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KUNEKT CORPORATION

ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED OCTOBER 31, 2011

INDEX

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PART I

This annual report contains forward-looking statements that involve risk, uncertainties and assumptions. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expect”, “plan”, “anticipate”, “believe”, “estimate”, “predict”, “potential” or “continue” or the negative of these terms or other comparable terminology. Examples of forward-looking statements made in this annual report on Form 10-K include statements about:

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Our business plans,

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Our ability to raise additional finances, and

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Our future investments and allocation of capital resources.

These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including:

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General economic and business conditions,

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Risks associated with the mobile market,

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Our lack of operating history, and  

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The risks in the section of this annual report entitled “Risk Factors”,

any of which may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

While these forward-looking statements and any assumptions upon which they are based are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results

The following discussion and analysis should be read in conjunction with the financial statements and related notes and the other financial information appearing elsewhere in this annual report. Our financial statements are stated in United States dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.

As used in this annual report, the terms “we”, “us” and “our” mean Kunekt Corporation, unless otherwise indicated.

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Item 1      Business

Corporate Development

We are a development-stage company that was originally organized to enter into the financial account card market with a proprietary patent pending financial account card product that we were developing. Our patent application, which was filed with the U.S. Patent and Trademark Office, was abandoned on September 3, 2010.

We subsequently changed our business to market mobile devices, specifically mobile phones, smartphones and tablet devices. We have stopped pursuing the our business to market mobile devices and we are currently seeking new business opportunities with established business entities for the merger with or acquisition of a target business. In certain instances, a target business may wish to become our subsidiary or may wish to contribute assets to us rather than merge. We have not yet begun negotiations or entered into any definitive agreements for potential new business opportunities and there can be no assurance that we will be able to enter into any definitive agreements.

Transaction with AMS-INT

On June 29, 2011, Kunekt entered into a master agreement (the “Master Agreement”) with Ya Zhu Silk, Inc. (“YaZhu”), AMS-INT Asia Limited (“AMS”), Ferngrui Yue (“Yue”), Guangzhou Xingwei Communications Technology Ltd. Inc. (“XingWei”), Matt Li (“Li”), Beijing Yiyueqiji Science and Technology Development Ltd. Inc. (“Yiyueqiji”), and Mark Bruk (“Bruk”) whereby the parties agreed to the following:

·

the following agreements, which were subject to regulatory approval, including the issuance by the British Columbia Securities Commission of an order varying its temporary cease trade order issued against Kunekt, which Kunekt has been unable to obtain, are not valid and are terminated and cancelled:

o

a share exchange agreement dated January 20, 2011, as amended on March 31, 2011, among AMS, Yue, XinWei, and Kunekt, whereby Kunekt agreed to acquire all of the shares held by Yue in the capital of AMS in exchange for the issuance of a total of 2,400,000 common shares in the capital stock of Kunekt and 60,480 preferred shares in the capital stock of Kunekt (the “Yu Kunekt Shares”),

o

a share vesting and repurchase option agreement dated March 31, 2011 between Kunekt and Yue, whereby Yue agreed that the Yu Kunekt Shares would be subject to a release schedule and all unreleased shares could be bought back by Kunekt for nominal consideration,

o

a share exchange agreement dated January 20, 2011, as amended on March 31, 2011, among AMS, Li, Yiyueqiji, and Kunekt, whereby Kunekt agreed to acquire all of the shares held by Li in the capital of AMS in exchange for the issuance of a total of 27,600,00 common shares in the capital stock of Kunekt and 695,520 preferred shares in the capital stock of Kunekt (collectively, the “Li Kunekt Shares”),

o

a share vesting and repurchase option agreement dated March 31, 2011 between Kunekt and Li, whereby Li agreed that the Li Kunekt Shares would be subject to a release schedule and all unreleased shares could be bought back by Kunekt for nominal consideration,

o

an exclusive distribution and sales agency agreement dated March 24, 2011 between Kunekt and Yiyueqiji, whereby Kunekt obtained the exclusive rights for the world to market, distribute and sell certain products and services in consideration of Kunekt marketing the products and services under its Kunekt brand and transferring management skills in smartphones to Yiyueqiji, and

o

an exclusive distribution and sales agency agreement dated March 27, 2011 between Kunekt and XinWei, whereby Kunekt obtained the exclusive rights for the world to market, distribute and sell certain products and services in consideration of Kunekt marketing the products and services under its Kunekt brand and transferring management skills in smartphones to XinWei;

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·

immediately upon the signing of the Master Agreement, YaZhu, Yue, and XinWie will enter into a share exchange agreement (the “Yue Share Exchange Agreement”), whereby YaZhu will acquire all of the Shares of AMS held by Yue in exchange for the issuance of 1,200,000 shares in the common stock of YaZhu (each, a “YaZhu Share”);

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immediately upon the signing of the Master Agreement, YaZhu, Li, and Yiyueqiji will enter into a share exchange agreement (the “Li Share Exchange Agreement”), whereby YaZhu will acquire all of the Shares of AMS held by Li in exchange for the issuance of 3,384,000 YaZhu Shares;

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immediately upon the signing of the Master Agreement, Kunekt and AMS will enter into a license agreement, as described below;

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immediately upon the signing of the Master Agreement, Kunekt and YaZhu will enter into an asset purchase agreement, as described below;

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if Kunekt completes a distribution of the YaZhu Shares to the shareholders of Kunekt, within 10 days of the completion of such distribution, Bruk will cancel such number of YaZhu Shares such that Bruk will have no more than 148,917 YaZhu Shares; and

·

immediately upon the signing of the Master Agreement, all of the parties to the Master Agreement will enter into a registration rights agreement, as described below.

On June 29, 2011 and pursuant to the Master Agreement, Kunekt and AMS entered into a non-exclusive trademark license agreement (the “License Agreement”), whereby Kunekt granted to AMS the right to use its trademarks throughout the world in exchange for a royalty of one half of one percent of the gross revenues produced by AMS, which shall be paid within 30 days of the termination of the License Agreement. The License Agreement will terminate upon the earlier of: (i) six months from June 29, 2011; (ii) the closing of the Asset Purchase Agreement (as defined below), or (iii) such other date as is mutually agreed to by the parties hereto. Kunekt may terminate the License Agreement by delivering written notice to AMS and AMS may terminate the License Agreement by delivering 30 days written notice to Kunekt.

On June 29, 2011 and pursuant to the Master Agreement, Kunekt and YaZhu entered into an asset purchase agreement (the “Asset Purchase Agreement”), whereby Kunekt agreed to sell all of its assets (the “Assets”) to YaZhu (the “Sale”) in consideration of the issuance of 2,480,000 YaZhu Shares to Kunekt. The Sale is subject to Kunekt receiving the approval from its shareholders for the Sale. The closing of the Sale will take place on the later of (i) five business days after Kunekt receives shareholder approval for the Sale; (ii) five business days after the date that AMS, Yiyueqiji and Xinwei provide YaZhu with the information necessary and in the proper form to file a Current Report on Form 8-K that contains Form 10 information about YaZhu after the acquisition of AMS, as required by Item 2.01(f) of Form 8-K, including the consolidated audited financial statements for AMS, Yiyueqiji and Xinwei, or (iii) such other date as the parties hereto mutually agree (the “Closing Date”). Kunekt agreed to use commercially reasonable efforts to obtain approval for the Sale from its shareholders.

On June 29, 2011 and pursuant to the Master Agreement, YaZhu, Kunekt, AMS, Li, Yue, Yiyueqiji, Xinwei and Bruk entered into a registration rights agreement (the “Registration Rights Agreement”) whereby YaZhu agreed to register all YaZhu shares issued pursuant to the Master Agreement or agreements entered into pursuant to the Master Agreement within 120 days of June 30, 2011. YaZhu agreed to pay a penalty provision of 1.5% of the deemed value of the YaZhu Shares, being $1.00 per YaZhu Share, per month if the YaZhu Shares are not registered within 120 days of June 30, 2011. YaZhu agreed to pay all of the expenses of the registration.

In addition to any other rights Kunekt might have under any other agreement, if the YaZhu Shares issued pursuant to the Asset Purchase Agreement are not registered pursuant to an effective registration statement (pursuant to the Registration Rights Agreement) within 240 days of the Closing Date, YaZhu shall execute and deliver to Kunekt all such bills of sale, assignments, instruments of transfer, deeds, assurances, consents and other documents as shall be

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necessary to effectively transfer the Asset to Kunekt, free and clear of all encumbrances, or any contract to create an encumbrance, unless such encumbrance is permitted by Kunekt.

Pursuant to a share subscription agreement (the “Share Subscription Agreement”) entered into between Kunekt and a subscriber (the “Subscriber”), the Subscriber transferred $1,750,000 (the “Advance”) to Kunekt as an interest free loan and as consideration for the issuance of 1,223,777 common shares in the capital of Kunekt (each, a “Kunekt Share”) at a price of $1.43 per Kunekt Share. Due to a temporary cease trade order issued by the British Columbia Securities Commission prohibiting the trading in the securities of Kunekt, Kunekt has been unable to close the transactions contemplated by the Share Subscription Agreement, including the issuance of any Kunekt Shares to the Subscriber. On June 29, 2011, Kunekt, the Subscriber, and AMS entered into an agreement, whereby the Advance made by the Subscriber to Kunekt was forgiven in exchange for the payment of $784,000 from Kunekt to the Subscriber and the assignment of a promissory note issued by AMS to Kunekt in the amount of $216,000 to the Subscriber.

On January 19, 2012, Kunekt entered into an amended master agreement (the “Amended Master Agreement”) with all the parties to the Master Agreement, whereby the parties agreed that they have been unable to close the Yue Share Exchange Agreement and Li Share Exchange Agreement (collectively, the “Share Exchange Agreements”) and therefore wish to update the Share Exchange Agreements, the License Agreement and Registration Rights Agreement to reflect the delay in closing, as follows:

Share Exchange Agreements

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The Yu Share Exchange Agreement was amended as follows:

o

section 1.1(s) was amended by deleting the reference to “April 1, 2011 to December 31, 2011” as set out in the definition of “First Period” and replacing it with “October 31, 2011 to June 30, 2012”;

o

section 1.1(vv) was amended by deleting the reference to “April 1, 2011 to March 31, 2011” as set out in the definition of “Second Period” and replacing it with “October 31, 2011 to September 30, 2012”; and

o

section 2.2(b) was amended by deleting the reference to “September 30, 2011” and replacing it with “March 31, 2012”.

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The Li Share Exchange Agreement was amended as follows:

o

section 1.1(s) was amended by deleting the reference to “April 1, 2011 to December 31, 2011” as set out in the definition of “First Period” and replacing it with “October 31, 2011 to June 30, 2012”;

o

section 1.1(vv) was amended by deleting the reference to “April 1, 2011 to March 31, 2011” as set out in the definition of “Second Period” and replacing it with “October 31, 2011 to September 30, 2012”; and

o

section 2.2(b) was amended by deleting the reference to “September 30, 2011” and replacing it with “March 31, 2012”.

Registration Rights

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Section 1.1(f) of the Registration Rights Agreement was amended by deleting the reference to “June 30, 2011” as set out in the definition of “Effectiveness Date” and replacing it with “December 31, 2011”.

License Agreement

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Section 1.3 of the License Agreement was deleted and replaced with the following:

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Term.  The Licence will commence as of the Effective Date and subject to earlier termination pursuant to the terms of this Agreement, will expire upon the earlier of: (a) one year from the Effective Date; (b) the closing of the Asset Purchase Agreement between the Licensor and Ya Zhu Silk, Inc. referenced in the Master Amending Agreement; or (c) such other date as is mutually agreed to by the parties hereto.

New Business

In anticipation of completing the sale of our assets as outlined in “Transaction with AMS-INT” above, we may seek a business opportunity with entities who have recently commenced operations, or entities who wish to utilize the public marketplace in order to raise additional capital in order to expand business development activities, to develop a new product or service, or for other corporate purposes. We may acquire assets and establish wholly-owned subsidiaries in various businesses or acquire existing businesses as subsidiaries.

In implementing a structure for a particular business acquisition or opportunity, we may become a party to a merger, consolidation, reorganization, joint venture, or licensing agreement with another corporation or entity. We may also acquire stock or assets of an existing business. Upon the consummation of a transaction, it is likely that our present management will no longer be in control of our company. In addition, it is likely that our officers and directors will, as part of the terms of the acquisition transaction, resign and be replaced by one or more new officers and directors.

As of the date hereof, we have not entered into any formal written agreements for a business combination or opportunity. When any such agreement is reached, we intend to disclose such an agreement by filing a current report on Form 8-K with the Securities and Exchange Commission.

We anticipate that the selection of a business opportunity in which to participate will be complex and without certainty of success. We believe that there are numerous firms in various industries seeking the perceived benefits of being a publicly registered corporation. Business opportunities may be available in many different industries and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex. Business opportunities that we believe are in the best interests of our company may be scarce or we may be unable to obtain the ones that we want. We can provide no assurance that we will be able to locate compatible business opportunities.

Plan of Operation

We moved our head office back to the United States as of December 2011. Our wholly-owned subsidiary, Kunekt Corporation Limited, in Hong Kong, which was to be responsible for our operations in China, is part of the assets sold pursuant to the Asset Purchase Agreement.

Intellectual Properties

On November 22, 2010, we applied for a trademark on “Kunekt” with the U.S. Patent and Trademark Office for the following goods and services: mobile phones and smartphones. On June 14, 2011 we were issued a Notice of Allowance (NOA) for filing a Statement of Use (SOU), which NOA grants us six (6)-months to file a SOU. On January 13, 2012 we were granted an Extension of Time to File a Statement of Use, which grants us a further six (6)-months to file a SOU.

On January 27, 2011, we applied for a trademark on “Kruze” with the U.S. Patent and Trademark Office for the following goods and services: mobile phones and smartphones. On June 14, 2011 we were issued a Notice of Allowance (NOA) for filing a Statement of Use (SOU), which NOA grants us six (6)-months to file a SOU. On January 12, 2012 we were granted an Extension of Time to File a Statement of Use, which grants us a further six (6)-months to file a SOU.

On January 27, 2011, we applied for a trademark on “Krome” with the U.S. Patent and Trademark Office for the following goods and services: mobile phones and smartphones. On March 10, 2011 we were issued an Office Action, which denied the application.

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On January 27, 2011, we applied for a trademark on “Krush” with the U.S. Patent and Trademark Office for the following goods and services: handheld wireless devices, mobile phones and smartphones. On March 10, 2011 we were issued an Office Action, which denied the application.

On September 24, 2008, we applied for a service mark on “Kunekt” with the U.S. Patent and Trademark Office for certain financial services. We were granted the registered service mark on "Kunekt" (Registration #3,622,342) by the United States Patent and Trademark Office on May 19, 2009.

On June 16, 2008, we entered into a domain name assignment agreement between our company and our president, treasurer and sole director, Mark Bruk. Under the terms of the domain name assignment agreement, Mark Bruk transferred to us the following Internet domain names: Kunekt.com; Kunekt.net; Kunekt.org; Kunect.com; Kunect.net; Kunect.org; Cunekt.com; Cunekt.net; Cunekt.org; Cunect.com; Cunect.net; and Cunect.org for consideration of $1. However, if we change our name from Kunekt Corporation, the domain name assignment agreement immediately terminates and all rights in and to the aforementioned Internet domain names reverts back to Mark Bruk.

Pursuant to the License Agreement, we have licensed the use of all of our intellectual property to AMS. Pursuant to the Asset Purchase Agreement, we have agreed to sell all of our intellectual property to Ya Zhu. As a condition to the Asset Purchase Agreement, we must obtain the approval of our shareholders.

Employees

At present, we have no employees other than our president, treasurer and director, Mark Bruk. His primary interest is not our company and he devotes approximately 25-40 hours per fiscal quarter to our operations.

Item 1A      Risk Factors

In addition to other information in this annual report on Form 10-K, the following risk factors should be carefully considered in evaluating our business because such factors may have a significant impact on our business, operating results, liquidity and financial condition. As a result of the risk factors set forth below, actual results could differ materially from those projected in any forward looking statements.

Additional risks and uncertainties not presently known to us, or that we currently consider to be immaterial, may also impact our business, operating results, liquidity and financial condition. If any such risks occur, our business, operating results, liquidity and financial condition could be materially affected in an adverse manner. Under such circumstances, you may lose all or part of your investment.

Risks Related to our Financial Condition

There is substantial doubt about our ability to continue as a going concern.

Our auditor's report on our October 31, 2011 financial statements expressed an opinion that substantial doubt exists as to whether we can continue as an ongoing business. On September 24, 2009, we secured $450,000 in a loan from our founder, which loan was subsequently repaid on May 31, 2011, and $15,000 from our prospectus offering, which prospectus was filed on Form 424A with the Securities and Exchange Commission on January 14, 2008. We will need to raise additional capital, or we may be required to suspend or cease activities within one year.

We have incurred an accumulative net loss of $40,730 for the period from October 1, 2007 (date of inception) to October 31, 2011 and we have had no revenue. As of October 31, 2011, we had a working capital deficit of $33,855. We anticipate our ongoing expenses over the next one year to be $91,000 for the one year period.  Mark Bruk, our president, treasurer and director, in addition to his investment in our common stock, has invested an additional $2,455 in our company and made a $450,000 loan to the company, which loan was subsequently repaid on May 31, 2011. Our future is dependent upon our ability to obtain financing and upon future profitable operations from the sale of our mobile device products. We plan to seek additional funds through future debt or equity financing. Our financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event we cannot continue in

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existence.

As we have been issued an opinion by our auditors that substantial doubt exists as to whether we can continue as a going concern, it may be more difficult for us to attract investors.

If we do not obtain adequate financing, our business will fail, which will result in the complete loss of your investment.

Our current operating funds are just adequate enough for corporate existence over the next one year. Our cash balance as of October 31, 2011 is $127,220 and we had a working capital deficit of $33,855. We anticipate our ongoing expenses over the next one year to be $91,000 for the one year period. We may require additional financing in order to maintain our corporate existence and status as a reporting issuer. If required, we intend to raise additional capital through future debt or equity financing.

Currently, management cannot provide investors with an accurate estimate of the additional proceeds required to complete the sale of our assets and locate a business opportunity with an entity which may have recently commenced operations, or an entity who may wish to utilize the public marketplace in order to raise additional capital in order to expand business development activities. Investors should be aware that even if we complete the sale of our assets and locate an entity to acquire or merge with the costs associated may be cost prohibitive, which would result in the total loss of any investment made in our company.

Currently, we do not have any arrangements for financing and can provide no assurance to investors that we will be able to obtain financing when required. Obtaining additional financing would be subject to a number of factors, including our ability to attract interest from potential customers for our new mobile device products, changes in the mobile device marketplace, and investor sentiment. These factors may have an effect on the timing, amount, terms or conditions of additional financing and make such additional financing unavailable to us.

No assurance can be given that we will obtain access to capital markets in the future or that financing, adequate to satisfy the cash requirements of implementing our business strategies will be available on acceptable terms. Our inability to gain access to capital markets or obtain acceptable financing could have a material adverse effect upon the results of our operations and upon our financial conditions.

Risks Related To Our Operations

Business opportunities that we believe are in the best interests of our company may be scarce or we may be unable to obtain the ones that we want. If we are unable to obtain a business opportunity that we believe is in the best interests of our company, we may never recommence operations and will go out of business. If we go out of business, investors will lose their entire investment in our company.

We are, and will continue to be, an insignificant participant in the number of companies seeking a suitable business opportunity or business combination. A large number of established and well-financed entities, including venture capital firms, are actively seeking suitable business opportunities or business combinations which may also be desirable target candidates for us. Virtually all such entities have significantly greater financial resources, technical expertise and managerial capabilities than we do. We are, consequently, at a competitive disadvantage in identifying possible business opportunities and successfully completing a business combination. We will also compete with numerous other small public companies seeking suitable business opportunities or business combinations. If we are unable to obtain a business opportunity that we believe is in the best interests of our company, we may never recommence operations and will go out of business. If we go out of business, investors will lose their entire investment in our company.

Since we lack an operating history, we face a high risk of business failure, which may result in the loss of your investment.

We cannot guarantee that in the future we will be successful in generating revenue or raising funds through the sale of shares or through debt financing to pay for manufacturing, sales and marketing expenses. As of the date of this annual report, we have not earned any revenue. Failure to generate revenue may cause us to go out of business,

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which will result in the complete loss of your investment.

Our information systems could be damaged as a result of disasters or unpredictable events, which could have an adverse effect on our business operations.

Our information systems are stored on servers in the United States. If major disasters such as earthquakes, fires, floods, wars, terrorist attacks, computer viruses, transportation disasters or other events occur, our information systems may be seriously damaged. We may incur expenses or loss of revenues relating to such damages.

Our quarterly results may fluctuate because of many factors and, as a result, investors should not rely on quarterly operating results as indicative of future results.

Fluctuations in operating results or the failure of operating results to meet the expectations of public market analysts and investors may negatively impact the value of our securities. Quarterly operating results may fluctuate in the future due to a variety of factors that could affect revenues or expenses in any particular quarter. Fluctuations in quarterly operating results could cause the value of our securities to decline. Investors should not rely on quarter-to-quarter comparisons of results of operations as an indication of future performance. As a result of the factors listed below, it is possible that in future periods results of operations may be below the expectations of public market analysts and investors. This could cause the market price of our securities to decline.

Risks Related to our Management

Our president is a non-resident of the United States.

Mark Bruk, our president, treasurer and sole director, is a non-resident of the United States. Accordingly, investors may not feel comfortable investing in a company whose management is outside of the country and may have concerns regarding the future stability of the company. There can be no assurance management will ever be run by residents of the United States.

Key management personnel may leave our company, which could adversely affect our ability to continue operations.

We are entirely dependent on the efforts of Mark Bruk, our president, treasurer and director. The loss of our president, treasurer and director, or of other key personnel hired in the future, could have a material adverse effect on the business and our prospects.  There is no guarantee that replacement personnel, if any, will help our company to operate profitably. We do not maintain key person life insurance on Mr. Bruk.

Compensation may be paid to our officers, directors and employees regardless of our profitability. Such payments may negatively affect our cash flow and our ability to finance our business plan, which would cause our business to fail.

Mark Bruk, our president, treasurer and director is receiving compensation and Arom Thaveeloue, our secretary and/or any future employees of our company may be entitled to receive compensation, payments and reimbursements regardless of whether we operate at a profit or a loss. Any compensation received by Mr. Bruk, Mr. Thaveeloue or any other personnel in the future will be determined from time to time by the board of directors, which currently consists solely of Mr. Bruk, or Mr. Bruk in his capacity as our president, as applicable. We expect to reimburse Mr. Bruk, Mr. Thaveeloue and any future personnel for any direct out-of-pocket expenses they incur on behalf of us.

Risks Related To Our Capital Structure

Because our stock is a penny stock, shareholders will be more limited in their ability to sell their stock.

The shares of our common stock constitute “penny stocks” under the Securities Exchange Act of 1934. The shares will remain classified as a penny stock for the foreseeable future. The classification as a penny stock makes it more difficult for a broker/dealer to sell the stock into a secondary market, which makes it more difficult for a purchaser

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to liquidate his or her investment. Any broker/dealer engaged by the purchaser for the purpose of selling his or her shares will be subject to rules 15g-1 through 15g-10 of the Securities Exchange Act of 1934. Rather than having to comply with these rules, some broker-dealers will refuse to attempt to sell a penny stock.

The "penny stock" rules adopted by the SEC under the Securities Exchange Act of 1934 subjects the sale of the shares of our common stock to certain regulations which impose sales practice requirements on broker/dealers. For example, brokers/dealers selling such securities must, prior to effecting the transaction, provide their customers with a document that discloses the risks of investing in such securities.

Legal remedies, which may be available to an investor in "penny stocks,” are as follows:

(a)

if "penny stock" is sold to an investor in violation of his or her rights listed above, or other federal or states securities laws, the investor may be able to cancel his or her purchase and get his or her money back.

(b)

if the stocks are sold in a fraudulent manner, the investor may be able to sue the persons and firms that caused the fraud for damages.

(c)

if the investor has signed an arbitration agreement, however, he or she may have to pursue his or her claim through arbitration.

If the person purchasing the securities is someone other than an accredited investor or an established customer of the broker/dealer, the broker/dealer must also approve the potential customer's account by obtaining information concerning the customer's financial situation, investment experience and investment objectives. The broker/dealer must also make a determination whether the transaction is suitable for the customer and whether the customer has sufficient knowledge and experience in financial matters to be reasonably expected to be capable of evaluating the risk of transactions in such securities. Accordingly, the SEC's rules may limit the number of potential purchasers of the shares of our common stock.

If we are dissolved, it is unlikely that there will be sufficient assets remaining to distribute to the shareholders.

In the event of our dissolution, any proceeds realized from the liquidation of our assets will be distributed to the shareholders only after all claims of our creditors are satisfied. In that case, the ability of our shareholders to recover any portion of their investments in our shares will depend on the amount of funds realized and the claims to be satisfied therefrom.

Since we have 66,000,000 authorized shares, our management could issue additional shares, diluting our current shareholders' equity.

We have 66,000,000 authorized shares (65,000,000 shares of common stock with a par value of $0.001 per share and 1,000,000 shares of preferred stock with a par value of $0.01 per share), of which 62,000,000 common shares are currently issued and outstanding. We do not anticipate issuing any preferred shares in the foreseeable future.
Large increases in authorized shares and share issuances by us would generally have a negative impact on our share price. It is possible that, due to an increase in the authorized shares or additional share issuance, you could lose a substantial amount, or all, of your investment.

Since our president currently owns 51.6% of the issued and outstanding common stock, investors may find that his decisions are contrary to their interests.

As of the date of this annual report, Mark Bruk, our president, treasurer and sole director, currently owns 51.6% of the issued and outstanding shares. As a result, he is able to choose all of our directors and control the direction of our company. Mr. Bruk's interests may differ from the interests of other shareholders. Factors that could cause his interests to differ from the interests of other shareholders include the impact of corporate transactions on the timing of business operations and his ability to continue to manage the business given the amount of time he is able to devote to our company.

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We do not intend to pay dividends on any investment in the shares of stock of our company.

We have never paid any cash dividends and do not currently intend to pay any dividends for the foreseeable future. Because we do not intend to declare dividends, any gain on an investment in our company will need to come through an increase in the stock's price. This may never happen and investors may lose all of their investment in our company.

Compliance with changing regulation of corporate governance and public disclosure will result in additional expenses.

Changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002 and related SEC regulations, have created uncertainty for public companies and significantly increased the costs and risks associated with accessing the public markets and public reporting. Our management team will need to invest significant management time and financial resources to comply with both existing and evolving standards for public companies, which will lead to increased general and administrative expenses and a diversion of management time and attention from revenue generating activities to compliance activities.

Item 1B      Unresolved Staff Comments

Not applicable.

Item 2      Properties

Our registered office is located at 112 North Curry Street, Carson City, Nevada 89703 and our telephone number is (646) 736-0345 and our fax number is (866) 386-6365. Our operational premises are located where our president is operating from, which is from his home in Vancouver, Canada. These operational premises are provided at no charge by our president. We believe our current premises are adequate for our current operations.

Item 3      Legal Proceedings

On February 28, 2011, the British Columbia Securities Commission (BCSC) issued a temporary Halt Trade Order (HTO) against the company due to its concerns about various promotional material found on the Internet (the “Promotional Material Web Sites”). The HTO was renewed on March 3, 2011 and expired on March 8, 2011. However, on March 8, 2011, the Executive Director of the BCSC issued a Temporary Order and Notice of Hearing (the “CTO”) in the province of British Columbia, Canada, whereby the BCSC ordered that all persons cease trading in the securities of Kunekt until certain information is provided to the BCSC. On April 12, 2011 the BCSC denied Kunekt’s application to have the CTO removed or varied to allow us to complete the aforementioned Agreements with liberty to re-apply upon providing further evidence to the BCSC that neither Kunekt, nor any of its directors, officers or insiders, caused or had any direct or indirect involvement in the preparation or publication of the Promotional Material Web Sites or any knowledge of them prior to being informed of them by BCSC staff.

Background Information

Staff of the BCSC had sought assistance and assurances from Kunekt and its director/insider and officers with respect to the Promotional Material Web Sites. The company responded to the concerns of the BCSC which were identified to the company by the BCSC Staff on or about March 2, 2011.

Neither Kunekt, nor its director/insider or officers had any involvement, direct or indirect, in the materials found on the Promotional Material Web Sites, including any creation, financing (paid or prospective) or dissemination of said material. Further, other than as identified to the BCSC, the director/insider and officers of Kunekt had no knowledge of the Promotional Material Web Sites until being informed of them by BCSC staff.

13

Unauthorized Websites

Upon being advised of the existence of the Promotional Material Web Sites, on or about March 4, 2011, Kunekt issued cease and desist demands to each of the Promotional Material Web Sites. In addition, Kunekt located unauthorized web sites that were promoting Kunekt and sent email cease and desist demands to those web sites (a total of 19 web sites which include the 3 identified by the BCSC Staff). Kunekt also asked for and received confirmation from all third party public relations, investor relations and creative writing (blog) consultants/firms working on behalf of the company, of their non-involvement.

Unauthorized E-Letters

One of the Promotional Material Web Sites contained content promoting Kunekt and promising substantial profits. The director/insider and officers of Kunekt were unaware of this website until advised by BCSC Staff by email on March 2, 2011. In addition, various promotional emails have been identified which contain similar content, also purportedly from the same source (the “Unauthorized E-Letters”).

Neither Kunekt, nor its director/insider and officers had any involvement in, direct or indirect, in the Unauthorized E-Letters including any creation, financing (paid or prospective) or dissemination of said e-letters. Indeed, Kunekt has issued cease and desist demands to the apparent originators of the Unauthorized E-Letters.

Authorized Kunekt Websites and Email Alerts

“Authorized Kunekt Websites”

The only authorized investor relations, marketing and promotional websites owned or managed by the company or owned or managed by third party public relations, investor relations and creative writing (blog) consultants/firms working on behalf of the company are;

· www.kunekt.com

· www.kunektivity.com

· www.ProActiveNewsroom.com/knkt

· www.TheProActiveNetwork.com

· www.pitchengine.com/newsroom.php?id=35283

· www.youtube.com/kunekt

· www.twitter.com/kunekt

· www.facebook.com/KunektCorp

“Authorized Kunekt Email Alerts”

Kunekt also publishes news releases (available through Authorized Kunekt Websites and www.prnewswire.com); and authorized email alerts (identified as mailer@kunekt.com) to anyone subscribing through “www.kunekt.com”. No other news releases or email alerts are published by Kunekt.

Kunekt may add or remove Authorized Kunekt Websites and/or Authorized Kunekt Email Alert links in the future, the Authorized Kunekt Websites and Authorized Kunekt Email Alerts are listed at www.kunekt.com/investor.

The only statements endorsed by Kunekt are those that appear in the Authorized Kunekt Websites and Authorized Kunekt Email Alerts. Any website, e-letter, or similar communication which gives an undertaking relating to the future value or price of Kunekt securities is wholly unauthorized.

Other than as disclosed herein, there are no other material pending legal proceedings to which our company is a party or of which any of our property is the subject, and no such proceedings are known by us to be contemplated.

Other than as disclosed herein, there are no other material proceedings to which any director, officer, or affiliate of our company, or any owner of record or beneficial owner of more than 5% of any class of voting securities of our

14

company, or any associate of any such director, officer, affiliate of our company, or security holder is a party adverse to our company or has a material interest adverse to our company.

Item 4      [Removed and Reserved]

15

PART II

Item 5      Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market for Securities

Our shares of common stock, par value $0.001, are quoted for trading on the Pink Sheets under the symbol “KNKT”. The following table reflects the high and low bid information for our common stock for each fiscal quarter during the fiscal year ended October 31, 2011 and 2010. The bid information was obtained from the Over-the-Counter Bulletin Board and reflects inter-dealer prices, without retail mark-up, markdown or commission, and may not necessarily represent actual transactions.

Holders of Our Common Stock

As of February 22, 2012, there were 7 holders of record of our common stock. Our transfer agent is Island Stock Transfer, 100 2nd Avenue South, Suite 705S, St. Petersburg, Florida 33701.

Dividend Policy

We have not declared or paid any cash dividends since inception. We intend to retain future earnings, if any, for use in the operation and expansion of our business and do not intend to pay any cash dividends in the foreseeable future. There are no restrictions in our articles of incorporation or bylaws that prevent us from declaring dividends. The Nevada Revised Statutes, however, do prohibit us from declaring dividends where, after giving effect to the distribution of the dividend:

·

we would not be able to pay our debts as they become due in the usual course of business; or

·

our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the rights of stockholders who have preferential rights superior to those receiving the distribution.

16

Recent Sales of Unregistered Securities

Since November 1, 2007, we have not sold any equity securities that were not registered under the Securities Act of 1933.

Purchase of Equity Securities by Our Company and Affiliated Purchasers

None.

Securities authorized for issuance under equity compensation plans.

We do not have any stock compensation plans.

Item 6      Selected Financial Data

Not applicable.

Item 7      Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this annual report. 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 those discussed below and elsewhere in this annual report.

Our audited financial statements are stated in United States dollars and are prepared in accordance with United States generally accepted accounting principles.

Company Overview

We are a development-stage company that was originally organized to enter into the financial account card market with a proprietary patent pending financial account card product that we were developing. Our patent application, which was filed with the U.S. Patent and Trademark Office, was abandoned on September 3, 2010.

We subsequently changed our business to market mobile devices, specifically mobile phones, smartphones and tablet devices.

As of the date of this annual report we have generated no revenues from our operations.

New Business

In anticipation of completing the sale of our assets as outlined in “Item 1 – Business, Corporate Development, Transaction with AMS-INT” on page 5, we may seek a business opportunity with entities who have recently commenced operations, or entities who wish to utilize the public marketplace in order to raise additional capital in order to expand business development activities, to develop a new product or service, or for other corporate purposes. We may acquire assets and establish wholly-owned subsidiaries in various businesses or acquire existing businesses as subsidiaries.

In implementing a structure for a particular business acquisition or opportunity, we may become a party to a merger, consolidation, reorganization, joint venture, or licensing agreement with another corporation or entity. We may also acquire stock or assets of an existing business. Upon the consummation of a transaction, it is likely that our present management will no longer be in control of our company. In addition, it is likely that our officers and directors will, as part of the terms of the acquisition transaction, resign and be replaced by one or more new officers and directors.

17

As of the date hereof, we have not entered into any formal written agreements for a business combination or opportunity. When any such agreement is reached, we intend to disclose such an agreement by filing a current report on Form 8-K with the Securities and Exchange Commission.

We anticipate that the selection of a business opportunity in which to participate will be complex and without certainty of success. We believe that there are numerous firms in various industries seeking the perceived benefits of being a publicly registered corporation. Business opportunities may be available in many different industries and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex. Business opportunities that we believe are in the best interests of our company may be scarce or we may be unable to obtain the ones that we want. We can provide no assurance that we will be able to locate compatible business opportunities.

Plan of Operation

We moved our head office back to the United States as of December 2011. Our wholly-owned subsidiary, Kunekt Corporation Limited, in Hong Kong, which was to be responsible for our operations in China, is part of the assets sold pursuant to the asset sale agreement.

Over the next twelve months we estimate that we should need to spend approximately $91,000 on maintaining our status as a public fully-reporting company. The following is a breakdown of our anticipated expenses over the next four quarters.

Financial Condition, Liquidity and Capital Resources

At October 31, 2011, we had $127,220 cash on hand and in the bank compared to $387,150 in cash at October 31, 2010. At October 31, 2011, we had a working capital deficit of $33,855 compared to a working capital deficit of $221,631, at October 31, 2010. This decrease in working capital deficit was primarily the result of the gain on settling a debt.

At October 31, 2011, we had total assets of $155,430 consisting of cash of $127,220, prepaid expenses of $8,603, $4,198 in security deposits, and trust account of $15,409. Our total assets at October 31, 2010 were $387,248 consisting of cash of $387,150 and prepaid expenses of $98. This change is primarily the result of repaying the $450,000 loan from our president.

At October 31, 2011, our total liabilities were $169,678, consisting of accrued interest, on a previously outstanding loan, to our principle executive officer of $42,331, a note payable and accrued interest to our principle executive officer of $11,433, accrued wages payable to our principle executive officer of $69,575, income tax payable of $38,845 and accounts payable of $7,494. Our total liabilities at October 31, 2010 were $608,879, consisting of a loan payable and accrued interest to our principle executive officer of $480,711, a note payable and accrued interest to our principle executive officer of $59,147, accrued wages payable to our principle executive officer of $55,575 and accounts payable of $13,446.

For the year ended October 31, 2011, net cash generated by operating activities was $701,788, net cash used by investment activities was nil, net cash used by financing activities was $466,391. For the year ended October 31, 2010, net cash used by operating activities was $34,902, net cash used by investment activities was nil, net cash provided by financing activities was $52,513.

18

We must raise capital to continue the staged design, development, production, packaging and distribution of our mobile device products and initiate sales and marketing activities.

Management has estimated the cost over the next twelve months to be $91,000 to maintain our corporate existence and status as a reporting issuer. Our current cash on hand are just adequate enough for the next twelve months. We may require additional financing in order to maintain our corporate existence and status as a reporting issuer. If required, we intend to raise additional capital through future debt or equity financing.

Management believes that if we obtain sufficient funds to operate our business through future debt or equity financing, we may generate sales revenue within the following twelve months thereof. However, additional debt or equity financing may not be available to us on acceptable terms or at all, and thus we could fail to satisfy our future cash requirements.

If we are unsuccessful in raising the additional proceeds through future equity financing we will then have to seek additional funds through debt financing, which would be highly difficult for a new development stage company to secure. Therefore, we are highly dependent upon the future equity financing and failure to obtain equity financing would result in our having to seek capital from other resources such as debt financing, which may not even be available to us. However, if such financing were available, because we are a development stage company we would likely have to pay additional costs associated with high risk loans and be subject to an above market interest rate. At such time these funds are required, management would evaluate the terms of such debt financing and determine whether the business could sustain operations and growth and manage the debt load. If we cannot raise additional proceeds via future debt or equity financing we would be required to cease business operations. As a result, investors in our common stock would lose all of their investment. Also management believes if we cannot raise sufficient revenues or maintain our reporting status with the Securities and Exchange Commission we will have to cease all efforts directed towards the company. As such, any investment previously made would be lost in its entirety.

Management does not plan to hire additional employees at this time but to continue to retain the services of third-party consultants. We do not expect the purchase or sale of plant or any significant equipment and we do not anticipate any change in the number of our employees. We have no current material commitments.

Our auditors have issued a "going concern" opinion. This means that there is substantial doubt that we can continue as an on-going business for the next one year unless we obtain additional capital to pay our bills. This is because we have not generated any revenues and no substantial revenues are anticipated. Accordingly, we must raise cash from sources other than revenues. Our only source for cash at this time is investments by our president, treasurer and sole director. We must raise cash to implement our business strategy and stay in business. On September 24, 2009, we raised $450,000 in a loan from our founder, which loan was subsequently repaid on May 31, 2011, and we have used up $15,000 we raised through initial public offering of shares of our common stock, therefore our president, treasurer and sole director will need to make additional financial commitments to our company and/or we will need to raise additional capital through future debt or equity financing.

Results of Operations

Our operating expenses consist of professional and legal fees, investor and public relations fees, website development fees, stock transfer agent fees, officer wages, incorporation costs, and general and administrative expenses. General and administrative expenses consist of computer and internet expenses, office supplies, rents and travel expenses.

19

Professional and legal fees for the year ended October 31, 2011 were $364,655 compared to $44,933 for the year ended October 31, 2010. The increase in professional fees was primarily attributable to a significant increase in  the work done by our founder in marketing the company and towards completing an attempted acquisition of AMS-INT, see Item 1 Business, Transaction with AMS-INT on page 5. The increase in legal fees was primarily attributable to the Company’s response to a temporary Halt Trade Order (HTO) issued against the company by the British Columbia Securities Commission (BCSC), see Item 3 Legal Proceedings on page 13.

For the year ended October 31, 2011 accounting fees were $6,078, auditing fees were $16,262, legal fees were $145,645, investor relations fees were $80,250, public relations fees were $40,116, stock transfer agent fees were $2,650, website development fees were $24,356 and miscellaneous professional fees were $43,829, compared to $966, $16,455, $14,878, nil, nil, $3,634, nil and $9,000 respectively for the year ended October 31, 2010. For the year ended October 31, 2011 incorporation costs were $4,021, compared to nil for the year ended October 31, 2010.

Officer wages for the year ended October 31, 2011 were $52,750 compared to $35,550 for the year ended October 31, 2010. During the year ended October 31, 2011, our president, Mark Bruk, worked 500 hours at a rate of $25 per hour and approximately 1,006 hours at a rate of $40 per hour, as a result, we paid $38,750 and accrued $14,000 in wages payable to Mr. Bruk. For the year ended October 31, 2010, Mr. Bruk worked 1,422 hours at a rate of $25 per hour and, as a result, we accrued $35,550 in wages payable to Mr. Bruk.

General and administrative expenses for the year ended October 31, 2011 was $125,860 compared to $8,820 for the year ended October 31, 2010. The significant increase in general and administrative expenses was primarily attributable to a significant increase in  the work done by our founder in marketing the company and towards completing an attempted acquisition of AMS-INT, see Item 1 Business, Transaction with AMS-INT on page 5.

The following table shows a breakdown of material components of our patent filing costs and other expenses:

Financing Activities

Financing activities resulted in a net cash outflow of $466,391 for the year ended October 31, 2011 compared to a net cash inflow of $52,513 for the year ended October 31, 2010, which was primarily the result of repaying the $450,000 loan which had been made by the president.

Between January 21, 2008 and February 15, 2008, we received thirty-three subscriptions, for a total of 750,000 shares of common stock (par value $0.001). Arom Thaveeloue, our secretary, subscribed for 50,000 shares of common stock and we received $1,000 in the form of a bank draft as payment for the underlying securities. These subscriptions for shares of common stock in our Company were pursuant to our prospectus filed with the Securities and Exchange Commission on Form 424A on January 14, 2008. We received $15,000 in the form of bank drafts as payment for the underlying securities, which securities were subscribed for at a price of $0.02 per share and were subsequently issued on June 16, 2008. On September 24, 2009, we secured $450,000 in a loan from our founder and president, which loan was subsequently repaid on May 31, 2011.

20

We intend to seek additional funding through public or private financings to fund our operations through fiscal 2012 and beyond. However, if we are unable to raise additional capital when required or on acceptable terms, or achieve cash flow positive operations, we may have to significantly scale back operations both of which may affect our ability to continue as a going concern.

Additional Disclosure of Outstanding Share Data

As of February 22, 2012, we had 62,000,000 shares of common stock issued and outstanding.

Off Balance Sheet Arrangements

We currently have no off-balance sheet arrangements, including any outstanding derivative financial statements, off-balance sheet guarantees, interest rate swap transactions or foreign currency contracts, nor are any contemplated by management. We do not engage in trading activities involving non-exchange traded contracts.

The term "off-balance sheet arrangement" generally means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with the company is a party, under which the company has (i) any obligation arising under a guarantee contract, derivative instrument or variable interest; or (ii) a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets.

Critical Accounting Policies

The following are the accounting policies that we consider to be critical accounting policies. Critical accounting policies are those that are both important to the portrayal of our financial condition and results and those that require the most difficult, subjective, or complex judgments, often as results of the need to make estimates about the effect of matters that are subject to a degree of uncertainty.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities in the consolidated condensed financial statements and accompanying notes included elsewhere in this annual report. The United States Securities and Exchange Commission has defined a company’s most critical accounting policies as the ones that are most important to the portrayal of the company’s financial condition and results of operations, and which require the company to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. For additional information, see the notes to consolidated condensed financial statements included elsewhere in this annual report and also please refer to our annual reports on Form SB-2 for the year ended October 31, 2007 and on Form 10-K for the years ended October 31, 2008, 2009 and 2010, for a more detailed discussion of our critical accounting policies. Although we believe that our estimates and assumptions are reasonable, they are based upon information presently available. Actual results may differ significantly from these estimates under different assumptions or conditions.

We did not make any material changes in or to our critical accounting policies during the year ended October 31, 2011.

The carrying amounts of our financial instruments, including cash, accounts payable, and accrued liabilities, approximate fair value due to their short maturities.

Recent Accounting Pronouncements

In June 2009, the FASB issued guidance under Accounting Standards Codification (“ASC”) Topic 105, “Generally Accepted Accounting Principles” (SFAS No. 168, The FASB Accounting Standards Codification TM and the Hierarchy of Generally Accepted Accounting Principles). This guidance establishes the FASB ASC as the single source of authoritative U.S. GAAP recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative U.S.

21

GAAP for SEC registrants. SFAS 168 and the ASC are effective for financial statements issued for interim and annual periods ending after September 15, 2009. The ASC supersedes all existing non-SEC accounting and reporting standards. All other non-grandfathered, non-SEC accounting literature not included in the ASC has become non-authoritative. Following SFAS 168, the FASB will no longer issue new standards in the form of Statements, FSPs, or EITF Abstracts. Instead, the FASB will issue Accounting Standards Updates, which will serve only to update the ASC, provide background information about the guidance, and provide the bases for conclusions on the change(s) in the ASC. We adopted ASC 105 effective for our financial statements issued as of October 31, 2009. The adoption of this guidance did not have an impact on our financial statements but will alter the references to accounting literature within the consolidated financial statements.

Item 7A      Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 8      Financial Statements and Supplementary Data

Our fiscal year end is October 31. Our audited financial statements are stated in U.S. dollars and are prepared in conformity with generally accepted accounting principles of the United States.

Our financial statements for the fiscal year ended October 31, 2011 immediately follow:

22

KUNEKT CORPORATION

(A Development Stage Company)

INDEX TO FINANCIAL STATEMENTS

October 31, 2011 and 2010 and
From Inception on October 1, 2007 Through October 31, 2011

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders

Kunekt Corporation

(A Development Stage Company)

Carson City, Nevada

We have audited the accompanying balance sheets of Kunekt Corporation (A Development Stage Company) as of October 31, 2011 and 2010, and the related statements of operations and other comprehensive income (loss), stockholders' equity (deficit), and cash flows for the years then ended, and from inception on October 1, 2007 through October 31, 2011. These financial statements are the responsibility of the Company's management. 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 audits 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 Kunekt Corporation (A Development Stage Company) as of October 31, 2011 and 2010, and the results of its operations and its cash flows for the years then ended, and from inception on October 1, 2007 through October 31, 2011, in conformity with U.S. generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.  As discussed in Note 4 to the financial statements, the Company has suffered recurring losses from operations, and its total liabilities exceeds its total assets.  This raises substantial doubt about the Company's ability to continue as a going concern.  Management's plans in regard to these matters are also described in Note 4 to the financial statements.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ HJ & Associates, LLC

HJ & Associates, LLC

Salt Lake City, Utah

February 27, 2012

F - 2

KUNEKT CORPORATION

(A Development Stage Company)

BALANCE SHEETS

The accompanying notes are an integral part of these financial statements.

F - 6

KUNEKT CORPORATION

(A Development Stage Company)

Notes to the Financial Statements

October 31, 2011

NOTE 1 -

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a.

Organization

The Company was incorporated in the State of Nevada as a for-profit company on October 1, 2007 and established a fiscal year end of October 31.  The Company is a development-stage company which was originally organized to enter into the financial account card market with a proprietary patent pending financial account card product (the “Kunekt Card”) and related services that the Company was developing. On September 3, 2010 the Company abandoned its patent application after receiving a final Office Action from the United States Patent and Trademark Office declining the patent application. On December 2, 2010 the Company announced that it is shifting is primary focus to designing, building and marketing mobile phones, smartphones and tablets. On June 29, 2011, the Company announced that it was planning to sell its assets as outlined in “Item 1 – Business, Corporate Development, Transaction with AMS-INT” on page 5 of its most recent annual report on Form 10-K.

b.

Basis of Presentation

The Company uses the accrual method of accounting for financial purposes and has elected October 31 as its year-end.

c.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosers.  Accordingly, actual results could differ from those estimates.

d.

Fixed Assets

Fixed assets are recorded at cost.  Major additions and improvements are capitalized.  Minor replacements, maintenance and repairs that do not increase the useful life of the assets are expensed as incurred.  Depreciation of property and equipment is determined on a straight-line basis over the expected useful lives.

The cost and related accumulated depreciation of equipment retired or sold are removed from the accounts and any differences between the undepreciated amount and the proceeds from the sale are recorded as gain or loss on sale of equipment.

e.

Long-Lived Assets

Our policy regarding long-lived assets is to evaluate the recoverability of our assets when the facts and circumstances suggest that the assets may be impaired. This assessment is performed based on the estimated undiscounted cash flows compared to the carrying value of the assets. If the future cash flows (undiscounted and without interest charges) are less than the carrying value, a write-down would be recorded to reduce the related asset to its estimated fair value.

f.

Fair Value of Financial Instruments

The carrying amounts of the Company’s financial instruments, including cash, accounts payable, and accrued liabilities, approximate fair value due to their short maturities.

g.

Revenue

The Company records revenue on the accrual basis when all goods and services have been performed and delivered, the amounts are readily determinable, and collection is reasonably assured.  The Company has not generated any revenue since its inception.

F - 7

KUNEKT CORPORATION

(A Development Stage Company)

Notes to the Financial Statements

October 31, 2011

NOTE 1 -

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)

h.

Website Development Costs

Internal and external costs incurred during the preliminary project stage are expensed as they are incurred. Internal and external costs incurred to develop internal-use computer software during the application development stage are capitalized. Training costs are not internal-use software development costs and, if incurred during this stage, are expensed as incurred. These capitalized costs are amortized based on their estimated useful life over three years. Payroll and other related costs are not capitalized, as the amounts principally relate to maintenance.

i.

Cash and Cash Equivalents

The Company considers all highly liquid investments with maturity of three months or less to be cash equivalents.

j.

Foreign Currency Translation

The Company's cash deposits with a functional currency other than the U.S. dollar translate amounts to the reporting currency, United States dollars. At each balance sheet date, assets and liabilities that are denominated in a currency other than U.S. dollars are adjusted to reflect the current exchange rate which may give rise to a foreign currency translation adjustment accounted for as a separate component of stockholders’ equity and included in comprehensive loss.

For transactions undertaken by the Company in foreign currencies, monetary assets and liabilities are translated into the functional currency at the exchange rate in effect at the end of the year. Non-monetary assets and liabilities are translated at the exchange rate prevailing when the assets were acquired or the liabilities assumed. Revenues and expenses are translated at the rate approximating the rate of exchange on the transaction date. Exchange gains and losses are included in the determination of net income (loss) for the year.

k.

Comprehensive Loss

Comprehensive loss is comprised of foreign currency translation adjustments.

l.

Recent Accounting Pronouncements

In June 2009, the FASB issued guidance under Accounting Standards Codification (“ASC”) Topic 105, “Generally Accepted Accounting Principles” (SFAS No. 168, The FASB Accounting Standards Codification TM and the Hierarchy of Generally Accepted Accounting Principles). This guidance establishes the FASB ASC as the single source of authoritative U.S. GAAP recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative U.S. GAAP for SEC registrants. SFAS 168 and the ASC are effective for financial statements issued for interim and annual periods ending after September 15, 2009. The ASC supersedes all existing non-SEC accounting and reporting standards. All other non-grandfathered, non-SEC accounting literature not included in the ASC has become non-authoritative. Following SFAS 168, the FASB will no longer issue new standards in the form of Statements, FSPs, or EITF Abstracts. Instead, the FASB will issue Accounting Standards Updates, which will serve only to update the ASC, provide background information about the guidance, and provide the bases for conclusions on the change(s) in the ASC. We adopted ASC 105 effective for our financial statements issued as of October 31, 2009. The adoption of this guidance did not have an impact on our financial statements but will alter the references to accounting literature within the consolidated financial statements.

F - 8

KUNEKT CORPORATION

(A Development Stage Company)

Notes to the Financial Statements

October 31, 2011

NOTE 1 -

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)

m.

Basic Income (Loss) Per Share

The computation of basic income (loss) per share of common stock is based on the weighted average number of shares outstanding during the period of the consolidated financial statements as follows:

Net income (loss) per share is computed by dividing the net income (loss) allocable to common stockholders by the weighted average number of shares of common stock outstanding.  

n.

Income Taxes

The Company accounts for income taxes in accordance with Accounting Standards Codification Topic 740, Income Taxes ("Topic 740"), which requires the recognition of deferred tax liabilities and assets at currently enacted tax rates for the expected future tax consequences of events that have been included in the financial statements or tax returns. A valuation allowance is recognized to reduce the net deferred tax asset to an amount that is more likely than not to be realized.

Topic 740 provides guidance on the accounting for uncertainty in income taxes recognized in a company's financial statements. Topic 740 requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more-likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements.

At the adoption date of November 1, 2007, the Company had no unrecognized tax benefit which would affect the effective tax rate if recognized.

The Company includes interest and penalties arising from the underpayment of income taxes in the consolidated statements of operations in the provision for income taxes. As of October 31, 2010, the Company had no accrued interest or penalties related to uncertain tax positions.

The Company files an income tax return in the U.S. federal jurisdiction. The company was incorporated in Nevada in October of 2007; therefore, the Company is subject to U.S. federal examinations by tax authorities since inception. Since Nevada does not have a state income tax no returns are required to be filed in that jurisdiction.

F - 9

KUNEKT CORPORATION

(A Development Stage Company)

Notes to the Financial Statements

October 31, 2011

NOTE 1 -

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)

n.

Income Taxes (continued)

Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences.  Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases.  Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.  Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

Net deferred tax assets and liabilities consist of the following components as of October 31:

The income tax provision differs from the amount of income tax determined by applying the U.S. federal income tax rates of 27.25% to pretax income from continuing operations for the years ended October 31, 2011 and October 31, 2010 due to the following: