SILVERGRAPH INTERNATIONAL INC - FORM 10-K - August 12, 2015

Attached files

file filename
EX-31 - SILVERGRAPH INTERNATIONAL INCex31-1.htm
EX-31 - SILVERGRAPH INTERNATIONAL INCex31-2.htm
EX-32 - SILVERGRAPH INTERNATIONAL INCex32-2.htm
EX-32 - SILVERGRAPH INTERNATIONAL INCex32-1.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

[X]  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2014

[  ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
For the transition period from ___ to ____

Commission file number: 000-30951

SILVERGRAPH INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)

     
Nevada
(State or other jurisdiction of incorporation or organization)
  
67-0695367
(I.R.S. Employer Identification No.)
One America Plaza, 600 West Broadway, Suite 700,
New York, New York
(Address of principal executive offices)
  
90067-0000
(Zip Code)
 
Registrant’s telephone number, including area code:   (212) 980-9400

Securities registered pursuant to Section 12(b) of the Act:   None

Securities registered pursuant to Section 12(g) of the Act:   Common Stock, par value $0.001

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in 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 15(d) of the Act.
Yes [ X ]   No [  ]

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 (§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 [   ]   No [  ]

 
Indicate by check mark if disclosure of delinquent filers pursuant to item 405 of Regulation S-K  (§229.405 of this chapter) 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.      [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
   
Large accelerated filer [  ]
Non-accelerated filer [  ]
Accelerated filed [  ]
Smaller reporting company [X]


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  
Yes [X]   No [  ]

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of June 30, 2014 was approximately $173,000.

Applicable Only to Registrants Involved in Bankruptcy Proceedings During the Preceding Five Years:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.  Yes [X]   No [  ]

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.  The number of shares outstanding of the registrant’s common stock as of July 31, 2015 was 2,971,154.

Documents Incorporated by Reference

List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) Any annual report to security holders; (2) Any proxy or information statement; and (3) Any prospectus filed pursuant to rule 424(b) or (c) of the Securities Act of 1933.  The listed documents should be clearly described for identification purposes (e.g., annual report to security holders for fiscal year ended December 24, 1980).  None.

FORM 10-K
 
For the Year Ended December 31, 2014
 
 
INDEX   Page
     
   
     
    2
    3
    5
    5
    5
    5
         
   
     
    6
    8
    9
    11
    11
    11
    12
    12
         
   
     
    13
    15
    16
    16
    17
         
   
     
    18
  19
 
 
In this annual report the words "we," "us," "our," and the "Company" refer to Silvergraph International, Inc. and New Era Studios, Inc. (as statutory successor in interest to Silvergraph LGT, LLC), our dissolved subsidiary.

FORWARD LOOKING STATEMENTS

When used in this report, the words “may,” “will,” “expect,” “anticipate,” “continue,” “estimate,” “project,” “intend,” and similar expressions are intended to identify forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 regarding events, conditions, and financial trends that may affect the Company’s future plans of operations, business strategy, operating results, and financial position.  Persons reviewing this report are cautioned that any forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties and that actual results may differ materially from those included within the forward-looking statements as a result of various factors.

Statements made in this Form 10-K that  are not historical or current facts are  "forward-looking  statements" made pursuant to the safe harbor  provisions of Section 27A of the  Securities Act of 1933, as amended, and Section 21E of the Securities  Exchange Act of 1934, as amended.  We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made.  Any forward-looking statements represent our best judgment as to what may occur in the future.  These forward-looking statements include our plans and objectives for our future growth, including plans and objectives related to the consummation of acquisitions and future private and public issuances of our equity and debt securities.   The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties.  Assumptions relating to the foregoing involve 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 the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could be inaccurate and, therefore, there can be no assurance that the forward-looking statements included in this Form 10-K will prove to be accurate.   In light of the significant uncertainties inherent in the forward-looking statements included herein, you should not regard the inclusion of such information as our representation or the representation of any other person that we will achieve our objectives and plans.  We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.
 
 


Historical Development

On June 23, 2006, Silvergraph International and New Era, formerly a Nevada corporation and successor in interest by merger to Silvergraph LGT, LLC, a Delaware limited liability company, executed an Agreement and Plan of Share Exchange (the “Share Exchange”), pursuant to which the shareholders of New Era exchanged their issued and outstanding shares of New Era common stock for shares of restricted Silvergraph International common stock.  Effective as of June 23, 2006 New Era, now dissolved, became our wholly-owned subsidiary.  We treated this transaction as a recapitalization for accounting purposes, with New Era deemed the accounting acquirer and Silvergraph International the legal acquirer.  

  On December 5, 2008, stockholders holding a majority of shares entitled to vote authorized by written consent a reverse stock split of the Company’s outstanding common stock in the range of from 1:30 to 1:66, as determined in the sole discretion of the Board of Directors.  On February 24, 2009, the Board of Directors authorized by written consent to effect a 1-for-66 reverse split of the Company’s issued and outstanding shares.  The reverse stock took effect at the open of business on March 24, 2009.  

Our Business

Since 2009, we have been relatively inactive, after deciding to wind up the business of our subsidiary, New Era.  Up until 2009, through our operating subsidiary, New Era, we developed and distributed wall art to the U.S. mass wall art market.    

In 2012, we dissolved New Era.  We are continuing to pursue and evaluate strategies to enhance shareholder value including the merger with a private operating company.  We continue to take steps to lower our operating costs in order to manage our working capital needs. However, we cannot guarantee that these actions will ensure our continued operations.

We plan to attempt to locate and negotiate with a business entity for the merger of that target company into our company. In certain instances, a target company may wish to become a subsidiary of our company or may wish to contribute assets to our company rather than merge. No assurances can be given that we will be successful in locating or negotiating with any target company.  As a publicly-traded, reporting company under the Securities Exchange Act of 1934, as amended, we provide a method for a foreign or domestic private company to become a public, reporting company whose securities are qualified for trading in the United States secondary market.

The selection of a business opportunity in which to participate is complex, extremely risky and will be made by our management in the exercise of its business judgment. There is no assurance that we will be able to identify and acquire any business opportunity which will ultimately prove to be beneficial to our company and shareholders.

Because we have no specific business plan or expertise, our activities are subject to several significant risks. In particular, any business acquisition or participation we pursue will likely be based on the decision of management without the consent, vote, or approval of our shareholders.

Employees

We currently have one part-time employee.  We believe that our employee relations are good.  We intend to continue to conduct business primarily using our employee and consultants.  However, some consultants may become employees in the future. We have no union employees.
 
 
-2-
 
 

 The business, financial condition and operating results of Silvergraph International could be adversely affected by any of the following factors, in which event the value of the equity securities of Silvergraph International could decline, and investors could lose part or all of their investment. The risks and uncertainties described below are not the only ones that we face. Additional risks and uncertainties not presently known to management, or that management currently thinks are immaterial, may also impair future business operations.  For purposes of the discussion of the following risk factors, references to “we” and “our” include, unless otherwise indicated, Silvergraph International, Inc.

We have a history of losses, nominal historical operating results, and currently do not have any operations.

We have, from inception through December 31, 2014, incurred an accumulated deficit of $6,940,746.   We have not been engaged in active business operations since 2009, although we continue to explore potential business combinations.

If we re-start operations, our results will be subject to all the risks inherent in the establishment of a developing enterprise and the uncertainties arising from the absence of a significant operating history.  We can give no assurance that we will operate on a profitable basis which may lead to the entire loss of an investment in our common stock.
 
Due to the nature of our business, an investment in our securities is highly speculative. We have not realized a profit from our historical operations and there is little likelihood that we will realize any profits in the short or medium term.  In addition, our independent registered public accountants have raised substantial doubts in connection with their opinion related to our audited financial statements as to our ability to continue as a going concern.

We expect to continue to incur administrative and, should we re-start operations, operating costs.  Consequently, we expect to incur operating losses and negative cash flows until we restart operations and are profitable, or, until we locate and enter into another business that operates profitably, of which there is no assurance.  

We have had negative cash flows from operations since inception. We will require significant additional financing, the availability of which cannot be assured, and if we are unable to obtain such financing, our business may fail.

To date, we have had negative cash flows from operations and have depended on sales of our equity securities and debt financing to meet our cash requirements. Our ability to restart the business or enter into another business through merger or otherwise will be dependent upon our ability to raise significant additional financing. If we are unable to obtain such financing, we will not be able to fully develop our business. In addition, our independent registered public accountants have raised substantial doubts in connection with their opinion related to our audited financial statements as to our ability to continue as a going concern.
 
We may not be able to obtain additional equity or debt financing on acceptable terms as required. Even if financing is available, it may not be available on terms that are favorable to us or in sufficient amounts to satisfy our requirements. If we require, but are unable to obtain, additional financing in the future, we may be unable to implement our business plan and our growth strategies, respond to changing business or economic conditions, withstand adverse operating results and compete effectively.
 
 
 
-3-
 
 
Our Board of Directors has not made a determination of fairness regarding related-party transactions.

Our Board of Directors has entered into loan transactions with certain persons who are now principal shareholders pursuant to amendments to the original loan transaction.  (See Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operation – Convertible Promissory Notes).  Our Board of Directors has not made a determination as to whether these related-party transactions were made on terms no less favorable than terms we could have obtained from unaffiliated third parties.  Our Board of Directors has adopted a policy that any future transactions between us and our officers, directors or principal stockholders will require the approval of a majority of the disinterested directors and will be on terms no less favorable than we could obtain from an unaffiliated third party.

Failure to achieve and maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could lead to loss of investor confidence in our reported financial information.

Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, we are required to furnish a report by our management on our internal control over financial reporting.  If we cannot provide reliable financial reports or prevent fraud, then our business and operating results could be harmed, investors could lose confidence in our reported financial information, and the trading price of our stock could drop significantly.  In order to achieve compliance with Section 404 of the Act within the prescribed period, we have engaged in a process to document and evaluate our internal control over financial reporting, which has been challenging.  

If we fail to achieve and maintain the adequacy of our internal controls, as such standards are modified, supplemented or amended from time to time, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act.  Moreover, effective internal controls, particularly those related to revenue recognition, are necessary for us to produce reliable financial reports and are important to helping prevent financial fraud.
 
If we issue additional shares in the future, it will result in dilution for our existing shareholders.

Our articles of incorporation authorize the issuance of up to 100,000,000 shares of common stock.  Our Board of Directors may choose to issue some or all of such shares to acquire one or more businesses or to provide additional financing in the future.  The issuance of any such shares will result in a reduction of the book value and market price of the outstanding shares of our common stock.  If we issue any such additional shares, such issuance will cause a reduction in the proportionate ownership and voting power of all current shareholders.

The Securities and Exchange Commission's penny stock regulations may restrict trading of our stock, which may limit a stockholder's ability to buy and sell our stock.

The Securities and Exchange Commission (the “SEC”) has adopted regulations which generally define “penny stock” to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions.  The penny stock rules, which initially govern our securities, impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and "accredited investors".  The term "accredited investor" refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual incomes for the last two years and anticipated incomes for this year exceeding $200,000 or $300,000 jointly with their spouse.  The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC, which provides information about penny stocks and the nature and level of risks in the penny stock market.  The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer's account.  A broker-dealer must provide to a customer orally or in writing the bid and offer quotations, and the
 
 
-4-
 
 
broker-dealer and salesperson compensation information prior to effecting the transaction.  In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction.  These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock.
 
 FINRA sales practice requirements may also limit a stockholder's ability to buy and sell our stock.
 
In addition to the penny stock rules, the Financial Industry Regulatory Authority (“FINRA,” formerly the NASD) has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer.  Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer's financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers.  FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit an investor’s ability to buy and sell our stock and may have an adverse effect on the market for our shares.

Our common stock is illiquid and factors unrelated to our operations may negatively impact the price of our common stock.

Our common stock currently trades on a limited basis on the OTC Bulletin Board.  Trading of our stock through the OTC Bulletin Board is frequently very thin and highly volatile. There can be no assurances that a sufficient market will develop in the stock, in which case it could be difficult for shareholders to sell their stock.  The market price of our common stock could fluctuate substantially due to a variety of factors, trading volume in our common stock, changes in general conditions in the economy and the financial markets or other developments affecting our competitors or us.  In addition, the stock market is subject to extreme price and volume fluctuations.  This volatility has had a significant effect on the market price of securities issued by many companies for reasons unrelated to their operating performance and could have the same effect on our common stock.


There have been no events which are required to be reported under this Item.


We do not currently own or lease any properties.  


No legal proceedings are threatened or pending against us or any of our officers or directors.  Further, none of our officers, directors or affiliates are parties against us or have any material interests in actions that are adverse to the Company’s interests.


Not applicable.

 


Market Information

Our common stock is currently listed on the OTC Bulletin Board under the symbol “SVGP.”  The common stock is highly illiquid with only sporadic trading, at a current price of $0.17 per share.  

The following table sets forth the high and low transaction price for each quarter within the fiscal years ended December 31, 2013 and 2014, as provided by the Nasdaq Stock Markets, Inc.  The information reflects prices between dealers, and does not include retail markup, markdown, or commissions, and may not represent actual transactions.
 
Fiscal Year Ended
    
Bid Prices
  
December 31,
Period
  
High
    
Low
  
               
2013
First Quarter
   $ 0.20     $ 0.20  
 
Second Quarter
   $ 0.20     $ 0.20  
 
Third Quarter
   $ 0.20     $ 0.15  
 
Fourth Quarter
   $ 0.17     $ 0.15  
                   
2014
First Quarter
   $ 0.17     $ 0.17  
 
Second Quarter
   $ 0.17     $ 0.17  
 
Third Quarter
   $ 0.17     $ 0.17  
 
Fourth Quarter
   $ 0.17     $ 0.17  
                   
Our shares are subject to Section 15(g) and Rule 15g-9 of the Securities and Exchange Act, commonly referred to as the “penny stock” rule.  The rule defines penny stock to be any equity security that has a market price less than $5.00 per share, subject to certain exceptions.  The rule provides that any equity security is considered to be a penny stock unless that security is:
 
● registered and traded on a national securities exchange meeting specified criteria set by the SEC;
● issued by a registered investment company;
● excluded from the definition on the basis of price (at least $5.00 per share) or the issuer’s net tangible assets.
 
Trading in the penny stocks is subject to additional sales practice requirements on broker-dealers who sell penny stocks to persons other than established customers and accredited investors.  Accredited investors, in general, include certain institutional investors and individuals with assets in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 together with their spouse.  

For transactions covered by these rules, broker-dealers must make a special suitability determination for the purchase of our securities and must have received the purchaser’s written consent to the transaction prior to the purchase.  Additionally, for any transaction involving a penny stock, the rules require the delivery, prior to the first transaction, of a risk disclosure document relating to the penny stock.  A broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative, and current quotations for the security.  Finally, monthly statements must be sent to the purchaser disclosing recent price information for the penny stocks.  Consequently, these rules may restrict the ability of broker-dealers to trade or maintain a market in our common stock and may affect the ability of shareholders to sell their shares.
 
 
-6-
 
 
Holders

As of July 31, 2015, there were approximately 150 shareholders of record holding 2,971,154 shares of common stock. The holders of common stock are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders. Holders of the common stock have no preemptive rights and no right to convert their common stock into any other securities. There are no redemption or sinking fund provisions applicable to the common stock.

Dividends

We have not paid, nor declared, any dividends since our inception and do not intend to declare any such dividends in the foreseeable future. Our ability to pay dividends is subject to limitations imposed by Nevada law.  Under Nevada law, dividends may be paid to the extent that a corporation’s assets exceed its liabilities and it is able to pay its debts as they become due in the usual course of business.

Securities Authorized Under Equity Compensation Plans

The following table lists the securities authorized for issuance under any equity compensation plans approved by our shareholders and any equity compensation plans not approved by our shareholders as of December 31, 2014.   This chart also includes individual compensation agreements.
 
  EQUITY COMPENSATION PLAN INFORMATION  
Plan category
  
Number of securities to be issued upon exercise of outstanding options, warrants and rights
(a)
    
Weighted-average exercise price of outstanding options, warrants and rights
(b)
    
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
(c)
  
Equity compensation plans  approved by security holders            
     0     $ 0.00       0  
Equity compensation plans not approved by security holders
     0     $ 0.00       15,152  
Total
     0     $ 0.00       15,152  
 
Stock Option Plan

Our Board of Directors approved a stock option plan on June 26, 2006.  The purpose of the 2006 stock option plan is to promote our interests by attracting key employees and directors, providing each of our key employees and directors with an additional incentive to work to increase the value of our common stock and providing key employees and directors with a stake in our future, which corresponds to the stake of the stockholders.  Our Board reserved for issuance a total of 15,152 shares of common stock under the 2006 stock option plan.  We have not granted any options to date.  Our Board, in approving the 2006 stock option plan, has recommended that the shareholders approve this 2006 stock option plan.  The stock option plan has not been approved by the Company’s shareholders.

 
-7-
 
 
Each stock option granted under the 2006 stock option plan will entitle the holder to purchase the number of shares of common stock specified in the grant at the purchase price specified.  The 2006 stock option plan authorizes the Compensation Committee to grant:

 
●
incentive stock options within the meaning of Section 422 of the Internal Revenue Code to key employees, and
 
●
non-qualified stock options under the Internal Revenue Code to key employees or non-employee directors.

If an option granted under the 2006 stock option plan expires, is cancelled or is exchanged for a new option before a holder exercises the option in full, the shares reserved for the unexercised portion of the option will become available again for use under the 2006 stock option plan. Shares underlying an option that a holder surrenders and shares used to satisfy an option price or withholding obligation will not again become available for use under the 2006 stock option plan.

Recent Sales of Unregistered Securities

  None.

Issuer Purchase of Securities
 
 None.

             
   
Years ended December 31
  
SUMMARY OF BALANCE SHEET
  
2014
    
2013
  
Cash and cash equivalents
  
$
1,310
    
$
2,636
  
Total current assets
    
1,310
      
2,636
  
Total assets
    
1,310
      
2,636
  
Total current liabilities
    
10,516
      
12,710
  
Total liabilities
    
522,861
      
459,155
  
Accumulated deficit
    
(6,940,746
)
    
(6,875,714
)
Total stockholders’ deficit
  
$
(521,551
)
  
$
(456,519
)
                 
SUMMARY OF OPERATING RESULTS
                
Revenues, net
  
$
-
    
$
-
  
Cost of sales
    
-
      
-
  
Gross profit
    
-
      
-
  
Total operating expenses
    
36,032
      
32,067
  
Operating loss
    
(36,032
)
    
(32,067
)
Other expenses, net
    
(29,000
)
    
(27,400
)
Net loss
  
$
(65,032
)
  
$
(59,467
)
Net loss per share
  
$
(0.02
)
  
$
(0.02
)
 
 
-8-
 
 

Executive Overview

Since 2009 we have been largely inactive except for efforts to sell assets and to seek a possible business combination.

In 2012 we dissolved New Era; however, we are continuing to pursue and evaluate strategies to enhance shareholder value including the merger with a private company in industries outside the art and printing industries.  We continue to take steps to lower our operating costs and manage our working capital needs. However, we cannot guarantee that these actions will ensure our continued existence.
 
Liquidity and Capital Resources

We derived our primary source of funds during the twelve months ended December 31, 2014 from the sale of additional debt securities.  Working capital as of December 31, 2014 was negative $521,551 as compared to negative working capital of $10,074 as of December 31, 2013.  The cash balance at December 31, 2014 was $1,310 compared to $2,636 at December 31, 2013.

Net cash used in operating activities was $38,226 for the twelve months ended December 31, 2014, as compared to $29,241 for the twelve months ended December 31, 2013.  During each period presented, we used net cash principally to fund our net losses.
  
Net cash provided by financing activities was $36,900 during the twelve months ended December 31, 2014, as compared to net cash provided by financing activities of $29,500 for the twelve months ended December 31, 2013.  Net cash provided by financing activities during 2014 was principally related to the issuance of promissory notes.    

We have suffered recurring losses from operations and have an accumulated deficit of approximately $6,940,746 at December 31, 2014.  Additionally, as of December 31, 2014, we had cash and cash equivalents of $1,310.  Primarily as a result of our recurring losses and our lack of liquidity, we have received a report from our independent registered public accountants for our financial statements for the year ended December 31, 2014 that includes an explanatory paragraph describing the uncertainty as to our ability to continue as a going concern. To continue our operations and to grow our current operations and to make acquisitions, if any, under our current business model during the next twelve months, we will need to secure additional working capital, by way of equity or debt financing, or otherwise.  After this twelve month period, we may need additional financing for working capital, and in the case of acquisitions for payment of seller notes and future earned cash to sellers of acquired companies. There can be no assurance that we will be able to secure sufficient financing or on terms acceptable to us. If adequate funds are not available on acceptable terms, we would need to delay, limit or eliminate some or all of our proposed operations, and we may be unable to successfully promote our products or develop new or enhanced products or prosecute acquisitions, any of which could lower our revenues and net income, if we achieve profitability in the future.  If we raise additional funds through the issuance of convertible debt or equity securities, the percentage ownership of our current stockholders is likely to be diluted, unless some of our current stockholders were to invest in subsequent convertible debt or equity financings, and some of the newly issued securities may also have rights superior to those of the common stock.  Additionally, if we issue or incur debt to raise funds, we may be subject to limitations on our operations.

 
-9-
 
 
Convertible Promissory Notes

In August 2012, the Company and the note holders agreed to consolidate the Former Notes, and as a result, the Former Notes were cancelled and the Company issued a new note (the “Consolidated Note”) for $350,600.  The Consolidated Note is secured by all of the Company’s assets, bears interest at a rate of 7% per annum and matures on December 31, 2014. The Company is currently in discussions to extend the maturity date of the Consolidated Note.  Effective May 19, 2014, the Consolidated Note was amended to limit the number of shares into which the Convertible Note and related accrued interest can be converted.  The aggregate maximum number of shares issuable for conversion was limited to 96,261,250 shares, which represents $385,045 of note principal and accrued interest at the stated conversion price of $0.004 per share.   Any balance of note principal and accrued interest in excess of $385,045 will never be convertible into shares of the Company’s common stock unless the authorized shares of the Company are increased.  At December 31, 2014, $385,045 of the Consolidated Note and accrued interest were convertible at a rate of $0.004 per share into 96,261,250 shares of the Company’s common stock, and the balance of $18,800 will never be convertible into shares of the Company’s common stock.  At December 31, 2014 and 2013, total outstanding balance of principal and accrued interest was $403,845 and $378,845, respectively.  

Promissory Notes

On April 26, 2012, the Company issued its unsecured Promissory Note (the “Note”) to private investors for $33,000.  The Note is unsecured and accrues interest of 5% per annum payable upon maturity.  During 2014, the Company received an additional $36,900 of proceeds under the Note.  Effective April 20, 2014, the maturity date of the Note was extended from April 26, 2014, to December 31, 2015.  At December 31, 2014 and 2013, the amount due under the promissory note totaled $108,500 and $67,600 including accrued interest of $9,100 and $5,100, respectively.

Results of Operations for Years ended December 31, 2014 and 2013

Revenues.    We had no revenues during the years ended December 31, 2014 and 2013.  We continue to explore new opportunities that will generate revenue and enhance shareholder value.

Gross profit.     We had no revenues and therefore no costs of revenues for the years December 31, 2014 and 2013, respectively.     

Operating expenses.    Operating expenses consist mainly of legal and accounting expenses.  Operating expenses decreased by $3,965 to $36,032 for the year ended December 31, 2014 versus $32,067 for the year ended December 31, 2013.  

Other expense.  Other expense principally consists of interest and financing expense related to outstanding debt and shares issuances.   We had interest expense of $29,000 for the year ended December 31, 2014, compared to interest expense of $27,400 for the year ended December 31, 2013.  The change in balance or increase in interest expense of $1,600 related primarily to the increase in debt levels.
 
Net Loss.  Our net loss for the year ended December 31, 2014 was $65,032 compared to loss of $59,467 for the year ended December 31, 2013.  The difference was attributable to the aforementioned lack of revenue, increased operating expense, and increased interest expense as discussed above.
 
Critical Accounting Policies

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires us to make judgments, assumptions and estimates that affect the amounts reported. Note 1 of the Notes to Consolidated Financial Statements describes the significant accounting policies used in the preparation of the consolidated financial statements. Certain of these significant accounting policies are considered to be critical accounting policies, as defined below. On a regular basis, we review the accounting policies we use in reporting our financial results.

 
-10-
 
 
A critical accounting policy is one that is both material to the presentation of our financial statements and requires us to make difficult, subjective or complex judgments that could have a material effect on our financial condition and results of operations. Specifically, critical accounting estimates have the following attributes:
 
● we have to make assumptions about matters that are highly uncertain at the time of the estimate; and
● different estimates we could reasonably have used, or changes in the estimate that are reasonably likely to occur, would have a material effect on our financial condition or results of operations.
 
We cannot make estimates and assumptions about future events or determine their effects with certainty. We base our estimates on historical experience and on various other assumptions that we believe to be applicable and reasonable under the circumstances. These estimates may change as new events occur, as we obtain additional information and as our operating environment changes. These changes have historically been minor and we have included them in the financial statements as soon as they became known.  In addition, we periodically face uncertainties, the outcomes of which are not within our control and we will not know for prolonged periods of time. Based on a critical assessment of our accounting policies and the underlying judgments and uncertainties affecting the application of those policies, we believe that our combined financial statements are fairly stated in accordance with accounting principles generally accepted in the United States of America, and present a meaningful presentation of our financial condition and results of operations.

We believe that the following are our critical accounting policies:
 
Stock-Based Compensation

        The Company periodically issues stock options and warrants to employees and non-employees in non-capital raising transactions for services and for financing costs. The Company accounts for stock option and warrant grants issued and vesting to employees based on the authoritative guidance provided by the Financial Accounting Standards Board whereas the value of the award is measured on the date of grant and recognized over the vesting period. The Company accounts for stock option and warrant grants issued and vesting to non-employees in accordance with the authoritative guidance of the Financial Accounting Standards Board whereas the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Non-employee stock-based compensation charges generally are amortized over the vesting period on a straight-line basis. In certain circumstances where there are no future performance requirements by the non-employee, option grants are immediately vested and the total stock-based compensation charge is recorded in the period of the measurement date.

        The fair value of the Company's stock options and warrants grant is estimated using the Black-Scholes option pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the stock options or warrants, and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes option pricing model, and based on actual experience. The assumptions used in the Black-Scholes option pricing model could materially affect compensation expense recorded in future periods.
 

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.


Our financial statements appear at the end of this report beginning with the Index to Financial Statements on page F-1.


We have not had a change in, or disagreement with, our independent registered public accounting firm for the past two fiscal years.

 
 
-11-
 
 

Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Securities and Exchange act of 1934 Rules 13a-15(f), for the period ended December 31, 2014.  Based on this evaluation, our Chief Executive Officer concluded that our disclosure controls and procedures were effective as of December 31, 2014.
 
Management’s Annual Report on Internal Control over Financial Reporting

Our Chief Executive Officer and Chief Financial Officer are responsible to design or supervise a process to be effected by our Board of Directors that provides reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.  The policies and procedures include:
 
 ● maintenance of records in reasonable detail to accurately and fairly reflect the transactions and dispositions of  assets,
 ● provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and directors, and
 ● provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on our financial statements.
 
For the year ended December 31, 2014, management has relied on the framework of the Committee of Sponsoring Organizations of the Treadway Commission (COSO), to evaluate the effectiveness of our internal control over financial reporting and based upon that framework, management has determined that our internal control over financial reporting is effective.  A controls system cannot provide absolute assurance, however, that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.
 
Our management determined that there were no changes made in our internal controls over financial reporting during the fourth quarter of 2014 that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.

This annual report does not include, and is not required to include, an attestation report of our registered public accounting firm regarding internal control over financial reporting.  Management’s report was not subject to attestation by the our registered public accounting firm pursuant to rules of the SEC that permit the company to provide only management’s report in this annual report.


None.

 


Directors and Executive Officers

The following table sets forth the name, age, position and office term of each of our executive officers and directors.  The number of directors is currently fixed at five.  The initial terms of office of our directors will expire upon the election and qualification of directors at our next annual meeting of stockholders.  All directors serve until the next annual stockholders meeting or until their successors are duly elected and qualified.  All officers serve at the discretion of the Board of Directors.

Name
Age
Position
Term of Director
Jason Adelman (1)
46
Chief Executive Officer, Chief Financial Officer, Secretary and Director
May 28, 2015 until our next annual meeting
       
James R. Simpson (1)
45
Former Chief Executive Officer, Chief Financial Officer, Secretary and Director
From June 2006 until May 28, 2015.
       
(1)  
On May 28, 2015, the Company’s Board of Directors approved the resignation of James R. Simpson, as the Company’s Director, Chief Executive Officer, Chief Financial Officer and Secretary.  The Company’s Board of Directors approved Jason Adelman as a Director and he was also appointed to fill the vacant positions of Chief Executive Officer, Chief Financial Officer and Secretary.

Compliance with Section 16(a) of the Exchange Act

Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s directors and executive officers and persons who own more than ten percent of a registered class of the Company’s equity securities to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and other equity securities of the Company.  Officers, directors and greater than ten percent shareholders are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file.

During the most recent fiscal year, to the Company’s knowledge, the following delinquencies occurred:

 
Name
  
No. of Late Reports
 No. of Transactions
Reported Late
 No. of
Failures to File
 
0
0
0
 
0
0
0
 
Code of Ethics

We adopted a Code of Ethics for the Chief Executive Officer, the President and Financial Executives in June 2006. Upon written request we will provide a copy of the Code of Ethics to any person without charge.  Address your request to:
 
Shareholder Communications
 
Silvergraph International, Inc.
 
 
 
-13-
 
 
Committees

In June 2006 our Board of Directors considered establishing an audit, nominating and compensation committee; however, the Board decided to delay such action until the Company seeks listing on the Nasdaq Stock Market and/or these committees are required by regulation.  Therefore, we do not currently have an audit committee; accordingly, we do not have an audit committee financial expert serving on an audit committee.


Executive Officers and Directors

The following tables set forth certain information about compensation paid, earned or accrued for services by (i) the Company’s Chief Executive Officer and (ii) all other executive officers who earned in excess of $100,000 in the years ended December 31, 2014, 2013, and 2012 (“Named Executive Officers”):

 
 
Name and
Principal
Position
  
 
 
 
 
Year
  
 
 
Salary
($)
    
 
 
Bonus
($)
    
 
Stock
Awards
($)
    
 
Option
Awards
($)
    
Non-Equity
Incentive
Plan
Compensation
($)
    
Nonqualified
Deferred
Compensation
($)
    
 
All Other
Compensation
($)
    
 
 
Total
($)
  
                                                     
Jason Adelman (1) CEO, CFO, Secretary and Director
  
2014
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
                                                                     
James R.
Simpson (1)
  
 2014
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Former CEO, CFO, and Secretary
  
2013
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
                                                                     
   
2012
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
 
(1)  
On May 28, 2015, the Company’s Board of Directors approved the resignation of James R. Simpson, as the Company’s Director, Chief Executive Officer, Chief Financial Officer and Secretary.  The Company’s Board of Directors approved Jason Adelman as a Director and he was also appointed to fill the vacant positions of Chief Executive Officer, Chief Financial Officer and Secretary.
 
Employment Contracts

We currently do not have written employment agreements with our executive officers.  On April 11, 2008, William W. Lee and James R. Simpson terminated their employment agreements with New Era.  The Termination Agreement provided that each executive’s unpaid salary as of the date of the agreement would remain an outstanding obligation on the books and records of the Company until the salary was paid or Silvergraph International merged with a separate company unaffiliated with any of the executives.   In the case of a merger each executive’s unpaid salary would be converted into common stock at $5.28 per share.
 
 
 
-14-
 
 
Director Compensation

We do not have any standard arrangement for compensation of our directors for any services provided as director, including services for committee participation or for special assignments.  The following table sets forth director compensation as of and for 2014:

 
Name
   Fees Earned or
Paid in Cash ($)
     Stock Awards
($)
     Option Awards
($)
     Non-Equity Incentive
Plan Compensation ($)
     Nonqualified Deferred
Compensation Earnings ($)
     All Other
Compensation ($)
    
Total ($)
  
                                           
James R. Simpson
     -0-       -0-       -0-       -0-       -0-       -0-       -0-  
 
Outstanding Equity Awards at Fiscal Year-End

The following table sets forth certain information concerning outstanding stock awards held by the Named Executive Officers on December 31, 2014:

  Option Awards       Stock Awards        
 
 
Name
  
Number of Securities
Underlying Unexercised
Options (#) Exercisable
    
 
 
 
 
Number of Securities
Underlying Unexercised
Options (#) Unexercisable
    
 
Equity Incentive Plan
Awards: Number of
Securities Underlying
Unexercised Unearned
Options (#)
    
 
 
 
Option Exercise
Price ($)
    
 
 
 
Option Expiration
Date
    
 
 
Number
of Shares or Units
of Stock That Have
Not Vested (#)
    
 
 
 
Market Value
of Shares or Units of Stock
That Have
Not Vested ($)
    
Equity Incentive Plan
Awards: Number
of Unearned Shares,
Units or Other Rights That Have Not Vested
(#)
    
Equity Incentive
Plan Awards: Market
or Payout Value of
Unearned Shares,
Units or Other Rights That Have Not
Vested ($)
  
                                                       
James R. Simpson
     -0-       -0-       -0-       N/A       N/A       -0-       -0-       -0-       -0-  
 
 
-15-
 
 

Beneficial Ownership

The following table sets forth as of July 31, 2015, the name and the number of shares of our common stock, par value, $0.001 per share, held of record or beneficially by each person who held of record, or was known by the Company to own beneficially more than 5% of the 2,971,154 issued and outstanding shares of our common stock, and the name and shareholdings of each director and of all officers and directors as a group.
 
CERTAIN BENEFICIAL OWNERS
  
 
Title of class
Name and address of beneficial owners
  
Amount and nature of
beneficial owner
    
Percent
of class (1)
  
               
Common
Antaeus Capital Partners, LLC
1875 Century Park  East, Ste. 1460
Los Angeles, CA 90067
     1,219,500       41.0 %
                   
Common
Ideal Growth LLC
2855 Cottonwood Pkwy #340
Salt Lake City, UT 84121
     200,000       6.7 %
                   
Common
Thomas G. Schuster
1421 West Westport Circle
MeQuon, WI 53092
     536,547       18.1 %
 
 
MANAGEMENT
  
 
Title of class
Name and address of beneficial owners
  
Amount and nature of
beneficial owner
    
Percent
of class (1)
  
               
Common
James R. Simpson*
     125,158       4.2 %
                   
(*) Former Officer and/or director.  22541 Parkfield, Mission Viejo, CA


Related Party Transactions

(See Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operation -– Convertible Promissory Notes).  

Director Independence

We do not have any independent directors serving on our Board of Directors.
 
 
-16-
 
 

Audit Fee

The aggregate fees billed for each of the last two fiscal years for professional services rendered by the independent registered public accounting firm for the audit of Silvergraph International’s annual financial statement and review of financial statements included in our periodic reports and services normally provided by the accounting firm in connection with statutory and regulatory filings or engagements were $12,400 for fiscal year ended 2014 and $15,594 for fiscal year ended 2013.
 
Audit-Related Fees

We did not have fees for other audit related services for fiscal years ended 2014 and 2013.

Tax Fees

We did not have fees for tax compliance, tax advice and tax planning for the fiscal years 2014 and 2013.

All Other Fees

There were no other aggregate fees billed in either of the last two fiscal years for products and services provided by the independent registered public accounting firm, other than the services reported above.

Pre-approval Policies

We do not have a standing audit committee currently serving and as a result our Board of Directors performs the duties of an audit committee.  Our Board of Directors evaluates and approves, in advance, the scope and cost of the engagement of an accounting firm before the accounting firm renders audit and non-audit services.  We do not rely on pre-approval policies and procedures.
  
 
PART IV


(a)(1)           Financial Statements

For a list of financial statements and supplementary data filed as part of this Annual Report, see the Index to Financial Statements beginning at page F-1 of this Annual Report.

(a)(2)           Financial Statement Schedules

We do not have any financial statement schedules required to be supplied under this Item.

(a)(3)           Exhibits

Refer to (b) below.
 
(b)                Exhibits

3.1(i)
  
Articles of Incorporation (Incorporated by reference to Exhibit 3.1(i) to Form 10-SB filed on July 6, 2000)
     
3.1(ii)
  
Amendment to Articles of Incorporation (Incorporated by reference to Exhibit 3.1(ii) to Form 8-K filed on June 23, 2006)
     
3.1(iii)
  
Amended and Restated Articles of Incorporation (Incorporated by reference to Exhibit 3.1 to Form 8-K filed on March 24, 2009)
     
3.2
  
Bylaws (Incorporated by reference to Exhibit 3.3 to Form 10-SB filed on July 6, 2000)
     
14.1
  
Code of Ethics (Incorporated by reference to Exhibit 14.1 to Form 8-K filed on June 26, 2006)
     
21
  
Subsidiaries of Silvergraph
     
31.1
  
Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
     
31.2
  
Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
     
32.1
  
Chief Executive Officer Certification Pursuant to 18 USC, Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
     
32.2
  
Chief Financial Officer Certification Pursuant to 18 USC, Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
     
101.INS
  
XBRL Instance Document
     
101.SCH
  
XBRL Schema Document
     
101.CAL
  
XBRL Calculation Linkbase Document
     
101.DEF
  
XBRL Definition Linkbase Document
     
101.LAB
  
XBRL Labels Linkbase Document
     
101.PRE
  
XBRL Presentation Linkbase Document
 


Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
SILVERGRAPH INTERNATIONAL, INC.
    
       
       
Date:  August 13, 2015
  
/s/ Jason Adelman
  
   
Jason Adelman, Chief Executive Officer,
Chief Financial Officer, Secretary and Director
  
 
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
 
       
Date:  August 13, 2015
  
/s/ Jason Adelman
  
   
Jason Adelman, Chief Executive Officer,
Chief Financial Officer, Secretary and Director
  
       
       

INDEX TO FINANCIAL STATEMENTS
 



To the Board of Directors and Stockholders
Silvergraph International, Inc.  


We have audited the balance sheets of Silvergraph International, Inc. as of December 31, 2014 and 2013, and the related statements 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 consolidated 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 consolidated 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 Silvergraph International, Inc. as of December 31, 2014 and 2013, 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 1 to the financial statements, the Company has suffered recurring losses and negative cash flows from operating activities, which have resulted in a negative working capital and a stockholders' deficit. These factors raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
 
Weinberg & Company, P.A.
Los Angeles, California
August 11, 2015



SILVERGRAPH INTERNATIONAL, INC.

   
December 31,
2014
    
December 31,
2013
  
ASSETS
            
Current assets:
            
     Cash and cash equivalents
   $ 1,310     $ 2,636  
  
                
     Total assets
   $ 1,310     $ 2,636  
                 
LIABILITIES AND STOCKHOLDERS’ DEFICIT
                
Current liabilities:
                
     Accounts payable
   $ 10,516     $ 12,710  
Convertible promissory notes and accrued interest
     403,845       -  
     Promissory notes and accrued interest
     108,500       -  
     Total current liabilities
     522,861       12,710  
                 
     Convertible promissory notes and accrued interest
     -       378,845  
     Promissory note and accrued interest
     -       67,600  
                 
     Total liabilities
     522,861       459,155  
                 
Commitments and contingencies
                
                 
Stockholders' Deficit
                
      Common Stock, $0.001 par value, 100,000,000 shares authorized: 2,971,154 shares issued and outstanding
     2,971       1,267  
     Additional paid-in capital
     6,416,224       6,189,385  
     Common shares issuable (0 and 1,703,586 shares)
     -       228,543  
     Accumulated deficit
     (6,940,746 )     (6,875,714 )
     Total stockholders' deficit
     (521,551 )     (456,519 )
                 
     Total liabilities and stockholders’ deficit
   $ 1,310     $ 2,636  
                 
 
The accompanying notes are an integral part of these financial statements

 
SILVERGRAPH INTERNATIONAL, INC. AND SUBSIDIARY
 
             
   
Year Ended
December 31, 2014
    
Year Ended
 December 31,
2013
  
             
Revenues
   $ -     $ -  
Cost of sales
     -       -  
Gross profit
     -       -  
Operating expenses
     (36,032 )     (32,067 )
Operating loss
     (36,032 )     (32,067 )
Interest expense - net
     (29,000 )     (27,400 )
Net loss
   $ (65,032 )   $ (59,467 )
Net loss per share, basic and fully diluted
   $ (0.02 )   $ (0.02 )
 
Weighted average shares outstanding, basic and fully diluted
     2,971,154       2,971,154  
 
The accompanying notes are an integral part of these financial statements

SILVERGRAPH INTERNATIONAL, INC.
YEARS ENDED DECEMBER 31, 2014 AND 2013

                                     
               
Additional
    
Common
              
   
Common
    
Stock
    
Paid-in
    
Shares
    
Accumulated
        
   
Shares
    
Amount
    
Capital
    
Issuable
    
Deficit
    
Total
  
Balance, January 1, 2013
     1,267,368     $ 1,267     $ 6,189,385     $ 228,543     $ (6,816,247 )   $ (397,052 )
Net loss
     --       --       --       --       (59,467 )     (59,467 )
Balance, December 31, 2013
     1,267,368       1,267       6,189,385       228,543       (6,875,714 )     (456,519 )
Common shares issued
     1,703,786       1,704       226,839       (228,543 )     -       -  
Net loss
     --       --       --       --       (65,032 )     (65,032 )
Balance, December 31, 2014
     2,971,154     $ 2,971     $ 6,416,224     $ -     $ (6,940,746 )   $ (521,551 )
 
The accompanying notes are an integral part of these financial statements


SILVERGRAPH INTERNATIONAL, INC.

   
Years Ended December 31,
  
   
2014
    
2013
  
             
Operating activities:
            
   Net loss
   $ (65,032 )   $ (59,467 )
   Adjustment to reconcile net loss to net cash used in
operating activities:
                
        Accrued interest on debt
     29,000       27,400  
        Changes in assets and liabilities:
                
        Accounts payable and accrued expenses
     (2,194 )     2,826  
           Net cash used in operating activities
     (38,226 )     (29,241 )
                 
Financing activities:
                
    Proceeds from issuance of promissory notes
     36,900       29,500  
          Net cash provided by financing activities
     36,900       29,500  
                 
Change in cash and cash equivalents
     (1,326 )     259  
Cash and cash equivalents, beginning of period
     2,636       2,377  
Cash and cash equivalents, end of period
   $ 1,310     $ 2,636  
                 
Supplemental cash flow information:
                
    Cash paid for interest
   $ -     $ -  
    Cash paid for income taxes
   $ -     $ -  
 
The accompanying notes are an integral part of these financial statements


SILVERGRAPH INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013


Nature of Operations

Through 2009, Silvergraph International, Inc. ("Silvergraph" or the “Company”) was a designer, manufacturer, marketer and branded retailer of fine-art reproductions, art-based home decorative accessories, collectibles and gift products.  In 2007, we experienced significant challenges due to the unexpected contraction of our business with our largest client which caused us in 2008 to evaluate various strategies to best enhance value for our shareholders including the sale to or merger with a larger art or printing organization that would benefit from our technology.  In the second half of 2008, we began to wind down our subsidiary New Era Studios, Inc. (“New Era”), and to sell its assets, to pay down its debts and to provide working capital for the Company.  We also raised $285,000 in interim bridge capital to support our operations and took steps to significantly lower our cost of operations.   We are continuing to pursue and evaluate strategies to enhance shareholder value including the merger with a private company in industries outside the art and printing industries.  We continue to take steps to lower our operating costs and help fund our working capital needs. However, we cannot guarantee that these actions will ensure our continued operations.
 
Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has suffered recurring losses from its operations since its inception and has an accumulated deficit of $6,940,746 and stockholders’ deficit of $521,551 at December 31, 2014.  The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classifications of liabilities that might be necessary should the Company be unable to continue its existence. The recovery of the Company’s assets is dependent upon continued operations of the Company.  In addition, the Company's recovery is dependent upon future events, the outcome of which is undetermined. The Company intends to continue to attempt to raise additional capital, but there can be no certainty that such efforts will be successful.

To continue our operations and to grow our current operations and to make acquisitions, if any, under our current business model during the next twelve months, we will need to secure additional working capital, by way of equity or debt financing, or otherwise.  After this twelve month period, we may need additional financing for working capital, and in the case of acquisitions for payment of seller notes and future earned cash to sellers of acquired companies. There can be no assurance that we will be able to secure sufficient financing or on terms acceptable to us. If adequate funds are not available on acceptable terms, we would need to delay, limit or eliminate some or all of our proposed operations, and we may be unable to successfully promote our products or develop new or enhanced products or prosecute acquisitions, any of which could lower our revenues and net income, if we achieve profitability in the future.  If we raise additional funds through the issuance of convertible debt or equity securities, the percentage ownership of our current stockholders is likely to be diluted, unless some of our current stockholders were to invest in subsequent convertible debt or equity financings, and some of the newly issued securities may also have rights superior to those of the common stock.  Additionally, if we issue or incur debt to raise funds, we may be subject to limitations on our operations.
 
 
F-7
 
 
Stock-Based Compensation

The Company periodically issues stock options and warrants to employees and non-employees in non-capital raising transactions for services and for financing costs. The Company accounts for stock option and warrant grants issued and vesting to employees based on the authoritative guidance provided by the Financial Accounting Standards Board whereas the value of the award is measured on the date of grant and recognized over the vesting period. The Company accounts for stock option and warrant grants issued and vesting to non-employees in accordance with the authoritative guidance of the Financial Accounting Standards Board whereas the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Non-employee stock-based compensation charges generally are amortized over the vesting period on a straight-line basis. In certain circumstances where there are no future performance requirements by the non-employee, option grants are immediately vested and the total stock-based compensation charge is recorded in the period of the measurement date.

The fair value of the Company's stock options and warrants grant is estimated using the Black-Scholes option pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the stock options or warrants, and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes option pricing model, and based on actual experience. The assumptions used in the Black-Scholes option pricing model could materially affect compensation expense recorded in future periods.
 
Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Estimates are used in the accounting for potential liabilities and valuing equity instruments. Actual results could differ from those estimates.
 
Loss per share

Basic net loss per share amount is computed by dividing the net loss by the weighted average number of common shares outstanding.  In computing diluted earnings per share, the weighted average number of shares outstanding is adjusted to reflect the effect of potentially dilutive securities, such as stock options and warrants.  Common stock equivalent shares are excluded from the computation if their effect is antidilutive.  At December 31, 2013 and 2014, common stock equivalents were comprised of potential common shares to be issued upon conversion of convertible promissory note of 94,711,250 and 87,649,883 common shares as of December 31, 2014 and 2013, respectively.  At December 31, 2013, common share equivalents also included 200,000 shares of the Company’s common shares.  These warrants expired in 2014.

Fair Value of Financial Instruments
 
The carrying amounts of our financial instruments, including cash and cash equivalents, accounts payable and accrued liabilities, approximate fair value because of their generally short maturities.

The Company uses various inputs in determining the fair value of its investments and measures these assets on a recurring basis.  Financial assets recorded at fair value in the consolidated balance sheets are categorized by the level of objectivity associated with the inputs used to measure their fair value.  Authoritative guidance provided by the FASB defines the following levels directly related to the amount of subjectivity associated with the inputs to fair valuation of these financial assets:
 
●
Level 1 – quoted prices in active markets for identical investments

●
Level 2 – other significant observable inputs (including quoted prices for similar investments, market corroborated inputs, etc.)

●
Level 3 – significant unobservable inputs (including the Company’s own assumptions in determining the fair value of investments)
 
 
F-8
 
 
As of December 31, 2014, the Company’s financial assets subject to measurement included only Level 1 items of cash and short term investments.  The fair value of these financial assets was equal to their recorded value. There were no unrealized gains or losses included in earnings resulting from long-term investments associated with Level 2 or 3 financial assets during the year ended December 31, 2014.

Recent Accounting Pronouncements
 
In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-09 (ASU 2014-09), Revenue from Contracts with Customers.  ASU 2014-09 will eliminate transaction- and industry-specific revenue recognition guidance under current U.S. GAAP and replace it with a principle based approach for determining revenue recognition.  ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract.  The ASU also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract.  ASU 2014-09 is effective for reporting periods beginning after December 15, 2016, and early adoption is not permitted.  Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption.  Management is currently assessing the impact the adoption of ASU 2014-09 and has not determined the effect of the standard on our ongoing financial reporting.

In April 2014, the FASB issued Accounting Standards Update No. 2014-08 (ASU 2014-08), Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360).   ASU 2014-08 amends the requirements for reporting discontinued operations and requires additional disclosures about discontinued operations.  Under the new guidance, only disposals representing a strategic shift in operations or that have a major effect on the Company's operations and financial results should be presented as discontinued operations.  This new accounting guidance is effective for annual periods beginning after December 15, 2014.  The Company is currently evaluating the impact of adopting ASU 2014-08 on the Company's results of operations or financial condition.

In August 2014, the FASB issued Accounting Standards Update No. 2014-15 (ASU 2014-15), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued.  An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern.  The ASU applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted.  The Company is currently evaluating the impact the adoption of ASU 2014-15 on the Company’s financial statement presentation and disclosures.
 
Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements. 
 
 
F-9
 
 
NOTE 2—CONVERTIBLE PROMISSORY NOTES

 In February 2008 the Company issued 7% convertible promissory notes (the “Former Notes”) for $150,000.  Between 2008 and 2011, the Former Notes were amended several times and the Company received additional proceeds, and agreed to issue a total of 1,627,986 shares of common stock to these note holders (see Note 4).  In August, 2012, the Former Notes had an aggregate principal balance and accrued interest of $354,045.
 
In August 2012, the Company and the note holders agreed to consolidate the Former Notes, and as a result, the Former Notes were cancelled and the Company issued a new note (the “Consolidated Note”) for $350,600.  The Consolidated Note is secured by all of the Company’s assets, bears interest at a rate of 7% per annum and matures on December 31, 2014, subsequently extended to December 2015. The aggregate maximum number of shares issuable for conversion was limited to 96,261,250 shares, which represents $385,045 of note principal and accrued interest at the stated conversion price of $0.004 per share.   Any balance of note principal and accrued interest in excess of $385,045 will never be convertible into shares of the Company’s common stock unless the authorized shares of the Company are increased.  At December 31, 2014, $385,045 of the Consolidated Note and accrued interest were convertible at a rate of $0.004 per share into 96,261,250 shares of the Company’s common stock.  At December 31, 2014 and 2013, total outstanding balance of principal and accrued interest was $403,845 and $378,845, respectively.  

NOTE 3 – PROMISSORY NOTE
 
On April 26, 2012, the Company issued its unsecured Promissory Note (the “Note”) to private investors for $33,000.  The Note is unsecured and accrues interest of 5% per annum payable upon maturity.  During 2014, the Company received an additional $36,900 of proceeds under the Note.  Effective April 20, 2014, the maturity date of the Note was extended from April 26, 2014, to December 31, 2015.  At December 31, 2014 and 2013, the amount due under the promissory note totaled $108,500 and $67,600 including accrued interest of $9,100 and $5,100, respectively.

NOTE 4 – EQUITY                                           

Common shares issuable

Pursuant to the 7th and up to the 13th amendments of the Company’s convertible promissory notes from May 2009 up to December 2011, the Company granted these note holders a total of 1,628,186 shares of common stock. The shares were issued to the note holders concurrent to the receipt of proceeds pursuant to the amended convertible notes (see Note 2).  The Company accounted these shares at fair value and was recorded as part of interest expense at the respective date of grant.  The Company issued these shares in December 2014.
 
On April 1, 2011, the Company entered into an Acknowledgment and Release with Beach Freeman Lim & Cleland, a California limited liability partnership (“Beach”), under which the Company agreed to issue Beach 75,600 shares of common stock in exchange for Beach agreeing to accept the shares in full satisfaction of any and all amounts owe Beach amounting to $75,590.  The Company accounted these shares at fair value upon issuance in April 2011.  The Company issued these shares in December 2014.

 
F-10
 
Warrants Outstanding

A summary of warrant activity and changes for the year ended December 31, 2014 and 2013 is presented below:
             
Warrants
Shares
  
Weighted-Average Exercise Price
  
Weighted-Average
Remaining Contractual
Term (Years)
Outstanding and exercisable at December 31, 2012
200,000
  
$
0.50
  
1.8
     Granted
            
     Expired
-
    
-
  
-
Outstanding at December 31, 2013
200,000
  
$
0.50
  
0.8
     Granted
-
    
-
  
-
     Expired
(200,000)
    
0.50
  
-
Outstanding and exercisable at December 31, 2014
-
  
$
-
  
-

    Additional information regarding warrants outstanding as of December 31, 2014 is as follows:
 
Exercise Price
  
Number Outstanding
  
Weighted Average
Remaining Contractual Life (Years)
  
Number Exercisable
  
Intrinsic Value of
Warrants at December 31, 2014
$-
    
-
    
-
    
-
    
-

Convertible Promissory Notes

As of December 31, 2014 and 2013, potential shares of common stock to be issued totaled 96,261,250 and 87,649,883 respectively pursuant to the terms of the Company’s outstanding convertible notes (see Note 2).

NOTE 5 – INCOME TAXES

The Company did not provide for any Federal or state income tax expense during the years ended December 31, 2014 and 2013 as a result of the availability of net operating loss carryforwards.  As of December 31, 2014, the Company had provided a 100% valuation allowance with respect to such Federal and state net operating loss carryforwards, as it cannot determine that it is more likely than not that it will be able to realize such deferred tax assets.  This valuation allowance represents the difference in the Company’s effective income tax of 0% and the Federal statutory income tax rate of 34% for the year ended December 31, 2014.

As of December 31, 2014, for Federal and state income tax purposes, the Company had approximately $2,000,000 in net operating loss carryforwards expiring through 2016.   Internal Revenue Code Section 382 substantially restricts the ability of a corporation to utilize existing net operating losses in the event of a defined "ownership change".  The Company has determined that there will likely be significant limitations on its ability to utilize its net operating loss carryforwards in future periods for Federal income tax purposes due to such ownership changes.

Effective January 1, 2007, the Company adopted Financial Accounting Standards Board that 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 this guidance, 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 a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. This guidance also provides guidance on derecognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. At the date of adoption, and as December 31, 2014 and 2013, the Company does not have a liability for unrecognized tax benefits.
 
 
F-11
 
 
The Company files income tax returns in the U.S. federal jurisdiction and various states. The Company is subject to U.S. federal or state income tax examinations by tax authorities for five years after 2014. During the periods open to examination, the Company has net operating loss and tax credit carry forwards for U.S. federal and state tax purposes that have attributes from closed periods. Since these NOLs and tax credit carry forwards may be utilized in future periods, they remain subject to examination.

The Company’s policy is to record interest and penalties on uncertain tax provisions as income tax expense. As of December 31, 2014, the Company has no accrued interest or penalties related to uncertain tax positions.

NOTE 6 – COMMITMENTS AND CONTINGENCIES

From time to time, the Company is involved in various legal proceedings arising from the normal course of its business activities. Any adverse outcome from these matters is currently not expected to have a material adverse impact on the results of operations, cash flows or financial position of the Company, either individually or in the aggregate.

NOTE 7 – RELATED PARTY TRANSACTIONS

The Company’s office facility has been provided without charge by Mr. James Simpson, former Chief Executive Officer.  Such cost was not material to the financial statements and accordingly, have not been reflected therein.

Mr. Simpson did not receive any compensation from the Company for the years ended December 31, 2014 and 2013.

NOTE 8 – SUBEQUENT EVENTS

On May 28, 2015, the Company’s Board of Directors approved the resignation of James R. Simpson, as the Company’s Director, Chief Executive Officer, Chief Financial Officer and Secretary.  The Company’s Board of Directors approved Jason Adelman as a Director and he was also appointed to fill the vacant positions of Chief Executive Officer, Chief Financial Officer and Secretary.
 
 
F-12
 

 

Stock widget

Investing forum

SILVERGRAPH INTERNATIONAL INC Reports

Also read