Part II. FINANCIAL INFORMATION
Item 8. Financial Statements
TRIM HOLDING GROUP
(formerly TNT Designs, Inc.)
(A Development Stage Company)
INDEX TO FINANCIAL STATEMENTS
____________________________________________________________________________
TRIM HOLDING GROUP
(formerly TNT Designs, Inc.)
(A Development Stage Company)
FINANCIAL STATEMENTS
As of and for the three months ended December 31, 2009 and 2008
Page No.
INDEX TO FINANCIAL STATEMENTS F - 1
REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM F - 2
FINANCIAL STATEMENTS
Balance Sheets
At December 31, 2009 (audited) and 2008 (unaudited) F - 3
Statements of Operations
For three months ended December 31, 2009 (audited)
and 2008 (unaudited), and the period from February
17, 2004 (Inception) to December 31, 2009 F - 4
Statements of Stockholders' Deficit
For the period from February 17, 2004 (Inception)
to December 31, 2009 F - 5
Statements of Cash Flows
For three months ended December 31, 2009 (audited)
and 2008 (unaudited), and the period from February
17, 2004 (Inception) to December 31, 2009 F - 6
NOTES TO FINANCIAL STATEMENTS F - 7 thru F - 12
F - 1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
BOARD OF DIRECTORS AND STOCKHOLDERS
Trim Holding Group
(formerly TNT Designs, Inc.)
(A Development Stage Company)
We have audited the accompanying balance sheet of Trim Holding Group (formerly
TNT Designs, Inc.) (a development stage company) (the "Company") as of December
31, 2009, and the related statements of operations, stockholders' deficit and
cash flows for the three months then ended and for the period from February 17,
2004 (inception) through December 31, 2009. 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 audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audit included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Company as of December
31, 2009, and the results of its operations and cash flows for the three months
then ended and for the period from February 17, 2004 (inception) through
December 31, 2009, in conformity with accounting principles generally accepted
in the United States of America.
/s/UHY LLP
Southfield, MI
April 15, 2010
F - 2
TRIM HOLDING GROUP
(formerly TNT Designs, Inc.)
(A Development Stage Company)
BALANCE SHEETS
December 31,
2009 2008
(unaudited)
ASSETS
Current Assets:
Cash $ 29,289 $ 842
Prepaid expense 8,000 -
Total Current Assets 37,289 842
Other Assets:
Deferred Stock Offering Expenses 32,842 -
Patent 12,252,500 -
Total Other Assets 12,285,342 -
TOTAL ASSETS $12,322,631 $ 842
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Accounts payable and accrued expenses $ 58,415 $ 17,002
Due to stockholder/officer - 70,482
Total Current Liabilities 58,415 87,484
Commitments and Contingencies - -
Stockholders' Equity (Deficit):
Preferred stock series 1, class P-1 par value $8.75;
25,000,000 shares authorized; 22,000 issued and
outstanding on December 31, 2009 192,500 -
Preferred stock series 1, class P-2 par value $7.00;
75,000,000 shares authorized; 3,750,000 issued and
outstanding on December 31, 2009, net of discount 12,252,500 -
Common stock par value $0.0001; 400,000,000 shares
authorized; 2,262,500 issued and outstanding on
December 31, 2009 and 2,292,500 issued and
outstanding on December 31, 2008 226 229
Additional paid-in capital 139,182 29,221
Deficit accumulated during the development stage (320,192) (116,091)
Total Stockholders' Equity (Deficit) 12,264,216 (86,642)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT $12,322,631 $ 842
The accompanying notes are an integral part of these financial statements.
F - 3
TRIM HOLDING GROUP
(formerly TNT Designs, Inc.)
(A Development Stage Company)
STATEMENTS OF OPERATIONS
From
February 17,
2004 (Inception)
For 3 Months Ended through
December 31, December 31,
2009 2008 2009
(unaudited)
Sales $ - $ - $ 42,021
Cost of Goods Sold - - 36,419
Gross Profit - - 5,602
General and Administrative
Expenses 110,754 3,303 325,794
Net Loss $ (110,754)$ (3,303) (320,192)
Net Loss Per Share:
Basic and Diluted $ (0.05)$ - $ (0.14)
Weighted Average Shares
Outstanding:
Basic and Diluted 2,262,500 2,292,500 2,254,296
The accompanying notes are an integral part of these financial statements.
F - 4
TRIM HOLDING GROUP
(formerly TNT Designs, Inc.)
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE PERIOD FEBRUARY 17, 2004 (INCEPTION) THROUGH DECEMBER 31, 2009
Preferred Preferred Deficit
Stock Stock Addit- Accumulated
Series 1, Series 1, ional during
Class P-1 Class P-2 Common Stock Paid-In Development
Shares Value Shares Value Shares Value Capital Stage Total
Sale of Common Stock to Officer, at $0.0001, per share (February 17, 2004)
- $ - - $ - 2,000,000 200 $ - $ - $ 200
Sale of Common Stock Under Private Placement, at $0.10, per share, (March to
May 2004)
- - - - 100,000 10 9,990 - 10,000
Stock Issued for Services at $0.10, per share, (December 2004)
- - - - 100,000 10 9,990 - 10,000
Sale of Common Stock Sold Under Private Placement, at $0.10, per share, (March
2005)
- - - - 92,500 9 9,241 - 9,250
Officer Advances & Accrued Expenses Discharged
- - - - (30,000) (3)109,961 - 109,958
Stock issued to officer to satisfy debt at $8.75 per share (December 4, 2009)
22,000 192,500 - - - - - - 192,500
Stock issued as consideration for patent agreement at $7.00 per share
(December 31, 2009), net of discount
- - 3,750,000 12,252,500 - - - - 12,252,500
Net Loss:
For the period February 17, 2004 (Inception) to September 30, 2009
- - - - - - - (209,438) (209,438)
For the period October 1, 2009 to December 31, 2009
- - - - - - - (110,754) (110,754)
Balance as of December 31, 2009
22,000 192,500 3,750,000 12,252,500 2,262,500 226 139,182 (320,192) 12,264,216
The accompanying notes are an integral part of these financial statements.
F - 5
TRIM HOLDING GROUP
(formerly TNT Designs, Inc.)
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
From
February 17,
2004
(Inception)
For 3 Months Ended through
December 31, December 31,
2009 2008 2009
(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss (110,754) (3,303) (320,192)
Adjustments to reconcile net loss to net cash
(used in) operating activities: - - 10,000
Common stock issued for services
Changes in assets and liabilities:
Prepaid expense (8,000) - 8,000
Accounts payable and accrued expenses 27,828 131 97,892
Net Cash Used In Operating Activities (90,926) (3,172) (220,300)
CASH FLOWS FROM FINANCING ACTIVITIES:
Deferred stock offering expenses (32,842) - (32,842)
Net advances from stockholder/officer 152,500 - 262,981
Proceeds from sale of common shares - - 19,450
Net Cash Provided by Financing Activit 119,658 - 249,589
NET CHANGE IN CASH AND CASH EQUIVALENTS 28,732 (3,172) 29,289
CASH AND CASH EQUIVALENTS:
Beginning of the Period 557 4,014 -
End of the Period 29,289 842 29,289
Supplemental disclosure of non-cash activities:
Discharge in full of stockholder/officer advances by
issuing preferred stock, class P-1 for $192,500.
Acquisition of patent rights valued at $12,252,500
paid for by issuing preferred stock, class P-2
for $12,252,500
The accompanying notes are an integral part of these financial statements.
F - 6
TRIM HOLDING GROUP
(formerly TNT Designs, Inc.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - NATURE OF BUSINESS
Trim Holding Group (formerly TNT Designs, Inc.) (the "Company") was
incorporated on February 17, 2004 in the state of Delaware. A substantial part
of the Company's activities were involved in developing a business plan to
market and distribute scarves, handbags and other products.
On June 16, 2009, the majority interest in the Company was purchased in a
private agreement by Louis Bertoli, an individual, with the objective to
acquire and/or merge with other businesses. At December 31, 2009, the Company
had not yet commenced operations. Expenses incurred from February 17, 2004
(date of inception) through December 31, 2009 relate to the Company's formation
and general administrative activities.
On October 7, 2009, the Company merged with and into Trim Nevada, Inc., which
became the surviving corporation. The merger will not result in any change in
the Company's management, assets, liabilities, net worth or location of
principal executive offices. However, this merger changed the legal domicile
from Delaware to Nevada where Trim Nevada, Inc. was incorporated. Each
outstanding share of TNT Designs, Inc. were automatically converted into one
share of the common stock of Trim Nevada, Inc.
Pursuant to the merger, the Company changed its name from TNT Designs, Inc. to
Trim Holding Group
and announced the change in the Company's business focus to health care and
environmental quality sectors.
The Company, based on proposed business activities, is a ''blank check''
company. The Securities and Exchange Commission defines such a Company as ''a
development stage company'' when it has no specific business plan or purpose,
or has indicated that its business plan is to engage in a merger or acquisition
with an unidentified company or companies, or other entity or person; and is
issued 'penny stock,' as defined in Rule 3a 51-1 under the Securities Exchange
Act of 1934. Many states have
enacted statutes, rules and regulations limiting the sale of securities of
''blank check'' companies in
their respective jurisdictions. Management does not intend to undertake any
efforts to cause a market
to develop in its securities, either debt or equity, until the Company
concludes a business combination.
The Company was acquired as a vehicle to investigate and, if such investigation
warrants, acquire a target company or business seeking the perceived advantages
of being a publicly held corporation and, to a lesser extent that desires to
employ the Company's funds in its business. The Company's principal business
objective for the next twelve (12) months, and beyond such time, will be to
achieve long-term growth potential through a combination with a business rather
than immediate, short-term earnings. The Company will not restrict its
potential candidate target companies to any specific business, industry or
geographical location and, thus, may acquire any type of business. The
analysis of new business opportunities will be undertaken by or under the
supervision of the officers and directors of the Company.
NOTE 2 - BASIS OF PRESENTATION
The accompanying audited Financial Statements ("Financial Statements") have
been prepared by management in accordance with generally accepted accounting
principles ("GAAP") in the United States of America.
NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES
Development Stage Company
The Company is a development stage company. The Company is still devoting
substantially all of its efforts on establishing the business and its planned
principal operations have not commenced. All
F - 7
TRIM HOLDING GROUP
(formerly TNT Designs, Inc.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES (continued)
losses accumulated, since inception, have been considered as part of the
Company's development
stage activities.
Use of Estimates
The preparation of financial statements, in conformity with GAAP, requires
management to make estimates and assumptions that affect the reported amounts
of assets, liabilities, disclosures of
contingent assets and liabilities as of the date of the financial statements
and the reported amounts
of revenues and expenses during the reporting period. Management evaluates
these estimates
and assumptions on a regular basis. Actual results could differ from these
estimates.
Year End
The Board of Directors approved the change of the Company's year end on October
7, 2009
from September 30 to December 31, pursuant to the merger described in Note 1.
Cash Equivalents
The Company considers all highly liquid investments with maturities of three
months or less at the
time of purchase to be cash equivalents.
Patents
It is the Company's policy to capitalize the costs associated with securing a
patent. The patents will
be carried at cost less accumulated amortization, which is calculated on a
straight-line basis over a
period of 10 years, which is estimated as the asset's useful life. Accumulated
amortization as of December 31, 2009 and 2008 was $0.
Long-lived Assets
Long-lived assets are evaluated for impairment when events occur or
circumstances indicate that the remaining estimated useful lives may warrant
revision or that the remaining balances may not be recoverable. When this
occurs, an estimate of undiscounted cash flows is used to determine if the
remaining balances are recoverable.
Income Taxes
The Company accounts for income taxes under the asset and liability method,
where deferred tax
assets and liabilities are recognized for the future tax consequences
attributable to differences
between the financial statements carrying amounts of existing assets and
liabilities and their
respective tax bases. Deferred tax assets and liabilities are measured using
enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected
to be recovered or settled. Valuation allowances are established when
necessary to reduce deferred
tax assets to the amount expected to be realized.
Effective January 1, 2009, the Company adopted Accounting Standards
Codification guidance regarding accounting for uncertainty in income taxes.
This guidance clarifies the accounting for income taxes by
prescribing the minimum recognition threshold an income tax positions is
required to meet before being recognized in the financial statements and
applies to all income tax positions. Each income tax position is assessed
using a two step process. A determination is first made as to whether it is
more likely than not that the income tax position will be sustained, based upon
the technical merits, upon examination by the taxing authorities. If the
income tax position is expected to meet the more likely than not criteria, the
benefit recorded in the financial statements equals the largest amount that is
greater than 50% likely to be realized upon its ultimate settlement. At
December 31, 2009, there were no uncertain tax positions that require accrual.
F - 8
TRIM HOLDING GROUP
(formerly TNT Designs, Inc.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES (continued)
None of the Company's federal or state income tax returns is currently under
examination by the Internal Revenue Service ("IRS") or state authorities.
However, fiscal years 2006 and later remain subject to examination by the IRS
and respective states.
Net Loss per Share
Basic loss per share is computed by dividing net income, or loss, by the
weighted average number
of shares of common stock outstanding for the period. Diluted loss per share
is computed by dividing
net income, or loss, by the weighted average number of shares of common stock
outstanding for the period and the number of shares of common stock into which
the preferred stock is convertible. Using the if-converted method, Series P-1
converts at 1.25-to-1 and Series P-2 converts 1-to-1.
As of December 31, 2009 and 2008, basic and diluted loss per share was the same
as there were no
outstanding instruments having a dilutive effect.
Recently Issued Accounting Pronouncements
In June 2009, the Financial Accounting Standards Board ("FASB") established the
FASB Accounting Standards Codification (Codification), which officially
commenced July 1, 2009, to become the source of
authoritative US GAAP recognized by the FASB to be applied by nongovernmental
entities. Rules and interpretive releases of the SEC under authority of
federal securities laws are also sources of authoritative US GAAP for SEC
registrants. Generally, the Codification is not expected to change US GAAP.
All other accounting literature excluded from the Codification will be
considered non-authoritative. The Codification
is effective for financial statements issued for interim and annual periods
ending after September 15, 2009. We adopted the new standards for our year
ending December 31, 2009. All references to authoritative accounting
literature are now referenced in accordance with the Codification.
In June 2009, FASB issued guidance related to consolidation of variable
interest entities. This guidance amends Interpretation 46(R) to replace the
quantitative-based risks and rewards calculation for
determining which enterprise, if any, has a controlling financial interest in a
variable interest entity with
an approach focused on identifying which enterprise has the power to direct the
activities of a variable interest entity that most significantly impact the
entity's economic performance and (1) the obligation to absorb losses of the
entity or (2) the right to receive benefits from the entity. This guidance
shall be
effective as of the beginning of each reporting entity's first annual reporting
period that begins after November 15, 2009, for interim periods within that
first annual reporting period, and for interim and
annual reporting periods thereafter. Earlier application is prohibited. The
Company does not expect
the adoption of this guidance to have a material impact on its financial
statements.
In June 2009, FASB issued guidance related to accounting for transfers of
financial assets, in order to improve the relevance, representational
faithfulness, and comparability of the information that a reporting entity
provides in its financial reports about a transfer of financial assets; the
effects of a transfer on its financial position, financial performance, and
cash flows; and a transferor's continuing involvement in transferred financial
assets. This guidance must be applied as of the beginning of each reporting
entity's first annual reporting period that begins after November 15, 2009, for
interim periods within that first annual reporting period and for interim and
annual reporting periods thereafter. Earlier application is prohibited. This
guidance must be applied to transfers occurring on or after the effective date.
The Company does not expect the adoption of this guidance to have a material
impact on its financial statements.
NOTE 4 - PATENTS
On December 31, 2009, the Company entered into a patent agreement with Allkey,
Ltd. to obtain the full and exclusive right, title and interest in patents for
a personal massaging device. Affiliates of Chief
F - 8
TRIM HOLDING GROUP
(formerly TNT Designs, Inc.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
NOTE 4 - PATENTS (continued)
Executive Officer, majority shareholder and director, Louis Bertoli, own a
minority interest of Allkey, Ltd. The patents purchased are for the United
States, Canada and Mexico. In consideration for such patent rights, the Company
issued 3,750,000 shares of Class P-2 preferred stock (each USD $7.00 par value)
of the Company. Additionally, the Company acquired the option to acquire the
exclusive patent rights in 46 other countries.
The Company has the right to repurchase some or all of the shares for USD $7.00
per share ($26,250,000 for all the Class P-2 preferred shares) on or before
December 31, 2012. If the Company chooses not to repurchase the shares by such
date, Allkey, Ltd. has the right to sell the shares to a third-party, subject to
the Company's right of first refusal. If the proceeds from such third-party sale
are less than USD $26,250,000, then the Company is obligated to pay the
difference to Allkey, Ltd.
The patent rights and preferred stock issued were recorded at their estimated
fair value as determined using the "relief from royalty" valuation model that
takes into account, among other items, projected future revenue of products
covered by the patent rights, an assumed royalty rate that the Company would pay
if it had licensed the technology covered by the patents, and an appropriate
discount rate based on the Company's estimated cost of capital. The initial fair
value of the patent rights was determined to be $12,252,500 at December 31,
2009. As a result, the Class P-2 preferred stock has been recorded net of a
discount of $13,997,500 to its par value of USD $7.00.
The amortization expense for these patent costs for the each of the next 5
years and in aggregate is as follows:
For the years ended December 31,
2010 $ 1,225,250
2011 1,225,250
2012 1,225,250
2013 1,225,250
2014 1,225,250
2015-2019 6,126,250
$ 12,252,500
NOTE 5 - DUE TO OFFICER
As of December 31, 2008, a retiring officer and then majority shareholder had
made advances of $70,271. These advances and the related accrued expenses of
$17,003 as of December 31, 2008
($39,687 as of June 16, 2009, date of discharge) were discharged and
transferred to Additional
Paid-In Capital in accordance with the private sale agreement between the
retiring officer and Louis Bertoli (current majority shareholder).
The current majority shareholder loaned the Company $152,500 during the three
months ended December 31, 2009 to be used for working capital.
On December 4, 2009, the Company issued 22,000 shares of Series 1, Class P-1
Preferred Stock
(par value $8.75 per share) to Louis Bertoli (director and officer of the
Company) in consideration for satisfaction of this outstanding debt. Balance
of debt on date of discharge was $192,500.
F - 10
TRIM HOLDING GROUP
(formerly TNT Designs, Inc.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
NOTE 6 - RELATED PARTY TRANSACTIONS
On July 20, 2009, the Company entered into a two-year consulting agreement with
Amersey Investment Holding LLC (affiliated party). The affiliated party will
provide office space, office identity and assist the Company with corporate,
financial, administrative and management records. During 3 months ended
December 31, 2009, the Company incurred expenses of $15,000 in relation to
these services.
As of December 31, 2009, the Company had prepaid expenses from this affiliated
party for administrative service of $8,000, which is included on the Balance
Sheet as Prepaid Expense.
A patent was purchased December 31, 2009 from a related party, as described in
detail in Note 4.
NOTE 7 - INCOME TAXES
The Company has incurred losses since February 17, 2004 (inception). The
Company has a net operating loss carry forward for income tax purposes of
approximately $334,000 that may be applied against future taxable income.
Deferred income taxes arise from timing differences resulting from income and
expense items reported for financial accounting and tax purposes in different
periods. The principal source of timing difference
is the timing of the utilization of the net operating losses.
The Company is uncertain whether it will realize any future tax benefit of its
deferred tax asset and, accordingly, a full valuation allowance was provided
against the Company's deferred tax asset.
As of December 31, 2009 and 2008, the deferred tax asset computed by applying
the U.S. statutory income tax rate of 34% tax bracket consists of the
following:
2009 2008
Federal loss carry forwards $ 113,000 $ 39,000
State loss carry forwards 13,000 4,000
Deferred tax asset 126,000 43,000
Valuation allowance (126,000) (43,000)
$ - $ -
The approximate available unused capital loss carry forward expiring at various
dates through December 31, 2029 is $334,000.
NOTE 8 - STOCKHOLDERS' EQUITY
On October 7, 2009, pursuant to the merger described in Note 1, the Company
increased the number
of authorized shares of common stock from 30,000,000 to 400,000,000 with no
change in par value of $0.0001 per share.
Pursuant to the merger described in Note 1, the Company also authorized the
designation of two
classes of preferred stock totaling 100,000,000 shares. The first class is
called Series 1, Class P-1 consisting of 25,000,000 authorized shares with a
par value of $8.75 per share; each share will have voting rights equal to 100
shares of common stock; each share will be convertible into 1.25 shares of
F - 11
TRIM HOLDING GROUP
(formerly TNT Designs, Inc.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
NOTE 8 - STOCKHOLDERS' EQUITY (continued)
common stock at the discretion of the shareholder. The second class is called
Series 1, Class P-2 consisting of 75,000,000 authorized shares with a par value
of $7.00 per share; each share will have
the voting rights equal to 1 share of common stock; each share will be
convertible into one share of common stock at shareholder's discretion.
The holders of Series 1, Class P-1 shares are entitled to dividends declared on
Common Stock, as if the shares were converted to Common Stock at the ratio of
1.25-to-1. The holders of Series 1, Class P-2
shares are entitled to dividends declared on Common Stock, as if the shares
were converted to Common Stock at the ratio of 1-to-1.
The holders of preferred stock, both Series 1, Class P-1 and Series 1, Class P-
2 shall have the right to liquidate and convert their shares at any time, upon
written election to the Company.
On December 30, 2009, the Company filed a Form S-1, using the "shelf"
registration process, with
the Securities and Exchange Commission to register 15,000,000 shares of our
common stock, par
value USD $0.0001, with a proposed maximum offering price per unit of USD
$7.00. Under the shelf registration, the Company from time to time may sell
the securities registered in one or more offerings
up to an aggregate initial dollar amount of USD $105,000,000.
NOTE 9 - SUBSEQUENT EVENTS
The Company has performed a review of all events that occurred after December
31, 2009. The Company did not have any subsequent events.
F - 12