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EX-31.1 - STARINVEST CERTIFICATION - STARINVEST GROUP, INC. | ex31-1.htm |
EX-32.1 - STARINVEST CERTIFICATION - STARINVEST GROUP, INC. | ex32-1.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-K
(Mark
One)
x ANNUAL REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the
fiscal year ended December 31, 2009
OR
o TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
COMMISSION
FILE NUMBER: 814-00652
STARINVEST GROUP,
INC.
(Exact
name of registrant as specified in its charter)
Nevada
|
91-1317131
|
|
(State
of Incorporation)
|
(I.R.S.
Employer Identification Number)
|
|
3300
North A Street Suite 2-210
Midland, Texas 79705
|
||
(Address
of principal executive offices)
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||
Registrant’s
telephone number, including area code: (432) 682-8373
|
Securities
registered pursuant to Section 12(b) of the Act:
None
Securities
registered pursuant to Section 12(g) of the Act:
Title of each
class
Common
Stock, par value $0.001 per share
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes o No x
Indicate
by checkmark if the registrant is not required to file reports pursuant to
Section 13 or 15(d) of the Act.
Yes o 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 o
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
Yes o No
x
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large
Accelerated
Filer ¨
|
Accelerated
Filer ¨
|
Non-Accelerated
Filer ¨
|
Smaller
Reporting
Company x
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2)
Yes o No x
State the
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
last sold, or the average bid and asked price of such common equity, as of the
last business day of the registrant’s most recently computed second fiscal
quarter. $2,973,605 based upon $0.03 per share which was the last price at which
the common equity was sold on the Over the Counter Bulletin Board.
The
number of shares of the issuer’s common stock issued and outstanding as of March
26, 2010 was 201,620,194 shares.
Documents
Incorporated By Reference: None
FORM
10-K FOR THE FISCAL YEAR
ENDED
DECEMBER 31, 2009
TABLE
OF CONTENTS
Page
No.
|
||
PART
I
|
|
|
Item
1
|
Description
of Business
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3 |
Item
1A
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Risk
Factors
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6 |
Item
1B
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Unresolved
Staff Comments
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12 |
Item
2
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Description
of Property
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12 |
Item
3
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Legal
Proceedings
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12 |
Item
4
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Removed
and Reserved
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13 |
PART
II
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||
Item
5
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Market
for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
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13 |
Item
6
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Selected
Financial Data
|
15 |
Item
7
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
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16 |
Item
7A
|
Quantitative
and Qualitative Disclosure About Market Risk
|
21 |
Item
8
|
Financial
Statements and Supplementary Data
|
21 |
Item
9
|
Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
|
34 |
Item
9A
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Controls
and Procedures
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34 |
Item
9B
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Other
Information
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|
PART
III
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Item
10
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Directors,
Executive Officers and Corporate Governance
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36 |
Item
11
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Executive
Compensation
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38 |
Item
12
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Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
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41 |
Item
13
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Certain
Relationships and Related Transactions, and Director
Independence
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42 |
Item
14
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Principal
Accountant Fees and Services
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42 |
PART
IV
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||
Item
15
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Exhibits,
Financial Statement Schedules
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43 |
Signatures
|
44 |
2
PART
I
As used
in this Annual Report on Form 10-K (this “Report”), references to the “Company,”
the “Registrant,” “STIV,” “we,” “our” or “us” refer to StarInvest Group, Inc.,
unless the context otherwise indicates.
Forward-Looking
Statements
This
Report contains forward-looking statements. For this purpose, any
statements contained in this Report that are not statements of historical fact
may be deemed to be forward-looking statements. Forward-looking information
includes statements relating to future actions, prospective products, future
performance, or results of current or anticipated products, sales and marketing
efforts, costs and expenses, interest rates, outcome of contingencies, financial
condition, and results of operations, liquidity, business strategies, cost
savings, objectives of management, and other matters. You can identify
forward-looking statements by those that are not historical in nature,
particularly those that use terminology such as “may,” “will,” “should,”
“expects,” “anticipates,” “contemplates,” “estimates,” “believes,”
“plans,” “projected,” “predicts,” “potential,” or “continue” or the negative of
these similar terms. The Private Securities Litigation Reform Act of
1995 provides a “safe harbor” for forward-looking information to encourage
companies to provide prospective information about themselves without fear of
litigation so long as that information is identified as forward-looking and is
accompanied by meaningful cautionary statements identifying important factors
that could cause actual results to differ materially from those projected in the
information.
These
forward-looking statements are not guarantees of future performance and involve
risks, uncertainties and assumptions that we cannot predict. In evaluating these
forward-looking statements, you should consider various factors, including the
following: (a) those risks and uncertainties related to general economic
conditions, (b) whether we are able to manage our planned growth efficiently and
operate profitable operations, (c) whether we are able to generate sufficient
revenues or obtain financing to sustain and grow our operations, (d) whether we
are able to successfully fulfill our primary requirements for cash, which are
explained below under “Liquidity and Capital Resources”. We assume no
obligation to update forward-looking statements, except as otherwise required
under the applicable federal securities laws.
Overview
The
Company is focused on offering a full menu of services in the financial sector
through its subsidiaries My Transfer Agent, LLC, Stocktransfer.com,
MyTransferAgent.com, EXX.com and Todd & Co. As a result of our October 16,
2009 acquisition of EXX.COM, LLC, the Company is now forming a strategy to
expand the customer base of EXX.com into our Broker Dealer (BD Todd and Company.
The (EXX.Com) ECN platform will provide quote services, news retrieval,
charting, option chain pricing and archive all trading information, for readily
accessibility, as required by securities regulations in the financial industry.
In addition customers of our BD and EXX will have remote access to viewing and
executing orders through the EXX platform on the NYSE, OTC
markets, OTC BB , OTC Pink sheets and option markets. The EXX Customer support
desk will facilitate traditional services for clients looking for direct
assistance and offer full service to the retail audience. The institutional
application is a cost effective, compliant focused flexible system with unique
characteristics welcomed by institutional customers. EXX will aggressively
market the platform by mid 2010.
My Transfer
Agent (“MTA”) provides "turn-key" solutions of transfer agent,
legal, EDGAR and other related services to public and private companies. MTA
serves as a Transfer Agent performing the functions of original issue,
cancellation and reissuance of stock certificates and noncertificated shares.
MTA is committed to delivering a complete package of products and services
focused on today's technology but never losing sight that service is the first
priority. The strategy for MTA is to acquire smaller transfer agents, to
aggregate the customer base and introduce new technologies and services to its
customers
3
Stock Transfer.com
(“ST”) is an agent’s resource for information providing the latest
information about the stock transfer industry and providing consulting services
for public and private companies. StockTransfer.com consolidates
industry specific information to educate, inform and assist companies with
finding information about being or going public. The site is also used as a
vehicle to educate shareholders about their investments and give them access to
services and professionals who can assist them.
EXX.COM
(EXX) is a software company that provides services to Broker-Dealers, Hedge
Funds, Algorithmic Trading Firms, and high net worth
individuals. Revenues are generated by three sources; fees, rebates
and commissions. Fees include individual fees, desktop fees, database
fees, compliance fees, archiving fees, FIX connection fees, OMS fees and
professional fees. Rebates include payment by the exchanges for order
flow primarily options exchanges. Commissions include transactional fees for
trading equity and options.
EXX does
not have signed agreements in place with clients. The clients rely on
the EXX platform to provide stable and robust trading sessions. They are billed
monthly for fee’s and commissions.
EXX
operates with a support staff and a programmer support team. EXX management
continues to look for efficiencies and complementary services to increase cost
efficiencies and increase profit margins. EXX has a customer help
desk that is the first contact for our clients if they have any questions or
problems with a trade or the software. We have contract programmers and system
technicians to handle any hardware and/or connection problem that may come up
during the trading session and to support problems that the help desk needs
assistance with.
EXX is in the
business of building autonomous, efficient reliable and cost effective trading
platforms in order to achieve Straight through Processing (STP) in the financial
industry. The Company's main business is customizing proprietary
platforms from one program so STP is enabled across all the financial
networks.
Todd
& Company is a registered Broker dealer in the financial sector. StarInvest
recently closed the acquisition and acquired all of the outstanding shares of
common stock of Todd & Co. On March 17, 2010, Todd & Company received
FINRA’s approval of the firm’s 1017 applications and acceptance of StarInvest
Group Inc., as the new owner. We are currently interviewing candidates for the
positions of CEO and CCO. Once they are introduced and approved by
FINRA, Todd & Company will be able to begin operations. This may represent a
further step forward in the implementation of our long term strategy to become a
full service financial firm with 21st century technologies
creating a recurring revenue model by servicing new and existing
customers.
The
Company is also retaining a portion of its portfolio focused in a wide variety
of different sectors including but not limited to alternative resources, and
services. As of December 31, 2009, we invested approximately $649,999
in 2 companies. The Company is looking to sell non core business as
the financial sector has become our foundation to grow. The proceeds from the
asset sales will be used to reduce debt and drive growth in MTA, Todd & Co
and EXX.com.
Although
2009 has been a very challenging year for all small business, especially in the
financial sector, STIV was able to reduce cash expenditures and to address a
number of unexpected challenges. For example, shortly after the sale of EXX to
StarInvest Group, Inc, the founders Carter and Dovico resigned from their
positions. While the Company is evaluating legal remedies to recover any loss
caused by Carter and Dovico, the management was able to quickly replace them
with a new team and at the same time trim operational costs by more that 60%.
Also the vendors of EXX have been very supportive in working with the company as
it manages its cash flow.
We are a
small company with limited financial and managerial resources. In
addition to the risks and uncertainties that we face, we have an immediate need
to raise additional capital to fund our business and the plans that we have
made. We cannot assure you that we will be successful in raising any
additional capital, if we are successful in doing so, that we can do so on terms
that reasonable in light of our current circumstances.
4
History
We are a
Nevada corporation that was elected to be regulated as a business development
company under the Investment Company Act of 1940, as amended (the “1940 Act”).
The Company was a specialty investment company principally providing capital and
other assistance to start-up and micro companies. The Company focused its
portfolio in a wide variety of different sectors including but not limited to
alternative resources, technology, biotech, insurance, and
services. Our investment objective was to maximize our portfolio’s
total return by investing in the debt and/or equity securities of start-up and
micro companies. We also sought to provide our stockholders with current income
on investments in debt securities and long-term capital growth through the
appreciation in the value of warrants or other equity instruments that we may
receive when we make debt investments or equity investments.
In 2008,
the Company changed it business focus and withdrew its election to be treated as
a business development company and as a result of its withdrawal of election to
be treated as Business Development Company, the Company was no longer qualified
to be treated as a RIC. Accordingly, the Company filed the appropriate
documentation to withdraw its election to be treated as a RIC.
Currently,
we are an operating company with the ultimate goal to become a full services
financial firm providing Transfer Agent, Edgar filings services, Brokering, and
Trading Solutions to domestic and international companies.
Our
headquarter is located at 3300 North A Street, Suite 2-210, Midland, Texas 79705
and our telephone number is (432) 682-8373.
Many
transfer agents and broker/dealers have scaled back their operations or simply
closed down in response to the credit crunch and the slowdown of the economy.
Many others operate in a difficult and fragmented market and lack the necessary
size to efficiently service their clients. In addition, the current regulatory
environment favors large and established businesses forcing smaller companies to
review their structure and change their strategies.
Management
believes that all these factors will create opportunities for the Company to
acquire and or to merge with other financial services providers
given the ongoing consolidation in the
financial industry. Now more than ever it is vital for a corporation to increase
revenues while decreasing the overall operating costs. Starinvest strongly
believes that growth through acquisitions represents the best possible solution
to reach these goals and achieve profitability for its
shareholders.
Competition
My
Transfer Agent, LLC
By the
1960’s there were thousands of commercial transfer agents servicing public
companies and municipalities. Today, no more than 20 companies dominate the
business. More than 90% of all companies “outsource” the transfer agent function
to commercial transfer agents. The transfer agent business is highly
specialized. Few companies have the necessary expertise to perform the following
tasks; transferring stock, escheatment, capital structure changes, employee
stock plan and direct purchase plan administration, dividend distributions,
dividend reinvestment plan administration, proxy tabulation.
Commercial
transfer agents are regulated by the SEC. Agents also have to comply with
federal bank, postal and IRS regulations. In addition, each of the states has
different abandoned property laws. All of these agencies can fine transfer
agents that are not in compliance. Also commercial transfer agents have
specialized equipment. The cost of mailing machines, OCR readers, or software
can be spread over thousands of accounts. In-house agents may struggle to
justify some of these expenses.
Commercial
transfer agents assume liability. Commercial transfer agents for the New York
and American Stock Exchange companies have to carry transfer agent liability
insurance. Also commercial transfer agents provide expert advice providing
guidance on new regulations, direct purchase plans, industry innovations, and
know the pulse of the industry. Many agents also have a formal client
communication program including newsletters and seminars.
5
EXX.com
There are
many companies competing in this arena from small trading firms to large
companies like Goldman, Sachs and Co. Each one of them provides a
trading “engine” enabling their clients to trade fast and
efficiently. What separates EXX from the competition is the
customization capability of its software, which is designed primarily to serve
small/medium size Broker Dealers and Hedge Funds. Also, the advanced
compliance component, of the OATS reporting has been designed to provide
compliance departments the ability to review archived documents and adjust risk
management features in real-time. This is pertinent to the current
environment of increased scrutiny by the regulatory agencies on the financial
services industry.
Employees
We have
three employees that manage our day-to-day operations: Robert H. Cole
is serving as our Chief Executive Officer and Chief Financial Officer and
Cristiano Germinario is serving as the Company’s Secretary and Operations
Manager of My Transfer Agent, LLC. Leon Urbaitel is serving as the
President of Stocktransfer, LLC and My Transfer Agent, LLC.
We had
three employees that manage the day to day operations of EXX. James
Dovico served as Chief Executive Officer and Douglas Carter served as the Chief
Technological Officer and Marc Raffensperger served as Help Desk
coordinator. On December 11, 2009, James Dovico resigned as the
CFO of EXX, and on February 19, 2010 Douglas Carter resigned as the CTO of EXX
and on the same date Marc Raffensperger resigned as Help Desk coordinator. We
are currently evaluating legal remedies to recover any loss caused by Messrs.
Carter and Dovico. At the present time, Christopher Collins is serving as the
Help Desk coordinator and Stephen Bamford is serving as the CTO. We are
currently looking for a new CEO.
Compliance
Policies and Procedures. We have adopted and implemented
written policies and procedures reasonably designed to prevent violation of the
federal securities laws, and are required to review these compliance policies
and procedures annually for their adequacy and the effectiveness of their
implementation.
ITEM
1A. RISK
FACTORS
An
investment in our securities involves certain risks relating to our structure
and investment objectives. The risks set out below are not the only risks we
face, and we face other risks which are not yet predictable. If any of the
following risks occur, our business, financial condition and results of
operations could be materially adversely affected. In such case, our net asset
value and the trading price of our common stock could decline, and you may lose
all or part of your investment.
RISKS
RELATING TO OUR BUSINESS
Our
ability to continue as a “going concern” is uncertain.
Our
consolidated financial statements have been presented on the basis that we are a
going concern, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. The independent
registered public accounting firm’s report on our consolidated financial
statements as of and for the fiscal year ended December 31, 2009 includes an
explanatory paragraph that states that we have an accumulated deficit and
experienced recurring losses from operations that raise a substantial doubt
about our ability to continue as a going concern. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
We have
an accumulated deficit of $14,427,501 and $12,237,547 at December 31, 2009 and
2008, respectively. Additionally, for the years ended December 31, 2009 and
2008, we used cash in operations of $725,960 and $115,498,
respectively.
6
Our
ability to meet future cash and liquidity requirements is dependent on a variety
of factors, including our ability to raise more capital, successfully negotiate
extended payment terms with our lenders and the performance of our
investments. The presence of the going concern note may have an
adverse impact on our relationship with third parties such as potential
investors, our lenders and potential targets for investment. If we
are unable to continue as a going concern, our lenders would foreclose on their
collateral and we would have to liquidate our remaining assets, if
any. This would have a material adverse effect on your investment in
us.
We
have historically lost money and decreases may continue in the
future.
We have
historically lost money. The net loss for 2009 was approximately
$1,913,328 and we expect that future losses are likely to
occur. Accordingly, we may experience significant liquidity and cash
flow problems if we are not able to raise additional capital as needed and on
acceptable terms. No assurances can be given that we will be
successful in reaching or maintaining profitable operations.
We
need additional capital to finance operations.
Our
operations have relied almost entirely on external financing to fund our
operations. Such financing has historically come from a combination
of borrowings and from the sale of common stock and assets to third
parties. We will need to raise additional capital to fund our
anticipated operating expenses and future expansion. Among other
things, external financing will be required to cover our operating
costs. We cannot assure you that financing whether from external
sources or related parties will be available in an amount sufficient to continue
operations or on terms favorable to us. If we sell shares of our
common stock to raise capital, the equity interests of our existing shareholders
may be diluted. If we are unable to obtain adequate financing we may
have to curtail, suspend or cease business operations. Any of these
events would be materially harmful to our business and may result in a lower
stock price.
We have a
limited operating history as a transfer agent. We are subject to all of the
business risks and uncertainties associated with any new business enterprise,
including the risk that we will not achieve our targets and that the value of
your investment in us could decline substantially.
Our
officers and directors have the ability to exercise significant influence over
matters submitted for stockholder approval and their interests may differ from
other stockholders.
We have 3
shareholders that own more than a 10% interest and among them, they own
approximately 39.27% of the outstanding shares. Our directors and executive
officers directly and indirectly own in the aggregate approximately 15.63% of
our outstanding shares. Our directors and executive officers, whether acting
alone or together, may have significant influence in determining the outcome of
any corporate transaction or other matter submitted to our Board for approval,
including issuing common and preferred stock, and appointing officers, which
could have a material impact on mergers, acquisitions, consolidations and the
sale of all or substantially all of our assets, and also the power to prevent or
cause a change in control. The interests of these board members may
differ from the interests of the other stockholders.
We
may change our business objectives without shareholder approval.
We may
make acquisitions without shareholder approval and such acquisitions could
adversely affect our stock price, liquidity, and the ability of our shareholders
to sell their stock.
Our financial condition and results of
operations will depend on our ability to manage our future growth
effectively.
We have a
limited operating history. As such, we are subject to the business
risks and uncertainties associated with any new business enterprise, including
the lack of experience in managing or operating a transfer agent company. Our
ability to achieve our targets will depend on our ability to grow, which will
depend, in turn, on our ability to identify, analyze, and acquire competitors
that meet our investment criteria. Accomplishing this result on a cost-effective
basis is largely a function of our management’s structuring of the investment
process, its ability to provide competent, attentive and efficient services to
customers, and our access to financing on acceptable terms. As we grow, we will
need to hire, train, supervise and manage new employees. Failure to manage our
future growth effectively could have a material adverse effect on our business,
financial condition and results of operations.
7
We
operate in a highly competitive market for investment
opportunities.
A large
number of entities compete with us. We compete with a large number of private
and public transfer agents including financial services companies such as banks.
Many of our competitors are substantially larger and have considerably greater
financial, technical and marketing resources than we do. For example, some
competitors may have a lower cost of funds and access to funding sources that
are not available to us. There can be no assurance that the competitive
pressures we face will not have a material adverse effect on our business,
financial condition and results of operations. Also, as a result of this
competition, we may not be able to take advantage of attractive opportunities
from time to time, and we can offer no assurance that we will be able to
identify and make acquisitions that are consistent with our
strategy.
Our
business model depends upon the development of strong referral
relationships.
If we
fail to maintain our relationships with key firms, or if we fail to establish
strong referral relationships with other firms, we will not be able to grow our
business and achieve our objectives. In addition, persons with whom we have
informal relationships are not obligated to provide us with potential clients,
and therefore there is no assurance that such relationships will lead to the
origination of new revenues.
We
may not realize gains from our Current Portfolio.
We
invested in debt securities, as well as equity securities. However, the equity
interests we received may not appreciate in value and, in fact, may decline in
value. Accordingly, we may not be able to realize gains from our Current
Portfolio, and any gains that we do realize on the disposition of any equity
interests may not be sufficient to offset any other losses we
experience.
As stated
above, our current investments are not generally in publicly traded securities.
Substantially all of these securities are subject to legal and other
restrictions on resale or will otherwise be less liquid than publicly traded
securities. The illiquidity of our investments may make it difficult for us to
sell such investments if the need arises. Also, if we are required to liquidate
all or a portion of our portfolio quickly, we may realize significantly less
than the value at which we have previously recorded our investments. We expect
that our holdings of equity securities may require several years to appreciate
in value, and we can offer no assurance that such appreciation will
occur.
We
may experience fluctuations in our quarterly results.
We may
experience fluctuations in our quarterly operating results due to a number of
factors, including the rate at which we make new investments, the interest rates
payable on the debt securities we acquire, the default rate on such securities,
the level of our expenses, variations in and the timing of the recognition of
realized and unrealized gains or losses, the degree to which we encounter
competition in our markets and general economic conditions. As a result of these
factors, results for any period should not be relied upon as being indicative of
performance in future periods.
Regulations
governing our operation as a transfer agent company could affect our ability to
raise additional capital, which may expose us to risks, including the typical
risks associated with leverage.
8
We will
require a substantial amount of capital, which we may acquire from the following
sources:
Senior securities
and other indebtedness. We may issue debt securities or
preferred stock and/or borrow money from banks or other financial institutions,
which we refer to collectively as “senior securities”. If we issue
senior securities, including preferred stock and debt securities, we will be
exposed to typical risks associated with leverage, including an increased risk
of loss. If we incur leverage to make investments, a decrease in the value of
our investments would have a greater negative impact on the value of our common
stock. If we issue debt securities or preferred stock, it is likely that such
securities will be governed by an indenture or other instrument containing
covenants restricting our operating flexibility. In addition, such securities
may be rated by rating agencies, and in obtaining a rating for such securities,
we may be required to abide by operating and investment guidelines that could
further restrict our operating flexibility. Furthermore, any amounts that we use
to service our indebtedness would not be available for distributions to our
common stockholders.
Common
stock. We may sell the
Company’s common stock, warrants,
options or rights to acquire common stock, at a price below the then-current net
asset value of our common stock if our Board of Directors determines that such
sale is in our best interest and that of our stockholders, and our stockholders
approve such sale. If we raise additional funds by issuing more common stock or
senior securities convertible into, or exchangeable for, our common stock, the
percentage ownership of our stockholders at that time would decrease and they
may experience dilution. Moreover, we
can offer no assurance that we will be able to issue and sell additional equity
securities in the future on favorable
terms or at all.
A
change in interest rates may adversely affect our profitability.
A portion
of our income will depend upon the difference between the rate at which we
borrow funds (if we do borrow) and the interest rate on the debt securities in
which we invested. Some of our investments in debt securities are at
fixed rates and others at variable rates. We may, but will not be required to,
hedge against interest rate fluctuations by using standard hedging instruments
such as futures, options and forward contracts, subject to applicable legal
requirements. These activities may limit our ability to participate in the
benefits of lower interest rates with respect to the hedged portfolio. Adverse
developments resulting from changes in
interest rates or hedging transactions could have a material adverse effect on
our business, financial condition and results of operations. Also, we have
limited experience in entering into hedging transactions, and we will initially
have to purchase or develop such expertise.
Provisions of the Nevada General
Corporation Law and of our charter and bylaws could deter takeover attempts and
have an adverse impact on the price of our common stock.
Our
charter and bylaws, as well as certain statutory and regulatory requirements,
contain certain provisions that may have the effect of discouraging a third
party from making an acquisition proposal for us. These anti-takeover provisions
may inhibit a change of control in circumstances that could give the holders of
our common stock the opportunity to realize a premium over the market price for
our common stock.
Start-up
and micro companies are subject to many risks, including volatility, intense
competition, decreasing life cycles and periodic downturns.
Prior to
the withdraw to be treated as a business development company; we invested in
small and micro companies, some of which may have relatively short operating
histories. The revenues, income (or losses) and valuations of start-up and micro
companies can and often do fluctuate suddenly and dramatically.
9
Elections
to not make follow-on investments in our portfolio companies could impair the
value of our portfolio.
Following
an initial investment in a portfolio company, we may make additional investments
in that portfolio company as “follow-on” investments, in order to: (1) increase
or maintain in whole or in part our equity ownership percentage; (2) exercise
warrants, options or convertible securities that were acquired in the original
or subsequent financing; or (3) attempt to preserve or enhance the value of our
investment. We may elect not to make follow-on investments or otherwise lack
sufficient funds to make those investments. We have the discretion to make any
follow-on investments, subject to the availability of capital resources. The
failure to make follow-on investments may, in some circumstances, jeopardize the
continued viability of a portfolio company and our initial investment, or may
result in a missed opportunity for us to increase our participation in a
successful operation. Even if we have sufficient capital to make a desired
follow-on investment, we may elect not to make a follow-on investment because we
may not want to increase our concentration of risk, because we prefer other
opportunities, or because we are inhibited by compliance with business
development company requirements or the desire to maintain our tax
status.
Because we generally do not hold
controlling equity interests in our portfolio companies, we may not be in a
position to exercise control over our portfolio companies or to prevent
decisions by management of our portfolio companies that could decrease the value
of our investments.
Although
we may do so in the future, to date we have generally not taken controlling
equity positions in our portfolio companies. As a result, we are subject to the
risk that a portfolio company may make business decisions with which we
disagree, and the stockholders and management of a portfolio company may take
risks or otherwise act in ways that are adverse to our interests. Due to the
lack of liquidity for the debt and equity investments that we typically hold in
our portfolio companies, we may not be able to dispose of our investments in the
event we disagree with the actions of a portfolio company, and may therefore
suffer a decrease in the value of our investments.
RISKS
RELATED TO AN INVESTMENT IN OUR COMMON STOCK
Our
common stock price may be volatile.
The
trading price of our common stock may fluctuate substantially. Many factors
relating to the price of our common stock are beyond our control and may not be
directly related to our operating performance. These factors include, but are
not limited to, the following:
·
|
price
and volume fluctuations in the overall stock market from time to
time;
|
·
|
significant
volatility in the market price and trading volume of securities of
regulated investment companies, business development companies or other
financial services companies;
|
·
|
actual
or anticipated changes in our earnings or fluctuations in our operating
results or changes in the expectations of securities
analysts;
|
·
|
general
economic conditions and trends;
|
·
|
loss
of a major funding source; or
|
·
|
departures
of key personnel.
|
10
In the
past, following periods of volatility in the market price of a company’s
securities, securities class action litigation has often been brought against
that company. Due to the potential volatility of our stock price, we may
therefore be the target of securities litigation in the future. Securities
litigation could result in substantial costs and divert management’s attention
and resources from our business.
There
is a risk that you may not receive dividends or that our dividends may not grow
over time.
We cannot
assure you that we will achieve our targets that will allow any specified level
of cash distributions or year-to-year increases in cash
distributions.
Our common stock is deemed to be a
“penny stock,” which may make it more difficult for you to sell your
shares.
Our
common stock is deemed to be “penny stock” as that term is defined and
promulgated under the Securities Exchange Act of 1934. These requirements may
reduce the potential market for the common stock by reducing the number of
potential investors. For example many mutual funds and other institutional
investors are prohibited from investing in “penny stocks.” This may make it more
difficult for investors of the common stock to sell shares to third parties or
to otherwise dispose of them. This could cause our stock price to decline. Penny
stocks are stock with a price of less than $5.00 per share.
Broker/dealers
dealing in penny stocks are required to provide potential investors with a
document disclosing the risks of penny stocks. Moreover, broker/dealers are
required to determine whether an investment in a penny stock is a suitable
investment for a prospective investor.
Our
common stock may be affected by limited trading volume and may fluctuate
significantly.
There has
been a limited public market for our common stock and there can be no assurance
that an active trading market for our common stock will develop. As a
result, this could adversely affect our shareholders’ ability to sell our common
stock in short time periods, or possibly at all. Our common stock has
experienced, and is likely to experience in the future, significant price and
volume fluctuations that could adversely affect the market price of our common
stock without regard to our operating performance. In addition, we
believe that factors such as quarterly fluctuations in our financial results and
changes in the overall economy or the condition of the financial markets could
cause the price of our common stock to fluctuate substantially. Substantial
fluctuations in our stock price could significantly reduce the price of our
stock.
Our
common stock is traded on the “Over-the-Counter Bulletin Board,” which may make
it more difficult for you to resell your shares due to suitability
requirements.
Our
common stock is currently traded on the Over the Counter Bulletin Board (OTCBB)
where we expect it to remain for the foreseeable future. Broker-dealers often
decline to trade in OTCBB stocks given that the market for such securities is
often limited, the stocks are more volatile, and the risks to investors are
greater. These factors may reduce the potential market for our common
stock by reducing the number of potential investors. This may make it more
difficult for investors in our common stock to sell shares to third parties or
to otherwise dispose of them. This could cause our stock price to
decline.
Future
developments may cause our stock to be no longer traded on the
OTCBB.
Future
developments, such as a loss of assets, insolvency, or an inability to comply
with certain regulatory requirements, may cause our stock to be no longer listed
on the OTCBB, which may make it more difficult to sell your stock or may affect
the price at which you may be able to sell your stock.
11
Changes
in the law or regulations that govern us could have a material effect on us or
our operations.
We are
regulated by the SEC. In addition, changes in the laws or regulations
that govern transfer agents may significantly affect our
business. Any change in the law or regulations that govern our
business could have a material effect on us or our operations. Laws
and regulations may be changed from time to time, and the interpretations of the
relevant laws and regulations also are subject to change, which may have a
material effect on our operations.
The
market for our stock is limited and our stock price may be
volatile.
The
market for our common stock has been limited due to low trading volume and the
small number of brokerage firms acting as market makers. Because of the
limitations of our market and volatility of the market price of our stock you
may face difficulties in selling shares at attractive prices. The average daily
trading volume for our stock has varied significantly from week to week and from
month to month, and the trading volume often varies widely from day to
day.
We
may incur significant expenses as a result of being quoted on the OTCBB, which
may negatively impact our financial performance.
We may
incur significant legal, accounting and other expenses as a result of being
listed on the OTCBB. The Sarbanes-Oxley Act of 2002, as well as related rules
implemented by the Commission has required changes in corporate governance
practices of public companies. We expect that compliance with these laws, rules
and regulations, including compliance with Section 404 of the Sarbanes-Oxley Act
of 2002 as discussed in the following risk factor, may substantially increase
our expenses, including our legal and accounting costs, and make some activities
more time-consuming and costly. As a result, there may be a substantial increase
in legal, accounting and certain other expenses in the future, which would
negatively impact our financial performance and could have a material adverse
effect on our results of operations and financial condition.
ITEM
1B. UNRESOLVED STAFF COMMENTS
None
We do not
own any real estate or other physical properties materially important to our
operation. Since March 2006, our principal executive offices have been located
to 3300 North A Street Suite 2-210, which are being provided by our CEO/CFO,
Robert Cole, free of charge, on a month to month basis. Management
believes that our office in Texas is adequate for our operation
s as presently conducted. EXX
is currently located at 600 Old Country Road, Suite 318, Garden City,
NY. MTA is currently located at 117 Randolph, Jersey City,
NJ.
ITEM
3. LEGAL PROCEEDINGS
There are
no other pending legal proceedings to which the Company is a party or in which
any director, officer or affiliate of the Company, any owner of record or
beneficially of more than 5% of any class of voting securities of the Company,
or security holder is a party adverse to the Company or has a material interest
adverse to the Company. From time to time, we may be a party to certain legal
proceedings in the ordinary course of business, including proceedings relating
to the enforcement of our rights under contracts with our portfolio companies.
While the outcome of these legal proceedings cannot be predicted with certainty,
we do not expect that these proceedings will have a material effect upon our
financial condition or results of operations.
12
ITEM 5. MARKET FOR
REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
Our
common stock is listed on the OTCBB under the symbol
“STIV.” Following is the range of high and low sales prices on the
OTCBB for the common stock for the periods indicated. This chart was based on
information obtained from the OTCBB.
|
High
|
|
Low
|
|
|||
Calendar
Year 2009
|
|
|
|
||||
First
Quarter
|
|
$
|
0.07
|
|
$
|
0.01
|
|
Second
Quarter
|
|
$
|
0.07
|
|
$
|
0.01
|
|
Third
Quarter
|
|
$
|
0.03
|
|
$
|
0.01
|
|
Fourth
Quarter
|
|
$
|
0.03
|
|
$
|
0.01
|
|
Calendar
Year 2008
|
|
|
|
|
|
||
First
Quarter
|
|
$
|
0.05
|
|
$
|
0.03
|
|
Second
Quarter
|
|
$
|
0.09
|
|
$
|
0.01
|
|
Third
Quarter
|
|
$
|
0.06
|
|
$
|
0.01
|
|
Fourth
Quarter
|
|
$
|
0.03
|
|
$
|
0.01
|
|
The last
reported price for our common stock on March 31, 2010 was $0.02 per
share.
Holders
As of
March 31, 2010, we had approximately 700 shareholders of record.
Dividends
We have
not paid cash dividends on our common stock and we do not plan to pay cash
dividends in the foreseeable future.
13
Recent
Sales of Unregistered Securities
On
December 28, 2009 the Company issued 10,000,000 restricted common shares in
relation to the $140,214.92 secured promissory note dated December 16, 2009
between the Company and Reese-Cole Partnership, Ltd. Under the terms of the
secured note the Company agreed to issue 10,000,000 restricted common shares to
Reese-Cole Partnership, Ltd as inducement to the lender to grant the loan. The
transaction is exempt from registration pursuant to an exemption from
registration provided by Section 4(2) of the Securities Act of 1933, as amended.
The proceeds were used for working capital purposes.
As of
December 28, 2009 a total of $57,000, was due and payable to R & J Cole,
Inc. for Mr. Cole’s services as CEO/CFO. Mr. Cole agreed to accept
6,500,000 restricted common shares in lieu of $52,000 of the $57,000 which was
owed and the stock was registered under the name of R & J Cole, Inc. The
transaction is exempt from registration pursuant to an exemption from
registration provided by Section 4(2) of the Securities Act of 1933, as
amended.
On
December 09, 2009 the Company issued a total of 625,000 restricted common shares
of the Company as stock compensation to its employees and consultants. The
transaction is exempt from registration pursuant to an exemption from
registration provided by Section 4(2) of the Securities Act of 1933, as
amended.
On
November 04, 2009 the Company agreed to acquire all of the outstanding capital
stock of Todd & Co., a broker/dealer located in Hasbrouck Height, New Jersey
for $100,000 convertible note convertible into 3,333,333 restricted common
shares of the Company. The transaction is exempt from registration pursuant to
an exemption from registration provided by Section 4(2) of the Securities Act of
1933, as amended.
On
October 28, 2009 the Company issued 11,641,096 restricted common shares in
relation to the conversion of the defaulted $775,000 note dated March 12, 2006.
As of October 28, 2009 a total of $321,108, was due and payable. The Noteholders
agreed to convert such amount into 11,641,096 restricted common shares of the
Company. The transaction is exempt from registration pursuant to an exemption
from registration provided by Section 4(2) of the Securities Act of 1933, as
amended.
On
October 09, 2009 the Company issued 82,000,000 restricted common shares in
relation to its acquisition of EXX.com. Of the 82,000,000 shares, 41,000,000
shares of common stock were issued to James Dovico, and the remaining balance of
41,000,000 shares of common stock were issued to Douglas Carter. The transaction
is exempt from registration pursuant to an exemption from registration provided
by Section 4(2) of the Securities Act of 1933, as amended.
14
Issuer
Purchases of Equity Securities
We have
not repurchased any shares of our common stock during the fiscal year ended
December 31, 2009.
Securities
authorized for issuance under equity compensation plans.
On
December 10, 2009 the Company issued as compensation a total of 625,000
restricted common shares with a market valued of approximately $6,250 to Tim
Keyes (100,000), Leon Urbaitel, (100,000), Mark Raffensperger (50,000), Chris
Collins (100,000), Chris Griffin (100,000), Manu Kalia (25,000) and Cristiano
Germinario (150,000) for their services as Directors of the
Company.
ITEM
6. SELECTED FINANCIAL DATA
The following selected
financial data for the each of the last five fiscal years for the Company is
derived from our financial statements which have been audited by Larry
O’Donnell, CPA, our independent registered public accounting firm. The data
should be read in conjunction with our financial statements and related notes
thereto and “Management’s Discussion and Analysis of Financial Condition and
Results of Operations” included elsewhere in this report.
Statement of
Operations
Year
Ended December 31,
|
||||||||||||||||||||
Statement of Operations
|
2009
|
2008
|
2007
|
2006
|
2005
|
|||||||||||||||
|
|
|
|
|
|
|||||||||||||||
|
|
|
|
|
||||||||||||||||
Total
Income
|
954,410 | 133,686 | 186,934 | 86,707 | 41,931 | |||||||||||||||
Selling,
administrative and
general
& stock based expenses
|
1,489,763 | 338,583 | 148,585 | 241,134 | 865,829 | |||||||||||||||
Net
income (loss) before other income (expense)
|
(1,340,988 | ) | (204,897 | ) | 38,349 | (154,427 | ) | (823,898 | ) | |||||||||||
|
||||||||||||||||||||
Interest
expense
|
50,519 | 52,510 | 76,697 | 51,532 | 22,362 | |||||||||||||||
Net
realized unrealized gain (loss)/(Other expense)
|
(572,340 | ) | (476,234 | ) | (25,127 | ) | (868,480 | ) | 219,503 | |||||||||||
Net
income (loss)
|
$ | (1,913,328 | ) | $ | (681,131 | ) | $ | 13,222 | $ | (1,022,907 | ) | $ | (626,757 | ) | ||||||
|
||||||||||||||||||||
EARNINGS
PER COMMON SHARE:
|
||||||||||||||||||||
|
||||||||||||||||||||
Basic
& diluted income (loss) per common share
|
$ | (0.02 | ) | $ | (0.01 | ) | $ | 0.00 | $ | (0.04 | ) | $ | (0.03 | ) | ||||||
|
15
Balance
Sheet
|
December
31,
|
|||||||||||||||||||
Balance Sheet
|
2009
|
2008
|
2007
|
2006
|
2005
|
|||||||||||||||
|
|
|
|
|
|
|||||||||||||||
Working
capital
|
$ | (1,624,414 | ) | $ | (336,326 | ) | $ | (527,692 | ) | $ | (1,257,206 | ) | $ | (827,045 | ) | |||||
|
||||||||||||||||||||
Total
assets
|
$ | 3,752,867 | $ | 1,482,822 | $ | 2,155,537 | $ | 1,734,537 | $ | 2,697,660 | ||||||||||
|
||||||||||||||||||||
Long-term
debt, capital leases and due to officer
|
$ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
|
||||||||||||||||||||
Shareholders’
Equity (Deficit)
|
$ | 1,909,698 | $ | 1,097,160 | $ | 1,541,904 | $ | 335,450 | $ | 1,825,465 |
ITEM
7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Certain
statements contained in this Annual Report, including statements regarding the
anticipated development and expansion of our business, our intent, belief or
current expectations, primarily with respect to the future operating performance
of the Company and the services we expect to offer and other statements
contained herein regarding matters that are not historical facts, are
“forward-looking” statements. Future filings with the Securities and Exchange
Commission, future press releases and future oral or written statements made by
us or with our approval, which are not statements of historical fact, may
contain forward-looking statements, because such statements include risks and
uncertainties, actual results may differ materially from those expressed or
implied by such forward-looking statements.
All
forward-looking statements speak only as of the date on which they are made. We
undertake no obligation to update such statements to reflect events that occur
or circumstances that exist after the date on which they are made. The following
analysis of our financial condition and results of operations should be read in
conjunction with our financial statements and the related notes thereto
contained elsewhere in this Annual Report.
Our
primarily objective will be to operate and expand internally our transfer agent
business. Also we will look to expand our business through acquisitions and/or
mergers of our operating subsidiaries My Transfer Agent, LLC and Stocktransfer,
LLC with current competitors. We will seek to acquire transfer agents that have
been operating for at least one year prior to the date of our acquisition and at
the time of our investment have employees, revenues and preferably positive cash
flow.
Our
secondary objective will be to liquidate our current portfolio maximizing the
value for our shareholders. As stated above, our current investments are not
generally in publicly traded securities. Substantially all of these securities
are subject to legal and other restrictions on resale or will otherwise be less
liquid than publicly traded securities. The illiquidity of our investments may
make it difficult for us to sell such investments if the need arises. Also, if
we are required to liquidate all or a portion of our portfolio quickly, we may
realize significantly less than the value at which we have previously recorded
our investments. We expect that our holdings of equity securities may require
several years to be fully liquidated and we can offer no assurance that such
liquidation will occur.
16
To the
extent possible, our loans are collateralized by a security interest in the
borrower’s assets or guaranteed by a principal to the transaction. Interest
payments, if not deferred, are normally payable quarterly.
Investment
|
Cost
|
|
Crownbutte
Wind Power, Inc
|
Common
Stock
|
$199,999
|
Western
Roses Memorial Park, Inc
|
Secured
Loan
|
$450,000
|
Total
|
$649,999
|
Health
Rush, Inc and Strasbourger Pearson Tulcin Wolff, Inc were written off at the end
of the fiscal quarter ending December 31, 2009. Currently Health
Rush’s management is seeking funding to roll out the strategy in the North East
US market. StarInvest’s management has decided to write down the value of
Health Rush to zero to be conservative on its portfolio valuations. If the
situation should change management will re-adjust Health Rush’s
valuation.
Strasbourger
Pearson Tulcin Wolff Inc (SPTW) withdrew its registration as a Broker Dealer in
July 2009. With the financial markets challenges and erosion of credit
facilities the capital requirement forced the firm to withdraw its registration.
Currently, the firm is inactive; therefore management has decided to write
down the value of SPTW to zero to be conservative on its portfolio valuations.
If the situation should change management will re-adjust SPTW’s
valuation.
Critical
Accounting Policies
The
preparation of financial statements and related disclosures in conformity with
generally accepted accounting principles in the United States requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities, disclosure of contingent assets and liabilities at the
date of the financial statements, and revenues and expenses during the periods
reported. Actual results could materially differ from those estimates. We have
identified our investment valuation policy as a critical accounting
policy.
Investment
Valuation
The most
significant estimate inherent in the preparation of our financial statements is
the valuation of investments and the related amounts of unrealized appreciation
and depreciation of investments recorded. We value our investment portfolio each
quarter. For investments in which there is no readily available, reliable market
information, the Company utilized the “fair value method” for ascribing
value. This valuation method has members of our portfolio management
team provide information to our Board of Directors on each portfolio company
including the most recent financial statements and forecasts, if
any. The Board of Directors then uses the information provided by the
portfolio management team in its determination of the final fair value of
investments, as noted in the Schedule of Investments.
The Board
of Directors’ final determination of fair value is based on some or all of the
following factors, as applicable, and any other factors considered
relevant:
17
·
|
the
nature of any restrictions on the disposition of the
securities;
|
·
|
assessment
of the general liquidity/illiquidity of the
securities;
|
·
|
the
issuer’s financial condition, including its ability to make payments and
its earnings and discounted cash
flow;
|
·
|
the
markets in which the issuer does
business;
|
·
|
the
cost of the investment;
|
·
|
the
size of the holding and the capitalization of
issuer;
|
·
|
the
nature and value of any collateral;
|
·
|
the
prices of any recent transactions or bids/offers for the securities or
similar securities or any comparable securities that are publicly
traded;
|
·
|
any
available analyst, media or other reports or information deemed reliable
by the independent valuation firm regarding the issuer or the markets or
industry in which it operates;
|
·
|
certified
appraisal reports
|
·
|
past
experience with the valuation of the securities;
and
|
·
|
the
sensitivity of the securities to fluctuations in interest
rates.
|
·
|
private
placements and restricted securities that do not have an active trading
market;
|
·
|
securities
whose trading has been suspended or for which market quotes are no longer
available;
|
·
|
debt
securities that have recently gone into default and for which there is no
current market;
|
·
|
securities
whose prices are stale; and
|
·
|
securities
affected by significant events.
|
Due to
the uncertainty inherent in the valuation process, such estimates of fair value
may differ significantly from the values that would have resulted had a readily
available market for the securities existed, and the differences could be
material. Additionally, changes in the market environment and other events that
may occur over the life of the investments may cause the amount ultimately
realized on these investments to be different than the valuation currently
assigned.
Interest Income
Recognition
Interest
income is recorded on the accrual basis to the extent that such amounts are
expected to be collected.
Year
ended December 31, 2009 compared to year ended December 31, 2008
18
Income
For the
year ended, December 31, 2009 gross revenue totaled $954,410 as compared to
$133,686 for the year ended December 31, 2008. During the past year
the Company has shifted its focus from a business development company to
becoming a transfer agent and a software provider for Broker-Dealers, Hedge
Funds, Algorithmic Trading Firms, and high net worth individuals. As
such, its operations now consist of managing the day by day operations of two
subsidiaries, as well as, liquidating our current portfolio. Future
revenues are expected to be generated by our subsidiaries as well as from the
liquidation of our current portfolio.
Expenses
For the
year ended December 31, 2009, expenses totaled $1,489,763 as compared to
$338,583 for the year ended December 31, 2008. The increase was a
result of the purchase of EXX.com in 2009.
Net Income (Loss) before
other income (expenses)
The
company’s net loss before other income (expenses) totaled $1,340,988 as compared
to a loss of $204,897, respectively for the years ended December 31, 2009 and
2008. This increase to the loss is primarily due to the purchase of
EXX.com.
Net Realized
Gains/Losses
The
Company had net realized gain for the year ended December 31, 2009 of $9,399 as
compared to a gain of $50,349 in 2008. The Company sold some
performing investments in both 2009 and 2008 that created the realized
gain.
Net Unrealized Depreciation
on Investments
Net
unrealized losses were $581,739 for the year ended December 31, 2009 as compared
to losses of $526,583 for the year ended December 31, 2008, primarily as a
result of decreases in the value of the Company’s portfolio
investments.
Year
ended December 31, 2008 compared to year ended December 31, 2007
Income
Income
for the years ended December 31, 2008 and 2007 were $133,686 and $186,934,
respectively. During 2007 the Company shifted its focus to becoming
an investment company. As such, its operations consisted of making
investments in small, developing businesses. In 2008, the Company
renounced its existence as an investment company. Future revenues are
expected to be generated through our subsidiaries and the liquidation of our
investments.
Expenses
For the
year ended December 31, 2008, general and administrative expenses were $120,560
as compared to $243,776 for the year ended December 31, 2007, a decrease of
51%. The decrease was a result of decreased operating expenses due to
the reorganization of the Company's operations in 2008.
19
Net Income (Loss) before
other income (expense)
The
Company’s net loss before other income (expense) totaled $204,897 for the year
ended December 31, 2008. This compared to net income before other
income (expense) of $38,349 for the year ended December 31,
2007. This income in 2007 was primarily due to the extraordinary
income caused by the write down of accounts payable.
Net Unrealized Depreciation
on Investments
Net
unrealized losses were $526,583 in the year ended December 31, 2008 as compared
to an unrealized loss of $250,554 for the year ended December 31, 2007,
primarily as a result of the write down of company investments in both 2008 and
2007.
During
the fiscal year ended December 31, 2009, the Company funded its requirements for
working capital primarily through the sale of investments and convertible
loans.
For the
year ended December 31, 2009, net cash used in operating activities was
$725,960, which was primarily attributable to a net loss of $1,913,328 and a net
change in unrealized depreciation of $581,739, along with an increase in
accounts payable and accrued expenses of $652,652. This compares to
net cash used in operating activities of $115,498 for the year ended December
31, 2008. The primary difference was the increase in accounts payable
and accrued expenses along with the net loss from its subsidiary EXX.com in
2009.
Net cash
used by investing activities was $35,304 for the year ended December 31, 2009 as
compared to net cash received from investments of $272,353 for the year ended
December 31, 2008.
For the
year ended December 31, 2009, net cash provided by financing activities was
$764,855 which was attributable to proceeds from convertible
loans. This compares to $202,127 used by financing activities in
2008.
The
Company anticipates a significant increase in capital expenditures subject to
obtaining additional financing, of which there can be no
assurance. The Company’s capital requirements depend on numerous
factors, including market acceptance of the Company’s investment ability to
obtain additional financing, technological developments, capital expenditures
and other factors. The Company has an immediate need for additional financing to
continue operations. The Company is seeking to obtain additional
capital through the sale of its securities and loans. If the Company
does not receive additional financing, the Company will be required to cease
operations. If the Company obtains additional financing, of which there can be
no assurance, the Company may sell its equity securities. The sale of
additional equity or convertible debt securities could result in additional
dilution to stockholders. There can be no assurance that financing will be
available in the required amounts or on terms acceptable to the Company, if
at all.
Going
Concern Consideration
The
Company has an accumulated deficit of $14,427,501 at December 31,
2009. Additionally, for the year ended December 31, 2009, the Company
had net cash used by operating activities of $725,960. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
Management
is taking steps to address this situation by implementing its new business plan
and by working on the marketing of its subsidiaries My Transfer Agent, LLC and
EXX.com and liquidating its current investment holdings as soon as
practicable.
20
Management
expects operations to generate negative cash flow at least through December 2010
and the Company does not have existing capital resources or credit lines
available that are sufficient to fund operations and capital requirements as
presently planned over the next twelve months. The ability of the
Company to continue as a going concern is dependent on the Company’s ability to
further implement its business plan. The consolidated financial
statements do not include any adjustments that might be necessary if the Company
is unable to continue as a going concern. Management believes that
the actions presently being taken to further implement its business plan and
generate additional revenues provide the opportunity for the Company to continue
as a going concern. Management intends to attempt to raise additional
funds by way of a public or private offering. While the Company
believes in its ability to raise additional funds, there can be no assurances to
that effect.
Off-Balance
Sheet Arrangements
At
December 31, 2009, the Company did not have any off-balance sheet liabilities or
other contractual obligations that are reasonably likely to have a current or
future material effect on our financial condition.
ITEM
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET
RISK
A smaller
reporting company is not required to provide the information required by this
Item.
Page
|
|
Report
of Independent Registered Public Accounting Firm
|
|
Balance
Sheet for the years ending December 31, 2009 and December 31,
2008
|
|
Statements
of Operations for the year ending December 31, 2009, 2008 and
2007,
|
|
Statement
of Cash Flows for the year ending December 31, 2009, 2008 and
2007
|
|
Statement
of Stockholders' Equity for the year ending December 31,
2009
|
|
Notes
to Financial Statements
|
21
Larry
O'Donnell, CPA, P.C.
Telephone
(303)
745-4545 2228
South Fraser Street
Fax (303)
369-9384 Unit
I
Email
larryodonnellcpa@msn.com Aurora,
Colorado 80014
www.larryodonnellcpa.com
Report
of Independent Registered Public Accounting Firm
To the
Board of Directors
StarInvest
Group, Inc.
Midland,
Texas
I have
audited the accompanying balance sheets of StarInvest Group, Inc. including the
schedule of investments as of December 31, 2009 and 2008, and the related
statements of operations, stockholders’equity and cash flows for the years ended
December 31, 2009, 2008 and 2007. These financial statements are the
responsibility of the Company's management. My responsibility is to express an
opinion on these financial statements based on my audits.
I
conducted my audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require
that I 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 was I engaged to perform, an audit of its
internal control over financial reporting. My audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company’s internal control
over financial reporting. Accordingly, I express no such opinion. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. I believe that my audits provide a reasonable basis for
my opinion.
In my
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of StarInvest Group, Inc. as of
December 31, 2009 and 2008, and the results of its operations and cash flows for
the years ended December 31, 2009, 2008 and 2007 in conformity with accounting
principles generally accepted in the United States of America.
The
accompanying consolidated financial statements have been presented on the basis
that it is a going concern, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. The Company has an
accumulated deficit of $14,427,501 at December 31, 2009. Additionally, for the
year ended December 31, 2009, the Company incurred a net loss of $1,913,328.
These matters raise substantial doubt about the Company's ability to continue as
a going concern. Management's plans in regards to these matters are also
described in Note 2. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
Larry
O’Donnell, CPA, P.C.
March 30,
2010
22
STARINVEST
GROUP, INC.
|
||||||||
BALANCE
SHEET
|
||||||||
AS
OF DECEMBER 31, 2009 & 2008
|
||||||||
2009
|
2008
|
|||||||
ASSETS
|
(audited)
|
(audited)
|
||||||
Current
Assets
|
||||||||
Cash
|
$ | 11,527 | $ | 7,936 | ||||
Receivable,
deposits and other
|
179,476 | 1,553 | ||||||
Total
current assets
|
191,003 | 9,489 | ||||||
Computers
and software (net)
|
150,809 | 14,847 | ||||||
Investments
and loans (cost of $649,999 & $1,297,970)
|
721,630 | 1,282,525 | ||||||
Website
and other assets (net)
|
619,415 | 111,361 | ||||||
Goodwill
|
2,070,010 | 64,600 | ||||||
Total
assets
|
$ | 3,752,867 | $ | 1,482,822 | ||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
Current
liabilities
|
||||||||
Accounts
payable and accrued expenses
|
$ | 671,891 | $ | 19,239 | ||||
Loans
payable
|
1,143,526 | 341,423 | ||||||
Total
current liabilities
|
1,815,417 | 360,662 | ||||||
Long
term liabilities
|
27,752 | 25,000 | ||||||
Stockholders'
equity
|
||||||||
Common
stock, $.001 par value, 900,000,000 shares
|
||||||||
authorized;
201,620,200 and 91,875,714 shares issued
|
||||||||
and
outstanding, respectively
|
201,620 | 91,876 | ||||||
Additional
paid-in-capital
|
16,135,579 | 13,242,831 | ||||||
Treasury
stock
|
- | - | ||||||
Accumulated
deficit
|
(14,427,501 | ) | (12,237,547 | ) | ||||
Total
stockholders' equity
|
1,909,698 | 1,097,160 | ||||||
Total
liabilities and stockholders' equity
|
$ | 3,752,867 | $ | 1,482,822 |
23
STARINVEST
GROUP, INC.
|
||||||||||||
STATEMENT
OF OPERATIONS
|
||||||||||||
FOR
THE YEARS ENDED DECEMBER 31,
|
||||||||||||
2009
|
2008
|
2007
|
||||||||||
Operations:
|
||||||||||||
Total
Revenue
|
$ | 954,410 | $ | 133,686 | $ | 186,934 | ||||||
Cost
of sales
|
805,635 | - | - | |||||||||
Gross
profit
|
148,775 | 133,686 | 186,934 | |||||||||
Expenses:
|
||||||||||||
General
and administrative
|
1,316,196 | 120,560 | 243,776 | |||||||||
Professional
Fees
|
123,048 | 223,186 | 92,256 | |||||||||
Other
(Income) expense
|
- | (57,673 | ) | (264,144 | ) | |||||||
Interest
Expense
|
50,519 | 52,510 | 76,697 | |||||||||
Total
expenses
|
1,489,763 | 338,583 | 148,585 | |||||||||
Net
Income (Loss) before other income (expenses)
|
(1,340,988 | ) | (204,897 | ) | 38,349 | |||||||
Net
Realized and Unrealized Gains (Losses):
|
||||||||||||
Net
realized gains (losses)
|
9,399 | 50,349 | 225,427 | |||||||||
Net
change in unrealized depreciation
|
(581,739 | ) | (526,583 | ) | (250,554 | ) | ||||||
Total
net realized and unrealized losses
|
(572,340 | ) | (476,234 | ) | (25,127 | ) | ||||||
Net
income (loss)
|
$ | (1,913,328 | ) | $ | (681,131 | ) | $ | 13,222 | ||||
Basic
& diluted earnings (loss) per common share
|
$ | (0.02 | ) | $ | (0.01 | ) | $ | 0.00 | ||||
Weighted
average shares outstanding - basic & diluted
|
110,665,532 | 72,408,306 | 52,707,483 |
24
STARINVEST
GROUP, INC.
|
||||||||||||
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
||||||||||||
FOR
THE YEARS ENDED DECEMBER 31,
|
||||||||||||
2009
|
2008
|
2007
|
||||||||||
Cash
flows from operating activities:
|
||||||||||||
Net
income (loss)
|
$ | (1,913,328 | ) | $ | (681,131 | ) | $ | 13,222 | ||||
Adjustments
to reconcile net loss to net
|
||||||||||||
cash
used in operating activities:
|
||||||||||||
Depreciation
and amortization
|
67,131 | 2,777 | - | |||||||||
Net
unrealized loss in investments
|
581,739 | 526,583 | 250,554 | |||||||||
Interest
expense
|
50,519 | 45,000 | 76,697 | |||||||||
Consulting
income
|
- | - | (35,000 | ) | ||||||||
Non-cash
professional fees
|
6,250 | 72,000 | - | |||||||||
Interest
income
|
(45,000 | ) | (60,851 | ) | (151,934 | ) | ||||||
Extraordinary
income
|
- | (57,673 | ) | (264,144 | ) | |||||||
(Increase)
decrease in receivable
|
(177,923 | ) | 6,182 | 100,000 | ||||||||
Changes
in assets and liabilities
|
||||||||||||
(Increase)
decrease in assets:
|
||||||||||||
Other
investments
|
- | - | (24,491 | ) | ||||||||
Increase
(decrease) in liabilities:
|
||||||||||||
Non-cash
decrease in accounts payable
|
52,000 | 57,673 | 264,144 | |||||||||
Accounts
payable and accrued expenses
|
652,652 | (26,058 | ) | (259,207 | ) | |||||||
Total
adjustments
|
1,187,368 | 565,633 | (43,381 | ) | ||||||||
Net
cash used in operating activities
|
(725,960 | ) | (115,498 | ) | (30,159 | ) | ||||||
Cash
flows used by investing activities
|
||||||||||||
Net
cash (paid for) received from investments
|
(35,304 | ) | 272,353 | (600,000 | ) | |||||||
Cash
flows from financing activities
|
||||||||||||
Net
proceeds from (repayments) of loans
|
764,855 | (201,913 | ) | (526,247 | ) | |||||||
Debt
converted to shares
|
- | - | 266,633 | |||||||||
Payment
to repurchase shares
|
- | (214 | ) | - | ||||||||
Proceeds
from issuance of common stock
|
- | - | 926,600 | |||||||||
Net
cash provided by (used in) financing activities
|
764,855 | (202,127 | ) | 666,986 | ||||||||
Net
increase (decrease) in cash
|
3,591 | (45,272 | ) | 36,827 | ||||||||
Cash,
beginning of period
|
7,936 | 53,208 | 16,381 | |||||||||
Cash,
end of period
|
11,527 | 7,936 | 53,208 |
25
STARINVEST
GROUP, INC.
|
||||||||||
STOCKHOLDERS'
EQUITY
|
||||||||||
AS
OF DECEMBER 31, 2009 & 2008
|
||||||||||
Stock
|
||||||||||
Common
Stock
|
Additional
|
Subscription
|
Treasury
|
Accumulated
|
||||||
Shares
|
Amount
|
Paid
In Capital
|
Receivable
|
Stock
|
Deficit
|
Total
|
||||
Beginning
Balance, January 1, 2008
|
68,679,047
|
68,679
|
13,029,641
|
-
|
-
|
(11,556,416)
|
1,541,904
|
|||
Issuance
of common stock for Professional Fees
|
9,500,000
|
9,500
|
62,500
|
-
|
-
|
-
|
72,000
|
|||
Issuance
of common stock for Acquisition
|
13,716,667
|
13,717
|
150,883
|
-
|
-
|
-
|
164,600
|
|||
Net
repurchase and retiring of shares
|
(20,000)
|
(20)
|
(193)
|
-
|
-
|
-
|
(213)
|
|||
Net
loss
|
-
|
-
|
-
|
-
|
-
|
(681,131)
|
(681,131)
|
|||
Balance,
December 31, 2008
|
91,875,714
|
91,876
|
13,242,831
|
-
|
-
|
(12,237,547)
|
1,097,160
|
|||
Issuance
of common stock for Professional Fees
|
7,125,000
|
7,125
|
51,125
|
-
|
-
|
-
|
58,250
|
|||
Issuance
of common stock for Acquisition
|
82,000,000
|
82,000
|
2,513,010
|
-
|
-
|
-
|
2,595,010
|
|||
Net
repurchase, retiring issued for debt shares
|
8,978,390
|
8,978
|
(8,978)
|
-
|
-
|
(276,626)
|
(276,626)
|
|||
Convertible
notes
|
11,641,090
|
11,641
|
337,591
|
-
|
-
|
-
|
349,232
|
|||
Net
loss
|
-
|
-
|
-
|
-
|
-
|
(1,913,328)
|
(1,913,328)
|
|||
Balance,
December 31, 2009
|
201,620,194
|
201,620
|
16,135,579
|
-
|
-
|
(14,427,501)
|
1,909,698
|
26
STARINVEST
GROUP, INC
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2009
NOTE
1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business
StarInvest
Group, Inc. (“StarInvest” or the “Company”) was incorporated on September 26,
1985 as Gemini Energy Corporation under the laws of the State of
Nevada. On January 28, 1994, the Company’s name was changed to Nerox
Energy Corporation. On April 24, 1998 the Company’s name was changed
to Nerox Holding Corporation. On December 15, 1998 the Company’s name
was changed to E*twoMedia.com. On December 19, 2000 the Company’s
name was changed to Exus Networks, Inc. On November 22, 2002 the
Company’s name was changed to Exus Global, Inc. On January 13, 2005
the Company’s name was changed to StarInvest Group, Inc.
In
January 2001, an Agreement to Exchange Stock dated January 15, 2001 was entered
into by and between Exus and Exus New York (the “Agreement”). Under
terms of the Agreement, Exus New York exchanged all of its issued and
outstanding shares for 20,000,000 shares of the Company. After the
Agreement, the Company owned 79% of the outstanding common stock of the combined
entity and became the surviving corporation. The transaction has been
accounted for as a reverse acquisition under the purchase method for business
combinations. On November 25, 2002, the Company amended its articles
of incorporation to change the name of the Company to Exus Global,
Inc. On March 9, 2004, the Company filed Form N-54 to elect to report
as a business development company (BDC) under the Investment Company Act of
1940. On January 12, 2005, the Company changed its name to StarInvest
Group Inc.
In 2008,
the Company changed it business focus and withdrew its election to be treated as
a business development company and as a result its withdrawal of election to be
treated as business development company, the Company was no longer qualified to
be treated as a RIC.
Revenue
Recognition
We record
interest income on an accrual basis for loans on which we expect to collect such
amounts. We will not accrue interest if we have reason to doubt our
ability to collect such interest. Consulting revenue is recognized at
the time the services are performed.
Cash
and Cash Equivalents
Cash and
cash equivalents consist of demand deposits and highly liquid investments with
original maturities of three months or less. Cash and cash
equivalents are carried at cost or amortized cost, which approximates fair
value.
Property
and Equipment
Property
and equipment are stated at cost. Depreciation is being provided on
the modified accelerated cost recovery system over the estimated useful lives of
the assets (generally three to ten years).
27
Loss
per Common Share
The
Company complies with SFAS No. 128, “Earnings per Share”. SFAS No.
128 requires dual presentation of basic and diluted earnings per share for all
periods presented. Basic earnings per share excludes dilution and is
computed by dividing loss applicable to common stockholders by the weighted
average number of common shares outstanding for the period. Diluted
earnings per share reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or converted
into common stock or resulted in the issuance of common stock that then shared
in the earnings of the entity. Since there are no outstanding
options, convertible debentures or preferred stock there is no difference
between basic and diluted calculations.
Stock-Based
Compensation
Statement
of Financial Accounting Standards No. 123, “Accounting for Stock-Based
Compensation” (“SFAS 123”), encourages, but does not require, companies to
record compensation cost for stock-based employee compensation plans at fair
value. The Company has chosen to account for stock-based compensation
using the intrinsic value method prescribed in Accounting Principles Board
Opinion No. 25, “Accounting for Stock Issued to Employees”, and related
Interpretations. Accordingly, compensation cost for stock options is
measured as the excess, if any, of the estimated fair value of the Company’s
stock at the date of the grant over the amount an employee must pay to acquire
the stock. The Company has adopted the “disclosure only” alternative
described in SFAS 123 and SFAS 148, which require pro forma disclosures of net
income and earnings per share as if the fair value method of accounting had been
applied.
Fair
Value of Financial Instruments
The
carrying amount reported in the consolidated balance sheets for cash, accounts
payable and accrued expenses approximate fair value because of the immediate or
short-term maturity of the financial instruments.
Use
of Estimates
The
financial statements have been prepared in accordance with accounting principles
generally accepted in the United States of America that require management to
make estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results may differ from
those estimates. In the normal course of business, the Company may
enter into contracts that contain a variety of representations and provide
indemnifications. The Company’s maximum exposure under these
arrangements is unknown as this would involve future claims that may be made
against the Company that have not yet occurred. However, based upon
experience, the Company expects the risk of loss to be remote.
Investment
Valuation
The
Company carries its investments at fair value, as determined in good faith by
the Board of Directors. Securities that are publicly traded are
valued at the closing price on the valuation date. Debt and equity
securities that are not publicly traded are valued at fair value as determined
in good faith by the Board of Directors. In making such
determination, the Board of Directors values non-convertible debt securities at
cost plus amortized original issue discount plus payment-in-kind (“PIK”)
interest, if any, unless adverse factors lead to a determination of a lesser
valuation. Due to the uncertainty inherent in the valuation process,
such estimates of fair value may differ significantly from the values that would
have resulted had a readily available market for the securities existed, and the
differences could be material. Additionally, changes in the market
environment and other events that may occur over the life of the investments may
cause the gains or losses ultimately realized on these investments to be
different than the valuation currently assigned.
28
Federal
Income Taxes
Permanent
differences are reclassified among capital accounts in the financial statement
to reflect their tax character. Temporary differences arise when
certain items of income, expense, gain or loss are recognized at some time in
the future. Differences in classification may also result from the
treatment of short-term gains as ordinary income for tax purposes.
The
Company utilizes the asset and liability method of accounting for deferred
income taxes. Under this method, deferred tax assets and liabilities
are established based on the differences between financial statement and income
tax bases of assets and liabilities using enacted tax rates in effect for the
year in which the differences are expected to reverse. The Company
provides a valuation allowance against deferred tax assets if, based on the
weight of available evidence, it is more likely than not that some or all of the
deferred tax assets will not be realized.
Recently
Issued Accounting Pronouncements
In
December 2007, the FASB issued FASB Statement No. 160 “Noncontrolling Interests
in Consolidated Financial Statements - an amendment of ARB No.
51” (“SFAS No. 160”), which causes noncontrolling interests in
subsidiaries to be included in the equity section of the balance
sheet. SFAS No. 160 applies prospectively to business combinations
for which the acquisition date is on or after the beginning of the first annual
reporting period beginning on or after December 15, 2008, except for the
presentation and disclosure requirements, which shall be applied retrospectively
for all periods presented. The Company will adopt this standard at
the beginning of the Company’s fiscal year ending December 31, 2008 for all
prospective business acquisitions. The Company has not determined the
effect that the adoption of SFAS No. 160 will have on the financial results of
the Company.
In
March 2008, the Financial Accounting Standards board (FASB) issued
Statement of Financial Accounting Standards No. 161, “Disclosures about
Derivative Instruments and Hedging Activities” (SFAS 161). SFAS 161 is
effective for fiscal years and interim periods beginning after November 15,
2008. SFAS 161 requires enhanced disclosures about Fund’s derivative and
hedging activities. Management is currently evaluating the impact the
adoption of SFAS 161 will have on the Fund’s financial statement
disclosures.
The FASB
has revised SFAS No. 141. This revised statement establishes uniform
treatment for all acquisitions. It defines the acquiring company.
The statement further requires an acquirer to recognize the assets
acquired, the liabilities assumed, and any non-controlling interest in the
acquired at the acquisition date, measured at their fair market values as of
that date. It requires the acquirer in a business combination achieved in
stages to recognize the identifiable assets and liabilities, as well as the
non-controlling interest in the acquired, at the full amounts of their fair
values. This changes the way that minority interest is recorded and modified as
a parent’s interest in a subsidiary changes over time. This statement also
makes corresponding significant amendments to other standards that related to
business combinations, namely, 109, 142 and various EITF’s. This statement
applies prospectively to business combinations for which the acquisition date is
on or after the beginning of the first annual reporting period beginning on or
after December 15, 2008. The Company believes the implementation of this
standard will have no effect on our financial statements.
In May
2008, FASB issued SFAS 162, “The Hierarchy of Generally Accepted Accounting
Principles”. Effective 60 days following the SEC’s approval of the Public
Company Accounting Oversight Board amendments to AU Section 411, The Meaning of
Present Fairly in Conformity With Generally Accepted Accounting Principles. The
Board does not expect that this Statement will result in a change in current
practice. However, transition provisions have been provided in the unusual
circumstance that the application of the provisions of this Statement results in
a change in practice. The Company believes the implementation of this standard
will have no effect on our financial statements.
In May,
2008 FASB issued SFAS 163. This Statement requires that an insurance
enterprise recognize a claim liability prior to an event of default (insured
event) when there is evidence that credit deterioration has occurred in an
insured financial obligation. This Statement also clarifies how Statement 60
applies to financial guarantee insurance contracts, including the recognition
and measurement to be used to account for premium revenue and claim liabilities.
Those clarifications will increase comparability in financial reporting of
financial guarantee insurance contracts by insurance enterprises. This Statement
requires expanded disclosures about financial guarantee insurance contracts. The
Company believes the implementation of this standard will have no effect on our
financial statements.
29
NOTE
2 - GOING CONCERN
The
accompanying consolidated financial statements have been presented on the basis
that it is a going concern, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. The
Company has an accumulated deficit of $14,427,501 at December 31,
2009. Additionally, for the year ended December 31, 2009, the Company
had net cash used by operating activities of $725,960. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
Management
is taking steps to address this situation by implementing its new business plan
and by working on the marketing of its subsidiaries My Transfer Agent, LLC and
EXX.com and liquidating its current investment holdings as soon as
practicable.
Management
expects operations to generate negative cash flow at least through December 2010
and the Company does not have existing capital resources or credit lines
available that are sufficient to fund operations and capital requirements as
presently planned over the next twelve months. The ability of the
Company to continue as a going concern is dependent on the Company’s ability to
further implement its business plan. The consolidated financial
statements do not include any adjustments that might be necessary if the Company
is unable to continue as a going concern. Management believes that
the actions presently being taken to further implement its business plan and
generate additional revenues provide the opportunity for the Company to continue
as a going concern. Management intends to attempt to raise additional
funds by way of a public or private offering. While the Company
believes in its ability to raise additional funds, there can be no assurances to
that effect.
NOTE
3 - INCOME TAXES
Current
income taxes are computed at statutory rates on pretax
income. Deferred taxes would be recorded based on differences in
financial statements and taxable income. At December 31, 2009, the
Company had elected to carry forward net operating losses for federal and state
income tax purposes of approximately $8,769,300 that are available to reduce
future taxable income through 2022. As utilization of such operating
losses for tax purposes is not assured, the deferred tax asset has been fully
reserved through the recording of a 100% valuation allowance. These
operating losses may be limited to the extent an “ownership change”, as defined
under section 382 of the Internal Revenue Code, occurs. The provision
(benefit) for income taxes differs from the amounts computed by applying the
statutory Federal income tax rate of 35% to income (loss) before provision for
income taxes is as follows:
|
|
2009
|
|
2008
|
|
||
Tax
benefit computed at statutory rates
|
|
$
|
(669,600
|
)
|
$
|
(238,400
|
)
|
State
income tax benefit (net of Federal Tax)
|
|
|
(95,600
|
)
|
|
(34,100
|
)
|
Permanent
differences
|
|
|
125,000
|
|
|
125,000
|
|
Income
tax benefit not utilized
|
|
|
640,200
|
|
|
147,500
|
|
Net
income tax benefit
|
|
$
|
-
|
|
$
|
-
|
|
The
components of the deferred tax asset as of December 31, 2009 are as
follows:
|
|
2009
|
|
2008
|
|
||
Deferred
Tax Asset:
|
|
|
|
|
|
||
Net
Operating Loss Carryforward
|
|
$
|
3,507,700
|
|
$
|
2,742,500
|
|
Accrued
compensation
|
|
|
-
|
|
|
-
|
|
|
|
|
3,507,700
|
|
|
2,742,500
|
|
Less:
Valuation Allowance
|
|
|
(3,507,700
|
)
|
|
(2,742,500
|
)
|
Net
Deferred Tax Asset
|
|
$
|
-
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
30
NOTE
4 – LOANS PAYABLE
2009
|
2008
|
|||
Current
loans payable with an aggregate principal of $775,000, due May 10, 2007,
principal and interest at 8% per annum, interest paid
quarterly. Accrued interest on these loans at December 31, 2008
is approximately $71,108. These loans are
unsecured.
|
0
|
321,108
|
||
Convertibles
Debenture payable with an aggregate principal of $886,103.97, due in March
31, 2013 at an interest at 3% per annum, interest paid
semi-annually. Accrued interest on these convertibles at
December 31, 2009 is approximately $9,156.02. These loans are
unsecured.
|
895,260
|
0
|
||
Other
Loans
|
251,018
|
0
|
||
Totals
|
$1,146,278
|
$
321,108
|
NOTE
5 - COMMITMENTS AND CONTINGENCIES
Employment
Agreements
The
Company has a contract with R & J Cole, Inc, to hire Robert H. Cole to serve
as its CEO/CFO. Under this Contract, the Company agreed to pay Mr.
Cole $7,500 per month until December 31, 2009. For 2010 the Contract was
modified to increase Mr. Cole salary from $7,500 per month to $10,000 per
month. The Company has a contract with Mr. Cristiano Germinario to
serve as consultant of the Company. He has been serving in this
capacity since April 1, 2006 and continues to serve in this
position. Under its consulting agreement Mr. Germinario is paid
$5,000 per month. This contract expired in March 2009 and has been extended
until March 2010. All contracts can be extended from year to
year.
Litigation
There are
no lawsuits that we are aware of as of March 26, 2009.
31
NOTE
6 - STOCKHOLDERS’ DEFICIT
Stock as settlement of
debt
We were
in default of the $775,000 note related to the Loan Agreement with Strasbourger,
Pearson, Tulcin, Wolff, Incorporated (“SPTW”) a privately-held NYSE Member Firm,
which specializes in convertible securities, and small-cap private placement
(“SPTW”) dated March 12, 2006. On October 28, 2009 the Company and the
Noteholders reached an agreement under which the Company agreed to pay a total
of $349,232.88 including principal and accrued interest to the Noteholders and
the Noteholders agreed to convert such amount into 11,641,096 restricted common
shares of the Company.
On
December 28, 2009, we instructed our transfer agent to issue 6,500,000
restricted common shares to R & J Cole, Inc to settle a total of $52,000 of
unpaid salaries due to our CEO Mr. Robert H. Cole.
Stock
Sold
During
the year ended December 31, 2009, the Company sold a total of $886,103
convertible debentures, convertible into 41,213,575 restricted shares of its
common stock under a Regulation D offering. No shares were sold in
2009.
Stock
Options
As of
December 31, 2009 the Company granted a total of 3 series of Warrants (A-B-C) to
the noteholder in relation to the Company’s Regulation D offering. Each series
grants the right to the noteholders to exercise the right to convert up to
41,213,575 restricted shares of its common stock at a strike price of
$0.15 $0.25 and $0.35 respectively.
NOTE
7 - SUBSEQUENT EVENTS
On
January 07, 2010 the Board of Director instructed the Company’s transfer agent
to put a stop transfer on all certificates issued to James Dovico and Douglas
Carter in relationship to their sale of EXX. The Board has been informed that
Dovico and Carter have breached their contract on several occasions, and the
Company is taking legal actions to recover any loss incurred in this
transaction.
32
NOTE
8 - EARNINGS PER SHARE
The
following table sets forth the computation of basic and diluted net income per
share for the years ended December 31, 2009 and 2008:
Year
ended
December
31, 2009
|
Year
ended
December
31, 2008
|
||||||
Numerator
for basic and diluted income (loss) per share
|
$
|
(1,913,328)
|
$
|
(681,131
|
)
|
||
Denominator
for basic and diluted weighted average shares
|
110,665,532
|
72,408,306
|
|||||
Basic
and diluted net loss per common share
|
$
|
(0.02)
|
$
|
(0.01
|
)
|
NOTE
9 - OTHER INCOME
Other
income includes primarily extraordinary income (relief of debt) due to the write
down of accounts payable in 2007 and 2008. The Company does not
ordinarily write down payables, thus the one large tax payable and smaller trade
payables were considered extraordinary.
NOTE
10 - FINANCIAL HIGHLIGHTS
Statement of Operations
Data:
|
For
the Year Ended
December 31, 2009
|
For
the Year Ended
December 31, 2008
|
Total
Income
|
$954,410
|
$133,686
|
Total
Expenses
|
1,489,763
|
338,583
|
Net
Income (Loss) before other income (expense)
|
(1,340,988)
|
(204,897)
|
Net
Realized and Unrealized (Losses) Gains
|
(572,340)
|
(476,234)
|
Net
Income (Loss)
|
(1,913,328)
|
(681,131)
|
Per
Share Data:
|
||
Net
Income (Loss) per Share
|
$(0.02)
|
$(0.01)
|
Balance
Sheet Data:
|
||
Total
Assets
|
$3,752,867
|
$1,482,822
|
Borrowings
Outstanding
|
1,143,526
|
341,423
|
Shareholders’
Equity
|
1,909,698
|
1,097,160
|
33
ITEM
9. CHANGES IN AND DISAGREEMENTS WITH INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM ON ACCOUNTING AND FINANCIAL DISCLOSURE
There
were no changes in or disagreements on accounting or financial disclosure with
Larry O’Donnell, CPA, the Company’s independent public accounting firm during
the fiscal year ended December 31, 2009.
ITEM
9A. CONTROLS
AND PROCEDURES
Our Chief
Executive Officer and Principal Financial Officer, after evaluating the
effectiveness of the Company’s “disclosure controls and procedures” (as defined
in the Securities Exchange Act of 1934 (Exchange Act) Rules 13a-15(e) or
15d-15(e)) as of the end of the period covered by this annual report, has
concluded that our disclosure controls and procedures are effective such that the information
required to be
disclosed by us in reports filed under the Securities Exchange
Act of 1934 is
(i) recorded,
processed, summarized and reported within the time periods specified in the
SEC’s rules and
forms and (ii) accumulated and
communicated to our management, including our Chief Executive Officer and Chief
Financial Officer, as appropriate to allow timely decisions regarding
disclosure. A controls
system cannot provide absolute assurance, however, that the objectives of the
controls system are met, and no evaluation of controls can provide absolute
assurance that all control issues and instances of fraud, if any, within a
company have been detected. We believe our disclosure controls and procedures
are designed to provide reasonable assurance of achieving their objectives and
our principal executive officer and principal financial officer concluded that
our disclosure controls and procedures are effective.
Management’s Report
on Internal Control Over Financial Reporting
Management
of the Company is responsible for establishing and maintaining adequate internal
control over financial reporting. As defined in Rules 13a-15(f) under the
Securities Exchange Act of 1934, internal control over financial reporting is a
process designed by, or under the supervision of, the Company’s principal
executive, principal operating and principal financial officers, or persons
performing similar functions, and effected by the Company’s board of directors,
management and other personnel, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with accounting principles generally
accepted in the United States of America.
The
Company’s internal control over financial reporting includes those policies and
procedures that (1) pertain to the maintenance of records, that, in reasonable
detail, accurately and fairly reflect the transactions and dispositions of the
Company’s assets; (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and
expenditures of the Company are being made only in accordance with
authorizations of the Company’s management and directors; and (3) provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the Company’s assets that could have a
material effect on the financial statements.
Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
34
The
Company’s management, including the Company’s Chief Executive Officer and
Principal Financial Officer assessed the effectiveness of the Company’s internal
control over financial reporting as of December 31, 2009. In making this
assessment, management used the framework in “Internal Control - Integrated
Framework” promulgated by the Committee of Sponsoring Organizations of the
Treadway Commission, commonly referred to as the “COSO” criteria. Based on the
assessment performed, management believes that as of December 31, 2009, the
Company’s internal control over financial reporting was effective based upon the
COSO criteria. Additionally, based on management’s assessment, the Company
determined that there were no material weaknesses in its internal control over
financial reporting as of December 31, 2009.
This
annual report does not include an attestation report of the Company’s
independent registered public accounting firm regarding internal control over
financial reporting. Management’s report was not subject to attestation by the
Company’s registered public accounting firm pursuant to temporary rules of the
SEC that permit the Company to provide only management’s report in this annual
report.
Changes
in Internal Controls
During
the year ended December 31, 2009, there was no change in internal control over
financial reporting that has materially affected, or is reasonably likely to
materially affect our internal control over financial reporting.
The
Company’s management, including the chief executive officer and principal
financial officer, do not expect that its disclosure controls or internal
controls will prevent all error and all fraud. A control system, no matter how
well conceived and operated, can provide only reasonable, not absolute,
assurance that the objectives of the control system are met. In addition, the
design of a control system must reflect the fact that there are resource
constraints, and the benefits of controls must be considered relative to their
costs. Because of the inherent limitations in all control systems, no evaluation
of controls can provide absolute assurance that all control issues and instances
of fraud, if any, within a company have been detected. These inherent
limitations include the realities that judgments in decision-making can be
faulty, and that breakdowns can occur because of simple error or
mistake.
Additionally,
controls can be circumvented by the individual acts of some persons, by
collusion of two or more people or by management’s override of the control. The
design of any systems of controls is based in part upon certain assumptions
about the likelihood of future events, and there can be no assurance that any
design will succeed in achieving its stated goals under all potential future
conditions. Over time, control may become inadequate because of changes in
conditions, or the degree of compliance with the policies or procedures may
deteriorate. Because of these inherent limitations in a cost-effective control
system, misstatements due to error or fraud may occur and not be detected.
Individual persons perform multiple tasks which normally would be allocated to
separate persons and therefore extra diligence must be exercised during the
period these tasks are combined. Management is aware of the risks associated
with the lack of segregation of duties at the Company due to the small number of
employees currently dealing with general administrative and financial matters.
Although management will periodically reevaluate this situation, at this point
it considers the risks associated with such lack of segregation of duties and
that the potential benefits of adding employees to segregate such duties do not
justify the substantial expense associated with such increases. It is also
recognized the Company has not designated an audit committee and no member of
the board of directors has been designated or qualifies as a financial expert.
The Company should address these concerns at the earliest possible
opportunity.
35
Name
|
Age
|
Position
|
Robert
H. Cole
|
66
|
Chief
Executive, Chief Financial Officer and Director
|
Cristiano
Germinario
|
38
|
Secretary
and Director
|
Manu
Kalia
|
38
|
Director
|
The
following is a brief summary of the background of each executive officer and
director:
Robert H.
Cole has been a Director of our Company since March 9, 2006 and our Chief
Executive Officer, Chief Financial Officer since May 10, 2006. Since 1981 he has
been President of Permian Business Group, a business consulting company founded
by Mr. Cole specialized in the sale and installation of computer
solutions. From 1970 to 1980, Mr. Cole was a Senior Analyst with Gulf
Oil Company, and in 1989 he became Chairman of Aplex Industries where he grew
the company to $8 million in sales. Mr. Cole founded Stadium Chair
Company in 1999, and sold it in 2003. Mr. Cole holds a Bachelor’s
Degree in Electrical Engineering, a Masters of Science in Computing Science from
Texas A&M, and a MBA from Houston Baptist University.
Cristiano
Germinario
Cristiano
Germinario has been a Director of our company since November 20, 2006 and
Secretary of the Company since August 2007. From April 2000 to May 2006,
Cristiano D. Germinario worked as a financial analyst at IIG International
Investment Company, a New York based fund specialized in Trade
Financing. Cristiano D. Germinario holds a Masters Degree in
Political Science from the University of Bologna, Italy.
Manu
Kalia
Manu
Kalia brings 13 years of high tech and financial management experience to
StarInvest. He has served at senior management levels as: CEO of Promana
Solutions Inc. (web services), CFO of ARC International PLC (semiconductors),
CFO of Tradeworx Inc. (statistical-arbitrage financial analytics/ hedge fund),
and CEO of Open Source Creations Inc. (online collaboration). Prior to
that, Manu spent time as an investment banker for Commonwealth
Associates, as an analyst for Sanford Bernstein, and as a manager at Lucent
Technologies Bell Laboratories. Manu holds a Bachelors in Engineering
Sciences (cum laude) from Dartmouth College, and an MBA from the Amos Tuck
School of Business Administration at Dartmouth. anu brings 13 years of high
tech and financial management experience to StarInvest. He has served at senior
management levels as: CEO of Promana Solutions Inc. (web services), CFO of ARC
International PLC (semiconductors), CFO of Tradeworx Inc. (statistical-arbitrage
financial analytics/ hedge fund), and CEO of Open Source Creations Inc. (online
collaboration). Prior to that, Manu spent time as an investment banker
for Commonwealth Associates, as an analyst for Sanford Bernstein, and as a
manager at Lucent Technologies Bell Laboratories. Manu holds a
Bachelors in Engineering Sciences (cum laude) from Dartmouth College, and
an MBA from the Amos Tuck School of Business Administration at
Dartmouth.
36
Except as
indicated above, none of our directors holds any directorships in companies with
a class of securities registered pursuant to Section 12 of the Securities
Exchange Act or subject to the requirements of Section 15(d) of such Act or any
company registered as an investment company under the Investment Company Act of
1940, as amended. There are no family relationships among any of our directors
or executive officers.
Board
Composition
The
Company’s board of directors consists of three directors. At each
annual meeting of its stockholders, all of its directors are elected to serve
from the time of election and qualification until the next annual meeting
following election. In addition, the Company’s bylaws provide that
the maximum authorized number of directors may be changed by resolution of the
stockholders or by resolution of the board of directors. The
non-officer directors received no pay for their services.
Meetings
and Committees of the Board of Directors
Our Board
of Directors conducts its business through meetings of the
Board. During the fiscal year ended December 31, 2009, our Board of
Directors held telephone meetings and took numerous actions by unanimous
consent.
Nominating Committee. Our
entire Board of Directors participates in consideration of director nominees.
The Board will consider candidates who have experience as a board member or
senior officer of a company or who are generally recognized in a relevant field
as a well-regarded practitioner, faculty member or senior government officer.
The Board will also evaluate whether the candidates' skills and experience are
complementary to the existing Board's skills and experience as well as the
Board's need for operational, management, financial, international,
technological or other expertise. The Board will interview candidates that meet
the criteria and then select nominees that Board believes best suit our
needs.
The Board
will consider qualified candidates suggested by stockholders for director
nominations. Stockholders can suggest qualified candidates for director
nominations by writing to our President Robert Cole at P.O. Box 50236, Midland,
TX, 79710. Submissions that are received that meet the criteria
described above will be forwarded to the Board for further review and
consideration. The Board will not evaluate candidates proposed by stockholders
any differently than other candidates.
Audit
Committee. Presently, the Board of Directors acts as the audit
committee. The Audit Committee operates pursuant to a charter adopted by the
Board of Directors. The charter sets forth the responsibilities of the Audit
Committee. Following the resignation of Ronald Signore as a director on January
10, 2008, we no longer have an Audit Committee financial expert. The
primary function of the Audit Committee is to serve as an independent and
objective party to assist the Board of Directors in fulfilling its
responsibilities for overseeing and monitoring the quality and integrity of the
Company’s financial statements, the adequacy of the Company’s system of internal
controls, the review of the independence, qualifications and performance of the
Company’s independent registered public accounting firm, and the performance of
the Company’s internal audit function.
Limitations
of Liability and Indemnification of Directors and Officers
Our
bylaws limit the liability of directors and officers to the maximum extent
permitted by Nevada law. We will indemnify any person who was or is a
party, or is threatened to be made a party to, an action, suit or proceeding,
whether civil, criminal, administrative or investigative, if that person is or
was a director, officer, employee or agent of ours or serves or served any other
enterprise at our request.
We have
been advised that it is the position of the SEC that insofar as the
indemnification provisions referenced above may be invoked to disclaim liability
for damages arising under the Securities Act, these provisions are against
public policy as expressed in the Securities Act and are, therefore,
unenforceable.
37
Compliance
with Section 16(a) of the Exchange Act
Section
16(a) of the Exchange Act requires our executive officers, directors and persons
who beneficially own more than 10% of a registered class of the Company’s equity
securities to file with the SEC initial reports of ownership and reports of
changes in ownership of our common stock. Such persons are required
by SEC regulations to furnish us with copies of all Section 16(a) report which
they file. Based upon our review of the Forms 3, 4 and 5 submitted by
these reporting persons, during the fiscal year ended December 31, 2009, Manu
Kalia did not file a Form 3 in connection with his appointment to the Board of
Directors.
Code
of Ethics
We have
adopted a code of ethics that applies to our principal executive officer,
principal financial officer, principal accounting officer or controller, or
persons performing similar functions. For purposes of this Item, the
term code of ethics means written standards that are reasonably designed to
deter wrongdoing and to promote:
·
|
honest
and ethical conduct, including the ethical handling of actual or apparent
conflicts of interest between personal and professional
relationships;
|
·
|
full,
fair, accurate, timely, and understandable disclosure in reports and
documents that the issuer files with, or submits to, the SEC and in other
public communications made by us;
|
·
|
compliance
with applicable governmental laws, rules and
regulations;
|
·
|
the
prompt internal reporting of violations of the code to the board of
directors or another appropriate person or persons;
and
|
·
|
accountability
for adherence to the code.
|
We will
provide to any person without charge, upon request, a copy of our code of
ethics. Such request may be made in writing to the board of directors
at the address of our company.
The
following table sets forth information regarding compensation earned in or with
respect the Company’s fiscal year ending December 31, 2009 by:
|
Each
person who served as the Registrant's principal executive officer or
acting in a similar capacity during the last completed fiscal year,
regardless of compensation level ;
|
|
|
Each
person who served as the Registrant's principal financial officer or
acting in a similar capacity during the last completed fiscal year,
regardless of compensation level;
and
|
|
The
Registrant's three most highly compensated executive officers other than
the principal Executive Officer and the principal financial officer who
were serving as executive officers at the end of the last completed fiscal
year; and
|
|
|
Up
to two additional individuals for whom disclosure would have been provided
pursuant to paragraph (a)(3)(iii) of Item 402 but for the fact that the
individual was not serving as an executive officer of the registrant at
the end of the last completed fiscal
year
|
38
We refer
to these officers collectively as our named executive officers.
Summary
Compensation Table
|
|||||||||
Name
and principal position
|
Year
|
Salary
|
Bonus
|
Stock
awards
|
Option
awards
|
Nonequity
incentive plan compensation
|
Nonqualified
deferred compensation earnings
|
All
other compensation
|
Total
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
||
Robert
H. Cole CEO and CFO
|
2009
|
90,000
|
0
|
0
|
0
|
0
|
0
|
0
|
90,000
|
Mr.
Leon Urbaitel
(CEO
of MTA)
|
2009
|
60,000
|
0
|
0
|
0
|
0
|
0
|
60,000
|
|
Cristiano
Germinario (Secretary)
|
2009
|
60,000
|
0
|
0
|
0
|
0
|
0
|
0
|
60,000
|
Employment Agreements – On
December 31, 2008 the Company entered into an Employment Agreement with R &
J Cole, Inc. pursuant to which the Company agrees to pay Mr. Cole $7,500 per
month to serve as the Chief Executive Officer and Chief Financial Officer of the
Company. The Company has agreed to modify this contract for 2010 fiscal year and
agreed to pay R& J Cole, Inc. $10,000 per month. The Employment Contract can
be extended upto five years, as of that date, unless either party shall have
given to the other party notice, in the manner hereinafter provided, no later
than on September 30th of
each year.
On May 1,
2009 the Company entered into a Employment Agreement with Mr. Cristiano
Germinario pursuant to which Mr. Germinario serves as the Operation Manager of
My transfer Agent, LLC. In consideration for his services, the
Company agrees to compensate Mr. Germinario $5,000 per month. The
Employment Agreement expires in March 31, 2011.
On
October 20, 2008 the Company entered into an Agreement with Mr. Leon Urbaitel
pursuant to which Mr. Urbaitel has served as Chief Executive Officer of My
Transfer Agent, LLC, a wholly owned subsidiary of the Company. In
consideration for his services as Chief Executive Officer of MTA,, the Company
agrees to pay Mr. Urbaitel $5,000 per month. This contract expires in September
30, 2011. The Company owes Mr. Urbaitel a balance of $12,500 for the payment of
the $25,000 cash bonus related to his employment agreement dated October 20,
2008.
Outstanding
Equity Awards
As of
December 31, 2009, none of our directors or executive officers held unexercised
options, stock that had not vested, or equity incentive plan awards. No stock
options or stock appreciation rights were granted to any of our directors or
executive officers during the period from the date of our incorporation through
December 31, 2009.
39
Option/SAR
Grants
We do not
currently have a stock option plan. No individual grants of stock options,
whether or not in tandem with stock appreciation rights known as SARs or
freestanding SARs have been made to any executive officer or any director since
our inception; accordingly, no stock options have been granted or exercised the
officer and director since we were founded.
We do not
have any long-term incentive plans that provide compensation intended to serve
as incentive for performance. No individual grants or agreements regarding
future payouts under non-stock price-based plans have been made to any executive
officer or any director or any employee or consultant since our inception;
accordingly, no future payouts under non-stock price-based plans or agreements
have been granted or entered into or exercised by any of the officers or
directors or employees or consultants since we were founded.
Other
Compensation
We have
no pension, health, annuity, bonus, insurance, equity incentive, non-equity
incentive, stock options, profit sharing or similar benefit plans.
Director
Compensation
The
following table sets forth information concerning compensation paid to or earned
by our directors during 2009 under contractual agreements or other,
arrangements.
Name
(a)
|
Year
|
Fees
earned or paid in cash
($)
(b)
|
Stock
Awards
($)
(c)
|
Option
Awards
($)
(d)
|
Non-equity
incentive plan compensation
($)
(e)
|
Nonqualified
deferred compensation earnings
($)
(f)
|
All
other compensation
($)
(g)
|
Total
($)
(h)
|
Robert
H. Cole
|
2009
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
Manu
Kalia(1)
|
2009
|
0
|
250
|
0
|
0
|
0
|
0
|
250
|
*Cristiano
Germinario(2)
|
2009
|
0
|
1,500
|
0
|
0
|
0
|
0
|
1,500
|
(1)
25,000 shares were issued to Manu Kalia for services rendered as a director of
the Company.
(2)150,000
shares were issued to Cristiano Germinario for services rendered as director of
the Company.
Summary
of Director Compensation
On
December 09, 2009 the Company issued 175,000 restricted shares of common stock
as bonus compensation to it directors, 25,000 shares were issued to Manu Kalia
for services rendered as a director of the Company and 150,000 shares were
issued to Cristiano Germinario for services rendered as director of the
Company.
40
ITEM
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The
following table lists, as of March 31, 2010, 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
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.
The
percentages below are calculated based on 201,620,194 shares of our common stock
issued and outstanding as of March 31, 2010.
As of
December 31, 2009 the Company granted a total of 3 series of Warrants (A-B-C) to
the noteholder in relation to the Company’s Regulation D offering. Each series
grants the right to the noteholders to exercise the right to convert up to
41,213,575 restricted shares of its common stock at a strike price of $0.15
$0.25 and $0.35 respectively.
Except as
indicated by footnote, and subject to community property laws where applicable,
to our knowledge, each person listed is believed to have sole voting and
investment power with respect to all shares of common stock owned by such
person.
Name
of Beneficial Owner
|
Number
of Shares of Common Stock Beneficially Owned
|
Percent
of Common Stock Beneficially Owned
|
Beneficial
Owners of 5%
|
||
Robert
H. Cole(1)
5102
Los Alamitos Ct.
Midland,
Texas 79705
|
26,166,667
|
12.98%
|
Ronald
Moschetta (2)
345
Blackheath Road
Lido Beach,,
NY 11561
|
25,000,000
|
12.40%
|
James
Dovico
85
Johnneck Road
Shirlew,
NY 11967
|
28,000,000
|
13.89%
|
Douglas
Carter
28
Rose Run
Lamberville,
NJ 08530
|
18,000,000
|
8.93%
|
Cristiano
Germinario
198
Arlington Avenue
Jersey
City, New Jersey 07305
|
1,150,000
|
0.57%
|
Leon
Urbaitel
33
North Avenue, APT 12
Burlington,
VT 05401
|
4,183,333
|
2.07%
|
All
directors and executive officers as a group (three people)
|
50.84%
|
(1) Robert H.
Cole directly owns 295,000 restricted common shares. Also Mr. Cole owns 50% of
R&J Cole, Inc., the general partner and owner of 1% of Reese-Cole
Partnership Ltd, that directly owns 11,666,667 restricted common shares of the
Company. In addition, Mr. Cole is acting as the custodian for his son Mr. David
R. Cole, who directly owns 250,000 common shares. R&J Cole, Inc. owns
14,500,000 restricted common shares.
(2) Ronald
Moschetta directly owns 13,000,000 restricted common. Also he controls Phoenix
Holdings, Inc that directly owns 12,000,000 restricted common
shares.
41
ITEM
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
We
were in default of the $775,000 note related to the Loan Agreement, dated March
12, 2006, with Strasbourger, Pearson, Tulcin, Wolff, Incorporated (“SPTW”) a
privately-held NYSE Member Firm, which specializes in convertible securities,
and small-cap private placement. On October 28, 2009 the Company and the
Noteholders reached an agreement under which the Company agreed to pay a total
of $349,232.8 including principal and accrued interest to the Noteholders and
the Noteholders agreed to convert such amount into 11,641,096 restricted common
shares of the Company.
The
Company has an Employment Contract with R & J Cole, Inc, to hire Robert H.
Cole to serve as its CEO/CFO. Under this Contract, the Company agreed
to pay Mr. Cole $7,500 per month until December 31, 2009. For 2010 the Contract
was modified to increase Mr. Cole salary from $7,500 per month to $10,000 per
month. The contract will expire on December 31, 2013.
The
Company has an Employment Contract with Mr. Cristiano Germinario to serve as the
Operation Manager of My Transfer Agent, LLC. He has been
serving in this capacity since May 1, 2009 and continues to serve in this
position. Before that, he served as a consultant to the company since
April 1, 2006. Under the Employment Contract, Mr. Germinario is paid $5,000 per
month. This contract expired on March 31, 2011. All contracts can be
extended from year to year.
Currently,
we utilize space in Midland, Texas that is provided to us without charge by Mr.
Robert Cole, our Chief Executive Officer and Chief Financial Officer and a
director.
From
April 2005 to present, our principal independent accountant has been Larry
O'Donnell, CPA, P.C. Their pre-approved fees billed to the Company are
summarized below:
Fiscal
year ending
December
31, 2009
|
Fiscal
year ending
December
31, 2008
|
|||
Audit
Fees
|
$
|
5,000
|
$
|
5,000
|
Audit
Related Fees
|
$
|
0
|
$
|
0
|
Tax
Fees
|
$
|
0
|
$
|
0
|
All
Other Fees
|
$
|
0
|
$
|
0
|
(1) AUDIT
FEES
The
aggregate fees billed for each of the last two fiscal years for professional
services rendered by the principal accountant for the audit of the Company’s
annual financial statements and review of financial statements included in the
Company’s Form 10-Q (17 CFR 249.308a) or 10-QSB (17 CFR 249.308b) or services
that are normally provided by the accountant in connection with statutory and
regulatory filings or engagements for those fiscal years was $5,000 for the
fiscal year ended December 31, 2008 and $5,000 for the fiscal year ended
December 31, 2009.
(2)
AUDIT-RELATED FEES
No fees
were billed in each of the last two fiscal years for assurance and related
services by the principal accountant related to the performance of the audit or
review of the Company’s financial statements.
(3) TAX
FEES
No fees
were billed for each of the fiscal years ended December 31, 2008 and 2009 for
professional services rendered by the principal accountant for tax compliance,
tax advice, and tax planning.
(4) ALL
OTHER FEES
No fees
billed were bill for each of the fiscal years ended December 31, 2008 and 2009
for professional services rendered by the principal accountant for any other
services.
(5)
PRE-APPROVAL POLICIES AND PROCEDURES
Before
the accountant is engaged by the issuer to render audit or non-audit services,
the engagement is nominated by the members of the Audit Committee and approved
by the Company’s board of directors.
42
Exhibit
No. Description
3.1
|
Restated
Articles of Incorporation (annexed as Exhibit 3.(I) to the Registrant’s
Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2003
filed with the Securities and Exchange Commission on May 22, 2003 and
incorporated herein by reference).
|
|
3.2
|
Certificate
of Amendment to the Articles of Incorporation (annexed as Annex I to the
Registrant’s Information Statement filed with the Securities and
Exchange Commission on February 10, 2004 and incorporated herein by
reference).
|
|
3.3
|
By-Laws
(annexed as Annex I to the Registrant’s Information Statement on Form 14C
filed with the Securities and Exchange Commission on December 23, 2002and
incorporated herein by reference).
|
|
4.1
|
Series
A Preferred Stock Certificate of Designation (annexed as Appendix II to
the Registrant’s Information Statement filed on December 20, 2002 filed
with the Securities and Exchange Commission on December 20, 2002 and
incorporated herein by reference).
|
|
4.2
|
Series
B Preferred Stock Certificate of Designation (annexed as Exhibit 3.1 to
the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter
ended March 31, 2004 filed with the Securities and Exchange Commission on
June 4, 2004 and incorporated herein by reference).
|
|
10.1
|
Employment
Agreement dated as of November 1, 2001 between the Registrant and Isaac
Sutton (annexed as Exhibit 10.4 to the Registrant’s Annual Report on Form
10-KSB for the fiscal year ended December 31, 2001 filed with the
Securities and Exchange Commission on May 20, 2002 and incorporated herein
by reference).
|
|
10.2
|
Registration
Rights Agreement (annexed as Exhibit 10.2 to the Registrant’s Current
Report on Form 8-K filed with the Securities and Exchange Commission on
November 20, 2002 and incorporated herein by
reference).
|
|
10.3
|
Shareholder
Agreement and Irrevocable Proxy (annexed as Exhibit 10.3 to the
Registrant’s Current Report on Form 8-K filed with the Securities and
Exchange Commission on November 20, 2002 and incorporated herein by
reference).
|
|
10.4
|
Asset
Acquisition Agreement dated October 28, 2002 between the Registrant and
New Millennium Development Group, Inc. (annexed as Exhibit 10.1 to the
Registrant’s Current Report on Form 8-K filed with the Securities and
Exchange Commission on November 20, 2002 and incorporated herein by
reference).
|
|
10.5
|
2002
Stock Option Plan (annexed as Appendix III to the Registrant’s Information
Statement filed with the Securities and Exchange Commission on December
20, 2002 and incorporated herein by reference).
|
|
10.6
|
Loan
Agreement Modification and Conversion dated December 31, 2002 between the
Registrant and New Canaan Investment Partners, LLC (annexed as Exhibit 20
to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter
ended March 31, 2003 filed with the Securities and Exchange Commission on
May 22, 2003 and incorporated herein by reference).
|
|
10.7
|
Assignment
and Assumption of Lease, dated March 12, 2006 (annexed as Exhibit 10.4 to
the Registrant’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2005 filed with the Securities and Exchange Commission on
March 31, 2006 and incorporated herein by reference).
|
|
10.8
|
Secured
Promissory Note for $775,000 with Strasbourger Pearson Tulcin & Wolff,
dated March 12, 2006 (annexed as Exhibit 10.8 to the Registrant’s Annual
Report on Form 10-K for the fiscal year ended December 31, 2006, filed
with the Securities and Exchange Commission on April 17, 2007, and
incorporated herein by reference).
|
|
10.9
|
Loan
and Security Agreement with Strasbourger Pearson Tulcin & Wolff, dated
March 12, 2006 (annexed as Exhibit 10.9 to the Registrant’s Annual Report
on Form 10-K for the fiscal year ended December 31, 2006, filed with the
Securities and Exchange Commission on April 17, 2007, and incorporated
herein by reference).
|
|
10.10
|
Assignment
of GoIP Global, Inc. Debt to Isaac H. Sutton, dated March 12, 2006
(annexed as Exhibit 10.10 to the Registrant’s Annual Report on Form 10-K
for the fiscal year ended December 31, 2006, filed with the Securities and
Exchange Commission on April 17, 2007, and incorporated herein by
reference).
|
|
10.11
|
Employment
contract with Mr. Robert H. Cole (annexed as Exhibit 10.11 to the
Registrant’s Annual Report on Form 10-K for the fiscal year ended December
31, 2006, filed with the Securities and Exchange Commission on April 17,
2007, and incorporated herein by reference).
|
|
10.12
|
Consultant
agreement with Mr. Cristiano Germinario (annexed as Exhibit 10.8 to the
Registrant’s Annual Report on Form 10-K for the fiscal year ended December
31, 2006, filed with the Securities and Exchange Commission on April 17,
2007, and incorporated herein by reference).
|
|
10.13
|
Purchase
Agreement, dated May 28, 2009, among Exx.com LLC, James Dovico and Douglas
Carter and StarInvest Group, Inc. (annexed as Exhibit
10.1 to the Registrant’s Current Report on Form 8-K, filed with the
Securities and Exchange Commission on June 18, 2009, and incorporated
herein by reference).
|
|
14.1
|
Code
of Ethics
|
31
|
Certification
of Chief Executive Officer and Chief Financial Officer pursuant to Rule
13a-14 of the Securities Exchange Act of 1934, as
amended.*
|
|
32
|
Certification
of Chief Executive Officer and Chief Financial Officer pursuant to Section
906 of The Sarbanes-Oxley Act of 2002.*
|
|
*
Filed herewith.
|
43
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
March
31, 2010
|
STARINVEST
GROUP, INC.
|
|
By: /s/ Robert H. Cole
|
||
Name: Robert
H. Cole
|
||
Title:
Chief Executive Officer, Chief Financial Officer and Director (Principal
Executive, Financial and Accounting
Officer)
|
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
Signatures Title
Date
|
Signature
|
Title
|
March
31, 2010
|
/s/ Robert H. Cole
|
Chief
Executive Officer, Chief Financial Officer and Director
(Principal Executive, Financial and Accounting
Officer)
|
March
31, 2010
|
/s/ Cristiano Germinario
|
Secretary
and Director
|
44