ITEM 1. BUSINESS.
We formed as a Nevada corporation on March 7, 2001 as Wren, Inc. We had no business activities until September 2004 when we determined to pursue a business plan of selling items via the internet. Our activities have been limited to identifying and purchasing certain merchandise for resale, establishing a website and writing our business plan. Our business is to liquidate distressed or surplus inventory via the internet. We are a seller of closeout merchandise and offer customers a discount over retail pricing. We believe our business can offer suppliers an attractive alternative to in-store liquidation sales that may detract from their ongoing efforts.
In order to commence our business operations, we purchased golfing equipment inventory from Pine Valley, Ltd. for $25,000. The inventory consists of milled putters, ladies’ metal woods, and leather golf gloves, in various quantities. On May 25, 2008 we purchased 1,030 “hanging chairs” from a manufacturer in China. We have sold some of these hanging chairs on a wholesale basis to various retail establishments throughout the United States.
Our online inventory resale business has not grown to our expectations and during 2008 we continued to search for inventory and other products we thought would be appealing to the public. We encountered a potential business opportunity in the form of a license for the marketing and distribution of the NextFitness Keychain Trainer. Consequently, during the fourth quarter of 2008, we had a change in management and subsequent to year end, on March 4, 2009, the Company entered into an Exclusive License and Distribution Agreement with NextFitness, Inc. for the right to market and sell the NextFit KeyChain Trainer and associated Service. The License and Distribution Agreement calls for a license fee to be paid as follows: issuance of 600,000 Class A Preferred Stock, issuance of 600,000 Class B Preferred Stock, $800,000 payable in the form of a Promissory Note, and further payments of $800,000, $300,000, $200,000 and $200,000 and warrants to purchase 4,500,000 shares of common stock. In addition, the Company must pay to NextFitness, Inc. $2.00 for every subscriber each month excluding subscriber’s first month and a minimum monthly payment of $30,000.
NextFit Keychain Trainer and associated Service combine technology, expert coaching, and music to motivate people to reach their fitness goals. The Nextfit Keychain Trainer, a training and fitness aid, is a proprietary portable media player, which plugs into a USB port on any internet-connected computer to download fitness workouts, providing access to the NextFit Service, with dozens of coaches and millions of possible workouts, specially tailored to individual Subscribers. The Keychain Trainer fits in pocket or purse and subscribers plug in the included headphones, press play on the Keychain Trainer, and listen as their personal trainers guide them to their fitness goals.
In order to focus on the NextFit Keychain Trainer business, on March 6, 2009, the Company disposed of its surplus inventory marketing business along with the surplus inventory. With the purchase of the NextFit Keychain Trainer license we have moved our focus to the consumer-direct selling of the NextFit Keychain Trainer and associated Service using a network-marketing strategy, which consists of a person to person, hand-to-hand approach selling.
NextFit Keychain Trainer and associated Service combine technology, expert coaching, and music to motivate people to reach their fitness goals. The keystone of the Company’s business is the appeal of the NextFit Keychain trainer as a training and fitness aid, which appeal is used to sell both the Keychain Trainer and associated content, which results in an initial retail sale of the Keychain Trainer and in a subscription, with associated monthly payments, for the download of dynamic and personalized health and fitness audio and/or video workouts featuring celebrities and/or preeminent trainers to the Keychain Trainers (the “Service”).
The business is built on: 1) The exclusive consumer-direct distribution license for the NextFit Keychain Trainer and associated Service, and 2) a person-to-person, relationship-based distribution model (“Network Marketing”).
The NextFit Keychain Trainer is a proprietary portable media player, which plugs into a USB port on any internet-connected computer to download fitness workouts, providing access to the NextFit Service, with dozens of coaches and millions of possible workouts, specially tailored to the individual Subscriber.
The Keychain Trainer fits in pocket or purse Subscribers plug in the included headphones, press play on the Keychain Trainer, and listen as their personal trainers guide them to their fitness goals.
Marketed advantages of the Keychain Trainer and associated Service:
·
Offers a fun, simple, easy way to get fit: Subscribers just listen to the music and follow their trainers’ instructions.
·
Subscribers plug the Keychain Trainer into the USB port of an internet-connected computed and develop a customized fitness plan.
·
Each session is custom-tailored for the individual Subscriber. Trainers call each Subscriber by name.
·
Gives Subscribers access to celebrity trainers like “America’s Trainer,” Kathy Smith; David Kirsch, who trains Heidi Klum and Anne Hathaway; running expert Jeff Galloway; and to
·
more than 40 other preeminent coaches.
·
Coaching for every fitness level.
·
Content library of more than 2,500 exercises, hundreds of kinds of equipment, and 150,000 audio clips form the world’s largest audio exercise database. Every audio clip professionally scripted, tested, and recorded.
·
Over 100 tracks of professionally-designed fitness music included (with ability for advanced users to mix in their own music)
·
Over $15 million invested by Nextfitness in the technology platform.
·
8 patents pending on technology, such as the “Dynamic Media Production” system, which tailors workouts based upon the results of prior sessions and the conditions (home, gym, etc.)
The Keychain Trainer naturally lends itself to Network Marketing. A distributor can hand a demonstration Keychain Trainer to a prospective subscriber and ask him or her to listen for themselves to a pre-loaded promotional session. This process, takes little time and replaces millions of dollars in advertising to get a Keychain Trainer into the hands of a prospective customer.
The Network Marketing distribution model has a number of distinct advantages:
·
The majority of our advertising and marketing is done by Distributors, who do not get compensated for their efforts unless a product is sold, so it requires less capital to operate the business
·
Low barrier to entry, financially viable for Distributors right from the start
o
This both creates and meets demand, unlike retail, which just meets demand
·
Quality of the celebrity audio pitch creates confidence in Distributors, generating growth
·
Shared residuals mean an attentive & engaged sales force with a focus on retention
·
Process of pitching, signing up, and tracking is automated: we keep track of how and when products are distributed, activated, and used
·
Trying to sell to friends is hard; finding an opening to hand out a “KT” is easy
·
Based on credible, existing relationships, and the influence of someone you know
·
People help us retain and keep customers actively using the product
·
Community focus, getting groups together to motivate & inspire one another
·
The Company has developed a Network Marketing compensation plan that rewards distributors for selling the Keychain Trainer and associated Service.
The Keychain Trainer initially will retail for $99.95 per unit. Monthly subscription rates for a single subscription initially will be offered at $24.95 per month.
Employees
We do not currently have any employees but rely upon the efforts of our officers and directors to conduct our business. We do not have any employment or compensation agreements in place with our officers and directors although they are reimbursed for expenditures advanced on our behalf.
ITEM 2.
ITEM 2. PROPERTIES.
We do not currently own any property. We sublease our principal executive and administrative offices located at 235 West Sego Lily Drive, 2nd Floor, Sandy, Utah 84070. Our office space is approximately 10,913 rentable square feet and the sublease is for a period of almost 6 years, terminating February 14, 2012. This sublease is on a full service basis, including all building operating expenses. The lease rate of $18.50 per rentable square foot is paid monthly and increases on an annual basis by 3%. Currently, the rate is $17,329 per month.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS.
The Company is not the subject of any pending legal proceedings; and to the knowledge of management, no proceedings are presently contemplated against the Company by any federal, state or local governmental agency.
Further, to the knowledge of management, no director or executive officer is party to any action in which any has an interest adverse to the Company.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
Market Information
Our common stock is listed on the Over the Counter Bulletin Board (“OTCBB”), under the symbol “WRNT". There was not an active market and no trading volume during fiscal 2007 and there has been no trading volume in 2008.
The above quotations, as provided by Pink Sheets OTC Markets, Inc., represent prices between dealers and do not include retail markup, markdown or commission. In addition, these quotations do not represent actual transactions.
Holders
As of March 30, 2009, there were approximately 71 shareholders of record holding 6,000,000 shares of common stock. This number does not include an indeterminate number of stockholders whose shares are held by brokers in street name. 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 cash dividends since our inception and do not intend to declare any such dividends in the foreseeable future. Our ability to pay cash dividends is subject to limitations imposed by Nevada law. Under Nevada law, cash 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 for Issuance Under Equity Compensation Plans
None.
Recent Sales or Purchases of Unregistered Securities
None during 2008. Subsequent to year end and Pursuant to the terms of the License and Distribution Agreement, the Company issued 600,000 shares of Series A Preferred Stock; 600,000 shares of Series B Preferred Stock; and warrants to purchase 4,500,000 shares of common stock. Series A Preferred Stock is convertible into 10 shares of Common Stock for each Series A Share, no voting rights are provided. Series B Preferred Stock is convertible into 10 shares of Common Stock for each Series B Share and provides for 2 votes per share on a converted basis. The warrant is for the purchase of up to 4,500,000 shares at an exercise price of $0.334 per share for a period of three years, until March 4, 2012.
The shares and warrants were issued pursuant to exemptions from registration under Regulation D. No commissions were paid and no brokers were involved in the transaction.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA.
Since we are a “smaller reporting company,” as defined by SEC regulation, we are not required to provide the information required by this Item.
ITEM 7.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
FORWARD-LOOKING STATEMENTS
The statements made below with respect to our outlook for fiscal 2009 and beyond represent “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934 and are subject to a number of risks and uncertainties. These include, among other risks and uncertainties, whether we will be able to generate sufficient cash flow from our operations or other sources to fund our working capital needs, maintain existing relationships with our lender, successfully introduce and attain market acceptance of any new products, attract and retain qualified personnel both in our existing markets and in new territories in an extremely competitive environment, and potential obsolescence of our technologies.
In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “could,” “would,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “projects,” “predicts,” “potential” and similar expressions intended to identify forward-looking statements. These statements are only predictions and involve known and unknown risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by such forward-looking statements. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Also, these forward-looking statements represent our estimates and assumptions only as of the date of this report. Except as otherwise required by law, we expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement contained in this report to reflect any change in our expectations or any change in events, conditions or circumstances on which any of our forward-looking statements are based. We qualify all of our forward-looking statements by these cautionary statements.
Results of Operations
Years Ended December 31, 2008 and 2007
We have revenue of $21,652 for the year ended December 31, 2008 with cost of goods sold at $13,074 for a gross profit of $8,578. Our general and administrative expenses were $45,875 and we had interest expense of $923 for a net loss of $38,220. For the year ended December 31, 2007, we did not generate any revenue and had general and administrative expenses of $17,137 and interest expense of $1,272 for a net loss of $18,409.
Liquidity and Capital Resources
The Company remains in the development stage. The Company's balance sheet as of December 31, 2008, reflects a total asset value of $44,462. We have current liabilities of $47,581 which consist of $858 in a bank overdraft, $25,785 in accounts payable, $514 in payroll taxes payable, $2,138 in accrued interest to a related party and $18,286 in a note payable to a related party. The Company has minimal cash and no line of credit, other than that which present management may agree to extend to or invest in the Company, nor does it expect to have one. The Company will carry out its plan of business as discussed above. The Company cannot predict to what extent its liquidity and capital resources will be diminished by the operation of its proposed business.
The Company filed a registration statement on Form SB-2 with the Securities and Exchange Commission to register a minimum of 1,500,000 shares and a maximum of 2,000,000 shares of common stock. The public offering price was $0.05 per shareThe registration statement was declared effective on August 8, 2007. The Company completed its offering on February 28, 2008 and raised $80,063 from the sale of 1,601,262 shares of common stock.
On December 31, 2008 and 2007, the Company has a note payable to Tryant, LLC for $18,286 and $42,528, respectively. The note accrues interest at 8% per annum and is payable on demand. At December 31, 2008 and 2007 accrued interest was $2,138 and $1,884, respectively.
NEED FOR ADDITIONAL FINANCING
Based upon current management’s willingness to extend credit to the Company and/or invest in the Company, the Company believes that its existing capital may be sufficient to meet the Company's cash needs required for the costs of compliance with the continuing reporting requirements of the Securities Exchange Act of 1934, as amended, and for the costs incurred in pursuing its business objectives, for an indefinite period of time. There is no assurance, however, that the available funds will ultimately prove to be adequate to allow it to become a profitable business and the Company's needs for additional financing might increase substantially. In addition, as current management is under no obligation to continue to extend credit to the Company and/or invest in the Company, there is no assurance that such credit or investment will continue or that it will continue to be sufficient for future periods.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, results of operations or liquidity.
ITEM 7A.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Since we have no assets and do not have any investments in eligible portfolio companies there is no quantitative information, as of the end of December 31, 2008, about market risk that has any impact on our present business. Once we begin making investments in eligible portfolio companies there will be market risk sensitive instruments and we will disclose the applicable market risk information at that time
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The required financial statements are included following the signature page of this Form 10-K.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
The Company has had no disagreements with its certified public accountants with respect to accounting practices or procedures or financial disclosure.
ITEM 9A(T).
ITEM 9A(T). CONTROLS AND PROCEDURES.
(a) Evaluation of Disclosure Controls and Procedures. Our management, with the participation of our President, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, our President concluded that our disclosure controls and procedures as of the end of the period covered by this report were effective such that the information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including our President, as appropriate to allow timely decisions regarding disclosure. 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. We believe our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives and our principal executive officer and principal financial officer concluded that our disclosure controls and procedures are effective.
Management’s Annual Report on Internal Control over Financial Reporting. Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives.
Our management, with the participation of the President, evaluated the effectiveness of the Company’s internal control over financial reporting as of December 31, 2008. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated Framework. Based on this evaluation, our management, with the participation of the President, concluded that, as of December 31, 2008, our internal control over financial reporting was effective.
This annual report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.
(b) Changes in Internal Control over Financial Reporting. There were no changes in the Company's internal controls over financial reporting, known to the chief executive officer or the chief financial officer, that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.
ITEM 9B.
ITEM 9B. OTHER INFORMATION
There are no further disclosures. All information that was required to be disclosed in a Form 8-K during the fourth quarter 2008 has been disclosed.
PART III
ITEM 10.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
Identification of Directors and Executive Officers
The following table sets forth the name, age, position and office term of each executive officer and director of the Company.
Name
Age
Position
Director or Officer Since
Daniel D. Drummond
President and Director
December 2005
Justin Pentelute
President and Director
July 2008
All officers hold their positions at the will of the Board of Directors. All directors hold their positions for one year or until their successors are elected and qualified.
Set forth below is certain biographical information regarding the Company’s executive officer and director:
Daniel D. Drummond, President and Director. Mr. Drummond graduated with a Bachelor of Science degree from the United States Military Academy at West Point in 1975. Following a military career with the U.S. Army, Mr. Drummond held positions with various companies in marketing, consulting and operations. From April 2003 until December 2003, Mr. Drummond was Vice President of Systems Development for two start-up companies, PoweRX Pharmacy, a pain-management pharmacy, and PoweRx Technologies, a company specializing in the development of handheld prescription-writing applications and systems. Since February 2004, Mr. Drummond has been a member of Tryant, LLC., a firm specializing in mergers and acquisitions. Mr. Drummond is currently the sole officer and director of Wren, Inc., an internet marketing company, and is the president and director of UAGH, Inc., a development stage company.
Justin Pentelute, President and Director. Mr. Pentelute was a consultant for Tryant, LLC, a firm specializing in mergers and acquisitions, from September 2007 - December 2008. From 2006 to 2007, Mr. Pentelute was a real estate agent for Montana Properties in Eureka, Montana . From 2005 to 2006 Mr. Pentelute was a Sales Professional for Desert BMW of Henderson, Nevada. From 2002 to 2005, Mr. Pentelute was a Sales Professional for RC Willey of Henderson , Nevada. From 2001 to 2002, Mr. Pentelute was the Manager for Logs 4 Life in Grand Junction , Colorado
On December 31, Justin Pentelute, our President and a Director, resigned from serving as both President and Director of the Company. Mr. Pentelute's resignation is for personal reasons and not due to any controversy or disagreement with the Company regarding its financial reporting or accounting policies or otherwise.
Subsequent to year end 2008, we had a change in management.
On February 23, 2009, Daniel D. Drummond, acting as our sole officer and director, through a Unanimous Written Consent of Directors filled the vacancy on our Board of Directors by appointing Jeff Jenson to our Board of Directors. Also on February 23, 2009, our Board of Directors appointed Jeff Jenson as our President. Subsequent to the appointment of Jeff Jenson as President, Daniel D. Drummond resigned as an officer and Director of Wren, Inc.
On March 4, 2009, the Company appointed Teri Sundh to fill a vacancy on the Board of Directors and to serve as Chief Executive Officer of the Company.
The following table reflects our management as of March 4, 2009.
Name
Age
Position
Director or Officer Since
Teri Sundh
CEO, Director
March 2009
Jeffrey D. Jenson
CFO, President and Director
February 2009
Ms. Sundh, Chief Executive Officer and Director, 41 years old, has excelled in executive management for over 15 years, negotiating multi-million dollar contracts with Fortune 500 companies as a vice president at Franklin Covey, as well as developing strategic partnership for several successful startups. Her experience includes negotiations with Xerox, Disney, IBM, Merrill Lynch, Coca-Cola, Nike, AT&T, and the National Chamber of Commerce. Teri has managed hundreds of employees and developed numerous national sales/marketing programs. As one of the first key executives of ThinMillionaire Inc., Teri was responsible for developing and negotiating each of the many strategic relationships that ThinMillionaire formed with vendors, promotional partners, and fulfillment centers including Kraft, EAS, General Growth, SlimFast, Simon Properties and Jenny Craig. Ms. Sundh later co-founded and launched ZingBack Inc, a patent-pending voice messaging technology and served as Executive Vice President from March 2002 until November 2004. Ms. Sundh founded and has served as CEO since January 2005 of NextFitness, Inc. (formerly Podfitness.com, Inc.), where she helped create the world’s first personalized audio fitness system. In 2008, Teri was honored as one of “30 Women to Watch” by Utah Business magazine.
Mr. Jenson, Chief Financial Officer, President and Director, 38 years old, is the Managing Director of Tryant, LLC. Mr. Jenson has been a financial consultant to development-stage businesses and public corporations for 16 years. Mr. Jenson was a founder of Vic’s Nutritional Products, Inc., which developed, owned, and operated its retail outlets in shopping malls throughout the US and which was subsequently purchased by Guthy Renker in 2002. Prior to his work with Vic’s Nutritional Products, Mr. Jenson was president of Jenson Services, a Utah merger-and-acquisition corporation.
The Company has no audit committee financial expert, as defined under Section 228.401, serving on its audit committee because it has no audit committee and is not required to have an audit committee because it is not a listed security as defined in Section 240.10A-3.
Term of Office
The term of office of the current directors shall continue until new directors are elected or appointed.
Involvement in Certain Legal Proceedings
During the past five years, no present or former director, person nominated to become a director, executive officer, promoter or control person of the Company:
(1) Was a general partner or executive officer of any business by or against which any bankruptcy petition was filed, whether at the time of such filing or two years prior thereto;
(2) Was convicted in a criminal proceeding or named the subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);
(3) Was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; and
(4) Was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any federal or state authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described above under this Item, or to be associated with persons engaged in any such activity;
(5) Was found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.
Financial Expert
The Company has no audit committee financial expert, as defined under Section 228.401, serving on its audit committee because it has no audit committee and is not required to have an audit committee because it is not a listed security as defined in Section 240.10A-3.
Code of Ethics
The Company has adopted a code of ethics that applies to the Company’s principal executive officer, principal financial officer, principal accounting officer or controller. The Company will provide, at no cost, a copy of the Code of Ethics to any shareholder of the Company upon receiving a written request sent to the Company’s address shown on Page 1 of this report.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
Other than Justin Pentelute, no current or prior officer or director has received any remuneration or compensation from the Company in the past three years, nor has any member of the Company’s management been granted any option or stock appreciation right. Accordingly, no tables relating to such items have been included within this Item. None of our employees are subject to a written employment agreement nor has any officer received a cash salary since our founding. The Company has verbally agreed to pay Ms. Sundh, our new Chief Executive Officer, an annual salary of $140,000 per year and intends to formalize the agreement in the near future.
The Summary Compensation Table shows certain compensation information for services rendered in all capacities for the fiscal periods ended December 31, 2008, 2007 and 2006. Other than as set forth herein, no executive officer's salary and bonus exceeded $100,000 in any of the applicable years. The following information includes the dollar value of base salaries, bonus awards, the number of stock options granted and certain other compensation, if any, whether paid or deferred.
Compensation of Directors
There are no agreements to compensate any of the directors for their services.
Our officers and directors are reimbursed for expenses incurred on our behalf. Our officers and directors will not receive any finder’s fee as a result of their efforts to implement the business plan outlined herein. However, our officers and directors anticipate receiving benefits as beneficial shareholders of our common stock.
As of year end 2008, we had not adopted any retirement, pension, profit sharing, stock option or insurance programs or other similar programs for the benefit of our employees.
Termination of Employment and Change of Control Arrangement
There are no compensatory plans or arrangements, including payments to be received from the Company, with respect to any former employees, officers or directors which would in any way result in payments to any such person because of his or her resignation, retirement or other termination of such person’s employment with the Company or its subsidiaries, or any change in control of the Company, or a change in the person’s responsibilities following a change in control of the Company.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
The following table sets forth as of March 30, 2009, the number and percentage of the 6,000,000 shares of outstanding common stock which, according to the information supplied to the Company, were beneficially owned by (i) each person who is currently a director of the Company, (ii) each executive officer, (iii) all current directors and executive officers of the Company as a group and (iv) each person who, to the knowledge of the Company, is the beneficial owner of more than 5% of the outstanding common stock. Except as otherwise indicated, the persons named in the table have sole voting and dispositive power with respect to all shares beneficially owned, subject to community property laws where applicable.
(1)
Officer and/or director
(2)
Jeff Jenson is the Manager of Fit 4 Money, LLC and is considered to have beneficial ownership of the 750,000 shares held in the name of Fit 4 Money, LLC
(3)
153,038 shares in the name of Alexander Ferries-Lone Giraffe LLC, 328,300 shares in the name of Alexander Ferries - Moose Investments, LLC and 178,790 shares held directly in the name of Alex Ferries. Mr. Ferries is the Manager of Shining Meadows, LLC and is considered to have beneficial ownership of the 328,300 shares held in the name of Shining Meadows, LLC
(4)
5,000 shares in the name of Daniel D. Drummond FBO William D Drummond and 362,580 shares held directly in the name of Daniel D. Drummond
In addition to our common stock, we have Series A and Series B Convertible Preferred Stock issued and outstanding. The following table shows beneficial ownership of all voting shares as of March 30, 2009.
Title of Class
Name and Address of Beneficial Owner
Amount of Beneficial Voting Ownership
% (2)
Series B
Teri Sundh
235 West Sego Lily Dr., 2nd Floor
Sandy, UT 84070
6,000,000
33.33%
Common
Jeff Jenson
89 Lone Hollow
Sandy, UT 84092
1,107,580
18.46%
Series B
Equity Online, Inc. (3)
3544 E. Danish Rd.
Sandy, UT 84093
6,000,000
33.33%
Series A
NextFitness, Inc. (3)
235 W. Sego Lily Dr., 2nd Floor
Sandy, UT 84070
3,000,000
0%
Series A
NextFit, Inc. (4)
2354 W. Sego Lily Dr., 2nd Floor
Sandy, UT 84070
3,000,000
0%
All Officers and Directors as a Group (2 Persons)
7,107,580
39.49%
(1)
Officer and/or director
(2)
Based on total votes of 6,000,000 common votes and 12,000,000 Series B votes for a total of 18,000,000 votes
(3)
Jeff Hays is Manager of Equity Online, LLC and is sole officer and director of NextFitness, Inc.
(4)
Teri Sundh is CEO and Jeff Hays is President of NextFit, Inc.
There are no contracts or other arrangements that could result in a change of control of the Company.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, DIRECTOR INDEPENDENCE.
Transactions with Management and Others
On December 31, 2008 and 2007, the Company has a note payable to Tryant, LLC for $18,286 and $42,528, respectively. The note accrues interest at 8% per annum and is payable on demand. At December 31, 2008 and 2007 accrued interest was $2,138 and $1,884, respectively.
The Company has entered into an exclusive distribution agreement with NextFitness, Inc. Teri Sundh is a shareholder in both NextFitness, Inc. and Wren.
We sublease our office space from NextFitness, Inc. The sublease is a pass-through arrangement and NextFitness, Inc. does not profit from our sublease.
A condition of the License and Distribution Agreement requires the Company to pay Tryant, LLC, an entity 50% owned and controlled by Jeff Jenson, our President, the sum of $475,000 for consulting services and indemnification.
Indebtedness of Management
None; not applicable.
Conflicts of Interest
None of our key personnel is required to commit full time to our affairs and, accordingly, these individuals may have conflicts of interest in allocating management time among their various business activities. In the course of their other business activities, certain key personnel may become aware of investment and business opportunities which may be appropriate for presentation to us, as well as the other entities with which they are affiliated. As such, they may have conflicts of interest in determining to which entity a particular business opportunity should be presented.
Each officer and director is, so long as he is an officer or director, subject to the restriction that all opportunities contemplated by our plan of operation that come to his attention, either in the performance of his duties or in any other manner, will be considered opportunities of, and be made available to us and the companies that he is affiliated with on an equal basis. A breach of this requirement will be a breach of the fiduciary duties of the officer or director. If we or the companies to which the officer or director is affiliated each desire to take advantage of an opportunity, then the applicable officer or director would abstain from negotiating and voting upon the opportunity. However, the officer or director may still take advantage of opportunities if we should decline to do so. Except as set forth above, we have not adopted any other conflict of interest policy in connection with these types of transactions.
ITEM 14.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
Audit Fee
The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of Wren, Inc. annual financial statement and review of financial statements included in Cactus Wren’s 10-Q reports and services normally provided by the accountant in connection with statutory and regulatory filings or engagements were $12,129 for fiscal year ended 2008 and $7,500 for fiscal year ended 2007.
Audit-Related Fees
The aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit or review of Wren, Inc. financial statements that are not reported above were $0 for fiscal year ended 2008 and $0 for fiscal year ended 2007.
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 $0 for fiscal year ended 2008 and $0 for fiscal year ended 2007.
All Other Fees
The aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported above were $0 for fiscal year ended 2008 and $0 for fiscal year ended 2007.
We do not have an audit committee currently serving and as a result our board of directors performs the duties of an audit committee. Our board of directors will evaluate and approve in advance, the scope and cost of the engagement of an auditor before the auditor renders audit and non-audit services. We do not rely on pre-approval policies and procedures.
PART IV
ITEM 15.
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
Copies of the following documents are included as exhibits to this report pursuant to Item 601 of Regulation S-K.
The Company has adopted a code of ethics that applies to the Company’s principal executive officer, principal financial officer, principal accounting officer or controller. The Company will provide, at no cost, a copy of the Code of Ethics to any shareholder of the Company upon receiving a written request sent to the Company’s address shown on Page 1 of this report.
Exhibit #
Description
Location
Exhibit 3(i)
Articles of Incorporation
*
Exhibit 3(ii)
Bylaws
*
Exhibit 31
Certification of the Principal Executive Officer and
Attached
Principal Financial Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002
Exhibit 32
Certification of the Principal Executive Officer and
Attached
Principal Financial Officer pursuant to U.S.C. Section 1350
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**
* Incorporated by reference. Filed as exhibit to SB-2 on January 21, 2005
** The Exhibit attached to this Form 10-K shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise subject to liability under that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
WREN, INC.
Date: March 31, 2009
/s/ Teri Sundh
Teri Sundh
Chief Executive Officer
Date: March 31, 2009
/s/ Jeffery D. Jenson
Jeffrey D. Jenson
Chief Financial Officer
In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Date: March 31, 2009
/s/ Teri Sundh
Teri Sundh
Director
Date: March 31, 2009
/s/ Jeffery D. Jenson
Jeffrey D. Jenson
Director
WREN, INC.
[A Development Stage Company]
FINANCIAL STATEMENTS
PAGE
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
BALANCE SHEETS
STATEMENT OF OPERATIONS
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
STATEMENT OF CASH FLOWS
NOTES TO FINANCIAL STATEMENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors
Wren, Inc.
Sandy, Utah
We have audited the accompanying balance sheets of Wren, Inc. [a development stage company] as of December 31, 2008 and 2007 and the related statements of operations, stockholders' equity (deficit) and cash flows for each of the years in the two-year period ended December 31, 2008 and for the period from inception on March 7, 2001 through December 31, 2008. Wren, Inc.’s management is responsible for these financial statements. Our responsibility is to express an opinion on these 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 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 financial statements referred to above present fairly, in all material respects, the financial position of Wren, Inc. as of December 31, 2008 and 2007 and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2008 and for the period from inception on March 7, 2001 through December 31, 2008, in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming Wren, Inc. will continue as a going concern. As discussed in Note 4 to the financial statements, Wren, Inc. has incurred losses since its inception and has not yet established profitable operations. These factors raise substantial doubt about the ability of the Company to continue as a going concern. Management’s plans in regards to these matters are also described in Note 4. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.
/s/ PRITCHETT, SILER & HARDY, P.C.
Salt Lake City, Utah
March 31, 2009
WREN, INC.
[A Development Stage Company]
Balance Sheets
The accompanying notes are an integral part of these financial statements.
WREN, INC.
[A Development Stage Company]
STATEMENTS OF OPERATIONS
The accompanying notes are an integral part of these financial statements.
WREN, INC.
[A Development Stage Company]
STATEMENTS OF CASH FLOWS
Supplemental Schedule of Non-cash Investing and Financing Activities:
For the year ended December 31, 2008:
Offering expenses of $16,480 were deducted from the gross stock offering proceeds of $80,063, which provided net proceeds of $63,583 to the Company from its Common Stock offering on February 28, 2008.
At December 31, 2008 the Company converted advances payable-related party valued at $568 into a note payable-related party.
For the year ended December 31, 2007:
None.
The accompanying notes are an integral part of these financial statements.
WREN, INC.
[A Development Stage Company]
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
FROM THE DATE OF INCEPTION ON MARCH 7, 2001
THROUGH DECEMBER 31, 2008
The accompanying notes are an integral part of these financial statements.
WREN, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - Wren, Inc. (“the Company”) was organized under the laws of the State of Nevada on March 7, 2001. The Company plans to market close-out or surplus merchandise via the internet. The Company has not generated substantive revenues from its planned principal operations and is considered a development stage company as defined in Statement of Financial Accounting Standards No. 7. The Company has, at the present time, not paid any dividends and any dividends that may be paid in the future will depend upon the financial requirements of the Company and other relevant factors.
Cash and Cash Equivalents - The Company considers all highly liquid debt investments purchased with a maturity of three months or less to be cash equivalents.
Income Taxes - The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes” [See Note 6].
The Company adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, on January 1, 2007. As a result of the implementation of Interpretation 48, the Company recognized approximately no increase in the liability for unrecognized tax benefits.
The Company has no tax positions at December 31, 2008 and 2007 for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility.
The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. During the years ended December 31, 2008 and 2007, the Company recognized no interest and penalties. The Company had no accruals for interest and penalties at December 31, 2008, and 2007.
Revenue Recognition - The Company recognizes revenues in accordance with the Securities and Exchange Commission Staff Accounting Bulletin (SAB) number 104, "Revenue Recognition." SAB 104 clarifies application of U. S. generally accepted accounting principles to revenue transactions. Revenue is recognized when sales close and the inventory items are delivered to the customer. The Company records an account receivable for revenue earned but not yet collected. For revenue received in advance of services, the Company records a current liability classified as either deferred revenue or customer deposits.
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Accounts Receivable
Trade accounts receivable are carried at original invoice amount less an estimate made for doubtful accounts. Management of the Company determines the allowance for doubtful accounts by identifying potential troubled accounts and by using historical experience and future expectations applied to an aging of accounts. Trade accounts receivable are written off when deemed uncollectible. Recoveries of trade accounts receivable previously written off are recorded as income when received. Management determined that an allowance for doubtful accounts of $4,090 and $0 was required at December 31, 2008 and 2007, respectively.
Inventory - Inventory is carried at the lower of cost or market value using the specific identification method. At December 31, 2008, inventory consists of Australian coin purses valued at $30 and golf equipment inventory consisting of putters, ladies’ woods sets and golf gloves valued at $22,433 and recreational hanging chairs valued at $16,604. The Company has estimated that no allowance for slow moving or obsolete inventory was necessary at December 31, 2008.
Loss Per Share - The Company computes loss per share in accordance with Statement of Financial Accounting Standards No. 128, “Earnings Per Share,” which requires the Company to present basic and dilutive loss per share when the effect is dilutive [See Note 6].
Accounting Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimated by management.
Recently Enacted Accounting Standards - Statement of Financial Accounting Standards (“SFAS”) No. 157, “Fair Value Measurements”, SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities - Including an amendment of FASB Statement No. 115”, SFAS No. 160, “Noncontrolling Interest in Consolidated Financial Statements” (as amended), SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities - an amendment of FASB Statement No. 133”, SFAS No. 162, “The Hierarchy of GAAP Sources for Non-governmental entities”, and SFAS No. 163, “Accounting for Financial Guarantee Insurance Contracts” were recently issued. SFAS No. 157, 159, 160, 161, 162 and 163 have no current applicability to the Company or their effect on the financial statements would not have been significant.
NOTE 2 - CAPITAL STOCK
Preferred Stock - The Company has authorized 5,000,000 shares of preferred stock, $.001 par value, with such rights, preferences and designations and to be issued in such series as determined by the Board of Directors. No shares are issued and outstanding at December 31, 2008.
Common Stock - The Company has authorized 50,000,000 shares of common stock with a $.001 par value.
At December 31, 2008 and 2007 there were 13,601,262 and 12,000,000 shares issued and outstanding, respectively.
The Company filed a registration statement with the United States Securities and Exchange Commission on Form SB-2, which registration statement went effective on August 8, 2007. The Company issued 1,601,262 shares of its previously authorized but unissued common stock. The total proceeds from the sale of stock amounted to $80,063 (or $.05 per share). Offering costs were $16,480. The offering was completed on February 28, 2008.
In September 2004, the Company issued 1,000,000 shares of its previously authorized but unissued common stock. Total proceeds from the sale of stock amounted to $10,000 (or $.01 per share).
In September 2004, the Company issued 500,000 shares of its previously authorized but unissued common stock. Total proceeds from the sale of stock amounted to $5,000 (or $.01 per share).
In August 2003, the Company issued 500,000 shares of its previously authorized but unissued common stock. Total proceeds of the sale amounted to $500 (or $.001 per share).
In April 2001, the Company issued 10,000,000 shares of its previously authorized but unissued common stock. Total proceeds of the sale amounted to $1,000 (or $.0001 per share).
Stock Split - On June 15, 2001 the Company effected a 10-for-1 forward stock split. The financial statements for all periods presented have been restated to reflect the stock split.
NOTE 3 - INCOME TAXES
The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes”. SFAS No. 109 requires the Company to provide a net deferred tax asset/liability equal to the expected future tax benefit/expense of temporary reporting differences between book and tax accounting methods and any available operating loss or tax credit carryforwards. The Company has available at December 31, 2008, an operating loss carryforward of approximately $83,200 which may be applied against future taxable income and which expires in various years through 2028.
The amount of and ultimate realization of the benefits from the operating loss carryforwards for income tax purposes is dependent, in part, upon the tax laws in effect, the future earnings of the Company, and other future events, the effects of which cannot be determined. Due to a substantial change in the Company’s ownership, there is an annual limitation on the amount of net operating loss carryforwards which can be utilized. Because of the uncertainty surrounding the realization of the loss carryforwards, the Company has established a valuation allowance equal to the tax effect of the loss carryforwards and, therefore, no deferred tax asset has been recognized for the loss carryforwards. The net deferred tax asset is approximately $12,500 and $6,700 as of December 31, 2008 and 2007, respectively, with an offsetting valuation allowance of the same amount. The change in the valuation allowance for the year ended December 31, 2008 is approximately $5,800.
NOTE 4 - GOING CONCERN
The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. However, the Company has incurred losses since inception and has not yet been successful at establishing profitable operations. Further, the Company does not have adequate working capital to support its planned operations. These factors raise substantial doubt about the ability of the Company to continue as a going concern. In this regard, management is proposing to raise any necessary additional funds not provided by operations through loans or through additional sales of its common stock. There is no assurance that the Company will be successful in raising this additional capital or in achieving profitable operations. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.
NOTE 5 - RELATED PARTY TRANSACTIONS
Management Compensation - During the years ended December 31, 2008 and 2007, the Company paid $5,000 and $0 in compensation to its officers and directors.
Office Space - The Company has not had a need to rent office space. An officer/shareholder of the Company is allowing the Company to use his office as a mailing address, as needed, at no expense to the Company.
Note Payable - Tryant, LLC, a stockholder of the Company verbally agreed to pay the ongoing expenses of the Company in exchange for a Promissory Note that will be issued semi-annually.
On December 31, 2008 and 2007, the Company has a note payable to Tryant, LLC for $18,286 and $42,528, respectively. The note accrues interest at 8% per annum and is payable on demand. At December 31, 2008 and 2007 accrued interest was $2,138 and $1,884, respectively.
NOTE 6 - LOSS PER SHARE
The following data show the amounts used in computing loss per share for the periods presented:
Dilutive loss per share was not presented, as the Company had no common equivalent shares for all periods presented that would affect the computation of diluted loss per share.
NOTE 7 - CHANGE OF CONTROL AND OWNERSHIP
Change in Control and Ownership - On December 7, 2005 the Board of Directors approved a Stock Purchase Agreement wherein 98% of the outstanding shares of the Company were purchased by a new shareholder and thereby effecting a change in control of the Company and relocating the operations of the Company to San Diego, California.
The Company accepted the resignation of the current officer and director and appointed a new director and officer.
NOTE 8 - SUBSEQUENT EVENTS
On December 31, 2008, Justin Pentelute, our President and a Director, resigned from serving as both President and Director of the Company. Mr. Pentelute's resignation is for personal reasons and not due to any controversy or disagreement with the Company regarding its financial reporting or accounting policies or otherwise. Mr. Daniel Drummond, the remaining officer and director assumed the duties of President, until he resigned and the vacated position was filled by Jeff Jenson as of February 23, 2009.
On March 4, 2009, the Company appointed Teri Sundh to fill a vacancy on the Board of Directors and to serve as Chief Executive Officer of the Company. The Company has verbally agreed to pay Ms. Sundh an annual salary of $140,000 per year and intends to formalize the agreement in the near future.
On March 4, 2009, the Company entered into an Exclusive License and Distribution Agreement with NextFitness, Inc. for the right to market and sell the NextFit KeyChain Trainer and associated Service. NextFit Keychain Trainer and associated Service combine technology, expert coaching, and music to motivate people to reach their fitness goals. The Nextfit Keychain Trainer, a training and fitness aid, is a proprietary portable media player, which plugs into a USB port on any internet-connected computer to download fitness workouts, providing access to the NextFit Service, with dozens of coaches and millions of possible workouts, specially tailored to individual Subscribers. The Keychain Trainer fits in pocket or purse and subscribers plug in the included headphones, press play on the Keychain Trainer, and listen as their personal trainers guide them to their fitness goals.
The License and Distribution Agreement calls for a license fee to be paid as follows: issuance of 600,000 shares of Class A Preferred Stock, issuance of 600,000 shares of Class B Preferred Stock, $800,000 payable in the form of a Promissory Note, and further payments of $800,000, $300,000, $200,000 and $200,000. In addition, the Company must pay to NextFitness, Inc. $2.00 for every subscriber each month excluding subscriber’s first month, with a minimum payment of $30,000 per month. The Company shall purchase 10,000 Keychain Trainers from NextFitness at $25 per unit on or prior to May 15, 2009.
A further condition of the License and Distribution Agreement requires the Company to pay Tryant, LLC, an entity 50% owned and controlled by Jeff Jenson, our President, the sum of $475,000 for consulting services and indemnification. The Company has agreed to issue Tryant, LLC 4,500,000 warrants for the purchase of Wren stock at a price of $0.334.
On March 6, 2009, the Company disposed of its surplus inventory marketing business along with the surplus inventory. The assets were sold to Jeff Jenson, president and director of the Company in exchange for the cancellation of 7,601,242 shares of common stock of the Company held by Mr. Jenson.