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EX-32.1 - CASEYCORP ENTERPRISES, INC | v181100_ex32-1.htm |
EX-31.1 - CASEYCORP ENTERPRISES, INC | v181100_ex31-1.htm |
U.S. SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C.
20549
FORM
10-K
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE
ACT OF 1934
For the
fiscal year ended December 31, 2009
Commission
file number: 333-147979
CASEYCORP ENTERPRISES,
INC.
(Exact
name of registrant as specified in its charter)
Nevada
|
98-0523910
|
|
(State
of incorporation)
|
(I.R.S.
Employer Identification
No.)
|
21 W 47
St, Suite 24
New York,
NY 10036.
(Address
of principal executive offices)
Tel:
(212) 382-2404
(Registrant’s
telephone number, including area code)
Securities
registered pursuant to Section 12(b) of the Exchange Act:
None
Securities
registered pursuant to Section 12(g) of the Exchange Act:
Common
Stock, $0.0001 par value
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes ¨ No x
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act. Yes ¨ No x
Check
whether the issuer (1) filed all reports required to be filed by Section 13 or
15(d) of the Exchange Act during the past 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§229.405 of this chapter) is not contained herein, and will not
be contained, to the best of registrant’s knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. ¨
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
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 of the Act). Yes ¨ 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. $___________
based upon $0.001 per share which was the last price at which the common equity
purchased by non-affiliates was last sold, since there is no public bid or ask
price.
The
number of shares of the issuer’s common stock issued and outstanding as of April
__, 2010 was
_________ shares.
Documents
Incorporated By Reference:
None
TABLE
OF CONTENTS
Page
|
||
PART
I
|
|
|
Item
1
|
Business
|
3
|
Item
1A
|
Risk
Factors
|
4
|
Item
1B
|
Unresolved
Staff Comments
|
4
|
Item
2
|
Properties
|
4
|
Item
3
|
Legal
Proceedings
|
5
|
Item
4
|
Submission
of Matters to a Vote of Security Holders
|
5
|
PART
II
|
|
|
Item
5
|
Market
for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
|
5
|
Item
6
|
Selected
Financial Data
|
6
|
Item
7
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operation
|
6
|
Item
7A
|
Quantitative
and Qualitative Disclosures About Market Risk.
|
8
|
Item
8
|
Financial
Statements.
|
8
|
Item
9
|
Changes
in and Disagreements With Accountants on Accounting and Financial
Disclosure
|
8
|
Item 9A
|
Controls and
Procedures
|
8
|
Item
9B
|
Other
Information
|
9
|
PART
III
|
|
|
Item
10
|
Directors,
Executive Officers and Corporate Governance
|
9
|
Item
11
|
Executive
Compensation
|
10
|
Item
12
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
|
11
|
Item
13
|
Certain
Relationships and Related Transactions, and Director
Independence
|
12
|
Item
14
|
Principal
Accountant Fees and Services
|
12
|
PART
IV
|
|
|
Item
15
|
Exhibits,
Financial Statement Schedules
|
13
|
SIGNATURES
|
14
|
2
PART
I
Item
1. Business
As used
in this Annual Report on Form 10-K (this “Report”), references to the “Company,”
the “Registrant,” “we,” “our” or “us” refer to CaseyCorp Enterprises, 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, 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.
Corporate
Background
Caseycorp Enterprises, Inc. (the
“Company”) was incorporated on February 21, 2007 under the laws of the State of
Nevada. The Company originally planned to focus on developing and distributing
advanced surveillance and security products. The Company acts
as a middleman aggregating gold, diamonds and other precious metals which are
purchased primarily from retail jewelers (who have purchased gold from
customers) and selling it to refiners.
3
Our
offices are currently located at 21 W 47 St, Suite 24, New York, NY 10036. Our
telephone number is (212) 382-2404. Our website is located at:
www.wecashgold.com.
Our
Business and Markets
The
Company was a development stage company which was incorporated on February 21,
2007 in the state of Nevada to engage in the business of selling security
products. On May 14, 2009, the Company acquired ESM Refiners, Inc.
(“ESM”) a newly organized New York corporation formed to enter into the business
of being a wholesale buyer and seller of gold, diamonds and precious metals. The
Company acts as a middleman aggregating the gold, diamonds and other precious
metals, which is purchased primarily from retail jewelers (who have purchased
the products from customers) and selling it to refiners. Following the
consummation of the acquisition, ESM became a wholly-owned subsidiary of
the Company. Then, on October 2, 2009, the Company acquired
EZSellGold.com, Inc., a New York corporation (“EZS”) engaged in the business of
purchasing gold and diamonds from consumers. Following the
consummation of the acquisition, EZS became a wholly-owned subsidiary of
the Company.
Marketing
The
Company’s marketing plan is focused on its retail operations within the United
States, which will all be conducted at kiosks to be located within popular
shopping malls.
Competition
There is
intense competition in both the wholesaler and retails markets for the purchase
of scrap gold jewelry. Competition is especially intense in the
retail market where 100s of small and large competitors, many with advertising
and marketing budgets larger than the Company’s, compete to purchase gold
jewelry from consumers.
Employees
We
currently have four full time employees.
Item
1A. Risk Factors
Not
required for smaller reporting companies.
Item 1B. Unresolved Staff
Comments
None.
Item 2. Properties
We
currently maintain our corporate offices and a retail location at 21 W 47 St,
New York, NY 10036. We currently pay rent of $5,000 and the space is leased
through October 2013. In addition, we also rent space from a related entity on a
month-to-month basis for $3,000 per month. We believe that this space
will be sufficient for our current and planned future operations.
4
Item 3. Legal
Proceedings.
There are
no 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. The Company’s property is not the subject of any pending
legal proceedings.
Item 4. Submission of Matters to a Vote of
Security Holders.
During
the period ending December 31, 2009, there has not been any matter which was
submitted to a vote of the Company’s shareholders through the solicitation of
proxies or otherwise.
PART
II
Item
5. Market for Registrant’s Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities.
The following table sets forth, for the
periods indicated, the range of quarterly high and low sales prices for our
Common Stock which trades on the Over-the-Counter Bulletin Board under the
symbol “CCPR.” However, there is no established trading market for our
common stock prior to July, 2009.
Common Stock
|
High
|
Low
|
||||||
2009
|
||||||||
First
Quarter
|
$ | - | $ | - | ||||
Second
Quarter
|
- | - | ||||||
Third
Quarter
|
0.25 | 0.06 | ||||||
Fourth
Quarter
|
0.20 | 0.10 | ||||||
2008
|
||||||||
First
Quarter
|
$ | - | $ | - | ||||
Second
Quarter
|
$ | - | $ | - | ||||
Third
Quarter
|
$ | - | $ | - | ||||
Fourth
Quarter
|
$ | - | $ | - |
Holders
As of
March 31, 2009, our common stock was held by 75 stockholders of
record.
Dividends
We have
never declared or paid any cash dividends on our common stock nor do we
anticipate paying any in the foreseeable future. Furthermore, we expect to
retain any future earnings to finance our operations and expansion. The payment
of cash dividends in the future will be at the discretion of our Board of
Directors and will depend upon our earnings levels, capital requirements, any
restrictive loan covenants and other factors the Board considers relevant. On
November 10, 2009, the Company effectuated a one-for-one stock dividend of its
common stock. The shares were issued on February 10,
2010.
5
Equity
Compensation Plans
We do not
have any equity compensation plans.
Recent
Sales of Unregistered Securities; Use of Proceeds from Registered
Securities
None
Purchases
of Equity Securities by the Small Business Issuer and Affiliated
Purchasers
We have
not repurchased any shares of our common stock during the fiscal year ended
December 31, 2009.
Item 6. Selected Financial
Data.
Not
applicable.
Item
7. Management’s Discussion and Analysis of Financial Condition and
Results of Operations.
Certain
statements contained in this prospectus, 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 CaseyCorp Enterprises, Inc. 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.
Overview
The
Company originally planned to focus on developing and distributing advanced
surveillance and security products. On May 14, 2009, the
Company acquired ESM to enter into the business of being a wholesale buyer and
seller of gold, diamonds and other precious metals. The Company acts
as a middleman aggregating the gold, diamonds and other precious metals, which
are purchased primarily from retail jewelers (who have purchased the products
from customers) and selling it to refiners at a mark up ranging from .75% to
1.1%. On October 2,
2009, the Company acquired EZS which is engaged in the business of purchasing
gold and diamonds from consumers.
6
Results
of Operations
Revenues
Revenues
for the year ended December 31, 2009 were $45,299,368. We sell gold, diamonds
and other precious metals primarily to two refiners which accounted for 98% of
total revenues for the period. The Company had no revenues for the
year ended December 31, 2008.
Cost
of Sales and Gross Profit
Our cost
of sales represent the cost of purchasing precious metals which we then
aggregate and sell to refiners. Cost of sales for the six year ended
December 31, 2009 were $44,855,282. The gross profit for the
year period amounted to $444,086 or 0.98 % of revenue.
General
and Administrative
General
and administrative expenses for the year ended December 31, 2009 was
$280,809, which are primarily rent, payroll and professional
fees. In addition, general and administrative expenses includes the
amortization of the exclusive purchasing agreement in the amount of $80,375 (see
Note 5 – Intangible Assets in the consolidated financial
statements). General and administrative expenses for the year ended
December 31, 2008 were $40,882 which were primarily professional fees incurred
to enable the Company to satisfy the requirements of a reporting
company.
Liquidity and
Capital Resources
As of
December 31, 2009, we had cash of $138,555 which was primarily the result of
cash provided from operating activities in the amount of $61,238 and
non-interest bearing loans from a stockholder in the amount of
$68,432. Management believes that cash on hand, plus anticipated
revenue will be sufficient to support our operations through the end of 2010;
provided that, in the event that that Company shall acquire additional products
or subsidiaries, we may require significant amounts of additional capital sooner
than the end of 2010. In such a case, we may seek to sell additional equity or
debt securities or obtain a credit facility. The sale of additional equity or
convertible debt securities could result in additional dilution to our
stockholders. Incurring indebtedness would result in an increase in our fixed
obligations and could result in borrowing covenants that would restrict our
operations. There can be no assurance that financing will be available in
amounts or on terms acceptable to us, if at all. If financing is not available
when required or is not available on acceptable terms, we may be unable to
develop or enhance our products or services, or, we may potentially not be able
to continue business activities. Any of these events could have a material and
adverse effect on our business, results of operations and financial
condition.
Off-Balance
Sheet Arrangements
We have
no off-balance sheet arrangements.
The
statement made above relating to the adequacy of our working capital is a
forward-looking statement within the meaning of the Private Securities
Litigation Reform Act of 1995. The statements that express the “belief,”
“anticipation,” “plans,” “expectations,” “will” and similar expressions are
intended to identify forward-looking statements.
7
Critical
Accounting Policies and Estimates
Our
discussion and analysis of its financial condition and results of operations are
based upon its financial statements, which have been prepared in accordance with
accounting principles generally accepted in the United States. The
preparation of these financial statements requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenues and
expenses, and related disclosure of contingent assets and
liabilities. On an on-going basis, we evaluate our estimates,
including those related to bad debts, income taxes and contingencies and
litigation. We base our estimates on historical experience and on
various other assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about
carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates under
different assumptions or conditions.
Item
7A. Quantitative and Qualitative Disclosures About Market
Risk.
Not
applicable.
Item
8. Financial
Statements.
The
information called for by this Item 8 is included following the "Index to
Financial Statements" on page F-1 contained in this Annual Report on
Form 10-K.
Item
9 Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure.
None
Item
9A. Controls and Procedures.
Disclosure
Controls and Procedures
Our
disclosure controls and procedures are designed to ensure that information
required to be disclosed in reports that we file or submit under the Securities
Exchange Act of 1934 is recorded, processed, summarized and reported within the
time periods specified in the rules and forms of the SEC. Our Chief Executive
Officer and Chief Financial Officer have reviewed the effectiveness of our
“disclosure controls and procedures” (as defined in the Securities Exchange Act
of 1934 Rules 13a-14(c) and 15d-14(c)) during the period covered by this report
and have concluded that the disclosure controls and procedures are effective to
ensure that material information relating to us is recorded, processed,
summarized, and reported in a timely manner. There were no significant changes
in our internal controls or in other factors that could significantly affect
these controls subsequent to the last day they were evaluated by our Chief
Executive Officer and Chief Financial Officer.
Internal
Controls Over Financial Reporting
During
the quarter 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 chief 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.
8
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. It is also recognized CaseyCorp 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.
Item 9B. Other
Information.
None.
PART
III
Item 10. Directors, Executive Officers and
Corporate Governance.
Directors
and Executive Officers
The
following table sets forth certain information regarding the members of our
board of directors and our executive officers:
Name
|
Age
|
Positions and Offices
Held
|
||
Eduard
Musheyev
|
47
|
Director,
Chairman, Chief Executive Officer, President and
Treasurer
|
Mr.
Musheyev, age 47, has over 30 years experience in the gold and jewelry industry
both in the retail and wholesale market. In 1983, he founded a
company dealing in the wholesale jewelry sector where he built up an extensive
network of retail customers. In 1990, he opened a retail jewelry store in New
York City and within five years had established eight retail stores with
combined sales of $5 million and then in 2001, founded a wholesale jewelry
operation.
There are
no familial relationships among any of our directors or officers. None of our
directors or officers is a director in any other U.S. reporting companies. None
of our directors or officers has been affiliated with any company that has filed
for bankruptcy within the last five years. The Company is not aware of any
proceedings to which any of the Company’s officers or directors, or any
associate of any such officer or director, is a party adverse to the Company or
any of the Company’s subsidiaries or has a material interest adverse to it or
any of its subsidiaries.
9
Each director of the Company serves for
a term of one year or until the successor is elected at the Company's annual
shareholders' meeting and is qualified, subject to removal by the Company's
shareholders. Each officer serves, at the pleasure of the board of directors,
for a term of one year and until the successor is elected at the annual
meeting of the board of directors and is qualified.
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Securities Exchange Act of 1934 requires officers and directors of
the Company and persons who own more than ten percent of a registered class of
the Company's equity securities to file reports of ownership and changes in
their ownership with the Securities and Exchange Commission, and forward copies
of such filings to the Company. We believe, based solely on our review of the
copies of such forms, that during the fiscal year ended December 31, 2009, all
reporting persons complied with all applicable Section 16(a) filing
requirements.
Code
of Ethics
We do not
currently have a Code of Ethics applicable to our principal executive, financial
and accounting officers. We do not have a “financial expert” on the board or an
audit committee or nominating committee.
Potential
Conflicts of Interest
Since we
do not have an audit or compensation committee comprised of independent
directors, the functions that would have been performed by such committees are
performed by our directors. The Board of Directors has not established an audit
committee and does not have an audit committee financial expert, nor has the
Board established a nominating committee. The Board is of the opinion that such
committees are not necessary since the Company has only two directors, and to
date, such directors have been performing the functions of such committees.
Thus, there is a potential conflict of interest in that our directors and
officers have the authority to determine issues concerning management
compensation, nominations, and audit issues that may affect management
decisions. We are not aware of any other conflicts of interest with any of our
executive officers or directors.
Involvement
in Certain Legal Proceedings
There are
no legal proceedings that have occurred within the past five years concerning
our directors, or control persons which involved a criminal conviction, a
criminal proceeding, an administrative or civil proceeding limiting one's
participation in the securities or banking industries, or a finding of
securities or commodities law violations.
Item 11. Executive
Compensation.
Summary
Compensation
Name
and Position
|
Year
|
Salary
|
Bonus
|
All other
compensation
|
Total
|
||||||||||||
Eduard
Musheyev
Chief
Executive Officer
|
2009
|
$ | 120,000 | $ | - | $ | - | $ | 120,000 |
10
Outstanding
Equity Awards
None of
our directors or executive officers holds unexercised options, stock that has
not vested, or equity incentive plan awards.
Compensation
of Directors
Since our
incorporation on February 21, 2007, no compensation has been paid to any of our
directors in consideration for their services rendered in their capacity as
directors.
Item
12. Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters.
The
following table lists, as of April 12, 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 45,000,000 shares of our common stock
issued and outstanding as of April 12, 2010. We do not have any outstanding
options, warrants or other securities exercisable for or convertible into shares
of our common stock. Unless otherwise indicated, the address of each person
listed is c/o Caseycorp Enterprises, Inc., 21 W 47 St, Suite 24, New York, NY
10036.
Name
of Beneficial
Owner
|
Number of Shares
of Common Stock
Beneficially Owned
|
Percent of
Common Stock
Beneficially Owned
|
||||||
Eduard
Musheyev
|
22,500,000 | 50 | % | |||||
All
directors and executive officers as a group (one person)
|
22,500,000 | 50 | % |
11
Item
13. Certain Relationships and Related Transactions, and Director
Independence.
On May
14, 2009, the ESM entered into an exclusive purchasing agreement with Ed &
Serge Gold and Diamond, Inc. (“ESGD”), an entity wholly-owned by one of the
Company’s stockholders. Under the agreement, ESGD has agreed not to sell any
gold and diamonds to any other party other than ESM. ESM retains the right,
however, to purchase from other vendors. Under the agreement, ESGD has agreed to
invoice the Company at cost plus .05% on daily sales of up to $250,000 and .025%
of daily sales over on amounts over $250,000. The agreement is for five years
and automatically renews for additional one year periods unless notified by
either party. Substantially all of the merchandise purchases that were made by
the Company for the year ended December 31, 2009 were from ESGD. At
December 31, 2009, the Company owed ESGD $359,583.
In 2009,
one of the stockholders advanced monies to the Company. The advances
are non-interest bearing and due on demand. At December 31, 2009, the
balance owed to the stockholder amounted to $68,432.
Director
Independence
We are
not subject to listing requirements of any national securities exchange or
national securities association and, as a result, we are not at this time
required to have our board comprised of a majority of “independent directors.”
We do not believe that any of our directors currently meet the definition of
“independent” as promulgated by the rules and regulations of the American Stock
Exchange.
Item
14. Principal Accounting Fees and Services.
The
Company has had the following independent registerd public accounting
firms:
From
February 21, 2007 and through the subsequent periods for the fiscal year ended
December 31, 2007, and for the three and six months ended March 31, 2008 and
June 30, 2008, respectively, our principal independent auditor was Wolinetz,
Lafazan & Company, P.C. (“Wolinetz”).
From
November 12, 2008 and through subsequent periods for the nine months ended
September 30, 2008, the fiscal year ended December 31, 2008, and for the three
months ended March 31, 2009, our principal independent auditor was Barzily and
Company ("Barzily").
Thereafter,
we engaged Rotenberg Meril Solomon Bertiger & Guttilla, P.C. (“RMSBG”) for
the six and nine months ended June 30, 2009 and September 30, 2009,
respectively, and the fiscal year ended December 31, 2009.
Audit
Fees
The
aggregate fees billed by Wolinetz for professional services rendered for the
review of the Company’s financial statements included in the Company’s Quarterly
Reports on Form 10-Q for the three and six month periods ended March 31, 2008
and June 30, 2008, respectively, during fiscal year 2008 were
$4,500.
The
aggregate fees billed by Barzily for professional services rendered for the
audit of the Company’s annual financial statements for the fiscal year ended
December 31, 2008, and for the review of the financial statements included in
the Company’s Quarterly Reports on Form 10-Q for the nine months ended September
30, 2008, during fiscal years 2008 were $6,000.
12
The
aggregate fees billed by Barzily for professional services rendered for the for
the review of the financial statements included in the Company’s Quarterly
Reports on Form 10-Q for the three months ended March 31, 2009, during fiscal
year 2009 were $1,000.
The
aggregate fees billed by RMSBG for professional services rendered for the audit
of the Company’s annual financial statements for the fiscal year ended December
31, 2009, and for the review of the financial statements included in the
Company’s Quarterly Reports on Form 10-Q for the six and nine months ended June
30, 2009 and September 30, 2009, respectively, during fiscal year 2009 were
$52,000.
Audit-Related
Fees
We did
not incur any audit related fees during the fiscal years ended December 31, 2009
or 2008.
Tax
Fees
Our
principal independent registered public accounting firms did not perform any tax
related services for us during the fiscal years ended December 31, 2009 or 2008.
All
Other Fees
Our
independent registered public accounting firms did not perform any other
services for us during the fiscal years ended December 31, 2009 or
2008.
PRE-APPROVAL
OF SERVICES
We do not
have an audit committee. Our Board of Directors pre-approves all services,
including both audit and non-audit services, provided by our independent
accountants. For audit services, each year the independent auditor provides our
Board of Directors with an engagement letter outlining the scope of the audit
services proposed to be performed during the year, which must be formally
accepted by the Board of Directors before the audit commences. The independent
auditor also submits an audit services fee proposal, which also must be approved
by the Board of Directors before the audit commences.
PART
IV
Item 15. Exhibits. Financial Statement
Schedules.
Description
|
||
3.1
|
Articles
of Incorporation of Registrant (annexed to the Registration Statement on
Form SB-2 filed with the Securities and Exchange Commission on December 6,
2007 and incorporated herein by reference)
|
|
3.2
|
By-Laws
of Registrant (annexed to the Registration Statement on Form SB-2 filed
with the Securities and Exchange Commission on December 6, 2007 and
incorporated herein by reference)
|
|
10.1
|
Form
of Regulation S Subscription Agreement (annexed to the Registration
Statement on Form SB-2 filed with the Securities and Exchange Commission
on December 6, 2007 and incorporated herein by
reference)
|
|
31.1
|
Certification pursuant
to Section 302 of the Sarbanes-Oxley Act (filed
herewith)
|
|
32.1
|
Certification of
Principal Executive Officer and Principal Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley (filed
herewith)
|
13
SIGNATURES
In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Date:
April 15, 2010
|
||
CASEYCORP ENTERPRISES, INC.
|
||
By:
|
/s
|
|
Name:
Eduard Musheyev
|
||
Title:
President, Chief Executive Officer,
Chairman, and Director (Principal Executive, Financial, and Accounting Officer) |
In
accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
Date:
April 15, 2010
|
By:
|
/s/
|
Name:
Eduard Musheyev
|
||
Title:
President, Chief Executive Officer,
Chairman, and Director (Principal Executive, Financial, and Accounting Officer) |
14
CASEYCORP ENTERPRISES,
INC
INDEX
TO FINANCIAL STATEMENTS
DECEMBER
31, 2009
Page
|
|
Reports
of Independent Registered Public Accounting Firms
|
F-1
& F-2
|
Consolidated
Financial Statements:
|
|
Consolidated
Balance Sheets as of December 31, 2009 and 2008
|
F-3
|
StConsolidated
Statements of Operations for the years ended December 31, 2009 and
2008
|
F-4
|
StConsolidated
Statements of Stockholders' Equity (Deficiency) for the years ended
December 31, 2009 and 2008
|
F-5
|
Consolidated
Statements of Cash Flows for the years ended December 31, 2009 and
2008
|
F-6
|
Notes
to Consolidated Financial Statements
|
F-7
|
REPORT
OF INDEPENDENT REGISTERED ACCOUNTING FIRM
To the
Board of Directors and Stockholders of
CaseyCorp
Enterprises, Inc.
We have
audited the accompanying consolidated balance sheet of CaseyCorp Enterprises,
Inc. and Subsidiaries (the "Company") as of December 31, 2009, and the related
consolidated statements of operations, changes in stockholders’ equity
(deficiency) and cash flows for the year then ended. The consolidated
financial statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these financial statements based on
our audit. The financial statements of the Company as of and for the
year ended December 31, 2008 were audited by other auditors whose report dated
March 23, 2009 on those statements included an explanatory paragraph describing
conditions that existed that raised substantial doubt about the Company's
ability to continue as a gong concern.
We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of the Company as of December
31, 2009 and the results of its operations and cash flows for the year then
ended in conformity with accounting principles generally accepted in the United
States of America.
On January 1, 2009, the Company
adopted FASB ASC 805, "Business Combinations."
/s/ ROTENBERG
MERIL SOLOMON BERTIGER & GUTTILLA, P.C.
ROTENBERG
MERIL SOLOMON BERTIGER & GUTTILLA, P.C.
Saddle
Brook, New Jersey
April 15,
2010
F-1
REPORT
OF INDEPENDENT REGISTERED ACCOUNTING FIRM
To the
Board of Directors and Stockholders
CaseyCorp
Enterprises, Inc.
We have
audited the accompanying balance sheet of CaseyCorp Enterprises, Inc. (a
Development Stage Company) (the "Company") as of December 31, 2008 and the
related statements of operations, stockholders’ deficiency and cash flows for
the year then ended. These financial statements are the
responsibility of the Company’s management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of CaseyCorp Enterprises, Inc. as of
December 31, 2008 and the results of their operations and cash flows for the
year then ended in conformity with accounting principles generally accepted in
the United States of America.
The
accompanying financial statements have been prepared assuming the Company will
continue as a going concern. The Company has incurred an operating loss for the
period February 21, 2007 (inception) to December 31, 2008, had no revenues and
had not commenced planned principal operations as of the date of our report.
These factors raised substantial doubt about the Company’s ability to continue
as a going concern. The financial statements did not include any adjustments
that might have resulted from the outcome of this uncertainty.
/s/ Barzily
& Co.
Jerusalem,
Israel
March 23,
2009
F-2
CASEYCORP
ENTERPRISES INC. AND SUBSIDIARIES
CONSOLIDATED
BALANCE SHEETS
December
31,
|
December
31,
|
|||||||
2009
|
2008
|
|||||||
ASSETS
|
||||||||
CURRENT
ASSETS
|
||||||||
Cash
|
$ | 138,555 | $ | - | ||||
Accounts
receivable
|
562,774 | - | ||||||
Prepaid
expenses and other current assets
|
3,470 | - | ||||||
Total
current assets
|
704,799 | - | ||||||
Property
and equipment - net
|
12,884 | - | ||||||
Security
deposits
|
10,075 | - | ||||||
Intangible
assets – net
|
562,625 | - | ||||||
Goodwill
|
598,200 | - | ||||||
Total
assets
|
$ | 1,888,583 | $ | - | ||||
LIABILITIES
AND STOCKHOLDERS' EQUITY (DEFICIENCY)
|
||||||||
CURRENT
LIABILITIES
|
||||||||
Accounts
payable and accrued liabilities
|
$ | 31,062 | $ | 12,091 | ||||
Accounts
payable – related party
|
359,583 | - | ||||||
Income
taxes payable
|
84,185 | - | ||||||
Loan
payable, stockholder
|
68,432 | - | ||||||
Loan
payable
|
4,500 | 4,500 | ||||||
Total
current liabilities
|
547,762 | 16,591 | ||||||
LONG-TERM
LIABILITIES
|
||||||||
Deferred
income taxes
|
140,118 | - | ||||||
Total
liabilities
|
687,880 | 16,591 | ||||||
COMMITMENTS
|
||||||||
STOCKHOLDERS'
EQUITY (DEFICIENCY)
|
||||||||
Preferred
stock, $.0001 par value; 5,000,000 shares authorized; none issued and
outstanding
|
- | - | ||||||
Common
stock, $.0001 par value; 500,000,000 shares authorized; 45,000,000 and
22,000,000 issued and outstanding, respectively
|
4,500 | 2,200 | ||||||
Additional
paid-in capital
|
1,135,888 | 43,600 | ||||||
Retained
earnings (deficit)
|
60,315 | (62,391 | ) | |||||
Total
stockholders' equity (deficiency)
|
1,200,703 | (16,591 | ) | |||||
Total
liabilities and stockholders' equity (deficiency)
|
$ | 1,888,583 | $ | - |
See Notes
to Consolidated Financial Statements.
F-3
CASEYCORP
ENTERPRISES INC. AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF OPERATIONS
Year
|
Year
|
|||||||
Ended
|
Ended
|
|||||||
December
31,
|
December
31,
|
|||||||
2009
|
2008
|
|||||||
Revenues
|
$ | 45,299,368 | $ | - | ||||
Cost
of sales
|
44,855,282 | - | ||||||
Gross
profit
|
444,086 | - | ||||||
General
and administrative expenses
|
280,809 | 40,882 | ||||||
Income
(loss) from operations
|
163,277 | (40,882 | ) | |||||
Interest
expense
|
(360 | ) | (192 | ) | ||||
Income
(loss) before provision of taxes
|
162,917 | (41,074 | ) | |||||
Provision
for income taxes
|
40,211 | - | ||||||
Net
income (loss)
|
$ | 122,706 | $ | (41,074 | ) | |||
Basic
and diluted earnings (loss) per share:
|
$ | 0.00 | $ | 0.00 | ||||
Weighted
average number of shares outstanding
|
||||||||
Basic
and diluted
|
32,404,110 | 22,000,000 |
See Notes
to Consolidated Financial Statements.
F-4
CASEY
CORP ENTERPRISES INC. AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)
Additional
|
||||||||||||||||||||
Common
Stock
|
Paid-in
|
Accumulated
|
||||||||||||||||||
Shares
|
Amount
|
Capital
|
Deficit
|
Total
|
||||||||||||||||
Balances
at January 1, 2008
|
22,000,000 | $ | 2,200 | $ | 43,600 | $ | (21,317 | ) | $ | 24,483 | ||||||||||
Net
loss
|
- | - | - | (41,074 | ) | (41,074 | ) | |||||||||||||
Balances
at December 31, 2008
|
22,000,000 | 2,200 | 43,600 | (62,391 | ) | (16,591 | ) | |||||||||||||
Common
stock issued for services
|
500,000 | 50 | 200 | - | 250 | |||||||||||||||
Common
stock issued for acquisition of subsidiaries
|
22,500,000 | 2,250 | 1,092,088 | - | 1,094,338 | |||||||||||||||
Net
income
|
- | - | - | 122,706 | 122,706 | |||||||||||||||
Balances
at December 31, 2009
|
45,000,000 | $ | 4,500 | 1,135,888 | 60,315 | 1,200,703 |
See Notes
to Consolidated Financial Statements.
F-5
CASEYCORP
ENTERPRISES INC. AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CASH FLOWS
Year
|
Year
|
|||||||
Ended
|
Ended
|
|||||||
December
31,
|
December
31,
|
|||||||
2009
|
2008
|
|||||||
CASH
FLOWS FROM OPERATING ACTIVITIES
|
||||||||
Net
income (loss)
|
$ | 122,706 | $ | (41,074 | ) | |||
Adjustments
to reconcile net income (loss) to net cash provided by (used in) operating
activities:
|
||||||||
Common
stock issued for services rendered
|
250 | - | ||||||
Depreciation
and amortization
|
83,041 | - | ||||||
Deferred
income taxes
|
(43,974 | ) | ||||||
(Increase)
decrease in operating assets:
|
||||||||
Accounts
receivable
|
(562,774 | ) | - | |||||
Prepaid
expenses and other current assets
|
(750 | ) | - | |||||
Increase
(decrease) in operating liabilities:
|
||||||||
Accounts
payable
|
18,971 | 10,427 | ||||||
Accounts
payable - related party
|
359,583 | - | ||||||
Income
taxes payable
|
84,185 | - | ||||||
Net
cash provided by (used in) operating activities
|
61,238 | (30,647 | ) | |||||
CASH
FLOWS FROM INVESTING ACTIVITIES
|
||||||||
Cash
aquired in acquisition
|
13,828 | - | ||||||
Purchases
of property and equipment
|
(4,943 | ) | - | |||||
Net
cash provided by investing activities
|
8,885 | - | ||||||
CASH
FLOWS FROM FINANCING ACTIVITIES
|
||||||||
Proceeds
from stockholder loans - net
|
68,432 | - | ||||||
Proceeds
from borrowing
|
- | 4,500 | ||||||
Net
cash provided by financing activities
|
68,432 | 4,500 | ||||||
INCREASE
(DECREASE) IN CASH
|
138,555 | (26,147 | ) | |||||
CASH
- BEGINNING OF YEAR
|
- | 26,147 | ||||||
CASH
- END OF YEAR
|
$ | 138,555 | $ | - | ||||
Schedule
of non-cash investing and financing transactions:
|
||||||||
Issuance
of common stock for acquisitions of subsidiaries
|
$ | 1,094,338 | $ | - | ||||
Supplemental
disclosures of cash flow information:
|
||||||||
Cash
paid for:
|
||||||||
Interest
|
$ | - | $ | - | ||||
Taxes
|
$ | - | $ | - |
See Notes
to Consolidated Financial Statements.
F-6
CASEYCORP
ENTERPRISES, INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE
1 – GENERAL
CaseyCorp
Enterprises, Inc. ("CaseyCorp" or the "Company") was incorporated on February
21, 2007 under the laws of the State of Nevada. The Company
acts as a middleman aggregating gold, diamonds and other precious metals which
are purchased primarily from retail jewelers (who have purchased the products
from customers) and selling it to refiners. The Company originally
planned to focus on developing and distributing advanced surveillance and
security products.
On
November 10, 2009, the Company effectuated a one-for-one stock dividend of its
common stock. The
shares were issued on February 10, 2010. All share figures and per
share amounts and results in this Annual Report on Form 10-K are reflected on a
post-split basis.
NOTE
2 – ACQUISITIONS
In
January 2009, the Company adopted ASC 805, "Business Combinations" ("ASC
805"). ASC 805 changed how business acquisitions are accounted for
and will impact financial statements both on the acquisition date and in
subsequent periods.
On May
14, 2009, pursuant to a Stock Purchase Agreement, the Company acquired all of
the outstanding shares of ESM Refiners, Inc. ("ESM") from Eduard
Musheyev. Concurrent with the acquisition of ESM, Mr. Musheyev became
the president of the Company. ESM was a newly organized New York
corporation formed to enter into the business of being a wholesale buyer and
seller of gold, diamonds and other precious metals. The total
consideration for the acquisition of ESM was 11,250,000 shares of the Company’s
common stock valued at $984,000. The fair value of the acquisition
was determined using a discounted cash flow analysis based upon projected
financial information of the ESM business. In addition, the Company
allocated the purchase price to any intangible assets that are separable from
goodwill. An intangible asset may be recognized apart from goodwill if it is
able to be separated from the entity and sold. Factors contributing
to a purchase price that result in goodwill are customer contacts and reputation
within the industry.
The
purchase price allocation was determined to be as follows:
Intangible
assets
|
$
|
643,000
|
||
Goodwill
|
598,200
|
|||
Deferred
tax liability
|
(257,200
|
)
|
||
Total
net assets acquired
|
$
|
984,000
|
During
the fourth quarter of 2009, the Company completed its valuation of the
acquisition and reallocated a portion of the value originally assigned to
goodwill to its intangible assets. As such, goodwill, which
originally was recorded at $810,000, was decreased to $341,000, before taking
into account the effects of deferred income taxes.
F-7
On
October 2, 2009, pursuant to an amended stock purchase agreement, the Company
acquired all of the outstanding shares of EZSellGold.com, Inc., (“EZS")
from Mr. Musheyev. EZS is a New York corporation engaged in the business of
purchasing gold and diamonds from consumers. The total consideration for the
acquisition of EZS was 11,250,000 shares of the Company’s common stock valued at
$110,338. The acquisition was accounted for as a transaction between
entities under common control. As such, the net assets acquired were
recorded at their carrying amounts at the date of the acquisition.
The
purchase price allocation was determined to be as follows:
Cash
|
$
|
13,827
|
||
Prepaid
expenses
|
2,720
|
|||
Property
and equipment, net
|
10,608
|
|||
Other
assets
|
10,075
|
|||
Deferred
tax asset
|
73,108
|
|||
Total
net assets acquired
|
$
|
110,338
|
The
following unaudited pro forma summary represents consolidated results for the
Company as if the acquisitions had been consummated on January 1, 2008. The pro
forma information presented in the table below does not necessarily reflect the
actual results that would have been achieved, nor is it necessarily indicative
of future consolidated results of the Company for the years ended December 31,
2009 and 2008.
Year Ended
Ended
|
||||||||
December
31,
|
||||||||
2009
|
2008
|
|||||||
Revenue
|
$ | 45,569,997 | $ | 25,705 | ||||
Net income
(loss)
|
$ | 124,235 | $ | (225,372 | ) | |||
Earnings
(loss) per share,
|
||||||||
basic
and diluted
|
$ | 0.00 | $ | (0.01 | ) |
NOTE
3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Adoption
of FASB Accounting Standards Codification
Effective
July 1, 2009, the Financial Accounting Standards Board’s (“FASB”) Accounting
Standards Codification ("ASC") became the single official source of
authoritative, nongovernmental generally accepted accounting principles (“GAAP”)
in the United States. The historical GAAP hierarchy was eliminated and the ASC
became the only level of authoritative GAAP, other than guidance issued by the
Securities and Exchange Commission. Our accounting policies were not affected by
the conversion to ASC. However, references to specific accounting standards in
the footnotes to our consolidated financial statements have been changed to
refer to the appropriate section of ASC.
F-8
Principles of Consolidation
The
accompanying consolidated financial statements include the accounts of ESM and
EZS, the Company’s wholly-owned subsidiaries. All significant inter-company
balances and transactions have been eliminated.
Use
of Estimates
These
financial statements and accompanying notes have been prepared in accordance
with accounting principles generally accepted in the United States of America.
The preparation of these financial statements requires management to make
estimates, judgments and assumptions that affect the reported amounts of assets,
liabilities, revenues and expenses. The Company continually evaluates the
accounting policies and estimates we use to prepare the consolidated financial
statements. The Company bases its estimates on historical experiences and
assumptions believed to be reasonable under current facts and circumstances.
Actual amounts and results could differ from these estimates made by
management.
Accounts
Receivable
Accounts
receivable are recorded net of an allowance for doubtful accounts based upon
management's analysis of the collectivity of the balances. At December 31,
2009, no allowance was necessary as the accounts receivable were fully collected
in January 2010.
Revenue
Recognition
The
Company follows the guidance of the Securities and Exchange Commission’s Staff
Accounting Bulletin No. 104 for revenue recognition. The Company records
revenue when all of the following have occurred; (1) persuasive evidence of an
arrangement exists, (2) product delivery has occurred, (3) the sales price to
the customer is fixed or determinable, and (4) collectability is reasonably
assured.
The
Company earns revenue from the sale of melted precious metals, including gold,
silver and platinum. Revenue is recorded upon acceptance by the refiner and the
weight is set in troy ounces. Once the refiner accepts the items (acceptance is
defined as the refiner taking title to the precious metals and bearing the risk
of loss), the Company permits no returns from the refiner. The refiner remits
payment to the Company based upon what the refiner determines to be the fair
value of the precious metals. Upon transfer of the precious metals to the
refiner, the Company has no further obligations.
Cost
of Revenues
The
Company includes in cost of sales the cost of precious metal purchases and
refining fees.
F-9
Concentration
of Credit Risk
The
Company maintains its cash balances at several major financial institutions
located in New York. At December 31, 2009, accounts at each institution are
insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000.
Certain additional amounts are FDIC insured under the Transaction Account
Guarantee Program. The Company had no amounts over the insured limits at
December 31, 2009 and 2008. The Company has not incurred any losses
on these accounts.
Basic
and Diluted Earnings (Loss) per Share
Basic
earnings (loss) per share is computed by dividing the net income (loss) by the
weighted average number of shares of common stock outstanding during the period.
Diluted income (loss) per share is computed similar to basic income (loss) per
share except that the denominator is increased to include the number of
additional common shares that would have been outstanding if the potential
common shares had been issued and if the additional common shares were dilutive.
There were no dilutive financial instruments issued and outstanding as of
December 31, 2009 and 2008.
Income
Taxes
The
Company accounts for income taxes in accordance with accounting guidance now
codified as FASB ASC 740, "Income Taxes," which requires that the Company
recognize deferred tax liabilities and assets based on the differences between
the financial statement carrying amounts and the tax bases of assets and
liabilities, using enacted tax rates in effect in the years the differences are
expected to reverse. Deferred income tax benefit (expense) results from the
change in net deferred tax assets or deferred tax liabilities. A valuation
allowance is recorded when it is more likely than not that some or all deferred
tax assets will not be realized.
The
Company has adopted the provisions of FASB ASC 740-10-05 "Accounting for
Uncertainty in Income Taxes." The ASC clarifies the accounting for
uncertainty in income taxes recognized in an enterprise's financial
statements. The ASC prescribes a recognition threshold and
measurement attribute for the financial statement recognition and measurement of
a tax position taken or expected to be taken in a tax return. The ASC
provides guidance on de-recognition, classification, interest and penalties,
accounting in interim periods, disclosure and transition.
Fair
Value of Financial Instruments
Substantially
all of the Company’s financial instruments, consisting primarily of accounts
receivable, accounts payable and accrued expenses, accounts payable – related
party and loans payable, are carried at, or approximate, fair value because of
their short-term nature or because they carry market rates of
interest.
F-10
Property and
Equipment
Property
and equipment are stated at cost. Depreciation is provided for by the
straight-line method over the estimated useful lives of five years. Long-lived
assets are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of the asset may not be
recoverable.
Intangible
Assets
Intangible
assets are amortized using the straight-line method over the period of expected
benefit. Intangible assets are reviewed for impairment whenever
events or changes in circumstances indicate that the related carrying amount may
be impaired.
Website
Development Costs
The
Company's internal website development processes are relatively short-term in
nature. The costs incurred in the preliminary stages of development are expensed
as incurred. Once an application has reached the development stage, internal and
external costs, if direct and incremental, will be capitalized and amortized on
a straight-line basis over the estimated useful life. Maintenance and
enhancement costs are typically expensed as incurred unless such costs relate to
substantial upgrades and enhancements to the website that result in added
functionality in which case, the costs will be capitalized.
Goodwill
Goodwill
consists of the excess of cost over net assets acquired of ESM. Goodwill is not
amortized, but is tested at least annually for impairment, or if circumstances
change that will more likely than not reduce the fair value of the reporting
unit below its carrying amount. The Company has performed its first impairment
test in the last quarter of 2009 and will perform annual impairment testing on a
recurring basis in the last quarter of each year. Impairments, if any, will be
expensed in the year incurred. As of December 31, 2009, there was no impairment
to goodwill.
Advertising
and Marketing
The
Company expenses advertising and marketing costs as incurred.
Development
Stage
From
inception through the first quarter of 2009, the Company was in the development
stage as it had not yet commenced planned principal operations. FASB
ASC 915, "Development Stage Entities," defines a development stage activity
as one in which all efforts are devoted substantially to establishing a new
business and even if planned principal operations have commenced, revenues are
insignificant. As of the second quarter of 2009, commencing with the
acquisition of ESM, the Company was no longer in the development
stage.
F-11
Recently
Issued Accounting Pronouncements
In
January 2009, the Company adopted FASB ASC 350, "Intangibles – Goodwill and
Other" ("ASC 350") and FASB ASC 275, "Risks and Uncertainties" ("ASC
275"). ASC 350 and ASC 275 amended the factors an entity should
consider in developing renewal or extension assumptions used in determining the
useful life of recognized intangible assets under ASC 350 and ASC
275. This new guidance applies prospectively to intangible assets
that are acquired individually or with a group of other assets in business
combinations and asset acquisitions. The adoption of ASC 350 and ASC
275 did not have an impact on the Company’s consolidated financial
statements.
In
January 2009, the Company adopted FASB ASC 810, “Consolidation” (“ASC
810”). ASC 810 changed the accounting and reporting for
minority interests, which will be recharacterized as noncontrolling interests
and classified as a component of equity. ASC 810 was effective for
the Company beginning in the first quarter of 2009. The adoption of
ASC 810 did not have an impact on the Company’s consolidated financial
statements.
Management
does not believe that any other recently issued, but not yet effective,
accounting standard if currently adopted would have a material effect on the
accompanying financial statements.
NOTE
4 – PROPERTY AND EQUIPMENT, NET
Property
and equipment at December 31, 2009 consisted primarily of office equipment
totaling $13,722. Accumulated depreciation at December 31, 2009
amounted to $838. The Company did not have any property and equipment at
December 31, 2008.
Depreciation amounted to
$838 for the year ended December 31, 2009.
NOTE
5 – INTANGIBLE ASSETS
At
December 31, 2009, intangible assets represent the following:
|
1.
|
The
value of the exclusive purchasing agreement entered into by ESM (see Note
6) totaling $643,000 being amortized over the initial term of the contract
of five years and
|
|
2.
|
Website
development costs of EZS being amortized over an estimated useful life of
three months. These costs were fully amortized as of December
31, 2009.
|
F-12
Amortization
amounted to $80,375 for the year ended December 31, 2009. Estimated
amortization expense for each of the fiscal years 2010 through 2013 is $128,600
and $48,225 in fiscal 2014.
NOTE
6 – ACCOUNTS PAYABLE – RELATED PARTY
On May
14, 2009, the ESM entered into an exclusive purchasing agreement with Ed &
Serge Gold and Diamond, Inc. (“ESGD”), an entity wholly-owned by one of the
Company’s stockholders. Under the agreement, ESGD has agreed not to sell any
gold and diamonds to any other party other than ESM. ESM retains the right,
however, to purchase from other vendors. Under the agreement, ESGD has agreed to
invoice the Company at cost plus .05% on daily sales of up to $250,000 and .025%
of daily sales over on amounts over $250,000. The agreement is for five years
and automatically renews for additional one year periods unless notified by
either party within thirty days prior to the end of the term. Substantially all
of the merchandise purchases that were made by the Company for the year ended
December 31, 2009 were from ESGD. At December 31, 2009, the Company
owed ESGD $359,583.
NOTE
7 – LOANS PAYABLE - STOCKHOLDER
Loans
payable – stockholder consist of non-interest bearing advances due on
demand. At December 31, 2009 and 2008, the balance owed to the
stockholder amounted to $68,432 and $0, respectively.
NOTE
8 - INCOME TAXES
The
Company and its subsidiaries file a consolidated income tax return. The
provision for income taxes consists of the following:
2009
|
2008
|
|||||||
Current:
|
||||||||
Federal
|
$
|
71,557
|
$
|
—
|
||||
State
and local
|
12,628
|
—
|
||||||
Total
|
84,185
|
—
|
||||||
Deferred:
|
||||||||
Federal
|
(37,378)
|
—
|
||||||
State
and local
|
(6,596)
|
—
|
||||||
Total
|
(43,974)
|
—
|
||||||
Total
provision for income taxes
|
$
|
40,211
|
$
|
—
|
The
following is a reconciliation between the federal statutory rate of 34% and the
effective rate:
F-13
2009
|
2008
|
|||||||
Expected
tax provision at a 34% rate
|
$
|
55,392
|
$
|
(13,965)
|
||||
Effect
of state and local income taxes
|
9,775
|
(2,464)
|
||||||
Net
operating loss carry forward
|
(11,824)
|
16,430
|
||||||
Net
operating loss utilized
|
(13,132)
|
—
|
||||||
Total
provision for income taxes
|
$
|
40,211
|
$
|
—
|
The
components of deferred tax assets and liabilities are as follows:
2009
|
2008
|
|||||||
Intangible
assets
|
$
|
(225,050)
|
$
|
—
|
||||
Net
operating loss carry forward
|
84,932
|
24,956
|
||||||
Total
deferred tax (liabilities) assets
|
(140,118)
|
24,956
|
||||||
Valuation
allowance
|
—
|
(24,956)
|
||||||
Net
deferred tax liability
|
$
|
(140,118)
|
$
|
—
|
At
December 31, 2008, CaseyCorp had available $62,391 of net operating loss carry
forwards. Due to the uncertainty of their realization, no income tax
benefit was recorded by the Company for these loss carry forwards as valuation
allowances have been established for any such benefits. At December
31, 2009, Caseycorp has available $29,561 of net operating loss carry forwards
expiring in fiscal 2028.
As
described in Note 2, CaseyCorp acquired ESM and EZS through the issuance of its
common stock. Due to changes in stock ownership, the use of
Caseycorp's net operating loss carry forwards is limited under Section 382
of the Internal Revenue Code. The Company expects to be able to fully utilize
the net operating losses in future years.
At
December 31, 2009, EZS had pre-acquisition net operating loss carry forwards of
$182,770. These losses can only be applied against taxable income
earned by EZS. The Company expects to be able to fully utilize the net operating
losses in future years.
At December 31, 2009 and 2008, the
Company had no material unrecognized tax benefits and no adjustments to
liabilities or operations were required. The Company does not expect that its
unrecognized tax benefits will materially increase within the next twelve
months. We
recognize interest and penalties related to uncertain tax positions in general
and administrative expense. As of December 31, 2009 and 2008, we have not
recorded any provisions for accrued interest and penalties related to uncertain
tax positions.
The
Company files federal, state and local income tax returns in jurisdictions with
varying statutes of limitations. The 2006 through 2008 tax years generally
remain subject to examination by federal, state and local tax
authorities.
F-14
NOTE
9 – STOCKHOLDERS' EQUITY (DEFICIENCY)
In
January 2009, the Company issued 500,000 shares of its common stock to service
providers in consideration of services rendered totaling $250.
On May
14, 2009, the Company issued 11,250,000 shares of its common stock to
acquire ESM. See Note 2.
On
October 1, 2009, the Company issued 11,250,000 shares of its common stock to
acquire EZS. See Note 2
NOTE
10 – SALES AND MAJOR CUSTOMERS
Two
customers accounted for 82% and 16% of total revenues for the year ended
December 31, 2009. At December 31, 2009, these two customers accounted for 58%
and 42% of accounts receivable.
NOTE
11 - COMMITMENTS
Employment
Agreement
On May
14, 2009, the Company appointed Eduard Musheyev as President. In connection
with his appointment, the Company and Mr. Musheyev entered into a five-year
employment agreement pursuant to which Mr. Musheyev will be paid an annual base
salary of $120,000 provided that, in the event, the Company, as measured on a
year to date basis, has a net loss, the base salary will be accrued and not paid
until the Company has a positive net income. Mr. Musheyev is also
entitled to bonuses, as determined from time to time by the Company's board of
directors, based on the Company's profitability and earnings goals, as
determined in a bonus plan to be adopted by the board of directors.
Leases
EZS
leases office space in New York, New York at a monthly rental of $5,000. The
lease expires in October 2013. In addition, the Company shares space
with ESDG and pays ESDG rent on a month-to-month basis of $3,000.
Future
minimum rentals under this lease are as follows:
Year
ending
December
31,
|
||||
2010
|
$ | 60,000 | ||
2011
|
$ | 60,000 | ||
2012
|
$ | 60,000 | ||
2013
|
$ | 50,000 | ||
Total
|
$ | 230,000 |
Rent
expense amounted to $46,550 and $0 for the years ended December 31, 2009 and
2008, respectively.
F-15