On May 27, 2010, the Board approved cancellation of 2,500 common
shares, which were returned to the Company’s transfer agent.
On August 6, 2010, the Company entered into a purchase agreement
with Allkey Ltd, where Allkey would purchase 6,000,000 shares of the Company’s
common stock with 1.5 warrants attached to each share. The warrants issued
with the common stock can be converted into 9,000,000 share of Common Stock if
all warrants are exercised. Allkey is obligated to pay $7.00 per share for a
total price of $42,000,000 payable in 7 tranches, the first one being due 30
days from the date of the SEC approval of the Company’s registration statement,
S-1 originally filed August 25, 2010. As a result of this stock issuance the
controlling interest in the company changed, with Allkey owning 73% of all
issued and outstanding shares.
On October 13, 2010, we filed an amendment to the registration
statement with the SEC, which updates the purchase price of the 6,000,000
shares and 9,000,000 warrants from $7.00 to $10.20 per share.
On December 7, 2010, we entered into a rescission agreement with
Allkey whereby the parties agreed to mutually rescind the patent and purchase
agreements. As a result of the rescission agreement, the 3,750,000 Series 2,
Class P-2 preferred shares and 6,000,000 common shares that were issued to
Allkey were returned to the Company’s transfer agent, and the 9,000,000
warrants were cancelled.
NOTE 7 – RELATED PARTY TRANSACTIONS
The current majority shareholder loaned the Company $338,039
during the year ended December 31, 2010 to be used for working capital. These
advances are unsecured, non-interest bearing and due on demand.
In 2009, the Company issued 22,000 shares of Series 1, Class P-1
preferred stock (par value $8.75 per share) to Louis Bertoli (director and
officer of the Company) in settlement of amounts owed to Mr. Bertoli totaling
$192,500. Series 1, Class P-1 preferred stock can be converted to common stock
in the ratio of 1.25:1.
On July 20, 2009, the Company entered into a two-year consulting
agreement with Amersey Investment Holding LLC, a company controlled by a
director (“Amersey”). Amersey will provide office space, office identity and
assist the Company with corporate, financial, administrative and management
records. For the three months ended March 31, 2011 and the year ended December
31, 2010, the Company incurred expenses of $15,000 and $60,000, respectively,
in relation to these services.
The Company uses Bay City Transfer Agency & Registrar Inc.
(“BCTAR”) to do its stock transfers. BCTAR is a company controlled by a
director. For the three months ended March 31, 2011 and the year ended
December 31, 2010, the Company incurred expenses of $2,250 and $11,190,
respectively, in relation to these services.
A patent was purchased December 31, 2009 from a related party, as
described in detail in Note 5, and terminated in December 2010.
8 – SUBSEQUENT EVENTS
that have occurred subsequent March 31, 2011 have been evaluated through the
date of this audit report. There have been no subsequent events that occurred
during such period that would require disclosure in these consolidated
financial statements or would be required to be recognized in the consolidated
financial statements as of or for the three months ended March 31, 2011.
Item 2. Management’s
Discussion and Analysis of Financial Condition and Results of Operation.
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 we 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.