Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTIONS 13 OR 15 (d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the fiscal year ended February 28, 2015
Commission file number: 001-36549
CME Realty, Inc.
(Exact Name of Registrant as Specified in its Charter)
Nevada 46-2084743
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
2690 Weston Road, Suite 200, Weston, FL 33331
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (954) 458-9996
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to section 12(g) of the Act:
Common Stock, $0.001 par value
(Title of class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined by Rule 405 of the Securities Act. Yes [ ] No [X]
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 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 [ ]
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
Large Accelerated Filer [ ] Accelerated Filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
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 sold, or the average bid and asked prices of such common equity as of the
last business day of the registrant's most recently completed second fiscal
quarter, $40,000 on August 31, 2014, based on the price at which the common
equity was sold.
The number of shares outstanding of the issuer's common stock, $.001 par value,
as of May 12, 2015 was 70,000,000 shares.
CME Realty, Inc.
Form 10-K Annual Report
Table of Contents
PART I
Item 1. Business 3
Item 1A. Risk Factors 4
Item 1B. Unresolved Staff Comments 6
Item 2. Properties 6
Item 3. Legal Proceedings 6
Item 4. Mine Safety Disclosures 6
PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities 6
Item 6. Selected Financial Data 7
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations 7
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 8
Item 8. Financial Statements and Supplementary Data 8
Item 9. Change in and Disagreements with Accountants on Accounting and
Financial Disclosure 8
Item 9A Controls And Procedures 8
Item 9B. Other Information 9
PART III
Item 10. Directors, Executive Officers, and Corporate Governance 10
Item 11. Executive Compensation 11
Item 12. Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters 11
Item 13. Certain Relationships and Related Transactions, and Director
Independence 12
Item 14. Principal Accounting Fees and Services 12
PART IV
Item 15. Exhibits and Financial Statement Schedules 13
Signatures 14
2
FORWARD LOOKING STATEMENT INFORMATION
Certain statements made in this Annual Report on Form 10-K are "forward-looking
statements" regarding the plans and objectives of management for future
operations. Such statements involve known and unknown risks, uncertainties and
other factors that may cause our actual results, performance or achievements to
be materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. The forward-looking
statements included herein are based on current expectations that involve
numerous risks and uncertainties. Our plans and objectives are based, in part,
on assumptions involving judgments with respect to, among other things, future
economic, competitive and market conditions and future business decisions, all
of which are difficult or impossible to predict accurately and many of which are
beyond our control. Although we believe that our assumptions underlying the
forward-looking statements are reasonable, any of the assumptions could prove
inaccurate and, therefore, there can be no assurance that the forward-looking
statements included in this report will prove to be accurate. In light of the
significant uncertainties inherent in the forward-looking statements included
herein particularly in view of the current state of our operations, the
inclusion of such information should not be regarded as a statement by us or any
other person that our objectives and plans will be achieved. Factors that could
cause actual results to differ materially from those expressed or implied by
such forward-looking statements include, but are not limited to, the factors set
forth herein under the headings "Business," "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Risk Factors".
We undertake no obligation to revise or update publicly any forward-looking
statements for any reason. The terms "CME", the "Company", "we", "our", "us", or
any derivative thereof, as used herein refer to CME Realty, Inc.
PART 1
ITEM 1. BUSINESS.
CME Realty, Inc. was incorporated in the State of Nevada on August 10, 2012. CME
has not generated revenues and has accumulated losses of $83,202 from inception
(August 10, 2012) to February 28, 2015 and accordingly, is still in the
development stage.
The Company's initial plan of operations was to engage in providing real estate
services for the Las Vegas residential market. The Company was unable to
implement this plan of operations for a number of reasons, including without
limitation, the inability to raise sufficient capital.
In light of the foregoing, on February 13, 2015, Carlos Espinosa, the principal
shareholder and sole director and executive officer of CME, sold 50,000,000
shares of the Company's common stock held by him (the "CME Shares") to Kenneth
McLeod for $252,000. The CME Shares represented 74.13% of the Company's issued
and outstanding common stock. Contemporaneously therewith, Mr. Espinosa resigned
as an officer of the Company and appointed Mr. McLeod as a director, President
and Secretary-Treasurer of the Company. Subsequently, Mr. Espinosa resigned as a
director of CME. Mr. McLeod, 43, has approximately 15 years' experience in
marketing management and support. As a result of the foregoing, a "Change in
Control" of CME was deemed to have taken place.
On March 17, 2015, we implemented a five-for-one split of our common stock in
the form of a stock dividend to shareholders or record at the close of business
on March 9. 2015. In connection therewith, shareholders as of such date received
four additional shares of CME common stock for each share held by them as of the
record date. Unless otherwise indicated, all share numbers and per share numbers
in this report have been retroactively adjusted to give effect to the March 2015
stock split.
On April 22, 2015, CME entered into a letter of intent to acquire all of the
capital stock of Rock N' Roll Imports, Inc., a California corporation ("RNR")
engaged in alcoholic beverage development, marketing and distribution in
exchange for (a) the issuance of 50,000,000 shares of our common stock and (b)
the contemporaneous contribution to CME's capital of the CME Shares currently
held by Mr. McLeod (the "RNR Acquisition").
3
Consummation of the RNR Acquisition is subject to various terms and conditions,
including the drafting, negotiation and signing of definitive documentation and
completion of satisfactory due diligence among other matters. If the Company is
able to successfully complete the RNR Acquisition, RNR will become a
wholly-owned subsidiary of the Company and the Company's ongoing business
efforts would be focused on developing and expanding RNR's business.
CME's executive offices are located at 2690 Weston Road, Suite 200, Weston, FL
33331 and its telephone number is (954) 458-9996.
ITEM 1A. RISK FACTORS.
RISKS ASSOCIATED WITH OUR COMPANY:
WE ARE A DEVELOPMENT STAGE COMPANY, HAVE GENERATED NO REVENUES
AND HAVE ONLY AN OPERATING HISTORY.
The Company was incorporated on August 10, 2012; we have not yet commenced our
full-scale business operations and we have not yet realized any revenues and
from inception through February 28, 2015, we incurred an aggregate loss of
$83,202. We have no operating history upon which an evaluation of our future
prospects can be made. We cannot guarantee that we will be successful in
realizing revenues or in achieving or sustaining positive cash flow at any time
in the future. Any such failure could result in the possible closure of our
business or force us to seek additional capital through loans or additional
sales of our equity securities to continue business operations, which would
dilute the value of shares held by existing shareholders.
WE MAY BE UNSUCCESSFUL IN OUR ATTEMPT TO CONSUMMATE THE RNR ACQUISITION.
On April 22, 2015, we entered into a letter of intent to acquire all of the
capital stock of RNR, a California based corporation engaged in alcoholic
beverage development, marketing and distribution in the RNR Acquisition.
Following its consummation, we intend to focus our ongoing business efforts on
developing and expanding RNR's business. Consummation of the RNR Acquisition is
subject to various terms and conditions and there can be no assurance that we
will be able to successfully do so. Even if we consummate the RNR Acquisition,
there can be no assurance that when, if ever, we will generate significant
revenues and achieve profitability.
WE MAY REQUIRE ADDITIONAL CAPITAL TO IMPLEMENT OUR BUSINESS OPERATIONS.
Whether or not we successfully consummate the RNR Acquisition, we may require
additional capital to implement our business operations, whether through RNR or
otherwise. There can be no assurance that any such capital will be available
when needed, that if available, that it can be obtained on commercially
reasonable terms or that any additional capital secured will not result in
dilution of the equity interests of present shareholders. If we are unable to
secure additional capital when needed, our business and operations would be
significantly harmed.
IF WE SUCCESSFULLY CONSUMMATE THE RNR ACQUISITION, WE WILL BE SUBJECT TO ALL THE
RISKS WHICH RNR'S BUSINESS ENTAILS.
If we successfully consummate the RNR Acquisition, we will be subject to all the
risks incurred by a relatively early stage company engaged in the development,
marketing and distribution of alcoholic beverages, including successful product
development efforts, commercialization and consumer acceptance of RNR's
alcoholic beverage products, limited marketing and sales efforts, the ability of
RNR to successfully distribute its products, a high level of competition in the
industry and the need to if we successfully consumate the RNR Acquisition,
comply with significant government regulation. There can be no assurance that
any of these risks would not have an adverse effect on our business operations,
results of operations and condition (financial or otherwise).
4
RISKS RELATED TO OUR FINANCIAL CONDITION AND THE GOING CONCERN QUALIFICATION BY
OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
As shown in the financial statements included in this report, CME has had no
revenues to date and has incurred only losses since its inception. The Company
has had no operations and has been issued a "going concern" opinion from our
independent registered public accounting firm, based upon the Company's reliance
upon the sale of our common stock as the sole source of funds for future
operations.
THE LOSS OF THE SERVICES OF KENNETH MCLEOD COULD SEVERELY IMPACT OUR BUSINESS
OPERATIONS AND FUTURE DEVELOPMENT OF OUR BUSINESS MODEL, WHICH COULD RESULT IN A
LOSS OF REVENUES AND YOUR INABILITY TO EVER SELL ANY SHARES YOU PURCHASE IN THIS
OFFERING.
Until we consummate the RNR Acquisition, our performance is substantially
dependent upon the professional expertise of Kenneth McLeod our President and
Secretary, Treasurer. If he were unable to perform his services, this loss of
the services could have an adverse effect on our business operations, results of
operations and condition (financial or otherwise).
WE DO NOT PAY DIVIDENDS ON OUR COMMON STOCK.
We have not paid any dividends on our common stock since inception and do not
anticipate paying dividends in the foreseeable future. We plan to retain
earnings, if any, to finance the development and expansion of our business.
THE TRADING MARKET FOR OUR COMMON STOCK IS LIMITED AND SPORADIC.
Our common stock is listed for trading on the OTC Bulletin Board. However, there
is only a limited and sporadic market for our common stock. Accordingly, the
ability of a shareholder to sell shares of common stock may be harmed by the
limited liquidity in the market. Moreover the trading price of our common stock
may be subject to high degree of volatility.
THE MARKET PRICE OF OUR COMMON STOCK MAY ALSO FLUCTUATE SIGNIFICANTLY IN
RESPONSE TO VARIOUS FACTORS, MANY OF WHICH ARE BEYOND OUR CONTROL.
Whether of not we consummate th RNR Acquisition, the market price of our common
stock may also fluctuate significantly in response to various factors, many of
which are beyond our control, including the following:
* variations in our quarterly operating results;
* changes in general economic conditions and in the industry in which we
are operating;
* changes in market valuations of similar companies;
* announcements by us or our competitors of significant new contracts,
acquisitions, strategic partnerships or joint ventures, or capital
commitments;
* loss of a major customer, partner or joint venture participant; and
* the addition or loss of key managerial and collaborative personnel.
Any such fluctuations may adversely affect the market price of our common stock,
regardless of our actual operating performance. As a result, shareholders may be
unable to sell their shares, or may be forced to sell them at a loss.
THE APPLICATION OF THE "PENNY STOCK" RULES COULD ADVERSELY AFFECT THE MARKET
PRICE OF OUR COMMON STOCK AND INCREASE TRANSACTION COSTS WITH RESPECT TO THE
SALE OF THOSE SHARES.
The SEC has adopted rule 3a51-1 which establishes the definition of a "penny
stock," for the purposes relevant to us, as any equity security that has a
market price of less than $5.00 per share or with an exercise price of less than
$5.00 per share, subject to certain exceptions. For any transaction involving a
penny stock, unless exempt, Rule 15g-9 requires:
5
* that a broker or dealer approve a person's account for transactions in
penny stocks; and
* the broker or dealer receives from the investor a written agreement to
the transaction, setting forth the identity and quantity of the penny
stock to be purchased.
In order to approve a person's account for transactions in penny stocks, the
broker or dealer must:
* obtain financial information and investment experience objectives of
the person; and
* make a reasonable determination that the transactions in penny stocks
are suitable for that person and the person has sufficient knowledge
and experience in financial matters to be capable of evaluating the
risks of transactions in penny stocks.
The broker or dealer must also deliver, prior to any transaction in a penny
stock, a disclosure schedule prescribed by the SEC relating to the penny stock
market, which, in highlight form:
* sets forth the basis on which the broker or dealer made the
suitability determination; and
* that the broker or dealer received a signed, written agreement from
the investor prior to the transaction.
Generally, brokers may be less willing to execute transactions in securities
subject to the "penny stock" rules. This may make it more difficult for
investors to dispose of our common stock and cause a decline in the market value
of our stock.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
None.
ITEM 2. PROPERTIES.
The Company does not own or lease any property at the present time and has no
agreements to acquire or lease any property. Our executive offices are located
at 2690 Weston Road, Suite 200, Weston, FL 33331 and are furnished by a
shareholder at no cost. We believe that this space is adequate for our needs at
this time, and we believe that we will be able to locate additional space in the
future, if needed, on commercially reasonable terms.
ITEM 3. LEGAL PROCEEDINGS.
None.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
PART II
ITEM 5. MARKET FOR OUR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES.
(A) MARKET INFORMATION. Our common stock is quoted on the OTC Bulletin Board
under the symbol CMRL. The trading market for our common stock is limited and
sporadic and few, trades occurred prior to the first quarter of fiscal 2016.
(B) HOLDERS. As of May 12, 2015, there were 35 record holders of all of our
issued and outstanding shares of common stock.
(C) DIVIDEND POLICY
We have not declared or paid any cash dividends on our common stock and do not
intend to declare or pay any cash dividend in the foreseeable future. The
payment of dividends, if any, is within the discretion of the board of directors
6
and will depend on our earnings, if any, our capital requirements and financial
condition and such other factors as the Board of Directors may consider.
ITEM 6. SELECTED FINANCIAL DATA.
As a smaller reporting company, as defined in Rule 12b-2 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), we are not required to
provide the information required by this item.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Certain statements in this report and elsewhere (such as in other filings by the
Company with the SEC, press releases, presentations by the Company of its
management and oral statements) may constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995.
Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks,"
"estimates," and "should," and variations of these words and similar
expressions, are intended to identify these forward-looking statements. Actual
results may materially differ from any forward-looking statements. Factors that
might cause or contribute to such differences include, among others, competitive
pressures and constantly changing technology and market acceptance of the
Company's products and services. The Company undertakes no obligation to
publicly release the result of any revisions to these forward-looking
statements, which may be made to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events.
RESULTS OF OPERATIONS
The Company has earned no revenue or profits to date, and the Company
anticipates that it will continue to incur net losses for the foreseeable
future. The Company incurred a net loss of $22,995 and $51,651 for the years end
February 28, 2015 and 2014 and a cumulative net loss of $83,202 from inception
(August 10, 2012) through February 28, 2015, respectively. Our losses are the
result of professional and administrative expenses incurred for regulatory
reporting requirements.
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its expenses and costs thus far utilizing the proceeds
of $40,000 raised in our initial public offering, which we closed on January 10,
2014 by selling 20,000,000 shares of common stock at $0.02 per share.
For the fiscal year ended February 28, 2015, the Company incurred a loss in the
amount of $22,995. The loss is a result of organizational expenses and expenses
associated with implementing our business plan. The Company as a whole may
continue to operate at a loss for an indeterminate period thereafter, depending
upon the performance of its business. In the process of carrying out its
business plan, the Company will continue to identify new financial partners and
investors. However, it may determine that it cannot raise sufficient capital in
the future to support its business on acceptable terms, or at all. Accordingly,
there can be no assurance that any additional funds will be available on terms
acceptable to the Company or at all. The Company is authorized to issue
75,000,000 shares of common stock.
We have no known demands or commitments and are not aware of any events or
uncertainties as of February 28, 2015 that will result in or that are reasonably
likely to materially increase or decrease our current liquidity.
CAPITAL RESOURCES
We had no material commitments for capital expenditures as of February 28, 2015.
OFF-BALANCE SHEET ARRANGEMENTS
As of February 28, 2015, we have no off-balance sheet arrangements such as
guarantees, retained or contingent interest in assets transferred, obligation
under a derivative instrument and obligation arising out of or a variable
interest in an unconsolidated entity.
7
CRITICAL ACCOUNTING POLICIES
We prepare our financial statements in conformity with GAAP, which requires
management to make certain estimates and assumptions and apply judgments. We
base our estimates and judgments on historical experience, current trends and
other factors that management believes to be important at the time the financial
statements are prepared and actual results could differ from our estimates and
such differences could be material. We have identified below the critical
accounting policies which are assumptions made by management about matters that
are highly uncertain and that are of critical importance in the presentation of
our financial position, results of operations and cash flows. Due to the need to
make estimates about the effect of matters that are inherently uncertain,
materially different amounts could be reported under different conditions or
using different assumptions. On a regular basis, we review our critical
accounting policies and how they are applied in the preparation our financial
statements.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
As a smaller reporting company, as defined in Rule 12b-2 of the Exchange Act, we
are not required to provide the information required by this item.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
See the index to the Financial Statements below, beginning on page F-1.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
ITEM 9A. CONTROLS AND PROCEDURES.
(A) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Our President and Secretary-Treasurer, who is our sole executive officer,
carried out an evaluation of the effectiveness of our "disclosure controls and
procedures" (as defined in the Exchange Act Rules 13a-15(e) and 15-d-15(e)) as
of the end of the period covered by this report (the "Evaluation Date"). Based
upon that evaluation, the chief executive and chief financial officer concluded
that as of the Evaluation Date, our disclosure controls and procedures are
ineffective to ensure that information required to be disclosed by us in the
reports that we file or submit under the Exchange Act (i) is recorded,
processed, summarized and reported, within the time periods specified in the
SEC's rules and forms and (ii) is accumulated and communicated to our
management, including our chief executive and chief financial officer, as
appropriate to allow timely decisions regarding required disclosure.
(B) MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Our management is responsible for establishing and maintaining adequate internal
control over financial reporting (as defined in Rule 13a-15(f) under the
Exchange Act). Our management assessed the effectiveness of our internal control
over financial reporting as of the Evaluation Date. In making this assessment,
our management used the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission in Internal Control-Integrated
Framework. Our management has concluded that, as of the Evaluation Date, our
internal control over financial reporting is not effective based on these
criteria. Material weaknesses noted by our management include lack of a
functioning audit committee; lack of a majority of outside directors on our
board of directors, resulting in ineffective oversight in the establishment and
monitoring of required internal controls and procedures; inadequate segregation
of duties consistent with control objectives and affecting the functions of
authorization, recordkeeping, custody of assets, and reconciliation; and,
management dominated by a single individual/small group without adequate
compensating controls.
8
This annual report does not include an attestation report of our independent
registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by our independent
registered public accounting firm pursuant to temporary rules of the SEC that
permit us to provide only management's report in this annual report."
(C) LIMITATIONS ON SYSTEMS OF CONTROLS
Our sole executive officer, does not expect that our disclosure controls and
procedures or our internal controls will prevent all error or fraud. A control
system, no matter how well conceived and operated, can provide only reasonable,
not absolute, assurance that the objectives of the control system are met.
Further, the design of a control system must reflect the fact that there are
resource constraints and the benefits of controls must be considered relative to
their costs. Due to the inherent limitations in all control systems, no
evaluation of controls can provide absolute assurance that all control issues
and instances of fraud, if any, have been detected. To address the material
weaknesses identified in our evaluation, we performed additional analysis and
other post-closing procedures in an effort to ensure our financial statements
included in this annual report have been prepared in accordance with generally
accepted accounting principles. Accordingly, management believes that the
financial statements included in this report fairly present in all material
respects our financial condition, results of operations and cash flows for the
periods presented.
(D) MANAGEMENT'S REMEDIATION INITIATIVES
In an effort to remediate the identified material weaknesses and other
deficiencies and enhance our internal controls, we plan to initiate, the
following series of measures:
We will create a position to segregate duties consistent with control objectives
and will increase our personnel resources and technical accounting expertise
within the accounting function when funds are available to us. And, we plan to
appoint one or more outside directors to our board of directors who shall be
appointed to an audit committee resulting in a fully functioning audit committee
who will undertake oversight in the establishment and monitoring of required
internal controls and procedures such as reviewing and approving estimates and
assumptions made by management when funds are available to us.
Management believes that the appointment of one or more outside directors, who
shall be appointed to a fully functioning audit committee, will remedy the lack
of a functioning audit committee and a lack of a majority of outside directors
on our Board.
We will work as quickly as possible to implement these initiatives; however, the
lack of adequate working capital and positive cash flow from operations will
likely slow these implementations.
(E) CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There were no changes in our internal controls over financial reporting that
occurred during the last fiscal quarter covered by this report that has
materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.
ITEM 9B. OTHER INFORMATION.
None.
9
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
The following table sets forth information concerning our officers and directors
as of May 12, 2015:
Name Age Title
---- --- -----
Kenneth McLeod 43 President, Secretary-Treasurer, and
Director
Our officers and directors are elected to hold office until the next annual
meeting of shareholders and until their respective successors have been elected
and qualified, or until prior resignation or removal.
BUSINESS EXPERIENCE
KENNETH MCLEOD - PRESIDENT, SECRETARY-TREASURER AND DIRECTOR
Kenneth McLeod, 43, has approximately 15 years' experience in marketing
management and support. Mr. McLeod assumed his positions with the company in
connection with the February 13, 2015 "Change in Control" transaction. Since
2013, Mr. McLeod has served as Marketing Manager for Media 7 Investment, a
Florida based financial marketing concern. In this position, Mr. McLeod has had
overall responsibility for development and execution of Media 7's marketing
strategy, including identification and capture of market trends and
requirements, domestic go-to-market strategies, and development and execution of
program creation and deployment. From 2012 to 2013, Mr. McLeod was Production
Manager at Sproutloud Media Networks, where he was responsible for management of
offline projects including coordination with clients, account managers, account
executives, production team, USPS mail standards and vendors. From 2010 to 2012,
he was Production Manager at Food for the Poor and from 2009 to 2010 occupied a
similar position at BankAtlantic. Mr. McLeod holds a bachelor's degree from the
University of Florida.
COMPENSATION AND AUDIT COMMITTEES
As we only have one board member and given our limited operations, we do not
have separate or independent audit or compensation committees. Our Board of
Directors has determined that it does not have an "audit committee financial
expert," as that term is defined in Item 407(d)(5) of Regulation S-K. In
addition, we have not adopted any procedures by which our shareholders may
recommend nominees to our Board of Directors.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our directors and executive officers
and persons who beneficially own more than ten percent of our Common Stock
(collectively, the "Reporting Persons") to report their ownership of and
transactions in our Common Stock to the SEC. Copies of these reports are also
required to be supplied to us. To our knowledge, during the fiscal year ended
February 28, 2015 the Reporting Persons complied with all applicable Section
16(a) reporting requirements.
CODE OF ETHICS
We have not adopted a Code of Ethics given our limited operations. We expect
that our Board of Directors following a merger or other acquisition transaction
will adopt a Code of Ethics.
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ITEM 11. EXECUTIVE COMPENSATION.
Kenneth McLeod is an officer and a director. Mr. McLeod does not receive any
regular compensation for his services rendered on our behalf. Neither Mr. McLeod
nor his predecessor, Carlos Espinosa, who resigned his position in connection
with the February 15, 2015 "Change in Control" transaction, received any
compensation during the fiscal years ended February 28, 2015, 2014 and 2013.
No officer or director is required to make any specific amount or percentage of
his business time available to us.
DIRECTOR COMPENSATION
We do not currently pay any cash fees to our directors, nor do we pay director's
expenses in attending board meetings.
EMPLOYMENT AGREEMENTS
We are not a party to any employment agreements.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS.
The following table sets forth certain information as of May 12, 2015 regarding
the number and percentage of our Common Stock (being our only voting securities)
beneficially owned by each officer, director, each person (including any "group"
as that term is used in Section 13(d)(3) of the Exchange Act) known by us to own
5% or more of our Common Stock, and all officers and directors as a group.
Amount of
Title of Name, Title and Address of Beneficial Currently
Class Beneficial Owner of Shares (1) Ownership (2) Outstanding
----- ------------------------------ ------------- -----------
Common Kenneth McLeod 50,000,000 71.4%
President, Secretary-Treasurer
and Director
All officers and directors as a
group (one person) 50,000,000 71.4%
----------
(1) The address of our executive officer, director and beneficial owner c/o CME
Realty, Inc. 2690 Weston Road, Suite 200, Weston, FL 33331.
(2) As used in this table, "beneficial ownership" means the sole or shared
power to vote, or to direct the voting of, a security, or the sole or share
investment power with respect to a security (i.e., the power to dispose of,
or to direct the disposition of a security).
Unless otherwise indicated, we have been advised that all individuals or
entities listed have the sole power to vote and dispose of the number of shares
set forth opposite their names. For purposes of computing the number and
percentage of shares beneficially owned by a security holder, any shares which
such person has the right to acquire within 60 days of the date of this report
are deemed to be outstanding, but those shares are not deemed to be outstanding
for the purpose of computing the percentage ownership of any other security
holder. We currently do not maintain any equity compensation plans.
11
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE.
Kenneth McLeod is our sole director. He is not "independent" as such term is
defined by a national securities exchange or an inter-dealer quotation system.
Various related party transactions are reported throughout the notes to our
financial statements and should be considered incorporated by reference herein.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
Messineo & Co., CPAs, LLC ("M&Co") are our current independent registered public
accounting firm.
AUDIT FEES
Aggregate audit fees billed by M&Co for the fiscal years ended February 28, 2015
and 2014, including quarterly reviews were $9,500 and $9,500, respectively.
AUDIT-RELATED FEES
Aggregate audit-related fees billed by M&Co totaled $0 and $0, for the fiscal
years ending February 28, 2015 and 2014, respectively.
TAX FEES
Aggregate tax fees billed by M&Co totaled $0 and $0, for the fiscal years ending
February 28, 2015 and 2014, respectively.
PRE-APPROVAL POLICY
We do not currently have a standing audit committee. The above services were
approved by our board of directors.
12
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) The following documents are filed as part of this Report:
1. Financial Statements. The following financial statements and the
report of our independent registered public accounting firm, are filed
herewith.
* Report of Independent Registered Public Accounting Firm
* Balance Sheets at February 28, 2015 and February 28, 2014
* Statements of Operations for the years ended February 28, 2015
and February 28, 2014
* Statements of Changes in Shareholders' Deficiency for the years
ended February 28, 2015 and February 28, 2014
* Statements of Cash Flows for the years ended February 28, 2015
and February 28, 2014
* Notes to Financial Statements
2. Financial Statement Schedules.
Schedules are omitted because the information required is not applicable or the
required information is shown in the financial statements or notes thereto.
3. Exhibits Incorporated by Reference or Filed with this Report.
Exhibit No. Description
----------- -----------
3.1 Articles of Incorporation *
3.2 Bylaws *
31.1 Chief Executive Officer Certification pursuant to section 302 of
the Sarbanes-Oxley Act of 2002 **
31.2 Chief Financial Officer Certification pursuant to section 302 of
the Sarbanes-Oxley Act of 2002 **
32.1 Chief Executive Officer and Chief Financial Officer Certification
pursuant to section 906 of the Sarbanes-Oxley Act of 2002 **
101 Interactive Data files pursuant to Regulation S-T **
----------
* Filed as an exhibit of the same number to the Company's Registration
Statement on Form S-1 (File No. 333-187855) and incorporated herein by
reference.
** Included herewith
13
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
CME Realty, Inc.
Date: May 13, 2015 By: /s/ Kenneth McLeod
-------------------------------------------------
Kenneth McLeod, President and Secretary-Treasurer
In accordance with the Exchange Act, 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: May 13, 2015 By: /s/ Kenneth McLeod
-------------------------------------------------
Kenneth McLeod, President, Secretary-Treasurer
and Director
(Principal Executive, Financial and
Accounting Officer)
14
--------------------------------------------------------------------------------
MESSINEO & CO., CPAS LLC
2471 N MCMULLEN BOOTH ROAD, SUITE 302
CLEARWATER, FL 33759-1362 [LOGO]
T: (518) 530-1122
F: (727) 674-0511
================================================================================
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Stockholders
CME Realty Inc.
Weston, FL
We have audited the accompanying balance sheets of CME Realty Inc. (the
"Company") as of February 28, 2015 and 2014 and the related statement of
operations, stockholders' deficit and cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits 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 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. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of CME Realty Inc. as of February
28, 2015 and 2014 and the results of its operations and its cash flows for the
years then ended, 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 recurring losses, has not generated
revenue, and may be unable to raise further equity. These factors raise
substantial doubt about its ability to continue as a going concern. Management's
plans regarding those matters are also described in Note 2. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
/s/ Messineo & Co., CPAs, LLC
---------------------------------------
Messineo & Co., CPAs, LLC
Clearwater, Florida
April 24, 2015
F-1
CME REALTY INC.
BALANCE SHEETS
February 28, February 28,
2015 2014
-------- --------
ASSETS
CURRENT ASSETS
Cash $ -- $ 9,404
-------- --------
TOTAL CURRENT ASSETS $ -- $ 9,404
======== ========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 6,000 $ 13,551
Due to related party -- 6,060
-------- --------
TOTAL CURRENT LIABILITIES 6,000 19,611
-------- --------
STOCKHOLDERS' DEFICIT
Common stock: authorized 75,000,000 shares of
common stock; $0.001 par value;
issued and outstanding 70,000,000 and 70,000,000 shares
at February 28, 2015 and 2014, respectively * 70,000 70,000
Additional Paid in Capital 7,202 (20,000)
Accumulated deficit (83,202) (60,207)
-------- --------
TOTAL STOCKHOLDERS' EQUITY/(DEFICIT) (6,000) (10,207)
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY/(DEFICIT) $ -- 9,404
======== ========
----------
* On February 23, 2015, the board of directors declared a five for one
forward split, effective March 9, 2015. Shares have been retroactively
restated.
The auditors' report and accompanying notes are an integral
part of these financial statements
F-2
CME REALTY, INC.
STATEMENTS OF OPERATIONS
For the Years Ended
February 28,
-----------------------------------
2015 2014
------------ ------------
Revenues $ -- $ --
Operating Expenses
Professional 20,590 45,275
General and administration 2,405 6,376
------------ ------------
Total operating expenses 22,995 51,651
------------ ------------
NET LOSS BEFORE TAXES (22,995) (51,651)
Income tax benefit -- --
------------ ------------
NET LOSS $ (22,995) $ (51,651)
============ ============
BASIC AND DILUTIVE LOSS PER SHARE $ (0.00) $ (0.00)
============ ============
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 70,000,000 70,000,000
============ ============
----------
* On February 23, 2015, the board of directors declared a five for one
forward split, effective March 9, 2015. Shares have been retroactively
restated.
The auditors' report and accompanying notes are an integral
part of these financial statements
F-3
CME REALTY INC.
STATEMENTS OF STOCKHOLDERS' DEFICIT
Common Stock
----------------------- Additional
Number of Paid-in Accumulated
Shares Amount Capital Deficit Total
------ ------ ------- ------- -----
Balance at February 28, 2013 50,000,000 $ 50,000 $(40,000) $ (8,556) $ 1,444
Common Stock issued for cash 20,000,000 20,000 20,000 -- 40,000
Net loss -- -- -- (51,651) (51,651)
---------- -------- -------- -------- --------
BALANCE, FEBRUARY 28, 2014 70,000,000 70,000 (20,000) (60,207) (10,207)
---------- -------- -------- -------- --------
Capital contribution, related party -- -- 27,202 -- 27,202
Net loss -- -- -- (22,995) (22,995)
---------- -------- -------- -------- --------
BALANCE, FEBRUARY 28, 2015 70,000,000 $ 70,000 $ 7,202 $(83,202) $ (6,000)
========== ======== ======== ======== ========
----------
* On February 23, 2015, the board of directors declared a five for one
forward split, effective March 9, 2015. Shares have been retroactively
restated.
The auditors' report and accompanying notes are an integral
part of these financial statements.
F-4
CME REALTY INC.
STATEMENTS OF CASH FLOWS
For the Year Ended
February 28,
---------------------------
2015 2014
-------- --------
OPERATING ACTIVITIES
Net loss $(22,995) $(51,651)
Increase (decrease) in A/P and accrued expenses (7,551) 10,301
Expenses paid on company's behalf by shareholder -- (306)
-------- --------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (30,546) (41,656)
-------- --------
FINANCING ACTIVITIES
Proceeds from sale of common stock -- 40,000
Shareholder loan 21,142 6,060
-------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES 21,142 46,060
-------- --------
NET INCREASE (DECREASE) IN CASH (9,404) 4,404
CASH, BEGINNING OF PERIOD 9,404 5,000
-------- --------
CASH, END OF PERIOD $ -- $ 9,404
======== ========
Supplemental cash flow information and
noncash financing activities:
Cash paid for:
Interest $ -- $ --
======== ========
Taxes $ -- $ --
======== ========
The auditors' report and accompanying notes are an integral
part of these financial statements.
F-5
CME REALTY INC.
NOTES TO THE AUDITED FINANCIAL STATEMENTS
FEBRUARY 28, 2015 AND 2014
NOTE 1 - NATURE OF OPERATIONS AND BASIS OF PRESENTATION
CME Realty, Inc. was formed in the state of Nevada on August 10, 2012 and its
year-end is February 28. We are a company with a principle business of real
estate services for the residential market. We plan to hire a team of
professionals that will individually specialize in each of our services. The
services we initially plan to offer include listing and sales of residential
properties, short sales and foreclosures. Our goal is to become a partner with
our clients in the decision making process. We plan to provide all our
professionals with the latest market knowledge utilizing demographic and mapping
technology and micro and macro real estate statistics.
NOTE 2 - GOING CONCERN
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company has a history of losses
and incurred a loss of $22,995 for the year ending February 28, 2015. Losses
have resulted in an accumulated deficit of $83,202. From inception through
February 28, 2015, the Company has had no revenue producing operations and has
not commenced its business plan. In view of these matters, the Company's ability
to continue as a going concern is dependent upon the Company's ability to begin
operations and to achieve a level of profitability. The Company intends on
financing its future development activities and its working capital needs
largely from the sale of public equity securities with some additional funding
from other traditional financing sources, including term notes until such time
that funds provided by operations are sufficient to fund working capital
requirements. The financial statements of the Company do not include any
adjustments relating to the recoverability and classification of recorded
assets, or the amounts and classifications of liabilities that might be
necessary should the Company be unable to continue as a going concern.
The sole officer and director has agreed to advance funds to the Company to meet
its obligations at his discretion. There is no written commitment to continue to
fund the obligations of the Company.
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The financial statements present the balance sheets, statements of operations,
stockholders' deficit and cash flows of the Company. These financial statements
are presented in United States dollars and have been prepared in accordance with
accounting principles generally accepted in the United States.
CASH AND CASH EQUIVALENTS
For the purposes of the statement of cash flows, the Company considers highly
liquid financial instruments purchased with a maturity of three months or less
to be cash equivalent. At February 28, 2015 and 2014, the Company had $0 and
$9,404, respectively, in cash.
F-6
ADVERTISING
Advertising costs are expensed as incurred. As of February 28, 2015 and 2014, no
advertising costs have been incurred.
PROPERTY
The Company does not own or rent any property. The office space is provided by
the CEO at no charge.
USE OF ESTIMATES AND ASSUMPTIONS
Preparation of the financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
RECLASSIFICATION
Certain amounts in the prior period financial statements have been reclassified
to conform to the current period presentation. These reclassifications are
limited to the presentation of common stock and additional paid in capital, to
retroactively present the effects of a five for one forward stock split,
effective March 9, 2015.
REVENUE AND COST RECOGNITION
The Company has no current source of revenue; therefore the Company has not yet
adopted any policy regarding the recognition of revenue or cost.
INCOME TAXES
The Company follows the liability method of accounting for income taxes.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
balances. Deferred tax assets and liabilities are measured using enacted or
substantially enacted tax rates expected to apply to the taxable income in the
years in which those differences are expected to be recovered or settled.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion or all of the deferred
tax assets will not be realized. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period that
includes the date of enactment or substantive enactment.
NET LOSS PER SHARE
Basic loss per share includes no dilution and is computed by dividing loss
available to common stockholders by the weighted average number of common shares
outstanding for the period. Dilutive loss per share reflects the potential
dilution of securities that could share in the losses of the Company. Because
the Company does not have any potentially dilutive securities, the accompanying
presentation is only of basic loss per share.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 2014, the Financial Accounting Standards Board issued Accounting
Standards Update No. 2014-10, which eliminated certain financial reporting
requirements of companies previously identified as "Development Stage Entities"
(Topic 915). The amendments in this ASU simplify accounting guidance by removing
all incremental financial reporting requirements for development stage entities.
The amendments also reduce data maintenance and, for those entities subject to
audit, audit costs by eliminating the requirement for development stage entities
to present inception-to-date information in the statements of income, cash
flows, and shareholder equity. Early application of each of the amendments is
permitted for any annual reporting period or interim period for which the
entity's financial statements have not yet been issued (public business
F-7
entities) or made available for issuance (other entities). Upon adoption,
entities will no longer present or disclose any information required by Topic
915. The Company has adopted this standard.
In June 2014, FASB issued Accounting Standards Update (ASU) No. 2014-12
COMPENSATION -- STOCK COMPENSATION (TOPIC 718), ACCOUNTING FOR SHARE-BASED
PAYMENTS WHEN THE TERMS OF AN AWARD PROVIDE THAT A PERFORMANCE TARGET COULD BE
ACHIEVED AFTER THE REQUISITE SERVICE PERIOD. A performance target in a
share-based payment that affects vesting and that could be achieved after the
requisite service period should be accounted for as a performance condition
under Accounting Standards Codification (ASC) 718, COMPENSATION -- STOCK
COMPENSATION. As a result, the target is not reflected in the estimation of the
award's grant date fair value. Compensation cost would be recognized over the
required service period, if it is probable that the performance condition will
be achieved. The guidance is effective for annual periods beginning after 15
December 2015 and interim periods within those annual periods. Early adoption is
permitted. Management has reviewed the ASU and believes that they currently
account for these awards in a manner consistent with the new guidance, therefore
there is no anticipation of any effect to the consolidated financial statements.
In August 2014, FASB issued Accounting Standards Update (ASU) No. 2014-15
PREPARATION OF FINANCIAL STATEMENTS - GOING CONCERN (SUBTOPIC 205-40),
DISCLOSURE OF UNCERTAINTIES ABOUT AN ENTITY'S ABILITY TO CONTINUE AS A GOING
CONCERN. Under generally accepted accounting principles (GAAP), continuation of
a reporting entity as a going concern is presumed as the basis for preparing
financial statements unless and until the entity's liquidation becomes imminent.
Preparation of financial statements under this presumption is commonly referred
to as the going concern basis of accounting. If and when an entity's liquidation
becomes imminent, financial statements should be prepared under the liquidation
basis of accounting in accordance with Subtopic 205-30, PRESENTATION OF
FINANCIAL STATEMENTS--LIQUIDATION BASIS OF ACCOUNTING. Even when an entity's
liquidation is not imminent, there may be conditions or events that raise
substantial doubt about the entity's ability to continue as a going concern. In
those situations, financial statements should continue to be prepared under the
going concern basis of accounting, but the amendments in this Update should be
followed to determine whether to disclose information about the relevant
conditions and events. The amendments in this Update are effective for the
annual period ending after December 15, 2016, and for annual periods and interim
periods thereafter. Early application is permitted. The Company will evaluate
the going concern considerations in this ASU, however, at the current period,
management does not believe that it has met conditions which would subject these
financial statements for additional disclosure.
The company has evaluated all the recent accounting pronouncements and believes
that none of them will have a material effect on the company's financial
statement.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company's balance sheet includes financial instruments, including cash,
accounts payable, accrued expenses and amounts payable to related party. The
carrying amounts of current assets and current liabilities approximate their
fair value because of the relatively short period of time between the
origination of these instruments and their expected realization.
ASC 820, FAIR VALUE MEASUREMENTS AND DISCLOSURES, defines fair value as the
exchange price that would be received for an asset or paid to transfer a
liability (an exit price) in the principal or most advantageous market for the
asset or liability in an orderly transaction between market participants on the
measurement date. ASC 820 also establishes a fair value hierarchy that
distinguishes between (1) market participant assumptions developed based on
market data obtained from independent sources (observable inputs) and (2) an
F-8
entity's own assumptions about market participant assumptions developed based on
the best information available in the circumstances (unobservable inputs). The
fair value hierarchy consists of three broad levels, which gives the highest
priority to unadjusted quoted prices in active markets for identical assets or
liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).
The three levels of the fair value hierarchy are described below:
Level 1 Unadjusted quoted prices in active markets that are accessible at the
measurement date for identical, unrestricted assets or liabilities
Level 2 Inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly or indirectly,
including quoted prices for similar assets or liabilities in active
markets; quoted prices for identical or similar assets or liabilities
in markets that are not active; inputs other than quoted prices that
are observable for the asset or liability (e.g., interest rates); and
inputs that are derived principally from or corroborated by observable
market data by correlation or other means.
Level 3 Inputs that are both significant to the fair value measurement and
unobservable.
Fair value estimates discussed herein are based upon certain market assumptions
and pertinent information available to management as of February 28, 2015. The
respective carrying value of certain on-balance-sheet financial instruments
approximated their fair values due to the short-term nature of these
instruments.
NOTE 4 - RELATED PARTY
In support of the Company's efforts and cash requirements, it has relied on
advances from the controlling shareholder, an officer and director, until such
time that the Company can support its operations through generating revenue or
attains adequate financing through sales of its equity or traditional debt
financing. The controlling shareholder has pledged his support to fund
continuing operations, however, there is no formal written commitment. Amounts
represent advances or amounts paid in satisfaction of liabilities. The advances
are considered temporary in nature and therefore are considered payable on
demand and non-interest bearing. At February 28, 2015 and 2014, the President
has paid expenses on behalf of the Company in the amount of $21,142 and $6,060,
respectively. In February 2015, the prior president forgave debts in the amount
of $27,202, which was recorded as a contribution to capital. At February 28,
2015 and 2014, amounts due to this related party was $0 and $6,060,
respectively.
During the year ending February 28, 2014 the Company paid consulting fees to the
Chief Operating Officer, in the amount of $20,000.
The Company does not own or lease property or lease office space. The office
space used by the Company was arranged by the founder of the Company to use at
no charge.
The Company does not have employment contracts with its key employees, including
the controlling shareholder who is an officer of the Company.
The amounts and terms of the above transactions may not necessarily be
indicative of the amounts and terms that would have been incurred had comparable
transactions been entered into with independent third parties.
F-9
NOTE 5 - CAPITAL STOCK
The Company is authorized to issue an aggregate of 75,000,000 common shares with
a par value of $0.001 per share. No preferred shares have been authorized or
issued. At February 28, 2015 and 2014, 70,000,000 and 70,000,000 common shares
are issued and outstanding, respectively.
On January 14, 2014, the Company issued 20,000,000 shares for cash to multiple
investors. These shares were issued at $0.002 per share for total cash of
$40,000.
On February 23, 2015, the board of directors declared a five-for-one split of
the Company's stock in the form of a stock dividend to shareholders of record at
the close of business on March 9, 2015. Accordingly, shareholders of the Company
as of the record date will receive four additional shares of common stock for
each share then held. Certificates evidencing the additional shares were
distributed March 2015. All share presented have been retroactively restated for
the effects of the forward stock split.
As of February 28, 2015 and 2014, there are no warrants or options outstanding
to acquire any additional shares of common stock of the Company.
NOTE 6 - INCOME TAXES
We did not provide any current or deferred U.S. federal income tax provision or
benefit for any of the periods presented because we have experienced operating
losses since inception. Accounting for Uncertainty in Income Taxes when it is
more likely than not that a tax asset cannot be realized through future income
the Company must allow for this future tax benefit. We provided a full valuation
allowance on the net deferred tax asset, consisting of net operating loss carry
forwards, because management has determined that it is more likely than not that
we will not earn income sufficient to realize the deferred tax assets during the
carry forward period.
The components of the Company's deferred tax asset and reconciliation of income
taxes computed at the statutory rate to the income tax amount recorded is as
follows:
2015 2014
-------- --------
Net operating loss carry forward $ 83,202 $ 60,207
Effective Tax rate 34% 34%
-------- --------
Deferred Tax Assets 28,288 20,470
Less: Valuation Allowance (28,288) (20,470)
-------- --------
Net deferred tax asset $ 0 $ 0
======== ========
The net federal operating loss carry forward will begin to expire in 2034. This
carry forward may be limited upon the consummation of a business combination
under IRC Section 381. The tax years that remain subject to examination by major
taxing jurisdictions are those for the years ended from inception (February 28,
2013).
F-10
NOTE 7 - COMMITMENTS AND CONTINGENCIES
From time to time the Company may be a party to litigation matters involving
claims against the Company. Management believes that there are no current
matters that would have a material effect on the Company's financial position or
results of operations.
NOTE 8 - SUBSEQUENT EVENTS
On February 23, 2015, the board of directors declared a five-for-one split of
the Company's stock in the form of a stock dividend to shareholders of record at
the close of business on March 9, 2015. Accordingly, shareholders of the Company
as of the record date will receive four additional shares of common stock for
each share then held. Certificates evidencing the additional shares were
distributed March 2015. All share presented have been retroactively restated for
the effects of the forward stock split.
Management has evaluated subsequent events through the date the financial
statements were available to be issued. Management is not aware of any
significant events that occurred subsequent to the balance sheet date that would
have a material effect on the financial statements thereby requiring adjustment
or disclosure.
F-1
