Attached files
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(Amendment No. 2)
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2010
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File No. 000-53853
Art Dimensions, Inc.
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(Exact Name of Small Business Issuer as specified in its charter)
Colorado 80-0182193
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(State or Other (IRS Employer File
Jurisdiction Number)
of Incorporation)
3636 S. Jason Street
Englewood, Colorado 80113
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(Address of Principal (Zip Code)
Executive Offices)
(303) 781-7280
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(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock
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Indicate by check mark if registrant is a well-known seasoned issuer, as defined
in Rule 405 of the Securities Act. Yes |_| No |X|.
Indicate by check mark if registrant is not required to file reports pursuant to
Section 13 or 15(d) of the Exchange Act. Yes |_| No |X|.
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: |X| No: |_|
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-K is contained in this form and no disclosure will 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. |X|
Indicate by check mark whether the registrant is a large accelerated filer, a
non-accelerated filer, or a smaller reporting company. See definitions of "large
accelerated filer," "accelerated filer," and "small reporting company" in Rule
12b-2 of the Exchange Act.
Large accelerated filer |_| Accelerated filer |_| Non-accelerated filer |_| (Do
not Smaller reporting company |X| 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 |_| No |X|.
State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was last sold, or the average bid and asked price of such common equity, as of
the last business day of the registrant's most recently completed second fiscal
quarter: approximately $1,136,163.
FORM 10-K
Art Dimensions, Inc.
INDEX
PART I
Item 1. Business 3
Item 1A. Risk Factors 6
Item 2. Property 12
Item 3. Legal Proceedings 12
Item 4. Submission of Matters to a Vote of Security Holders 12
PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder 12
Matters and Issuer Purchases of Equity Securities
Item 6. Selected Financial Data 14
Item 7. Management's Discussion and Analysis of Financial Condition and 14
Results of Operations
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 19
Item 8. Financial Statements and Supplementary Data 19
Item 9. Changes in and Disagreements with Accountants on Accounting and 32
Financial Disclosures
Item 9A(T). Controls and Procedures 32
Item 9B. Other Information 33
PART III
Item 10. Directors, Executive Officers and Corporate Governance 33
Item 11. Executive Compensation 35
Item 12. Security Ownership of Certain Beneficial Owners and Management 35
and Related Stockholder Matters
Item 13. Certain Relationships and Related Transactions, and Director 35
Independence
Item 14. Principal Accountant Fees and Services 36
Item 15. Exhibits Financial Statement Schedules 36
Financial Statements pages 21 - 31
Signatures 38
References in this document to "us," "we," or "Company" refer to Art Dimensions,
Inc.
Forward-Looking Statements
The following discussion contains forward-looking statements regarding us, our
business, prospects and results of operations that are subject to certain risks
and uncertainties posed by many factors and events that could cause our actual
business, prospects and results of operations to differ materially from those
that may be anticipated by such forward-looking statements. Factors that may
affect such forward-looking statements include, without limitation: our ability
to successfully develop new products and services for new markets; the impact of
competition on our revenues, changes in law or regulatory requirements that
adversely affect or preclude clients from using us for certain applications;
delays our introduction of new products or services; and our failure to keep
pace with our competitors.
When used in this discussion, words such as "believes", "anticipates",
"expects", "intends" and similar expressions are intended to identify
forward-looking statements, but are not the exclusive means of identifying
forward-looking statements. Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date of this
report. We undertake no obligation to revise any forward-looking statements in
order to reflect events or circumstances that may subsequently arise. Readers
are urged to carefully review and consider the various disclosures made by us in
this report and other reports filed with the Securities and Exchange Commission
that attempt to advise interested parties of the risks and factors that may
affect our business.
PART I
Item 1. DESCRIPTION OF BUSINESS.
General
We were incorporated in January 29, 2008. We began operations as of our
date of incorporation, January 29, 2008. We were formerly a wholly-owned
subsidiary of Art Design, Inc.("ATDN"). On August 21, 2009, the directors of
ATDN approved, subject to the effectiveness of a registration with the
Securities and Exchange Commission, a spin-off to ATDN shareholders on a pro
rata basis, with one share each of ART DIMENSIONS, Inc. to be issued for each
ten shares issued and outstanding of common stock owned by such ATDN
shareholders as of the Record Date. Since ATDN's business is related to the
current activities of Art Dimensions, the ATDN directors decided it was in the
best interest of ATDN and Art Dimensions and ATDN's shareholders to spin-off Art
Dimensions to minimize any potential of conflict of interest by more clearly
focusing each company on their own, individual business plans. Also, the
management of Art Design, Inc. originally thought that the two companies would
operate in a more closely-related manner. However, management of Art Design,
Inc. now believes that the companies have two unique and distinct business plans
and should not be directly tied together in order to maximize the potential
success of both. ATDN's business is primarily the sale of products with service
and consulting as ancillary components. On the other hand, Art Dimensions
business is to primarily service and consulting with the sale of products as an
ancillary component. To the extent there may be an overlap of activities, a
potential conflict of interest may exist. However, each company will utilize its
best efforts to minimize any impact. Both companies operate as separate,
distinct entities. The shares of Art Dimensions were spun off to the ATDN in
December, 2009. On June 1, 2008, an organization named Spyglass Investment
Partnership ("Spyglass ") agreed to provide operating capital in the form of a
loan of $250,000 to cover operating expenses. This loan is evidenced by an
unsecured promissory note which now due December 31, 2011. It should be noted
that Spyglass is under no obligation to lend us funds under the term of the
note.
We issued have a total of 300,000 warrants to Spyglass , exercisable at a
price of $0.001 per share subject to adjustment, for a period of five years from
the date of issuance. These warrants were issued as an additional inducement for
Spyglass to loan us $250,000. The warrants are subject to registration rights.
Our principal executive offices are located at 3636 S. Jason Street,
Englewood, Colorado 80110. Our telephone number is (303) 781-7820. We have no
website.
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Business
We provide art consulting and marketing services and advises or represent
individuals who are in the business of creating, producing or selling art.
Secondarily, and as an adjunct to our primary purpose, we also earn revenue from
the sale of art and interior design products. To date, however, all of our
revenue has come solely from the sale of products. We anticipate that the sale
of products will primarily be to our artist clients but may also incidentally be
to the general public. Our business plan is provide both services and products
to our clients. We provide art consulting, marketing services, and
representation to artists, as well as to sell them or their clients interior
design products.
We estimate that we must generate between $10,000 and $20,000 in gross
profit in any fiscal year to be profitable. These operating costs include
insurance, taxes, utilities, maintenance, contract services and all other costs
of operations. However, the operating costs and expected revenue generation are
difficult to predict. We expect to generate revenues in the next twelve months
from operations using referrals from ATDN and unrelated individuals and entities
that associate with or work with individuals in the business of creating,
producing or selling art.
Since there can be no assurances that revenues will be sufficient to cover
operating costs for the foreseeable future, it may be necessary to raise
additional funds. Due to our limited operating history, raising additional funds
may be difficult. In June 2008, an organization named Spyglass agreed to provide
operating capital in the form of a loan of $250,000 to cover operating expenses.
The loan matured on May 31, 2010, and we entered into a new loan. This loan is
evidenced by an unsecured promissory note which now due December 31, 2011. It
should be noted that Spyglass is under no obligation to lend us funds under the
term of the note. If we are unable to raise funds to cover any operating deficit
after December 31, 2011, our business may fail.
We plan to continue to increase our revenues with the addition of
additional clients and projects. We have no definitive agreements in place at
this time for the generation of revenues, however.
The consulting and marketing services we provide to artists includes, but
are not limited to the following business activities such as: development of a
business plan and/or marketing plan; website analysis of the artist's site; how
an artist should present oneself and his/her art; how to price art for
sale/exhibition; pricing art for sale; critical essay for an exhibition
catalogue; write/rewrite of an artist statement; provide custom content for an
artist or gallery website and provide seminars and lectures on business aspects
of art. The business representation services we provide to artists includes but
not limited to: contract review and/or negotiation and mediation and dispute
resolution. The consulting and marketing services we provide to non-artists
includes the following types of activities or tasks: advice on whether to buy or
sell a work of art; advice on how to develop a collection; consulting on estate
or inheritance issues; expert witness testimony; assistance with fundraisers or
charity events; seminars and lectures on art business issues; critical essay for
an exhibition or collection catalogue and estate planning for art.
We are growing our business in the following manner. We market our services
in a number of different forums. We attend different gatherings where artists
and non-artist congregate such as trade shows, auctions and exhibitions. We also
market our services via the internet and at events and activities sponsored by
ATDN. Other sales channels include print media focused on art or artists or art
collectors. We also market our services via direct sales campaigns to artists
and non-artists alike. We also believe that we must provide a high level of
service for our customers. We believe that it is our responsibility to make
certain that our products and services are satisfying for our customers.
Operations
Our plan is to concentrate our operations in the Denver, Colorado
metropolitan area and online through a website, which we will eventually
develop.
Marketing and Promotion
We generate revenues in the next twelve months from our operations using
referrals from ATDN and unrelated individuals and entities that operate in the
art consulting and artist representation business. We also market through direct
contact with prospective customers. We also use general solicitation of
customers through various forms of media advertising, including, but not limited
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to, print media and the internet. We have no sales representatives who solicit
potential clients. We have not yet fully developed our marketing program and do
not know the specific cost of such a program, although we believe that it will
be expensive.
Competition
We have a limited operating history and, therefore, will have inherent
difficulty competing in the art consulting, marketing and business
representation business. Our performance depends, in large part, on our ability
to engage with successful artists to perform consulting and marketing services
and advise or represent individuals whom are in the business of creating,
producing or selling art. The art consulting business is highly fractured with
respect to price and services offered. There are a handful of competitors that
represent the very successful artists. Many of these firms are well-established,
including national, regional and local organizations possessing substantially
greater financial, marketing, personnel and other resources than we do. There
can be no assurance that we will be able to respond to various competitive
factors affecting the art industry and be able to attract and advise our clients
accordingly. There is very little competition for up and coming artists, but the
demand for consulting, marketing and agent representation services is hard to
gauge. We believe that this market is underserved, but most artists are not used
to treating their vocation as a business and may not believe they need our
services. If we are unable to develop an economical model to serve this market
we will not be profitable. We cannot guarantee that we will be able to
successfully compete in the highly competitive high-end or poorly served low-end
markets. We cannot expect to be a significant factor in the collectibles field
in the foreseeable future.
Effect of Governmental Regulations: Compliance with Environmental Laws
We do not believe that we are subject to any material government or
industry regulation.
Property
We currently use the offices of ATDN. We plan to occupy separate office
facilities and obtain office furniture and equipment after the spin-off. We own
no real estate nor have plans to acquire any real estate.
Raw Materials
The use of raw materials is not a material factor in our operations at the
present time. We do not expect raw materials to be a material factor in the
future.
Backlog
At December 31, 2010, we had no backlogs.
Employees
We have two part-time employees. As we expand, we intend to hire employees.
However, we have no present plans to do so. We may hire part-time help as needed
from time-to-time for specific projects. We do not pay salaries to our two
officers. However, we reimburse them for any out-of-pocket expenses they incur
on our behalf. In addition, in the future, we may approve the payment of
salaries for our management, but currently, no such plans have been approved. We
do not currently pay for vacation, holidays or provide major medical coverage.
None of our officers or directors is a party to any employment agreement.
However, we may adopt such plans in the future.
Proprietary Information
We do not currently have any patent or trademark protection. If we
determine it is feasible to file for such trademark protection, we still have no
assurance that doing so will prevent competitors from using the same or similar
names, marks, concepts or appearance.
Government Regulation
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We are not subject to any material government or industry regulation.
Research and Development
We have never spent any amount in research and development activities.
Environmental Compliance
Since we only act in the capacity of an intermediary, we do not expect
environmental laws to have any material impact on us.
How to Obtain Our SEC Filings
We file annual, quarterly, and special reports, proxy statements, and other
information with the Securities Exchange Commission (SEC). Reports, proxy
statements and other information filed with the SEC can be inspected and copied
at the public reference facilities of the SEC at 100 F Street N.E., Washington,
DC 20549. Such material may also be accessed electronically by means of the
SEC's website at www.sec.gov.
Our investor relations department can be contacted at our principal
executive office located at our principal office, 3636 S. Jason Street,
Englewood, Colorado 80113. Our phone number at our headquarters is (303)
781-7280.
Item 1A. RISK FACTORS.
You should carefully consider the risks and uncertainties described below and
the other information in this document before deciding to invest in shares of
our common stock.
The occurrence of any of the following risks could materially and adversely
affect our business, financial condition and operating result. In this case, the
trading price of our common stock could decline and you might lose all or part
of your investment.
We were recently formed as a Colorado business entity, have a limited operating
history, and have never been profitable. Our limited operating history makes it
difficult for us to evaluate our future business prospects and make decisions
based on those estimates of our future performance. We are inherently a risky
investment. If we make poor budgetary decisions as a result of unreliable
historical data, we could continue to incur losses, which may result in a
decline in our stock price. We cannot guarantee we will ever develop a
substantial number of clients. Even if we develop a substantial number of
clients, there is no assurance that we will become a profitable company. As a
result, we may never become profitable, and could go out of business.
We were formed as a Colorado business entity in January 2008. At the present
time, we have a limited operating history and have never been profitable. There
can be no guarantee that we will ever be profitable. From our inception on
January 29, 2008 through December 31, 2010, we generated $4,247 in revenue. We
had a net loss of $31,109 for this period. Our revenues depend upon the number
of clients we can develop and service. Our limited operating history makes it
difficult to evaluate our business on the basis of historical operations. As a
consequence, our past results may not be indicative of future results. Although
this is true for any business, it is particularly true for us because of our
limited operating history. Reliance on historical results may hinder our ability
to anticipate and timely adapt to increases or decreases in sales, revenues or
expenses. For example, if we overestimate our future sales for a particular
period or periods based on our historical growth rate, we may increase our
overhead and other operating expenses to a greater degree than we would have if
we correctly anticipated the lower sales level for that period and reduced our
controllable expenses accordingly. If we make poor budgetary decisions as a
result of unreliable historical data, we could continue to incur losses, which
may result in a decline in our stock price. We cannot guarantee we will ever
develop a substantial number of clients. Even if we develop a substantial number
of clients, there is no assurance that we will become a profitable company.
Because we are a company with a limited history, the operations in which we
engage in, the art consulting, marketing and agent business, is an extremely
risky business. We have no historical frame of reference to determine whether
this proposed business model will be successful. We may never become profitable,
and, as a result, we could go out of business.
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Because we had incurred operating losses from our inception during our limited
operating history, our accountants have expressed substantial doubts about our
ability to continue as a going concern.
For the period ended December 31, 2010 and 2009, our accountants have expressed
substantial doubt about our ability to continue as a going concern as a result
of our loss from operations and the requirement of significant future
expenditures in connection with marketing efforts and general and administrative
expenses. Our ability to achieve and maintain profitability and positive cash
flow is dependent upon:
o our ability to locate clients who will purchase our services; and
o our ability to generate revenues.
Based upon current plans, we may incur operating losses in future periods
because we may, from time to time, be incurring expenses but not generating
sufficient revenues. We expect between $10,000 and $20,000 in operating costs
over the next twelve months. We cannot guarantee that we will be successful in
generating sufficient revenues or other funds in the future to cover these
operating costs. Failure to generate sufficient revenues will cause us to go out
of business.
We have a business plan which is expensive and may not generate increases in our
revenues.
We intend to grow our business and have a business plan. In connection with this
plan, we anticipate that we will incur expenses associated with our growth and
expansion. Our funds may not be adequate to offset all of the expenses we incur
in expanding our business. We will need to generate revenues to offset expenses
associated with our growth, and we may be unsuccessful in achieving revenues,
despite our attempts to grow our business. If our growth strategies do not
result in significant revenues, we may have to abandon our plans for further
growth or may even cease our operations.
Because we are small and do not have much capital, we must limit our operations
to the Denver, Colorado metropolitan area. A company in our industry with
limited operations has a smaller opportunity to be successful. If we do not make
a profit, we may have to suspend or cease operations.
Because we are small and do not have much capital, we must limit our operations.
We must limit our operations to the Denver, Colorado metropolitan area as the
only geographical area in which we operate. Because we may have to limit our
operations, we may not generate sufficient sales to make a profit. If we do not
make a profit, we may have to suspend or cease operations.
Because our current officers and directors are involved with other businesses in
the same industry, the manner in which we operate may create the possibility of
a conflict of interest.
Both Mrs. Gregarek and Mrs. Sheehan are also involved with other businesses in
the same industry. Both are officers and directors of Art Design, Inc.
Additionally, Mr. and Mrs. Sheehan own the Accessory Warehouse, Inc. Mrs.
Gregarek is an independent contractor for interior design work. These other
arrangements could create conflict of interest with respect to our operations.
We cannot guarantee that any potential conflicts can be avoided.
We are a company with limited operating history which intends to grow its
operations to become profitable as soon as possible. As a result, we must
effectively manage the growth of our operations, or we may outgrow our current
infrastructure.
We have two part-time employees, Mrs. Gregarek, our President and Kathy Sheehan,
our Secretary-Treasurer. If we experience rapid growth of our operations, we
could see a backlog of client orders. We can resolve these capacity issues by
hiring additional personnel and upgrading our infrastructure. However, we cannot
guarantee that sufficient additional personnel will be available or that we will
find suitable personnel to aid our growth. In any case, we will continue
pursuing additional sales growth for our company. Expanding our infrastructure
will be expensive, and will require us to train our workforce, and improve our
financial and managerial controls to keep pace with the growth of our
operations.
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Because we are a company with limited operating history and revenues and only
minimally capitalized, we have a lack of liquidity and will need additional
financing in the future. Our future success depends, in large part, on the
continued financing of Spyglass. The loss of this financing would have a
material adverse effect on our business. Additional financing may not be
available when needed, which could delay our development or indefinitely
postpone it. Our investors could lose some or all of their investment.
We are only minimally capitalized. Because we are only minimally capitalized, we
expect to experience a lack of liquidity for the foreseeable future in our
operations. We will adjust our expenses as necessary to prevent cash flow or
liquidity problems. However, we expect we will need additional financing of some
type, which we do not now possess, to fully develop our operations. We expect to
rely principally upon our ability to raise additional financing, the success of
which cannot be guaranteed. Spyglass is currently our only source of financing.
It should be noted that Spyglass is under no obligation to lend us funds under
the term of the note. We have no indication that Spyglass would refuse to lend
us funds if we should ask. Spyglass is owned, in part by Mrs. Gregarek's
husband. It would be very difficult to find a financing source to replace
Spyglass. The loss of the Spyglass financing would have a material adverse
effect on our business. At the present time, we have no definitive plans for
financing in place, other than the funds which we have already obtained. In the
event that we need additional capital, we will need to identify alternate
sources of capital for working capital purposes. To the extent that we
experience a substantial lack of liquidity, our development in accordance with
our proposed plan may be delayed or indefinitely postponed, our operations could
be impaired, we may never become profitable, fail as an organization, and our
investors could lose some or all of their investment.
Because we are a company with limited operating history, we have no experience
as a public company. Our inability to operate as a public company could be the
basis of your losing your entire investment in us. We have never operated as a
public company. We have no experience in complying with the various rules and
regulations which are required of a public company. As a result, we may not be
able to operate successfully as a public company, even if our operations are
successful. We plan to comply with all of the various rules and regulations
which are required of a public company. However, if we cannot operate
successfully as a public company, your investment may be materially adversely
affected. Our inability to operate as a public company could be the basis of
your losing your entire investment in us.
Our ability to grow our business depends on relationships with others. We have
only a few established relationships at this time. We may never develop
sufficient relationships to grow a successful business. Further, if we were to
lose those relationships, we could lose our ability to sell services. If we lose
enough clients, we could go out of business.
Eventually, all of our revenue and gross profit are expected to come from
consulting, marketing and representing artists in their business dealings.
However, in the interim, we will also sell products. To date, however, all of
our revenue has come solely from the sale of products. Nevertheless, our
business plan is clearly focused to develop revenue and gross profit primarily
from consulting, marketing and representing artists in their business dealings.
While our relationships will change from time to time, we must rely upon our
clients for our success. Our performance depends, in large part, on our ability
to engage with successful artists to perform consulting and marketing services
and advise or represent individuals whom are in the business of creating,
producing or selling art. Artists are skilled in their vocation, but often lack
the general business knowledge and expertise to obtain and secure contracts.
Most artists do not understand what they do not know and therefore how to avoid
them or what value an organization like ours provides. This means that there can
be no assurance that we will be able to secure clients at fees they can afford
or are willing to pay. If we can identify and establish relationships with a
select group of clients that see value in and can afford the services we provide
we will be able to establish a reputation and develop and grow our niche market.
At the present time, we do not have a significant number of clients and cannot
guarantee we will ever develop sufficient numbers of clients to be profitable.
We plan to use the efforts of our management to develop our clients. If we do
develop such clients, we risk that a given client will switch to utilizing
similar services from another provider or decide to perform the tasks on his or
her own. Our ability to generate revenue from the sale consulting, marketing and
agent representation services would diminish. If we lose enough clients, we
could go out of business.
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We are a relatively small company with limited resources compared to some of our
current and potential competitors, which may hinder our ability to compete
effectively. The art consulting industry is highly fractured competitive. If we
are not well received or successful, we may never achieve profitability.
The art consulting business is highly fractured with respect to price and
services offered. There are a handful of competitors that represent the very
successful artists. Many of these firms are well-established, including
national, regional and local organizations possessing substantially greater
financial, marketing, personnel and other resources than we do. There can be no
assurance that we will be able to respond to various competitive factors
affecting the art industry and be able to attract and advise our clients
accordingly. There is very little competition for up and coming artists, but the
demand for consulting, marketing and agent representation services is hard to
gauge. We believe that this market is underserved, but most artists are not
familiar with treating their vocation as a business and may not believe they
need our services. If we are unable to develop an economical model to serve this
market we will not be profitable. We cannot guarantee that we will be able to
successfully compete in the highly competitive high-end or poorly served low-end
markets.
We believe that the key to our success will be successful marketing of our
service and product offering. As a result, we may need to substantially invest
in marketing efforts in order to grow our business, which will be expensive.
In order to grow our business, we will need to develop and maintain widespread
recognition and acceptance of our company, our business model and our services.
We have only recently begun to present our service and product offering to our
potential market as we have identified it in our business plan. We plan to rely
primarily on word of mouth from contacts we develop personally through our
efforts to promote and market ourselves. We plan to use the efforts of our
management to develop these contacts. In order to successfully grow our company,
we may need to significantly increase our financial commitment to creating
awareness and acceptance of our company among potential clients, which would be
expensive. To date, marketing and advertising expenses have been negligible. We
have not yet fully developed our marketing program and do not know the specific
cost of such a program, although we believe that it will be expensive. If we
fail to successfully market and promote our business, we could lose potential
clients to our competitors, or our growth efforts may be ineffective. If we
incur significant expenses promoting and marketing ourselves, it could delay or
completely forestall our profitability.
We have no agreement with any broker or dealer to act as a market maker for our
securities. The lack of a broker or dealer to create or maintain a market in our
stock could adversely impact the price and liquidity of our securities.
We have no agreement with any broker or dealer to act as a market maker for our
securities and there is no assurance that we will be successful in obtaining any
market makers. Thus, no broker or dealer will have an incentive to make a market
for our stock. The lack of a market maker for our securities could adversely
influence the market for and price of our securities, as well as your ability to
dispose of, or to obtain accurate information about, and/or quotations as to the
price of, our securities.
We are an art consulting, marketing and intermediary organization. Our business
is not diversified, which could result in significant fluctuations in our
operating results. A downturn in that sector may reduce our stock price, even if
our business is successful.
We are an art consulting, marketing and intermediary organization, and,
accordingly, dependent upon trends in that business sector. Downturns in that
sector could adversely effect on our business. A downturn in that sector may
reduce our stock price, even if our business is successful.
The share control position of Rebecca Gregarek, David Gregarek, Kathy and Todd
Sheehan will limit the ability of other shareholders to influence corporate
actions.
After distribution of our shares to the Art Design shareholders, our largest
shareholders, Rebecca Gregarek, David Gregarek, Kathy Sheehan and Todd Sheehan
will own and control 1,140,000 shares, after giving effect to the Spyglass
warrants and thereby control approximately 82.5% of our outstanding shares.
Because these individuals will beneficially control almost 83% of the
outstanding shares they will have a significant role in controlling the election
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or removal of our directors, the supervision and management of our business or a
change in control of or sale of our company, even if they believed such changes
were in the best interest of our shareholders generally.
Our future success depends, in large part, on the continued service of our
President and Secretary-Treasurer.
We depend almost entirely on the efforts and continued employment of Mrs.
Gregarek, our President and Kathy Sheehan, our Secretary-Treasurer. Mrs.
Gregarek is our primary executive officer, and we will depend on her for nearly
all aspects of our operations. Mrs. Sheehan is our primary financial officer,
and we will depend on her for nearly all aspects of our financial compliance. We
do not have an employment contract with either Mrs. Gregarek or Mrs. Sheehan,
and we do not carry key person insurance on either's life. The loss of the
services of Mrs. Gregarek or Mrs. Sheehan through incapacity or otherwise, would
have a material adverse effect on our business. It would be very difficult to
find and retain qualified personnel such as Mrs. Gregarek or Mrs. Sheehan.
Applicable SEC rules governing the trading of "Penny Stocks" limit the liquidity
of our common stock, which may affect the trading price of our common stock. The
over-the-counter market for stock such as ours is subject to extreme price and
volume fluctuations. You may not able to sell your shares when you want to do
so, if at all.
Our common stock is currently not quoted in any market. If our common stock
becomes quoted, we anticipate that it will trade well below $5.00 per share. As
a result, our common stock is considered a "penny stock" and is subject to SEC
rules and regulations that impose limitations upon the manner in which our
shares can be publicly traded. The Exchange Act and such penny stock rules
generally impose additional sales practice and disclosure requirements on
broker-dealers who sell our securities to persons other than certain accredited
investors who are, generally, institutions with assets in excess of $5,000,000
or individuals with net worth in excess of $1,000,000 or annual income exceeding
$200,000, or $300,000 jointly with spouse, or in transactions not recommended by
the broker-dealer. These regulations require the delivery, prior to any
transaction involving a penny stock, of a disclosure schedule explaining the
penny stock and the associated risks. Under these regulations, certain brokers
who recommend such securities to persons other than established customers or
certain accredited investors must make a special written suitability
determination for the purchaser and receive the written purchaser's agreement to
a transaction prior to purchase. These regulations have the effect of limiting
the trading activity of our common stock and reducing the liquidity of an
investment in our common stock. The securities of companies such as ours have
historically experienced extreme price and volume fluctuations during certain
periods. These broad market fluctuations and other factors, such as new product
developments and trends in the our industry and in the investment markets
generally, as well as economic conditions and quarterly variations in our
operational results, may have a negative effect on the market price of our
common stock. As a result of any or all of these factors, you may not able to
sell your shares when you want to do so, if at all.
We have the authority to issue up to 50,000,000 shares of common stock,
1,000,000 shares of preferred stock, and to issue options and warrants to
purchase shares of our common stock without stockholder approval. We are only
planning to issue 1,082,060 shares in this registration statement. As a result,
issuances of our stock could dilute current shareholders and adversely affect
the market price of our common stock, if a public trading market develops.
We have the authority to issue up to 50,000,000 shares of common stock,
1,000,000 shares of preferred stock, and to issue options and warrants to
purchase shares of our common stock without stockholder approval. Although no
financing is planned currently, we may need to raise additional capital to fund
operating losses. If we raise funds by issuing equity securities, our existing
stockholders who receive shares in the spin-off may experience substantial
dilution. In addition, we could issue large blocks of our common stock to fend
off unwanted tender offers or hostile takeovers without further stockholder
approval.
The issuance of preferred stock by our board of directors could adversely affect
the rights of the holders of our common stock. An issuance of preferred stock
could result in a class of outstanding securities that would have preferences
with respect to voting rights and dividends and in liquidation over the common
stock and could, upon conversion or otherwise, have all of the rights of our
common stock. Our board of directors' authority to issue preferred stock could
discourage potential takeover attempts or could delay or prevent a change in
control through merger, tender offer, proxy contest or otherwise by making these
attempts more difficult or costly to achieve.
10
Our common stock currently has a limited trading market and thereis no guarantee
an active trading market will ever develop for our securities.
There is presently a limited trading market for our common stock. We have traded
in the Over-the-Counter Bulletin Board under the trading symbol ATDM since
November, 2010. If an active market never develops for our common stock, it will
be difficult for you to sell any shares you purchase. In such a case, you may
find that you are unable to achieve any benefit from your investment or
liquidate your shares without considerable delay, if at all. In addition, if we
our common stock is no longer quoted on a public trading market, your common
stock will not have a quantifiable value and it may be difficult, if not
impossible, to ever resell your shares, resulting in an inability to realize any
value from your investment.
Colorado law and our Articles of Incorporation protect our directors from
certain types of lawsuits, which could make it difficult for us to recover
damages from them in the event of a lawsuit.
Colorado law provides that our directors will not be liable to our company or to
our stockholders for monetary damages for all but certain types of conduct as
directors. Our Articles of Incorporation require us to indemnify our directors
and officers against all damages incurred in connection with our business to the
fullest extent provided or allowed by law. The exculpation provisions may have
the effect of preventing stockholders from recovering damages against our
directors caused by their negligence, poor judgment or other circumstances. The
indemnification provisions may require our company to use our assets to defend
our directors and officers against claims, including claims arising out of their
negligence, poor judgment, or other circumstances.
Because we are a company with limited operating history, we do not expect to pay
dividends on common stock.
We have not paid any cash dividends with respect to our common stock, and it is
unlikely that we will pay any dividends on our common stock in the foreseeable
future. Earnings, if any, that we may realize will be retained in the business
for further development and expansion.
ITEM 2. DESCRIPTION OF PROPERTY.
We currently use the offices of ATDN. We plan to occupy separate office
facilities and obtain office furniture and equipment. We own no real estate nor
have plans to acquire any real estate We currently carry no inventory and have
no other property.
ITEM 3. LEGAL PROCEEDINGS.
We are not a party to any material legal proceedings, nor is our property
the subject of any material legal proceeding.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
We held no shareholders meeting in the fourth quarter of our fiscal year.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES.
Holders
As of January 1 2010, we had a total of 1,082,060 shares of our Common
Stock outstanding. The number of holders of record of our common stock at that
date was one hundred.
Market Information
11
Our shares of common stock are quoted on the Over-the-Counter Bulletin
Board under the trading symbol ATDM. The shares became trading in November, 2010
but there is no extensive history of trading. The high and low bid price has
been $2.00 and $1.05, respectively, during the entire time the shares have been
quoted. The quotations reflect interdealer prices, without retail mark-up,
mark-down or commission, and may not represent actual transactions.
Dividend Policy
Holders of common stock are entitled to receive such dividends as may be
declared by our Board of Directors. No dividends on the common stock were paid
by us during the periods reported herein nor do we anticipate paying dividends
in the foreseeable future.
Equity Compensation Plan Information
We have no outstanding stock options or other equity compensation plans.
The Securities Enforcement and Penny Stock Reform Act of 1990
The Securities Enforcement and Penny Stock Reform Act of 1990 requires
additional disclosure and documentation related to the market for penny stock
and for trades in any stock defined as a penny stock. Unless we can acquire
substantial assets and trade at over $5.00 per share on the bid, it is more
likely than not that our securities, for some period of time, would be defined
under that Act as a "penny stock." As a result, those who trade in our
securities may be required to provide additional information related to their
fitness to trade our shares. These requirements present a substantial burden on
any person or brokerage firm who plans to trade our securities and would thereby
make it unlikely that any liquid trading market would ever result in our
securities while the provisions of this Act might be applicable to those
securities.
Any broker-dealer engaged by the purchaser for the purpose of selling his
or her shares in us will be subject to Rules 15g-1 through 15g-10 of the
Securities and Exchange Act. Rather than creating a need to comply with those
rules, some broker-dealers will refuse to attempt to sell penny stock.
The penny stock rules require a broker-dealer, prior to a transaction in a
penny stock not otherwise exempt from those rules, to deliver a standardized
risk disclosure document prepared by the Commission, which:
o contains a description of the nature and level of risk in the market
for penny stocks in both public offerings and secondary trading;
o contains a description of the broker's or dealer's duties to the
customer and of the rights and remedies available to the customer with
respect to a violation to such duties or other requirements of the
Securities Act of 1934, as amended;
o contains a brief, clear, narrative description of a dealer market,
including "bid" and "ask" prices for penny stocks and the significance
of the spread between the bid and ask price;
o contains a toll-free telephone number for inquiries on disciplinary
actions;
o defines significant terms in the disclosure document or in the conduct
of trading penny stocks; and
o contains such other information and is in such form (including
language, type, size and format) as the Securities and Exchange
Commission shall require by rule or regulation;
The broker-dealer also must provide, prior to effecting any transaction in
a penny stock, to the customer:
o the bid and offer quotations for the penny stock;
o the compensation of the broker-dealer and its salesperson in the
transaction;
o the number of shares to which such bid and ask prices apply, or other
comparable information relating to the depth and liquidity of the
market for such stock; and
o monthly account statements showing the market value of each penny
stock held in the customer's account.
12
In addition, the penny stock rules require that prior to a transaction in a
penny stock not otherwise exempt from those rules; the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written acknowledgment of the receipt
of a risk disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and dated copy of a written suitability statement.
These disclosure requirements will have the effect of reducing the trading
activity in the secondary market for our stock because it will be subject to
these penny stock rules. Therefore, stockholders may have difficulty selling
their securities.
Stock Transfer Agent
The stock transfer agent for our securities is Corporate Stock Transfer of
Denver, Colorado. Their address is 3200 Cherry Creek Drive South, Suite 430,
Denver, Colorado 80209. Their phone number is (303)282-4800.
ITEM 6. SELECTED FINANCIAL DATA
A smaller reporting company is not required to provide the information in
this Item.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Certain statements in this Management's Discussion and Analysis of
Financial Condition and Results of Operations that are not historical facts are
forward-looking statements such as statements relating to future operating
results, existing and expected competition, financing and refinancing sources
and availability and plans for future development or expansion activities and
capital expenditures. Such forward-looking statements involve a number of risks
and uncertainties that may significantly affect our liquidity and results in the
future and, accordingly, actual results may differ materially from those
expressed in any forward-looking statements. Such risks and uncertainties
include, but are not limited to, those related to effects of competition,
leverage and debt service financing and refinancing efforts, general economic
conditions, and changes in applicable laws or regulations. The following
discussion and analysis should be read in conjunction with the consolidated
financial statements and notes thereto appearing elsewhere in this report.
Results of Operations
We operate an art consulting, marketing in addition to advising artists in
their business dealings. Secondarily, and as an adjunct to our primary purpose,
we also earn revenue from the sale of art and interior design products. We
anticipate that the sale of products will primarily be to our artist clients but
may also incidentally be to the general public. We earn revenue from the sale of
art products and consulting services, but do not separate sales into different
operating segments. To date, however, all of our revenue has come solely from
the sale of products
From our inception on January 29, 2008 through December 31, 2010, all of
our revenue was generated from one client. We had $4,247 in revenue.
For the fiscal year ended December 31, 2010, we generated $1,019 in net
revenue, compared to $309 for the fiscal year ended December 31, 2009.
Our operating expenses consisting solely of general and administrative
expenses, were $19,628 for the fiscal year ended December 31, 2010, and $6,220
for the fiscal year ended December 31, 2009. From our inception on January 29,
2008 through December 31, 2010, our operating expenses were $35,356.
We had a net loss of $18,609 for the fiscal year ended December 31, 2010,
and $5,911 for the fiscal year ended December 31, 2009. From our inception on
January 29, 2008 through December 31, 2010, our net loss was $31,109.
Because we do not pay salaries, and our major professional fees have been
paid for the year, operating expenses are expected to remain fairly constant.
13
We expect to incur operating losses in future periods because we will be
incurring expenses and not generating sufficient revenues. We believe that we
will be required to make significant future expenditures in connection with
marketing efforts along with general administrative expenses. We expect
approximately to range between $10,000 and $20,000 in operating costs through
December 31, 2011. We cannot guarantee that we will be successful in generating
sufficient revenues or other funds in the future to cover these operating costs.
Failure to generate sufficient revenues or additional financing when needed
could cause us to go out of business.
Liquidity and Capital Resources.
As of December 31, 2010, we had cash or cash equivalents of $736. As of
December 31, 2009, we had cash or cash equivalents of $1,365.
Net cash used for operating activities was $15,629 for the fiscal year
ended December 31, 2010. This compares to net cash used for operating activities
of $762 for the fiscal year ended December 31, 2009.
Cash flows provided by or used for investing activities were $-0- for all
relevant periods.
Cash flows provided by financing activities were $15,000 and $-0- for the
fiscal year ended December 31, 2010 and 2009 respectively.
Over the next twelve months we do not expect any material capital costs to
develop operations. We do not plan to purchase real estate or large capital
items.
On June 1, 2008, an organization named Spyglass Investment Partnership
("Spyglass ") agreed to provide operating capital in the form of a loan of
$250,000 to cover operating expenses. This loan is evidenced by an unsecured
promissory note which now due December 31, 2011. This promissory note is under
the same terms and conditions and same amount as the prior promissory note with
Spyglass.It should be noted that Spyglass is under no obligation to lend us
funds under the term of the note.
We believe that we have sufficient capital in the short term for our
current level of operations. Further, we believe that we can attract sufficient
product sales and services within our present organizational structure and
resources to become profitable in our operations. We also have the potential of
additional capital from Spyglass. While additional resources would be needed to
expand into additional locations, which we have no plans to do at this time.
We do not know how long we will be required to rely upon our loan from
Spyglass. We plan to repay any loan amounts from our operations. It should be
noted that we have not had to draw down on this loan from Spyglass to date. If
we are unable to develop sufficient revenues or raise funds to cover any
operating deficit after December 31, 2011, our business may fail. We do not
anticipate needing to raise additional capital resources in the next twelve
months, other than our loan from Spyglass. It should be noted that Spyglass is
under no obligation to lend us funds under the term of the note. We have no
indication that Spyglass would refuse to lend us funds if we should ask.
However, if such funds were unavailable when needed, we would have a choice to
substitute lenders, use operations for our funds, or go out of business.
We believe that the combination of revenues and funds which Spyglass can
provide to offset any revenue shortfall will sustain us at least through
December 31, 2011. Based upon our past history of operations, we estimate that
we must generate between $10,000 and $20,000 in gross profit to be profitable.
We do not know when we will be able to generate this level of gross profit. Our
principal source of liquidity will be our operations. We expect variation in
revenues to account for the difference between a profit and a loss. Also
business activity is closely tied to the U.S. economy, particularly the economy
in Denver, Colorado. Our ability to achieve and maintain profitability and
positive cash flow is dependent upon our ability to successfully develop our
business and our ability to generate revenues.
In any case, we try to operate with minimal overhead. Our primary activity
will be to seek to develop clients for our products and services and,
14
consequently, our sales. If we succeed in developing clients for our products
and services and generating sufficient sales, we will become profitable. We
cannot guarantee that this will ever occur. Our plan is to build our company in
any manner which will be successful.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements with any party.
Critical Accounting Policies
Our discussion and analysis of results of operations and financial
condition are based upon our financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States of
America. The preparation of these consolidated financial statements requires us
to make estimates and judgments that affect the reported amounts of assets,
liabilities, sales and expenses, and related disclosure of contingent assets and
liabilities. We evaluate our estimates on an ongoing basis, including those
related to provisions for uncollectible accounts receivable, inventories,
valuation of intangible assets and contingencies and litigation. We base our
estimates on historical experience and on various other assumptions that are
believed to be reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying values of assets and liabilities
that are not readily apparent from other sources. Actual results may differ from
these estimates under different assumptions or conditions.
We have identified the following policies below as critical to our business
and results of operations.
Revenue is recognized on an accrual basis as earned under contract terms,
the product or service price to the client is fixed or determinable, and
collectibility is reasonably assured. More specifically, revenue is recognized
when ordered products are shipped, and any corresponding consulting and design
services have been rendered. Services performed under contract, which may vary
in length, are recognized on an ongoing basis over the life of the contract as
services are performed. Our consulting service contracts generally allow either
party to terminate the contract upon reasonable notice.
General and administrative costs include those costs allocated to the
ongoing expenditures of running our business including in general such items as
office overhead, professional fees and management compensation.
For further discussion on the application of these and other accounting
policies, see Note 1 to the accompanying audited financial statements for the
period ended September 30, 2008, included elsewhere in this document. Our
reported results are impacted by the application of the following accounting
policies, certain of which require management to make subjective or complex
judgments. These judgments involve making estimates about the effect of matters
that are inherently uncertain and may significantly impact quarterly or annual
results of operations. For all of these policies, management cautions that
future events rarely develop exactly as expected, and the best estimates
routinely require adjustment. Specific risks associated with these critical
accounting policies are described in the following paragraphs.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
We have had revenue during the fiscal year ended December 31, 2010.
Anticipated future operating revenue will come from art consulting, marketing
and agent representation services provided to individuals whom are in the
business of selling art. Such revenues will be recorded as the art services are
performed.
Secondarily, and as an adjunct to our primary purpose, we also earn revenue
from the sale of art and interior design products. We anticipate that the sale
of products will primarily be to our artist clients but may also incidentally be
to the general public.
15
Trends
There are no known trends, events or uncertainties that have had or that
are reasonably expected to have a material impact on the net sales or revenues
or income from our operations. Our management has not made any commitments,
which will require any material financial resources.
Plan of Operation
Our plan for the next twelve months is to operate at a profit or at break
even, although we have a history of losses. Our plan is to attract sufficient
additional product sales and services within our present organizational
structure and resources to become profitable in our operations.
Currently, we are conducting business in only one location in the Denver
Metropolitan area. We have no plans to expand into other locations or areas. The
timing of the completion of the milestones needed to become profitable are not
directly dependent on the success of our public offering. We believe that we can
achieve profitability as we are presently organized with sufficient business.
If we are not successful in our operations we will be faced with several
options:
1. Cease operations and go out of business;
2. Continue to seek alternative and acceptable sources of capital;
3. Bring in additional capital that may result in a change of control;
or
4. Identify a candidate for acquisition that seeks access to the public
marketplace and its financing sources.
Currently, we have sufficient capital to implement our business operations
or to sustain them for the next twelve months. If we can become profitable, we
could operate at our present level indefinitely.
To date, we have never had any discussions with any possible acquisition
candidate. However, if we cannot operate our business in a profitable manner, we
may seek other opportunities, including, but not limited to, one or more
acquisitions.
Proposed Milestones to Implement Business Operations
At the present time, we are operating from one location in the Denver
Metropolitan area. Our plan is to make our operation profitable by the end of
our next fiscal year.
We believe that we can be profitable or at break even by the end of the
current fiscal year, assuming sufficient sales. Based upon our current plans, we
have adjusted our operating expenses so that cash generated from operations and
from working capital financing is expected to be sufficient for the foreseeable
future to fund our operations at our currently forecasted levels. This has not
always been the case, since we have had a history of losses. To try to operate
at a break-even level based upon our current level of anticipated business
activity, we believe, based upon our operating history, that we must generate a
gross profit on our revenue of approximately $50,000 per year. However, if our
forecasts are inaccurate, we will need to raise additional funds. On the other
hand, we may choose to scale back our operations to operate at break-even with a
smaller level of business activity, while adjusting our overhead to meet the
revenue from current operations. In addition, we expect that we will need to
raise additional funds if we decide to pursue more rapid expansion, the
development of new or enhanced services and products, appropriate responses to
competitive pressures, or the acquisition of complementary businesses or
technologies, or if we must respond to unanticipated events that require us to
make additional investments. We cannot assure that additional financing will be
available when needed on favorable terms, or at all.
We expect to incur operating losses in future periods because we will be
incurring expenses and not generating sufficient revenues. We expect
approximately $50,000 in operating costs over the next twelve months. We cannot
guarantee that we will be successful in generating sufficient revenues or other
funds in the future to cover these operating costs. Failure to generate
sufficient revenues or additional financing when needed could cause us to go out
of business
16
No commitments to provide additional funds have been made by management or
current shareholders. There is no assurance that additional funds will be made
available to us on terms that will be acceptable, or at all, if and when needed.
We expect to continue to generate and increase sales, but there can be no
assurance we will generate sales sufficient to continue operations or to expand.
We also are planning to rely on the possibility of referrals from clients
and will strive to satisfy our clients. We believe that referrals will be an
effective form of advertising because of the quality of service that we bring to
clients. We believe that satisfied clients will bring more and repeat clients.
In the next 12 months, we do not intend to spend any funds on research and
development and do not intend to purchase any large equipment.
Recently Issued Accounting Pronouncements
We do not expect the adoption of any recently issued accounting
pronouncements to have a significant impact on our net results of operations,
financial position, or cash flows.
Seasonality
We do not expect our sales to be impacted by seasonal demands for our
products and services.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.
A smaller reporting company is not required to provide the information in
this Item.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
17
ART DIMENSIONS, INC.
CONSOLIDATED FINANCIAL STATEMENTS
with
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
December 31, 2010 and 2009
18
ART DIMENSIONS, INC.
Consolidated Financial Statements
TABLE OF CONTENTS
Page
---------
REPORT OF INDEPENDENT REGISTEREDPUBLIC ACCOUNTING FIRM 20
CONSOLIDATED FINANCIAL STATEMENTS
Balance sheets 22
Statements of operations 23
Statements of stockholders' equity 24
Statements of cash flows 25
Notes to financial statements 26
19
RONALD R. CHADWICK, P.C.
Certified Public Accountant
2851 South Parker Road, Suite 720
Aurora, Colorado 80014
Telephone (303)306-1967
Fax (303)306-1944
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors
Art Dimensions, Inc.
Denver, Colorado
I have audited the accompanying balance sheet of Art Dimensions, Inc. (a
development stage company) as of December 31, 2009, and the related statements
of operations, stockholders' equity and cash flows for the year then ended and
for the period from January 29, 2008 (inception) through December 31, 2009.
These financial statements are the responsibility of the Company's management.
My responsibility is to express an opinion on these financial statements based
on my audit.
I conducted my audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that I plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. I believe that my audit provides a reasonable
basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Art Dimensions, Inc. as of December
31, 2009, and the results of its operations and its cash flows for the year then
ended and for the period from January 29, 2008 (inception) through December 31,
2009, 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 in Note 2 to the
financial statements the Company has suffered a loss from operations and has a
stockholders' deficit that raise substantial doubt about its ability to continue
as a going concern. Management's plans in regard to these matters are also
described in Note 2. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
Aurora, Colorado /s/ Ronald R. Chadwick, P.C.
----------------------------
March 25, 2010 RONALD R. CHADWICK, P.C.
20
Report of Independent Registered Public Accounting Firm
To the Board of Directors
Art Dimension, Inc.
(a development stage company)
Englewood, Colorado
We have audited the balance sheet of Art Dimension Inc. (a development stage
company) (the "Company") as of December 31, 2010 and the related statements of
operations, shareholders' equity, and cash flows for the year then ended and for
the period from January 29, 2008 (Inception) through December 31, 2010. 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 audit. The accompanying financial statements of the Company for the period
from January 29, 2008 (inception) to December 31, 2009 were not audited by us.
Those statements were audited by other auditors whose report, dated March 25,
2010 expressed an unqualified opinion on those statements and included an
explanatory paragraph regarding the Company s ability to continue as a going
concern. The financial statements for the period from January 29, 2008
(inception) to December 31, 2009 reflect a net loss of $12,500. Our opinion,
insofar as it relates to the cumulative amounts included for such prior periods
as indicated in the accompanying financial statements, is based solely on the
report of such other auditors.
We conducted our audit 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 audit and the report of
other auditors provide a reasonable basis for our opinion.
In our opinion, based on our audits and the reports of other auditors, the
financial statements referred to above present fairly, in all material respects,
the financial position of Company as of December 31, 2010, and the results of
its operations and its cash flows for the year then ended and for the period
from January 29, 2008 (inception) through December 31, 2010, in conformity with
accounting principles generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming
that Art Design, Inc. will continue as a going concern. As discussed in Note 2
to the financial statements, Art Design, Inc. suffered losses from operations
and has a working capital deficit, which raises substantial doubt about its
ability to continue as a going concern. Management's plans regarding those
matters also are described in Note 2 The financial statements do not include any
adjustments to reflect the possible future effects on the recoverability and
classification of assets or the amounts and classification of liabilities that
may result from the outcome of this uncertainty.
/s/ MaloneBailey, LLP
MaloneBailey, LLP
www.malonebailey.com
Houston, Texas
April 13, 2011
21
ART DIMENSIONS, INC.
(A Development Stage Company)
BALANCE SHEETS
Dec. 31, Dec. 31,
2010 2009
-------- ---------
ASSETS
Current assets
Cash $ 736 $ 1,365
Accounts Receivable 533 -
-------- ---------
Total current assets 1,269 1,365
-------- ---------
Total Assets $ 1,269 $ 1,365
======== =========
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities
Related party payables $18,513 -
-------- ---------
Total current liabilities 18,513 -
-------- ---------
Total Liabilities 18,513 -
-------- ---------
Stockholders' Equity
Preferred stock, no par value;
1,000,000 shares authorized;
no shares issued and outstanding - -
Common stock, no par value;
50,000,000 shares authorized;
1,082,060 shares issued and outstanding 2,000 2,000
Additional paid in capital 11,865 11,865
Deficit accumulated during the development stage (31,109) (12,500)
-------- ---------
Total Stockholders' Equity (17,244) 1,365
-------- ---------
Total Liabilities and Stockholders' Equity $ 1,269 $ 1,365
======== =========
The accompanying notes are an integral part of the financial
statements.
22
ART DIMENSIONS, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
Period
From
Jan. 29,
2008
Year Year (Inception)
Ended Ended Through
Dec. 31, Dec. 31, Dec. 31,
2010 2009 2010
--------- -------- ---------
Net Revenue $ 1,019 $ 309 $ 4,247
Operating expenses:
Compensatory equity issuances 5,407
General and administrative 19,628 6,220 29,949
------------------ ---------
19,628 6,220 35,356
------------------ ---------
Loss from operations (18,609) (5,911) (31,109)
------------------ ---------
Provision for income tax - - -
------------------ ---------
Net loss $(18,609)$ (5,911) $(31,109)
================== =========
Net loss per share
(Basic and fully diluted) $ (0.02)$ -
==================
Weighted average number of common shares
outstanding 1,082,060 1,961,753
===================
The accompanying notes are an integral part of the financial
statements.
23
ART DIMENSIONS, INC.
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY
Common Stock Deficit
------------------ Accumulated
Amount During The Stock
No Par Paid In Development holders'
Shares Value Capital Stage Equity
------------------ --------- ------------- ---------
Balances at Jan. 29, 2008
(Inception) - $ - $ - $ - $ -
Compensatory stock issuance -
January 29, 2009 shares issued
for
formation services at service
value 2,000,000 2,000 2,000
Compensatory warrant issuances -
January 29, 2009 shares issued
for
consulting services at service
value 3,407 3,407
Net income (loss) for the period (6,589) (6,589)
Balances at Dec. 31, 2008 2,000,000 $ 2,000 $ 3,407 $ (6,589) $ (1,182)
Redemption and redistribution
of shares from spin off
from parent (917,94) -
Debt relief from spin off 8,458 8,458
Net income (loss) for the year (5,911) (5,911)
Balances at Dec. 31, 2009 1,082,060 $ 2,000 $11,865 $ (12,500) $ 1,365
Net income (loss) for the year (18,609) (18,609)
Balances at Dec. 31, 2010 1,082,060 2,000 11,865 (31,109) (17,244)
========== ======= ======= =========== =========
The accompanying notes are an integral part of the financial
statements.
24
ART DIMENSIONS, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
Period
From
Jan. 29,
2008
Year Year (Inception)
Ended Ended Through
Dec. 31, Dec. 31, Dec. 31,
2010 2009 2010
--------- -------- ---------
Cash Flows From Operating Activities:
Net loss $(18,609) $ (5,911) $(31,109)
Adjustments to reconcile net loss to net
cash provided by (used for) operating
activities:
Common stock issued for services 2,000
Warrant expense 3,407
Change in operating assets and liabilities:
Accounts Receivable (533) - (533)
Related party payables 3,513 5,149 11,971
--------- -------- ---------
Net cash provided by (used for)
operating activities (15,629) (762) (14,264)
--------- -------- ---------
Cash Flows From Financing Activities:
Borrowing on debt-affiliated company $ 15,000 $ - $ 15,000
--------- -------- ---------
Net cash provided by financing activities $ 15,000 $ - $ 15,000
Net Increase (Decrease) In Cash (629) (762) 736
Cash At The Beginning Of The Period 1,365 2,127 -
--------- -------- ---------
Cash At The End Of The Period $ 736 $ 1,365 $ 736
========= ======== =========
Supplemental Disclosure
Cash paid for interest $ - $ - $ -
Cash paid for income taxes $ - $ - $ -
The accompanying notes are an integral part of the financial
statements.
25
ART DIMENSIONS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 2009 and 2010
NOTE 1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Art Dimensions, Inc. (the "Company"), was incorporated in the State of Colorado
on January 29, 2008. The Company is was formed to provide art consulting and
marketing services and advise or represent individuals who are in the business
of creating, producing and selling art. While the Company intends to provide
consulting and marketing services in the future, the Company's business to date
has consisted solely of selling pieces of art. The Company is considered to be a
development stage entity, as defined by the Financial Accounting Standards Board
("FASB") Accounting Standards Codification ("ASC") Topic 915. For the period
from January 29, 2008 (date of inception) through December 31, 2010, the Company
has not generated any revenues to date, has no significant assets and has
incurred losses since inception from developing its business and planned
operations. Consequently, its operations are subject to all the risks inherent
in the establishment of a new business enterprise.
Cash and cash equivalents
-------------------------
The Company considers all highly liquid investments with an original maturity of
three months or less as 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 reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Income tax
----------
We follow Financial Accounting Standards Board ("FASB") Statement of Financial
Accounting Standards ("SFAS") No. 109, ASC 740 - "Accounting for Income Taxes"
("ASC 740"). This standard requires the use of an asset and liability approach
for financial accounting for and reporting of income taxes. If it is more likely
than not that some portion or all of a deferred tax asset will not be realized,
a valuation allowance is recognized.
Net loss per share
------------------
The net loss per share is computed by dividing the net loss by the weighted
average number of shares of common outstanding. Warrants, stock options, and
other dilutive instruments are not included in the computation if the effect
would be anti-dilutive. As of and for the year ended December 31, 2010 and 2009,
350,000 common shares issuable under warrants outstanding were excluded from the
diluted loss per share calculation because they would be anti-dilutive.
General and administrative costs
--------------------------------
General and administrative costs include those costs allocated to the ongoing
expenditures of running the Company's business including in general such items
as office overhead, professional fees and management compensation.
26
NOTE 1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
(continued)
Revenue recognition
-------------------
Revenue is recognized on an accrual basis as earned under contract terms, the
product or service price to the client is fixed or determinable, and
collectability is reasonably assured. More specifically, revenue is recognized
when ordered products are shipped, and any corresponding consulting and design
services have been rendered. Services performed under contract, which may vary
in length, are recognized on an ongoing basis over the life of the contract as
services are performed. Billings are presented to clients for time spent as
opposed to being fixed price, with billing rates and product prices agreed upon
in advance of work performance or product shipment. Any partial up-front
payments received under contract are recorded as a deposit liability until such
time as services required under the contract are performed. The Company's
consulting service contracts generally allow either party to terminate the
contract upon reasonable notice. Revenue generated in the capacity of an agent
is presented on a net basis pursuant to ASC 605. The prior year revenue was
reclassified and presented on a net basis to conform with the current year's
presentation.
Financial Instruments
---------------------
The Company's financial instruments consist principally of cash and cash
equivalents, accounts receivables, and related party payables. Management
believes that the recorded values of our other financial instruments approximate
their current fair values because of their nature and relatively short maturity
dates or durations.
Stock based compensation
------------------------
The Company accounts for employee and non-employee stock awards under ASC 718,
whereby equity instruments issued to employees for services are recorded based
on the fair value of the instrument issued and those issued to non-employees are
recorded based on the fair value of the consideration received or the fair value
of the equity instrument, whichever is more reliably measurable. There were no
employee stock options issued or outstanding at December 31, 2010 and 2009.
Products and services, geographic areas and major customers
The Company earns revenue from the sale of art products and consulting services,
but does not separate sales into different operating segments. All sales are
domestic and to external customers. All Company sales for the period from
December 31, 2010 and 2009 of $1,019 and $309 were to two customers.
Recently Issued Accounting Pronouncements
-----------------------------------------
The Company has evaluated all the recent accounting pronouncements through the
filing date and believes that none of them will have a material effect on the
Company. Reclassifications
Certain prior amounts have been reclassified to conform with the current year
presentation
NOTE 2. GOING CONCERN
The Company has suffered a loss from operations and in all likelihood will be
required to make significant future expenditures in connection with marketing
efforts along with general administrative expenses. These conditions raise
substantial doubt about the Company's ability to continue as a going concern.
The accompanying financial statements do not reflect any adjustments that might
result if the Company is unable to continue as a going concern.
The Company may raise additional capital through the sale of its equity
securities, through an offering of debt securities, or through borrowings from
financial institutions. By doing so, the Company hopes through marketing efforts
to generate revenues from sales of its art consulting and marketing services.
Management believes that actions presently being taken to obtain additional
27
funding provide the opportunity for the Company to continue as a going concern.
NOTE 3. INCOME TAXES
Deferred income taxes arise from the temporary differences between financial
statement and income tax recognition of net operating losses. These loss
carryovers are limited under the Internal Revenue Code should a significant
change in ownership occur. The Company accounts for income taxes pursuant to ASC
740. At December 31, 2010 and 2009 the Company had approximately $8,000 and
$6,000 and in unused federal net operating loss carryforwards, which begin to
expire principally in the year 2028. The change in the valuation allowance in
2010 and 2009 was approximately $2,800 and $2,000.
The Company's income tax filings are subject to audit by various taxing
authorities. The Company's open audit periods are 2007, 2008, 2009 and 2010,
although, the statute of limitations for the 2007 tax year will expire effective
March 15, 2011. In evaluating the Company's provisions and accruals, future
taxable income, and reversal of temporary differences, interpretations and tax
planning strategies are considered. The Company believes its estimates are
appropriate based on current facts and circumstances.
NOTE 4. NOTE AGREEMENT
The Company has entered into a note agreement with an outside party under which
it may borrow up to $250,000 at 15% per annum to fund Company operations. The
stated due date on any funds borrowed under the agreement is May 31, 2009, which
was extended until December 31, 2011. The note agreement calls for quarterly
interest payments, with a rate of 24% per annum accrued on late amounts. At
December 31, 2010 and 2009 no amounts had been borrowed by the Company under
this agreement, nor is the lending party under any binding obligation to lend to
the Company.
NOTE 5. STOCK COMPENSATION
In January 2008 the Company issued its parent corporation 2,000,000 common
shares valued at $2,000 for formation stage consulting services.
Stock options and warrants
--------------------------
At December 31, 2010 and 2009 the Company had stock options and warrants
outstanding as described below.
The Company accounts for non-employee stock options and warrants under ASC 718,
whereby option and warrant costs are recorded based on the fair value of the
consideration received or the fair value of the equity instruments issued,
whichever is more reliably measurable. Unless otherwise provided for, the
Company covers option and warrant exercises by issuing new shares.
The Company had no outstanding options or warrants at January 29, 2008. During
the period from January 29, 2008 (inception) through December 31, 2008 the
Company issued 300,000 warrants to purchase common stock in connection with the
$250,000 credit facility, and 50,000 of warrants for services. The warrants
allow the holder to purchase one share of common stock per warrant at an
exercise price of $.001, exercisable through May 13, 2013. The fair value of
these warrant grants ($3,407) was estimated on the date of grant using the
Black-Scholes option pricing model with the following assumptions: risk free
interest rate of 3.52, dividend yield of 0%, expected life of 5 years,
volatility of 142%. Volatility was calculated using the historical, annualized
standard deviation method employing stock prices of a limited activity public
entity. As there was and is currently no trading market for the Company's stock,
it was impractical for the Company to calculate volatility using its own share
price, therefore the Company used the stock price of a publicly traded company
with limited activity to approximate anticipated volatility of its own shares.
The trading prices of a limited activity public company was chosen to best
estimate the Company's own stock price volatility as the Company currently
conducts only limited operations and there can be no guarantee of expanded
operations in the future. No warrants were exercised, expired or were cancelled
during the period nor during the year ended December 31, 2010, leaving a
December 31, 2010 and 2009 balance of 350,000 non-employee stock warrants
28
outstanding. In addition, there was no unamortized compensation expense as of
December 31, 2010 and 2009.
NOTE 6. SPIN OFF TRANSACTION
Effective in December 2009 the Company was spun off from its parent corporation
Art Design, Inc. (the "Parent"). The Parent returned to the Company the
2,000,000 common shares in the Company held by the Parent, and the Company then
distributed to each Art Design, Inc. shareholder one common share of Art
Dimensions, Inc. for each ten shares of Art Design, Inc. held by the
shareholder. This resulted in a distribution of 1,082,060 Art Dimensions, Inc.
common shares, after which Art Dimensions, Inc. was no longer a subsidiary of
Art Design, Inc. The net change in the outstanding common shares of Art
Dimensions, Inc. after the return and redistribution of shares was a decrease of
917,940 common shares. The Company recorded paid in capital from debt relief of
$8,458 from amounts due to the Parent which the Parent forgave upon spin off.
NOTE 7. RELATED PARTY TRANSACTIONS
The Company has borrowed money from a company affiliated through common control.
The related party payable balance was $15,000 at December 31, 2010. The loan
does not bear interest and is payable upon demand.
ITEM 9. DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
We did not have any disagreements on accounting and financial disclosures with
our present accounting firm during the reporting period.
ITEM 9A. CONTROLS AND PROCEDURES.
Disclosure Controls and Procedures
An evaluation was carried out under the supervision and with the
participation of the Company's management, including its Principal Executive
Officer and Principal Financial Officer, of the effectiveness of the Company's
disclosure controls and procedures as of the end of the period covered by this
report on Form 10-K/A. Disclosure controls and procedures are procedures
designed with the objective of ensuring that information required to be
disclosed in reports filed under the Securities Exchange Act of 1934, such as
this Form 10-K/A, is recorded, processed, summarized and reported, within the
time period specified in the Securities and Exchange Commission's rules and
forms, and that such information is accumulated and is communicated to the
Company's management, including the Company's Principal Executive Officer and
Principal Financial Officer, or persons performing similar functions, as
appropriate, to allow timely decisions regarding required disclosure. Based on
that evaluation, management concluded that, as of December 31, 2010, the
Company's disclosure controls and procedures were effective.
Management's Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate
internal control over financial reporting and for the assessment of the
effectiveness of internal control over financial reporting. As defined by the
Securities and Exchange Commission, internal control over financial reporting is
a process designed by, or under the supervision of the Company's Principal
Executive Officer and Principal Financial Officer and implemented 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 the Company's financial statements in accordance with U.S.
generally accepted accounting principles.
Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Also, 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.
29
The Company's Principal Executive Officer and the Principal Financial
Officer evaluated the effectiveness of the Company's internal control over
financial reporting as of December 31, 2010 based on criteria established in
Internal Control - Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission, or the COSO Framework. Management's
assessment included an evaluation of the design of the Company's internal
control over financial reporting and testing of the operational effectiveness of
those controls.
Based on this evaluation, management concluded that the Company's internal
control over financial reporting was effective as of December 31, 2010.
Changes in Internal Control Over Financial Reporting
There was no change in the Company's internal control over financial
reporting that occurred during the most recent fiscal quarter that has
materially affected, or is reasonably likely to materially affect, the Company's
internal control over financial reporting.
ITEM 9B. OTHER INFORMATION.
Nothing to report.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
The following tables set forth information regarding the Company's current
executive officers and directors as of December 31, 2010:
Name: Age Position:
-------------------------------------------------------------------------------
Rebecca Gregarek 55 President and Director
Kathy Sheehan 48 Secretary-Treasurer and Director
Rebecca Gregarek was appointed the President and a Director of our company
on January 29, 2008. She has been involved in the interior design business in
various capacities since 1975. She has been a Director of ATDN since May, 2007.
From 2005 to the present, she has also been an Interior Design Consultant with
By Design Group, Englewood, Colorado. From 2001-2005, she was associated with
Home Builders Flooring, LLC- HBF Designs, Denver, Colorado. This group worked at
the Shea Design Center in Highlands Ranch, Colorado to develop custom window
Coverings and after-market sales for new home buyers. She oversaw a sales team
in training and developing marketing and advertising strategies. Her group won
the JD Powers Award for customer satisfaction for 2001, 2002 and 2003. Ms.
Gregarek does not hold an academic degree but attended Arapahoe Community
College, with courses in Interior Design. She is a Certified Window Fashion
Designer and a member of American Society of Interior Designers. She will devote
approximately 20 hours per month to carry out her responsibilities for us and
approximately 10 hours per month to carry out her duties as a member of the ATDN
Board of Directors.
Kathy Sheehan has been the Secretary-Treasurer, Chief Financial Officer and
a Director of our company since inception January 29, 2008. She has been the
President Chief Executive Officer, Treasurer, Chief Financial Officer and a
Director of ATDN. since inception in January, 2002. She has also been the Chief
Financial Officer, director and principal owner of Accessory Warehouse, Inc., a
private company in the wholesale art framing manufacturing and home furnishing
warehouse business, located in Denver, Colorado, from 1992 to the present. She
attended Front Range Community College from 1980 to 1983. She has completed the
Dale Carnegie Leadership Course. She will devote a minimum of 10 hours per month
to our operations and approximately 40 hours per month to carry out her duties
as an officer and director of ATDN.
Neither can be considered to be an independent director. We do not
presently have the resources to hire one or more independent directors but plan
to do so as soon as we are able.
Committees of the Board of Directors
30
Currently, we do not have any committees of the Board of Directors.
Director and Executive Compensation
No compensation has been paid and no stock options granted to any officer
or director in the last three fiscal years.
Employment Agreements
We have no written employment agreements with our executive officer.
Equity Incentive Plan
We have not adopted an equity incentive plan, and no stock options or
similar instruments have been granted to any of our officers or directors.
Indemnification and Limitation on Liability of Directors
Our Articles of Incorporation limit the liability of our directors to the
fullest extent permitted by Colorado law. Specifically, our directors will not
be personally liable to our company or any of its shareholders for monetary
damages for breach of fiduciary duty as directors, except liability for (i) any
breach of the director's duty of loyalty to the corporation or its shareholders;
(ii) acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law; (iii) voting for or assenting to a distribution
in violation of Colorado Revised Statutes Section 7-106-401 or the articles of
incorporation if it is established that the director did not perform his duties
in compliance with Colorado Revised Statutes Section 7-108-401, provided that
the personal liability of a director in this circumstance shall be limited to
the amount of distribution which exceeds what could have been distributed
without violation of Colorado Revised Statutes Section 7-106-401 or the articles
of incorporation; or (iv) any transaction from which the director directly or
indirectly derives an improper personal benefit. Nothing contained in the
provisions will be construed to deprive any director of his right to all
defenses ordinarily available to the director nor will anything herein be
construed to deprive any director of any right he may have for contribution from
any other director or other person.
At present, there is no pending litigation or proceeding involving any of
our directors, officers, employees or agents where indemnification will be
required or permitted. Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to our directors, officers and
controlling persons pursuant to the foregoing provisions, or otherwise, we have
been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers, and persons who own more than
10% of a registered class of the Company's outstanding equity securities to file
with the Securities and Exchange Commission initial reports of ownership and
reports of changes in ownership of Common Stock and other equity securities of
the Company. Officers, directors and greater than 10% shareholders are required
by SEC regulations to furnish the Company with copies of all Section 16(a) forms
they file. We have nothing to report in this regard.
Director and Executive Compensation
No compensation has been paid and no stock options granted to any of our
officers or directors in the last three fiscal years.
Code of Ethics
Our board of directors has not adopted a code of ethics but we plan to do
so.
31
Item 11. EXECUTIVE COMPENSATION.
No compensation has been paid and no stock options granted to any of our
officers or directors since our incorporation in January, 2008.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS.
The following table sets forth, as of December 31, 2010, information regarding
the ownership of our common stock by:
* persons who own more than 5% of our common stock;
* each of our directors and each of our executive officers; and
* all directors and executive officers as a group.
We had 1,082.060 shares issued and outstanding as of December 31, 2010. The
following table reflects our stock ownership as of that date.
Name and Address of No. of Percentage of
Beneficial Owner Common Shares Ownership
-------------------------------------------------------------------------------
Todd and Kathy Sheehan (1) 515,000 37.3%
3636 S. Jason Street
Englewood, CO 80110
Rebecca Gregarek (2) 625,000 45.2%
3636 S. Jason Street
Englewood, CO 80110
All Officers and Directors 1,140,000 82.5%
as a Group
(two persons) (3)
-------------------
(1) Kathy and Todd Sheehan are husband and wife. Kathy Sheehan owns 255,000
shares of record. Todd Sheehan owns 245,000 shares of record the minor children
of Mr. and Mrs. Sheehan own a total of 15,000 shares of record.
(2)Rebecca Gregarek owns 320,000 shares of record. Her husband, David, owns
10,000 shares of record. Her minor child owns 5,000 shares of record. Her adult
child owns 5,000 shares of record, for which she disclaims beneficial ownership.
Her husband, David, is a part owner of Spyglass, which has loaned funds to us
and which has a warrant to purchase 300,000 shares of our common stock, which is
included in this table.
(3) Shares held by all officers and directors as a group are also being
beneficially held by other individuals.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
On June 1, 2008, an organization named Spyglass Investment Partnership
("Spyglass ") agreed to provide operating capital in the form of a loan of
$250,000 to cover operating expenses. The husband of Mrs. Gregarek, our
President, David Gregarek, is an owner of Spyglass. The loan matured on May 31,
2010, and we entered into a new loan. This loan is evidenced by an unsecured
promissory note which now due December 31, 2011. The transaction was reviewed
and approved by our director, Mrs. Sheehan, who has no interest in Spyglass. At
December 31, 2010 no amounts had been borrowed by us under this agreement, nor
is the lending party under any binding obligation to lend to us.
32
We issued have a total of 300,000 warrants to Spyglass, exercisable at a
price of $0.001 per share subject to adjustment, for a period of five years from
the date of issuance. These warrants were issued as an additional inducement for
Spyglass to loan us $250,000. The warrants are subject to registration rights.
The husband of Mrs. Gregarek, our President, David Gregarek, is an owner of
Spyglass. We have not received anything else of value from Mr. Gregarek,
directly or indirectly, and have no plans to receive anything else.
Rebecca Gregarek, our President, and , David Gregarek, her spouse, and an
owner of Spyglass will own approximately 45.2% of our issued and outstanding
shares of common stock, after giving effect to the exercise of the 300,000
warrants held by Spyglass. Todd Sheehan and Kathy Sheehan, owns and controls
515,000 shares of stock thereby controlling approximately 37.3% of our issued
and outstanding shares of common stock. As a group, these individuals own
approximately 82.5% of our issued and outstanding shares of common stock.
We borrowed money from a company affiliated through common control. The
related party payable balance was $15,000 at December 31, 2010. The loan does
not bear interest and is payable upon demand.
We use the offices of ATDN. No expense provision for this use has been
provided since it has been determined that it is immaterial.
ITEM 14: PRINCIPAL ACCOUNTANT FEES AND SERVICES
Our independent auditor, MaloneBailey, LLP Certified Public Accountants,
billed an aggregate of $5,000 for the year ended December 31, 2010 and for
professional services rendered for the audit of the Company's annual financial
statements and review of the financial statements included in its quarterly
reports. Ronald R. Chadwick, P.C., our former accountant, billed an aggregate of
$7,500 for the year ended December 31, 2009 and for professional services
rendered for the audit of the Company's annual financial statements and review
of the financial statements included in its quarterly reports.
We do not have an audit committee and as a result our entire board of
directors performs the duties of an audit committee. Our board of directors
evaluates the scope and cost of the engagement of an auditor before the auditor
renders audit and non-audit services.
ITEM 15. EXHIBITS FINANCIAL STATEMENT SCHEDULES.
The following financial information is filed as part of this report:
(a) (1) FINANCIAL STATEMENTS
(2) SCHEDULES
(3) EXHIBITS. The following exhibits required by Item 601 to be filed
herewith are incorporated by reference to previously filed
documents:
Exhibit
Number Description
-------------------------------------------------------------------------------
3.1* Articles of Incorporation
3.2* Bylaws
4.1* Warrant dated June 1, 2008 for Spyglass Investment Partnership
4.2* Warrant dated June 1, 2008 for David Wagner & Associates, P.C.
5.1 Opinion re: Legality
10.1* Promissory note dated June 1, 2008 with Spyglass Investment
Partnership
10.2* Promissory note dated June 1, 2009 with Spyglass Investment
Partnership
10.3* Promissory note dated June 1, 2010 with Spyglass Investment
Partnership
10.4 Promissory note dated December 31, 2010 with Spyglass
Investment Partnership
31.1 Certification of CEO pursuant to Sec. 302
32.1 Certification of CEO pursuant to Sec. 906
31.2 Certification of CFO pursuant to Sec. 302
32.2 Certification of CEO pursuant to Sec. 906
33
* Previously filed
(b) Reports on Form 8-K. No reports were filed under cover of Form 8-K during
the fourth quarter of the fiscal year ended December 31, 2010.
34
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Art Dimensions, Inc.
Date: September 20, 2012
By:/s/ Rebecca Gregarek
----------------------------------
Rebecca Gregarek
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Exchange Act of 1934 this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Date: September 23, 2012 By:/s/ Kathy Sheehan
----------------------------------
Kathy Sheehan
Principal Financial and
Accounting Officer and a
Director
Date: September 20, 2012 By:/s/ Rebecca Gregarek
----------------------------------
Rebecca Gregarek
Principal Executive Officer and
a Director
35