Attached files
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EX-31.1 - 302 CERTIFICATION OF CEO - SUNRIDGE INTERNATIONAL, INC. | p1107_ex31-1.htm |
EX-32.2 - 906 CERTIFICATION OF CFO - SUNRIDGE INTERNATIONAL, INC. | p1107_ex32-2.htm |
EX-31.2 - 302 CERTIFICATION OF CFO - SUNRIDGE INTERNATIONAL, INC. | p1107_ex31-2.htm |
EX-32.1 - 906 CERTIFICATION OF CEO - SUNRIDGE INTERNATIONAL, INC. | p1107_ex32-1.htm |
UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C.
20549
FORM 10-Q
þ |
QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
|
For
the quarterly period ended September 30,
2009
|
||
o
|
TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
|
For
the transition period from __________ to
__________
|
SUNRIDGE INTERNATIONAL, INC.
(Exact name of registrant
as specified in its charter)
Nevada
|
|
98-0348905
|
(State
or other jurisdiction of
|
|
(IRS Employer Identification
No.)
|
incorporation
or organization)
|
|
|
16857
E. Saguaro Blvd.
Fountain
Hills, Arizona 85268
(Address
of principal executive offices)
(480)
837-6165
(Registrant’s telephone
number, including area code)
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 þ No o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act. (Check one):
Large accelerated filer o | Accelerated filer o |
Non-accelerated filer o | Small reporting company þ |
Indicate
by check mark whether the registrant is a shell company (as defined by Rule
12b-2 of the Exchange Act). Yes o No þ
As of
November 16, 2009, 40,000,000 shares of the issuer’s common stock were
outstanding.
SUNRIDGE
INTERNATIONAL, INC.
Table
of Contents
Page | ||
Forward-Looking Statements | 3 | |
PART I. FINANCIAL INFORMATION | ||
Item
1.
|
Financial
Statements
|
4 |
Consolidated Balance
Sheets as of September 30, 2009 (Unaudited) and June 30,
2009
|
4
|
|
Unaudited
Consolidated Statements of Operations for the Three Months ended September
30, 2009 and 2008
|
5
|
|
Unaudited Consolidated Statements of Changes in Stockholders' Equity for the Three Months ended September 30, 2009 | 6 | |
Unaudited
Consolidated Statements of Cash Flows for the Three Months ended
September 30, 2009 and 2008
|
7
|
|
Condensed
Notes to the Consolidated Financial Statements
|
8
|
|
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
14
|
Item
3.
|
Quantitative and
Qualitative Disclosures About Market Risk
|
17
|
Item
4T.
|
Controls
and Procedures
|
18
|
PART II. OTHER INFORMATION | ||
Item
1.
|
Legal
Proceedings
|
19
|
Item
1A.
|
Risk
Factors
|
19
|
Item
2.
|
Unregistered Sales
of Equity Securities and Use of Proceeds
|
19
|
Item
3.
|
Defaults
Upon Senior Securities
|
19
|
Item
4.
|
Submission of
Matters to a Vote of Security Holders
|
19
|
Item
5.
|
Other
Information
|
19
|
Item
6.
|
Exhibits
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20
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Signatures |
21
|
|
2
SUNRIDGE
INTERNATIONAL, INC.
FORWARD-LOOKING
STATEMENTS
This Quarterly Report on
Form 10-Q (“Quarterly Report”) contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, and should
be read in conjunction with the Financial Statements of SunRidge International,
Inc. (the “Company” or “SunRidge”). Such statements are not
historical facts and reflect our current views regarding matters such as
operations and financial performance. In general, forward-looking statements are
identified by such words or phrases as “expects,” “anticipates,” “believes,”
“could,” “approximates,” “estimates,” “may,” “intends,” “predicts,” “projects,”
“plans,” or “will,” or the negative of those words or other terminology. These
statements are not guarantees of future performance and involve certain
known and unknown inherent risks, uncertainties and other factors that are
difficult to predict; our actual results could differ materially from those
expressed in these forward-looking statements. The cautionary
factors, risks and other factors presented should not be construed as
exhaustive. Other risks not presently known to us, or that we
currently believe are immaterial, could also adversely affect our business,
financial condition or results of operations.
Each forward-looking
statement should be read in context with, and with an understanding of, the
various disclosures concerning our business made elsewhere in this Quarterly
Report, as well as other public reports filed by us with the United States
Securities and Exchange Commission. Readers should not place undue reliance on
any forward-looking statement as a prediction of actual results of developments.
Except as required by applicable law or regulation, we undertake no obligation
to update or revise any forward-looking statement contained in this Quarterly
Report.
3
PART I. |
FINANCIAL INFORMATION
|
Item 1. |
Financial Statements
|
SUNRIDGE
INTERNATIONAL, INC. AND
SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30, 2009
(Unaudited) and June 30, 2009
9/30/2009
|
6/30/2009
|
|||||||
ASSETS
|
||||||||
CURRENT
ASSETS
|
||||||||
Cash
and cash equivalents
|
$ | 1,024 | $ | – | ||||
Inventory
|
1,416 | 3,556 | ||||||
Total
Current Assets
|
2,440 | 3,556 | ||||||
Property
and equipment, net
|
3,469 | 3,669 | ||||||
OTHER
ASSETS
|
||||||||
Deposits
|
4,520 | 4,520 | ||||||
TOTAL
ASSETS
|
$ | 10,429 | $ | 11,745 | ||||
LIABILITIES
AND STOCKHOLDERS' EQUITY/(DEFICIT)
|
||||||||
CURRENT
LIABILITIES
|
||||||||
Notes
payable - related parties
|
$ | 415,769 | $ | 289,726 | ||||
Notes
payable
|
195,300 | 195,300 | ||||||
Accounts
payable
|
202,483 | 101,452 | ||||||
Cash
overdraft
|
2,587 | 2,463 | ||||||
Advance
payable
|
5,300 | – | ||||||
Accrued
interest
|
73,317 | 61,553 | ||||||
TOTAL
LIABILITIES
|
894,756 | 650,494 | ||||||
COMMITMENTS
|
– | – | ||||||
STOCKHOLDERS'
EQUITY/(DEFICIT)
|
||||||||
Preferred
Stock, $0.001 par value, 50,000,000 shares
|
||||||||
authorized
and zero shares outstanding at September 30, 2009
|
||||||||
and
June 30, 2009, respectively
|
– | – | ||||||
Common
Stock - $0.001 par value; 500,000,000 shares
|
||||||||
authorized;
40,000,000 and 40,000,000 shares outstanding
|
||||||||
at
September 30, 2009 and June 30, 2009, respectively
|
40,000 | 40,000 | ||||||
Additional
paid-in capital
|
12,386,970 | 12,386,970 | ||||||
Accumulated
deficit
|
(13,311,297 | ) | (13,065,719 | ) | ||||
TOTAL
STOCKHOLDERS' EQUITY/(DEFICIT)
|
(884,327 | ) | (638,749 | ) | ||||
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY/(DEFICIT)
|
$ | 10,429 | $ | 11,745 |
The
accompanying condensed notes are an integral part of these unaudited
consolidated financial
statements.
4
SUNRIDGE INTERNATIONAL, INC. AND
SUBSIDIARIES
UNAUDITED
CONSOLIDATED STATEMENTS OF OPERATIONS
For the
three months ended September 30, 2009 and 2008
Three
months ended,
|
||||||||
9/30/2009
|
9/30/2008
|
|||||||
PRODUCT
REVENUES
|
$ | 7,000 | $ | 49,632 | ||||
Cost
of Product Revenues
|
2,270 | 11,900 | ||||||
GROSS
PROFIT
|
4,730 | 37,732 | ||||||
GENERAL
& ADMINISTRATIVE EXPENSES
|
||||||||
Employees
and consultants expenses
|
1,000 | 17,000 | ||||||
Reorganization costs | 176,523 | – | ||||||
Selling
and marketing expenses
|
– | 7,000 | ||||||
Legal
and professional fees
|
35,689 | 1,000 | ||||||
Rent
expense
|
19,360 | 13,560 | ||||||
Telephone
and utilities
|
1,246 | 3,664 | ||||||
Office
expenses
|
246 | 12,056 | ||||||
Freight
|
114 | 798 | ||||||
Insurance
|
115 | 6,635 | ||||||
Other
general and administrative expenses
|
949 | 566 | ||||||
TOTAL
GENERAL & ADMINISTRATIVE EXPENSES
|
235,142 | 62,279 | ||||||
LOSS
FROM OPERATIONS
|
(230,412 | ) | (24,547 | ) | ||||
OTHER
INCOME (EXPENSES)
|
||||||||
Other
Income
|
– | 1,010 | ||||||
Interest
expense
|
(15,166 | ) | (13,436 | ) | ||||
TOTAL
OTHER INCOME (EXPENSES)
|
(15,166 | ) | (12,426 | ) | ||||
NET
LOSS
|
$ | (245,578 | ) | $ | (36,973 | ) | ||
Basic
Loss per Share
|
$ | (0.01 | ) | $ | (0.00 | ) | ||
Weighted
Average Shares Outstanding
|
40,000,000 | 40,000,000 |
The accompanying condensed
notes are an integral part of these unaudited consolidated financial
statements.
5
SUNRIDGE
INTERNATIONAL, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
For the three months ended September 30, 2009
UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
For the three months ended September 30, 2009
|
Additional
|
Stockholders'
|
||||||||||||||||||
Common Stock |
Paid-in
|
Accumulated
|
Equity
|
|||||||||||||||||
Shares
|
Par
Value
|
Capital
|
Deficit
|
(Deficit)
|
||||||||||||||||
BALANCE
AT JULY 1, 2008
|
19,450,000 | $ | 19,450 | $ | 12,407,520 | $ | (12,828,816 | ) | $ | (401,846 | ) | |||||||||
Effect of recapitalization (See Note 1): | ||||||||||||||||||||
Stock
Retired
|
(12,500,000 | ) | (12,500 | ) | 12,500 | – | – | |||||||||||||
Issuance
of Common Stock
|
33,050,000 | 33,050 | (33,050 | ) | – | – | ||||||||||||||
BALANCE AT JULY 1, 2008 RECAPITALIZED | 40,000,000 | 40,000 | 12,386,970 | (12,828,816 | ) | (401,846 | ) | |||||||||||||
Net
loss
|
– | – | – | (236,903 | ) | (236,903 | ) | |||||||||||||
BALANCE AT JUNE 30, 2009 | 40,000,000 | 40,000 | 12,386,970 | (13,065,719 | ) | (638,749 | ) | |||||||||||||
Net Loss | – | – | – | (245,578 | ) | (245,578 | ) | |||||||||||||
BALANCE
AT SEPTEMBER 30, 2009
|
40,000,000 | $ | 40,000 | $ | 12,386,970 | $ | (13,311,297 | ) | $ | (884,327 | ) |
The
accompanying condensed notes are an integral part of these unaudited
consolidated financial statements.
6
SUNRIDGE INTERNATIONAL, INC. AND SUBSIDIARIES
UNAUDITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the
three months ended September 30, 2009 and 2008
Three
months ended,
|
||||||||
9/30/2009
|
9/30/2008
|
|||||||
INCREASE
(DECREASE) IN CASH AND CASH EQUIVALENTS:
|
||||||||
OPERATING
ACTIVITIES:
|
||||||||
Net
loss
|
$ | (245,578 | ) | $ | (36,973 | ) | ||
Adjustments
to reconcile net income to net
|
||||||||
cash
used by operating activities:
|
||||||||
Depreciation
|
200 | 200 | ||||||
Reorganization costs | 176,523 | – | ||||||
Changes
in Assets and Liabilities:
|
||||||||
Accounts
receivable
|
– | (30,588 | ) | |||||
Inventory
|
2,140 | 3,350 | ||||||
Accounts
payable
|
53,824 | (1,383 | ) | |||||
Accrued
interest
|
11,764 | 8,187 | ||||||
NET
CASH USED IN OPERATING ACTIVITIES
|
(1,127 | ) | (57,207 | ) | ||||
INVESTING ACTIVITIES: | ||||||||
Proceeds from reverse merger | 1,027 | – | ||||||
NET CASH PROVIDED BY INVESTING ACTIVITIES | 1,027 | – | ||||||
FINANCING
ACTIVITIES:
|
||||||||
Overdraft
borrowings
|
124 | – | ||||||
Overdraft
repayments
|
– | (410 | ) | |||||
Proceeds
from borrowings
|
2,000 | 68,100 | ||||||
Payments
to borrowers
|
(1,000 | ) | (10,200 | ) | ||||
NET
CASH PROVIDED BY FINANCING ACTIVITES
|
1,124 | 57,490 | ||||||
NET
CHANGE IN CASH AND CASH EQUIVALENTS
|
1,024 | 283 | ||||||
CASH
AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
– | – | ||||||
CASH
AND CASH EQUIVALENTS AT SEPTEMBER 30, 2009 and 2008
|
$ | 1,024 | $ | 283 | ||||
Supplemental
disclosure of cash flow information:
|
||||||||
Cash
paid during the three months for:
|
||||||||
Interest
|
$ | 3,400 | $ | 5,250 | ||||
Income taxes | $ | – | $ | – |
The accompanying condensed
notes are an integral part of these unaudited consolidated financial
statements.
7
SUNRIDGE
INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – ORGANIZATION AND
DESCRIPTION OF BUSINESS
Ophthalmic
International, Inc. (“OI”) was incorporated in March 1997 in the state of
Nevada. OI had been a wholly-owned subsidiary of Coronado Industries, Inc. until
January 26, 2007, when OI and its subsidiaries were purchased from Coronado
Industries, Inc. for cash and other consideration.
Tari,
Inc. (“Tari”) was incorporated on May 2, 2001 under the laws of the State of
Nevada and located in Toronto, Ontario, Canada. The accounting and reporting
policies of Tari conform to accounting principles generally accepted in the
United States of America. Tari’s fiscal year end is March 31.
In
September 2009, Tari consummated an Agreement of Share Exchange and Plan of
Reorganization (the “Agreement”) with OI. Pursuant to the Agreement, Tari agreed
to issue an aggregate of 33,050,000 shares of its restricted common stock to the
shareholders of OI in exchange for all the issued and outstanding common stock
shares of OI.
The
exchange of shares has been accounted for as a reverse acquisition in the form
of a recapitalization with OI as the “accounting acquirer.” Prior to the
acquisition, Tari changed its name to SunRidge International, Inc. (hereinafter
referred to as “SunRidge” or the “Company”). Following the
acquisition, OI became the wholly-owned subsidiary of
SunRidge. SunRidge has adopted a fiscal year end of June 30.
Operations after the acquisition will be based in Fountain Hills, Arizona, where
the Company intends to manufacture and market a patented Vacuum Fixation Device
and patented suction rings to major medical supply companies and health care
providers throughout the world. As a recapitalization the accompanying
financial statements represent the activity of OI.
GOING
CONCERN
The
Company’s financial statements are presented on a going concern basis, which
contemplates the realization of assets and the satisfaction of liabilities in
the normal course of business. Ophthalmic International, Inc. has not made an
operating profit since 1996. Further, the Company has a working capital deficit
of $(892,316) and a negative net worth of $(884,327) as of September 30,
2009.
The
financial statements do not include any adjustments to reflect the possible
future effects of the recoverability and classification of assets or the amounts
and classifications of liabilities that may result from the uncertainty of the
Company’s ability to continue as a going concern.
8
SUNRIDGE INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 – SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES
BASIS
OF PRESENTATION
In the
opinion of management, the accompanying consolidated financial statements
reflect all adjustments (consisting of normal recurring accruals) necessary to
present fairly the Company’s financial position as of September 30, 2009 and the
results of its operations, changes in stockholders’ deficit, and cash flows for
the three months ended September 30, 2009. Although management believes that the
disclosures in these consolidated financial statements are adequate to make the
information presented not misleading, certain information and footnote
disclosures normally included in financial statements that have been prepared in
accordance with accounting principles generally accepted in the United States of
America have been condensed or omitted pursuant to the rules and regulations of
the Securities Exchange Commission.
The
result of operations for the three months ended September 30, 2009, are not
necessarily indicative of the results that may be expected for the full year
ending June 30, 2010. The accompanying consolidated financial statements should
be read in conjunction with the more detailed consolidated financial statements,
and the related footnotes thereto, filed with the Company’s Current Report on
Form 8-K filed October 2, 2009.
PRINCIPLES
OF CONSOLIDATION
The
consolidated financial statements include the financial position, results of
operations, cash flows and changes in stockholders’ equity (deficit) of the
Company and its wholly-owned subsidiaries. All material intercompany
transactions, accounts and balances have been eliminated.
USE
OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
CASH
AND CASH EQUIVALENTS
Cash and
cash equivalents are considered to be all highly liquid investments purchased
with an initial maturity of three (3) months or less.
9
SUNRIDGE INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 – SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (Continued)
INVENTORIES
Inventories
consist primarily of materials and parts and are stated at the lower of cost, as
determined on a first-in, first-out (“FIFO”) basis, or market.
ACCOUNTS
RECEIVABLE
The
Company follows the allowance method of recognizing uncollectible accounts
receivable. The allowance method recognized bad debt expense as a
percentage of accounts receivable based on a review of the individual accounts
outstanding and the Company’s prior history of uncollectible accounts
receivable. As of September 30, 2009, the Company has not established an
allowance for uncollectible accounts receivable. The Company does not
record interest income on delinquent accounts receivable balances until it is
received.
PROPERTY
AND EQUIPMENT
Property
and equipment are stated at cost. Maintenance and repairs that neither
materially add to the value of the property nor appreciably prolong its life are
charged to operations as incurred. Betterments or renewals are
capitalized when incurred. Depreciation is provided using accelerated methods
over the following useful lives:
Office furniture & Equipment | 5 – 7 Years | |
Machinery | 5 – 7 Years | |
Leasehold Improvements | 5 – 39 Years |
LONG-LIVED
ASSETS
We review
long-lived assets for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Assets to be disposed of are reported at the lower of
carrying amount or fair value less cost to sell.
10
SUNRIDGE
INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 – SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (Continued)
DEFERRED
INCOME TAXES
Deferred
income taxes are provided on an asset and liability method, whereby deferred tax
assets are recognized for deductible temporary differences and operating loss
and tax credit carry forwards and deferred tax liabilities are recognized for
taxable temporary differences. Temporary differences are the
differences between the reported amounts of assets and liabilities and their tax
basis. 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.
LOSS
PER SHARE
Basic
loss per share includes no dilution and is computed by dividing loss to common
stockholders by the weighted average number of common shares outstanding for the
period. The effect of the recapitalization is included in all periods
presented.
FAIR
VALUE OF FINANCIAL INSTRUMENTS
The
carrying values of our financial instruments included in current assets and
current liabilities approximated their respective fair values at each balance
sheet date due to the immediate or short-term maturity of these financial
instruments. The fair value of long-term notes payable is based on
current rates at which we could borrow funds with similar remaining
maturities.
RECENT
ACCOUNTING PRONOUNCEMENTS
With the
exception of those discussed below, there have been no recent accounting
pronouncements or changes in accounting pronouncements during
the three months ended September 30, 2009, that are of significance, or
potential significance, to us.
In May
2008, the FASB issued guidance which clarifies the accounting for convertible
debt instruments and specifies that issuers should separately
account for the liability and the equity components of convertible debt
instruments that may be settled in cash upon conversion. This guidance
is effective for fiscal years and interim periods beginning after December 15,
2008. The Company has evaluated the impact of this statement
and has determined that this clarification will not have a material impact on
the Company's financial position and results of operations.
11
SUNRIDGE
INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 – SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (Continued)
RECENT
ACCOUNTING PRONOUNCEMENTS (Continued)
In June
2008, the EITF reached a consensus that addresses the determination of whether
an instrument (or an embedded feature) is indexed to an
entity's own stock, which is the first part of the scope exception in FASB ASC
815-10-15. This consensus is effective for fiscal years beginning
after December 15, 2008, and interim periods within those fiscal years. Early
application is not permitted. The Company has evaluated
the impact of this statement on our financial statements, and has determined
that the consensus did not have a material impact on its financial
position and results of operations.
In
October 2008, the EITF issued guidance which addresses the accounting when
entities enter into revenue arrangements with multiple payment
streams for a single deliverable or a single unit of accounting. The EITF could
not reach agreement on the transition of this guidance. The
Company is currently assessing the impact of this guidance on its financial
position and results of operations.
In April
2009, the FASB issued guidance on interim disclosures about fair value of
financial instruments which are effective for interim and annual
reporting periods ending after June 15, 2009. The guidance amends the other-
than-temporary impairment guidance in GAAP for debt securities
to modify the requirement for recognizing other-than-temporary impairments and
changes the existing impairment model and modifies
the presentation and frequency of related disclosures. The Company is currently
assessing the impact of this guidance on its financial position
and results of operations.
Effective
July 1, 2009, the Company adopted the Financial Accounting Standards Board
("FASB") Accounting Standards Codification and the Hierarchy
of Generally Accepted Accounting Principles (ASC 105), (formerly SFAS No. 168,
The FASB Accounting Standards Codification and the
Hierarchy of Generally Accepted Accounting Principles). This standard
establishes only two levels of US GAAP, authoritative and nonauthoritative.
The FASB Accounting Standards Codification (the "Codification" or "ASC") became
the source of authoritative, nongovernmental
US GAAP, except for rules and interpretive releases of the SEC, which are
sources of authoritative US GAAP for SEC registrants. All other
non-grandfathered, non-SEC accounting literature not included in the
Codification became nonauthoritative. The Company
began using the new guidelines and numbering system prescribed by the
Codification when referring to US GAAP in the first quarter of fiscal
2010. As the Codification was not intended to change or alter existing US GAAP,
it did not have any impact on the Company's consolidated
financial statements.
In August
2009, the FASB issued guidance clarifying the measurement of liabilities at fair
value. This guidance is effective for the first reporting
period (including interim periods) beginning after issuance. The Company is
currently assessing the impact of this guidance on its financial
position and results of operations.
In
October 2009, the FASB issued guidance on revenue recognition for
multiple-deliverable revenue arrangements. The guidance is effective
prospectively
for revenue arrangements entered into or materially modified in fiscal years
beginning on or after June 15, 2010 and addresses how to
separate deliverables and how to measure and allocate arrangement consideration
to one or more units of accounting. The Company is currently
assessing the impact of this guidance on its financial position and results of
operations.
12
SUNRIDGE
INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 – SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (Continued)
The
Company recognizes revenue when persuasive evidence of an arrangement exists,
delivery has occurred or services have been rendered, our price is fixed or
determinable, and collection is reasonably assured. We recognize revenue on our
standard products when title passes to the customer upon shipment. The standard
products do not have customer acceptance criteria. The Company has standard
rights of return that are accounted for as a warranty provision. The Company
does not have any price protection agreements or other post shipment
obligations. For custom equipment where customer acceptance is part of the sales
agreement, revenue will be recognized when the customer has accepted
the product. In cases where custom equipment does not have customer acceptance
as part of the sales agreement, revenue will be recognized upon shipment, as
long as the system meets the specifications as agreed upon with the customer.
Certain transactions may have multiple deliverables, with the deliverables
clearly defined. To the extent that the secondary deliverables are other than
perfunctory, the Company will recognize the revenue on each deliverable as it is
delivered, if separable, or on the completion of all deliverables, if not
separable.
NOTE 3 –
EQUITY
In
September 2009, Tari completed a five-for-one forward stock split which brought
the shares outstanding of Tari from 3,890,000 to 19,450,000. The
five-for-one forward split has been accounted for retroactively for all periods
presented.
The
President of Tari contributed 12,500,000 shares of common stock to the Company
as part of the exchange of shares with OI.
In
September 2009, Tari consummated an Agreement of Share Exchange and Plan of
Reorganization (the “Agreement”) with OI. Pursuant to the Agreement, Tari agreed
to issue an aggregate of 33,050,000 shares of its restricted common stock to all
of the shareholders of OI in exchange for all the issued and outstanding common
stock shares or OI.
NOTE 4 – SUBSEQUENT
EVENTS
The Company has
evaluated subsequent events through November 19, 2009, which is the date the
financial statements were issued.
13
SUNRIDGE INTERNATIONAL, INC.
Item 2. |
Management’s Discussion and Analysis of Financial Condition and
Results of Operations.
|
Overview
The following is a
discussion of the financial condition of the Company as of September 30, 2009
and June 30, 2009, and results of operations of the Company as of and for the
periods ended September 30, 2009 and September 30, 2008. This
discussion should be read in conjunction with the Financial Statements of the
Company and the related notes included in the Company’s Current Report on Form
8-K filed with the Securities and Exchange Commission ("SEC") on October 2,
2009.
On
September 5, 2009, we entered into an Agreement of Share Exchange and Plan of
Reorganization (the “Share Exchange Agreement”) and consummated a share exchange
(the “Share Exchange”) with Ophthalmic International, Inc. (“OI”), a Nevada
corporation. The closing date of the transaction was September 29, 2009
(the “Closing Date”) and resulted in the acquisition of OI (the
“Acquisition”). Pursuant to the terms of the Share Exchange
Agreement, we acquired all of the outstanding capital stock of OI from the five
OI shareholders, and the OI shareholders transferred and contributed all of
their share interests in OI to us. In
exchange, we issued to the OI shareholders 33,050,000 shares, or approximately
82.6% of our common stock. On the Closing Date, OI became our wholly
owned subsidiary.
Appointment
of New Officers and Directors
In
connection with the Share Exchange Agreement, we appointed G. Richard Smith,
President, CEO and a director of the Company, Gary R. Smith as CFO, Treasurer
and Secretary, John Sharkey as a director and Victor Webb as a
director. Furthermore, concurrent with the Closing Date of the Share
Exchange Agreement, Mr. Theodore Tsagkaris, the sole officer and Director
of SunRidge, resigned from his officer positions, but remained as a
Director.
Amendment
to Articles of Incorporation
On
July 1, 2009, our Board of Directors approved an amendment to our Articles
of Incorporation to change our name from TARI, Inc. to SunRidge International,
Inc. This resolution was approved by our majority shareholder on July
10, 2009. This amendment to our Articles of Incorporation was filed
with the Secretary of State of Nevada on July 23, 2009. This name
change was approved by the Financial Industry Regulatory Authority (“FINRA”) on
September 23, 2009.
On July
1, 2009, our Board of Directors approved an amendment to our Articles of
Incorporation to increase our authorized common stock from 100,000,000 to
500,000,000 shares, to increase our authorized preferred stock from 10,000,000
to 50,000,000 shares, and to increase our outstanding common stock shares from
3,890,000 to 19,450,000 shares. This amendment to our Articles of
Incorporation was filed with the Secretary of State of Nevada on August 4,
2009. This 5-to-1 forward split was approved by FINRA on September
23, 2009.
14
SUNRIDGE INTERNATIONAL, INC.
Change
in Shell Company Status
As a
result of the Share Exchange described above, we ceased being a shell
company as of September 29, 2009.
Certain
Relationships and Related Transactions
From July
1, 2008 through June 30, 2009, G. Richard Smith, our President, and his
family loaned OI an additional $49,341. $11,000 of these loans bear
an annual interest rate of 18% and the remainder bear an annual interest rate of
12%. All of these loans are due on demand or prior to December 21,
2009. G. Richard Smith received loan repayments of $42,675 during the
year. During fiscal year 2009, the Company paid $2,815 on an
automobile loan for a member of G. Richard Smith’s family. At
June 30, 2009, G. Richard Smith was owed $186,726 by OI and Gary R. Smith, our
Secretary/Treasurer, was owed $12,500 by OI.
From July 1, 2009 to
September 30, 2009, G. Richard Smith loaned OI an additional $2,000. This
loan bears an interest rate of 12% per annum and is due on demand. During
the quarter ended September 30, 2009, Gary R. Smith was repaid $1,000 on his
loans. At September 30, 2009, G. Richard Smith was owed $188,726 by OI and
Gary R. Smith was owed $11,500.
As of
June 30, 2009, Theodore Tsagkaris, our prior President, Secretary, and Treasurer
and current Director, was owed $138,193 for advances to the Company and $30,000
for accrued management fees. These debts are unsecured and are
non-interest bearing. The Share Exchange Agreement provides that
these sums, and $21,812 of accounts payable owed to third parties, will be paid
in three equal payments within four months of the closing of the Share Exchange
Agreement. The Share Exchange Agreement also provides that upon the
payment in full of these Company debts, Mr. Tsagkaris will resign as a Director
of the Company. During the quarter ended September 30, 2009, no additional
debt was accrued to Mr. Tsagkaris.
On April 18,
2008, Marston & Webb, Inc. loaned OI $20,000. This loan bears an
interest rate of 12% per annum and is due on demand. On September 29,
2009, Victor Webb, a principal of Marston & Webb, Inc., became a director of
the Company. At September 30, 2009, Marston & Webb, Inc. was owed
$20,000 of principal and accrued interest thereon by OI.
15
SUNRIDGE INTERNATIONAL, INC.
Ophthalmic
International, Inc.
OI was
founded in 1997 and until January 2007, was a subsidiary of Coronado Industries,
Inc., a publicly traded company. In January 2007, OI was acquired by G.
Richard Smith, OI’s President and majority shareholder and former Chairman,
Director and principal shareholder of Coronado Industries, Inc. Since
January 2007, OI has operated as a private company. At one time OI
attempted a merger with a public company, but the terms were unsatisfactory so
the deal was not consummated and OI remained private.
Since
1997, Ophthalmic International, Inc. has manufactured and marketed a fixation
device with a patented designed suction ring that treats Open Angle and
Pigmentary glaucoma.
In the
United States, glaucoma is the second leading cause of blindness affecting
approximately 3,000,000 persons. Of those, about 60,000 are legally blind. If
detected and treated early, glaucoma need not cause blindness or even severe
vision loss. While there is no cure for glaucoma, we believe that our
patented device and process provide an effective treatment for afflicted persons
and that a significant global market for our patented process, equipment and
rings currently exists. OI has not yet received FDA approval for sale of its
products in the United States and at this time it appears OI’s sales in Europe
and Canada will be negatively impacted until such FDA approval is
obtained.
Glaucoma
may have many forms which cause or present a feature of progressive damage to
the optic nerve due to increased pressure within the eyeball. As the optic nerve
deteriorates, blind spots and patterns develop. If left untreated, the result
may be total blindness. The space between the lens and the cornea in the eye is
filled with a fluid called the aqueous humor. This fluid circulates from behind
the colored portion of the eye (the iris) through the opening at the center of
the eye (pupil) and into the space between the iris and cornea. The aqueous
humor is produced constantly, so it must be drained constantly. The drain is at
the point where the iris and cornea meet, known as the drainage angle, which
directs fluid into a channel (Schlemm’s canal) that then leads it to a system of
small veins outside the eye. When the drainage angle does not function properly,
the fluid cannot drain and pressure builds up within the eye. Pressure also is
exerted on another fluid in the eye, the vitreous humor behind the lens, which
in turn presses on the retina. This pressure affects the fibers of the optic
nerve, slowly damaging them. The result over time is a loss of
vision.
Results of
Operations
The
Company's revenues in the quarter ended September 30, 2009 decreased by 85.9%
($42,632) compared to the quarter ended September 30, 2008, as the result
of less volume. Our gross margin as a percentage of revenues remained
about the same in the 2009 quarter in comparison to the 2008
quarter.
16
SUNRIDGE INTERNATIONAL, INC.
Our
general and administrative expenses increased dramatically in the 2009 quarter
in comparison to the 2008 quarter as a result of the $176,523 charge for
Reorganization Costs from the reverse acquisition of SunRidge by
Ophthalmic. Employees and Consultants Expenses decreased by 94.1%
($16,000) in the 2009 quarter as a result of hiring less consultants and having
no receptionist in 2009. Legal and Professional Fees increased
dramatically during the 2009 quarter as a result of the reverse acquisition
of SunRidge by Ophthalmic completed in September 2009. Selling and
Marketing Expenses decreased in the 2009 quarter from the 2008 quarter as a
result of ceased product promotion activities in 2009. Our Rent Expense
increased during the 2009 quarter as a result of interest and penalty charges by
our landlord for non-payment earlier in the year. Our Employees and
Consultants Expenses will likely increase in the remainder of 2009 and 2010 as
we commence paying salaries to our officers and hire additional personnel,
assuming we can obtain sufficient working capital. We are likely to incur
substantial research and development expenses in 2010 as we commence clinical
studies in Canada. There is no assurance that we will ever be
profitable.
Liquidity and Capital
Resources
We
suffered a severe liquidity shortage in fiscal years 2008 and 2009. From January
2008 to September 30, 2009, we have borrowed a total of $487,026, including
$271,726 from our President and his family. These loans bear interest
at annual rates from 12% to 18% and all of these loans are due on demand or
prior to December 21, 2009. Our interest expense during the quarter ended
September 30, 2009 increased by 11.4% ($1,730) from the quarter ended September
30, 2008. Without substantial funding in the very near future, our
liquidity shortage will become critical. We are hopeful we will be
able to obtain substantial funding in the near term and the long term, but we
presently have no agreements or arrangement to obtain any such
funds.
The
consolidated financial statements contained in this Form 10-Q have been prepared
assuming we will continue to operate and do not include any adjustments that
might be necessary if we are unable to continue as a going concern. Our
independent registered public accountants issued a going concern qualification
to their audit report on our consolidated financial statements for the fiscal
year ended June 30, 2009 and that qualification would have been extended through
the quarter ended September 30, 2009.
Over the
next three years, we must obtain at least $6,500,000 of funding to finance our
two planned patient clinical studies in Canada and the U.S. and our planned
administrative staff. If such funding is not obtained, it is unlikely we will
receive FDA approval for the sale of our product in the U.S. Without FDA
approval our revenues will be totally dependent on foreign sales.
Item 3. |
Quantitative and Qualitative Disclosures About Market
Risk.
|
Not
applicable.
17
SUNRIDGE INTERNATIONAL, INC.
Item 4T. |
Controls and Procedures.
|
Management is
responsible for
establishing and maintaining adequate internal control over financial reporting
for the small business issuer. The Company’s Chief Executive Officer
and Chief Financial Officer have concluded, based on an evaluation required by
paragraph (b) of Section 240.13a-15 or 240.15d-15 of the Rules of the Securities
Exchange Act of 1934 (the “Exchange Act”), conducted as of the end of the period
covered by this Quarterly Report on Form 10-Q, that the Company’s disclosure
controls and procedures (as defined in Exchange Act Rules 13a–15(e) or
240.15d-15(e)) have functioned effectively. For purposes
of this Item, the term “disclosure controls and procedures” means controls and
other procedures of the Company that are designed to ensure that information
required to be disclosed by the Company in the reports that it files or submits
under the Exchange Act (15 U.S.C. 78a et seq.) is recorded, processed, summarized and reported, within
the time periods specified in the Commission’s rules and forms. Disclosure
controls and procedures include, without limitation, controls and procedures
designed to ensure that information required to be disclosed by the Company in
the reports that it files or submits under the Exchange Act is accumulated and
communicated to the issuer’s management, including its principal executive and
principal financial officers, or persons performing similar functions, as
appropriate to allow timely decisions regarding required
disclosure.
There
have been no changes in the Company’s internal control over financial reporting
identified in connection with the evaluation required by paragraph (d) of
Section 240.13a-15 or 240.15d-15 of the Rules of the Exchange Act, that occurred
during the Company’s last fiscal quarter that have materially affected, or is
reasonably likely to materially affect, the Company’s internal control over
financial reporting.
As
directed by Section 404 of the Sarbanes-Oxley Act, the Securities and Exchange
Commission adopted rules requiring each public company to include a report of
management on the company’s internal controls over financial reporting in its
annual reports. In addition, the independent registered public
accounting firm auditing a company’s financial statements must also attest to
the effectiveness of the company’s internal controls over financial reporting.
While we were not subject to these requirements for the fiscal year ended
June 30, 2009, we will be subject to these requirements beginning fiscal
year 2010.
While
we expect to expend significant resources in developing the necessary
documentation and testing procedures required by Section 404 of the
Sarbanes-Oxley Act, there is a risk that we may not be able to comply timely
with all of the requirements imposed by this rule. In the event that
we are unable to receive a positive attestation from our independent registered
public accounting firm with respect to our internal controls, investors and
others may lose confidence in the reliability of our financial statements and
our stock price and ability to obtain equity or debt financing as needed could
suffer.
In
addition, in the event that our independent registered public accounting firm is
unable to rely on our internal controls in connection with its audit of our
financial statements, and in the further event that it is unable to devise
alternative procedures in order to satisfy itself as to the material accuracy of
our financial statements and related disclosures, it is possible that we would
be unable to file our Annual Report on Form 10-K with the Securities and
Exchange Commission, which could also adversely affect the market price of our
common stock and our ability to secure additional financing as
needed.
18
SUNRIDGE INTERNATIONAL, INC.
PART II. |
OTHER INFORMATION
|
Item 1. |
Legal
Proceedings.
|
None.
Item 1A. |
Risk Factors.
|
Not
applicable.
Item 2. |
Unregistered Sales of Equity Securities and Use of
Proceeds.
|
At the
closing of the Share Exchange Agreement on September 29, 2009 we issued
33,050,000 shares of our common stock to the four shareholders of OI in exchange
for all of the outstanding captial stock of OI. This transaction was
conducted pursuant to Rule 506 of Regulation D, without public solicitation and
underwriting commissions.
Item 3. |
Defaults Upon Senior Securities.
|
None.
Item 4. |
Submission of Matters to a Vote of Security
Holders.
|
None.
Item 5. |
Other Information.
|
None.
19
SUNRIDGE INTERNATIONAL, INC.
Item 6. |
Exhibits
|
Exhibit
No.
|
Description
|
|
2.1
|
Share
Exchange Agreement, dated September 5, 2009, by and among SunRidge
International Inc. and Ophthalmic International, Inc.
(1)
|
|
3.1 | Articles of Exchange filed with the Nevada Secretary of State on July 23, 2009 (2) | |
3.2 | Certificate of Change filed with the Nevada Secretary of State on August 4, 2009 (3) | |
31.1*
|
Certification by
Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act
*
|
|
31.2*
|
Certification by
Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act
*
|
|
32.1* | Certification by Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act * | |
32.2*
|
Certification by
Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act
*
|
__________
*
|
Filed herewith.
|
(1)
|
Incorporated by
reference to Exhibit 2.1 of the Current Report on Form 8-K filed by the
Company on October 2,
2009.
|
(2)
|
Incorporated by
reference to Exhibit 3.1 of the Current Report on Form 8-K filed by the
Company on October 2,
2009.
|
(3)
|
Incorporated by
reference to Exhibit 3.2 of the Current Report on Form 8-K filed by the
Company on October 2,
2009.
|
20
SUNRIDGE INTERNATIONAL, INC.
Signatures
Pursuant to the
requirements of the Securities Exchange Act of 1934, the Company has duly caused
this report to be signed on its behalf by the undersigned thereunto duly
authorized.
SUNRIDGE INTERNATIONAL, INC. | |||
Dated: November
19, 2009
|
By:
|
/s/ G. Richard Smith | |
G.
Richard Smith
President
and Chief Executive
Officer
(Principal Executive
Officer)
|
|||
Dated: November
19, 2009
|
By:
|
/s/ Gary R. Smith | |
Gary
R.
Smith
Secretary/Treasurer,
Chief
Financial Officer and Director
(Principal
Accounting Officer)
|
|||
21