Attached files
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Fiscal Year Ended December 31, 2010
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File No. 000-53563
KRANEM CORPORATION
d/b/a
LEARNINGWIRE.COM
--------------------------------
(Exact name of registrant as specified in its charter)
Colorado 02-0585306
-------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
5300 Cherry Creek, Unit 1328
Denver, Colorado 80246
-------------------------------------- --------
(Address of Principal Executive Office) Zip Code
Registrant's telephone number, including Area Code: (303) 592-1614
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock
Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. [ ]
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. [ ]
Indicate by check mark whether the registrant (1) has filed all reports 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 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. [X]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Act): [X ] Yes [ ] No
The aggregate market value of the voting stock held by non-affiliates of the
Company on June 30, 2010 was -0-.
As of March 15, 2011, the Company had 4,267,125 issued and outstanding shares of
common stock.
Documents incorporated by reference: None
ITEM 1. DESCRIPTION OF BUSINESS
Learningwire was incorporated in Colorado on April 18, 2002 under the name
Kranem Corporation. The Company operates under its "Learningwire" tradename
which is registered with the Colorado Secretary of State.
Learningwire was formed to sell office and office supply products to
businesses, educational institutions, government agencies and individuals
nationwide through its website www.learningwire.com. Since January 1, 2006
Learningwire has been inactive.
As of March 15, 2011 Learningwire did not have any offices or any
employees.
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 2. PROPERTIES
None.
ITEM 3. LEGAL PROCEEDINGS.
Learningwire is not involved in any legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASE OF EQUITY SECURITIES.
On November 11, 2005 the director of Learningwire approved a stock dividend
such that each of Learningwire's shareholders received 3.5 shares of common
stock for each common share held on November 11, 2005. Unless otherwise
indicated, all per share data in this report has been revised to reflect this
stock dividend.
2
The common stock of Learningwire was quoted on the OTC Bulletin Board under
the symbol "KRAN". However, as of March 11, 2011, the shares of Learningwire
have not traded.
As of March 15, 2011 Learningwire had 4,267,125 outstanding shares of
common stock and 45 shareholders of record.
Holders of common stock are entitled to receive dividends as may be
declared by the Board of Directors. The Board of Directors is not obligated to
declare a dividend, and it is not anticipated that future dividends will be
paid.
Learningwire's Articles of Incorporation authorize its Board of Directors
to issue up to 10,000,000 shares of preferred stock. The provisions in the
Articles of Incorporation relating to the preferred stock allow Learningwire's
directors to issue preferred stock with multiple votes per share and dividend
rights which would have priority over any dividends paid with respect to the
holders of Learningwire's common stock. The issuance of preferred stock with
these rights may make the removal of management difficult even if the removal
would be considered beneficial to shareholders generally, and will have the
effect of limiting shareholder participation in certain transactions such as
mergers or tender offers if these transactions are not favored by Learningwire's
management.
Trades of Learningwire's common stock, should a market ever develop, will
be subject to Rule 15g-9 of the Securities Exchange Act of 1934, which rule
imposes certain requirements on broker/dealers who sell securities subject to
the rule to persons other than established customers and accredited investors.
For transactions covered by the rule, brokers/dealers must make a special
suitability determination for purchasers of the securities and receive the
purchaser's written agreement to the transaction prior to sale. The Securities
and Exchange Commission also has rules that regulate broker/dealer practices in
connection with transactions in "penny stocks". Penny stocks generally are
equity securities with a price of less than $5.00 (other than securities
registered on certain national securities exchanges or quoted on the NASDAQ
system, provided that current price and volume information with respect to
transactions in that security is provided by the exchange or system). The penny
stock rules require a broker/ dealer, prior to a transaction in a penny stock
not otherwise exempt from the rules, to deliver a standardized risk disclosure
document prepared by the Commission that provides information about penny stocks
and the nature and level of risks in the penny stock market. The broker/dealer
also must provide the customer with current bid and offer quotations for the
penny stock, the compensation of the broker/dealer and its salesperson in the
transaction, and monthly account statements showing the market value of each
penny stock held in the customer's account. The bid and offer quotations, and
the broker/dealer and salesperson compensation information, must be given to the
customer orally or in writing prior to effecting the transaction and must be
given to the customer in writing before or with the customer's confirmation.
These disclosure requirements may have the effect of reducing the level of
trading activity in the secondary market for Learningwire's common stock.
3
ITEM 6. SELECTED FINANCIAL DATA
Not applicable.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Learningwire is not active. Between its inception in April 2002 and
December 31, 2010, Learningwire's revenues have only been $6,703.
During the period from inception (April 18, 2002) through December 31,
2010, Learningwire's operations used $229,392 in cash and Learningwire purchased
$18,505 of equipment. Capital was provided by the sale of Learningwire's common
stock to Learningwire's officers, directors and public and private investors as
well as loans and capital contributions from Learningwire's President.
Learningwire has no means to generate revenue necessary to pay its
obligations to regulatory bodies, directors, accountants and lawyers. Management
continues to pursue other business opportunities, including merger opportunities
with other businesses which may result in a reverse-take-over of Learningwire.
However, there is no guarantee that management will be successful in these
endeavors.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS.
Not applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See the financial statements attached to this report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
On January 19, 2010 Learningwire hired De Joya Griffith & Company, LLC as
its new independent auditors. De Joya Griffith & Company, LLC replaced Cordovano
and Honeck which had previously audited the Company's financial statements.
See Learningwire's 8-K report dated January 19, 2010 for further
information.
ITEM 9A. CONTROLS AND PROCEDURES
Under the direction and with the participation of Learningwire's principal
and executive financial officers, Learningwire carried out an evaluation of the
effectiveness of the design and operation of its disclosure controls and
procedures as of December 31, 2010. Learningwire maintains disclosure controls
and procedures that are designed to ensure that information required to be
4
disclosed in its periodic reports with the Securities and Exchange Commission is
recorded, processed, summarized and reported within the time periods specified
in the SEC's rules and regulations, and that such information is accumulated and
communicated to Learningwire's management, including its principal executive
officer and principal financial officer, as appropriate, to allow timely
decisions regarding required disclosure. Learningwire's disclosure controls and
procedures are designed to provide a reasonable level of assurance of reaching
its desired disclosure control objectives. Based on this evalution,
Learningwire's principal executive and financial officers concluded that
Learningwire's disclosure controls and procedures were effective.
Management's Report on Internal Control Over Financial Reporting
Learningwire's management is responsible for establishing and maintaining
adequate internal control over financial reporting and for the assessment of the
effectiveness of internal control over financial reporting. As defined by the
Securities and Exchange Commission, internal control over financial reporting is
a process designed by, or under the supervision of Learningwire's principal
executive officer and principal financial officer and implemented by
Learningwire's Board of Directors, management and other personnel, to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of Learningwire's financial statements in accordance with U.S.
generally accepted accounting principles.
Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may deteriorate.
Learningwire's management evaluated the effectiveness of its internal
control over financial reporting as of December 31, 2010 based on criteria
established in Internal Control - Integrated Framework issued by the Committee
of Sponsoring Organizations of the Treadway Commission, or the COSO Framework.
Management's assessment included an evaluation of the design of Learningwire's
internal control over financial reporting and testing of the operational
effectiveness of those controls.
Inherent in any small business is the pervasive problem involving
segregation of duties. Since Learningwire has a small accounting department,
segregation of duties cannot be completely accomplished at this stage in its
corporate lifecycle. Accordingly, Learningwire's management has added
compensating controls to reduce and minimize the risk of a material misstatement
in Learningwire's annual and interim financial statements.
Based on this evaluation, Learningwire's management concluded that
Learningwire's internal control over financial reporting was effective as of
December 31, 2010.
There was no change in Learningwire's internal control over financial
reporting that occurred during the quarter ended December 31, 2010 that has
materially affected, or is reasonably likely to materially affect,
Learningwire's internal control over financial reporting.
5
ITEM 9B. OTHER INFORMATION
None.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Name Age Title
---- --- -----
Stephen K. Smith 69 President and a Director
Michael Grove 66 Secretary, Treasurer and Principal Financial Officer
Stephen K. Smith has served as Learningwire's President and as a director
since January 21, 2004. Between 2000 and his association with Learningwire Mr.
Smith, has been managing his investments. Mr. Smith retired from Dell Computer
Corporation in 2000. Prior to his retirement Mr. Smith held the following
positions with Dell Computer:
o Director of Operations - 1997 - 2000
o Director of Worldwide Product Development - 1995 - 1997
o Director of Customer Service and Technical Support - 1992 - 1995
o Senior Manufacturing Manager - 1989 - 1992
Between 1964 and 1989 Mr. Smith was in the United States Marine Corps.
While in the Marine Corps Mr. Smith had various national and international
assignments ranging from Director of Marine Corps Officer Recruiting to Chief of
Emergency Action, Defense Nuclear Agency. Mr. Smith retired from the Marine
Corps. with the rank of Colonel. Mr. Smith received a Bachelor of Arts degree
from Hanover College in 1964 and his Master of Arts degree from the University
of Northern Colorado in 1978.
Michael Grove has been Learningwire's Secretary, Treasurer and Principal
Financial Officer since January 2004. Since 2000 Mr. Grove has been the
Principal Financial Officer for Technical Trades Institute, Inc. Between 1999
and 2000 Mr. Grove was an accountant for One Capital Corporation. Between 1995
and 1996 Mr. Grove was the business manager, and between 1996 and 1999 Mr. Grove
was the general manager of Paxson Communications, Inc. Mr. Grove has a
background of over 27 years in financial and sales management. Mr. Grove has
worked in the audit department of the CPA firm Peat, Marwick - Mitchel & Co. and
has held sales positions as controller, chief financial officer and chief
executive of several public and private companies in the oil and gas, stock
brokerage, broadcasting and education industries. Mr. Grove is a CPA and earned
a Bachelor of Science in Accounting from the University of Colorado.
Learningwire believes that Mr. Smith's longstanding experience with
Learningwire qualifies him to serve as a director.
Learningwire's directors are elected to hold office until the next annual
meeting of shareholders and until their successors have been elected and
qualified. Learningwire's executive officers are elected by the Board of
Directors and hold office until resignation or removal by the Board of
Directors.
6
None of Learningwire's directors are independent as that term is defined in
section 803 of the listing standards of the NYSE AMEX. Learningwire does not
have a compensation or an audit committee.
Learningwire has not adopted a code of ethics applicable to its principal
executive, financial and accounting officers and persons performing similar
functions. Learningwire does not believe a code of ethics is needed at this time
since Learningwire has only two officers.
Compensation Committee Interlocks and Insider Participation.
Learningwire directors acts as its compensation committee.
During the year ended December 31, 2010, no officer of Learningwire was
also a member of the compensation committee or a director of another entity,
which other entity had one of its executive officers serving as a director of
Learningwire or as a member of Learningwire's compensation committee.
Section 16(b) Compliance
On January 20, 2009, Learningwire filed a Form 8-A registering its common
stock under section 12(g) of the Securities Exchange Act of 1934 and subjecting
Learningwire's directors, officers and beneficial holders of 10% or greater of
Learningwire's common stock (the "Principal Shareholders") to section 16(a) of
the Exchange Act.
Section 16(a) required Learningwire's directors, officers and Principal
Shareholders to file a Form 3, Initial Statement of Beneficial Ownership of
Securities, on January 20, 2009, the day that Learningwire's registration under
Section 12(g) of the Exchange Act became effective. Section 16(a) also requires
Learningwire's directors, officers and Principal Shareholders to file a Form 4,
Statement of Changes of Beneficial Ownership of Securities within two business
days of a transaction that changes such director's, officer's or Principal
Shareholder's beneficial ownership in Learningwire's common stock and a Form 5,
Annual Statement of Beneficial Ownership of Securities within 45 days after the
end of Learningwire's fiscal year if a Form 3 or Form 4 was not filed on a
timely basis.
On January 20, 2009 Stephen K. Smith was Learningwire's sole director and
the President of Learningwire and Michael Grove was the Secretary, Treasurer and
Principal Financial Officer of Learningwire. Both Mr. Smith and Mr. Grove have
not filed Form 3s reporting their beneficial ownership of Learningwire's common
stock.
On January 20, 2009 Anne Brady was the beneficial owner of 13% of
Learningwire's common stock. Ms. Brady has not filed a Form 3 reporting her
beneficial ownership of Learningwire's common stock.
7
As of March 11, 2011 Mr. Smith, Mr. Grove and Ms. Brady have not filed Form
5s reporting their annual beneficial ownership of Learningwire's common stock.
Mr. Smith, Mr. Grove and Ms. Smith have not been required to file any Form
4s.
[Note that upon filing of the 8-A12G, the officers/directors became obligated to
file Forms 3 and 4]
ITEM 11. EXECUTIVE COMPENSATION
The following table shows in summary form the compensation received by the
President of Learningwire during the two fiscal years ended December 31, 2010.
None of Learningwire's officers have ever received in excess of $100,000 in
compensation during any fiscal year.
All
Name and Restricted Other
Principal Fiscal Stock Options Compen-
Position Year Salary Bonus Awards Awards sation Total
---------- ---- ------ ----- ------ ------ ------ -----
Stephen Smith, 2010 -- -- -- -- -- --
President 2009 -- -- -- -- -- --
Learningwire does not have any consulting or employment agreements with any
of its officers or directors.
Learningwire has not granted any stock options as of January 31, 2011.
Learningwire's director does not receive any compensation for his services
as a director.
Long-Term Incentive Plans. Learningwire does not provide its officers or
employees with pension, stock appreciation rights, long-term incentive or other
plans.
Employee Pension, Profit Sharing or other Retirement Plans. Learningwire
does not have a defined benefit, pension plan, profit sharing or other
retirement plan, although it may adopt one or more of such plans in the future.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table shows the ownership of Learningwire's common stock as
of March 15, 2011, by each shareholder known by Learningwire to be the
beneficial owner of more than 5% of Learningwire's outstanding shares, each
director and executive officer of Learningwire and all directors and executive
officers as a group. Except as otherwise indicated, each shareholder has sole
voting and investment power with respect to the shares they beneficially own.
8
Shares
Name and Address of Beneficially Percent of
Beneficial Owner Owned Class
---------------------------------- ------------ ----------
Stephen K. Smith 2,250,000 53%
5425 Petticoat Lane
Austin, TX 78746
Michael Grove 225,000 5.3%
4540 Nelson Dr.
Broomfield, CO 80020
All Executive Officers and 2,475,000 58%
Directors as a group (two persons)
5% Shareholders
Anne Brady 562,500 13%
7170 Calabria Ct.
Unit F
San Diego, CA 92122
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, DIRECTOR INDEPENDENCE.
As of December 31, 2010 Stephen Smith, Learningwire's President, had
advanced $112,600, net of repayments, to Learningwire. These advances do not
bear interest, are unsecured and are due on demand.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
De Joya Griffith & Company, LLC audited Learningwire's financial statements
for the years ended December 31, 2010 and 2009. The following table shows the
fees billed to Learningwire for the years ended December 31, 2009 by De Joya
Griffith & Company.
2010 2009
---- ----
Audit Fees $8,500 $8,500
Audit Related Fees -- --
Design and Implementation Fees -- --
9
Audit fees represent amounts billed for professional services rendered for
the audit of Learningwire's annual financial statements and for reviewing
unaudited financial statements included in Learningwire's 10-Q reports. Before
De Joya Griffith & Company was engaged by Learningwire to render audit services,
the engagement was approved by Learningwire's Directors.
ITEM 15. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES.
Exhibit
Number Exhibit Name
------ -------------
3.1 Articles of Incorporation (1)
3.2 Bylaws (1)
10.1 Distribution Agreement with Ingram Micro, Inc. (1)
31 Rule 13a-14(a) Certifications
32 Section 1350 Certifications
(1) Incorporated by reference to the same exhibit filed with Learningwire's
Registration Statement on Form SB-2 (Commission File # 333-121072).
10
Report of Independent Registered Public Accounting Firm
To The Board of Directors and Stockholders
Kranem Corporation d/b/a Learningwire.com
We have audited the accompanying balance sheets of Kranem Corporation d/b/a
Learningwire.com (A Development Stage Company) as of December 31, 2010 and 2009,
and the related statements of operations, stockholders' deficit, and cash flows
for the years then ended and from inception (April 18, 2002) to December 31,
2010. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on the financial
statements based on our audit.
We conducted our audit in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit 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 financial statements referred to above present fairly, in
all material respects, the financial position of Kranem Corporation d/b/a
Learningwire.com (A Development Stage Company) as of December 31, 2010, and the
results of their operations and cash flows for the year then ended and from
inception (April 18, 2002) to December 31, 2010 in conformity with
PersonNameaccounting principles generally accepted in the United States.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 3 to the financial
statements, the Company has suffered recurring losses from operations, which
raise substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 3. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
De Joya Griffith & Company, LLC
/s/ De Joya Griffith & Company, LLC
Henderson, Nevada
February 25, 2011
Henderson, Nevada
-------------------------------------------------------------------------------
2580 Anthem Village Drive, Henderson, NV 89052
Telephone (702) 563-1600 Facsimile (702) 920-8049
F-1
Kranem Corporation
(dba Learningwire.com)
(A Development Stage Company)
Balance Sheets
(Audited)
December 31, December 31,
2010 2009
------------ --------------
Assets
Current assets
Cash $ 143 $ -
-------------- --------------
Total assets $ 143 $ -
============== ==============
Liabilities and Stockholders' Deficit
Current liabilities
Accounts payable and accrued
liabilities $ 11,692 $ 15,492
Indebtedness to related parties 112,600 112,600
-------------- --------------
Total current liabilities 124,292 128,092
-------------- --------------
Total liabilities 124,292 128,092
-------------- --------------
Stockholders' deficit
Preferred stock, no par value,
10,000,000 shares authorized, no
shares issued and outstanding
Common stock, no par value, 50,000,000
shares authorized, 4,267,125 shares
issued and outstanding 74,230 74,230
Additional paid-in capital 161,210 147,710
Deficit accumulated during development
stage (359,589) (350,032)
-------------- --------------
Total stockholders' deficit (124,149) (128,092)
-------------- --------------
Total liabilities and stockholders'
deficit $ 143 $ -
============== ==============
The accompanying notes are an integral part of these financial
statements.
F2
Kranem Corporation
(dba Learningwire.com)
(A Development Stage Company)
Statements of Operations
(Audited)
For the years ended Inception
December 31, (April 18, 2002) to
-------------------------
2010 2009 December 31, 2010
----------- ------------ ------------------
Revenue $ - $ - $ 6,703
----------- ------------ ----------------
Expenses:
Depreciation - - 18,505
Contract labor - - 21,435
Contributed rent - 15,000 100,000
General and administrative expenses 67 - 22,184
Professional fees 9,490 9,736 100,988
Rent - - 16,250
Salaries - - 42,385
Selling, advertising and marketing - 936 44,555
----------- ------------ ----------------
Total expenses 9,557 25,672 366,302
----------- ------------ ----------------
Other income
Interest income - - 10
----------- ------------ ----------------
Total other income - - 10
----------- ------------ ----------------
Net loss $ (9,557) $ (25,672) $ (359,589)
=========== ============ ================
Weighted average number of
common shares outstanding - basic 4,267,125 4,267,125
=========== ============
Net loss per share-basic $(0.00) $(0.01)
=========== ============
The accompanying notes are an integral part of these financial
statements.
F3
Kranem Corporation
(dba Learningwire.com)
(A Development Stage Company)
Statements of Stockholders' Deficit
(Audited)
Deficit
Accumulated
Common Stock Additional During Total
----------------
Paid-in Development Stockholders'
Shares Amount Capital Stage Deficit
----------------------------------------------------
Net loss - $- $- $(32,091) $(32,091)
----------------------------------------------------
Balance, December 31, 2002 - - - (32,091) (32,091)
----------------------------------------------------
Contributed rent, 2003 - - 10,000 - 10,000
Net loss - - - (75,682) (75,682)
----------------------------------------------------
Balance, December 31, 2003 - - 10,000 (107,773) (97,773)
----------------------------------------------------
January 2004
Founders shares
$0.02 (pre-split price)
per share 2,250,000 10,000 - - 10,000
January 2004
$0.04 (pre-split price)
per share 562,500 5,000 - - 5,000
February 2004
Private placement
$0.20 (pre-split price)
per share less $10,180
offering costs 966,375 32,770 - - 32,770
February 2004
$0.009 per share 225,000 2,000 - - 2,000
Contributed rent, 2004 - - 15,000 - 15,000
Net loss - - - (68,959) (68,959)
----------------------------------------------------
Balance, December 31, 2004 4,003,875 49,770 25,000 (176,732) (101,962)
----------------------------------------------------
September 2005
Private placement
$0.50 (pre-split price)
per share less $4,790
offering costs 263,250 24,460 - - 24,460
Contributed rent, 2005 - - 15,000 - 15,000
Net loss - - - (42,752) (42,752)
----------------------------------------------------
Balance, December 31, 2005 4,267,125 74,230 40,000 (219,484) (105,254)
----------------------------------------------------
Donated capital, 2006 - - 6,790 - 6,790
Contributed rent, 2006 - - 15,000 - 15,000
Net loss - - - (35,022) (35,022)
----------------------------------------------------
Balance, December 31, 2006 4,267,125 74,230 61,790 (254,506) (118,486)
----------------------------------------------------
F-4
Donated capital, 2007 - - 18,600 - 18,600
Contributed rent, 2007 - - 15,000 - 15,000
Net loss - - - (39,028) (39,028)
----------------------------------------------------
Balance, December 31, 2007 4,267,125 74,230 95,390 (293,534) (123,914)
----------------------------------------------------
Donated capital, 2008 - - 15,150 - 15,150
Contributed rent, 2008 - - 15,000 - 15,000
Net loss - - - (30,826) (30,826)
----------------------------------------------------
Balance, December 31, 2008 4,267,125 74,230 125,540 (324,360) (124,590)
----------------------------------------------------
Donated capital, 2009 - - 7,170 - 7,170
Contributed rent, 2009 - - 15,000 - 15,000
Net loss - - - (25,672) (25,672)
----------------------------------------------------
Balance, December 31, 2009 4,267,125 $74,230 $147,710 $(350,032) $(128,092)
====================================================
Donated capital, 2010 - - 13,500 - 13,500
Net loss - - - (9,557) (9,557)
----------------------------------------------------
Balance, December 31, 2010 4,267,125 $74,230 $161,760 $(359,589) $(124,149)
====================================================
The accompanying notes are an integral part of these financial
statements.
F5
Kranem Corporation
(dba Learningwire.com)
(A Development Stage Company)
Statements of Cash Flows
(Audited)
For the years ended Inception
December 31, (April 18, 2002) to
------------------------------------------
2010 2009 December 31, 2010
---------- ------------ -----------------
Operating activities
Net loss $ (9,557) $(25,672) $ (359,589)
Adjustments to reconcile net loss to
net cash (used) by operating
activities:
Depreciation - - 18,505
Contributed rent - 15,000 100,000
Changes in operating assets and liabilities:
Increase in accounts payable and
accrued expenses (3,800) 3,502 11,692
---------- ------------ ---------------
Net cash (used) by operating activities (13,357) (7,170) (229,392)
---------- ------------ ---------------
Investing activities
Purchase of fixed assets - - (18,505)
---------- ------------ ---------------
Net cash (used) by investing activities - - (18,505)
---------- ------------ ---------------
Financing activities
Donated capital 13,500 7,170 61,210
Issuances of common stock - - 89,200
Payments for offering costs - - (14,970)
Increase in notes payable - related
party - - 119,850
Repayment of notes payable - related
party - - (7,250)
---------- ------------ ---------------
Net cash provided by financing
activities 13,500 7,170 248,040
---------- ------------ ---------------
Net increase (decrease) in cash 143 - 143
Cash - beginning - - -
---------- ------------ ---------------
Cash - ending $ 143 $ - $ 143
========== ============ ===============
Supplemental disclosures:
Interest paid $ - $ - $ -
========== ============ ===============
Income taxes paid $ - $ - $ -
========== ============ ===============
The accompanying notes are an integral part of these financial
statements.
F6
Kranem Corporation
(dba Learningwire.com)
(A Development Stage Company)
Notes to Audited Financial Statements
Note 1 - History and organization of the company
The Company was organized April 18, 2002 (Date of Inception) under the laws of
the State of Colorado, as Kranem Corporation. The Company operates under its
tradename, "Learningwire.com," which is registered with the State of Colorado.
The Company is authorized to issue up to 50,000,000 shares of its common stock
with no par value and up to 10,000,000 shares of preferred stock with no par
value.
The Company previously offered high-quality, office and office supply products
to businesses, educational institutions, government agencies and individuals
through its website, www.learningwire.com. The website enabled customers to
research products, purchase products online, track orders and receive
administrative support. The Company has ceased its on-line operations and
currently has no revenue-producing activities. The Company's current business
plan is to evaluate, structure and complete a merger with, or acquisition of, a
privately owned corporation.
The Company has limited operations and in accordance with FASB ASC 915-10,
"Development Stage Entities," the Company is considered a development stage
company.
Note 2 - Accounting policies and procedures
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 revenue and expenses during the reporting period. Actual
results could differ from those estimates.
Cash and cash equivalents
For the purpose of the statements of cash flows, all highly liquid investments
with an original maturity of three months or less are considered to be cash
equivalents. The carrying value of these investments approximates fair value.
General and administrative expenses
The significant components of general and administrative expenses consist of
rent, sales and marketing expenses, legal and professional fees.
Earnings per share
The Company follows ASC Topic 260 to account for the earnings per share. Basic
earning per common share ("EPS") calculations are determined by dividing net
income by the weighted average number of shares of common stock outstanding
during the year. Diluted earning per common share calculations are determined by
dividing net income by the weighted average number of common shares and dilutive
common share equivalents outstanding. During periods when common stock
equivalents, if any, are anti-dilutive they are not considered in the
computation.
F7
Kranem Corporation
(dba Learningwire.com)
(A Development Stage Company)
Notes to Audited Financial Statements
Note 2 - Accounting policies and procedures (continued)
Income Taxes
The Company follows FASB ASC 740-10, "Income Taxes" for recording the provision
for income taxes. Deferred tax assets and liabilities are computed based upon
the difference between the financial statement and income tax basis of assets
and liabilities using the enacted marginal tax rate applicable when the related
asset or liability is expected to be realized or settled. Deferred income tax
expenses or benefits are based on the changes in the asset or liability each
period. If available evidence suggests that it is more likely than not that some
portion or all of the deferred tax assets will not be realized, a valuation
allowance is required to reduce the deferred tax assets to the amount that is
more likely than not to be realized. Future changes in such valuation allowance
are included in the provision for deferred income taxes in the period of change.
Deferred income taxes may arise from temporary differences resulting from income
and expense items reported for financial accounting and tax purposes in
different periods. Deferred taxes are classified as current or non-current,
depending on the classification of assets and liabilities to which they relate.
Deferred taxes arising from temporary differences that are not related to an
asset or liability are classified as current or non-current depending on the
periods in which the temporary differences are expected to reverse.
The Company applies a more-likely-than-not recognition threshold for all tax
uncertainties. ASC Topic 740 only allows the recognition of those tax benefits
that have a greater than fifty percent likelihood of being sustained upon
examination by the taxing authorities. As of December 31, 2010, the Company
reviewed its tax positions and determined there were no outstanding, or
retroactive tax positions with less than a 50% likelihood of being sustained
upon examination by the taxing authorities, therefore this standard has not had
a material affect on the Company.
The Company does not anticipate any significant changes to its total
unrecognized tax benefits within the next 12 months.
The Company classifies tax-related penalties and net interest as income tax
expense. As of December 31, 2010 and 2009, no income tax expense has been
incurred.
The Company evaluated all recent accounting pronouncements issued since December
31, 2009 and determined that the adoption of these pronouncements would not have
a material effect on the financial position, results of operations or cash flows
of the Company.
F8
Kranem Corporation
(dba Learningwire.com)
(A Development Stage Company)
Notes to Audited Financial Statements
Note 3 - Going concern
The Company's financial statements are prepared using generally accepted
accounting principles in the United States of America applicable to a going
concern which contemplates the realization of assets and liquidation of
liabilities in the normal course of business. The Company's ability to continue
as a going concern is dependent upon its ability to consummate a merger or
acquisition, generate sufficient cash flow to meet obligations on a timely
basis, and ultimately to attain profitability. The Company has obtained working
capital through equity offerings and management plans to obtain additional
funding through equity or debt financings in the future. The Company's president
and shareholders have also funded the Company's operations with working capital
advances and capital contributions; however, no directors, officers or
shareholders have committed to fund the Company's operations or to make loans or
other financing arrangements available to the Company. There is no assurance
that the Company will be successful in its efforts to raise additional working
capital or achieve profitable operations. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
The ability of the Company to continue as a going concern is dependent upon its
ability to successfully accomplish the plans described in the preceding
paragraph and eventually secure other sources of financing and attain profitable
operations. These financial statements do not include any adjustments relating
to the recoverability and classification of recorded asset amounts, or amounts
and classification of liabilities that might result from this uncertainty.
Note 4 - Income taxes
For the years ended December 31, 2010 and 2009, the Company incurred net
operating losses and, accordingly, no provision for income taxes has been
recorded. In addition, no benefit for income taxes has been recorded due to the
uncertainty of the realization of any tax assets. At December 31, 2010 and 2009,
the Company had approximately $359,589 and $350,032 of federal and state net
operating losses. The net operating loss carryforwards, if not utilized, will
begin to expire in 2027. The provision for income taxes consisted of the
following components for the year ended December 31:
Components of net deferred tax assets, including a valuation allowance, are as
follows at December 31:
December 31,
2010 2009
-------------------------
Deferred tax assets:
Net operating loss carryforwards 125,586 122,511
Valuation allowance (125,586) (122,511)
-------------------------
Total deferred tax assets $ -0- $ -0-
=========================
The valuation allowance for deferred tax assets as of December 31, 2010 and 2009
was $125,586 and $122,511, respectively. In assessing the recovery of the
deferred tax assets, management considers whether it is more likely than not
that some portion or all of the deferred tax assets will not be realized. The
ultimate realization of deferred tax assets is dependent upon the generation of
future taxable income in the periods in which those temporary differences become
deductible. Management considers the scheduled reversals of future deferred tax
liabilities, projected future taxable income, and tax planning strategies in
making this assessment. As a result, management determined it was more likely
than not the deferred tax assets would not be realized as of December 31, 2010
and 2009, and recorded a full valuation allowance.
F9
Kranem Corporation
(dba Learningwire.com)
(A Development Stage Company)
Notes to Audited Financial Statements
Note 4 - Income taxes (continued)
Reconciliation between the statutory rate and the effective tax rate
is as follows at December 31:
2010 & 2009
-----------
Federal statutory rate (35.0)%
State taxes, net of federal benefit (0.00)%
Change in valuation allowance 35.0%
Effective tax rate 0.0%
===========
Note 5 - Stockholders' equity
The Company is authorized to issue 50,000,000 shares of its common stock, with
no par value, and up to 10,000,000 shares of its preferred stock, with no par
value.
During January 2004, the Company sold 2,250,000 shares of its no par value
common stock to an officer for $10,000 ($0.004 per share). The Company relied
upon exemptions from registration believed by it to be available under federal
and state securities laws in connection with the stock sale.
During January 2004, the Company sold 562,500 shares of its no par value common
stock to one purchaser for $5,000 ($0.009 per share). The Company relied upon
exemptions from registration believed by it to be available under federal and
state securities laws in connection with the stock sale.
During January and February 2004, the Company sold 966,375 shares of its no par
value common stock for $0.04 per share pursuant to an exemption from
registration claimed under Regulation D of the Securities Act of 1933, as
amended. The Company received net proceeds of $32,770 after deducting offering
costs totaling $10,180. The Company relied upon exemptions from registration
believed by it to be available under federal and state securities laws in
connection with the offering.
During February 2004, the Company sold 225,000 shares of its no par value common
stock to an officer for $2,000 ($0.009 per share). The Company relied upon
exemptions from registration believed by it to be available under federal and
state securities laws in connection with the stock sale.
During the period from April through June 2005, the Company sold 263,250 shares
of its no par value common stock for $0.11 per share, pursuant to a Registration
Statement on Form SB-2. The Company received net proceeds of $24,460 after
deducting offering costs totaling $4,790.
On November 11, 2005, the Company declared 4.5:1 common stock split to
shareholders of record at the close of business on November 11, 2005. The number
of shares issued on November 11, 2005 totaled 3,318,875 and increased the number
of common shares outstanding to 4,267,125. Shares issued prior to November 11,
2005 have been retroactively restated to reflect the impact of the stock split.
Through the year ended December 31, 2006, affiliates of the Company contributed
capital in the amount of $6,790. The entire amount was donated, is not expected
to be repaid and is considered to be additional paid-in capital.
F-10
Kranem Corporation
(dba Learningwire.com)
(A Development Stage Company)
Notes to Audited Financial Statements
Note 5 - Stockholders' equity (continued)
Through the year ended December 31, 2007, affiliates of the Company contributed
capital in the amount of $18,600. The entire amount was donated, is not expected
to be repaid and is considered to be additional paid-in capital.
Through the year ended December 31, 2008, affiliates of the Company contributed
capital in the amount of $15,150. The entire amount was donated, is not expected
to be repaid and is considered to be additional paid-in capital.
Through the year ended December 31, 2009, two non affiliates of the Company
contributed capital in the amount of $7,170. The entire amount was donated, is
not expected to be repaid and is considered to be additional paid-in capital.
Through the year ended December 31, 2010, two non affiliates of the Company
contributed capital in the amount of $13,500. The entire amount was donated, is
not expected to be repaid and is considered to be additional paid-in capital.
From May 1, 2003 through December 31, 2009, a director contributed office space
to the Company. The office space is considered to be valued at $1,250 per month
based on management's estimate of the market rate in the local area and is
included in the accompanying financial statements as contributed rent expense
with a corresponding credit to additional paid-in capital. As of December 31,
2009, the Company no longer utilizes this office space. During the years ended
December 31, 2010 and 2009, contributed rent was $0 and $15,000, respectively.
From inception (April 18, 2002) to December 31, 2010 contributed rent was $100,
000.
As of December 31, 2010, there have been no other issuances of common stock.
Note 6 - Warrants and options
As of December 31, 2010, there were no warrants or options outstanding to
acquire any additional shares of common stock.
Note 7 - Related party transactions
During the year ended December 31, 2003, an employee advanced the Company $4,000
for working capital. The advance was non-interest bearing and due on demand. The
Company repaid the advance during the year ended December 31, 2004.
During January 2004, the Company sold 2,250,000 shares of its no par value
common stock to an officer for $10,000 ($0.004 per share). The Company relied
upon exemptions from registration believed by it to be available under federal
and state securities laws in connection with the stock sale.
During February 2004, the Company sold 225,000 shares of its no par value common
stock to an officer for $2,000 ($0.009 per share). The Company relied upon
exemptions from registration believed by it to be available under federal and
state securities laws in connection with the stock sale.
F11
Kranem Corporation
(dba Learningwire.com)
(A Development Stage Company)
Notes to Audited Financial Statements
Note 7 - Related party transactions (continued)
During the three months ended March 31, 2005, an affiliate advanced the Company
$3,200 for working capital. The advances were non-interest bearing and due on
demand. The Company repaid the advances prior to June 30, 2005.
During the period from April through June 2005, the Company sold 263,250 shares
of its no par value common stock for $0.11 per share, pursuant to a Registration
Statement on Form SB-2. The Company received net proceeds of $24,460 after
deducting offering costs totaling $4,790.
Through the year ended December 31, 2006, affiliates of the Company contributed
capital in the amount of $6,790. The entire amount was donated, is not expected
to be repaid and is considered to be additional paid-in capital.
During 2007, an affiliate advanced the Company $50 for working capital. The
advance was repaid during 2007.
Through the year ended December 31, 2007, affiliates of the Company contributed
capital in the amount of $18,600. The entire amount was donated, is not expected
to be repaid and is considered to be additional paid-in capital.
Through the year ended December 31, 2008, affiliates of the Company contributed
capital in the amount of $15,150. The entire amount was donated, is not expected
to be repaid and is considered to be additional paid-in capital.
Through the year ended December 31, 2009, two non affiliates of the Company
contributed capital in the amount of $7,170. The entire amount was donated, is
not expected to be repaid and is considered to be additional paid-in capital.
Through the year ended December 31, 2010, two non affiliates of the Company
contributed capital in the amount of $13,500. The entire amount was donated, is
not expected to be repaid and is considered to be additional paid-in capital.
From May 1, 2003 through December 31, 2009, a director contributed office space
to the Company. The office space is considered to be valued at $1,250 per month
based on management's estimate of the market rate in the local area and is
included in the accompanying financial statements as contributed rent expense
with a corresponding credit to additional paid-in capital. As of December 31,
2009, the Company no longer utilizes this office space. During the years ended
December 31, 2010 and 2009, contributed rent was $0 and $15,000, respectively.
From inception (April 18, 2002) to December 31, 2010, contributed rent was
$100,000.
Since the inception of the Company on April 18, 2002, the Company has borrowed
funds from a shareholder, who is also current President, CEO and director, for
working capital. At December 31, 2008, the Company was indebted to this
affiliate in the amount of $112,600. There were no additional proceeds received
or payments against the liability during the years ended December 31, 2010 and
2009. The advances are non-interest bearing and are due on demand.
F12
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
KRANEM CORPORATION dba LEARNINGWIRE.COM
March 17, 2011 By: /s/ Stephen K. Smith
-------------------------------------
Stephen K. Smith, President and
Chief Executive Officer
In accordance with the Exchange Act, this Report has been signed by the
following persons on behalf of the Registrant in the capacities and on the dates
indicated.
Signature Title Date
--------- ----- ----
/s/ Stephen K. Smith President, Chief March 17, 2011
------------------------- Executive Officer and
Stephen K. Smith a Director
/s/ Michael Grove Principal Financial March 21, 2011
------------------------- and Accounting Officer
Michael Grove
KRANEM CORPORATION
FORM 10-K
EXHIBITS
