Attached files
| file | filename |
|---|---|
| EX-32.1 - Willing Holding, Inc. | v181194_ex32-1.htm |
| EX-31.1 - Willing Holding, Inc. | v181194_ex31-1.htm |
| EX-10.13 - Willing Holding, Inc. | v181194_ex10-13.htm |
| EX-10.12 - Willing Holding, Inc. | v181194_ex10-12.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-K
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE
SECURUTIES EXCHANGE ACT OF 1934
For the
fiscal year ended December 31, 2009
Commission
File Number 000-53234
WILLING HOLDING,
INC.
(Exact
name of registrant as specified in its charter)
Florida
(State or
other jurisdiction of incorporation or organization)
21218 St.
Andrews Ave., #131
Boca Raton, FL 33432
(Address
of principal executive offices, including zip code.)
(561)
705-4386
(telephone
number, including area code)
Securities
registered pursuant to Section 12(b) of the Act:
None
Securities
registered pursuant to section 12(g) of the Act:
Common
Stock, $.001 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 o 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 x No o
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. o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
|
Large
accelerated filer o
|
Accelerated
filer o
|
|
Non-accelerated
filer o
|
Smaller
reporting company x
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
Yes o No x
The
aggregate market value of the voting stock held by non-affiliates of the
registrant, as of June 30, 2009, was approximately $2,627,916 based upon
the price the shares were last sold. For purposes of this disclosure, shares of
common stock held by persons who hold more than 5% of the outstanding shares of
common stock and shares held by executive officers and directors of the
registrant have been excluded because such persons may be considered to be
affiliates. This determination of affiliate status is not necessarily a
conclusive determination for other purposes.
Indicate
the number of shares outstanding of each of the registrant’s classes of common
stock, as of the latest practicable date: as of April 13, 2010
there were 27,802,344 Class A Common Stock and 1,500,000 shares of Class B
Common Stock.
WILLING
HOLDING, INC.
TABLE OF
CONTENTS
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Page No.
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Part
I
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Item
1.
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Business
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3 | |||
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Item
2.
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Properties
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7 | |||
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Item
3.
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Legal
Proceedings
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7 | |||
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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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8 | |||
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Item
7.
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Management’s
Discussion and Analysis of Financial Condition and Plan of
Operation
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9 | |||
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Item
9A (T)
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Controls
and Procedures
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13 | |||
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Item
9B.
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Other
Information
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14 | |||
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Item
10.
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Financial
Statements
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15 | |||
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Part
III
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Item
11.
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Directors
and Executive Officers
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16 | |||
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Item
12.
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Executive
Compensation
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19 | |||
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Item
13.
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Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
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19 | |||
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Item
14.
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Certain
Relationships and Related Transactions
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20 | |||
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Item
15.
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Principal
Accounting Fees and Services
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21 | |||
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Part
IV
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Item
16.
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Exhibits
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22 | |||
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Signatures
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23 | ||||
2
FORWARD
LOOKING STATEMENTS
Statements
included in this Annual Report that do not relate to present or historical
conditions are called “forward-looking statements.” Such forward-looking
statements involve known and unknown risks and uncertainties and other factors
that could cause actual results or outcomes to differ materially from those
expressed in, or implied by, the forward-looking statements. Forward-looking
statements may include, without limitation, statements relating to our plans,
strategies, objectives, expectations and intentions. Words such as “believes,”
“forecasts,” “intends,” “possible,” “estimates,” “anticipates,” “plans,”
“could,” “will” and similar expressions are intended to identify forward-looking
statements. Our ability to predict projected results or the effect of events on
our operating results is inherently uncertain. Forward-looking statements should
not be read as a guarantee of future performance or results, and will not
necessarily be accurate indications of the times at, or by which, such
performance or results will be achieved. Important factors that could cause
actual performance or results to differ materially from those expressed in, or
implied by, forward-looking statements include, but are not limited to: (i)
industry competition, conditions, performance and consolidation, (ii)
legislative and/or regulatory developments, (iii) our ability to grow our
business through the acquisition of complementary businesses, (iv) risks
associated with acquisition and the integration of assets or businesses we
intend to acquire, (v) the effects of adverse general economic conditions, both
within the United States and globally, (vi) success in retaining or recruiting
officers, directors and employees, (vii) potential inability to obtain
additional financing, particularly in light of the current liquidity crisis
occurring in the United States and globally, (viii) limited pool of target
businesses, and (ix) other factors described under “Risk Factors”
below.
Forward-looking
statements speak only as of the date the statements are made. We assume no
obligation to update forward-looking statements to reflect actual results,
changes in assumptions or changes in other factors affecting forward-looking
information except to the extent required by applicable securities laws. If we
update one or more forward-looking statements, no inference should be drawn that
we will make additional updates with respect thereto or with respect to other
forward-looking statements.
DESCRIPTION
OF OUR COMPANY AND ITS PREDECESSOR
Our
Company
We were
organized as a technology company in 2005 and initially focused our efforts in
the telecommunications industry and the development and sale of Internet-based
products and services. Our operations have primarily been the telemarketing of
various products and services through our subsidiary New World Mortgage, Inc.
(“New World”). Initially, New World’s telemarketing consisted of
selling residential and commercial mortgages and related products. However, as a
result of the recent decline in the mortgage industry and the real estate
market, New World has re-trained its telemarketing and sales personnel to
provide new Internet marketing products and services including search engine
optimization (“SEO”).
History
of the Business
Willing
Holding, Inc.
We were
organized as a limited liability company in Florida in November 2005 under the
name The Perfect Web LLC, and operated as a subsidiary of Perfect Web
Technologies, Inc. (“PWTI”). PWTI created this subsidiary for the
purpose of building a telecommunications, technology and marketing
company.
From 2006
to 2007, we began putting together our management team and a group of
consultants to research the telecommunications and Internet marketing market and
search for potential state and government contract and business
opportunities.
We filed
a certificate of conversion with the Secretary of State of Florida to convert to
a Florida profit corporation in August 2007, changing our name to The Perfect
Web, Inc., and then changed our name again to Willing Holding, Inc. in January
2008. On July 31, 2008, our then-majority shareholder, PWTI, spun-off 1,000,880
of its shares of our common stock to its shareholders. PWTI then returned to us
the remaining 18,999,120 shares of our common stock for cancellation, effective
as of the same date. The purpose of the cancellation was so that we could be an
independent operating company after the spin-off. PWTI did not receive any
compensation for the cancelled shares.
New
World Mortgage, Inc.
During
2008, we moved to complete our management team by locating experienced sales
personnel. Having met and interviewed Mr. Kevin Leonard, the principal at New
World Mortgage, Inc. (“New World”), we decided to acquire Mr. Leonard’s sales
and marketing team and telemarketing call center through the acquisition of New
World.
On April
15, 2008, we acquired 100% of the outstanding common stock of New World, a
California corporation organized in March 2001, in exchange for issuing 25,000
shares of our common stock to Francis Leonard, the father of Kevin Leonard and
previously the sole shareholder of New World. Since October 15, 2008, we and
Francis Leonard have had the right to rescind the acquisition transaction on the
terms set forth in the stock purchase agreement, including for example,
bankruptcy of either party, death or permanent disability of Mr. Francis
Leonard, failure of New World to maintain certain cash flow margins or our
failure to use our best efforts to fund the growth of New World. This right of
rescission has no expiration date.
3
General
Development of Business and Overview
In 2003,
Mr. Kevin Leonard and his father, Francis Leonard, initially founded New World
as a privately held mortgage brokerage/banking firm. Until recently, as a
company providing mortgage brokerage/banking services, New World specialized in
both online and subprime lending and provided the following six distinct
services: New World’s home and commercial loan programs included: purchase,
refinance, debt consolidation, home equity loans, second mortgages, construction
loans, and home improvement loans to a wide range of credit
borrowers.
In July
2003, New World opened its first licensed location in the Southwestern United
States. By July 2004, New World had opened its first licensed location in the
Northeastern United States. In July 2006, the Company had licensed locations in
25 states and over 300 loan originators (“virtual loan officers”) and
independent service branches and launched an online Broker and Banker Platform.
Much of New World’s growth was attributable to its telemarketing call center
located in its main office in Murrieta, California.
New World
acted primarily as a mortgage broker generating potential home and commercial
clients. New World, through its telemarketing and sales efforts and its virtual
loan officers would utilize one-to-one relationships or its Broker and Banker
Platform to match a home and commercial client mortgage request with a mortgage
lender. In some situations, New World invested in mortgages by purchasing loans
and seeking to resell them to investors. Unsold mortgages were held
as company assets.
In 2006,
New World created an online Broker and Banker Platform to utilize the Internet
to cut down on the time it would take the virtual loan officers to create a data
file of information on a prospective mortgage client, process the data with the
mortgage lender or multiple lenders and obtain a mortgage commitment for a
particular client.
Online
Broker and Banker Platform
The
Broker and Banker platform is New World’s online lead generation technology that
offers a fast, online solution that matches a client’s mortgage loan information
with lenders’ mortgage products designed to cut down on the time to a mortgage
commitment.
The
Broker and Banker platform is made up of the following integrated
components:
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·
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Web
site Interface;
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Client
- online form and credit application;
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Online communication of mortgage products; | |
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Customer care support; | |
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Automated email tools; | |
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Product and pricing configuration for automated pre-qualified offers; and | |
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Offer conditions and rules-based closing costs. |
Mortgage
Loan Process
The
virtual loan officers independently develop marketing plans to locate potential
clients of home and commercial mortgages. The virtual loan officers distribute
the home and commercial mortgage leads to New World for the introduction to
mortgage lenders either manually or through New World’s Broker and Banker
Platform. New World has established relationships with mortgage lenders that
provided various home and commercial mortgage options. Clients seeking loan
products began the New World process either by contacting a virtual loan
officer, contacting New World via its telemarketing sales organization or by
completing a form located on its online Broker and Banker Platform. Clients
would also contact a virtual loan officer or a New World representative directly
to complete a qualification form based on the instructions and answers to
questions. After the qualification form was complete, New World’s Broker and
Banker Platform automatically retrieved the particular consumer’s credit score.
The clients’ data and credit scores are then automatically compared to the
underwriting criteria of the lenders with whom we had lending arrangements and
mortgage product. If a client qualified they could receive multiple loan offers
in response to a single request and then compare, review, and accept the offer
that best suited their needs.
Repositioning
of the Business
In late
2007, New World’s management recognized the downward trend in housing and a
demand for mortgage products and services. As a result, its management initiated
the development of our proprietary search engine optimization (“SEO”) products
and services at that time. The primary focus of SEO’s and in part, search engine
marketing (“SEM”) firms, is to provide a higher search engine ranking, drive
Internet traffic and improve indexing on the major search engines that in turn,
delivers qualified consumers.
As a
result, in 2009 New World ceased conducting business as a mortgage broker and
discontinued all its mortgage operations.
New
World’s Internet Marketing/Lead Generation and SEO Plan
Defining
SEO Markets
While the
overall number of searches continues to increase month by month, competition
between the top search engines, Google, Yahoo, Microsoft and to a lesser extent
Ask.com is marketed through new product, services and third party marketing
platforms. Google In July, 2009, Yahoo and Microsoft have agreed to a pact where
Microsoft will provide the underlying search technology on Yahoo’s popular Web
sites. The pact will more broadly showcase Microsoft’s recent
overhaul of its search engine, renamed Bing. The pact allows
Yahoo to focus the company on its strengths as a producer of Web media sites and
as a marketer in on-line display advertising. While Microsoft
receives access to Yahoo’s search technology, Yahoo receives a big bump in
annual revenues, 88% of the search-generated ad revenues from its own sites for
the first 5 years of the 10-year deal.
4
What
occurred during the competitive buildup and commercial success of search
technology is a new business has developed by smaller companies who have created
software and business applications that use the top search companies as the
building blocks of their business. Utilizing its experience in past development
of software for managing its mortgage brokering business and its current
telemarketing and sales organization to create business leads New World has
created its SEO platform to provide top rank search listings for small business
and professional service market.
New
World’s Local Search Platform
New World
has created a market niche by providing its Internet marketing/lead generation
and SEO subscription services to small businesses and professional service
providers in targeted geographic areas. The small
businesses and professional service providers may include the
following:
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Lawyers
specializing in specific areas like
divorce; DUI, personal injury in Los Angeles,
California;
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Accountants
who specialize in tax or estate planning in Hartford,
Connecticut;
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Real
estate brokers who specialize in vacation rentals in Orlando,
Florida;
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Plumbers
who specialized in clogged toilets in Boston, Massachusetts
;
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Electricians
who are needed in Miami, Florida;
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Florist
who sell roses in San Diego,
California.
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Starting
in 2008, New World began to create the foundation of its SEO business by
acquiring URL’s (Uniform
Resource Locator (“URL”) specifies where an
identified resource is available and the mechanism for retrieving it. The
best-known example of which is the address of a web page on the World Wide Web),
in targeted geographic locations for specific industries. Of which,
an example is www.attorneyintemecula.com. New
World now owns and manages hundreds of websites in local markets
throughout the US.
Through
the use of its software and business applications, New World works to get each
of their websites ranked in the top search requests for the geographic location
for a specific small business or professional service provider.
New
World’s Products and Revenue Streams
New
World’s primary revenue stream is driven by its established telemarketing sales
organization to drive local business to monthly and annual subscription for top
rank search listings in the Yahoo, Bing and Google local
search. In addition to its telemarketing and sales organization
New World utilizes its Internet marketing applications that include broadcast
e-mail and SEO technologies to attract a target market to its products and
services. New World’s SEO Platform positions its customers to come up for
multiple key search phrases, drive traffic to the customers
website, landing page and their Google, Yahoo and Bing
local business page.
New
World’s SEO Subscription Product
New
World’s SEO subscription service includes the following:
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Development
of website landing page for the
customer,
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Detailed
keyword research to identify the most effective key phrases to
target,
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Top
listing on Yahoo, Bing and Google local
search,
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Detailed
one-to-one consultation with you to outline
strategy,
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Customer
support that includes,
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Data
on hits and views of the website landing
page,
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Analytics
implementation & monitoring,
and
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Search
request tracking and reporting for customers and ROI
tracking.
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New World
uses its SEO platform and human expertise to optimize the URL managed by New
World and each page of a customer’s website for top search engine
placements. The entry level SEO subscription price starts at
$89.00 per month. New World also sells six month and yearly
subscriptions at a discount to the monthly price.
New
World’s Internet marketing/ lead generation product.
New
World’s Internet marketing product is a lead generator for specific business and
professional service providers. New World expands its SEO platform to
generate search engine placement results for a specific product or
service. The Internet marketing and lead generation product is geared
to those specific markets where individual leads may turn into large accounts
for the customer.
5
Examples
of customers for the Internet marketing/lead generation service may be real
estate agents selling high end properties. In this case New World
generates leads utilizing its SEO platform, gathers data on the quantity of
leads that will be created over a period of time then tests the quality of the
lead. When the lead generation data is complete New World sells the
leads in either or a combination of the following:
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at
a premium price; or
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a
percentage of the closed sale brought on by the
lead.
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Customers
who utilize the Internet marketing/lead generation service typically pay fees in
excess of $1,000.00 per lead sold.
COMPETITION
We face
intense competition in the search engine and Web portal
industry. Many other competitors are well established, have greater
resources and have a name and brand recognition. These companies also have
customer bases that are much larger than ours. We cannot be sure that our
targeting of small business and the professional service providers will be
successful in differentiating our services from those offered by our much larger
competitors and those smaller companies SEO, SEM and Internet advertising
companies.
Some of
the many small business SEO, SEM and Internet advertising competitors
include:
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At.com
local,
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TMP
Directional Marketing,
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Local
Search Ranking.com,
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15Miles.com, ListedFirst.com,
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GeoLocalSEO,
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eLocal
Listing,
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Customer
Magnetism.
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Customers
Our
existing customers are located primarily in the United States and are derived
from selling our Internet marketing/lead generation and SEO products and
services. We do not currently depend on one or a few customers for our business.
Our SEO products and service are sold on a subscription basis and our customers
are charged month to month for the service. Our Internet marketing/lead
generation premium services are sold on a lead by lead basis. We have
small businesses and professional service providers as customers and do not
anticipate relying on any major customers in the future.
Seasonality
Our SEO
business is not seasonal and we do not anticipate that we will be subject to
significant seasonal variations.
Research
and Development
New World
began conducting research and development activities for its SEO business in
2007.
Intellectual
Property
We intend
to protect our original intellectual property through a combination of
non-compete and confidentiality agreements, along with patents, copyrights
and/or trademarks as appropriate. Copyright laws and applicable trade secret
laws may protect our proprietary algorithms and computer code. However, we have
not initiated the process of applying for any federal copyright, trade mark or
other similar registration.
We do not
currently have adequate funds from operations to fund our growth strategy or any
acquisition. It is likely that we will seek financing through a combination of
debt and/or equity depending on the size and the terms of the acquisition. As a
result of the recent lack of liquidity in the credit markets, however, it is
unlikely that we will be able to borrow significant amounts of funds in order to
acquire companies. We will therefore need to utilize equity through either the
sale of our common stock publicly or privately or through the use of our common
stock as consideration in the acquisition of a company. However, we may not be
able to target or acquire strategic acquisitions on terms beneficial to us or
our internal growth may not develop as expected.
EMPLOYEES
AND EMPLOYMENT AGREEMENTS
On August
10, 2009, the Board accepted the resignation of Gideon D. Taylor as Chairman and
CEO. On August 10, 2009 the Board appointed Thomas L. DiStefano III
as Chairman of the Board and CEO.
BANKRUPTCY
OR SIMILAR PROCEEDINGS
There has
been no bankruptcy, receivership or similar proceeding.
COMPLIANCE
WITH GOVERNMENT REGULATION
We will
be required to comply with all regulations, rules and directives of governmental
authorities and agencies applicable to our general operations as well as
Internet commerce and operations.
6
NEED
FOR GOVERNMENT APPROVAL FOR ITS PRODUCTS OR SERVICES
We are
not required to apply for or have any government approval for our product or
services.
REPORTS
TO SECURITIES HOLDERS
We
provide an Annual Report that includes audited financial information to our
shareholders. We will make our financial information equally available to any
interested parties or investors through compliance with the disclosure rules for
a small business issuer under the Securities Exchange Act of 1934. We are
subject to disclosure filing requirements including filing Form 10K annually and
Form 10Q quarterly. In addition, we will file Form 8K and other proxy and
information statements from time to time as required. We do not intend to
voluntarily file the above reports in the event that our obligation to file such
reports is suspended under the Exchange Act. The public may read and copy any
materials that we file with the Securities and Exchange Commission, (“SEC”), at
the SEC’s Public Reference Room at 100 F Street NE, Washington, DC 20549.
The public may obtain information on the operation of the Public Reference Room
by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site
(http://www.sec.gov) that contains reports, proxy and information statements,
and other information regarding issuers that file electronically with the
SEC.
We
currently occupy approximately 6,000 sq. ft. at 41655 Date Street, Suite 200,
Murrieta, CA 92562 where the operations of New World are presently
conducted. We believe the existing facilities are in good or
excellent condition. The facilities are adequate for our current needs but may
not be in the future as we anticipate an increase in our full-time
employees. The lease term expired on December 31, 2007 and is
currently a month to month tenancy. The monthly base rent is
$3,000.00. In 2009, New World, in an understanding with Top
Rank Listing, Inc., moved the operational cost of the rent and utilities to be
paid by Top Rank Listing in consideration for New World utilizing its sales
organization to market Top Ranks Listing’s products and services. Up
until December 31, 2008 we occupied and leased approximately 1242 sq. ft. of
office space located at 3 Centerview Drive, Suite 240, Greensboro, North
Carolina 27407, for $1,242 per month. On March 24, 2010,
we negotiated a lease buyout on all past due and future rent due for $10,000.00
with the current landlord Security National Properties.
On April
24, 2007, Stearns Lending, Inc. (“Stearns”) instituted an action against New
World and Francis Leonard in the Superior Court of the State of California,
Riverside County, alleging breach of contract, specific performance,
express contractual indemnity, unjust enrichment and declaratory relief. The
complaint alleges that New World breached its indemnification obligations under
the Loan Broker/Correspondent Agreement it entered into with Stearns on or about
November 11, 2005. The agreement provided that New World would indemnify Stearns
and hold it harmless against any claim, loss, damage, cost or other liability
arising out of New World’s breach of any of its covenants, duties and/or
obligations under the agreement. One of its obligations was that it would
repurchase any loan Stearns funded that was found to be over 30 days delinquent
within the first 120 days. Stearns claims that New World acted as a broker for a
first and second mortgage to an individual in the aggregate amount of $622,000,
and that the loans were over 30 days delinquent in the first 120 days. The
complaint states that the defaults were never cured and that New World failed to
repurchase or indemnify Stearns. Stearns was seeking monetary compensatory
damages, which it claimed would likely exceed $622,000. New World and Stearns
commenced negotiations and in July 2008 entered into a settlement agreement. The
court has retained jurisdiction over the matter to enforce the terms of the
settlement agreement. On December 29, 2009, the court ordered the settlement and
judgment to be $75,557.50. As of the date of this
Annual Report, the judgment has not been satisfied.
On
September 20, 2007, Arthur Casale instituted an action in the Superior Court of
California, County of San Diego, against New World and 12 other defendants
including Kevin Leonard, New World’s chief executive officer. The plaintiff
alleges a “mass conspiracy” of New World, GMAC Mortgage, LLC, Mortgageit, Inc.,
and several other title and escrow companies whereby all of the defendants have
“come together to create a scheme” by which they could take the plaintiff’s home
in order to collect fees and commissions. The plaintiff claims $1,000,000 in
damages. The matter is currently pending, since the individual whom the
plaintiff accused of leading the conspiracy has died. A mediation occurred on
November 18, 2008, however, the parties were unable to come to an
agreement. We believe Mr. Casale’s claims are without merit, and we
intend to vigorously defend against the claim.
On
January 25, 2008, a judge in the Circuit Court for Prince George’s County,
Maryland, entered a judgment in favor of First Franklin Financial Corp. against
New World in the amount of $319,860 for breach of contract. As of the date of
this Annual Report, the judgment has not been satisfied.
On July
21, 2008, a default judgment against New World was entered in the United States
District Court of the Eastern District of New York in Gary Hosking v. New World
Mortgage, Inc. and New World Capital Holdings, Inc., Case No. 2007cv02200, for
failure to appear in a class action lawsuit under the Fair Labor Standards Act
to recover unpaid overtime compensation, liquidated damages, allegedly
unlawfully withheld wages, statutory penalties, and damages owed to certain loan
officers formerly employed by New World. The amount of damages and attorney’s
fees has yet to be determined by the court. On December 16, 2009, the
court determined that service on Kevin Leonard and Francis Leonard was not
effectuated.
7
On August
1, 2008, New World and NEC Financial Services Inc. (“NEC”) entered into a
stipulation for judgment in NEC Financial Services Inc. v. New World Mortgage,
Inc. and Francis Leonard, Case No. RIC 445282, in the Superior Court of the
State of California, County of Riverside, whereby New World agreed to pay NEC
the sum of $86,300 (the “Stipulation Amount”) for its breach of certain
equipment leases. The court entered a judgment in the principal amount of
$132,656 which shall be stayed so long as New World pays NEC the Stipulation
Amount in installments over the course of the next three years.
On
October 30, 2008, in First Collateral Service, Inc. v. New World Mortgage, Inc.;
Francis Thomas Leonard, Case No. 74 148 Y 00479 08 LUCM, an arbitrator for the
American Arbitration Association in the State of New York entered a judgment
against New World in favor of First Collateral Service, Inc. (“First
Collateral”) in the amount of $702,751 (“Judgment Amount”) which represents two
performing loans which First Collateral has not been able to sell. The judgment
was entered as a result of New World, Francis Leonard and First Collateral
entering into a settlement agreement and release whereby New World and Francis
Leonard agreed to have a judgment entered against them for the Judgment Amount.
New World believes that First Collateral will eventually be able to sell these
two loans but in this economic climate, it is difficult to predict exactly when.
At such time as those loans are sold, New World will be credited with the sale
amount, but will be liable for any short fall, costs and fees not otherwise
absorbed. As of the date of this Annual Report, the judgment has not been
satisfied.
On
December 3, 2008, a default judgment against New World was entered in the
Supreme Court of the State of New York, County of Suffolk, in 900 Merchant’s
Concourse, LLC v. Geneva Funding Corp., New World Mortgage, Inc. and Domenick
Pisciotta, Index No. 005167/2008, in favor of 900 Merchant’s Concourse, LLC in
the amount of $375,000 plus interest and costs. As of the date of this Annual
Report, the judgment has not been satisfied.
Except as
set forth above, based on the information available to us, we do not believe we
are currently subject to any other material litigation or legal proceeding. We
are party to other litigations and other litigations may arise in the
future which may be material and may or may not be in the ordinary
course of business.
Because
the eventual outcome of any litigation is hard to predict, we are not certain
whether the eventual outcome of any new litigation will have a material adverse
effect on our business. In addition, we may become involved in other litigation
from time to time relating to claims arising in the ordinary course of our
business which, even if not meritorious, could result in the expenditure of
significant financial and managerial resources.
ITEM
5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
Our
common stock was listed on the OTC Bulletin Board on August 19, 2009 under the
symbol “WHDX”. The high and low bid prices reflect trading in
our Common Stock between that date and December 31, 2009.
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HIGH
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LOW
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HIGH
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LOW
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BID
PRICES
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ASK
PRICES
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Fiscal Year
2009:
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Third
Quarter
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$
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.25
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$
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.25
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$
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1.01
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$
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1.00
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Fourth
Quarter
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$
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.25
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$
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.25
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$
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1.01
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$
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1.00
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(b) HOLDERS
- As of April 13, 2010, there were 198 shareholders of record of
the Company’s Common Stock. This number does not include:
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·
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any
beneficial owners of common stock whose shares are held in the names of
various dealers, clearing agencies, banks, brokers and other fiduciaries,
or
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·
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broker-dealers
or other participants who hold or clear shares directly or indirectly
through the Depository Trust Company, or its nominee, Cede &
Co.
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DIVIDENDS
We have
never declared or paid any cash dividends on our common stock. For the
foreseeable future, we intend to retain any earnings to finance the development
and expansion of our business, and we do not anticipate paying any cash
dividends on our common stock. Any future determination to pay dividends will be
at the discretion of the Board of Directors and will be dependent upon then
existing conditions, including our financial condition and results of
operations, capital requirements, contractual restrictions, business prospects,
and other factors that the board of directors considers relevant.
8
SECTION
RULE 12(G) OF THE SECURITIES EXCHANGE ACT OF 1934
The
Company’s shares are covered by Section 12(g) of the Securities Exchange Act of
1934, as amended that imposes additional sales practice requirements on
broker/dealers who sell such securities to persons other than established
customers and accredited investors (generally institutions with assets in excess
of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual
income exceeding $200,000 or $300,000 jointly with their spouses). For
transactions covered by the Rule, the broker/dealer must make a special
suitability determination for the purchase and have received the purchaser’s
written agreement to the transaction prior to the sale. Consequently, the Rule
may affect the ability of broker/dealers to sell our securities and also may
affect your ability to sell your shares in the secondary market.
SECURITIES
AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
In 2009
we had no Incentive or Compensation Plans.
There
were no purchases of shares of our common stock by us or any affiliated
purchasers during the year ended December 31, 2009.
ITEM
7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The
following discussion of our financial condition and results of operations should
be read in conjunction with our financial statements and related notes included
in our audited financial statements under Item 10 of this Annual
Report.
Statements
included in this document, or incorporated herein by reference, that do not
relate to present or historical conditions are “forward-looking statements”
within the meaning of that term in Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
Additional oral or written forward-looking statements may be made by the Company
from time to time, and such statements may be included in documents that are
filed with the SEC. Such forward-looking statements involve risks and
uncertainties that could cause results or outcomes to differ materially from
those expressed in the forward-looking statements. Forward-looking statements
may include, without limitation, statements relating to the Company’s plans,
strategies, objectives, expectations and intentions and are intended to be made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Words such as “believes,” “forecasts,” “intends,”
“possible,” “estimates,” “anticipates,” “expects”, and “plans” and similar
expressions are intended to identify forward-looking statements. The Company’s
ability to predict projected results or the effect of events on the Company’s
operating results is inherently uncertain. Forward-looking statements involve a
number of risks, uncertainties and other factors that could cause actual results
to differ materially from those discussed in this document. Factors that could
affect the Company’s assumptions and predictions include, but are not limited
to, risks related to:
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·
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industry
competition, conditions, performance and
consolidation;
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·
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product
demand and market acceptance risks;
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·
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legislative
and/or regulatory developments;
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·
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the
presence of competitors with greater financial resources than
us;
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·
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exposure
to obsolescence due to the rapid technological changes occurring in
Internet and marketing industries;
and
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·
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effects
of adverse general economic conditions within the United States; or
financial performance.
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References
in this report to “we,” “us” or “our company” refer to Willing Holding,
Inc.
Overview
With the
acquisition of our wholly-owned subsidiary, New World, in April 2008, a
significant portion of our operations have consisted of providing mortgage and
e-commerce products and services through our telemarketing call center and sales
organization. Until 2008, New World’s operations had primarily consisted of
acting as a mortgage broker for the lending and investing of funds in real
estate mortgages. New World had accomplished this through its telemarketing
group, which operated a call center in Murrieta, California. We have continued
our efforts to grow our business within the Internet marketing and SEO
industries and intend to use New World’s sales organization and telemarketing
experience in the support of those endeavors.
9
The
residential real estate market in the United States has experienced a
significant downturn due to declining real estate values, substantially reducing
mortgage loan originations and securitizations, and precipitating more
generalized credit market dislocations and a significant contraction in
available liquidity globally, which has negatively impacted our revenues. This
economic downturn has affected our ability to generate revenue that we
historically generated from selling mortgage products and services. Our
telemarketing call center and sales organization was not able to generate sales
for our Internet marketing and SEO products at the previous two years gross
revenue levels for 2009.
In
mid-2007, New World’s management recognized the downward trend in housing and
the demand for mortgage products and services. As a result, its management
initiated the development of our proprietary search engine optimization (“SEO”)
products and services at that time. The primary focus of SEO’s and in part,
search engine marketing (“SEM”) firms, is to provide a higher search engine
ranking, drive Internet traffic and improve indexing on the major search engines
that in turn, delivers qualified consumers. During 2009 New World ceased its
operation s in the mortgage industry.
We do not
currently have adequate cash funds from operations to fund our growth strategy
or any acquisition. It is likely that we will seek financing through a
combination of debt and/or equity depending on the size and the terms of the
acquisition. As a result of the recent lack of liquidity in the credit markets,
however, it is unlikely that we will be able to borrow significant amounts of
funds in order to acquire companies. We will therefore need to utilize equity
through either the sale of our common stock publicly or privately or through the
use of our common stock as consideration in the acquisition of a company.
However, we may not be able to target or acquire strategic acquisitions on terms
beneficial to us or our internal growth may not develop as
expected.
Recent
Event
On March
23, 2010, the Company and 11i Solutions, Inc., a Georgia corporation (“11i
Solutions”), entered into a Purchase Agreement (the “Agreement”), effective
March 26, 2010. The parties additionally entered into an Escrow
Agreement (“Escrow Agreement”) on March 26, 2010. As per the terms of
the Agreement 11i Solutions will acquire a majority position in the capital
stock of the Company. The Board of Directors of the Company has unanimously
approved the Purchase Agreement.
11i
Solutions provides wireless technologies and other services and hardware to a
variety of rapidly expanding markets, specifically: critical infrastructure
security, antiterrorism, homeland security, intelligence, and law enforcement.
11i has designed and developed innovative, multi-purpose solutions, addressing
the growing problem of the malicious use of cellular-wireless technology. 11i
targets the commercial, government and international markets for its products
and services. 11i Solutions is headquartered in Kennesaw, Georgia.
Upon the
terms and subject to the conditions of the Agreement, 11i Solutions purchased
25,000,000 shares of the Class A common stock of the Company (the “Shares”)
pursuant to the distribution terms provided in the Escrow Agreement for
$225,000.00. Pursuant to the terms of the Agreement Thomas L.
DiStefano III resigned as chief executive officer of the Company and Domingo M.
Silvas III was appointed as the new chief executive
officer. Subsequent to the resignation of Mr. DiStefano he was
reappointed as CEO by an Amendment to the Purchase Agreement. In the Amendment
Mr. DiStefano remains the Company’s Chief Executive Officer (“CEO”) until the
first payment of the purchase price in the amount of $75,000 (or receipt of the
First Installment) in order to maintain cohesive order in the Company’s s
business operations and this provision shall amend Section 5. g. iii and iv of
the Agreement. Additionally, Melissa K.
Conner resigned as a director of the Company under the terms of the Agreement.
The Agreement provides that Mr. DiStefano and Mr. Silvas will serve as
co-chairmen of the Company until all closing conditions under the Agreement and
the Escrow Agreement have been satisfied. The terms of the Agreement
include 11i Solutions paying all the outstanding debt obligations of the Company
during a ninety day period commencing on March 26,
2010, the effective date of the Agreement. At such time as
the full purchase price for the Shares has been paid and all outstanding debt
obligations of the Company have been discharged under the terms of the Escrow
Agreement, Mr. DiStefano will resign from his position as co-chairman of the
Company.
Upon
completion of the terms of Escrow Agreement, the Company’s new chief executive
officer will become Domingo M. Silvas III. Mr. Silvas served in the
United States Army NG as a combat medic from March 1992 to
March1996. From December 1996 through March 2000 he was an operation
manager for NAF located in Germany. In 2000 he founded Leads Direct a web-based
online management/delivery system for clients and their sales
associates. From March 2005 to September 2007 Mr. Silvas was a senior
project director for Core Technologies. In August 2007, Mr. Silvas
founded 11i Networks, Inc. and became its Chairman where he raised the initial
startup capital, and recruited the management team. In Jan 2010, 11i
Networks, Inc.’s subsidiary 11i Solutions, Inc. was launched as a wireless
technology company with products and solutions developed for anti-terrorism and
homeland security.
In July
2009, while serving as chairman of 11i Networks, Inc., Mr.
Silvas became chief executive officer of AquaGold International Inc.
(OTCPK:AQUI) a water bottling company with the purpose of restructuring its
management team and creating business
development opportunities. Mr. Silvas resigned
from AquaGold
International Inc. in December 2009 to concentrate exclusively on 11i
Solutions, Inc. and its capital formation, technology development,
business development and transition from a private to a public
company.
The
Company is not aware of any arrangement or understanding between Mr. Silvas and
any other person, pursuant to which he was selected as a director except as
provided in the Agreement. Mr. Silvas is not a party to any
transaction or currently proposed transaction with the Company that is
reportable under Item 404(a) of Regulation S-K.
10
The
Agreement contains certain rescission rights for both the Company and 11i
Solutions including without limitation the mutual right to rescind the Agreement
if 11i Solutions has not complied with the terms of the Agreement, including
full payment of the purchase price for the Shares within the ninety day
term. As of the date of this Annual Report the Purchase Agreement and
Escrow Agreement remain in effect.
The
foregoing descriptions of the Agreement and Escrow Agreement are only summaries,
do not purport to be complete and are qualified in their entirety by reference
to the Agreement and Escrow Agreement, attached in the exhibit index to this
Annual Report, which agreements are incorporated herein by
reference.
The
Agreement and Escrow Agreement have been included to provide security holders
with information regarding their terms. The representations, warranties and
covenants contained in the Agreement and Escrow Agreement were made only for
purposes of the Agreement and as of specified dates, were solely for the benefit
of the parties to the Agreement, and may be subject to limitations agreed upon
by the contracting parties, including being qualified by confidential
disclosures exchanged between the parties in connection with the execution of
the Agreement and Escrow Agreement. The representations and warranties may have
been made for the purposes of allocating contractual risk between the parties to
the Agreement and Escrow Agreement instead of establishing these matters as
facts, and may be subject to standards of materiality applicable to the
contracting parties that differ from those applicable to potential investors and
other third parties. Information concerning the subject matter of the
representations and warranties may change after the date the Agreement and
Escrow Agreement, which subsequent information may or may not be fully reflected
in the Company’s public disclosures.
Results
of Operations
Twelve
Months Ended December 31, 2009 as Compared with the Twelve Months
Ended December 31, 2008
The
current economic downturn in the housing and mortgage industries has especially
affected revenue that we have historically generated from selling mortgage
products and services. Our Telemarketing Group did not return to its
previous revenue levels generated from selling mortgages and revenues were
substantially lower.
Revenues. Revenues
for the twelve months ended December 31, 2009 were $259,521, which was primarily
due to our SEO business and the winding down of our mortgage business as
compared to $1,156,616 in revenue during the twelve months
ended December 31, 2008 that included remaining mortgage related
products and services for which we had outstanding work orders. We do
not anticipate revenues being generated from our former mortgage
business.
Operating Expenses. Operating expenses for
the twelve months ended December 31, 2009 were $2,159,004, which includes
selling and general administration costs (“SGA”) as compared to $4,134,391 in
operating expenses of which are attributed to SGA during the twelve months
ending December 31, 2008. During 2009 our wages were primarily
commission based and made up the significant portion of our operating expenses
with the rent and utilities and other operating expenses being paid by our
partner Top Rank Listing. In the twelve months ending December 31,
2008, wages and related costs equaled $831,489 and SGA costs were
$1,451,181 that were the predominant portion of operating
expenses. Wages and related costs were substantially higher as
compared to revenue than it has historically been for New World, due to the fact
that we have kept our Telemarketing Group and sales organization to re-train for
the SEO product and services and our relationship with Top Rank
Listing.
Loss from Operations. Our loss from
operations for the twelve months ended December 31, 2009 of
$(1,899,483) includes $1,521,352 in termination of employment
agreements and their prepaid expenses plus the reversal of stock options and
their expenses and loss on fixed assets that has been recorded as an expense as
compared to the same period ended December 31, 2008 losses of
$(3,733,662). Aside from us incurring employment termination, stock
option reversal expenses and loss on fixed assets our losses reflect our
transition into the SEO products and services industry and are indicative of the
adverse effect the economic downturn in the housing and mortgage industry has
had on our Telemarketing Group. Additionally the Net Loss reflected in the
twelve months ended December 31, 2009 does not include the judgment liabilities
none of which we believe will impair our ability to continue our Telemarketing
Group business selling SEO products and services.
In
addition, New World has been subject to litigation arising from its mortgage
operations, many of which we believe have no merit or are in some cases
fraudulent. However, as a result of our subsidiary’s deteriorating financial
condition, we have not had the available funds to defend New World against many
of these claims. This has resulted in courts entering several
default judgments against New World.
This
litigation has had a material impact on our revenues, expenses, and net loss
during the twelve months ending December 31, 2009 and may have a material impact
going forward. If the holders of any judgments attempt to enforce those
judgments, it will have a material adverse effect on our business, results of
operations, financial position and liquidity.
Cash
Flows
Operating Activities. Net
cash flow provided by operating activities was a loss of ($1,889,483) with
$2,950 net cash provided by operating activities during the year ended December
31, 2009. This primarily resulted from the conversion of debt to
equity, cancellation of employment agreements, stock based compensation, prepaid
expenses and the disposal of fixed assets.
11
Investing Activities. Net
cash used in investing activities totaled $54,000.00 as we needed to borrow in
the form of loans, working capital from our chairman as well as continue
payments on debt in the year ended December 31, 2009.
Financing Activities. Our
only financing activity to date has been the sale of 125,000 shares of our Class
A common stock to an investor for gross proceeds of $360,000 in January
2008. On October 28, 2008, however, we entered into a mutual general
release agreement whereby the investor agreed to tender his shares of common
stock to the Company for cancellation in exchange for our issuance of a
promissory note in the principal amount of $360,000. The note was
non-interest bearing, payable in monthly installments of $7,200, and matured on
December 28, 2012. On August 24, 2009, the investor converted the
remaining promissory note owed for Class A Common stock @ $.6624 per share or
500,000 shares of our Class A Common stock.
Plan
of Operation
We plan
to expand our subsidiary New World’s Internet marketing product as a lead
generator for specific businesses and professional service
providers. New World plans to grow its SEO platform to generate
search engine placement results for a specific product or service that is geared
to specific markets where individual leads may turn into large accounts for the
customer.
New World
generates leads utilizing its SEO platform, gathers data on the quantity of
leads that will be created over a period of time then tests the quality of the
lead. When the lead generation data is complete New World sells the
leads in either or a combination of a premium price or a percentage of the
closed sale brought on by the lead.
Our
expansion plan for New World is directly tied to the Agreement to purchase
shares by 11i Solutions, Inc. We believe that the business
combination between 11i Solutions and New World will enhance New World’s
telemarketing, call center and SEO services as well as 11i Solutions products
and services. See Recent Event above and the Note to our audited
financial statements entitled Subsequent Events.
Liquidity
and Capital Resources
Our cash
requirements during the year ended December 31, 2009 were financed primarily
from financing activities, operating cash flow, disposition of property and
equipment and accounts receivables. As of December 31, 2009, we had
cash and cash equivalents of approximately $4,450.00.
On
September 29, 2009 and December 17, 2009 we issued unsecured promissory notes
(the “Notes”) in the aggregate principal amount of $20,000.00 and $30,000.00 for
certain loans provided to the Company by Thomas L. DiStefano III, the CEO and
Chairman of the Company.
The Notes
are non-interest bearing and the outstanding principal amount of each
Note is due and payable on the date that is the earlier of (i) December 1, 2009
and February 15, 2010, or (ii) within five (5) days of the
closing of any subsequent financing of the Company (whether completed as a debt
or equity financing).
The terms
of each Note provide that in the “Default and Remedy” (as that term is defined
in the Note) by the Company, if the Company fails to pay the principal on the
date on which it falls due or to perform any of the agreements, conditions,
covenants, provisions, or stipulations contained in this Note, then Lender, at
its option and without notice to Company , may declare immediately due and
payable the entire unpaid balance of principal with interest from the date of
default at the rate of 12% per year and all other sums due by Borrower hereunder
anything herein to the contrary notwithstanding. Payment of this sum
may be enforced and recovered in whole or in part at any time by one or more of
the remedies provided to Lender in this Note. In that case, Lender
also may recover all costs in connection with suit, a reasonable attorney’s fee
for collection, and interest on any judgment obtained by Lender at the rate of
12% per year. The remedies of Lender and the warrants provided in
this Note shall be cumulative and concurrent, and they may be pursued singly,
successively, or together at the sole discretion of Lender. They may
be exercised as often as occasion shall occur, and failing to exercise one shall
in no event be construed as a waiver or release of it.
At the
time of this Annual Report we have not made payment on either of the Notes for
$20,000.00 and $30,000.00 for certain loans provided to the Company by Thomas L.
DiStefano III, the CEO and Chairman of the Company.
If we
experience a shortage of funds prior to generating revenue from operations we
may utilize funds from our director who has informally agreed to advance funds
to allow us to pay for business operations, however, our director has no formal
commitment, arrangement or legal obligation to advance or loan funds to
us.
We have
experienced a significant loss from operations. Our ability to continue as a
going concern is dependent upon our ability to secure additional financing and
attain profitable operations. We believe that our existing available cash and
cash equivalents and operating cash flow may not be sufficient to satisfy our
operating cash needs for the next 12 months at our current level of business. We
do not have any arrangements with any bank or financial institution to secure
additional financing and there can be no assurance that any such arrangement, if
required or otherwise sought, would be available on terms deemed to be
commercially acceptable and in our best interests. In addition, if our working
capital or other capital requirements are greater than currently anticipated, we
could be required to seek additional funds through sales of equity, debt or
convertible securities, or through credit facilities. Failure to secure such
financing or to raise additional capital or borrow additional funds and/or
expand our operations may result in our not being able to continue as a going
concern. Our independent registered public accounting firm has issued a going
concern opinion on ours and New World’s audited financial statements for the
fiscal year ended December 31, 2009.
12
Our plans
to address these operating conditions consist of the following
initiatives:
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secure
additional equity financing; secure additional short and long-term debt
financing;
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·
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pursue
the purchase of certain revenue generating assets or
businesses;
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·
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and
reduce our current expenditure
rates.
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There is
no guarantee that such resources will be available to us on terms acceptable to
us, or at all, or that such resources will be received in a timely manner, if at
all, or that we will be able to reduce our expenditure rate without materially
and adversely affecting our business. Inability to secure additional resources
may cause us to cease operations, seek bankruptcy protection, or liquidate our
business. Management’s implementation of one or more of these options may be
subject to shareholder approval.
We
understand the current economic climate will limit our efforts to raise the
necessary capital to expand business operations. We intend to seek additional
funds through the sale of our securities as needed in the future in order to
finance additional technical, sales, management and marketing personnel and to
expand our marketing and promotional capabilities. In addition, it is our
intention, if at all possible, to finance any future acquisitions through the
issuance of our debt and/or equity securities. However, we might not be able to
obtain any additional funds when required on commercially reasonable terms, or
at all.
Contractual
Obligations
Not
required under Regulation S-K for “smaller reporting companies.”
Our
independent auditors have issued a going concern paragraph in their opinion on
the financial statements for the year ended December 31, 2009, that states there
is substantial doubt about our ability to continue as a going concern. Our
ability to continue as a going concern is dependent on our ability to access
capital through debt and equity funding.
Our
summary of significant accounting practices are described in Note 1 to our
financial statements.
Off-Balance Sheet
Arrangements. We do not have any off-balance sheet
arrangements, investments in special purpose entities or undisclosed borrowings
or debt. Additionally, we are not a party to any derivative contracts or
synthetic leases.
The rate
of inflation has had little impact on the Company’s results of operations
and is not expected to have a significant impact on
continuing operations
Our
management, with the participation of our Chief Executive Officer and Chief
Financial Officer, conducted an evaluation of the effectiveness of our
disclosure controls and procedures, as defined in Rule 13a-15(e) under the
Securities Exchange Act of 1934, as amended, as of December 31, 2008. Based
upon the December 31, 2008 disclosure controls evaluation, our Chief
Executive Officer and Chief Financial Officer concluded that our disclosure
controls and procedures were effective to provide a reasonable level of
assurance that information required to be disclosed in the reports we file,
furnish or submit under the Exchange Act is recorded, processed, summarized and
reported within the specified time periods in the rules and forms of the
Securities and Exchange Commission. These officers have concluded that our
disclosure controls and procedures were also effective to provide a reasonable
level of assurance that information required to be disclosed in the reports that
we file, furnish or submit under the Exchange Act is accumulated and
communicated to management, including the Chief Executive Officer and Chief
Financial Officer, to allow timely decisions regarding required disclosure, all
in accordance with Exchange Act Rule 13a-15(e). Our disclosure controls and
procedures are designed to provide reasonable assurance of achieving these
objectives. Since we have become a new public company as of August 19, 2008
and we have neither filed an Annual Report with respect to our 2007 fiscal year
nor were we required to do so, due to a transition period established by rules
of the SEC for newly public companies, we are not yet required to:
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maintain
internal control over financial reporting (as defined in Exchange Act
Rule 13a-15(f)), pursuant to Exchange Act
Rule 13a-15(a);
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evaluate,
pursuant to Exchange Act Rule 13a-15(c), our internal control over
financial reporting;
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13
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·
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evaluate,
pursuant to Exchange Act Rule 13a-15(d), any change in our internal
control over financial reporting that occurred during the quarter ended
December 31, 2008;
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·
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include
in this Annual Report a report of management’s assessment regarding
internal control over financial reporting pursuant to Exchange Act
Rule 13a-15(b); or
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·
|
include
in this Annual Report an attestation report of our registered independent
public accounting firm.
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Without
limiting the meaning or effect of any of the foregoing statements, during the
quarter ended December 31, 2008, there were no changes in our internal
control over financial reporting that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.
Our
management, including our Chief Executive Officer and Chief Financial Officer,
does not expect that our 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. Further, 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 the 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
override of the controls.
ITEM 9B. OTHER
INFORMATION
11i
Solutions provides wireless technologies and other services and hardware to a
variety of rapidly expanding markets, specifically: critical infrastructure
security, antiterrorism, homeland security, intelligence, and law enforcement.
11i has designed and developed innovative, multi-purpose solutions, addressing
the growing problem of the malicious use of cellular-wireless technology. 11i
targets the commercial, government and international markets for its products
and services. 11i Solutions is headquartered in Kennesaw, Georgia.
Upon the
terms and subject to the conditions of the Agreement, 11i Solutions purchased
25,000,000 shares of the Class A common stock of the Company (the “Shares”)
pursuant to the distribution terms provided in the Escrow Agreement for
$225,000.00. Pursuant to the terms of the Agreement Thomas L.
DiStefano III resigned as chief executive officer of the Company and Domingo M.
Silvas III was appointed as the new chief executive
officer. Additionally, Melissa K. Conner resigned as a director of
the Company under the terms of the Agreement. The Agreement provides that Mr.
DiStefano and Mr. Silvas will serve as co-chairmen of the Company until all
closing conditions under the Agreement and the Escrow Agreement have been
satisfied. The terms of the Agreement include 11i Solutions paying
all the outstanding debt obligations of the Company during a ninety
day period commencing on March 26, 2010, the effective date of the
Agreement. At such time as the full purchase price for the Shares has
been paid and all outstanding debt obligations of the Company have been
discharged under the terms of the Escrow Agreement, Mr. DiStefano will resign
from his position as co-chairman of the Company.
Subsequent
to the resignation of Mr. DiStefano he was reappointed as CEO by an Amendment to
the Purchase Agreement. In the Amendment Mr. DiStefano remains the Company’s
Chief Executive Officer (“CEO”) until the first payment of the purchase price in
the amount of $75,000 (or receipt of the First Installment) in order to maintain
cohesive order in the Company’s business operations and this provision shall
amend Section 5. g. iii and iv of the Agreement.
14
ITEM
10. FINANCIAL STATEMENTS
|
Report
of Independent Registered Public Accounting Firm
|
F-1 | |||
|
Audited
Financial Statements of Willing Holding, Inc.
|
||||
|
Balance
Sheets
|
F-2 | |||
|
Statement
of Operations
|
F-3 | |||
|
Statements
of Stockholder’s Equity (Deficit)
|
F-4 | |||
|
Statement
of Cash Flows
|
F-5 | |||
|
Notes
to Financial Statements
|
F-6 |
15
GRUBER
& COMPANY LLC
The Board
of Willing Holding, Inc.
We have
audited the accompanying consolidated balance sheet of Willing Holding, Inc. as
of December 31, 2009 and 2008 and the related consolidated statements of
operations, stockholders equity and cash flows for the years then ended. These
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.
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 our 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 includes examining
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our 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 2008 and the results of its’ consolidated operations and its’
stockholders equity and cash flows for the years 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. As discussed in the notes to the financial
statements, the Company had a loss in 2009 of $1,899,483 and its total
liabilities exceeded its current assets by $2,701,755 and had a retained deficit
of $5,763,090. These factors among others raise substantial doubt about its
ability to continue as a going concern. These financial statements do not
include any adjustments that might result from the outcome of this
uncertainty
Gruber
& Company LLC
Lake St.
Louis MO 63367
Dated:
April 13, 2010
F-1
|
December
31,
2009
|
December
31,
2008
|
|||||||
|
Assets
|
||||||||
|
Current
Assets:
|
||||||||
|
Cash
and Cash Equivalents
|
$ | 2,950 | 5,259 | |||||
|
Other
current assets
|
1,500 | $ | 7,000 | |||||
|
Prepaid
Expenses
|
— | 303,600 | ||||||
|
Total
Current Assets
|
4,450 | 315,859 | ||||||
|
Fixed
Assets
|
— | 427,232 | ||||||
|
Prepaid
Expenses and Deposits
|
— | 910,305 | ||||||
|
Total
Assets
|
$ | 4,450 | $ | 1,653,396 | ||||
|
Liabilities
and Stockholders’ Equity
|
||||||||
|
Current
Liabilities:
|
||||||||
|
Accounts
Payable and Accrued Expenses
|
540,050 | 419,957 | ||||||
|
Related
Party Payable
|
$ | 78,191 | $ | 103,251 | ||||
|
Due
to Former Parent
|
— | 127,945 | ||||||
|
Judgment
and Settlements Payable
|
2,087,984 | 2,113,428 | ||||||
|
Current
Portion of Long Term Debt
|
— | 117,278 | ||||||
|
Total
Current Liabilities
|
2,706,225 | 2,881,859 | ||||||
|
Long
Term Debt
|
— | 445.894 | ||||||
|
Total
Liabilities
|
2,706,225 | 3,327,753 | ||||||
|
Stockholders’
Equity:
|
||||||||
|
Preferred
Stock, 10,000,000 authorized , 250,000 and 0 issued and outstanding @ $
.001 par value
|
— | 250 | ||||||
|
Common
Stock, 150,000,000 shares authorized, 2,802,344 and
1,760,880 issued and outstanding @ $ .0001 par value
respectively
|
280 | 177 | ||||||
|
Additional
Paid in Capital
|
3,061,035 | 2,188,823 | ||||||
|
Retained
Deficit
|
(5,763,090 | ) | (3,863,617 | ) | ||||
|
Total
Stockholders’ Equity (Deficit)
|
(2,707,775 | ) | (1,674,357 | ) | ||||
|
Total
Liabilities and Stockholders Equity
|
$ | 4,450 | $ | 1,653,396 | ||||
The
accompanying notes are an integral part of these financial
statements.
F-2
|
For
the years ended
December
31,
|
||||||||
|
2009
|
2008
|
|||||||
|
Revenues
|
$ | 259,521 | 1,156,616 | |||||
|
Expenses:
|
— | |||||||
|
Selling,
General and Administrative Costs
|
2,159,004 | 4,134,391 | ||||||
|
Loss
from Operations
|
(1,899,483 | ) | (2,977,775 | ) | ||||
|
Other
Expenses:
|
||||||||
|
Impairment
Loss
|
— | (757,887 | ) | |||||
|
Gain
on Investment
|
— | 2,000 | ||||||
|
Total
Other Expenses
|
— | (755,887 | ) | |||||
|
Net
(Loss)
|
$ | (1,899,483 | ) | $ | (3,733,662 | ) | ||
|
Profit
(Loss) Per Share
|
$ | (.77 | ) | $ | (3.10 | ) | ||
|
Weighted
Average Shares Outstanding Basic
and fully diluted
|
2,458,670 | 1,205,742 | ||||||
The
accompanying notes are an integral part of these financial
statements.
F-3
Statement
s of Stockholders’ Equity
(Deficit)
|
|
|
Retained
|
||||||||||||||||||||||||||
|
Common
Stock
|
Preferred
Stock
|
Earnings
|
||||||||||||||||||||||||||
|
Shares
|
Amount
|
Shares
|
Amount
|
APIC
|
(Deficit)
|
Total
|
||||||||||||||||||||||
|
Balance
December 31, 2007
|
20,000,000 | 2,000 | — | — | — | (129,945 | ) | (127,945 | ) | |||||||||||||||||||
|
Shares
cancelled
|
(18,999,120 | ) | (1,900 | ) | — | — | — | — | (1,900 | ) | ||||||||||||||||||
|
Shares
issued for cash
|
125,000 | 12 | — | — | 360,088 | — | 360,100 | |||||||||||||||||||||
|
Shares
cancelled
|
(125,000 | ) | $ | (12 | ) | — | $ | — | $ | (359,988 | ) | $ | — | $ | (360,000 | ) | ||||||||||||
|
Shares
issued for services
|
735,000 | 74 | 250,000 | 250 | 2,116,726 | — | 2,117,050 | |||||||||||||||||||||
|
Shares
issued for acquisition
|
25,000 | 3 | — | — | 71,997 | — | 72,000 | |||||||||||||||||||||
|
Net
Loss
|
(3,733,662 | ) | (3,830,662 | ) | ||||||||||||||||||||||||
|
Balance
December 31, 2008
|
1,760,880 | 177 | 250,000 | 250 | $ | 2,188,823 | (3,863,607 | ) | (1,674,357 | ) | ||||||||||||||||||
|
Shares
issued for services
|
175,000 | 17 | — | — | 393,103 | 393,120 | ||||||||||||||||||||||
|
Shares
issued for debt conversion
|
866,464 | 86 | — | — | 573,859 | 573,945 | ||||||||||||||||||||||
|
Shares
surrendered
|
— | — | (250,000 | ) | (250 | ) | 250 | — | — | |||||||||||||||||||
|
Stock
options cancelled
|
(95,000 | ) | (95,000 | ) | ||||||||||||||||||||||||
|
Net
Loss
|
— | — | — | — | — | (1,899,483 | ) | (1,899,483 | ) | |||||||||||||||||||
|
Balance
December 31, 2009
|
2,802,344 | 280 | — | — | 3,061,035 | (5,763,090 | ) | (2,701,775 | ) | |||||||||||||||||||
The
accompanying notes are an integral part of these financial
statements.
F-4
|
For
the Years Ended
December
31,
|
||||||||
|
2009
|
2008
|
|||||||
|
Cash
Flows from Operating Activities:
|
||||||||
|
Net
Profit (Loss) for Year
|
$ | (1,899,483 | ) | $ | (3,733,662 | ) | ||
|
Depreciation
and amortization
|
40,900 | 120,000 | ||||||
|
Gain
(loss) on Marketable Securities
|
5,500 | 2,000 | ||||||
|
Share
issuance
|
72,000 | |||||||
|
Share
issuance for services
|
393,120 | 2,116,800 | ||||||
|
Loss
on cancellation of employment contract
|
836,900 | — | ||||||
|
Forfeiture
of stock options
|
(95,000 | ) | ||||||
|
Loss
on disposal of fixed assets
|
386,332 | |||||||
|
Share
issuance
|
253 | |||||||
|
Marketable
Securities
|
— | 95,000 | ||||||
|
Loans
held for resale
|
— | — | ||||||
|
Prepaid
Costs and Advances
|
166,800 | (1,213,905 | ) | |||||
|
Due
to Affiliate
|
— | — | ||||||
|
Accounts
Payable and Judgments Payable
|
300,649 | 2,533,482 | ||||||
|
Cash
Provided (Used) By Operations
|
135,718 | (8,032 | ) | |||||
|
Net
Cash Used by Investing Activities
|
||||||||
|
Purchase
of Assets
|
— | (547,232 | ) | |||||
|
Marketable
Securities
|
— | (105,000 | ) | |||||
|
Cash
Provided by Investing Activities
|
— | (652,232 | ) | |||||
|
Net
Cash Provided by Financing Activities
|
||||||||
|
Proceeds
of Common Stock and Contribution
|
100 | |||||||
|
Proceeds
from (payment to) Related Party
|
(25,060 | ) | 103,251 | |||||
|
Increase
in (repayment of ) borrowings
|
(112,967 | ) | 597,892 | |||||
|
Repayment
of Borrowings
|
(34,720 | ) | ||||||
|
Cash
Used for Financing Activities
|
(138,027 | ) | 666,523 | |||||
|
Increase
(Decrease) in Cash
|
(2,309 | ) | 5,259 | |||||
|
Cash-Beginning
|
5,259 | — | ||||||
|
Cash-End
|
$ | 2,950 | $ | 5,259 | ||||
|
Supplemental
disclosures:
|
||||||||
|
Income
Taxes paid
|
$ | — | $ | — | ||||
|
Interest
Expense
|
$ | — | $ | — | ||||
|
Supplemental
Disclosure of Non-Cash Items:
|
||||||||
|
Common
stock issued for conversion of debt
|
$ | 573,945 | — | |||||
The
accompanying notes are an integral part of these financial
statements.
F-5
WILLING
HOLDING, INC.
DECEMBER
31, 2009AND 2008
Note
1 – Organization, Business & Operations
Willing
Holding, Inc. formerly Perfect Web Inc. was incorporated in the state of Florida
in November of 2005. For the years 2006, 2007 and until July 2008 the Company
was a wholly owned subsidiary of Perfect Web Technologies, Inc. when it was spun
out as a separate Company. The Company has entered the business of
telemarketing and Internet marketing that manages a call center employing either
a live operator or a recorded message, in which case it is known as “automated
telemarketing” using voice broadcasting to acquire potential
clients through its wholly owned subsidiary New World
Mortgage.
Prior to
the emergence of an economic slowdown and its adverse effect on the mortgage and
housing industries, New World developed an e- commerce platform that combines
search engine organization and website design for small businesses, its primary
market. The service, located at www.toprankedlisting.com, is focused on placing
its clients in the top of the major search engines local directories that
include those provided by Yahoo and Google.
The
accompanying consolidated financial statements have been prepared in conformity
with generally accepted accounting principles which contemplate
continuation of the company as a going concern. However, as of December 31,
2009, the Company has an accumulated deficit of $5,986,406 and has yet to be
profitable. The Company’s current business plan requires additional funding
beyond its anticipated cash flows from operations. These and other factors raise
substantial doubt about the Company’s ability to continue as a going
concern.
The
ability of the Company to continue as a going concern is dependent upon its
ability to raise additional capital and achieve profitable operations. The
accompanying consolidated financial statements do not include any adjustments
that might be necessary if the Company is unable to continue as a going
concern.
Note
3 - Summary of Significant Accounting Policies
Principles
of Consolidation
The
accompanying financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of
America.
The
financial statements include the accounts of the Company, and its newly acquired
100% owned subsidiary, New World Mortgage which was acquired on April 15,
2008.
The
Company treated this acquisition as a purchase and as such has included in the
statement of operations their activity from April 15, 2008 to December 31, 2008
and then from January 1, 2009 to December 31, 2009. All intercompany
transactions have been eliminated in consolidation.
Cash
and cash equivalents
The
Company considers all liquid investments with a maturity of three months or less
from the date of purchase that are readily convertible into cash to be cash
equivalents.
Inventories
Inventories
are stated at the lower of cost or market. Cost is computed on a
weighted-average basis, which approximates the first-in, first-out method;
market is based upon estimated replacement costs. Costs included in inventory
primarily include finished spirit product and packaging.
F-6
Use of
estimates
The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Property
& equipment
Property
and equipment are recorded at cost. Depreciation is computed using the
straight-line method over useful lives of 3 to 10 years. The cost of assets sold
or retired and the related amounts of accumulated depreciation are removed from
the accounts in the year of disposal. Any resulting gain or loss is reflected in
current operations. Assets held under capital leases are recorded at the lesser
of the present value of the future minimum lease payments or the fair value of
the leased property. Expenditures for maintenance and repairs are charged to
operations as incurred.
Impairment
of long-lived assets
Effective
January 1, 2002, the Company adopted Statement of Financial Accounting Standards
No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS
144”), which addresses financial accounting and reporting for the impairment or
disposal of long-lived assets and supersedes SFAS No. 121, “Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,”
and the accounting and reporting provisions of APB Opinion No. 30, “Reporting
the Results of Operations for a Disposal of a Segment of a Business.” The
Company periodically evaluates the carrying value of long-lived assets to be
held and used in accordance with SFAS 144. SFAS 144 requires impairment losses
to be recorded on long-lived assets used in operations when indicators of
impairment are present and the undiscounted cash flows estimated to be generated
by those assets are less than the assets’ carrying amounts. In that event, a
loss is recognized based on the amount by which the carrying amount exceeds the
fair market value of the long-lived assets. Loss on long-lived assets to be
disposed of is determined in a similar manner, except that fair market values
are reduced for the cost of disposal.
Basic
and Diluted Net Income per Share
Basic
earnings per share is calculated using the weighted-average number of common
shares outstanding during the period without consideration of the dilutive
effect of stock warrants and convertible notes. Diluted earnings per share is
calculated using the weighted-average number of common shares outstanding during
the period after consideration of the dilutive effect of stock warrants and
convertible notes.
Stock-based
compensation
In
December 2004, the Financial Accounting Standards Board (FASB) issued SFAS No.
123(R), Share-Based Payment. This pronouncement amends SFAS No. 123, Accounting
for Stock-Based Compensation, and supersedes APB Opinion No. 25, Accounting for
Stock Issued to Employees. SFAS No. 123(R) requires that companies account for
awards of equity instruments issued to employees under the fair value method of
accounting and recognize such amounts in their statements of operations. Under
SFAS No. 123(R), we are required to measure compensation cost for all
stock-based awards at fair value on the date of grant and recognize compensation
expense in our consolidated statements of operations over the service period
that the awards are expected to vest.
The
Company accounts for stock-based compensation issued to non-employees and
consultants in accordance with the provisions of SFAS 123(R) and the Emerging
Issues Task Force consensus in Issue No. 96-18 (“EITF 96-18”), “Accounting for
Equity Instruments that are Issued to Other Than Employees for Acquiring or in
Conjunction with Selling, Goods or Services”. Common stock issued to
non-employees in exchange for services is accounted for based on the fair value
of the services received.
Fair
value of financial instruments
Statement
of Financial Accounting Standard No. 107, Disclosures about Fair Value of
Financial Instruments, requires that the Company disclose estimated fair values
of financial instruments. The carrying amounts reported in the statements of
financial position for current assets and current liabilities qualifying as
financial instruments are a reasonable estimate of fair value.
F-7
Revenue
recognition
Sales of
products and related costs of products sold are recognized when (i) persuasive
evidence of an arrangement exists, (ii) delivery has occurred, (iii) the price
is fixed or determinable and (iv) collectability is reasonably
assured.
Allowance
for doubtful accounts
We
provide an allowance for estimated uncollectible accounts receivable balances
based on historical experience and the aging of the related accounts
receivable.
Advertising
The
Company expenses advertising costs as incurred. The Company incurred no
Advertising costs for the years ended December 31, 2009 and 2008.
Income
Taxes
The
Company accounts for income taxes in accordance with SFAS No. 109, “Accounting
for Income Taxes.” Deferred taxes are provided on the liability method whereby
deferred tax assets are recognized for deductible temporary differences, and
deferred tax liabilities are recognized for taxable temporary differences.
Temporary differences are the differences between the reported amounts of assets
and liabilities and their tax bases. Deferred tax assets are reduced by a
valuation allowance when, in the opinion of management, it is more likely than
not that some portion or all of the deferred tax assets will be realized.
Deferred tax assets and liabilities are adjusted for the effects of changes in
tax laws and rates on the date of enactment.
The
Company for 2006 and 2007 was a subsidiary and consolidated it losses with the
Parent. As of December 31, 2009, the company has a net operating loss
carry forward of approximately $6,000,000. As it is more likely than not,
that the Company will not realize the benefit of this, therefore, no provision
for a deferred tax asset has been established.
Research
and development costs
Expenditures
for research & development are expensed as incurred. Such costs are required
to be expensed until the point that technological feasibility is established.
The Company incurred no research and development costs for the years ended
December 31, 2009 and 2008.
Reclassifications
Certain
items in the prior year financial statements have been reclassified for
comparative purposes to conform to the presentation in the current period’s
presentation. These reclassifications have no effect on the previously reported
income (loss).
Recently
Issued Accounting Pronouncements
The
adoption of these accounting standards had the following impact on the Company’s
statements of income and financial condition:
|
·
|
FASB
ASC Topic 855, “Subsequent Events”. In May 2009, the FASB issued FASB ASC
Topic 855, which establishes general standards of accounting and
disclosure of events that occur after the balance sheet date but before
financial statements are issued or are available to be issued. In
particular, this Statement sets forth : (i) the period after the balance
sheet date during which management of a reporting entity should evaluate
events or transactions that may occur for potential recognition or
disclosure in the financial statements, (ii) the circumstances under which
an entity should recognize events or transactions occurring after the
balance sheet date in its financial statements, (iii) the disclosures that
an entity should make about events or transactions that occurred after the
balance sheet date. This FASB ASC Topic should be applied to the
accounting and disclosure of subsequent events. This FASB ASC Topic does
not apply to subsequent events or transactions that are within the scope
of other applicable accounting standards that provide different guidance
on the accounting treatment for subsequent events or transactions. This
FASB ASC Topic was effective for interim and annual periods ending after
June 15, 2009, which was June 30, 2009 for the Corporation. The adoption
of this Topic did not have a material impact on the Company’s financial
statements and disclosures.
|
F-8
|
·
|
FASB
ASC Topic 105, “The FASB Accounting Standard Codification and the
Hierarchy of Generally Accepted Accounting Principles”. In June 2009, the
FASB issued FASB ASC Topic 105, which became the source of authoritative
GAAP recognized by the FASB to be applied by nongovernmental entities.
Rules and interpretive releases of the SEC under authority of federal
securities laws are also sources of authoritative GAAP for SEC
registrants. On the effective date of this FASB ASC Topic, the
Codification will supersede all then-existing non-SEC accounting and
reporting standards. All other non-SEC accounting literature not included
in the Codification will become non-authoritative. This FASB ASC Topic
identify the sources of accounting principles and the framework for
selecting the principles used in preparing the financial statements of
nongovernmental entities that are presented in conformity with GAAP. Also,
arranged these sources of GAAP in a hierarchy for users to apply
accordingly. In other words, the GAAP hierarchy will be modified to
include only two levels of GAAP: authoritative and non-authoritative. This
FASB ASC Topic is effective for financial statements issued for interim
and annual periods ending after September 15, 2009. The adoption of this
topic did not have a material impact on the Company’s disclosure of the
financial statements
|
|
·
|
FASB
ASC Topic 320, “Recognition and Presentation of Other-Than-Temporary
Impairments”. In April 2009, the FASB issued FASB ASC Topic 320 amends the
other-than-temporary impairment guidance in GAAP for debt securities to
make the guidance more operational and to improve the presentation and
disclosure of other-than-temporary impairments on debt and equity
securities in the financial statements. This FASB ASC Topic does not amend
existing recognition and measurement guidance related to
other-than-temporary impairments of equity securities. The FASB ASC Topic
shall be effective for interim and annual reporting periods ending after
June 15, 2009, with early adoption permitted for periods ending after
March 15, 2009. Earlier adoption for periods ending before March 15, 2009,
is not permitted. This FASB ASC Topic does not require disclosures for
earlier periods presented for comparative purposes at initial adoption. In
periods after initial adoption, this FASB ASC Topic requires comparative
disclosures only for periods ending after initial adoption. The adoption
of this Topic did not have a material impact on the Company’s financial
statements and disclosures.
|
The
Company is evaluating the impact that the following recently issued accounting
pronouncements may have on its financial statements and
disclosures.
|
·
|
FASB
ASC Topic 860, “Accounting for Transfer of Financial Asset”., In June
2009, the FASB issued additional guidance under FASB ASC Topic 860,
“Accounting for Transfer and Servicing of Financial Assets and
Extinguishment of Liabilities”, which improves the relevance,
representational faithfulness, and comparability of the information that a
reporting entity provides in its financial statements about a transfer of
financial assets; the effects of a transfer on its financial position,
financial performance, and cash flows; and a transferor’s continuing
involvement, if any, in transferred financial assets. The Board undertook
this project to address (i) practices that have developed since the
issuance of FASB ASC Topic 860, that are not consistent with the original
intent and key requirements of that statement and (ii) concerns of
financial statement users that many of the financial assets (and related
obligations) that have been derecognized should continue to be reported in
the financial statements of transferors. This additional guidance requires
that a transferor recognize and initially measure at fair value all assets
obtained (including a transferor’s beneficial interest) and liabilities
incurred as a result of a transfer of financial assets accounted for as a
sale. Enhanced disclosures are required to provide financial statement
users with greater transparency about transfers of financial assets and a
transferor’s continuing involvement with transferred financial assets.
This additional guidance must be applied as of the beginning of each
reporting entity’s first ing period that begins after November 15, 2009,
for interim periods within that first annual reporting period and for
interim and annual reporting periods thereafter. Earlier application is
prohibited. This additional guidance must be applied to transfers
occurring on or after the effective
date.
|
|
·
|
FASB
ASC Topic 810, “Variables Interest Entities”. In June 2009, the FASB
issued FASB ASC Topic 810, which requires an enterprise to perform an
analysis to determine whether the enterprise’s variable interest or
interests give it a controlling financial interest in a variable interest
entity. This analysis identifies the primary beneficiary of a variable
interest entity as the enterprise that has both of the following
characteristics: (i)The power to direct the activities of a variable
interest entity that most significantly impact the entity’s economic
performance and (ii)The obligation to absorb losses of the entity that
could potentially be significant to the variable interest entity or the
right to receive benefits from the entity that could potentially be
significant to the variable interest entity. Additionally, an enterprise
is required to assess whether it has an implicit financial responsibility
to ensure that a variable interest entity operates as designed when
determining whether it has the power to direct the activities of the
variable interest entity that most significantly impact the entity’s
economic performance. This FASB Topic requires ongoing reassessments of
whether an enterprise is the primary beneficiary of a variable interest
entity and eliminate the quantitative approach previously required for
determining the primary beneficiary of a variable interest entity, which
was based on determining which enterprise absorbs the majority of the
entity’s expected losses, receives a majority of the entity’s expected
residual returns, or both. This FASB ASC Topic shall be effective as of
the beginning of each reporting entity’s first annual reporting period
that begins after November 15, 2009, for interim periods within that first
annual reporting period, and for interim and annual reporting periods
thereafter. Earlier application is
prohibited.
|
F-9
|
·
|
FASB
ASC Topic 820, “Fair Value measurement and Disclosures”, an Accounting
Standard Update. In September 2009, the FASB issued this Update to
amendments to Subtopic 82010, “Fair Value Measurements and Disclosures”.
Overall, for the fair value measurement of investments in certain entities
that calculates net asset value per share (or its equivalent). The
amendments in this Update permit, as a practical expedient, a reporting
entity to measure the fair value of an investment that is within the scope
of the amendments in this Update on the basis of the net asset value per
share of the investment (or its equivalent) if the net asset value of the
investment (or its equivalent) is calculated in a manner consistent with
the measurement principles of Topic 946 as of the reporting entity’s
measurement date, including measurement of all or substantially all of the
underlying investments of the investee in accordance with Topic 820. The
amendments in this Update also require disclosures by major category of
investment about the attributes of investments within the scope of the
amendments in this Update, such as the nature of any restrictions on the
investor’s ability to redeem its investments at the measurement date, any
unfunded commitments (for example, a contractual commitment by the
investor to invest a specified amount of additional capital at a future
date to fund investments that will be made by the investee), and the
investment strategies of the investees. The major category of investment
is required to be determined on the basis of the nature and risks of the
investment in a manner consistent with the guidance for major security
types in GAAP on investments in debt and equity securities in paragraph
320-10-50-lB. The disclosures are required for all investments within the
scope of the amendments in this Update regardless of whether the fair
value of the investment is measured using the practical expedient. The
amendments in this Update apply to all reporting entities that hold an
investment that is required or permitted to be measured or disclosed at
fair value on a recurring or non recurring basis and, as of the reporting
entity’s measurement date, if the investment meets certain criteria The
amendments in this Update are effective for the interim and annual periods
ending after December 15, 2009. Early application is permitted in
financial statements for earlier interim and annual periods that have not
been issued.
|
|
·
|
FASB
ASC Topic 740, “Income Taxes”, an Accounting Standard Update. In September
2009, the FASB issued this Update to address the need for additional
implementation guidance on accounting for uncertainty in income taxes. The
guidance answers the following questions: (i) Is the income tax paid by
the entity attributable to the entity or its owners? (ii) What constitutes
a tax position for a pass-through entity or a tax-exempt not-for-profit
entity? (iii) How should accounting for uncertainty in income taxes be
applied when a group of related entities comprise both taxable and
nontaxable entities? In addition, this Updated decided to eliminate the
disclosures required by paragraph 740-10-50-15(a) through (b) for
nonpublic entities. The implementation guidance will apply to financial
statements of nongovernmental entities that are presented in conformity
with GAAP. The disclosure amendments will apply only to nonpublic entities
as defined in Section 740-10-20. For entities that are currently applying
the standards for accounting for uncertainty in income taxes, the guidance
and disclosure amendments are effective for financial statements issued
for interim and annual periods ending after September 15,
2009.
|
Note
4 – Goodwill
The
Company recognized goodwill, on its acquisition of New World Mortgage and its
issuance of stock to the shareholders on record at the time of separation from
the former Parent. The Company has evaluated the acquisition on future cash
flows and has concluded that the acquisition should be impaired. The loss on
impairment was shown in the statement of operations under other expense in the
previous year’s financial statements.
F-10
Note
5 – Fixed Assets
Fixed
Assets consist of Autos, Computers, Furniture and Fixtures and other office
equipment with asset lives of between three and five years At September 30, 2009
furniture fixtures and computers were fully depreciated and the only asset
consisted of one vehicle. The following summarizes the Company’s fixed assets at
December 31 2009 and December 31, 2008:
|
December
31,
|
December 31,
|
|||||||
|
2009
|
2008
|
|||||||
|
Vehicles
and Other
|
$
|
—
|
$
|
395,770
|
||||
|
Furniture,
Fixtures and Computers
|
—
|
624,406
|
||||||
|
Less:
Accumulated Depreciation
|
—
|
(592,944
|
)
|
|||||
|
Net
Property & Equipment
|
$
|
—
|
$
|
427,232
|
||||
Depreciation
Expense for the twelve months ended December 31, 2009 and 2008, was
$40,900 and $71,672, respectively.
The
Company’s debt at December 31, 2009 and December 31, 2008, consists of the
following:
|
December
31,
|
December 31,
|
|||||||
|
2009
|
2008
|
|||||||
|
Warehouse
Line-Judgment
|
$
|
702,751
|
$
|
702,751
|
||||
|
Note
Payable to Bank
|
—
|
158,576
|
||||||
|
Note
Payable Related Party
|
78,191
|
103,251
|
||||||
|
Note
Payable to GMAC
|
—
|
58,997
|
||||||
|
Various
Judgments for non-payment
|
1,385,233
|
1,410,676
|
||||||
|
Notes
Payable Former Shareholder
|
—
|
345,600
|
||||||
|
Total
|
2,166,175
|
2,779,851
|
||||||
|
Less
Current Portion
|
(2,166,175
|
)
|
(2,333,957
|
)
|
||||
|
Long
Term Debt
|
$
|
-
|
$
|
445,894
|
||||
In 2008,
the Company received a judgment notice for lack of payment for a Warehouse Line
totaling $702,751.
Note
payable to a related party is due without interest and is payable on
demand.
Note
Payable to GMAC at December 31, 2008, is due with monthly payments of $1,180
interest free due October 2012. During the year ended December
31, 2009, the vehicle was turned back to GMAC, which subsequently sold the
vehicle which resulted in a shortfall in the amount of $14,768 which amount is
included in accounts payable and accrued expenses.
The
Company is liable on fifteen judgments for various amounts related to
obligations not satisfied equaling $1,385,233. The Company has been unable to
arrange any satisfactory agreement for payment.
On
September 29, 2009, Willing Holding, Inc. (the “Company”) issued two unsecured
promissory notes in the aggregate principal amount of $20,000 for certain loans
provided to the Company by Thomas L. DiStefano III, the CEO and Chairman of the
Company. The Notes are non-interest bearing at and the outstanding
principal amount of each Note are due and payable on the date that is the
earlier of (i) December 1, 2009, or (ii) within five (5) days of the closing of
any subsequent financing of Company (whether completed as a debt or equity
financing). The terms of each Note provide that in the “Default and Remedy” (as
that term is defined in the Note) by the Company, If Company fails to pay
principal on the date on which it falls due or to perform any of the agreements,
conditions, covenants, provisions, or stipulations contained in this Note, then
Lender, at its option and without notice to Company , may declare immediately
due and payable the entire unpaid balance of principal with interest from the
date of default at the rate of 12% per year and all other sums due by Borrower
hereunder anything herein to the contrary notwithstanding. Payment of this sum
may be enforced and recovered in whole or in part at any time by one or more of
the remedies provided to Lender in this Note. In that case, Lender also may
recover all costs in connection with suit, a reasonable attorney’s fee for
collection, and interest on any judgment obtained by Lender at the rate of 12%
per year. The remedies of Lender and the warrants provided in this Note shall be
cumulative and concurrent, and they may be pursued singly, successively, or
together at the sole discretion of Lender. They may be exercised as often as
occasion shall occur, and failing to exercise one shall in no event be construed
as a waiver or release of it.
F-11
On August
24, 2009, the Company entered into a Debt Conversion Agreement (see
Note 11) that converted a total of $573,945 of debt into Class A Common Stock at
a conversion rate of $.6624 per share.
Note
7 – Due to Former Parent
The
Company’s debt consisted of amounts owed the former Parent due on demand without
interest for advances made by the Parent for expenses principally in 2007 and
2006. On August 24, 2009, the Company entered into a Debt Conversion Agreement
(see Note 11) whereby this balance was converted into Class A Common
Shares.
Note
8– Commitments and Contingencies
Leases
The
Company currently occupies office space at 41655 Date Street, Suite 200,
Murrieta, CA 92562. The lease term is currently a month to month. In
2009, New World, in an understanding with Top Rank Listing, Inc., moved the
operational cost of the rent and utilities to Top Rank Listing in consideration
for New World marketing Top Ranks products and services. Until
December 31, 2008 we leased office space located at 3 Centerview Drive, Suite
240, Greensboro, North Carolina 27407. On March 24, 2010,
we negotiated a lease buyout on all past due and future rent due for $10,000.00
with the current landlord Security National Properties.
Employment
Agreements
On August
10, 2009, Gideon Taylor, the founder and President,
resigned. Pursuant to his resignation, Mr. Taylor surrendered 750,000
shares of Class B Common Stock and 250,000 shares of Preferred
Stock.
On August
12, 2009, the Employment Agreement with Kevin Leonard, the founder of New World
Mortgages, Inc., was mutually terminated. The contract specified that
he was to receive $200,000 in base salary for the first year of service; five
hundred thousand shares of the Company’s common stock (500,000
shares); and had the Option to purchase two hundred and fifty
thousand shares (250,000 shares) at $2.50 per share for a period of five years
from the date of the acquisition. Under the terms of the termination agreement:
all accrued salary and stock options have been retroactively cancelled to the
original contract date and Mr. Leonard will maintain his ownership rights in the
Class A Common stock that was issued pursuant to the original employment
agreement.
Litigation
The
Company is involved in various lawsuits as a defendant which have resulted in
judgments against them as detailed in Note 6 to these financial statements. The
company is also involved in additional lawsuits where the ultimate result
is unknown but is not expected to result in any future liability.
Note
9-Related Party Transaction
On
September 29, 2009, Willing Holding, Inc. (the “Company”) issued four unsecured
promissory notes in the aggregate principal amount of $52,940 for certain loans
provided to the Company by Thomas L. DiStefano III, the CEO and Chairman of the
Company. (see Note 6).
The
Company has issued two additional notes to related parties on an unsecured basis
in the principal amount of $12,500 to Kevin Leonard, and $12,751 to Bill
Leonard.
The
Company is now involved in two different business segments-the first mortgage
loans and the second Search Engine Fees. At December 31, 2009 the respective
profit and losses were as follows:
|
Mortgage
|
Search Engine
|
Parent
|
Total
|
|||||||||||||
|
Revenues
|
$
|
103,750
|
$
|
155,772
|
$
|
-
|
$
|
259,522
|
||||||||
|
Expenses
|
332,343
|
158,582
|
1,668,080
|
2,159,005
|
||||||||||||
|
Loss
|
$
|
(228,593
|
)
|
$
|
(2,810
|
)
|
$
|
(1,668,080
|
)
|
$
|
(1,899,483
|
)
|
||||
F-12
Note
11 - Equity
Preferred
Stock
On August
10, 2009, Gideon Taylor, the founder and President,
resigned. Pursuant to the resignation, Mr. Taylor surrendered 250,000
shares of Preferred Stock. There are no Preferred Shares issued and outstanding
at September 30, 2009.
Common
Stock
As there
is no trading history and the Company’s’ securities are not offered to the
public, the Management determined that the fair value of its Class A common
stock through the period ended June 30, 2009 was the last price paid when it
raised funds or $2.88 per share. From July 1, 2009 forward, the
Company determined that the fair value should be $.6624 per share as this was
the value at which debtors were willing to convert their debt into common
stock.
During
the year ended December 31, 2008 the Company issued 1,760,880 shares of stock,
125,000 for cash of $360,000, which was later cancelled and converted to debt,
735,000 shares for services rendered, $913,100 included as an expense under
general and administrative costs in the statement of operations, and $1,203,950
as a prepaid expense related to the unamortized portion of services rendered,
under various agreements at December 31, 2008. The company also issued 25,000
shares in connection with its purchase of New World Mortgage totaling $72,000.In
July of 2008 the company issued 1,000,880 shares of stock valued at $2.88 to the
shareholders of Perfect Web Technology Inc. as consideration for the spin off.
The company then impaired this transaction as it could not determine,
sufficiently, the economic value in future periods.
During
the nine months ended September 30, 2009, the Company issued 125,000 shares to a
consultant totaling $360,000 ($2.88 per share); 50,000 shares to a Director for
services totaling $33,120 ($.6624 per share); and 866,464 shares for the
conversion of debt totaling $573,945 ($.6624 per share).
Debt
Conversion
On August
24, 2009, the Company entered into a Debt Conversion Agreement with Robert
Johnson (“Johnson”) and other certain debt holders. The Debt
Conversion Agreement provides that a promissory note in favor of
Johnson in the principal amount of $331,200 dated October 28, 2008 plus $242,745
of additional debt owed to other debt holders for a total of $573,945 has been
converted into our Class A Common Stock at a conversion rate of $.6624 per share
totaling 866,464 shares.
Options
Pursuant
to the termination of the Employment Agreement with Kevin Leonard (see note 8)
the 250,000 stock options granted Mr. Leonard have been retroactively cancelled
totaling $95,000. There are no issued or outstanding stock options as
of December 31, 2009.
The
Company has evaluated all subsequent events through April 15, 2010, the date
this Annual Report on Form 10-K was filed with the SEC.
On March
23, 2010, the Company and 11i Solutions, Inc., a Georgia corporation (“11i
Solutions”), entered into a Purchase Agreement (the “Agreement”), effective
March 26, 2010. The parties additionally entered into an Escrow
Agreement (“Escrow Agreement”) on March 26, 2010. As per the terms of
the Agreement 11i Solutions will acquire a majority position in the capital
stock of the Company. The Board of Directors of the Company has unanimously
approved the Purchase Agreement.
11i
Solutions provides wireless technologies and other services and hardware to a
variety of rapidly expanding markets, specifically: critical infrastructure
security, antiterrorism, homeland security, intelligence, and law enforcement.
11i has designed and developed innovative, multi-purpose solutions, addressing
the growing problem of the malicious use of cellular-wireless technology. 11i
targets the commercial, government and international markets for its products
and services. 11i Solutions is headquartered in Kennesaw, Georgia.
Upon the
terms and subject to the conditions of the Agreement, 11i Solutions purchased
25,000,000 shares of the Class A common stock of the Company (the “Shares”)
pursuant to the distribution terms provided in the Escrow Agreement for
$225,000.00. Pursuant to the terms of the Agreement Thomas L.
DiStefano III resigned as chief executive officer of the Company and Domingo M.
Silvas III was appointed as the new chief executive
officer. Subsequent to the resignation of Mr. DiStefano he was
reappointed as CEO by an Amendment to the Purchase Agreement. In the Amendment
Mr. DiStefano remains the Company’s Chief Executive Officer (“CEO”) until the
first payment of the purchase price in the amount of $75,000 (or receipt of the
First Installment) in order to maintain cohesive order in the Company’s s
business operations and this provision shall amend Section 5. g. iii and iv of
the Agreement. Additionally, Melissa K.
Conner resigned as a director of the Company under the terms of the Agreement.
The Agreement provides that Mr. DiStefano and Mr. Silvas will serve as
co-chairmen of the Company until all closing conditions under the Agreement and
the Escrow Agreement have been satisfied. The terms of the Agreement
include 11i Solutions paying all the outstanding debt obligations of the Company
during a ninety day period commencing on March 26,
2010, the effective date of the Agreement. At such time as
the full purchase price for the Shares has been paid and all outstanding debt
obligations of the Company have been discharged under the terms of the Escrow
Agreement, Mr. DiStefano will resign from his position as co-chairman of the
Company.
F-13
Upon
completion of the terms of Escrow Agreement, the Company’s new chief executive
officer will become Domingo M. Silvas III. Mr. Silvas served in the
United States Army NG as a combat medic from March 1992 to
March1996. From December 1996 through March 2000 he was an operation
manager for NAF located in Germany. In 2000 he founded Leads Direct a web-based
online management/delivery system for clients and their sales
associates. From March 2005 to September 2007 Mr. Silvas was a senior
project director for Core Technologies. In August 2007, Mr. Silvas
founded 11i Networks, Inc. and became its Chairman where he raised the initial
startup capital, and recruited the management team. In Jan 2010, 11i
Networks, Inc.’s subsidiary 11i Solutions, Inc. was launched as a wireless
technology company with products and solutions developed for anti-terrorism and
homeland security.
In July
2009, while serving as chairman of 11i Networks, Inc., Mr. Silvas
became chief executive officer of AquaGold International Inc. (OTCPK:AQUI) a
water bottling company with the purpose of restructuring its management team
and creating
business development opportunities. Mr. Silvas resigned
from AquaGold
International Inc. in December 2009 to concentrate exclusively on 11i
Solutions, Inc. and its capital formation, technology development,
business development and transition from a private to a public
company.
The
Company is not aware of any arrangement or understanding between Mr. Silvas and
any other person, pursuant to which he was selected as a director except as
provided in the Agreement. Mr. Silvas is not a party to any
transaction or currently proposed transaction with the Company that is
reportable under Item 404(a) of Regulation S-K.
The
Agreement contains certain rescission rights for both the Company and 11i
Solutions including without limitation the mutual right to rescind the Agreement
if 11i Solutions has not complied with the terms of the Agreement, including
full payment of the purchase price for the Shares within the ninety day
term. As of the date of this Annual Report the Purchase Agreement and
Escrow Agreement remain in effect.
The
foregoing descriptions of the Agreement and Escrow Agreement are only summaries,
do not purport to be complete and are qualified in their entirety by reference
to the Agreement and Escrow Agreement, attached in the exhibit
index to this Annual Report, which agreements are incorporated herein
by reference.
The
Agreement and Escrow Agreement have been included to provide security holders
with information regarding their terms. The representations, warranties and
covenants contained in the Agreement and Escrow Agreement were made only for
purposes of the Agreement and as of specified dates, were solely for the benefit
of the parties to the Agreement, and may be subject to limitations agreed upon
by the contracting parties, including being qualified by confidential
disclosures exchanged between the parties in connection with the execution of
the Agreement and Escrow Agreement. The representations and warranties may have
been made for the purposes of allocating contractual risk between the parties to
the Agreement and Escrow Agreement instead of establishing these matters as
facts, and may be subject to standards of materiality applicable to the
contracting parties that differ from those applicable to potential investors and
other third parties. Information concerning the subject matter of the
representations and warranties may change after the date the Agreement and
Escrow Agreement, which subsequent information may or may not be fully reflected
in the Company’s public disclosures.
ITEM
11. DIRECTORS AND EXECUTIVE OFFICERS
On March
23,2010 and then amended on April 5, 2010 upon the terms and subject to the
conditions of the Agreement, Thomas L. DiStefano III resigned as chief executive
officer of the Company and Domingo M. Silvas III was appointed as the new chief
executive officer. Subsequent to the resignation of Mr. DiStefano he
was reappointed as CEO by an Amendment to the Purchase Agreement. In the
Amendment Mr. DiStefano remains the Company’s Chief Executive Officer (“CEO”)
until the first payment of the purchase price in the amount of $75,000 (or
receipt of the First Installment) in order to maintain cohesive order in the
Company’s s business operations and this provision shall amend Section 5. g. iii
and iv of the Agreement. Additionally, Melissa K.
Conner resigned as a director of the Company under the terms of the Agreement.
The Agreement provides that Mr. DiStefano and Mr. Silvas will serve as
co-chairmen of the Company until all closing conditions under the Agreement and
the Escrow Agreement have been satisfied.
The
names, ages and titles of our executive officers and directors are as
follows:
|
Name
|
Age
|
Position
|
||
|
Thomas
L. DiStefano III
|
52
|
Co-Chairman/Chief
Executive Officer/Chief Financial Officer
|
||
|
Domingo
M. Silvas III
|
35
|
Co-Chairman
|
||
|
Kevin
Leonard
|
40
|
President
New World Mortgage, Inc.
|
16
Executive
Officers and Directors
The
principal occupations for the past five years (and, in some instances, for prior
years) of each of our executive officers, present directors and proposed
directors are as follows:
Thomas
L. DiStefano III - Co-Chairman, Chief Executive Officer and Chief Financial
Officer
Mr.
DiStefano has served on our board of directors since July 2009 and has served as
our chief executive officer and chief financial officer since August 2009. From
July 2009 to March 2010 Mr. DiStefano was our chairman of the board of
directors, and since March 2010, Mr. DiStefano has served as our co-chairman.
Mr. DiStefano founded Perfect Web Technologies, Inc. (“PWBI”), the former parent
company of Willing Holding, Inc., in July 1997 and became its Chairman and
Chief Executive Officer in July 1997 having served in these positions until
the present.
Mr.
DiStefano is the inventor of three issued patents 6,631,400, 6,771,291 and
7,353,199 and three patents pending. Each of the patents
represent technologies and innovation that relate to Internet applications,
software and business methods, they include; electronic document development and
publishing, e-mail management and distribution, access management and password
protection, collaboration and e-commerce and marketing tools.
From
January 1993 to June 1997, Mr. DiStefano was the President of TLD3 Investment
Group, Inc. a financial consulting firm providing services to private
and public companies. From June 1991 to December 1992, Mr. DiStefano
was a Series 7 and 63 Registered Representative. Mr.
DiStefano was awarded a B.A. in economics from Eastern Connecticut
State University in 1979.
Domingo
M. Silvas III - Co-Chairman
Mr.
Silvas has served as co-chairman since March 2010. He served in
the United States Army NG as a combat medic from March 1992 to
March1996. From December 1996 through March 2000 he was an operation
manager for NAF located in Germany. In 2000 he founded Leads Direct a web-based
online management/delivery system for clients and their sales
associates. From March 2005 to September 2007 Mr. Silvas was a senior
project director for Core Technologies. In August 2007, Mr. Silvas
founded 11i Networks, Inc. and became its Chairman where he raised the initial
startup capital, and recruited the management team. In January
2010, 11i Networks, Inc.’s subsidiary 11i Solutions, Inc.
was launched as a wireless technology company with products and solutions
developed for anti-terrorism and homeland security. In July
2009, while serving as chairman of 11i Networks, Inc., Mr.
Silvas became chief executive officer of AquaGold International Inc.
(OTCPK:AQUI) a water bottling company with the purpose of restructuring its
management team and creating business
development opportunities. Mr. Silvas resigned
from AquaGold
International Inc. in December 2009 to concentrate exclusively on 11i
Solutions, Inc. and its capital formation, technology development,
business development and transition from a private to public
company.
Kevin Leonard. - President, New World
Mortgage
Mr.
Leonard had been the President of New World Mortgage, Inc., since March 2001
until his appointment as its Chief Executive Officer in connection with our
acquisition of New World in April 2008 from Kevin Leonard’s father Francis
Leonard.
Prior to
his employment with New World, he was the West Coast Regional Manager of
Southern Star Mortgage Corp, a company engaged in the originations of
residential mortgages where he oversaw operations and a sales team of loan
officers from 1999 to 2001. Prior to his employment with Southern Star Mortgage,
he was a sales representative for Ameriquest Mortgage.
Board
Committees
We have
not previously had an audit committee, compensation committee or nominations and
governance committee. During our 2010 fiscal year, our board of
directors expects to create such committees, in compliance with established
corporate governance requirements.
Audit
Committee. We plan to
establish an audit committee of the board of directors. The audit
committee’s duties would be to recommend to the board of directors the
engagement of independent auditors to audit our financial statements and to
review our accounting and auditing principles. The audit committee
would review the scope, timing and fees for the annual audit and the results of
audit examinations performed by the internal auditors and independent public
accountants, including their recommendations to improve the system of accounting
and internal controls. The audit committee would at all times be
composed exclusively of directors who are, in the opinion of the board of
directors, free from any relationship which would interfere with the exercise of
independent judgment as a committee member and who possess an understanding of
financial statements and generally accepted accounting principles.
Compensation
Committee. We plan to
establish a compensation committee of the board of directors. The
compensation committee would review and approve our salary and benefits
policies, including compensation of executive officers. The
compensation committee would also administer our proposed Incentive Compensation
Plan, and recommend and approve grants of stock options and restricted stock
under that plan.
Nominations and
Governance Committee. We plan to establish a nominations and
governance committee of the board of directors. The purpose of the
nominations and governance committee would be to select, or recommend for our
entire board’s selection, the individuals to stand for election as directors at
the annual meeting of stockholders and to oversee the selection and composition
of committees of our board. The nominations and governance
committee’s duties would also include considering the adequacy of our corporate
governance and overseeing and approving management continuity planning
processes.
17
Term
of Office
Our
Directors are appointed to hold office for two years until the next annual
meeting of our shareholders or until his or her successor is elected and
qualified, or until he or she resigns or is removed. Our officer is appointed by
our Board of Directors and holds office until removed by the Board.
Director
Compensation
Directors
are expected to timely and fully participate in all regular and special board
meetings, and all meetings of committees that they may serve on. We
expect to compensate non-management directors through stock option or restricted
stock grants under our proposed Incentive Compensation Plan, though we have not
determined the exact number of options or stock to be granted at this
time. As of December 31, 2009 Melissa K. Conner was granted 50,000
shares of our Class A Common stock for her service as a director.
Board
of Directors Leadership Structure and Role in Risk Oversight
Our board
of directors previously appointed Messrs. DiStefano and Silvas to serve as our
co-chairmen of the board of directors. The board believes that Mr. DiStefano’s
service as both chairman of the board and chief executive officer is in the best
interest of the Company and its stockholders given Mr. DiStefano’s in-depth
knowledge of the issues, opportunities and challenges facing the Company, and
that Mr. DiStefano is best positioned to communicate these issues to the
shareholders and to efficiently develop and lead agendas that ensure that the
board’s time and attention are focused on the most critical matters. The board
hopes to recruit one or more independent directors in the near future and
intends to promote the active involvement of the independent
directors. The Company does not currently utilize a lead independent
director due to the Company’s lack of an independent director serving on the
board. The board retains the authority to review and modify this leadership
structure as it may deem appropriate from time in the interests of the Company’s
stockholders.
As part
of its independent oversight function, the board reviews and monitors financial,
strategic and operational risk through annual and periodic reviews with
management. The board has primary responsibility for monitoring
financial reporting risk.
Periodically
the board reviews the Company’s business strategy including financial,
operational and regulatory risks facing the Company and the Company’s plans to
mitigate these risks.
The full
board of directors monitors risks associated with the Company’s overall
financial reporting and among its responsibilities is a review of risk
assessment and management and significant risks or exposures. In addition, the
Committee has a responsibility to assess the steps management has taken to
minimize such risks. The full board of directors also reviews the effectiveness
and integrity of the Company’s financial reporting processes and the Company’s
internal control structure (including both disclosure controls and procedures
and internal control over financial reporting).
Indebtedness
of Directors and Executive Officers
None of
our executive officers or present or proposed directors, or their respective
associates or affiliates, is indebted to us.
Family
Relationships
There are
no family relationships among our executive officers and present or proposed
directors.
Legal
Proceedings
As of the
date of this current report, there are no material proceedings to which any of
our present or proposed directors, executive officers, affiliates or
stockholders is a party adverse to us.
CODE
OF ETHICS
We do not
currently have a code of ethics, because we have only limited business
operations and only one officer and two directors, we believe a code of ethics
would have limited utility. We intend to adopt such a code of ethics as our
business operations expand and we have more directors, officers and
employees.
SECTION
16(A) BENEFICIAL REPORTING COMPLIANCE
Section
16(a) of the Exchange Act requires our officers, directors, and persons who own
more than ten percent of a registered class of our equity securities to file
reports of securities ownership and changes in such ownership with the SEC and
NASDAQ. Officers, directors, and greater-than-ten-percent stockholders are
required by SEC regulations to furnish us with copies of all Section 16(a) forms
that they file.
18
Based
solely upon a review of Forms 3 and Forms 4, furnished to us pursuant to Rule
16a-3 under the Exchange Act, we believe that all such forms required to be
filed pursuant to Section 16(a) of the Exchange Act during the year ended
December 31, 2009 were timely filed, as necessary, by the officers, directors,
and security holders required to file such forms, except that Mr. DiStefano
filed a late Form 4.
ITEM
12. EXECUTIVE COMPENSATION
MANAGEMENT
COMPENSATION
The table
below summarizes all compensation awarded to, earned by, or paid to our
executive officers by any person for all services rendered in all capacities to
us for the period from our inception through to December 31, 2009:
Executive
Compensation
The table
below summarizes the compensation earned for services rendered to Willing
Holding, Inc. in all capacities, for the years indicated, by its Chief Executive
Officer and two most highly-compensated executive officers other than the Chief
Executive Officer.
|
Annual
Compensation
|
Long-Term
Compensation
|
|||||||||||||||||||||||||||||||
|
Awards
|
Payouts
|
|||||||||||||||||||||||||||||||
|
Securities
|
||||||||||||||||||||||||||||||||
|
Restricted
|
Underlying
|
|||||||||||||||||||||||||||||||
|
Name
and
|
Other
Annual
|
Stock
|
Options/
|
LTIP
|
All
Other
|
|||||||||||||||||||||||||||
|
Principal
|
Fiscal
|
Salary
|
Bonus
|
Compensation
|
Award(s)
|
SARs
|
Payouts
|
Compensation
|
||||||||||||||||||||||||
|
Position
|
Year
|
($)
|
($)
|
($)
|
($)
|
(#)
|
($)
|
($)
|
||||||||||||||||||||||||
|
Thomas
L. DiStefano III
|
2009
|
150,000
|
-
|
-
|
0
|
-
|
-
|
-
|
||||||||||||||||||||||||
|
Melissa
K Conner
|
2009
|
0
|
-
|
-
|
50,000
|
-
|
-
|
-
|
||||||||||||||||||||||||
|
Kevin
Leonard
|
2009
|
0
|
-
|
-
|
0
|
-
|
-
|
-
|
||||||||||||||||||||||||
|
-
|
-
|
0
|
-
|
-
|
-
|
|||||||||||||||||||||||||||
The
aggregate amount of benefits in each of the years indicated did not exceed the
lesser of $50,000 or 10% of the compensation of any named officer.
Options/SAR
Grants and Fiscal Year End Option Exercises and Values
We have
not had a stock option plan or other similar incentive compensation plan for
officers, directors and employees, and no stock options, restricted stock or SAR
grants were granted or were outstanding at any time.
There are
no current employment agreements between the company and its
officer/director.
There are
no annuity, pension or retirement benefits proposed to be paid to any Officer,
Director or employee of the Company in the event of retirement at normal
retirement date pursuant to any presently existing plan provided or contributed
to by the company or any of its subsidiaries, if any.
ITEM
13. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth certain information concerning the number of shares
of our common stock owned beneficially as of April 13, 2010 by: (i) each person
(including any group) known to us to own more than five percent (5%)
of any class of our voting securities, (ii) our directors, and or (iii) our
executive officers. Unless otherwise indicated, the shareholder listed possesses
sole voting and investment power with respect to the shares shown.
|
Name(1)
|
Number of Shares Beneficially Owned(2)
|
Percentage of Shares Beneficially Owned(3)
|
||||||||
|
5%
Stockholders:
|
||||||||||
| (4) | 25,000,000 | 89.92 | % | |||||||
|
Executive Officers and
Directors :
|
||||||||||
|
Thomas
L. DiStefano III (5)
|
510,549 | 1.83 | % | |||||||
|
Kevin
Leonard*
|
195,000 | .7 | % | |||||||
|
Domingo
M. Silvas III
|
- | - | ||||||||
|
*
|
Less
than one percent.
|
|
(1)
|
Unless
otherwise indicated, the address of each person is c/o Willing Holding,
Inc., 21218 St. Andrews Blvd. #131, Boca Raton, FL
33433.
|
|
(2)
|
Unless
otherwise indicated, includes shares owned by a spouse, minor children and
relatives sharing the same home, as well as the entities owned or
controlled by the named person. Also includes shares if the
named person has the right to acquire those shares within 60 days after
December 31, 2009, by the exercise of any warrant, stock option or other
right. Unless otherwise noted, shares are owned of record and
beneficially by the named person.
|
|
(3)
|
The
calculation in this column is based upon 27,802,344 shares of common stock
outstanding on April 13 2010. The issued and outstanding shares
include 25,000,000 shares of Class A common stock issued in the name of
11i Solutions and held in escrow in accordance with the terms of the
Escrow Agreement by and between the Company and 11i Solutions and the
escrow agent thereto, dated March 26, 2010, as subsequently
amended. The shares of common stock and shares underlying stock
options are deemed outstanding for purposes of computing the percentage of
the person holding such stock options but are not deemed outstanding for
the purpose of computing the percentage of any other
person.
|
| Pursuant to the Agreement and Escrow Agreement there are 25,000,000 shares held in escrow for the benefit of 11i Solutions, Inc. These shares will only be distributed by the escrow agent when the terms of the Agreement have been fulfilled and the closing has occurred. 11i Solutions, Inc. may not vote the shares or distribute the shares until the terms of the Agreement have been fulfilled and the closing has occurred. | |
|
(5)
|
Pursuant to the Agreement by and between the Company and 11i Solutions, as amended, Thomas L. DiStefano III received 1,500,000 shares of the Company’s Class B Common Stock. Mr. DiStefano owns 100% of the issued and outstanding Class B shares of the Company. |
19
On
September 29, 2009 we issued two unsecured promissory notes (each a “Note”
and collectively, the “Notes”) in the aggregate principal amount of $20,000 for
certain loans provided to the Company by Thomas L. DiStefano III, the Chief
Executive Officer, Chief Financial Officer and Co-Chairman of the
Company.
The Notes
are non-interest bearing at and the outstanding principal amount of each Note
are due and payable on the date that is the earlier of (i) December 1,
2009, or (ii) within five (5) days of the closing of any subsequent
financing of Company (whether completed as a debt or equity
financing).
The terms
of each Note provide that in the “Default and Remedy” (as that term is defined
in the Note) by the Company, If Company fails to pay principal on the
date on which it falls due or to perform any of the agreements, conditions,
covenants, provisions, or stipulations contained in this Note, then Lender, at
its option and without notice to Company , may declare immediately due and
payable the entire unpaid balance of principal with interest from the date of
default at the rate of 12% per year and all other sums due by Borrower hereunder
anything herein to the contrary notwithstanding. Payment of this sum
may be enforced and recovered in whole or in part at any time by one or more of
the remedies provided to Lender in this Note. In that case, Lender
also may recover all costs in connection with suit, a reasonable attorney’s fee
for collection, and interest on any judgment obtained by Lender at the rate of
12% per year. The remedies of Lender and the warrants provided in
this Note shall be cumulative and concurrent, and they may be pursued singly,
successively, or together at the sole discretion of Lender. They may
be exercised as often as occasion shall occur, and failing to exercise one shall
in no event be construed as a waiver or release of it.
On
December 17, 2009, we issued an unsecured promissory note (the “Note” ) in the
aggregate principal amount of $30,000.00 for certain loans provided to the
Company by Thomas L. DiStefano III.
The Note
is non-interest bearing and the outstanding principal amount the Note
is due and payable on the date that is the earlier of (i) February 15,
2010, or (ii) within five (5) days of the closing of any subsequent
financing of Company (whether completed as a debt or equity
financing).
The terms
of each Note provide that in the “Default and Remedy” (as that term is defined
in the Note) by the Company, If Company fails to pay principal on the
date on which it falls due or to perform any of the agreements, conditions,
covenants, provisions, or stipulations contained in this Note, then Lender, at
its option and without notice to Company , may declare immediately due and
payable the entire unpaid balance of principal with interest from the date of
default at the rate of 12% per year and all other sums due by Borrower hereunder
anything herein to the contrary notwithstanding. Payment of this sum
may be enforced and recovered in whole or in part at any time by one or more of
the remedies provided to Lender in this Note. In that case, Lender
also may recover all costs in connection with suit, a reasonable attorney’s fee
for collection, and interest on any judgment obtained by Lender at the rate of
12% per year. The remedies of Lender and the warrants provided in
this Note shall be cumulative and concurrent, and they may be pursued singly,
successively, or together at the sole discretion of Lender. They may
be exercised as often as occasion shall occur, and failing to exercise one shall
in no event be construed as a waiver or release of it.
On March
23, 2010, the Company and 11i Solutions, Inc., a Georgia corporation (“11i
Solutions”), entered into a Purchase Agreement (the “Agreement”), effective
March 26, 2010. The parties additionally entered into an Escrow
Agreement (“Escrow Agreement”) on March 26, 2010. As per the terms of
the Agreement 11i Solutions will acquire a majority position in the capital
stock of the Company (the “Agreement”). The Board of Directors of the Company
has unanimously approved the Purchase Agreement. Unless otherwise indicated, we
refer to the Company, as we, us, or our, in this Annual Report on Form 10-K
(“Form 10-K”).
20
11i
Solutions provides wireless technologies and other services and hardware to a
variety of rapidly expanding markets, specifically: critical infrastructure
security, antiterrorism, homeland security, intelligence, and law enforcement.
11i has designed and developed innovative, multi-purpose solutions, addressing
the growing problem of the malicious use of cellular-wireless technology. 11i
targets the commercial, government and international markets for its products
and services. 11i Solutions is headquartered in Kennesaw, Georgia.
Upon the
terms and subject to the conditions of the Agreement, 11i Solutions purchased
25,000,000 shares of the Class A common stock of the Company (the “Shares”)
pursuant to the distribution terms provided in the Escrow Agreement for
$225,000.00. Pursuant to the terms of the Agreement Thomas L.
DiStefano III resigned as chief executive officer of the Company and Domingo M.
Silvas III was appointed as the new chief executive
officer. Additionally, Melissa K. Conner resigned as a director of
the Company under the terms of the Agreement. The Agreement provides that Mr.
DiStefano and Mr. Silvas will serve as co-chairmen of the Company until all
closing conditions under the Agreement and the Escrow Agreement have been
satisfied. The terms of the Agreement include 11i Solutions paying
all the outstanding debt obligations of the Company during a ninety
day period commencing on March 26, 2010, the effective date of the
Agreement. At such time as the full purchase price for the Shares has
been paid and all outstanding debt obligations of the Company have been
discharged under the terms of the Escrow Agreement, Mr. DiStefano will resign
from his position as co-chairman of the Company.
Subsequent
to the resignation of Mr. DiStefano he was reappointed as CEO by an Amendment to
the Purchase Agreement. In the Amendment Mr. DiStefano remains the Company’s
Chief Executive Officer (“CEO”) until the first payment of the purchase price in
the amount of $75,000 (or receipt of the First Installment) in order to maintain
cohesive order in the Company’s s business operations and this provision shall
amend Section 5. g. iii and iv of the Agreement.
ITEM
15. PRINCIPAL ACCOUNTING FEES AND SERVICES
The total
fees charged to the company for audit services, including quarterly reviews,
were $14,200.00, audit-related services were $16,000, tax services were $0,
and other services were $0 during the year ended December 31,
2009.
21
PART
IV
EXHIBIT
INDEX
Index to
Exhibits
|
Exhibit
Number
|
Description
|
|
|
2.1
|
Stock
Purchase Agreement between Willing Holding, Inc., Francis Thomas Leonard
and New World Mortgage, Inc.*
|
|
|
3(i)
|
Amended
and Restated Articles of Incorporation as filed with the Secretary of
State of the State of Florida on November 10, 2008.*
|
|
|
3(ii)
|
By-Laws*
|
|
|
10.1
|
Employment
Agreement between Perfect Web Technologies, Inc., Willing Holding, Inc.
and Gideon Taylor.*
|
|
|
10.2
|
Employment
Agreement between Willing Holding, Inc., New World Mortgage, Inc. and
Kevin Leonard.*
|
|
|
10.3
|
Lease
Agreement, dated February 27, 2008, by and between Sequoia Investments
XIV, LLC and Willing Holding, Inc. for Greensboro, NC
space.*
|
|
|
10.4
|
Lease
Agreement, dated January 1, 2007, by and between Karen Morrison and New
World Mortgage, Inc. for Murrieta, CA space.*
|
|
|
10.5
|
Consultant
Agreement between Willing Holding, Inc. and Glenn Morris/Mortgage Services
of Gibsonville.*
|
|
|
10.6
|
Promissory
Note dated October 28, 2008 executed by Willing Holding, Inc. in favor of
Robert Johnson.*
|
|
|
10.7
|
Form
of Debt Conversion Agreement
|
|
|
10.7
|
Unsecured
Promissory Note, dated September 16, 2009, in the principal amount of
$7,000 executed by Willing Holding, Inc. in favor of Thomas L. DiStefano
III.
|
|
|
10.8
|
Unsecured
Promissory Note, dated September 16, 2009, in the principal amount of
$13,000 executed by Willing Holding, Inc. in favor of Thomas L. DiStefano
III.
|
|
|
10.9
|
Unsecured
Promissory Note, dated December 17, 2009, in the principal amount of
$30,000.00 executed by Willing Holding, Inc. in favor of Thomas L.
DiStefano III.
|
|
|
10.10
|
Purchase
Agreement by and among Willing Holding, Inc., 11i Solutions, Inc., and
Thomas L. DiStefano III, effective as of March 26,
2010.
|
|
|
10.11
|
Escrow
Agreement by and among Willing Holding, Inc., 11i Solutions, Inc., and the
additional party named therein serving as escrow agent, dated as of March
26, 2010.
|
|
|
10.12
|
Amendment
to the Purchase Agreement+
|
|
|
10.13
|
Amendment
to the Escrow Agreement+
|
|
|
31.1
|
Principal
Executive Officer and Principal Financial Officer Certification Pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.+
|
|
|
32.1
|
Principal
Executive Officer and Principal Financial Officer Certification Pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.+
|
|
*
|
Incorporated
by reference to the corresponding exhibit filed with the Registration
Statement on Form 10 (File No. 000-53496) filed with the SEC on November
12, 2008, and subsequently amended on May 27,
2009.
|
|
+
|
Filed
herewith
|
22
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.
|
WILLING
HOLDING, INC.
|
||
|
Date:
April 15, 2009
|
By:
|
/s/
THOMAS L. DISTEFANO III
|
|
THOMAS
L. DISTEFANO III
|
||
|
Chief
Executive Officer, Chief Financial Officer and
Co-Chairman
|
||
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.
|
Signature
|
Title
|
Date
|
||
|
/s/
THOMAS L. DISTEFANO III
|
Chief
Executive Officer,
|
April
15, 2010
|
||
|
THOMAS
L. DISTEFANO III
|
Chief Financial Officer and Co-Chairman | |||
|
/S/
DOMINGO M. SILVAS III
|
Co-Chairman
|
April
15, 2010
|
||
|
DOMINGO
M. SILVAS III
|
23