ITEM 1. BUSINESS
Form and Year of Organization
The Registrant consists of Redify Group, Inc. (“RDFY”, non-operating parent corporation) and its sole and wholly-owned operating subsidiary, TradinGear.Com, Incorporated (“Tradingear,” combined, the "Company"). The company changed its name to Redify Group, Inc. from TGFIN Holdings, Inc. (“TGFN”) on October 2, 2013. The Company reactivated its previously inactive operating subsidiary, Tradingear in order to resume its previous business of developing software, under a new d/b/a: iDEV3.
On April 15, 2013 the company filed a Definitive 14C for the purpose of changing the Company’s name and effectuating a ten (10) to one (1) reverse split of the Company’s common stock. These corporate actions were approved by the Financial Industry Regulatory Authority (“FINRA”) on February 28, 2014, and became effective with the OTCQB at the opening of trading on February 28, 2014 under the symbol “TGFND”. The “D” appeared on the Company’s ticker symbol for the following 20 business days. Thereafter, the Company’s ticker symbol became RDFY.
Redify Group, Inc. was incorporated under the laws of Delaware in March 1985 as Mark, Inc. From March 1992 to September 12, 2002 Redify Group, Inc. was known as Digitran Systems, Incorporated ("DSI"), and from September 12, 2002 to October 2, 2013 it was known as TGFIN Holdings, Inc. during which time, TradinGear.com, Incorporated (incorporated under the laws of the State of Delaware on July 7, 1999) became the operating subsidiary of Redify Group, Inc. Redify Group, Inc., then known as TGFIN Holdings, Inc. sold the assets of Tradingear.com Incorporated effective March 31, 2003.
BUSINESS OF TRADINGEAR.COM, INCORPORATED:
Principal products or services and their markets
The Company currently develops software Applications (“APPS”) for the Apple iphone and other devices. These software applications, known as “SportsCast Baseball,” SportsCast Basketball, and SportsCast Soccer,” were purchased from Gaer Consulting Group, a related party. Gaer Consulting Group was wholly-owned by Sam Gaer, TGFIN’s then largest single shareholder. These applications were new software applications with no previous operating history.
Marketing and Distribution methods
The Applications are sold online at the Apple Store, which charges a 30% fee for marketing and distribution. Currently the APPS are being offered for free in order to build an advertising audience.
Competitive business conditions
There are currently over approximately 1,000,000 active Apps available at the Apple Store. Developers range from small, single App developers, to large professional clearing house incubators. Competition for ideas is intense and many competitors advertise to attract ideas and even offer to co-develop Apps with the idea originator. The Company has offered developers shares of RDFY common stock in exchange for their Apps. This is an avenue the Company still continues to offer and evaluate.
Patents, Copyrights and Trademarks
The Company owns the copyrights and trade names for all the Apps it has purchased.
Research and Product Development
The company purchased certain assets to be used in the building and customization of social networking sites intended to target certain groups with common interests. On December 31, 2012 (See NOTE 2 - TERMINATION OF AGREEMENT) the company entered into a definitive agreement to purchase Assets from IceLounge Media, Inc., a private, unrelated company, which it expensed as Research and Development. The company agreed to exchange 2,557,708 shares valued at the per share market price of $.10, for an amount of $255,771, on December 31, 2012. On April 15, 2013 both parties mutually agreed to terminate the agreement prior to closing without obligation, penalty or consequence to either party. The Assets were returned to IceLounge and TGFIN’s common stock was not issued. The Company had expensed $255,771 as Research and development cost, or $.10 per share for the 2,557,708 shares to have been issued. On April 15, 2013 the company credited Research and development costs for $255,771 and removed the common stock payable for the same amount.
Otherwise, the company spent no resources on research and project development in 2013.
Employees
As of December 31, 2013 and 2012, the Company had no employees. Two former part-time employees donate their time to the company. The estimated value of work provided is imputed and recorded as a non-cash expense of the company. The Company is not a party to any collective bargaining agreements.
REPORTS TO SECURITY HOLDERS
The Company files with the SEC an annual report on Form 10-K, quarterly reports on Form 10-Q, and information reports on Form 8-K and other reports as required by law. The investing public may read and copy any materials the company files with the SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The Company files its reports electronically. The SEC maintains an Internet site that contains reports, proxy and information statements and other information regarding issuers, such as ourselves, that file electronically with the SEC at (http://www.sec.gov.)
ITEM 1A.
ITEM 1A. Risk Factors.
As a smaller reporting company, the Company is not required to provide risk factors.
ITEM 2
ITEM 2 Properties.
The company has no real properties and has no lease obligations.
ITEM 3
ITEM 3 Legal Proceedings.
In the normal course of business, there may be various legal actions and proceedings pending which seek damages against the Company. As of December 31, 2013 there were no claims asserted or threatened against the Company.
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.
The Company's common shares trade on the Electronic Bulletin Board of the National Association of Securities Dealers, Inc. under the symbol "RDFY.OB" or “RDFY.PK”. During the year ended December 31, 2013, the company traded under the symbol “TGFN.OB” or
“TGFN.PK”. The following table shows, for the calendar periods indicated, the range of reported high and low bid quotations for those shares. Such prices reflect inter dealer prices, without retail markup, mark down or commission and may not necessarily represent actual transactions.
Shareholders
As of December 31, 2013, the Company had 342 record holders of its Class A Common Stock, no holders of its Class B Common Stock, no holders of its undesignated Preferred Stock and 14 record holders of its Series 1, Class A 8% Cumulative Convertible Preferred Stock.
Dividends
The Company had not paid any dividends on its Class A or Class B Common Stock (“Common Stock”) and the Board of Directors of the Company presently intends not to declare dividends, but to pursue a policy of retaining earnings, if any, for use in the Company's operations and to finance expansion of its business. The declaration and payment of dividends in the future on the Common Stock will be determined by the Board of Directors in light of conditions then existing, including the Company's earnings, financial condition, capital requirements and other factors. In addition, as noted below, the Company is in arrears in the payment of dividends on its Series 1, Class A 8% Cumulative Convertible Preferred Stock.
Holders of Series 1, Class A 8% Cumulative Convertible Preferred shares are entitled to cumulative dividends of 8% per annum on the stated value of the stock, designated at $7 per share. Dividends are payable semi-annually on September 15 and March 15. No dividends have been declared or paid since March 15, 1993, resulting in dividends in arrears at December 31, 2013 of approximately $578,592 or $11.48 per share. Dividends are not payable on any other class of stock ranking junior to the Series 1, Class A 8% Cumulative Convertible Preferred Stock until the full cumulative dividend requirements of the Series 1, Class A 8% Cumulative Convertible Preferred Stock have been satisfied. There are not sufficient Series 1, Class A 8% Cumulative Convertible Preferred Shares (left unconverted) to trade publicly and the financial condition of the company has made the probability of dividend payment to Series 1, Class A 8% Cumulative Convertible Preferred shareholders unlikely.
Securities authorized for issuance under equity compensation plans.
None
Description of Securities
Common Stock
The authorized capital stock of the Company consists of 50,000,000 shares of Class A Common stock, par value $.01 per share, of which 2,942,286 were outstanding as of December 31, 2013 and 5,000,000 shares of Class B Common stock, par value $.01 per share, of which no shares have been issued. On March 28, 2013 the company’s Board of Directors authorized a ten (10) to one (1) reverse-split of the company’s Class A Common Stock, which became effective February 28, 2014. Holders of Class A Common Stock and Class B Common Stock are entitled to one vote per share.
The Class A Common Stock and the Class B Common Stock attributes and rights are identical except for the following: (a) Class B has pre-emptive rights with respect to Class B issuances, (b) Class A has a dividend and liquidation preference, and (c) if there is a Class B, its holders have the right to control the Board of Directors. The Company has no plans to issue any Class B Common Shares in the near future. All references to Common Stock issuances, unless otherwise indicated, refer to the Class A Common Stock shares.
The company had recorded Common Stock payable in the amount of $255,771, which represented 2,557,708 shares of the company’s Common stock valued at the market price of $.10 on December 31, 2012 to be issued to the assignees of IceLounge Media, Inc., a private, unrelated company. See NOTE 2 - TERMINATION OF AGREEMENT. On April 15, 2013 both parties mutually agreed to terminate the agreement prior to closing without obligation, penalty or consequence to either party. The Assets were returned to IceLounge and TGFIN’s common stock was not issued. The Company had expensed $255,771 as Research and development cost, or $.10 per share for the 2,557,708 shares to have been issued. On April 15, 2013 the company credited Research and development costs for $255,771 and removed the common stock payable for the same amount.
As of December 31, 2012 the Company had an outstanding stock compensation payable in the amount of $36,000, representing 320,000 shares of Common stock authorized to be issued to directors for services rendered in prior periods. On March 11, 2014 the related shares were issued.
On January 1 and April 1, 2013 the Company awarded 10,000 shares of common stock to each Director and the Chairman in accordance with a Board Resolution. The shares were valued at the market price at the date of issuance of $.10 and $.20, respectively, per share resulting in compensation expense of $4,000, of which $3,500 was recognized in the year ended December 31, 2013. On March 11, 2014 the shares were issued.
On March 12, and April 22, 2013 the company sold 250,000 shares of its common stock for $50,000 or $.20 per share to two investors. Subsequent to December 31, 2013, on March 20, 2014, the shares were issued. The issuance was recorded as of December 31, 2013.
Preferred Stock
The Company has authorized 1,000,000 shares of Preferred Shares with a par value of $.01 per share, of which 450,000 are undesignated and unissued. The remaining 550,000 shares are designated as Series 1 Class A 8% Cumulative Convertible Preferred Stock (“Preferred stock”), of which 50,400 shares were issued and outstanding as of December 31, 2013. There are insufficient Series 1, Class A 8% Cumulative Convertible Preferred Shares remaining to trade publicly.
Holders of both, the Series 1, Class A 8% Cumulative Convertible Preferred Stock and the undesignated class of Preferred stock are entitled to one-tenth of a vote for each share of preferred stock held.
Since only the Series 1, Class A 8% Cumulative Convertible Preferred Shares are issued and outstanding, all references to preferred shares, unless otherwise indicated, refer to the Series 1, Class A 8% Cumulative Convertible Preferred Shares.
The Series 1, Class A 8% Cumulative Convertible Preferred Stock carries a liquidation preference equal to its stated value plus any unpaid dividends. The Company may, at its option, redeem at any time all shares of the preferred stock or some of them upon notice to each preferred stockholder at a per share price equal to the stated value ($7.00) plus all accrued and unpaid dividends thereon (whether or not declared) to the date fixed for redemption, subject to certain other provisions and requirements. Preferred Shares may be converted into Common Shares on a one share of Preferred Stock for two shares of Common Stock basis.
ITEM 6.
ITEM 6. Selected Financial Data.
Not required for smaller reporting issuers.
ITEM 7.
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion should be read in conjunction with the Consolidated Financial Statements and notes thereto. See "ITEM 8 FINANCIAL STATEMENTS".
Management's Discussion and Analysis:
The following discussion should be read in conjunction with the consolidated historical financial statements of the Company and related notes thereto included elsewhere in this Form 10-K for the year ended December 31, 2013. This discussion contains forward-looking statements regarding the business and industry of the Company within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the current plans and expectations of the Company and involve risks and uncertainties that could cause actual future activities and results of operations to be materially different from those set forth in the forward-looking statements. The information set forth and discussed
below for the years ended December 31, 2013 and December 31, 2012 was derived from the consolidated financial statements included elsewhere herein.
RESULTS OF OPERATIONS
2013 VERSUS 2012
The Company recognized a negative total operating expenses of ($154,160) for the year ended December 31, 2013 versus $359,240 for the year ended December 31, 2012. To understand the true dynamics of the results of operations, these totals need to be adjusted for one unique transaction, which created an expense in the year ended December 31, 2012 for Research and Development, which was reversed in the year ended December 31, 2013, creating the recognition of Net Income. See NOTE 2: TERMINATION OF AGREEMENT.
After adjusting for that single entry, operating expenses for the year ended December 31, 2013 of $101,611 decreased $1,857, or 1.8%, from the operating expenses for the year ended December 31, 2013 of $103,469, due primarily to the changes in the following categories:
Increases: (1) Transfer agent fees of $2,830, or 137.9%; (2) Legal fees of $2,000, or 100% and (3) Travel expenses of $13,775, or 459.2% due primarily to increased activity surrounding the Asset Purchase Agreement and subsequent Termination of Agreement described above, offset by:
Decreases: (1) Stock Compensation of $16,500, or 82.5%, which were greater in the year ended December 31, 2012 due in part to (a) the price of the annual, standard stock issuances to the Board of Directors of $1,500, and (b) the volume of shares issued to the Board as bonus shares of $15,000; (2) a decrease of $4,551 in Amortization expense, due to expiration of the amortization period and (3) Office expenses of $1,200, or 100%.
In addition, Interest Expense increased $1,658, or 34.9%, due to greater amounts owed for the full year ended December 31, 2013 versus those due during the year ended December 31, 2012 and Interest Income increased $30, or 3,331.2% due to greater amounts invested for the year ended December 31, 2013.
Liquidity and Capital Resources:
At its current level of operations, the Company will need to raise additional capital during the next fiscal year.
There were no capital expenditures in 2012 or 2013.
CURRENT PLAN OF OPERATIONS
The company went through the name change and reverse split as actions precedent to an overhaul and redefinition of the company’s business plan, and to renew its commitment to adding value for its shareholders. The Company will continue to seek suitable merger and
acquisition candidates, add more qualified management and to develop profitable business ventures in exchange for stock in the company. We will continue to pursue the SportsCast suite of products with a renewed marketing plan as well as aggressively seek to acquire profitable businesses.
The company expects to sell stock in the Company in order to recapitalize and finance the efforts identified.
Management encourages its shareholders to communicate directly with the Company for its typical investor relations, including address changes and for general corporate information by calling or writing to the Company at its administrative offices or by posting a message to tradingear@comcast.net. Management also encourages shareholders to keep their address current with the Company.
DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS
This annual report includes forward looking statements which involve risks and uncertainties. Such statements can be identified by the use of forward-looking language such as "will likely result", "may", "are expected to", "is anticipated", "estimate", "believes", "projected", or similar words. All statements, other than statements of historical fact included in this section, are forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. The Company's actual results could differ materially from those anticipated in any such forward-looking statements as a result of various risks, including, without limitation, the dependence on a single line of business; the failure to close proposed financing; rapid technological change; inability to attract and retain key personnel; the potential for significant fluctuations in operating results; the loss of a major customer; and the potential volatility of the Company's common stock.
ITEM 7A.
ITEM 7A. Quantitative and Qualitative disclosure about Market Risk.
Not required for smaller reporting companies.
ITEM 8.
ITEM 8. Financial statements and Supplementary Data
The Consolidated Financial Statements are filed as part of this Annual Report on Form 10-K.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Redify Group, Inc., formerly TGFIN Holdings, Inc.
(A Development Stage Company)
Smithfield, Utah
We have audited the accompanying consolidated balance sheets of Redify Group, Inc., formerly TGFIN Holdings, Inc., (A Development Stage Company) as of December 31, 2013 and 2012, and the related consolidated statements of operations, stockholders' deficit, and cash flows for the years then ended and from inception of the development stage on April 1, 2003 through December 31, 2013. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated 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 audit 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 consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Redify Group, Inc., formerly TGFIN Holdings, Inc. (A Development Stage Company) as of December 31, 2013 and 2012, and the results of their operations and their cash flows for the years then ended and from inception of the development stage on April 1, 2003 through December 31, 2013, in conformity with U.S. generally accepted accounting principles.
As discussed in Note 6 to the consolidated financial statements, the Company's recurring losses from operations raises substantial doubt about its ability to continue as a going concern. Management's plans as to these matters are also described in Note 6. These consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ HJ & Associates, LLC
HJ & Associates, LLC
Salt Lake City, Utah
April 4, 2014
REDIFY GROUP, INC., formerly known as TGFIN HOLDINGS, INC., AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
December 31, 2013
December 31, 2012
ASSETS
Current Assets:
Cash
$
8,372
$
Prepaid expenses
-
Total Current Assets
8,872
Total Assets
$
8,872
$
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current Liabilities:
Accounts payable
$
13,235
$
13,558
Accrued expenses
15,268
8,863
Stock compensation payable
-
36,000
Convertible notes payable-related party
79,000
74,000
Common stock payable
-
255,771
Total Current Liabilities
107,503
388,192
Stockholders’ Deficit:
Preferred stock ($.01 par value) 1,000,000 shares
authorized, 50,400 shares issued and outstanding
Common stock ($0.01 par value) 55,000,000 shares
authorized, 2,942,286 and 2,332,105 issued and
outstanding
29,423
23,321
Additional paid-in-capital
4,269,569
4,140,671
Retained deficit prior to development stage
(1,077,063)
(1,077,063)
Retained deficit during development stage
(3,321,064)
(3,475,255)
Total Stockholders’ Deficit
(98,631)
(387,822)
Total Liabilities and Stockholders’ Deficit
$
8,872
$
The accompanying notes are an integral part of these consolidated financial statements.
REDIFY GROUP, INC., formerly known as TGFIN HOLDINGS, INC., AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
January 1, 2013 to December 31, 2013
January 1, 2012 to December 31, 2012
From inception of development stage on April 1, 2003 to December 31, 2013
Income Statement
Revenues
$
-
$
-
$
Cost of Good Sold
-
-
-
Gross Profit
-
-
Expenses
Research and development
(255,771)
255,771
-
Payroll and related
48,500
65,000
2,028,019
Selling, General and Administrative
28,606
11,770
925,902
Legal and Professional
24,505
22,148
492,598
Amortization
-
4,551
12,000
Total operating expense
(154,160)
359,240
3,458,519
Operating Income (Loss)
154,160
(359,240)
(3,458,163)
Other Income
Interest Income
137,099
Total other income
137,099
Net Income (Loss)
$
154,191
$
(359,239)
$
(3,321,064)
Basic Income (loss) per share
$
0.07
$
(0.15)
Diluted Income (loss) per share
$
0.05
$
(0.15)
Weighted Average Number of shares outstanding-Basic
2,332,105
2,332,105
Weighted Average Number of shares outstanding-Fully diluted
2,867,105
2,332,105
The accompanying notes are an integral part of these consolidated financial statements.
REDIFY GROUP, INC., formerly known as TGFIN HOLDINGS, INC., AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
Balances December 31, 2006
50,500
2,254,405
22,544
3,959,071
(2,825,379)
1,156,742
Common stock issued for compensation
-
-
17,500
11,325
-
11,500
Net loss from operations for the year ended December 31, 2007
-
-
-
-
-
(399,088)
(399,088)
Balances December 31, 2007
50,500
2,271,905
22,719
3,970,396
(3,224,467)
769,154
Common stock issued for compensation
-
-
30,000
12,575
-
12,875
Net loss from operations for the year ended December 31, 2008
-
-
-
-
-
(455,979)
(455,979)
Balance December 31, 2008
50,500
2,301,905
23,019
3,982,971
(3,680,446)
326,050
Common stock issued for compensation
-
-
30,000
7,700
-
8,000
Conversion of Preferred Stock
(100)
(2)
-
-
-
Net loss from operations for the year ended December 31, 2009
-
-
-
-
-
(311,907)
(311,907)
Balance December 31, 2009
50,400
2,332,105
23,321
3,990,671
(3,992,353)
22,143
Imputed value of donated labor
-
-
-
-
55,000
-
55,000
Value of Software Contributed
-
-
-
-
12,000
-
12,000
Net loss from operations for the year ended December 31, 2010
-
-
-
-
-
(131,294)
(131,294)
Balances December 31, 2010
50,400
2,332,105
23,321
4,057,671
(4,123,647)
(42,151)
Imputed value of donated labor
-
-
-
-
38,000
-
38,000
Net loss from operations for the year ended December 31, 2012
-
-
-
-
-
(69,432)
(69,432)
Balances December 31, 2011
50,400
2,332,105
23,321
4,095,671
(4,193,079)
(73,583)
Imputed value of donated labor
-
-
-
-
45,000
-
45,000
Net loss from operations for the year ended December 31, 2012
-
-
-
-
-
(359,239)
(359,239)
Balances December 31, 2012
50,400
2,332,105
23,321
4,140,671
(4,552,318)
(387,822)
Imputed value of donated labor
-
-
-
-
45,000
-
45,000
Common stock issued to investors
-
-
250,000
2,500
47,500
-
50,000
Common stock issued for compensation payable
-
-
320,000
3,200
32,800
-
36,000
Common stock issued as director compensation
-
-
40,000
3,600
-
4,000
Common stock issued in rounding of Reverse Split
-
-
(2)
-
-
Net Income from operations for the year ended December 31, 2013
-
-
-
-
-
154,191
154,191
Balances December 31, 2013
50,400
$504
2,942,286
$29,423
$4,269,569
$(4,398,127)
($98,631)
The accompanying notes are an integral part of these consolidated Financial Statements.
REDIFY GROUP, INC., formerly known as TGFIN HOLDINGS, INC., AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
January 1, 2013 to December 31, 2013
January 1, 2012 to December 31, 2012
From inception of development stage on April 1, 2003 to December 31, 2013
Statement of Cash Flows
Cash Flows from Operating Activities:
Net Income (Loss)
$
154,191
$
(359,239)
$
(3,321,064)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of deferred compensation
-
-
13,751
Amortization of software
-
4,551
12,000
Compensation costs of common stock awarded to
employees and consultants
4,000
20,000
175,355
Value of donated services
45,000
45,000
183,000
Cost of common stock issued to shareholders
-
-
16,500
Cost of purchased research and development
(255,771)
255,771
-
Changes in assets and liabilities:
Decrease (increase) in accounts receivable
-
-
31,250
Decrease (increase) in prepaid expenses
(500)
-
14,252
(Decrease) increase in accounts payable and accrued expenses
6,082
4,335
(198,990)
Net cash used in operating activities
(46,998)
(29,582)
(3,073,946)
Net cash provided by investing activities
-
-
-
Cash Flows from Financing activities:
Proceeds from convertible notes payable
5,000
29,000
79,000
Proceeds from Common Stock
50,000
-
50,000
Net cash provided by financing activities
55,000
29,000
129,000
Net Increase (Decrease) in cash and cash equivalents
8,002
(582)
(2,944,946)
Cash, beginning of period
2,953,318
Cash, end of period
$
8,372
$
$
8,372
Cash paid during the period for:
Income taxes
$
-
$
-
$
12,609
Interest
$
-
$
-
$
-
Supplemental Disclosures of Non-Cash Investing and Financing Activities:
Common stock issued for accrued liabilities
$
40,000
$
-
$
91,230
Common stock issued to prior shareholders
$
-
$
-
$
16,500
Conversion of preferred stock
$
-
$
-
$
Common stock issued in rounding of Reverse split
$
$
-
$
Common Stock options issued for software purchase
$
-
$
-
$
5,114
Software acquired with common stock options
$
-
$
-
$
12,000
The accompanying notes are an integral part of these consolidated Financial Statements.
REDIFY GROUP, INC., formerly known as TGFIN HOLDINGS, INC., AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2013 and 2012
1. THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company
The Company consists of Redify Group, Inc. (“RDFY”, non-operating parent corporation) and its sole and wholly-owned operating subsidiary, TradinGear.Com, Incorporated (“Tradingear,” combined, the "Company"). The company changed its name to Redify Group, Inc. from TGFIN Holdings, Inc. (“TGFN”) on October 2, 2013. The Company reactivated its previously inactive operating subsidiary, Tradingear in order to resume its previous business of developing software, under a new d/b/a: iDEV3.
On April 15, 2013 the company filed a Definitive 14C for the purpose of changing the Company’s name and effectuating a ten (10) to one (1) reverse split of the Company’s common stock. These corporate actions were approved by the Financial Industry Regulatory Authority (“FINRA”) on February 28, 2014, and became effective with the OTCQB at the opening of trading on February 28, 2014 under the symbol “TGFND”. The “D” appeared on the Company’s ticker symbol for the following 20 business days. Thereafter, the Company’s ticker symbol became RDFY.
Redify Group, Inc. was incorporated under the laws of Delaware in March 1985 as Mark, Inc. From March 1992 to September 12, 2002 Redify Group, Inc. was known as Digitran Systems, Incorporated ("DSI"), and from September 12, 2002 to October 2, 2013 it was known as TGFIN Holdings, Inc. during which time, TradinGear.com, Incorporated (incorporated under the laws of the State of Delaware on July 7, 1999) became the operating subsidiary of Redify Group, Inc. Redify Group, Inc., then known as TGFIN Holdings, Inc. sold the assets of Tradingear.com Incorporated effective March 31, 2003.
Principles of Consolidation
The accompanying financial statements consolidate the accounts of the parent company and its wholly-owned subsidiary. All significant inter-company accounts and transactions have been eliminated in consolidation.
Fair Value of Financial Instruments
Carrying amounts of certain of the Company's financial instruments, including cash and cash equivalents, trade receivables, accounts payable and other accrued liabilities, approximate fair value because of their short maturities.
REDIFY GROUP, INC., formerly known as TGFIN HOLDINGS, INC., AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2013 and 2012
1. THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Use of Management's Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Revenue Recognition
The Company recognizes revenue from iphone application downloads when funds commissions are earned.
Research and Development
Research and Developments costs are expensed as incurred. The company purchased certain assets to be used in the building and customization of social networking sites intended to target certain groups with common interests. On December 31, 2012 (See NOTE 2 - TERMINATION OF AGREEMENT) the company entered into a definitive agreement to purchase Assets from IceLounge Media, Inc., a private, unrelated company, which it expensed as Research and Development. The company agreed to exchange 2,557,708 shares valued at the per share market price of $.10, for an amount of $255,771, on December 31, 2012. On April 15, 2013 both parties mutually agreed to terminate the agreement prior to closing without obligation, penalty or consequence to either party. The Assets were returned to IceLounge and TGFIN’s common stock was not issued. The Company had expensed $255,771 as Research and development cost, or $.10 per share for the 2,557,708 shares to have been issued. On April 15, 2013 the company credited Research and development costs for $255,771 and removed the common stock payable for the same amount.
Otherwise, the company spent no resources on research and project development in 2013.
REDIFY GROUP, INC., formerly known as TGFIN HOLDINGS, INC., AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2013 and 2012
(Continued)
1. THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Investments
The Company accounts for its investments in debt and equity securities in accordance with ASC 320-10,which requires that investments in debt securities and marketable equity securities be designated as trading, held-to-maturity or available-for-sale.
Management determines the appropriate classification of its investments in debt and equity securities at the time of purchase and reevaluates such determinations at each balance sheet date. Debt securities for which the Company does not have the intent or ability to hold to maturity are classified as available for sale, along with any investments in equity securities. Securities available for sale are carried at fair value, with unrealized gains and losses, net of income taxes, reported as a separate component of Stockholders' Equity.
Property and Equipment
Property and equipment are recorded at cost and depreciated for financial accounting purposes on the straight-line method over their respective estimated useful lives ranging from three to thirty-nine years. Upon retirement or other disposition of these assets, the cost and related accumulated depreciation are removed from the accounts and the resulting gains or losses are reflected in the results of operations.
Expenditures for maintenance and repairs are charged to operations. Renewals and betterments are capitalized. Depreciation of leased equipment under capital leases is included in depreciation.
Impairment of Long-Lived Assets
The Company adopted ASC 360-10, which requires that long-lived assets that are to be disposed of by sale be measured at the lower of book value or fair value less cost to sell. Discontinued operations includes all components of an entity with operations that:
(1) can be distinguished from the rest of the entity, and
(2) will be eliminated from the ongoing operations of the entity in a disposal
transaction.
All long-lived assets are evaluated for impairment annually or whenever events or changes in circumstances indicate the carrying amount may not be recoverable. Any impairment in value is recognized as an expense in the period when the impairment occurs.
REDIFY GROUP, INC., formerly known as TGFIN HOLDINGS, INC., AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2013 and 2012
(Continued)
1. THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Stock-Based Compensation
The Company accounts for the issuance of stock, stock options, stock warrants and other share based payment arrangements in accordance with the provisions of ASC 718-10. We measure compensation costs related to our share-based payment transactions at fair value on the grant date and recognize those costs in the financial statements over the vesting period during which the employee provides service in exchange for the grant.
As of December 31, 2012 the Company had an outstanding stock compensation payable in the amount of $36,000, representing 320,000 shares of Common stock authorized to be issued to directors for services rendered in prior periods. On March 11, 2014 the related shares were issued.
On January 1 and April 1, 2013 the Company awarded 10,000 shares of common stock to each Director and the Chairman in accordance with a Board Resolution. The shares were valued at the market price at the date of issuance of $.10 and $.20, respectively, per share resulting in compensation expense of $4,000, of which $3,500 was recognized in the year ended December 31, 2013.
Earnings (Loss) Per Share
The Company computes earnings or loss per share in accordance with ASC 260-10. Basic earnings per share excludes the dilutive effects of options, warrants and convertible securities and is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding. Diluted earnings per share reflects the potential dilution that could occur if securities or other agreements to issue common stock were exercised or converted into common stock. Diluted earnings per share is computed based upon the weighted average number of common shares and dilutive common equivalent shares outstanding.
Common equivalent shares also include the incremental common shares issuable upon the conversion of the Preferred Stock (using the if-converted method). Common equivalent shares are excluded from the calculation if their effect is anti-dilutive.
535,000 shares of Common stock related to the conversion of outstanding convertible debt were considered in determining fully-diluted earnings per share for 2013.
REDIFY GROUP, INC., formerly known as TGFIN HOLDINGS, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2013 and 2012
(Continued)
1. THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Reclassifications
Certain reclassifications have been made to the prior year balances to conform to the current year presentation.
Income Taxes
The Company’s operations have not changed significantly compared to prior years. The Company’s tax position taken in prior years for deferred income taxes has been provided by temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for tax purposes. To the extent allowed by GAAP, we provide valuation allowances against the deferred tax assets for amounts when the realization is uncertain. Management reviews these items regularly in light of changes in tax laws and court rulings at both federal and state levels.
To address accounting for uncertainty in tax positions, the Company clarifies the accounting for income taxes by prescribing a minimum recognition threshold that a tax position is required to meet before being recognized in the financial statements. The company also provides guidance on de-recognition, measurement, classification, interest and penalties, accounting in interim periods, disclosures, and transition.
The Company files income tax returns in the U.S. federal jurisdiction, and the state of Utah. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2007.
Interest and penalties associated with unrecognized tax benefits are classified as additional income taxes in the statement of income.
Deferred income taxes are provided using the liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of the changes in tax laws and rates of the date of enactment.
REDIFY GROUP, INC., formerly known as TGFIN HOLDINGS, INC., AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2013 and 2012
1. THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination.
Interest and penalties associated with unrecognized tax benefits are classified as additional income taxes in the statement of income.
Sales Tax
In accordance with FASB ASC 605-45, formerly EITF Issue 06-3, How Taxes Collected From Customers and Remitted to Government Authorities Should be Presented in the Income Statement, the Company will account for sales taxes on its goods and services on a gross basis in the statement of operations and retained earnings.
Cash and Cash Equivalents
The Company holds the majority of its excess cash in interest-bearing instruments with short term (less than one year) maturities at several financial institutions. The Company considers all highly liquid investments with maturities of three months or less when purchased to be a cash equivalent.
REDIFY GROUP, INC., formerly known as TGFIN HOLDINGS, INC., AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2013 and 2012
(Continued)
2. TERMINATION OF AGREEMENT
On December 31, 2012 the Company entered into an agreement to purchase certain assets and technologies (“Assets”) from IceLounge Media, Inc. (“IMI”), an unrelated party, in exchange for 49% of TGFIN's common stock. On April 15, 2013 both parties mutually agreed to terminate the agreement prior to closing without obligation, penalty or consequence to either party. The Assets were returned to IceLounge and TGFIN’s common stock was not issued. The Company had expensed $255,771 as Research and development cost, or $.10 per share for the 2,557,708 shares to have been issued. On April 15, 2013 the company credited Research and development costs for $255,771 and removed the common stock payable for the same amount.
3. INTANGIBLE ASSETS
A Former Officer of the Company contributed Intangible Assets to the Company valued at his predecessor’s cost of $12,000. These assets consist of selected iphone Applications. The Company has capitalized these intangible assets and amortized them over a 34 month period. During the years ended December 31, 2013 and 2012 the Company recorded amortization expense of $-0- and $4,551, respectively.
4. PROVISION FOR INCOME TAXES
Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry-forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
Net deferred tax assets consist of the following components as of December 31, 2013 and 2012:
Deferred tax assets:
NOL Carryover
$1,533,900
$1,515,600
Amortization
-
Related Party Accruals
6,000
3,500
Deferred tax liabilities
-
Valuation Allowance
(1,539,900)
(1,519,400)
Net deferred tax asset
$ -
$ -
REDIFY GROUP, INC., formerly known as TGFIN HOLDINGS, INC., AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2013 and 2012
(Continued)
4. PROVISION FOR INCOME TAXES (continued)
The income tax provision differs from the amount of income tax determined by applying the U.S. federal income tax rates of 39% to pretax income from continuing operations for the years ended December 31, 2013 and 2012 due to the following:
Book Income (Loss)
$ 60,200
$ (140,100)
Amortization
(300)
Related Part Interest
2,500
1,800
Stock for Services/Contributed services
(80,600)
13,000
Valuation Allowance
(18,200)
(125,000)
Provision for Income Taxes
$ -
$ -
At December 31, 2013, the Company had net operating loss carry-forwards of approximately $3,933,000 that may be offset against future taxable income from the year 2014 through 2033. No tax benefit has been reported in the December 31, 2013 financial statements since the potential tax benefit is offset by a valuation allowance of the same amount.
Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry-forwards for Federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carry-forwards may be limited as to use in future years.
5. STOCK OPTIONS AND WARRANTS
A summary of the status of the Company's outstanding stock options and warrants (all of which were exercisable) as of December 31, 2013 and 2012 and changes during the years then ended, is presented below:
Shares
Weighted Average Exercise Price
Shares
Weighted Average Exercise Price
Outstanding, beginning of year
60,000
$
.30
$
Granted
60,000
.30
Expired/Cancelled
(60,000)
Exercised
Outstanding end of year
$
60,000
$
.30
Exercisable
$
60,000
$
.30
REDIFY GROUP, INC., formerly known as TGFIN HOLDINGS, INC., AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2013 and 2012
(Continued)
6. GOING CONCERN MODIFICATION
The Company has been a Development Stage Company since April 1, 2003. It has continuously sought an acceptable merger or acquisition candidate since then and has incurred losses each year. For the year ended December 31, 2013 the company had a Retained Deficit of $4,398,127. The company’s cash reserves of $8,372 as of December 31, 2013 are not adequate to fund all of the anticipated expenses for the year ending December 31, 2013. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result from the outcome of this uncertainty.
The Company expects to issue stock to raise sufficient operating capital.
7. COMMITMENTS AND CONTINGENCIES
In the normal course of business, there may be various legal actions and proceedings pending which seek damages against the Company. As of December 31, 2013 there were no other claims asserted or threatened against the Company.
8. CONVERTIBLE NOTES PAYABLE - RELATED PARTY
December 31, 2013
December 31, 2012
Convertible 8% Demand Notes Payable
$
79,000
$
74,000
Total Convertible Notes payable
$
79,000
$
74,000
The Convertible 8% Notes Payable (“Notes”) were originated on various dates in 2010, 2011 and 2012. Additional notes payable were received on January 3, 2013 for $5,000 to reflect working capital funding provided by Sam Gaer, the, company’s then single largest shareholder. The Notes originated in 2010 are convertible into common stock of RDFY at $.30 per share at any time at the holder’s option. The Notes are secured by all the assets of the Company and its subsidiary. The Notes originated in 2011 are convertible into common stock of RDFY at $.15 per share at any time at the holder’s option. The Notes originated in 2012 and 2013 are convertible into common stock of RDFY at $.10 per share at any time at the holder’s option. Accrued interest related to these notes as of December 31, 2013 was $15,268. Effective December 19, 2012 all rights to the Notes were assigned to Marni Gaer, the spouse of Sam Gaer.
REDIFY GROUP, INC., formerly known as TGFIN HOLDINGS, INC., AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2013 and 2012
(Continued)
9. CAPITAL STOCK
Common Stock
The authorized capital stock of the Company consists of 50,000,000 shares of Class A Common stock, par value $.01 per share, of which 2,942,286 were outstanding as of December 31, 2013 and 5,000,000 shares of Class B Common stock, par value $.01 per share, of which no shares have been issued. On March 28, 2013 the company’s Board of Directors authorized a ten (10) to one (1) reverse-split of the company’s Class A Common Stock, which became effective February 28, 2014. All references to Common stock have been retroactively restated to reflect the reverse split. Holders of Class A Common Stock and Class B Common stock are entitled to one vote per share.
The Class A Common Stock and the Class B Common Stock attributes and rights are identical except for the following: (a) Class B has pre-emptive rights with respect to Class B issuances, (b) Class A has a dividend and liquidation preference, and (c) if there is a Class B, its holders have the right to control the Board of Directors. The Company has no plans to issue any Class B Common Shares in the near future. All references to Common Stock issuances, unless otherwise indicated, refer to the Class A Common Stock shares.
On March 12, and April 22, 2013 the company sold 250,000 shares of its common stock for $50,000 or $.20 per share to two investors, which were issued on March 20, 2014.
As of December 31, 2012 the Company had an outstanding stock compensation payable in the amount of $36,000, representing 320,000 shares of Common stock authorized to be issued to directors for services rendered in prior periods. On March 11, 2014 the related shares were issued.
On January 1 and April 1, 2013 the Company awarded 10,000 shares of common stock to each Director and the Chairman in accordance with a Board Resolution. The shares were valued at the market price at the date of issuance of $.10 and $.20, respectively, per share resulting in compensation expense of $4,000, of which $3,500 was recognized in the year ended December 31, 2013. On March 11, 2014 the shares were issued.
In addition, the company had recorded Common Stock payable in the amount of $255,771, which represented 2,557,708 shares of the company’s Common stock valued at the market price of $.10 on December 31, 2012 to be issued to the assignees of Ice Lounge Media, Inc., a private, unrelated company. See NOTE 2 - TERMINATION OF AGREEMENT. On April 15, 2013 both parties mutually agreed to terminate the agreement prior to closing without obligation, penalty or consequence to either party. The Assets were returned to Ice Lounge and TGFIN’s common
REDIFY GROUP, INC., formerly known as TGFIN HOLDINGS, INC., AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2013 and 2012
(Continued)
9. CAPITAL STOCK (continued)
stock was not issued. The Company had expensed $255,771 as Research and development cost, or $.10 per share for the 2,557,708 shares to have been issued. On April 15, 2013 the company credited Research and development costs for $255,771 and removed the common stock payable for the same amount.
Preferred Stock
The Company has authorized 1,000,000 shares of Preferred Shares with a par value of $.01 per share, of which 450,000 are undesignated and unissued. The remaining 550,000 shares are designated as Series 1 Class A 8% Cumulative Convertible Preferred Stock (“Preferred stock”), of which 50,400 shares were issued and outstanding as of December 31, 2013. There are insufficient Series 1, Class A 8% Cumulative Convertible Preferred Shares remaining to trade publicly.
Holders of both, the Series 1, Class A 8% Cumulative Convertible Preferred Stock and the undesignated class of Preferred stock are entitled to one-tenth of a vote for each share of preferred stock held.
Since only the Series 1, Class A 8% Cumulative Convertible Preferred Shares are issued and outstanding, all references to preferred shares, unless otherwise indicated, refer to the Series 1, Class A 8% Cumulative Convertible Preferred Shares.
The Series 1, Class A 8% Cumulative Convertible Preferred Stock carries a liquidation preference equal to its stated value plus any unpaid dividends. The Company may, at its option, redeem at any time all shares of the preferred stock or some of them upon notice to each preferred stockholder at a per share price equal to the stated value ($7.00) plus all accrued and unpaid dividends thereon (whether or not declared) to the date fixed for redemption, subject to certain other provisions and requirements. Preferred Shares may be converted into Common Shares on a one share of Preferred Stock for two shares of Common Stock basis.
REDIFY GROUP, INC., formerly known as TGFIN HOLDINGS, INC., AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2013 and 2012
(Continued)
9. CAPITAL STOCK (continued)
Holders of Series 1, Class A 8% Cumulative Convertible Preferred shares are entitled to cumulative dividends of 8% per annum on the stated value of the stock, designated at $7 per share. Dividends are payable semi-annually on September 15 and March 15. No dividends have been declared or paid since March 15, 1993, resulting in dividends in arrears at December 31, 2013 of approximately $578,592 or $11.48 per share. Dividends are not payable on any other class of stock ranking junior to the Series 1, Class A 8% Cumulative Convertible Preferred Stock until the full cumulative dividend requirements of the Series 1, Class A 8% Cumulative Convertible Preferred Stock have been satisfied. There are not sufficient Series 1, Class A 8% Cumulative Convertible Preferred Shares (left unconverted) to trade publicly and the financial condition of the company has made the probability of dividend payment to Series 1, Class A 8% Cumulative Convertible Preferred shareholders unlikely.
10. SUBSEQUENT EVENTS
Reverse Split
On April 15, 2013 the company filed a Definitive 14C for the purpose of changing the Company’s name and effectuating a ten (10) to one (1) reverse split of the Company’s common stock. Subsequent to December 31, 2013 these corporate actions were approved by the Financial Industry Regulatory Authority (“FINRA”) on February 28, 2014, and became effective with the OTCQB at the opening of trading on February 28, 2014 under the symbol “TGFND”. The “D” appeared on the Company’s ticker symbol for the following 20 business days. Thereafter, the Company’s ticker symbol became RDFY.
The Company has evaluated subsequent events pursuant to ASC Topic 855 and has determined that there are no additional events to report.
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
Management’s annual report on internal control over financial reporting. Section 404 of the Sarbanes-Oxley Act of 2002 requires management to include in this Annual Report on Form 10-K a report on the effectiveness of our internal control over financial reporting. The Company’s external auditors were not engaged to examine management's assertion about the effectiveness of internal control over financial reporting as of December 31, 2013 and, accordingly, they did not express an opinion thereon.
Management of Redify Group, Inc. is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that:
· pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of Redify Group, Inc.;
· provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures of Redify Group, Inc. are being made only in accordance with authorizations of management and directors of Redify Group, Inc.; and
· provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of Redify Group, Inc.’ s assets that could have a material effect on the financial statements.
Because of its inherent limitations, a system of internal control over financial reporting can provide only reasonable assurance and may not prevent or detect misstatements. 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.
Management, including our principal executive officer and principal financial officer, assessed the effectiveness of our internal control over financial reporting as of December 31, 2013. In making this assessment, management used the criteria set forth in “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations (“COSO”) of the Treadway Commission.
Based on our assessment and those criteria, our management believes that Redify Group, Inc. maintained effective internal control over financial reporting as of December 31, 2013.
Evaluation of disclosure controls and procedures. Our chief executive officer and chief financial officer are responsible for establishing and maintaining “disclosure controls and procedures” (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) for Redify Group, Inc. Our chief executive officer and chief financial officer, after evaluating the effectiveness of our disclosure controls and procedures as of the end of the period covered by this annual report, have concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our chief executive officer and chief financial officer, to allow timely decisions regarding required disclosure. Based upon that evaluation, the Company’s principal executive officer and principal financial officer concluded that the Company’s disclosure controls and procedures are effective in enabling the Company to record, process, summarize and report information required to be included in the Company’s periodic SEC filings within the required time period.
Changes in Internal Control. There was no change in our internal control over financial reporting that occurred during the year ended December 31, 2013 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Management’s Report on Internal Control over Financial Reporting
Management of Redify Group, Inc., together with its consolidated subsidiary (the Company), is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process designed under the supervision of the Company’s principal executive and principal financial officers to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external reporting purposes in accordance with U.S. generally accepted accounting principles.
As of the end of the Company’s 2013 fiscal year, management conducted an assessment of the effectiveness of the Company’s internal control over financial reporting based on the criteria set forth in “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations (“COSO”) of the Treadway Commission. Based on our assessment and those criteria, our management concluded that Redify Group, Inc. maintained effective internal control over financial reporting as of December 31, 2013.
Changes in Internal Control Over Financial Reporting
There have been no changes in internal control over financial reporting.
ITEM 9B:
ITEM 9B: OTHER INFORMATION
None; not applicable.
PART III
ITEM 10:
ITEM 10: DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
Identification of Directors and Executive Officers
Our executive officers and directors and their respective ages, positions and biographical information are set forth below.
Name
Positions Held
Date of Election or Designation
S. Emerson Lybbert
Chairman
April 1, 2003
President
Mami Gaer
Secretary
November 15, 2010
Director
Aaron Etra
Director
April 1, 2003
Background and Business Experience
The Company's By-laws provide that the Directors of the Company shall serve until the next annual meeting of shareholders and until their successors are duly appointed and qualified. All officers serve at the pleasure of the Board of Directors. During the fiscal year ended December 31, 2013 there was one meeting of the Board of Directors.
S. Emerson Lybbert - Chairman of the Board, President
Scott Emerson Lybbert, 56 years old, was appointed CEO and Chairman of Redify Group, Inc. and TradinGear by the Board of Directors on April 29, 2003. From October 1, 2002 to April 2003, he had been a consultant under contract to perform and advise the Company with respect to normal CFO duties. Mr. Lybbert held the same position for the parent company, when it was Digitran Systems, Incorporated ("Digitran") in Logan, Utah from March 1998 to March 1999, during which time he also served as a Director and Corporate Secretary. From April 2000 until the merger with TradinGear.com, Incorporated on September 12, 2002, he had been a consultant to Digitran on a limited, volunteer basis, which included an appointment as Corporate Secretary in April 2001.
Mr. Lybbert graduated from the University of Utah with a Bachelors and Masters Degree in Professional Accountancy in 1983 and 1984, respectively. He then joined the Tampa, Florida office of Price Waterhouse until leaving in 1991 as an Audit Manager. Since then, and up until his appointment as CEO of the Company, Mr. Lybbert had been, both a CFO and CIO for nine years; Consultant for three years; and Investor for all twelve. He has a wide range of experience in manufacturing, agriculture, food processing, retail, wholesale distribution, public utilities, software, and investment fund management. Mr. Lybbert has been a shareholder since 1991.
Marni Gaer - Director, Secretary and In House Counsel
Marni Gaer, 47 years of age, became a Director, Corporate Secretary, and In House Counsel of TradinGear in October 1999. She was then elected to these positions for TGFIN on September 12, 2002. She voluntarily resigned her board position, without dispute, on February 19, 2009 and accepted it back again on November 15, 2010. Since 1992, Ms. Gaer also has been and currently serves as Vice-President and General Counsel for International Printing Corporation, a family business located in Queens, New York, where her responsibilities include union and labor negotiations and general corporate law. Ms. Gaer earned her JD from Brooklyn Law School in 1991 and graduated from the University of Pennsylvania with a Bachelor of Arts in Economics in 1988.
Aaron Etra - Director
Aaron Etra, 73 years of age, was appointed Director of TGFIN and TradinGear on April 29, 2003. Aaron Etra has been the President of Investors & Developers Associates, Inc., a developer of commercial, residential and industrial property in the U.S., since 1981 as well as Chairman of Molecular Technology Group, a biotechnology and consumer products and research and development group of companies since 1998. He is also a Director of ABSS Corp. Mr. Etra has been an Attorney and a counselor at law since 1966 specializing in commercial, corporate, tax and personal law. His professional education includes a J.D. in Law at Columbia University in 1965, L.L.M. in Law at New York University in 1966, a B.A. in Political Science and Economics at Yale University in 1962 and he attended the Hague Academy of International Law during the summers of 1964-65.
Involvement in certain legal proceedings by Officers and Directors
None
Compliance with Section 16(a) of the Securities Exchange Act of 1934, as amended.
The Company does not believe that any reporting person failed to file in a timely fashion any report required by section 16(a) of the Securities Act of 1934, as amended, for the fiscal year ended December 31, 2013
Audit committee and Financial Expert
The Company does not have a formal Audit committee. All members of the Board of Directors serve the functions of the audit committee, with S. Emerson Lybbert, Chairman, CEO and CFO serving as its Chairman. S. Emerson Lybbert is a "Financial expert" within the meaning of such phrase under applicable regulations of the Securities and Exchange Commission, and currently is the Board's only "financial expert," although all Board members are financially literate. The Board members, functioning also as audit committee members, have:
1) reviewed and discussed the audited financial statements with management,
2) discussed with the independent auditors the matters required to be discussed by PCAOB,
3) received the written disclosures and the letter from the independent accountants required by Independence Standards Board Standard No. 1, and discussed with the independent accountant the independent accountant's independence, and
4) recommended that the audited financial statements be included in the company's annual report 10-K.
The Board members performing the function of the audit committee are, S. Emerson Lybbert, Marni Gaer, and Aaron Etra.
Code of Ethics
The Board of Directors has not yet adopted a Code of Ethics for its CEO and CFO because it believes the design of, and compliance with, its controls and procedures are sufficiently complete to mitigate such risks at its current level of operations given the company is currently a Development Stage Company with no operations. The Board of Directors maintains all approval authority over significant transactions; use or commitment of company resources; and the incurrence of debt or equity, etc.
ITEM 11:
ITEM 11: EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
Name and Principle Position
Year
Salary
($)
Bonus
($)
Fees Earned or Paid In Cash
($)
Stock Awards
($)
Option Awards
($)
Non-
Equity
Incentive
Plan
Compen-sation
Earnings
($)
Change in Pension Value and Nonqual-ified Deferred Compen-sation Earnings ($)
All
Other
Compen-
sation
($)
Total Compen-sations
($)
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
S. Emerson Lybbert
12/31/13
2,000
2,000
Chairman
12/31/12
6,000
6,000
CEO
12/31/11
1,000
1,000
Marni Gaer
12/31/13
1,000
1,000
Director
12/31/12
7,000
7,000
Counsel
12/31/11
1,000
1,000
Aaron Etra
12/31/13
1,000
1,000
Director
12/31/12
7,000
7,000
12/31/11
1,000
1,000
Other Items
There were no exercises of stock options (or tandem stock Appreciation rights) and freestanding appreciation rights (or unexercised options or stock appreciation rights) made during the fiscal year ended December 31, 2013 by any Named Executive Officer.
Outstanding Equity Awards at Fiscal Year-End
Option Awards
Stock Awards
Name
Number of Securities Underlying Unexercised Options (#) Exercisable
Number of Securities underlying Unexercised Options (#) Unexercisable
Equity Incentive Plan Awards Number of Securities Underlying Unexercised Unearned Options (#)
Option Exercise Price
($)
Option Expiration Date
Number of Shares or Units of Stock That Have Not Vested (#)
Market Value of Shares or Units of Stock That Have Not Vested
($)
Equity Incentive Plan Awards: Number of Unearned Shares, Vested Units or Other Rights That Have Not Vested (#)
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
S. Emerson Lybbert
None
None
None
None
None
None
None
None
None
Marni Gaer
None
None
None
None
None
None
None
None
None
Aaron Etra
None
None
None
None
None
None
None
None
None
Compensation of Directors
At the discretion of the Board of Directors, an option exercisable for a period of five years to acquire 10,000 shares of Common Stock at a price based on the market value on the first trading day in January could be granted to each currently serving Director. No options were granted to Directors or Officers during the fiscal years ended December 31, 2013 or 2012.
The Company's Bylaws as well as Delaware corporate statutes provide for indemnification of and advances of expenses (including legal fees) under certain circumstances for officers and directors who are a party to or threaten to be made a party to any proceeding by reason of the fact that they are a director, officer or employee of the Company, against expenses and amounts paid in settlement of such actions.
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 as of March 31, 2014 the number of shares of Common Stock, (neither of whom own any Series 1 Class A 8% Cumulative Convertible Preferred Stock) owned by each person known to be the beneficial owner of more than five percent of the outstanding shares of the Company's Common Stock and Preferred Stock, by each director and each officer of the Company and by all officers and directors as a group. Unless otherwise indicated, all persons have sole voting and investment power over such shares, subject to community property laws.
(1)
Unless otherwise indicated, each person named in the table exercises sole voting and investment power with respect to all shares beneficially owned. As at the date hereof, Redify Group, Inc. had outstanding 2,962,286 shares of its common stock.
(2)
Marni Gaer is the wife of Samuel Gaer. Includes 10,000 shares held in trust for the children of Marni and Samuel Gaer, of which Marni Gaer is the Trustee. Effective December 19, 2012, Sam Gaer transferred all the shares he owned at the time to Marni Gaer. The amount includes 10,000 shares recorded for compensation as of January 1, 2014 and issued on March 11, 2014.
(3)
Amount includes shares held in Trusts, for which Kim Hemphill is the Trustee.
(4)
The amount includes 10,000 shares recorded for compensation as of January 1, 2014 and issued on March 11, 2014.
None of the Beneficial Owners or Groups listed above holds any other class of shares other than common stock.
Security Ownership of Management
The following table sets forth the share holdings of our Company’s directors and executive officers as of March 31, 2014 and to the date hereof:
As of March 31, 2014 Management and Directors alone own 1,507,101 shares, or 50.9% of the total of 2,962,286.
Changes in Control
Effective December 19, 2012 Sam Gaer, the company’s then largest shareholder transferred his entire financial interest in the company to his spouse, Marni Gaer, In-house counsel and Director, in a related party, non-monetary, non-compensatory transaction for the purpose of personal family financial planning. This transfer resulted in a change of control of the company.
Securities Authorized for Issuance under Equity Compensation Plans
None
Equity Compensation Plan Information
Plan Category
Number of Securities to be issued upon exercise of outstanding options, warrants and rights
Weighted-average exercise price of outstanding options, warrants and rights
Number of securities remaining available for future issuance under equity compensation plans excluding securities reflected in column (a)
(a)
(b)
(c)
Equity compensation plans approved by security holders
None
None
None
Equity compensation plans not approved by security holders
None
None
None
Total
None
None
None
ITEM 13:
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTORS INDEPENDENCE
None.
ITEM 14:
ITEM 14: PRINCIPAL ACCOUNTANT 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 AND FINANCIAL STATEMENT SCHEDULES
(a)(1)(2) Financial Statements. See our audited financial statements for the year ended December 31, 2013, contained in Part II, Item 8, above, which are incorporated by reference.
(a)(3) Exhibits: The following are filed as part of this Annual Report
Exhibit 31.1 Certification of Scott Emerson Lybbert as Chief Executive Officer, pursuant to section 302 of the Sarbanes-Oxley act of 2002.
Exhibit 31.2 Certification of Scott Emerson Lybbert as Chief Financial Officer, pursuant to section 301 of the Sarbanes-Oxley act of 2002.
Exhibit 32
Certification of Scott Emerson Lybbert, pursuant to section 906 of the Sarbanes-Oxley Act of 2002
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.
REDIFY GROUP, INC.
Date:
April 4, 2014
By:
/s/S. Emerson Lybbert
S. Emerson Lybbert
President, Principal Executive Officer and Principal Financial Officer
Pursuant to the requirements of the Securities and 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.
REDIFY GROUP, INC.
Date:
April 4, 2014
By:
/s/S. Emerson Lybbert
S. Emerson Lybbert
President, Principal Executive Officer and Principal Financial Officer
Date:
April 4, 2014
By:
/s/Marni Gaer
Marni Gaer
Director
Date:
April 4, 2014
By:
/s/Aaron Etra
Aaron Etra
Director