ITEM 1. - BUSINESS.
CORPORATE BACKGROUND
International Industrial Enterprises, Inc. was incorporated on November 19, 1976 in the State of Delaware by John C. Prescott, a resident of Las Vegas, Nevada whose purpose was real estate investment, which continued until April 1982 at which time a bankruptcy was declared. The company became dormant until July 29, 1994 when Jose F. Garcia made an offer to purchase the company.
Plans to operate a business materialize on June 14, 2004, when Jose F. Garcia, a major stockholder purchased Karlton Management, Inc., whose name was changed to Group One Associates Inc., a Nevada Corporation. Group One Associates, Inc. became an acquisition of our company, when Mr. Garcia made it a capital contribution to our company.
The new President Edward V. Stambro had many years of experience in designing and printing tourist maps for tourist oriented locations and work began on tourist maps for Las Vegas.
Our Business stalled for eight months due to the demise of our President in October 2006. On June 18, 2007, a new President was elected and our business began anew.
While we do not own any printing equipment; we do job-out our printing needs (maps) to established printing companies. Our tourist maps are due to be printed on quality paper stock and our map designs are comical as well as informational.
We intend to hire experienced advertising salesmen to sell advertising space on our maps.
There is vigorous competition in the publishing and distribution of maps of Las Vegas.
Some of these maps are sold and some are free.
We intend to compete by offering a free Las Vegas map with advertisers, which feature main thoroughfares (no secondary roads) and the location of Hotels, Casinos, Restaurants and tourist locations.
We are not dependent upon the availability of raw materials and do not have to rely upon any principal suppliers, patents, trademarks, licenses, concessions, royalty agreements and labor contracts.
Government regulations and approval are not required nor are there any probable government regulation foreseen in the future.
Employees
At December 31, 2007, the Company had 1 full time employee. None of its employees were represented by a collective bargaining arrangement.
The Company does not carry key person life insurance on any of its Directorial personnel. The loss of the services of any of its executive officers or other directors could have a material adverse effect on the business, results of operations and financial condition of the Company. The Company's future success also depends on its ability to retain and attract highly qualified technical and managerial personnel.
There can be no assurance that the Company will be able to retain its key managerial and technical personnel or that it will be able to attract and retain additional highly qualified technical and managerial personnel in the future. The inability to attract and retain the technical and managerial personnel necessary to support the growth of the Company's business, due to, among other things, a large increase in the wages demanded by such personnel, could have a material adverse effect upon the Company's business, results of operations and financial condition.
ITEM 1A.
ITEM 1A. - RISK FACTORS.
WE HAVE NO OPERATING HISTORY OR BASIS FOR EVALUATING PROSPECTS.
Since our inception we have had minimal operations. Our independent auditor has expressed a “going concern” qualification in the Independent Auditor’s Report on the footnotes to our consolidated financial statements. This means that there is doubt as to our ability to continue operations.
WE DEPEND SUBSTANTIALLY UPON OUR PRESIDENT, WHOSE EXPERIENCE IS LIMITED, TO MAKE ALL MANAGEMENT DECISIONS.
Our ability to effect a merger will be dependent upon the efforts of our president, David Rogers. Notwithstanding the importance of Mr. Rogers, we have not entered into any employment agreement or other understanding with Mr. Rogers concerning compensation or obtained any “key man” life insurance on any of his life. The loss of the services of Mr. Rogers will have a material adverse effect on our business objectives and success. We rely upon the expertise of Mr. Rogers and do not anticipate that we will hire additional personnel.
THERE MAY BE CONFLICTS OF INTEREST BETWEEN OUR MANAGEMENT AND OUR NON-MANAGEMENT SHAREHOLDERS.
Conflicts of interest create the risk that management may have an incentive to act adversely to the interests of other investors. Our officers may be entitled to receive compensation from a target company they identify or provide services to in connection with a business combination. A conflict of interest may arise between our management’s personal pecuniary interest and their fiduciary duty to our shareholders. Further, our management’s own pecuniary interest may at some point compromise their fiduciary duty to our shareholders. In addition, Mr. Rogers, our president and sole director and our chief financial officer, is currently involved with other businesses and future conflicts may arise.
WE WILL BE SUBJECT TO INTENSE COMPETITION.
We operate in the highly competitive tourist map publishing industry. We face competition from existing companies with considerably more financial and business related sources. Such competition may have an adverse effect on our profitability.
Accordingly, we expect to compete on the basis of quality and service. We expect to be less able than our larger competitors to handle generally increasing costs and expenses of doing business. Additionally, it is expected that there may be significant technological advances in the future and we may not have adequate resources to enable us to take advantage of such advances.
WE MAY ENCOUNTER UNFORESEEN COSTS IN THE TOURIST MAP BUSINESS.
Our estimates of the cost of and time to be consumed in the provision of various services customarily provided by like companies based upon management’s knowledge may not be accurate. There can be no assurance that analysis of the customer’s various needs, recommendations for and/or implementation of improvements, modifications, cost reductions, and consulting and specific problem-solving, will not cost significantly more than expected or even prove to be prohibitive. Further, we are unable to predict the amount of time or funding that will be consumed in our efforts to obtain the additional debt and/or equity financing required permitting us to offer a full range of services. There can be no assurance that cost overruns will not occur or that such cost overruns will not adversely affect us.
WE HAVE SOME MODEST DEBT OBLIGATIONS
The Company has some short-term obligations, which may affect our cash flow and ability to operate as anticipated.
ITEM 1B.
ITEM 1B. - UNRESOLVED STAFF COMMENTS.
None.
ITEM 2.
ITEM 2. - PROPERTIES.
The Company does not own any property at the present time and has no agreements to acquire any property. Our executive offices are located at 4116 Antique Sterling Ct., Las Vegas, Nevada 89129. (The space is approximately 150 square feet total) and is provided by a shareholder at no cost. We believe that this space is adequate for our needs at this time, and we believe that we will be able to locate additional space in the future, if needed, on commercially reasonable terms.
ITEM 3.
ITEM 3. - LEGAL PROCEEDINGS.
None.
ITEM 4.
ITEM 4. - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
PART II
ITEM 5.
ITEM 5. - MARKET FOR OUR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
(a) Market Information. Our Common Stock is not trading on any public trading market or stock exchange. No assurance can be given that any market for our Common Stock will ever develop.
(b) Holders. As of February 20, 2009, there were 41 record holders of all of our issued and outstanding shares of Common Stock.
(c) Dividend Policy
We have not declared or paid any cash dividends on our Common Stock and do not intend to declare or pay any cash dividend in the foreseeable future. The payment of dividends, if any, is within the discretion of the Board of Directors and will depend on our earnings, if any, our capital requirements and financial condition and such other factors as the Board of Directors may consider.
ITEM 6.
ITEM 6. - SELECTED FINANCIAL DATA.
As a smaller reporting company, as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we are not required to provide the information required by this item.
ITEM 7.
ITEM 7. - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Certain statements in this report and elsewhere (such as in other filings by the Company with the Securities and Exchange Commission ("SEC"), press releases, presentations by the Company of its management and oral statements) may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," and "should," and variations of these words and similar expressions, are intended to identify these forward-looking statements. Actual results may materially differ from any forward-looking statements. Factors that might cause or contribute to such differences include, among others, competitive pressures and constantly changing technology and market acceptance of the Company's products and services. The Company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements, which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
Plan of operation for the next twelve months
At present, there is no cash flow to sustain our operation for the next twelve months which leaves us with the following:
1. Being a public company will position us with the ability to raise capital. Debt/Equity.
2. We expect to obtain personal and business loans for the next six months operations from officers, directors, shareholders and business relationships. These loans will provide operational funds for the next six-month period at which time sales to advertisers are anticipated to begin and provide revenue to pay operational expenses.
3. There are no causes for any material changes at this time.
4. There are no seasonal aspects that could have a negative material effect on our financial condition or results of operation.
5. The major trend is the continuous growth of the numbers of tourists 39,000,000 in 2006 of which 4,000,000 were conventioneers.
Growth process is expected to continue, as there is over ten billion dollars allocated at present for construction of facilities on the Las Vegas Strip, and plans for additional commercial and home construction are projected.
In 1956, there were 35,000 inhabitants; at present there are over two million. Growth is expected to be between 2.5% and 3.5% for the next two years.
(ii) RESULTS OF OPERATIONS
The Company has earned no significant revenue or profits to date, and the Company anticipates that it will continue to incur net losses for the foreseeable future. The Company incurred a net loss of $ 132 for the year ended December 31, 2008, as compared to a net loss of $ 2,286 for 2007. From the date of inception February 4, 1999, to December 31, 2008, the Company lost a total of $ 58,431. Most labor and services have been compensated with issuances of stock or cash payment has been deferred.
Liquidity and Capital Resources
The Company has financed its expenses and costs thus far through financing and through the increase in its accounts payable, payments made by others for the company and by the settlement of the payable amounts with shares of common stock of the Company. As of December 31, 2008, the Company had a working capital deficit of $ 15,246 compared to a working capital deficit of $ 15,114 as December 31, 2007.
For the most recent fiscal year, 2008, the Company incurred a loss in the amount of $132 and $2,286 for 2007. Both years’ losses are a result of organizational expenses and expenses associated with setting up a Company structure in order to begin implementing its business plan. The Company anticipates that until these procedures are completed, it will not generate revenues, and may continue to operate at a loss thereafter, depending upon the performance of the business.
During the period from February 4, 1999 (date of inception) through December 31, 2008, the Company has incurred an accumulated net loss of $58,431 has not attained profitable operations. The Company is dependent upon obtaining adequate financing to enable it to pursue its business plan and manage its operations so that they are profitable.
(iii) The Company has limited financial resources available, which has had an adverse impact on the Company's liquidity, activities and operations. These limitations have adversely affected the Company's ability to obtain certain projects and pursue additional business. There is no assurance that the Company will be able to raise sufficient funding to enhance the Company's financial resources sufficiently to generate volume for the Company, or to engage in any significant research and development, or purchase plant or significant equipment.
Management has been successful in raising sufficient funds to cover the Company’s immediate expenses including the cost of auditing and filing required documents for 2008.
The Company as a whole may continue to operate at a loss for an indeterminate period thereafter, depending upon the performance of its new businesses. In the process of carrying out its business plan, the Company will continue to identify new financial partners and investors. However, it may determine that it cannot raise sufficient capital to support its business on acceptable terms, or at all. Accordingly, there can be no assurance that any additional funds will be available on terms acceptable to the Company or at all. As of December 31, 2008, the company was authorized to issue 50,000,000 shares of common stock.
Commitments
We do not have any commitments which are required to be disclosed in tabular form as of December 31, 2008.
Off-Balance Sheet Arrangements
As of December 31, 2008, we have no off-balance sheet arrangements such as guarantees, retained or contingent interest in assets transferred, obligation under a derivative instrument and obligation arising out of or a variable interest in an unconsolidated entity.
ITEM 7A.
ITEM 7A. - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
As a smaller reporting company, as defined in Rule 12b-2 of the Exchange Act, we are not required to provide the information required by this item.
ITEM 8.
ITEM 8. - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
See the index to the Financial Statements below, beginning on page.
ITEM 9.
ITEM 9.- -CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
ITEM 9A(T).
ITEM 9A(T). - CONTROLS AND PROCEDURES.
(a) Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our president and chief financial officer, carried out an evaluation of the effectiveness of our “disclosure controls and procedures” (as defined in the Exchange Act Rules 13a-15(e) and 15-d-15(e)) as of the end of the period covered by this report (the “Evaluation Date”). Based upon that evaluation, the president and chief financial officer concluded that as of the Evaluation Date, our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act (i) is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and (ii) is accumulated and communicated to our management, including our president and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.
(b) Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2008. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework. Our management has concluded that, as of December 31, 2008, our internal control over financial reporting is effective based on these criteria. This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management’s report in this annual report.”
(c) Changes in Internal Control over Financial Reporting
There were no changes in our internal controls over financial reporting that occurred during the last fiscal quarter covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B.
ITEM 9B. - OTHER INFORMATION
None.
PART III
ITEM 10.
ITEM 10. - DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
The following table sets forth information concerning our officers and directors as of February 20, 2009:
Name
Age
Title
David W. Rodgers
President, Secretary, Treasurer, Director.
Our officers and directors are elected to hold office until the next annual meeting of shareholders and until their respective successors have been elected and qualified, or until prior resignation or removal.
Business Experience
David W. Rodgers, President, Secretary Treasurer, Director.
2001 - 2007
R4 Services, Owner/Internet Sales and Marketing Services.
1998 - 2001
Research 2000, Director/ Public Relations and Advertising
1995 - 1997
Phoenix Media Group/Sales/Account Manager
1991 - 1994
Special Alert Publications, Owner/Newsletter and Corporate Report.
Education
University of Notre Dame - Bachelor of Science Degree, Engineering Sciences.
1997 to Present.
Web Design and Internet Marketing courses at community colleges, seminars, workshop and on-line.
1983 to Present.
Sales and Business courses at community colleges, seminars, workshop and on-line.
Compensation and Audit Committees
As we only have one board member and given our limited operations, we do not have separate or independent audit or compensation committees. Our Board of Directors has determined that it does not have an “audit committee financial expert,” as that term is defined in Item 407(d)(5) of Regulation S-K. In addition, we have not adopted any procedures by which our shareholders may recommend nominees to our Board of Directors.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors and executive officers and persons who beneficially own more than ten percent of our Common Stock (collectively, the “Reporting Persons”) to report their ownership of and transactions in our Common Stock to the SEC. Copies of these reports are also required to be supplied to us. To our knowledge, during the fiscal year ended December 31, 2008 the Reporting Persons complied with all applicable Section 16(a) reporting requirements.
Code of Ethics
We have not adopted a Code of Ethics given our limited operations. We expect that our Board of Directors following a merger or other acquisition transaction will adopt a Code of Ethics.
ITEM 11.
ITEM 11. - EXECUTIVE COMPENSATION.
David Rogers is our sole officer and director. Mr. Rogers does not receive any regular compensation for his services rendered on our behalf. Mr. Rogers did not receive any compensation during the years ended December 31, 2008 and 2007. No officer or director is required to make any specific amount or percentage of his business time available to us.
Director Compensation
We do not currently pay any cash fees to our sole director, nor do we pay director’s expenses in attending board meetings.
Employment Agreements
We are not a party to any employment agreements.
ITEM 12.
ITEM 12. - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
The following table sets forth certain information as of February 20, 2009 regarding the number and percentage of our Common Stock (being our only voting securities) beneficially owned by each officer, director, each person (including any “group” as that term is used in Section 13(d)(3) of the Exchange Act) known by us to own 5% or more of our Common Stock, and all officers and directors as a group.
Name and address
Position
Amount
Percent held
Class
David W. Rodgers
Pres/Sec/Treas/Dir.
500,000 shares
20%
Common
1982 Rainbow Blvd. # 101.
Las Vegas, NV 89108
Jose F. Garcia
Beneficial Owner
500,000 shares
20%
Common
4116 Antique Sterling Ct.
Las Vegas, NV 89129
Unless otherwise indicated, we have been advised that all individuals or entities listed have the sole power to vote and dispose of the number of shares set forth opposite their names. For purposes of computing the number and percentage of shares beneficially owned by a security holder, any shares which such person has the right to acquire within 60 days of February 20, 2009 are deemed to be outstanding, but those shares are not deemed to be outstanding for the purpose of computing the percentage ownership of any other security holder.
We currently do not maintain any equity compensation plans.
ITEM 13.
ITEM 13. - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
Our Board of Directors consist solely of David Rogers. He is not independent as such term is defined by a national securities exchange or an inter-dealer quotation system.
Various related party transactions are reported throughout the notes to our financial statements and should be considered incorporated by reference herein.
ITEM 14.
ITEM 14. - PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Gruber and Company LLC is our independent registered public accounting firm.
Audit Fees
The aggregate fees billed by Gruber and Company LLC for professional services rendered for the audit of our annual financial statements and review of financial statements included in our quarterly reports on Form 10-Q or services that are normally provided in connection with statutory and regulatory filings were $ 3,500 and $3,000 for the fiscal years ended December 31, 2008 and 2007, respectively.
Audit-Related Fees
There were no fees billed by Gruber and Company LLC for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements for the fiscal years ended December 31, 2008 and 2007, respectively.
Tax Fees
The aggregate fees billed by Gruber and Company LLC for professional services for tax compliance, tax advice, and tax planning were $0 and $0 for the fiscal years ended December 31, 2008 and 2007, respectively.
There were no fees billed by Gruber and Company LLC for other products and services for the fiscal years ended December 31, 2008 and 2007, respectively.
Pre-Approval Policy
We do not currently have a standing audit committee. The above services were approved by our Board of Directors.
PART IV
Item 15.
Item 15. Exhibits and Financial Statement Schedules
(a) The following documents are filed as part of this Report:
1. Financial Statements. The following financial statements and the report of our independent registered public accounting firm, are filed herewith.
·
Report of Independent Registered Public Accounting Firm (Gruber and Co..-2008 and 2007)
·
Balance Sheets at December 31, 2008 and 2007
·
Statements of Operations for the years ended December 31, 2008 and 2007and for the cumulative period from January 28, 2000 (Date of Inception) to December 31, 2008
·
Statements of Changes in Shareholders’ Deficiency for the period from January 28, 2000 (Date of Inception) to December 31, 2008
·
Statements of Cash Flows for the years ended December 31, 2008 and 2007, and for the cumulative period from Nov. 19, 1976 (Date of Inception) to December 31, 2008
·
Notes to Financial Statements
2. Financial Statement Schedules.
Schedules are omitted because the information required is not applicable or the required information is shown in the financial statements or notes thereto.
3. Exhibits Incorporated by Reference or Filed with this Report.
Exhibit No.
Description
31.1
Chief Executive Officer Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002*
32.1
Chief Executive Officer Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002.*
*Included herewith
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
International Industrial Enterprises, Inc.
Date: February 20, 2009
By: /s/ David Rogers
David Rogers, President
In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Date: February 20, 2009
By: /s/ David Rogers
David Rogers, President and Director
(Principal Executive Officer)
Date: February 20, 2009
By: /s/ David Rogers
David Rogers, Chief Financial Officer
(Principal Financial and Accounting Officer)
GRUBER & COMPANY LLC
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of International Industrial Enterprises, Inc.
We have audited the accompanying balance sheet of International Industrial Enterprises, Inc. (A Development Stage Company) as of December 31, 2008 and 2007, and the related statements of operations, stockholders equity and cash flows for the years then ended and from inception to December 31, 2008 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 our audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. 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 financial position of the Company as at December 31, 2008 and 2007 and the results of its’ operations and its’ stockholders equity and cash flows for the years then ended, and from inception to December 31, 2008 in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in the notes to the financial statements, the Company has a negative equity and no real business operations. .These items among others, raises substantial doubt about its ability to continue as a going concern.. These financial statements do not include any adjustments that might result from the outcome of this uncertainty
Gruber & Company LLC
Lake St. Louis MO 63367
January 29, 2009
INTERNATIONAL INDUSTRIAL ENTERPRISES, INC
CONSOLIDATED BALANCE SHEETS
December 31,
December 31,
ASSETS
Current Assets:
Cash and Cash Equivalents
$
$
Note Receivable
-
-
Total Current Assets
TOTAL ASSETS
$
$
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT):
Current Liabilities:
Stockholder Loan
$
15,321
$
15,171
Total Liabilities
15,321
15,171
Stockholders' Equity (Deficit):
Common Stock, authorized 50,000,000 shares, $.001 par value,
2,500,000, and 2,500,000 issued and outstanding, respectively
2,500
2,500
Additional Paid in Capital
40,685
40,685
Retained Deficit
(58,431)
(58,299)
Total Stockholders' Equity (Deficit)
(15,246)
(15,114)
Total Liabilities and Stockholders' Equity (Deficit)
$
$
The accompanying notes are an integral part of these consolidated financial statements.
The accompanying notes are an integral part of these consolidated financial statements.
The accompanying notes are an integral part of these consolidated financial statements.
The accompanying notes are an integral part of these consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
INTERNATIONAL INDUSTRIAL ENTERPRISES, INC
NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLCIES
The financials include the accounts of International Industrial Enterprises, Inc. (the “Company”) and Group One Associates, Inc. (GOA) a wholly owned subsidiary.
GOA, until July 2004 was in the corporate formation and resident agent business in the state of Nevada. In December 2005, GOA sold its assets, consisting of goodwill and a customer list to an unrelated third party. On December 21, 2005 GOA changed its name from Karlton Management Inc. GOA is in the publication of Tourists Maps business.
GOA (formerly Karlton) was incorporated in February of 1999 in the state of Nevada. The Company was incorporated in Delaware in 1976 and is the parent entity. The Company intends to seek additional acquisitions.
The Company is a development stage company whereby either planned principal operations have yet to begin, or planned principal operations have begun but the company has not realized significant revenues.
b. Going Concern
The Company has been unable to generate sufficient operating revenues and has incurred material losses.
There is no assurance that the Company will be able to obtain funding through the sale of additional securities or that such funding, if available, will be obtained on terms favorable to or affordable by the Company.
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. These financial statements do not include any adjustments that might result from this uncertainty.
BASIS OF PRESENTATION
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and estimates and assumptions that effect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported period. Actual results could differ from those estimates. Management further acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud. The Company’s system of internal accounting control is designed to assure, among other items, that (1) recorded transactions are valid; (2) valid transactions are recorded and (3) transactions are recorded in the period in a timely manner to produce financial statements which present fairly the financial condition, results of operations and cash flows of the company for the respective periods being presented.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation. - The consolidated financial statements include the accounts of the Company and GOA. All significant intercompany balances and transactions have been eliminated in consolidation.
Fair value of financial instruments - The Company’s financial instruments consist of cash and cash equivalents, receivables, accounts payable and accrued expenses, loans payable to related parties, and loans payable to third parties, which approximate fair value because of their short maturity.
Cash and cash equivalents - For purposes of the consolidated balance sheets and statements of cash flows, the Company considers all highly liquid debt instruments purchased with maturities of three months or less to be cash equivalents.
Property and equipment - Property and equipment are recorded at cost. All maintenance and repair costs are expensed when incurred. Depreciation is computed using the straight-line method over the estimated useful lives of the respective assets.
Other assets - Other assets are recorded at the lower of cost or fair value. In accordance with SFAS No. 142, “Goodwill and Other Intangible Assets”, these assets are reviewed at least annually for impairment.
Revenue recognition - Revenue is recognized on sales when services are completed. Risk of loss on accounts receivable is assessed periodically and the allowance for doubtful accounts is adjusted based on this risk assessment.
Research and development costs - Research and development costs, including patent acquisition, filing and registration costs and prototype development costs, are charged to expense in the periods incurred
Stock-based compensation - The Company may periodically issue shares of common stock for services rendered or for financing costs. The company may also periodically issue shares of common stock in conjunction with the acquisition of an all or a portion of the equity interest in a business. The shares of common stock vest immediately on issuance and are not subject to any redemption rights.
The value of the shares of common stock issued for accounting purposes is based on the market price of the shares at the date of the transaction or on the fair value of the services rendered or net assets acquired, whichever is more determinable, based on the specific facts and circumstances of each transaction.
The company may periodically issue stock options to employees and stock options or warrants to non employees in non capital raising transactions for services and for financing costs.
The Company has adopted Statement of financial Accounting Standards No. 123, “Accounting for Stock Based Compensation” (SFASno.123), which established a fair value method of accounting for stock based compensation plans.
The provisions of SFAS No. 123 allow companies to either record and expense in the financial statements to reflect the estimated fair value of stock options to employees, or to continue to follow the intrinsic value method set forth in Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees”, but to disclose on an annual basis the pro forma. effect on net income (loss) and net income (loss) per share had the fair value of the stock options been recorded in the financial statements. SFAS 123 was amended by SFAS No. 148, which now requires companies to disclose in interim financial statements the pro forma effect on net income (loss) and net income (loss) per common share of the estimated fair market value of stock options issued to employees. The company has elected to continue to account for stock based compensation plans utilizing the intrinsic value method. Accordingly, compensation cost for stock options will be measured as the excess, if any, of the fair market price of the Company’s common stock at the same date of grant above the amount an employee must pay to acquire the common stock.
In accordance with SFAS No. 123, the cost of stock options and warrants issued to non-employees is measured at the grant date based upon the fair value of the award. The fair value of the stock based award is determined using the Black Scholes option-pricing model. The resulting amount is charged to expense on the straight line basis over the period in which the company expects to receive benefit, which is generally the vesting period.
In accordance with SFAS No. 123, the company will provide footnote disclosure with respect to stock based employee compensation. The value of a stock based award will be determined using the Black Scholes option pricing model, whereby compensation cost is the fair value of the ward as determined by the pricing model at the grant date or measurement date. The resulting amount will be charged to expense on the straight line basis over the period in which the Company expects to receive benefit, which is generally the vesting period. Stock options issued to non employee directors at fair market value will be accounted for under the intrinsic value method.
The company did not have any stock options outstanding during the years ended December 31, 2005 and 2004. Accordingly no pro forma financial disclosure is provided herein.
Income taxes - Income taxes are accounted for under the assets and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled.
Earnings (loss) per share- Basic earnings (loss) per share are computed by dividing the net income (loss) by the weighted-average number of shares of common stock and common stock equivalents. Common stock equivalents represent the dilutive effect of the assumed exercise of the outstanding stock options and warrants, using the treasury stock method. The calculation of fully diluted earnings (loss) per share assumes the dilutive effect of the exercise of outstanding options and warrants at either the beginning of the respective period presented or the date of issuance, whichever is later.
Recent Accounting Pronouncements
In December 2007, the FASB issued SFAS No. 141(R), Business Combinations (FAS 141(R)). This Statement provides greater consistency in the accounting and financial reporting of business combinations. It requires the acquiring entity in a business combination to recognize all assets acquired and liabilities assumed in the transaction, establishes the acquisition-date fair value as the measurement objective for all assets acquired and liabilities assumed, and requires the acquirer to disclose the nature and financial effect of the business combination. FAS 141(R) is effective for fiscal years beginning after December 15, 2008. We will adopt FAS 141(R) no later than the first quarter of fiscal 2010 and are currently assessing the impact the adoption will have on our financial position and results of operations.
In December 2007, the FASB issued SFAS No. 160. Noncontrolling Interests in Consolidated Financial Statements (FAS 160). This Statement amends Accounting Research Bulletin No. 51, Consolidated Financial Statements, to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. FAS 160 is effective for fiscal years beginning after December 15, 2008. We will adopt FAS 160 no later than the first quarter of fiscal 2010 and are currently assessing the impact the adoption will have on our 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, which permits entities to choose to measure at fair value eligible financial instruments and certain other items that are not currently required to be measured at fair value. The standard requires that unrealized gains and losses on items for which the fair value option has been elected be reported in earnings at each subsequent reporting date. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. We will adopt SFAS No. 159 no later than the first quarter of fiscal 2009. We are currently assessing the impact the adoption of SFAS No. 159 will have on our financial position and results of operations.
In September 2006, the FASB issued SFAS No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106, and 132(R). SFAS No. 158 requires company plan sponsors to display the net over- or under-funded position of a defined benefit postretirement plan as an asset or liability, with any unrecognized prior service costs, transition obligations or actuarial gains/losses reported as a component of other comprehensive income in shareholders’ equity. SFAS No. 158 is effective for fiscal years ending after December 15, 2006. We adopted the recognition provisions of SFAS No. 158 as of the end of fiscal 2007. The adoption of SFAS No. 158 did not have an effect on the Company’s financial position or results of operations.
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. SFAS No. 157 establishes a framework for measuring fair value in generally accepted accounting principles, clarifies the definition of fair value and expands disclosures about fair value measurements. SFAS No. 157 does not require any new fair value measurements. However, the application of SFAS No. 157 may change current practice for some entities. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. We will adopt SFAS No. 157 in the first quarter of fiscal 2009. We are currently assessing the impact that the adoption of SFAS No. 157 will have on our financial position and results of operations.
In July 2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109 (FIN 48). This interpretation clarifies the application of SFAS No. 109, Accounting for Income Taxes, by defining a criterion that an individual tax position must meet for any part of the benefit of that position to be recognized in an enterprise’s financial statements and also provides guidance on measurement, derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 is effective for fiscal years beginning after December 15, 2006, but earlier adoption is permitted. The Company is in the process of evaluating the impact of the application of the Interpretation to its financial statements.
NOTE 2 - STOCKHOLDER LOAN
The Company is indebted to a shareholder, a related party for a loan of $15,321. Terms indicate that it is payable on demand interest free.
NOTE 3 - INCOME TAXES
No provisions for income taxes have been recorded since the Company has incurred losses since inception.
Based on management‘s present assessment, the Company has not yet determined it to be more likely than not that a deferred tax asset attributable to the future utilization of net operating loss carryforwards as of December 31, 2007 will be realized. Accordingly, the Company has provided a 100% allowance against the deferred tax asset in the financial statements at December 31, 2008. The Company will continue to review this valuation allowance and make adjustments as appropriate.
Current United States tax laws limit the amount of loss available to be offset against future taxable income when a substantial change in ownership occurs. Therefore, the amount available to offset future taxable income may be limited.