Item 1. DESCRIPTION OF BUSINESS
Current Business Model
The Company’s newly initiated business model targets both working business joint ventures for the existing Company and exploring the possibilities of logical acquisitions that will assist the Company to grow. The Company has initiated conversations with both potential business partners and potential business acquisitions. As part of subsequent events, on May 31, 2010, the Company signed a Letter of Authorization agreement with Business Growth, LLC, where the Company was authorized the right to market and sell ICLED lighting products under the ZipGlobal Green Lighting Company private label, both individually and with their business associates, on a worldwide basis. ZipGlobal Green Lighting Company is a 100% wholly owned subsidiary of ZipGlobal Holdings, Inc. There was no cost to acquire this Letter of Authorization agreement. There is an 8% gross sales royalty for all ZipGlobal Green Lighting company sales, that is payable to Business Growth, LLC. The initial term of this Letter of Authorization is for 5 years.
General
We were incorporated in the state of Delaware on November 17, 2005. On November 30, 2005, we acquired Beasley Holdings Limited, a British Virgin Island company, through an arms-length transaction pursuant to which we issued an aggregate of 16,000,000 shares of our common stock in a share exchange to the stockholders of Beasley. We have been operating 100% of our business operations through Beasley since our acquisition of Beasley in November 2005.
Up until March 31, 2008, we were a retail provider of Internet telephony services with over 2,000 registered subscribers. During the quarter ending March 31, 2008, we made the strategic decision to discontinue the VoIP aspect of our business due to its declining profitability. Our VoIP business was formally ceased on June 15, 2008, within this current fiscal year ended March 31, 2009. For the purpose of full disclosure, this annual report will contain a description of our VoIP business as it existed up until the sale of our Beasley Holdings subsidiary on March 31, 2009.
From February 2005 to August 2007, we also purchased blocks of VoIP telephony minutes from telecommunication providers and resold them to other telecommunication providers. We conducted this portion of our business pursuant to contracts we had with suppliers and purchasers of domestic and long-distance telecommunication minutes pursuant to which we purchased blocks of VoIP minutes and resold them on agreed upon prices without volume commitments. In August 2007, the Company halted the operation of its telecommunication minutes resell business because of small gross profit margins.
We were not able to achieve profitability since our inception and as a result we decided to cease our operations in the VoIP business during the fourth quarter ended March 31, 2008 and we formally ceased our VoIP operations on June 15, 2008, within this fiscal year ended March 31, 2009. For purposes of full disclosure as to our operations as they existed within the fiscal year ended March 31, 2009, we have included a description of our discontinued operations in this Form 10-K.
Beasley Holdings Limited Sale
On March 31, 2009, ZipGlobal Holdings, Inc. and Beasley Holdings Limited, a then wholly-owned subsidiary of the Company, entered into an Agreement by which the Company sold 100% the shares of the issued and outstanding shares of Beasley to Beasley in consideration for Beasley forgiving an aggregate sum of $329,768 owed by the Company to Beasley.
Employees
At March 31, 2010, we had one part time employee. This one part time employee does not include the Corporate Executives.
Patents and Trademarks
We did not own, either legally or beneficially, any patents or trademarks.
Executive Offices
Our principal executive offices are located at 99 Derby Street, Suite 200, Hingham, Massachusetts 02043 and our telephone number is (781) 556-1062.
Summary Financial Information
The table below summarizes (i) our audited balance sheet at March 31, 2010, compared to March 31, 2009 and (iii) our statement of operations for the audited year ended March 31, 2010 compared to March 31, 2009.
Available Information
We are subject to the information reporting requirements of the Exchange Act, and, accordingly, are required to file periodic reports, including quarterly and annual reports and other information with the Securities and Exchange Commission. Such reports and other information may be inspected and copied at the public reference facilities maintained by the Commission at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an Internet website that contains reports, proxy and information statements and other information regarding registrants that file electronically. The address of the website is http://www.sec.gov.
Item 1A.
Item 1A. RISK FACTORS
N/A
Item 1B.
Item 1B. Unresolved Staff Comments
None
Item 2.
Item 2. Properties.
Executive Offices - United States. Since December 1, 2008, our principal executive offices are located at 99 Derby Street, Suite 200, Hingham, Massachusetts 02043 and our telephone number is (781) 556-1062. We pay $250 per month for our use of this space.
Item 3.
Item 3. Legal Proceedings.
The Company is not party to any legal proceedings nor is it aware of any investigation, claim or demand made on the Company that may reasonably result in any legal proceedings.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
PART II
Item 5.
Item 5. Market for Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Since March 14, 2007, our common stock has been listed for trading on the OTC Bulletin Board, or OTCBB, under the ticker symbol, “ZIPG.” Stocks traded on the OTCBB Sheets are usually thinly traded, highly volatile, and not followed by analysts. Investors in our common stock may experience a loss or liquidity problem with their share holdings.
The holders of the Company’s common stock are entitled to one vote per share. The common stock holders do not have preemptive rights to purchase, subscribe for, or otherwise acquire any shares of common stock.
Prior to our listing on the OTCBB, there was no active trading in the Company’s common stock. Upon the effectiveness of our Registration Statement on Form SB-2, as amended (File No.: 333-135134) on November 8, 2006, the Company requested that a broker-dealer / market maker submit an application to the NASD in order to make a market for the Company's shares and for the shares to be quoted on the OTC Bulletin Board. The Company’s application consisted of current corporate information, financial statements and other documents as required by Rule 15c2-11 of the Exchange Act. Inclusion on the OTC Bulletin Board permits price quotations for the Company's shares to be published by such service. Secondary trading of the Company's shares may, however, be subject to certain state imposed restrictions. Except for being quoted on the OTC Bulletin Board, there are no plans, proposals, arrangements or understandings with any person concerning the development of a trading market in any of the Company's securities.
The ability of individual stockholders to trade their shares in a particular state may be subject to various rules and regulations of that state. A number of states require that an issuer's securities be registered in their state or appropriately exempted from registration before the securities are permitted to trade in that state. Presently, the Company has no plans to register its securities in any particular state. Further, the Company's shares are be subject to the provisions of Section 15(g) and Rule 15g- 9 of the Exchange Act, commonly referred to as the "penny stock" rule. Section 15(g) sets forth certain requirements for transactions in penny stocks and Rule 15g-9(d)(1) incorporates the definition of penny stock as that used in Rule 3a51-1 of the Exchange Act.
The SEC generally defines penny stock to be any equity security that has a market price less than $5.00 per share, subject to certain exceptions. Rule 3a51-1 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; authorized for quotation on The NASDAQ Stock Market; 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; or exempted from the definition by the SEC. Broker- dealers who sell penny stocks to persons other than established customers and accredited investors (generally persons with assets in excess of $1,000,000 or annual income exceeding $200,000, or $300,000 together with their spouse), are subject to additional sales practice requirements.
For transactions covered by these rules, broker-dealers must make a special suitability determination for the purchase of such 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, unless exempt, the rules require the delivery, prior to the first transaction, of a risk disclosure document relating to the penny stock market. A broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative, and current quotations for the securities. Finally, monthly statements must be sent to clients disclosing recent price information for the penny stocks held in the account and information on the limited market in penny stocks. Consequently, these rules may restrict the ability of broker-dealers to trade and/or maintain a market in the Company's common stock and may affect the ability of stockholders to sell their shares.
At March 31, 2010, the Company had 21,405,798 shares of common stock issued and outstanding. At March 31, 2010, there were approximately 105 holders of record of our common stock. The record holders include some brokerage firms and nominees who may be holding shares in “street name” for the benefit of other holders. The Company believes that the number of beneficial owners of its common stock is slightly higher than the number of record holders.
The range of high and low bid information for our common stock on the OTCBB since the Company’s listing on the OTCBB on March 14, 2007 is set forth below. Such quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions. There was a limited trading market for our common stock during the period reflected below:
Dividend Policy
We have never declared or paid dividends on our common stock. We currently intend to retain all future earnings for use in the operation and expansion of our business and do not anticipate paying any cash dividends on common stock in the foreseeable future. Any future dividends will be at the discretion of the board of directors, after taking into account various factors, including among others, operations, current and anticipated cash needs and expansion plans, the income tax laws then in effect, the requirements of Nevada law, and any restrictions that may be imposed by our future credit arrangements.
Transfer Agent
Our transfer agent is Standard Registrar and Transfer Corporation located at 12528 South 1840 East, Draper 4455 South 700 East, Suite 200, Salt Lake City, Utah 84020, telephone number (801) 571-8844.
Recent Sales of Unregistered Securities
On October 27, 2005, the Company issued 100,000 shares of common stock for total consideration of $100 to the sole shareholder of the Company under the exemption from registration afforded the Company under Section 4(2) of the Securities Act of 1933, as amended due to the fact that the issuance did not involve a public offering of securities. .
In December 2007 and February 2008, the Company received six-month bridge loans totaling $130,000, including a $20,000 bridge loan with Jane Lee, the wife of Michael C. Lee, our President and CEO. The Company has the option to extend the loans for one additional six-month period. Interest on the loans consists of one restricted shares of the Company’s stock for each $2 borrowed. If the loans are extended, the interest will be an additional share of the Company’s stock for each $2 borrowed. Appropriate amount of interest shares are to be issued to the individual lenders within thirty (30) days after receiving the principal amounts and, if applicable, thirty (30) days after the additional six-month periods begin. On April 1, 2008, the Company received a $25,000 bridge loan from Jane Lee, the wife of Michael C. Lee, our President, CEO and a Director, and issued to Mrs. Lee 12,500 shares of common stock. The maturity date was one year. The Company issued these shares under the exemption from registration afforded the Company under Section 4(2) of the Securities Act of 1933, as amended, due to the fact that the issuance did not involve a public offering of securities.
Beginning immediately after the one year anniversary of each individual bridge loan, the Company has been extending each bridge loan for additional six month periods. Interest on each bridge loan for all extended six month periods has remained the same and has consisted of one restricted share of the Company’s stock for each $2 borrowed. As of the date of this filing, all individual bridge loans remain in effect. The Company has been issuing interest shares accordingly. The Company issued these shares under the exemption from registration afforded the Company under Section 4(2) of the Securities Act of 1933, as amended, due to the fact that the issuance did not involve a public offering of securities. The Company has issued a cumulative total of 375,000 shares of restricted common stock as interest on these loans.
On July 17, 2009, the Company issued 1,697,506 shares of common stock to Michael Lee for services rendered. The Company issued these shares under the exemption from registration afforded the Company under Section 4(2) of the Securities Act of 1933, as amended, due to the fact that the issuance did not involve a public offering of securities.
On July 17, 2009, the Company issued 140,000 shares of common stock to Getting You There, LLC. Virginia K. Sourlis is the sole member of Getting You There, LLC and is the managing partner of The Sourlis Law Firm. The shares issued to Getting You There, LLC were in consideration of legal services rendered by The Sourlis Law Firm to the Company. The Company issued these shares under the exemption from registration afforded the Company under Section 4(2) of the Securities Act of 1933, as amended, due to the fact that the issuance did not involve a public offering of securities.
On August 27, 2009, the Company issued 230,000 shares at $0.05 in a private placement and received proceeds of $11,500. The Company issued these shares under the exemption from registration afforded the Company under Section 4(2) of the Securities Act of 1933, as amended, due to the fact that the issuance did not involve a public offering of securities.
On June 9, 2010, the Company issued 300,000 shares at $0.10 in a private placement with an accredited investor and received proceeds of $30,000. The Company issued these shares under the exemption from registration afforded the Company under Section 4(2) of the Securities Act of 1933, as amended, due to the fact that the issuance did not involve a public offering of securities.
Item 6.
Item 6. Selected Financial Data
Not applicable.
Item 7.
Item 7. Management’s Discussion and Analysis or Plan of Operation.
You should read the following discussion together with "Selected Historical Financial Data" and our consolidated financial statements and the related notes included elsewhere in this annual report. This discussion contains forward-looking statements, which involve risks and uncertainties. Our actual results may differ materially from those we currently anticipate as a result of many factors, including the factors we describe under "Risk Factors," "Special Note Regarding Forward-Looking Statements" and elsewhere in this annual report.
Business Overview
Before our March 31, 2008 year end, we made the strategic decision to discontinue the VoIP aspect of our business due to its declining profitability.
We formally ceased our VoIP operations on June 15, 2008.
Beasley Holdings Limited Sale
On March 31, 2009, ZipGlobal Holdings, Inc. and Beasley Holdings Limited, a then wholly-owned subsidiary of the Company, entered into an Agreement by which the Company sold 100% the shares of the issued and outstanding shares of Beasley to Beasley in consideration for Beasley forgiving an aggregate sum of $329,768 owed by the Company to Beasley.
Plan of Operation
As indicated in the accompanying financial statements, the Company has incurred cumulative net operating losses of $2,616,817 since inception. Management’s plans include generating revenue through its business and developing new markets for its product. Failure to generate adequate sales revenues with adequate margins could result in the Company having to curtail or cease operations. Additionally, even if the Company does generate adequate revenues, there can be no assurances that such revenues will be sufficient to enable it to develop business to a level where it will generate profits and positive cash flows from operations. These matters raise substantial doubt about the Company’s ability to continue as a going concern. However, the accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.
The Company has realized limited revenues after deciding to end its VoIP business, and its plan of operation for the next twelve months is to maintain available limited revenues and locate a suitable acquisition or merger candidate and consummate a business combination. The Company may need additional cash advances from its stockholder or loans from other parties to pay for operating expenses until the Company consummates a merger or business combination with a privately-held operating company. Although it is currently anticipated that the Company can satisfy its cash requirements with additional cash advances or loans from other parties, if needed, for at least the next twelve months, the Company can provide no assurance that it can continue to satisfy its cash requirements for such period.
Since ending our VoIP business on June 15, 2008, our purpose has been to maintain available limited revenues and to effect a business combination with an operating business which we believe has significant growth potential. We are currently considered to be a “blank check” company in as much as we have no specific business plans, no operations, or revenues. We currently have no definitive agreements or understanding with any prospective business combination candidates and have not targeted any business for investigation and evaluation nor are there any assurances that we will find a suitable business with which to combine. The implementation of our business objectives is wholly contingent upon a business combination and/or the successful sale of securities in the company.
Discontinued Operations
In August 2007, the Company halted the operation of its telecommunication minutes resell business because of small gross profit margins. Additionally, during the quarter ending March 31, 2008, the Company made the strategic decision to discontinue the VoIP aspect of its business due to its declining profitability. The VoIP business was formally ceased on June 15, 2008. These businesses represent the totality of the Company’s operations and have been accounted for as a discontinued operation.
Results of Operations
Before our March 31, 2008 year end, we made the strategic decision to discontinue the VoIP aspect of our business due to its declining profitability. We formally ceased our VoIP operations on June 15, 2008.
Cash. At March 31, 2010 and 2009, we had cash of $101 and $1,346, respectively, on hand.
Total Assets. At March 31, 2010, we had $101 in total assets, as compared to $1,346 at March 31, 2009.
Total Liabilities. Total Liabilities consist of Accrued Expenses, Bridge Loans and Amounts due to our President and Chief Executive Officer. At March 31, 2010, we had Accrued Expenses of $113,641 as compared to $66,781 at March 31, 2009. At March 31, 2010 and 2009, we had $155,000 in bridge loans. At March 31, 2010, we had $600 in amounts due our President and Chief Executive Officer, compared to $0 at March 31, 2009.
Net Loss. Up until we ceased our VoIP Business on June 15, 2008, we recognized revenue through our retail sales consisting of the sale of gateway kits, subscription services plans and fees and our prepaid ZipGlobal To-Go Recharge Cards and through our resale of blocks of telecommunications time to other telecommunication providers. As indicated in the accompanying financial statements, the Company has incurred cumulative net operating losses of $2,616,817 since inception. Our overall net loss increased to $571,253 for the fiscal year ended March 31, 2010 from $85,349 for the fiscal year ended March 31, 2009. This increase was primarily due to the valuation of issued interest shares and for services issued shares.
General and Administrative Expenses. Our general and administrative expenses consist of related overhead costs for sales, marketing, customer support, finance, human resources and management. Our general and administrative expenses increased to $541,043 for the fiscal year ended March 31, 2010, from $107,116 for the fiscal year ended March 31, 2009. This increase was primarily due to the valuation of issued interest shares and for services issued shares.
Liquidity and Capital Resources
As indicated in the accompanying financial statements, the Company has incurred cumulative net operating losses of $2,616,817 since inception. We have incurred significant operating losses since our inception. As a result, we have generated negative cash flows from operations and had an accumulated stockholders’ deficit of $2,616,817 causing our independent auditors to issue a “going concern” opinion. Our primary sources of funds have been loans from officers and from the sale of common stock in a series of private placement offerings. We borrowed an aggregate of $337,020 from two of our executive officers, $235,246 of which was converted into shares of common stock on March 28, 2006 The remaining $101,774 was sold as part of the sale of Beasley Holdings, Inc. and is non-interest bearing and has not specific repayment date. We also sold an aggregate of 2,185,300 shares of our common stock in private placement transactions consummated in November 2005 and February, May and June 2006 for $0.50 per share, resulting in net proceeds of approximately $1,034,476. We are using the proceeds from the loans and offerings for working capital and other general corporate expenses, including funding operating losses.
In December 2007 and February 2008, the Company received six-month bridge loans totaling $130,000, including a $20,000 bridge loan with Jane Lee, the wife of Michael C. Lee, our President and CEO. The Company has the option to extend the loans for one additional six-month period. Interest on the loans consists of one restricted shares of the Company’s stock for each $2 borrowed. If the loans are extended, the interest will be an additional share of the Company’s stock for each $2 borrowed. Appropriate amount of interest shares are to be issued to the individual lenders within thirty (30) days after receiving the principal amounts and, if applicable, thirty (30) days after the additional six-month periods begin. On April 1, 2008, the Company received a $25,000 bridge loan from Jane Lee, the wife of Michael C. Lee, our President, CEO and a Director, and issued to Mrs. Lee 12,500 shares of common stock. The maturity date was one year. The Company issued these shares under the exemption from registration afforded the Company under Section 4(2) of the Securities Act of 1933, as amended, due to the fact that the issuance did not involve a public offering of securities.
Beginning immediately after the one year anniversary of each individual bridge loan, the Company has been extending each bridge loan for additional six month periods. Interest on each bridge loan for all extended six month periods has remained the same and has consisted of one restricted share of the Company’s stock for each $2 borrowed. As of the date of this filing, all individual bridge loans remain in effect. The Company has been issuing interest shares accordingly. The Company issued these shares under the exemption from registration afforded the Company under Section 4(2) of the Securities Act of 1933, as amended, due to the fact that the issuance did not involve a public offering of securities. The Company has issued a cumulative total of 375,000 shares of restricted common stock as interest on these loans.
During July 2008, the Company issued 270,000 shares of common stock at 16 2/3 cents per share, or 6 shares of restricted stock for each dollar invested, in a private placement for $45,000.
On July 17, 2009, the Company issued 1,697,506 shares of common stock to Michael Lee for services rendered. The shares were valued at their last trading price of $0.25 per share. Accordingly, the Company recognized stock based compensation of $424,377.
On July 17, 2009, the Company issued 140,000 shares of common stock to Getting You There, LLC. Virginia K. Sourlis is the sole member of Getting You There, LLC and is the managing partner of The Sourlis Law Firm. The shares issued to Getting You There, LLC were in consideration of legal services rendered by The Sourlis Law Firm to the Company. The shares were valued at their last trading price of $0.25 per share. Accordingly, the Company recognized professional fees of $35,000.
On August 27, 2009, the Company issued 230,000 shares at $0.05 in a private placement and received proceeds of $11,500.
In April of 2010, the Company borrowed $600 from the President and Chief Executive Officer. The borrowing is non-interest bearing and has no repayment terms.
On May 31, 2010, the Company signed a Letter of Authorization agreement with Business Growth, LLC, where the Company was authorized the right to market and sell ICLED lighting products under the ZipGlobal Green Lighting Company private label, both individually and with their business associates, on a worldwide basis. ZipGlobal Green Lighting Company is a 100% wholly owned subsidiary of ZipGlobal Holdings, Inc.
There was no cost to acquire this Letter of Authorization agreement. There is an 8% gross sales royalty for all ZipGlobal Green Lighting company sales, that is payable to Business Growth, LLC. The initial term of this Letter of Authorization is for 5 years.
On June 9, 2010, the Company issued 300,000 shares at $0.10 in a private placement with and accredited investor and received proceeds of $30,000.
CRITICAL ACCOUNTING PRINCIPALS
Cash and Cash Equivalents
The Company considers all highly-liquid investments with an original maturity of three months or less to be cash equivalents.
Fair Values of Financial Instruments
The Company uses financial instruments in the normal course of business. The carrying values of accrued expenses, bridge loans, and amounts due to officer approximate their fair value due to the short-term maturities of these liabilities.
Income Taxes
The Company accounts for income taxes in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 740, Income Taxes. ASC Topic 740 requires the determination of deferred tax assets and liabilities based on the differences between the financial statement and income tax bases of assets and liabilities, using estimated tax rates in effect for the year in which the differences are expected to reverse. The measurement of a deferred tax asset is adjusted by a valuation allowance, if necessary, to recognize tax benefits only to the extent that, based on available evidence, it is more likely than not that they will be realized. In determining the valuation allowance, the Company considers factors such as the reversal of deferred income tax liabilities, projected taxable income and the character of income tax assets and tax planning strategies. A change to these factors could impact the estimated valuation allowance and income tax expense.
Net Loss per Common Share
The Company computes per share amounts in accordance with ASC Topic 260, Earnings per Share. ASC Topic 260 requires presentation of basic and diluted EPS. Basic EPS is computed by dividing the income (loss) available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted EPS is based on the weighted-average number of shares of common stock and common stock equivalents outstanding during the period.
Stock-Based Compensation
The Company accounts for stock based compensation using the fair value method.
The Company accounts for stock issued for services using the fair value method. The measurement date of shares issued for services is the date at which the counterparty’s performance is complete.
Foreign Currency Translation
The Company considers the U.S. Dollar to be its functional currency. Max International Investment Limited and Zippay Technology Limited, subsidiaries of Beasley, have functional currencies other than the U.S. Dollar. As such, assets and liabilities were translated into U.S. Dollars at the period end exchange rates. Statement of Operations amounts were translated using the average rate during the year. Gains and losses resulting from translating foreign currency financial statements were accumulated in accumulated other comprehensive loss, a separate component of stockholder’s deficit. The Company realized its translation gain/loss in 2009 with the sale of Beasley Holdings.
Recent Accounting Pronouncements
Effective July 1, 2009, the FASB Accounting Standards Codification became the single source of authoritative generally accepted accounting principles in the United States of America. The Codification changed the referencing of financial standards but did not change or alter existing U.S. GAAP. The Codification became effective for the Company in the second quarter of Fiscal 2010.
In May 2009, the FASB issued guidance regarding subsequent events, which was subsequently updated in February 2010. This guidance established general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. In particular, this guidance set forth the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements, and the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. This guidance was effective for financial statements issued for fiscal years and interim periods ending after June 15, 2009, and was therefore adopted by the Company for the second quarter 2009 reporting. The adoption did not have a significant impact on the subsequent events that the Company reports, either through recognition or disclosure, in the consolidated financial statements. In February 2010, the FASB amended its guidance on subsequent events to remove the requirement to disclose the date through which an entity has evaluated subsequent events, alleviating conflicts with current SEC guidance.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Item 7A.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
Item 8.
Item 8. Financial Statements.
ZIPGLOBAL HOLDINGS, INC.
CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2010 AND 2009
MEYLER & COMPANY, LLC
CERTIFIED PUBLIC ACCOUNTANTS
ONE ARIN PARK
HIGHWAY 35
MIDDLETOWN, NJ 07748
Report of Independent Registered Public Accounting Firm
To the Board of Directors
and Stockholders
ZipGlobal Holdings, Inc.
Hingham, MA
We have audited the accompanying consolidated balance sheets of ZipGlobal Holdings, Inc. and Subsidiary as of March 31, 2010 and 2009 and the related consolidated statements of operations and stockholder’s deficit, and cash flows for the two years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of ZipGlobal Holdings, Inc. and Subsidiary as of March 31, 2010 and 2009 and the results of its operations and its cash flows for the two years then ended, in conformity with accounting principles generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note A to the consolidated financial statements, the Company has incurred cumulative losses of $2,616,817 since inception, and there are existing uncertain conditions the Company faces relative to its ability to obtain capital and operate successfully. These conditions raise substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters are also described in Note A. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.
/s/ Meyler & Company, LLC
Middletown, NJ
June 29,
ZIPGLOBAL HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
See accompanying notes to financial statements.
ZIPGLOBAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
See accompanying notes to consolidated financial statements.
ZIPGLOBAL HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
See accompanying notes to consolidated financial statements.
ZIPGLOBAL HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
See accompanying notes to consolidated financial statements.
ZIPGLOBAL HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
See accompanying notes to consolidated financial statements.
ZIPGLOBAL HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended March 31, 2010 and 2009
NOTE A - NATURE OF BUSINESS
ZipGlobal Holdings, Inc. (the “Company”), a Delaware corporation previously working through its wholly owned subsidiary, Beasley Holdings Limited, a British Virgin Island Company (“Beasley”) located in Hong Kong, was a provider of next-generation telecommunication services for the global oriented customer. The Company offered high quality, multimedia-enabled communication services that unite disparate and dispersed local communities in global dialogues. Beasley had two wholly owned subsidiaries, Max International Investment Limited, which has locations in Hong Kong and The People’s Republic of China and provides management and information technology support services to Beasley, and ZipPay Technology Limited, which is a Hong Kong Company developing business in The People’s Republic of China. ZipPay Technology Limited was incorporated in Hong Kong on September 28, 2006. The Company discontinued the operations of Beasley and subsidiaries in 2008 and sold Beasley and its subsidiaries in 2009.
The Company’s newly initiated business model targets both working business joint ventures for the existing Company and exploring the possibilities of logical acquisitions. On May 31, 2010, the Company signed a Letter of Authorization agreement with Business Growth, LLC, where the Company was authorized the right to market and sell ICLED lighting products under the ZipGlobal Green Lighting Company private label, both individually and with their business associates, on a worldwide basis.
Reverse Merger
On November 30, 2005, the Company entered into a share exchange agreement with Beasley to exchange 16,000,000 shares of the Company’s common stock for all of the issued and outstanding shares of Beasley. In connection with the merger, Beasley became a wholly owned subsidiary of the Company. Prior to the merger, the Company was a non-operating “shell” corporation. For financial statement purposes, the merger has been reflected in the financial statements as though it occurred on March 31, 2005. The historical statements prior to the date of merger are those of Beasley. Since the merger is a recapitalization and not a business combination, pro-forma information is not presented.
Going Concern
As indicated in the accompanying financial statements, the Company has incurred cumulative net operating losses of $2,616,817 since inception. Management’s plans include merging with or acquiring the assets of private operating companies. Failure to merge with or acquire the assets of private operating companies could result in the Company having to curtail or cease operations. Additionally, even if the Company does merge with or acquire the assets of private operating companies, there can be no assurances that it will be sufficient to enable it to develop business to a level where it will generate profits and positive cash flows from operations. These matters raise substantial doubt about the Company’s ability to continue as a going concern. However, the accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. These consolidated financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Consolidated Financial Statements
The consolidated financial statements include the Company and its wholly owned subsidiary. All significant intercompany transactions and balances have been eliminated in consolidation.
ZIPGLOBAL HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended March 31, 2010 and 2009
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 related notes. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly-liquid investments with an original maturity of three months or less to be cash equivalents.
Fair Values of Financial Instruments
The Company uses financial instruments in the normal course of business. The carrying values of accrued expenses, bridge loans, and amounts due to officer approximate their fair value due to the short-term maturities of these liabilities.
Income Taxes
The Company accounts for income taxes in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 740, Income Taxes. ASC Topic 740 requires the determination of deferred tax assets and liabilities based on the differences between the financial statement and income tax bases of assets and liabilities, using estimated tax rates in effect for the year in which the differences are expected to reverse. The measurement of a deferred tax asset is adjusted by a valuation allowance, if necessary, to recognize tax benefits only to the extent that, based on available evidence, it is more likely than not that they will be realized. In determining the valuation allowance, the Company considers factors such as the reversal of deferred income tax liabilities, projected taxable income and the character of income tax assets and tax planning strategies. A change to these factors could impact the estimated valuation allowance and income tax expense.
Net Loss Per Common Share
The Company computes per share amounts in accordance with ASC Topic 260, Earnings per Share. ASC Topic 260 requires presentation of basic and diluted EPS. Basic EPS is computed by dividing the income (loss) available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted EPS is based on the weighted-average number of shares of common stock and common stock equivalents outstanding during the period.
Stock-Based Compensation
The Company accounts for stock based compensation using the fair value method.
The Company accounts for stock issued for services using the fair value method. The measurement date of shares issued for services is the date at which the counterparty’s performance is complete.
ZIPGLOBAL HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended March 31, 2010 and 2009
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Foreign Currency Translation
The Company considers the U.S. Dollar to be its functional currency. Max International Investment Limited and Zippay Technology Limited, subsidiaries of Beasley, had functional currencies other than the U.S. Dollar. As such, assets and liabilities were translated into U.S. Dollars at the period end exchange rates. Statement of Operations amounts were translated using the average rate during the year. Gains and losses resulting from translating foreign currency financial statements were accumulated in accumulated other comprehensive loss, a separate component of stockholder’s deficit. The Company realized its translation gain/loss in 2009 with the sale of Beasley Holdings.
Recent Accounting Pronouncements
Effective July 1, 2009, the FASB Accounting Standards Codification became the single source of authoritative generally accepted accounting principles in the United States of America. The Codification changed the referencing of financial standards but did not change or alter existing U.S. GAAP. The Codification became effective for the Company in the second quarter of Fiscal 2010.
In May 2009, the FASB issued guidance regarding subsequent events, which was subsequently updated in February 2010. This guidance established general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. In particular, this guidance set forth the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements, and the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. This guidance was effective for financial statements issued for fiscal years and interim periods ending after June 15, 2009, and was therefore adopted by the Company for the second quarter 2009 reporting. The adoption did not have a significant impact on the subsequent events that the Company reports, either through recognition or disclosure, in the consolidated financial statements. In February 2010, the FASB amended its guidance on subsequent events to remove the requirement to disclose the date through which an entity has evaluated subsequent events, alleviating conflicts with current SEC guidance.
NOTE C - DISCONTINUED OPERATIONS
In August 2007, the Company halted the operation of its telecommunication minutes resell business because of small gross profit margins. Additionally, during the quarter ending March 31, 2008, the Company made the strategic decision to discontinue the VoIP aspect of its business due to its declining profitability. The VoIP business formally ceased on June 15, 2008. These businesses represented the majority of the Company’s operations and have been accounted as a discontinued operation.
The Company sold 100% of the issued and outstanding shares of Beasley Holdings, Inc. effective March 31, 2009 to two shareholders of the Company. In consideration for the shares of Beasley Holdings, Inc., the two shareholders of the Company agreed to release the Company from all claims, indebtedness and liabilities of Beasley Holdings, Inc. Summarized financial information for the discontinued operations is shown below:
ZIPGLOBAL HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended March 31, 2010 and 2009
NOTE C - DISCONTINUED OPERATIONS (CONTINUED)
NOTE D - DUE TO STOCKHOLDERS
During the year ended March 31, 2009, the Company borrowed and repaid $7,000 from the President and Chief Executive Officer.
During the year ended March 31, 2010, the Company borrowed $600 from the President and Chief Executive Officer. The borrowing is non-interest bearing and has no repayment terms.
NOTE E - STOCKHOLDERS’ DEFICIT
On July 17, 2009, the Company issued 1,697,506 shares of common stock to Michael Lee for services rendered. The shares were valued at their last trading price of $0.25 per share. Accordingly, the Company recognized stock based compensation of $424,377.
On July 17, 2009, the Company issued 140,000 shares of common stock to Getting You There, LLC. Virginia K. Sourlis is the sole member of Getting You There, LLC and is the managing partner of The Sourlis Law Firm. The shares issued to Getting You There, LLC were in consideration of legal services rendered by The Sourlis Law Firm to the Company. The shares were valued at their last trading price of $0.25 per share. Accordingly, the Company recognized professional fees of $35,000.
On August 27, 2009, the Company issued 230,000 shares at $0.05 in a private placement and received proceeds of $11,500.
For the year ended March 31, 2010 and 2009, the Company issued 155,000 and 155,000 shares of common stock, respectively, for interest In connection with the bridge loans (See Note H). The fair value of these shares is being amortized over the life of the bridge loans.
NOTE F - INCOME TAX PROVISION
The Company has net operating losses of approximately $ 1,606,000 and $1,040,000 in 2010 and 2009, respectively. The international components have an unlimited carry forward time period and the U.S. components expire commencing 2005. The net operating loss results in deferred tax assets as follows:
ZIPGLOBAL HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended March 31, 2010 and 2009
NOTE F - INCOME TAX PROVISION (CONTINUED)
Income taxes computed using statutory tax rates differ from the Company’s effective tax rate due to the following:
NOTE G - STOCK OPTION PLAN
The following table summarizes stock option activity for the year ended March 31, 2010:
(1) The intrinsic value is the difference between the market price of the stock and the exercise price of the option. As the exercise price and market price are the same on all the options, the options have no intrinsic value.
ZIPGLOBAL HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended March 31, 2010 and 2009
NOTE H- BRIDGE LOANS
In December 2007 and February 2008, the Company received six-month bridge loans totaling $130,000. In April 2008, the Company received an additional bridge loan totaling $25,000. The Company has the option to extend the loans for one additional six-month period. Interest on the loans consists of one restricted shares of the Company’s stock for each $2 borrowed. If the loans are extended, the interest will be an additional share of the Company’s stock for each $2 borrowed. Appropriate amount of interest shares are to be issued to the individual lenders within thirty days after receiving the principal amounts and, if applicable, thirty days after the additional six-month periods begin.
Beginning immediately after the one year anniversary of each individual bridge loan, the Company has been extending each bridge loan for additional six month periods. Interest on each bridge loan for all extended six month periods has remained the same and has consisted of one restricted share of the Company’s stock for each $2 borrowed. As of the date of this filing, all individual bridge loans remain in effect. The Company has been issuing interest shares accordingly. The Company issued these shares under the exemption from registration afforded the Company under Section 4(2) of the Securities Act of 1933, as amended, due to the fact that the issuance did not involve a public offering of securities. The Company has issued a cumulative total of 375,000 shares of restricted common stock as interest on these loans.
The weighted averaged borrowing and interest rates of these bridge loans were $155,000 and 29%, respectively, for the year ended March 31, 2010 and $154,932 and 56%, respectively, for the year ended March 31, 2009.
Of the bridge loans, $45,000 is with the spouse of the President and CEO of the Company.
NOTE I - SUBSEQUENT EVENTS
In April of 2010, the Company borrowed $600 from the President and Chief Executive Officer. The borrowing is non-interest bearing and has no repayment terms.
On May 31, 2010, the Company signed a Letter of Authorization agreement with Business Growth, LLC, where the Company was authorized the right to market and sell ICLED lighting products under the ZipGlobal Green Lighting Company private label, both individually and with their business associates, on a worldwide basis. ZipGlobal Green Lighting Company is a 100% wholly owned subsidiary of ZipGlobal Holdings, Inc.
There was no cost to acquire this Letter of Authorization agreement. There is an 8% gross sales royalty for all ZipGlobal Green Lighting company sales, that is payable to Business Growth, LLC. The initial term of this Letter of Authorization is for 5 years
On June 9, 2010, the Company issued 300,000 shares at $0.10 in a private placement with an accredited investor and received proceeds of $30,000.
In June 2010, $110,000 in bridge loans were renewed and the Company issued 55,000 shares of common stock as interest.
Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9AT. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
In connection with the preparation of this annual report, an evaluation was carried out by the Company’s management, with the participation of the principal executive officer and the principal financial officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (“Exchange Act”)) as of March 31, 2010. Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Commission’s rules and forms, and that such information is accumulated and communicated to management, including the chief executive officer and the chief financial officer, to allow timely decisions regarding required disclosures.
Based on that evaluation, the Company’s management concluded, as of the end of the period covered by this report, that the Company’s disclosure controls and procedures were effective in recording, processing, summarizing, and reporting information required to be disclosed, within the time periods specified in the Commission’s rules and forms, and that such information was accumulated and communicated to management, including the principal executive officer and the principal financial officer, to allow timely decisions regarding required disclosures.
Management’s Report on Internal Control over Financial Reporting
The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process, under the supervision of the principal executive officer and the principal financial officer, designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external purposes in accordance with United States generally accepted accounting principles (GAAP). Internal control over financial reporting includes those policies and procedures that:
●
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the Company’s assets;
●
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of the 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 the board of directors; and
●
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.
The Company’s management conducted an assessment of the effectiveness of our internal control over financial reporting as of March 31, 2010, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, which assessment identified material weaknesses in internal control over financial reporting. A material weakness is a control deficiency, or a combination of deficiencies in internal control over financial reporting that creates a reasonable possibility that a material misstatement in annual or interim financial statements will not be prevented or detected on a timely basis. Since the assessment of the effectiveness of our internal control over financial reporting did identify a material weakness, management considers its internal control over financial reporting to be ineffective.
Management has concluded that our internal control over financial reporting had the following deficiency:
●
We were unable to maintain any segregation of duties within our business operations due to our reliance on a single individual fulfilling the role of active officer and director. While this control deficiency did not result in any material misstatements to our 2008, 2009 or 2010 interim or annual financial statements, it could have resulted in a material misstatement that might have been prevented or detected by a segregation of duties. Accordingly we have determined that this control deficiency constitutes a material weakness.
To the extent reasonably possible, given our limited resources, our goal is, upon consummation of a merger with a private operating company, to separate the responsibilities of principal executive officer and principal financial officer, intending to rely on two or more individuals. We will also seek to expand our current board of directors to include additional individuals willing to perform directorial functions. Since the recited remedial actions will require that we hire or engage additional personnel, this material weakness may not be overcome in the near term due to our limited financial resources. Until such remedial actions can be realized, we will continue to rely on the advice of outside professionals and consultants.
Changes in Internal Controls over Financial Reporting
During the period ended March 31, 2010, there has been no change in internal control over financial reporting that has materially affected, or is reasonably likely to materially affect our internal control over financial reporting.
This annual report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. We were not required to have, nor have we, engaged our independent registered public accounting firm to perform an audit of internal control over financial reporting pursuant to the rules of the Commission that permit us to provide only management’s report in this annual report.
Item 9B.
Item 9B. Other Information
Subsequent Events:
In April of 2010, the Company borrowed $600 from the President and Chief Executive Officer. The borrowing is non-interest bearing and has no repayment terms.
On June 1, 2010, the Company signed a Letter of Authorization agreement with Business Growth, LLC, where the Company was authorized the right to market and sell ICLED lighting products under the ZipGlobal Green Lighting Company private label, both individually and with their business associates, on a worldwide basis. ZipGlobal Green Lighting Company is a 100% wholly owned subsidiary of ZipGlobal Holdings, Inc. There was no cost to acquire this Letter of Authorization agreement. There is an 8% gross sales royalty for all ZipGlobal Green Lighting company sales, that is payable to Business Growth, LLC. The initial term of this Letter of Authorization is for 5 years.
On June 9, 2010, the Company issued 300,000 shares at $0.10 in a private placement with an accredited investor and received proceeds of $30,000.
PART III
Item 10.
Item 10. Directors, Executive Officers, Promoters, Control Persons and Corporate Governance; Compliance with Section 16(a) of the Exchange Act.
(a)
Identification of Directors, Executive Officers, Promoters, and Control Persons for the fiscal year ended March 31, 2010:
Our executive officers and directors and their respective ages are as follows:
Name of Director
Age
Position
Michael C. Lee
President, Chief Executive Officer and Director
Zhong Hua Li
Chairman of the Board
Hio Tong Ieong
Secretary and Director
Set forth below is a brief description of the background and business experience of our executive officers and directors:
Michael C. Lee - Mr. Lee has been serving as our President, Chief Executive Officer and as a member of our Board of Directors since our formation in November 2005. From September 1977 to December 1999, Mr. Lee was the President of East Coast Food Products based in Holbrook, Massachusetts. From December 1999 to November 2005, Mr. Lee was the President of Progressive Technology Partners, a consulting company located in Hingham, Massachusetts. Mr. Lee has also served as a director on several publicly traded companies, including North American Scientific Corporation from March 1995 to March 2001 and Prime Spot Media from April 1994 to April 1998.
Zhong Hua (Jimmy) Li - Mr. Li has been serving as the Chairman of our Board of Directors and as a member of our Board of Directors since our acquisition of Beasley on November 30, 2005. Mr. Li had also served as the Head of Asian Marketing and Sales of Beasley since its formation in February 2004 until our acquisition of Beasley in November 2005. In March 2000, Mr. Li founded L&H Telecom, a telecommunications company. From L&H Telecom’s founding until March 2004, Mr. Li served as the company’s President and Chief Executive Officer.
Hio Tong (Ken) Ieong - Mr. Ieong has been serving as our Secretary and as a member of our Board of Directors since our formation in November 2005. In February 2004, Mr. Ieong founded, and was the sole stockholder of, Beasley and served as its President and Chief Executive Officer and Chairman until our acquisition of Beasley in November 2005. In 1995, Mr. Ieong co-founded and was the Chief Communications Officer of Elephant Talk Limited, a facility-based international long distance carrier with offices and hubs in Hong Kong, Los Angeles, Boston, New York, Singapore and Beijing, until November 2003. Mr. Ieong was Head of Asian Marketing and Sales until the sale of the Beasley Holdings subsidiary on March 31, 2009.
Term of Office
Our directors are appointed for a one-year term to hold office until the next annual general meeting of our stockholders or until removed from office in accordance with our bylaws. Our officers are appointed by our Board of Directors and hold office until removed by the Board.
Significant Employees
We have no significant employees other than our officers and directors. We conduct our business through agreements with consultants and arms-length third parties.
Code of Ethics
We have not adopted a Code of Business Conduct and Ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions in that our officers and directors serves in all the above capacities. The Code of Business Conduct and Ethics has not been adopted because the Company has limited operations and we do not believe that such Codes are necessary at this time. If in the future, the Board of Directors believes such Codes are warrant, it will adopt a Code of Ethics and Business Conduct.
Committees of the Board of Directors
Our audit committee presently consists of our officers and directors. We do not have a compensation committee, nominating committee, an executive committee of our board of directors, stock plan committee or any other committees.
(b)
Family Relationships. None
(c)
Involvement in Certain Legal Proceedings. There have been no events under any bankruptcy act, no criminal proceedings and no judgments, injunctions, orders or decrees material to the evaluation of the ability and integrity of any director, executive officer, promoter or control person of Registrant during the past five years.
(d)
The Board of Directors acts as the Audit Committee and the Board has no separate committees. The Company does not have a qualified financial expert at this time because it has not been able to hire a qualified candidate. Further, the Company believes that it has inadequate financial resources at this time to hire such an expert. The Company intends to continue to search for a qualified individual for hire.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Exchange Act requires the Company's officers and directors, and persons who own more than ten percent of a registered class of the Company's equity securities pursuant to section 12, to file reports of ownership and changes in ownership with the SEC. Officers, directors and greater than 10% shareholders are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file.
Due to the fact that the Company does not have a class of equity securities registered under section 12 of the Exchange Act, no reports were required to be filed under Section 16(a) of the Exchange Act by any of the Company's executive officers, directors or 10% beneficial owners.
Item 11.
Item 11. Executive Compensation.
No compensation was paid to our named executive officers during the last two fiscal years.
We do not currently pay, nor have we in the past, our directors or officers any salary or fees for their services.
Each of the officers and directors spend part of their time on the Company’s business.
Employment Agreements
We do not have any employment agreements with our executive officers.
Stock Option Plan
On March 20, 2006, our Board of Directors adopted, and our shareholders approved, the ZipGlobal Holdings, Inc. 2006 Stock Option Plan and reserved for issuance 1,700,000 shares of our common stock for issuance upon the exercise of stock options granted thereunder, subject to adjustment in the event of a stock split, reverse stock split, stock dividend, recapitalization, combination or reclassification, as determined by the Board.
Purpose. The purpose of the Plan is to advance the interests of the Company and its stockholders by helping the Company obtain and retain the services of key employees, officers, consultants, and directors, upon whose judgment, initiative and efforts the Company is substantially dependent, and to provide those persons with further incentives to advance the interests of the Company.
Administration. The Plan is to be administered by a committee of the Board, consisting of two or more directors appointed by the Board. If the Board, in its discretion, does not appoint such a Committee, the Board itself will administer the Plan and take such other actions as the Committee is authorized to take hereunder; provided that the Board may take such actions hereunder in the same manner as the Board may take other actions under the Company’s certificate of incorporation and by-laws generally.
Awards. The Plan authorizes the Board or a committee of the Board, to issue two different types of options, options intended to qualify under the Internal Revenue Code of 1986, as amended (ISOs), and non-statutory stock options not intended to qualify under the Code (NSOs).
Authority and Discretion of Committee. The Committee has full and final authority in its discretion, at any time and from time to time, subject only to the express terms, conditions and other provisions of the Company’s certificate of incorporation, by-laws and the Plan, as to and the specific limitations on such discretion set forth herein:
i.
to select and approve the persons who will be granted options under the Plan from among the eligible participants, and to grant to any person so selected one or more options to purchase such number of shares of common stock as the Committee may determine;
ii.
to determine the period or periods of time during which options may be exercised, the exercise price and the duration of such options, and other matters to be determined by the Committee in connection with specific option grants and agreements as specified under the Plan;
iii.
to interpret the Plan, to prescribe, amend and rescind rules and regulations relating to the Plan, and to make all other determinations necessary or advisable for the operation and administration of the Plan; and
iv.
to delegate all or a portion of its authority under the Plan to one or more directors of the Company who are executive officers of the Company, but only in connection with options granted to eligible participants who are not officers or directors of the Company, and subject to such restrictions and limitations (such as the aggregate number of shares of common stock called for by such options that may be granted) as the Committee may decide to impose on such delegate directors.
Limitation on Authority. Notwithstanding the foregoing, or any other provision of the Plan, the Committee will have no authority to grant options to any of its members, unless approved by the Board.
Designation of Options. Except as otherwise provided herein, the Committee will designate any option granted hereunder either as an ISO or as an NSO. To the extent that the Fair Market Value (determined at the time the Option is granted) of Stock with respect to which all ISOs are exercisable for the first time by any individual during any calendar year (pursuant to the Plan and all other plans of the Company and/or its subsidiaries) exceeds $100,000, such option will be treated as an NSO. The Committee may grant ISOs only to persons who are employees of the Company and/or its subsidiaries.
Option Agreements. Options will be deemed granted hereunder only upon the execution and delivery of an Option Agreement by the Optionee and a duly authorized officer of the Company. Options will not be deemed granted hereunder merely upon the authorization of such grant by the Committee.
Payment of Exercise Price. Each Option Agreement will specify the exercise price with respect to the exercise of Option Stock thereunder, to be fixed by the Committee in its discretion, but in no event will the exercise price for an ISO granted hereunder be less than the Fair Market Value (or, in case the optionee is a 10% Stockholder (as defined in the Plan), one hundred ten percent (110%) of such Fair Market Value) of the Option Stock at the time such ISO is granted, and in no event will the exercise price for an NSO granted hereunder be less than the 80% of Fair Market Value. The exercise price will be payable to the Company in United States dollars in cash or by check or, such other legal consideration as may be approved by the Committee, in its discretion.
Termination of the Option. Except as otherwise provided in the Plan, each option agreement will specify the period of time, to be fixed by the Committee in its discretion, during which the option granted therein will be exercisable, not to exceed ten (10) years from the date of grant in the case of an ISO; provided that the option period will not exceed five (5) years from the date of grant in the case of an ISO granted to a 10% Stockholder (as defined in the Plan).
To the extent not previously exercised, each option will terminate upon the earliest of the following occasions: (i) expiration of the option period specified in the option agreement; (ii) thirty (30) days after the date that the optionee ceases to be an Eligible Participant for any reason, other than by reason of death, disability, and cessation of optionee’s services; (iii) twelve (12) months after the date that the optionee ceases to be an Eligible Participant by reason of such person’s death or disability; or (iv) on the date immediately preceding the date Optionee’s services ceased. If, on the date of termination, the optionee is not vested as to his or her entire Option, the shares covered by the unvested portion of the option shall revert to the Plan. If, after termination, the optionee does not exercise his or her option within the time specified by the Committee, the option shall terminate, and the shares covered by such Option shall revert to the Plan.
Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Committee shall notify each optionee as soon as practicable prior to the effective date of such proposed transaction. The Committee in its discretion may provide for an optionee to have the right to exercise his or her option until ten (10) days prior to such transaction as to all of the optioned stock covered thereby, including shares as to which the option would not otherwise be exercisable. In addition, the Committee may provide that any Company repurchase option applicable to any shares purchased upon exercise of an option shall lapse as to all such Shares, provided the proposed dissolution or liquidation takes place at the time and in the manner contemplated. To the extent it has not been previously exercised, an option will terminate immediately prior to the consummation of such proposed action.
Merger or Asset Sale. In the event of a merger of the Company with or into another corporation, or the sale of substantially all of the assets of the Company, each outstanding option shall be assumed or an equivalent option or right substituted by the successor corporation or a parent or subsidiary of the successor corporation. In the event that the successor corporation refuses to assume or substitute for the option, the optionee shall fully vest in and have the right to exercise the option as to all of the optioned stock, including shares as to which it would not otherwise be vested or exercisable. If an option becomes fully vested and exercisable in lieu of assumption or substitution in the event of a merger or sale of assets, the Committee shall notify the optionee in writing or electronically that the option shall be fully vested and exercisable for a period of fifteen (15) days from the date of such notice, and the option shall terminate upon the expiration of such period. For the purposes of this paragraph, the option shall be considered assumed if, following the merger or sale of assets, the option or right confers the right to purchase or receive, for each share of optioned stock subject to the option immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of common stock for each share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares); provided, however, that if such consideration received in the merger or sale of assets is not solely common stock of the successor corporation or its parent, the Committee may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the option, for each share of optioned stock subject to the option, to be solely common stock of the successor corporation or its parent equal in fair market value to the per share consideration received by holders of common stock in the merger or sale of assets.
Lock-Up Period. The Plan provides that shares of the Company’s common stock issued upon the exercise of an option granted under the Plan may not be, directly or indirectly, sold, transferred, assigned, encumbered or otherwise for a period of not less than 24 months following the date of issuance.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
None of our officers and directors received any options to purchase our common stock during the fiscal year ended March 31, 2010.
Compensation of Directors
We do not currently pay any cash fees to our directors, but we pay directors’ expenses in attending board meetings. During the year ended March 31, 2010 and 2009, no director expenses were reimbursed.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The following table sets forth certain information regarding the beneficial ownership of our common stock As of the date of filing of this Annual Report on Form 10-K by (i) each executive officer named in the Summary Compensation Table under “Executive Compensation,” (ii) each member of our Board of Directors, (iii) each person deemed to be the beneficial owner of more than five percent (5%) of any class of our common stock, and (iv) all of our executive officers and directors as a group. Unless otherwise indicated, each person named in the following table is assumed to have sole voting power and investment power with respect to all shares of our common stock listed as owned by such person. Unless otherwise noted, the address for each reporting person below is c/o ZipGlobal Holdings, Inc., 99 Derby Street, Suite 200, Hingham, Massachusetts 02043.
*Represents less than 1%
(1)
Applicable percentage of ownership is based on 21,783,298 shares of common stock issued and outstanding as of the date of this Annual Report on Form 10-K. Pursuant to Rule 13d-3 promulgated under the Exchange Act, any securities not outstanding which are subject to warrants, rights or conversion privileges exercisable within 60 days are deemed to be outstanding for purposes of computing the percentage of outstanding securities of the class owned by such person but are not deemed to be outstanding for the purposes of computing the percentage of any other person.
(2)
Includes 589,780 shares of common stock held by Mike Lee’s wife, Jane Lee.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
* On March 20, 2006, our Board of Directors adopted, and our shareholders approved, the ZipGlobal Holdings, Inc. 2006 Stock Option Plan and reserved for issuance 1,700,000 shares of our common stock for issuance upon the exercise of stock options granted thereunder, subject to adjustment in the event of a stock split, reverse stock split, stock dividend, recapitalization, combination or reclassification, as determined by the Board.
Item 13.
Item 13. Certain Relationships and Related Transactions, and Director Independence
Except as otherwise indicated herein, there have been no related party transactions, or any other transactions or relationships required to be disclosed pursuant to Item 404 of Regulation S-K.
Director Independence
The OTCBB on which we have our shares of common stock quoted does not have any director independence requirements. In determining whether our directors are independent, we refer to NASDAQ Stock Market Rule 4200(a)(15). Based on those widely-accepted criteria, we have determined that our Directors are not independent at this time.
No member of management is or will be required by us to work on a full time basis, although our president currently devotes fulltime to us. Accordingly, certain conflicts of interest may arise between us and our officer(s) and director(s) in that they may have other business interests in the future to which they devote their attention, and they may be expected to continue to do so although management time must also be devoted to our business. As a result, conflicts of interest may arise that can be resolved only through their exercise of such judgment as is consistent with each officer's understanding of his/her fiduciary duties to us.
The Sarbanes-Oxley Act of 2002, as well as rule changes proposed and enacted by the SEC, the New York and American Stock Exchanges and the Nasdaq Stock Market, as a result of Sarbanes-Oxley, require the implementation of various measures relating to corporate governance. These measures are designed to enhance the integrity of corporate management and the securities markets and apply to securities that are listed on those exchanges or the Nasdaq Stock Market. Because we are not presently required to comply with many of the corporate governance provisions and because we chose to avoid incurring the substantial additional costs associated with such compliance any sooner than legally required, we have not yet adopted these measures.
Because none of our directors are independent directors, we do not currently have independent audit or compensation committees. As a result, these directors have the ability, among other things, to determine their own level of compensation. Until we comply with such corporate governance measures, regardless of whether such compliance is required, the absence of such standards of corporate governance may leave our stockholders without protections against interested director transactions, conflicts of interest, if any, and similar matters and investors may be reluctant to provide us with funds necessary to expand our operations.
We intend to comply with all corporate governance measures relating to director independence as and when required. However, we may find it very difficult or be unable to attract and retain qualified officers, directors and members of board committees required to provide for our effective management as a result of Sarbanes-Oxley Act of 2002. The enactment of the Sarbanes-Oxley Act of 2002 has resulted in a series of rules and regulations by the SEC that increase responsibilities and liabilities of directors and executive officers. The perceived increased personal risk associated with these recent changes may make it more costly or deter qualified individuals from accepting these roles.
Item 14.
Item 14. Principal Accounting Fees and Services
(1) Audit Fees
The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for our audit of annual financial statements and review of financial statements included in our quarterly reports or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years were:
(2) Audit-Related Fees
The aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountants that are reasonably related to the performance of the audit or review of our financial statements and are not reported in the preceding paragraph:
(3) Tax Fees
The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning were:
(4) All Other Fees
The aggregate fees billed in each of the last two fiscal years for the products and services provided by the principal accountant, other than the services reported in paragraphs (1), (2), and (3) was:
PART IV.
Item 15.
Item 15. Exhibits and Reports on Form 8-K
Index to Exhibits
Exhibit
Number
Description of Exhibits
3.1*
Certificate of Incorporation of ZipGlobal Holdings, Inc., dated November 17, 2005.
3.2*
Certificate of Incorporation of Beasley Holdings Limited, dated February 13, 2004.
3.3*
Bylaws of ZipGlobal Holdings, Inc.
4.1*
Form of Corporate Stock of ZipGlobal Holdings, Inc.
4.2*
Form of Incentive Stock Option under ZipGlobal Holdings, Inc. 2006 Stock Option Plan
4.3*
Form of Non-Qualified Stock Option under ZipGlobal Holdings, Inc. 2006 Stock Option Plan
10.1*
Registration Rights Agreement entered into with each selling stockholder
10.2*
Lock-up Agreement entered into with each selling stockholder
10.3*
Share Exchange Agreement, dated November 29, 2005, by and among the shareholders of Beasley Holdings Limited and ZipGlobal, Inc.
10.4*
ZipGlobal Holdings, Inc. 2006 Stock Option Plan
10.5*
Convertible Promissory Note, dated March 28, 2006, made by ZipGlobal Holdings, Inc. for the benefit Hio Tong Ieong in the principal amount of $136,373 bearing interest at the rate of 8% per annum
10.6*
Convertible Promissory Note, dated March 28, 2006, made by ZipGlobal Holdings, Inc. for the benefit of Zhong Hua Li in the principal amount of $98,873 bearing interest at the rate of 8% per annum
10.7*
Conversion, dated March 28, 2006, of Convertible Promissory Note, dated March 28, 2006, made by ZipGlobal Holdings, Inc. for the benefit Hio Tong Ieong for 272,746 shares of common stock of ZipGlobal Holdings, Inc.
10.8*
Conversion, dated March 28, 2006, of Convertible Promissory Note, dated March 28, 2006, made by ZipGlobal Holdings, Inc. for the benefit of Zhong Hua Li for 197,746 shares of common stock of ZipGlobal Holdings, Inc.
10.9*
Agreement on Management Fee, dated March 31, 2006, between Beasley Holdings Limited and Max International Investment Limited
10.10*
Carrier Service Agreement, dated March 1, 2006, between Lucky Tone Communications Limited and Beasley Holdings Limited
10.11*
Service Agreement, dated October 25, 2005, between Toll International Limited and Beasley Holdings Limited
10.12*
Reciprocal International Carrier Service Agreement, dated December 30, 2005, between KDDI America, Inc. and Beasley Holdings Limited
10.13
Agreement, dated March 31, 2009, between ZipGlobal Holdings, Inc. and Beasley Holdings, Limited.
21.1*
Subsidiaries of ZipGlobal Holdings, Inc.
31.1
Certification of Michael C. Lee pursuant to 18 U.S.C. Section 1350, as adopted, to Section 302 of the Sarbanes-Oxley Act of 2002
32.2
Certification of Michael C. Lee pursuant to 18 U.S.C. Section 1350, as adopted, to Section 906 of the Sarbanes-Oxley Act of
* Previously filed as an exhibit to Registration Statement on Form SB-2, as amended (File No.: 333-13514) and incorporated by reference herein.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
ZIPGLOBAL HOLDINGS, INC.
Dated: June 29, 2010
By:
/s/ MICHAEL C. LEE
MICHAEL C. LEE
President, Chief Executive Officer,
and Director
(Principal Executive Officer) (Principal Financial Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following person on behalf of the registrant and in the capacities and on the dates indicated.
Signature/Title:
Date:
/s/ MICHAEL C. LEE
June 29, 2010
MICHAEL C. LEE
President, Chief Executive Officer,
and Director
(Principal Executive Officer)
(Principal Financial Officer)
/s/ ZHONG HUA LI
June 29, 2010
ZHONG HUA LI
Chairman of the Board and Director
/s/ HIO TONG IEONG
June 29, 2010
HIO TONG IEONG
Secretary and Director