Attached files
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[x] Quarterly Report Pursuant to Section 13 or 15(d) Securities
Exchange Act of 1934 for Quarterly Period Ended December 31, 2010
-OR-
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities And Exchange Act of 1934 for the transaction period from
_________ to________
Commission File Number: 333-162469
Stone Harbor Investments, Inc.
--------------------------------------------
(Exact name of registrant as specified in its charter)
Nevada 27-0374885
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization Identification Number)
7985 113th Street, Suite 211
Seminole, FL 33772
(Address of principal executive offices, Zip Code)
(727) 393-7439
(Registrant's telephone number, including area code)
Indicate by check mark 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 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 [ ]
Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerate filer, or a small
reporting company as defined by Rule 12b-2 of the Exchange Act):
Large accelerated filer [ ] Non-accelerated filer [ ]
Accelerated filer [ ] Smaller reporting company [x]
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act).
Yes [ ] No [x]
The number of outstanding shares of the registrant's common stock,
February 9, 2011: Common Stock - 78,276,000
2
Stone Harbor Investments, Inc.
FORM 10-Q
For the quarterly period ended December 31, 2010
INDEX
Page
----
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited) 3
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 12
Item 3. Quantitative and Qualitative Disclosure About
Market Risk 17
Item 4. Controls and Procedures 17
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 19
Item 1A. Risk Factors 19
Item 2. Unregistered Sales of Equity Securities and Use
of Proceeds 19
Item 3. Defaults upon Senior Securities 19
Item 4. (Removed and Reserved)
Item 5. Other Information 19
Item 6. Exhibits 19
SIGNATURES
3
PART I
Item I - FINANCIAL STATEMENTS
STONE HARBOR INVESTMENTS, INC.
(A Development Stage Company)
Balance Sheets
ASSETS
December 31, June 30,
2010 2010
----------- -------
(Unaudited) (Audited)
CURRENT ASSETS
Cash $ 274 $ 1,743
--------- ---------
Total Current Assets 274 1,743
--------- ---------
TOTAL ASSETS $ 274 $ 1,743
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable and accrued expenses 15,628 36,102
Loans from shareholders 38,469 3,300
--------- ---------
Total Liabilities 54,097 39,402
--------- ---------
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, $0.00001 par value,
20,000,000 shares authorized, 0 shares
issued and outstanding
Common stock, $0.00001 par value,
250,000,000 shares authorized, 78,276,000
and 78,276,000 shares issued and
outstanding, respectively. 783 783
Additional paid-in capital 60,337 60,337
Deficit accumulated during the development
stage (114,943) (98,779)
--------- --------
Total Stockholders' Equity (Deficit) (53,823) (37,659)
--------- --------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 274 $ 1,743
========= ========
The accompanying notes are an integral
part of these financial statements
4
STONE HARBOR INVESTMENTS, INC.
(A Development Stage Company)
Statements of Operations
From Inception through December 31, 2010
From Inception
Three Months Three Months Six Months Six Months on May 14,
Ended Ended Ended Ended 2009 Through
December 31, December 31, December 31, December 31, December 31,
2010 2009 2010 2009 2010
------------ ----------- ----------- ----------- -----------
OPERATING EXPENSES
General and
administrative $ 14,180 $ 19,828 $ 16,164 $ 36,142 $ 114,943
----------- ----------- ----------- ----------- -----------
Total Operating
Expenses 14,180 19,828 16,164 36,142 114,943
----------- ----------- ----------- ----------- -----------
INCOME (LOSS) FROM
OPERATIONS (14,180) (19,828) (16,164) (36,142) (114,943)
----------- ----------- ----------- ----------- -----------
OTHER EXPENSES
Other income - - - - -
----------- ----------- ----------- ----------- -----------
INCOME (LOSS) BEFORE
INCOME TAXES (14,180) (19,828) (16,164) (36,142) (114,943)
Income tax expense - - - - -
----------- ----------- ----------- ----------- -----------
NET INCOME (LOSS) $ (14,180) $ (19,828) $ (16,164) $ (36,142) $ (114,943)
=========== =========== =========== =========== ===========
BASIC INCOME (LOSS)
PER COMMON SHARE $ (0.000) $ (0.000) $ (0.000) $ (0.000) $ (0.002)
=========== =========== =========== =========== ===========
BASIC WEIGHTED
AVERAGE NUMBER OF
COMMON SHARES
OUTSTANDING 78,276,000 72,935,341 78,276,000 72,548,525 75,327,483
=========== =========== =========== =========== ===========
DILUTED INCOME (LOSS)
PER COMMON SHARE $ (0.000) $ (0.000) $ (0.000) $ (0.000) $ (0.002)
=========== =========== =========== =========== ===========
DILUTED WEIGHTED
AVERAGE NUMBER OF
COMMON SHARES
OUTSTANDING 78,276,000 72,935,341 78,276,000 72,548,525 75,327,483
=========== =========== =========== =========== ===========
5
STONE HARBOR INVESTMENTS, INC.
(A Development Stage Company)
Statements of Cash Flows
From Inception
Six Months Six Months on May 14,
Ended Ended 2009 Through
December 31, December 31, December 31,
2010 2009 2010
----------- ----------- ------------
OPERATING ACTIVITIES
Net loss $ (16,164) $ (36,142) $ (114,943)
Adjustments to reconcile net loss to
net cash used by operating activities:
Common stock issued for legal services - 250 250
Increase (Decrease) In Accounts Payable
and Accrued Expenses (20,474) 7,060 15,628
----------- ----------- -----------
Net Cash Used in
Operating Activities (36,638) (28,832) (99,065)
----------- ----------- -----------
INVESTING ACTIVITIES
Net Cash Used in Investing Activities - - -
----------- ----------- -----------
FINANCING ACTIVITIES
Loans from shareholders 35,169 - 38,469
Common stock issued for cash - 20,870 60,870
----------- ----------- -----------
Net Cash Provided by
Financing Activities 35,169 20,870 99,339
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH (1,469) (7,962) 274
CASH AT BEGINNING OF PERIOD 1,743 14,650 -
----------- ----------- -----------
CASH AT END OF PERIOD $ 274 $ 6,688 $ 274
=========== =========== ===========
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION
CASH PAID FOR:
Interest $ - $ -
Income Taxes $ - $ -
The accompanying notes are an integral
part of these financial statements.
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STONE HARBOR INVESTMENTS, INC.
(A Development Stage Company)
Notes to Financial Statements
From Inception Through December 31, 2010
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
------------------
The financial statements presented are those of Stone Harbor
Investments, Inc. The Company was originally incorporated under the
laws of the state of Nevada on May 14, 2009. Stone Harbor Investments,
Inc. offers internet and web-related services to small businesses
including website development and design, marketing analysis, and
general business services including business planning and accounting
support functions for internet start-up companies. The Company
provides high-end, affordable Internet and business related services to
small businesses that are looking to expand their existing marketing
efforts to reach a larger audience via the World Wide Web. Management
has experience in marketing, commercial website development and
business-to-business sales.
These financial statements have been prepared on a going concern basis,
which implies that the Company will continue to realize its assets and
discharge its liabilities in the normal course of business. For the six
months ending December 31, 2010, the Company recognized no sales
revenue and incurred a net loss of $16,164, and had an accumulated
deficit of $114,943 as of December 31, 2010. The continuation of the
Company as a going concern is dependent upon the continued financial
support from its shareholders, the ability to raise equity or debt
financing, and the attainment of profitable operations from the
Company's future business. Additionally as part of its business plan,
the Company is actively seeking merger partners and strategic alliances
in order to accelerate its growth in the industry. These factors raise
substantial doubt regarding the Company's ability to continue as a
going concern. These financial statements do not include any
adjustments to the recoverability and classification of recorded asset
amounts and classification of liabilities that might be necessary
should the Company be unable to continue as a going concern.
Use of Estimates
----------------
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those estimates.
Dividends
---------
The Company has not adopted any policy regarding payment of dividends.
No dividends have been paid during any of the periods shown.
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STONE HARBOR INVESTMENTS, INC.
(A Development Stage Company)
Notes to Financial Statements
From Inception Through December 31, 2010
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Advertising Costs
-----------------
The Company's policy regarding advertising is to expense advertising
when incurred. The Company had not incurred any advertising expense for
the six months ended December 31, 2010 or December 31, 2009
respectively.
Cash and Cash Equivalents
-------------------------
For purposes of the Statement of Cash Flows, the Company considers all
highly liquid instruments purchased with a maturity of three months or
less to be cash equivalents to the extent the funds are not being held
for investment purposes. As at December 31, 2010 and December 31, 2009
respectively the Company had no cash equivalents.
Basic (Loss) per Common Share
Basic (loss) per share is calculated by dividing the Company's net loss
applicable to common shareholders by the weighted average number of
common shares during the period. Diluted earnings per share is
calculated by dividing the Company's net income available to common
shareholders by the diluted weighted average number of shares
outstanding during the year. The diluted weighted average number of
shares outstanding is the basic weighted number of shares adjusted for
any potentially dilutive debt or equity. There are no such common stock
equivalents outstanding as of December 31, 2010 and December 31, 2009
respectively.
From Inception
For the Six For the Six On May 14,
Months Ended Months Ended 2009 Through
December 31, December 31, December 31,
2010 2009 2010
------------ ------------ --------------
Net (Loss) Per
Share- Basic
Net (Loss) $ (16,164) $ (36,142) $ (114,943)
Weighted Average
Shares - Basic 78,276,000 72,548,525 75,327,483
----------- ------------ -----------
Net (Loss) Per share
- Basic $ (0.000) $ (0.000) $ (0.002)
=========== ============ ===========
Net (Loss) Per
Share- Diluted
Net (Loss) $ (16,164) $ (36,142) $ (114,943)
8
STONE HARBOR INVESTMENTS, INC.
(A Development Stage Company)
Notes to Financial Statements
From Inception Through December 31, 2010
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Weighted Average
Shares - Diluted 78,276,000 72,548,525 75,327,483
----------- ------------ -----------
Net (Loss) Per share
- Diluted $ (0.000) $ (0.000) $ (0.002)
=========== ============ ==========
Income Taxes
The Company provides for income taxes under ASC 740 "Accounting for
Income Taxes". ASC 740 requires the use of an asset and liability
approach in accounting for income taxes. Deferred tax assets and
liabilities are recorded based on the differences between the financial
statement and tax bases of assets and liabilities and the tax rates in
effect when these differences are expected to reverse.
ASC 740 requires the reduction of deferred tax assets by a valuation
allowance if, based on the weight of available evidence, it is more
likely than not that some or all of the deferred tax assets will not be
realized.
The provision for income taxes differs from the amounts which would be
provided by applying the statutory federal income tax rate of 39% to
the net loss of $16,164 for the six months ending December 31, 2010
before provision for income taxes for the following reasons:
For the Six
Months Ended
December 31, 2010
-----------------
Income tax expense (benefit) at statutory rate $ (6,304)
Valuation allowance 6,304)
----------
Income tax expense $ -)
==========
Net deferred tax assets consist of the following components as of:
December 31, 2010
-----------------
NOL carryover $ 44,828)
Valuation allowance (44,828)
----------
Net deferred tax asset $ -
==========
9
STONE HARBOR INVESTMENTS, INC.
(A Development Stage Company)
Notes to Financial Statements
From Inception Through December 31, 2010
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Impairment of Long-Lived Assets
The Company continually monitors events and changes in circumstances
that could indicate carrying amounts of long-lived assets may not be
recoverable. When such events or changes in circumstances are present,
the Company assesses the recoverability of long-lived assets by
determining whether the carrying value of such assets will be recovered
through undiscounted expected future cash flows. If the total of the
future cash flows is less than the carrying amount of those assets, the
Company recognizes an impairment loss based on the excess of the
carrying amount over the fair value of the assets. Assets to be
disposed of are reported at the lower of the carrying amount or the
fair value less costs to sell.
Accounting Basis
The basis is accounting principles generally accepted in the United
States of America. The Company has adopted a June 30 fiscal year end.
Stock-based compensation.
In July 2009, the Company issued 25,000 shares of stock in connection
with legal services associated with the Company's S-1 filing. The
shares were valued at $.01 per share. An additional 50,000 shares were
issued to reflect the Company's stock split effective January 5, 2010
(see footnote 5).
The Company records stock-based compensation in accordance with ASC 718
(formerly SFAS No. 123R "Share Based Payments"), using the fair value
method. All transactions in which goods or services are the
consideration received for the issuance of equity instruments are
accounted for based on the fair value of the consideration received or
the fair value of the equity instrument issued, whichever is more
reliably measurable. Equity instruments issued to employees and the
cost of the services received as consideration are measured and
recognized based on the fair value of the equity instruments issued.
Recent Accounting Pronouncements
The company has evaluated all the recent accounting pronouncements and
believes that none of them will have a material effect on the company's
financial statements.
NOTE 2 - STOCKHOLDERS' EQUITY
COMMON STOCK
- In June 2009, we entered into a stock subscription agreement for
the sale of 12,000,000 shares of common stock at a price of $0.00333
per share. The Company realized $40,000 from this subscription.
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STONE HARBOR INVESTMENTS, INC.
(A Development Stage Company)
Notes to Financial Statements
From Inception Through December 31, 2010
NOTE 2 - STOCKHOLDERS' EQUITY (continued)
- In September 2009, the Company entered into various agreements
for the sale of 201,000 shares at a price of $0.00333 per share to 39
different investors. The Company realized $670 from these
subscriptions.
- In December 2009, the Company entered into an agreement for the
sale of 6,000,000 at a price of $0.00333 per share. The Company
realized $20,000 from this subscription.
The above issuances of stock reflect the effect of the Company's stock
split effective on January 5, 2010 (see footnote 5).
NOTE 3 - STOCK SUBSCRIPTION RECEIVABLE
In May 2009, the Company issued to its founder 60,000,000 shares of its
common stock for a price of $.0000033. Payment for the stock was
received on September 9, 2009.
The above issuances of stock reflect the effect of the Company's stock
split effective on January 5, 2010 (see footnote 5).
NOTE 4 - RELATED PARTY TRANSACTIONS
Consulting Services - Related Party
The Company's founder and majority shareholder provides various
consulting services to the Company for which he is compensated.
Consultant fees paid were $-0- for the three months ending December 31,
2010, and $15,500 for the period from inception to December 31, 2010.
Note Payable - Related Party
On June 24, 2010, the Company received $3,300 as a loan from the
Company's founder and majority shareholder for operating expenses. The
note has no definitive payment terms and bears no interest. The
Company will pay the balance off when it has the available funds.
During the quarter ending December 31, 2010, the Company received and
additional $35,169 as a loan from the Company's founder and majority
shareholder for operating expenses. The note has no definitive payment
terms and bears no interest. The Company will pay the balance off when
it has the available funds.
NOTE 5 - STOCK SPLIT
The company's board of directors authorized a three-for-one stock split
effective on January 5, 2010. Each shareholder of record on January 5,
2010 received two additional shares of common stock for each share held
on that date. All share and related information presented in these
financial statements and accompanying footnotes have been adjusted to
reflect the increased number of shares resulting from this action.
11
STONE HARBOR INVESTMENTS, INC.
(A Development Stage Company)
Notes to Financial Statements
From Inception Through December 31, 2010
NOTE 6 - SUBSEQUENT EVENTS
Management evaluated all activity and concluded that no subsequent
events have occurred that would require recognition in the Financial
Statements or disclosure in the Notes to the Financial Statements.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULT OF OPERATIONS
The following plan of operation provides information which management
believes is relevant to an assessment and understanding of our results
of operations and financial condition. The discussion should be read
along with our financial statements and notes thereto. This section
includes a number of forward-looking statements that reflect our
current views with respect to future events and financial performance.
Forward-looking statements are often identified by words like believe,
expect, estimate, anticipate, intend, project and similar expressions,
or words which, by their nature, refer to future events. You should not
place undue certainty on these forward-looking statements. These
forward-looking statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from
our predictions.
Our Business
We offer internet and web-related services to small businesses
including website development and design, marketing analysis and
general business services including business planning and accounting
support functions for internet start-up companies. We intend to
provide affordable Internet and business related services to small
businesses that are looking to expand their existing marketing efforts
to reach a larger audience via the World Wide Web. Our future will
depend on our ability to bring our services to the market place, which
requires careful planning of providing a service that meets customer
standards without incurring unnecessary cost and expense. Our
operation results can also be affected by our ability to introduce new
services or to adjust pricing to try to gain a competitive advantage.
Our website is located at www.stoneharborweb.com.
The demand for web development and marketing services in the small
business market continues to grow. The majority of e-commerce service
providers focus on servicing large and medium-sized corporations. We
intend to develop a business network to try to reduce steep project
costs and allow us to offer web development services at competitive
prices. We hope to accomplish this by aligning ourselves with other
service providers to package an affordable, turn-key internet and
business services offering. There can be no assurance we will be able
to provide our services at lower costs than other service providers or
that we will be able to align ourselves with other service providers to
bundle services as a turn-key offering. The development of our
services will require the commitment of substantial resources. If
additional capital is not available on acceptable terms, we may not be
able to implement our business development plans or continue our
business operations.
Plan of Operation
We have begun limited operations, and we require outside capital to
implement our business model.
13
1. We have begun to implement our business plan by target
marketing our web and ancillary services to small businesses by
networking with professionals in the business community such as
attorneys and accountants to establish our referral source
network.
2. All business functions are coordinated and managed by the
founder of our company and consultants to the founder, including
other service providers, who assisted the registrant in the
preparation of its recently effective S-1A registration statement
(Effective Date, May 6, 2010 - The registrant's SEC filings can
be found on the www.sec.gov website), and who helped to package
our business services solutions for small business website and e-
commerce projects.
3. To support our limited marketing efforts we have begun to
develop marketing materials and a public relations and
advertising program by promoting our website,
www.stoneharborweb.com, at local business events. To expand our
marketing efforts we are actively seeking additional financing on
favorable terms to more quickly promote our business model to a
larger audience. There can be no assurance we will be successful
in implementing our marketing campaign or that we will be able to
provide our services at lower costs than our competitors. The
development of an on-going marketing campaign will require the
commitment of substantial resources. If additional capital is
not available on acceptable terms, we may not be able to
implement our business development plans or continue our business
operations.
4. We have begun to have discussions with prospective clients
regarding our service offering. Our plan of operations includes
attendance at networking opportunities within the business
community and among professionals. The marketing expenses for
the next twelve months are estimated to cost $25,000. The
majority shareholder has committed to cover any cash shortfalls
of the registrant, although there is no written agreement or
guarantee. If we are unable to satisfy our cash requirements we
may be unable to proceed with our plan of operations.
5. Over the next 12 month after the initiation of our marketing
campaign, we believe that we will have identified suitable
clients to manage their web development and general business
services needs and begin to generate revenues from our targeted
marketing approach. This refers to the minimum amount of time
that we estimate will be required to generate revenues based on
meetings with prospective clients in our local market. Once a
prospective client is identified we specify their requirements
and negotiate a contract. To date we have not entered into any
contracts or agreements. There can be no assurance that we will
be able to identify suitable prospective clients for our services
or be able to negotiate contracts on favorable terms.
14
Our future will depend on our ability to identify suitable prospective
clients and our ability to bring our services to the market place,
which requires careful planning of providing a service that meets our
client's standards without incurring unnecessary cost and expense. Our
operational results can be affected by our ability to introduce our
services or to adjust pricing to try to gain a competitive
advantage. Certain competitors may be willing to accept lower fees
based on their overhead structure. As a result, we may have difficulty
attracting new clients. There can be no assurance we will be able to
implement our services. If we are unable to generate sufficient
clients, we may have to reduce, suspend or cease our efforts.
Limited Operating History
We have generated no independent financial history and have not
previously demonstrated that we will be able to expand our business
through an increased investment in marketing activities. We cannot
guarantee that our marketing efforts will be successful. The business
is subject to risks inherent in growing an enterprise, including
limited capital resources and possible rejection of our services
offering and/or sales methods.
We believe that cash on hand and expected revenues will not be adequate
to satisfy our cash requirements for the next 12 months. In order to
continue our plan of operations we will need additional financing in
the next 12 months. Future financing may not be available to us on
acceptable terms. If financing is not available on satisfactory terms,
we may be unable to continue expanding our operations. Equity
financing will result in a dilution to existing shareholders.
Results of Operations
For the three months ended December 31, 2010, we did not receive any
revenues and had operating expenses of $14,180. General and
administrative expenses consisted primarily of professional fees. Net
loss for the three months ended December 31, 2010 was $14,180.
Comparatively, for the three months ended December 31, 2009, we did not
receive any revenues and had operating expenses of $19,828. General
and administrative expenses consisted primarily of professional fees.
Net loss for the three months ended December 31, 2009 was $19,828.
The significant decrease in general and administrative expenses was
mainly due to lower professional fees since the completion of the
registrant's registration statement in May 2010.
For the six months ended December 31, 2010, we did not receive any
revenues and had operating expenses of $16,164. General and
administrative expenses consisted primarily of professional fees. Net
loss for the six months ended December 31, 2010 was $16,164.
Comparatively, for the six months ended December 31, 2009, we did not
receive any revenues and had operating expenses of $36,142. General
and administrative expenses consisted primarily of professional fees.
Net loss for the six months ended December 31, 2009 was $36,142.
15
The significant decrease in general and administrative expenses was
mainly due to lower professional fees since the completion of the
Company's registration statement in May 2010.
Going Concern
As reflected in the accompanying financial statements, we have an
accumulated deficit of $114,943 at December 31, 2010; a net loss for
the six months ended December 31, 2010 and 2009 of $16,164 and 36,142.
This raises 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 raise additional capital and implement our business
plan. The financial statements do not include any adjustments that
might be necessary if we are unable to continue as a going concern.
Management believes that actions presently being taken to obtain
additional funding and implementing our strategic plans provide the
opportunity for us to continue as a going concern.
Liquidity and Capital Resources
As of December 31, 2010, we had $274 in cash.
For the six months ended December 31, 2010 and 2009, we did not pursue
any investing activities.
For the six months ended December 31, 2010, we had loans from
shareholders of $35,169 resulting in net cash provided by financing
activities of $35,169.
For the six months ended December 31, 2009, we received proceeds from
the sale of common stock issued for cash of $20,870 resulting in net
cash provided by financing activities of $20,870.
Based upon the above, we do not have enough cash to support our daily
operations while we are attempting to commence operations and produce
revenues. We estimate the Company needs an additional $35,000 to
implement its business plan over the next twelve months. The majority
shareholder has committed to cover any cash shortfalls of the Company,
although there is no written agreement or guarantee. If we are unable
to satisfy our cash requirements we may be unable to proceed with the
Offering and our plan of operations. In addition, we anticipate we
will need $25,000 to cover marketing and operational expenses to
achieve revenues. The Company estimates it will commence generating
sales revenues over the next 12 months after the initiation of our
marketing campaign. During this time we believe that we will have
identified suitable clients to manage their web development and general
business services needs and begin to generate revenues from our
targeted marketing approach. This refers to the minimum amount of time
that we estimate will be required to generate revenues based on
meetings with prospective clients in our local market. Once a
prospective client is identified we specify their requirements and
negotiate a contract. To date we have not entered into any contracts
16
or agreements. We may be unable to successfully implement our
business plan to generate revenues. There can be no assurance that we
will be able to identify suitable prospective clients for our services
or be able to negotiate contracts on favorable terms.
To cover the additional cash requirements the Company may sell
additional shares of stock or it will require shareholder loans to
cover any shortfall. However, if we are unable to satisfy our cash
requirements we may be unable to proceed with our plan of operations.
We do not anticipate the purchase or sale of any significant equipment.
We also do not expect any significant additions to the number of
employees.
The foregoing represents our best estimate of our cash needs based on
current planning and business conditions. In the event we are not
successful in reaching our initial revenue targets, additional funds
may be required, and we may not be able to proceed with our business
plan for the development and marketing of our core services. Should
this occur, we would suspend or cease operations. We anticipate that
depending on market conditions and our plan of operations, we may incur
operating losses in the foreseeable future.
We are still pursuing our plan of operations but to date we have not
been able to raise additional funds through either debt or equity
offerings. Without this additional cash we have been unable to complete
our plan of operations and commence generating revenue. We believe that
we may not be able to raise the necessary funds to continue to pursue
our business operations. As a result of the foregoing, we have recently
begun to explore our options regarding the development of a new
business plan and direction. We are currently engaged in the
discussions with a company regarding the possibility of a reverse
triangular merger involving our company. At this stage, no definitive
terms have been agreed to, and neither party is currently bound to
proceed with the merger.
Critical Accounting Policies and Estimates
Our financial statements and related public financial information are
based on the application of accounting principles generally accepted in
the United States ("GAAP"). GAAP requires the use of estimates,
assumptions, judgments and subjective interpretations of accounting
principles that have an impact on the assets, liabilities, revenues and
expense amounts reported. These estimates can also affect supplemental
information contained in our external disclosures including information
regarding contingencies, risk and financial condition. We believe our
use of estimates and underlying accounting assumptions adhere to GAAP
and are consistently and conservatively applied. We base our estimates
on historical experience and on various other assumptions that we
17
believe to be reasonable under the circumstances. Actual results may
differ materially from these estimates under different assumptions or
conditions. We continue to monitor significant estimates made during
the preparation of our financial statements.
Our significant accounting policies are summarized in Note 1 of our
financial statements. While all these significant accounting policies
impact our financial condition and results of operations, we view
certain of these policies as critical. Policies determined to be
critical are those policies that have the most significant impact on
our financial statements and require management to use a greater degree
of judgment and estimates. Actual results may differ from those
estimates. Our management believes that given current facts and
circumstances, it is unlikely that applying any other reasonable
judgments or estimate methodologies would cause effect on our
consolidated results of operations, financial position or liquidity for
the periods presented in this report.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements, financings, or other
relationships with unconsolidated entities or other persons, also known
as special purpose entities.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS
The registrant is subject to certain market risks, including changes in
interest rates and currency exchange rates. The registrant does not
undertake any specific actions to limit those exposures.
ITEM 4. CONTROLS AND PROCEDURES
This quarterly report does not include an attestation report of the
registrant's registered public accounting firm regarding internal
control over financial reporting. Management's report was not subject
to attestation by the registrant's registered public accounting firm
pursuant to temporary rules of the Securities and Exchange Commission
that permit the registrant to provide only management's report in this
quarterly report.
a) Evaluation of Disclosure Controls. Michael Toups, our chief
executive officer and chief financial officer, evaluated the
effectiveness of our disclosure controls and procedures as of the end
of our quarter ended December 31, 2010 pursuant to Rule 13a-15(b) of
the Securities and Exchange Act. Disclosure controls and procedures are
controls and other procedures that are designed to ensure that
information required to be disclosed by us in the reports that we file
or submit under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the SEC's rules and
forms. Disclosure controls and procedures include, without limitation,
controls and procedures designed to ensure that information required to
be disclosed by us in the reports that we file under the Exchange Act
is accumulated and communicated to our management, as appropriate to
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allow timely decisions regarding required disclosure. Based on his
evaluation, Mr. Toups concluded that our disclosure controls and
procedures were effective as of December 31, 2010.
It should be noted that any system of controls, however well designed
and operated, can provide only reasonable, and not absolute, assurance
that the objectives of the system are met. In addition, the design of
any control system is based in part upon certain assumptions about the
likelihood of future events. Because of these and other inherent
limitations of control systems, there can be no assurance that any
design will succeed in achieving its stated goals under all potential
future conditions
b) Changes in internal control over financial reporting. There have
been no changes in our internal control over financial reporting that
occurred during the last fiscal quarter that has materially affected,
or is reasonably likely to materially affect, our internal control over
financial reporting. Our management team will continue to evaluate our
internal control over financial reporting in 2010 as we implement our
Sarbanes Oxley Act testing.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings. not applicable.
Item 1A. Risk Factors. not applicable
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
not applicable.
Item 3. Defaults Upon Senior Securities.
not applicable.
Item 4. (Removed and Reserved)
Item 5. Other Information. not applicable.
Item 6. Exhibits
Exhibit 31 - Certifications pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
Exhibit 32 - Certifications pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
SIGNATURES
Pursuant to the requirements 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.
Dated: February 9, 2011
STONE HARBOR INVESTMENTS, INC.
By: /s/Michael Toups
---------------------------
Michael Toups, Principal Executive Officer
