Item 1. Description of Business
Organization
a. Corporate History.
We were originally incorporated in the State of Nevada on March 2, 1998, as USI Communications, Inc. We provided engineering, rental and program services to the broadcast industry, video production, and manufacture of mobile and fixed video equipment. We conducted operations from facilities located in North Carolina and ceased operation in August 2000.
In July of 2002 we purchased the rights to a water irrigation system and filed a Certificate of Amendment to our Articles of Incorporation effectively changing our corporate name to Square Shooter, Inc. As Square Shooter, Inc., we designed, developed and marketed this water irrigation system designed to conserve water consumption by dispensing water from sprinkler systems in a square shaped pattern, thusly reducing overspray onto unwanted areas and focusing water delivery to necessary areas. Despite continued efforts to market our innovative water irrigation system, we again ceased operations in late 2004.
In November of 2006, we entered into an asset purchase agreement with VisiTrade, L.L.C., a Nevada limited liability company, where, in exchange for 19,852,723 shares of our common stock, we purchased certain software that acted as a trading platform for financial market participants. In connection with the asset purchase agreement, we filed an Articles of Merger with the Nevada Secretary of State effectively changing our name to VisiTrade, Inc. We believed that this software had the potential to develop a cost effective alternative trading system that could provide a 24-hour trading platform and facilitate bringing together purchasers and sellers of securities while performing the functions commonly performed by larger securities exchanges. Again, despite continued efforts to market this alternative trading system, we ceased operations in early 2007.
Our current management was not part of the previous management teams associated with our previous business endeavors. After researching the company’s records and relevant market conditions during the historical time periods of these previous endeavors, current management believes the past businesses failed due to: (i) demand for the company’s products and services; (ii) loss of key personnel with specialized skills applicable to previous business models; (ii) increased costs associated with rapid changes and technological advances; and (iv) changes in general market conditions.
In October of 2007, we resumed operations in planning and organizing ourselves as an online retailer of aftermarket Triumph motorcycle parts and accessories.
b. Current Business Operations.
Under our proposed business plan we will operate as an online retailer of aftermarket Triumph motorcycle parts and accessories. We plan to market our products primarily through our internet website www.sportbike-customs.com. We own the domain name www.sportbike-customs.com but have not completed our website. The website is currently a link to www.british-customs.com, one of our proposed marketing partners. Our corporate headquarters are located at 2038 Corte del Nogal, Suite 110, Carlsbad, California 92011. Our telephone number at our corporate head office is 760-804-8844.
With Triumph motorcycles growing in popularity over the past decade, we believe there has been an unfilled demand for Triumph parts and accessories. Our retail sales operation will aim to fulfill that demand through the online sales of aftermarket Triumph motorcycle parts and accessories.
Our proposed business operations will be composed initially of online retail sales of aftermarket Triumph parts and accessories. Consumers looking for Triumph parts and accessories have traditionally been forced to either hunt down parts and accessories from the scattered network of small Triumph retailers or purchase from large general parts distributors that may lack the familiarity with the Triumph brand. We have found that many of these existing online Triumph parts and accessory dealers do not maintain a large enough or diverse enough parts inventory to satisfy a “one stop shop” for Triumph parts and accessories Our aim is to provide a centralized, experienced and knowledgeable retail outlet for everything Triumph. Consumers will be able to locate and purchase a wide variety of Triumph parts and accessories in one location rather than being forced to hunt down individual parts from scattered retailers. Under our proposed business model, we plan to develop strategic marketing and sales relationships with smaller online Triumph parts and accessory dealers. By aggregating the inventories of these smaller retailers into a “one stop shop” of Triumph parts and accessories, we feel we will be able to offer Triumph consumers a more convenient and cost effective way to purchase Triumph parts and accessories,
Our proposed retail website will allow consumers to browse Triumph parts and accessories as easily as if they were standing in a retail outlet. Consumers using the website will be able to either browse through categorized pages on Triumph parts and accessories or refine their shopping experience using detailed search engines designed to put the consumer in contact with the parts they need quickly and efficiently. Each item will be displayed on our website with a detailed picture, description and pricing information to assist the consumer in finding and purchasing their desired products.
Through our website, we believe we will provide a number of benefits to our consumers and suppliers including:
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Ready Access to Products on a Secure Site. Our customers will be able to access and purchase our products 24 hours a day from the convenience of their computer. We will not sell any personal information about our customer base to third parties and all online sales transaction will be secured.
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Value Pricing. Once organized, our multiple sourcing networks will locate and obtain Triumph parts and accessories allowing our users to compare prices. Our sales teams will cost-effectively match customer demand with supply on a just-in-time basis, employing our planned rapid fulfillment process.
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Positive Customer Experience. Our internal sales and customer service representatives will be available by e-mail and telephone to respond to questions and provide guidance regarding product availability, order status and product use and functionality.
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Reliable and Efficient Distribution Channel. Once our network of parts distributors is firmly established, we will be able to provide a low-risk, high-volume channel through which our suppliers may sell merchandise.
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Protection of Brand Integrity. We will maintain the integrity of our suppliers’ brands by responding to customer inquiries regarding their products in a professional manner, by ensuring that we sell only quality goods on our website and by selling only factory sealed goods in original form together with all accessories still intact.
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Optimize inventory management through the use of technology. Our merchandise buyers will be supported by software that provides updated sales information. This technology will enable us to make informed decisions and quickly change prices in an effort to maximize sales volume, gross profits and return on inventory capital.
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Maintain low customer acquisition costs. We believe that by utilizing targeted online campaigns, including direct e-mail campaigns, we will be able to keep our per customer acquisition costs relatively low.
Our initial goal and current focus is the completion of our website. This is the backbone of our proposed operations platform and the stepping stone for future business activities. We have had substantial difficulties in the completion of our website. As disclosed in our First Amended Form 10 filed with the SEC on October 15, 2008, we expected to have completed our website and had it operational by late 2008/early 2009. Such completion date has been delayed substantially due initially to technical difficulties with our web design and development, and currently due to lack of adequate capital to fund such development due to current market conditions. Our website completion has been delayed substantially and we currently hope to complete the initial beta version of our software platform by the middle of the third quarter of 2010. Based upon the current status of our software platform and negotiations with our software designers, we currently estimate we will require approximately $45,000 in software design and development costs to complete the final beta version of our website. We currently do not have such funds available. While we are currently searching for additional capital infusion sources, we have also considered offering an equity interest as compensation for the completion of such services if such equity compensation can be offered on terms which the Company finds reasonable. Once the beta version and testing of such version is complete, we may incur additional costs associated with revising and editing such platform. We have no way of knowing what such additional costs will amount to until we are able to test the final beta version of the platform.
Concurrently with our efforts to develop and complete our website, we have begun negotiations to develop strategic marketing and sales relationships with other Triumph parts and accessory dealers in order to aggregate the inventories of these smaller retailers into our “one stop shop” of Triumph parts and accessories. Although we have begun these negotiations, this goal is secondary to the completion of our website. We expect to begin finalizing these sales and marketing relationships with in the first few months of the completion of our website. We do not expect to incur material costs or expenses associated with the initial negotiations of these relationships, nor in the eventual finalization of such relationships.
Following the finalization of our website and development of sales and marketing relationships with Triumph parts and accessory dealers and suppliers, we will need to hire additional sales and support staff to assist in the day to day operations. Initially, our plan is to hire one customer support employee and two sales employees to assist in these operations. We estimate payroll expenses associated with hiring a customer support agent to be approximately $35,000 annually. We do not expect to incur fixed costs with the hiring of sales staff as we intend to base sales staff compensation strictly on a commission based model. In addition, we may consider offering our support staff compensation in the form of an equity interest in the Company, although the details of such equity compensation program have not been determined.
As of the date of this report, we have earned no revenues and have not finalized any agreements with any parts distributors. We had begun initial negotiations with Triumph parts and accessory dealers; however, due to our setbacks in the development of our software platform, such negotiations have been put on hold. We do not expect to begin earning revenues until after the completion of our website. We do not believe we will be able to satisfy our near future cash requirements as we further develop our website and expand our sales network as described above. Before we are able to complete our website and begin to develop our sales and marketing relationships, we believe we will need to finance our operations through proceeds from the issuance of equity securities and loans. Although we have pursued several possible opportunities in connection with such financings, we have not been able to obtain necessary financings on terms we believe are beneficial to the Company. When we are able to secure such funds, they will be used as working capital to fund the completion of our website, the build-out of our sales network and for internal operations.
Once our website has been completed and we begin to generate revenues, in order to increase sales we plan to increase our brand awareness through advertising. We plan to utilize newspaper, trade magazine, trade show, online, and word of mouth advertising outlets.
Further out, we plan to possibly expand our operations into parts manufacturing. Many Triumph parts, especially for older model Triumphs, are scarce. The aim of our website is to offer our customers a central location to find these Triumph parts and accessories. Initially we hope to offer the customer a wide range of parts and accessories from existing manufacturers to choose from. In addition to retailing other manufacturer's parts, we hope to begin manufacturing our own line of Triumph parts and accessories. By initially building the reputability of our name through our retail sales website, we hope to transfer that same customer base and satisfaction with our retail business to our manufacturing business. These manufacturing goals are long term goals and we have taken no affirmative steps towards attaining these goals.
Our expectations are based on certain assumptions concerning the anticipated costs associated with our expected projects. These assumptions concern future events and circumstances that we believe to be significant to our operations and upon which our working capital requirements will depend. Some assumptions will invariably not materialize and some unanticipated events and circumstances may occur subsequent to the date of this report. The timing and amount of our capital requirements will depend on a number of factors, including the speed with which we complete our website, our ability to establish relationships with Triumph parts and accessory dealers and the eventual demand for our products and services. As described herein, we will seek funding for our capital requirements from the sale of our securities and loans, however, it is possible that we will be unable to obtain sufficient additional capital through these avenues.
We intend to retain any future earnings to retire any future debt, finance the expansion of our business and any necessary capital expenditures, and for general corporate purposes.
Personnel
We currently do not have any full time employees. We intend to hire full time employees and additional independent contract labor on an as needed basis when our website is complete.
Item 2.
Item 2. Description of Properties
At present, we do not own any property. Our executive offices currently consist of shared leased office space located at 2038 Corte Del Nogal, Suite 110, Carlsbad, CA 92011 and our phone number is 760-804-8844. The Company subleases approximately 3,000 square feet of office and administrative space, as well as the use of, among other things, internet, postage, copy machines, electricity, furniture, fixtures etc. at a rate of $2,000 per month.
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 Registrant's Common Equity and Related Stockholder Matters
(a) Market Information.
The common stock of the Company, $.001 par value, is currently traded over the counter and is listed on the Pink Sheets under the symbol "VTDI" The availability of historical trading prices of our common stock is limited, with periods of little or no trading activity. The following table sets forth the available approximate range of high and low closing prices for the common stock of the Company during the periods indicated. The quotations presented reflect inter-dealer prices, without retail markup, markdown, or commissions, and may not necessarily represent actual transactions in the common stock.
On June 7, 2010 the closing quotation for our common stock was $0.0027 per share. As reflected by the high and low prices on the foregoing table, the trading price of the common stock of the Company can be volatile with dramatic changes over short periods. The trading price may reflect imbalances in the supply and demand for shares of the Company, market reaction to perceived changes in the industry in which the Company sells products and services, general economic conditions, and other factors. Investors are cautioned that the trading price of the common stock can change dramatically based on changing market perceptions that may be unrelated to the Company and its activities.
(b) Approximate number of equity security holders.
The approximate number of record holders of the Company's common stock as of June 7, 2010 was 48, which does not include shareholders whose stock is held through securities position listings.
(c) Dividends.
The Company did not declare or pay any cash dividends on its common stock during the past two fiscal years.
(d) Securities authorized for issuance under equity compensation plans.
We currently do not have any stock option or other equity compensation plans.
(e) Recent sales of unregistered securities.
During the year ending 2005, we issued a total of 2,250,000 common shares of common stock to officers of the Company as compensation for their services. These shares were valued at $0.10 per share.
In December of 2005, we issued a total of 2,038,461 common shares to consultants of the Company as compensation for their services for the year ending 2005. These shares were valued at $0.10 per share.
During the year ending 2006, we issued a total of 2,601,852 common shares to officers of the Company as compensation for their services. These shares were valued at $0.10 per share.
On November 2, 2006, we approved of a 5 to 1 reverse split. The financial statements included herein have been retroactively restated to reflect this reverse split.
On November 7, 2006, we retired 224 shares of common stock due to the 5 to 1 reverse split. These shares were valued at $0.10 per share.
In December of 2006, we issued 19,852,723 shares in connection with an Asset Purchase Agreement between the Company and Visitrade, LLC. These shares were valued at $0.10 per share.
During the year ending 2007, we issued a total of 518,518 common shares to officers of the Company as compensation for their services. These shares were valued at $0.10 per share.
In January of 2007, we issued 1,000,000 common shares to consultants of the Company as compensation for their services. These shares were valued at $0.95 per share.
In January of 2007, we issued 40,000 common shares to consultants of the Company as compensation for their services. These shares were valued at $0.55 per share.
In February of 2007, we issued 2,050,000 common shares to consultants of the Company as compensation for their services. These shares were valued at $0.17 per share.
In April of 2007, we issued 75,000 common shares to consultants of the Company as compensation for their services. These shares were valued at $0.08 per share.
In May of 2007, we issued 40,000 common shares to consultants of the Company as compensation for their services. These shares were valued at $0.26 per share.
In June of 2007, we issued 350,000 common shares to consultants of the Company as compensation for their services. These shares were valued at $0.18 per share.
In July of 2007, we cancelled 660,000 common shares that were previously issued in error.
In August of 2008, 17 common shares were cancelled due to rounding related to a reverse merger that occurred in 2006.
In November of 2008, 6 common shares were issued due to rounding related to a reverse merger that occurred in 2006.
All of the issuances of securities described above were deemed to be exempt from registration in reliance on Section 4(2) of the Securities Act of 1933 as transactions by an issuer not involving a public offering. We made the determination that each investor had enough knowledge and experience in finance and business matters to evaluate the risks and merits of the investment. There was no general solicitation or general advertising used to market the securities. We provided each investor with disclosure of all aspects of our business, including providing the investor with press releases, access to our auditors, and other financial, business, and corporate information. A legend was placed on the stock certificates stating that the securities have not been registered under the Securities Act and cannot be sold or otherwise transferred without an effective registration or an exemption therefrom.
(f) Purchases of equity securities by the small business issuer and affiliated purchasers.
During the year ended December 31, 2008, neither the Company nor any of its affiliates purchased any equity securities of the Company or on behalf of the Company.
Item 6.
Item 6. Selected Financial Data
Not Applicable.
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with our audited consolidated financial statements and related notes included in this report. This report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. The statements contained in this report that are not historic in nature, particularly those that utilize terminology such as “may,” “will,” “should,” “expects,” “anticipates,” “estimates,” “believes,” or “plans” or comparable terminology are forward-looking statements based on current expectations and assumptions.
The forward-looking events discussed in this report, the documents to which we refer you and other statements made from time to time by us or our representatives, may not occur, and actual events and results may differ materially and are subject to risks, uncertainties and assumptions about us. For these statements, we claim the protection of the “bespeaks caution” doctrine. All forward-looking statements in this document are based on information currently available to us as of the date of this report, and we assume no obligation to update any forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements.
Critical Accounting Policies.
Our critical and significant accounting policies, including the assumptions and judgments underlying them, are disclosed in the Notes to the Financial Statements. These policies have been consistently applied in all material respects and address such matters as revenue recognition and depreciation methods. The preparation of the financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates. The accounting treatment of a particular transaction is specifically dictated by accounting principles, generally accepted in the United States of America, with no need for management’s judgment in their application. There are also areas in which management’s judgment in selecting any viable alternative would not produce a materially different result. See our audited financial statements and notes thereto which contain accounting policies and other disclosures required by accounting principles, generally accepted in the United States of America.
Results of Operations
Revenues
We had no revenues for the year ended December 31, 2008 or for the year ended December 31, 2007.
Net Profit (Loss).
For the year ended December 31, 2008, we sustained net losses of $46,518 as compared with a net profit of $19,916 for the year ended December 31, 2007. The increase in net loss is attributed to increased costs associated with general and administrative expenses.
Liquidity and Capital Resources
At December 31, 2008, the Company had assets of $0. There were liabilities of $58,518 due to related parties. Current assets of $0 and current liabilities of $58,518 resulted in a working capital deficiency of $58,518.
The accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern. Because of recurring operating losses and the excess of current liabilities over current assets, there is substantial doubt about the Company's ability to continue as a going concern. The Company's continuation as a going concern is dependent on attaining profitable operations through business acquisitions, restructuring its financial arrangements, and obtaining additional outside financing as needed.
We intend to retain any future earnings to retire any existing debt, finance the expansion of our business and any necessary capital expenditures, and for general corporate purposes.
Forward-Looking Statements
The Company, from time to time, may publish forward-looking statements relating to such matters as anticipated financial performance, business prospects, technological development, new products, research and development activities and similar matters. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. In order to comply with the terms of the safe harbor, the Company notes that a variety of factors could cause the Company's actual results and experience to differ materially from the anticipated results or other expectations expressed in any of the Company's forward-looking statements. The risks and uncertainties that may affect the operations, performance, development and results of the Company's business include, but are not limited to, the following: (a) the failure to obtain additional borrowed and/or equity capital on favorable terms for acquisitions and expansion; (b) adverse changes in federal and state laws, or other matters affecting the Company's business; (c) the demand for the Company's products and services; and (d) other risks detailed in the Company's Securities and Exchange Commission filings.
This Form 10-K contains and incorporates by reference certain "forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act with respect to results of operations and businesses of the Company. All statements, other than statements of historical facts, included in this Form 10-K, including those regarding market trends, the Company's financial position, business strategy, projected costs, and plans and objectives of management for future operations, are forward-looking statements. In general, such statements are identified by the use of forward-looking words or phrases including, but not limited to, "intended, will, should, may, expect, anticipate, estimates, projects" or the negative thereof or variations thereon or similar terminology.
Forward-looking statements are based on the Company's current expectations. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. Because forward-looking statements involve risk and uncertainty, the Company's actual results could differ materially. Important factors that could cause actual results to differ materially from the Company's expectations are disclosed hereunder and elsewhere in this Form 10-K. These forward-looking statements represent the Company's judgment as of the date of this Form 10-K. All subsequent written and oral forward-looking statements attributable to the Company are expressly qualified in their entirety by the Cautionary Statements. The Company disclaims, however, any intent or obligation to update its forward-looking statements.
Item 7A.
Item 7A. Quantitative and Qualitative Disclosure about Market Risk.
Not applicable.
Item 8.
Item 8. Financial Statements and Supplementary Data.
CONTENTS
Hamilton PC
2121 S. Oneida St., Suite 312
Denver, CO 80224
P: (303) 548-8072
F: (888) 466-4216
cpaeah@msn.com
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Stockholders
Visitrade, Inc.
We have audited the accompanying balance sheets of Visitrade, Inc., and subsidiaries as of December 31, 2008, and the related statements of operations, stockholders’ equity (deficit) and cash flows for the year then ended. 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. The financials statements of Visitrade, Inc. and subsidiaries as of December 31, 2007, were audited by other auditors whose report dated October 6, 2008, expressed an unqualified opinion with a going concern.
We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. 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.
The accompanying financial statements have been prepared assuming that Visitrade, Inc. will continue as a going concern. As discussed in Note 3 to the financial statements, Visitrade, Inc. suffered recurring losses from operations which raises substantial doubt about its ability to continue as a going concern. Management's plans regarding those matters also are described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Visitrade, Inc. and subsidiaries as of December 31, 2008, and the result of its operations and its cash flows for the year then ended, in conformity with U.S. generally accepted accounting principles.
Hamilton, PC
/s/ Hamilton, PC
Denver, Colorado
April 30,
VISITRADE, INC.
Notes to the Financial Statements
for the years ended December 31, 2008 and 2007
NOTE 1 ORGANIZATION
USI Communications, Inc. (the “Company”) was incorporated on March 2, 1998 in the state of Nevada. The company provided engineering, rental and program services to the broadcast industry, video production, and manufacture of mobile and fixed video equipment. The Company conducted operations from facilities located in North Carolina and ceased operation in August 2000. On July 9, 2002, the Company filed a Certificate of Amendment to their Articles of Incorporation effectively changing their corporate name to Square Shooter, Inc. As Shooter, Inc., the Company designed, developed and marketed a water irrigation system designed to conserve water consumption. On November 1, 2006, the Company entered into an asset purchase agreement with Visitrade, LLC, a Nevada limited liability company, where the Company purchased certain software that acted as a trading platform for financial market participants. Visitrade, LLC was formed on April 4, 2004. The Company filed a Certificate of Amendment to their Articles of Incorporation effectively changing their corporate name to VisiTrade, Inc. The Company ceased operations as VisiTrade, Inc. in early 2007. In October of 2007, the Company operates as an online retailer of aftermarket Triumph motorcycle parts, accessories and apparel.
NOTE 2 SUMMARY OF ACCOUNTING POLICIES
Principles of Consolidation
The consolidated balance sheet include the accounts of Visitrade, Inc. and its’ wholly owned subsidiaries, thereby reflecting the transactions related to the November 1, 2006 effective date of the asset purchase agreement. The consolidated statements of operations include the operations of the predecessor entity, Visitrade, LLC since November 1, 2006, the effective date of the acquisition of the Visitrade, LLC business. All significant intercompany accounts and transactions have been eliminated in consolidation.
Accounting Method
The financial statements are prepared using the accrual method of accounting. The Company has elected a December 31 year-end.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
Cash equivalents include short-term, highly liquid investments with maturities of three months or less at the time of acquisition.
Provision for Income Taxes
The Company accounts for income taxes according to the provisions of US GAAP. Recognition of deferred tax assets and liabilities reflect the expected future tax consequences of temporary differences between the financial statement and tax basis of assets and liabilities. US GAAP requires a company to determine whether it is more likely than not that the tax position will be sustained, will be sustained upon examination based upon the technical merits of the position. If the more-likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements. As a result of the implementation of US GAAP, the Company performed a review of its material tax positions in accordance with recognition and measurement standards.
The components of income tax expense are as follows:
As of December 30, 2008 we had a net operating loss (NOL) carryforward of $ 2,349,687. These NOL carryforwards begin to expire in the year 2024.
Deferred tax assets and the valuation account are as follows at:
Basic Net Loss per Share of Common Stock
In accordance with US GAAP, basic net loss per common share is based on the weighted average number of shares outstanding during the periods presented. Diluted earnings per share are computed using weighted average number of common shares plus dilutive common share equivalents outstanding during the period. There are no convertible instruments or stock options that are convertible into common stock.
Recent Accounting Pronouncements
In June 2009, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2009-01, “Generally Accepted Accounting Principles” (ASC Topic 105) which establishes the FASB Accounting Standards Codification (“the Codification” or “ASC”) as the official single source of authoritative U.S. generally accepted accounting principles. All existing accounting standards are superseded. All other accounting guidance not included in the Codification will be considered non-authoritative. The Codification also includes all relevant Securities and Exchange Commission guidance organized using the same topical structure in separate sections within the Codification. Following the Codification, the FASB will not issue new standards in the form of Statements, FASB Staff Positions or Emerging Issues Task Force Abstracts. Instead, it will issue Accounting Standards Updates (“ASU”) which will serve to update the Codification, provide background information about the guidance and provide the basis for conclusions on the changes to the Codification. The Codification is not intended to change GAAP, but it will change the way GAAP is organized and presented. The Codification is effective for the Company’s third quarter financial statements and the principal impact on the financial statements is limited to disclosures as all future references to authoritative accounting literature will be referenced in accordance with the Codification. In order to ease the transition to the Codification, the Company is providing the Codification cross-reference alongside the references to the standards issued and adopted prior to the adoption of the Codification.
In August 2009, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2009-05, “Measuring Liabilities at Fair Value” (“ASU 2009-05”). The amendments in this ASU apply to all entities that measure liabilities at fair value and provides clarification that in circumstances in which a quoted price in an active market for the identical liability is not available, an entity is required to measure fair value using one or more techniques laid out in this ASU. The guidance provided in this ASU is effective for the first reporting period (including interim periods) beginning after issuance. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements.
In September 2009, the FASB issued ASU No. 2009-13 “Revenue recognition - Multiple deliverable revenue arrangements”. The ASU provides amendments to the criteria in “Revenue recognition - multiple element arrangements” for separating consideration in multiple element arrangements. The amendments in this ASU establish a selling price hierarchy for determining the selling price of a deliverable. Further, the term fair value in the revenue guidance will be replaced with selling price to clarify that the allocation of revenue is based on entity-specific assumptions rather than assumptions of a market place participant. The amendments in this ASU will be effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. Early adoption is permitted. The Company is currently evaluating this ASU.
Financial Instruments
In determining fair value, the Company uses various valuation approaches within the US GAAP fair value measurement framework. Fair value measurements are determined based on the assumptions that market participants would use in pricing an asset or liability. US GAAP establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. US GAAP defines levels within the hierarchy based on the reliability of inputs as follows:
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Level 1 - Quoted prices in active markets for identical assets or liabilities.
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Level 2 - Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly.
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Level 3 - Unobservable inputs based on the Company’s assumptions.
US GAAP requires the use of observable market data if such data is available without undue cost and effort. The Company’s adoption of US GAAP did not result in any changes to the accounting for its financial assets and liabilities.
The recorded amounts of financial instruments, including cash equivalents accounts payable and accrued expenses, and long-term debt approximate their market values as of September 30, 2009 and December 31, 2008.
Property and Equipment
Property and equipment are stated at cost. Expenditures for maintenance, repairs and renewals are charged to expense, whereas major additions are capitalized. The cost and accumulated depreciation of assets retired, sold or otherwise disposed of are eliminated from the accounts and resulting gains or losses, if any, are reflected through the statement of income.
Depreciation is computed using the straight-line method over the estimated useful lives of 7 years. There was no depreciation expense for the years ended December 31, 2008 and 2007.
The company ceased operations related to the trading platform system in early 2007.
Accounts Receivable
We must make judgments about the collectability of our accounts receivable to be able to present them at their net realizable value on the balance sheet. We analyze the aging of our customer accounts and review historical bad debt problems. From this analysis, we record an estimated allowance for receivables that we believe will ultimately become uncollectible. As of December 31, 2008, we had no allowance for bad debts since we deemed that 100% of the amount in Accounts Receivable is collectible.
Concentration of Risk
Financial instruments which potentially subject the Company to concentrations of credit risk are cash and marketable securities. The Company places its cash with financial institutions deemed by management to be of high credit quality. The amount on deposit in any one institution that exceeds federally insured limits is subject to credit risk. All of the Company’s investment in marketable securities are considered “available-for-sale” and are carried at their fair value, with unrealized gains and losses (net of income taxes) that are temporary in nature recorded in accumulated other comprehensive income (loss) in the accompanying balance sheets. The fair values of the Company’s investments in marketable securities are determined based on market quotations.
Segment Reporting
Based on the Company's integration and management strategies, the Company operated in a single business segment. For the years ended December 31, 2008 and 2007.
NOTE 3 GOING CONCERN
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. Because of the recurring operating losses, no revenues and the excess of current liabilities over current assets, there is substantial doubt about the Company’s ability to continue as a going concern. The Company’s continuation as a going concern is dependent on attaining profitable operations, and obtaining additional outside financing. The Company has funded losses from operations primarily from the issuance of debt. The Company believes that the issuance of equity and debt will continue to fund operating losses in the short-term until the Company can generate revenues sufficient to fund its operations.
NOTE 4 DISCONTINUED OPERATIONS
Due to a significant lack of revenues and cash flow, management made the decision to discontinue operations related to the trading platform system during the year of 2007. In accordance with, US GAAP no proceeds were recognized from the sale of assets, due to no assets being sold. The Company incurred a loss of $2,303,168 from the discontinued operations for the year ended December 31, 2007. The discontinuation of operations will impact future cash flows, as the company will no longer rely on any cash inflow from revenues. Management’s plans to generate future cash flow will come from continued operations of our online retailer website and raising additional capital through either debt or equity instruments. There are no significant past, present or expected upcoming cash uses as a result of the discontinuation of operations.
NOTE 5 COMMITMENTS, LEASES AND RELATED PARTY TRANSACTIONS
On October 1, 2008, the Company entered into an operating agreement with Noctua Fund Manager, LLC. The company obtains certain administrative, bookkeeping and management services from Noctua Fund Manager, LLC for a fee of $10,000 per month. Mark L. Baum, Esq., Visitrade’s former CEO and president, is a managing member of the Noctua Fund Manager, LLC.
Noctua Fund Manager, LLC made cash advances to the company to cover certain administrative expenses during the years ended December 31, 2008 and 2007 in the amounts of $22,518 and $8,000.
For the years ended December 31, 2008 and 2007, there was $52,518 and $8,000 owed to Noctua Fund Manager, LLC, respectively and no payments have been made to the Noctua Fund Manager, LLC.
The Company subleases space from Business Consulting Group Unlimited, Inc., an entity owned by our former CEO and sole director, Mark L. Baum, Esq. pursuant to which the Company leases approximately 3,000 square feet of office and administrative space, as well as use of, among other things, internet, postage, copy machines, electricity, furniture, fixtures etc. at a rate of $2,000 per month. The lease term with Business Consulting Group Unlimited, Inc. expires October 1, 2009, and continues based on a month to month term thereafter.
For the years ended December 31, 2008 and 2007, there was $6,000 and $0 owed to BCGU, respectively and no payments have been made to the BCGU.
For the year ended December 31, 2006, the Company assumed $31,916 in related party debt, which were monies provided by officers of the company to cover certain general and administrative expenses of the Company. In July 2007, the officers gave up their rights to the amount due to them.
NOTE 6 ISSUANCE OF SHARES FOR SERVICES - STOCK OPTIONS
In accordance with US GAAP, the Company has expensed all share-based payment transactions to employees and non-employees at fair value in or over the period that the award was earned and performance complete. Fair value was measured by the stock value upon the date the counterparty’s performance was complete since there were no performance commitments.
NOTE 7 COMMON STOCK
During the year ended December 31, 2007, the Company issued 4,592,036 shares for services rendered to the Company valued between $0.95 and $0.08 per share. Value was based on the trading value of the stock on the date of issue.
In August of 2008, 17 common shares were cancelled due to rounding related to a reverse merger that occurred in 2006.
In November of 2008, 6 common shares were issued due to rounding related to a reverse merger that occurred in 2006.
NOTE 8 SUBSEQUENT EVENTS
The Company has performed an evaluation of events occurring subsequent to year end through the issuance date of this report. Based on our evaluation, no events need to be disclosed.
Item 9A.
Item 9A. Controls and Procedures
(A) Evaluation of disclosure controls and procedures
We evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Annual Report on Form 10-K. Disclosure controls and procedures are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act, such as this Annual Report on Form 10-K is recorded, processed, summarized and reported within the time periods specified by the SEC. Disclosure controls are also designed to ensure that such information is accumulated and communicated to our management, including the CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.
The Company’s management is responsible for establishing and maintaining effective internal control over financial reporting (as defined in Rule 13a-15(f) of the Securities Exchange Act). Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2008. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on that assessment, management believes that, as of December 31, 2008, the Company’s internal control over financial reporting was ineffective based on the COSO criteria, due to the following material weakness listed below. 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 the our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management's report in this annual report.
In addition, due to the untimely filing of management’s assessment of internal controls over financial reporting in the original Form 10-K for the year ending December 31, 2008, the Company believes their disclosure control procedures are ineffective as well. The Company plans to remedy this issue by completing their assessment of internal controls over financial reporting in a timely manner in their subsequent Form 10-K filings going forward.
Material Weaknesses Identified
In connection with the preparation of our financial statements for the year ended December 31, 2008, certain significant deficiencies in internal control became evident to management that, in the aggregate, represents material weaknesses, including:
During the year ended December 31, 2008, the company internally performed all aspects of our financial reporting process, including, but not limited to, access to the underlying accounting records and systems, the ability to post and record journal entries and responsibility for the preparation of the financial statements. Due to the fact these duties were performed oftentimes by the same people, a lack of review was created over the financial reporting process that might result in a failure to detect errors in spreadsheets, calculations, or assumptions used to compile the financial statements and related disclosures as filed with the SEC. These control deficiencies could result in a material misstatement to our interim or annual financial statements that would not be prevented or detected.
Because of the inactivity of the Company and lack of operations during the years ended December 31, 2001, 2002, 2003 and portions of the year ended December 31, 2004, the Company did not maintain formal financial books and records. The financial books and records of the Company for these periods were subsequently compiled from documents and records obtained from various sources, including the former officers of the Company. During the latter part of 2004 and to the present, the Company has implemented a full accounting system, and continues to implement procedures and controls to ensure that information required to be disclosed by the Company in reports that the Company files or submits under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC.
Plan for Remediation of Material Weaknesses
Where possible, we intend to take appropriate and reasonable steps to make the necessary improvements to remediate these deficiencies and we intend to consider the results of our remediation efforts and related testing as part of our year-end 2009 assessment of the effectiveness of our internal control over financial reporting.
(B) Changes in internal controls
During the period covered by this report, there were no changes in the Company's internal control over financial reporting that occurred during the last fiscal quarter that have materially affected, or are 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, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act
Directors and Executive Officers.
The following table sets forth, as of the date of this report, the name, age and position of our sole director, executive officers and other significant employees:
Officers and Directors
NAME
AGE
SINCE
POSITION
Ford Sinclair
Chief Executive Officer, Principal Financial Officer, Secretary and Sole Director
The backgrounds of our directors, executive officers and significant employees are as follows:
Ford Sinclair, Chief Executive Officer, Principal Financial Officer, Secretary and Sole Director.
Mr. Sinclair is our Chief Executive Officer, Principal Financial Officer, Secretary and our sole Director and has been since April of 2010. Mr. Sinclair is not a full time employee and has other outside commitments. Mr. Sinclair brings an impressive background of success to the Company, specializing in business development, mergers and acquisitions, and new market development for a variety of companies. In 2000 through to 2004, Mr. Sinclair has been directly responsible for completing successful acquisitions of Global Golf Holdings. Since 2004, Mr. Sinclair has been the President and CEO for Banis Business Development Group, a management and consulting firm. Mr. Sinclair currently also serves as Director for Ice House Data Centers, Inc. Mr. Sinclair does not beneficially own any Company securities. Mr. Sinclair devotes approximately 10-20 hours per week to the Company’s business and management.
Audit Committee.
We do not have an audit committee. We do not have a financial expert serving on our board of directors
Code of Ethics
We have adopted a Code of Ethics and Business Conduct on December 31, 2007 authorizing the establishment of a committee to ensure that our disclosure controls and procedures remain effective. Our Code also defines the standard of conduct expected by our officers, directors and employees.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors, executive officers, and stockholders holding more than 10% of our outstanding common stock, to file with the Securities and Exchange Commission initial reports of ownership and reports of changes in beneficial ownership of our common stock. Executive officers, directors and greater-than-10% stockholders are required by SEC regulations to furnish us with copies of all Section 16(a) reports they file. To our knowledge, based solely on review of the copies of such reports furnished to us for the year ended December 31, 2008, no Section 16(a) reports required to be filed by our executive officers, directors and greater-than-10% stockholders were filed on a timely basis.
Item 11.
Item 11. Executive Compensation
The following table summarizes all of the annual compensation paid to all of the company’s named executive officers for the years ended December 31, 2009, 2008, 2007 and 2006:
(1)
On April 1, 2010, Mr. Ford Sinclair was appointed as our Chief Executive Officer, Secretary, Treasurer and sole Director. Mr. Sinclair currently receives no employment compensation for holding these positions.
(2)
Mr. Mark L. Baum, Esq. held the positions of Chief Executive Officer, Secretary, Treasurer and sole Director from July 7, 2007 until his resignation on April 1, 2010.
(3)
Mr. Michael West held the positions of President and Chief Executive Officer January 1, 2006 until his resignation on October 2, 2006.
(4)
Mr. C. Anthony Ferracone held the positions of Secretary and Treasurer January 1, 2006 until his resignation on July 6, 2007.
(5)
Mr. Lawrence Bolton held the positions of President and Chief Executive Officer October 2, 2006 until his resignation on July 6, 2007.
Option Exercise In Last Fiscal Year And Fiscal Year End Option Values
Our executive officers were not issued any options which could have been exercised during the fiscal years ended December 31, 2008 or 2007.
Directors' Compensation
Our directors have not received any compensation for the year ended December 31, 2008. All Directors during the fiscal year ended December 31, 2008 have been listed in the Executive Compensation table above. All directors may receive reimbursement for reasonable out-of-pocket expenses in attending board of directors meetings.
Compensation Committee
We have not formed an independent compensation committee.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth certain information regarding the beneficial ownership of the 28,747,704 issued and outstanding shares of our common stock as of the date of this registration statement by the following persons:
1.
Each person who is known to be the beneficial owner five percent (5%) or more of our issued and outstanding shares of common stock;
2.
Each of our Directors and executive Officers; and
3.
All of our Directors and Officers as a group
(1)
The address for Noctua Fund, L.P. is c/o Noctua Fund Manager, LLC, 2038 Corte Del Nogal, Suite 110, Carlsbad, CA 92011. Noctua Fund Manager, LLC is an entity equally beneficially owned and controlled by Mark L. Baum and James B. Panther II through entities owned or controlled by them. Such persons are non-voting minority limited partners in the Noctua Fund, L.P. itself.
(2)
The address is 2038 Corte del Nogal, Suite 110, Carlsbad, California 92008.
(3)
Our sole Director and Officer is Ford Sinclair.
Beneficial ownership is determined in accordance with the rules and regulations of the SEC. The number of shares and the percentage beneficially owned by each individual listed above include shares that are subject to options held by that individual that are immediately exercisable or exercisable within 60 days from the date of this registration statement and the number of shares and the percentage beneficially owned by all officers and directors as a group includes shares subject to options held by all officers and directors as a group that are immediately exercisable or exercisable within 60 days from the date of this registration statement
Item 13.
Item 13. Certain Relationships and Related Transactions.
None.
Item 14.
Item 14. Principal Accountant Fees and Services
Audit Fees
For the year ended December 31, 2008, Hamilton PC, the company’s principal accountant’s, billed the Company $3,000 for fees for the audit of the Company’s annual financial statements and December 31, 2007, Pollard-Kelley Auditing Services, Inc., the Company’s former principal accountants, billed the Company $2,000, for fees for the audit of the Company’s annual financial statements and review of financial statements included in the Company’s Forms 10-Q.
Audit-Related Fees
For the years ended December 31, 2008 and December 31, 2007, Hamilton PC and Pollard-Kelley Auditing Services, Inc. did not provide the Company with any assurances or related services reasonably related to the performance of the audit or review of the Company’s financial statements and are not reported above under "Audit Fees."
Tax Fees
For the years ended December 31, 2008 and December 31, 2007, Hamilton PC and Pollard-Kelley Auditing Services, Inc. did not bill for professional services for tax compliance, tax advice, and tax planning.
All Other Fees
For the years ended December 31, 2008 and December 31, 2007, Hamilton PC and Pollard-Kelley Auditing Services, Inc. did not bill the Company for fees associated with the preparation and filing of the Company’s filings, the creation of pro forma financial statements and other related matters.
Audit Committee Pre-Approval Policies
The Company currently does not have an audit committee. The Company’ Board of Directors currently approves in advance all audit and non-audit related services performed by the Company’s principal accountants.
Item 15.
Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
a. Exhibits
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
VISITRADE, INC.
Date: June 15, 2010 /s/ Ford F. Sinclair
By: Ford F. Sinclair
Its: Chief Executive Officer and Principal Financial Officer
In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Date: June 15, 2010 /s/ Ford F. Sinclair
By: Ford F. Sinclair
Its: Director