Attached files
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________________________
FORM 10-Q
__________________________________
þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended April 30, 2011
OR
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File No. 333-74928 |
VAULT AMERICA, INC.
(Exact Name of Registrant as specified in its Charter)
______________________________________
Nevada | 52-2325923 |
(State or other jurisdiction of incorporation) | (IRS Employer Identification No.) |
PO Box 15040 Calgary, Alberta | T3H 0N8 |
(Address of Principal Executive Offices) | (Zip Code) |
Issuer's telephone number, including area code: (403) 719-5401
_______________________________
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.001 par value
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
þYes ¨No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer ¨ | Accelerated filer ¨ |
Non-accelerated filer ¨ | Smaller Reporting Company þ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
¨Yes þ No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant has filed all documents and reports required to be filed by Section 12, 13, or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. ¨Yes ¨ No
APPLICABLE ONLY TO CORPORATE ISSUERS
As of June 9, 2011, there were 1,144,324 outstanding shares of the issuer's common stock, par value $0.001 per share ("Common Stock"), which is the only class of common stock of the issuer.
Table of Contents
F-1 | |
F-1 | |
F-3 | |
F-5 | |
F-7 | |
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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 2 |
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 5 |
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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCCEDS | 5 |
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SIGNATURES | 7 |
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VAULT AMERICA, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
APRIL 30, 2011 AND OCTOBER 31, 2010
(Unaudited) | ||||
April 30, 2011 | October 31, 2010 | |||
ASSETS | ||||
CURRENT ASSETS | ||||
Cash and cash equivalents | $ 127,408 | $ 164,535 | ||
G.S.T and P.S.T. receivable | 454 | 588 | ||
Prepaid expenses and other current assets | 440 | 419 | ||
TOTAL CURRENT ASSETS | 128,302 | 165,542 | ||
PROPERTY AND EQUIPMENT, net of | ||||
accumulated depreciation of $10,316 and | ||||
$8,835 | 959 | 1,154 | ||
OTHER ASSETS | ||||
Guaranteed investment Certificate | 644,042 | 594,764 | ||
TOTAL ASSETS | $ 773,303 | $ 761,460 |
(Continued)
F - 1
VAULT AMERICA, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
APRIL 30, 2011 AND OCTOBER 31, 2010
(Unaudited) | ||||
April 30, 2011 | October 31, 2010 | |||
LIABILITIES AND STOCKHOLDERS EQUITY | ||||
CURRENT LIABILITIES | ||||
Accounts payable and accrued expenses | $ 12,348 | $ 18,081 | ||
STOCKHOLDERS EQUITY | ||||
Preferred A stock, par value $.001 per share; | ||||
Authorized, 70,000 shares; | ||||
Issued and outstanding, 790 shares at April 30, 2011 | ||||
and October 31, 2010 | 10 | 10 | ||
Preferred B stock, par value $.001 per share; | ||||
Authorized, 1,000 shares; | ||||
Issued and outstanding, 1,000 shares at April 30, | ||||
2011 and October 31, 2010 | 1 | 1 | ||
Common stock, par value $.001 per share; | ||||
Authorized, 50,000,000 shares; | ||||
Issued and outstanding, 1,144,324 shares at April 30, | ||||
2011 and October 31, 2010 | 1,144 | 1,144 | ||
Paid in capital in excess of par value of stock | 3,539,621 | 3,539,621 | ||
Accumulated deficit | ( 2,948,272) | ( 2,911,177) | ||
Accumulated other comprehensive income | ||||
(primarily cumulative translation adjustment) | 217,451 | 162,780 | ||
809,955 | 792,379 | |||
Less treasury stock of 2,012,000 shares at April 30, 2011 | ||||
and October 31, 2010, at cost | ( 49,000) | ( 49,000) | ||
TOTAL STOCKHOLDERS EQUITY | 760,955 | 743,379 | ||
TOTAL LIABILITIES AND STOCKHOLDERS | $ 773,303 | $ 761,460 | ||
EQUITY |
See accompanying notes.
F - 2
VAULT AMERICA, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED APRIL 30, 2011 AND 2010
(UNAUDITED)
Three Months
Ended
Six Months Ended
April 30
April
30
2011
2010
2011
2010
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TOTAL REVENUES |
| $ - | $ - | $ - | $ - |
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES |
| 29,519 | 32,596 | 76,713 | 72,613 |
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(LOSS) FROM OPERATIONS |
| ( 29,519) | ( 32,596) | ( 76,713) | ( 72,613) |
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OTHER INCOME |
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Income from legal settlement |
| - | - | 33,748 | - |
Interest income |
| 3,090 | 1,865 | 5,870 | 2,320 |
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TOTAL OTHER INCOME |
| 3,090 | 1,865 | 39,618 | 2,320 |
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(LOSS) FROM OPERATIONS BEFORE CORPORATION INCOME TAXES |
| ( 26,429) | ( 30,731) | ( 37,095) | ( 70,293) |
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CORPORATION INCOME TAXES |
| - | - | - | - |
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NET (LOSS) |
| $ ( 26,429) | $ ( 30,731) | $ ( 37,095) | $ ( 70,293) |
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NET (LOSS) FROM OPERATIONS PER COMMON SHARE BASIC AND DILUTED |
| $ ( 0.02) | $ ( 0.03) | $ ( 0.03) | $ ( 0.06) |
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WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING BASIC AND DILUTED |
| 1,144,324 | 1,144,324 | 1,144,324 | 1,144,324 |
See accompanying notes.
F - 3
VAULT AMERICA, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
FOR THE THREE AND SIX MONTHS ENDED APRIL 30, 2011 AND 2010
(UNAUDITED)
Three Months Ended |
Six Months Ended |
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2011 |
2010 |
2011 |
2010 |
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NET (LOSS) | $ ( 26,429) | $ ( 30,731) | $ ( 37,095) | $ ( 70,293) |
OTHER COMPREHENSIVE INCOME | ||||
FOREIGN CURRENCY TRANSLATION | ||||
ADJUSTMENT | 40,192 | 50,357 | 54,671 | 51,940 |
NET COMPREHENSIVE INCOME (LOSS) |
$ 13,763 | $ 19,626 | $ 17,576 | $ ( 18,353) |
See accompanying notes.
F - 4
VAULT AMERICA, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED APRIL 30, 2011 AND 2010
(UNAUDITED)
2011
2010
CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net (loss) from operations |
| $ ( 37,095) | $ ( 70,293) |
Adjustments to reconcile net (loss) to net cash (used) by operating activities: |
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Depreciation |
| 195 | 252 |
Changes in operating assets and liabilities: |
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G.S.T. and P.S.T. receivable |
| 134 | 346 |
Prepaid expenses and deposits |
| ( 21) | ( 511) |
Accounts payable and accrued expenses |
| ( 5,733) | ( 10,750) |
Net cash (used) by operating activities |
| ( 42,520) | ( 80,956) |
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CASH FLOWS FROM INVESTING ACTIVITIES |
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Purchase and increase in value of guaranteed investment certificate |
| ( 49,278) |
( 598,061) |
Net cash (used) by investing activities |
| ( 49,278) | ( 598,061) |
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CASH FLOWS FROM FINANCING ACTIVITIES |
| - | - |
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EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS |
| 54,671 | 51,940 |
NET (DECREASE) IN CASH AND CASH EQUIVALENTS |
| ( 37,127) |
( 627,077) |
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD |
| 164,535 | 839,451 |
CASH AND CASH EQUIVALENTS, END OF PERIOD |
| $ 127,408 | $ 212,374 |
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION |
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CASH PAID DURING THE PERIOD FOR: |
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Interest |
| $ - | $ - |
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Taxes |
| $ - | $ - |
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See accompanying notes.
F - 5
VAULT AMERICA, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2011
(UNAUDITED)
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Presentation - The interim consolidated financial statements of the Company are condensed and do not include some of the information necessary to obtain a complete understanding of the financial data. Management believes that all adjustments necessary for a fair presentation of results have been included in the unaudited consolidated financial statements for the interim periods presented. Operating results for the six months ended April 30, 2011 are not necessarily indicative of the results that may be expected for the year ended October 31, 2011. Accordingly, your attention is directed to the footnote disclosures found in the October 31, 2010 Annual Report and particularly to Note 1, which includes a summary of significant accounting policies.
Nature of Business and History of Company Vault America, Inc. (hereinafter referred to as the Company) was organized on April 25, 2001, under the laws of the State of Nevada. The Company operates as a holding company for future acquisitions of subsidiaries.
Foreign Currency Translation - The financial statements of the subsidiary are measured using the Canadian dollar as the functional currency. Assets, liabilities and equity accounts of the subsidiary are translated at exchange rates as of the balance sheet date. Revenues and expenses are translated at average rates of exchange in effect during the year. The resulting cumulative translation adjustments have been recorded as a separate component of stockholders' equity. The financial statements are presented in United States of America dollars.
Principles of Consolidation For the six months ended April 30, 2011 and 2010, the Company was consolidated with its wholly-owned subsidiary, Security Bancorp, Inc. (SBI). All material intercompany accounts and transactions have been eliminated.
Cash and Cash Equivalents - For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents.
Property and Equipment - Property and equipment are stated at cost. Major renewals and improvements are charged to the asset accounts while replacements, maintenance and repairs, which do not improve or extend the lives of the respective assets, are expensed. At the time property and equipment are retired or otherwise disposed of, the asset and related accumulated depreciation accounts are relieved of the applicable amounts. Gains or losses from retirements or sales are credited or charged to income.
The Company depreciates the property and equipment on the straight-line method as follows:
Furniture and fixtures
10 years
Computer equipment
5 years
Long-Lived Assets The Company recognizes impairment losses on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets carrying amount. In such circumstances, those assets are written down to estimated fair value. Long-lived assets consist primarily of fixed assets. There were no impairment losses recorded on these financial statements.
F - 6
VAULT AMERICA, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2011
(UNAUDITED)
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Common Stock Issued for Non-Cash Transactions - It is the Companys policy to value stock issued for non-cash transactions, such as services, at the fair market value of the goods or services received or the consideration granted, whichever is more readily determinable, at the date the transaction is negotiated.
Treasury Stock The Company intends to hold repurchased shares in Treasury for general corporate purposes, including issuances under the employee stock option plan. The Company accounts for the Treasury stock using the cost method.
Accounting Estimates - Management uses estimates and assumptions in preparing financial statements in accordance with accounting principles generally accepted in the United States. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were used.
Net Income (Loss) Per Share - The Company adopted ASC 260, Earnings Per Share, that requires the reporting of both basic and diluted earnings (loss) per share. Basic earnings (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. In accordance with ASC 260, any anti-dilutive effects on net earnings (loss) per share are excluded.
Concentration of Credit Risk Financial Instruments
Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and trade accounts receivable. The Companies place their temporary cash investments in reputable financial institutions.
2.
LEGAL SETTLEMENT
The Company received $33,748 from previous lawsuits, which includes a settlement in the amount of $24,883, as well as the reimbursement of legal fees for a second lawsuit in the amount of $8,865.
3.
SUBSEQUENT EVENTS
Management has evaluated subsequent events through the date which the financial statements were available for issue. There were no subsequent events related to these financial statements.
F - 7
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Vault America, Inc. (hereinafter referred to as the Company) was organized on April 25, 2001, under the laws of the State of Nevada. The Company operates as a holding company for its operating subsidiaries and future acquisitions.
Critical Accounting Policies
Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. In consultation with our Board of Directors, we have identified several accounting principles that we believe are key to an understanding of our financial statements. These important accounting policies require management's most difficult, subjective judgments.
Principles of Consolidation
For the three and six months ended April 30, 2011 and 2010, the consolidated financial statements include the accounts of Vault America, Inc. and its wholly-owned subsidiary, Security Bancorp, Inc.
All material inter-company accounts and transactions have been eliminated.
Stock Issued for Non-Cash Transactions
It is the Companys policy to value stock issued for non-cash transactions, such as services, at the fair market value of the goods or services received or the consideration granted, whichever is more readily determinable, at the date the transaction is negotiated.
Preferred A stock that is issued for non-cash transactions, such as services, at the fair market value of the goods or services received or the consideration granted, whichever is more readily determinable, at the date the transaction is negotiated and by applying the conversion feature of one share of preferred A stock into 100 shares of common stock.
No new stock was issued for non-cash transactions for the six months ended April 30, 2011 and 2010.
Property and Equipment
Property and equipment are stated at cost. Major renewals and improvements are charged to the asset accounts while replacements, maintenance, and repairs, which do not improve or extend the lives of the respective assets, are expensed. At the time property and equipment are retired or otherwise disposed of, the asset and related accumulated depreciation accounts are relieved of the applicable amounts. Gains or losses from retirements or sales are credited or charged to income.
The Company depreciates property and equipment on the straight-line method as follows:
Furniture and fixtures | 10 years | |||
Computer equipment | 5 years | |||
Income Taxes |
Provisions for income taxes are based on taxes payable or refundable for the current year and deferred taxes on temporary differences between the amount of taxable income and pretax financial income and between the tax bases of assets and liabilities and their reported amounts in the financial statements. Deferred tax assets and liabilities are included in the financial statements at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled as prescribed in ASC 740,
2
Accounting for Income Taxes. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes.
Foreign Currency Translation
The financial statements of our Canadian subsidiary are measured using the Canadian dollar as the functional currency. Assets, liabilities and equity accounts of the company are translated at exchange rates as of the balance sheet date. Revenues and expenses are translated at the average rate in effect during the year. The resulting cumulative translation adjustment has been recorded as a separate component of stockholders' equity. The financial statements are presented in United States of America dollars.
SELECTED FINANCIAL INFORMATION
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| Three Months Ended | Six Months Ended | ||
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| 4/30/2011 | 4/30/2010 | 4/30/2011 | 4/30/2010 |
Statement of Operations Data: |
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| Total revenue | $ - | $ - | $ - | $ - |
| (Loss) from operations | ( 29,519) | ( 32,596) | ( 76,713) | ( 72,613) |
| Net (loss) | $ ( 26,429) | $ ( 30,731) | $ ( 37,095) | $ ( 70,293) |
| Net (loss) per share from operations Basic and Diluted | $ ( 0.02) | $ ( 0.03) | $ ( 0.03) | $ ( 0.06) |
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Balance Sheet Data: |
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| Total assets |
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| $ 773,303 | $ 813,450 |
| Total liabilities |
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| $ 12,348 | $ 11,861 |
| Stockholders' equity |
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| $ 760,955 | $ 801,589 |
Revenues. There were no revenues from operations for the six months ended April 30, 2011 or 2010.
Cost of Sales and Gross Profit. There were no costs of sales for the six months ended April 30, 2011 or 2010.
Selling, General and Administration Expenses. We had $76,713 of selling, general and administrative expenses for the six months ended April 30, 2011, which were mainly accounting, legal, and management fees. We had $72,613 of selling, general and administrative expenses for the six months ended April 30, 2010, which were mainly accounting and legal fees.
(Loss) from Operations. We had a net loss from operations of $37,095 for the six months ended April 30, 2011, which was mainly due to the selling, general and administrative expenses, offset by a legal settlement received of $33,748 and interest income of $5,870. We had net loss from operations of $70,293 for the six months ended April 30, 2010, which was mainly due to the selling, general and administrative expenses, offset by interest income of $2,320.
Corporation Income Taxes. Corporation income tax for the six months ended April 30, 2011 and 2010 was $-0-. No income tax expense was due for the six months ended April 30, 2011 and 2010 due to losses and available net operating loss carryforwards.
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Foreign Currencies. The key foreign currencies in which we effect transactions are the Canadian dollar and the United States dollar. For the six months ended April 30, 2011 the average exchange rate was 0.98970 United States dollars to Canadian dollars. This is a 5% decrease from the six months ended April 30, 2010 in which the average exchange rate was 1.04163 United States dollars to Canadian dollars.
Capital and Sources of Liquidity. We currently have no material commitments for capital expenditures and have no material fixed expenses per year.
Working capital is summarized and compared as follows:
Working capital is summarized and compared as follows: | ||||||
April 30, | ||||||
2011 | 2010 | |||||
Current assets | $ 128,302 | $ 213,899 | ||||
Current liabilities | 12,348 | 11,861 | ||||
Working capital | $ 115,954 | $ 202,038 |
Our net cash used by operations was $42,520 for the six months ended April 30, 2011. We had a net loss of $37,095, which included non-cash depreciation of $195. We had cash provided by a decrease in G.S.T and P.S.T receivable of $134. We had cash used by an increase in prepaid expenses and deposits of $21 and a decrease in accounts payable and accrued expenses of $5,733.
Our net cash used by operations was $80,956 for the six months ended April 30, 2010. We had a net loss of $70,293, which included non-cash depreciation of $252. We had cash provided by a decrease in G.S.T. and P.S.T. receivable of $346. We had cash used by an increase in prepaid expenses and deposits of $511 and a decrease in accounts payable and accrued expenses of $10,750.
We had net cash used by investing activities of $49,278 and $598,061 for the six months ended April 30, 2011 and 2010, respectively, due to the purchase and increase in value of a guaranteed investment certificate.
There were no cash flows from investing activities for the six months ended April 30, 2011 and 2010.
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Item 4. Controls and Procedures. |
Evaluation of disclosure controls and procedures.
Based on our managements evaluation (with the participation of our principal executive officer and principal financial officer), as of the end of the period covered by this report, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, (the Exchange Act)) were effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.
Changes in internal control over financial reporting.
There were no changes in internal control over our financial reporting that occurred during the six-month period ending April 30, 2011 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II OTHER INFORMATION |
Item 1. Legal Proceedings |
The Company currently has a pending lawsuit against a former employee for the misappropriation or destruction of information that was proprietary to the Company and its business, as well as the breach of his employment contract. The Company is seeking damages in the amount of $1,250,000.
The Company has successfully defeated a counterclaim which had been advanced by the former employee and Vault America no longer has any liability with respect to such action, however, the action is still pending against the Companys subsidiary. The Company is vigorously working on defeating this counterclaim.
Management, based on consultation with its legal counsel, believes that there will not be any liability to the Company from this counterclaim.
Item 1a. Risk factors |
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and this Item is not applicable to the Company or we are not required to provide the information required under this item.
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | |
None | ||
Item 3. | Defaults Upon Senior Securities. | |
None. |
Item 4. Submission of Matters to a Vote of Security Holders. |
No matters were submitted to a vote of security holders during the quarter ended April 30, 2011.
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Item 5. Other Information |
No other information required to be disclosed on Form 8-K filed was filed during the quarter.
Item 6. Exhibits |
(A) Exhibits. |
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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.
Dated: June 9, 2011
VAULT AMERICA, INC., a Nevada corporation
By: _/s/ Harold F. Schultz________________________
Harold F. Schultz
Chairman of the Board, President, Chief Financial
Officer and Chief Executive Officer
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