operations primarily through equity
financings and we expect that we will continue to fund our operations through
the equity and debt financing if revenues are insufficient. If we raise
additional financing by issuing equity securities, our existing stockholders'
ownership will be diluted. Obtaining commercial loans, assuming those loans
would be available, will increase our liabilities and future cash commitments.
There is no assurance that we will be able to maintain operations at a level
sufficient for an investor to obtain a return on his, her, or its investment in
our common stock. Further, we may continue to be unprofitable.
On June 29, 2012, our subsidiary Data Pangea LLC entered into a loan agreement
with MLJP LLC, whereby MLJP has agreed to lend US $350,000 to Data Pangea. This
loan is evidenced by a promissory note pursuant to which the principal amount
will be due and payable on the earlier of September 1, 2013. The loan will bear
interest at the rate of 12% per annum, payable in quarterly, in arrears,
commencing August 29, 2012, and quarterly thereafter. MLJP LLC (Majority
Stockholder) is a 45% shareholder of the Company.
During August 2012, additional loans were made totaling $60,000.
OFF BALANCE SHEET ARRANGEMENTS
We have no significant off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on our financial condition,
changes in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources that is material to
stockholders.
DEVELOPMENT STAGE COMPANY
Our company complies with the ASC 915, its characterization of our company as a
Development Stage enterprise.
12
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Although these estimates are based on management's knowledge of current events
and actions it may undertake in the future, they may ultimately differ from
actual results. We believe our estimates and assumptions are reasonable;
however, such estimates and assumptions are subject to a number of risks and
uncertainties that may cause actual results to differ materially from such
estimates.
RISKS AND UNCERTAINTIES
Our company's business could be impacted by price pressure on its product
manufacturing, acceptance of its products in the market place, new competitors,
changes in federal and/or state legislation and other factors. If our company is
unsuccessful in securing adequate liquidity, its plans may be curtailed. Adverse
changes in these areas could negatively impact our company's financial position,
results of operations and cash flows.
CASH
Cash equivalents include all highly liquid debt instruments with original
maturities of three months or less which are not securing any corporate
obligations.
PROPERTY AND EQUIPMENT
Property and equipment is stated at cost. Depreciation is computed by the
straight-line method over estimated useful lives (3-7 years). Intellectual
property assets are stated at their fair value acquisition cost. Amortization of
intellectual property assets is calculated by the straight line method over
their estimated useful lives (3- 15 years). Historical costs are reviewed and
evaluated for their net realizable value of the assets. The carrying amount of
all long-lived assets is evaluated periodically to determine if adjustment to
the depreciation and amortization period or the unamortized balance is
warranted. Based upon its most recent analysis, our company believes that no
impairment of property and equipment existed at August 31, 2012.
LONG-LIVED ASSETS
Long-lived assets such as property, equipment and identifiable intangibles are
reviewed for impairment whenever facts and circumstances indicate that the
carrying value may not be recoverable. When required impairment losses on assets
to be held and used are recognized based on the fair value of the asset. The
fair value is determined based on estimates of future cash flows, market value
of similar assets, if available, or independent appraisals, if required. If the
carrying amount of the long-lived asset is not recoverable from its undiscounted
cash flows, an impairment loss is recognized for the difference between the
carrying amount and fair value of the asset. When fair values are not available,
Our company estimates fair value using the expected future cash flows discounted
at a rate commensurate with the risk associated with the recovery of the assets.
Depreciation expense from inception March 22, 2012 through August 31, 2012 was
$3,826.
13
REVENUE RECOGNITION
Revenues of our company will be from the sale of advertising on the web-site and
video viewing platform. Revenues will be recognized once all of the following
criteria have been met:
* persuasive evidence of an arrangement exists;
* delivery of Facebook's obligations to our customer has occurred;
* the price is fixed or determinable; and
* collectability of the related receivable is reasonably assured.
Advertising revenue is generated from the display of advertisements on our
website and viewing platform. The arrangements are evidenced by either online
acceptance of terms and conditions or contracts that stipulate the types of
advertising to be delivered, the timing and the pricing. The typical term of an
advertising arrangement is approximately 30 days with billing generally
occurring after the delivery of the advertisement.
We will recognize revenue from the display of impression-based advertisements on
our website in the contracted period when the impressions are delivered.
Impressions are considered delivered when an advertisement appears in pages
delivered to users.
We will also recognize revenue from the delivery of click-based advertisements
on our website. Revenue associated with these advertisements is recognized in
the period that a user clicks on an advertisement.
ADVERTISING
The costs of advertising are expensed as incurred. Advertising expenses are
included in our company's operating expenses. Advertising expenses were $0 for
the period from March 22, 2012 (inception) through August 31, 2012.
RESEARCH AND DEVELOPMENT
Research expenditure is recognized as an expense when it is incurred.
Development expenditure is recognized as an expense except that expenditure
incurred on development projects are capitalized as long-term assets to the
extent that such expenditure is expected to generate future economic benefits.
Development expenditure is capitalized if, and only if an entity can demonstrate
all of the following:
1. its ability to measure reliably the expenditure attributable to the
asset under development;
2. the product or process is technically and commercially feasible;
3. its future economic benefits are probable;
4. its ability to use or sell the developed asset;
5. the availability of adequate technical, financial and other resources
to complete the asset under development; and
6. its intention to complete the intangible asset and use or sell.
INCOME TAXES
Our company accounts for income taxes under the liability method. Deferred tax
assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. Deferred tax
assets and liabilities are measured using enacted tax rates in effect for the
year in which those temporary differences are expected to be recovered or
settled.
14
EARNINGS PER SHARE
Our company computes basic and diluted earnings per share amounts in accordance
with ASC Topic 260, "Earnings per Share". Basic earnings per share is computed
by dividing net income (loss) available to common shareholders by the weighted
average number of common shares outstanding during the reporting period. Diluted
earnings per share reflects the potential dilution that could occur if stock
options and other commitments to issue common stock were exercised or equity
awards vest resulting in the issuance of common stock that could share in the
earnings of our company.
Note that this MD&A discussion contains forward-looking statements that involve
risks and uncertainties. Please see the section entitled "Forward-Looking
Statements" on page 4 for important information to consider when evaluating such
statements and related notes included under Item 8 hereof.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a "smaller reporting company," as defined by SEC regulations promulgated
under the Securities Exchange Act of 1934, the Company is not required to
provide the information required by this item.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The accompanying financial statements of the Company and report of independent
registered public accounting firm required by this item are filed herewith as
Exhibit F and are incorporated herein by this reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
(a) The Company maintains a system of disclosure controls and procedures (as
defined in Rule 13a-15(e) under the Exchange Act). As required by Rule 13a-15(b)
under the Exchange Act, management of the Company, under the direction of the
Company's Chief Executive Officer and Chief Financial Officer, reviewed and
performed an evaluation of the effectiveness of design and operation of the
Company's disclosure controls and procedures (as defined in Rule 13a-15(e) under
the Exchange Act) as of August 31, 2012. Based on that review and evaluation,
the Chief Executive Officer and Chief Financial Officer, along with the
management of the Company, have determined that as of August 31, 2012, the
disclosure controls and procedures are effective.
MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management is responsible for establishing and maintaining adequate internal
control over financial reporting and for the assessment of the effectiveness of
those internal controls. As defined by the SEC, internal control over financial
reporting is a process designed by the Company's Chief Executive Officer and
Chief Financial Officer to provide reasonable assurance regarding the
15
reliability of financial reporting and the preparation of the financial
statements in accordance with U.S. generally accepted accounting principles.
Management has assessed the effectiveness of the Company's internal control over
financial reporting as of August 31, 2012. In making this assessment, management
used the criteria set forth by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on
its assessment and those criteria, management has concluded that its internal
control over financial reporting was effective as of August 31, 2012. 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 SEC rules that permit the Company to provide
only management's report in this annual report.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There were no changes in the Company's internal control over financial reporting
or in other factors identified in connection with the evaluation required by
paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during the
fourth quarter ended August 31, 2012 that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.
ITEM 9B. OTHER INFORMATION
None.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The Company has not adopted a Code of Ethics applicable to its officers,
including its principal executive officer, principal financial officer,
principal accounting officer or controller and any other persons performing
similar functions.
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the names, ages and positions held with respect
to each executive officer and each member of the Board of Directors of the
Company as of August 31, 2012.
Name Age Position Since
---- --- -------- -----
Michael Spiegel 43 Chief Executive Officer, March 2012
President, and Director
Lou Rosen 58 Chief Financial Officer, March 2012
Chief Operating Officer, and Director
MICHAEL SPIEGEL has served as a Director of the Company since March 2012 and as
the Company's Acting Principal Executive Officer since March 2012. Michael
Spiegel was appointed as Chief Executive Officer. Michael Spiegel is an
16
established entrepreneur with a history of incubating technology startups since
1996. He has been an integral part in developing the burgeoning South Florida
technology sector. Mr. Spiegel was the President of MNS Holdings, a real estate
holding company located in Fort Lauderdale, Florida, from 2005 to 2011. In 1998
he founded WebUnited, one of the first regional ISP's in South Florida, and was
its CEO until it was sold in 2004. Prior to that, he served as the CEO of
Protectpoint Security, a managed security platform for small to mid-sized
businesses.
LOU ROSEN has served as a Director of the Company since March 2012, and is
currently the Company's Acting Principal Financial Officer. Mr. Lou Rosen was
appointed as Chief Operating Officer of the Company. Rosen brings over three
decades of experience to VuMee. Prior to joining VuMee, Rosen was an integral
part of his family's business, Lynn Electronics Corporation, one of the foremost
providers of data and telecommunications products in the industry. Philadelphia,
PA native, Lou Rosen received a BS in Education from Temple University in 1976
and continued his education at Temple earning a Juris Doctorate in 1980. Rosen's
professional track record with Lynn Electronics Corporation shows great success
and prowess. Since Lou Rosen's involvement, Lynn Electronics Corp. has expanded
rapidly. As the retail telecom industry grew in the 1980s, Lynn went in a new
direction and focused on manufacturing low voltage wire and cable. Keystone Wire
& Cable emerged as the distribution arm of Lynn Electronics Corp. Rosen grew
Keystone Wire & Cable by opening a warehouse in Pompano Beach, FL. His business
model was extremely successful and, through relationships with competitors,
Rosen coordinated negotiations to acquire a small local competitor.
FAMILY RELATIONSHIPS
There are no family relationships between any of the Company's executive
officers and directors.
CODE OF ETHICS
The Company has not adopted a Code of Ethics applicable to its officers,
including its principal executive officer, principal financial officer,
principal accounting officer or controller or any other persons performing
similar functions.
AUDIT COMMITTEE
The Company does not have a separately-designated, standing audit committee (the
"Audit Committee"). The Company's Audit Committee comprises of the Board of
Directors. During the 2012 fiscal year, the Audit Committee met with the
management and independent auditors of the Company. The Audit Committee reviews
the scope of the Company's accountants' engagement, including the remuneration
to be paid, and reviews the independence of the auditors. The Audit Committee,
with the assistance of appropriate personnel, reviews the Company's annual
financial statements and the independent auditor's report, including any
significant reporting and operational issues; corporate policies and procedures
as they relate to accounting and financial reporting and financial controls; any
litigation to which the Company is a party; and use by the Company's executive
officers of expense accounts and other non-monetary perquisites, if any. The
Audit Committee may direct the Company's legal counsel, independent auditors and
internal staff to inquire into and report to it on any matter having to do with
the Company's accounting or financial procedures or reporting.
The Board of Directors has not adopted a written charter for the Audit
Committee. The Board of Directors has determined that none of its Directors are
considered an "audit committee financial expert" within the meaning of that term
as defined in Item 407(d)(5)(ii) of Regulation S-K by the SEC pursuant to
Section 407 of the Sarbanes-Oxley Act of 2002, as amended. The Company does not
have an audit committee financial expert serving on its Audit Committee (as the
Company is not presently engaged in active operations).
17
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
To the Company's knowledge, based solely on its review of copies of filed
reports (if any) furnished to the Company or written representations that no
other reports were required, the Company believes that during the year ended
August 31, 2012, its officers, directors and greater than ten percent (10%)
beneficial owners complied with all Securities Exchange Act of 1934 Section
16(a) filing requirements.
ITEM 11. EXECUTIVE COMPENSATION
The Summary Compensation Table below sets forth compensation paid by the Company
to Michael Spiegel, the Company's Chief Executive Officer, and Lou Rosen, the
Company's Chief Financial Officer, for the fiscal year ended August 31, 2012 (as
applicable). Mr. Spiegel and Mr. Rosen are collectively referred to as the
"Named Executive Officers."
SUMMARY COMPENSATION TABLE
Name and Option
Principal Position Year Salary($) Bonus($) awards($)(1)(2) Total
------------------ ---- --------- -------- --------------- -----
Michael Spiegel 2012 -0- -0- -0- -0-
Chief Executive Officer
and President
Lou Rosen 2012 -0- -0- -0- -0-
Chief Financial Officer
----------
(1) The Company does not have any employment contract or termination of
employment or change in control agreement with any Named Executive Officer.
(2) The amounts in this column (if any) do not reflect compensation actually
received by the Named Executive Officer nor do they reflect the actual
value that will be recognized by the Named Executive Officer.
COMPENSATION OF DIRECTORS
The Board of Directors is not compensated for each regular meeting they attend
and are also not reimbursed for out-of-pocket expenses associated with
attendance.
Director Compensation
Fees Non-Equity Nonqualified
Earned Incentive Deferred
Paid in Stock Option Plan Compensation All Other
Name Cash Awards Awards Compensation Earnings Compensation Total
---- ---- ------ ------ ------------ -------- ------------ -----
Michael Spiegel -0- -0- -0- -0- -0- -0- -0-
Lou Rosen -0- -0- -0- -0- -0- -0- -0-
----------
(1) No directors fee were paid for attendance at the 2012 annual meeting of
stockholders and attendance at regular Board meeting in 2012.
18
OPTION GRANTS IN 2012
The Company granted no stock options during the year ended August 31, 2012, and
as of August 31, 2012 the Company had no stock options outstanding or
exercisable.
FISCAL YEAR END OPTION VALUES
There were no stock options exercised by any Named Executive Officer during
2012. As of August 31, 2012, there were no stock options outstanding or
exercisable.
EMPLOYMENT CONTRACTS
The Company has no employment agreements.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Board of Directors does not have a separate compensation committee, or any
other committee performing similar functions. Rather, the entire Board of
Directors acts as a compensation committee. The Company has only one part-time
employee. The Board of Directors does not believe the Company would derive any
significant benefit from a separate compensation committee.
The Board of Directors, in the foregoing capacity, has determined to compensate
non-employee directors as provided under the heading "Compensation of Directors"
above, and to compensate executive officers as provided above.
COMPENSATION COMMITTEE REPORT
As a "smaller reporting company," as defined by SEC regulations promulgated
under the Securities Exchange Act of 1934, the Company is not required to review
or discuss the Compensation Discussion and Analysis required by ss.229.402(b).
Board of Directors
Michael Spiegel
Lou Rosen
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
EQUITY COMPENSATION PLANS
The following table sets forth summary information regarding equity compensation
plans previously approved and not previously approved by the Company's
stockholders as of August 31, 2012.
19
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
Plan Category Warrants and Rights Warrants and Rights Equity Compensation Plans
------------- ------------------- ------------------- -------------------------
Equity Compensation Plans -0- -- --
Approved by Security
Holders
Equity Compensation Plans Not -0- -- --
Approved by Security Holders
TOTAL -0- -- --
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table shows, as of August 31, 2012, the Common Stock of the
Company owned beneficially by (i) each director of the Company, (ii) each
executive officer of the Company, (iii) all directors and executive officers as
a group, and (iv) each person known by the Company to be the "beneficial owner"
of more than five percent (5%) of the outstanding shares of such Common Stock.
"Beneficial ownership" is a technical term broadly defined by the SEC to mean
more than ownership in the usual sense. For example, you "beneficially" own
Common Stock not only if you hold it directly, but also if you indirectly
(through a relationship, a position as a Director or trustee, or a contract or
understanding) have or share the power to vote or sell the stock or have the
right to acquire it within 60 days.
Percentage of
Shares Class
Beneficially Beneficially Title of
Name (1) Current Title Owned Owned Class
-------- ------------- ----- ----- -----
Michael Spiegel Director; Chief Executive Officer -0- * Common
and President
Lou Rosen Director; Chief Financial Officer -0- * Common
All Directors and
Executive Officers
as a Group
(2 Persons) -0- * Common
----------
* Less than 1.0%.
(1) The address for all persons listed above is c/o VuMEE, Inc., 50 E. Sample
Road, Suite 301, Pompano Beach, Florida 33064.
20
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The following describes certain transactions or relationships between the
Company and its officers, directors and certain related parties in which any of
them had a direct or indirect material interest.
Except as otherwise stated below, all transactions between and among the Company
and its subsidiaries described below, its executive officers and the
subsidiaries and each of their respective affiliates may involve conflicts of
interest. The Company believes that transactions with affiliates have been made
on terms no less favorable to the Company than those available from unaffiliated
third parties.
FUNDING ARRANGEMENTS AND WORKING CAPITAL LOANS
Because the Company expects to exhaust its limited cash resources, and does not
have any active business operations to generate cash flow to fund its operating
expenses, the Company will need to raise additional cash before its cash
resources are exhausted or cease operations and liquidate.
During the past year, the Company had relied upon the Majority Stockholder to
fund operations and expenses (and to extend maturities on indebtedness funded by
the Majority Stockholder). The Majority Stockholder has no commitment or
obligation to provide additional funding or financing to the Company (or to
extend maturities on existing indebtedness), based on a recent communication
with the Majority Stockholder, the Company anticipates receiving an additional
working capital loan from the Majority Stockholder during the fiscal year 2013.
During fiscal year ended August 31, 2012, the Company received loans from its
Majority Stockholder in the amount of $410,000.
DIRECTOR INDEPENDENCE
The members of the Board of Directors are not all "independent" under the
definition of independence pursuant to NASDAQ National Market ("NASDAQ") listing
standards. None of the members of the Audit Committee are "independent" under
the definition of independence for audit committee members pursuant to the
NASDAQ listing standards.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
AUDIT FEES
The aggregate fees billed for professional services rendered by Drake & Klein,
CPAs regarding the audit of the Company's financial statements for the fiscal
year ended August 31, 2012 was approximately $7,500 each year. The aggregate
fees billed by Drake & Klein, CPAs regarding the reviews of the financial
statements included in the Company's Forms 10-Q for the fiscal year ended August
31, 2012 was $2,500.
21
AUDIT-RELATED FEES
The aggregate fees billed for audit-related services rendered by Drake & Klein,
CPAs to the Company, during the fiscal years ended August 31, 2012, was $0.
TAX FEES
The aggregate fees billed for tax-related services provided by Drake & Klein,
CPAs in connection with tax compliance, tax advice and tax planning services for
the fiscal year ended August 31, 2012, was approximately $0. Drake & Klein, CPAs
did not prepared the Company's income tax returns for the fiscal year ended
August 31, 2012 and provided no tax-related services during the fiscal year
ended August 31, 2012.
ALL OTHER FEES
The Company paid additional fees to Tracy Weintraub, PA for the fiscal year
ended August 31, 2012, is $8,000. (for general business consulting).
PRE-APPROVAL OF SERVICES BY THE EXTERNAL AUDITOR
The Audit Committee has adopted a policy for pre-approval of audit and permitted
non-audit services by the Company's external auditor. The Audit Committee will
consider annually and, if appropriate, approve the provision of audit services
by its external auditor and consider and, if appropriate, pre-approve, the
provision of certain defined audit and non-audit services. The Audit Committee
will also consider on a case by case basis and, if appropriate, approve specific
engagements that are not otherwise pre-approved. Of the AUDIT-RELATED FEES, TAX
FEES and ALL OTHER FEES described above, the Audit Committee pre-approved the
fees billed.
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a)(1) Financial Statements
Reference is made to the Index set forth on Page F-1 of this Annual Report
on Form 10-K.
(a)(2) Financial Statement Schedules
All schedules have been omitted because they are inapplicable or the
information is provided in the financial statements, including the notes
thereto.
(a)(3) Exhibits
31.1 Certification of the Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
31.2 Certification of the Chief Financial Officer Report pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.
32 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101 Interactive data files pursuant to Rule 405 of Regulation S-T.
22
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
VuMEE, INC.
By: /s/ Michael Spiegel
-------------------------------------
Michael Spiegel
Chief Executive Officer and President
By: /s/ Lou Rosen
-------------------------------------
Lou Rosen
Chief Financial Officer
Dated: October 16, 2012
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Michael Spiegel
----------------------------- Chief Executive Officer, President and Director October 16, 2012
Michael Spiegel Principal Executive Officer
/s/ Lou Rosen
----------------------------- Chief Financial Officer and Director October 16, 2012
Lou Rosen Principal Financial and Accounting Officer
23
"EXHIBIT F"
INDEX TO FINANCIAL STATEMENTS
VuMEE, Inc. PAGE
----
Report of Independent Registered Public Accounting Firm .................. F-2
Balance Sheet as of August 31, 2012 ...................................... F-3
Statement of Operations from March 22, 2012 (Inception) through
August 31, 2012 .......................................................... F-5
Statement of Stockholders' Deficiency from March 22, 2012 (Inception)
through August 31, 2012 .................................................. F-6
Statement of Cash Flows from March 22, 2012 (Inception) through
August 31, 2012 .......................................................... F-7
Notes to Financial Statements ............................................ F-8
F-1
DRAKE & KLEIN CPAS
A PCAOB REGISTERED ACCOUNTING FIRM
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Stockholders
VuMEE, Inc.
We have audited the accompanying balance sheet of VuMEE, Inc. as of August 31,
2012, and the related statement of operations, stockholders' deficiency, and
cash flows from March 22, 2012 (Inception) through August 31, 2012 then ended.
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 audit.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audits included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of VuMEE, Inc. as from March 22,
2012 (Inception) through August 31, 2012, and the results of its operations and
its cash flows for the years then ended 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 shown in the accompanying financial
statements, the Company has significant net losses and cash flow deficiencies.
Those conditions raise substantial doubt about the Company's ability to continue
as a going concern. Management's plans regarding those matters are described in
Note 1. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/ Drake & Klein CPAs
---------------------------------
Drake & Klein CPAs
Clearwater, Florida
September 21, 2012
PO Box 2493 2451 McMullen Booth Rd.
Dunedin, FL 34697-2493 Suite 210
727-512-2743 Clearwater, FL 33759-1362
F-2
VuMEE, Inc.
F/K/A Paperworks, Inc.
(A Development Stage Company)
Balance Sheet
August 31, 2012
---------------
ASSETS
Current assets:
Cash $ 30,297
Prepaid expenses 2,860
--------
Total current assets 33,157
--------
Property and equipment:
Computer equipment 64,810
Furniture and fixtures 2,000
Leasehold improvements 1,681
--------
Total property and equipment 68,491
Less accumulated depreciation 3,826
--------
Property and equipment, net 64,665
--------
Other assets:
Security deposits 10,512
Website development 334,196
Intangible assets, net 113,792
--------
Total other assets 458,500
--------
Total assets $556,322
========
The accompanying notes are an integral part of these financial statements.
F-3
VuMEE, Inc.
F/K/A Paperworks, Inc.
(A Development Stage Company)
Balance Sheet
(continued)
August 31, 2012
---------------
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities:
Accounts payable $ 88,316
Note payable 150,000
---------
Total current liabilities 238,316
---------
Long-term liabilities:
Due to related party 410,000
---------
Total liabilities 648,316
---------
Commitments and contingencies
Stockholders' deficiency:
Common Stock, $0.001 par value per share. 750,000,000
shares authorized, 60,001,000 shares issued and
outstanding at August 31, 2012 60,001
Additional paid-in capital 439,999
Accumulated deficit during the development stage (591,994)
---------
Total stockholders' deficiency (91,994)
---------
Total liabilities and stockholders' deficiency $ 556,322
=========
The accompanying notes are an integral part of these financial statements.
F-4
VuMEE, Inc.
F/K/A Paperworks, Inc.
(A Development Stage Company)
Statement of Operations
From
March 22, 2012
(Inception)
through
August 31, 2012
---------------
Revenue $ --
------------
Expenses:
Computer and internet expenses 171,132
Marketing and related expenses 141,373
Salary expenses 80,818
Professional fees 54,228
Travel and related expenses 40,338
Contract labor 38,400
Amortization and depreciation expenses 15,034
Other general and administrative 50,671
------------
Total expenses 591,994
------------
Loss before income taxes (591,994)
Provision for income taxes --
------------
Net loss $ (591,994)
============
Basic and diluted net loss per share:
Net loss per common share $ (0.01)
============
Net loss attributable to common stockholders $ (0.01)
============
Basic and diluted weighted average shares outstanding 60,000,174
============
The accompanying notes are an integral part of these financial statements.
F-5
VuMEE, Inc.
F/K/A Paperworks, Inc.
(A Development Stage Company)
Statement of Stockholders' Deficiency
Accumulated
Deficit
Additional During the
Common Stock Paid in Development
Shares Par Value Capital Stage Total
------ --------- ------- ----- -----
Balance at March 21, 2012 6,000,000 6,000 54,000 (45,955) 14,045
Net loss to reverse merger -- -- -- (22,659) (22,659)
Stock split 10-1 share of
common stock 54,000,000 54,000 (54,000) -- --
Cancellation of previously issued
common stock (30,000,000) (30,000) 30,000 -- --
Issuance of common stock in exchange
for 100% interest in Data Pangea, LLC 30,001,000 30,001 478,613 -- 508,614
Recapitalization of Paperworks, Inc.
on reverse merger -- -- (68,614) 68,614 --
Net loss from March 22, 2012 (inception)
through August 31, 2012 -- -- -- (591,994) (591,994)
----------- -------- -------- --------- ---------
Balance at August 31, 2012 60,001,000 $ 60,001 $439,999 $(591,994) $ (91,994)
=========== ======== ======== ========= =========
The accompanying notes are an integral part of these financial statements.
F-6
VuMEE, Inc.
F/K/A Paperworks, Inc.
(A Development Stage Company)
Statement of Cash Flows
From
March 22, 2012
(Inception)
through
August 31, 2012
---------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (591,994)
Adjustments to reconcile net loss to net cash
used in operating activities:
Amortization and depreciation 15,034
Changes in operating assets and liabilities:
Increase decrease in Prepaid expenses (2,860)
Increase decrease in Security deposits (10,512)
Increase decrease in Accounts payable 88,316
-----------
NET CASH USED IN OPERATING ACTIVITIES (502,016)
-----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (68,491)
Purchase of intangibles (125,000)
Increase in website development costs (334,196)
-----------
NET CASH USED IN INVESTING ACTIVITIES (527,687)
-----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from note payables 150,000
Proceeds from related party loans 410,000
Proceeds from stockholders' equity 500,000
-----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 1,060,000
-----------
Net increase in cash 30,297
Cash at beginning of period --
-----------
Cash at end of period $ 30,297
===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid $ --
-----------
Income taxes paid $ --
-----------
The accompanying notes are an integral part of these financial statements.
F-7
VuMEE, Inc.
FKA Paperworks, Inc.
(A Development Stage Company)
Notes to the Financial Statements
1. GENERAL ORGANIZATION AND BUSINESS
VuMee, Inc., F/K/A PaperWorks, Inc. ("the Company") was incorporated under the
laws of State of Nevada on April 30, 2008, with an authorized capital of
75,000,000 common shares with a par value of $0.001. The Company's year- end is
August 31st. The company is in the development stage.
The Corporation per Plan of Merger dated April 23, 2012 deemed it advisable that
VuMee, Inc. (it's wholly owned subsidiary) be merged into the Company with the
Company remaining as the surviving Corporation under the name "VuMee, Inc.".
Also on April 23, 2012, The Company voted to effect a split of the Corporation's
authorized, issued and outstanding shares of common stock on a one (1) old for
ten (10) new basis, such that its authorized capital shall increase from
75,000,000 shares to 750,000,000 shares of common stock and, correspondingly,
its issued and outstanding shares increased from 6,000,000 shares to 60,000,000
shares of common stock, all with a par value of $0.001; no fractional shares
were issued in connection with the Forward Split, in the case of a fractional
share, the fractional share were rounded up.
GOING CONCERN
These financial statements have been prepared on a going concern basis which
assumes the Company will be able to realize its assets and discharge its
liabilities in the normal course of business for the foreseeable future. The
Company has incurred losses since inception resulting in an accumulated deficit
of $591,994, as of August 31, 2012 and further losses are anticipated in the
development of its business raising substantial doubt about the Company's
ability to continue as a going concern. The ability to continue as a going
concern is dependent upon the Company generating profitable operations in the
future and/or to obtain the necessary financing to meet its obligations and
repay its liabilities arising from normal business operations when they come
due. Management intends to finance operating costs over the next twelve months
with existing cash on hand and loans from directors and or private placement of
common stock.
ACQUISITION
On May 17, 2012, the Company closed a share exchange agreement with Data Pangea,
LLC, a Florida Limited Liability Company ("Data Pangea"), in exchange for
30,001,000 shares of its common stock. Concurrently a former director and
officer cancelled 30,000,000 shares previously held.
This transaction was accounted for as a reverse merger. These statements contain
the balance sheet and operations of Data Pangea before and after the merger.
Since, Data Pangea was started in March 2012, there is no audited balance sheet
at August 31, 2011.
Data Pangea, LLC.is a limited liability company organized on March 22, 2012
under the laws of Florida. Data Pangea, LLC d/b/a VuMee was founded on the
principle that celebrities should be monetized for video content that they
publish to their social networks. Data Pangea is a development stage entity that
was organized to purchase and utilize the intangible assets of a company related
by certain common owners.
F-8
VuMee allows celebrities with a social network fan base ("Celebrities") the
ability to generate revenue by simply uploading video content to their social
networks. The VuMee platform allows Celebrities the ability to share in the
advertising revenues with the Company.
VuMee is a fully functional celebrity video sharing platform via a mobile
experience. VuMee has developed an automated mobile video content distribution
network for distributing video content with paid advertising over mobile
networks. VuMee's proprietary business model harnesses the global power of
existing social networks, by providing a way to monetize Celebrities' friends
and fans. VuMee provides the ability for anyone or any brand with a fan base, to
upload video via the VuMee App on their mobile device or PC, and seamlessly
share that content with their fan base. VuMee's proprietary business methodology
and software provides the method of coupling paid advertising with video content
which allows the Celebrity to generate revenue through the VuMee platform.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DEVELOPMENT STAGE COMPANY
The Company complies with the ASC 915, its characterization of the Company as a
Development Stage enterprise.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Although these estimates are based on management's knowledge of current events
and actions it may undertake in the future, they may ultimately differ from
actual results. We believe our estimates and assumptions are reasonable;
however, such estimates and assumptions are subject to a number of risks and
uncertainties that may cause actual results to differ materially from such
estimates.
RISKS AND UNCERTAINTIES
The Company's business could be impacted by price pressure on its product
manufacturing, acceptance of its products in the market place, new competitors,
changes in federal and/or state legislation and other factors. If the Company is
unsuccessful in securing adequate liquidity, its plans may be curtailed. Adverse
changes in these areas could negatively impact the Company's financial position,
results of operations and cash flows.
CASH
Cash equivalents include all highly liquid debt instruments with original
maturities of three months or less which are not securing any corporate
obligations.
CONCENTRATIONS OF CREDIT RISK AND FAIR VALUE
Financial instruments that potentially subject the Company to concentrations of
credit risk consist principally of cash and accounts receivable.
The Company maintains significant cash deposits primarily with three financial
institutions. All deposits are fully insured as of August 31, 2012. The Company
has not previously experienced any losses on such deposits. Additionally, the
Company performs periodic evaluations of the relative credit ratings of these
institutions as part of its investment strategy.
Concentrations of credit risk with respect to accounts receivable are limited
due to accelerated payment terms in current customer contracts and
creditworthiness of the current customer base.
F-9
The carrying amounts of cash and cash equivalents, accounts receivable, other
current assets, accounts payable and accrued expenses approximate fair value due
to the short-term nature of these instruments. The carrying value of loans and
notes payable approximate fair value based on their terms which reflect market
conditions existing as of August 31, 2012.
PROPERTY AND EQUIPMENT
Property and equipment is stated at cost. Depreciation is computed by the
straight-line method over estimated useful lives (3-7 years). Intellectual
property assets are stated at their fair value acquisition cost. Amortization of
intellectual property assets is calculated by the straight line method over
their estimated useful lives (3- 15 years). Historical costs are reviewed and
evaluated for their net realizable value of the assets. The carrying amount of
all long-lived assets is evaluated periodically to determine if adjustment to
the depreciation and amortization period or the unamortized balance is
warranted. Based upon its most recent analysis, the Company believes that no
impairment of property and equipment existed at August 31, 2012.
LONG-LIVED ASSETS
Long-lived assets such as property, equipment and identifiable intangibles are
reviewed for impairment whenever facts and circumstances indicate that the
carrying value may not be recoverable. When required impairment losses on assets
to be held and used are recognized based on the fair value of the asset. The
fair value is determined based on estimates of future cash flows, market value
of similar assets, if available, or independent appraisals, if required. If the
carrying amount of the long-lived asset is not recoverable from its undiscounted
cash flows, an impairment loss is recognized for the difference between the
carrying amount and fair value of the asset. When fair values are not available,
the Company estimates fair value using the expected future cash flows discounted
at a rate commensurate with the risk associated with the recovery of the assets.
We did not recognize any impairment losses for any period ended August 31, 2012.
Depreciation expense from March 22, 2012 (inception) through August 31, 2012 was
approximately $3,800.
REVENUE RECOGNITION
Revenues of the Company will be from the sale of advertising on the web-site and
video viewing platform. Revenues will be recognized once all of the following
criteria have been met:
* persuasive evidence of an arrangement exists;
* delivery of Facebook's obligations to our customer has occurred;
* the price is fixed or determinable; and
* collectability of the related receivable is reasonably assured.
Advertising revenue is generated from the display of advertisements on our
website and viewing platform. The arrangements are evidenced by either online
acceptance of terms and conditions or contracts that stipulate the types of
advertising to be delivered, the timing and the pricing. The typical term of an
advertising arrangement is approximately 30 days with billing generally
occurring after the delivery of the advertisement.
We will recognize revenue from the display of impression-based advertisements on
our website in the contracted period when the impressions are delivered.
Impressions are considered delivered when an advertisement appears in pages
delivered to users.
We will also recognize revenue from the delivery of click-based advertisements
on our website. Revenue associated with these advertisements is recognized in
the period that a user clicks on an advertisement.
F-10
ADVERTISING
The costs of advertising are expensed as incurred. Advertising expenses are
included in the Company's operating expenses. Advertising expenses were $0 for
the period from inception, March 22, 2012 through August 31, 2012.
RESEARCH AND DEVELOPMENT
Research expenditure is recognized as an expense when it is incurred.
Development expenditure is recognized as an expense except that expenditure
incurred on development projects are capitalized as long-term assets to the
extent that such expenditure is expected to generate future economic benefits.
Development expenditure is capitalized if, and only if an entity can demonstrate
all of the following:
1. its ability to measure reliably the expenditure attributable to the
asset under development;
2. the product or process is technically and commercially feasible;
3. its future economic benefits are probable;
4. its ability to use or sell the developed asset;
5. the availability of adequate technical, financial and other resources
to complete the asset under development; and
6. its intention to complete the intangible asset and use or sell.
INCOME TAXES
The Company accounts for income taxes under the liability method. Deferred tax
assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. Deferred tax
assets and liabilities are measured using enacted tax rates in effect for the
year in which those temporary differences are expected to be recovered or
settled.
EARNINGS PER SHARE
The Company computes basic and diluted earnings per share amounts in accordance
with ASC Topic 260, "Earnings per Share". Basic earnings per share is computed
by dividing net income (loss) available to common shareholders by the weighted
average number of common shares outstanding during the reporting period. Diluted
earnings per share reflects the potential dilution that could occur if stock
options and other commitments to issue common stock were exercised or equity
awards vest resulting in the issuance of common stock that could share in the
earnings of the Company.
RECENT ACCOUNTING PRONOUNCEMENTS
The Company reviews new accounting standards as issued. No new standards had any
material effect on these financial statements. The accounting pronouncements
issued subsequent to the date of these financial statements that were considered
significant by management were evaluated for the potential effect on these
financial statements. Management does not believe any of the subsequent
pronouncements will have a material effect on these financial statements as
presented and does not anticipate the need for any future restatement of these
financial statements because of the retro-active application of any accounting
pronouncements issued subsequent to August 31, 2012 through the date these
financial statements were issued.
3. FINANCIAL INSTRUMENTS AND FAIR VALUES
The fair value of a financial instrument represents the amount at which the
instrument could be exchanged in a current transaction between willing parties,
other than in a forced or liquidation sale. Fair value estimates are made at a
specific point in time, based upon relevant market information about the
financial instrument.
F-11
The carrying amount of cash and other assets approximates fair value due to the
short-term maturities of these instruments.
The fair values of all other financial instruments, including debt, approximate
their book values as the instruments are short-term in nature or contain market
rates of interest.
4. INTANGIBLE ASSETS
During 2011 and the first months of 2012, VuMee, LLC a Delaware limited
liability company, was developing a social media video sharing platform. In
March 2012, as part of a settlement agreement between members, VuMee, LLC
transferred the intangible assets developed to VuMee Acquisition, LLC, also a
Delaware limited liability company.
On March 23, 2012 VuMee Acquisition and Data Pangea entered into an asset
purchase agreement, whereby Data Pangea purchased all of the intangible assets
of VuMee Acquisition. The final value of each asset and the allocation of the
purchase price of the intangible assets has not yet been determined. Current
estimates are listed below.
Certain members of VuMee, LLC and VuMee,Acquisition LLC also have an interest in
Data Pangea. Due to the related party relationship, the recorded values of the
intangible assets acquired by Data Pangea will be limited to the consideration
given.
Identifiable intangible assets at August 31, 2012 include the following:
Allocated Amortization
purchase price Period (years)
-------------- --------------
Trade names, logos, trademarks $ 10,000 10 years
Internet domain name 2,000 10 years
Patents 45,000 10 years
Customer lists 11,000 5 years
Software 50,000 3 years
Website 2,000 3 years
Infrastructure - procedures, manuals, records 5,000 3 years
--------
Total purchase price to allocate $125,000
========
Amortization expense for the period, March 22, 2012 through August 31, 2012 was
approximately $11,000.
5. NOTE PAYABLE - SHORT-TERM
The Company has a note payable in the amount of $150,000. The interest is at 8%
per annum and shall be paid quarterly in arrears commencing October 15, 2012 and
quarterly thereafter. The note matures on June 30, 2013.
6. DUE TO RELATED PARTY - LONG-TERM
As of August 31, 2012, the Company has loans payable to stockholders in the
amount of $410,000. Interest at 12% per annum and will accrue quarterly
beginning August 29, 2012 with all unpaid interest and principal payable on
September 1, 2013.
7. COMMON STOCK
The total number of common shares authorized that may be issued by the Company
is 750,000,000 shares with a par value of one tenth of one cent ($0.001) per
share. No other class of shares is authorized.
F-12
On August 31, 2008, the company issued 3,000,000 pre-split shares of the common
stock for a total cash proceeds of $15,000.
On July 13, 2009, the Company issued 3,000,000 pre-split shares of common stock
for a total cash proceeds of $45,000.
On May 17, 2012 the Company issued 30,001,000 shares of its common stock for the
acquisition of Data Pangea, LLC, and cancelled 30,000,000 shares of common stock
of a former Director/Officer.
At August 31, 2012 there were no outstanding stock options or warrants.
As of August 31, 2012, the Company had 60,001,000 common shares issued and
outstanding.
8. COMMITMENTS AND CONTINGENCIES
LEASES
VuMEE is leasing corporate office space located in Pompano Beach, Florida from
an unrelated third party. The lease was effective May 4, 2012, and provides for
a term of three years and two months with monthly rental payments of
approximately $2,700 with 3% annual increases. The lease provides for a one,
three year renewal unless either party provides at least 30 days' prior written
notice to the other of its intent to terminate the lease upon expiration of the
then-current term. The total rents paid in 2012 were approximately $7,800.
LEGAL PROCEEDINGS
From time to time, the Company is party to business disputes arising in the
normal course of its business operations. The Company's management believes that
none of these actions, standing alone, or in the aggregate, is currently
material to the Company's operations or financial condition.
EMPLOYMENT AGREEMENTS
The Company has no employment agreements.
9. INCOME TAXES
As of August 31, 2012, the Company had net operating loss carry forwards of
approximately $592,000 that may be available to reduce future years' taxable
income through 2032. Future tax benefits which may arise as a result of these
losses have not been recognized in these financial statements, as their
realization is determined not likely to occur and accordingly, the Company has
recorded a valuation allowance for the deferred tax asset relating to these tax
loss carry-forwards.
Significant components of the Company's net deferred income taxes are as
follows:
From
March 22, 2012
(Inception)
through
August 31, 2012
---------------
Deferred tax assets:
Net operating loss carryforwards $ 228,400
---------
Deferred tax assets 228,400
Less valuation allowance (228,400)
---------
Net deferred tax assets $ --
=========
F-13
A reconciliation of the U.S. statutory federal income tax rate to the effective
income tax rate (benefit) follows:
From
March 22, 2012
(Inception)
through
August 31, 2012
---------------
U.S. Federal Statutory rate (35.00%)
State income taxes, net of federal benefit (3.58)
Change in valuation allowance 38.58
---------
0.00%
=========
In assessing the ability to realize a portion of the deferred tax assets,
management considers whether it is more than likely than not that some portion
or all of the deferred tax assets will not be realized. The ultimate realization
of the deferred tax assets is dependent upon the generation of future taxable
income during the periods in which those temporary differences become
deductible. Management considers the scheduled reversal of deferred tax
liabilities and projected future taxable income in making the assessment. After
consideration of the evidence, both positive and negative, management has
determined that a $228,400 valuation allowance at August 31, 2012 is necessary
to reduce the deferred tax assets to the amount that will more likely than not
be realized. The change in the valuation allowance for the current year is
$228,400. At August 31, 2012, the Company has available net operating loss
carryforwards for federal and state income tax purposes of approximately
$592,000 expiring at various times through 2032.
10. VALUATION AND QUALIFYING ACCOUNTS
A summary of the activity in the Company's valuation and qualifying accounts is
as follows:
Balance at Charged to Balance at
Beginning of Costs and Other End of
Description Period Expenses Write-off's Changes Period
----------- ------ -------- ----------- ------- ------
Deferred tax asset
valuation allowance:
From March 22, 2012
(Inception) through
August 31, 2012 -- $228,400 -- -- $228,400
11. SUBSEQUENT EVENT
On September 1, 2012, the Company entered into one year employment agreements
with Michael Spiegel, CEO and Lou Rosen, CFO for monthly compensation in the
amount of $12,500 and $12,500, respectively.
F-14