NOTE 1 – CONDENSED FINANCIAL STATEMENTS
The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at June 30, 2013, and for all periods presented herein, have been made.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these financial statements be read in conjunction with the financial statements and notes thereto included in the Company's December 31, 2012 audited financial statements. The results of operations for the periods ended June 30, 2013 and 2012 are not necessarily indicative of the operating results for the full years.
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
These financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America and are stated in US dollars. Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of financial statements for a period necessarily involves the use of estimates which have been made using careful judgment. Actual results may differ from these estimates.
Reclassification of Financial Statement Accounts
Certain amounts in the condensed financial statements have been reclassified to conform to the presentation adopted in the June 30, 2013 financial statements.
Use of Estimates
The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reportable amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Development Stage Company
The Company is considered to be in the development stage as defined in Accounting Standards Codification (ASC) 915 “Development Stage Entities.” The Company is devoting substantially all of its efforts to development of business plans.
Basic Loss Per Share
Basic loss per share is calculated by dividing the Company’s net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing the Company’s net income available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. There were no dilutive or potentially dilutive instruments outstanding as of June 30, 2013 and December 31, 2012.
Stock Issued in Exchange for Services
The valuation of common stock issued in exchange for services is valued at an estimated fair market value as determined by the most readily determinable value of either the stock or services exchanged. Values of the stock are based upon other sales and issuances of the Company’s common stock within the same general time period.
Cash and Cash Equivalents
Cash equivalents are comprised of certain highly liquid investments with original maturities of three months or less when purchased. The Company maintains its cash in bank deposit accounts which at times may exceed federally insured limits of $250,000. The Company has not experienced any losses related to this concentration of risk. Deposits did not exceed insured limits during six months ended June 30, 2013 and the year ended December 31, 2012.
Financial Instruments
For accounts receivable, accounts payable, accrued liabilities, current portion of long-term debt and long-term debt, the carrying amounts of these financial instruments approximates their fair value. Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments.
Foreign Currency Translation
The Company translates foreign currency transactions and balances to its reporting currency, United States Dollars, in accordance with ASC 830 “Foreign Currency Matters”. Monetary assets and liabilities are translated into the functional currency at the exchange rate in effect at the end of the year. Non-monetary assets and liabilities are translated at the exchange rate prevailing when the assets were acquired or the liabilities assumed. Revenue and expenses are translated at the rate approximating the rate of exchange on the transaction date. All exchange gains and losses are included in the determination of net loss for the year.
Income Taxes
The Company applies ASC 740, which requires the asset and liability method of accounting for income taxes. The asset and liability method requires that the current or deferred tax consequences of all events recognized in the financial statements are measured by applying the provisions of enacted tax laws to determine the amount of taxes payable or refundable currently or in future years. Deferred tax assets are reviewed for recoverability and the Company records a valuation allowance to reduce its deferred tax assets when it is more likely than not that all or some portion of the deferred tax assets will not be recovered.
The Company adopted ASC 740, at the beginning of fiscal year 2008. This interpretation requires recognition and measurement of uncertain tax positions using a “more-likely-than-not” approach, requiring the recognition and measurement of uncertain tax positions. The adoption of ASC 740 had no material impact on the Company’s financial statements.
Recent Accounting Pronouncements
Except for rules and interpretive releases of the SEC under authority of federal securities laws and a limited number of grandfathered standards, the FASB Accounting Standards Codification™ (“ASC”) is the sole source of authoritative GAAP literature recognized by the FASB and applicable to the Company. Management has reviewed the aforementioned rules and releases and believes any effect will not have a material impact on the Company's present or future consolidated financial statements.
NOTE 3 – GOING CONCERN
The Company's financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.
In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management's plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses and seeking equity and/or debt financing. However management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.
The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
NOTE 4 – RELATED PARTY PAYABLES
The Company from time to time has borrowed funds from or has received services from several individuals and corporations related to the Company for operating purposes As of June 30, 2013 the Company owed related parties $23,107 (December 31, 2012 - $398,107). These amounts bear no interest, are not collateralized, and are due on demand.
NOTE 5 – COMMON STOCK
The Company has two classes of stock authorized as of June 30, 2013. The Company has 50,000,000 shares of preferred stock authorized with no shares outstanding as of June 30, 2013 and December 31, 2012. The Company also has 200,000,000 shares of common stock authorized with 92,038,238 shares issued and outstanding as of June 30, 2013 (December 31, 2012 – 2,038,240)
During the year ended December 31, 2012, the Company issued new shares as follows:
On October 1, 2012, the Company effected a 1 for 50 reverse stock split. All references in these financial statements to number of common shares issued and outstanding, price per share and weighted average number of common shares have been adjusted to reflect the stock split on a retroactive basis, unless otherwise noted. The Company’s authorized preferred stock and authorized common stock remain unchanged.
Prior to the reverse stock split, the Company had 100,788,607 common shares issued and outstanding. Immediately after the reverse split the Company had 2,038,240 common shares issued and outstanding, including 22,467 common shares issued to various shareholders as a result of rounding. The rounding shares were not issued for compensation and have no net effect on owner’s equity.
During the six months ended June 30, 2013, the Company issued 89,999,998 Common shares in settlement of debts owed by the Company (see Note 8).
NOTE 6 – CONVERTIBLE PROMISSORY NOTES PAYABLE
During April and May, 2013 the Company issued convertible promissory notes in the amount of $15,000 to two unrelated third parties. The notes mature on December 31, 2014.
On June 3, 2013, The Company issued convertible promissory notes in the amounts of $15,000 and $5,000 to an unrelated third party. The notes mature on December 31, 2015.
The convertible promissory notes are non-interest bearing until maturity and bear interest at 3% per annum thereafter. The convertible promissory notes will become due and payable if the Company receives financing totalling $5,000,000 in aggregate prior to the maturity date. The promissory notes are convertible into common shares of the Company either in whole or in part at the option of the creditor, at terms set by the Company.
NOTE 7 – PROMISSORY NOTE RECEIVABLE
On June 3, 2013 the Company advanced the sum of $11,194 to an unrelated party, secured by a promissory note.
The promissory note is non-interest bearing until maturity and bears interest at 3% per annum thereafter. The promissory note will become due and payable if the debtor receives financing totalling $5,000,000 in aggregate prior to the maturity date. The promissory note is convertible into common shares of the debtor either in whole or in part at the option of the Company, at terms set by the debtor.
NOTE 8 – DEBT SETTLEMENT
On May 9, 2013 the Company settled debts owed to related parties in the amount of $50,000 by the issuance of 50,000,000 Common Shares. The Company recorded a loss of $565,000 on this transaction.
On May 20, 2013 the Company settled debts owed to related parties in the amount of $375,000 by the issuance of 39,999,998 Common Shares. The Company recorded a loss of $1,709,000 on this transaction.
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