UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For fiscal year ended March 31, 2016
Commission File Number 000-55023
ZLATO INC.
(Exact name of registrant as specified in its Charter)
Nevada 46-3883208
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Mlynska 28, 040 01 Kosice, Slovak Republic
(Address of principal executive offices) (Zip Code)
646-875-5747
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address, and former fiscal year,
if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $0.001
(Title of class)
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. [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check
one):
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [X] No [ ]
At September 30, 2015, the last business day of the Registrant's most recently
completed second fiscal quarter, the aggregate market value of the voting common
stock held by non-affiliates of the Registrant (without admitting that any
person whose shares are not included in such calculation is an affiliate) was
$50,000. At March 31, 2016, the end of the Registrant's most recently completed
fiscal year, there were 6,000,000 shares of the Registrant's common stock, par
value $0.001 per share, outstanding.
ZLATO INC. - TABLE OF CONTENTS
PART I
ITEM 1. Business 2
ITEM 1A. Risk Factors 10
ITEM 1B. Unresolved Staff Comments 10
ITEM 2. Properties 10
ITEM 3. Legal Proceedings 10
ITEM 4. Mine Safety Disclosures 10
PART II
ITEM 5. Market for Registrant's Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities 10
ITEM 6. Selected Financial Data 11
ITEM 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations 11
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 26
ITEM 9A. Controls and Procedures 26
ITEM 9B. Other Information 27
PART III
ITEM 10. Directors, Executive Officers, and Corporate Governance 27
ITEM 11. Executive Compensation 29
ITEM 12. Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters 30
ITEM 13. Certain Relationships and Related Transactions, and Director
Independence 31
ITEM 14. Principal Accounting Fees and Services 32
PART IV
ITEM 15. Exhibits, Financial Statement Schedules 32
Signatures 33
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K of Zlato Inc., a Nevada corporation (the
"Company"), contains "forward-looking statements," as defined in the United
States Private Securities Litigation Reform Act of 1995. In some cases, you can
identify forward-looking statements by terminology such as "may", "will",
"should", "could", "expects", "plans", "intends", "anticipates", "believes",
"estimates", "predicts", "potential" or "continue" or the negative of such terms
and other comparable terminology. These forward-looking statements include,
without limitation, statements about our market opportunity, our strategies,
competition, expected activities and expenditures as we pursue our business
plan, and the adequacy of our available cash resources. 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. Actual results may differ materially from the predictions
discussed in these forward-looking statements. The economic environment within
which we operate could materially affect our actual results. Additional factors
that could materially affect these forward-looking statements and/or predictions
include, among other things: the Company's need for and ability to obtain
additional financing, the volatility of real estate prices, and the exercise of
the control by Dana Gallovicova, the Company's sole officer and director, other
factors over which we have little or no control; and other factors discussed in
the Company's filings with the Securities and Exchange Commission ("SEC").
Our management has included projections and estimates in this Form 10-K, which
are based primarily on management's experience in the industry, assessments of
our results of operations, discussions and negotiations with third parties and a
review of information filed by our competitors with the SEC or otherwise
publicly available. We caution readers not to place undue reliance on any such
forward-looking statements, which speak only as of the date made. We disclaim
any obligation subsequently to revise any forward-looking statements to reflect
events or circumstances after the date of such statements or to reflect the
occurrence of anticipated or unanticipated events.
INTRODUCTION
Unless otherwise specified or required by context, as used in this Annual
Report, the terms "we," "our," "us" and the "Company" refer collectively to
Zlato Inc. The term "fiscal year" refers to our fiscal year ending March 31.
Unless otherwise indicated, the term "common stock" refers to shares of our
common stock.
Our financial statements are stated in United States Dollars (US$) and are
prepared in accordance with United States generally accepted accounting
principles (U.S. GAAP).
1
PART I
ITEM 1. BUSINESS
We were incorporated on February 25, 2013 in the State of Nevada to engage in
the development and sale of electronic medical record ("EMR") software for small
and medium sized physician offices and clinics. Our principal executive offices
are located at Mlynska 28, 040 01 Kosice, Slovak Republic. Our phone number is
(646) 875-5747. We currently have no revenues, and we have no subsidiaries. Our
trading symbol on OTC Markets is "ZFLO".
We have never declared bankruptcy, have never been in receivership, and have
never been involved in any legal action or proceedings. Since incorporation, we
have not made any significant purchase or sale of assets. We are not a blank
check registrant as that term is defined in Rule 419(a)(2) of Regulation C of
the Securities Act of 1933, since we have a specific business plan or purpose.
We do not have any present plans or arrangements with any representatives of the
owners of any business or company regarding the possibility of an acquisition or
merger.
PRINCIPAL PRODUCTS AND SERVICES
We completed a registered offering and raised $50,000 in 2014, which we used to
complete development of our basic EMR software and for the launch of our
website. You can view the website and register to view and use our EMR software
at www.zlatoinc.com.
Our basic EMR software collects and captures patient data electronically, and
stores it in a format that enables efficient access and viewing, and
distribution by printing or email. Our planned second phase product development
will focus on interconnectivity of our EMR software with various third party
vital signs monitors, such as blood pressure monitors or temperature monitors.
We currently have no revenues, no operating history, and no users or revenues
for our software. We need to raise an additional $200,000 to maintain our
existence and fund an adequate marketing program to launch our product.
Corporate existence maintenance costs alone over the next 12 months are
approximately $15,000. We need another $50,000 to further develop our software
over an 8-10 month period to interface with third party diagnostic and vital
signs monitor equipment suppliers.
We cannot guarantee we will be successful with planned our business plan. Our
business is subject to all of the risks inherent in the establishment of a new
business enterprise. We currently have no funds, and our Director has been
lending our company funds only to pay for our corporate existence and maintain
our regulatory filings. We will not be able to commercially launch our EMR
product without additional financing. Without additional financing on a timely
basis, our business will fail.
PRINCIPAL PRODUCTS AND SERVICES
An Electronic Medical Record ("EMR") is the digital or software based version of
a paper-based medical record, which is generated by the patient's healthcare
provider for each patient encounter or visit. EMRs contain the data captured or
transcribed in electronic format from all medical departments related to the
particular visit, such as laboratory or blood work, pharmacy prescriptions, or
2
x-ray or other forms of radiology or body scanning. Digital EMRs are stored on a
computer database, either onsite or offsite, and the software is designed to
provide a structured and integrated method of gathering, storing, retrieving,
and sharing of a particular patient's healthcare record. This compares to
traditional paper based records, which are written by hand and stored in
physical paper files in the health care providers' physical office.
EMR solutions help to achieve paperless administration across the healthcare
industry. This form of administration will ultimately facilitate the creation of
a centralized patient repository. The records generated through successful
implementation of EMRs in healthcare practices can be used for various purposes
such as patient care, administration, research, healthcare quality improvement,
and processing of reimbursements. EMR is a part of healthcare information
technology that is used to make paperless computerized patient data in order to
increase efficiency of primary care facilities.
In the USA and most other developed countries that have either privately or
publically funded healthcare, paper based and EMR software and records are
maintained and controlled by the healthcare provider organization (hospital,
clinic or physician). We believe our product can potentially provide a superior
solution to reduce the time and cost to record patient data through the
standardization of data entry, enable more comprehensive real time data entry,
and enable the smaller and medium sized offices to better manage their patient
records, all of which can potentially reduce record errors.
Our basic EMR software has been developed to provide on line, real time computer
access and contains an easy to use physician/medical personnel interface, and an
electronic database backend which collects and organizes all patient data in an
efficient, error free, and secure, and private manner. If we are successful in
raising suitable financing to launch our product, we plan to modify the EMR
software to satisfy all mandatory regulatory and compliance issues in the
countries where we ultimately offer the product, and ensure that it qualifies
for any available EMR incentive funding available from government agencies. Our
software was designed with open architecture, therefore allowing changes,
additions, modifications of EMR components with ease. This flexibility is also
important for connectivity with multiple device manufacturers, as each device
will require its unique components to interface with our system to capture
patient data without the need for human interface.
Our planned distribution and revenue models may undergo significant revisions,
as we get closer to launching our commercial product. At this stage in our
development, there can be no assurance that we will be successful in generating
revenues from our product, or that users will be receptive to even using the
product.
THE MARKET
We consider our proposed business to be a segment of the overall health care
industry. We are planning to target small to medium sized physician offices and
clinics in the USA, providing we are successful in raising sufficient funds to
commercialize our product. According to the most recent Federation of State
Medical Boards census released September 4, 2015, there were approximately
912,000 physicians in the USA in 2014 and although there are no current
definitive government statistics, various private surveys of medical
professionals generally indicate that a significant majority were practicing in
groups of 9 or less. We are also planning to focus on the USA because the USA is
primarily a private, for profit system under which physicians have significant
autonomy over equipping their practices and related infrastructure.
3
Two primary factors are driving the conversion to EMR from paper based records.
First, is the rising demand for the healthcare cost containment and need to
improve the quality of healthcare services. EMR solutions will help to improve
clinical efficiency in the following ways:
* Provide improved accessibility to patient records
* Improved communication between provider and clinical departments such
as pharmacy, laboratory, and other clinical departments
* Improved communication among healthcare facilities
* Reduced transcription errors, resulting in saved time / costs and
lesser number of chart
* Improved clinical decision making with correct data
* Automated Vital Signs Integration from Device/Monitoring systems
* Increases Profitability for Physicians
EMR adoption has increased significantly due to incentive funding for EMR
implementation as part of the American Recovery and Reinvestment Act (See
"Government Regulations"). Doctors who don't prescribe electronically are
penalized financially. Although this mandate is Medicare-driven, Medicare
collects statistics for patients of all ages and insurance groups, not just
those receiving Medicare benefits. Because of their size and use, we believe
Medicare requires will eventually drive conversion to EMR for all records,
whether Medicare related or not.
Lastly, we believe EMR adoption and use is a significant beneficiary of the
Affordable Care Act. The Board census noted previously also found that 20
million additional people gained health coverage over the last 5 five years
through various private, federal and state marketplaces, which further
necessitates the need for simple to use and productive EMR solutions.
COMPETITION AND COMPETITIVE STRATEGY
Although our basic EMR software has been developed, we currently do not have the
financial resources to market and sell it.
Our EMR software will be competing in the healthcare industry for primarily
small and medium sized physician offices and clinics. The U.S. EMR software
market currently has many competitors. Our competitors vary in size and cost
structure from very small companies with limited resources to very large,
diversified corporations with greater financial and marketing resources than
ours. We are considered the smallest as we do not currently our product
available for sale or use. We will be competing with well funded start-ups,
traditional independent software developers and manufacturers, and fully
integrated large private and publicly held companies producing a wide range of
products and services. We will likely face additional competition from the entry
of new companies into our target market.
Our competitors have significantly greater resources and are able to spend more
time and money on concept and focus testing, software and product development,
testing and marketing. Lead times are significant for the adoption and regular
use of EMR software by any given small to medium sized physician office or
clinic. Conversions of paper records to EMR databases usually involve
customization and significant time to train personnel and convert paper records.
Competition is also based on product quality and features, data storage,
brand-name recognition, ease of use, effectiveness of marketing and price. In
order to compete effectively, we believe we must offer:
4
- Competitive pricing
- 24 hour user support
- 99.999% guaranteed uptime for hosted solutions
- Rapid development of new features
- Incentives and bonuses to clients who refer new customers
- Dedicated sales and support staff
- Work directly with users to develop features according to their needs
- Work directly with all the major device manufacturers to integrate
their devices seamlessly into our system
In addition, regardless of our competitor's market position, financial resources
or size, our success also depends on our ability to successfully execute several
other competitive strategies, which we believe must successfully address the
following for our customers:
INCREASE OFFICE PRODUCTIVITY AND CLINICAL WORKFLOW: Our EMR product must
ultimately reduce office transition time and resources to convert the existing
paper records, in addition to ongoing daily data record keeping.
CONNECTIVITY AND INTEGRATED AUTOMATION OF PATIENT VITAL SIGNS: Ultimately, our
EMR software must have the ability to record patient vital signs directly from a
given monitoring device, such as a blood pressure monitor, seamlessly into the
EMR database. This reduces human data entry errors and increases office
productivity. In the future, we plan to incorporate this functionality by
creating vital signs capture through the use of an integrating software
development kit for use with various diagnostic monitoring equipment
manufacturers.
REDUCED USER COST THROUGH THE USE OF OPEN SOURCE SOFTWARE: We believe we can
achieve a pricing advantage over our competitors, as our software has been
created from `open-source software.' and modified to suit our needs. As a
result, our software development costs are reduced, which enables us to pass
these savings onto customers. Open source software is where the original creator
provides the rights to study, change and distribute the software for free to
anyone and for any purpose. Typically, open source software is found on the
internet and is obtained at no cost, free of licensing fees, which enables us to
pass on those savings to our users
DATA BACK-UP: Our EMR database is backed up instantly when data is entered. The
back up facilities can either be managed in house on separate servers or with
independent third party data storage facilities.
PHYSICIAN/OPERATOR REMOTE ACCESS: Our software offers physicians and their
approved operators the ability to remotely login and view patient records via
secure access. We believe remote access is a competitive advantage that most
other EMR providers do not provide, and is an invaluable feature when physicians
and care providers not in the office and require patient data.
DATA SECURITY & ENCRYPTION: Data security is a key aspect of our software to
comply with HIPAA security rules (See "Government Regulations") and ensure data
security. Encryption is the conversion of data into a form, often called
ciphertext, which cannot be understood by another party, human or machine,
without being decrypted first. Our software programs and all future client
installations have been configured to comply with current HIPPA rules and offer
a high level of protection through the use of algorithms to scramble the
original input data into a new form which cannot be read without the use of
decryption keys.
5
In order for our software and our company to be successful, we will first need
to alert our target market about our proposed EMR product and the advantages we
intend to offer our prospective customers when we have the financing to do so.
We will also have to develop a comprehensive, ongoing marketing plan to sell the
software. We believe our marketing and promotion strategy will be subject to
major revisions are we get closer to actually launching the product.
SALES STRATEGY
We are still in the planning and formulation stages with respect to the
commercialization of our product. Our planned sales strategy, as discussed
herein, may change significantly as we get closer to commercialization.
We plan to price our software product competitively. Current EMR software is
generally licensed to the user by the developer or distributor. The user
typically pays a one time implementation fee for the basic system. In North
America, the fee typically varies from $500.00 for single practitioners to
$1,500-2,000 for medium sized offices and clinics with 10+ physicians. Annual
license fees, which include technical support and annual security/encryption
renewals, currently average approximately $4,500-7,000 per year. Software
development kits for connectivity to vitals monitors and third party monitoring
equipment is priced in addition to the basic implementation and licensing fees,
and is generally determined on a case by case basis.
Initially, we plan to use our corporate website and contract a professional
sales consultant to market and sell our proposed product. In addition to
corporate information and other standard sections contained on the website, we
plan to use our website as a sales tool for our initial product release, new
releases and updates, new industry trends and concepts. We will seek out a
contract professional with extensive experience in Health Information Technology
("HIT") and a solid data base of medical industry contacts and relationships.
HIT includes both basic EMR recordkeeping and databases, vitals and other
monitor connectivity. Additionally, we plan to focus all of our selling
activities on the concept of return on investment ("ROI") to both end use
customers and distributors. We believe the economic focus on ROI for adoption
and use of our product will assist the growth of initial sales, resultant
testimonials and ultimately, proof that clearly demonstrates the effectiveness
of our EMR solution. We believe this will allow us to leverage sales contracts
early, and ultimately drive revenue. This focus should also demonstrate to our
prospective customers that we have a strong grasp on the various components that
contribute to a positive and beneficial ROI to the user.
Ultimately, we need to demonstrate that the scope of improved efficiency varies
with degree of implementation, and includes reduced labor costs, improved cash
flow, streamlined clinical and financial management workflow, increased
reimbursement, and detailed financial reporting, all of which can potentially
increase profits for our users.
Prior to product launch, we plan to identify various medical conferences, forums
and trade shows across the country, which focus on Medical devices and/or
information technology. Attending a select number of trade shows will be a key
component of our initial sales and marketing strategy to demonstrate the
technology and the positive attributes of our solution. These forums include:
* Medical Associations (i.e.: American Medical Association)
* Trade Shows & Medical conferences
* Physician Education Campaigns
6
DISTRIBUTION OF PRODUCTS OR SERVICES
When our EMR software is ready for commercial sale, we plan to distribute it
through four primary channels:
Direct Selling: Our contract sales consultant, when hired, will be responsible
for developing direct sales. This model will allow the Company to have direct
control and influence over customization for vital sign automation with specific
customers.
Partnerships with diagnostic vital sign monitor manufacturers: This channel is
invaluable for two primary reasons. These manufacturers already have a captive
audience with physicians and clinics, and they also have significant interest in
developing interoperability with their vital signs equipment.
Medical Distribution Companies: This channel would entail medical distribution
supply companies re-selling our product to our target market. This will involve
establishing `list price' and industry-comparable distributor discounts of
approximately 30-40% off list.
SAAS model: Software as a service, meaning that our staff will run the
application and store the data. The data would be encrypted and stored on
secured servers.
Our distribution plans may change significantly as we get closer to
commercializing our product.
SOURCES AND AVAILABILITY OF PRODUCTS AND SUPPLIES
There are no constraints on the sources or availability of outsource software
developers and supplies related to our business. We have been using either local
third party software development contractors or firms based in Eastern Europe
for development, and plan to continue doing so for client installations and to
develop third party interfaces, when we have the necessary financing to do so.
Our officers and directors will continue to be responsible for the entire
development and production process including manpower requirements and the
supervision and coordination of internal and external resources. We currently do
not anticipate any supply or manpower availability constraints with respect to
identifying and choosing any of the contractors we require.
DEPENDENCE ON ONE OR A FEW MAJOR CUSTOMERS
We plan on selling our products and services directly and indirectly to small
and medium sized, end use, physician offices and clinics. Therefore, we do not
anticipate dependence on one or a few major customers.
GOVERNMENT REGULATIONS
There are numerous laws and regulations that govern the use, storage and
transmission of patient medical records to protect privacy. Laws and regulations
vary significantly by country, and even by state in the USA. Because patient
privacy is of critical importance, laws and regulations are expected to become
even more burdensome to protect against electronic theft, or unauthorized
transmission or use of patient records. In order to comply, we will likely be
7
required to modify our software and data storage for each jurisdiction in which
we intend to sell our product. Additionally, we are unable to predict the impact
that these modifications and future legislation, legal decisions or regulations
concerning our EMR software may have on our business, financial condition, and
results of operations. If we are found to be negligent in the design of our
software which results in unauthorized transmission or use of patient data, we
could be subject to lawsuits and penalties which could severely affect our
business.
At the federal level in the USA, the privacy of individually identifiable health
information, the security of electronic protected health information including
EMRs, and confidentiality of identifiable information being used to analyze
patient safety events and improve patient safety is protected under the Health
Insurance Portability and Accountability Act ("HIPPA"). HIPAA requirements and
security rules give patients more control over their health information, set
limits on the use and release of their medical records, and establishes a series
of privacy standards for health care providers which provides penalties for
those who do not follow these standards. EMRs require the use of data encryption
for transmission and storage, ensuring that only the intended recipients are
able to view them. There are other HIPAA data security systems that are
typically installed on health care computer systems and networks, including
firewalls to prevent unauthorized access, and electronic auditing systems which
require users to identify themselves and which log specific records that are
accessed by them. Many health care providers find it useful to have HIPAA data
security audits of their systems performed on a regular basis. These
examinations and reports, if addressed properly, can serve to ensure a high
level of compliance and also to mitigate penalties for inadvertent problems.
HIPAA electronic medical records privacy rules allow health care providers to
use or disclose patient health information, such as diagnostic images,
laboratory tests, diagnoses, and other medical information for treatment
purposes without the patient's authorization. This includes sharing the
information to consult with other providers, including providers who themselves
are not covered entities (as defined by HIPAA), to aid in the treatment of a
different patient, or to refer the patient to a specialist.
Our business is also subject to the HITECH Act (Health Information Technology
for Economic and Clinical Health) which is part of the American Recovery and
Reinvestment Act of 2009. One aspect of this Act focuses on relief programs and
economic stimulus for the Health sector, and outlines initiatives for the use of
technology in the healthcare industry, and specific "meaningful use" criteria.
Meaningful use is the set of standards defined by the Centers for Medicare &
Medicaid Services (CMS) Incentive Programs that governs the use of electronic
health records and allows eligible providers and hospitals to earn incentive
payments by meeting specific criteria. These criteria are considered to be
beneficial to our business (provided we can introduce our product in a timely
manner). The goal of meaningful use is to promote the spread of electronic
health records to improve health care in the United States. The benefits of the
meaningful use of EMR's include:
COMPLETE AND ACCURATE INFORMATION: With electronic medical records, providers
have the information they need to provide the best possible care. Providers will
know more about their patients and their health history before they walk into
the examination room.
BETTER ACCESS TO INFORMATION: Electronic medical records facilitate greater
access to the information providers need to diagnose health problems earlier and
improve the health outcomes of their patients. Electronic health records also
allow information to be shared more easily among doctors' offices, hospitals,
and across health systems, leading to better coordination of care.
8
PATIENT EMPOWERMENT: Electronic health records will help empower patients to
take a more active role in their health and in the health of their families.
Patients can receive electronic copies of their medical records and share their
health information securely over the Internet with their families.
We have developed our basic EMR software and client installation procedures to
comply with these regulations, which may be subject to change at our cost at any
time in the future.
PATENT, TRADEMARK, LICENSE & FRANCHISE RESTRICTIONS AND CONTRACTUAL OBLIGATIONS
& CONCESSIONS
We currently do not own any intellectual property have not obtained any
copyrights, patents or trademarks in respect of any intellectual property.
Software is susceptible to piracy and unauthorized copying. Our primary
protection against unauthorized use, duplication and distribution of our
products is copyright and trademark protection of our software product and any
related elements and enforcement to protect these interests. As we get closer to
commercializing and selling our product, we plan to copyright and trademark the
following:
* Trademarks associated with elements of the software, such as any
logos;
* Trademarks under which the software is marketed;
* the copyrights for the software
We plan to register copyrights and trademarks in countries where we distribute
our product. We may seek other protection over these assets if we have the cash
resources to do so.
We have not entered into any franchise agreements or other contracts that have
given, or could give rise to obligations or concessions.
RESEARCH AND DEVELOPMENT ACTIVITIES AND COSTS
Provided we can raise suitable funding, we plan on spending $50,000 for software
development activities over 12 months from the date of successful completion.
This includes all user input design, design and programming for our planned
vital signs equipment inoperability kit.
EMPLOYEES AND EMPLOYMENT AGREEMENTS
In addition to being our sole officer and director, Ms. Gallovicova is currently
our only employee. She is currently planning to devote a minimum of 10-20 hours
per week to company matters, but has indicated that he will devote more time as
the board of directors determines is necessary to manage the affairs of the
company. There is no formal employment agreement between the Company and Ms.
Gallovicova.
We also plan on hiring a sales consultant provided we are successful in raising
the additional financing described herein.
9
ITEM 1A. RISK FACTORS
As a "smaller reporting company," as defined in Rule 12b-2 of the Exchange Act,
we are not required to provide the information called for by this Item.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
We do not currently own any real property. Our corporate offices are located at
Mlynska 28, 040 01 Kosice, Slovak Republic. We pay annual rent of approximately
$400 for this shared office space. This location will serve as our primary
executive offices for the foreseeable future. Management believes the current
premises arrangements are sufficient for its needs for at least the next 12
months.
We currently have no investment policies as they pertain to real estate, real
estate interests or real estate mortgages.
ITEM 3. LEGAL PROCEEDINGS
We are not currently involved in any legal proceedings and we are not aware of
any pending or potential legal actions.
ITEM 4. MINE SAFETY DISLOSURES
Not Applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
Our common shares are quoted on the OTC Markets under the ticker symbol ZFLO. As
of the date hereof, there have not been any trades.
HOLDERS
On July 6, 2016 there were 28 holders of record of our common stock.
DIVIDEND POLICY
Historically, we have not paid any dividends to the holders of our common stock
and we do not expect to pay any such dividends in the foreseeable future, as we
expect to retain our future earnings for use in the operation and expansion of
our business.
10
RECENT SALES OF UNREGISTERED SECURITIES
None.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
We have not established any compensation plans under which equity securities are
authorized for issuance.
PURCHASES OF EQUITY SECURITIES BY THE REGISTRANT AND AFFILIATED PURCHASERS
We did not purchase any of our shares of common stock or other securities during
the year ended March 31, 2016.
ITEM 6. SELECTED FINANCIAL DATA
As a "smaller reporting company," as defined in Rule 12b-2 of the Exchange Act,
we are not required to provide the information called for by this Item.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our financial statements and
related notes included elsewhere in this report.
GOING CONCERN
Our auditor's report expresses an opinion over our March 31, 2016 financial
statements that substantial doubt exists as to whether we can continue as an
ongoing business. We have very limited operations and no revenues. We have
incurred losses from operations since inception. No revenues are anticipated
until we complete and successfully commercialize our planned EMR software. The
ability of our Company to continue as a going concern is dependent on raising
capital to fund our business plan and ultimately to attain profitable
operations. Accordingly, these factors raise substantial doubt as to the
Company's ability to continue as a going concern.
Our activities to date have been financed from the proceeds of share
subscriptions and loans from our Director. From our inception to March 31, 2016,
we have raised a total of $65,000 in gross proceeds from the issuance of our
common stock. From inception to March 31, 2016 our Director lent $21,586 (for
the year ended March 31, 2016 - $15,826) to our company to pay for our existence
and regulatory filings. There is no guarantee that we will be able to raise any
additional funds through any other offerings or methods.
OVERVIEW
Statements in this section and elsewhere in this Form 10-K that are not
statements of historical or current fact constitute "forward-looking"
statements.
11
LIMITED OPERATING HISTORY AND NEED FOR ADDITIONAL CAPITAL
Our Company was incorporated in the State of Nevada on February 25, 2013 to
engage in the development and sale of EMR software for small to medium sized
physician offices and clinics. We have very limited financial backing and
assets. We will then need to raise additional financing to maintain our
existence, commercially launch our product and provide additional functionality.
Our long term business objectives are:
* Achieve ongoing profitability from the sale of our products and create
value for our stockholders, users and clients.
* Become a well-recognized brand for easy to use, cost effective EMR
software and connectivity to third party diagnostic equipment
* Develop a leadership role over time in our specialty.
We currently have no employees. During the first stages of our company's growth,
our officer and director will provide her time free of charge to execute our
business plan. Due to limited financial resources, she is planning to dedicate
between 10-20 hours per week, to ensure all operations are executed. Since we
intend to operate with very limited administrative support, our officer and
director will continue to be responsible for administering the company at least
until we raise suitable additional financing to launch our product. If
successful, we plan on hiring one sales consultant for direct sales and
marketing activities.
We cannot guarantee we will be successful in our business operations. Our
business is subject to all of the risks inherent in the establishment of a new
business enterprise and we are a number of months away from generating any
revenue, if at all.
12 MONTH PLAN OF OPERATION
Our plan of operations over the next 12 month period is focused exclusively on
raising additional capital. We currently estimate we will require an additional
$200,000 for corporate existence, the commercial launch of our basic EMR
software and another 8-10 months (subsequent to the completion of our basic EMR
software) and $50,000 to develop the software development kit for
interoperability with third parties. Our corporate existence maintenance costs
alone included in the above noted total are $15,000 for the next 12 months. We
do not have any arrangements in place for this additional financing.
Our commercial launch budget also includes approximately $20,000 for the
development of an automated software deployment system which will enable us to
either run the software for licensed users on our servers, or sell our software
to clients via the internet. Fixes and updates can also be easily deployed
through this system, ensuring that all of our clients are running on the latest
version. We also plan to hire a contract sales consultant at a monthly cost of
$3,000. His or her initial responsibilities will focus on the selection of
several beta test clients to test our software prior to commercial sale.
Ms. Gallovicova will also be responsible for all financing activities, and
developing all job specifications for our third party contract software
developers or firms. She will also be responsible for hiring the sales
consultant, and will oversee the sales consultant in their role specifically as
beta test subjects are selected and the marketing plan is developed.
12
Without additional financing on a timely basis, our business will fail.
RESULTS OF OPERATIONS
We incurred a loss of $15,564 for the year ended March 31, 2016 compared to
$22,438 for March 31, 2015. Our 2015 loss includes $10,289 for professional fees
and $5,275 for general and administrative costs. Our 2015 loss includes $17,050
for professional fees and $5,388 for general and administrative costs.
We have incurred cumulative losses of $89,504. We believe we will continue to
incur losses into the foreseeable future as we develop our business.
REVENUES
We did not generate any revenues in 2014 or 2015. Future revenue generation is
dependent on the successful commercial launch of our EMR product, for which we
need significant financing to market and sell our product.
LIQUIDITY AND CAPITAL RESOURCES
Historically, we have financed our cash flow and operations solely from the sale
of common stock and loans from our Director.
We started our fiscal year ending March 31, 2016 with a $8,940 net working
capital deficiency. As previously indicated, we received $15,826 in loan
proceeds during the year from our Director. The loan is non interest bearing,
has no repayment terms and is due on demand. During the year ended March 31,
2016, we used $15,344 in cash for our operations. As a result, our remaining
cash balance as of March 31, 2016 was $482 and we had a working capital
deficiency of $24,504 including the accumulated loan balance of $21,586.
Our continued corporate existence is solely dependent on further loans or equity
financing. We currently have no cash to continue. We still must raise
significant additional funding to continue with our business. If we cannot raise
additional financing, we will be forced to cease operations and our business
will fail.
These funds will have to be raised through equity financing, debt financing, or
other sources, which may result in the dilution in the equity ownership of our
shares. We will also need more funds if the costs of commercialization and
further development are greater than we have budgeted. We will also require
additional financing to sustain our business operations if we are ultimately not
successful in earning revenues. We currently do not have any arrangements for
further financing and we may not be able to obtain financing when required.
Obtaining commercial loans, assuming those loans would be available, will
increase our liabilities and future cash commitments.
There are no assurances that we will be able to obtain further funds required
for our continued operations. Even if additional financing is available, it may
not be available on terms we find favorable. At this time, there are no
anticipated sources of additional funds in place. Failure to secure the needed
additional financing will have an adverse effect on our ability to remain in
business.
13
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
We do not expect the adoption of any recently issued accounting pronouncements
to have a significant impact on our net results of operations, financial
position, or cash flows.
OFF-BALANCE SHEET ARRANGEMENTS
We have no off-balance sheet arrangements.
SUBSEQUENT EVENTS
None.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a "smaller reporting company," as defined in Rule 12b-2 of the Exchange Act,
we are not required to provide the information called for by this Item.
14
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Zlato Inc.
March 31, 2016 and 2015
Report of Independent Registered Public Accounting Firm 16
Balance Sheets as of March 31, 2016 and 2015 17
Statements of Operations for the Years Ended March 31, 2016 and 2015 18
Statement of Stockholders' Equity for the Years Ended March 31, 2016
and 2015 19
Statements of Cash Flows for the Years Ended March 31, 2016 and 2015 20
Notes to the Financial Statements 21
15
PLS CPA, A Professional Corp.
* 4725 MERCURY STREET SUITE 210 * SAN DIEGO * CALIFORNIA 92111 *
* TELEPHONE (858) 722-5953 * FAX (858) 761-0341 * FAX (858) 764-5480
* E-MAIL changgpark@gmail.com *
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of Zlato, Inc.
We have audited the accompanying balance sheet of Zlato, Inc. (the "Company") as
of March 31, 2016 and 2015, and the related statements of operations,
stockholders' equity, and cash flows for the years then ended. The Company's
management is responsible for these financial statements. 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. 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 Zlato, Inc. as of March 31,
2016 and 2015, 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 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's losses from operations raise substantial doubt about its ability
to continue as a going concern. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ PLS CPA
-----------------------------
PLS CPA, A Professional Corp.
July 7, 2016
San Diego, CA. 92111
Registered with the Public Company Accounting Oversight Board
16
ZLATO INC.
BALANCE SHEETS
March 31, 2016 March 31, 2015
-------------- --------------
ASSETS
Current assets
Cash and bank accounts $ 482 $ --
-------- --------
Total current assets 482 --
-------- --------
Total assets $ 482 $ --
======== ========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable $ 3,400 $ 3,180
Due to Director 21,586 5,760
-------- --------
Total current liabilities 24,986 8,940
-------- --------
Stockholders' deficit
Authorized:
75,000,000 common shares
Par value $0.001
Issued and outstanding:
6,000,000 common shares 6,000 6,000
Additional paid-in capital 59,000 59,000
Accumulated deficit (89,504) (73,940)
-------- --------
Total stockholders' deficit (24,504) (8,940)
-------- --------
Total liabilities and stockholders' deficit $ 482 $ --
======== ========
The accompanying notes are an integral part of these financial statements.
17
ZLATO INC.
STATEMENTS OF OPERATIONS
Year Ended Year Ended
March 31, 2016 March 31, 2015
-------------- --------------
REVENUE $ -- $ --
OPERATING EXPENSES
General & administrative 5,275 5,388
Professional fees 10,289 17,050
---------- ----------
Loss before income taxes (15,564) (22,438)
Provision for income taxes -- --
---------- ----------
Net loss $ (15,564) $ (22,438)
========== ==========
Basic and diluted loss per Common share (1)
========== ==========
Weighted average number of common shares outstanding 6,000,000 6,000,000
========== ==========
----------
(1) less than $0.01
The accompanying notes are an integral part of these financial statements.
18
ZLATO INC.
STATEMENTS OF STOCKHOLDERS' DEFICIT
Common Stock Additional Total
------------------- Paid in Accumulated Stockholders'
Shares Amount Capital Deficit Deficit
------ ------ ------- ------- -------
Balance March 31, 2014 6,000,000 $ 6,000 $ 59,000 $ (51,502) $ 13,498
Net loss for the period -- -- -- (22,438) (22,438)
--------- ------- -------- --------- ---------
Balance March 31, 2015 6,000,000 6,000 59,000 (73,940) (8,940)
--------- ------- -------- --------- ---------
Net loss for the period -- -- -- (15,564) (15,564)
--------- ------- -------- --------- ---------
Balance March 31, 2016 6,000,000 $ 6,000 $ 59,000 $ (89,504) $ (24,504)
========= ======= ======== ========= =========
The accompanying notes are an integral part of these financial statements.
19
ZLATO INC.
STATEMENTS OF CASH FLOWS
Year Ended Year Ended
March 31, 2016 March 31, 2015
-------------- --------------
OPERATING ACTIVITIES
Net loss for the period $ (15,564) $ (22,438)
Changes in operating assets and liabilities:
Accounts payable 220 3,080
--------- ---------
Net cash used for operating activities (15,344) (19,358)
--------- ---------
FINANCING ACTIVITIES
Loan from director 15,826 5,760
Proceeds from issuance of common stock -- --
--------- ---------
Net cash provided by financing activities 15,826 5,760
Increase (decrease) in cash during the period 482 (13,598)
Cash, beginning of the period -- 13,598
--------- ---------
Cash, end of the period $ 482 $ --
========= =========
Supplemental disclosure with respect to cash flows:
Cash paid for income taxes $ -- $ --
Cash paid for interest $ -- $ --
The accompanying notes are an integral part of these financial statements.
20
ZLATO INC.
NOTES TO FINANCIAL STATEMENTS
March 31, 2016
NOTE 1. GENERAL ORGANIZATION AND BUSINESS
The Company was originally incorporated under the laws of the state of Nevada on
February 25, 2013. The Company is devoting substantially all of its present
efforts to establish a new business, and has had no revenues from operations to
date.
Initial operations have included organization and capital formation. Management
also has recently developed electronic medical record software for small to
medium sized physician offices and clinics, and is planning to market it
commercially when they can successfully raise the financing to do so.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Basis
The accounting and reporting policies of the Company conform to U.S. generally
accepted accounting principles. In the opinion of management, all adjustments
considered necessary for fair presentation have been included in the financial
statements.
Basis of Presentation
The financial statements of the Company have been prepared using the accrual
basis of accounting in accordance with generally accepted accounting principles
in the United States of America and are presented in U.S. dollars. The Company
has adopted a March 31 fiscal year end.
Dividends
The Company has not yet adopted any policy regarding payment of dividends. No
dividends have been paid during the periods shown.
Cash
The Company's cash consists of funds deposited with its lawyer into the law
firm's trust account.
21
ZLATO INC.
NOTES TO FINANCIAL STATEMENTS
March 31, 2016
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Earnings per Share
The basic earnings (loss) per share is calculated by dividing the Company's net
income available to common shareholders by the weighted average number of common
shares during the year. The diluted earnings (loss) per share is calculated by
dividing the Company's net income (loss) available to common shareholders by the
diluted weighted average number of shares outstanding during the year. The
diluted weighted average number of shares outstanding is the basic weighted
number of shares adjusted as of the first of the year for any potentially
dilutive debt or equity. The Company has not issued any options or warrants or
similar securities since inception.
Foreign Currency Translation
The Company has adopted the US dollar as its functional and reporting currency
because most of its transactions are denominated in US currency.
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 the Company could realize in a current market
exchange.
Income Taxes
A deferred tax asset or liability is recorded for all temporary differences
between financial and tax reporting and net operating loss carryforwards.
Deferred tax expense (benefit) results from the net change during the year of
deferred tax assets and liabilities.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion, or all of the deferred
tax assets, will not be realized. Deferred tax assets and liabilities are
adjusted for the effects of changes in tax laws and rates on the date of
enactment.
22
ZLATO INC.
NOTES TO FINANCIAL STATEMENTS
March 31, 2016
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Revenue Recognition
The Company will recognize revenue when products are fully delivered or services
have been provided and collection is reasonably assured.
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reporting period. Actual results could differ from those estimates.
Recent Accounting Pronouncements
The Company does not expect the adoption of recently issued accounting
pronouncements to have a significant impact on the Company's results of
operations, financial position or cash flow.
NOTE 3. GOING CONCERN
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern, which contemplates, among other
things, the realization of assets and satisfaction of liabilities in the normal
course of business. The Company has net losses from the date of incorporation on
February 25, 2013 to March 31, 2016 of $89,504. The ability of the Company to
continue as a going concern is dependent upon the Company's successful efforts
to either generate revenues or raise sufficient capital for its business plans
and then attain profitable operations. In response to these issues, management
has planned the following actions:
- The Company intends to fund its expenditures through loans or equity
financing arrangements, which may be insufficient to fund its proposed
development expenditures, working capital and other cash requirements
through the next fiscal year.
- Management is currently formulating plans to develop and sell
electronic medical records software to generate future revenues. There
can be no assurances, however, that management's expectations of
future revenues will be realized.
23
ZLATO INC.
NOTES TO FINANCIAL STATEMENTS
March 31, 2016
NOTE 3. GOING CONCERN (continued)
Management estimates the minimum amount of additional funding necessary to
enable the Company to carry out its intended business plan and remain viable for
at least the twelve months following the date of the financial statements is
approximately $50,000. These factors, among others, raise substantial doubt
about the Company's ability to continue as a going concern. These financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
NOTE 4. STOCKHOLDERS' EQUITY
Authorized
The Company is authorized to issue 75,000,000 shares of $0.001 par value common
stock. All common stock shares have equal voting rights, are non-assessable and
have one vote per share. Voting rights are not cumulative and, therefore, the
holders of more than 50% of the common stock could, if they choose to do so,
elect all of the directors of the Company.
Issued and Outstanding
On February 25, 2013 (inception), the Company issued 5,000,000 shares of its
common shares to its President, Secretary Treasurer and Director for cash of
$.003 per share or$15,000 in aggregate. See Note 5. On September 30 and October
31, 2013 the Company accepted subscriptions under its registered offering for
1,000,000 shares of common stock for cash of $0.05 per share or aggregate
proceeds of $50,000.
NOTE 5. RELATED PARTY TRANSACTIONS
The Company's officer and director is involved in other business activities and
may, in the future, become involved in other business opportunities. If a
specific business opportunity becomes available, such persons may face a
conflict in selecting between the Company and their other business interests.
The Company has not formulated a policy for the resolution of such conflicts.
On February 25, 2013, the Company issued 5,000,000 shares of its common stock to
its President, Secretary Treasurer and Director for cash of $15,000. See Note 4.
During the year ended March 31, 2016, the Director of the Company advanced
$15,826 to the Company to pay expenses on behalf of the Company. Total advances
to March 31, 2016 are $21,586. The advances bear no interest, are unsecured, and
due on demand.
24
ZLATO INC.
NOTES TO FINANCIAL STATEMENTS
March 31, 2016
NOTE 6. INCOME TAXES
Net deferred tax assets are $0. Realization of deferred tax assets is dependent
upon sufficient future taxable income during the period that deductible
temporary differences and carry-forwards are expected to be available to reduce
taxable income. As the achievement of required future taxable income is
uncertain, the Company recorded a 100% valuation allowance. Management believes
it is likely that any deferred tax assets will not be realized.
March 31, 2016 March 31, 2015
-------------- --------------
Net loss before taxes $ 15,564 $ 22,438
Statutory rate 35% 35%
-------- --------
Computed expected tax recovery 5,447 7,853
Change in valuation allowance (5,447) (7,853)
-------- --------
Income tax provision $ -- $ --
======== ========
The accumulated net loss before taxes is $89,504, resulting in an aggregate
deferred tax asset/recovery of $31,326. The Company has recorded a 100%
valuation allowance due to the uncertainty of realization.
The Company's aggregate net operating losses of $89,504 expire as follows:
March 31, 2033 - $ 555 March 31, 2034 - 50,947 March 31, 2035 - 22,438 March 31,
2036- 15,564
$89,504
NOTE 7. SUBSEQUENT EVENTS
We have evaluated subsequent events through to the date of issuance of the
financial statements, and did not have any material recognizable subsequent
events after March 31, 2016.
25
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
DISCLOSURE CONTROLS AND PROCEDURES
Under the supervision and with the participation of our management, including
our principal executive officer and the principal financial officer, we are
responsible for conducting an evaluation of the effectiveness of the design and
operation of our internal controls and procedures, as defined in Rules 13a-15(e)
and 15d-15(e) under the Securities Exchange Act of 1934, as of the end of the
fiscal year covered by this report. Disclosure controls and procedures means
that the material information required to be included in our Securities and
Exchange Commission ("SEC") reports is recorded, processed, summarized and
reported within the time periods specified in SEC rules and forms relating to
our company, including any consolidating subsidiaries, and was made known to us
by others within those entities, particularly during the period when this report
was being prepared. Based on this evaluation, our principal executive officer
and principal financial officer concluded as of the evaluation date that our
disclosure controls and procedures were not effective as of March 31, 2016.
MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
As of March 31, 2016, management assessed the effectiveness of our internal
control over financial reporting. The Company's management is responsible for
establishing and maintaining adequate internal control over financial reporting
for the Company. 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
amended, as a process designed by, or under the supervision of, the Company's
President and Chief Executive Officer 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 GAAP 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 our transactions and dispositions of our
assets;
* Provide reasonable assurance our transactions are recorded as
necessary to permit preparation of our financial statements in
accordance with GAAP, and that receipts and expenditures are being
made only in accordance with authorizations of our management and
directors; and
* Provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use or disposition of our assets that
could have a material effect on the financial statement.
In evaluating the effectiveness of our internal control over financial
reporting, our management used the criteria set forth by the Committee of
Sponsoring Organizations of the Treadway Commission ("COSO") in Internal Control
- Integrated Framework. Based on that evaluation, completed by Dana Gallovicova,
26
our President and Chief Executive Officer, who also serves as our principal
accounting and principal financial officer, Ms. Gallovicova concluded that,
during the period covered by this report, such internal controls and procedures
were not effective to detect the inappropriate application of US GAAP rules as
more fully described below.
This was due to deficiencies that existed in the design or operation of our
internal controls over financial reporting that adversely affected our internal
controls and that may be considered to be material weaknesses. The matters
involving internal controls and procedures that our management considered to be
material weaknesses under the standards of the Public Company Accounting
Oversight Board were: (i) 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; (ii)
inadequate segregation of duties consistent with control objectives; and (iii)
ineffective controls over period end financial disclosure and reporting
processes. The aforementioned material weaknesses were identified by our
President and Chief Executive Officer who also serves as our principal financial
and accounting officer, in connection with the review of our financial
statements as of March 31, 2016.
Management believes that the lack of a functioning audit committee and the lack
of a majority of outside directors on our board of directors results in
ineffective oversight in the establishment and monitoring of required internal
controls and procedures, which could result in a material misstatement in our
financial statements in future periods.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There were no changes in the Company's internal control over financial reporting
that occurred during the fourth quarter of the year ended March 31, 2016 that
have materially affected, or that are reasonably likely to materially affect,
the Company's internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
None.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
All directors of our company hold office until the next annual meeting of the
stockholders or until their successors have been elected and qualified. The
officers of our company are appointed by our board of directors and hold office
until their death, resignation or removal from office. Our directors and
executive officers, their ages, positions held, and duration as such, are as
follows:
Date First Elected
Name Position Held with the Company Age or Appointed
---- ------------------------------ --- ------------
Dana Gallovicova President, CEO Secretary, 43 February 25, 2013
Treasurer and Director
27
BUSINESS EXPERIENCE
The following is a brief account of the education and business experience of
each director and executive officer during at least the past five years,
indicating each person's business experience, principal occupation during the
period, and the name and principal business of the organization by which he was
employed.
MS. DANA GALLOVICOVA, SECRETARY TREASURER AND MEMBER OF THE BOARD OF DIRECTORS
Ms. Gallovicova has been serving as our President, CEO, Secretary Treasurer and
a Director since February 25, 2013. The term of her office is for one year and
is renewable on an annual basis.
She received an Economics Diploma from the Business Academy of Kosice, Slovakia
in 1991 and a Nursing Care Certificate from the Nursing College of Bratislava,
Slovakia in 1995. She has acted as the Executive Assistant to the Mayor's Office
for the City of Kosice, Slovakia since 2005. Kosice is the second largest city
in Slovakia Republic with a population of approximately 250,000 inhabitants. Her
duties include oversight of over 5,000 property tax accounts and she is
responsible for assessments, invoicing and collections. She is also responsible
for planning and organizing civic functions and events for the Mayor, and
assists the City Manager with civic budgets, related presentations and business
plans for the city. These experiences, qualifications and attributes have led to
our conclusion that Ms. Gallovicova should be serving as a member of our Board
of Directors in light of our business and structure.
She is currently devoting approximately 10-20 hours a week of his time to our
company, and is planning to devote 40 hours per week if necessary during the
next 12 months of operation.
She is not an officer or director of any reporting company that files annual,
quarterly, or periodic reports with the United States Securities and Exchange
Commission.
BOARD COMPOSITION
Our Bylaws provide that the Board of Directors shall consist of no less than 1,
but not more than 8 directors. Each director serves until his successor is
elected and qualified.
COMMITTEES OF THE BOARD OF DIRECTORS
We do not presently have a separately constituted audit committee, compensation
committee, nominating committee, executive committee or any other committees of
our Board of Directors. Nor do we have an audit committee "financial expert." As
such, our entire Board of Directors acts as our audit committee and handles
matters related to compensation and nominations of directors.
SIGNIFICANT EMPLOYEES
We have no significant employees other than the sole executive officer and
director described above.
28
FAMILY RELATIONSHIPS
There are no familial relationships between our officers and directors.
CERTAIN LEGAL PROCEEDINGS
No director, nominee for director, or executive officer of the Company has
appeared as a party in any legal proceeding material to an evaluation of his
ability or integrity during the past five years.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our executive
officers and directors, and persons who own more than ten percent of a
registered class of our equity securities, file reports of ownership and changes
in ownership with the SEC. Executive officers, directors and greater-than-ten
percent stockholders are required by SEC regulations to furnish us with all
Section 16(a) forms they file. Based on our review of filings made on the SEC
website, and the fact of us not receiving certain forms or written
representations from certain reporting persons that they have complied with the
relevant filing requirements, we believe that, during the year ended March 31,
2014, all of our executive officers, directors and greater-than-ten percent
stockholders complied with all Section 16(a) filing requirements.
CODE OF ETHICS
The Company has not adopted a code of ethics that applies to its principal
executive officers, principal financial officer, principal accounting officer or
controller, or persons performing similar functions. The Company has not adopted
a code of ethics because it has only commenced operations.
ITEM 11. EXECUTIVE COMPENSATION.
The following table sets forth information with respect to compensation paid by
us to our sole officer for the fiscal periods indicated:
SUMMARY COMPENSATION TABLE
Change in
Pension
Value &
Non-Equity Nonqualified
Incentive Deferred All
Name and Plan Compen- Other
Principal Stock Option Compen- sation Compen-
Position Year Salary($) Bonus($) Awards($) Awards($) sation($) Earnings($) sation($) Totals($)
------------ ---- --------- -------- --------- --------- --------- ----------- --------- ---------
Dana Gallovicova 2016 0 0 0 0 0 0 0 0
President, CEO 2015 0 0 0 0 0 0 0 0
Secretary, Treasurer
29
Subsequent to the date our date of incorporation, our executive officer has not
received and are not accruing any compensation. She anticipates this arrangement
will remain in effect for the next 12 months. We have not entered into any
employment or consulting agreements with our sole director and executive
officer.
OUTSTANDING EQUITY AWARDS AT 2015 FISCAL YEAR-END
We do not currently have a stock option plan or any long-term incentive plans
that provide compensation as an incentive for performance. We have not made any
individual stock option grants or other equity incentive awards to our executive
officer and director since our inception.
EMPLOYMENT CONTRACTS
The Company has not entered into an employment agreement with its officer and
director during the year ended March 31, 2016.
DIRECTOR COMPENSATION TABLE
Change in
Pension
Fees Value and
Earned Non-Equity Nonqualified All
or Incentive Deferred Other
Paid in Stock Option Plan Compensation Compen-
Name Cash($) Awards($) Awards($) Compensation($) Earnings($) sation($) Total($)
---- ------- --------- --------- --------------- ----------- --------- --------
Dana Gallovicova 2016 0 0 0 0 0 0 0
2015 0 0 0 0 0 0 0
We have no formal plan for compensating our director for her services in her
capacity as director. Our director is entitled to reimbursement for reasonable
travel and other out-of-pocket expenses incurred in connection with attendance
at meetings of our board of directors. The board of directors may award special
remuneration to any director undertaking any special services on behalf of Zlato
other than services ordinarily required of a director. Since inception to the
date hereof, no director received and/or accrued any compensation for his
services as a director, including committee participation and/or special
assignments.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDERS MATTERS
PRINCIPAL SHAREHOLDERS
The following table lists, as of March 31, 2016, the number of shares of common
stock of our Company that are beneficially owned by (i) each person or entity
known to our Company to be the beneficial owner of more than 5% of the
outstanding common stock; (ii) each officer and director of our Company; and
(iii) all officers and directors as a group. Information relating to beneficial
ownership of common stock by our principal shareholders and management is based
30
upon information furnished by each person using "beneficial ownership" concepts
under the rules of the Securities and Exchange Commission. Under these rules, a
person is deemed to be a beneficial owner of a security if that person has or
shares voting power, which includes the power to vote or direct the voting of
the security, or investment power, which includes the power to vote or direct
the voting of the security. The person is also deemed to be a beneficial owner
of any security of which that person has a right to acquire beneficial ownership
within 60 days. Under the Securities and Exchange Commission rules, more than
one person may be deemed to be a beneficial owner of the same securities, and a
person may be deemed to be a beneficial owner of securities as to which he or
she may not have any pecuniary beneficial interest. Except as noted below, each
person has sole voting and investment power.
Amount and
Amount and Nature of
Nature of Beneficial Percent
Beneficial Ownership of Class
Title of Name and Address of Ownership Prior Subsequent Prior to
Class Beneficial Owner to Offering to Offering Offering (2)
----- ---------------- ----------- ----------- -----------
Common Dana Gallovicova 5,000,000 5,000,000 83.33%
Mlynska 28, 040 01
Kosice, Slovak Republic
Common Directors and officers
as a group (1) 5,000,000 5,000,000 83.33%
----------
1. Represents beneficial ownership
2. Based on the total of 6,000,000 outstanding common shares as of the date
hereof
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE
Ms. Gallovicova purchased 5,000,000 shares of our common stock for $0.003 per
share. All of these shares are restricted securities, and are held by the sole
officer and director of our Company. (See "Principal Shareholders".)
As of March 31, 2016, Ms. Gallovicova lent our company an aggregate of $21,586
to pay for certain of our regulatory filings and to maintain our corporate
existence. The loan is non interest bearing, has no specified repayment terms
and is due on demand.
POTENTIAL CONFLICTS OF INTEREST
Since we do not have an audit or compensation committee comprised of independent
directors, the functions that would have been performed by such committees are
performed by our directors. Thus, there is a potential conflict of interest in
that our directors and officers have the authority to determine issues
concerning management compensation and audit issues that may affect management
decisions. Our officers and directors have conflicts of interest in that they
have other time commitments that will prevent them from devoting full-time to
our operations, which may affect our operations. We are not aware of any other
conflicts of interest with any of our executives or directors.
31
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The aggregate fees billed during the fiscal years ended March 31, 2016 and 2015
for professional services rendered by PLS CPA, A Professional Corp. with respect
to the audits of our 2016 and 2015 financial statements, as well as their
quarterly reviews of our interim financial statements and services normally
provided by the independent accountant in connection with statutory and
regulatory filings or engagements for these fiscal periods, were as follows:
Year Ended Year Ended
March 31, 2016 March 31, 2015
-------------- --------------
Audit Fees and Audit Related Fees $ 8,000 $ 8,000
Tax
Fees -- --
All Other
Fees 300 300
-------- --------
TOTAL $ 8,300 $ 8,300
======== ========
PRE APPROVAL POLICIES AND PROCEDURES
We do not have a separately designated Audit Committee. The Board of Directors
pre-approves all services provided by our independent auditors. All of the above
services and fees were reviewed and approved by the Board of Directors either
before or after the respective services were rendered.
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
Exhibit
Number Description
------ -----------
3.1 Articles of Incorporation (1)
3.2 Bylaws (1)
31.1 Certification of Principal Executive Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.
31.2 Certification of Principal Financial Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.
32.1 Certification of Principal Executive and Principal Financial Officer
and pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101 Interactive data files pursuant to Rule 405 of Regulation S-T.
----------
(1) Incorporated by reference to the Registrant's Registration Statement on
Form S-1 (File No. 333-188610), filed with the Commission on May 15, 2013.
32
SIGNATURES
Pursuant to the requirements 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.
ZLATO INC.
Date: July 7, 2016 By: /s/ Dana Gallovicova
------------------------------------
President, CEO, Secretary,
Treasurer, Principal Executive,
Financial and Accounting Officer
33