Item 1. Description of Business
Forward-looking Statements
This annual report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "will", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable laws, including the securities laws of the United States, we do not intend to update any of the forward-looking statements so as to conform these statements to actual results.
As used in this annual report, the terms "we", "us", "our", “the Company”, and "Pharma" mean Pharma Investing News, Inc., unless otherwise indicated.
All dollar amounts refer to US dollars unless otherwise indicated.
Overview
Pharma Investing News, Inc. was incorporated in the State of Nevada on February 8, 2011. However, we commenced initial operations in July 2008 with the registration of our website domain harmainvestingnews.com. These initial operations consisted of developing the website and establishing our marketing plan.
We are an internet-based company that provides advertising solutions to pharmaceutical and biotechnology companies. The goal of pharmainvestingnews.com is to provide an online community where pharmaceutical and biotechnology companies will be able to provide corporate updates and other information to the public. This service is free of charge to viewers and offers pharmaceutical and biotech companies the ability to showcase their businesses and build brand awareness. We intend to establish our website as a valuable resource for the pharmaceutical and biotechnology industries where the public will go to find the latest information relating to the industry, as a whole, as well as specific information about companies and new product details. We believe that we can position pharmainvestingnews.com to become an all-inclusive resource, allowing users to acquire in-depth analyses, detailed marketing information and current news on research and development and other trends within the pharmaceutical and biotech industries.
In order to set ourselves apart and establish pharmainvestingnews.com as the online resource for the latest news and developments in the pharmaceutical and biotechnology sectors, we believe that we have developed a business model that will allow the Company to generate revenue while offering a valuable service to both individuals and the industry alike. For our current clients we assist in the development and management of marketing campaigns that are launched on pharmainvestingnews.com and other outlets across the internet. Our specifically designed marketing campaigns utilize, not only pharmainvestingnews.com, but we also offer a suite of services that allow our clients to take advantage of other online media channels. These marketing campaigns are designed to assist our clients with the promotion of their goods and services directly to the public. The goal of our advertising is to create brand awareness, not only for our clients, but for pharmainvestingnews.com. By establishing pharmainvestingnews.com as a trusted online resource we will be able to maximize our revenue while providing a service that benefits both the public and the pharmaceutical and biotechnology sectors alike.
Products and Services
Through our current website and anticipated future enhancements, it is our goal to provide both our clients and our viewers with a website with multi-level functionality that enables clients to showcase their businesses while enabling viewers to receive up-to-date information relating to our client’s current product offerings and general corporate updates, including our client’s performance in the capital markets.
PharmaInvestingNews.com for Clients
Since the creation of our business plan and the initial development of our website, it has been our goal to provide our clients with more than just a venue for static ad placements. It is our goal to provide our clients with multi-level advertising solutions in which they are able to showcase all facets of their company. We offer different marketing packages based on our client’s needs and advertising needs and timeframes. The marketing campaigns that we’ve designed are offered in 3, 6 and 12 month terms, and we will enter into written agreements with clients who decide to use our services. Our pricing for our currently offered packages is as follows:
· 3 Months- $ 8,000
· 6 Months- $13,000
· 12 Months- $21,000
We currently offer the following services as part of our packages:
·
Homepage Features - As with most websites, the homepage of our website is the most viewed page; thus, all of our clients are listed on the homepage of our website. We also offer featured advertising spots on our homepage so that our clients, for an additional fee, may gain maximum exposure to potential viewers. We can track click-through ratios to prove to our clients that featured advertising spots on our homepage lead to more profile page (discussed below) views for our client’s respective company.
·
Profile Pages - Profile pages make up the bulk of our website. Profile pages allow clients to showcase information about their company. Each of our advertising clients has a profile page to feature information such as: corporate history, product and research developments, news and events, featured articles, and stock information.
·
Corporate Video Production - We also offer corporate video production for our clients. We can then upload the video to our website to further market our clients. We can also provide our clients with a hard-copy of their video.
·
Ad-Stopper - Our most inclusive marketing package includes two uses of an ad-stopper, whereby the website will only run that particular Company’s advertisements for a full day.
Additional Services
We offer the following additional services as add-ons to our packages, but prices vary depending on the service provided:
·
Radio and Video Interviews - As with our video production capabilities, we can also create radio and video interviews for our clients. We will interview clients in a question and answer format, based on material that the client would like to discuss and highlight. These interviews are then prepared for integration onto our website and/or given to the client for their use. Price is dependent on the time of year, air time, and interviewer used.
·
Social Media Campaigns - Social media, including Facebook, Twitter, Myspace, etc. is a growing marketing venue. We feel that it is necessary for our clients to develop a social media presence, so we offer our clients full social media campaigns in which we will manage all of their accounts. All- inclusive social media campaigns on a monthly basis are $1100 per month; however, if we have a client that signs up for 6 months we offer a 10% discount and for 12 months we offer a 15% discount.
·
Press Release Production - We are able to offer our clients assistance with the drafting and review of press releases. We charge $125 per hour for assisting with the drafting and reviewing of press releases.
·
Email Alerts - Based on the contract a client has with us, we will send out e-mail alerts for any subscribers of our website who opt-in to receive e-mail alerts. E-mail alerts include up to date news and events relevant to a client. We charge $2,500 per news release.
PharmaInvestingNews.com for Viewers
While we expect to generate most of our revenues from our advertising clients, the viewer and user statistics of our website will provide us with the ability to attract new clients. As with most Internet-based advertising companies, it is our plan to develop our website into a user-friendly informational platform where pharmaceutical and biotechnology companies can showcase their businesses and products through multi-dimensional campaigns to viewers searching for that particular information. Website viewers do not have to pay any fees to view our website and search for client information.
·
Profile Pages­ - Viewers are able to view our clients’ profile pages and see all facets of the client’s business; including: corporate history, news and events, stock information, all video and/or radio interviews, all press releases put out by the client, and more.
·
E-mail Subscription Capability - Viewers also have the opportunity to sign up for our e-mail newsletter free of charge. Our e-mail newsletters will be sent out to all of our subscribers as needed or requested by our clients. As with most e-mail subscription newsletters, our subscribers always have the option to opt-out of the subscription to no longer receive our newsletters.
Infrastructure Platform
A stable network of servers and routers capable of handling high internet traffic and large database driven search features is required to support PharmaInvestingNews.com. The database and server infrastructure is outsourced to Hostway.com, (www.hostway.com). The Company has paid for a one-year hosting plan with Hostway.com. At the end of this the first one-year hosting package with Hostway.com, we plan to assess the traffic and usage of our website, and possibly upgrade our services.
Revenue Streams
·
Coupon Uploads: We will have software developed into the website wherein a small business can upload a coupon pertaining to a certain geographic area and category for a small fee, and pay for the upload directly through our website. We anticipate that this will be the leading source of revenue for our Company.
·
Affiliate Marketing: By bringing buyers and sellers together to facilitate transactions, affiliate partner commissions are paid by online merchants. When customers click on an advertisement on our website for a product they wish to purchase, the orders will be processed by the "affiliate” partner that then handles fulfillment of the customers’ orders. In other words, TyphoonCoupons.com does not stock or ship any product that is advertised or purchased. The customers’ orders are filled by the actual vendor and the Company receives a commission for driving the customer to the vendor. The Company will implement this Model into various areas of the website.
·
Advertising Model: We will charge companies to advertise their products to our website visitors, by means such as banner advertising, email campaigns and text message marketing. This Model will be the least used by the Company, but will still be included in our marketing materials and remain an option to businesses.
Subsidiaries
We do not have any subsidiaries.
Intellectual Property
We do not own, either legally or beneficially, any patents or trademarks.
Research and Development Expenditures
We have not incurred any research or development expenses.
Government Regulations
We currently do not have substantial operations and therefore not subject to overly onerous government regulations.
US Regulations
Our operations are or will be subject to various types of regulation at the federal, state and local levels.
Employees and Consultants
Currently we have two consultants that work for us on a part-time basis, Robert Kane and Chad Johnson.
Item 1A.
Item 1A. Risk Factors
Not required.
Item 1B.
Item 1B. Unresolved Staff Comments
None.
Item 2.
Item 2. Properties
We have an executive office located 9107 Wilshire Blvd., Suite 450, Beverly Hills, California 90210. Our telephone number is 1-888-267-1175. We do not pay any rent for our office.
Item 3.
Item 3. Legal Proceedings
We are not currently a party to any legal proceedings.
Item 4.
Item 4. Mine Safety Disclosures.
Not applicable.
PART II
Item 5.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Market Information
There is a limited public market for our common shares. Our common shares are quoted on the OTC Bulletin Board under the symbol “PINV.OB”. Trading in stocks quoted on the OTC Bulletin Board is often thin and is characterized by wide fluctuations in trading prices due to many factors that may be unrelated to a company’s operations or business prospects. We cannot assure you that there will be a market in the future for our common stock.
OTC Bulletin Board securities are not listed or traded on the floor of an organized national or regional stock exchange. Instead, OTC Bulletin Board securities transactions are conducted through a telephone and computer network connecting dealers in stocks. OTC Bulletin Board issuers are traditionally smaller companies that do not meet the financial and other listing requirements of a regional or national stock exchange.
Our common stock became eligible for quotation on the OTC Bulletin Board on August 14, 2012. As of June 12, 2013, our shares have traded very minimally. The current market price is $2.00 per share.
Holders
As of June 12, 2013, there were approximately 33 holders of record of our common stock.
Dividends
We did not issue any stock dividends during our fiscal year ended February 28, 2013.
Equity Compensation Plans
We have not implemented any equity compensation plans.
Recent Sales of Unregistered Securities
We did not make any sales of unregistered securities which were not previously reported in our quarterly filings for fiscal 2013.
Use of Proceeds from Sale of Registered Securities
None during the fiscal year ended February 28, 2013.
Item 6.
Item 6. Selected Financial Data
Not required for smaller reporting companies.
Item 7.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation
Safe Harbor
This Annual Report on Form 10-K contains forward-looking statements that involve risks and uncertainties. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology including, "could" "may", "will", "should", "expect", "plan", "anticipate", "believe", "estimate", "predict", "potential" and the negative of these terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially.
While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested in this Annual Report.
Overview
We are a development stage company. We do not have revenues. We have minimal assets, and have incurred losses since inception.
Results of Operations
Working Capital
February 28, 2013
$
February 29, 2012
$
Current Assets
12,386
Current Liabilities
65,798
90,363
Working Capital Deficit
(65,765)
(77,977)
Cash Flows
Year Ended
Year Ended
February 28, 2013
$
February 29, 2012
$
Cash Flows used in Operating Activities
(7,697)
(29,408)
Cash Flows provided from (used in) Financing Activities
(4,656)
32,794
Net increase (decrease) in Cash During Period
(12,353)
3,386
Operating Revenues
We have not generated any revenues since inception.
Operating Expenses and Net Loss
For the year ended February 28, 2013, the Company incurred $39,838 of operating expenses, comprised of $37,168 in professional fees relating to accounting, audit, and legal services relating to the Company’s SEC filings, and $2,670 of general and administrative expenses relating to day-to-day operations. During the year ended February 29, 2012, the Company incurred $84,697 of operating expenses comprised of $74,273 of professional fees, $5,000 of consulting fees, and $5,424 of general and administrative expenses. The decrease in operating expenses was due to the fact that the Company had limited cash flow for operations during the year and the fact that the Company incurred more professional fees in the prior year relating to the Company’s SEC registration process.
During the year ended February 28, 2013, the Company incurred a net loss of $338 and $nil loss per share compared with a net loss of $84,697 and a $0.02 loss per share during the year ended February 29, 2012. During the year, the Company recorded a gain on settlement of debt of $39,500 relating to forgiveness of professional fees owed by the Company.
Liquidity and Capital Resources
As at February 28 2013, the Company had cash and total assets of $33 compared with $12,386 at February 29, 2012. The decrease in cash was due to the Company’s use of cash during the year which was not replaced by financing from equity or debt sources. The Company had total liabilities of $65,798 at February 28, 2013 compared with $90,363 at February 29, 2012. The decrease in liabilities was due to the forgiveness of $39,500 of professional fees that were previously incurred, offset by a net increase in amounts due to related parties for expenses incurred by management relating to day-to-day operations.
Cashflows from Operating Activities
During the year ended February 28, 2013, the Company used $7,697 of cash for operating activities compared with $29,408 during the year ended February 29, 2012. The decrease was due to the fact that the Company had limited sources of cash during the year, and had limited operating activities.
Cashflows from Investing Activities
During the years ended February 28, 2013 and February 29, 2012, the Company did not have any investing activities.
Cashflows from Financing Activities
During the year ended February 28, 2013, the Company used $4,656 of cash for financing activities compared with proceeds of $32,794 during the year ended February 29, 2012. During the year, the Company received $12,550 of proceeds from the issuance of common shares and $880 from a related party, which was offset by repayments of $18,086 for amounts owed to related parties. During the year ended February 29, 2012, the Company received $12,720 of proceeds from the issuance of common shares and $880 from a related party.
Critical Accounting Policies
Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.
We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. A complete summary of these policies is included in the notes to our financial statements. In general, management’s estimates are based on historical experience, on information from third-party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.
Going Concern
We have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive activities. For these reasons, our auditors stated in their report on our audited financial statements that they have substantial doubt that we will be able to continue as a going concern without further financing.
Future Financings
We will continue to rely on equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund planned acquisitions and activities.
Off-Balance Sheet Arrangements
We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Contractual Obligations
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
Recently Issued Accounting Pronouncements
The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
Item 7A.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Not required for smaller reporting companies.
Item 8.
Item 8. Financial Statements and Supplementary Data
PHARMA INVESTING NEWS, INC.
(A Development Stage Company)
Financial Statements
For the Year Ended February 28, 2013 and February 29, 2012
Report of Independent Registered Public Accounting Firm......................................................................
Balance Sheets..................................................................................................................................................
Statements of Operations.................................................................................................................................F-4
Statements of Cash Flows................................................................................................................................F-5
Notes to the Financial Statements..................................................................................................................F-6
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Pharma Investing News, Inc.
We have audited the accompanying balance sheets of Pharma Investing News, Inc. (the Company) as of February 28, 2013 and February 29, 2012 and the related statements of operations, stockholders’ deficit and cash flows for the years then ended and for the cumulative period from February 1, 2011 (date of inception) through February 28, 2013. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our 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 consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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 Pharma Investing News, Inc. as of February 28, 2013 and February 29, 2012, and the results of their operations and cash flows for the years then ended and for the cumulative period from February 1, 2011 (date of inception) through February 28, 2013, in conformity with U.S. generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has a working capital deficit of $65,765 and accumulated losses of $91,035 for the period from inception through February 28, 2013 which raises substantial doubt about its ability to continue as a going concern. Management’s plans concerning these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Sadler, Gibb & Associates, LLC
Salt Lake City, UT
June 13, 2013
PHARMA INVESTING NEWS, INC.
(A Development Stage Company)
Balance Sheets
(Expressed in US dollars)
(The accompanying notes are an integral part of these financial statements)
PHARMA INVESTING NEWS, INC.
(A Development Stage Company)
Statements of Operations
(Expressed in US dollars)
(The accompanying notes are an integral part of these financial statements)
PHARMA INVESTING NEWS, INC.
(A Development Stage Company)
Statements of Cash Flows
(Expressed in US dollars)
(The accompanying notes are an integral part of these financial statements)
PHARMA INVESTING NEWS, INC.
(A Development Stage Company)
Statement of Stockholders’ deficit
(Expressed in US dollars)
(The accompanying notes are an integral part of these financial statements)
PHARMA INVESTING NEWS, INC.
(A Development Stage Company)
Notes to the Financial Statements
1.
Nature of Operations and Continuance of Business
Pharma Investing News, Inc. (the “Company”) was incorporated in the State of Nevada on February 1, 2011. The Company is a Development Stage Company, as defined by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 915, Development Stage Entities.
Going Concern
These financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. As of February 28, 2013, the Company has not recognized any revenue, and has a working capital deficit of $65,765 and an accumulated deficit of $91,035. The continuation of the Company as a going concern is dependent upon the continued financial support from its management, and its ability to identify future investment opportunities and obtain the necessary debt or equity financing, and generating profitable operations from the Company’s future operations. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
2.
Summary of Significant Accounting Policies
a)
Basis of Presentation
The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) and are expressed in U.S. dollars. The Company’s fiscal year end is February 28.
b)
Use of Estimates
The preparation of financial statements in conformity with US GAAP 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. The Company regularly evaluates estimates and assumptions related to the deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
c)
Cash and cash equivalents
The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents.
d)
Basic and Diluted Net Loss per Share
The Company computes net loss per share in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. For the periods presented, there were no outstanding potential common stock equivalents and therefore basic and diluted earnings per share result in the same figure.
2.
Summary of Significant Accounting Policies (continued)
e)
Financial Instruments
Pursuant to ASC 820, Fair Value Measurements and Disclosures and ASC 825, Financial Instruments, an entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:
Level 1
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
Level 2
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
Level 3
Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
The Company’s financial instruments consist principally of cash, accounts payable, and amounts due to related parties. Pursuant to ASC 820, the fair value of our cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. We believe that the recorded values of all of our other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.
f)
Comprehensive Loss
ASC 220, Comprehensive Income, establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As of February 28, 2013 and February 29, 2012, the Company has no items that represent a comprehensive loss and, therefore, has not included a schedule of comprehensive loss in the financial statements.
g) Income taxes
Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company has adopted ASC 740 “Accounting for Income Taxes” as of its inception. Pursuant to ASC 740, the Company is required to compute tax asset benefits for net operating losses carried forward. The potential benefits of net operating losses have not been recognized in this financial statement because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years.
h)
Recent Accounting Pronouncements
The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
3.
Related Party Transactions
During the periods ended February 28, 2013 and February 29, 2012, the Company’s President and CEO advanced $880 and $20,074, paid expenses in the amount of $39,000 and $4,817, respectively, on behalf of the Company. During the periods ended February 28, 2013 and February 29, 2012, the Company made payments to the Company’s President and CEO of $18,086 and $0, respectively. Accordingly, these amounts have been recorded as due to related parties in the amounts of $56,685 and $34,891 at February 29, 2012 and February 28, 2011. The amounts owing are unsecured, non-interest bearing, and due on demand.
4.
Common Shares
a)
On May 31, 2012, the Company issued 179,317 common shares at $0.07 per share for proceeds of $12,550.
b)
On February 29, 2012, the Company issued 181,698 common shares for proceeds of $12,720.
c)
On February 1, 2011, the Company issued 5,000,000 founders’ shares to the President and Director of the Company.
5.
Settlement of Debt
On August 31, 2012, the Company settled outstanding professional fees of $69,500 for payment of $30,000, which was paid by the President and CEO of the Company. This resulted is a gain on settlement of debt in the amount of $39,500 for the year ended February 28, 2013.
6.
Income Taxes
The Company has $91,035 ofnet operating losses carried forward to offset taxable income in future years which expire commencing in fiscal 2031. The income tax benefit differs from the amount computed by applying the US federal income tax rate of 34 percent to net loss before income taxes. As at February 28, 2013, the Company had no uncertain tax positions.
The cumulative tax effect at the expected rate of 34 percent of significant items comprising our net deferred tax amount is as follows:
February 28,
$
February 29,
$
Net loss before taxes
(338)
(84,697)
Statutory rate
34%
34%
Computed expected tax recovery
28,797
Change in valuation allowance
(115)
(28,797)
Income tax provision
-
-
The cumulative tax effect at the expected rate of 34 percent of significant items comprising our net deferred tax amount is as follows:
Net operating loss carryforwards
30,952
30,837
Valuation allowance
(30,952)
(30,837)
Net deferred tax asset
-
-
7.
Subsequent Events
We have evaluated subsequent events through the date of issuance of the financial statements, and did not have any material recognizable subsequent events.
Item 9.
Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time period specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports filed under the Exchange Act is accumulated and communicated to management, including the Chief Executive Officer covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of February 28, 2013 (the “Evaluation Date”). Based upon the evaluation of our disclosure controls and procedures as of the Evaluation Date, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective because of the identification of a material weakness in our internal control over financial reporting which is identified below, which we view as an integral part of our disclosure controls and procedures.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Rule 13a-15(f). Our internal control over financial reporting is a process designed to provide reasonable assurance to our management and board of directors regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.
Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (ii) 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 of America, and our receipts and expenditures of are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal controls over financial reporting may not prevent or detect misstatements. All internal control systems, no matter how well designed, have inherent limitations, including the possibility of human error and the circumvention of overriding controls. Accordingly, even effective internal control over financial reporting can provide only reasonable assurance with respect to financial statement preparation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our management assessed the effectiveness of our internal control over financial reporting as of February 28, 2013. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on its evaluation, our management concluded that there is a material weakness in our internal control over financial reporting and Management has concluded that the Company’s internal controls over financial reporting are not effective as of February 28, 2013. A material weakness is a deficiency, or a combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
The material weakness relates to the lack of segregation of duties in our financial reporting process and we utilize outside third party consultants. We do not have a separately designated audit committee. This weakness is due to our lack of excess working capital to hire additional staff. To remedy this material weakness, we intend to engage an internal accountant to assist with financial reporting as soon as our finances will allow.
Sadler, Gibb & Associates, LLC, our registered independent public accounting firm, was not required to and has not issued a report concerning the effectiveness of our internal control over financial reporting as of February 28, 2013.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the fourth quarter of our fiscal year ended February 28, 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitations on the Effectiveness of Controls
Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our Disclosure Controls and internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management or board override of the control.
The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
Item 9B.
Item 9B. Other Information.
None.
PART III
Item 10.
Item 10. Directors, Executive Officers and Corporate Governance.
Directors and Officers
Our bylaws allow the number of directors to be fixed by the Board of Directors. Our Board of Directors has fixed the number of directors at two.
Our current directors and officers are as follows:
Name
Age
Position
Robert Kane
Director, President, C.E.O., Principal Executive Officer and Treasurer
Chad Johnson
Director, C.O.O., C.F.O., Principal Accounting Officer and Secretary
The directors will serve as directors until our next shareholder meeting or until a successor is elected who accepts the position. Officers hold their positions at the will of the Board of Directors. There are no arrangements, agreements or understandings between non-management shareholders and management under which non-management shareholders may directly or indirectly participate in or influence the management of our affairs.
Robert Kane, Director, President, C.E.O., Principal Executive Officer and Treasurer
Mr. Kane worked as a registered representative for Stifel Nicolaus & Co. from November 2008 to December 2009. From January 2010 to February 2011, Mr. Kane worked as president of Cannabis Consulting, Inc. Mr. Kane has worked as vice president of investor relations for Cannabis Science, Inc. (OTCBB: CBIS) from September 2011 to present.
Chad Johnson, Director, C.O.O., C.F.O., Principal Accounting Officer and Secretary
Mr. Chad S. Johnson, a native Kansan, is a 1989 graduate of Harvard with a concentration in economics and a 1992 graduate of Harvard Law School. After a federal clerkship, Mr. Johnson worked as a financial institutions mergers, acquisitions and regulatory attorney for Skadden Arps Slate Meagher & Flom LLP from 1993 through 2000, taking a leave to work full-time on the Gore/Lieberman campaign and subsequent recount effort. Mr. Johnson served as founder, pro bono general counsel, and/or director for several gay and lesbian civil rights organizations and AIDS charitable organizations during his time at Skadden Arps. He then served as executive director of the national LGBT democrats’ organization for two years before pursuing various private entrepreneurial ventures while also serving as chief of staff and general counsel for a premier cosmetic surgery center from 2003 to present. In 2010, Mr. Johnson co-founded and joined the board of directors of the non-profit World AIDS Institute and thereafter the Timothy Ray Brown Foundation of the World AIDS Institute. As well he has been a director and General Counsel of Cannabis Science, Inc. (OTCBB: CBIS) since December 2012 and Director and COO of the X-Change Corporation (OTCBB: XCHC) since January 2013.
Significant Employees
There are no individuals other than our executive officers who make a significant contribution to our business.
Family Relationships
There are no family relationships among our officers or directors.
Legal Proceedings
No officer, director or persons nominated for such positions, promoter or significant employee has been involved in the last ten years in any of the following:
·
Any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;
·
Any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
·
Being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; and
·
Being found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.
Section 16(a) Beneficial Ownership Compliance Reporting
Section 16(a) of the Securities Exchange Act of 1934 requires a company’s directors and officers, and persons who own more than ten-percent (10%) of the company’s common stock, to file with the Securities and Exchange Commission reports of ownership on Form 3 and reports of change in ownership on Forms 4 and 5. Such officers, directors and ten-percent stockholders are also required to furnish the company with copies of all Section 16(a) reports they file. Based solely on our review of the copies of such forms received by us and on written representations from certain reporting persons, we believe that all Section 16(a) reports applicable to our officers, directors and ten-percent stockholders with respect to the fiscal year ended February 28, 2013 were filed.
Code of Ethics
We have not yet adopted a code of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions because we have not yet finalized the content of such a code. Companies whose equity securities are listed for trading on the OTC Bulletin Board are not currently required to implement a code of ethics.
Director Nominees
As of February 28, 2013 there have been no material changes to the procedures by which security holders may recommend nominees to our Board of Directors.
Audit Committee
The functions of the Audit Committee are currently carried out by our Board of Directors. Our Board of Directors has determined that we do not presently need an audit committee financial expert on our Board of Directors carrying out the duties of the Audit Committee. Our Board of Directors has determined that the cost of hiring a financial expert to act as one of our directors and to be a member of the Audit Committee or otherwise perform Audit Committee functions outweighs the benefits of having a financial expert on the Audit Committee.
Item 11.
Item 11. Executive Compensation.
The table below summarizes all compensation awarded to, earned by or paid to our executive officer by any person for all services rendered in all capacities to us for the fiscal period from our inception on February 1, 2011 to February 28, 2013 (our fiscal year-end).
Summary Compensation
Name and Principal Position
Year
Salary
($)
Bonus
($)
Stock Awards
($)
Option Awards
($)
Non-Equity Incentive
Plan Compensa tion
($)
Non-qualified Deferred
Compensation Earnings
($)
All Other Compensa tion
($)
Total
($)
Robert Kane,
Director, President, C.E.O., Principal Executive Officer and Treasurer
Chad Johnson,
Director, C.O.O., C.F.O., Principal Accounting Officer and Secretary
Our executive officers and directors did not receive any other compensation as directors or officers or any benefits.
Outstanding Equity Awards at Fiscal Year End
As of February 28, 2013, we did not have any unexercised stock options held by any of our shareholders.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The following table sets forth the ownership, as of June 12, 2013, of our common stock by each of our directors, and by all executive officers and directors as a group, and by each person known to us who is the beneficial owner of more than 5% of any class of our securities. As of June 12, 2013, there were 5,361,015 common shares issued and outstanding. All persons named have sole voting and investment power with respect to the shares, except as otherwise noted. The number of shares described below includes shares which the beneficial owner described has the right to acquire within 60 days of the date of this Annual Report.
Title of Class
Name and Address of Beneficial Owner
Amount and Nature of Beneficial Ownership
Percent of Class
Common
Robert Lawrence
1810 East Sahara Ave
Suite 1571
Las Vegas, NV 89104
5,000,000
93.3%
All Executive Officers and Directors as a Group
5,000,000
93.3%
(1)
Robert Lawrence is our former President CEO, CFO Secretary, Treasurer and a Director.
(2)
Calculated based on issued and outstanding shares of 5,361,015 as June 12, 2013.
Pension, Retirement or Similar Benefit Plans
There are no arrangements or plans in which we provide pension, retirement or similar benefits to our directors or executive officers. We have no material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of the Board of Directors or a committee thereof.
Compensation Committee
We currently do not have a compensation committee of the Board of Directors or a committee performing a similar function. It is the view of the Board that it is appropriate for us not to have such a committee because of our size and because the Board as a whole determines executive compensation. Each of our directors is also is a senior officer of the company.
Compensation Committee Report
Our Board of Directors as a whole has revised and discussed the compensation discussion and analysis disclosed in this Form 10-K and based on this review and discussion, has determined that the disclosure be included in this annual report.
Compensation of Directors
We do not pay our directors any fees for attendance at Board meetings or similar remuneration or reimburse them for any out-of-pocket expenses incurred by them in connection with our business.
Change of Control
As of February 28, 2013 we had no pension plans or compensatory plans or other arrangements which provide compensation in the event of a termination of employment or a change in our control.
Item 13.
Item 13. Certain Relationships and Related Transactions, and Director Independence
None of the following parties has, since our date of incorporation, had any material interest, direct or indirect, in any transaction with us or in any presently proposed transaction that has or will materially affect us:
·
Any of our directors or officers;
·
Any person proposed as a nominee for election as a director;
·
Any person who beneficially owns, directly or indirectly, shares carrying more than 5% of the voting rights attached to our outstanding shares of common stock;
·
Our sole promoter, Roxana Gloria Candela Calixto;
·
Any relative or spouse of any of the foregoing persons who has the same house as such person;
·
Immediate family members of directors, director nominees, executive officers and owners of 5% or more of our common stock.
Director Independence
The rules of the SEC require that we, because we are not listed on any national securities exchange, choose a definition of director “independence” for purposes of determining which directors are independent. We have chosen to follow the definition of independence as determined by the Marketplace Rules of The Nasdaq National Market (“NASDAQ”). Pursuant to NASDAQ’s definition, we do not have any independent directors.
Item 14.
Item 14. Principal Accounting Fees and Services
Audit, Audit-Related and Non-Audit Fees
The following table represents fees for the professional audit services and fees billed for other services rendered by our current auditors, Sadler, Gibb & Associates for the audit of our consolidated annual financial statements for the years ended February 29, 2012 and February 28, 2013 and any other fees billed for other services rendered Sadler, Gibb & Associates, LLC during that period.
Audit Committee Approval
Since our inception, our Board of Directors, performing the duties of the audit committee, has reviewed all audit and non-audit related fees at least annually. The Board, acting as the audit committee, pre-approved all audit related services for the year ended February 28, 2013.
PART IV
Item 15.
Item 15. Exhibits, Financial Statement Schedules
The financial statement schedules are omitted because they are inapplicable or the requested information is shown in our financial statements or related notes thereto.
Exhibits
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act, the Registrant has duly caused this Annual Report to be signed on its behalf by the undersigned thereunto duly authorized.
Pursuant to the requirements of the Exchange Act this Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/ Robert Kane
Robert Kane
Director, President, C.E.O., Principal Executive Officer and Treasurer
June 13, 2013
/s/ Chad Johnson
Chad Johnson
Director, C.O.O., C.F.O., Principal Accounting Officer and Secretary
June 13, 2013