ITEM 1: DESCRIPTION OF BUSINESS
IN GENERAL
We commenced operations as a provider of web services and products that enable small and medium-sized businesses to establish, maintain, promote and optimize their Internet presence. However, there is no assurance that our current business model is commercially and economically viable. Further marketing of our product and services in a broader client environment will be required before a final evaluation as to the economic feasibility of the Company's business model is determined. Economic feasibility refers to the ability of an enterprise to conduct its business operations in a profitable and cash-flow positive manner.
Our goal is to enable small and medium-sized businesses to outsource their Web services needs to us. Our Web services include, among other features, Website design and publishing, local, regional, and national Internet marketing and advertising, search engine optimization, search engine submission, and lead generation. We believe this combination will provide our customers with a comprehensive solution to their Web services needs.
We are currently reviewing other potential acquisitions of companies involved in the computer peripheral and services sectors and also investigating opportunities in the alternative energy and life science space.
Our success depends on a significant number of small and medium-sized business outsourcing Website design, hosting, and management as well as adopting other online business solutions. As our existing and target customers are small and medium-sized businesses, these businesses are more likely to be significantly affected by economic downturns than larger, more established businesses. Additionally, these customers often have limited discretionary funds, which they may choose to spend on items other than our Web services and products. If small and medium-sized businesses experience economic hardship, they may be unwilling or unable to expend resources to develop their Internet presences, which would negatively affect the overall demand for our services and products and could cause our revenue to decline.
We intend to build our business around a subscription-based ASP model that allows small and medium-sized businesses to outsource their Web services to us. Given that many small and medium-sized businesses do not have the in- house expertise to effectively design an Internet presence that will generate adequate traffic to their Websites and increase direct consumer interaction, the key elements of our business model and approach are to provide comprehensive Web-based solutions for Small and Medium-Sized Businesses. Our primary service offerings include Website design and publishing, Internet marketing and advertising, search engine optimization, search engine submission, and lead generation. In addition to our primary service offering, we provide a variety of premium services to customers who desire more advanced capabilities, such as e-commerce solutions and more sophisticated Internet marketing services. This breadth and flexibility of our offerings allow us to address the Web services needs of a wide variety of customers, ranging from those just establishing their Websites to those requiring a more robust Internet presence.
We intend to sell our Web services and products primarily to customers identified through strategic marketing relationships with established companies that have large numbers of small and medium-sized business customers, such as business associations. We intend to establish a direct sales force that utilizes leads generated by our strategic marketing relationships to acquire new customers. Our sales force will specialize in selling to small and medium-sized businesses across a wide variety of industries throughout North America.
Since inception on May 9, 2007 the Company continues to be primarily involved in organizational activities and has realized very limted revenues from its planned operations. We may experience fluctuations in operating results in future periods due to a variety of factors, including our ability to obtain additional financing in a timely manner and on terms favorable to us, our ability to successfully develop our business model, the amount and timing of operating costs and capital expenditures relating to the expansion of our business, operations and infrastructure and the implementation of marketing programs, key agreements, and strategic alliances, and general economic conditions specific to our industry.
INDUSTRY BACKGROUND
Our target market consists of approximately 23 million businesses in the United States. This market onsists of approximately 14.7 million income-generating home-based businesses and approximately 8.2 million additional businesses with fewer than 100 employees that are not home-based businesses, as estimated by IDC, in March 2006. Adding these two markets together, this target market represents approximately 23 million businesses. We believe that small and medium-sized businesses understand that an effective Web presence isimportant to their success because of the increasing acceptance of the Internetas a tool for both consumers and businesses. We believe our market opportunity is driven by the following factors:
- - Small and medium-sized businesses often lack technical and marketing skills needed to create an effective Web presence;
- - As Internet usage continues to grow, small and medium-sized businesses will need more robust and complex Web services to generate customer traffic and impact buying behavior;
- - Small and medium-sized businesses are value-driven and monitor the return on their investments;
- - Outsourcing of information technology through the Internet is growing in acceptance and use; and
- - Profitably serving small and medium-sized businesses can be a challenge and vendors must have cost-effective and efficient processes.
According to a March 2006 report (# 35050) by IDC approximately 73% of U.S. small businesses had Internet access in 2005, which is expected to grow to nearly 81% by 2010. The pervasiveness of the Internet has enabled companies to deliver important components of information technology infrastructure remotely as a service. Businesses can now outsource systems and software to Application Service Providers ("ASP"), which allows the implementation, hosting, maintenance, and upgrading of systems and software to be done in a more cost- effective manner than businesses may have been able to do internally.
Use of the Internet by consumers is also widespread and growing. Jupiter Research, an independent market research firm, in a report dated March 2006, projected that the percentage of U.S. households with Internet access will increase from 69% in 2005 to 77%, or 93 million households, by 2011. Consumers searching the Internet for local businesses and services typically use two types of services: Internet yellow pages Websites and geographically targeted searches. We believe consumers will increasingly choose to use the Internet to find local merchants, retailers, and service providers, rather than using the print yellow pages.
While small and medium-sized businesses have generally been slower than larger businesses to adopt the Internet as an integral part of their business strategies, we believe that an Internet presence is seen by most small business owners today as a business necessity, similar to a phone and fax number. We believe that small and medium-sized businesses increasingly understand the Internet's usefulness and importance in promoting their businesses and selling their services and products. According to a March 2006 IDC report (#35050), there were approximately 8.1 million small businesses, excluding home-based businesses, in the United States in 2005, approximately 4.8 million of which had Websites. Based on those figures, we calculate that 59% of small businesses, excluding home-based businesses, were estimated to have Websites in 2005.
Notwithstanding, the market for Web services is highly competitive and evolving and we expect competition to increase from existing competitors as well as new market entrants. Most existing competitors typically offer a limited number of specialized solutions and services, but may provide a more comprehensive set of services in the future. These competitors include, among others, Website designers, Internet service providers, Internet search engine providers, local business directory providers, Website domain name registrars, eCommerce service providers, lead generation companies and hosting companies. These competitors may have greater resources, more brand recognition, and larger installed bases of customers than the Company currently has, and we cannot ensure that we will be able to compete favorably against them.
SALES AND MARKETING STRATEGY
Our objective is to become a leading provider of Web services and products for small to medium-sized businesses.
Key elements of our strategy include:
Continuing to Target the Small and Medium-Sized Business Market Segment. We believe the small and medium-sized business market offers us the best opportunity to continue building a eading national Web services company. We believe this is an attractive market because it is large and because these businesses need a comprehensive, affordable solution to their Web services requirements. Our Web services meet critical business needs of these businesses that they often do not have the time, resources, or technical skills to fulfill themselves.
Developing or Acquiring Complementary Services and Technologies. We market and sell Web services that are essential to an effective Internet presence such as local and regional lead generation, search engine optimization, Website search tools, affiliate marketing networks, and Web analytics. While we intend to provide many of these services through our relationships with other vendors or contractors, we will seek opportunities either to internally develop some or all of these services and products or acquire businesses that provide them.
Expanding our Distribution Channels. To sell our Web services and products cost efficiently, we plan to establish strategic marketing relationships with organizations that have strong brand recognition with small and medium-sized businesses. We also plan to undertake marketing and sales activities so that a larger proportion of our customers are acquired through increased direct sales and new reseller programs.
Selling Additional Services and Products to Existing Customers. As of September 30, 2008, we had only one client. As customers build their Internet presence, we believe that we can demonstrate the value of the additional premium services and products we offer, which can increase our average revenue per customer and improve our revenue growth. For example, we can provide paid search and e- commerce capabilities to our current customers' Websites, enabling additional sources of revenue for them while also contributing to a measurable return on their investment.
Strengthening Customer Retention. We are dedicated to enhancing customer retention and building lasting relationships with our customers. We believe it is critical to customer retention to target small and medium-sized businesses that already understand the value of the Internet to their success. Improving customer retention also requires maximizing customer loyalty. Therefore, we are focused on customer satisfaction, consistent communication, Web service and product enhancements, and high quality customer service. Additionally, we believe that by educating our existing and prospective customers about the value of our services to their businesses we can build lasting customer relationships.
COMPLIANCE WITH GOVERNMENT REGULATION
We do not believe that government regulation will have a material impact on the way we conduct our business.
EMPLOYEES
We have no employees as of the date of this annual report other than our sole director.
RESEARCH AND DEVELOPMENT EXPENDITURES
We have not incurred any other research or development expenditures since our incorporation.
SUBSIDIARIES
We do not have any subsidiaries.
PATENTS AND TRADEMARKS
We do not own, either legally or beneficially, any patents or trademarks.
RISK FACTORS
An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below and the other information in this prospectus before investing in our common stock. If any of the following risks occur, our business, operating results and financial condition could be seriously harmed. The trading price of our common stock could decline due to any of these risks, and you may lose part or all of your investment.
RISKS RELATED TO OUR BUSINESS
THE SUCCESS OF OUR BUSINESS DEPENDS ON THE CONTINUED GROWTH OF THE INTERNET AS A BUSINESS TOOL FOR SMALL AND MEDIUM-SIZED BUSINESSES.
Expansion in the sales of our Web services and products will depend on the continued acceptance of the Internet as a communications and commerce platform for small and medium-sized businesses. The use of the Internet as a business tool could be adversely affected by delays in the development or adoption of new standards and protocols to handle increased demands of Internet activity, security, reliability, cost, ease-of-use, accessibility, and quality of service. The performance of the Internet and its acceptance as a business tool have been harmed in the past by viruses, worms, and similar malicious programs, and the Internet has experienced a variety of outages and other delays as a result of damage to portions of its infrastructure. If for any reason the Internet does not remain a widespread communications medium and commercial platform or businesses do not continue to become Internet enabled and maintain an online presence, the demand for our services and products would be significantly reduced, thereby significantly affecting our sales and the success of our business.
IF ECONOMIC OR OTHER FACTORS NEGATIVELY AFFECT THE SMALL AND MEDIUM-SIZED BUSINESS SECTOR, OUR CUSTOMERS MAY BECOME UNWILLING OR UNABLE TO PURCHASE OUR WEB SERVICES AND PRODUCTS, WHICH COULD CAUSE OUR REVENUE TO DECLINE AND IMPAIR OUR ABILITY TO OPERATE PROFITABLY.
Our existing and target customers are small and medium-sized businesses. These businesses are more likely to be significantly affected by economic downturns than larger, more established businesses. Additionally, these customers often have limited discretionary funds, which they may choose to spend on items other than our Web services and products. If small and medium-sized businesses experience economic hardship, they may be unwilling or unable to expend resources to develop their Internet presences, which would negatively affect the overall demand for our services and products and could cause our revenue to decline.
OUR OPERATING RESULTS ARE DIFFICULT TO PREDICT AND FLUCTUATIONS IN OUR PERFORMANCE MAY RESULT IN VOLATILITY IN THE MARKET PRICE OF OUR COMMON STOCK.
Due to our limited operating history, our evolving business model, and the unpredictability of our emerging industry, our operating results are difficult to predict. We expect to experience fluctuations in our operating and financial results due to a number of factors, such as:
*our ability to retain and increase sales to existing customers, attract new customers, and satisfy our customers' requirements;
*the renewal rates for our services;
*changes in our pricing policies;
*the introduction of new services and products by us or our competitors;
*our ability to hire, train and retain members of our sales force;
*the rate of expansion and effectiveness of our sales force;
*technical difficulties or interruptions in our services;
*general economic conditions;
*additional investment in our services or operations; and
*our success in maintaining and adding strategic marketing relationships.
Such fluctuations may result in volatility in the market price of our common stock.
WE FACE INTENSE AND GROWING COMPETITION. IF WE ARE UNABLE TO COMPETE SUCCESSFULLY, OUR BUSINESS WILL BE SERIOUSLY HARMED.
The market for our Web services and products is competitive and has relatively low barriers to entry. Our competitors vary in size and in the variety of services they offer. We encounter competition from a wide variety of company types, including:
*Website design and development service and software companies;
*Internet service providers and application service providers;
*Internet search engine providers;
*Local business directory providers; and
*Website domain name providers and hosting companies.
In addition, due to relatively low barriers to entry in our industry, we expect the intensity of competition to increase in the future from other established and emerging companies. Increased competition may result in price reductions, reduced gross margins, and loss of market share, any one of which could seriously harm our business. We also expect that competition will increase as a result of industry consolidations and formations of alliances among industry participants.
Moreover, many of our current competitors have longer operating histories, significantly greater financial, technical, marketing and other resources, greater brand recognition and, we believe, a larger installed base of customers. These competitors may be able to adapt more quickly to new or emerging technologies and changes in customer requirements. They may be able to devote greater resources to the promotion and sale of their services and products than we can. If we fail to compete successfully against current or future competitors, our revenue could increase less than anticipated, or even decline, and our business could be significantly harmed.
OUR FAILURE TO BUILD BRAND AWARENESS WITHIN A SHORT PERIOD OF TIME COULD COMPROMISE OUR ABILITY TO COMPETE AND TO GROW OUR BUSINESS.
As a result of the anticipated increase in competition in our market, and the likelihood that some of this competition will come from companies with established brands, we believe brand name recognition and reputation will become increasingly important. Our planned strategy of relying significantly on third- party strategic marketing relationships to find new customers may impede our ability to build brand awareness, as our customers may mistakenly believe our Web services and products will be those of the parties with which we have strategic marketing relationships. If we do not continue to build brand awareness, we could be placed at a competitive disadvantage to companies whose brands are more recognizable than ours.
IF WE CANNOT ADAPT TO TECHNOLOGICAL ADVANCES, OUR WEB SERVICES AND PRODUCTS MAY BECOME OBSOLETE AND OUR ABILITY TO COMPETE WOULD BE IMPAIRED.
Changes in our industry occur very rapidly, including changes in the way the Internet operates or is used by small and medium-sized businesses and their customers. As a result, our Web services and products could become obsolete within a short time period. The introduction of competing products employing new technologies and the evolution of new industry standards could render our existing products or services obsolete and unmarketable. To be successful, our Web services and products must keep pace with technological developments and evolving industry standards, address the ever-changing and increasingly sophisticated needs of our customers, and achieve market acceptance. If we are unable to develop new Web services or products, or enhancements to our Web services or products, on a timely and cost-effective basis, or if new Web services or products or enhancements do not achieve market acceptance, our business would be seriously harmed.
PROVIDING WEB SERVICES AND PRODUCTS TO SMALL AND MEDIUM-SIZED BUSINESSES DESIGNED TO ALLOW THEM TO INTERNET-ENABLE THEIR BUSINESSES IS A NEW AND EMERGING MARKET; IF THIS MARKET FAILS TO DEVELOP, WE WILL NOT BE ABLE TO GROWOUR BUSINESS.
Our success depends on a significant number of small and medium-sized business outsourcing Website design, hosting, and management as well as adopting other online business solutions. The market for our Web services and products is relatively new and untested. Custom Website development has been the predominant method of Internet enablement, and small and medium-sized businesses may be slow to adopt our template-based Web services and products. Further, if small or medium-sized businesses determine that having an Internet presence is not giving their businesses an advantage, they would be less likely to purchase our Web services and products. If the market for our Web services and products fails to grow or grows more slowly than we currently anticipate, or if our Web services and products fail to achieve widespread customer acceptance, our business would be seriously harmed.
THE ISSUANCE OF ADDITIONAL SHARES WILL RESULT IN DILUTION TO OUR CURRENT SHAREHOLDERS.
To date, we have been dependent on funds contributed by our President, Mr. Ya Tang Chao, for the operations of the Company. In order to secure additional funding to continue operations, we may need to engage in equity or debt financings. If we raise additional funds through further issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of our common stock, including the shares of common stock sold in this offering. Any debt financing secured by us in the future could involve restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions. In addition, we may not be able to obtain additional financing on terms favorable to us, if at all. If we are unable to obtain adequate financing or financing on terms satisfactory to us, when we require it, our ability to continue to support our business growth and to respond to business challenges could be significantly impaired.
IF WE DO NOT OBTAIN ADDITIONAL FINANCING TO SUPPORT BUSINESS GROWTH, OUR BUSINESS MAY FAIL.
We intend to continue to make investments to support our business growth and may require additional funds to respond to business challenges, including the need to develop new services and products or enhance our existing Web services, enhance our operating infrastructure and acquire complementary businesses and technologies.
While at September 30, 2008 we had cash on hand of $3,246, unless we obtain additional funding, we expect that we will only be able to continue operations for twelve months. We anticipate that additional funding will be needed for general administrative expenses and marketing costs.
In order to expand our business operations, we anticipate that we will have to raise additional funding. If we are not able to raise the capital necessary to fund our business expansion objectives, we may have to delay the implementation of our business plan.
We do not currently have any arrangements for financing. The availability of additional funding will be subject to a number of factors, including general market conditions, investor acceptance of our business plan and initial results from our business operations. These factors may impact the timing, amount, terms or conditions of additional financing available to us. The most likely source of future funds, if any, is through the sale of additional shares of common stock or advances from our sole director.
WE HAVE COMMENCED LIMITED BUSINESS OPERATIONS, AND THEREFORE WE FACE A HIGH RISK OF BUSINESS FAILURE.
We were incorporated on May 9, 2007 and to date have been involved primarily in organizational activities. We have earned limited revenues in the amount of $1434 since inception. and have total income of $(37,052) from our incorporation to September 30, 2008.
We have had very limited operations. Accordingly, you cannot thoroughly evaluate our business and our future prospects, due to a lack of operating history.
IF WE ARE UNABLE TO RETAIN KEY PERSONNEL, THIS MAY COMPROMISE OUR ABILITY TO SUCCESSFULLY MANAGE OUR BUSINESS AND PURSUE OUR GRWOTH STRATEGY.
We depend on the services of our sole director and officer, Ya Tang Chao, for the future success of our business. The loss of the services of Mr. Chao could have an adverse effect on our business, financial condition and results of operations. We do not carry any key personnel life insurance policies on Mr. Chao and we do not have a contract for his services.
OUR DIRECTOR AND OFFICER OWNS 60.79% OF OUR OUTSTANDING COMMON STOCK AND THEREFORE HAS CONTROL OVER ALL CORPORATE DECISIONS. HE MAY MAKE BUSINESS DECISIONS THAT ARE DISADVANTAGEOUS TO MINORITY SHAREHOLDERS.
As of the date of this Prospectus, Mr. Chao, our sole director and officer, owns approximately 60.79% of the outstanding shares of our common stock. Accordingly, he will have significant influence in determining the outcome of all corporate transactions or other matters, including the election of directors, mergers, consolidations and the sale of all or substantially all of our assets, as well as the power to prevent or cause a change in control. The interests of Mr. Chao may differ from the interests of the other stockholders and may result in corporate decisions that are disadvantageous to other shareholders.
GOVERNMENTAL REGULATION INVOLVING THE TRANSMISSION OF INFORMATION OVER THE INTERNET IS EVOLVING, AND WE MAY FACE LIABILITY IN CONNECTION WITH THE INFORMATION THAT IS TRANSMITTED USING OUR WEB SERVICES AND PRODUCTS.
The legal framework that applies to the Internet is continually evolving. Laws relating to the Internet have been, and likely will continue to be, enacted that address issues of privacy, security, pricing, taxation, quality and substance of services and products, and other issues. Because our Web services and products allow customers to transmit information over the Internet on their own Websites, and because we develop many of these Websites, we may be found to be liable for any improper information that our customers transmit. We may face liability for defamation, negligence, copyright, patent or trademark infringement, and other claims based on the nature and content of the materials being transmitted by our Web services. Although we retain discretion to cancel the Web services being provided to customers if we learn such content is being transmitted, there can be no guarantee that our customers will refrain from such transmission or that we will not be deemed responsible for the content being transmitted or hosted using our Web services or products. Government regulations also could affect the cost of communicating on the Internet and could negatively affect the demand for our Web services and products, and our business could thereby be harmed.
RISKS RELATED TO OUR COMMON STOCK
OUR COMMON SHARES ARE CONSIDERED PENNY STOCK, WHICH LIMITS AN INVESTOR'S ABILITY TO SELL THE STOCK.
Our shares of common stock constitute penny stock under the Securities and Exchange Act. The shares will remain penny stock for the foreseeable future. Broker-dealer practices in connection with transactions in "penny stocks" are regulated by penny stock rules adopted by the Securities and Exchange Commission. Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on some national securities exchanges or quoted on NASDAQ). 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 that 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, if the broker-dealer is the sole market maker, the broker-dealer must disclose this fact and the broker-dealer's presumed control over the market, and monthly account statements showing the market value of each penny stock held in the customer's account. In addition, broker-dealers who sell these securities to persons other than established customers and "accredited investors" 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. Consequently, these requirements may have the effect of reducing the level of trading activity, if any, in the secondary market for a security subject to the penny stock rules, and investors in our common stock may find it difficult to sell their shares.
FORWARD-LOOKING STATEMENTS
All statements other than statements of historical fact made in this report are forward looking. In particular, the statements herein regarding industry prospects and future results of operations or financial position are forward- looking statements. These forward-looking statements can be identified by the use of words such as "believes," "estimates," "could," "possibly," "probably,"anticipates," "projects," "expects," "may," "will," or "should" or other variations or similar words. No assurances can be given that the future results anticipated by the forward-looking statements will be achieved. Forward-looking statements reflect management's current expectations and are inherently uncertain. Our actual results may differ significantly from management's expectations.
The following discussion and analysis should be read in conjunction with our financial statements, included herewith. This discussion should not be construed to imply that the results discussed herein will necessarily continue into the future, or that any conclusion reached herein will necessarily be indicative of actual operating results in the future. Such discussion represents only the best present assessment of our management.
ITEM 2:
ITEM 2: DESCRIPTION OF PROPERTY
The Company does not have, own or lease any property.
ITEM 3:
ITEM 3: LEGAL PROCEEDINGS
There are no legal proceedings pending or threatened against us.
ITEM 4:
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted during the fourth quarter of our fiscal year to a vote of security holders, through the solicitation of proxies or otherwise.
PART II
ITEM 5:
ITEM 5: MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
MARKET INFORMATION
Our shares of common stock were quoted on the OTC Bulletin Board on June 9, 2008. This market is extremely limited and the prices quoted are not a reliable indication of the value of our common stock. As of September 30 2008, no trades of our common stock occurred through the facilities of the OTC Bulletin Board.
The quotations on the OTC Bulletin Board reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.
We had 29 shareholders of record as at the date of this annual report.
DIVIDENDS
There are no restrictions in our articles of incorporation or bylaws that prevent us from declaring dividends. The Nevada Revised Statutes, however, do prohibit us from declaring dividends where, after giving effect to the distribution of the dividend:
1. we would not be able to pay our debts as they become due in the usual course of business; or
2. our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the rights of shareholders who have preferential rights superior to those receiving the distribution.
We have not declared any dividends, and we do not plan to declare any dividends in the foreseeable future.
ITEM 6:
ITEM 6: MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Our success depends on a significant number of small and medium-sized business outsourcing Website design, hosting, and management as well as adopting other online business solutions. As our existing and target customers are small and medium-sized businesses, these businesses are more likely to be significantly affected by economic downturns than larger, more established businesses. Additionally, these customers often have limited discretionary funds, which they may choose to spend on items other than our Web services and products. If small and medium-sized businesses experience economic hardship, they may be unwilling or unable to expend resources to develop their Internet presences, which would negatively affect the overall demand for our services and products and could cause our revenue to decline.
Our technology automates many aspects of creating, maintaining, enhancing, and marketing Websites on behalf of our customers. We intend to become one of the industry's largest providers of affordable Web services and products enabling small and medium-sized businesses to have an effective Internet presence. Our primary service offerings include Website design and publishing, Internet marketing and advertising, search engine optimization, search engine submission, and lead generation. In addition to our primary service offering, we provide a variety of premium services to customers who desire more advanced capabilities, such as e-commerce solutions and more sophisticated Internet marketing services. This breadth and flexibility of our offerings allow us to address the Web services needs of a wide variety of customers, ranging from those just establishing their Websites to those requiring a more robust Internet presence.
Our target market consists of approximately 23 million businesses in the United States. This market onsists of approximately 14.7 million income-generating home-based businesses and approximately 8.2 million additional businesses with fewer than 100 employees that are not home-based businesses, as estimated by IDC, in March 2006. Adding these two markets together, this target market represents approximately 23 million businesses. We believe that small and medium-sized businesses understand that an effective Web presence isimportant to their success because of the increasing acceptance of the Internetas a tool for both consumers and businesses.
We intend to sell our Web services and products primarily to customers identified through strategic marketing relationships with established companies that have large numbers of small and medium-sized business customers, such as business associations. We intend to establish a direct sales force that utilizes leads generated by our strategic marketing relationships to acquire new customers. Our sales force will specialize in selling to small and medium-sized businesses across a wide variety of industries throughout North America.
Over the coming 12 months, we plan to engage in a variety of marketing activities to increase awareness of our services and products, to sell additional services and products to our existing customer base, and to enhance the value we provide to small business entities. Our marketing activities will include:
{circle}Targeted e-mail and direct response campaigns to prospects and customers;
{circle}Search engine advertising;
{circle}Electronic customer newsletters; and
{circle}Affiliate programs.
We expect to incur the following costs in the next 12 months in connection with our business operations:
Marketing costs: [$20,000] General administrative costs: [$10,000] ----------- Total: [$30,000]
In addition, we anticipate spending an additional $10,000 on professional fees, including fees payable in connection with complying with reporting obligations.
Total expenditures over the next 12 months are therefore expected to be $40,000.
We do not have sufficient funds on hand to commence intended business operations and our cash reserves are not sufficient to meet our obligations for the next twelve-month period. As a result, we will need to seek additional funding in the near future. We currently do not have a specific plan of how we will obtain such funding; whomever, we anticipate that additional funding will be in the form of equity financing from the sale of our common stock.
We may also seek to obtain short-term loans from our directors. 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 equity financing.
If we are unable to raise the required financing, we will be delayed in conducting our business plan.
RESULTS OF OPERATIONS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2008
We did not earn any revenues during the fiscal year ended September 30, 2008. We have not fully implemented our sales and marketing strategy for our bamboo wood flooring products and can therefore provide no assurance that our business model and plan is economically feasible.
We incurred operating expenses in the amount of $37,052 for the year ended September 30, 2008. These operating expenses were comprised of banking charges of $82, office expenses of $246, professional fees of $24,686, filing and transfer agent fees of $10,538, and travel and promotional costs of $1,500.
As compared to a small net income of $1,398 achieved in fiscal 2007, we reverted to a loss of ($37,052) in fiscal 2008 primarily due to the incurrence of filing and transfer agent fees of $10,538 (2007 - $0) and an increase in professional fees ($24,686 in 2008 as compared to $0 in 2007).
We have not attained profitable operations and are dependent upon obtaining financing to complete our proposed business plan. For these reasons, there is substantial doubt that we will be able to continue as a going concern.
ITEM 7:
ITEM 7: FINANCIAL STATEMENTS
GEORGE STEWART, CPA 2301 SOUTH JACKSON STREET, SUITE 101-G SEATTLE, WASHINGTON 98144 (206) 328-8554 FAX(206) 328-0383
December 12, 2008
Board of Directors Web Wizard, Inc. 6588 Southoaks Cres Unit 76 Burnaby, B.C. V5E 4K1
Dear Board Members:
I have been engaged to audit the financial statements of Web Wizard, Inc. for the years ended September 30, 2008 and 2007. Independence is crucial to the performance of audit services, and our professional standards require that I communicate least annually regarding all relationships between my firm and Web Wizard, Inc. that, in my professional judgment, may reasonably thought to bear on my independence.
I have access to George Stewart, CPA's policies and procedures relating to independence and conflict of interest. I have a list of clients with publicly traded securities in which investment by me and employees of the Firm is forbidden. I have evidence for myself and employees about their adherence to these policies.
In my professional judgment, George Stewart, CPA is independent with respect to Web Wizard, Inc. within the meaning of the Securities Acts(the Acts) administered by the United States Securities and Exchange Commission.
In forming my professional judgment about my independence, I have identified no relationships between George Stewart, CPA and Web Wizard, Inc. which might bear on the determination of my independence.
I would be pleased to meet with the Board to discuss auditor independence and to respond directly to any questions you may have.
Sincerely,
/S/ George Stewart
George Stewart, CPA
WEB WIZARD, INC. (A DEVELOPMENT STAGE COMPANY) FINANCIAL STATEMENTS SEPTEMBER 30, 2008 (STATED IN US DOLLARS) (UNAUDITED)
BALANCE SHEETS
STATEMENTS OF OPERATIONS
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
STATEMENTS OF CASH FLOWS
NOTES TO THE FINANCIAL STATEMENTS
WEB WIZARD, INC. (A Development Stage Company) BALANCE SHEETS
The accompanying notes are an integral part of these financial statements
WEB WIZARD, INC. (A Development Stage Company) STATEMENTS OF OPERATIONS
The accompanying notes are an integral part of these financial statements
WEB WIZARD, INC. (A Development Stage Company) STATEMENTS OF CASH FLOWS
The accompanying notes are an integral part of these financial statements
WEB WIZARD, INC. (A Development Stage Company) STATEMENTS OF CASH FLOWS
The accompanying notes are an integral part of these financial statements
WEB WIZARD, INC. (A Development Stage Company) NOTES TO THE FINANCIAL STATEMENTS September 30, 2008
1. BASIS OF REPRESENTATION
The Company was incorporated in the State of Nevada on May 9, 2007. The Company is in the business of website development. The Company is considered to be a development stage company and has not generated significant revenues from operations.
Going Concern The accompanying financial statements have been prepared assuming the Company will continue as a going concern. Its ability to continue as a going concern is dependent upon the ability of the Company to obtain the necessary financing to meet its obligations and pay its liabilities arising from normal business operations when they come due. The outcome of these matters cannot be predicted with any certainty at this time and raise substantial doubt that the Company will be able to continue as a going concern. These financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should the Company be unable to continue as a going concern. Management believes that the Company will need to obtain additional funding by borrowing funds from its directors and officers, or a private placement of common stock.
2. SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America. Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of financial statements involves the use of estimates, which have been made using judgment. Actual results may vary from these estimates.
The financial statements have, in management's opinion, been prepared within the framework of the significant accounting policies summarized below:
Development Stage Company
The Company is considered to be in the development stage, pursuant to Statement of Financial Accounting Standards ("SFAS") No. 7, "Accounting and Reporting by Development Stage Enterprises." Since its formation, the Company has not yet realized any revenues from its planned operations.
Financial Instruments
The fair value of the Company's financial instruments, consisting of cash and accounts payable and accrued liabilities, is equal to fair value due to their short-term to maturity. Unless otherwise noted, it is management's opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments.
Income Taxes
The Company has adopted SFAS No. 109 - "Accounting for Income Taxes". SFAS No. 109 requires the use of the asset and liability method of accounting of income taxes. Under the asset and liability method of SFAS No. 109, deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statements carrying amounts of 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.
WEB WIZARD, INC. (A Development Stage Company) NOTES TO THE FINANCIAL STATEMENTS September 30, 2008
2. SIGNIFICANT ACOUNTING POLICIES (cont'd{ellipsis})
Foreign Currency Translation
The financial statements are presented in United States dollars. In accordance with SFAS No. 52, "Foreign Currency Translation", foreign denominated monetary assets and liabilities are translated into their United States dollar equivalents using foreign exchange rates which prevailed at the balance sheet date. Non-monetary assets and liabilities are translated at the transaction date. Revenue and expenses are translated at average rates of exchange during the period. Related translation adjustments are reported as a separate component of stockholders' equity, whereas gains or losses resulting from foreign currency transactions are included in results of operations.
Basic and Diluted Loss Per Share
In accordance with SFAS No. 128 - "Earnings Per Share", the basic loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding. Diluted loss per common share is computed similar to basic loss per common share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. At December 31, 2007, the Company had no stock equivalents that were anti-dilutive and excluded in the loss per share computation.
Stock-based Compensation
In December 2004, the Financial Accounting Standards Board ("FASB") issued SFAS No. 123R, "Share-Based Payment", which replaced SFAS No. 123, "Accounting for Stock-Based Compensation" and superseded APB Opinion No. 25, "Accounting for Stock Issued to Employees". In January 2005, the Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin ("SAB") No. 107, "Share- Based Payment", which provides supplemental implementation guidance for SFAS No. 123R. SFAS No. 123R requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on the grant date fair value of the award. Under SFAS No. 123R, the Company must determine the appropriate fair value model to be used for valuing share-based payments and the amortization method for compensation cost. The Company adopted SFAS No. 123R on March 1, 2006. As the Company has never granted any stock options the adoption of this accounting policy had no effect on its financial position or results of operations.
Comprehensive Income
The Company has adopted SFAS 130, "Reporting Comprehensive Income", which establishes standards for reporting and display of comprehensive income, its components and accumulated balances. When applicable, the Company would disclose this information on its Statement of Stockholder's Equity. Comprehensive income comprises equity except those resulting from investments by owners and distributions to owners. The Company has not had any transactions that are required to be reported in other comprehensive income.
WEB WIZARD, INC. (A Development Stage Company) NOTES TO THE FINANCIAL STATEMENTS September 30, 2008
2. SIGNIFICANT ACOUNTING POLICIES (cont'd{ellipsis})
Recent Accounting Pronouncements
In September 2006, the SEC issued SAB No. 108, "Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements." SAB No. 108 addresses how the effects of prior year uncorrected misstatements should be considered when quantifying misstatements in current year financial statements. SAB No. 108 requires companies to quantify misstatements using a balance sheet and income statement approach and to evaluate whether either approach results in quantifying an error that is material in light of relevant quantitative and qualitative factors. SAB No. 108 is effective for periods ending after November 15, 2006. The adoption of SAB No. 108 had no material effect on the Company's financial statements.
In September 2006, the FASB issued SFAS No. 157, "Fair Value Measures". This Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), expands disclosures about fair value measurements, and applies under other accounting pronouncements that require or permit fair value measurements. SFAS No. 157 does not require any new fair value measurements. However, the FASB anticipates that for some entities, the application of SFAS No. 157 will change current practice. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, which for the Company would be the fiscal year beginning March 1, 2008. The Company is currently evaluating the impact of SFAS No. 157 but does not expect that it will have a material impact on its financial statements.
In September 2006, the FASB issued SFAS No. 158, "Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans." This Statement requires an employer to recognize the over funded or under funded status of a defined benefit post retirement plan (other than a multiemployer plan) as an asset or liability in its statement of financial position, and to recognize changes in that funded status in the year in which the changes occur through comprehensive income. SFAS No. 158 is effective for fiscal years ending after December 15, 2006. The implementation of SFAS No. 158 had no material impact on the Company's financial position and results of operations.
In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities". This Statement permits entities to choose to measure many financial assets and financial liabilities at fair value. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. The Company is currently assessing the impact of SFAS No. 159 on its financial position and results of operations.
3. COMMON STOCK
In June 2007, the Company issued 7,400,000 shares of common stock at a price of $0.001 per share, for total proceeds of $7,400.
In July 2007, the Company issued 825,000 shares of common stock, for total proceeds of $16,500.
At September 30, 2008, the Company had no issued or outstanding stock options or warrants.
ITEM 8:
ITEM 8: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 8A: CONTROLS AND PROCEDURES
The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. Management must evaluate its internal controls over financial reporting, as required by Sarbanes-Oxley (SOX) Section 404 (a). 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 U.S. generally accepted accounting principles.
As of September 30, 2008, management assessed the effectiveness of the Company's internal control over financial reporting based on the criteria for effective internal control over financial reporting established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") and SEC guidance on conducting such assessments. Based on that evaluation, they concluded that, during the period covered by this report, such internal controls and procedures were not effective to detect the inappropriate application of US GAAP rules as more fully described below. This was due to deficiencies that existed in the design or operation of our internal controls over financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses.
The matters involving internal controls and procedures that the Company's management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: (1) lack of a functioning audit committee and lack of a majority of outside directors on the Company's board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; (2) inadequate segregation of duties consistent with control objectives; (3) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements; and (4) ineffective controls over period end financial disclosure and reporting processes. The aforementioned material weaknesses were identified by the Company's Chief Financial Officer in connection with the audit of our financial statements as of September 30, 2007 and communicated the matters to our management.
Management believes that the material weaknesses set forth in items (2), (3) and (4) above did not have an affect on the Company's financial results. However, management believes that the lack of outside directors on the Company's board of directors can resulting in oversight in the establishing and monitoring of required internal controls and procedures which can affect the process of preparing Company's financial statements.
We are committed to improving our financial organization. As part of this commitment, we will create a position to segregate duties consistent with control objectives and will increase our personnel resources and technical accounting expertise within the accounting function when funds are available to the Company: i) Appointing one or more outside directors to our board of directors who shall be appointed to the audit committee of the Company 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 ; and ii) Preparing and implementing sufficient written policies and checklists which will set forth procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements.
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 the Company's Board. In addition, management believes that preparing and implementing sufficient written policies and checklists will remedy the following material weaknesses (i) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements; and (ii) ineffective controls over period end financial close and reporting processes. Further, management believes that the hiring of additional personnel who have the technical expertise and knowledge will result in proper segregation of duties and provide more checks and balances within the financial reporting department. Additional personnel will also provide the cross training needed to support the Company if personnel turn over issues within the financial reporting department occur. This coupled with the appointment of additional outside directors will greatly decrease any control and procedure issues the Company may encounter in the future.
We will continue to monitor and evaluate the effectiveness of our internal controls and procedures and our internal controls over financial reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow.
ITEM 8B.CHANGES IN INTERNAL CONTROLS
There have been no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rules 13a-15 or 15d-15 under the Exchange Act that occurred during the small business issuer's last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART III
ITEM 9:
ITEM 9: DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Name Age Position with Registrant Served as a Director or Officer Since
Ya Tang Chao 32 President, C.E.O, May 9, 2007 Secretary, Treasurer and Director
Set forth below is a brief description of the background and business experience of our sole executive officer and director for the past five years.
Mr. Chao has acted as our President, CEO, Secretary, Treasurer and Director since our incorporation on May 9, 2007. Since 2000, Mr. Chao has worked as an IT consultant to HSBC's Group Development Center, the Bank's information technology arm based in Burnaby, British Columbia and focused on developing Web applications for the bank's online banking operations. From 1996 until 1999, Mr. Chao was a software engineer with IPACS, a Singapore-based IT outsourcing company with operations in Shanghai, China. At IPACS, Mr. Chao helped developed software applications and platforms for brokerage houses and banks based in Shanghai. Mr. Chao graduated with a Bachelor's Degree in Computer Science from China National Textile University in 1999.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our executive officers and directors, and persons who beneficially own more than 10% of our equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Officers, directors and greater than 10% shareholders are required by SEC regulation to furnish us with copies of all Section 16(a) forms they file. Based on our review of the copies of such forms we received, we believe that during the fiscal year ended September 30, 2008 all such filing requirements applicable to our officers and directors were complied with exception that reports were filed late by the following persons:
Number TransactionsKnown Failures Of late Not Timely To File a Name and principal position Reports Reported Required Form - -------------------------------------------------------------------------------- - ---------- Ya Tang Chao 0 0 0 (President, Chief Executive Officer, Treasurer, Secretary and Director)
ITEM 10:
ITEM 10: EXECUTIVE COMPENSATION
The table below summarizes all compensation awarded to, earned by, or paid to our executive officers by any person for all services rendered in all capacities to us for the fiscal year ended September 30, 2008.
ITEM 11:
ITEM 11: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table provides the names and addresses of each person known to us to own more than 5% of our outstanding common stock as of the date of this prospectus, and by our officer and director, individually and as a group. Except as otherwise indicated, all shares are owned directly.
The percent of class is based on 8,225,000 shares of common stock issued and outstanding as of the date of this prospectus.
ITEM 12:
ITEM 12: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None of the following parties has, since our date of incorporation, had any material interest, direct or indirect, in any transaction with us or in any presently proposed transaction that has or will materially affect us:
{circle}Any of our directors or officers;
{circle}Any person proposed as a nominee for election as a director;
{circle}Any person who beneficially owns, directly or indirectly, shares carrying more than 10% of the voting rights attached to our outstanding shares of common stock;
{circle}Any member of the immediate family of any of the foregoing persons who has the same house as such person.
ITEM 13:
ITEM 13: EXHIBITS AND REPORTS
Exhibits
3.1* Articles of Incorporation 3.2* Bylaws 31.1 Certification pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 *filed as an exhibit to our registration statement on Form SB-2 dated January 11, 2008
Reports on Form 8-K
We did not file any reports on Form 8-K during the last quarter of fiscal 2008.
ITEM 14:
ITEM 14: PRINCIPAL ACCOUNTANT FEES AND SERVICES
Our principal accountants, George Stewart, CPA, rendered invoices to us during the fiscal periods indicated for the following fees and services:
Fiscal year ended Fiscal year ended September 30, 2008 September 30, 2007 Audit fees $7,700 $7,500 Audit-related fees Nil Nil Tax fees Nil Nil All other fees Nil Nil
Audit fees consist of fees related to professional services rendered in connection with the audit of our annual financial statements, the review of the financial statements included in each of our quarterly reports on Form 10-QSB.
Our policy is to pre-approve all audit and permissible non-audit services performed by the independent accountants. These services may include audit services, audit-related services, tax services and other services. Under our audit committee's policy, pre-approval is generally provided for particular services or categories of services, including planned services, project based services and routine consultations. In addition, we may also pre-approve particular services on a case-by-case basis. We approved all services that our independent accountants provided to us in the past two fiscal years.
SIGNATURES
Pursuant to the requirements of 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.
Web Wizard Inc.
By /s/ Ya Tang Chao Ya Tang Chao President, CEO, Treasurer, Secretary & Director Date: December 12, 2008
In accordance with the Securities Exchange Act, this report has been signed below by the following person(s) on behalf of the registrant and in the capacities and on the dates indicated.
By /s/ Ya Tang Chao __________ Ya Tang Chao President, CEO, Treasurer, Secretary & Director Date: December 12, 2008