ADB INTERNATIONAL GROUP, INC.
(A Development Stage Company)
f/k/a Centriforce Technology Corporation
Notes to Unaudited Financial Statements
March 31, 2014
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1. The Company and Significant Accounting Policies
Organizational Background: ADB International Group, Inc.,
(ADBI or the Company) is a New Jersey corporation based in Florida
with offices in Israel. ADB International Group, Inc. (ADB) is a holding
company with two subsidiaries. Centriforce Technology Corp (Centriforce), which is wholly
owned by ADB, and Subsea Oil Technologies, Inc.
Basis of Presentation: The accompanying financial statements have been prepared
in conformity with accounting principles generally accepted in the United States of
America, which contemplate continuation of the Company as a going concern. The Company has
not established any source of revenue to cover its operating costs, and as such, has
incurred an operating loss since inception. Further, as of March 31, 2014, the cash
resources of the Company were insufficient to meet its current business plan, and the
Company had negative working capital. These and other factors raise substantial doubt
about the Company's ability to continue as a going concern. The accompanying 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 possible inability of the Company to continue as a
Significant Accounting Policies
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 statement and the reported
amounts of revenues and expenses during the reporting period. Actual results could differ
from the estimates.
Cash and Cash Equivalents: For financial statement presentation purposes,
the Company considers those short-term, highly liquid investments with original maturities
of three months or less to be cash or cash equivalents. There were no cash equivalents as
of March 31, 2014 and December 31, 2013.
Property and Equipment: New property and equipment are recorded at cost.
Property and equipment included in the bankruptcy proceedings and transferred to the
Trustee had been valued at liquidation value. Depreciation is computed using the
straight-line method over the estimated useful lives of the assets, generally 5 years.
Expenditures for renewals and betterments are capitalized. Expenditures for minor items,
repairs and maintenance are charged to operations as incurred. Gain or loss upon sale or
retirement due to obsolescence is reflected in the operating results in the period the
event takes place.
Development Stage Enterprise: As of January 1, 2011, the Company
re-entered the development stage. The financial statements have been updated to reflect
this change as of this date.
Valuation of Long-Lived Assets: We review the recoverability of our
long-lived assets including equipment, goodwill and other intangible assets, when events
or changes in circumstances occur that indicate that the carrying value of the asset may
not be recoverable. The assessment of possible impairment is based on our ability to
recover the carrying value of the asset from the expected future pre-tax cash flows
(undiscounted and without interest charges) of the related operations. If these cash flows
are less than the carrying value of such asset, an impairment loss is recognized for the
difference between estimated fair value and carrying value. Our primary measure of fair
value is based on discounted cash flows. The measurement of impairment requires management
to make estimates of these cash flows related to long-lived assets, as well as other fair
Stock Based Compensation: Stock-based awards are accounted for using the
fair value method in accordance with ASC 718, Share-Based Payments. Our
primary type of share-based compensation consists of stock options. We use the
Black-Scholes option pricing model in valuing options. The inputs for the valuation
analysis of the options include the market value of the Companys common stock, the
estimated volatility of the Companys common stock, the exercise price of the
warrants and the risk free interest rate.
Accounting For Obligations And Instruments Potentially To Be Settled In The
Companys Own Stock: We account for obligations and instruments potentially
to be settled in the Companys stock in accordance with FASB ASC 815, Accounting
for Derivative Financial Instruments. This issue addresses the initial balance
sheet classification and measurement of contracts that are indexed to, and potentially
settled in, the Companys own stock.
Fair Value of Financial Instruments: FASB ASC 825, Financial
Instruments, requires entities to disclose the fair value of financial instruments,
both assets and liabilities recognized and not recognized on the balance sheet, for which
it is practicable to estimate fair value. FASB ASC 825 defines fair value of a financial
instrument as the amount at which the instrument could be exchanged in a current
transaction between willing parties. At March 31, 2014 and December 31, 2013, the
carrying value of certain financial instruments (cash and cash equivalents, accounts
payable and accrued expenses.) approximates fair value due to the short-term nature of the
instruments or interest rates, which are comparable with current rates.
Fair Value Measurements: The Company measures fair value under a framework
that utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques
used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted
prices in active markets for identical assets or liabilities (level 1 measurements) and
the lowest priority to unobservable inputs (level 3 measurements). The three levels of
inputs which prioritize the inputs used in measuring fair value are:
Level 1: Quoted prices (unadjusted) in active markets that are accessible at the
measurement date for assets or liabilities. The fair value hierarchy gives the highest
priority to Level 1 inputs.
Level 2: Other inputs that are observable, directly or indirectly, such as quoted
prices for similar assets and liabilities or market corroborated inputs.
Level 3: Unobservable inputs are used when little or no market data is available, which
requires the Company to develop its own assumptions about how market participants would
value the assets or liabilities. The fair value hierarchy gives the lowest priority to
Level 3 inputs.
In determining fair value, the Company utilizes valuation techniques in its assessment
that maximize the use of observable inputs and minimize the use of unobservable inputs.
The following table presents the Companys financial assets and liabilities that are
carried at fair value, classified according to the three categories described above:
Fair Value Measurements at March 31, 2014
|Total assets at fair value
Value Measurements at December 31, 2013
|Total assets at fair value
When the Company changes its valuation inputs for measuring financial
assets and liabilities at fair value, either due to changes in current market conditions
or other factors, it may need to transfer those assets or liabilities to another level in
the hierarchy based on the new inputs used. The Company recognizes these transfers at the
end of the reporting period that the transfers occur. For the fiscal periods ended March
31, 2014 and December 31, 2013, there were no significant transfers of financial assets or
financial liabilities between the hierarchy levels.
Earnings per Common Share: We compute net income (loss) per
share in accordance with ASC 260, Earning per Share. ASC 260 requires
presentation of both basic and diluted earnings per share (EPS) on the face of the income
statement. Basic EPS is computed by dividing net income (loss) available to common
shareholders (numerator) by the weighted average number of shares outstanding
(denominator) during the period. Diluted EPS gives effect to all dilutive potential common
shares outstanding during the period using the treasury stock method and convertible
preferred stock using the if-converted method. In computing Diluted EPS, the average stock
price for the period is used in determining the number of shares assumed to be purchased
from the exercise of stock options or warrants. Diluted EPS excludes all dilutive
potential shares if their effect is anti-dilutive. All per share disclosures retroactively
reflect shares outstanding or issuable as though the reverse split had occurred January 1,
Income Taxes: We have adopted ASC 740, Accounting
for Income Taxes. Pursuant to ASC 740, we are required to compute tax asset
benefits for net operating losses carried forward. The potential benefits of net operating
losses have not been recognized in these financial statements because the Company cannot
be assured it is more likely than not it will utilize the net operating losses carried
forward in future years.
We must make certain estimates and judgments in determining income tax
expense for financial statement purposes. These estimates and judgments occur in the
calculation of certain tax assets and liabilities, which arise from differences in the
timing of recognition of revenue and expense for tax and financial statement purposes.
Deferred tax assets and liabilities are determined based on the
differences between financial reporting and the tax basis of assets and liabilities using
the tax rates and laws in effect when the differences are expected to reverse. ASC 740
provides for the recognition of deferred tax assets if realization of such assets is more
likely than not to occur. Realization of our net deferred tax assets is dependent upon our
generating sufficient taxable income in future years in appropriate tax jurisdictions to
realize benefit from the reversal of temporary differences and from net operating loss, or
NOL, carryforwards. We have determined it more likely than not that these timing
differences will not materialize and have provided a valuation allowance against
substantially all of our net deferred tax asset. Management will continue to evaluate the
realizability of the deferred tax asset and its related valuation allowance. If our
assessment of the deferred tax assets or the corresponding valuation allowance were to
change, we would record the related adjustment to income during the period in which we
make the determination. Our tax rate may also vary based on our results and the mix of
income or loss in domestic and foreign tax jurisdictions in which we operate.
In addition, the calculation of our tax liabilities involves dealing
with uncertainties in the application of complex tax regulations. We recognize liabilities
for anticipated tax audit issues in the U.S. and other tax jurisdictions based on our
estimate of whether, and to the extent to which, additional taxes will be due. If we
ultimately determine that payment of these amounts is unnecessary, we will reverse the
liability and recognize a tax benefit during the period in which we determine that the
liability is no longer necessary. We will record an additional charge in our provision for
taxes in the period in which we determine that the recorded tax liability is less than we
expect the ultimate assessment to be.
ASC 740 which requires recognition of estimated income taxes payable or
refundable on income tax returns for the current year and for the estimated future tax
effect attributable to temporary differences and carry-forwards. Measurement of deferred
income tax is based on enacted tax laws including tax rates, with the measurement of
deferred income tax assets being reduced by available tax benefits not expected to be
Uncertain Tax Positions
The Financial Accounting Standards Board issued Interpretation No. 48,
Accounting for Uncertainty in Income Taxes an interpretation of FASB
Statement No. 109, Accounting for Income Taxes (FIN No. 48) which was
effective for the Company on January 1, 2007. FIN No. 48 addresses the
determination of whether tax benefits claimed or expected to be claimed on a tax return
should be recorded in the financial statements. Under FIN No. 48, the Company
may recognize the tax benefit from an uncertain tax position only if it is more likely
than not that the tax position will be sustained on examination by the taxing authorities
based on the technical merits of the position. The tax benefits recognized in
the financial statements from such position should be measured based on the largest
benefit that has a greater than fifty percent likelihood of being realized upon ultimate
settlement. FIN No. 48 also provides guidance on derecognition, classification,
interest and penalties, accounting in interim periods and disclosure requirements.
Our federal and state income tax returns are open for fiscal years
ending on or after December 31, 2008. We are not under examination by any jurisdiction for
any tax year. At December 31, 2013 we had no material unrecognized tax benefits and
no adjustments to liabilities or operations were required under FIN 48.
Recent Accounting Pronouncements
In July 2013, FASB issued ASU No. 2013-11, "Presentation of an
Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a
Tax Credit Carryforward Exists." The provisions of ASU No. 2013-11 require an
entity to present an unrecognized tax benefit, or portion thereof, in the statement of
financial position as a reduction to a deferred tax asset for a net operating loss
carryforward or a tax credit carryforward, with certain exceptions related to
availability. ASU No. 2013-11 is effective for interim and annual reporting periods
beginning after December 15, 2013. The adoption of ASU No. 2013-11 is not expected to have
a material impact on the Company's Consolidated Financial Statements.
In February 2013, the Financial Accounting Standards Board (FASB) issued
Accounting Standards Update (ASU) No. 2013-02, Comprehensive Income (Topic 220):
Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income, to
improve the transparency of reporting these reclassifications. Other comprehensive income
includes gains and losses that are initially excluded from net income for an accounting
period. Those gains and losses are later reclassified out of accumulated other
comprehensive income into net income. The amendments in the ASU do not change the current
requirements for reporting net income or other comprehensive income in financial
statements. All of the information that this ASU requires already is required to be
disclosed elsewhere in the financial statements under U.S. GAAP. The new amendments will
require an organization to:
Present (either on the face of the statement where net income is
presented or in the notes) the effects on the line items of net income of significant
amounts reclassified out of accumulated other comprehensive income - but only if the item
reclassified is required under U.S. GAAP to be reclassified to net income in its entirety
in the same reporting period; and
Cross-reference to other disclosures currently required under U.S. GAAP
for other reclassification items (that are not required under U.S. GAAP) to be
reclassified directly to net income in their entirety in the same reporting period. This
would be the case when a portion of the amount reclassified out of accumulated other
comprehensive income is initially transferred to a balance sheet account (e.g., inventory
for pension-related amounts) instead of directly to income or expense.
The amendments apply to all public and private companies that report
items of other comprehensive income. Public companies are required to comply with these
amendments for all reporting periods (interim and annual). The amendments are effective
for reporting periods beginning after December 15, 2012, for public companies. Early
adoption is permitted. The adoption of ASU No. 2013-02 is not expected to have a material
impact on our financial position or results of operations.
Management does not anticipate that the adoption of these standards will
have a material impact on the financial statements.
The Financial Statements presented herein have been prepared by us in
accordance with the accounting policies described in our December 31, 2013 Annual Report
and should be read in conjunction with the Notes to Financial Statements which appear in
The preparation of these financial statements in conformity with
accounting principles generally accepted in the United States requires us to make
estimates and judgments that affect the reported amounts of assets, liabilities, revenues
and expenses, and related disclosure of contingent assets and liabilities. On an on going
basis, we evaluate our estimates, including those related intangible assets, income taxes,
insurance obligations 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
resources. Actual results may differ from these estimates under different assumptions or
In the opinion of management, the information furnished in these interim
financial statements reflects all adjustments necessary for a fair statement of the
financial position and results of operations and cash flows as of and for the three-month
periods ended March 31, 2014 and 2013. All such adjustments are of a normal recurring
nature. The Financial Statements do not include some information and notes necessary to
conform to annual reporting requirements.
2. Stockholders' Equity
Common Stock-We are currently authorized to issue up to 500,000,000
shares of $0.001 par value common stock. All issued shares of common stock are entitled to
vote on a 1 share/1 vote basis.
Recent Issuances of Common Stock-2013:
On October 14, 2013 we issued 7,553,215 shares of our common stock in
settlement of $50,000 due to a former related party plus associated accrued interest of
$25,532. The conversion occurred within the terms of the promissory note and no gain or
On December 23, 2013 we issued 200,000,000 shares of common stock in
exchange for $20,000.These shares were sold to an officer of the company at a discount to
market at the date of the agreement. The shares were valued at the closing price as of the
date of the agreement and resulted in recognition of $1,000,000 in compensation services
for the year ended December 31, 2013.
Historical Activity Prior to December 31, 2013:
In 2013, our former CEO provided services to the Company without cost
valued at $3,000.
Stock Issued upon conversion of debt-During the year ended December 31,
2012, we issued 7,020,500 shares of our common stock in settlement of $50,000 due to a
former related party plus associated accrued interest of $20,500. The conversion occurred
within the terms of the promissory note and no gain or loss resulted.
Preferred Stock-We are currently authorized to issue up to
25,000,000 shares of no par value preferred stock. Effective December 31, 2007 the board
of directors approved the cancellation of all previously issued preferred shares and
approved the cancellation and extinguishment of all common and preferred share conversion
rights of any kind, including without limitation, warrants, options, convertible debt
instruments and convertible preferred stock of every series and accompanying conversion
rights of any kind.
Stock Option-There are no employee or non-employee option grants.
3. Related Party Transactions not Disclosed Elsewhere
Mr. Zekri, our Secretary and director, provided without cost to the
Company his services valued at $800 per month which totaled $2,400 for 2014. He also
provided without cost to the Company office space valued at $200 per month, which totaled
$600 for the three-month period ended March 31, 2014.
4. Disposition of Inactive Subsidiaries
On January 30, 2012, ADBI relinquished its 100% ownership and all rights
to Centriforce Technology Corporation and its 50% ownership in Sub Sea Oil Technologies,
Inc. The underlying assets of both Centriforce and SubSea had no value at that time.
5. Convertible Notes
During 2013 the Company signed a series of twelve new unsecured
promissory notes for an aggregate of $128,920 to related parties. One note for $71,545 is
due to current officer/director of the company. The notes bear interest at 15% per annum
and are due approximately one year from the date of issuance. The maturity dates range
from February 5, 2014 to December 31, 2014 with all amounts recorded as current
liabilities. The notes have conversion rights that allow the holder of the note to convert
the principal balance into the Company's common stock at the lender's sole discretion at
$0.0035 per share except for the officer/director note of $71,545 which is convertible at
$0.0001 per share.
In accordance with ASC 470, the Company has analyzed the beneficial
nature of the conversion terms and determined that a beneficial conversion feature (BCF)
exists because the effective conversion price was less than the quoted market price at the
time of the issuance. The Company calculated the value of the BCF using the intrinsic
method as stipulated in ASC 470. The BCF of $128,920 has been recorded as a discount to
the 2013 notes payable and a corresponding entry to Additional Paid-in Capital. The
historical aggregate discount arising from the BCF on all such notes is $185,046.
For the three months ended March 31, 2014 and 2013 the Company has
recognized $5,723 and $4,227 in accrued interest expense, respectively, and has amortized
$29,552 and $9,763, respectively of the beneficial conversion feature which has also been
recorded as interest expense. The aggregate carrying value of convertible notes is as
March 31, 2014
December 31, 2013
|Face amount of
Since Inception:-On January 20, 2009, the Company received $50,000
through the issuance of a convertible note. The note bears interest at the rate of 10% per
annum and has a maturity date of 12 months. The note is convertible into common stock at a
price of $0.01 per share. The company recorded a debt discount of $50,000 all of which was
amortized to interest expense during 2009. During the year ended December 31, 2012, the
Company issued 7,020,500 shares in connection with the conversion of this debt into
equity, along with $20,500 of accrued interest. The conversion occurred within the terms
of the promissory note and no gain or loss resulted. The net balance of the note was zero
as of 12/31/2012 and $50,000 as of 12/31/2011.
On January 18, 2010, the Company received $50,000 through the issuance
of a convertible note. The note bears interest at the rate of 10% per annum and has a
maturity date of 12 months. The note is convertible into common stock at a price of $0.01
per share. The company recorded a debt discount of $50,000 all of which was amortized to
interest expense during 2010. The net balance of the note was $50,000 as of 12/31/2012 and
During 2012, the Company received a total of $56,126 through the
issuance of convertible notes to 5 shareholders. The notes bear interest at the rate of
15% per annum and having a maturity date of 12 months. The notes are convertible into
common stock par value $0.001 per share. The Company recorded interest expense on the
amount of $12,525 during 2012 and $12,610 in amortization of debt discount during 2012.
6. Development Stage Activities and Going Concern
The Company is currently in the development stage, which it re-entered
on January 1, 2011 and has limited operations. The accompanying financial statements have
been prepared in conformity with accounting principles generally accepted in the United
States of America, which contemplate continuation of the Company as a going concern. The
Company has not established any source of revenue to cover its operating costs, and as
such, has incurred an operating loss since inception. Further, as of March 31, 2014, the
cash resources of the Company were insufficient to meet its current business plan. These
and other factors raise substantial doubt about the Companys ability to continue as
a going concern. The accompanying 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 possible inability
of the Company to continue as a going concern.
7. Subsequent Events
There were no subsequent events following the period ended March 31,
2014 through the date the financial statements were issued.
2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATION
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Since early 2012, following our transition from our water desalinization technology
business, we have pursued our plan to serve as a distributor of water treatment products
manufactured by established companies in the water treatment industry. During 2012, the
Companys business activities involved evaluating the water treatment business and
product research, seeking marketing and distribution agreements, evaluating the regulatory
requirements and engaging in related activities to become a distributor of water treatment
products in certain markets.
During 2012, the Company consulted with third parties, including its shareholders and
technical persons known by or introduced to the Company having knowledge of the water
treatment industry, in order to evaluate competing water treatment technologies and
potential "partners" for which the Company could potentially serve as
distributor. These efforts resulted in the execution of Distribution Agreements with
Treatec21 and GreenEng, companies that we believe have competitive and innovative water
treatment technologies and products.
The Company was successful in entering into Distribution Agreements with both Treatec21
and GreenEng and plans to evaluate other potential water treatment product manufacturers,
whether based in Israel or elsewhere, and enter into additional distribution agreements.
Our initial focus was to market and sell the Treatec and GreenEng water treatment products
in North America through direct sales and representatives, as well as in Australia and New
Zealand through our representative, Mr. Tal Yoresh, a resident of Australia. The Company
believed that the Treatec21 and GreenEng water treatment products, as well as other water
treatment technology products, had the potential to enable us to be competitive in the
water treatment markets in which we operate.
Background-Water Treatment Business
In furtherance of our business plan, we entered into distribution agreements with
Treatec21 Industries Ltd (treatec21.com/Eng/), a major Israeli-based private company
("Treatec"), a wholly-owned subsidiary for Yaad, a company with securities
traded on the Tel Aviv Exchange, and in January 2013 with Green Eng Absolute Green
Engineering Ltd, also a private Israeli company. Both Treatec21 and Green Eng are engaged
in the water treatment industry with Treatec having significant sales in Israel, China and
Europe, while most of GreenEng sales are in Israel. While there was no assurance, the
Company believed that it would have been able to successfully enter into licensing
agreements with other companies in the water treatment industry during 2013.
Following execution of our license agreements with Treatec and GreenEng, we estimated
that to implement and complete the first phase of our business plan, we would require
approximately $400,000. However, we did have any financing arrangements in place and we
were not able to secure such financing to pursue our business plan and, notwithstanding
our belief that we would be able to successfully sell and distribute both the Treatec and
GreenEng water treatment products in North America, we were not able to generate any
revenues from the sale of any water treatment products.
During the last quarter of 2013, we had discussion with a principal shareholder, Ron
Weissberg, who is now our Chairman, CEO, CFO and control shareholder, about considering
other business opportunities for the Company. To that end, Mr. Weissberg invested $91,545
in December 2013, evidenced by his subscription for 200 million shares at par value and a
convertible note in the amount of $71,545. The convertible note payable to Mr. Weissberg
bears interest at the rate of 15% per annum, is due in December 2014 and is convertible
into shares of the Company's common stock at a price of $0.0001 per share. At March 31,
2014, the Company is deemed to be a shell company as that term is defined under Rule
144(i) promulgated by the SEC under the Securities Act of 1933, as amended.
Results of Operations during the three months ended March 31, 2014 as
compared to the period ended March 31, 2013
We have not generated any revenues since inception. We had operating expenses related
to general and administrative expenses, being a public company and interest expenses.
During the period ended March 31, 2014, we incurred $59,029 in net loss due to general and
administrative expenses of $23,754 and other expenses of $35,275 consisting of interest
expense of $5,723 and $29,552 in amortization in debt discount compared to a net loss
during the period ended March 31, 2013 of $30,319 mainly due to general and administrative
expenses of $16,329, interest expenses of $4,227 and $9,763 in amortization of debt
Our general and administrative expenses increased by $7,425 or 45% during the period
ended March 31, 2014 as compared to the same period in the prior year mainly due to an
increase in professional fees. During the three months ended March 31, 2014, our interest
expenses increased by $1,496 or 35% as compared to the same period in the prior year.
Amortization of debt discount increase by $19,789 or 202% as compared to the same period
in the prior year.
Liquidity and Capital Resources
On March 31, 2014, we had total assets of $52,781 consisting of cash in the same
amount. We had total current liabilities of $150,623 consisting of $27,091 in accrued
expenses and $123,532 in convertible notes compared to accrued expenses of $21,368 and
$93,980 in convertible notes on December 31, 2013. Our accumulated deficits as of March
31, 2014 and December 31, 2013 were $3,641,739 and $3,582,710, respectively.
We used $23,754 in our operating activities during the three months ended March 31,
2014, which was due to a net loss of $59,029 offset by amortization of debt discount of
$29,552 and an increase in accounts payable of $5,723. We used $15,213 in our operating
activities during the three months ended March 31, 2013, which was due to a net loss of
$30,319 offset by donated services valued at $3,000, amortization of debt discount of
$9,763, increase in prepaid expenses of $900 and an increase in accounts payable of
We financed our negative cash flow during the three months ended March 31, 2014 through
available cash resources. We financed our negative cash flow from operations during the
same period in the prior year through the issuance of convertible notes of $15,000.
There can be no assurance that additional capital will be available to us as we pursue
other business opportunities. We currently have no agreements, arrangements or
understandings with any person to obtain funds through bank loans, lines of credit or any
Our auditors have issued an opinion on our financial statements which includes a
statement describing our going concern status. This means that there is substantial doubt
that we can continue as an on-going business for the next twelve months unless we obtain
additional capital to pay our bills and meet our other financial obligations. This is
because we have not generated any revenues and no revenues are anticipated. There are no
limitations in our articles of incorporation on our ability to borrow funds or raise funds
through the issuance of restricted common stock. Our limited resources and lack of
operating history may make it difficult to do borrow funds or raise capital. Our inability
to borrow funds or raise funds through the issuance of restricted common stock required to
facilitate our business plan may have a material adverse effect on our financial condition
and future prospects. Any borrowing will subject us to various risks traditionally
associated with indebtedness, including the risks of interest rate fluctuations and
insufficiency of cash flow to pay principal and interest.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Back to Table of Contents
4. CONTROLS AND PROCEDURES Back to Table of Contents
Evaluation of disclosure controls and procedures.
As of March 31, 2014, the Company's chief executive officer and chief financial officer
conducted an evaluation regarding the effectiveness of the Company's disclosure controls
and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act.
Based upon the evaluation of these controls and procedures, our chief executive officer
and chief financial officer concluded that our disclosure controls and procedures were not
effective as of the end of the period covered by this report.
Changes in internal controls.
During the quarterly period covered by this report, no changes occurred in our internal
control over financial reporting that materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
LEGAL PROCEEDINGS Back
to Table of Contents
We are not currently subject to any material legal proceedings, nor, to
our knowledge, is any material legal proceeding threatened against us. However, from time
to time, we may become a party to certain legal proceedings in the ordinary course of
1A. RISK FACTORS Back to Table of Contents
In addition to the other information set forth in this report, you
should carefully consider the factors discussed in Part I, Item 1. Description
of Business, subheading "Risk Factors in our Annual Report on Form 10-K/A
for the year ended December 31, 2013, which could materially affect our business,
financial condition or future results. The risks described in our Annual Report on
Form 10-K/A are not the only risks facing our company. Additional risks and
uncertainties not currently known to us or that we currently deem to be immaterial also
may materially adversely affect our business, financial condition and/or operating
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS Back to Table of Contents
ITEM 3. DEFAULTS UPON SENIOR
to Table of Contents
4. MINE SAFTY DISCLOSURE. Back to Table of Contents
5. OTHER INFORMATION Back to Table of Contents
6. EXHIBITS Back to Table of Contents
(a) The following documents
are filed as exhibits to this report on Form 10-Q or incorporated by reference herein. Any
document incorporated by reference is identified by a parenthetical reference to the SEC
filing that included such document.
||Section 302 Certification of
the Sarbanes-Oxley Act of 2002 of Sharar Ginsberg, filed herewith.
of the Sarbanes-Oxley Act of 2002 of Sharar Ginsberg, filed herewith