Item 1. Business
Soellingen Advisory Group, Inc., a Florida corporation, (“SAGI” or the ”Company”) provides consulting services primarily to independent business owners and other market participants located in California, the Southeast and Midwest of the United States of America (the “U.S.”). Historically, we conducted initial marketing and sales activities to take advantage of opportunities related to time, location and quality of business operations. We have conducted our operations primarily in industry/incentive friendly regions of The United States of America.
The Company's "strategic business and financial planning" advisory services are designed to assist small and mid-sized businesses, predominantly those in the environmental technologies and other industries, with the expertise and experience required to expand into international or broader domestic markets. Specifically, Soellingen works with clients that have a successful local or regional operating business whose products, services and / or business model can be expanded into broader markets, but who don't necessarily possess the business acumen or contacts to do so on their own. In these cases, Soellingen provides its clients with such services as corporate and marketing strategies, international markets development, growth and operations management, financial modeling, business analysis (markets, competition etc.) and due diligence. Soellingen does not provide advisory services to individuals, dealing exclusively with business and corporate clients, and does not provide any financial, investment banking or other regulated services for which licenses are required.
We have conducted marketing and sales activities to take advantage of opportunities related to time, location and quality of various consulting projects.
We currently conduct our marketing operations primarily in Industry/Incentive friendly regions of The United States of America.
Our plan of operation for the next twelve months will be to expand our client base. We market our consulting services to small and medium size businesses. As we continue to grow we will need to raise additional funds. We do anticipate obtaining additional financing to fund operations through common stock offerings, to the extent available, or to obtain additional financing to the extent necessary to augment our working capital. SAGI currently has more than 10 clients (who desire that their identities remain confidential) under contract providing the company minimum monthly fees in excess of $25,000. SAGI provides corporate
development consulting and international business development assistance for these companies looking to expand into international markets. The Company’s experience and expertise includes: Finance, Marketing, Business Development, Project Management, Operations Management, Strategic & Business Planning and Media/Marketing. We do not have need for the purchase of any property or equipment at this time. SAGI will not have any significant changes in the current number of employees.
Our CEO has agreed to continue to fund our operations as needed over the next 12 months until cash flows are sufficient to sustain operations. Pursuant to the agreement it is binding on our CEO and he has agreed to only the return of his capital with no interest or other consideration. Thus far there has not been any need for funds provided by our CEO. In addition, our Plan of Operation for the next twelve months is to raise capital to continue to expand our operations. Although we are not presently engaged in any capital raising activities, we anticipate that we may engage in one or more private offering of our Company’s securities after the completion of this offering. We would most likely rely upon the transaction exemptions from registration provided by Regulation D,
Rule 506 or conduct another private offering under Section 4(2) of the Securities Act of 1933. See “Note 2 - Going Concern” in our financial statements for additional information as to the possibility that we may not be able to continue as a “going concern.”
Marketing Plan
SAGI has developed a multi-pronged, targeted marketing program aimed at informing potential customers of the Company’s services.
Internet Promotions
SAGI will utilize its website and email database for both educational and promotional activities. We will promote all of our upcoming Company events such as workshops, seminars, business clubs, etc. and include testimonials from our client base. Our primary means of promoting the website is the registration with all major and most minor search engines, insuring that web users are directed to the site when they search for information regarding business consulting. Finally, the Company’s web address is featured on all printed materials, including advertisements, stationary, etc. Our URL IS WWW.SOELLINGEN.COM, effective as of July 4, 2013.
Strategic Alliances
SAGI will gain a significant amount of leads through developing strategic alliance relationships with companies offering complimentary services and products to the small to medium size business markets. This will enable SAGI to market its services into the customer database of the partnering company leveraging the trust developed between the strategic partner and their customers.
Seminars & Workshops
SAGI will periodically conduct seminars and workshops to educate the marketplace on all products and services offered. This strategy is an effective and highly leveraged method to reach large portions of the market.
Several sectors of the environmental technologies industry is regulated by federal and state regulations. To provide the best service for a customer, the Company must develop a relationship with that customer. The Company must learn about the customer’s production goals and aspirations, and the Company must retain each customer’s past and current situation in a secure and responsible manner.
Industry Overview
Scores of other major companies have made consulting a core part of executive development. The belief is that, under the right circumstances, one-on-one interaction with an objective third party can provide a focus that other forms of organizational support simply cannot. A sampling of the top management consulting firms are but not limited to:
NAME OF FIRM
Location of Corporate Headquarters
McKinsey & Company
Greater New York City Area
The Boston Consulting Group, Inc.
Greater Boston Area
Bain & Company
Greater Boston Area
Booz & Company
Washington DC Metro Area
Monitor Group
Greater Boston Area
Oliver Wyman
Greater New York City Area
Accenture
Greater Chicago Area
Towers Watson
Greater Philadelphia Area
AlixPartners, LLP
Greater Detroit Area
A.T. Kearney
Greater Chicago Area
Strategy for growth
In addition to our consulting services which provide assistance to client companies with operations management, international expansion strategy, and marketing, once our business model is established, the primary strategy for growth will be through duplication of the business model in states with large concentrations of technology businesses and/or other industry specific benefits as well as acquisition of currently operating managing consulting companies.
Our Business Model
SAGI’s model is based on a vision of expanding its current consulting service, while at the same time; offering a new complementary service consisting of assisting small to medium-sized companies to gain knowledge of international market opportunities and expansion strategies. This complementary service shall be provided through an introduction to our strategic alliance partners. Our primary objective will be for SAGI to provide business and corporate development consulting while at the same time introducing our client to strategic alliance partners who will then counsel them through various capital funding strategies.
The Company's "strategic business and financial planning" advisory services are designed to assist small and mid-sized businesses, predominantly those in the environmental technologies industries, with the expertise and experience required to expand into international or broader domestic markets. Specifically, Soellingen works with clients that have a successful local or regional operating business whose products, services and / or business model can be expanded into broader markets, but who don't necessarily possess the business acumen or contacts to do so on their own. In these cases, Soellingen provides its clients with such services as corporate and marketing strategies, international markets development, growth and operations management, financial modeling, business analysis (markets, competition etc.) and due diligence. Soellingen does not provide advisory services to individuals, dealing exclusively with business and corporate clients, and does not provide any financial, investment banking or other regulated services for which licenses are required.
SAGI will continue to penetrate markets in states such as Florida, New York, California, Texas, Colorado, Georgia and the U.S Midwest, where capital and benefits incentives, as well as, a built-in industry establishment will facilitate our efforts and minimize the need for additional operational infrastructure.
Building the SAGI Infrastructure
The operational infrastructure of SAGI is already in place. However, the capacity to support future growth will be limited by the number of consultants within the consulting firm. SAGI will look to acquire other independent firms and/or consulting professionals to expand its consulting capacity accordingly. The Company is not a blank-check company and was not formed for the purposes of a reverse merger or any other like transaction. The Company does now and will continue to operate as an advisory company, on a fee-based compensation basis, for independent clients requiring our expertise, experience and international contact networks. Any acquisitions that the Company may make in the future, would be of companies similar in nature to our own, operating in similar or complementary industry segments or geographic location; that would provide Soellingen with new growth opportunities or competitive advantage. The majority of the current consulting duties will initially be the responsibility of current senior management; however, as the Company implements its strategic growth plan, additions to the management team and growth in the operating structure will be required.
Expand To New Geographic Markets
While the near-term focus of SAGI management will be to grow its customer base in its local markets, the Company also intends to expand its market presence via an acquisition strategy of existing consulting firms. The “acquisition” growth strategy is now and will continue to be secondary to our primary “organic” growth strategy of obtaining individual clients.
Item 1A.
Item 1A. Risk Factors
Because we are a Smaller Reporting Company, we are not required to provide the information required by this item.
Item 1B.
Item 1B. Unresolved Staff Comments
NONE
Item 2.
Item 2. Properties
Our primary office is currently located at 777 South Flagler Drive, Suite 800, West Palm Beach, Florida, the offices of Mr. Haig, our CEO and President. Mr. Haig does not receive any remuneration for the use of his offices.
In November 2013 we expanded our operations, requiring an office located at 1785 Alta Vista Drive, Suite 103, Ottawa Ontario. Our five (5) year lease is for 2,356 square feet of office space.
Item 3.
Item 3. Legal Proceedings
We are not currently a party to any legal proceedings nor are any contemplated by us at this time.
Item 4.
Item 4. Mine safety disclosures
Not Applicable
PART II.
Item 5.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information
No public market for common stock
There is presently no public market for our common stock. There is no assurance that a trading market will develop, or, if developed, that it will be sustained. A purchaser of shares may, therefore, find it difficult to resell our securities offered herein should he or she desire to do so when eligible for public resale
Holders
As of April 13, 2015 there were 61 shareholders of record of our common stock.
Dividends
Since inception we have not paid any dividends on our common stock. We currently do not anticipate paying any cash dividends in the foreseeable future. Although we intend to retain our earnings, if any, to finance the exploration and growth of our business, our Board of Directors will have the discretion to declare and pay dividends in the future. Payment of dividends in the future will depend upon our earnings, capital requirements, and other factors, that our Board of Directors may deem relevant.
Recent Sales of Unregistered Securities
We have reported all sales of our unregistered equity securities that occurred during 2014 in our Reports on Form 10-Q or Form 8-K, as applicable.
Item 6.
Item 6. Selected Financial Data
We are a Smaller Reporting Company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
Item 7.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors. The management’s discussion, analysis of financial condition, and results of operations should be read in conjunction with our financial statements and notes thereto contained elsewhere in this report.
Our Business Overview
Plan of Operation
Our plan of operation for the next twelve months will be to expand our client base. We market our consulting services to small and medium size businesses. As we continue to grow we will need to raise additional funds. We do anticipate obtaining additional financing to fund operations through common stock offerings, to the extent available, or to obtain additional financing to the extent necessary to augment our working capital. SAGI currently has more than 10 clients (who desire that their identities remain confidential) under contract providing the Company minimum monthly fees in excess of $25,000. SAGI provides corporate development consulting and international business development assistance for these companies looking to expand into international markets. The Company’s experience and expertise includes: Finance, Marketing, Business Development, Project Management, Operations Management, Strategic & Business Planning and Media/Marketing. We do not have need for the purchase of any property or equipment at this time. SAGI will not have any significant changes in the current number of employees.
Our CEO has agreed to continue to fund our operations as needed over the next 12 months until cash flows are sufficient to sustain operations. Pursuant to the agreement it is binding on our CEO and he has agreed to only the return of his capital with no interest or other consideration. Thus far there has been limited need for funds provided by our CEO. In addition, our Plan of Operation for the next twelve months is to raise capital to continue to expand our operations. Although we are not presently engaged in any capital raising activities, we anticipate that we may engage in one or more private offering of our Company’s securities after the completion of this offering. We would most likely rely upon the transaction exemptions from registration provided by Regulation D, Rule 506 or conduct another private offering under Section 4(2) of the Securities Act of 1933. See “Note 2 - Going Concern” in our financial statements for additional information as to the possibility that we may not be able to continue as a “going concern.”
Critical Accounting Policies
We prepare our financial statements in conformity with GAAP, which requires management to make certain estimates and assumptions and apply judgments. We base our estimates and judgments on historical experience, current trends and other factors that management believes to be important at the time the financial statements are prepared and actual results could differ from our estimates and such differences could be material. We have identified below the critical accounting policies which are assumptions made by management about matters that are highly uncertain and that are of critical importance in the presentation of our financial position, results of operations and cash flows. On a regular basis, we review our accounting policies and how they are applied and disclosed in our financial statements.
Principles of Consolidation - The accompanying consolidated financial statements include the accounts of Soellingen Advisory Group, Inc., and its wholly owned subsidiaries, Soellingen Canada, Inc., a Canadian subsidiary. All intercompany accounts and transactions have been eliminated in consolidation.
Use Of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Financial Instruments - The Company’s balance sheet includes financial instruments, including cash, accounts receivable, notes receivable, marketable securities, prepaid expenses, security deposits, accounts payable, accrued expenses, deferred revenue, amounts due to related parties, and notes payable. The carrying amounts of current assets and current liabilities approximate their fair value because of the relatively short period of time between the origination of these instruments and their expected realization.
Results of Operations for the years ending December 31, 2014 and 2013
The Company was incorporated on March 28, 2013; therefore the information provided for year 2013 was not a full year and may not be comparable to the current year, 2014.
Revenues
Revenues were $501,708 and $142,958 for the year ending December 31, 2014 and for the period March 28, 2013 (date of inception) through December 31, 2013, respectively. Total revenues were the result of the Company’s service agreements. Under the terms of the service agreements the Company will provide consulting services for strategic business and financial planning. The Company invoices their respective clients monthly ranging from $3,000 to $6,500. Each service agreement is for a twelve month period. The Company, in accordance with their client service agreement, has provisions for stock compensation, as an upfront revenue, which is valued at the fair value of the stock received and ratably recognized as revenue over the length of the contract terms.
Operating Expenses
Total expenses for the year ending December 31, 2014 and for the period March 28, 2013 (date of inception) through December 31, 2013 was $670,980 and $321,838, respectively. Total expenses consisted of professional fees of $75,180 and $30,983; consulting and management fees of $391,371 and $254,850; selling and marketing expenses totaled $97,775 and $17,387; and general and administrative of $99,741 and $16,668 for the year ending December 31, 2014 and for the period March 28, 2013 (date of inception) through December 31, 2013, respectively.
Other Income and Expenses
For the year ending December 31, 2014 and for the period March 28, 2013 (date of inception) through December 31, 2013, other expenses were primarily interest expense, in the amount of $8,608 and $12,886, respectively. We recognized a loss on the extinguishment of payables, in the amount of $29 in 2013, as we satisfied our obligation through exchange of common stock, with a fair market value in excess of the retired payable.
Additionally, we recognized referral income, in the amount of $80,000 and $60,000 for the year ending December 31. 2014 and for the period March 28, 2013 (inception) through December 31, 2013, respectively. Total referral income resulted from referring new clients to New Opportunity Business Solutions, a debt holder. The Company has made arrangements with New Opportunity Business Solutions to make reductions to its note payable in return for successful referrals of entities that retain the services of New Opportunity Business Solutions. As of December 31, 2014 and 2013 the Company has made four and three successful referrals to New Opportunity Business Solutions, each at the agreed valuation of $20,000, which has been recognized as Other Income on the statement of operations.
During 2014 we recorded temporary effects, not realized, from foreign exchange (loss of $5,178) and a valuation adjustment on our marketable securities (gain of $86,750), included in other comprehensive income (loss). During 2013 we recorded temporary effects, not realized, from foreign exchange (gain of $191) and a valuation adjustment on our marketable securities (loss of $4,800), included in other comprehensive income (loss).
Financial Condition
Total assets were $803,039 at December 31, 2014. The increase in total assets was primarily due to accounts receivables, notes receivable and marketable equity securities available for sale, which amounted to approximately $762,000 or 95% of total assets. Total liabilities were $609,412 as of December 31, 2014, all of which was currently due or on demand. Total liabilities include a promissory note, payable upon demand, related to a consulting contract associated with our registration. The balance on the promissory note was $59,750 or 9.8% of all liabilities. Working capital, defined by current assets less current liabilities, was a deficit of $292,388 as of December 31, 2014.
Liquidity and Capital Resources
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern which contemplates, among other things, the realization of assets and satisfaction of liabilities in the ordinary course of business.
The Company had a net loss for the year ending December 31, 2014, of $97,776. At December 31, 2014 we had working capital deficiency of $292,388. Because of the absence of positive cash flows from operations, the Company will require additional funding for continuing the development and marketing of services. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Net cash used in operating activities for the year ended December 31, 2014 was $137,655. Net cash used in investment activities for the year ended December 31, 2014 was $16,016. Net cash provided by financing activities for the year ended December 31, 2014 was $153,825. Net cash provided by financing activities is from sales proceeds of our common stock.
We anticipate that our future liquidity requirements will arise from the need to fund our growth from operations, pay current obligations and future capital expenditures. The primary sources of funding for such requirements are expected to be cash generated from operations and raising additional funds from the private sources and/or debt financing. However, we can provide no assurances that we will be able to generate sufficient cash flow from operations and/or obtain additional financing on terms satisfactory to us, if at all, to remain a going concern. Our continuation as a going concern is dependent upon our ability to generate sufficient cash flow to meet our obligations on a timely basis and ultimately to attain profitability. Our Plan of Operation for the next twelve months is to raise capital to continue to expand our operations. Although we are not presently engaged in any capital raising activities, we anticipate that we may engage in one or more private offering of our Company’s securities after the completion of this offering. We would most likely rely upon the transaction exemptions from registration provided by Regulation D, Rule 506 or conduct another private offering under Section 4(2) of the Securities Act of 1933. See “Note 2 - Going Concern” in our financial statements for additional information as to the possibility that we may not be able to continue as a “going concern.”
We are not aware of any trends or known demands, commitments, events or uncertainties that will result in or that are reasonably likely to result in material increases or decreases in liquidity.
Capital Resources.
We had no material commitments for capital expenditures as of December 31, 2014.
Item 7A.
Item 7A. Quantitative and Qualitative Disclosure About Market Risk
We are a Smaller Reporting Company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
Item 8.
Item 8. Financial Statements and Supplementary Data
Messineo & Co., CPAs LLC
2471 N McMullen Booth Rd Ste. 302
Clearwater, FL 33759-1362
T: (518) 530-1122
F: (727) 674-0511
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors of:
Soellingen Advisory Group, Inc.
West Palm Beach, Florida
We have audited the accompanying consolidated balance sheets of Soellingen Advisory Group, Inc. as of December 31, 2014 and 2013 and the related consolidated statements of comprehensive income, stockholders' equity and cash flows for the year ending December 31, 2014 and for the period March 28, 2013 (date of inception) through December 31, 2013. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit 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 in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Soellingen Advisory Group, Inc. as of December 31, 2014 and 2013 and the results of its consolidated operations and its cash flows for the year ending December 31, 2014 and for the period March 28, 2013 (date of inception) through December 31, 2014, in conformity with accounting principles generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has no history of sustained revenues and earnings resulting in an accumulated deficit, has negative cash flow from operating activities and will require additional funding for continuing the development of its business plan. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
As discussed in Note 3 to the consolidated financial statements, errors resulting in an overstatement of revenue and an understatement of deferred revenue were discovered by management. Accordingly, adjustments have been made to correct the error.
Messineo & Co., CPAs LLC
Clearwater, Florida
April 14, 2015
Soellingen Advisory Group, Inc.
Balance Sheets
See auditor’s report and notes to the audited financial statements.
Soellingen Advisory Group, Inc.
Statements of Operations
See auditor’s report and notes to the audited financial statements.
Soellingen Advisory Group, Inc.
Statement of Stockholders’ Equity
From inception (March 28, 2013) to December 31, 2014
See auditor’s report and notes to the audited financial statements.
Soellingen Advisory Group, Inc.
Statements of Cash Flows
See auditor’s report and notes to the audited financial statements.
SOELLINGEN ADVISORY GROUP, INC.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2014 AND 2013
NOTE 1. NATURE OF BUSINESS
Soellingen Advisory Group, Inc. (“The Company” or “SAGI”) was incorporated in the State of Florida as a for-profit Company on March 28, 2013. The Company was formed to provide consulting services financial, operational, managerial and strategic financial advice to entrepreneurs, small and mid-sized companies, as well as, not-for-profit organizations, and government agencies. The target industries are subject to constant change due to market trends, thereby making it extremely competitive. The business management and financing environment is complex, because several target segments are heavily regulated by both federal and state governments. SAGI’s approach assists general business operations with the growth and development, international expansion and marketing aspects of their business, allowing our potential customers to focus on the business aspects of operations. By using the services provided by SAGI, our clients are free to focus on compliance with regulations within their industry, and to complete their primary business goals.
The Company is headquartered in West Palm Beach, Florida.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
GOING CONCERN
The Company’s financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating cost and allow it to continue as a going concern. The Company has incurred a net operating loss of $97,776 for the year ending December 31, 2014. As of December 31, 2014 the Company has an accumulated deficit in the amount of $229,571 and a negative working capital of $292,388. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating and required capital expenditures until it becomes profitable to on an ongoing basis. If the Company is unable to obtain adequate capital, it could be forced to cease operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.
In order to continue as a going concern, the Company will need, among other things, additional qualified personnel and capital resources. Management’s plan to obtain such resources for the Company include, obtaining capital from management and significant stockholders sufficient to meet its minimal operating expenses and capital requirements. However, management cannot provide any assurance that the Company will be successful in accomplishing its plans.
There is no assurance that the Company will be able to obtain sufficient additional funds when needed or that such funds, if available, will be obtainable on terms satisfactory to the Company. In addition, profitability will ultimately depend upon the level of revenues received from business operations. However, there is no assurance that the Company will attain continued profitability. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts of Soellingen Advisory Group, Inc., and its wholly owned Canadian subsidiary, Soellingen (Canada) Inc. All intercompany accounts and transactions have been eliminated in consolidation.
BASIS OF PRESENTATION AND USE OF ESTIMATES
The Company prepares its consolidated financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP"), which require 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, and reported amounts of revenues and expenses during the reporting period. Significant estimate include collectability of accounts and notes receivable and allowances thereon, valuation of marketable securities, intangible asset lives and valuations of stock based compensation. Actual results could differ from those estimates.
CASH FLOWS REPORTING
The Company follows ASC 230, Statement of Cash Flows, for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (“Indirect method”) as defined by ASC 230, Statement of Cash Flows, to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments. The Company reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides information about investing and financing activities not resulting in cash receipts or payments in the period.
RELATED PARTIES
The Company follows ASC 850, “Related Party Disclosures,” for the identification of related parties and disclosure of related party transactions.
FINANCIAL INSTRUMENTS
The Company’s balance sheet includes financial instruments which are classified as accounts receivable, notes receivable, marketable securities, accounts payable, accrued expenses, deferred revenues and notes payable. The carrying amounts of current assets and current liabilities approximate their fair value because of the relatively short period of time between the origination of these instruments and their expected realization.
ASC 820, Fair Value Measurements and Disclosures, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:
Level 1
Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities
Level 2
Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.
Level 3
Inputs that are both significant to the fair value measurement and unobservable.
Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of December 31, 2014. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with an original maturity of three months or less at the date of acquisition to be cash equivalents. Cash and cash equivalents totaled $5,948 at December 31, 2014.
ACCOUNTS RECEIVABLE
The Company provides an allowance for uncollectible accounts based upon a periodic review and analysis of outstanding accounts receivable balances. Uncollectible receivables are charged to the allowance when deemed uncollectible. Recoveries of accounts previously written off are used to credit the allowance account in the periods in which the recoveries are made.
The Company has and may continue to accept restricted common stock of its client companies in satisfaction of its receivables. The stock received is a non-cash transaction and may not yield the valuation of the receivables exchanged at the fair value at the date of the exchange. Additionally, when exchanged for the client company stock, the future revenues may be deemed as a related party transaction.
CONCENTRATION OF CREDIT RISK
Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of trade receivables, notes receivable and cash.
Concentration of credit risk with respect to trade receivables is generally diversified due to the number of entities comprising the Company's customer base and their dispersion across geographic areas principally within the United States. The Company routinely addresses the financial strength of its customers and, as a consequence, believes that its receivable credit risk exposure is limited.
The Company places its temporary cash investments with high credit quality financial institutions. At times, the Company may maintain bank account balances, which exceed FDIC limits. The Company has not experienced any losses in such accounts and believes that it is not exposed to any significant credit risk on cash. Management does not believe significant credit risk exists at December 31, 2014.
INTANGIBLE ASSETS
The Company has applied the provisions of ASC topic 350 - Intangible - goodwill and other, in accounting for its intangible assets. Intangible assets are being amortized by straight-line method on the basis of a useful life of 3 years, to begin upon the operational commencement. Intangible assets consist of website development cost. In accordance with ASC 350-40-25, costs were expensed in planning and capitalized during development. Our website was launched in 2014 and no amortization was recognized in the period March 28, 2013 (date of inception) through December 31, 2013. Amortization commenced in 2014.
IMPAIRMENT OF LONG- LIVED ASSETS
The Company reviews and evaluates long-lived assets for impairment when events or changes in circumstances indicate that the related carrying amounts may not be recoverable. The assets are subject to impairment consideration under FASB ASC 360-10-35-17 if events or circumstances indicate that their carrying amount might not be recoverable. When the Company determines that an impairment analysis is required, quarterly, the analysis is performed using the rules of FASB ASC for Asset Impairment, Impairment or Disposal of Long- Lived Assets.
REVENUE RECOGNITION
The Company follows ASC 605, Revenue Recognition. The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.
The Company derives revenue from consulting arrangements with clients. Revenue is generated on a monthly fees, based on scope of work on expected hourly fee structure, or on a fixed contract costs, based on expected time to complete, additionally, costs incurred may be billed, as defined by the contractual arrangements.
The Company has and may continue to accept restricted common stock of its client companies in satisfaction of its receivables. The stock received is a non-cash transaction and may not yield the valuation of the receivables exchanged at the fair value at the date of the exchange. Additionally, when exchanged for the client company stock, the future revenues may be deemed as a related party transaction.
ADVERTISING
Advertising costs are expensed as incurred. Advertising costs were incurred, in the amount of $568 and $2,992, for the year ending December 31, 2014 and for the period May 28, 2013 (date of inception) through December 31, 2013, respectively.
SHARE-BASED EXPENSE
ASC 718, Compensation - Stock Compensation, prescribes accounting and reporting standards for all share-based payment transactions in which employee services are acquired. Transactions include incurring liabilities, or issuing or offering to issue shares, options, and other equity instruments such as employee stock ownership plans and stock appreciation rights. Share-based payments to employees, including grants of employee stock options, are recognized as compensation expense in the financial statements based on their fair values. That expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period).
The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC 505-50, Equity - Based Payments to Non-Employees. Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The fair value of the share-based payment transaction is determined at the earlier of performance commitment date or performance completion date.
Share-based expense for the year ending December 31, 2014 and for the period May 28, 2013 (date of inception) through December 31, 2013 totaled $0 and $1,950, respectively.
DEFERRED INCOME TAXES AND VALUATION ALLOWANCE
The Company accounts for income taxes under ASC 740, Income Taxes. Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. 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 income in the period the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations. No deferred tax assets or liabilities were recognized as of December 31, 2014.
FOREIGN CURRENCY TRANSLATIONS
The Company’s functional and reporting currency is the U.S. dollar. We own a subsidiary in Canada; transactions are made at the subsidiary level in both US and Canadian currency. All transactions initiated in Canadian dollars are translated into U.S. dollars in accordance with ASC 830-30, “Translation of Financial Statements,” as follows:
(i)
Monetary assets and liabilities at the rate of exchange in effect at the balance sheet date.
(ii)
Fixed assets and equity transactions at historical exchange rates.
(iii)
Revenue and expense items at the average rate of exchange prevailing during the period.
Adjustments arising from such translations are deferred until realization and are included as a separate component of stockholders’ equity as a component of comprehensive income or loss. Therefore, translation adjustments are not included in determining net income (loss) but reported as other comprehensive income.
Unrealized exchange gains and (loss), in the amount of $(5,178) and $191, were recorded for the year ending December 31, 2014 and for the period November 8, 2013 (date of subsidiary inception) through December 31, 2013.
NET INCOME (LOSS) PER COMMON SHARE
Net income (loss) per share is calculated in accordance with ASC 260, “Earnings Per Share.” The weighted-average number of common shares outstanding during each period is used to compute basic earning or loss per share. Diluted earnings or loss per share is computed using the weighted average number of shares and diluted potential common shares outstanding. Dilutive potential common shares are additional common shares assumed to be exercised.
Basic net income (loss) per common share is based on the weighted average number of shares of common stock outstanding at December 31, 2014 and 2013. As of December 31, 2014, the Company had no dilutive potential common shares.
RECENT ACCOUNTING PRONOUNCEMENTS
In May 2014, FASB issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers. The revenue recognition standard affects all entities that have contracts with customers, except for certain items. The new revenue recognition standard eliminates the transaction-and industry-specific revenue recognition guidance under current GAAP and replaces it with a principle-based approach for determining revenue recognition. Public entities are required to adopt the revenue recognition standard for reporting periods beginning after December 15, 2016, and interim and annual reporting periods thereafter. Early adoption is not permitted for public entities. The Company has reviewed the applicable ASU and has not, at the current time, quantified the effects of this pronouncement, however it believes that there will be no material effect on the consolidated financial statements.
In June 2014, FASB issued Accounting Standards Update (ASU) No. 2014-12 Compensation - Stock Compensation (Topic 718), Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. A performance target in a share-based payment that affects vesting and that could be achieved after the requisite service period should be accounted for as a performance condition under Accounting Standards Codification (ASC) 718, Compensation - Stock Compensation. As a result, the target is not reflected in the estimation of the award’s grant date fair value. Compensation cost would be recognized over the required service period, if it is probable that the performance condition will be achieved. The guidance is effective for annual periods beginning after 15 December 2015 and interim periods within those annual periods. Early adoption is permitted. Management has reviewed the ASU and believes that they currently account for these awards in a manner consistent with the new guidance, therefore there is no anticipation of any effect to the consolidated financial statements.
In August 2014, FASB issued Accounting Standards Update (ASU) No. 2014-15 Preparation of Financial Statements - Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. Under generally accepted accounting principles (GAAP), continuation of a reporting entity as a going concern is presumed as the basis for preparing financial statements unless and until the entity’s liquidation becomes imminent. Preparation of financial statements under this presumption is commonly referred to as the going concern basis of accounting. If and when an entity’s liquidation becomes imminent, financial statements should be prepared under the liquidation basis of accounting in accordance with Subtopic 205-30, Presentation of Financial Statements-Liquidation Basis of Accounting. Even when an entity’s liquidation is not imminent, there may be conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern. In those situations, financial statements should continue to be prepared under the going concern basis of accounting, but the amendments in this Update should be followed to determine whether to disclose information about the relevant conditions and events. The amendments in this Update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company will evaluate the going concern considerations in this ASU, however, at the current period, management does not believe that it has met conditions which would subject these financial statements for additional disclosure.
We have reviewed the FASB issued Accounting Standards Update (“ASU”) accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. The Company has carefully considered the new pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified principles will have a material impact on the corporation’s reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of our financial management and certain standards are under consideration.
NOTE 3. RESTATEMENT
The Company considered revenue recognition policy in regards to the initial receipt of share based compensation from clients, received upon the signing of contractual service arrangements. The Company recorded income for the fair value of the shares received as compensation. The restatement is for the correction of the recognition policy, as it has been determined that the fair value of the shares received are to be recognized over the terms of the contractual agreement. Valuation of shares have also been adjusted, as well as classification of a revenue source. Additionally, the revenue produced was through services provided by our officers, whereby the fair market value of their services are recognized in the restatement. Restatement is as follows:
Adjustments:
(a)
Valuation adjustment on shares received for service, adjusted from S1 offering price to par value.
(b)
Adjustment for income tax expense, reduced from income to full allowance.
(c)
Adjustment for deferred portion of shares received, per contract, ratably recognized over the length of the contract.
(d)
Reclassification of referral income, resulting in the reduction of note payable.
(e)
Recognized fair market value of services contributed by officers of the corporation, in the production of income and administrative services
NOTE 4. INVESTMENTS IN MARKETABLE SECURITIES
The Company was issued equity securities for services rendered or to be provided under contractual obligation. All investments are available for sale, or in the instances of restricted stock issues, are considered to be eligible for registration within a six month period; therefore, these investments are classified as held for trade as current assets on the Company’s balance sheet. For securities held of companies that are not yet publicly traded, or are in process of registration, the securities are held as a long-term asset and valued at cost. The Company has received shares in companies either through contract or the acceptance of shares in exchange for contracted services. The Company’s investment portfolio consists of publicly traded companies or early stage companies, in the process of registration.
The amortized cost and fair value of these investments were as follows:
The changes in fair value of the investments were recorded as follows:
December 31, 2014
Equity Securities
Fair value at beginning of period
$
19,200
Equities received, at fair value
13,750
Equities sold
---
Change in net unrealized gain (loss)
86,750
Fair value at end of period
$
119,700
The equity investments have been valued using level 1 inputs.
The Company has received marketable securities from clients, in exchange for service, per contractual agreement. Share received, which are not currently quoted on market exchange, as they are in process of registration, have been valued at the fair value of third party investors under regulation 506D, as filed. The Company had recorded the shares at the fair value, as a long-term asset. As of December 31, 2014 and 2013, the fair value of these securities were $453,000 and $40,000, respectively.
NOTE 5. PREPAID EXPENSE
The Company entered into a consulting agreement with New Opportunity Business Solutions (“NOBS”), a non-related party, on April 1, 2013. NOBS is to provide consulting services related to the preparation of the S1 registration statement being filed with the Security and Exchange Commission. The contract term is for a 12 month period with total compensation in the amount of $199,800, due and payable at the engagement date (April 1, 2013). The Company is ratably charging expense of the contract over the 12 month term in the amount of $16,650 per month. As of December 31, 2014 and 2013, the Company has expensed $49,950 and $149,850 and the prepaid balance was $0 and $49,950, respectively.
The balance of prepaid expense, inclusive of other prepayments, at December 31, 2014 and 2013 is $4,193 and $51,696, respectively.
NOTE 6. PROPERTY AND EQUIPMENT
Property and equipment consists of:
Depreciation for the year ending December 31, 2014 and for the period May 28, 2013 (date of inception) through December 31, 2013 was $2,767 and $0, respectively.
NOTE 7. INTANGIBLE PROPERTY
Intangible property consists of website development costs for the purpose of our on-line presence and marketing. Intangible property consists of:
Commencing in January 2014, the first period of operation, we commenced amortizing the costs over a three (3) year period, the useful life. Amortization expense was $4,146 and $0 for the year ending December 31, 2014 and for the period May 28, 2013 (date of inception) through December 31, 2013, respectively. Future amortization will be:
NOTE 8. PROMISSORY NOTE PAYABLE
Notes payable consisted of the following:
During the year ending December 31, 2014 and for the period May 28, 2013 (date of inception) through December 31, 2013, the note was reduced by $40,000 and $60,000 for referrals, per agreement, and in 2013 the noteholder exchanged $40,050 for 53,400 shares of common stock, at the fair market value (last traded price to non-related party) of $.75 per share.
NOTE 9. RELATED PARTY TRANSACTIONS
The Company's shareholders have pledged support to fund continuing operations; however there is no written commitment to this effect. The Company may be dependent upon the continued support of these parties. As of December 31, 2014 and 2013, the Company owed the Officers $22,675 and $21,375, respectively.
In March 2014, the Chief Executive Officer exchanged $13,310 due from advances and payment made on behalf of the Company for 17,746 shares of common stock. The exchange was made at the fair value of the common stock on the date of the exchange; no gain or loss on the extinguishment of the payable was recognized.
Some of the officers and directors of the Company are involved in other business activities and may, in the future, become involved in other business opportunities that become available. They may face a conflict in selecting between the Company and other business interests. The Company has not formulated a policy for the resolution of such conflicts.
The Company does not have employment contracts with its key employees, including the officers of the Company. On February 24, 2014, upon the hiring of our Chief Financial Officer, an employment contract was issued for an annual salary of $60,000 and included bonus and options, upon Board approval, based on the Company meeting corporate goals and milestones. Upon signing, 100,000 shares of common stock were issued to the Chief Financial Officer. $45,000 of expense was recognized under this contract for the year ending December 31, 2014.
The Chief Executive Officer and Chief Operating Officers have accrued and unpaid compensation, in the amounts of $80,000 and $60,000, respectively, for the year ending December 31, 2014. The Company recorded compensation to these individuals of $40,000 each in 2013, which was recorded as expense and a corresponding credit to capital, as a contribution of their service value.
The amounts and terms of the above and the transactions described below, may not necessarily be indicative of the amounts and terms that would have been incurred had comparable transactions been entered into with independent third parties.
On April 5, 2013 the Company issued 19,250,000 shares to David Haig, CEO, CFO, Founder and Director and 250,000 shares to Raymond Skaff, Director, Founder and Vice President of Corporate Communications, for services in the amount of $1,950.
NOTE 10. INCOME TAXES
The Company accounts for income taxes under the liability method. Deferred tax assets and liabilities are recorded based on the differences between the tax basis of assets and liabilities and their carrying amounts for financial reporting purpose, referred to as temporary differences. Deferred tax assets and liabilities at the end of each period are determined using the currently enacted tax rates applied to taxable income in the periods in which the deferred tax assets and liabilities are expected to be settled or realized.
The Company has not recorded a provision for income taxes as it they are fully off-set by valuation allowance. Deferred tax assets and liabilities are minimal and considered immaterial. Provision (benefit) for income taxes is as follows:
The Company has a net operating loss carryforward of approximately $229,000 as of December 31, 2014. The Company is currently open to audit under the statute of limitations by the Internal Revenue Service beginning with its initial year, 2013.
NOTE 11. SHAREHOLDERS’ EQUITY
On March 28, 2013 the Company, through approval of its Board of Directors, authorized common shares of 500,000,000 with a par value of $0.0001. On April 16, 2013, the Board of Directors approved the amendment of the articles of incorporation to authorize, in addition to the common shares, 100,000,000 shares of $0.0001 par value preferred shares.
PREFERRED STOCK
The Board of Directors is expressly vested with the authority to divide any or all of the 100,000,000 authorized preferred shares, $0.0001 par value, into series and to fix and determine the relative rights and preferences of the shares of each series. The Board of Directors have not made any designation to any series of preferred shares. As of December 31, 2014 there have been no preferred shares issued.
COMMON STOCK
On April 5, 2013 the Company issued 19,250,000 shares, par value $.0001, to David Haig, CEO and Director and 250,000 shares, par value $.0001, to Raymond Skaff, Director, in exchange for services totaling $1,950.
During the years ending December 31, 2014 and 2013 the Company sold 205,034 and 943,666 shares of common stock for cash proceeds of $153,825 and $45,100, respectively.
The Company issued 53,400 common shares in partially settlement of $40,050 of the promissory note payable. Shares were valued at the fair market price, as determined by the last sale to an unrelated party, of $0.75 per share, on December 31, 2013.
In November 2013, the Company issued 8,000 common shares in satisfaction of $5,971 of accounts payable. The share price, at the time of the exchange, was $0.75 per share, as determined by recent sales to non-related third parties. The Company recognized a loss of $29 in the extinguishment of the liability. On November 20, 2013 the Company issued 3,000 shares of common stock to a related party at a subscription price of $0.75 per share, for settlement of $2,250 of amounts payable.
In March 2014, the Chief Executive Officer exchanged $13,310 due from advances and payment made on behalf of the Company for 17,746 shares of common stock. The exchange was made at the fair value of the common stock on the date of the exchange; no gain or loss on the extinguishment of the payable was recognized.
WARRANTS AND OPTIONS
There are no warrants or options outstanding to acquire any additional shares of common stock of the Company.
NOTE 12. COMMITMENTS AND CONTINGENCIES
On October 10, 2013, the Company entered into an office lease in Ottawa, Ontario commencing December 1, 2013 and term expiring November 30, 2018. The lease terms allow for free rent periods, escalation in the annual fees and common area charges. Future lease obligations, as of December 31:
For the years ending December 31, 2014 and 2013, the Company has recorded rent expense, in association with the above lease and the Florida lease, in the amount of $52,578 and $4,855, including allocation of costs associated with the rent concessions in the amount of $3,599 and $1,835, respectively.
From time to time the Company may be a party to litigation matters involving claims against the Company. Management believes that there are no current matters that would have a material effect on the Company’s financial position or results of operations.
NOTE 13. SUBSEQUENT EVENTS
Management has evaluated subsequent events through the date the financial statements were available to be issued, considered to be the date of filing with the Securities and Exchange Commission. Based on our evaluation no events have occurred requiring adjustment to or disclosure in the financial statements.
Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
We did not have any disagreements on accounting and financial disclosure with our accounting firm during the reporting period.
Item 9A.
Item 9A. Controls and Procedures
(a) Management’s Annual Report on Internal Control over Financial Reporting
The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process designed under the supervision of the Company’s Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external purposes in accordance with the U.S. generally accepted accounting principles.
As of December 31, 2014, under the supervision and with the participation of our management, we conducted an evaluation of the effectiveness of the design and operations of our internal control over financial reporting, as defined in Rules 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 and based on the criteria for effective internal control described Internal
Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that our internal control over financial reporting was not effective so as to timely identify, correct and disclose information required to be included on our Securities and Exchange Commission (“SEC”) reports due to the Company’s limited internal resources and lack of ability to have multiple levels of transaction review. Through the use of external consultants and the review process, management believes that the financial statements and other information presented herewith are materially correct.
The management, including our Principal Executive Officer and Principal Financial Officer, does not expect that its disclosure controls and procedures, or its internal controls will prevent all error and all fraud. A control system no matter how well conceived and operated, can provide only reasonable not absolute assurance that the objectives of the control system are met. Further, the design of control system must reflect the fact that there are resource constraints, and the benefit of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any within the Company have been detected.
Material weaknesses identified by management included: lack of an audit committee and audit committee financial expert; lack of a majority of outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; inadequate segregation of duties consistent with control objectives and affecting the functions of authorization, recordkeeping, custody of assets, and reconciliation; and, management dominated by a single individual without adequate compensating controls.
Management believes that the material weaknesses set forth above did not have an effect on our financial results. However, management believes that the lack of a functioning audit committee and the lack of a majority of outside directors on our board of directors results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods.
Management’s Remediation Initiatives
In an effort to remediate the identified material weaknesses and other deficiencies and enhance our internal controls, we have initiated, or plan to initiate, the following series of measures:
We will and have created a position to segregate duties consistent with control objectives and we will increase our personnel resources and technical accounting expertise within the accounting function when funds are available to us. And, we plan to appoint one or more outside directors to our board of directors who shall be appointed to an audit committee resulting in a fully functioning audit committee who will undertake the oversight in the establishment and monitoring of required internal controls and procedures such as reviewing and approving estimates and assumptions made by management when funds are available to us.
Management believes that the appointment of one or more outside directors, who shall be appointed to a fully functioning audit committee, will remedy the lack of a functioning audit committee and a lack of a majority of outside directors on our Board.
We will work as quickly as possible to implement these initiatives; however, the lack of adequate working capital and positive cash flow from operations will likely slow this implementation.
This Annual Report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to the temporary rules of the SEC that permit the Company to provide only management’s report in this Annual Report.
This report shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liabilities of this section, and is not incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
Change in internal controls
We have not made any significant changes to our internal controls subsequent to the Evaluation Date. We have not identified any significant deficiencies or material weaknesses or other factors other than those specified above that could significantly affect these controls, and therefore, no corrective action was taken.
Item 9B.
Item 9B. Other Information
NONE
PART III
Item 10.
Item 10. Directors, Executive Officers and Corporate Governance
Directors and Executive Officers
The names and ages of our directors and executive officers are set forth below. Our By Laws provide for not less than one and not more than fifteen directors. All directors are elected annually by the stockholders to serve until the next annual meeting of the stockholders and until their successors are duly elected and qualified.
Background of Executive Officers and Directors
David Haig - For the last 20 years, David has been a leader, program manager and consultant in a wide variety of positions where program-development, project-management, innovation and leadership ability were critical. His principal areas of effectiveness are planning and operations, problem solving, resource (people, finance, material and knowledge) management and development, project management, team building, and strategic partnering. As a strategic-planning and operations-oriented executive, David developed expertise in planning, executing and controlling complex projects spanning several continents. He also has extensive hands-on expertise in strategy formulation, resource planning and budgeting, business planning, corporate finance, integrated knowledge-management systems, performance management, system dynamics and International project development.
Following university, where David studied corporate finance, economics and management information systems, he was primarily engaged in the direct funding and raising of investment and venture capital for US-based internet and dotcom companies. During this time, he also served in various advisory roles, assisting start-up and mid-sized companies with corporate and strategic planning, structuring complex financial transactions, and managing financial operations.
In 2000, following a series of successful merger & acquisition transactions and strategic sales, he partnered with colleagues to create a private equity company, Westingdale Limited, of which he served as Managing Director between 2007-2012, that expanded to include a niche corporate and financial advisory practice. During the next 13 years, David had the opportunity of serving as a strategic corporate advisor to many, early and mature stage, public and private companies, with revenues ranging from NIL to $115.0 million annually. As well, he directly managed and participated in nearly two dozen financing transactions and served in a number of interim executive positions for client companies, including CFO and CEO.
Positions held by David have included: Interim CFO, Oceanus Communications Inc. (1998-2000), a Canadian software company engaged in the development of video games and MMPG (massively multiplayer online game) technology; Vice-President, Corporate Development, Bio-Fertilis, Inc. (2008-2009) and Interim President and CEO, Bio-Fertilis, Inc. (2009-2011), an organic fertilizer company; Special Advisor to the CEO, Pure Energy Visions Corp. (2012), a rechargeable battery and wire-free charging technology company; and Special Advisor to the CEO, AgriMarine Holdings Inc. (2011-2012) (TSX-V:FSH), an international company engaged in sustainable aquaculture technology and fish farming. In addition to private sector business experience, David has served as an economic advisor and consultant for several foreign governments and governmental agencies, as well as a Business Planning Officer and Senior International Affairs Advisor for the Government of Canada.
David brings to Soellingen a 15-year history and track record of practical management experience, leading functional teams as well as company-wide operations, including direct responsibility for departmental and organizational P&L, oversight and management of teams in excess of 50 persons, start-up management and entrepreneurial experience, a broad international contact base, and clear understanding and knowledge of the public markets. David has previously and continues to present to international business symposia and frequently participates in business strategy and policy conferences for both the public and private sectors in North America.
It is not Soellingen's business model nor are there any plans, currently or anticipated, for Mr. Haig to serve in interim executive positions for any of our client companies.
Further information is available at http:www/davidhaig.ca or LinkedIn (ca.linkedin.com/pub/david-haig/42/5b8/314/).
Ray Skaff - Ray Skaff, a graduate of the 1983 Radio & Television Arts Program at Algonquin College, has been a driving force behind successful multimillion-dollar partnerships, projects, and fundraising events for more than 25 years. His leadership experience is well established in the communications, commercial, and not-for-profit industry, including extensive expertise with diverse media and marketing platforms, business development, trends, and government & community agencies. Ray has also built an impressive track record of increasing awareness, impressions, and branding at the same time as decreasing costs and enhancing operational efficiencies. He demonstrates superior oral and written communications skills, along with ability to thrive in high-stress, demanding environments.
Ray’s extensive tenure includes 20 years as Station Manager at Rogers Communications Ottawa, Director of Programming for the Cable Public Affairs Channel, and National Manager of Captioning Services at Rogers. Since 2010, Ray’s consulting company has provided exceptional professional services to various non-profit organizations and businesses to deliver a coordinated approach to analyzing and executing the project, develop marketing, public relations, and/or business plan that support the client’s goals. Also currently serves as General Partner and Vice President for RGR Hospitality.
In 2007, Ray was one of the first inductees in the Algonquin College Media Hall of Fame in Ottawa, Canada. The award was created to recognize trailblazers and role models in the Media Industry - setting the highest of standards for those who hope to follow in their footsteps. Ray also played a significant role in defining the Television Broadcasting curriculum as Chair of the Algonquin College Advisory Board.
Ray is a founder of Soelligen Advisory Group and will serve as a Director and as its VP, Corporate Communications & Marketing. He is continually recognized as a forward-thinking strategist who identifies and capitalizes on operational, procedural, programming, and business practices to positively impact an organization’s image, brand, and effect on the community. Ray consistently demonstrates a passion for his work and a commitment to performance excellence.
William D. Webb, Jr. has over 29 years of experience in financial services sector as well as independent consulting. During this time he has built retail financial services operations from the ground up by employing his problem solving skills, seeking innovation, and utilizing his signature pragmatism He currently works with small to mid-sized financial services firms that conduct business in mergers and acquisitions, advisory services, institutional brokerage services, among others.
From the years 2012 - 2014, Mr. Webb's positions include acting as a consultant and outsourced financial principal both for Regulatory Compliance, ILC and independently. He was the Chief Financial Officer for Allstate Financial Services, ILC from 2001 to 2012, where he built an operation with a sales force exceeding 10,000 registered representatives, as well as Treasurer for an SEC Registered Investment Adviser, and Treasurer for Allstate Distributors, lLC, a wholesale operation that marketed Allstate's proprietary financials service products. He has also served as Chief Compliance Officer for First Trust, a Unit Investment Trust distributor with over $8 billion of assets under management. From 1990 to 1999 Mr. Webb served as a Branch Chief for Broker- Dealer Examinations with the Securities and Exchange Commission in its Los Angeles office where he worked on several high profile cases including the Orange County Bankruptcy.
Mr. Webb has proven skills in strategy and execution management, business analysis, project management, financial reporting and capital management, including budgeting, forecasting and projections. In addition, William has worked in the accounting department
for a Fortune 50 Corporation and is vastly familiar with pubic reporting company issues and managing separate regulatory reporting
issues with affiliated entities. William managed and coordinated multiple team; with myriad competing corporate departments to
achieve consensus and to align the greater corporate goals with any given project.
Legal Proceedings
To the best of our knowledge, except as set forth herein, none of the directors or director designees to our knowledge has been convicted in a criminal proceeding, excluding traffic violations or similar misdemeanors, or has been a party to any judicial or administrative proceeding during the past five years that resulted in a judgment decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws, or finding of any violation of federal or state securities laws, except for matters that were dismissed without sanction or settlement.
Meetings and Committees of the Board of Directors
We do not have a nominating committee of the Board of Directors, or any committee performing similar functions. Nominees for election as a director are selected by the Board of Directors.
We do not yet have an audit committee or an audit committee financial expert. We expect to form such a committee composed of our non employee directors. We may in the future attempt to add a qualified board member to serve as an audit committee financial expert in the future, subject to our ability to locate and compensate such a person. Despite the lack of an audit committee, those members of the board of directors that would otherwise be on our audit committee will continue to analyze and investigate our actual and potential businesses prospects as members of our board of directors. Furthermore, our entire board of directors is aware of the importance of the financial and accounting due diligence that must be undertaken in furtherance of our business and they intend to conduct a comprehensive accounting financial analysis of the Company’s business.
Item 11.
Item 11. Executive Compensation
The following table sets forth information concerning the annual and long term compensation of our Chief Executive Officer, and the executive officers who served at the end of the fiscal year December 31, 2014, for services rendered in all capacities to us. The listed individuals shall hereinafter be referred to as the “Named Executive Officers.” Currently, we have no employment agreements with any of our Directors or Officers. All of our directors are unpaid. Compensation for the future will be determined when and if additional funding is obtained.
SUMMARY COMPENSATION TABLE
(1) There is no employment contract with Mr. Haig and Mr. Skaff at this time. Nor are there any agreements for compensation in the future. A salary and stock options and/or warrants program may be developed in the future. Compensation (salaries) for the year ending December 31, 2013 were unpaid and contributed to capital by the officers. Compensation (salaries) for the year ending December 31, 2014 were unpaid and included in accrued expenses.
(2) In April 2013 the Company issued our CEO 19,250,000 shares of common stock at par $0.0001 for services totaling $1,925.
In April 2013 the Company issued our Vice President, Corporate Communications 250,000 shares of common stock at par $0.0001 for services totaling $25. The amount of value for the services of Mr. Haig and Mr. Skaff were determined by agreement for shares in which each received as founders for (1) control (2) willingness to serve on the Board of Directors and (3) participation in the foundational days of the corporation. The amount received by each is not reflective to the true value of the contributed efforts by either Mr. Haig or Mr. Skaff and was arbitrarily determined by the Company.
Mr. Haig and Mr. Skaff have expended several months of time and expense in preparing the business for launch, including but not limited to, marketing, client acquisition, establishing our network, forming strategic alliances, raising capital, and formulating strategy.
(3) The restricted stock was valued at the last trade price on the day of issuance in accordance with ASC 718.
Director Compensation
Compensation Committee Interlocks and Insider Participation
Currently, our Board of Directors consists of Mr. Haig and Mr. Skaff. We are not actively seeking additional board members at this time. At present, the Board of Directors has not established any committees.
Director Compensation
There are currently no compensation arrangements in place for members of the board of directors.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The following table sets forth information concerning the beneficial ownership of shares of our common stock with respect to stockholders who were known by us to be beneficial owners of more than 5% of our common stock as of December 31, 2014, and our officers and directors, individually and as a group. Unless otherwise indicated, the beneficial owner has sole voting and investment power with respect to such shares of common stock.
Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission (“SEC”) and generally includes voting or investment power with respect to securities. In accordance with the SEC rules, shares of our common stock which may be acquired upon exercise of stock options or warrants which are currently exercisable or which become exercisable within 60 days of the date of the table are deemed beneficially owned by the optionees, if applicable. Subject to community property laws, where applicable, the persons or entities named below have sole voting and investment power with respect to all shares of our common stock indicated as beneficially owned by them.
(1)
Includes certificates held in name, wholly owned entities, and immediate family members.
(2)
The percentages are based on a total of 20,731,846 shares of common stock issued and outstanding as of December 31, 2014.
Item 13.
Item 13. Certain Relationships and Related Transactions, and Director Independence
Transactions with Related Persons, Promoters and Certain Control Persons
In April 2013 the Company issued our CEO 19,250,000 shares of common stock at par $0.0001 for services totaling $1,925.
In April 2013 the Company issued our Vice President, Corporate Communications 250,000 shares of common stock at par $0.0001 for services totaling $25.
Mr. Haig and Mr. Skaff have expended several months of time and expense in preparing the business for launch, including but not limited to, marketing, client acquisition, establishing our network, forming strategic alliances, raising capital, and formulating strategy.
In April 2013 the Company issued 40,000 shares of common stock at $0.025 to 6489125 Canada Corp., a corporation controlled by Raymond Skaff, our Vice President, Corporate Communications for USD $1,000.00.
In April 2013 the Company issued 12,000 shares of common stock at $0.025 for USD $300.00 to Karen Haig, the spouse of our CEO.
In March 2014 the Company exchanged 17,746 common shares to David Haig, in exchange for $13,310 of payables owed, valued at the fair market trading price at the date of exchange.
Our offices are currently located at 777 South Flagler Drive, Suite 800, West Palm Beach, Florida, the offices of Mr. Haig, our CEO and President. Mr. Haig does not receive any remuneration for the use of his offices.
Promoter
The Company does not have any promoters other than our CEO, David Haig.
Future Transactions
Future transactions with our officers, directors or greater than five percent stockholders will be on terms no less favorable to us than could be obtained from independent third parties, and all such transactions will be reviewed and subject to approval by our board of directors.
Director Independence
We do not presently have any independent directors. We consider independent directors to be individuals who are not employed by the Company in any capacity and who do not have any equity ownership interest in the Company. Our Board of Directors is comprised of our President and CEO, David Haig and Raymond Skaff, Vice President of Corporate Communications. Mr. Haig is currently majority shareholder of the Company’s common equity. We intend to seek additional independent members for our board of directors when the market conditions improve and we are able to provide compensation for our board of director members.
Item 14.
Item 14. Principal Accounting Fees and Services
The Company does not currently have an audit committee. The normal functions of the audit committee are handled by the board of directors, which consists of our sole director only.
PART IV
Item 15.
Item 15. Exhibits, Financial Statement Schedule
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SOELLINGEN ADVISORY GROUP, INC.
Name
Title
Date
/s/David Haig
Principal Executive Officer,
Director
April 15, 2015
/s/ William D. Webb, Jr.
Principal Accounting Officer,
Chief Financial Officer,
April 15, 2015
Supplemental Information to be Furnished With Reports Filed Pursuant to Section 15(d) of the Act by Registrants
Which Have Not Registered Securities Pursuant to Section 12 of the Act
NONE