ITEM 1. DESCRIPTION OF BUSINESS
History
We were incorporated in the State of Nevada on July 29, 2010. Since inception, we have been engaged in organizational efforts and obtaining initial financing. We were initially formed as a vehicle to pursue a business combination.
On July 8, 2014, our shareholders approved the change of the Company’s name from Xtralink Corp. to Xtralink Energy Corp. to reflect the Company’s intended course of business.
We have not been involved in any bankruptcy, receivership or similar proceeding.
On June 10, 2012, we entered into a Licensing Agreement (the “Agreement”) with Oxford International Inc. (“Oxford”), to license proprietary technology relating to converting municipal water to oxygen enriched pH balanced water (the “Water Conversion Technology”). We obtained exclusive licensing rights in the country of Singapore for a period of 20 years. We will have exclusive rights to sub-license, establish joint ventures and to commercialize products through the methods of the Water Conversion Technology. The license fee was
$ 40,000. Full payment of the license fee was made on August 15, 2012. We are subject to a royalty of 2% on licensee fees received from appointed sub-licensees as well as 2% on gross sales generated from operations. We are obligated to establish water bottling operations by December 31, 2013. In the event that we have not established operations by this date, Oxford has a right to void the Agreement.
On December 9, 2013, the Company signed an addendum to the license agreement with Oxford on June 10, 2012. This addendum will extend the commencement of operations date for one year, from December 31, 2013 until December 31, 2014, for a fee of $20,000. An initial fee of $ 10,000 was paid in December 2013 and the balance was paid in full in July 2014. We are currently negotiating a further extension and intend on finalizing this matter prior to December 31, 2014.
Current Business
Our business objective is to license the Water Conversion Technology through qualified interests and establish bottled water operations through a joint venture. We also intend on expanding our scope of business to shale oil exploration subject to raising necessary working capital.
Licensing operations
On June 13, 2012, we entered into a Sub-License Agreement with Lumut Technologies Ltd. (“Lumut”), to grant exclusive rights to sub-license, establish joint ventures and to commercialize products through the methods of the Water Conversion Technology for a period of 20 years in the country of Singapore. Lumut is subject to a sub-license fee of $ 64,000 payable in monthly installments of $ 4,000 commencing June 1, 2012 ending, October 1, 2013. The commencement date was subsequently amended to August 15, 2012, ending December 15, 2013. As per our Agreement with Oxford, 2% of any sub license fees received is payable on a quarterly basis. As additional consideration, gross sales from products generated from use of the Water Conversion Technology will be subject to a 5% royalty fee of which 2% is payable to Oxford and 3% will be retained by us. Lumut will also be required to establish bottled water operations by December 31, 2013 and in the event that this is not achieved, our agreement with Lumut will be void. License fees paid are not refundable.
We have a right to participate in joint venture operations with Lumut for a $ 150,000 investment for 40% ownership of the joint venture. We intend on entering into a joint venture agreement with Lumut to establish bottled water operations and are currently negotiating terms. There can be no assurance that a joint venture agreement will materialize.
On December 9, 2013, we signed an addendum to the sub license agreement (“Extension Agreement”) made with Lumut on June 13, 2012. This addendum will extend the terms of the extension granted by Oxford as noted above to allow Lumut an additional year to commence operations by December 31, 2014. Under this extension a fee of $20,000 is due as a lump sum payment or the fee can be paid in monthly installments of $5,000 commencing February 1, 2014 until June 1, 2014, totaling $25,000. Lumut has chosen the installment option. We are currently negotiating an extension with Oxford and we intend on extending further extensions granted to us by Oxford to Lumut.
Shale Oil Exploration:
We intend to expand our scope of business to shale oil exploration in Peru. We intend on acquiring 85% share of a Peruvian company with existing rights to exploit, mine, market, light crude over a 6,000 square kilometer designated shale property.
On July 8, 2014, we entered into a Consulting Service Agreement with Magnum Group International Inc. (“MGI”) to assist in the acquisition of an 85% share of a Peruvian company for consideration of a $ 175,000 fee payable upon completion of the acquisition. The fee shall cover expenditures made by MGI incurred during the negotiation process and deemed necessary for an acquisition to materialize. MGI has incurred such expenses voluntarily we are not required to reimburse these expenses unless we decided to proceed with the acquisition. The terms of the agreement provides that the acquisition must be made prior to December 31, 2014. In the event that the acquisition is not made, the agreement shall be terminated unless both parties agree to an extension in time.
We intend on raising sufficient working capital to fund the acquisition and the fee payable to MGI through shareholder loans and private placements. There can be no assurance that such funds will be raised or the acquisition will materialize. MGI holds 1,750,000 shares of our common stock and also holds the master license to the Water Conversion Technology we acquired through Oxford as per our agreement dated June 10, 2012.
Principal Products, Services and Their Markets
The Water Conversion Technology is based on a method of 7 steps consisting of:
(1) removal of dirt, sludge and other un-dissolved solids to less than one micron particle size,
(2) ozone is injected into the water to kill the bacteria and viruses and to coagulate the solids,
(3) water then goes through a carbon filtration system, whereby all the pesticides, herbicides, chlorine and other organic chemicals ( carcinogenic) are removed,
(4) water is subjected to UV lighting, enabling all pollutants to be destroyed,
(5) water then passes through a reverse osmosis system, enabling all chlorine and sodium and over 98% of all total dissolved solids (TDS) to be removed.
(6) water is processed through the Water Conversion Technology, where the water is pH balanced to a 8.3 state, without the addition of any substances,
(7) water is processed through the Water Conversion Technology, and oxygen molecules are bonded with the water molecules, making the water oxygen enriched for long periods of time.
The final product produced will be water that is in a pH balanced state ( 8.3 pH ), oxygen enriched, bacteria free, fluoride free, chlorine free, and sodium free with less than 2 parts per million (ppm) of total dissolved solids.
The water will be piped into sterilized non-­leaching plastic and capped with sterile caps.
Markets
It is our intention to establish joint venture operations with Lumut and market bottled water to residential and commercial customers throughout Singapore. We are negotiating terms of the joint venture agreement with Lumut. There can be no assurance that an agreement will materialize. In the event a joint venture is established with Lumut, our marketing efforts will initially be sub-contracted to third parties.
Distribution Methods and Installation
Our distribution methods are currently not in place as we have not established joint venture operations.
New Products
We are not developing nor do we intend to distribute any other products in the foreseeable future.
Competition
There are various competitors in the enriched oxygenated water market in Singapore. Competitors may have significantly greater financial, marketing and other resources than we have. Competitors have and may adopt aggressive pricing or inventory availability policies and devote substantially more resources to website and systems development than we do. Increased competition may result in reduced operating margins and loss of market share.
Availability of Raw Materials
Upon establishing joint venture operations with Lumut, our source of water will be from municipal supply. We have not entered into any definitive agreements with local authorities for such supply.
Patents, Trademarks and Labor Contracts
Patents
We do not directly hold any patents for the Water Conversion Technology.
Trademarks
We do not have any trademarks on our trade name or logo.
Labor Contracts
We do not have any labor contracts. Once we establish bottled water operations, we will require additional employees and also sales staff for marketing.
Government Regulation
The water processed under the Water Conversion Technology exceeds standards as set out by various health organizations in Singapore.
The following is an excerpt from the World Health Organization and International Water Association regarding piped water safety and standards.
http://www.wsportal.org/templates/ld_templates/layout_1367.aspx?ObjectId=30320&lang=eng
Singapore is an island city-state located south of Malaysia, with total land area of 700 sq km and population of 5 million. Singapore is listed as one of the water scarce countries in the world with some two-third of the island utilized as water catchments. Over the last 4 decades, through strategic planning and investment in research and technology, PUB has built a robust and diversified supply of water known as the ‘Four National Taps’. Water supplies comprise (I) local catchment-reservoir system, (II) imported water from west Malaysia, (III) highly purified reclaimed water known as NEWater and (IV) desalinated water.
In Singapore, the Ministry of the Environment and Water Resources (MEWR) is in charge of ensuring clean and green living environment. The ministry's mission is to deliver and sustain a clean and healthy environment and water resources for all in Singapore.
Under MEWR, there are two statutory boards, the National Environment Agency (NEA) & PUB. PUB, the national water agency of Singapore manages the nation’s water supply, water catchment and used water. PUB is also the major supplier of piped drinking water in Singapore. NEA focuses on the implementation of environmental policies to sustain a clean and healthy environment.
The NEA’s Drinking Water Unit (DWU) administers the Environmental Public Health (Quality of Piped Drinking Water) Regulations, 2008 to regulate the quality of piped drinking water supplied by water suppliers in Singapore. Under this regulation, all the drinking water suppliers in Singapore, including PUB, are required to comply with the stipulated water quality standards as listed in the Schedule of the EPH Regulations. The regulation also requires water suppliers to conduct sampling and testing of piped drinking water that they supply and implement water safety plans to minimize the likelihood of any piped drinking water fail to comply with the water quality standards.
Research and Development
We have incurred $Nil on research and development as of to date.
Compliance with Environmental Laws
To our knowledge, we are not subject to any environmental laws which are cause of concern among management.
We intend on using sustainable packaging in all areas of our operations. There are no regulations currently in place that require such practices.
Employees
As of to date, we had no full-time employees and no part-time employees. We have engaged a consultant who provides various services to our company.
Principal Business Office & Administrative Branch Office
Our administrative office for North American investor relations and U.S. regulatory reporting is located at 245 East Liberty Street, Suite 200, Reno, Nevada. Telephone: 1-702-637-6144.
ITEM 1A.
ITEM 1A. RISK FACTORS Any of the following risks could materially adversely affect our business, financial condition, or operating results.
All parties and individuals reviewing this Annual Report on Form 10K and considering us as an investment should be aware of the financial risk involved. When deciding whether to invest or not, careful review of the risk factors set forth herein and consideration of forward-looking statements contained in this registration statement should be adhered to. Prospective investors should be aware of the difficulties encountered as we face all the risks including competition, and the need for additional working capital. The likelihood of our success must be considered in light of the problems and expenses that are frequently encountered in connection with operations in the competitive environment in which we will be operating.
***You should read the following risk factors carefully before purchasing our common stock. ***
RISKS RELATING TO OUR BUSINESS
We have a limited operating history upon which an evaluation of our prospects can be made. For that reason, it would be difficult for a potential investor to judge our prospects for success.
We were organized in July 2010. We entered into the Agreement with Oxford in June 2012. We have had limited operations since our inception from which to evaluate our business and prospects. There can be no assurance that our future proposed operations will be implemented successfully or that we will have the ability to generate profits. If we are unable to sustain our operations, you may lose your entire investment. We face all the risks inherent in a new business, including the expenses, difficulties, complications and delays frequently encountered in connection with conducting operations, including capital requirements and management's potential underestimation of initial and ongoing costs. As a new business, we may encounter delays and other problems in connection with the methods of product distribution that we implement. We also face the risk that we will not be able to effectively implement our business plan. In evaluating our business and prospects, these difficulties should be considered. If we are not effective in addressing these risks, we will not operate profitably and we may not have adequate working capital to meet our obligations as they become due.
Management has no experience in the bottled water industry.
Our management and management of Lumut have no experience in the bottled water industry or any experience relating to distribution and sales of bottled water. In the event that we establish joint venture operations for bottled water distribution, we will initially rely on third party consultants to provide expertise. There can be no assurance that we will be able to retain qualified professionals nor can there be assurance we will have the working capital to sustain these services. If we cannot sustain these services, our business will fail.
We must hire qualified engineering and professional services personnel.
If we establish operations using Water Conversion Technology, we cannot be certain that we can attract or retain a sufficient number of highly qualified engineers and professional services personnel to efficiently maintain and enhance our operations. To meet our needs for engineers and professional services personnel, we may use more costly third-party contractors and consultants to supplement our own staff. Our business may be harmed if we are unable to establish and maintain relationships with third-party implementation providers.
If we do not receive shareholder loans loans we may be unable to continue meeting our minimum funding requirements.
We will require shareholder loans to meet our working capital needs. Our Company President guarantees funding our working capital needs for the next 12 months however, we have no formalized agreements with shareholders guaranteeing that any required funding will be available to us. We may exhaust this source of funding at any time, which would cause us to cease operations.
If we do not receive funding through private placements or shareholder as we may be unable to continue meeting our minimum funding requirements.
We require short term funding in the amount of approximately $ 33,000 in the next 12 months to fund our operations. Although our shareholders are committed to providing the necessary funding in order to generate revenues they are not obligated to do so. We have no formal agreements with our shareholders. If we do not receive shareholder loans or any other form of funding, our operations would cease indefinitely.
We are likely to incur losses.
We expect that we will incur losses for the next 6 months as we expect to incur costs relating to establishing operations in Singapore. There can be no assurances that we will ever be profitable.
We may subject to additional risks in a foreign country.
We will be operating in Singapore and therefore will be subject to risks inherent in business operations outside of the United States. These risks include, for example, currency fluctuations, regulatory problems, punitive tariffs, unstable local tax policies, trade embargoes, risks related to shipment of raw materials and finished goods across national borders and cultural and language differences. Foreign economies may differ favorably or unfavorably from the United States economy in growth of gross national product, rate of inflation, market development, rate of savings, and capital investment, resource self-sufficiency and balance of payments positions, and in other respects.
We may not be able to compete effectively against competitors, which could force us to curtail or cease business operations.
Competitors may have significantly greater name recognition, financial resources and larger distribution channels. If we are not able to compete effectively against our competitors, we will be forced to curtail or cease our business operations. We do not have any market share in the industry at this time.
We are dependent on the services of our President and the loss of his services could have a material adverse effect on our ability to carry on business.
We are substantially dependent upon the efforts and skills of our company President, Mr. Maurice Sale. We do not have an employment contract and thus he has no obligation to fulfill his capacities as President for any specified period of time. The loss of the services of Mr. Sale will have a material effect on our business in that we would not have the necessary leadership to continue operations.
Our shareholders may not be able to enforce U.S. civil liabilities claims.
Our assets are located outside the United States and our sole director and officer are located outside the United States. As a result, it may be difficult to effect service of process within the United States upon these persons. In addition, a shareholder should not assume that the courts in any other country (i) would enforce judgments of U.S. courts obtained in actions against us or such persons predicated upon the civil liability provisions of the U.S. federal securities laws or other laws of the United States, or (ii) would enforce, in original actions, liabilities against us or such persons predicated upon the U.S. federal securities laws or other laws of the United States.
RISKS RELATED TO OUR COMMON STOCK
There is currently no trading market for our Common Stock, and liquidity of shares of our Common Stock is limited.
There has been no public market for our securities and there can be no assurance that an active trading market for the securities offered herein will develop or be sustained. After the effective date of the registration statement of which this prospectus is a part, we intend to identify a market maker to file an application with the Financial Industry Regulatory Authority (“FINRA”) to have our common stock quoted on the Over-the-Counter Bulletin Board. We must satisfy certain criteria in order for our application to be accepted. We do not currently have a market maker willing to participate in this application process, and even if we identify a market maker, there can be no assurance as to whether we will meet the requisite criteria or that our application will be accepted. Our common stock may never be quoted on the Over-the-Counter Bulletin Board or a public market for our common stock may not materialize if it becomes quoted.
If our securities are not eligible for initial or continued quotation on the Over-the-Counter Bulletin Board or if a public trading market does not develop, purchasers of the common stock may have difficulty selling or be unable to sell their securities should they desire to do so, rendering their shares effectively worthless and resulting in a complete loss of their investment.
FINRA sales practice requirements may also limit a stockholder’s ability to buy and sell our stock.
In addition to the penny stock rules promulgated by the SEC, FINRA rules require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker dealers to recommend that their customers buy our common stock, which may limit the ability to buy and sell our stock and have an adverse effect on the market value for our shares.
An investor’s ability to trade our common stock may be limited by trading volume.
A consistently active trading market for our common stock may not occur on the OTCBB. A limited trading volume may prevent our shareholders from selling shares at such times or in such amounts as they may otherwise desire.
Because we will not pay dividends in the foreseeable future, stockholders will only benefit from owning common stock if it appreciates.
We have never paid dividends on our common stock and we do not intend to do so in the foreseeable future. We intend to retain any future earnings to finance our growth. Accordingly, any shareholder who anticipates the need for current dividends from his investment should not purchase our common stock.
We intend to attempt to have our common stock quoted on the OTC Bulletin Board, which will limit the liquidity and price of our securities more than if our securities were quoted or listed on a national exchange.
Initially, our securities will be traded in the over-the-counter market. We intend to commence the process of obtaining a quotation of our common stock on the OTC Bulletin Board (“OTCBB”). In order for our common stock to trade on the OTCBB, a registered broker-dealer, serving as a market maker, must be willing to list bid and ask quotations for our common stock, sponsor our listing on the OTCBB, and file an application with the OTCBB on our behalf to make a market in our common stock. It is not possible to predict how long it may take to obtain a listing on the OTCBB. In the event an application for quotation of our common stock is submitted to the OTCBB, there can be no guaranty that the OTCBB will approve the application. Quotation of our securities on the OTC Bulletin Board will limit the liquidity and price of our securities more than if our securities were quoted or listed on a national exchange.
Trading On The OTC Bulletin Board May Be Volatile And Sporadic, Which Could Depress The Market Price Of Our Common Stock And Make It Difficult For Our Stockholders To Resell Their Shares.
Trading in stock quoted on the OTC Bulletin Board is often thin and characterized by wide fluctuations in trading prices, due to many factors that may have little to do with our operations or business prospects. This volatility could depress the market price of our common stock for reasons unrelated to operating performance. Moreover, the OTC Bulletin Board is not a stock exchange, and trading of securities on the OTC Bulletin Board is often more sporadic than the trading of securities listed on a quotation system like NASDAQ or a stock exchange like Amex. Accordingly, shareholders may have difficulty reselling any of their shares.
Trading Of Our Stock May Be Restricted By The SEC’s Penny Stock Regulations And FINRA’s Sales Practice Requirements, Which May Limit A Stockholder’s Ability To Buy And Sell Our Stock.
The Securities and Exchange Commission has adopted Rule 15g-9 which generally defines “penny stock” to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and “accredited investors”. The term “accredited investor” refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in, and limit the marketability of, our common stock.
In addition to the “penny stock” rules promulgated by the Securities and Exchange Commission, the Financial Industry Regulatory Authority has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, the Financial Industry Regulatory Authority believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers. The Financial Industry Regulatory Authority’s requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock.
If we issue additional shares in the future, it will result in the dilution of our existing shareholders.
Our board of directors may choose to issue some or all of such shares to acquire one or more businesses or to provide additional financing in the future. The issuance of any such shares will result in a reduction of the book value and market price of the outstanding shares of our common stock. If we issue any such additional shares, such issuance will cause a reduction in the proportionate ownership and voting power of all current shareholders. Further, such issuance may result in a change of control of our corporation.
Our stock is substantially controlled by one shareholder for the foreseeable future and as a result, that shareholder will be able to control our overall direction.
Our sole director and officer and principal shareholder own 67% of our outstanding shares. As a result, they will be able to control the outcome of all matters requiring stockholder approval and will be able to elect all of our directors. Such control, which may have the effect of delaying, deferring or preventing a change of control, is likely to continue for the foreseeable future and significantly diminishes control and influence which future stockholders may have in our company. See "Principal Stockholders."
ITEM 1B.
ITEM 1B. UNRESOLVED STAFF COMMENTS None
ITEM 2.
ITEM 2. PROPERTIES
Principal Business Office
Our principal business office is located at 245 East Liberty Street, Suite 200, Reno, Nevada, 89501.
We conduct our business in the office of a company controlled by a shareholder. There has been no charge for this use. If there was a charge, it would be insignificant.
There are currently no proposed programs for the renovation, improvement or development of the facilities that we currently use. We believe that this arrangement is suitable given the nature of our current operations, and we also believe that we will not need to lease additional administrative offices in the immediate future.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our director, officer or affiliate, or any registered or beneficial stockholder, is an adverse party or has a material interest adverse to our interest.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
PART II
ITEM 5.
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
MARKET FOR COMMON EQUITY
Market Information
We are currently not listed on any exchange.
Stockholders of Our Common Shares
As of July 31, 2014, we had 34,510,000 shares of our common stock outstanding.
Dividend Policy
We have not declared or paid any cash dividends on our common stock or other securities and do not anticipate paying any cash dividends in the foreseeable future. Any future determination to pay cash dividends will be at the discretion of the Board of Directors and will be dependent upon our financial condition, results of operations, capital requirements, and such other factors as the Board of Directors deem relevant.
Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities
The following sets forth certain information concerning securities which were sold or issued by us without the registration of the securities under the Securities Act of 1933 in reliance on exemptions from such registration requirements within the past three years:
On May 30, 2011, we issued an aggregate of 25,010,000 shares of Common Stock to Maurice Sale for an aggregate price equal to $2,501, pursuant to the terms and conditions set forth in that certain common stock purchase agreement (the “Common Stock Purchase Agreement”).
The above noted shares were issued to reimburse Maurice Sale for expenses paid on behalf of the Company totaling $2,501, consist of incorporation costs, resident agent costs and a fee for preparing the necessary documentation as required for this Registration Statement.
On February 27, 2012, the Company entered into share subscription agreements with 30 shareholders for the sale of 10,500,000 common shares at $ 0.001 per share for total proceeds of $ 10,500. Each of the 30 shareholders holds less than 5% of the outstanding shares. The proceeds were used to funding working capital needs, a portion of such proceeds were used for the acquisition of the license from Oxford on June 10, 2012.
The common stock issuance was exempt from registration pursuant to Regulation S promulgated under the Act. We have complied with the requirements of Regulation S by having no directed selling efforts made in the United States, ensuring that the investors are non-U.S. persons with addresses in a foreign country and having the investors make representation to us certifying that he or she is not a U.S. person and is not acquiring the common stock for the account or benefit of a U.S. person, other than persons who purchased common stock in transactions exempt from the registration requirements of the Securities Act; and also agrees only to sell the common stock in accordance with the registration provisions of the Act or an exemption there from, or in accordance with the provisions of the Regulation.
Our Company president, Mr. Sale previously held 25,010,000 Common Stock representing 70% of outstanding stock. On July 8, 2014, Mr. Sale converted 1,000,000 of his Common Stock to 1,000,000 Preferred Stock. Both Preferred and Common Stock have a par value of $ 0.0001 and the conversion price was deemed at par value. The conversion allows Mr. Sale to hold 24,010,000 Common Stock representing 67% of outstanding stock and corresponding number of votes and 1,000,000 Preferred Stock with 100,000,000 votes. The conversion of Mr. Sale’s Common Stock to Preferred Stock was approved by majority vote.
As of July 31, 2014, 34,510,000 common shares were outstanding and 1,000,000 preferred shares were outstanding.
Equity Compensation Plan Information
Except as disclosed below, we do not have a stock option plan in favor of any director, officer, consultant or employee of our company.
Stock Option Grants
There are no outstanding options or warrants to purchase, or securities convertible into shares or equity compensation plans. Our issued and outstanding shares could be sold at the appropriate time pursuant to Rule 144 of the Securities Act.
Securities Authorized For Issuance Under Equity Compensation Plans
See above “Recent Sales of Securities”.
Purchase of Equity Securities by the Issuer and Affiliated Purchasers
We did not purchase any of our shares of common stock or other securities during our fourth quarter of our fiscal year ended July 31, 2014.
ITEM 6.
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
ITEM 7.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Cautionary Notice Regarding Forward Looking Statements
We desire to take advantage of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. This filing contains a number of forward-looking statements which reflect management’s current views and expectations with respect to our business, strategies, products, future results and events, and financial performance. All statements made in this filing other than statements of historical fact, including statements addressing operating performance, events, or developments which management expects or anticipates will or may occur in the future, including statements related to distributor channels, volume growth, revenues, profitability, new products, adequacy of funds from operations, statements expressing general optimism about future operating results, and non-historical information, are forward looking statements. In particular, the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “may,” variations of such words, and similar expressions identify forward-looking statements, but are not the exclusive means of identifying such statements, and their absence does not mean that the statement is not forward-looking. These forward-looking statements are subject to certain risks and uncertainties, including those discussed below. Our actual results, performance or achievements could differ materially from historical results as well as those expressed in, anticipated, or implied by these forward-looking statements. We do not undertake any obligation to revise these forward-looking statements to reflect any future events or circumstances.
Readers should not place undue reliance on these forward-looking statements, which are based on management’s current expectations and projections about future events, are not guarantees of future performance, are subject to risks, uncertainties and assumptions (including those described below), and apply only as of the date of this filing. Our actual results, performance or achievements could differ materially from the results expressed in, or implied by, these forward-looking statements. Factors which could cause or contribute to such differences include, but are not limited to, the risks to be discussed in our next Annual Report on Form 10-K and in the press releases and other communications to shareholders issued by us from time to time which attempt to advise interested parties of the risks and factors which may affect our business. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
The following discussion should be read in conjunction with our financial statements and the related notes included herein. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Factors that could cause or contribute to such differences include, but are not limited to those discussed below and elsewhere in this report, particularly in the section entitled “Risk Factors”.
Our financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.
OVERVIEW.
Critical Accounting Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. The application of GAAP involves the exercise of varying degrees of judgment. The resulting accounting estimates will not always precisely equal the related actual results. Management considers an accounting estimate to be critical if:
- assumptions are required to be made; and
- changes in estimates could have a material effect on our financial statements.
We have determined that the calculation of the fair value of equity securities issued, specifically Common Shares issued for services rendered by our President and also issued to settle debt incurred, meet those criteria of a significant estimate.
Management’s Discussion and Analysis of Financial Condition and Results of Operation
Description of Business
On June 10, 2012, we entered into the Agreement” with Oxford, to license proprietary technology relating to converting municipal water to oxygen enriched pH balanced water (the “Water Conversion Technology”). We obtained exclusive licensing rights in the country of Singapore for a period of 20 years. We will have exclusive rights to sub-license, establish joint ventures and to commercialize products through the methods of the Water Conversion Technology. The license fee of $40,000 was paid in August of 2012. We are subject to a royalty of 2% on licensee fees received from appointed sub-licensees as well as 2% on gross sales generated from operations. The Agreement also provides that we are obligated to establish water bottling operations by December 31, 2013. In the event that we have not established operations by this date, Oxford has a right to void the Agreement. On December 9, 2013, Oxford granted us an extension from December 31, 2013 to December 31, 2014 for consideration of $20,000. The extension fee has been paid in full.
On June 13, 2012, we entered into a Sub-License Agreement with Lumut, to grant exclusive rights to sub-license, establish joint ventures and to commercialize products through the methods of the Water Conversion Technology for a period of 20 years in the country of Singapore. Lumut is subject to a sub-license fee of $64,000 payable in monthly installments of $4,000 commencing August 15, 2012 and ending December 15, 2013. As per our Agreement with Oxford, 2% of any sub license fees received is payable on a quarterly basis. As additional consideration, gross sales from products generated from use of the Water Conversion Technology will be subject to a 5% royalty fee of which 2% is payable to Oxford and 3% will be retained by us. Lumut is required by our agreement to establish bottled water operations by December 31, 2013 and in the event that this is not achieved, our agreement with Lumut will be void. License fees paid are not refundable. On December 9, 2013, we granted Lumut an extension from December 31, 2013 to December 31, 2014 (“Extension Agreement”) for consideration of $ 25,000 payable in five monthly installments commencing February 1, 2014 through June 1, 2014. We are currently negotiation a further extension with Oxford and will finalize this matter prior to December 31, 2014.
We intend to establish joint venture operations using the Water Conversion Technology for bottled water distribution in Singapore with our appointed sub licensee, Lumut. The cost of establishing such operations cannot be determined at this time. We also intend to expand our scope of business to shale oil exploration in Peru. We intend on acquiring 85% share of a Peruvian company with existing rights to exploit, mine, market, light crude over a 6,000 square kilometer designated shale property.
On July 8, 2014, we entered into a Consulting Service Agreement with MGI to assist in the acquisition of an 85% share of a Peruvian company for consideration of a $175,000 fee payable upon completion of the acquisition. The fee shall cover expenditures made by MGI incurred during the negotiation process and deemed necessary for an acquisition to materialize. MGI has incurred such expenses voluntarily we are not required to reimburse these expenses unless we decide to proceed with the acquisition. The terms of the agreement provides that the acquisition must be made prior to December 31, 2014. In the event that the acquisition is not made, the agreement shall be terminated unless both parties agree to an extension in time.
We intend on raising sufficient working capital to fund the acquisition and the fee payable to MGI through shareholder loans and private placements. There can be no assurance that such funds will be raised or the acquisition will materialize.
Our expenses are expected to vary and we cannot determine trends in our expenditures given our lack of operating history.
On September 29, 2014, the Company received a penalty assessment from the IRS in the amount of $10,000 for failure to provide information with respect to certain foreign owned US Corporations on Form 5472 - Information Return of a 25% Foreign Owned US Corporation for the tax period ending 2013. The Company has filed in its tax returns Form 5472 and is disputing this claim and has replied to the IRS stating these facts and as of this report date, has not resolved the matter with the IRS.
Results of Operations
Revenues:
For the year ended July 31, 2014, we generated revenues of $ 25,000 from extension fees from Lumut as per our agreement dated December 9, 2013. For the year ended July 31, 2013, we generated revenues of $64,000 solely from sub license fees as per our July 13, 2012 agreement with Lumut.
Revenue generated from license fees and extension fees are recognized as 100% revenue upon the commencement date of the agreements. There can be no assurance that such fees will be paid on a timely basis.
Expenses:
Our expenses for the fiscal 2014 and 2013 year consist of the following:
Year Ended
July 31, 2014
Year Ended
July 31, 2013
Audit fee
$28,213
$10,515
Allowance for doubtful accounts
23,000
15,000
Extension fee
20,000
-
Professional and management fees
10,345
9,500
Amortization
4,528
3,833
Impairment charge
3,000
9,000
Other
3,746
2,717
Total
$92,832
$50,565
Audit fee - Our audit expenses have increased as a result of an increase in the 2014 audit fee and additional charges for the re-audit of our 2013 fiscal year. The re-audit was deemed necessary as a result of the revocation of our previous auditor’s registration with the PCAOB. Accruals were also adjusted to reflect actual costs.
Extension fee - Oxford granted us an extension on establishing bottled water operations from December 31, 2013 to December 31, 2014 for consideration of $20,000. This fee has been paid in full. A further extension is available to us however the consideration for such extension has not been determined. We expect to finalize any further extensions prior to November 30, 2014.
Professional and management fees - Our Company president charges a $2,500 management fee which is accrued to paid in capital each fiscal year and expected to remain consistent. Professional fees are incurred for preparation of periodic reports and related bookkeeping. Amounts charged are $1,000 per quarter and $4,000 per year end. The increase in professional fees was as a result of resident agent fees for previous year which were not invoiced until the 2014 fiscal year.
Amortization - The increase in amortization was as a result of decreasing the useful life from the remaining 8 years to 6 years based on an impairment charge assessed. See below “Impairment”.
Allowance for doubtful accounts - These charges are based upon the likelihood of collectability of the account based on past payment patterns. This amount is based on an estimate and assessed by management each quarter. Lumut has made verbal commitments to settle all amounts payable prior to November 30, 2014 and management has based its estimated on these statements. There can be no assurance that such amounts will be settled.
Impairment - We have made a qualitative evaluation of its license agreement which is recorded as an intangible asset. It has determined that it is more likely than not that the value of the asset is less than its carrying value, resulting in impairment. Based on that evaluation we have made a quantitative analysis based on factors including likelihood that the project will be completed, probability that the license will be extended, and the possibility of resale or replacing the licensee and has determined that there is a 30% reduction in the net carrying value of the license at the balance sheet date. Future changes in these inputs are likely to change the value of the intangible asset. The measurement of value will be reviewed quarterly.
Other - The majority of this expense represent charges for Edgar/XBRL costs which on a per quarter basis is expected not to vary however costs of XBRL increase upon increase in disclosures and additional tags allocated. Our current agreement provides a set amount of tags and additional tag allocations are charged on a per tag basis.
Liquidity and Capital Resources
As of July 31, 2014, we had assets totaling $21,983, comprised of cash of $ 344, license fees receivable of $40,000 (less allowance for doubtful accounts of $38,000) and an intangible asset - license of $40,000, less amortization $8,361 and impairment of $12,000. The impairment was based on our estimate of the likelihood of establishing bottled water operations as of December 31, 2014. We foresee that our licensor, Oxford will grant an extension for a fee however such arrangement has not yet materialized.
Not including planned joint venture operations or expansions as mentioned above, our cash requirements for the next twelve months are $ 33,000.
Audit and accounting
$17,000
Consulting fees
7,000
Filing fees
4,000
Miscellaneous
5,000
Total
$33,000
We can provide no assurance that the Company can continue to satisfy its cash requirements for at least the next twelve months.
We expect to sustain our working capital needs with amounts owed from Lumut through sub license fees of $15,000 currently over-due and $25,000 as per the extension agreement. However there can be no assurance that such payment will be made on a timely basis. We also expect to obtain financing through shareholder loans and private placements. Shareholder loans will be without stated terms of repayment or interest. We will not consider taking on any long-term or short-term debt from financial institutions in the immediate future. Shareholders loans may be granted from time to time as required to meet current working capital needs. We have no formal agreement that ensures that we will receive such loans. We may exhaust this source of funding at any time.
We are dependent upon certain related parties to provide continued funding and capital resources. If continued funding and capital resources are unavailable at reasonable terms, we may not be able to implement its plan of operations.
Cash Flows
Operating Activities:
Cash consumed from operating activities for year ended July 31, 2014 was $15,148 and cash consumed by operating activities for the fiscal year ended July 31, 2013 was $953.
July 31, 2014:
Charges not requiring the outlay of cash consist of amortization, allowance for doubtful accounts, impairment of asset, and management fee. The variance from fiscal 2014 and 2013 is discussed above under “Expenses”. The allowance for doubtful accounts was based on the payment patterns of our sole customer. The impairment was primarily based on our quantitative assessment of the value of our license agreement based on the likelihood of establishing bottling operations by December 31, 2014 reduced by the likelihood of a contract extension with our licensor.
Our decrease in accounts receivable, net $8,000 consists of cash payments received from Lumut from sub license fees owed of $33,000 which has been offset against the accrual of extension fees receivable of $25,000, net $8,000. Lumut expects to settle all amounts prior to November 30, 2014 however there can be no assurance that this will materialize.
Our increase in accounts payable are primarily attributed to the increase in audit fees as discussed above under “Expenses”. Additional costs which were extraordinary were costs for re-audit of our 2013 fiscal year.
July 31, 2013:
In July 31, 2013, cash flows provided by operating activities was principally the result of the receipt of $16,000 against the $64,000 sub license fee, partly offset by operating expenses paid in cash. Expenses not requiring the outlay of cash include an allowance for doubtful accounts of $10,000, Impairment of the value of our license agreement in the amount of $9,000, amortization of the license agreement value in the amount of $3,833 and the contribution of services by a manager in the amount of $2,500. In addition, current payables increased by $5,185.
Investing Activities
Our investing activities for the year ended July 31, 2013 consisted of the acquisition of our technology license in the amount of $40,000 pursuant to an obligation incurred in 2012. There were no investing activities involving cash flow in 2014.
Financing Activities
For the year ended July 31, 2014 our cash flow from financing was from $ 12,671 in shareholder loans. For 2013 our cash flows were from $3,000 in shareholder loans. The $12,671 consists primarily of funds advanced to cover audit fees for the quarter and fiscal year end, April 30, 2014 and July 31, 2014, respectively.
Additional capital is required in order to fund our working capital needs and we may receive additional financing through shareholder loans although we have no formal commitments from any shareholders at this time. We will not be considering taking on any long-term or short-term debt from financial institutions in the immediate future. Shareholder and consultant loans may be granted from time to time as required to meet current working capital needs. We have no formal agreement that ensures that we will receive such loans. We may exhaust this source of funding at any time.
Material Commitments
As per our Agreement with Oxford, we are obligated to establish bottled water operations on or before December 31, 2014. If we fail to do so, our agreement with Oxford is void. We may be granted additional extensions for a fee however such arrangements have not materialized. The license fee and extension fees paid to Oxford are not refundable. We have also extended this term as per our agreement with Lumut. The license and extension fees paid by Lumut to us are also not refundable.
Seasonal Aspects
Management is not currently aware of any seasonal aspects which would affect the results of our operations during any particular time of year.
Off Balance Sheet Arrangements
We have no off balance sheet arrangements.
Going Concern
We anticipate that additional funding will be required in the form of equity financing from the sale of our common stock. At this time, we cannot provide investors with any assurance that we will be able to raise sufficient funding from the sale of our common stock or through a loan from our directors to meet our obligations over the next twelve months. We do not have any arrangements in place for any future debt or equity financing.
ITEM 7A.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a “smaller reporting company”, we are not required to provide the information required by this Item.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
July 31, 2014 and 2013
Report of Independent Certified Public Accounting Firm (F-1)
Balance Sheets (F-2)
Statements of Operations (F-3)
Statements of Changes in Stockholders’ Equity (Deficit) (F-4 )
Statements of Cash Flows (F-5)
Notes to Financial Statements (F-6)
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANT
To the Board of Directors and Shareholders of Xtralink Energy Corp.
We have audited the accompanying balance sheets of Xtralink Energy Corp. as of July 31, 2014 and 2013, and the related statements of operations, changes in shareholders' equity, and cash flows for the years ended July 31, 2014 and 2013. These financial statements are the responsibility of the Company management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted the audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate under the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial positions of Xtralink Energy Corp. as of July 31, 2014 and 2013, and the results of its operations and cash flows for the years ended July 31, 2014 and 2013 in conformity with U.S. generally accepted accounting principles.
_________________________________
_________________________________
Michael F. Albanese, CPA
Parsippany, New Jersey
October 27, 2014
-F1-
XTRALINK ENERGY CORP.
BALANCE SHEETS
These accompanying notes are an integral part of these financial statements.
-F2-
XTRALINK ENERGY CORP.
STATEMENTS OF OPERATIONS
For the Years Ended July 31, 2014 and 2013
These accompanying notes are an integral part of these financial statements.
-F3-
XTRALINK ENERGY CORP.
STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT)
FOR THE YEARS ENDED JULY 31, 2014 AND 2013
These accompanying notes are an integral part of these financial statements.
-F4-
XTRALINK ENERGY CORP.
STATEMENTS OF CASH FLOWS
For the Years Ended July 31, 2014 and 2013
These accompanying notes are an integral part of these financial statements.
-F5-
XTRALINK ENERGY CORP.
NOTES TO FINANCIAL STATEMENTS
July 31, 2014
Note 1 - Nature of Operations
Xtralink Energy Corp. was incorporated in Nevada on July 29, 2010. The Company’s business objective is to license Water Conversion Technology through qualified interests and establish bottled water operations through a joint venture.
On June 10, 2012, the Company entered into a Licensing Agreement (the “Agreement”) with Oxford International Inc. (“Oxford”), to license proprietary technology relating to converting municipal water to oxygen enriched pH balanced water (the “Water Conversion Technology”). The Company obtained exclusive licensing rights in the country of Singapore for a period of 20 years. The Company will have exclusive rights to sub-license, establish joint ventures and to commercialize products through the methods of the Water Conversion Technology. The license fee was $ 40,000. The Company is subject to a royalty of 2% on licensee fees received from appointed sub-licensees as well as 2% on gross sales generated from operations. The Company is obligated to establish water bottling operations by December 31, 2013. In the event the Company has not established operations by that date, Oxford has a right to void the Agreement.
On December 9, 2013, the Company signed an addendum to the license agreement with Oxford on June 10, 2012. This addendum will extend the commencement of operations date for one year, from December 31, 2013 until December 31, 2014, for a fee of $20,000. An initial fee of $ 10,000 was paid before December 31, 2013 and the balance was paid in full in July 2014.
On June 13, 2012, the Company entered into a Sub-License Agreement with Lumut Technologies Ltd. (“Lumut”), to grant exclusive rights to sub-license, establish joint ventures and to commercialize products through the methods of the Water Conversion Technology for a period of 20 years in the country of Singapore. Lumut was subject to a sub-license fee of $ 64,000 payable in monthly installments of $ 4,000 commencing August 15, 2012 and ending December 15, 2013. As required by the Agreement with Oxford, 2% of any sub license fees received is payable on a quarterly basis. As additional consideration, gross sales from products generated from use of the Water Conversion Technology will be subject to a 5% royalty fee of which 2% is payable to Oxford and 3% will be retained by the Company. Lumut will also be required to establish bottled water operations by December 31, 2013; in the event that this is not achieved, the Company's agreement with Lumut will be void. License fees paid are not refundable. The Company has a right to participate as a 40% joint venture partner with Lumut for a $ 150,000 investment.
On December 9, 2013, the Company signed an addendum to the Lumut sub license agreement entered into on June 13, 2012. This addendum will extend the terms of the extension granted by Oxford as noted above to allow Lumut an additional year to commence operations by December 31, 2014. Under this extension a fee of $20,000 is due as a lump sum payment or the fee can be paid in monthly installments of $5,000 commencing February 1, 2014 until June 1, 2014, totaling $25,000. Lumut has chosen the installment option.
On July 8, 2014, the Shareholders approved the change of the Registrant name from Xtralink Corp. to Xtralink Energy Corp. to reflect the Company’s intended course of business.
-F6-
XTRALINK ENERGY CORP.
NOTES TO FINANCIAL STATEMENTS
July 31, 2014
Note 1 - Nature of Operations, continued
The Company intends to expand its scope of business to shale oil exploration in Peru. The Company intends on acquiring 85% share of a Peruvian company with existing rights to exploit, mine, market, light crude over a 6,000 square kilometer designated shale property.
On July 8, 2014, the Company entered into a Consulting Service Agreement with Magnum Group International Inc. (“MGI”) to assist in the acquisition of an 85% share of a Peruvian company for consideration of a $ 175,000 fee payable upon completion of the acquisition. The fee shall cover expenditures made by MGI incurred during the negotiation process and deemed necessary for an acquisition to materialize. MGI has incurred such expenses voluntarily and the Company is not required to reimburse these expenses unless the Company decides to proceed with the acquisition. The terms of the agreement provides that the acquisition must be made prior to December 31, 2014. In the event that the acquisition is not made, the agreement shall be terminated unless both parties agree to an extension in time.
Note 2 - Amendments to Development Stage Entity Reporting Requirements
The Company follows Topic 915 of the (FASB) Accounting Standards Codification (ASC) for disclosures on development stage reporting requirements. Topic 915 eliminates the requirements for development stage entities to (1) present inception to date information in the statements of income, cash flows, and shareholder’s equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years I had been in the development stage. Topic 915 is effective for annual reporting periods beginning after December 15, 2014 and interims therein. Early application of Topic 915 is permitted for any annual reporting period for which the entities financial statements have not been issued or made available for issuance. The Company has opted to adopt Topic 915 earlier than the effective date as this did not have a material effect on the financial statements.
Note 3 - Commitments and Contingencies
The Company is obligated to commence bottled water operations by December 31, 2014 under various extension agreements mentioned above in Note 1. There is reliance on a single project, and also a concentration in customer base and geographic area. As stated in Note 1 above the Company has a right to participate as a 40% joint venture partner with Lumut for a $ 150,000 investment. See Note 1 for details.
As stated in Note 1, the Company has entered into a Consulting Service Agreement with MGI to assist in the acquisition of an 85% share of a Peruvian company for consideration of a $ 175,000 fee payable upon completion of the acquisition. See Note 1 for details.
Note 4 - Significant Accounting Policies
Basis of presentation
The Company's financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP").
Use of estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates.
Cash equivalents
The Company considers all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents.
Accounts Receivable
The Company has established an allowance for doubtful accounts based on customer history and payment patterns.
-F7-
XTRALINK ENERGY CORP.
NOTES TO FINANCIAL STATEMENTS
July 31, 2014
Note 4 - Significant Accounting Policies, continued
Fair value of financial instruments
The Company follows ASC 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and ASC 820-10-35-37 of the FASB Accounting Standards Codification ("ASC 820-10-35-37") to measure the fair value of its financial instruments. ASC 820-10-35-37 established a framework for measuring fair value (U.S. GAAP), and expanded disclosure requirements about fair value measurements. To increase consistency and comparability in fair value measurement and related disclosures, ASC 820-10-35-37 established a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs.
The three (3) levels of fair value hierarchy defined by ASC 820-10-35-37 are described below:
Level 1
Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
Level 2
Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
Level 3
Pricing inputs that are generally unobservable inputs and not corroborated by market data.
Concentrations
The Company has an exclusive technology arrangement to license and operate an oxygenated and PH balanced water bottling system in the territory of Singapore. It is committed under that license agreement to begin bottling water by December 31, 2013. The Company has entered into an agreement with a third party, Lumut Technologies, LTD., to develop and operate the bottling plant. This has created concentrations in location and customer base.
Accounts receivable has a concentration in one customer. This customer has a poor payment history and a large overdue account balance.
Amortization
Capitalized license rights as described in Note 1 are being amortized over a ten year period beginning August 15, 2012.
-F8-
XTRALINK ENERGY CORP.
NOTES TO FINANCIAL STATEMENTS
July 31, 2014
Note 4 - Significant Accounting Policies, continued
Income taxes
The Company follows Section 740-10-30 of the FASB Accounting Standards Codification, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Statements of Operations in the period that includes the enactment date.
The Company adopted section 740-10-25 of the FASB Accounting Standards Codification ("Section 740-10-25"). Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under Section 740-10-25, the Registrant may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Section 740-10-25 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. The Registrant had no liabilities for unrecognized income tax benefits according to the provisions of Section 740-10-25.
Net income (loss) per common share
Net income (loss) per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net income per share is computed by dividing net income by the weighted average number of shares of common stock and potentially outstanding shares of common stock during each period.
Recently issued accounting standards
Management does not believe that any recently issued accounting pronouncements, whether effective or not if adopted, would have a material effect on the accompanying financial statements.
Revenue Recognition
Revenue is derived from licensing agreements. Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the contract amount is fixed or determinable, and collectability is probable.
-F9-
XTRALINK ENERGY CORP.
NOTES TO FINANCIAL STATEMENTS
July 31, 2014
Note 5 - Impairment of Assets
The Company has made a qualitative evaluation of its license agreement which is recorded as an intangible asset. It has determined that it is more likely than not that the value of the asset is less than its carrying value, resulting in impairment. Based on that evaluation the Company has made a quantitative analysis based on factors including likelihood that the project will be completed, probability that the license will be extended, and the possibility of resale or replacing the licensee and has determined that there is a 30% reduction in the net carrying value of the license at the balance sheet date. Future changes in these inputs are likely to change the value of the intangible asset. The measurement of value will be reviewed quarterly.
Year Ended
July 31, 2014
Beginning Value of License based on Cost
$40,000
Amortization
(8,361)
Impairment
(12,000)
Ending balance, July 31, 2014
$19,639
Amortization is included in operating expenses and impairment is shown as a separate line item on the statement of operations and balance sheet.
Note 6 - Related Party Transaction
The Company neither rents nor owns any properties. The Company utilizes the office space and equipment of its resident agent at no charge. Management estimates the value of such space and equipment to be immaterial.
During year ended July 31, 2014 and 2013, the Company president, advanced $ 12,671 and $ 3,000, respectively, to fund working capital needs. Those advances do not bear interest and have no stated terms for repayment. Also during the year ended July 31, 2014 and July 31, 2013, Mr. Sale contributed his services valued at $ 2,500 in each year; these amounts were added to Paid in Capital.
The Company president previously held 25,010,000 Common Stock representing 70% of outstanding stock. On July 8, 2014, Mr. Sale converted 1,000,000 of his Common Stock to 1,000,000 Preferred Stock. Both Preferred and Common Stock have a par value of $ 0.0001 and the conversion price was deemed at par value. The conversion allows Mr. Sale to hold 24,010,000 Common Stock representing 67% of outstanding stock and corresponding number of votes and 1,000,000 Preferred Stock with 100,000,000 votes. The conversion of Mr. Sale’s Common Stock to Preferred Stock was approved by majority vote.
On July 8, 2014, the Company entered into a consulting service agreement with MGI (Note 1). MGI holds 1,750,000 shares of the Company's common stock for the fiscal years ended July 31, 2014 and 2013 and holds the master license to the Water Conversion Technology the Company has licensed from Oxford as per the agreement dated June 10, 2012.
-F10-
XTRALINK ENERGY CORP.
NOTES TO FINANCIAL STATEMENTS
July 31, 2014
Note 7 - Common and Preferred Stock
Effective February 27, 2012, the Company entered into share subscription agreements with 30 shareholders for the sale of 10,500,000 common shares at $ 0.001 per share for total proceeds of $ 10,500.
On July 8, 2014, the shareholders of the Company approved an amendment to the Articles of Incorporation and Bylaws to change the number of the authorized capital of common stock of the Company from Two Hundred Million (200,000,000) to One Hundred Ninety Five Million (195,000,000), par value of $ 0.0001. Each common stock has one (1) vote. The shareholders also approved the establishment of a Preferred Stock class with an authorized capital of Five Million (5,000,000), par value of $ 0.0001. Each Preferred Stock has one hundred (100) votes, rank senior to Common Stock, shall share dividend payments with Common Stock holders, have senior liquidation preferences, have no conversion rights, entitled to vote to change terms issued to Preferred Stock holders, and are entitled to maintain shareholding percentage in the event of a stock split or an issuance of a Common Stock dividend.
Note 8 - Revenue Recognition
The Company has treated the sub-license and extension agreements as a sale with recognition of revenue 100% realized upon commencement of the agreements with Lumut. Total revenue of $ 25,000 as of July 31, 2014 consists of revenue recognized from the extension agreement dated December 9, 2013. Revenue of $ 64,000 as of July 31, 2013 consists of revenue recognized from the sub license agreement dated July 13, 2012.
Note 9 - Income Taxes
The Company has experienced losses since inception. As a result, it has incurred no Federal income tax. The Internal Revenue Code allows net operating losses (NOL's) to be carried forward and applied against future profits for a period of twenty years. The total of these tax basis NOL's at July 31, 2014 was $ 80,909 . The potential benefit of these NOL's has been recognized on the books of the Company, but it has been offset by a valuation allowance.
Under provisions of the pronouncements of the FASB, recognition of deferred tax assets is permitted unless it is more likely than not that the assets will not be realized. The Company has recorded a noncurrent deferred tax asset as presented below. The valuation allowance increased during 2014 by $ 10,572, the result of a tax basis loss during the year ended July 31, 2014.
Deferred Tax Asset
$ 12,136
Valuation Allowance
(12,136)
Balance Recognized
$ 0
If not used, the NOL carryforward will expire in the years ended July 31 as listed below:
$ 10,433
41,172
29,304
Total
$ 80,909
A reconciliation of the taxes calculated by applying statutory rates to pretax income with the provisions for income taxes is presented below:
Taxes calculated using the statutory rate
$ -
$ -
Tax effect of net operating losses
10,572
(1,152)
Tax effect of revenue deferral
(10,572)
1,152
Provision for income taxes
$ -
$ -
Under normal circumstances, the Internal Revenue Service is authorized to audit income tax returns during a three year period after the returns are filed. In unusual circumstances, the period may be longer. Barring unusual circumstances, tax returns for the years ended July 31, 2011 to 2014 were still exposed to audit as of July 31, 2014.
-F11-
XTRALINK ENERGY CORP.
NOTES TO FINANCIAL STATEMENTS
July 31, 2014
Note 10 - Supplemental Cash Flows Information
There was no cash paid during either the year 2014 and 2013 for interest or income taxes.
There were no non cash financing or investing transactions during either the year 2014 and 2013. During the July 31, 2012 year, an intangible asset was acquired for $40,000, which was paid in August 2012. During each the years ended July 31, 2014 and 2013, $2,500 was accrued for the services of the CEO, Maurice Sales and added to paid in capital.
Note 11 - Expenses
Major categories of expense include the following:
Year Ended
July 31, 2014
Year Ended
July 31, 2013
Audit fee
$ 28,213
$ 10,515
Allowance for doubtful accounts
23,000
15,000
Extension fee
20,000
-
Professional and management fees
10,345
9,500
Amortization
4,528
3,833
Impairment charge
3,000
9,000
Other
3,746
2,717
Total
$ 92,832
$ 50,565
Note 12 - Resignation of Independent Accountant
Effective May 12, 2014, the Company’s independent accountant, Mr. Robert Jeffrey of Jeffrey and Company resigned. His resignation was as a result of notification that Jeffery and Company is no longer registered with the Public Company Accounting Oversight Board.
On June 2, 2014, the Company appointed Michael F. Albanese, CPA as our independent accountant. Mr. Albanese is registered with the Public Company Accounting Oversight Board.
Note 13 - Subsequent Event
On September 29, 2014, the Company received a penalty assessment from the IRS in the amount of $ 10,000 for failure to provide information with respect to certain foreign owned US Corporations on Form 5472 - Information Return of a 25% Foreign Owned US Corporation for the tax period ending 2013. The Company has filed in its tax returns Form 5472 and is disputing this claim and has replied to the IRS stating these facts and as of this report date, has not resolved the matter with the IRS.
-F12-
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL STATEMENTS
None.
ITEM 9A(T).
ITEM 9A(T). CONTROLS AND PROCEDURES
Management’s Report on Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934 , as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and our chief financial officer (who is acting as our principal executive officer, principal financial officer and principle accounting officer) to allow for timely decisions regarding required disclosure.
As of July 31, 2014, the end of the fiscal period covered by this report, we carried out an evaluation, under the supervision of our chief executive officer, with the participation of our chief financial officer, of the effectiveness of the design and the operation of our disclosure controls and procedures. The officer concluded that the disclosure controls and procedures were effective as of the end of the period covered by this report.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of control procedures. The objectives of internal control include providing management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, and that transactions are executed in accordance with management’s authorization and recorded properly to permit the preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States. Our management assessed the effectiveness of our internal control over financial reporting as of July 31, 2014. 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. Our management has concluded that, as of July 31, 2014, our internal control over financial reporting was effective.
This annual report does not include an attestation report of our company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit our company to provide only management’s report in this annual report.
Inherent limitations on effectiveness of controls
Internal control over financial reporting has inherent limitations which include but is not limited to the use of independent professionals for advice and guidance, interpretation of existing and/or changing rules and principles, segregation of management duties, scale of organization, and personnel factors. Internal control over financial reporting is a process which involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements on a timely basis, however these inherent limitations are known features of the financial reporting process and it is possible to design into the process safeguards to reduce, though not eliminate, this risk. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. 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.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal controls over financial reporting that occurred during the year ended July 31, 2014 that have materially or are reasonably likely to materially affect, our internal controls over financial reporting.
ITEM 9B.
ITEM 9B. OTHER INFORMATION
On June 9, 2014, we filed a Form 8K, Item 4.01 announcing the resignation of our independent accountant and the appointment of a successor effective June 2, 2014.
On June 17, 2014, we filed a Form 8K/A, Item 4.01 and 9.01 to amend the original Form 8K filed on June 9, 2014 to comply with Regulation SK Item 304 and to also include exhibit 16.1 containing the auditor consent letter.
On July 16, 2014, we filed a Form 8K, Item 1.01, 3.03, 5.03 and 9.01 to announce our agreement with MGI dated July 8, 2014. In addition, on July 8, 2014, the shareholders approved an amendment to the Articles of Incorporation and Bylaws to change the number of the authorized capital of common stock from Two Hundred Million (200,000,000) to One Hundred Ninety Five Million (195,000,000), par value of $ 0.0001. Each common stock has one (1) vote. The shareholders also approved the establishment of a Preferred Stock class with an authorized capital of Five Million (5,000,000), par value of $ 0.0001. Each Preferred Stock has one hundred (100) votes. Our Company President, Mr. Sale converted 1,000,000 shares of his Common Stock to 1,000,000 shares of Preferred stock as approved by a majority vote.
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS
The following information sets forth the name of our sole officer and director, their present positions, age and biographical information within the last 5 years. Also provided is a brief description of the business experience of our director and executive officer and significant employees during the past five years and an indication of directorships held by such director in other companies subject to the reporting requirements of the Securities Exchange Act.
(1) Directors hold office until the next annual stockholders’ meeting or until a successor or successors are elected and appointed.
Maurice Sale
Mr. Sale is our founding director and officer appointed on August 3, 2010 and in continuing to have him act as a director and officer, it is the Company’s view that his general business experience in a wide variety of industries, and his experience with reporting companies warrant his retention by the Company. Mr. Sale will be responsible for all areas of operations.
For the past 5 years, Mrs. Sale has been a self-employed property management consultant in Kingston Jamaica.
Mr. Maurice Sale has over 40 years’ experience in life insurance sales and administration. He was formerly a Director of the Life Underwriters Association of Jamaica as well as Trustee of the LOJ Pension Plan.
Mr. Sale became a Chartered Life Underwriter (CLU) in 1969 and later was appointed a Justice of the Peace by the Government of Jamaica.
Family Relationships:
There are no family relationships among our director or executive officer.
Involvement in Certain Legal Proceedings:
None of our executive officers, control persons and director has been involved in any of the following events during the past five years and which is material to an evaluation of the ability or the integrity of our director or executive officer:
1. any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;
2. any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offences);
3. being subject to 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. being found by a court of competent jurisdiction (in a civil action), the SEC 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.
Investor Relations
As of July 31, 2014, we have not engaged investor relations professionals.
Audit Committee and Audit Committee Financial Expert
Our board of directors has determined that it does not have a member of its audit committee that qualifies as an "audit committee financial expert" as defined in Item 407(d)(5)(ii) of Regulation S-K, and is "independent" as the term is used in Item 7(d)(3)(iv) of Schedule 14A under the Securities Exchange Act of 1934, as amended.
We believe that the members of our board of directors are collectively capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting. We believe that retaining an independent director who would qualify as an "audit committee financial expert" would be overly costly and burdensome and is not warranted in our circumstances given the early stages of our development and the fact that we have not generated any material revenues to date. In addition, we currently do not have nominating, compensation or audit committees or committees performing similar functions nor do we have a written nominating, compensation or audit committee charter. Our board of directors does not believe that it is necessary to have such committees because it believes the functions of such committees can be adequately performed by our board of directors.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a)of the Exchange Act requires our officers and directors, and persons who own more than 10% of our common stock, to file reports of ownership and changes of ownership of such securities with the United States Securities and Exchange Commission. As of the year ended July 31, 2014, our sole officer and director have complied with Section 16(a).
Code of Ethics
Based on our size and our early stage of development we have not yet developed a code of ethics.
Material Changes to Nominations by Security Holders of Director Candidates
In the past fiscal year, there has been no material change to the procedures by which security holders may recommend nominees to the small business issuer’s board of directors.
DIRECTORS’ COMPENSATION
Our sole officer and director do not receive compensation. Directors are reimbursed for any expenses incurred on our behalf.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
The particulars of the compensation paid to the following persons:
· our principal executive officer;
· each of our two most highly compensated executive officers who were serving as executive officers at the end of the years ended July 31, 2014 and 2013; and
· up to two additional individuals for whom disclosure would have been provided under (b) but for the fact that the individual was not serving as our executive officer at the end of the years ended July 31, 2014 and 2013,
who we will collectively refer to as the named executive officers of our company, are set out in the following summary compensation table, except that no disclosure is provided for any named executive officer, other than our principal executive officers, whose total compensation did not exceed $100,000 for the respective fiscal year:
For the year ended July 31, 2014 and 2013, $ 2,500 was accrued for Mr. Sale’s management services and added to Paid in Capital.
There are no compensatory plans or arrangements with respect to our sole executive officer resulting from their resignation, retirement or other termination of employment or from a change of control.
Stock Options/SAR Grants
During our fiscal year ended July 31, 2014 there were no options granted to our named officer or director.
Outstanding Equity Awards at Fiscal Year End
No equity awards were outstanding as of the year ended July 31, 2014.
Option Exercises
During our Fiscal year ended July 31, 2014 there were no options exercised by our named officer.
Compensation of Directors
We do not have any agreements for compensating our directors for their services in their capacity as directors, although such directors are expected in the future to receive stock options to purchase shares of our common stock as awarded by our board of directors.
We have determined that none of our directors are independent directors, as that term is used in Item 7(d)(3)(iv)(B) of Schedule 14A under the Securities Exchange Act of 1934, as amended, and as defined by Rule 4200(a)(15) of the NASDAQ Marketplace Rules.
Pension, Retirement or Similar Benefit Plans
There are no arrangements or plans in which we provide pension, retirement or similar benefits for sole director or executive officer. We have no material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our director or executive officer, except that stock options may be granted at the discretion of the board of directors or a committee thereof.
Indebtedness of Directors, Senior Officers, Executive Officers and Other Management
None of our directors or executive officers or any associate or affiliate of our company during the last two fiscal years, is or has been indebted to our company by way of guarantee, support agreement, letter of credit or other similar agreement or understanding currently outstanding.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial ownership of our shares of common stock as of July 31, 2014 (i) each person known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock, (ii) each of our directors, (iii) each of our executive officers, and (iv) by all of our directors and executive officers as a group. Each person named in the table, has sole voting and investment power with respect to all shares shown as beneficially owned by such person and can be contacted at our executive office address.
The persons or entities listed below have sole voting and investment power with respect to all shares of common stock beneficially owned by them, except to the extent such power may be shared with a spouse. No change in control is currently being contemplated.
(1) Based on 34,510,000 shares outstanding as of July 31, 2014.
Under Rule 13d-3 of the Exchange Act a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Except as disclosed herein, no director, executive officer, shareholder holding at least 5% of shares of our common stock, or any family member thereof, had any material interest, direct or indirect, in any transaction, or proposed transaction since the year ended December 31, 2011, in which the amount involved in the transaction exceeded or exceeds the lesser of $120,000 or one percent of the average of our total assets at the year-end for the last three completed fiscal years.
On May 30, 2011, we issued an aggregate of 25,010,000 shares of Common Stock to Maurice Sale for an aggregate price equal to $2,501, pursuant to the terms and conditions set forth in that certain common stock purchase agreement (the “Common Stock Purchase Agreement”).
The above noted shares were issued to reimburse Maurice Sale for expenses paid on behalf of us totaling $2,501 and consist of incorporation costs, resident agent costs and a fee for preparing the necessary documentation as required for this Registration Statement.
On February 27, 2012, the Company entered into share subscription agreements with 30 shareholders for the sale of 10,500,000 common shares at $ 0.001 per share for total proceeds of $ 10,500. Each of the 30 shareholders holds less than 5% of the outstanding shares.
The common stock issuance was exempt from registration pursuant to Regulation S promulgated under the Act. We have complied with the requirements of Regulation S by having no directed selling efforts made in the United States, ensuring that the investors are non-U.S. persons with addresses in a foreign country and having the investors make representation to us certifying that he or she is not a U.S. person and is not acquiring the common stock for the account or benefit of a U.S. person, other than persons who purchased common stock in transactions exempt from the registration requirements of the Securities Act; and also agrees only to sell the common stock in accordance with the registration provisions of the Act or an exemption there from, or in accordance with the provisions of the Regulation.
Our Company president, Mr. Sale previously held 25,010,000 Common Stock representing 70% of outstanding stock. On July 8, 2014, Mr. Sale converted 1,000,000 of his Common Stock to 1,000,000 Preferred Stock. Both Preferred and Common Stock have a par value of $ 0.0001 and the conversion price was deemed at par value. The conversion allows Mr. Sale to hold 24,010,000 Common Stock representing 67% of outstanding stock and corresponding number of votes and 1,000,000 Preferred Stock with 100,000,000 votes. The conversion of Mr. Sale’s Common Stock to Preferred Stock was approved by majority vote.
As of July 31, 2014, 34,510,000 common shares were outstanding and 1,000,000 preferred shares were outstanding.
Director Independence
We currently act with one director, consisting of Maurice Sale. We have determined that our director is not an “independent director” as defined in NASDAQ Marketplace Rule 4200(a)(15).
We do not have a standing audit, compensation or nominating committee, but our entire board of directors acts in such capacities. We believe that our members of our board of directors are capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting. The board of directors of our company does not believe that it is necessary to have an audit committee because we believe that the functions of an audit committee can be adequately performed by the board of directors. In addition, we believe that retaining an independent director who would qualify as an “audit committee financial expert” would be overly costly and burdensome and is not warranted in our circumstances given the early stages of our development.
ITEM 14.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Pre-Approval Policies and Procedures
Prior to engaging our accountants to perform a particular service, our board of directors obtains an estimate for the service to be performed. All of the services described above were approved by the board of directors in accordance with its procedures.
Below is the aggregate amount of fees billed for professional services rendered by our principal accountants with respect to our last two fiscal years:
Audit fees
$ 28,213
$ 9,915
Audit related fees
-
Tax fees
-
-
All other fees
-
-
Total
$ 28,213
$ 10,515
All of the professional services rendered by principal accountants for the audit of our annual financial statements that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for last two fiscal years were approved by our board of directors.
All of the professional services rendered by principal accountants for the audit of our annual financial statements that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for last two fiscal years were approved by our board of directors.
Resignation of Jeffrey & Co.:
On May 6, 2014, the registration of our independent registered public accounting firm, Jeffrey & Company, was revoked by the Public Company Accounting Oversight Board. On May 12, 2014, the Jeffrey & Company (“Former Auditor”) resigned as the our auditor.
The Former Auditor was our independent registered public accounting firm from September 9, 2011 until May 12, 2014.
Appointment of a New Independent Registered Public Accounting Firm:
On June 2, 2014, we engaged Michael F. Albanese, CPA as our new independent registered public accounting firm. The appointment of Michael F. Albanese, CPA was approved by the Board of Directors.
Our next shareholder’s meeting will be held on August 1, 2015. As of to date, there are no plans to have Mr. Albanese present at the meeting.
Maintaining Principal Accountant’s Independence
Our Board of Directors has considered whether the provision of the services described below are compatible with maintaining the principal accountant’s independence and believes that such services do not compromise that independence.
ITEM 15.
ITEM 15. EXHIBITS
(a) Financial Statements
1. Financial statements for our company are listed in the index under Item 8 of this document
2. All financial statement schedules are omitted because they are not applicable, not material or the required information is shown in the financial statements or notes thereto.
*Filed on Form 10-12G with the SEC on September 30, 2011
**Filed on Form 10A-12G/A with the SEC on November 10, 2011
***Filed on Form 8K with the SEC on July 16, 2014
SIGNATURES
In accordance with section 13 and 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.
XTRALINK ENERGY CORP.
Date: October 27, 2014
/s/ Maurice Sale
By:
Maurice Sale
President, CEO, CFO, Treasurer, Director
In accordance with the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
SIGNATURE
TITLE
DATE
/s/ Maurice Sale
President, CEO, CFO, Treasurer and Director
October 27, 2014
Maurice Sale