UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 Or 15(D) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 6, 2011
AMWEST IMAGING INC.
815 John Street, Suite 210K
Evansville, IN 47713
323.556.0710
NEVADA 333-147959 56-2646829
(State or other Jurisdiction of (Commission (IRS Employer
Incorporation or organization) File Number) I.D. No.)
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On September 6, 2011, registrant completed the transactions contemplated by a
Share Exchange Agreement of September 6, 2011, by and amount registrant Amwest
Imaging Incorporated, a Nevada corporation, and the shareholders of Instant
Website Technology Inc. ("IWTI") Accordingly, registrant acquired all of the
issued and outstanding shares of Instant Website Technology Inc., in exchange
for the issuance in the aggregate of 6,060,000 shares of common stock of
registrant. As a result of the Share Exchange Agreement, Instant Website
Technology Inc., Inc. became a wholly-owned subsidiary of registrant.
Instant Website Technology Inc.'s primary business is providing relationship
building tools and processes that help any business cultivate profitable
relationships with customers, all through web-based solutions.
These web based solutions were created by the Company specifically for
businesses in need of a website and related online marketing tools. The primary
component of this web based solution, an on-demand fold out turn-key website for
immediate use.
The websites designed are highly advanced, niche creations that exceed the needs
of small businesses in the target market. All of the websites developed are
custom made from the design to the coding used.
The Company derives its revenue by charging a basic monthly fee of $49.99 for
anyone wanting to build, develop and maintain a website. Following the website
creation, design, and listing online, the client can utilize additional online
tools to develop a marketing plan for its customer base implementing SMS
technology ("texting") and email marketing which is a must-have in today's
social networking environment.
It is the Company's goal to provide a high end turnkey solution to any
businesses web presence that both increases the quality of the website as well
as vastly reduce the cost by eliminating the need for a dedicated web designer.
The client can properly train their staff to maintain and grow the website as
needed. Ultimately what IWTI is doing is providing a high quality solution that
will eliminate unknown costs to the small business and empower them to maintain
an online web presence.
ITEM 2.01 COMPLETION OF ACQUISITION OF ASSETS
On September 6, 2011, Amwest Imaging Incorporated acquired all of the issued and
outstanding shares of Instant Website Technology Inc., Inc., thereby making
Instant Website Technology Inc. a wholly-owned subsidiary of Amwest Imaging Inc.
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ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Readers are urged to carefully review and consider the various disclosures made
by us in this report and our other filings with the SEC. These reports attempt
to advise interested parties of the risks and factors that may affect our
business, financial condition and results of operations and prospects.
USE OF TERM
Except as otherwise indicated by the context, references in this report to:
"we," "us," "our," or "the Company" are to the business of Amwest Imaging
Incorporated, a Nevada corporation.
* "SEC" are to the Securities and Exchange Commission;
* "Securities Act" are to the Securities Act of 1933, as amended;
* "Exchange Act" are to the Securities Exchange Act of 1934, as amended;
* "U.S. dollars," "dollars" and "$" are to the legal currency of the
United States.
OVERVIEW
Instant Website Technology, Inc. ("ITWI" or the "Company") was incorporated in
the State of Nevada on January 14, 2010 and commenced business on July 26, 2010.
ITWI's primary business is providing relationship building tools and processes
that help any business cultivate profitable relationships with customers, all
through web based solutions. ITWI provides internet marketing through turnkey
solutions, primarily through its website: MyRestaurantWeb.com.
MyRestaurantWeb.com strives to provide powerful web presence technology to
businesses that rely on customer communication and interactivity with their web
properties.
FINANCIAL PERFORMANCE HIGHLIGHTS
The following summarizes certain key financial information for the inception
period ended June 30, 2011:
* REVENUES: Our revenues were $489,140 for the inception period ended June
30, 2011.
Our primary source of revenue was derived from our offering of website
marketing, on a monthly subscription basis. The Company derives its revenue
by charging a basic monthly fee of $49.99 for anyone wanting to build,
develop and maintain a website. Following the website creation, design, and
listing online, the client can utilize additional online tools to develop a
marketing plan for its customer base implementing SMS technology
("texting") and email marketing which is a must-have in today's social
networking environment. We charge our customers on a monthly service
program. Our program is designed to help our customers marketing efforts
through website technology developed. We do not pre-bill our customers on
annual or other basis, instead we bill on monthly basis, through credit
card or direct payments, for the purpose of limiting our liabilities. We
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have considered annual payment programs to help cash flows; however that
policy has not been instituted. We derived $35,940 from these recurring
customers.
During the year we sold our program platform to two unrelated industries,
in the aggregate of $453,200. These sales were to unrelated parties in
unrelated industries. These sales had no modification requirement or post
service contract requirements. These amounts were collected, as the sale
was final. We do not anticipate that this will be a recurring source of
revenue, but may consider similar offers as they are presented.
* OPERATING EXPENSES: We have no information for the purpose of comparison.
Our general and administrative expenses were incurred for our initial
infrastructure and organization, consisting primarily of compensation and
benefits to our general management, finance and administrative staff,
professional advisor fees and other expenses incurred in connection with
general operations. The general and administrative expenses were $122,339
for the inception period ended June 30, 2011. We incurred costs for our
product development in the amount of $288,984. These costs were incurred in
the betterment of our turn-key process, after the initial software
development and after the marketing our product, therefore expensing the
costs incurred. We do anticipate that there will be ongoing development, as
we add additional offerings and as technology advances. Professional
expenses, in the amount of $70,771 were related to management consultant
and legal, related to our sales contracts and public efforts, including
costs involved with the reverse merger.
* NET LOSS: Net loss was $ 165,890 for the inception period ended June 30,
2011.
LIQUIDITY AND CAPITAL RESOURCES
As reflected in the accompanying financial statements, the Company has incurred
a loss, resulting in an accumulated deficit of $165,890 for the initial period
ended June 30, 2011. The Company has had a net cash used in operating activities
of $18,183. The Company has working capital of $9,839. The Company believes that
the current increasing revenues, the potential for additional sales of platform,
the reduction in future development costs, and temporary financial support from
the majority shareholder are positive factors that remove substantial doubt
about the ability of the Company to continue as a going concern. Management
emphasizes that although it is currently implementing its business plan, the
Company is seeking additional sources of equity or debt financing and there is
no assurance these activities will be successful.
As of June 30, 2011, we had $19,885 cash and cash equivalents. We believe that
the cash available will be sufficient for only one month and is relying on
recurring revenues and financial support to maintain operations. The following
table provides detailed information about our net cash flow for all financial
statement periods presented in this report. To date, we have financed our
operations primarily through cash flows from operations and short-term
borrowings from related party.
4
CASH FLOW
For Inception
Period Ended
June 30,
2011
--------
Net cash used in operating activities $(18,183)
Net cash used in investing activities (1,932)
Net cash provided by financing activities (40,000)
Net increase (decrease) in cash and cash equivalents 19,885
Cash and cash equivalents at beginning of the year --
Cash and cash equivalents at end of the year 19,885
OPERATING ACTIVITIES
Net cash provided by operating activities was $19,885 for the inception period
ended June 30, 2011. The net cash provided by operating activities is primarily
generated from the net income earned during the period. During the year we
benefited from advances from our majority shareholder in the amount of $10,046.
As this amount occurred in the payment of expenses on behalf of the Company, the
amount is considered as an operating activity for cash flow purposes. This
amount is non-interest bearing and has no repayment terms.
FINANCING ACTIVITIES
Net cash provided by financing activities was $40,000 for the inception period
ended June 30, 2011. The net cash provided by financing activities is primarily
due to cash received from the sale of our common stock to unrelated parties.
OBLIGATIONS UNDER MATERIAL CONTRACTS
We have no obligations to pay cash or deliver cash to any other party.
INFLATION
Inflation and changing prices have not had a material effect on our business and
we do not expect that inflation or changing prices will materially affect our
business in the foreseeable future. However, our management will closely monitor
price changes in our industry and continually maintain effective cost controls
in operations.
OFF BALANCE SHEET ARRANGEMENTS
We do not have any off balance sheet arrangements that have or are reasonably
likely to have a current or future effect on our financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity or
capital expenditures or capital resources that is material to an investor in our
securities.
CRITICAL ACCOUNTING POLICIES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires our management to make
assumptions, estimates and judgments that affect the amounts reported, including
5
the notes thereto, and related disclosures of commitments and contingencies, if
any. We have identified certain accounting policies that are significant to the
preparation of our financial statements. These accounting policies are important
for an understanding of our financial condition and results of operation.
Critical accounting policies are those that are most important to the portrayal
of our financial conditions and results of operations and require management's
difficult, subjective, or complex judgment, often as a result of the need to
make estimates about the effect of matters that are inherently uncertain and may
change in subsequent periods. Certain accounting estimates are particularly
sensitive because of their significance to financial statements and because of
the possibility that future events affecting the estimate may differ
significantly from management's current judgments. We believe the following
critical accounting policies involve the most significant estimates and
judgments used in the preparation of our financial statements:
* ACCOUNTS RECEIVABLE, CREDIT
The Company currently supplies their web solutions on a monthly basis,
billing on the month of services and collection on customer accounts
through credit cards or direct payments. The Company does not issue credit
on services provided, therefore there are no accounts receivable. No
allowance for doubtful accounts is considered necessary to be established
for amounts that may not be recoverable, since there has been no credit
issued.
* SOFTWARE DEVELOPMENT COSTS AND CAPITAL TECHNOLOGY
The Company accounts for software development costs in accordance with
several accounting pronouncements, including FASB ASC 730, Research and
Development, FASB ASC 350-40, Internal-Use Software, FASB 985-20, Costs of
Computer Software to be Sold, Leased, or Marketed and FASB ASC 350-50,
Website Development Costs. The Company has capitalized the cost of the
technology license purchased from an unrelated third party. At the time of
purchase the technology was available to be marketed. As such additional
costs to customize, modify and betterment to the existing product was
charged to expense as it was incurred
Capitalized software costs are stated at cost. The estimated useful life of
costs capitalized is evaluated for each specific project and is currently
being amortized over five years. Amortization is computed on a straight
line basis. The carrying amount of all long-lived assets is evaluated
periodically to determine if adjustment to the amortization period or the
unamortized balance is warranted. Based upon its most recent analysis, the
Company believes that no impairment of the proprietary software existed at
June 30, 2011.
* REVENUE RECOGNITION
The Company recognizes revenue on arrangements in accordance with FASB ASC
No. 605, Revenue Recognition. In all cases, revenue is recognized only when
the price is fixed or determinable, persuasive evidence of an arrangement
exists, the service is performed and collectability is reasonably assured.
Consideration for future services are made by customers in advance of those
services being provided. All accounts are currently on a month to month
service, therefore revenue is recognized ratably over the period that the
services are subscribed, the current month. The Company does not offer
annual or other term agreements; therefore there is no unearned portion or
6
deferral of revenue. Services are billed in advance of the period those
services are provided.
The Company has not issued guarantees or other warrantees on the
advertising subscription success or results. The Company has not
experienced any refund requests or committed to any adjustments for
terminated subscriptions. The Company does not believe that there is any
required liability.
The Company has sold their bundled platform to two customers during the
period ended June 30, 2011. These sales were without recourse. There were
no provisions for licensing terms, modifications, training or other post
service contract arrangements. Since sale was final, revenue was recognized
on delivery.
ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES
Effective as of September 6, 2011, pursuant to the terms of the Share Exchange
Agreement described in Items 1.01, 2.01 and 5.01, registrant issued 6,060,000
shares of its common stock to the shareholders of Instant Website Technology
Inc., Inc., in exchange for all of the issued and outstanding capital stock of
Instant Website Technology Inc., Inc.
The shares of common stock issued under the Share Exchange Agreement were not
registered under the Securities Act of 1933 (the "Securities Act"), and bear
restrictive legends that reflect this status. The securities were issued in a
private placement in reliance on the exemption from registration provided by
Section 4(2) of the Securities Act. Registrant did not engage in any general
solicitation or advertisement for the issuance of these securities.
In connection with this issuance, each person represented that the securities
such person is acquiring cannot be resold except pursuant to a effective
registration under the Securities Act or in reliance on an exemption from the
registration requirements of the Securities Act, and that the certificates
representing such securities bear a restrictive legend to that effect and/or
such person intends to acquire the securities for investment only and not with a
view to the resale thereof
ITEM 5.01 CHANGE IN CONTROL OF REGISTRANT
Other than the transactions and agreements disclosed in this Form 8-K (or
previously reported in the Form 8-K of August 30, 2011 ) , registrant knows of
no arrangements which may result in a change in control of registrant.
No officer, director, promoter, or affiliate of registrant has, or proposes to
have, any direct or indirect material interest in any asset proposed to be
acquired by registrant through security holdings, contracts, options, or
otherwise.
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ITEM 5.02 DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; APPOINTMENT OF CERTAIN
OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS
On August 29, 2011, the Board of Directors (the "Board") of Amwest Imaging
Incorporated, a Nevada Corporation (the "Company") received the resignation of
Mr. Patrick Moore acting as the Company's President, Secretary, Treasurer, and
as a member of the Board of Directors.
Effective August 29, 2011, the Board of Directors (the "Board") of the Company,
elected Mr. Jason Gerteisen (age 28) as the sole Director, President, Secretary
and Treasurer of the company.
On August 29, 2011, in connection with the closing of the acquisition of Instant
Website Technologies Inc., the outgoing board of directors of registrant elected
the following persons to fill the vacancies created by the resignation of the
officers:
JASON GERTEISEN 28 President, Secretary, Director
The members of registrant's Board of Directors serve until the next annual
meeting of the stockholders, or until their successors have been elected. The
officers serve at the pleasure of the Board of Directors.
Information about our officers and directors are as follow
Mr. Gerteisen, of Evansville, Indiana, is a successful leader in sales and
management, with a focus on technology and web-based businesses.
As the Campaign Manager for Jim Tomes for Senate in Indiana, he designed and ran
a campaign that resulted in a huge win for the republican candidate of a seat
that had been held by democrats for over 15 years. While studying Global
Business Management at the University of Phoenix, he managed many quality and
successful projects as a Project Manager of companies in the construction
industry.
Mr. Gerteisen continued to develop his skills in web design and internet
marketing. Utilizing these skills, he helped to create and market several
successful websites.
As the former CEO of his own tech company, Mr. Gerteisen has guided the way for
others in his industry utilizing social marketing tools, web design, and
internet marketing to help create a global network of clients and business
builders.
8
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
INSTANT WEBSITE TECHNOLOGY, INC.
Financial Statements
For the Years Ended June 30, 2011 and 2010
Page
----
Financial Statements:
Report of Independent Registered Public Accounting Firm 10
Balance Sheet 11
Statement of Operations 12
Statement of Changes in Stockholders' Equity 13
Statement of Cash Flows 14
Notes to Audited Financial Statements 15
9
[LOGO] PETER MESSINEO
CERTIFIED PUBLIC ACCOUNTANT
1982 OTTER WAY PALM HARBOR FL 34685
PETER@PM-CPA.COM
T 727.421.6268 F 727.674.0511
================================================================================
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders:
Instant Website Technology, Inc.
Bradenton, Florida
I have audited the balance sheets of Instant Website Technology, Inc. as of June
30, 2011 and 2010 and the related statement of operations, changes in
stockholder's equity, and cash flows for the year ended June 30, 2011 and the
period January 14, 2010 (date of inception) through June 30, 2010. These
financial statements are the responsibility of the Company's management. My
responsibility was to express an opinion on these financial statements based on
my audits.
I conducted my audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that I plan
and perform the audits to obtain reasonable assurance about whether the
financial statements were free of material misstatement. The Company was not
required to have, nor was I engaged to perform, an audit of its internal control
over financial reporting. My audit included consideration of internal control
over financial reporting as a basis for designing audit procedures that were
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, I express no such opinion. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. I believe that my audit provide a reasonable basis for
my opinion.
In my opinion, the financial statements, referred to above, present fairly, in
all material respects, the financial position of Instant Website Technology,
Inc. as of June 30, 2011 and 2010, and the results of its operations and its
cash flows for the year ended June 30, 2011 and for the period January 14, 2010
(date of inception) through June 30, 2011, in conformity with accounting
principles generally accepted in the United States of America.
/s/ Peter Messineo, CPA
---------------------------------
Peter Messineo, CPA
Palm Harbor, Florida
November 16, 2011
10
Instant Website Technology, Inc.
Balance Sheets
June 30, June 30,
2011 2010
---------- ----------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 19,885 $ --
---------- ----------
TOTAL CURRENT ASSETS 19,885 --
---------- ----------
Property and equipment, net of accumulated
depreciation of $161 and $0, respectively 1,771 --
Intangible assets, net of accumulated
Amortization of $137,500 and $0, respectively 612,500 --
---------- ----------
TOTAL ASSETS $ 634,156 $ --
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ -- $ --
Loans from shareholder 10,046 --
---------- ----------
TOTAL CURRENT LIABILITIES 10,046 --
---------- ----------
TOTAL LIABILITIES 10,046 --
---------- ----------
STOCKHOLDERS' EQUITY
Common stock: 10,000,000 authorized; $0.001 par
value 21,060,043 and 0 shares issued and
outstanding, respectively 21,060 --
Additional paid in capital 768,940 --
Accumulated deficit (165,890) --
---------- ----------
TOTAL STOCKHOLDERS' EQUITY 624,110 --
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 634,156 $ --
========== ==========
See auditor's report and notes to the audited financial statements
11
Instant Website Technology, Inc.
Statements of Operation
For the Period
January 14, 2010
For the Year (date of inception)
Ended through
June 30, June 30,
2011 2010
------------ ------------
REVENUES $ 489,140 $ --
------------ ------------
OPERATING EXPENSES
Marketing and sales
Compensation 35,275 --
Professional 70,771 --
General and administrative 122,339 --
Research and development 288,984 --
Depreciation and amortization 137,661 --
------------ ------------
TOTAL OPERATING EXPENSES 655,030 --
------------ ------------
NET LOSS $ (165,890) $ --
============ ============
Basic and diluted loss per share $ (0.01) $ --
============ ============
Weighted average number of
shares outstanding 16,481,224 --
============ ============
See auditor's report and notes to the audited financial statements
12
Instant Website Technology, Inc.
Statement of Stockholders' Equity
Common Stock Additional
----------------------- Paid in Accumulated
Shares Amount Capital Deficit Total
------ ------ ------- ------- -----
Balance as of January 14, 2010 -- $ -- $ -- $ -- $ --
----------- ----------- ----------- ----------- -----------
Common shares issued:
July 26, 2011, to founders
for cash 18,000,000 18,000 7,000 25,000
August 1, 2010in exchange
for technology, at $.25
per share 3,000,000 3,000 747,000 750,000
October 8, 2011, for cash,
at $.25 per share 40,000 40 9,960 10,000
October 8, 2011, for cash,
at $.25 per share 20,043 20 4,980 5,000
Net loss (165,890) (165,890)
----------- ----------- ----------- ----------- -----------
Balance, June 30, 2011 21,060,043 $ 21,060 $ 768,940 $ (165,890) $ 624,110
=========== =========== =========== =========== ===========
See auditor's report and notes to the audited financial statements
13
Instant Website Technology, Inc.
Statements of Cash Flows
For the Period
January 14, 2010
For the Year (date of inception)
Ended through
June 30, June 30,
2011 2010
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) $ (165,890) $ --
Adjustment to reconcile Net Income to net
cash provided by operations:
Depreciation and amortization 137,661 --
Changes in assets and liabilities:
Accounts payable and accrued expenses -- --
Advances by shareholder 10,046 --
---------- ----------
NET CASH USED IN OPERATING ACTIVITIES (18,183) --
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment (1,932) --
---------- ----------
NET CASH USED IN INVESTING ACTIVITIES (1,932) --
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock for cash 40,000 --
---------- ----------
NET CASH PROVIDED BY FINANCING ACTIVATES 40,000 --
---------- ----------
Net increase (decrease) in cash and cash equivalents 19,885 --
Cash and cash equivalents, beginning of period -- --
---------- ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 19,885 $ --
========== ==========
Supplemental Cash Flow Information:
Cash paid for interest $ -- $ --
========== ==========
Cash paid for taxes $ -- $ --
========== ==========
Non-cash transactions:
Issuance of shares for intangible assets $ 750,000 $ --
========== ==========
See auditor's report and notes to the audited financial statements
14
INSTANT WEBSITE TECHNOLOGY, INC.
Notes to the Financial Statements
For the Years Ended June 30, 2011
1. NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS
Instant Website Technology, Inc. ("ITWI" or the "Company") was incorporated in
the State of Nevada on January 14, 2010 and commenced business on July 26, 2010.
ITWI's primary business is providing relationship building tools and processes
that help any business cultivate profitable relationships with customers, all
through web based solutions. ITWI provides internet marketing through turnkey
solutions, primarily through its website: MyRestaurantWeb.com.
MyRestaurantWeb.com strives to provide powerful web presence technology to
businesses that rely on customer communication and interactivity with their web
properties.
BASIS OF PRESENTATION
The Financial Statements and related disclosures have been prepared pursuant to
the rules and regulations of the Securities and Exchange Commission ("SEC"). The
Financial Statements have been prepared using the accrual basis of accounting in
accordance with Generally Accepted Accounting Principles ("GAAP") of the United
States. In the opinion of management, these financial statements include all
adjustments necessary in order to make them not misleading.
USE OF ESTIMATES
The Financial Statements have been prepared in conformity with U.S. GAAP, which
requires using management's best estimates and judgments where appropriate.
These estimates and judgments affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements. The estimates and judgments will also affect the
reported amounts for certain revenues and expenses during the reporting period.
Actual results could differ materially from these good faith estimates and
judgments.
FINANCIAL INSTRUMENTS
The Company's balance sheet includes certain financial instruments. The carrying
amounts of current assets and current liabilities approximate their fair value
because of the relatively short period of time between the origination of these
instruments and their expected realization.
Financial Accounting Standards Board (FASB) Accounting Standards Codification
(ASC) 820 "Fair Value Measurements and Disclosures" (ASC 820) defines fair value
as the exchange price that would be received for an asset or paid to transfer a
liability (an exit price) in the principal or most advantageous market for the
asset or liability in an orderly transaction between market participants on the
measurement date.. ASC 820 also establishes a fair value hierarchy that
distinguishes between (1) market participant assumptions developed based on
market data obtained from independent sources (observable inputs) and (2) an
entity's own assumptions about market participant assumptions developed based on
the best information available in the circumstances (unobservable inputs). The
fair value hierarchy consists of three broad levels, which gives the highest
priority to unadjusted quoted prices in active markets for identical assets or
liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).
The three levels of the fair value hierarchy are described below:
15
* Level 1 - Unadjusted quoted prices in active markets that are accessible at
the measurement date for identical, unrestricted assets or liabilities
* Level 2 - Inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly or indirectly,
including quoted prices for similar assets or liabilities in active
markets; quoted prices for identical or similar assets or liabilities in
markets that are not active; inputs other than quoted prices that are
observable for the asset or liability (e.g., interest rates); and inputs
that are derived principally from or corroborated by observable market data
by correlation or other means.
* Level 3 - Inputs that are both significant to the fair value measurement
and unobservable.
Fair value estimates discussed herein are based upon certain market assumptions
and pertinent information available to management as of June 30, 2011. The
respective carrying value of certain on-balance-sheet financial instruments
approximated their fair values due to the short-term nature of these
instruments.
The Company applied ASC 820 for all non-financial assets and liabilities
measured at fair value on a non-recurring basis. The adoption of ASC 820 for
non-financial assets and liabilities did not have a significant impact on the
Company's financial statements.
As of June 30, 2011 the fair values of the Company's financial instruments
approximate their historical carrying amount.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents includes all cash deposits and highly liquid financial
instruments with a maturity of three months or less.
ACCOUNTS RECEIVABLE, CREDIT
The Company currently supplies their web solutions on a monthly basis, billing
on the month of services and collection on customer accounts through credit
cards or direct payments. The Company does not issue credit on services
provided, therefore there are no accounts receivable. No allowance for doubtful
accounts is considered necessary to be established for amounts that may not be
recoverable, since there has been no credit issued.
SOFTWARE DEVELOPMENT COSTS AND CAPITAL TECHNOLOGY
The Company accounts for software development costs in accordance with several
accounting pronouncements, including FASB ASC 730, Research and Development,
FASB ASC 350-40, Internal-Use Software, FASB 985-20, Costs of Computer Software
to be Sold, Leased, or Marketed and FASB ASC 350-50, Website Development Costs.
The Company has capitalized the cost of the technology license purchased from an
unrelated third party. At the time of purchase the technology was available to
be marketed. As such additional costs to customize, modify and betterment to the
existing product was charged to expense as it was incurred
Capitalized software costs are stated at cost. The estimated useful life of
costs capitalized is evaluated for each specific project and is currently being
amortized over five years. Amortization is computed on a straight line basis.
The carrying amount of all long-lived assets is evaluated periodically to
determine if adjustment to the amortization period or the unamortized balance is
16
warranted. Based upon its most recent analysis, the Company believes that no
impairment of the proprietary software existed at June 30, 2011.
LONG-LIVED ASSETS AND INTANGIBLE PROPERTY:
Long-lived assets such as property, equipment and identifiable intangibles are
reviewed for impairment whenever facts and circumstances indicate that the
carrying value may not be recoverable. When required impairment losses on assets
to be held and used are recognized based on the fair value of the asset. The
fair value is determined based on estimates of future cash flows, market value
of similar assets, if available, or independent appraisals, if required. If the
carrying amount of the long-lived asset is not recoverable from its undiscounted
cash flows, an impairment loss is recognized for the difference between the
carrying amount and fair value of the asset. When fair values are not available,
the Company estimates fair value using the expected future cash flows discounted
at a rate commensurate with the risk associated with the recovery of the assets.
The Company did not recognize any impairment losses for any periods presented.
SHARE-BASED PAYMENTS
Share-based payments to employees, including grants of employee stock options
are recognized as compensation expense in the financial statements based on
their fair values, in accordance with FASB ASC Topic 718. That expense is
recognized over the period during which an employee is required to provide
services in exchange for the award, known as the requisite service period
(usually the vesting period). The Company had no common stock options or common
stock equivalents granted or outstanding for all periods presented. The company
may issue shares as compensation in the future periods for employee services.
The Company may issue restricted stock to consultants for various services. Cost
for these transactions will be measured at the fair value of the consideration
received or the fair value of the equity instruments issued, whichever is more
reliably measurable. The value of the common stock is to be measured at the
earlier of (i) the date at which a firm commitment for performance by the
counterparty to earn the equity instruments is reached or (ii) the date at which
the counterparty's performance is complete. The company has issue shares as
compensation in the future period for services associated with the registration
of the common shares.
REVENUE RECOGNITION
The Company recognizes revenue on arrangements in accordance with FASB ASC No.
605, Revenue Recognition. In all cases, revenue is recognized only when the
price is fixed or determinable, persuasive evidence of an arrangement exists,
the service is performed and collectability is reasonably assured.
Consideration for future services are made by customers in advance of those
services being provided. All accounts are currently on a month to month service,
therefore revenue is recognized ratably over the period that the services are
subscribed, the current month. The Company does not offer annual or other term
agreements; therefore there is no unearned portion or deferral of revenue.
Services are billed in advance of the period those services are provided.
The Company has not issued guarantees or other warrantees on the advertising
subscription success or results. The Company has not experienced any refund
requests or committed to any adjustments for terminated subscriptions. The
Company does not believe that there is any required liability.
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The Company has sold their bundled platform to two customers during the period
ended June 30, 2011. These sales were without recourse. There were no provisions
for licensing terms, modifications, training or other post service contract
arrangements. Since sale was final, revenue was recognized on delivery.
ADVERTISING
The costs of advertising are expensed as incurred. Advertising expense was $0
for the year ended June 30, 2011. Advertising expenses, when incurred are to be
included in the Company's operating expenses.
RESEARCH AND DEVELOPMENT
The Company expenses research and development costs when incurred. Research and
development costs include engineering and testing of product and outputs.
Indirect costs related to research and developments are allocated based on
percentage usage to the research and development. Research and development costs
were $288,984 for the year ending June 30, 2011.
INCOME TAXES
The Company accounts for income taxes under the Financial Accounting Standards
Board ("FASB") Accounting Standards Codification ("ASC") No. 740, Income Taxes
("ASC 740"). Under ASC 740, deferred tax assets and liabilities are recognized
for the future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled. Under
ASC 740, the effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the enactment date.
EARNINGS (LOSS) PER SHARE
Basic earnings (loss) per share calculations are determined by dividing net
income (loss) by the weighted average number of shares outstanding during the
year. Diluted earnings (loss) per share calculations are determined by dividing
net income (loss) by the weighted average number of shares. The Company does not
have any potentially dilutive instruments and, thus, anti-dilution issues are
not applicable.
2. RECENT ACCOUNTING PRONOUNCEMENTS
In May 2011, the FASB issued ASU No. 2011-04, "Fair Value Measurement (Topic
820): Amendments to Achieve Common Fair Value Measurement and Disclosure
Requirements in U.S. GAAP and IFRSs", which is intended to improve comparability
of fair value measurements presented and disclosed in financial statements
prepared in accordance with U.S. generally accepted accounting principles and
International Financial Reporting Standards. This standard clarifies the
application of existing fair value measurement requirements including (1) the
application of the highest and best use valuation premise, (2) the methodology
to measure the fair value of an instrument classified in a reporting entity's
shareholders' equity, (3) disclosure requirements for quantitative information
on Level 3 fair value measurements and (4) guidance on measuring the fair value
of financial instruments managed within a portfolio. In addition, the standard
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requires additional disclosures of the sensitivity of fair value to changes in
unobservable inputs for Level 3 securities. This standard is effective for
interim and annual reporting periods ending on or after December 15, 2011. The
adoption of this guidance is not expected to have a significant impact on the
Company's financial statements.
In June 2011, the FASB issued ASU No. 2011-05, "Presentation of Comprehensive
Income", which requires that comprehensive income be presented either in a
single continuous statement of comprehensive income or in two separate but
consecutive statements. The standard also requires entities to disclose on the
face of the financial statements reclassification adjustments for items that are
reclassified from other comprehensive income to net earnings. This standard no
longer allows companies to present components of other comprehensive income only
in the statement of equity. This standard is effective for interim and annual
reporting periods beginning after December 15, 2011. The adoption of this
guidance is not expected to have a significant impact on the Company's financial
statements other than the prescribed change in presentation.
Except for rules and interpretive releases of the SEC under authority of federal
securities laws and a limited number of grandfathered standards, the FASB
Accounting Standards Codification(TM) ("ASC") is the sole source of
authoritative GAAP literature recognized by the FASB and applicable to the
Company. Management has reviewed the aforementioned rules and releases and
believes any effect will not have a material impact on the Company's present or
future financial statements.
3. CAPITALIZED ASSETS
PROPERTY AND EQUIPMENT consists of the following, as of June 30:
2011 2010
-------- --------
Computer equipment $ 1,932 $ --
Less accumulated depreciation 161 --
-------- --------
$ 1,771 $ --
======== ========
Depreciation expense was $161 and $0 for the year ended June 30, 2011 and for
the period January 14, 2010 (date of inception) through June 30, 2010,
respectively.
INTANGIBLE ASSETS
The Company has capitalized the cost of acquiring their technology for internal
and external use. The purchase price was valued at the agreed upon price with
the unrelated party. Acquired software costs consist of the following, as of
June 30:
June 30, December 31,
2011 2009
-------- --------
Software: Asset Central $750,000 $ --
Less accumulated amortization 137,500 --
-------- --------
$612,500 $ --
======== ========
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Future amortization:
2012 $150,000
2013 150,000
2014 150,000
2015 150,000
2016 and thereafter 12,500
--------
$612,500
========
Amortization expense was $137,500 and $0 for the year ended June 30, 2011 and
for the period January 14, 2010 (date of inception) through June 30, 2010,
respectively.
4. INCOME TAXES
The Company utilizes the liability method of accounting for income taxes. Under
the liability method deferred tax assets and liabilities are determined based on
the differences between financial reporting basis and the tax basis of the
assets and liabilities and are measured using enacted tax rates and laws that
will be in effect, when the differences are expected to reverse. An allowance
against deferred tax assets is recognized, when it is more likely than not, that
such tax benefits will not be realized.
The Company has not recognized an income tax benefit for its operating losses
generated from operations, based on uncertainties concerning its ability to
generate taxable income in future periods. The tax benefit for the periods
presented is offset by a valuation allowance established against deferred tax
assets arising from operating losses and other temporary differences, the
realization of which could not be considered more likely than not. In future
periods, tax benefits and related deferred tax assets will be recognized when
management considers realization of such amounts to be more likely than not.
Deferred tax assets resulted from the net operating losses generated by the
Company. The Company provides for income taxes, for the periods ended June 30,
is as follows:
2011 2010
-------- --------
CURRENT PROVISION
Income tax provision (benefit) at
statutory rate $(56,400) $ --
State income tax expense (benefit),
net of federal benefit (6,100) --
-------- --------
subtotal (62,500) --
Valuation allowance 62,500 --
-------- --------
$ -- $ --
======== ========
Under the Internal Revenue Code of 1986, as amended, these losses can be carried
forward twenty years. As of June 30, 2011 the Company has no net operating loss
carry forwards, as the Company commenced operations during the year ended June
30, 2011.
The Company is currently open to audit under the statute of limitations by the
Internal Revenue Service for the short year ending June 30, 2010 (year of
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inception). The Company recognizes interest and penalties related to income
taxes in income tax expense. The Company had incurred no penalties and interest
for the years ended June 30, 2011.
5. RELATED PARTY TRANSACTIONS
LOANS FROM SHAREHOLDER
In support of the Company's efforts and cash requirements, it is relying on
advances from related parties until such time that the Company can support its
operations or attains adequate financing through sales of its equity or
traditional debt financing. Amounts represent advances or amounts paid in
satisfaction of certain liabilities as they come due. The advances are
considered temporary in nature and have not been formalized by a promissory
note. Notes are considered payable on demand and is non-interest bearing. The
Company owed $10,046 and $0 to its majority shareholder as of June 30, 2011 and
2010, respectively. No interest has been accrued or imputed on these debts, as
management believes that interest expense would be immaterial.
The majority shareholder has pledged his support to fund continuing operations;
however there is no written commitment to this effect. The Company is dependent
upon the continued support of this member.
The Company does not have employment contracts with its key employees, including
the majority shareholder who is the Chief Executive and Chief Technical Officer.
The amounts and terms of the above transactions may not necessarily be
indicative of the amounts and terms that would have been incurred had comparable
transactions been entered into with independent third parties.
6. EQUITY
The total number of shares of capital stock which the Company shall have
authority to issue is one hundred million (100,000,000) common shares with a par
value of $.01, of which 48,400,000 have been issued to founders. The Company
intends to issue additional shares in an effort to raise capital to fund its
operations. Common shareholders will have one vote for each share held.
No holder of shares of stock of any class is entitled as a matter of right to
subscribe for or purchase or receive any part of any new or additional issue of
shares of stock of any class, or of securities convertible into shares of stock
of any class, whether now hereafter authorized or whether issued for money, for
consideration other than money, or by way of dividend.
The Company is currently engaged in the registration of its equity, for the
purpose of raising cash through the issuance of common shares. Subsequent to the
year-end an additional 2 million shares were issued to investors for cash. The
Company through its proposed equity raise anticipates issuing an additional 2
million shares.
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There are no preferred shares authorized or outstanding. There have been no
warrants or options issued or outstanding.
7. COMMITMENTS
The Company utilizes space provided by the majority shareholder without charge.
Rent was $0 for all periods presented.
8. CONTINGENCIES
Some of the officers and directors of the Company are involved in other business
activities and may, in the future, become involved in other business
opportunities that become available. They may face a conflict in selecting
between the Company and other business interests. The Company has not formulated
a policy for the resolution of such conflicts.
From time to time the Company may become a party to litigation matters involving
claims against the Company. Management believes that there are no current
matters that would have a material effect on the Company's financial position or
results of operations.
9. SUBSEQUENT EVENTS
Management has evaluated subsequent events and is not aware of any significant
events that occurred subsequent to the balance sheet date but prior to the
issuance of this report on November 16, 2011 that should be disclosed.
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SIGNATURE
Pursuant to the requirement of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Amwest Imaging Incorporated
Dated: November 30, 2011 By: /s/ Jason Gerteisen
-----------------------------------
Jason Gerteisen, President
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