ITEM 1. Description of Business.
General
Modena I, Inc. is a development stage company which was incorporated under the laws of the State of Delaware on November 18, 2003. From inception to September 2007, the Company was focused on providing a vehicle for a foreign or domestic non-public company to become an SEC reporting (publicly-traded) company. To that end, we had intended to locate and negotiate with a business entity for the combination of that target company with the Company.
Since September 2007, we have been conducting preliminary investigation into becoming a wind and hydro electric energy company. We intend to identify and evaluate the economic feasibility and resource potential of wind and hydro properties, predominantly in the Greater Toronto area and the surrounding areas of Ontario Canada, for the purposes of developing commercial scale wind and hydro turbine projects. We intend to participate in these projects with development partners and receive revenue from the sale of electric energy through our working interests in the partnerships. As of the time of this filing, we have not identified any suitable properties, project opportunities or development partners.
We are a development stage company that has generated no revenues from operations since our incorporation on November 18, 2003. We have incurred losses since our inception, have no operations and rely upon the sale of our securities and funds provided by management to cover expenses. In addition, our independent accountant has issued an opinion indicating that there is substantial doubt about our ability to continue as a going concern.
Since September 2007, we have been primarily engaged in business planning activities, including researching wind and hydro energy technologies, developing our economic models and financial forecasts, performing due-diligence regarding potential development partners, investigating wind and hydro electric energy properties and project opportunities and raising capital.
Prior to generating any revenue from operations, we must complete the following steps:
1.
Site and Development Partner Identification and Agreement
2.
Due Diligence Data Collection to Determine Site Suitability
3.
Complete and Secure Approval of an Environmental Assessment
4.
Enter into Power Purchase Agreements
5.
Finalize Land Use or Acquisition Terms with Government or Private Land Owner
6.
Develop Access Roads to Our Site
7.
Complete Interconnection Studies Concerning Connection with Power Grid
8.
Complete Construction
We have not completed the work required on any of these steps. Additional financing must be obtained by us and future development partners to implement our business plan. There is no assurance that financing to cover the costs of implementing our business plan can be obtained.
Employees, Officers and Directors
Employees
We have no employees as of the date of this prospectus other than our sole executive officer and directors who devote only part of his time to our business.
Item 1A.
Item 1A. Risk Factors
An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below and the other information in this prospectus and any other filings we may make with the United States Securities and Exchange Commission in the future before investing in our common stock. If any of the following risks occur, our business, operating results and financial condition could be seriously harmed. Please note that throughout this prospectus, the words “we”, “our” or “us” refer to us and not to the selling stockholders.
We will require additional funds to achieve our current business strategy. Our inability to obtain additional financing will result in the failure of our business.
We have determined that our current operating funds are not sufficient to complete our intended business objectives. As of October 31, 2009, we had cash on hand in the amount of approximately $210. We have used the proceeds from the private placement and stock holder contributions to fund professional expenses associated with the registration of this offering. We will therefore need to raise additional capital in order to cover the costs of implementing our business plan. We do not have any arrangements in place for debt financing or the sale of our securities.
The most likely sources of future funds that will be available to us are through debt financing and through the sale of equity capital. We will only be able to secure debt financing for project development if we are able to prove that a wind or hydro project would be economically feasible to develop and operate.
Because we have not commenced business operations, we face a high risk of business failure.
We have not yet commenced business operations and accordingly, we have no way to evaluate the likelihood that our business will be successful. We were incorporated on November 18, 2003 and to date have been involved primarily in business planning activities, including researching wind and hydro energy technologies, developing our economic models and financial forecasts, performing due-diligence regarding potential development partners, investigating wind and hydro electric energy properties and project opportunities and raising capital.
Potential investors should be aware of the difficulties normally encountered by development stage companies and the high rate of failure of such enterprises. Prior to earning revenue from operations, of which there is no assurance, we will likely incur costs of at least $35,000 over the next 12 months and additional costs of $400,000 are anticipated in the development of our business. We therefore expect to incur significant losses in the foreseeable future. If we are unable to find development partners, obtain an interest in a suitable property and erect a wind or hydro turbine on it, we will not earn profits or be able to continue operations.
Because our continuation as a going concern is in doubt, we will be forced to cease business operations unless we can generate profitable operations in the future.
We have incurred losses since our inception. The Company has a working capital deficit of $22,215 and has no revenue stream. Further losses are anticipated in the development of our business. As a result, there is substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is dependent upon our ability to generate profitable operations in the future and/or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due. If we cannot raise additional capital to meet our obligations, we will be insolvent and will cease business operations.
If we are not able to obtain agreements with development partners for our wind or hydro turbine energy generation projects, our business will fail.
We anticipate that we will develop energy generation projects only with development partners. As of the date of this filing, we have not entered into a formal agreement with any development partners to study, develop or operate a specific project.
Even if we are able to reach an agreement with a development partner, we may not be able to obtain the financing necessary to complete the project. If we are unable locate suitable development partners or to develop an economically viable project, our business will fail.
If we are not able to locate a suitable property with commercial wind or hydro resource potential, our business will fail.
We have not entered into an agreement to place monitoring equipment on a specific property to determine whether it possesses a commercial wind or hydro resource to justify the erection of wind or hydro turbines. A wind resource on a property is measured by erecting a meteorological tower at the intended location that determines wind speeds and variances over the course of a year. A water resource is demonstrated by placing an acoustic current measuring device that determines water flows and variances at the intended location over the course of a year.
Even if we are able to determine that a commercial wind or hydro resource exists, we do not have the funds currently and may not be able to obtain the financing necessary in the future to complete its lease or purchase. If we are unable to acquire a suitable property interest with commercial wind or hydro resource potential, our business will fail.
Even if we demonstrate a commercial wind or water resource on a property, future changes in weather patterns could negatively impact our business, reducing potential profitability or causing our business to fail.
Changes in weather patterns may affect our ability to operate a wind or water electric energy project on any property we acquire. Wind data that we collect from a meteorological tower may vary from results actually achieved when a wind turbine is installed. Similarly, water flow data that we collect may differ from the actual results when water power turbines are installed. Changing global environmental and weather conditions may also affect the reliability of the data relating to a property.
Any wind or water resource that we develop, no matter where it is located, would be subject to variations in wind or water and changes in worldwide climatic conditions. Sudden or unexpected changes in environmental and meteorological conditions could reduce the productivity of our wind or water projects. Climatic weather patterns, whether seasonal or for an extended period of time, resulting in lower, inadequate and/or inconsistent wind speed or water to propel the wind or water turbines may render our projects incapable of generating adequate, or any, electric energy.
Our ability to erect a power generating facility on a property will be contingent upon us obtaining environmental and municipal permits. If we cannot acquire these permits, our business will fail.
In order to erect wind or hydro electric turbines on a property, we must excavate portions of the land and install concrete and mechanical structures. Before we commence this, we will need to obtain environmental and municipal permits from the government and the town responsible for the property interest we acquire. Depending on environmental impact, our proposed land disturbance may be unacceptable to these government bodies. In addition, the wind or hydro electric turbines themselves may be seen to have a negative impact on the environment or the aesthetics of the region. These factors may prevent us from obtaining necessary permits. In such circumstances, we would be forced to abandon our business plan.
If we cannot find a party to purchase electricity from us on acceptable terms, we will not be able to establish a wind or hydro project and our business will fail.
Even if we demonstrate a significant wind or water resource on a property we locate and that we obtain an interest in, we may not be able to secure a purchaser for any electricity that we produce on acceptable terms. Without a purchaser for electricity that we potentially produce from a wind or hydro turbine project, we will not be able to proceed with our business plan.
Because management does not have any technical experience in the hydro and wind energy sector, our business has a higher risk of failure.
Management does not have technical training in the field of hydro and wind energy operations. As a result, we may not be able to recognize and take advantage of opportunities in the in the hydro and wind energy sector without the aid of qualified consultants. As well, with no direct training or experience, our management may not be fully aware of the specific requirements related to working in the hydro and wind energy industry. Management’s decisions and choices may not be well thought out and our operations, earnings and ultimate financial success may suffer irreparable harm as a result.
If we are unable to hire and retain key personnel, then we may not be able to implement our business plan.
We depend on the services of our sole executive officer and our directors and our success depends on the continued efforts of such individuals to manage our business operations. The loss of the services of Mr. Sang Ho Kim and Surendran Shanmugam could have a negative effect on our business, financial condition and results of operations. In addition, our success in expanding our business operations is largely dependent on our ability to hire highly qualified personnel, especially specialized consultants and engineers. In addition, we may lose employees or consultants that we hire due to higher salaries and fees being offered by competitors or other businesses in the industry.
Because we will incur significant costs complying with our obligations as a reporting issuer, our ability to attain profitable operations will be adversely impacted.
Upon the effectiveness of the registration statement containing this prospectus, we will be required to file periodic reports with the Securities & Exchange Commission, including financial statements and disclosure regarding changes in our operations. We anticipate that we will incur approximately $25,000 per year in order to comply with these reporting requirements. As our operations become more complex, it is anticipated that these costs will increase. These compliance costs will be charged to operations and will negatively impact our ability to attain profitable operations.
Our sole executive officer, Sang-Ho Kim, may devote less than full time to our business, which may reduce our revenues.
In his capacity as the Chief Executive Officer, President, Chief Financial Officer, Treasurer, Secretary, and Director of Modena I, Inc., Sang-Ho Kim’s time is split between his position of owner of Edgetech Ventures, Inc., to which he currently devotes 20 hours per week. He anticipates that during the next twelve months he will devote approximately 70% of his time to our business. Sang-Ho Kim may not be able to devote the time necessary to our business to assure successful implementation of our business plan.
Our management decisions are made by Sang-Ho Kim and Surendran Shanmugam, if we lose their services, our revenues may be reduced.
The success of our business is dependent upon the expertise of management, Sang-Ho Kim and Surendran Shanmugam. Because they are essential to our operations, you must rely on their management decisions. We have not obtained any key person life insurance relating to them. If we lose their services, we may not be able to hire and retain other management with comparable experience. As a result, the loss of the services of Sang-Ho Kim and Surendran Shanmugam could reduce our revenues.
Our sole executive officer and directors own a majority of the outstanding shares of our common stock, and other stockholders may not be able to influence control of the company or decision making by management of the company.
Our sole executive officer and directors presently own, in the aggregate 95.1% of our outstanding common stock. As a result, our executive officer and directors have substantial control over all matters submitted to our stockholders for approval including the following matters: election of our board of directors; removal of any of our directors; amendment of our Certificate of Incorporation or bylaws; and adoption of measures that could delay or prevent a change in control or impede a merger, takeover or other business combination involving us. Other stockholders may find the corporate decisions influenced by our executive officers are inconsistent with the interests of other stockholders. In addition, other stockholders may not be able to change the directors and officers, and are accordingly subject to the risk that management cannot manage the affairs of the company in accordance with such stockholders’ wishes.
We may, in the future, issue additional common shares, which would reduce investors’ percent of ownership and may dilute our share value.
Our Certificate of Incorporation authorizes the issuance of 100,000,000 shares of common stock, par value $.001 per share, of which 44,040,000 shares are currently issued and outstanding. The future issuance of common stock may result in substantial dilution in the percentage of our common stock held by our then existing shareholders. We may value any common stock issued in the future on an arbitrary basis. The issuance of common stock for future services or acquisitions or other corporate actions may have the effect of diluting the value of the shares held by our investors, and might have an adverse effect on any trading market for our common stock.
Our common stock is subject to the "penny stock" rules of the SEC and the trading market in our securities is limited, which makes transactions in our stock cumbersome and may reduce the value of an investment in our stock.
The Securities and Exchange Commission has adopted Rule 15g-9 which establishes the definition of a "penny stock," for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require: (i) that a broker or dealer approve a person's account for transactions in penny stocks; and (ii) the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased. In order to approve a person's account for transactions in penny stocks, the broker or dealer must: (i) obtain financial information and investment experience objectives of the person; and (ii) make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.
The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the Security and Exchange Commission relating to the penny stock market, which, in highlight form: (i) sets forth the basis on which the broker or dealer made the suitability determination; and (ii) that the broker or dealer received a signed, written agreement from the investor prior to the transaction.
Generally, brokers may be less willing to execute transactions in securities subject to the "penny stock" rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our stock.
Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.
Because we do not intend to pay any cash dividends on our shares of common stock, our stockholders will not be able to receive a return on their shares unless they sell them.
We intend to retain any future earnings to finance the development and expansion of our business. We do not anticipate paying any cash dividends on our common stock in the foreseeable future. Unless we pay dividends, our stockholders will not be able to receive a return on their shares unless they sell them at a price higher than that which they initially paid for such shares.
The market for penny stocks has experienced numerous frauds and abuses which could adversely impact investors in our stock.
We believe that the market for penny stocks has suffered from patterns of fraud and abuse. Such patterns include:
·
Control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer;
·
Manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases;
·
"Boiler room" practices involving high pressure sales tactics and unrealistic price projections by inexperienced sales persons;
·
Excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and
The wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the inevitable collapse of those prices with consequent investor losses.
The offering price of our common stock could be higher than the market value, causing investors to sustain a loss of their investment.
The price of our common stock in this offering has not been determined by any independent financial evaluation, market mechanism or by our auditors, and is therefore, to a large extent, arbitrary. Our audit firm has not reviewed management's valuation, and therefore expresses no opinion as to the fairness of the offering price as determined by our management. As a result, the price of the common stock in this offering may not reflect the value perceived by the market. There can be no assurance that the shares offered hereby are worth the price for which they are offered and investors may therefore lose a portion or all of their investment.
State securities laws may limit secondary trading, which may restrict the states in which and conditions under which you can sell the shares offered by this prospectus.
Secondary trading in common stock sold in this offering will not be possible in any state until the common stock is qualified for sale under the applicable securities laws of the state or there is confirmation that an exemption, such as listing in certain recognized securities manuals, is available for secondary trading in the state. If we fail to register or qualify, or to obtain or verify an exemption for the secondary trading of, the common stock in any particular state, the common stock could not be offered or sold to, or purchased by, a resident of that state. In the event that a significant number of states refuse to permit secondary trading in our common stock, the liquidity for the common stock could be significantly impacted thus causing you to realize a loss on your investment.
Currently, there is no public market for our securities, and there can be no assurances that any public market will ever develop or that our common stock will be quoted for trading and, even if quoted, it is likely to be subject to significant price fluctuations.
There has not been any established trading market for our common stock, and there is currently no public market whatsoever for our securities. Additionally, no public trading can occur until we file and have declared effective a Registration Statement with the US Securities and Exchange Commission (“SEC”). We have not determined whether or when we will file a Registration Statement. There can be no assurances as to whether, subsequent to registration with the SEC:
·
any market for our shares will develop;
·
the prices at which our common stock will trade; or
·
the extent to which investor interest in us will lead to the development of an active, liquid trading market. Active trading markets generally result in lower price volatility and more efficient execution of buy and sell orders for investors.
In addition, our common stock is unlikely to be followed by any market analysts, and there may be few institutions acting as market makers for our common stock. Either of these factors could adversely affect the liquidity and trading price of our common stock. Until our common stock is fully distributed and an orderly market develops in our common stock, if ever, the price at which it trades is likely to fluctuate significantly. Prices for our common stock will be determined in the marketplace and may be influenced by many factors, including the depth and liquidity of the market for shares of our common stock, developments affecting our business, including the impact of the factors referred to elsewhere in these Risk Factors, investor perception of the Company and general economic and market conditions. No assurances can be given that an orderly or liquid market will ever develop for the shares of our common stock.
If a market develops for our shares, sales of our shares relying upon rule 144 may depress prices in that market by a material amount.
The majority of the outstanding shares of our common stock held by present stockholders are "restricted securities" within the meaning of Rule 144 under the Securities Act of 1933, as amended.
As restricted shares, these shares may be resold only pursuant to an effective registration statement, such as this one (for the shares registered hereunder) or under the requirements of Rule 144 or other applicable exemptions from registration under the Act and as required under applicable state securities laws. On November 15, 2007, the Securities and Exchange Commission adopted changes to Rule 144, which, would shorten the holding period for sales by non-affiliates to six months (subject to extension under certain circumstances) and remove the volume limitations for such persons. The changes became effective in February 2008. Rule 144 provides in essence that an affiliate who has held restricted securities for a prescribed period may, under certain conditions, sell every three months, in brokerage transactions, a number of shares that does not exceed 1.0% of a company's outstanding common stock. The alternative average weekly trading volume during the four calendar weeks prior to the sale is not available to our shareholders being that the Over the Counter Bulletin Board (“OTCBB”) (if and when listed thereon) is not an "automated quotation system" and, accordingly, market based volume limitations are not available for securities quoted only over the OTCBB. As a result of the revisions to Rule 144 discussed above, there is no limit on the amount of restricted securities that may be sold by a non-affiliate (i.e., a stockholder who has not been an officer, director or control person for at least 90 consecutive days) after the restricted securities have been held by the owner for a period of six months, if the Company has filed its required reports.. A sale under Rule 144 or under any other exemption from the Act, if available, or pursuant to registration of shares of common stock of present stockholders, may have a depressive effect upon the price of the common stock in any market that may develop.
We may be exposed to potential risks resulting from new requirements under Section 404 of the Sarbanes-Oxley Act of 2002.
If we become registered with the SEC, we will be required, pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, to include in our annual report our assessment of the effectiveness of our internal control over financial reporting. We do not have a sufficient number of employees to segregate responsibilities and may be unable to afford increasing our staff or engaging outside consultants or professionals to overcome our lack of employees.
Because we are not subject to compliance with rules requiring the adoption of certain corporate governance measures, our stockholders have limited protections against interested director transactions, conflicts of interest and similar matters.
The Sarbanes-Oxley Act of 2002, as well as rule changes proposed and enacted by the SEC, the New York and American Stock Exchanges and the Nasdaq Stock Market, as a result of Sarbanes-Oxley, require the implementation of various measures relating to corporate governance. These measures are designed to enhance the integrity of corporate management and the securities markets and apply to securities which are listed on those exchanges or the Nasdaq Stock Market. Because we are not presently required to comply with many of the corporate governance provisions and because we chose to avoid incurring the substantial additional costs associated with such compliance any sooner than necessary, we have not yet adopted these measures.
Because all our directors are non-independent, we do not currently have independent audit or compensation committees. As a result, the director has the ability, among other things, to determine his own level of compensation. Until we comply with such corporate governance measures, regardless of whether such compliance is required, the absence of such standards of corporate governance may leave our stockholders without protections against interested director transactions, conflicts of interest and similar matters and investors may be reluctant to provide us with funds necessary to expand our operations.
The costs to meet our reporting and other requirements as a public company subject to the Exchange Act of 1934 will be substantial and may result in us having insufficient funds to expand our business or even to meet routine business obligations.
If we become a public entity, subject to the reporting requirements of the Exchange Act of 1934, we will incur ongoing expenses associated with professional fees for accounting, legal and a host of other expenses for annual reports and proxy statements. We estimate that these costs will range up to $25,000 per year for the next few years and will be higher if our business volume and activity increases but lower during the first year of being public because our overall business volume will be lower, and we will not yet be subject to the requirements of Section 404 of the Sarbanes-Oxley Act of 2002. As a result, we may not have sufficient funds to grow our operations.
Item 1B.
Item 1B. Unresolved Staff Comments
Not Applicable
Item 2.
Item 2. Properties.
Our executive offices are located at the residence of our President and Chief Executive Officer. Mr. Kim provides such office to the Company at no charge. We believe that this space is adequate for our current and immediately foreseeable operating needs. We do not have any policies regarding investments in real estate, securities, or other forms of property.
We do not intend to renovate, improve, or develop properties. We are not subject to competitive conditions for property and currently have no property in insure. We have no policy with respect to investments in real estate or interests in real estate and no policy with respect to investments in real estate mortgages. Further, we have no policy with respect to investments in securities of or interests in persons primarily engaged in real estate activities.
Item 3.
Item 3. Legal Proceedings.
There are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders.
During the period ending October 31, 2009, there has not been any matter which was submitted to a vote of the Company’s shareholders through the solicitation of proxies or otherwise.
PART II
Item 5.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Market Information
There is no trading market for our Common Stock at present and there has been no trading market to date. There is no assurance that a trading market will ever develop or, if such a market does develop, that it will continue.
The Securities and Exchange Commission has adopted Rule 15g-9 which establishes the definition of a “penny stock,” for purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require: (i) that a broker or dealer approve a person’s account for transactions in penny stocks and (ii) the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased. In order to approve a person’s account for transactions in penny stocks, the broker or dealer must (i) obtain financial information and investment experience and objectives of the person; and (ii) make a reasonable determination that the transactions in penny stocks are suitable for that person and that person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks. The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the Commission relating to the penny stock market, which, in highlight form, (i) sets forth the basis on which the broker or dealer made the suitability determination and (ii) that the broker or dealer received a signed, written agreement from the investor prior to the transaction.
Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading, and about commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.
Holders
As of March 8, 2010 there were 44,040,000 shares of common stock issued and outstanding, 40,000,000 of which are controlled by Sang-Ho Kim, the Company's sole officer and director.
As of March 8, 2010 there were 41 holders of record of shares of our common stock. Holders of common stock do not have cumulative voting rights.
Therefore, holders of a majority of the shares of common stock voting for the election of directors can elect all of the directors. Holders of our common stock representing a majority of the voting power of our capital stock issued and outstanding and entitled to vote, represented in person or by proxy, are necessary to constitute a quorum at any meeting of our stockholders. A vote by the holders of a majority of our outstanding shares is required to effectuate certain fundamental corporate changes such as liquidation, merger or an amendment to our Articles of Incorporation.
Although there are no provisions in our charter or by-laws that may delay, defer or prevent a change in control, we are authorized, without shareholder approval, to issue shares of preferred stock that may contain rights or restrictions that could have this effect.
Holders of common stock are entitled to share in all dividends that the board of directors, in its discretion, declares from legally available funds. In the event of liquidation, dissolution or winding up, each outstanding share entitles its holder to participate pro rata in all assets that remain after payment of liabilities and after providing for each class of stock, if any, having preference over the common stock. Holders of our common stock have no pre-emptive rights, no conversion rights and there are no redemption provisions applicable to our common stock.
The issued and outstanding shares of our Common Stock were issued in accordance with the exemptions from registration afforded by Section 4(2) of the Securities Act of 1933.
Dividends
Since inception we have not paid any dividends on our common stock. We currently do not anticipate paying any cash dividends in the foreseeable future on our common stock, when issued pursuant to this offering. Although we intend to retain our earnings, if any, to finance the exploration and growth of our business, our Board of Directors will have the discretion to declare and pay dividends in the future.
Payment of dividends in the future will depend upon our earnings, capital requirements, and other factors, which our Board of Directors may deem relevant.
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.
Safe Harbor Statement under The Private Securities Litigation Reform Act of 1995
Certain statements contained in this section and elsewhere in this Form 10-K constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve a number of known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, but are not limited to, regulatory and economic factors, seasonality, competition, litigation, the nature of supplier or customer arrangements that become available to the Company in the future, adverse weather conditions, possible technological obsolescence of existing products and services, possible reduction in the carrying value of long-lived assets, estimates of the useful life of its assets, potential environmental liability, customer concentration, the ability to obtain financing, and other risks detailed in this report and in the Company's other periodic reports filed with the Securities and Exchange Commission ("SEC"). The words "believe", "expect", "anticipate", "may", "plan", "should" and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made.
Critical Accounting Policies
The Company's discussion and analysis of its financial condition and results of operations are based upon its consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. Several of the Company's accounting policies involve significant judgments, uncertainties and estimations. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. To the extent that actual results differ from management's judgments and estimates, there could be a material adverse effect on the Company. On a continuous basis, the Company evaluates its estimates, including, but not limited to, those estimates related to its allowance for doubtful accounts, inventory reserves, valuation allowance for the deferred tax assets relating to its net operating loss carry forwards ("NOL's") and commitments and contingencies. With respect to accounts receivable, the Company estimates the necessary allowance for doubtful accounts based on both historical and anticipated trends of payment history and the ability of the customer to fulfill its obligations. For inventory, the Company evaluates both current and anticipated sales prices of its products to determine if a write down of inventory to net realizable value is necessary. In determining the Company's valuation allowance for its deferred tax assets, the Company assesses its ability to generate taxable income in the future. The Company utilizes both internal and external sources to evaluate potential current and future liabilities for various commitments and contingencies. In the event that the assumptions or conditions change in the future, the estimates could differ from the original estimates.
The accounting policies of the company are in accordance with United States of America generally accepted accounting principles. Outlined below are those policies considered particularly significant:
Organization and Start Up Costs
Costs of start up activities, including organization costs are expensed as incurred.
Cash and Cash Equivalents
Cash and cash equivalents consist of commercial accounts and interest-bearing bank deposits and are carried at cost, which approximates current value. Items are considered to be cash equivalents if the original maturity is three months or less.
Income Taxes
Deferred tax assets and liabilities are recorded for differences between the financial statements and tax basis of the assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is recorded for the amount of income tax payable or refundable for the period increased or decreased by the change in deferred tax assets and liabilities during the period. As of October 31, 2009, a deferred tax asset (which arises solely as a result of net operating losses), has been entirely offset by a valuation reserve due to the uncertainty that this asset will be realized in the future.
Fair Value of Financial Instruments
The carrying value of the Company's accounts payable approximates fair value because of the short-term maturity of these instruments.
Earnings or Loss Per Share
Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the year. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding plus common stock equivalents (if dilutive) related to stock options and warrants for each year.
There were no dilutive financial instruments for the years ended October 31, 2009 or 2008.
Deferred Offering Costs
The Company defers as other assets the direct incremental costs of raising capital until such time as the offering is completed. At the time of the completion of the offering, the costs are charged against the capital raised. Should the offering be terminated, deferred offering costs are charged to operations during the period in which the offering is terminated.
Revenue Recognition
Revenue is recognized when it is realized or realizable and earned. Modena 1, Inc. considers revenue realized or realizable and earned when persuasive evidence of an arrangement exists, services have been provided, and collectability is reasonably assured. Revenue that is billed in advance such as recurring weekly or monthly services are initially deferred and recognized as revenue over the period the services are provided.
The Company currently has one revenue stream which is providing information technology consulting services. These revenues are recognized on completion of the services rendered. The customers are billed on completion and are due on receipt.
Recent Accounting Pronouncements
In June 2009 the FASB established the Accounting Standards Codification ("Codification'" or "ASC") as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in accordance with generally accepted accounting principles in the United States ("GAAP"). Rules and interpretive releases of the Securities and Exchange Commission issued under authority of federal securities laws are also sources of GAAP for SEC registrants. Existing GAAP was not intended to be changed as a result of the Codification, and accordingly the change did not impact our financial statements. The ASC does change the way the guidance is organized and presented.
In May 2009, the FASB issued SFAS No. 165, “Subsequent Events”, which is included in ASC Topic 855, Subsequent Events. ASC Topic 855 established principles and requirements for evaluating and reporting subsequent events and distinguishes which subsequent events should be recognized in the financial statements versus which subsequent events should be disclosed in the financial statements. ASC Topic 855 also requires disclosure of the date through which subsequent events are evaluated by management. ASC Topic 855 was effective for interim periods ending after June 15, 2009 and applies prospectively. Because ASC Topic 855 impacts the disclosure requirements, and not the accounting treatment for subsequent events, the adoption of ASC Topic 855 did not impact our results of operations or financial condition. See Note 9 for disclosures regarding our subsequent events.
Accounting Standards Update ("ASU") ASU No. 2009-05 (ASC Topic 820), which amends Fair Value Measurements and Disclosures - Overall, ASU No. 2009-13 (ASC Topic 605), Multiple-Deliverable Revenue arrangements, ASU No. 2009-14 (ASC Topic 985), Certain Revenue Arrangements that include Software Elements, and various other ASU's No. 2009-2 through ASU No. 2009-15 which contain technical corrections to existing guidance or affect guidance to specialized industries or entities were recently issued. These updates have no current applicability to the Company or their effect on the financial statements would not have been significant.
The Company does not expect that adoption of these or other recently issued accounting pronouncements will have a material impact on its financial position, results of operations or cash flows.
Recently Issued Accounting Standards
In August 2009, the FASB issued ASU No. 2009-05, Measuring Liabilities at Fair Value, which provides additional guidance on how companies should measure liabilities at fair value under ASC 820. The ASU clarifies that the quoted price for an identical liability should be used. However, if such information is not available, an entity may use the quoted price of an identical liability when traded as an asset, quoted prices for similar liabilities or similar liabilities traded as assets, or another valuation technique (such as the market or income approach). The ASU also indicates that the fair value of a liability is not adjusted to reflect the impact of contractual restrictions that prevent its transfer and indicates circumstances in which quoted prices for an identical liability or quoted price for an identical liability traded as an asset may be considered level 1 fair value measurements. This ASU is effective October 1, 2009. The adoption of this standard did not have a material impact on the results of operations or financial condition.
In October 2009, the FASB issued an amendment to the accounting standards related to the accounting for revenue in arrangements with multiple deliverables including how the arrangement consideration is allocated among delivered and undelivered items of the arrangement. Among the amendments, this standard eliminated the use of the residual method for allocating arrangement considerations and requires an entity to allocate the overall consideration to each deliverable based on an estimated selling price of each individual deliverable in the arrangement in the absence of having vendor-specific objective evidence or other third party evidence of fair value of the undelivered items. This standard also provides further guidance on how to determine a separate unit of accounting in a multiple-deliverable revenue arrangement and expands the disclosure requirements about the judgments made in applying the estimated selling price method and how those judgments affect the timing or amount of revenue recognition. This standard, for which the Company is currently assessing the impact, will become effective for the Company on January 1, 2011.
In October 2009, the FASB issued an amendment to the accounting standards related to certain revenue arrangements that include software elements. This standard clarifies the existing accounting guidance such that tangible products that contain both software and non-software components that function together to deliver the product's essential functionality, shall be excluded from the scope of the software revenue recognition accounting standards. Accordingly, sales of these products may fall within the scope of other revenue recognition standards or may now be within the scope of this standard and may require an allocation of the arrangement consideration for each element of the arrangement. This standard, for which the Company is currently assessing the impact, will become effective for the Company on January 1, 2011.
Overview
Modena I, Inc. is a development stage company which was incorporated under the laws of the State of Delaware on November 18, 2003. From inception to September 2007, the Company was focused on providing a vehicle for a foreign or domestic non-public company to become an SEC reporting (publicly-traded) company. Since September 2007, the Company has shifted its focus to becoming a wind and hydro electric energy generation company.
The address of our principal executive office is Modena I, Inc., c/o Sang Ho Kim, 735 Don Mills Rd., #1405 Toronto Ontario M3C 1S9, Canada. Our phone number at that location is (647) 435-9852 and our facsimile number is (416) 467-5179. We do not have a functioning website at this time.
Proposed Business
Since September 2007, we have shifted our focus and intend to become a wind and hydro electric energy generation company. We intend to identify and evaluate the economic feasibility and resource potential of wind and hydro properties, predominantly in the Greater Toronto area and surrounding areas of Ontario Canada, for the purposes of developing commercial scale wind and hydro turbine projects. We intend to participate in these projects with development partners and receive revenue from the sale of electric energy through our working interests in the partnerships. As of the time of this filing, we have not identified any suitable properties, project opportunities or development partners.
We are a development stage company that has generated no revenues from operations since our incorporation on November 18, 2003. We have incurred losses since our inception, have no operations and rely upon the sale of our securities and funds provided by management to cover expenses. In addition, our independent accountant has issued an opinion indicating that there is substantial doubt about our ability to continue as a going concern.
Since our inception, we have been primarily engaged in business planning activities, including researching for a target company with which to do a business combination. Since September 2007, we have been focused on researching wind and hydro energy technologies, developing our economic models and financial forecasts, performing due-diligence regarding potential development partners, investigating wind and hydro electric energy properties and project opportunities and raising capital.
Prior to generating any revenue from operations, we must first enter into an agreement with a development partner and locate and obtain an interest in a property with potential for a commercial wind or hydro electric energy project. Then, we must perform a detailed study of the wind and hydro resource of that property and if that resource study is positive we must complete a detailed construction cost estimate. If that cost estimate determines that exploiting the resource on the property is economically feasible, we must then obtain the necessary capital to construct the project. If sufficient wind or hydro resources exist and the construction estimate is economic and we obtain the necessary capital to construct the project, we must still further negotiate and execute an agreement for the purchase of the electric energy generated by the wind or hydro turbines to be constructed on the property. Only then, if all of the steps are completed above, can we obtain the necessary permits and conduct the environmental before construction takes place and connection to the electrical grid established.
Additional financing must be obtained by us and our development partners to implement our business plan. There is no assurance that financing to cover the costs of implementing our business plan can be obtained. We do not have any current plans to raise these funds.
Stages of Development
We have identified nine stages of development for our wind and hydro electric energy projects.
1.
Site and Development Partner Identification and Agreement - Identify regions that are economically viable for wind or hydro turbine development and development partners that would be appropriate for a particular project. We would then have to finalize an agreement with a development partner before proceeding.
2.
Data Collection - For the wind energy projects this involves location mapping and wind resource data monitoring and collection using meteorological instruments. For hydro-electric projects, this involves location mapping and water resource data monitoring and collection using acoustical current instruments.
3.
Environmental Assessment - Pursuant to relevant government regulations, wind energy projects and hydro electric energy projects meeting specified thresholds must be acknowledged in general by the relevant governmental regulatory authority. A document containing General Terms is then developed, in cooperation with various responsible government agencies, which could include a process of consultation with the general public. The application eventually submitted to the relevant authority details sufficient information on which to fully assess the environmental and social impact of the proposed project.
Following acceptance of the General Terms document, fieldwork and preliminary design work are conducted. In general, an application will not be accepted until a formal review process commences, at which time all information required under the General Terms document to conduct a full assessment has been collected and assembled.
4.
Power Purchase Agreements - At this stage we would respond to Requests for Proposals issued by utility companies in the area in which the project is located in order to obtain power purchase agreements.
5.
Site--Finalization of land lease or acquisition terms with government or private land owner
6.
Access - Wind and hydro electric energy sites permitted to us in general will be located in remote areas and require road construction for access. This access will be gated to prevent the inappropriate use of the roads near to potentially environmentally sensitive areas.
7.
Interconnection Studies - At this stage, we will retain engineering consultants to conduct studies on interconnecting our wind or hydro electric energy projects to the relevant transmission grid. Each wind power or hydro electric energy project requires a separate interconnection study.
8.
Construction - Once financing arrangements are made, the time allotted for the construction phase depends on the speed of regulatory permitting, the rate of road construction for remote areas and weather conditions. We estimate constructing a typical 1.5mW modern wind turbine as part of an overall project ranges between 18 and 24 months. For run of river hydro electric energy projects, we estimate construction time at 30 months.
9.
Operation - This phase of project development involves working with the supplier of wind or hydro electric energy turbines to optimize generation performance. Maintenance schedules and training will be facilitated by the wind or hydro turbine manufacturer and us.
We intend to carry out all stages of development in conjunction with development partners and consultants. The environmental assessment process is extremely unpredictable and accordingly, it is not possible at this point to predict if and when we will ever advance beyond the stage of development indicated in item three above. Accordingly it is not possible to predict when we will enter the operational stage of development indicated in item nine above, or when revenues will be generated.
We do not have sufficient resources to effectuate our business. We expect to incur a minimum of $400,000 in expenses during the next twelve months of operations. Accordingly, we will have to raise the funds to pay for such expenses. We might do so through a private offering after this registration statement is declared effective and our shares are quoted on the Over the Counter Bulletin Board. We potentially will have to issue debt or equity or enter into a strategic arrangement with a third party. There can be no assurance that additional capital will be available to us. We currently have no agreements, arrangements or understandings with any person to obtain funds through bank loans, lines of credit or any other sources.
Results of Operation
We have earned no revenues from operations from the time of our incorporation on November 18, 2003 to October 31, 2009. We do not anticipate earning any revenues from operations until we have acquired a property and establish a wind or hydro project on such property, secure a power purchase agreement and erect turbines on the land or water, of which there is no guarantee that we will be successful.
We incurred operating expenses in the amount of $72,329 for the period from our inception on November 18, 2003 to October 31, 2009. These operating expenses were comprised of professional fees, including legal and accounting fees, and administrative expenses.
Liquidity and Capital Resources
As shown in the accompanying financial statements, Modena generated a loss of $72,329 from November 18, 2003 (inception) to October 31, 2009, and has an accumulated deficit of $72,329 and negative working capital of $22,215 as of such period. These results raise substantial doubt as to our ability to continue as a going concern. Over the next twelve months, we anticipate expenses will be approximately $35,000, which includes administrative costs, including professional fees and general business expenses, including costs related to complying with our filing obligations as a reporting company. Our sole executive officer, Mr. Sang Ho Kim has indicated that he is prepared to loan such funds to us for these expenses, but there are no formal arrangements in this regard and he is not legally obligated to loan funds to us.
As our operations become more complex, it is anticipated that these costs will increase. We do not have sufficient funds on hand to cover these expenses. Our cash on hand, $210 as of October 31, 2009, will not be sufficient to implement operational activities during the next 12 months and we will require at least $400,000 additional funding to implement our business plan.
The table below sets forth the anticipated expenses for the next 12 months:
Amount Allocated
Amount Expended
Estimated Completion
Marketing Materials/Website
$ 20,000
Use as needed
Legal/Accounting
$ 50,000
Use as needed
SEC Reporting
$25,000
Use as needed
Computer Systems
$6,000
Use as needed
Wind/Hydro Monitors
$80,000
Use as needed
Consultants
$ 80,000
General Administration
Use as needed
Meals & Entertainment
$6,000
Use as needed
Insurance
$6,000
Use as needed
Office Supplies
$6,000
Use as needed
Salaries
$80,000
Use as needed
Professional Fees
$7,000
Use as needed
Rent
$6,000
Use as needed
Telephone/Mobile
$6,000
Use as needed
Travel
$20,000
Use as needed
Utilities
$2,000
Use as needed
Total
We have allocated approximately $139,000 towards general business purposes. Of this amount, $6,000 is intended to be used to computer hardware and software, $6,000 will be used to purchase general office supplies and $87,000 is set aside for salaries and other professional expenses.
We will not generate any revenues in the next twelve months and we will be required to raise additional capital by issuing equity or debt securities in exchange for cash in order to continue as a going concern. We can not assure you that any financing can be obtained or, if obtained, that it will be on reasonable terms. Without realization of additional capital, it would be unlikely for us to continue as a going concern.
Going Concern Consideration
Our independent auditors included an explanatory paragraph in their report on the financial statements included herein regarding concerns about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that lead to this disclosure by our independent auditors.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements
Item 7A.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Not applicable.
Item 8.
Item 8. Financial Statements.
MODENA 1, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
YEARS ENDED OCTOBER 31, 2009 and 2008
AND THE PERIOD FROM INCEPTION THROUGH OCTOBER 31, 2009
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Modena 1, Inc.
(A Development Stage Company)
We have audited the accompanying balance sheet of Modena 1, Inc. (A Development Stage Company) as of October 31, 2009 and the related statements of operations, shareholders' deficit and cash flows for the twelve month period then ended. The financial statements for the year ended October 31, 2008 and from inception, (November 18, 2003), through October 31, 2008 were audited by other auditors whose report expressed an unqualified opinion on those statements. 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 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. 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 Modena 1, Inc. as of October 31, 2009 and the results of its operations and cash flows for the period described above in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company suffered a net loss from operations and has a net capital deficiency, which raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ M&K CPAS, PLLC
www.mkacpas.com
Houston, Texas
March 8, 2010
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors of
Modena 1, Inc (A Development Stage Company)
We have audited the accompanying balance sheets of Modena 1, Inc (A Development Stage Company) as of October 31, 2008 and 2007 and the related statements of operations, changes in stockholders’ deficit, and cash flows for the years ended October 31, 2008 and 2007 and for period from the date of inception (November 18, 2003) to 31 October 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 audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Modena 1, Inc (A Development Stage Company) as of October 31, 2008 and 2007, and the results of its operations and its cash flows for the years ended October 31, 2008 and 2007 and for period from the date of inception (November 18, 2003) to 31 October 2008 in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company’s operating losses, negative working capital, and total capital deficiency raise substantial doubt about its ability to continue as a going concern. Note 2 also describes management’s plans to address these financial matters. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ DNTW Chartered Accountants, LLP
Markham, Canada
December 31, 2008
MODENA 1, INC.
(A Development Stage Company)
BALANCE SHEETS
AS of 31 OCTOBER 2009 and 2008
ASSETS
Current Assets:
Cash and cash equivalents
$
$ 210
Total Current Assets
Total Assets
$
$ 210
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Accounts payable and accrued liabilities
$
13,561
$ 2,936
Related party note
3,013
-
Convertible note, net of discount
5,852
4,569
Total Current Liabilities
22,426
7,504
Total Liabilities
22,426
7,5054
STOCKHOLDERS' DEFICIT
Capital stock - $.001 par value, 100,000,000 common shares authorized, 44,040,000 common shares outstanding as of October 31, 2009 and 2008, respectively
44,040
44,040
Additional paid in capital
6,072
(12,931)
Deficit accumulated during the development stage
(72,328)
(38,404)
Total Stockholders' Deficit
(22,216)
(7,2954)
Total Liabilities and Total Stockholders' Deficit
$
$ 210
MODENA 1, INC.
(A DEVELOPMENT STAGE COMPANY)
Notes to Financial Statements
October 31, 2009 and 2008
1.
History and Organization
Modena I, Inc. is a development stage company which was incorporated under the laws of the State of Delaware on November 18, 2003. From inception to September 2007, the Company was focused on providing a vehicle for a foreign or domestic non-public company to become an SEC reporting (publicly-traded) company. To this end, we intended to locate and negotiate with a business entity for the combination of that target company with the Company. Since September 2007, the Company has shifted its focus to becoming a wind and hydro electric energy generation company.
2.
Going Concern Assumption
These accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP") with the assumption that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. The Company has a working capital deficit of $22,216 and has no current revenue stream. These conditions raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments to the amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue as a going concern.
The Company's ability to continue as a going concern is also contingent upon its ability to complete certain capital formation activities and generate working capital operations in the future. Management's plan in this regard is to secure additional funds through equity financing activities, and from loans made by the Company's stockholder.
The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the inability of the Company to continue as a going concern.
3.
Basis of Presentation
The Company has not earned any revenues from limited principal operations and accordingly, the Company's activities have been accounted for as those of a "Development Stage Enterprise" as set forth in FASB Pronouncements. Among the disclosures required are that the Company's financial statements be identified as those of a development stage company, and that the statements of operation, stockholders' deficit and cash flows disclose activity since the date of the Company's inception.
4.
Summary of Significant Accounting Policies
The accounting policies of the Company are in accordance with US GAAP, and their basis of application is consistent with that of the previous year. Outlined below are those policies considered particularly significant:
a)
Fair Value of Financial Instruments
The Company adopted ASC No. 820-10 (ASC 820-10), formerly SFAS 157, Fair Value Measurements. ASC 820-10 relates to financial assets and financial liabilities.
ASC 820-10 defines fair value, establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (GAAP), and expands disclosures about fair value measurements. The provisions of this standard apply to other accounting pronouncements that require or permit fair value measurements and are to be applied prospectively with limited exceptions.
ASC 820-10 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This standard is now the single source in GAAP for the definition of fair value, except for the fair value of leased property as defined in SFAS 13. ASC 820-10 establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions, about market participant assumptions, that are developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).
The following presents assets that are measured and recognized at fair values as of October 31, 2009 on a non-recurring basis:
Level 1: None
Level 2: None
Level 3: None
As of October 31, 2009 and 2008, the carrying value of cash, accounts payable and accrued liabilities approximate their fair value due to the short-term maturity of such instruments.
b)
Income Taxes
The Company had adopted Accounting Standard Codification subtopic 740-10, Income Taxes (“ASC 740-10”) which requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statement or tax returns. Under this method, deferred tax assets and liabilities are recorded for differences between the financial statement and tax basis of the assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is recorded for the amount of income tax payable or refundable for the period increased or decreased by the change in deferred tax assets and liabilities during the period. As of October 31, 2009, a deferred tax asset (which arises solely as a result of net operating losses), has been entirely offset by a valuation reserve due the uncertainty that this asset will be realized in the future.
MODENA 1, INC.
(A DEVELOPMENT STAGE COMPANY)
Notes to Financial Statements
October 31, 2009 and 2008
c)
Earnings or Loss Per Share
The Company follows ASC No. 260, formerly SFAS No. 128, “Earnings Per Share” (ASC No. 260) that requires the reporting of both basic and diluted earnings (loss) per share. Basic earnings (loss) per share are computed by dividing net income (loss) by the weighted average number of common shares outstanding for the year. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding plus common stock equivalents (if dilutive) related to stock options and warrants for each year.
There were no dilutive financial instruments for the years ended October 31, 2009 and 2008.
d)
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles 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.
e)
Cash and Cash Equivalents
Cash and cash equivalents are considered to be all highly liquid investments purchased with an initial maturity of three (3) months or less.
f)
Beneficial Conversion Feature of Convertible Note
Company recognized the advantageous value of conversion rights attached to convertible note. Such rights gives the holder the ability to convert debt into shares of common stock at a price per share that is less than the fair market value of the common stock on the day the loan is made to the Company. The beneficial value was calculated as the intrinsic value of the beneficial conversion feature of the convertible note and the related accrued interest and was recorded as a discount to the related debt and an addition to additional paid in capital. The discount was calculated as $2,715 and, using the effective interest rate, is being amortized over the life of the convertible note.
MODENA 1, INC.
(A DEVELOPMENT STAGE COMPANY)
Notes to Financial Statements
October 31, 2009 and 2008
g)
Recent Accounting Pronouncements
In June 2009 the FASB established the Accounting Standards Codification ("Codification'" or "ASC") as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in accordance with generally accepted accounting principles in the United States ("GAAP"). Rules and interpretive releases of the Securities and Exchange Commission issued under authority of federal securities laws are also sources of GAAP for SEC registrants. Existing GAAP was not intended to be changed as a result of the Codification, and accordingly the change did not impact our financial statements. The ASC does change the way the guidance is organized and presented.
In May 2009, the FASB issued SFAS No. 165, “Subsequent Events”, which is included in ASC Topic 855, Subsequent Events. ASC Topic 855 established principles and requirements for evaluating and reporting subsequent events and distinguishes which subsequent events should be recognized in the financial statements versus which subsequent events should be disclosed in the financial statements. ASC Topic 855 also requires disclosure of the date through which subsequent events are evaluated by management. ASC Topic 855 was effective for interim periods ending after June 15, 2009 and applies prospectively. Because ASC Topic 855 impacts the disclosure requirements, and not the accounting treatment for subsequent events, the adoption of ASC Topic 855 did not impact our results of operations or financial condition. See Note 9 for disclosures regarding our subsequent events.
Accounting Standards Update ("ASU") ASU No. 2009-05 (ASC Topic 820), which amends Fair Value Measurements and Disclosures - Overall, ASU No. 2009-13 (ASC Topic 605), Multiple-Deliverable Revenue arrangements, ASU No. 2009-14 (ASC Topic 985), Certain Revenue Arrangements that include Software Elements, and various other ASU's No. 2009-2 through ASU No. 2009-15 which contain technical corrections to existing guidance or affect guidance to specialized industries or entities were recently issued. These updates have no current applicability to the Company or their effect on the financial statements would not have been significant.
The Company does not expect that adoption of these or other recently issued accounting pronouncements will have a material impact on its financial position, results of operations or cash flows.
Recently Issued Accounting Standards
In August 2009, the FASB issued ASU No. 2009-05, Measuring Liabilities at Fair Value, which provides additional guidance on how companies should measure liabilities at fair value under ASC 820. The ASU clarifies that the quoted price for an identical liability should be used. However, if such information is not available, an entity may use the quoted price of an identical liability when traded as an asset, quoted prices for similar liabilities or similar liabilities traded as assets, or another valuation technique (such as the market or income approach). The ASU also indicates that the fair value of a liability is not adjusted to reflect the impact of contractual restrictions that prevent its transfer and indicates circumstances in which quoted prices for an identical liability or quoted price for an identical liability traded as an asset may be considered level 1 fair value measurements. This ASU is effective October 1, 2009. The adoption of this standard did not have a material impact on the results of operations or financial condition.
In October 2009, the FASB issued an amendment to the accounting standards related to the accounting for revenue in arrangements with multiple deliverables including how the arrangement consideration is allocated among delivered and undelivered items of the arrangement. Among the amendments, this standard eliminated the use of the residual method for allocating arrangement considerations and requires an entity to allocate the overall consideration to each deliverable based on an estimated selling price of each individual deliverable in the arrangement in the absence of having vendor-specific objective evidence or other third party evidence of fair value of the undelivered items. This standard also provides further guidance on how to determine a separate unit of accounting in a multiple-deliverable revenue arrangement and expands the disclosure requirements about the judgments made in applying the estimated selling price method and how those judgments affect the timing or amount of revenue recognition. This standard, for which the Company is currently assessing the impact, will become effective for the Company on January 1, 2011.
In October 2009, the FASB issued an amendment to the accounting standards related to certain revenue arrangements that include software elements. This standard clarifies the existing accounting guidance such that tangible products that contain both software and non-software components that function together to deliver the product's essential functionality, shall be excluded from the scope of the software revenue recognition accounting standards. Accordingly, sales of these products may fall within the scope of other revenue recognition standards or may now be within the scope of this standard and may require an allocation of the arrangement consideration for each element of the arrangement. This standard, for which the Company is currently assessing the impact, will become effective for the Company on January 1, 2011.
MODENA 1, INC.
(A DEVELOPMENT STAGE COMPANY)
Notes to Financial Statements
October 31, 2009 and 2008
5.
Promissory Note
In July 2007, the Company received proceeds of $6,000 and issued a convertible note to an unrelated party. The loan bears a stated interest rate of 5% per annum, is unsecured and the principal amount of $6,000 plus all accrued interest is due on July 2, 2010. In addition, the holder has the option at any time to convert all or part of the outstanding principal and interest amount into common shares of the Company. The number of common shares that shall be issued upon conversion of the note shall be determined by the holder and the Company, where the price cannot be greater than the price per common share issued by the Company in the next round of financing.
The Company evaluated the conversion feature embedded in the debt instrument and concluded that a beneficial conversion feature exists since the stated interest rate is below the interest rate on that of similar loans. An estimated discount rate of 25% was determined based on the Company’s current capital structure and the discount on the loan was determined to be the beneficial conversion feature embedded in the convertible note and was recorded as an addition to additional paid-in capital and as a reduction in the loan payable balance. The discount, calculated as $2,715, will be amortized over the life of the loan using the effective interest method with the amortized portion recorded as interest expense. For the year ended October 31, 2009, interest expense of $1,283 was recorded on the loan compared to $1,002 of interest expense recorded for the year ended October 31, 2008.
6.
Capital Stock
Total shares authorized as of October 31, 2008 are 100,000,000 common shares, par value $0.001 per share. Total shares issued as of October 31, 2008 are 44,040,000 common shares. Holders of common stock are entitled to one vote for each share held. There are no restrictions that limit the Company's ability to pay dividends on its common stock. During fiscal year 2008 the Company has not declared any dividends since incorporation.
On October 6, 2008, the Company issued 1,600,000 shares of common stock to a Director, in consideration for the services rendered to the Company in his capacity as a director, valued in the amount of $4,000.
As of year ended October 31, 2008, we issued 2,240,000 shares of common stock to 40 investors in a private placement. The consideration paid for such shares was $0.0025 per share, amounting in the aggregate to $5,600.
On June 5, 2009, the Company’s board of directors declared a 39900% stock dividend. Each shareholder of record on June 5, 2009 received 399 additional shares of common stock for each share of common stock then held. The Company retained the current par value of $0.001 per share for all shares of common stock. All references in the financial statements to the number of shares outstanding, per share amounts, common stock, additional paid-in capital and stock option data of the Company’s common stock have been restated retroactively to reflect the effect of the stock dividend for all periods presented.
MODENA 1, INC.
(A DEVELOPMENT STAGE COMPANY)
Notes to Financial Statements
October 31, 2009 and 2008
7.
Income Taxes
The Company has paid no federal or state income taxes. As of October 31, 2009 and 2008, the Company has net operating loss carry forwards of $72,329 and $38,405 which, if unused, will begin to expire in 2023. The tax effect, at the statutory state and federal rates of 35% and 23.7%, of the operating loss carry forwards and temporary differences at October 31, 2009 and 2008 respectively, are as follows:
8.
Related Party Transactions
Related party transactions are in the normal course of operations and are recorded at amounts established and agreed between the related parties. Related party transactions not disclosed elsewhere in these financial statements are as follows:
During 2008, $4,450 was paid by shareholder contribution for professional fees, which were waived for reimbursement. Since inception to October 31, 2008, the shareholder has advanced funds for professional fees and other office and general expenses in the amount of $18,196. The shareholder has waived reimbursement of these expenses and considered these advances as a contribution to capital. Accordingly, the contributions have been recorded as additional paid-in capital. The Company incurred expenses relating to consulting services performed by a director and a shareholder for $4,000 which was paid by the issuance of 1,600,000 of the company’s common shares.
During 2009, $19,003 was paid by shareholder contribution for professional fees, which were waived for reimbursement. Since inception, the shareholder has advanced funds for professional fees and other office and general expenses in the amount of $37,199. The shareholder has waived reimbursement of these expenses and considered these advances as a contribution to capital. Accordingly, the contributions have been recorded as additional paid-in capital.
In September 2009, a related party shareholder loan the company $3,013, payable in demand, for payment of professional fees with imputed interest of 8%. Due to transaction occurring near year end October 31, 2009, the interest expense was found to be immaterial.
9.
Contingencies:
No legal proceedings are currently pending or, to our knowledge, threatened against us that, in the opinion our management, could reasonably be expected to have a material adverse effect on our business or financial condition or results of operations.
10.
Subsequent Events:
There were no events that took place subsequent to October 31, 2009 that in the opinion of management warrants further disclosures.
Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Effective June 5, 2009, the Company dismissed DNTW Chartered Accountants, LLP as the Company’s independent registered public accountants.
DNTW Chartered Accountants, LLP was the independent registered public accounting firm from July 18, 2007 until its dismissal on June 5, 2009. None of DNTW Chartered Accountants, LLP’s reports on the Registrant’s financial statements during such time period and until June 5, 2009, (a) contained an adverse opinion or disclaimer of opinion, or (b) contained any disagreements on any matters of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements, if not resolved to the satisfaction of the principal independent accountants, would have caused it to make reference to the subject matter of the disagreements in connection with its reports. The report on the financial statements prepared by DNTW Chartered Accountants, LLP for the years ended October 31, 2007 and October 31, 2008 was, however, modified as to uncertainty as the report contained a modifying paragraph with respect to the Registrant’s ability to continue as a going concern in accordance with Item 304(a)(1)(ii) of Regulation S-B. None of the reportable events set forth in Item 304(a)(1)(iv)(B) of Regulation S-B occurred during the period in which DNTW Chartered Accountants, LLP served as the Registrant’s principal independent accountants.
On June 5, 2009 the Company engage M&K CPAS, PLLC to act as its independent accountants.
The change in the Company’s auditors was approved by the Board of Directors.
The Company did not request any answer from M&K CPAS, PLLC regarding application of accounting principles or audit opinion type prior to engaging them to replace DNTW Chartered Accountants, LLP.
Item 9A.
Item 9A. Controls and Procedures.
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports made pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”). is recorded, processed, summarized and reported within the timelines specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can only provide reasonable assurance of achieving the desired control objectives, and in reaching a reasonable level of assurance, management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
As required by Rule 13a-15(b) under the Exchange Act, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the fiscal year covered by this report. Based on the foregoing, our Chief Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were not effective as of the end of period covered by this report in timely alerting them to material information relating to Modena 1, Inc. required to be disclosed in our periodic reports with the Securities and Exchange Commission.
Management’s Report on Internal Control Over Financial Reporting
Our Chief Executive Officer and Principal Financial Officer are responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) of the Exchange Act.
Internal control over financial reporting is promulgated under the Exchange Act as a process designed by, or under the supervision of, our Chief Executive Officer and Principal Financial Officer and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:
·
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;
·
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
·
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition or disposition of our assets that could have a material effect on the financial statements.
Readers are cautioned that internal control over financial reporting, no matter how well designed, has inherent limitations and may not prevent or detect misstatements. Therefore, even effective internal control over financial reporting can only provide reasonable assurance with respect to the financial statement preparation and presentation.
Our management, under the supervision and with the participation of our Chief Executive Officer and Principal Financial Officer, has evaluated the effectiveness of our internal controls over financial reporting as of the end of the period covered by this report based upon the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on our evaluation, management concluded that our internal control over financial reporting was not effective as of October 31, 2009 due to the following material weaknesses in the company’s internal control over financial reporting:
·
A system of internal controls (including policies and procedures) has neither been designed nor implemented.
·
A formal, internal accounting system has not been implemented.
·
Segregation of duties in the handling of cash, cash receipt, and cash disbursement is not formalized.
·
A number of journal entries.
Management is evaluating plans on a cost benefit basis to remedy the above weaknesses and we continue the process to complete a thorough review of our internal controls as part of our preparation for compliance with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002. Section 404 requires our management to report on, and our external auditors to attest to, the effectiveness of our internal control structure and procedures for financial reporting. As a non-accelerated filer under Rule 12b-2 of the Exchange Act, our first report under Section 404 as a smaller reporting company will be contained in our
Form 10-K for the year ended October 31, 2010.
This annual report does not include an attestation report of the company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the company to provide only management’s report.
There were no changes in our internal controls over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) that occurred during our fiscal year ended October 31, 2009, that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting. In the estimation of our senior management, none of the following changes in the composition of management have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting:
Item 9B.
Item 9B. Other Information
None.
PART II
OTHER INFORMATION
Item 10.
Item 10. Directors, Executive Officers, Promoters and Control Persons
Directors and Executive Officers
Set forth below are the names, ages and present principal occupations or employment, and material occupations, positions, offices or employments for the past five years of our current directors and executive officers.
Name and Business Address
Age
Position
Sang-Ho Kim
Chief Executive Officer, President, Chief Financial Officer, Treasurer, Secretary and Director
Surendran Shanmugan
Director
Sang Ho Kim was appointed as our President, Chief Executive Officer, Chief Financial officer and a member of the Board of Directors as of May 12, 2004. Mr. Kim is also the co-founder, Chairman and President of Edgetech Services, Inc., a public Nasdaq company specializing in internet and IT security, founded in 2001. Mr. Kim is an electrical engineer by profession and has held various management positions throughout his career.
Surendran Shanmugan was appointed as a member of the Board of Directors as of October 6, 2008. Mr. Shanmugam has over 15 years of experience in corporate finance and accounting with major organizations such as Price Waterhouse Coopers (PWC), Allianz Insurance, Nike Canada and INCO. He is also the Founder of SS Financial Services Inc. since May, 2002 which specializes in VC and loan financing. Mr. Shanmugan worked as an accounting manager for Edgetech Services from January to December of 2004.
Neither our sole executive officer nor any of our directors is a director in any other U.S. reporting companies. Our director/officer has not been affiliated with any company that has filed for bankruptcy within the last five years. The Company is not aware of any proceedings to which the Company’s officer/directors, or any associate of any such officer/directors, is a party adverse to the Company or any of the Company’s subsidiaries or has a material interest adverse to it.
Each director of the Company serves for a term of one year or until the successor is elected at the Company's annual shareholders' meeting and is qualified, subject to removal by the Company's shareholders. Each officer serves, at the pleasure of the board of directors, for a term of one year and until the successor is elected at the annual meeting of the board of directors and is qualified.
Audit Committee and Expert
We do not have an audit committee or an audit committee financial expert. Our corporate financial affairs are simple at this stage of development and each financial transaction can be viewed by any officer or director at will. The policy of having no committee will change if the constitution of one such becomes necessary as a result of growth of the company or as mandated by public policy.
Auditors; Code of Ethics; Financial Expert
We do not currently have a Code of Ethics applicable to our principal executive, financial and accounting officers. We do not have a “financial expert” on the board or an audit committee or nominating committee.
Potential Conflicts of Interest
Since we do not have an audit or compensation committee comprised of independent directors, the functions that would have been performed by such committees are performed by our directors. Thus, there is a potential conflict of interest in that our directors and officers have the authority to determine issues concerning management compensation and audit issues that may affect management decisions. We are not aware of any other conflicts of interest with any of our executives or directors.
Director Independence
We are not subject to listing requirements of any national securities exchange or national securities association and, as a result, we are not at this time required to have our board comprised of a majority of “independent directors.” We do not believe that any of our directors currently meet the definition of “independent” as promulgated by the rules and regulations of the American Stock Exchange.
Item 11.
Item 11. Executive Compensation
Summary Compensation
Since our incorporation on November 18, 2003, we have not paid any compensation to our directors or officers in consideration for their services rendered to our Company in their capacity as such, other than the issuance of 4,000 shares of the Company’s common stock to Surendran Shanmugam on October 6, 2008. We have no employment agreements with any of our directors or executive officers. We have no pension, health, annuity, bonus, insurance, stock options, profit sharing or similar benefit plans.
Since our incorporation on November 18, 2003, no stock options or stock appreciation rights were granted to any of our directors or executive officers. We have no equity incentive plans.
Outstanding Equity Awards
Our directors and officers do not have unexercised options, stock that has not vested, or equity incentive plan awards.
Compensation of Directors
Since our incorporation on November 18, 2003, we have issued 4,000 shares of common stock to Surendran Shanmugam in consideration for his services rendered in his capacity as director, valued in the amount of $4,000.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The following table lists, as of March 8, 2010, the number of shares of common stock of our Company that are beneficially owned by (i) each person or entity known to our Company to be the beneficial owner of more than 5% of the outstanding common stock; (ii) each officer and director of our Company; and (iii) all officers and directors as a group. Information relating to beneficial ownership of common stock by our principal shareholders and management is based upon information furnished by each person using “beneficial ownership” concepts under the rules of the Securities and Exchange Commission. Under these rules, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or direct the voting of the security, or investment power, which includes the power to vote or direct the voting of the security. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days. Under the Securities and Exchange Commission rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which he or she may not have any pecuniary beneficial interest. Except as noted below, each person has sole voting and investment power.
The percentages below are calculated based on 44,040,000 shares of our common stock issued and outstanding as of March 8, 2010. We do not have any outstanding options, warrants or other securities exercisable for or convertible into shares of our common stock. Unless otherwise indicated, the address of each person listed is c/o Modena I, Inc., c/o Mr. Sang Ho Kim, 735 Don Mills Rd., #1405 Toronto Ontario M3C 1S9 Canada.
(1) Mr. Shanmugam purchased 300,000 shares of the Company’s common stock in the private placement held from October 2007 through July 2008, for the aggregate purchase price of $750. He was also issued 1,600,000 shares of the Company’s common stock in consideration for his services as a director, valued in the amount of $4,000.
Changes in Control
There are no arrangements which may result in a change in control of the Company.
Item 13.
Item 13. Certain Relationships and Related Transactions
Other than the transactions discussed below, we have not entered into any transaction nor are there any proposed transactions in which our Director, executive officer, stockholder or any member of the immediate family of the foregoing had or is to have a direct or indirect material interest.
Since Mr. Sang Ho Kim became our sole officer and a director, he has advanced funds for professional fees and general expenses in the amount of $19,003 and $4,450 as of October 31, 2009 and 2008, respectively. Mr. Kim has waived reimbursement of these expenses and considered these advances as a contribution to capital. Accordingly, the contributions have been recorded as additional paid-in capital.
The Company has been provided office space by its President and Chief Executive Officer for all periods presented. There is no charge to the Company for the space.
Item 14.
Item 14. Principal Accounting Fees and Services.
Audit Fees
The aggregate fees billed for professional services rendered by the Company’s principal accountant for the audit of the Company’s annual financial statements for the fiscal years ended October 31, 2009 and 2008 were $6,000 and $5,000 respectively.
Audit-Related Fees
The Company incurred no fees during the last two fiscal years for assurance and related services by the Company’s principal accountant that were reasonably related to the performance of the audit or review of the registrant’s financial statements and are not reported under Item 9(e)(1) of Schedule A.
Tax Fees
The Company incurred no fees during the last two fiscal years for professional services rendered by the Company’s principal accountant for tax compliance, tax advice and tax planning.
All Other Fees
The Company incurred fees during the last two fiscal years ended October 31, 2009 and 2008 were $15,003 and $6,893 for services rendered by the Company’s principal accountants relating to the review of quarterly financial statements for inclusion in the Company's quarterly reports on Form 10Q.
PART IV
Item 15.
Item 15. Exhibits, Financial Statement Schedules
a)
Exhibits
(3)
(i) Articles of Incorporation
(1)
(ii) Bylaws.
(1)
(14)
Code of Ethics
(16)
Letter re: change in certifying accountant. (2)
(31.1)
Rule 13a-14(a)/15d-14(a) Certifications
(i) Certification of Sang-Ho Kim
(32.1)
Certification Pursuant To The Sarbanes-Oxley Act 18 U.S.C. Section 1350 As
Adopted Pursuant To Section 906 Of The Sarbanes-Oxley Act Of 2002
(i) Certification of Sang-Ho Kim
(1) Incorporated by reference to previous filing
(2)These items have been previously filed
b)
Reports on Form 8-K
Form 8-K Filed on June 23, 2009 reporting a joint venture agreement.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this quarterly report on Form 10-Q to be signed on its behalf by the undersigned thereunto duly authorized.
MODENA 1, INC.
Date: March 15, 2010
By:
/s/ Sang Ho Kim
Name:
Sang Ho Kim
Title: President, Chief Executive Officer,
Chief Financial Officer
(Principal Executive Financial and Accounting Officer)
EXHIBIT 31.1
CERTIFICATION PURSUANT TO 18 U.S.C. § 1350,
AS ADOPTED PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Sang Ho Kim, the President, Chief Executive Officer and Chief Financial Officer of Modena 1, Inc. (“Modena 1”) certify that:
1. I have reviewed this Annual Report on Form 10-K of Modena 1, Inc. for the period ended October 31, 2009;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Modena 1 as of,
and for, the periods presented in this report;
4. Modena 1’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for Modena 1 and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to Modena 1, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of Modena 1’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
(d) Disclosed in this report any change in Modena 1’s internal control over financial reporting that occurred during Modena 1’s most recent fiscal quarter (the small business issuer’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, Modena 1’s internal control over financial reporting; and
5. Modena 1’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to Modena 1’s auditors and the audit committee of Modena 1’s board of directors (or
persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect Modena 1’s ability to record, process, summarize and
report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in Modena 1’s internal control over financial reporting
Date: March 15, 2010
By:
/s/ Sang Ho Kim
Name:
Sang Ho Kim
Title:
President, Chief Executive Officer, Chief Financial Officer (Principal Executive Financial and Accounting Officer)
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report on Form 10-K of Modena 1, Inc. (the “Company”) for the period ended October 31, 2009 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Sang Ho Kim, the President, Chief Executive Officer and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1)
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)
The information contained in the Report fairly present, in all material respects, the financial condition and results of operations of the Company.
Date: March 15, 2010
By:
/s/ Sang Ho Kim
Name:
Sang Ho Kim
Title:
President, Chief Executive Officer, Chief Financial Officer (Principal Executive Financial and Accounting Officer)