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EXCEL - IDEA: XBRL DOCUMENT - ORANGEHOOK, INC. | Financial_Report.xls |
EX-31.1 - EXHIBIT311 - ORANGEHOOK, INC. | exhibit311.htm |
EX-32.1 - EXHIBIT321 - ORANGEHOOK, INC. | exhibit321.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
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þ
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ANNUAL REPORT PURSUANT TO SECTION 13 OR SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended September 30, 2011
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OR
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from _________ to __________
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Commission file number: 0-54249
Harmony Metals, Inc.
(Exact name of registrant as specified in its charter)
Florida
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27-1230588
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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6538 Collins Avenue, Suite 476
Miami, Florida 33141
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (501) 639-1909
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, par value $0.001 per share
(Title of Class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No þ
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No þ
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. Yes þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o
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. þ
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 definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer o Accelerated
filer o
Non-accelerated filer o 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 Exchange Act). Yes o No þ
The aggregate market value of the registrant’s Common Stock held by non-affiliates was $848,250, based on the price of $0.30 per share of Common Stock on November 30, 2011. Shares of Common Stock known by the registrant to be beneficially owned as of November 30, 2011 by the registrant’s directors and the registrant’s executive officers subject to Section 16 of the Securities Exchange Act of 1934 are not included in the computation. The registrant, however, has made no determination that such persons are “affiliates” within the meaning of Rule 12b-2 under the Securities Exchange Act of 1934.
At November 30, 2011, there were 9,407,500 shares of the registrant’s Common Stock issued and outstanding.
Harmony Metals, Inc.
FORM 10-K
For The Fiscal Year Ended September 30, 2011
Page | ||||
PART I
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Item 1.
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4
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Item 1A.
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6
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Item 1B.
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6
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Item 2.
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6
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Item 3.
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6
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Item 4.
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6
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PART II
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Item 5.
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7
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Item 6.
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8
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Item 7.
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9
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Item 7A.
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14
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Item 8.
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15
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Item 9.
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25
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Item 9A.
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25
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Item 9B.
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26
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PART III
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Item 10.
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27
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Item 11.
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30
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Item 12.
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33
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Item 13.
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34
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Item 14.
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34
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PART IV
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Item 15.
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34
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SIGNATURES |
EX-101 INSTANCE DOCUMENT
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EX-101 SCHEMA DOCUMENT
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EX-101 CALCULATION LINKBASE DOCUMENT
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EX-101 LABELS LINKBASE DOCUMENT
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EX-101 PRESENTATION LINKBASE DOCUMENT
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EX-101 DEFINITION LINKBASE DOCUMENT
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Explanatory Notes
In this Annual Report on Form 10-K, Harmony Metals, Inc. is sometimes referred to as the “Company”, “we”, “our”, “us” or “registrant” and U.S. Securities and Exchange Commission is sometimes referred to as the “SEC”.
PART I
Item 1. Business.
Our Company
Harmony Metals, Inc., is a designer and manufacturer of upscale jewelry and lifestyle accessories for both men and women. Our business strategy is to design and manufacture jewelry and lifestyle accessories based on original designs, which are inspired by nature and have an organic look and feel. We make jewelry from recycled materials, whenever possible, and use manufacturing processes and chemicals that minimize the impact on the environment.
Our company structure is set forth in the following chart:
HARMONY METALS, INC.
a Florida corporation
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HARMONY METALS DESIGNS, INC.
a Florida corporation
(100% Owned Subsidiary)
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For the period October 19, 2009, our inception, through September 30, 2011, we had an accumulated deficit in the amount of $(64,237). Our independent auditors have raised substantial doubt as to our ability to continue as a going concern, as expressed in its opinion on our financial statements included in this report. Our ability to continue as a going concern is dependent upon our ability to generate profits from our operations and/or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations, when they come due. There can be no assurance that we will operate at a profit or such additional financing will be available,
or if available, can be obtained on satisfactory terms.
We were incorporated as Gyan Pathway Corp. in the State of Florida on October 14, 2009. On June 17, 2010, we filed Amended and Restated Articles of Incorporation with the Secretary of State of Florida and changed our corporate name to Harmony Metals, Inc. Our fiscal year end is September 30.
Sales and Marketing
We are highly dependent on one key customer, Turchin Love & Light Jewelry Collection, LLC, which accounts for substantially all of our jewelry sales. We plan to establish relationships with other retailers, distributors and customers; however, other than Turchin Love & Light Jewelry Collection, LLC, we do not have any such customers.
We sell and market our jewelry and lifestyle accessories at one-on-one sales meetings with individual customers and through our website www.harmonymetalsdesigns.com. We plan to sell and market our jewelry and lifestyle accessories through attendance at trade and industry exhibitions for jewelry.
Distribution
We intend to use independent distributors to attract new accounts with retail department stores, upscale retailers and boutiques. We will provide distributors with sales tools, such as sales brochures, samples and displays to promote our products. Distributors will solicit customer orders through attendance at major trade and industry exhibitions for jewelry and one-on-one sales meetings and will take purchase orders. We will fill purchase orders from customers introduced to us by our distributors on terms agreed to by us and the customers. The business relationship of the distributor with us will be an independent contractor relationship. We intend to enter into
sales and marketing agreements with independent distributors, each of whom is granted the exclusive right to sell and market our products in its respective territory or to a particular customer; however, we currently have no such agreements in place. We expect that using independent distributors will expand our customer base and enable us to develop our brand.
Principal Products
Our jewelry and lifestyle accessories consist of original designs made from precious metals, such as gold, platinum and palladium, and gemstones and other precious and semi-precious stones. We have jewelry designs for rings, pendants, bracelets and necklaces and lifestyle accessory designs for key chains, money clips, cuff links and business card holders to accentuate our jewelry collection. We sell our jewelry and lifestyle accessories at price points that reflect the market price of the base materials plus a price mark-up. Our mark-up is typically determined by tripling the cost of the base materials; however, management may take markdowns to increase inventory turnover and as
required to keep merchandise fresh and current.
Raw Materials
The raw materials purchased by us are from suppliers located in United States. Our principal supplier for gemstones is Royal Gems, Inc., which is located in Miami, Florida. Our principal supplier for precious metals is Brent Kruger Metals, Inc., which is located in Deerfield Beach, Florida. We are not constrained in our purchasing by any contracts or agreements with any suppliers, manufacturers or distributors of the raw materials we use in our products. We acquire diamonds, gemstones, precious metals and other raw materials based upon, among other things, availability and price on the open wholesale market. All of our raw materials are readily available from a
large number of suppliers, manufacturers and distributors in the United States and, if necessary, from abroad. We use raw materials on a just-in-time basis and keep minimal inventory on hand.
Manufacturing
Jewelry manufacturing consists of designing molds and samples, buying materials, including gemstones and metals, arranging for jewelry to be made from these materials, and manufacturing the finished product. We use Associated Jewelry, Inc., which is located in Miami, Florida, for our jewelry castings. We plan to engage contract manufacturers to outsource manufacturing of our products and anticipate that we will enter into manufacturing agreements with them. We intend to utilize manufacturers located in the United States. We currently have no agreements with any contract manufacturers.
Intellectual Property
Our trademarks are owned by us, and we may federally register our trademarks in the future; however, we currently do not have any federally registered trademarks. We intend to copyright our jewelry and lifestyle accessory designs as the need arises; however, we currently do not have any federally registered copyrights.
Competition
The jewelry industry is extremely competitive and has low barriers to entry. The jewelry industry is fragmented and largely comprised of privately held companies, most of which are believed to be family owned and operated. We primarily compete with other jewelry designers and manufacturers of upscale jewelry selling to retail jewelry stores, substantially all of which have greater experience, brand name recognition and financial resources than us. We believe that our competitive strength lies in our ability to create eye-catching designs inspired by nature and having an organic look and feel. We will offer our customers original designs, including designs made from recycled materials,
whenever possible, low prices and superior craftsmanship supported by year-round service, which we believe will allow us to compete effectively and differentiate ourselves from other brands in the marketplace.
Government Regulation
We are subject to government regulations that regulate businesses generally, such as compliance with regulatory requirements of federal, state, and local agencies and authorities, including regulations concerning workplace safety and labor relations. In addition, our operations are affected by federal and state laws relating to marketing practices in the jewelry industry. Environmental laws and regulations do not materially impact our operations.
Personnel
As of November 30, 2011, we had two (2) employees. None of our personnel are covered by a collective bargaining agreement. We believe that our relationships with our employees are good.
Item 1A. Risk Factors.
Not applicable.
Item 1B. Unresolved Staff Comments.
None.
Item 2. Properties.
Our executive offices are located at 6538 Collins Avenue, Suite 476, Miami, Florida 33141. We occupy approximately 400 square feet of office space rent-free.
Item 3. Legal Proceedings.
We are not a party to any legal proceedings, nor are we aware of any threatened litigation whatsoever.
Item 4. [Removed and Reserved.]
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Market Information
Our common stock has been approved for quotation on the over-the-counter bulletin board market under the symbol “HRMY”. While we anticipate that a public trading market for our shares of common stock will develop, a public trading market for our shares of common stock has only recently commenced since the issuance of our trading symbol on June 20, 2011. There can be no assurance that such a public trading market will develop, or, if such a trading market is developed, that it can be maintained with liquidity. On November 30, 2011, there were 39 shareholders that owned 9,407,500 shares of our common stock, of which 2,827,500 are free-trading shares.
The reported high and low bid quotations for our common stock for the periods indicated, as reported by the OTC Bulletin Board, are as follows:
Low Bid
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High Bid
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Year Ended September 30, 2011
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First Quarter
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−
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−
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Second Quarter
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−
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−
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Third Quarter
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$0.10
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$0.10
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Fourth Quarter
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$0.10
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$0.30
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Such quotations reflect inter-dealer prices, without retail mark-up, mark-down or commissions, and may not necessarily represent actual transactions.
Dividends
We have not paid any dividends on our common stock, and it is not anticipated that any dividends will be paid in the foreseeable future. The declaration and payment of dividends in the future will be determined by the Board of Directors in light of conditions then existing, including our earnings, financial condition, capital requirements and other factors.
Use of Proceeds from Initial Public Offering
On February 7, 2011, the Company commenced its public offering pursuant to the Form S-1 Registration Statement (Registration No. 333-170408). The public offering was terminated on May 19, 2011. The Company offered and sold in the public offering 9,750 shares of its Series A Convertible Preferred Stock, and all of such shares of Series A Convertible Preferred Stock have been converted into 2,827,500 shares of Common Stock of the Company. The public offering provided proceeds to the Company in the amount of $97,500.
The proceeds of the offering in the amount of $97,500 were deposited in our non-interest bearing bank account, and have been used by us in the business, as of November 30, 2011, as follows:
Marketing, Promotion and Advertising
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$
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6,000
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Printing expenses
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2,030
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Executive Compensation
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0
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Legal fees and expenses
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70,000
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Accounting fees and expenses
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5,650
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Blue sky fees and expenses
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1,500
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Transfer Agent fees
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11,160
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Miscellaneous
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1,160
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Total
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$
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97,500
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Issuer Purchases of Equity Securities
Total Number of
Shares Purchased
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Average Price
Paid Per Share
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Total Number
of Shares Purchased
as Part of Publicly
Announced Plans
or Programs
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Maximum Number
of Shares that May
Yet Be Purchased
Under the Plans
or Programs
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Period
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July 1, 2011 to July 31, 2011(1)
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1,000,000
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$ |
.003
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-
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-
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August 1, 2011 to August 31, 2011
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-
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$ |
-
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-
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-
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September 1, 2011 to September 30, 2011
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-
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$ |
-
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-
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-
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Total
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1,000,000
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$ |
.003
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-
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-
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________________
(1)
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On July 12, 2011, the Company purchased 1,000,000 shares of common stock of the Company (the “Shares”) from Patrick A. Norton, the former, CEO, President, Secretary, Treasurer and Chairman of the Company, for a purchase price in the amount of Three Thousand Dollars ($3,000) in a private transaction between the Company and Mr. Norton. Such repurchase was not an open market transaction.
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Item 6. Selected Financial Data.
The following financial data has been derived from and should be read in conjunction with (i) our audited financial statements for the year ended September 30, 2011 and the period from October 19, 2009 (inception) through September 30, 2010, together with the notes to these financial statements; (ii) and the sections of this report entitled “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, included elsewhere herein or filed with the SEC. Our historical results are not necessarily indicative of the results we may achieve in any future period.
Consolidated Statements of Operations Data:
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Year Ended
September 30, 2011
(Audited)
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Period from
October 19, 2009
(inception)
through
September 30, 2010
(Audited)
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Revenue:
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$ | 100,094 | $ | 6,211 | ||||
Cost of Sales:
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19,094 | 2,500 | ||||||
Gross Profit:
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81,000 | 3,711 | ||||||
Expenses:
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Depreciation and Amortization
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100 | 46 | ||||||
General and administrative
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140,318 | 8,484 | ||||||
Total expenses
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140,418 | 8,530 | ||||||
Net (loss)
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$ | (59,418 | ) | $ | (4,819 | ) | ||
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Basic and diluted net (loss) per share
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$ | ** | $ | ** | ||||
** Less than $0.01
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Weighted average number of common shares outstanding
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8,453,514 | 1,222,248 | ||||||
Consolidated Balance Sheet Data:
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As of
September 30, 2011
(Audited)
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As of
September 30, 2010
(Audited)
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||||||
Cash and cash equivalents
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$ | 46,510 | $ | 9,639 | ||||
Working capital
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$ | 44,621 | $ | 9,639 | ||||
Total assets
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$ | 48,975 | $ | 10,093 | ||||
Total liabilities
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$ | 4,000 | $ | - | ||||
Total shareholders’ equity
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$ | 44,975 | $ | 10,093 |
Item 7. Management’s Discussion And Analysis Of Financial Condition And Results Of Operations
The following discussion and analysis should be read in conjunction with our consolidated financial statements, including the notes thereto, appearing in this Form 10-K and are hereby referenced. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this report. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this report. We believe it is important to
communicate our expectations. However, our management disclaims any obligation to update any forward-looking statements whether as a result of new information, future events or otherwise.
These forward-looking statements are based on our management’s current expectations and beliefs and involve numerous risks and uncertainties that could cause actual results to differ materially from expectations. You should not rely upon these forward-looking statements as predictions of future events because we cannot assure you that the events or circumstances reflected in these statements will be achieved or will occur. You can identify a forward-looking statement by the use of the forward-terminology, including words such as “may”, “will”, “believes”, “anticipates”, “estimates”, “expects”, “continues”,
“should”, “seeks”, “intends”, “plans”, and/or words of similar import, or the negative of these words and phrases or other variations of these words and phrases or comparable terminology. These forward-looking statements relate to, among other things: our sales, results of operations and anticipated cash flows; capital expenditures; depreciation and amortization expenses; sales, general and administrative expenses; our ability to maintain and develop relationship with our existing and potential future customers; and, our ability to maintain a level of investment that is required to remain competitive. Many factors could cause our actual results to differ materially from those projected in these forward-looking statements, including, but not limited to: variability of our revenues and financial performance;
risks associated with technological changes; the acceptance of our products in the marketplace by existing and potential customers; disruption of operations or increases in expenses due to our involvement with litigation or caused by civil or political unrest or other catastrophic events; general economic conditions, government mandates; and, the continued employment of our key personnel and other risks associated with competition.
Overview
We design and manufacture upscale jewelry for both men and women. Our jewelry designs are inspired by nature and have an organic look and feel. We make jewelry from recycled materials, where desirable, and use manufacturing processes and chemicals that minimize the impact on the environment. We have designs for rings, pendants, bracelets and necklaces in platinum, gold and silver for both men and women and also sell precious metal collectibles. Our fiscal year end is September 30th. Our website is www.harmonymetalsdesigns.com.
We were incorporated in the State of Florida on October 19, 2009, as a for-profit company. In April, 2010, we commenced providing our jewelry to the marketplace. For the period from October 19, 2009 (inception) to September 30, 2011, we recognized revenues in the amount of $106,305. Accordingly, we are no longer considered to be a development stage company.
On February 7, 2011, we commenced our public offering pursuant to the Form S-1 Registration Statement (Registration No. 333-170408). The public offering was terminated on May 19, 2011. We offered and sold in the public offering 9,750 shares of our Series A Convertible Preferred Stock, and all of such shares of Series A Convertible Preferred Stock have been converted into 2,827,500 shares of Common Stock. The public offering provided proceeds to us in the amount of $97,500.
We will require approximately $75,000 of available capital over the next 18 months to cover the expenses and the reporting and other compliance requirements involving being a public company, including transfer agent fees, investor relations and general office and administrative expenses.
Going Concern
Our financial statements have been prepared on the basis of accounting principles applicable to a going concern. As a result, they do not include adjustments that would be necessary if we were unable to continue as a going concern and would therefore be obligated to realize assets and discharge our liabilities other than in the normal course of operations. As reflected in the accompanying financial statements, we generated revenues in the amount of $100,094 and had an accumulated deficit in the amount of $(64,237) as of September 30, 2011. This raises substantial doubt about our ability to continue as a going concern, as expressed by our auditors in its opinion on our financial statements included in this
report. The ability of the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital and implement its business plan.
We have not yet established an ongoing source of revenues sufficient to cover our operating costs and allow us to continue as a going concern. Our ability to continue as a going concern is dependent on us obtaining adequate capital to fund operating losses until we become profitable. If we are unable to obtain adequate capital, we could be forced to cease operations. There can be no assurance that we will operate at a profit or additional debt or equity financing will be available, or if available, can be obtained on satisfactory terms.
The following table summarizes our milestones, projected and actual dates of completion and estimated budget allocation for implementing our business plan.
Milestones
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Projected Dates
of Completion and If Completed
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Estimated Budget
Allocation($)
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|||||
Complete Jewelry Designs and Molds
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Completed
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̶
|
|||||
Complete Jewelry Collection Prototypes
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Completed
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̶
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|||||
Complete Final Samples of Jewelry Collection
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Completed
|
̶
|
|||||
Complete Website
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Completed
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̶
|
|||||
Engage Sales Agents and Distributors and Sign Territorial Agreements
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December 2011
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5,000
|
|||||
Select Contract Manufacturer
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Completed
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̶
|
|||||
Design Business Cards
|
Completed
|
̶
|
|||||
Additional Working Capital
|
0-18 Months
|
70,000
|
|||||
Total
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75,000
|
If adequate funds are not available, then our ability to grow our business and execute on our business plan may be significantly hindered. See “—Liquidity and Capital Resources” and “—Going Concern”. Any measurement and comparison of revenues and expenses from continuing operations should not be considered necessarily indicative or interpolated as the trend to forecast our future revenues and results of operations.
Results of Operations for the Year Ended September 30, 2011 Compared to the Period October 19, 2009, our inception, through September 30, 2010
Revenues. The Company’s revenues for the year ended September 30, 2011 were $100,094 as compared to $6,211 for the period October 19, 2009 (our inception) through September 30, 2010, and the increase was due to an increase in jewelry sales from our collection.
Gross Profit. The Company’s gross profit for the year ended September 30, 2011was $81,000 as compared to $3,711 for the period October 19, 2009 (our inception) through September 30, 2010, and the increase in gross profit was due to an increase sale of higher margin items from our collection.
General and Administrative Expenses. General and administrative expenses for the year ended September 30, 2011 were $140,318 as compared to $8,484 for the period October 19, 2009 (our inception) through September 30, 2010. General and administrative expenses consisted of expenses relating to being a public reporting company, including professional service fees for preparing our SEC reports, transfer agent fees and blue sky filing fees relating to the Company’s public offering.
Impact of Inflation
We believe that the rate of inflation has had negligible effect on our operations. We believe we can absorb most, if not all, increased non-controlled operating costs by increasing sales prices, whenever deemed necessary and by operating our Company in the most efficient manner possible.
Cash Flows from Operating Activities
Net cash used in operating activities for the year ended September 30, 2011 was $(57,429) as compared to net cash used in operating activities in the amount of $(4,419) for the period October 19, 2009, our inception, to September 30, 2010. Net cash used in operating activities increased mainly due to increased purchasing of inventory for resale and professional service fees for preparing our SEC reports and transfer agent fees the expenses associated with being a public company.
Cash Flows from Investing Activities
Net cash flows from investing activities for the year ended September 30, 2011 was $0 as compared to $(500) for the period October 19, 2009, our inception, to September 30, 2010, which consisted of funds used to purchase furniture, equipment and tools.
Cash Flows from Financing Activities
Net cash flows from investing activities for the year ended September 30, 2011 was $94,300 as compared to $14,558 for the period October 19, 2009, our inception, to September 30, 2010, and increased due to the capital raised in our public offering.
Liquidity and Capital Resources
The following table sets forth our liquidity and capital resources as of September 30, 2011:
Cash and cash equivalents
|
$
|
46,510
|
|
Working capital
|
$ |
44,621
|
|
Total assets
|
$
|
48,975
|
|
Total liabilities
|
$ |
4,000
|
|
Total shareholders’ equity
|
$ |
44,975
|
We believe that our available cash is sufficient to allow us to execute our business plan We currently have no external sources of liquidity, such as arrangements with banks or credit institutions or off-balance sheet arrangements that will have or are reasonably likely to have a current or future effect on our financial condition or immediate access to capital.
Material Commitments
There were no material commitments for the period from October 19, 2009, our inception, through September 30, 2010 and the year ended September 30, 2011.
Purchase of Furniture and Equipment
We purchased furniture, equipment and tools in the amount of $500 on April 12, 2010, which we need to design and manufacture jewelry and lifestyle accessories. We do not plan to make material expenditures on furniture, tools and equipment during the next 12 months.
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, capital expenditures or capital resources that are material to investors.
Critical Accounting Policies
Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.
We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. In general, management's estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.
Cash and Cash Equivalents
We consider all highly liquid debt instruments with original maturities of three months or less to be cash equivalents. We have no cash equivalents.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
Inventories
Inventories are valued at the lower of cost or market on a first-in, first-out (FIFO) basis, and include finished goods.
Revenue Recognition
We recognize revenue on arrangements in accordance with Securities and Exchange Commission Staff Accounting Bulletin No. 101, “Revenue Recognition in Financial Statements’ and No. 104, “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 collectibility of the resulting receivable is reasonably assured.
Product sales and shipping revenues, net of promotional discounts, rebates, and return allowances, are recorded when the products are shipped and title passes to customers. Retail sales to customers are made pursuant to a sales contract that provides for transfer of both title and risk of loss upon our delivery to the carrier. Return allowances, which reduce product revenue, are estimated using historical experience. Revenue from product sales and services rendered is recorded net of sales taxes. Amounts received in advance for subscription services, are deferred and recognized as revenue over the subscription term.
Share Based Payments
In December 2004, the FASB issued SFAS No. 123(R), “Share-Based Payment,” which replaces SFAS No. 123 and supersedes APB Opinion No. 25. Under SFAS No. 123(R), companies are required to measure the compensation costs of share-based compensation arrangements based on the grant-date fair value and recognize the costs in the financial statements over the period during which employees or independent contractors are required to provide services. Share-based compensation arrangements include stock options and warrants, restricted share plans, performance-based awards, share appreciation rights and employee share purchase plans. In March 2005, the SEC issued Staff Accounting Bulletin No. 107, or “SAB
107”. SAB 107 expresses views of the staff regarding the interaction between SFAS No. 123(R) and certain SEC rules and regulations and provides the staff's views regarding the valuation of share-based payment arrangements for public companies. SFAS No. 123(R) permits public companies to adopt its requirements using one of two methods. On April 14, 2005, the SEC adopted a new rule amending the compliance dates for SFAS 123(R). Companies may elect to apply this statement either prospectively, or on a modified version of retrospective application under which financial statements for prior periods are adjusted on a basis consistent with the pro forma disclosures required for those periods under SFAS 123.
The Company has fully adopted the provisions of SFAS No. 123(R) and related interpretations as provided by SAB 107. As such, compensation cost is measured on the date of grant as the fair value of the share-based payments. Such compensation amounts, if any, are amortized over the respective vesting periods of the share-based payments.
Earnings (Loss) Per Share
We compute earnings per share in accordance with Statement of Accounting Standards No. 128, “Earnings per Share” (“SFAS No. 128”). Under the provisions of SFAS No. 128, basic earnings per share is computed by dividing the net income (loss) for the period by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing the net income (loss) for the period by the weighted average number of common and potentially dilutive common shares outstanding during the period. There were no potentially dilutive common shares outstanding during the year ended September 30, 2011 and the period from October 19, 2009 (inception)
through September 30, 2010.
Income Taxes
We account for income taxes in accordance with Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes” (“Statement 109”). Under the asset and liability method of Statement 109, deferred tax assets and liabilities are recognized for the estimated 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 in effect for the year in which those temporary differences are expected to be recovered or settled.
Fair Value of Financial Instruments
We consider that the carrying amount of financial instruments, including accounts payable, approximates fair value because of the short maturity of these instruments.
Recent Accounting Pronouncements
We have adopted all recently issued accounting pronouncements. The adoption of the accounting pronouncements, including those not yet effective, is not anticipated to have a material effect on our financial position or results of operations.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk.
We are not subject to risks related to foreign currency exchange rate fluctuations. Our functional currency is the United States dollar. We do not transact our business in other currencies. As a result, we are not subject to exposure from movements in foreign currency exchange rates. We do not use derivative financial instruments for speculative trading purposes.
Item 8. Financial Statements and Supplementary Data.
LAKE & ASSOCIATES, CPA’s LLC
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Shareholders of Harmony Metals, Inc.
We have audited the accompanying consolidated balance sheets of Harmony Metals, Inc. and Subsidiary as of September 30, 2011 and September 30, 2010, and the related consolidated statements of operations, shareholders’ equity, and cash flows for the period from October 19, 2009 (inception) through September 30, 2011. Harmony Metals, Inc. and Subsidiary’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the 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 also 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. We believe that our audits provide 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 Harmony Metals, Inc. and Subsidiary as of September 30, 2011 and September 30, 2010, and the results of its operations and its cash flows for the period from October 19, 2009 (inception) through September 30, 2011 in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed further in Note 1, the Company has incurred a significant loss since inception. The Company’s viability is dependent upon its ability to obtain future financing and the success of its future operations. These factors raise substantial doubt as to the Company’s ability to continue as a going concern. Management’s plan in regard to these matters is also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Lake & Associates, CPA’s LLC
Lake & Associates, CPA’s LLC
Schaumburg, Illinois
November 29, 2011
HARMONY METALS, INC. AND SUBSIDIARY
|
||||||||
CONSOLIDATED BALANCE SHEETS
|
||||||||
ASSETS
|
||||||||
September 30, 2011
(Audited)
|
September 30, 2010
(Audited)
|
|||||||
CURRENT ASSETS:
|
||||||||
Cash and equivalents
|
$ | 46,510 | $ | 9,639 | ||||
Inventory
|
2,111 | - | ||||||
Total Current Assets
|
48,621 | 9,639 | ||||||
FIXED ASSETS:
|
||||||||
Equipment, net
|
354 | 454 | ||||||
Total Assets
|
$ | 48,975 | $ | 10,093 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY
|
||||||||
CURRENT LIABILITIES:
|
||||||||
Accounts payable
|
$ | 4,000 | $ | - | ||||
Total Liabilities
|
4,000 | - | ||||||
SHAREHOLDERS' EQUITY:
|
||||||||
Preferred stock (15,000,000 authorized; par value $.001;
|
||||||||
none issued and outstanding on September 30, 2011 and September 30, 2010)
|
- | - | ||||||
Common stock (100,000,000 shares authorized; par value $.001; 9,407,500 and 7,620,000 shares
|
||||||||
issued and outstanding on September 30, 2011 and September 30, 2010, respectively)
|
9,408 | 7,620 | ||||||
Additional paid in captal
|
99,804 | 7,292 | ||||||
Accumulated deficit
|
(64,237 | ) | (4,819 | ) | ||||
Total Shareholders' Equity
|
44,975 | 10,093 | ||||||
Total Liabilities and Shareholders' Equity
|
$ | 48,975 | $ | 10,093 |
The accompanying notes are an intregal part of these statements.
HARMONY METALS, INC. AND SUBSIDIARY
|
||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS
|
||||||||
For the period ended
|
||||||||
For the year ended
|
October 19, 2009 (Inception)
|
|||||||
September 30, 2011
|
to September 30, 2010
|
|||||||
(Audited)
|
(Audited)
|
|||||||
Net Sales
|
$ | 100,094 | $ | 6,211 | ||||
Cost of Sales
|
19,094 | 2,500 | ||||||
Gross Profit
|
81,000 | 3,711 | ||||||
Expenses:
|
||||||||
Depreciation
|
100 | 46 | ||||||
General and Administrative
|
140,318 | 8,484 | ||||||
Total Expenses
|
140,418 | 8,530 | ||||||
Net (loss) before Income Taxes
|
(59,418 | ) | (4,819 | ) | ||||
Provision for Income Taxes
|
- | - | ||||||
Net (loss)
|
(59,418 | ) | (4,819 | ) | ||||
Basic and diluted net (loss) per common share
|
$ | ** | $ | ** | ||||
** Less than .01
|
||||||||
Weighted average number of common shares outstanding
|
8,453,514 | 1,222,248 |
The accompanying notes are an intregal part of these statements.
HARMONY METALS, INC. AND SUBSIDIARY | ||||||||||||||||||||||||||||
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY | ||||||||||||||||||||||||||||
FOR THE PERIOD FROM OCTOBER 19, 2009 (INCEPTION) THROUGH SEPTEMBER 30, 2011 | ||||||||||||||||||||||||||||
(Audited) | ||||||||||||||||||||||||||||
Preferred Stock | Common Stock |
Additional
Paid In
|
Accumulated
|
Total
Shareholders'
|
||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
(Deficit)
|
Equity
|
||||||||||||||||||||||
Balance at November 3, 2009
|
- | $ | - | 500,000 | $ | 500 | $ | - | $ | - | $ | 500 | ||||||||||||||||
Share Purchase, $0.001/share
|
||||||||||||||||||||||||||||
Common stock issued for cash on
August 19, 2010
|
- | - | 6,000,000 | 6,000 | 5,108 | - | 11,108 | |||||||||||||||||||||
Share Purchase, $0.00185/share
|
||||||||||||||||||||||||||||
Common stock issued for cash on
September 22, 2010
|
- | - | 1,000,000 | 1,000 | 1,950 | - | 2,950 | |||||||||||||||||||||
Share Purchase, $0.00295/share
|
||||||||||||||||||||||||||||
Common stock issued for services on
September 30, 2010
|
- | - | 120,000 | 120 | 234 | - | 354 | |||||||||||||||||||||
Directors' shares, $0.00295/share
|
||||||||||||||||||||||||||||
Net (loss) for the period
|
- | - | - | - | - | (4,819 | ) | (4,819 | ) | |||||||||||||||||||
Balance at September 30, 2010
|
- | $ | - | 7,620,000 | $ | 7,620 | $ | 7,292 | $ | (4,819 | ) | $ | 10,093 | |||||||||||||||
Common stock repurchased for
cash on April 22, 2011,
$0.005/share |
- | - | (40,000 | ) | (40 | ) | (160 | ) | - | (200 | ) | |||||||||||||||||
Common stock issued for cash
in public offering on May 19, 2011,
$0.03448/share
|
- | - | 2,827,500 | 2,828 | 94,672 | - | 97,500 | |||||||||||||||||||||
Common stock repurchased for
cash on July 12, 2011,
$0.003/share
|
- | - | (1,000,000 | ) | (1,000 | ) | (2,000 | ) | - | (3,000 | ) | |||||||||||||||||
Net (loss) for the period
|
- | - | - | - | - | (59,418 | ) | (59,418 | ) | |||||||||||||||||||
Balance at September 30, 2011
|
- | $ | - | 9,407,500 | $ | 9,408 | $ | 99,804 | $ | (64,237 | ) | $ | 44,975 |
The accompanying notes are an intregal part of these statements.
- 18 -
HARMONY METALS, INC. AND SUBSIDIARY
|
||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
||||||||
For the period
|
||||||||
For the year
|
October 19, 2009 (Inception)
|
|||||||
ended
September 30, 2011
|
through
September 30, 2010
|
|||||||
(Audited)
|
(Audited)
|
|||||||
OPERATING ACTIVITIES:
|
||||||||
Net loss
|
$ | (59,418 | ) | $ | (4,819 | ) | ||
Adjustments to reconcile net loss to net cash
|
||||||||
used in operating activitities:
|
||||||||
Depreciation
|
100 | 46 | ||||||
Issuance of common stock for services
|
- | 354 | ||||||
Increase in inventory
|
(2,111 | ) | - | |||||
Increase in accounts payable and accrued expenses
|
4,000 | - | ||||||
Net cash used in operating activities
|
(57,429 | ) | (4,419 | ) | ||||
INVESTING ACTIVITIES:
|
||||||||
Increase in equipment
|
- | (500 | ) | |||||
FINANCING ACTIVITIES:
|
||||||||
Proceeds from issuance of common stock
|
97,500 | 14,558 | ||||||
Repurchases of common stock
|
(3,200 | ) | - | |||||
Net cash provided by financing activities
|
94,300 | 14,558 | ||||||
NET INCREASE IN CASH
|
36,871 | 9,639 | ||||||
CASH BEGINNING BALANCE
|
9,639 | - | ||||||
CASH ENDING BALANCE
|
$ | 46,510 | $ | 9,639 | ||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
|
||||||||
Taxes paid
|
$ | - | $ | - | ||||
Interest paid
|
$ | - | $ | - |
The accompanying notes are an intregal part of these statements.
HARMONY METALS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2010 AND SEPTEMBER 30, 2011
NOTE 1 - DESCRIPTION OF BUSINESS
Description of Business
Harmony Metals, Inc., a Florida corporation (the “Company”, “we”, “us” and “our”), was incorporated on October 19, 2009, and conducts is operations through its sole operating subsidiary, Harmony Metals Designs, Inc., a Florida corporation, which was incorporated on June 17, 2010. Our company structure is set forth in the following chart:
HARMONY METALS, INC.
a Florida corporation
|
HARMONY METALS DESIGNS, INC.
a Florida corporation
(100% Owned Subsidiary)
|
The Company designs and manufactures upscale jewelry for both men and women. The Company’s jewelry designs are inspired by nature and have an organic look and feel. The Company makes jewelry from recycled materials, where desirable, and uses manufacturing processes and chemicals that minimize the impact on the environment. The Company has designs for rings, pendants, bracelets and necklaces in platinum, gold and silver for both men and women and also sells precious metal collectibles. Our website is www.harmonymetalsdesigns.com. Our fiscal year end is September 30th.
Basis of Presentation
The accompanying consolidated financial statements have been prepared by the Company. The Company’s consolidated financial statements are prepared in accordance with generally accepted accounting principals in the United States of America (“US GAAP”). The consolidated financial statements of the Company include the Company and its sole subsidiary. All material inter-company balances and transactions have been eliminated.
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 the satisfaction of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease
operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
Management’s Plan to Continue as a Going Concern
Our ability to continue as a going concern is dependent upon our ability to generate profitable business operations in the future and/or obtaining the necessary financing to meet our obligations and repay our liabilities. To date, we have operated at a loss and remained in business through the issuance of shares of our common stock and generating revenues from our business activities. We will require a minimum of $75,000 of available capital over the next 18 months to cover our expenses and working capital needs. Management's plan to continue as a going concern is based on us obtaining additional capital resources through the sale of our jewelry and collectibles, private financings and/or loans
from our shareholders on an as needed basis. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described above and eventually attaining profitable operations.
No Longer Development Stage Company
The Company recognized revenues in the amount of $100,094 and $6,211 for the year ended September 30, 2011 and the period from October 19, 2009 (inception) to September 30, 2010, respectively. Accordingly, the Company's activities are no longer being accounted for as a “Development Stage Enterprise” as set forth in Accounting Standards Codification (“ASC”) 915 “Development Stage Entities”, which was previously Financial Accounting Standards Board Statement No. 7.
Since its inception, the Company has been dependent upon the receipt of capital investment to fund its continuing activities. In addition to the normal risks associated with a new business venture, there can be no assurance that the Company's business plan will be successfully executed. Our ability to execute our business plan will depend on our ability to obtain additional financing and achieve a profitable level of operations. There can be no assurance that sufficient financing will be obtained. Further, we cannot give any assurance that we will generate substantial revenues or that our business operations will prove to be profitable.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash and Cash Equivalents
The Company considers all highly liquid debt instruments with original maturities of three months or less to be cash equivalents. The Company has no cash equivalents.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
Inventories
Inventories are valued at the lower of cost or market on a first-in, first-out (FIFO) basis, and include finished goods.
Equipment
Equipment is stated at cost, less accumulated depreciation. Depreciation is provided using the straight-line method over the estimated useful life of five years.
Advertising Costs
Advertising costs are expensed as incurred.
Revenue Recognition
The Company recognizes revenue when:
·
|
Persuasive evidence of an arrangement exists;
|
·
|
Shipment has occurred;
|
·
|
Price is fixed or determinable; and
|
·
|
Collectibility is reasonably assured.
|
The Company closely follows the provisions of ASC 605, “Revenue Recognition”, which includes the guidelines of Staff Accounting Bulletin No. 104 as described above.
Earnings (Loss) Per Share
The Company computes earnings per share in accordance with ASC 260, “Earnings Per Share”, which was previously Statement of Accounting Standards No. 128, "Earnings per Share (“SFAS No. 128”). Under the provisions of SFAS No. 128, basic earnings per share is computed by dividing the net income (loss) for the period by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing the net income (loss) for the period by the weighted average number of common and potentially dilutive common shares outstanding during the period. There were no potentially dilutive common shares outstanding during the period.
Income Taxes
The Company accounts for income taxes as outlined in ASC 740, “Income Taxes”, which was previously Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes.” Under the asset and liability method of Statement 109, deferred tax assets and liabilities are recognized for the estimated 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 in effect for the year in which those temporary differences are expected to be recovered or settled.
Fair Value of Financial Instruments
The Company considers that the carrying amount of financial instruments, including accounts payable, approximates fair value because of the short maturity of these instruments.
Recently Issued Accounting Pronouncements
The Company has adopted all recently issued accounting pronouncements. The adoption of the accounting pronouncements, including those not yet effective, is not anticipated to have a material effect on the financial position or results of operations of the Company.
Subsequent Events
We evaluated subsequent events through the date and time our financial statements were issued on November 29, 2011.
NOTE 3 - EQUITY TRANSACTIONS
On November 3, 2009, the Company issued 500,000 shares of common stock to Sahej Holdings, Inc. for cash in the 3amount of $500.
On August 19, 2010, the Company issued 6,000,000 shares of common stock to Sahej Holdings, Inc. for cash in the amount of $11,108.
On September 22, 2010, the Company issued 1,000,000 shares of common stock to Patrick A. Norton, its former President and Chief Executive Officer, Treasurer, for cash in the amount of $2,950.
On September 30, 2010, the Company issued 120,000 shares of common stock to three directors for services rendered at a value of $354.
On February 7, 2011, the Company commenced its public offering pursuant to the Form S-1 Registration Statement (Registration No. 333-170408). The public offering was terminated on May 19, 2011. The Company offered and sold in the public offering 9,750 shares of its Series A Convertible Preferred Stock, and all of such shares of Series A Convertible Preferred Stock have been converted into 2,827,500 shares of Common Stock of the Company. The public offering provided proceeds to the Company in the amount of $97,500.
On April 22, 2011, the Company repurchased 40,000 shares of common stock of the Company issued to Roudy Ambroise, its former director, for a cash purchase price in the amount of Two Hundred Dollars ($200). As a result thereof, Mr. Ambroise no longer owns any shares of capital stock of the Company.
On July 12, 2011, the Company repurchased 1,000,000 shares of common stock of the Company issued to Patrick A. Norton, its former director, for a cash purchase price in the amount of Three Thousand Dollars ($3,000). As a result thereof, Mr. Norton no longer owns any shares of capital stock of the Company.
NOTE 4 – INCOME TAXES
The Company provides for income taxes under ASC 740, “Income Taxes”, which was previously Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes. SFAS No. 109 requires the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse.
SFAS No. 109 requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.
The provision for income taxes differs from the amounts which would be provided by applying the statutory federal income tax rate of 34% to the net loss before provision for income taxes for the following reasons:
September 30,
|
September 30,
|
|||||||
2011
|
2010
|
|||||||
Income tax expense (asset) at statutory rate
|
$
|
(21,841
|
)
|
$
|
(1,638
|
)
|
||
Valuation allowance
|
21,841
|
1,638
|
||||||
Income tax expense per books
|
$
|
-0-
|
$
|
-0-
|
Net deferred tax assets consist of the following components as of:
September 30,
|
September 30,
|
|||||||
2011
|
2010
|
|||||||
NOL Carryover
|
$
|
64,237
|
$
|
4.819
|
||||
Valuation allowance
|
(64,237
|
)
|
(4,819
|
)
|
||||
Net deferred tax asset
|
$
|
-0-
|
$
|
-0
|
Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards for the years ended September 30, 2011 and the period ended October 19, 2009, our inception through September 30, 2010, were $(64,237) and $(4,819), respectively, and for federal income tax reporting purposes are subject to annual limitations. Should a change in our ownership occur the net operating loss carry forwards may be limited as to their use in future years.
NOTE 5 - CONCENTRATION OF CREDIT RISK
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash deposits. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. At September 30, 2011 and September 30, 2010, respectively, the Company had no amounts in excess of FDIC insured limit.
NOTE 6 – SUBSEQUENT EVENTS
We evaluated subsequent events through the date and time our financial statements were issued on November 29, 2011.
Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
Item 9A. Controls and Procedures.
We maintain disclosure controls and procedures that are designed to ensure that the information required to be disclosed in the reports that we file under the Securities Exchange Act of 1934 (the "Exchange Act") is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our President and Treasurer, as appropriate, to allow timely decisions regarding required disclosures. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and
operated, can only provide reasonable assurance of achieving the desired control objectives, and in reaching a reasonable level of assurance, management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
As required by SEC Rule 13a-15(b), we carried out an evaluation, under the supervision and with the participation of our management, including our President and Treasurer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of our fourth fiscal quarter covered by this report. Based on the foregoing, our President and Treasurer concluded that our disclosure controls and procedures were effective at the reasonable assurance level.
There has been no change in our internal controls over financial reporting during our fourth fiscal quarter ended September 30, 2011, that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Our management of is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the Company’s principal executive and financial officer and effected by the Company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures
that:
·
|
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;
|
·
|
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and
|
·
|
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.
|
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. 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.
The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of September 30, 2011. In making this assessment, the Company’s management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework. The COSO framework is based upon five integrated components of control: control environment, risk assessment, control activities, information and communications and ongoing monitoring.
Based on the assessment performed, management has concluded that the Company’s internal control over financial reporting, as of September 30, 2011, is effective and provides reasonable assurance regarding the reliability of its financial reporting and the preparation of its financial statements in accordance with generally accepted accounting principles. Further, management has not identified any material weaknesses in internal control over financial reporting as of September 30, 2011.
This annual report does not include an attestation report of the Company’s registered independent public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only management’s report in this annual report.
/s/ Olivia G. Ruiz
CEO, President and Treasurer
Item 9B. Other Information.
There exists no information required to be disclosed by us in a report on Form 8-K during the fourth quarter ended September 30, 2011, but not reported.
PART III
Item 10. Directors, Executive Officers and Corporate Governance.
Our directors and executive officers and their respective ages as of November 30, 2011, are as follows:
Name
|
Age
|
Principal Positions With Us
|
||
Olivia G. Ruiz
|
45
|
Chairman of the Board, Chief Executive Officer, President and Treasurer
|
||
Seth M. Weinstein
|
43
|
Secretary and Director
|
The following describes the business experience of each of our directors and executive officers, including other directorships held in reporting companies, if any:
Olivia G. Ruiz has served as the Chief Executive Officer and President since February 7, 2011 and as a Director of the Company since September 30, 2010. Since December 2009, Ms. Ruiz has served as Senior Recruiter – Talent Acquisition for Silicon Valley Bank. From August 2009 until May 2011, Ms. Ruiz has served as a director of Rainmakers Private Equity, an investment banking boutique firm. From March 2004 until March 2009, Ms. Ruiz served as a director for the San Francisco office of Russell Stephens, LLC, a recruitment firm for banking and financial services professionals. From July 2006 until December 2008, Ms. Ruiz
served as the president and director of Anasazi Capital Corp., an SEC reporting company. From February 2002 until March 2004, Ms. Ruiz provided executive-level operational support for Paul Capital Partners. From September 1998 until August 2001, Ms. Ruiz served as senior vice president of Opal Financial Group coordinating institutional investment conferences throughout the United States.
Seth M. Weinstein has served as the Secretary of the Company since February 8, 2011, and as a Director of the Company since September 30, 2010. Since March 2011, Mr. Weinstein has served as the managing member of JHP Partners, LLC, a Florida limited liability, an investment management company in Boca Raton, Florida. Since July 2008, Mr. Weinstein has served as the managing member of Portable Alpha Advisors, LLC, an investment management company in Boca Raton, Florida. Since April 2006, Mr. Weinstein has served as a managing member of Logan Equity Partners, LLC, a real estate investment management company in Boca Raton, Florida. Since October
2004, Mr. Weinstein has served as the managing member of Crescent City Capital Advisors, LLC, a hedge fund in Boca Raton, Florida. From September 2000 until June 2003, Mr. Weinstein was employed by Schonfeld Securities where he managed firm capital on a proprietary basis. From June 1998 until August 2000, Mr. Weinstein was employed by Spear, Leeds & Kellogg as a portfolio manager and was responsible for handling of firm capital on a proprietary basis. From May 1994 until March 1998, Mr. Weinstein was engaged as a trader and quantitative analyst for TCM Partners, a $40 million hedge fund in New York, New York.
Term of Office
All of our directors hold office until the next annual general meeting of the shareholders or until their successors are elected and qualified. Our officers are appointed by our board of directors and hold office until their earlier death, retirement, resignation or removal.
Significant Employees
There are no significant employees other than our executive officers.
Committees of the Board of Directors
Our board of directors intends to establish an audit committee, a compensation committee and a nominating and corporate governance committee. Our board may establish other committees from time to time to facilitate the management of our company; however, we have not yet established any such committees.
Audit committee. Our audit committee will oversee a broad range of issues surrounding our accounting and financial reporting processes and audits of our financial statements, including by (1) assisting our board in monitoring the integrity of our financial statements, our compliance with legal and regulatory requirements, our independent auditor's qualifications and independence and the performance of our internal audit function and independent auditors, (2) appointing, compensating, retaining and overseeing the work of any independent registered public accounting firm engaged for the purpose of performing any audits, reviews
or attest services, and (3) preparing the audit committee report that may be included in our annual proxy statement or annual report on Form 10-K. We will have at least three directors on our audit committee, each of whom will be independent under the requirements of the NASDAQ Capital Market, the Sarbanes-Oxley Act and the rules and regulations of the SEC. We have not yet formed our audit committee.
Compensation committee. Our compensation committee will review and recommend our policies relating to compensation and benefits for our executive officers and other significant employees, including reviewing and approving corporate goals and objectives relevant to compensation of our Chief Executive Officer and other executive officers, evaluating the performance of our executive officers relative to goals and objectives, determining compensation for these executive officers based on these evaluations and overseeing the administration of our incentive compensation plans. The compensation committee will also prepare the
compensation committee report that may be included in a subsequent annual report on Form 10-K. We will have at least two directors on our compensation committee, each of whom will be independent under the requirements of the NASDAQ Capital Market. We do not yet have a compensation committee.
Nominating and corporate governance committee. Our nominating and corporate governance committee will (1) identify, review and recommend nominees for election as directors, (2) advise our board of directors with respect to board composition, procedures and committees, (3) recommend directors to serve on each committee, (4) oversee the evaluation of our board of directors and our management, and (5) develop, review and recommend corporate governance guidelines and policies. We will have at least two directors on our nominating and corporate governance committee, each of whom will be independent under the requirements of the NASDAQ
Capital Market. We do not yet have a nominating and corporate governance committee.
Compensation Committee Interlocks and Insider Participation
Our board of directors does not have a compensation committee. Since inception, all of our executive compensation decisions have been made by our board of directors.
Code of Ethics
Our board of directors intends to adopt a code of ethics for our principal executive and senior financial officers. This code of ethics will apply to our principal executive officer, principal financial officer, principal accounting officer, and persons performing similar functions. We intend to post the full text of this code on our Internet website, which is www.sore-eez.com. We intend to disclose future amendments to provisions of our code of ethics, or waivers of such provisions, applicable to any principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, as required by law or regulation. We have not yet
adopted a code of ethics.
Family Relationships
None.
Involvement in Certain Legal Proceedings
None of our directors, executive officers or control persons has been involved in any of the events prescribed by Item 401(f) of Regulation S-K during the past ten years, including:
1.
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any petition under the Federal bankruptcy laws or any state insolvency law filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he or she was a general partner at or within two years before the time of such filing, or any corporation or business association of which he or she was an executive officer at or within two years before the time of such filing;
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2.
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any conviction in a criminal proceeding or being named a subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);
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3.
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being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him or her from, or otherwise limiting, the following activities:
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i.
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acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;
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ii.
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engaging in any type of business practice; or
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iii.
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engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws;
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4.
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being subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any type of business regulated by the Commodity Futures Trading Commission, securities, investment, insurance or banking activities, or to be associated with persons engaged in any such activity;
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5.
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being found by a court of competent jurisdiction in a civil action or by the SEC to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated;
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6.
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being found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated;
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7.
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being subject to, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of:
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i.
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any Federal or State securities or commodities law or regulation; or
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ii.
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any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or
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iii.
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any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
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8.
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being subject to, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
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Compliance with Section 16(a) of the Act
Section 16(a) of the Exchange Act requires our officers and directors, and persons who own more than ten percent (10%) of our shares of common stock, to file reports of ownership and changes in ownership with the SEC. Officers, directors and greater than ten percent (10%) stockholders are required by regulations promulgated by the SEC to furnish us with copies of all Section 16(a) forms that they file. With reference to transactions during the fiscal year ended September 30, 2011, to our knowledge, all Section 16(a) forms required to be filed with the SEC were filed.
Item 11. Executive Compensation.
Compensation Discussion and Analysis
The following table sets forth information concerning all cash and non-cash compensation awarded to, earned by or paid to our named executive officers for services performed for us during the period October 19, 2009, our inception, through September 30, 2010 and the year ended September 30, 2011, in all capacities.
Summary Compensation Table
Name and Principal Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards
($)
|
Option
Awards
($)
|
Non-Equity
Incentive Plan Compensation
($)
|
Change in
Pension Value
and Nonqualified Deferred
Compensation
Earnings
($)
|
All Other
Compensation
($)
|
Total
($)
|
|||||||||
CEO, President, Treasurer
Olivia G. Ruiz(1)
|
2011
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||
Former CEO, President,
Treasurer, Secretary
Patrick A. Norton(2)
|
2011
2010
|
13,020
600
|
- | - | - | - | - | - |
13,020
600
|
|||||||||
Seth M. Weinstein,
Secretary(3)
|
2011
|
-
|
-
|
- |
|
-
|
-
|
-
|
-
|
-
|
______________________
(1)
|
Ms. Ruiz became our CEO, President, Treasurer and Chairman on February 7, 2011 and has served on our Board of Directors since September 30, 2010. Our Board of Directors in its discretion may approve the payment of additional salaries and the reimbursement of expenses to such person; however, we are not required to make any such payments pursuant to any employment agreement or otherwise
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(2)
|
We paid Mr. Norton $13,620 for his services, which was determined by our Board of Directors as an appropriate amount of compensation to such person based on the value of his services. Mr. Norton resigned as our CEO, President, Treasurer, Secretary and Chairman on February 7, 2011.
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(3)
|
Mr. Weinstein became our Secretary on February 8, 2011.
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Potential Employment Agreement and Benefits
We have not entered into an employment agreement with our executive officers. Our Board of Directors in its discretion may approve the payment of salaries and the reimbursement of expenses to our executive officers; however, we are not required to make any such payments pursuant to an employment agreement or otherwise.
Potential Payments Upon Termination or Change in Control
As of the date of this report, there were no potential payments or benefits payable to our executive officers, upon their termination or in connection with a change in control.
Grants of Plan-Based Awards in Fiscal 2011
For the year ended September 30, 2011, we have not granted any plan-based awards to our executive officers.
Outstanding Equity Awards at Fiscal Year-End
For the year ended September 30, 2011, we do not have any outstanding equity awards to our executive officers.
Option Exercises and Stock Vested in Fiscal 2011
For the year ended September 30, 2011, our executive officers have neither exercised any options, nor did any unvested stock granted to executive officers vest. As of the date of this report, our executive officers do not have any stock options or unvested shares of stock of the Company.
Equity Incentive Plan
We do not expect to adopt an equity incentive plan during the next 12 months. When we adopt an equity incentive plan, the purposes of the proposed equity incentive plan are to attract and retain qualified persons upon whom our sustained progress, growth and profitability depend, to motivate these persons to achieve long-term company goals and to more closely align these persons' interests with those of our other shareholders by providing them with a proprietary interest in our growth and performance. Our executive officers will be eligible to participate in the plan. We have not determined the amount of shares of our common stock to be reserved for issuance under the proposed equity incentive
plan.
Compensation of Directors
Olivia G. Ruiz and Seth M. Weinstein, our directors have each been issued 40,000 shares of our common stock in consideration of their serving as directors. All directors are reimbursed for out-of-pocket expenses for business related purposes. We do not have any other arrangements for compensating our directors at this time. Our director compensation program is determined by our Board of Directors.
There was no cash and non-cash compensation awarded to, earned by or paid to the directors for services performed for us for the year ended September 30, 2011 and the period October 19, 2009, our inception, through September 30, 2010, in all capacities.
The following table sets forth information concerning all cash and non-cash compensation awarded to, earned by or paid to the following directors for services performed for us for the year ended September 30, 2011 in all capacities.
DIRECTOR COMPENSATION
Fees Earned
or Paid in
Cash
|
Stock
Awards
|
Option
Awards
|
Non-Equity
Incentive Plan Compensation
|
Change in
Pension Value
and Nonqualified Deferred
Compensation
Earnings
|
All Other
Compensation
|
Total
|
|||||||||
Name |
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Olivia G. Ruiz
|
-
|
-
|
|
-
|
-
|
-
|
-
|
-
|
|||||||
Seth Weinstein
|
-
|
-
|
|
-
|
-
|
-
|
-
|
-
|
|||||||
Roudy Ambroise(1)
|
-
|
-
|
|
-
|
-
|
-
|
-
|
-
|
|||||||
Patrick A. Norton(2)
|
-
|
-
|
|
-
|
-
|
-
|
-
|
-
|
________________
(1) Mr. Ambroise served as a director from September 30, 2010 until April 21, 2011.
(2) Mr. Norton served as a director from October 19, 2009, our inception, until July 12, 2011.
Employment Agreements
We have not entered into any employment agreements with our executive officers. Our decision to enter into an employment agreement, if any, will be made by our compensation committee.
Potential Payments Upon Termination or Change in Control
There were no potential payments or benefits payable to our named executive officers upon his termination of employment or in connection with a change in control.
Grants of Plan-Based Awards
We have not granted any plan-based awards to our named executive officers, since October 19, 2009, our inception.
Outstanding Equity Awards at Fiscal Year-End
We did not have any outstanding equity awards to our named executive officers, as of September 30, 2011, our fiscal year-end.
Option Exercises and Stock Vested in 2011
Our named executive officer did not exercise any options, nor did any unvested shares of stock vest, during September 30, 2011, our fiscal year end. Our named executive officer did not have any stock options or unvested shares of stock of the Company.
Equity Incentive Plan
We expect to adopt an equity incentive plan. The purposes of the plan are to attract and retain qualified persons upon whom our sustained progress, growth and profitability depend, to motivate these persons to achieve long-term company goals and to more closely align these persons' interests with those of our other shareholders by providing them with a proprietary interest in our growth and performance. Our executive officers, employees, consultants and non-employee directors will be eligible to participate in the plan. We have not determined the amount of shares of our common stock to be reserved for issuance under the proposed equity incentive plan.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The following table sets forth certain information regarding beneficial ownership of our common stock as of November 30, 2011, for:
• each person or group known to us to beneficially own 5% or more of our common stock;
• each of our directors and director nominees;
• each of our named executive officers; and
• all of our executive officers and directors as a group.
Unless otherwise indicated below, to our knowledge, all persons listed below have sole voting and investment power with respect to their shares of common stock, except to the extent authority is shared by spouses under applicable law. Unless otherwise indicated below, each entity or person listed below maintains an address of 6538 Collins Avenue, Suite 476, Miami, Florida 33141.
The number of shares beneficially owned by each shareholder is determined under rules promulgated by the SEC. The information is not necessarily indicative of beneficial ownership for any other purpose. Under these rules, beneficial ownership includes any shares as to which the individual or entity has sole or shared voting or investment power and any shares as to which the individual or entity has the right to acquire beneficial ownership within 60 days after November 30, 2011 through the exercise of any stock option, warrant or other right.
Beneficial Owner
|
Number of Shares
Beneficially Owned
|
Percent of
Outstanding Shares
|
||||||
Seth Weinstein
|
40,000 | * | ||||||
Olivia G. Ruiz
|
40,000 | * | ||||||
Sahej Holdings, Inc.(1)
|
6,500,000 | 69.1 | % | |||||
All directors and executive officers as a group
|
80,000 | * |
_______________
* Less than 1 percent.
(1)
|
Earline Nicole Taylor is the sole officer and director of Sahej Holdings, Inc. Ms. Taylor maintains sole voting and investment control of these shares of common stock. As a result, Ms. Taylor is deemed to beneficially own all of these shares of common stock. The address of Sahej Holdings, Inc. is 3004 NW 52nd Street, No. 2, Miami, Florida 33142.
|
Item 13. Certain Relationships and Related Transactions, and Director Independence.
None
Annual Report on Form 10-K
Copies of our Annual Report on Form 10-K, without exhibits, can be obtained without charge from us at Harmony Metals, Inc., 6538 Collins Avenue, Suite 476, Miami, Florida 33141, or by telephone at (501) 639-1909.
Item 14. Principal Accountant Fees and Services.
The following table sets forth fees billed to us for principal accountant fees and services during the period from October 19, 2009 (inception) through September 30, 2010 and the year ended September 30, 2011.
Year Ended
September 30,2011
|
October 19, 2009
(inception)
through
September 30, 2010
|
|||||||
Audit Fees
|
$ | 4,000 | $ | 3,750 | ||||
Audit-Related Fees
|
2,300 | - | ||||||
Tax Fees
|
- | - | ||||||
All Other Fees
|
- | - | ||||||
Total Audit and Audit-Related Fees
|
$ | 6,300 | $ | 3,750 |
Item 15. Exhibits.
(a)
|
Exhibits
|
The following exhibits are filed with this report on Form 10-K:
Exhibit No. |
Description
|
||
3 .1 |
Articles of Incorporation, as currently in effect*
|
||
3 .2 |
Bylaws, as currently in effect *
|
||
4 .1 |
Specimen common stock certificate*
|
||
21.1 |
List of Subsidiaries*
|
||
31.1 | 302 Certification – Olivia G. Ruiz (filed herewith) | ||
32.1 | 906 Certification – Olivia G. Ruiz (filed herewith) |
_____________
|
*
|
Previously filed with the SEC as an exhibit to our Registration Statement on Form S-1 (No. 333-170408) on November 5, 2010.
|
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, on the 30th day of November, 2011.
HARMONY METALS, INC.
By: /s/ Olivia G. Ruiz
Olivia G. Ruiz
Chief Executive Officer,
President and Treasurer
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature
|
Title
|
Date
|
||||
/s/ Olivia G. Ruiz
Olivia G. Ruiz
|
Chief Executive Officer (Principal Executive Officer),
Chief Financial Officer (Principal Financial and Accounting Officer)
and Chairman of the Board of Directors
|
November 30, 2011
|
||||
/s/ Seth M. Weinstein
Seth M. Weinstein
|
Secretary and Director
|
November 30, 2011
|
Harmony Metals, Inc.
Index to Exhibits
Exhibit No. |
Description
|
||
31.1 | 302 Certification – Olivia G. Ruiz | ||
32.1 | 906 Certification – Olivia G. Ruiz |
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