ITEM 1. BUSINESS
Business Development
Northsight is a development stage company incorporated in the State of Nevada on May 21, 2008. We were originally formed to engage in the business of marketing, developing, and producing unique, proprietary water products. Our original intended line of enhanced bottled waters was based upon the experience and expertise of our founder, designed to make everyday hydration and nutrition a more enjoyable experience. In May of 2008, we commenced our development stage operations, and had no significant assets. In May 2010, we abandoned our pursuit of the proprietary bottled water business.
Since our inception on May 21, 2008, through December 31, 2013, we have not generated any revenues and have incurred net losses of $741,649. In May of 2008, our only business activity was the formation of our corporate entity and the development of our business model. On July 11, 2008, we filed an S-1 Registration Statement with the Securities and Exchange Commission (the “SEC”), and the registration statement became effective on July 18, 2008.
On November 7, 2008, we closed our direct public offering and were able to raise $55,000 as proposed. The proceeds of the offering enabled us to maintain our operations and working capital requirements for approximately 12 months. During that time, we investigated various financing options and opportunities. No additional business operations have occurred nor has any revenue been generated as of the year ended December 31, 2013.
Currently, we continue to be a shell company within the meaning of applicable U.S. Securities laws.
However, on March 4, 2014, we entered into a non-binding letter of intent to acquire approximately 7,000 marijuana related domain names. We do not intend to engage in the sale or distribution of marijuana or related products. Instead, the Company plans to operate a website on which third parties can advertise, an online "yellow pages." The consummation of the transactions contemplated by the LOI is subject to satisfaction of various conditions, including negotiation and execution of mutually agreeable definitive documentation, among other conditions. There is no assurance that these transactions will be consummated.
Description of Business
We have been seeking and investigating potential assets, property or businesses to acquire. As noted above, in March, 2014, we entered into a non-binding letter of intent to acquire approximately 7,000 marijuana related domain names. The consummation of the transactions contemplated by the LOI is subject to satisfaction of various conditions. We have had no material business operations since inception.
Our plan of operation in the near term is to complete the acquisition of the marijuana related domain names and commence business operations. Since March 3, 2014, we have raised an aggregate of $606,500 from the sale of 2,426,000 shares of common stock at a per share price of $.25. See Note 9 Subsequent Events to the financial statements included with this Annual Report.
In the event we don’t complete the planned acquisition, our plan of operations for the next 12 months is to: (i) review industries in which we may have an interest; (ii) adopt a business plan regarding any selected industry; and (iii) commence such operations through funding and/or the acquisition of a “going concern” engaged in any industry selected. Other than the possible domain name acquisition, we are unable to predict when and if we may actually participate in any specific business endeavor, and will be unable to do so until we determine the particular industries in which we may participate.
We are currently preparing to complete the acquisition of the approximate 7,000 domain names, and are not otherwise engaged in any substantive business activity. In our present form, we may be deemed to be a vehicle to acquire or merge with a business or company. If we do not complete the possible domain name acquisition, we would not intend to restrict our search for business opportunities to any particular business or industry, and the areas in which we would seek out business opportunities or acquisitions, reorganizations or mergers might include, but not be limited to, the fields of high technology, manufacturing, natural resources, service, research and development, communications, transportation, insurance, brokerage, finance and all medically related fields, among others. We recognize that the number of suitable potential business ventures that may be available to us may be extremely limited, and may be restricted as to acquisitions, reorganizations and mergers with businesses or entities that desire to avoid what such entities may deem to be the adverse factors related to an initial public offering (“IPO”) as a method of going public. The most prevalent of these factors include substantial time requirements, legal and accounting costs, the inability to obtain an underwriter who is willing to publicly offer and sell shares, the lack of or the inability to obtain the required financial statements for such an undertaking, state limitations on the amount of dilution to public investors in comparison to the shareholders of any such entities, along with other conditions or requirements imposed by various federal and state securities laws, rules and regulations and federal and state agencies that implement such laws, rules and regulations.
Amendments to Form 8-K by the SEC regarding shell companies and transactions with shell companies that require the filing of all information about an acquired company that would have been required to have been filed had any such company filed a Form 10 with the SEC, along with required audited, interim and proforma financial statements, within four business days of the closing of any such transaction (Item 5.01(a)(8) of Form 8-K); and the recent amendments to Rule 144 adopted by the SEC that were effective on February 15, 2008, limit the resale of most securities of shell companies until one year after the filing of such information, may eliminate many of the perceived advantages of these types of going public transactions. These types of transactions are customarily referred to as “reverse” mergers in which the acquired company’s shareholders become controlling shareholders in the acquiring company and the acquiring company becomes the successor to the business operations of the acquired company. Regulations governing shell companies also deny the use of Form S-8 for the registration of securities and limit the use of this Form to a reorganized shell company until the expiration of 60 days from when any such entity is no longer considered to be a shell company. This prohibition could further restrict opportunities for us to acquire companies that may already have stock option plans in place that cover numerous employees. In such instances, there may be no exemption from registration for the issuance of securities in any business combination to these employees, thereby necessitating the filing of a registration statement with the SEC to complete any such reorganization, and incurring the time and expense that are normally avoided by reverse mergers.
Recent amendments to Rule 144, adopted by the SEC and effective on February 15, 2008, codify the SEC’s prior position limiting the tradeability of certain securities of shell companies, including those issued by us in any acquisition, reorganization or merger, and further limit the tradeability of additional securities of shell companies; these amendments further restrict the availability of opportunities for us to acquire any business or enterprise that desires to utilize us as a means of going public.
Any of these types of transactions, regardless of the particular prospect, would require us to issue a substantial number of shares of our common stock that could amount to as much as 95% of our outstanding voting securities following the completion of any such transaction; accordingly, investments in any such private enterprise, if available, would be much more favorable than any investment in us.
Management intends to consider a number of factors prior to making any decision as to whether to participate in any specific business endeavor, none of which may be determinative or provide any assurance of success. These may include, but will not be limited to, as applicable, an analysis of the quality of the particular business or entity’s management and personnel; the anticipated market acceptance of any new products or marketing concepts that any such business or company may have; the merits of any such business’ or company’s technological changes; the present financial condition, projected growth potential and available technical, financial and managerial resources of any such business or company; working capital, history of operations and future prospects; the nature of present and expected competition; the quality and experience of any such business’ or company’s management services and the depth of management; the business or the company’s potential for further research, development or exploration; risk factors specifically related to the business or company’s operations; the potential for growth, expansion and profit of the business or company; the perceived public recognition or acceptance of the company or the business’ products, services, trademarks and name identification; and numerous other factors which are difficult, if not impossible, to properly or accurately quantify or analyze, let alone describe or identify, without referring to specific objective criteria of an identified business or company.
Regardless, the results of operations of any specific entity may not necessarily be indicative of what may occur in the future, by reason of changing market strategies, plant or product expansion, changes in product emphasis, future management personnel and changes in innumerable other factors. Further, in the case of a new business venture or one that is in a research and development mode, the risks will be substantial, and there will be no objective criteria to examine the effectiveness or the abilities of its management or its business objectives. Also, a firm market for its products or services may yet need to be established, and with no past track record, the profitability of any such entity will be unproven and cannot be predicted with any certainty.
Management will attempt to meet personally with management and key personnel of the entity providing any potential business opportunity afforded to us, visit and inspect material facilities, obtain independent analysis or verification of information provided and gathered, check references of management and key personnel and conduct other reasonably prudent measures calculated to ensure a reasonably thorough review of any particular business opportunity; however, due to time constraints of management, these activities may be limited.
We are unable to predict when and if we may actually participate in any specific business endeavor. We anticipate that proposed business ventures will be made available to us through personal contacts of directors, executive officers and principal shareholders, professional advisors, broker dealers in securities, venture capital personnel and others who may present unsolicited proposals. In certain cases, we may agree to pay a finder’s fee or to otherwise compensate the persons who submit a potential business endeavor in which we eventually participate. Such persons may include our directors, executive officers and beneficial owners of our securities or their affiliates. In this event, such fees may become a factor in negotiations regarding any potential venture and, accordingly, may present a conflict of interest for such individuals. Management does not presently intend to acquire or merge with any business enterprise in which any member has a prior ownership interest.
Our directors and executive officers have not used any particular consultants, advisors or finders on a regular basis.
Although we currently have no plans to do so, depending on the nature and extent of services rendered, we may compensate members of our current management in the future for services that they may perform for us. Because we currently have extremely limited resources, and we are unlikely to have any significant resources until we have determined a business or enterprise to engage in or have completed a reorganization, merger or acquisition, management expects that any such compensation would take the form of an issuance of shares of our common stock to these persons; this would have the effect of further diluting the holdings of our other shareholders. There are presently no preliminary agreements or understandings between us and members of our management respecting such compensation. Any shares issued to members of our management would be required to be resold under an effective registration statement filed with the SEC or 12 months after we file the Form 10 information about the acquired company with the SEC as now required by Form 8-K. These provisions could further inhibit our ability to complete the acquisition of any business or complete any merger or reorganization with another entity, where finder’s or others who may be subject to these resale limitations refuse to provide us with any introductions or to close any such transactions unless they are paid requested fees in cash or unless we agree to file a registration statement with the SEC that includes any shares that are issued to them at no cost to them. These expenses could limit potential acquisition candidates, especially those in need of cash resources, and could affect the number of shares that our shareholders retain following any such transaction, by reason of the increased expense.
Substantial fees are also often paid in connection with the completion of all types of acquisitions, reorganizations or mergers, ranging from a small amount to as much as $600,000 or more. These fees are usually divided among promoters or founders or finders, after deduction of legal, accounting and other related expenses, and it is not unusual for a portion of these fees to be paid to members of management or to principal shareholders as consideration for their agreement to retire a portion of their shares of our common stock that are owned by them or to provide an indemnification for all of our prior liabilities. Management may actively negotiate or otherwise consent to the purchase of all or any portion of their shares of common stock as a condition to, or in connection with, a proposed reorganization, merger or acquisition. It is not anticipated that any such opportunity will be afforded to other shareholders or that such other shareholders will be afforded the opportunity to approve or consent to any particular stock buy-out transaction. In the event that any such fees are paid or shares are purchased, these requirements may become a factor in negotiations regarding any potential acquisition or merger by us and, accordingly, may also present a conflict of interest for such individuals. We have no present arrangements or understandings respecting any of these types of fees or opportunities. Any of these types of fees that are paid in shares of our common stock will also be subject to the resale limitations embodied in Rule 144.
Principal Products or Services and Their Markets
None; not applicable.
Distribution Methods of the Products or Services
None; not applicable.
Status of any Publicly Announced New Product or Service
None; not applicable.
Competitive Business Conditions and Smaller Reporting Company’s Competitive Position in the Industry and Methods of Competition
Management believes that there are literally thousands of shell companies engaged in endeavors similar to those engaged in by us; many of these companies have substantial current assets and cash reserves. Competitors also include thousands of other publicly-held companies whose business operations have proven unsuccessful, and whose only viable business opportunity is that of providing a publicly-held vehicle through which a private entity may have access to the public capital markets via a reverse merger. There is no reasonable way to predict our competitive position or that of any other entity in these endeavors; however, we, having no assets and no cash reserves, will no doubt be at a competitive disadvantage in competing with entities that have significant cash resources and have recent operating histories when compared with the complete lack of any substantive operations by us since inception.
Sources and Availability of Raw Materials and Names of Principal Suppliers
None; not applicable.
Dependence on One or a Few Major Customers
None; not applicable.
Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements or Labor Contracts, including Duration
None; not applicable.
Need for any Governmental Approval of Principal Products or Services
Because we currently have no business operations and produce no products nor provide any services, we are not presently subject to any governmental regulation in this regard. However, in the event that we complete a reorganization, merger or acquisition transaction with an entity that is engaged in business operations or provides products or services, we will become subject to all governmental approval requirements to which the reorganized, merged or acquired entity is subject or may become subject.
Effect of Existing or Probable Governmental Regulations on the Business
Smaller Reporting Company
We are subject to the reporting requirements of Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and we are subject to the disclosure requirements of Regulation S-K of the SEC, as a “smaller reporting company.” That designation relieves us of some of the informational requirements of Regulation S-K.
Sarbanes/Oxley Act
We are also subject to certain provisions of the Sarbanes-Oxley Act of 2002. The Sarbanes/Oxley Act created a strong and independent accounting oversight board to oversee the conduct of auditors of public companies and strengthens auditor independence. It also requires steps to enhance the direct responsibility of senior members of management for financial reporting and for the quality of financial disclosures made by public companies; establishes clear statutory rules to limit, and to expose to public view, possible conflicts of interest affecting securities analysts; creates guidelines for audit committee members’ appointment, compensation and oversight of the work of public companies’ auditors; management assessment of our internal controls; auditor attestation of our internal controls; prohibits certain insider trading during pension fund blackout periods; requires companies and auditors to evaluate internal controls and procedures; and establishes a federal crime of securities fraud, among other provisions. Compliance with the requirements of the Sarbanes/Oxley Act will likely substantially increase our legal and accounting costs if we complete an acquisition, reorganization or merger.
Exchange Act Reporting Requirements
Section 14(a) of the Exchange Act requires all companies with securities registered pursuant to Section 12(g) of the Exchange Act to comply with the rules and regulations of the SEC regarding proxy solicitations, as outlined in Regulation 14A. Matters submitted to our shareholders at a special or annual meeting thereof or pursuant to a written consent will require us to provide our shareholders with the information outlined in Schedules 14A or 14C of Regulation 14; preliminary copies of this information must be submitted to the SEC at least 10 days prior to the date that definitive copies of this information are forwarded to our shareholders.
On July 11, 2008 we filed an S-1 Registration Statement with the SEC and the registration statement became effective on July 18, 2008.
We are required to file annual reports on Form 10-K and quarterly reports on Form 10-Q with the Securities Exchange Commission on a regular basis, and are required to timely disclose certain material events (e.g., changes in corporate control; acquisitions or dispositions of a significant amount of assets other than in the ordinary course of business; and bankruptcy) in a Current Report on Form 8-K.
Research and Development Costs during the Last Two Fiscal Years
None; not applicable.
Cost and Effects of Compliance with Environmental Laws
We do not believe that our current or intended business operations are subject to any material environmental laws, rules or regulations that would have an adverse material effect on our business operations or financial condition or result in a material compliance cost; however, we will become subject to all such governmental requirements to which any reorganized, merged or acquired entity is subject or may become subject.
Number of Total Employees and Number of Full Time Employees
We currently have three employees, one of whom is full time.
Additional Information
You may read and copy any materials that we file with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may also find all of the reports or registration statements that we have previously filed electronically with the SEC at its Internet site at www.sec.gov. Please call the SEC at 1-202-551-8090 for further information on this or other Public Reference Rooms. Our SEC reports and registration statements are also available from commercial document retrieval services, such as CCH Washington Service Bureau, whose telephone number is 1-800-955-0219.
ITEM 1A.
ITEM 1A. RISK FACTORS
Not required for smaller reporting companies.
ITEM 1B.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2:
ITEM 2: PROPERTIES
We have no assets, property or business; our principal executive office address and telephone number are the business office address and telephone number of our parent company, Kuboo, Inc, and are currently provided at no cost. Because we have had no business, our activities have been limited to keeping us in good standing in the State of Nevada and timely filing our reports with the SEC. These activities have consumed an insignificant amount of management’s time; accordingly, the costs to Kuboo, Inc. of providing the use of its office and telephone have been nominal.
ITEM 3:
ITEM 3: LEGAL PROCEEDINGS
We are not a party to any pending legal proceeding. To the knowledge of our management, no federal, state or local governmental agency is presently contemplating any proceeding against us. No director, executive officer or affiliate of ours or owner of record or beneficially of more than 5% of our common stock is a party adverse to us or has a material interest adverse to us in any proceeding.
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
Our common shares were approved for quotation on the OTC Bulletin Board (OTCBB) of the Financial Industry Regulatory Authority, Inc. (“FINRA”) under the symbol “NCAP” on May 12, 2009. There is currently no established trading market for shares of our common stock. Management does not expect any viable market to develop in our common stock unless and until we complete an acquisition or merger. In any event, no assurance can be given that any market for our common stock will ever develop or be maintained.
For any market that develops for our common stock, the sale of “restricted securities” (common stock) pursuant to Rule 144 of the SEC by members of management or any other person to whom any such securities may be issued in the future may have a substantial adverse impact on any such public market. For information regarding the requirements for resales under Rule 144, see the heading “Rule 144” below.
The following table sets forth, for the periods indicated , the high and low closing quotations, as reported by the OTC Bulletin Board, and represents prices between dealers, does not include retail markups, markdowns or commissions, and may not represent actual transactions:
These prices were obtained from the Yahoo! Finance and do not necessarily reflect actual transactions, retail markups, mark downs or commissions.
Holders
At April 1, we had approximately 64 shareholders of record, not including an indeterminate number of holders who may hold shares in “street name.”
Dividends
We have not declared any cash dividends with respect to our common stock and do not intend to declare dividends in the foreseeable future. Our future dividend policy cannot be ascertained with any certainty, and unless and until we complete any acquisition, reorganization or merger, no such policy will be formulated. There are no material restrictions limiting, or that are likely to limit, our ability to pay dividends on our securities.
Securities Authorized for Issuance under Equity Compensation Plans
None; not applicable.
Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities
Unregistered Sales
The unregistered securities were sold by us during the last three years ended December 31, 2013:
On April 30, 2010, the Company issued 476,667 shares (1,430,000 pre-split shares) of common stock to two individuals for the conversion of debt totaling $10,000 ($.02 per share). The Company valued the shares using the fair value of the debt.
Effective April 12, 2011, we issued an aggregate total of 1,555,603 shares of our common stock, in consideration of $28,500 in cash and cancellation of debt in the amount of $16,681, for total consideration of $45,181, equal to approximately $0.029 per share. The securities were sold to two persons who were then directors, Thomas J. Howells (327,000 shares) and Travis T. Jenson (327,000 shares); Jenson Services, Inc., a Utah corporation that is controlled by Messrs. Howells and Jenson (383,000 shares); and Kelly Trimble, a then principal shareholder (518,603 shares).
Effective May 31, 2011, we and our then control shareholders (Thomas Howells, Travis Jenson, Jenson Services, Inc. and Kelly Trimble, collectively, the “Principal Shareholders”) entered into a Stock Purchase Agreement dated as of May 27, 2011 (“SPA”) with Safe Communications, Inc., a Texas corporation n/k/a Kuboo, Inc. (“Buyer”) under which the Buyer purchased for a $250,000 cash payment 10,000,000 shares of the Company’s common stock, representing 80% of the issued and outstanding common stock after giving effect to the purchase transaction.
During August, 2011, we issued our parent company, Safe Communications, Inc.( n/k/a Kuboo, Inc.), warrants to purchase 1,225,000 shares of our common stock, at an exercise price of $.20 per share, in full satisfaction of its having paid $10,900 in expenses we incurred.
The Company believes that the foregoing transactions were exempt from the registration requirements under Rule 506 of Regulation D promulgated under the Securities Act of 1933, as amended (“the Act”) or Section 4(2) under the Act, based on the following facts: in each case, there was no general solicitation, there was a limited number of investors, each of whom was an “accredited investor” (within the meaning of Regulation D under the “1933 Act”, as amended) and/or was (either alone or with his/her purchaser representative) sophisticated about business and financial matters, each such investor had the opportunity to ask questions of our management and to review our filings with the Securities and Exchange Commission, and all shares issued were subject to restrictions on transfer, so as to take reasonable steps to assure that the purchasers were not underwriters within the meaning of Section 2(11) under the 1933 Act.
Rule 144
The following is a summary of the current requirements of Rule 144:
Affiliate or Person Selling on Behalf of an Affiliate
Non-Affiliate (and has not been an Affiliate During the Prior Three Months)
Restricted Securities of Reporting Issuers
During six-month holding period - no resales
under Rule 144 Permitted.
After Six-month holding period - may resell in accordance with all Rule 144 requirements including:
· Current public information,
· Volume limitations,
· Manner of sale requirements, and
· Filing of Form 144.
During six- month holding period - no resales under Rule 144 permitted.
After six-month holding period but before one year - unlimited public resales under Rule 144 except that the current public information requirement still applies.
After one-year holding period - unlimited public resales under Rule 144; need not comply with any other Rule 144 requirements.
Restricted Securities of Non-Reporting Issuers
During one-year holding period - no resales under Rule 144 permitted.
After one-year holding period - may resell in accordance
with all Rule 144 requirements including:
· Current public information,
· Volume limitations,
· Manner of sale requirements, and
· Filing of Form 144.
During one-year holding period - no resales under Rule 144 permitted.
After one-year holding period - unlimited public resales under Rule 144; need not comply with any other Rule 144 requirements.
Shell Companies
The following is an excerpt from Rule 144(i) regarding resales of securities of shell companies:
“(i) Unavailability to securities of issuers with no or nominal operations and no or nominal non-cash assets.
(1) This section is not available for the resale of securities initially issued by an issuer defined below:
(i) An issuer, other than a business combination related shell company, as defined in §230.405, or an asset-backed issuer, as defined in Item 1101(b) of Regulation AB (§229.1101(b) of this chapter), that has:
(A) No or nominal operations; and
(B) Either:
(1) No or nominal assets;
(2) Assets consisting solely of cash and cash equivalents; or
(3) Assets consisting of any amount of cash and cash equivalents and nominal other assets; or
(ii) An issuer that has been at any time previously an issuer described in paragraph (i)(1)(i).
(2) Notwithstanding paragraph (i)(1), if the issuer of the securities previously had been an issuer described in paragraph (i)(1)(i) but has ceased to be an issuer described in paragraph (i)(1)(i); is subject to the reporting requirements of section 13 or 15(d) of the Exchange Act; has filed all reports and other materials required to be filed by section 13 or 15(d) of the Exchange Act, as applicable, during the preceding 12 months (or for such shorter period that the issue was required to file such reports and materials), other than Form 8-K reports (§249.308 of this chapter); and has filed current “Form 10 information” with the Commission reflecting its status as an entity that is no longer an issuer described in paragraph (i)(1)(i), then those securities may be sold subject to the requirements of this section after one year has elapsed from the date that the issuer filed “Form 10 information” with the Commission.
(3) The term “Form 10 information” means the information that is required by Form 10 or Form 20-F (§249.220f of this chapter), as applicable to the issuer of the securities, to register under the Exchange Act each class of securities being sold under this rule. The issuer may provide the Form 10 information in any filing of the issuer with the Commission. The Form 10 information is deemed filed when the initial filing is made with the Commission.”
Securities of a shell company cannot be publicly sold under Rule 144 in the absence of compliance with this subparagraph.
Section 4(1) of the Securities Act of 1933 as amended (the “Securities Act”)
Since we are a shell company as defined in subparagraph (i) of Rule 144, our shares of common stock cannot be publicly resold under Rule 144 until we comply with the requirements outlined above under the heading “Shell Companies.” Until those requirements have been satisfied, any resales of our shares of common stock must be made in compliance with the provisions of the exemption from registration under the Securities Act provided in Section 4(1) thereof, applicable to persons other than “an issuer, underwriter or a dealer.” That will require that such shares of common stock be sold in “routine trading transactions,” which would include compliance with substantially all of the requirements of Rule 144, regardless of its availability; and such resales may be limited to our non-affiliates. It is the position of the SEC that the Section 4(1) exemption is not available for the resale of any securities of an issuer that is or was a shell company, by directors, executive officers, promoters or founders or their transferees. See NASD Regulation, Inc., CCH Federal Securities Law Reporter, 1990-2000 Decisions, Paragraph No. 77,681, the so-called “Worm-Wulff Letter.”
Use of Proceeds of Registered Securities
Not applicable.
Purchases of Equity Securities by Us and Affiliated Purchasers
None; not applicable.
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
When used in this Annual Report, the words “may,” “will,” “expect,” “anticipate,” “continue,” “estimate,” “project,” “intend,” and similar expressions are intended to identify forward-looking statements within the meaning of Section 27a of the Securities Act and Section 21e of the Exchange Act regarding events, conditions, and financial trends that may affect our future plans of operations, business strategy, operating results, and financial position. Persons reviewing this Annual Report are cautioned that any forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties and actual results may differ materially from those included within the forward-looking statements as a result of various factors. Such factors are discussed further below and also include general economic factors and conditions that may directly or indirectly impact our financial condition or results of operations.
Plan of Operation
Our plan of operation in the near term is to complete the acquisition of the marijuana related domain names and commence business operations. Since March 3, 2014, we have raised an aggregate of $606,500 from the sale of 2,426,500 shares of common stock at a per share price of $.25. See Note 9 Subsequent Events to the financial statements included with this Annual Report.
In the event we don’t complete the planned acquisition, our plan of operation for the next 12 months is to: (i) consider a possible acquisition of a going concern, including the possibility of engaging in a transaction with our parent company, (ii) adopt a business plan for any acquired business, and (iii) upon completion of an acquisition and funding, to commence the business operations of the acquired business.
During the next 12 months, provided we do not complete the planned acquisition during such period, our only foreseeable cash requirements will relate to maintaining our good standing as a corporation in our state of organization; the payment of our Exchange Act reporting filing expenses, including associated legal and accounting fees; and costs incident to reviewing or investigating any potential business venture. We may have to raise additional funds during the next 12 months to fund our basic operating expenses.
Our common stock is currently quoted on the Over-the-Counter Bulletin Board (OTCBB) under the symbol NCAP.OB.
Liquidity and Capital Resources
At December 31, 2013 we had no cash on hand. As of April 2014, we have approximately $550,000 in cash or cash equivalents on hand, representing proceeds from the recent sales of our common stock. If additional funds are required, such funds may be provided by our parent company (which is currently experiencing a shortage of capital) or we may raise funds from third parties, either in the form of debt or equity. We may not be able to raise the funds we need to sustain our planned business operations. During 2013, Kuboo, Inc., the Company’s parent, paid $36,936 to outside professionals and other service providers for services rendered to the Company. These payments were treated as a contribution to our capital by Kuboo.
Results of Operations
We had no operations during the year ended December 31, 2013, and we currently have only limited operations as of the date of this filing. We reported no sales for the years ended December 31, 2013 and 2012. For the years ended December 31, 2013 and 2012, we incurred operating expenses of $41,376 and $41,038.
During the year ended December 31, 2013, we had forgiveness of debt of $4,500 related to the settlement accounts payable.
For the year ended December 31, 2013, net loss decreased by $4,162 to $36,876 from $41,038 reported for the year ended December 31, 2012, a decrease of approximately 10%. This decrease in net loss was attributable to the forgiveness of debt.
Off-Balance Sheet Arrangements
We had no off-balance sheet arrangements during the year ended December 31, 2013.
ITEM 7A:
ITEM 7A: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 8:
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
NORTHSIGHT CAPITAL, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
December 31, 2013
Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders
Northsight Capital, Inc. [a development stage company]
We have audited the accompanying balance sheets of Northsight Capital, Inc. [a development stage company] as of December 31, 2013 and 2012, and the related statements of operations, stockholders’ deficit, and cash flows for the years ended December 31, 2013 and 2012, and for the period from inception [May 21, 2008] through December 31, 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 an 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 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 purposes of expressing an opinion on the effectiveness of the Company’s internal controls 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 Northsight Capital, Inc. [a development stage company] as of December 31, 2013 and 2012, and the results of its operations and cash flows for the years ended December 31, 2013 and 2012, and for the period from inception through December 31, 2013, 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 3 to the financial statements, the Company has incurred a loss from operations and negative operating cash flows during the period from inception through December 31, 2013. These issues raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustment that might result from the outcome of this uncertainty.
/s/ Mantyla McReynolds, LLC
Mantyla McReynolds, LLC
Salt Lake City, Utah
April 15, 2014
NORTHSIGHT CAPITAL, INC.
(A Development Stage Company)
BALANCE SHEETS
The accompanying notes are an integral part of these financial statements
NORTHSIGHT CAPITAL, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
The accompanying notes are an integral part of these financial statements
NORTHSIGHT CAPITAL, INC.
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS’ DEFICIT
Continued on next page
Continued from previous page
The accompanying notes are an integral part of these financial statements
NORTHSIGHT CAPITAL, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
The accompanying notes are an integral part of these financial statements
NORTHSIGHT CAPITAL, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 2013 and 2012
1.
Nature of operations
Northsight Capital Inc. (“Northsight” or “the Company”) is a development stage company incorporated in the State of Nevada on May 21, 2008. The Company was originally formed to engage in the business of marketing, developing, and producing unique, proprietary water products. Northsight’s original intended line of enhanced bottled waters was based upon the experience and expertise of its founder, designed to make everyday hydration and nutrition a more enjoyable experience. In May of 2008, the Company commenced its development stage operations, and had no significant assets. The Company abandoned the proprietary bottled water business in 2010. In May, 2011, Safe Communications, Inc. (n/k/a Kuboo, Inc.) acquired 80% of the Company’s issued and outstanding common stock, and, as a result became its parent company. See Note 4 for more detail. Subsequent to December 31, 2013, the Company has entered into a non-binding letter of intent to acquire approximately 7,000 marijuana related internet domain names. The consummation of this transaction is subject to satisfaction of a number of conditions. See Note 9, Subsequent Events.
2.
Summary of significant accounting policies
Basis of Presentation
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities at the date of the financial statements, as well as their related disclosures. Such estimates and assumptions also affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers short-term interest bearing investments with initial maturities of three months or less to be cash equivalents. Cash and cash equivalents consist of cash in banks, free credit on investment accounts and money market accounts. The Company has no cash or cash equivalents.
Income Taxes
The Company’s taxable income or loss is included in the consolidated income tax returns of the Company’s parent. Current and deferred income taxes are allocated to the members of the consolidated group as if each member were a separate taxpayer. The Company accounts for income taxes in accordance with FASB ASC Topic 740 “Income Taxes,” which requires accounting for deferred income taxes under the asset and liability method. Deferred income tax assets and liabilities are computed for the difference between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on the enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce the deferred income tax assets to the amount expected to be realized.
The determination of the Company’s provision for income taxes requires significant judgment, the use of estimates, and the interpretation and application of complex tax laws. Significant judgment is required in assessing the timing and amounts of deductible and taxable items and the probability of sustaining uncertain tax positions. The benefits of uncertain tax positions are recorded in the Company’s financial statements only after determining a more-likely-than-not probability that the uncertain tax positions will withstand challenge, if any, from tax authorities. When facts and circumstances change, the Company reassesses these probabilities and records any changes in the consolidated financial statements as appropriate.
In accordance with GAAP, the Company is required to determine whether a tax position of the Company is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The tax benefit to be recognized is measured as the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. De-recognition of a tax benefit previously recognized could result in the Company recording a tax liability that would reduce stockholders’ equity.
This policy also provides guidance on thresholds, measurement, de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition that is intended to provide better financial statement comparability among different entities. Management’s conclusions regarding this policy may be subject to review and adjustment at a later date based on factors including, but not limited to, on-going analyses of and changes to tax laws, regulations and interpretations thereof. Generally, the tax filings are no longer subject to income tax examinations by major taxing authorities for years before 2009. Any potential examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with U.S. federal, state and local tax laws. The Company's management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.
Interest and Penalty Recognition on Unrecognized Tax Benefits
The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in other operational expenses. No interest expense or penalties have been recognized as of and for the years ended December 31, 2013 and 2012.
Fair Value of Financial Instruments
The fair values of the Company’s assets and liabilities that qualify as financial instruments under FASB ASC Topic 825, “Financial Instruments,” approximate their carrying amounts presented in the accompanying financial statements at December 31, 2013 and 2012.
Loss Per Common Share
The Company complies with the accounting and disclosure requirements of FASB ASC 260, “Earnings Per Share.” Basic loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted loss per common share incorporates the dilutive effect of common stock equivalents on an average basis during the period.
The calculation of diluted net loss per share excludes 1,225,000 warrants as of December 31, 2013 and 2012, since their effect is anti-dilutive.
Loss Contingencies
The Company recognizes contingent losses that are both probable and estimable. In this context, the Company defines probability as circumstances under which events are likely to occur. In regards to legal cost, we record such costs as incurred.
Nonemployee awards
The fair value of equity instruments issued to a nonemployee is measured by using the stock price and other measurement assumptions as of the earlier date of either: (i) a commitment for performance by the nonemployee has been reached; or (ii) the counterparty’s performance is complete. Expenses related to nonemployee awards are generally recognized in the same period as the Company incurs the related liability for goods and services received.
Recently Adopted Accounting Pronouncements
The Company does not expect the adoption of new accounting pronouncements to have a material effect on its financial statements and disclosures.
3.
Liquidity and Going Concern
The Company is a development stage enterprise and has accumulated operating losses since inception (May 2008) of $741,649, and has had negative cash flows from operating activities during the period from inception (May 2008) through December 31, 2013. These factors raise substantial doubt about the Company’s ability to continue as a going concern.
In March, 2014, the Company raised $606,500 from the sale of 2,426,000 shares of common stock at a per share price of $.25. See Note 9, Subsequent Events.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business. Since the Company recently raised capital through the sale of equity, the Company has cash available for the payment of operating expenses for the near term. Management plans to fund continued operations of the Company by eventually generating profits from operations and raising sufficient capital through placement of additional shares of its common stock or issuance of debt securities.
In the event the Company does not generate sufficient funds from revenues or financing through the issuance of its common stock or from debt financing, the Company may be unable to fully implement its business plan and pay its obligations as they become due, any of which circumstances would have a material adverse effect on its business prospects, financial condition, and results of operations. The accompanying financial statements do not include any adjustments that might be required should the Company be unable to recover the value of its assets or satisfy its liabilities.
4.
Related Party Transactions
Effective May 31, 2011, the Company and certain of its shareholders (Thomas Howells, Travis Jenson, Jenson Services, Inc. and Kelly Trimble, collectively, the “Principal Shareholders”) entered into a Stock Purchase Agreement dated as of May 27, 2011 (“SPA”) with Safe Communications, Inc., a Texas corporation n/k/a Kuboo, Inc. (“Buyer”) under which the Buyer purchased for a $250,000 cash payment 10,000,000 shares of the Company’s common stock, representing 80% of the issued and outstanding common stock after giving effect to the purchase transaction. In addition, under the SPA, if the Buyer did not complete certain transactions within the time period prescribed by the SPA, the Buyer would be obligated to pay the Company an additional $50,000 in cash. The transactions were not completed within the prescribed time period. The Company has not yet received any additional payment from the Buyer.
Effective May 31, 2011, the Company also entered into a Principal Shareholders Agreement with each of the Principal Shareholders dated as of May 27, 2011 (“PSA”), under which the Company agreed to make payments to the Principal shareholders in the aggregate amount of $250,000, in consideration of the Principal Shareholders’ undertakings in the SPA, including but not limited to their agreement to indemnify the Buyer in connection with the stock purchase contemplated in the SPA. If the Buyer makes the additional $50,000 payment referenced above, then the Company is required to pay such additional $50,000 to the Principal Shareholders in accordance with the PSA. The Company has not received any additional payment from the Buyer. Although the Company believes that it is not required to make the additional $50,000 payment to the Principal Shareholders until it receives such payment from the Buyer, the Company has recorded a corresponding liability in the amount of $50,000. Each of the Principal Shareholders was a significant shareholder of the Company, and, in addition, at the time of execution of the PSA, Messrs. Howells, Bassham and Jenson were directors of the Company, Mr. Howells was President and Mr. Bassham was Treasurer and Secretary.
In connection with the closing of the transactions contemplated by the SPA, effective May 31, 2011, Travis Jenson resigned as President and Director of the Company, Thomas Howells resigned as a director of the Company and
Wayne Bassham resigned as Treasurer and secretary of the Company. Mr. Bassham also tendered his resignation as a director of the Company, effective ten days after the Company’s mailing to its shareholders of an Information Statement on Schedule 14F-1. John P. Venners, President of the Buyer, was appointed interim President and a director of the Company, effective May 31, 2011. Mr. Venners was appointed an officer and director of the Company by Wayne Bassham, following the resignations of Messrs. Howells and Jenson, all as required by the SPA.
In connection with the closing of the stock purchase under the SPA, the Buyer obtained control of the Company by acquiring 80% of the Company’s issued and outstanding common stock and by having its designee, John P. Venners, President of the Buyer, appointed interim President and a director of the Company.
Since May 31, 2011, the date a change in control occurred, the Company has occupied office space at the corporate office of its parent company, Safe Communications, Inc. (n/k/a Kuboo, Inc.) (sometimes hereinafter referred to as “Kuboo”), which is provided at no cost. Kuboo incurs no incremental costs in providing this office space to the Company. At December 31, 2013, there was no amount in accounts payable due to Kuboo.
During the year ended December 31, 2013 and 2012, Kuboo paid $36,936 and $35,248 respectively on behalf of the Company in payment of the Company’s operating expenses, consisting primarily of professional and other fees related to being a public company. These payments were treated as a contribution to the capital of the Company.
5.
Stockholders’ Equity
During the years ended December 31, 2013 and 2012, there have been no issuances of common stock.
6.
Warrants and Options
At December 31, 2013, there were 1,225,000 warrants outstanding to purchase a like number of shares of the Company’s common stock at an exercise price of $0.20 per share. These warrants have a term of three years and were issued in connection with the payment of certain Company expenses by Kuboo during the third quarter ended September 30, 2011.
A summary of the status of the Company’s outstanding stock warrants as of December 31, 2013 and 2012 and changes during the period then ended is presented below:
The intrinsic value of the warrants was $0 as of December 31, 2013 and 2012.
7.
Income Taxes
The Company files consolidated tax returns with its parent. In accordance with GAAP, allocation of the consolidated income tax expense is necessary when separate financial statements are prepared for the affiliates. As a result, the Company uses a method that allocates current and deferred taxes to members of the consolidated group by applying the liability method to each member as if it were a separate taxpayer.
At December 31, 2013 and 2012, the Company had net operating loss (“NOL”) carry-forwards for federal and state income purposes approximating $486,000 and $449,000, respectively. These losses are available for future years and expire through 2033. Pursuant to Internal Revenue Code Section 382, utilization of these losses may be severely or completely limited due to more than 50% ownership changes in 2011 and 2010.
The deferred tax asset at December 31, 2013 and 2012 is summarized as follows:
The Company has taken a 100% valuation allowance against the deferred asset attributable to the NOL carry-forwards of approximately $486,000 and $449,000 at December 31, 2013 and 2012, respectively, due to the uncertainty of realizing the future tax benefits. The increase in valuation allowance of approximately $13,000 is primarily attributable to the Company’s net operating loss during the year ended December 31, 2013.
A reconciliation of income tax expense computed at the U.S. federal, state, and local statutory rates and the Company’s effective tax rate is as follows:
The components of the income tax provision for the years ended December 31, 2013 and 2012 are as follows:
8.
Office Lease
The Company currently occupies office space at the corporate office of Kuboo, which is provided at no cost. Kuboo incurs no incremental costs in providing this office space to the Company. For the years ended December 31, 2013 and 2012, the Company reported rental expense of $-0-.
9.
Subsequent Events
On March 4, 2014, we entered into a non-binding letter of intent to acquire approximately 7,000 marijuana related domain names. We do not intend to engage in the sale or distribution of marijuana or related products. Instead, the Company plans to operate a website on which third parties can advertise, an online "yellow pages." The consummation of the transactions contemplated by the LOI is subject to satisfaction of various conditions, including negotiation and execution of mutually agreeable definitive documentation, among other conditions. There is no assurance that these transactions will be consummated.
Between March 3 and April 1, 2014, the Company raised an aggregate of $606,500 from the sale of 2426,000 shares of common stock at a per share price of $.25. In connection with the sale of these securities, the company incurred finder’s fees of approximately $60,000 which will be satisfied through the issuance of approximately 240,000 shares of common stock.
On April 9, 2014, the Company entered into an agreement with the Principal Shareholders and Kuboo pursuant to which (i) the Principal Shareholders released the Company and Kuboo from any obligation to pay them an additional $50,000 under the PSA or SPA (or otherwise), (ii) the Company released Kuboo from any obligation under the SPA to pay to the Company the additional $50,000 specified in the SPA, (iii) the Principal Shareholders agreed to surrender 1,675,604 shares of the Company’s common stock to the Company for cancellation, (iv) the Principal Shareholders released the Company from any obligation to register the Company’s common shares pursuant to section 10.2 of the SPA or otherwise, and (v) the Company agreed to include on a piggyback basis an aggregate of 300,000 shares of common stock on each of the next two Securities Act registration statements that the Company files (an aggregate of 600,000 shares of common stock).
ITEM 9:
ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None; not applicable.
ITEM 9A(T):
ITEM 9A(T): CONTROLS AND PROCEDURES
Our principal executive/principal financial officer evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Annual Report. Based on that evaluation, our President and Secretary/Treasurer concluded that our disclosure controls and procedures as of the end of the period covered by the Annual Report were effective such that the information required to be disclosed by us in reports filed under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including our President and Secretary/Treasurer, as appropriate to allow timely decisions regarding disclosure. A controls system cannot provide absolute assurance, however, that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.
Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes of accounting principles generally accepted in the United States.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives.
Our President and Secretary/Treasurer evaluated the effectiveness of our internal control over financial reporting as of December 31, 2013. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control - Integrated Framework (1992). Based on this evaluation, our President and Secretary/Treasurer, concluded that, as of December 31, 2013, our internal control over financial reporting was not effective, based on having insufficient resources to establish an effective control environment during 2013.
This Annual Report does not include an attestation report of the Company’s 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 rules of the Security and Exchange Commission that permit the Company to provide only management’s report in this Annual Report.
Changes in Internal Control over Financial Reporting
There have been no changes in internal control over financial reporting.
PART III
ITEM 10:
ITEM 10: DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
Identification of Directors and Executive Officers
Our executive officer/director and his respective ages, positions and biographical information are set forth below.
*Mr. Venners resigned on March 24, 2014. On the same date, John Gorman succeeded Mr. Venners as President and sole Director of the Company. See Form 8-K Current Report filed on March 24, 2014.
Background and Business Experience
John P. Venners. Since May, 2011, Mr. Venners has been our President, Treasurer and a director. In addition, Mr. Venners has, since May and February, 2011, served as Treasurer and director (respectively) of NCAP Security Systems, Inc., a subsidiary of Kuboo, Inc., which had been developing a corporate security business. Since September, 2010, Mr. Venners has been President, CEO, and a director of Kuboo, Inc., an internet portal company which is focused on the development of child safe email and web text communications. Since January, 2008, Mr. Venners has served as President of BioEcoTek - Hawaii, a company engaged in the waste-to-energy business. In June, 2009, Mr. Venners founded and has since been President of Harbor Energy Capital, a renewable energy consulting business. Prior to January, 2008 and since 1976, Mr. Venners was President of Venners and Company, Ltd., a Washington D.C based energy consulting firm. Mr. Venners has more than 35 years of experience in developing and managing private and public companies. He began his business career after working at the White House Office of Emergency Preparedness during the 1973-74 national crises. He was co-founder of KFX, Inc. which traded on the NYSE. In addition, he teamed up with Sumitomo Corp to introduce new, innovative technologies to the North American market. Venners founded and managed numerous entities involved in international trade. He has been quoted on numerous occasions, including in the Wall Street Journal, Business Week, the New York Times, the Washington Post, and has traveled the world extensively on behalf of his various business ventures.
Significant Employees
We have no employees who are not executive officers, but who are expected to make a significant contribution to our business.
Family Relationships
There are no family relationships between our officers and directors.
Involvement in Certain Legal Proceedings
During the past 10 years, to our knowledge, none of our present or former directors, executive officers or persons nominated to become directors or executive officers has been the subject of any of the following:
(1) A petition under the federal bankruptcy laws or any state insolvency law was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two (2) years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two (2) years before the time of such filing;
(2) Such person was convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);
(3) Such person was the subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him or her from, or otherwise limiting, the following activities:
(i) Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;
(ii) Engaging in any type of business practice; or
(iii) Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws;
(4) Such person was the subject of any order, judgment or decree, not subsequently reversed,
suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than sixty (60) days the right of such person to engage in any activity described in paragraph (3)(i) above, or to be associated with persons engaged in any such activity;
(5) Such person was found by a court of competent jurisdiction in a civil action or by the SEC to have violated any federal or state securities law, and the judgment in such civil action or finding by the SEC has not been subsequently reversed, suspended, or vacated;
(6) Such person was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated;
(7) Such person was the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of:
(i) Any federal or state securities or commodities law or regulation; or
(ii) Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or
(iii) Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
(8) Such person was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
Compliance with Section 16(a) of the Exchange Act
The common stock of the Company is registered under the Exchange Act, and therefore, the officers, directors and holders of more than 10% of our outstanding shares are subject to the provisions of Section 16(a) which requires them to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and our other equity securities. Officers, directors and greater than 10% beneficial owners are required by SEC regulations to furnish us with copies of all Section 16(a) reports they file. Based solely upon review of the copies of such forms furnished to us during the fiscal year ended December 31, 2013, there were no untimely filings of Section 16(a) reports.
Code of Ethics
As of yet, we have not adopted a corporate code of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions.
Corporate Governance
Nominating Committee
We have not established a Nominating Committee because, due to our lack of material operations and the fact that we presently have only one director and one executive officer, we believe that we are able to effectively manage the issues normally considered by a Nominating Committee. Following the entry into any business or the completion of any acquisition, merger or reorganization, a further review of this issue will no doubt be necessitated and undertaken by new management.
If we do establish a Nominating Committee, we will disclose this change to our procedures in recommending nominees to our Board of Directors.
Audit Committee
We have not established an Audit Committee because, due to our lack of material operations and the fact that we presently have only one director and one executive officer, we believe that we are able to effectively manage the issues normally considered by an Audit Committee. Following the entry into any business or the completion of any acquisition, merger or reorganization, a further review of this issue will no doubt be necessitated and undertaken by new management.
ITEM 11:
ITEM 11: EXECUTIVE COMPENSATION
All Compensation
No cash compensation, deferred compensation or long-term incentive plan awards were issued or granted to our management during the years ended December 31, 2013 or 2012. Furthermore, no member of our management has been granted any option or stock appreciation rights; accordingly, no tables relating to such items have been included within this Item. The following table sets forth the aggregate compensation paid by our Company for services rendered during the periods indicated:
SUMMARY COMPENSATION TABLE
(1)
Mr. Venners became a director on May 31, 2011. Mr. Venners resigned on March 24, 2014. On the same date, John Gorman succeeded Mr. Venners as President and sole Director of the Company. See Form 8-K Current Report filed on March 24, 2014.
Outstanding Equity Awards at Fiscal Year-End
None, not applicable.
Compensation of Directors
There are no standard arrangements pursuant to which our directors are compensated for any services provided as director, including services for committee participation or for special assignments. Our directors received no compensation for service as directors for the year ended December 31, 2013.
ITEM 12:
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Security Ownership of Certain Beneficial Owners
The following table sets forth the ownership by (i) any person known to us to be the beneficial owner of more than five percent (5%) of any of our outstanding voting securities as of December 31, 2013 and (ii) members of our management as of March 30, 2014. Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. The persons named in the table below have sole voting power and investment power with respect to all shares of common stock shown as beneficially owned by them. The percentage of beneficial ownership is based upon 12,500,000 shares of common stock outstanding at that date.
Beneficial Owners
(1) These shares are held of record by Jenson Services, Inc., of which Travis T. Jenson and Thomas J. Howells are officers and directors.
Management
John P. Venners may be deemed to be the beneficial owner of the company shares held by Kuboo, Inc., as he is President and a director of Kuboo, Inc. See the heading “Beneficial Owners” of this Item above regarding the ownership of shares of our common stock by Kuboo, Inc.
SEC Rule 13d-3 generally provides that beneficial owners of securities include any person who, directly or indirectly, has or shares voting power and/or investment power with respect to such securities, and any person who has the right to acquire beneficial ownership of such security within 60 days. Any securities not outstanding which are subject to such options, warrants or conversion privileges exercisable within 60 days are treated as outstanding for the purpose of computing the percentage of outstanding securities owned by that person. Such securities are not treated as outstanding for the purpose of computing the percentage of the class owned by any other person. At the present time there are no outstanding options or warrants.
Changes in Control
There are no additional present arrangements or pledges of our securities which may result in a change in control of the Company, except that our parent company has pledged its shares of our common stock as collateral for a loan. In addition, if we consummate the planned acquisition of the approximate 7,000 domain names, there will be a resulting change of control of the Company. There are no provisions in our Articles of Incorporation or Bylaws that would delay, defer or prevent a change in control.
Securities Authorized for Issuance under Equity Compensation Plans
None, not applicable.
ITEM 13:
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTORS INDEPENDENCE
Transactions with Related Persons
Except as indicated below, there were no material transactions, or series of similar transactions, during our last two fiscal years, or any currently proposed transactions, or series of similar transactions, to which our Company or any of our subsidiaries was or is to be a party, in which the amount involved exceeded the lesser of $120,000 or 1% of the average of our total assets at year-end for the last two completed fiscal years and in which any director, executive officer or any security holder who is known to us to own of record or beneficially more than five percent of any class of our common stock, or any member of the immediate family of any of the foregoing persons, had an interest.
Since May 31, 2011, the Company has occupied office space at the corporate office of its parent company, Kuboo, Inc. (“ Kuboo”), which is provided at no cost. Kuboo incurs no incremental costs in providing this office space to the Company. At December 31, 2013, there was no amount in accounts payable due to Kuboo.
During 2011, we issued 1,225,000 warrants to Kuboo, to purchase a like number of our shares of common stock at an exercise price of $0.20 per share. These warrants were issued for reimbursement of expenses ($10,900) paid by Kuboo on our behalf.
Since May, 2011, Kuboo has paid approximately $92,029 in Company related expenses. These payments have been treated as a contribution to the Company’s capital.
Promoters and Certain Control Persons
See the heading “Transactions with Related Persons” above.
Parents of the Smaller Reporting Company
Our parent company, Kuboo, Inc., owns 10 million shares of our common stock, constituting 80% of our issued and outstanding common stock.
Director Independence
Currently, we have no independent directors serving on our Board of Directors.
ITEM 14:
ITEM 14: PRINCIPAL ACCOUNTING FEES AND SERVICES
The following is a summary of the fees billed to us by our principal accountants during the fiscal years ended December 31, 2013 and 2012:
Audit Fees - Consists of fees for professional services rendered by our principal accountants for the audit of our annual financial statements and review of the financial statements included in our Forms 10-Q or services that are normally provided by our principal accountants in connection with statutory and regulatory filings or engagements.
Audit-related Fees - Consists of fees for assurance and related services by our principal accountants that are reasonably related to the performance of the audit or review of our financial statements and are not reported under “Audit fees.”
Tax Fees - Consists of fees for professional services rendered by our principal accountants for tax compliance, tax advice and tax planning.
All Other Fees - Consists of fees for products and services provided by our principal accountants, other than the services reported under “Audit fees,” “Audit-related fees,” and “Tax fees” above.
Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors
We have not adopted an Audit Committee; therefore, there is no Audit Committee policy in this regard. However, we do require approval in advance of the performance of professional services to be provided to us by our principal accountant. Additionally, all services rendered by our principal accountant are performed pursuant to a written engagement letter between us and the principal accountant.
PART IV
ITEM 15:
ITEM 15: EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a)(1)(2)
Financial Statements. See the audited financial statements for the year ended December 31, 2013 contained in Item 8 above which are incorporated herein by this reference.
(a)(3)
Exhibits. The following exhibits are filed as part of this Annual Report:
No.
Description
3.1
Articles of Incorporation(1)
3.2
Bylaws(1)
4.1
Common Stock Purchase Warrant issued to Safe Communications, Inc. (n/k/a Kuboo, Inc.) (2)
10.1
Subscription Agreement(1)
10.2
Common Stock Purchase Agreement dated as of May 27, 2011, by and between the Company, Safe Communications, Inc. (n/k/a Kuboo, Inc.) and certain shareholders of the Company (3)
10.3
Principal Shareholders Agreement, dated as of May 27, 2011, by and between the Company and certain shareholders of the Company (4)
31.1
Certification of Principal Executive Officer as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002*
31.2
Certification of Principal Financial Officer as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002*
32.2
Certification of Principal Executive and Financial Officer pursuant to 18 U.S.C section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
(1)
Filed as Exhibits to our Form S-1 Registration Statement on July 11, 2008 and incorporated herein by reference.
(2)
Filed as an Exhibit 4.1 to our Form 10Q filed November 21, 2011 and incorporated herein by reference.
(3)
Filed as an Exhibit 10.1 to our Current Report on Form 8-K Filed on July 2, 2011 and incorporated herein by reference.
(4)
Filed as an Exhibit 10.2 to our Current Report on Form 8-K Filed on July 2, 2011 and incorporated herein by reference.
*Filed herewith.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
NORTHSIGHT CAPITAL, INC.
Date:
4/15/2014
By:
/s/John Gorman
John Gorman, President and Sole Director
Pursuant to the requirements of the Securities Exchange Act of 1934 this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
NORTHSIGHT CAPITAL, INC.
Date:
4/15/2014
By:
/s/ John Gorman
John Gorman, President and Sole Director