UNITED STATES

  SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Form 10-Q


x       QUARTERLYREPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF1934 

 

 

For the Quarterly Period Ended December 31, 2010

 

 

  o         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934 

 

 

Commission File No. 333-153575 

 

Highlight Networks,  Inc.

(Exact name of registrant as specified in its charter)


Nevada

 

26-1507527

(State of incorporation)

 

(IRS Employer Identification Number)


215 South Riverside Drive, Suite 12

Cocoa,  Florida 32922

(321) 684-5721

(Address,  including zip code, and telephone number,

including  area code, of registrant's principal executive offices)

 

(Former name, former address and former fiscal year, if changed since last  report)

 

 

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days  x Yes     o No

 

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.

 

o   Large accelerated filer Accelerated filer

 

o   Non-accelerated filer

 

x   Smaller reporting company

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  o Yes    x No

 

The number of shares outstanding of the issuer's common stock, was 1,505,500 common shares as of December 31, 2010.


 


HIGHLIGHT NETWORKS, INC.

DECEMBER 31, 2010

 

 

 

PART I FINANCIAL INFORMATION

Page

Item 1.

Financial Statements

 

 

Balance Sheets

  As of December 31, 2010 (Unaudited)

  As of  June 30, 2010

4

 

Unaudited Statements of Operations

  For the three months ended December 31, 2010 and  December 31, 2009

  For the six months ended December 31, 2010 and December 31, 2009

  For the cumulative period from June 21, 2007 (Date of Inception)  to December 31, 2010

5

 

Unaudited Statement of  Stockholders’ Deficiency from June 21, 2007 (Date of Inception) to December 31, 2010

6

 

Unaudited Statements of Cash Flows

  For the six months ended  December 31, 2010 and  December 31, 2009

  For the cumulative period from June 21, 2007 (Date of Inception) to December 31, 2010                                                   

7

 

Unaudited Notes to Financial Statements                                                                                                                                                               

8-9

Item 2.

Management’s Discussion and Analysis or Plan of Operation

10

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

12

Item 4.

Controls and Procedures

13

 

 

 

 

PART II – OTHER INFORMATION

 

Item 1.

Legal Proceedings   

15

Item1A           

Risk Factors

15

Item 2.

Unregistered Sale of Equity Securities and Use of Proceeds

15

Item 3.

Defaults Upon Senior Securities

15

Item 4.

Submission of Matters to a Vote of Security Holders

15

Item 5.

Other Information

15

Item 6.

Exhibits

15

 

 

 

 

SIGNATURES

16-20





















2


 

Forward-Looking Statements

 

 

Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.   These forward-looking statements generally are identified by the words "believes," "project," "expects," "anticipates," "estimates," "intends," "strategy," "plan," "may," "will," "would," "will be," "will continue," "will likely result, "and similar expressions.  We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of complying with those safe-harbor   provisions.  Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain.  Factors which could have a material adverse affect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.  We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.  Further information concerning our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC.

 

 

 

 

 

 

 

 

 

 

 


 

 



3


 

 

PART I.   FINANCIAL INFORMATION

 

 Item 1. Financial Statements


HIGHLIGHT NETWORKS, INC.

(A Development Stage Company)

BALANCE SHEETS

 

 

 

 

 

 

 

 (Unaudited)

 

 

 

 

 December 31,

 

 June 30,

 

 

2010

 

2010

ASSETS

 

 

 

 

  Current Assets:

 

 

 

 

    Cash

 

$

19,925 

 

$

982 

 

 

 

 

 

  Total Current Assets

 

19,925 

 

982 

 

 

 

 

 

TOTAL ASSETS

 

$

19,925 

 

$

982 

 

 

 

 

 

LIABILITIES & EQUITY

 

 

 

 

  Current Liabilities:

 

 

 

 

    Accounts Payable

 

$

5,750 

 

$

1,431 

    Related Party Note Payable

 

10,564 

 

5,000 

    Interest Payable

 

776 

 

12 

 

 

 

 

 

  Total Current Liabilities

 

17,090 

 

6,443 

 

 

 

 

 

  Total Liabilities

 

17,090 

 

6,443 

 

 

 

 

 

  Stockholders' Equity

 

 

 

 

    Common Stock- $.001 par value; 150,000,000 shares

 

 

 

 

    authorized; 1,500,940 and 1,505,500 shares outstanding

 

 

 

 

    as of June 30, 2010 and December 31, 2010

 

1,505 

 

1,501 

    Additional Paid-In Capital

 

75,433 

 

51,431 

    Deficit Accumulated During the Development Stage

 

(74,103)

 

(58,393)

 

 

 

 

 

  Total Stockholders' Equity

 

2,835 

 

(5,461)

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

 

$

19,925 

 

$

982 

 

 

 

 

 

See Notes to Unaudited Interim Financial Statements


 


 



4


 


 

HIGHLIGHT NETWORKS, INC.

(A Development Stage Company)

STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

 

 

 

 

 

Inception

 

 

For the Three Months Ended

 

For the Six Months Ended

 

(June 21, 2007)

 

 

December 31,

 

December 31,

 

to

 

 

2010

 

2009

 

2010

 

2009

 

September 30, 2010

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

Accounting Fees

 

1,750 

 

1,500 

 

9,250 

 

1,500 

 

14,095 

General and Administrative

 

1,935 

 

515 

 

5,646 

 

701 

 

14,782 

Legal Fees

 

 

 

50 

 

 

39,050 

Rent

 

 

 

 

 

3,400 

Valuation Impairment on Marketable Securities

 

 

 

 

2,000 

Total Expenses

 

3,685 

 

2,015 

 

14,946 

 

2,201 

 

73,327 

 

 

 

 

 

 

 

 

 

 

 

Operating Income (Loss)

 

(3,685)

 

(2,015)

 

(14,946)

 

(2,201)

 

(73,327)

 

 

 

 

 

 

 

 

 

 

 

Other (Income) Expense

 

 

 

 

 

 

 

 

 

 

Interest, Net

 

(464)

 

 

(764)

 

 

(776)

Total Other Income (Expense)

 

(464)

 

 

(764)

 

 

(776)

 

 

 

 

 

 

 

 

 

 

 

Net Loss Before Taxes

 

(4,149)

 

(2,015)

 

(15,710)

 

(2,201)

 

(74,103)

 

 

 

 

 

 

 

 

 

 

 

Income and Franchise Tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income (Loss)

 

$

(4,149)

 

$

(2,015)

 

$

(15,710)

 

$

(2,201)

 

$

(74,103)

 

 

 

 

 

 

 

 

 

 

 

Basic & Diluted Loss per Share

 

$

(0.00)

 

$

(0.00)

 

$

(0.01)

 

$

(0.00)

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Shares

 

 

 

 

 

 

 

 

 

 

Outstanding

 

1,504,302 

 

1,500,000 

 

1,502,580 

 

1,500,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

See Notes to Unaudited Interim Financial Statements

 

5


HIGHLIGHT NETWORKS, INC.

(A Development Stage Company)

STATEMENT OF STOCKHOLDERS' DEFICIENCY

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deficit

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 Additional

 

Since

 

Total

 

 

 Common Stock

 

 Paid in

 

 Development

 

Stockholders'

 

 

 Shares

 

 Par Value

 

 Capital

 

Stage

 

Deficiency

Inception June 21, 2007 - restated to reflect

 

 

 

 

 

 

 

 

 

 

2:1 stock split effective November 2008

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock Issued for Cash

 

1,000,000 

 

1,000 

 

(500)

 

 

500 

 

 

 

 

 

 

 

 

 

 

 

Net Loss

 

 

 

 

(1,580)

 

(1,580)

 

 

 

 

 

 

 

 

 

 

 

Balance at June 30, 2007

 

1,000,000 

 

1,000 

 

(500)

 

(1,580)

 

500 

 

 

 

 

 

 

 

 

 

 

 

Stock Issued for Cash

 

500,000 

 

500 

 

4,500 

 

 

4,500 

 

 

 

 

 

 

 

 

 

 

 

Net Loss

 

 

 

 

(23,100)

 

(23,100)

 

 

 

 

 

 

 

 

 

 

 

Balance at June 30, 2008

 

1,500,000 

 

1,500 

 

4,000 

 

(24,680)

 

(19,180)

 

 

 

 

 

 

 

 

 

 

 

Stock Agreement as Payment for Related Party Payable

 

7,329 

 

 

37,373 

 

 

37,380 

 

 

 

 

 

 

 

 

 

 

 

Contributed Capital

 

 

 

6,010 

 

 

6,010 

 

 

 

 

 

 

 

 

 

 

 

Stock Issued for Cash

 

260 

 

 

1,329 

 

 

1,329 

 

 

 

 

 

 

 

 

 

 

 

Net Loss

 

 

 

 

(20,654)

 

(20,654)

 

 

 

 

 

 

 

 

 

 

 

Balance at June 30, 2009

 

1,507,589 

 

1,508 

 

48,711 

 

(45,334)

 

4,885 

 

 

 

 

 

 

 

 

 

 

 

Stock Agreement Cancelled - Adjustment to Stock and Contributed Capital

 

(7,329)

 

(7)

 

(4,003)

 

 

(4,010)

 

 

 

 

 

 

 

 

 

 

 

Stock Issued for Cash

 

680 

 

 

3,468 

 

 

3,468 

 

 

 

 

 

 

 

 

 

 

 

Contributed Capital

 

 

 

3,255 

 

 

3,255 

 

 

 

 

 

 

 

 

 

 

 

Net Loss

 

 

 

 

(13,059)

 

(13,059)

 

 

 

 

 

 

 

 

 

 

 

Balance at June 30, 2010

 

1,500,940 

 

1,501 

 

51,431 

 

(58,393)

 

(5,461)

 

 

 

 

 

 

 

 

 

 

 

Stock Issued for Cash

 

4,560 

 

 

23,252 

 

 

23,256 

 

 

 

 

 

 

 

 

 

 

 

Contributed Captial

 

 

 

750 

 

 

750 

 

 

 

 

 

 

 

 

 

 

 

Net Loss

 

 

 

 

(15,710)

 

(15,710)

 

 

 

 

 

 

 

 

 

 

 

Balance at  December 31, 2010

 

1,505,500 

 

$

1,505 

 

$

75,433 

 

$

(74,103)

 

$

2,835 

 

 

 

 

 

 

 

 

 

 

 

See Notes to Unaudited Interim Financial Statements


6



HIGHLIGHT NETWORKS, INC.

(A Development Stage Company)

STATEMENT OF CASH FLOWS

(Unaudited)

 

 

 

 

 

 

 

For the Six Months Ended

 

 

 

 

December 31,

 

 

 

 

2010

 

2009

 

December 31, 2010

CASH FLOWS FROM OPERATING

 

 

 

 

 

 

ACTIVITIES:

 

 

 

 

 

 

Net Loss

 $ (15,710)

 

 $ (2,201)

 

 $ (74,103)

Adjustments required to reconcile net loss

 

 

 

 

 

to cash used in operating expenses:

 

 

 

 

 

Non cash expenses and impairment charges

  - 

 

  - 

 

  2,000 

Fair value of services provided by related parties

  - 

 

  - 

 

  37,400 

Expenses paid by related parties

  4,194 

 

  - 

 

  11,273 

Increase (decrease) in accounts payable and accrued services

  5,083 

 

  - 

 

  6,526 

Cash Used in Operating Activities

 

  (6,433)

 

  (2,201)

 

  (16,904)

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING

 

 

 

 

 

 

ACTIVITIES

 

 

 

 

 

 

Cash Used in Investing Activities

 

  - 

 

  - 

 

  - 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING

 

 

 

 

 

 

ACTIVITIES:

 

  2,120 

 

 

 

  3,776 

Proceeds from the issuance of common stock

  23,256 

 

  2,040 

 

  33,053 

Cash Generated by Financing Activities

 

  25,376 

 

  2,040 

 

  36,829 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in Cash

  18,943 

 

  (161)

 

  19,925 

Cash at Beginning of Period

  982 

 

  875 

 

  - 

Cash at End of Period

 

 $ 19,925 

 

 $ 714 

 

 $ 19,925 

 

 

 

 

 

 

 

See Notes to Unaudited Interim Financial Statements


 


7


 



HIGHLIGHT NETWORKS, INC.

(a development stage company)

NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS

 

Note 1 – Basis of Presentation:


The Financial Statements presented herein have been prepared by us in accordance with the accounting policies described in our June 30, 2010 audited financial statements and should be read in conjunction with the Notes to Financial Statements which appear in that report.


The preparation of these financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on going basis, we evaluate our estimates, including those related intangible assets, income taxes, insurance obligations and contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other resources. Actual results may differ from these estimates under different assumptions or conditions.


In the opinion of management, the information furnished in these interim financial statements reflect all adjustments necessary for a fair statement of the financial position and results of operations and cash flows as of and for the three and six-month periods ended December 31, 2010 and 2009. All such adjustments are of a normal recurring nature. The financial statements do not include some information and notes necessary to conform with annual reporting requirements.


Note 2 – Earning/Loss Per Share:


 Basic net loss per share is computed using the weighted average number of common shares outstanding during the period. Diluted net loss per common share is computed using the weighted average number of common and dilutive equivalent shares outstanding during the period. Dilutive common equivalent shares consist of options to purchase common stock (only if those options are exercisable and at prices below the average share price for the period) and shares issueable upon the conversion of Preferred Stock or convertible notes. Due to the net losses reported, dilutive common equivalent shares were excluded from the computation of diluted loss per share, as inclusion would be anti-dilutive for the periods presented.


There were no common equivalent shares required to be added to the basic weighted average shares outstanding to arrive at diluted weighted average shares outstanding in 2010 or 2009.


Note 3 – New Accounting Standards:


In January 2010, the FASB issued an amendment to ASC 820, Fair Value Measurements and Disclosure, to require reporting entities to separately disclose the amounts and business rationale for significant transfers in and out of Level 1 and Level 2 fair value measurements and separately present information regarding purchase, sale, issuance, and settlement of Level 3 fair value measures on a gross basis. This standard, for which the Company is currently assessing the impact, is effective for interim and annual reporting periods beginning after December 15, 2009 with the exception of disclosures regarding the purchase, sale, issuance, and settlement of Level 3 fair value measures which are effective for fiscal years beginning after December 15, 2010.

In January 2010, the FASB issued an amendment to ASC 505, Equity, where entities that declare dividends to shareholders that may be paid in cash or shares at the election of the shareholders are considered to be a share issuance that is reflected prospectively in EPS, and is not accounted for as a stock dividend. This standard is effective for interim and annual periods ending on or after December 15, 2009 and is to be applied on a retrospective basis. The adoption of this standard is not expected to have a significant impact on the Company’s financial statements..

In June 2009, the FASB issued guidance now codified as ASC 105, Generally Accepted Accounting Principles as the single source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with U.S. GAAP, aside from those issued by the SEC. ASC 105 does not change current U.S. GAAP, but is intended to simplify user access to all authoritative U.S. GAAP by providing all authoritative literature related to a particular topic in one place. The adoption of ASC 105 will not have a material impact on the Company’s financial statements, but did eliminate references to pre-codification standards.



8


 

Management does not anticipate that the adoption of these standards will have a material impact on the financial statements.


Note 4 – Related Party Transactions not Disclosed Elsewhere:


Due Related Parties: Amounts due related parties consist of regulatory compliance expenses paid directly by and cash advances received by affiliates. In 2010, Infanto Holdings LLC, whose principal stockholder Joseph C. Passalaqua is also a principal stockholder of Highlight Networks, Inc., loaned the Company $7,064.  This note is accruing 18% simple interest. As of December 31, 2010, the Company owes $7,064 in principal and $776 in interest related to this note.


Note 5 – Recent Sale of Common Stock:


Common Shares Issued for Cash:


The Company has issued 4,560 shares of common in the six months ended December 31, 2010. As of December 31, 2010, there are 1,505,500 shares of common stock outstanding.


·

On September 7, 2010 the Company issued 100 shares of common stock at   $5.10 per share.


·

On September 24, 2010 the Company issued 160 shares of common stock at $5.10 per share.


·

On October 27, 2010 the Company issued 3,600 shares of common stock at   $5.10 per share.


·

On November 2, 2010 the Company issued 700 shares of common stock at    $5.10 per share.




9


 


Item 2.  Management's Discussion and Analysis of financial Condition an Results of Operations

  

 The following discussion and analysis is intended as a review of significant factors affecting our financial condition and results of operations for the periods indicated. The discussion should be read in conjunction with our consolidated financial statements and the notes presented herein. In addition to historical information, the following Management's Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that involve risks and uncertainties. Our actual results could differ significantly from those anticipated in these forward-looking statements as a result of certain factors discussed in this Form 10-Q.


Overview


Highlight Networks, Inc. is a development stage, wireless broadband networking company in the business of planning, development and operation of both private and public access wireless broadband networks using WiFi (IEEE 802.11) and WiMAX (IEEE 802.16) wireless technologies to provide business and residential customers "last mile" connectivity. As of the date of this report, the Company has had limited ongoing operations consisting of product and technology review, analysis and system design and negotiations for system placement and third party contract services.


Results of Operations for three months ended December 31, 2010 compared to the three months ended December 31, 2009.


Revenues for the three months ended December 31, 2010 and for the three months ended December 31, 2009 were $-0- respectively for both periods.


General and administrative, accounting, legal, and valuation impairment expenses increased by $1,670, from $2,015 in the three months ended December 31, 2009 to $3,685 in the three months ended December 31, 2010.


The loss per share was $(0.00) for the three months ended December 31, 2009 and $(0.00) for the three months ended December 31, 2010.   The weighted average shares were 1,500,000 in the three months ended December 31, 2009 and 1,504,302 in the three months ended December 31, 2010.


Results of Operations for six months ended December 31, 2010 compared to the six months ended December 31, 2009.


Revenues for the six months ended December 31, 2010 and for the six months ended December 31, 2009 were $-0- respectively for both periods.


General and administrative, accounting, legal, and valuation impairment expenses increased by $12,745, from $2,201 in the six months ended December 31, 2009 to $14,946 in the six months ended December 31, 2010.


The loss per share was $(0.00) for the six months ended December 31, 2009 and $(0.01) for the six months ended December 31, 2010.   The weighted average shares were 1,500,000 in the six months ended December 31, 2009 and 1,502,580 in the six months ended December 31, 2010.


As of December 31, 2010, the Company had no agreements with sub-distributors relating to distribution commitments or guarantees that had not been recognized in the statement of operations.


Our auditors have issued a going concern opinion. This means that there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills. This is because we have not generated material revenues and sufficient revenues may not be forthcoming. Accordingly, we must raise cash from sources other than operations.



10



 

Liquidity and Capital Resources


The Company filed a registration statement with the Securities and Exchange Commission which became effective on October 6, 2008 for a self underwritten offering in the amount of $510,000 consisting of 100,000 shares of common stock at a share price of  $5.10.  The Company has had limited participation in the offering.  The Company is attempting to secure private funding to complete its first network installation however, there is not commitment for these funds and there is no assurance that the amount will be raised or that the Company will otherwise secure sufficient funds to achieve its business plan.

 

To date, the Company’s previous principal officer and the Company’s major shareholder have provided services and loans to the company in order to continue operations.  As of December 31, 2010, Infanto Holdings LLC, whose principal stockholder Joseph C. Passalaqua is also a principal stockholder of Highlight Networks, Inc., has loaned the Company $10,564.  These notes are accruing 18% simple interest. As of December 31, 2010, the Company owes $10,564 in principal and $776 in interest related to this note.


Net cash used in operating activities was $3,339 during the six-month period ended December 31, 2010.


Net cash provided by investing activities was $0 during the six-month period ended December 31, 2010.


Net cash provided by financing activities was $3,446 during the six-month period ended December 31, 2010.


Derivatives


At December 31, 2010, the Company had issued no derivative securities nor had it reserved any shares for issuance under grants of options and warrants were in excess of authorized shares on a fully diluted basis there by precluding equity treatment under FASB ASC 815, Accounting for Derivative Financial Instruments requires every derivative instrument to be recorded on the balance sheet as either an asset or liability measured at its fair value, with changes in the derivative's fair value recognized currently in earnings unless specific hedge accounting criteria are met. We value these derivative securities at fair value at the end of each reporting period (quarterly or annually), and their value is marked to market at the end of each reporting period with the gain or loss recognition recorded against earnings. We continue to revalue these instruments each reporting period to reflect their current value in light of the current market price of our common stock.


Commitments and Capital Expenditures


The Company had no material commitments for capital expenditures. 
 

 
Critical Accounting Policies Involving Management Estimates and Assumptions


Our discussion and analysis of our financial condition and results of operations is based on our financial statements. In preparing our financial statements in conformity with accounting principles generally accepted in the United States of America, we must make a variety of estimates that affect the reported amounts and related disclosures.


Stock Based Compensation

 

We will account for employee stock-based compensation costs in accordance with ASC 718, Share-Based Payments  , which requires all share-based payments to employees, including grants of employee stock options, to be recognized in our statements of operations based on their fair values. We will utilize the Black-Scholes option pricing model to estimate the fair value of employee stock based compensation at the date of grant, which requires the input of highly subjective assumptions, including expected volatility and expected life. Changes in these inputs and assumptions can materially affect the measure of estimated fair value of our stock-based compensation.


Use of Estimates


The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.


 

11


 

Deferred Tax Valuation Allowance


Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Valuation allowances are established when necessary to reduce deferred tax assets to the amount more likely than not to be realized. Income tax expense is the total of tax payable for the period and the change during the period in deferred tax assets and liabilities.


Accounting For Obligations And Instruments Potentially To Be Settled In The Company s Own Stock

 

We account for obligations and instruments potentially to be settled in the Company s stock in accordance with FASB ASC 815, ,Accounting for Derivative Financial Instruments Indexed To, and Potentially Settled In a Company s Own Stock . This issue addresses the initial balance sheet classification and measurement of contracts that are indexed to, and potentially settled in, the Company's own stock.


Off-Balance Sheet Arrangements


Highlight Networks, Inc. does not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet financial arrangements.


Common Stock


The Company is authorized to issue 150,000,000 shares of common stock, with par value of $0.001 per share. As of December 31, 2010, 1,505,500 shares of common stock are outstanding. Holders of common stock are entitled to receive dividends, when and if declared by the board of directors, subject to prior rights of holders of any preferred stock then outstanding and to share ratably in the net assets of the company upon liquidation. Holders of common stock do not have preemptive or other rights to subscribe for additional shares. The articles of incorporation do not provide for cumulative voting. Shares of common stock have equal voting, dividend, liquidation and other rights, and have no preference, exchange or appraisal rights.


In 2008-2009, Perry West, a previous officer of the Company, provided services valued at $2,000 per month and office space valued at $200 per month. The total value of $13,200 was reflected as an operating expense in 2009.  The Company accounted for this as a capital transaction and was obligated to issue 7,329 shares.  In 2009 the Company had determined a decline in fair value below the cost basis is other than temporary. Therefore the cost basis of the individual security was written down to fair value. The impairment of $2,000 was recorded in 2009. In 2010, the common stock agreement was rescinded. The common shares were cancelled. Under the terms of the agreement Mr. West accepted the marketable securities valued at $4,010 and forgave approximately $3,255 in amounts due him in exchange for returning the 7,329 shares of common stock.


On February 24, 2010 the Company issued 940 shares of common stock, of which 260 shares were previously purchased and listed as issued in November, 2008.  


On September 7, 2010 the Company issued 100 shares of common stock at $5.10 per share.


On September 24, 2010 the Company issued 160 shares of common stock at $5.10 per share.


On October 27, 2010 the Company issued 3,600 shares of common stock at $5.10 per share.


On November 2, 2010 the Company issued 700 shares of common stock at $5.10 per share.


As of December 31, 2010, there are 1,505,500 shares of common stock outstanding.


Item 3.  Quantitative and Qualitative Disclosures About Market Risk

 

 The Registrant is a smaller reporting company as defined by Item 10(f)(1) and is not required to provide the information required by this Item.  

 


 

12


 

Item 4T.     Controls and Procedures 

 

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES


For purposes of this Item 4T, the term disclosure controls and procedures means controls and other procedures of the Company (i) that are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended (15 U.S.C. 78a et seq. and hereinafter the “Exchange Act”) is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the Securities and Exchange Commission (the “Commission”), and (ii) include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our disclosure controls and procedures do not yet comply with the requirements in (i) and (ii) above.  


Our Chief Executive Officer and Chief Financial Officer have reviewed the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) as of the end of the period covered by this report and have concluded that (i) the Company’s disclosure controls and procedures are not effective to ensure that material information relating to the Company is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Commission, and that (ii) the Company’s controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.  


CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING


There was no change in our internal control over financial reporting identified in connection with our evaluation that occurred during our last quarter (our fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.


REPORT OF MANAGEMENT ON INTERNAL CONTROL OVER FINANCIAL REPORTING


Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the company. Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of our financial reporting for external purposes in accordance with accounting principles generally accepted in the United States of America. Internal control over financial reporting includes maintaining records that in reasonable detail accurately and fairly reflect our transactions; providing reasonable assurance that transactions are recorded as necessary for preparation of our financial statements; providing reasonable assurance that receipts and expenditures of Company assets are made in accordance with management authorization; and providing reasonable assurance that unauthorized acquisition, use or disposition of Company assets that could have a material effect on our financial statements would be prevented or detected on a timely basis. Because of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a misstatement of our financial statements would be prevented or detected.


Subsequent to filing on September 23, 2010 our Annual Report on Form 10-K for the year ended June 30, 2010 with the Commission, management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Management has concluded that the Company’s internal controls over financial reporting are not sufficient because as noted in the Annual Report, we have limited resources available. As we obtain additional funding and employ additional personnel, we will implement programs recommended by the Treadway Commission to ensure the proper segregation of duties and reporting channels.


Our independent public accountant, Michael F. Cronin, has not conducted an audit of our controls and procedures regarding internal control over financial reporting. Consequently, Robinson, Hill & Company expresses no opinion with regards to the effectiveness or implementation of our controls and procedures with regards to internal control over financial reporting.


13



 

INHERENT LIMITATIONS ON EFFECTIVENESS OF CONTROLS

 

The Company's management does not expect that its disclosure controls or its internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system's objectives will be met. 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. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or 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. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

  

 



14




PART II - OTHER INFORMATION

 

 

Item 1. Legal Proceedings.

 

 The Company is not a party to any pending legal proceeding and we are not aware of any pending legal proceeding in which any of our officers or directors or any beneficial holders of 5% or more of our voting securities are adverse to or have a material interest adverse to the Company.

 

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

 

 There were no unregistered sales of equity securities during the reported interim period.  

 

Item 3. Defaults on Senior Securities 

 

 The Company has no outstanding Senior Securities.

 

Item 4. Submission of Matters to a Vote of Security Holders 

 

 No matters have been submitted to the Company's security holders for a vote, through the solicitation of proxies or otherwise during the interim period ended December 31, 2010.

 

Item 5.  Other Information 

 

 None.

 

Item 6.  Exhibits 

 

 

EXHIBIT 31.1

HIGHLIGHT  NETWORKS, INC. PRINCIPAL EXECUTIVE OFFICER'S CERTIFICATE PURSUANT TO SECTION 302

EXHIBIT 31.2

HIGHLIGHT  NETWORKS, INC. PRINCIPAL FINANCIAL OFFICER'S CERTIFICATE PURSUANT TO SECTION 302

EXHIBIT 32.1

HIGHLIGHT  NETWORKS, INC. PRINCIPAL EXECUTIVE OFFICER’S CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,   AS ADOPTED PURSUANT TO SECTION 906 OFTHE SARBANES-OXLEY ACT OF 2002

EXHIBIT 32.2

HIGHLIGHT  NETWORKS, INC. PRINCIPAL FINANCIAL OFFICER'S CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,   AS ADOPTED PURSUANT TO SECTION 906 OFTHE SARBANES-OXLEY ACT OF 2002

 

15



 



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.

 
 

HIGHLIGHT NETWORKS, INC.

 
 

Dated: January 28, 2011

 
 

by: /s/ Anthony Lombardo        

Anthony Lombardo         

President and Chief Executive Officer


by: /s/ Damion Glushko        

Damion Glushko

Secretary; Director; Chief Financial Officer

 
 

Pursuant to the requirements of the Securities Exchange Act of 1934, the following persons on behalf of the Registrant and in the capacities and on the dates indicated have signed this report below.

 
 

by: /s/ Anthony Lombardo

Anthony Lombardo

President and Chief Executive Officer

(Principal Executive Officer)


by: /s/ Damion Glushko        

Damion Glushko

Secretary; Director; Chief Financial Officer

(Principal Financial Officer) 



16


 

EXHIBIT 31.1

 

 

HIGHLIGHT NETWORKS, INC.

OFFICER'S CERTIFICATE PURSUANT TO SECTION 302

 

I, Anthony Lombardo, the Chief Executive Officer of Highlight Networks, Inc., certify that:

 

1.   I have reviewed this Form 10-Q of Highlight Networks, Inc.;

 

2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances  under which such statements were made, not misleading with respect to the period covered by this report;

 

3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.   The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules  13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a)  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant,  including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b)  Designed such internal  control over  financial  reporting,  or caused such internal  control over  financial  reporting to be designed under our  supervision,   to  provide  reasonable assurance regarding the reliability of financial reporting and the  preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c)  Evaluated the effectiveness of the registrant’s' disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures,  as of the end of the period covered by this report based on such evaluation; and

 

(d)  Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s  internal control over financial reporting; and

 

5.   The registrant’s  other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s  auditors and the audit committee of the registrant’s  board of directors (or persons performing the equivalent functions):

 

(a)  All significant deficiencies and material weaknesses in the design or operation of internal control over  financial reporting which are reasonably likely to adversely affect the registrant’s  ability to record, process, summarize and report financial information; and

 

(b)  Any fraud, whether or not material, that involves management or other employees who have a significant  role in the registrant’s  internal control over financial reporting.

 

 

Dated: January 28, 2011

 

 /s/ Anthony Lombardo

Anthony Lombardo

President and CEO

(Principal Executive Officer)
(Principal Financial Officer)









































































































































































































































































































































































 



EXHIBIT 31.2

 

 

HIGHLIGHT NETWORKS, INC.

OFFICER'S CERTIFICATE PURSUANT TO SECTION 302

 

I, Damion Glushko, the Chief Financial Officer of Highlight Networks, Inc., certify that:

 

1.   I have reviewed this Form 10-Q of Highlight Networks, Inc.;

 

2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances  under which such statements were made, not misleading with respect to the period covered by this report;

 

3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.   The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules  13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a)  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business  issuer,  including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b)  Designed such internal  control over  financial  reporting,  or caused such internal  control over  financial  reporting to be designed under our  supervision,   to  provide  reasonable assurance regarding the reliability of financial reporting and the  preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c)  Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures,  as of the end of the period covered by this report based on such evaluation; and

 

(d)  Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

 

5.   The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

 

(a)  All significant deficiencies and material weaknesses in the design or operation of internal control over  financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

 

(b)  Any fraud, whether or not material, that involves management or other employees who have a significant  role in the registrant's internal control over financial reporting.

 

 

Dated: January 28, 2011


by: /s/ Damion Glushko

Damion Glushko

Secretary; Director; CFO

(Principal Financial Officer)





 

EXHIBIT 32.1

 

 

HIGHLIGHT NETWORKS, INC.

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF

THE SARBANES-OXLEY ACT OF 2002

 

 

In connection with the Quarterly Report of Highlight Networks, Inc. (the Company) on Form 10-Q for the period  ended December 31, 2010 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Anthony Lombardo, Chief  Executive  Officer of the Company, certify,  pursuant to 18 U.S.C.  ss.1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

 

(1)  The Report fully complies with the  requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

(2)  The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

A signed original of this written statement required by Section 906 has been provided to Anthony Lombardo and will be retained by Highlight Networks, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

 

 

 

 Dated: January 28, 2011

 

 /s/ Anthony Lombardo

Anthony Lombardo

President, CEO, CFO

(Principal Executive Officer)
(Principal Financial Officer)







EXHIBIT 32.2

 

 

HIGHLIGHT NETWORKS, INC.

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF

THE SARBANES-OXLEY ACT OF 2002

 

 

In connection with the Quarterly Report of Highlight Networks, Inc. (the Company) on Form 10-Q  for the period  ended December 31, 2010 as filed with the Securities and Exchange  Commission on the date hereof (the Report), I, Damion Glushko, Chief  Financial Officer of the Company, certify,  pursuant to 18 U.S.C.  ss.1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

 

(1)  The Report fully complies with the  requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

(2)  The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

A signed original of this written statement required by Section 906 has been provided to Damion Glushko and will be retained by Highlight Networks, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

 

 

 

Dated: January 28, 2011


by: /s/ Damion Glushko

Damion Glushko

Secretary; Director; CFO

(Principal Financial Officer)