UNITED
STATES SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C.
20549
FORM
8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of
the Securities and Exchange Act of
1934
Date of Report (date of earliest
event reported):
April 20, 2009
SPARKING
EVENTS, INC.
(Exact
name of registrant as specified in its charter)
Nevada
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333-148005
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20-8009362
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(State
or other jurisdiction of incorporation)
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(Commission
File Number)
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(IRS
Employer Identification
No.)
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112
North Curry Street
Carson
City, NV
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89703-4934
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code:
(775)
321-1013
(Former
name or former address, if changed since last report)
Copies of
communications should be sent to:
Perter
Campitiello, Esq.
Tarter
Krinsky & Drogin LLP
1350
Broadway
New York,
NY 10019
Telephone:
(212) 216-8085
Facsimile:
(212) 216-8001
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (
see
General
Instruction A.2. below):
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))
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SAFE
HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995
This
current report on Form 8-K (this Report) contains “forward-looking statements”
within the meaning of Section 27A of the Securities Act of 1933 (the Securities
Act) and Section 21E of the Securities Exchange Act of 1934 (Exchange Act). The
forward-looking statements are only predictions and provide our current
expectations or forecasts of future events and financial performance and may be
identified by the use of forward-looking terminology, including the terms
“believes,” “estimates,” “anticipates,” “expects,” “plans,” “intends,” “may,”
“will” or “should” or, in each case, their negative, or other variations or
comparable terminology, though the absence of these words does not necessarily
mean that a statement is not forward-looking. The forward-looking statements are
based on current views with respect to future events and financial performance.
Actual results may differ materially from those projected in the forward-looking
statements. The forward-looking statements are subject to risks, uncertainties
and assumptions, including, among other things those:
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associated
with the relative success of sales, marketing and product
development;
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competition,
including price competition; and
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general
economic and business conditions.
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ITEM 2.01
1. CHANGES IN CONTROL OF
REGISTRANT
The
disclosures set forth under Item 2 are incorporated by reference into this
Item 1.
2. COMPLETION OF
ACQUISITION OR DISPOSITION OF ASSETS
Acquisition
Of APlus International, Ltd.
On April
20, 2009, Sparking Events, Inc. (the “Company” or the “Registrant”) acquired
APlus International, Ltd. a privately owned Nevada limited liability company
(“APlus”), pursuant to an Agreement and Plan of Share Exchange (the
“Exchange”). APlus was organized under the laws of the State of
Nevada on April 12, 2005. APlus is a holding company whose principal
operating companies design, manufacture, market and sell advanced lighting
solutions, including light emitting diode (LED) lighting and other energy-saving
lighting in Taiwan. Upon consummation of the Exchange, the Registrant
adopted the business plan of APlus.
Pursuant
to the terms of the Exchange, Sparking Events, Inc. acquired APlus
International, Ltd. in exchange for an aggregate of 5,333,334 newly issued
shares (the “Exchange Shares”) of the Company’s common stock, par value $0.001
per share (the “Common Stock”), resulting in an aggregate of 5,793,334 shares of
Common Stock issued and outstanding. As a result of the Exchange, APlus
International, Ltd. became a wholly-owned subsidiary of Sparking Events,
Inc. Sparking Events, Inc. shares were issued to the APlus
International, Ltd. In addition, our principal stockholder, Adam
Borges Dos Santos agreed to retire his 9,000,000 shares of Common
Stock. The Registrant also issued 116,667 shares of Common Stock and
warrants to purchase additional 83,334 shares of common stock at an e
xercise
price of $1.00 per share and expiring in 2 years,
for services rendered
to Dragonfly Capital Partners, LLC (
“
Dragonfly
”
) in
connection with the Exchange, resulting in an aggregate of 5,905,001 shares of
Common Stock issued and outstanding.
Also on
April 20, 2009, following the Exchange, the Board of Directors of the Registrant
approved an amendment to the Registrant’s Articles of Incorporation increasing
the number of authorized shares of common stock from 75,000,000 to 225,000,000
and concurrently affecting a three for one (3:1) forward-split of the
Registrant’s issued and outstanding shares of Common Stock. Further,
on April 22, 2009 a majority of shareholders of Sparking Events, Inc. approved
an amendment to the Registrant’s articles of incorporation to change the name of
the Registrant to Xodtec Group USA, Inc. and the creation of 10,000,000 shares
of blank check pefreed stock. Upon the filing of a Definitive
Information Statement and effectiveness of the name change, the Company intends
to apply to the National Association of Security Dealers to change its stock
symbol on the Over the Counter Bulletin Board.
At the
effective time of the Exchange, our board of directors was reconstituted by the
resignation of Mr. Adam Borges Dos Santos
from his role
as sole principal officer and director, and the appointment of Yao-Ting (Curtis)
Su, Chao-Wu (Mike) Chou and Hui-Yu (Rachel) Che as directors. Our executive
management team also was reconstituted following the resignation
of Mr. Dos Santos as APlus’ president, and new officers were
appointed in place of our former officers. See “
Directors and Executive Officers,
Promoters and Control Persons.
”
On April
22, 2009 the Registrant entered into a Financial Advisory Agreement with Unise
Investment Corp. to provide financial consulting services in consideration for
116,667 shares of Common Stock. Further, on April 23, 2009, the
Registrant sold warrants exercisable into 200,000 post-split shares of Common
Stock at the exercise price of $0.65 per share and expiring in 6 months,
warrants exercisable into 500,000 shares of Common Stock at the exercise price
of $1.00 per share and expiring in 2 years and warrants exercisable into
post-split 800,000 shares of Common Stock at the exercise price of $1.50 per
share and expiring in
2
years.
We further agreed to
register the shares of Common Stock underlying these warrants and the
warrants issued to Dragonfly, as well as the shares of Common Stock issued to
Dragonfly.
Following
the issuance of the Exchange Shares and the retirement of Mr. Dos Santos’
shares, the former members of APlus now beneficially own approximately 92% of
the outstanding shares of our Common Stock. Accordingly, the Exchange represents
a change in control. As of the date of this report, there are 6,016,668 shares
of Common Stock issued and outstanding . For financial accounting
purposes, the acquisition was a reverse acquisition of Sparking Events, Inc. by
APlus International, Ltd., under the purchase method of accounting, and was
treated as a recapitalization with APlus International, Ltd. as the acquirer.
Upon consummation of the Exchange, Sparking Events, Inc. adopted the business
plan of APlus International, Ltd.
PART
1
DESCRIPTION
OF BUSINESS
OVERVIEW
Sparking
Events, Inc. (“Sparking Events,” “the Company”, “us”, “our” or “we,”) was
incorporated in the State of Nevada as a for-profit company on November 29, 2006
and established a fiscal year end of February 28. We are a development-stage
company organized to enter into the special event, concert production and
martial arts promotion industry. As a result of the Exchange with
APlus International, Ltd., we have adopted the business plan of APlus, and now
design, manufacture, market and sell advanced lighting solutions, including
light emitting diode (LED) lighting and other energy-saving
lighting. We offer a wide range of technically innovative indoor
white light, color-changing and outdoor lighting solutions that are used for
applications in public, commercial, architectural, residential, gardening, and
entertainment markets. Our solutions provide many benefits over traditional
incandescent, halogen, fluorescent, and compact fluorescent (CFL) light sources,
including lower energy consumption, longer life spans, and absence of hazardous
materials, lower maintenance costs and greater design flexibility.
Our
advanced LED lighting solutions are based on proprietary designs and patented
technologies associated with industrial design, electrical, optical, mechanical
and thermal engineering. We have developed domain expertise and applications
knowledge for end-user requirements in diverse markets. As a result, we are able
to offer total lighting solutions, which provide better performance and lower
overall cost to users.
According
to Freedonia Group, a market research company, the global lighting industry is
estimated to be approximately $120 billion in 2012 and the average growth rate
will be around 5% annually. On the contrary, iSupply, another market research
company, predicts that the compound annual growth rate (CAGR) for LED lighting
will be up to 14.6% during 2008 to 2012. The lighting fixtures include a variety
of technologies, such as incandescent, fluorescent, halogen, high intensity
discharge (HID), neon, compact inflorescent (CFL) and advanced lighting
solutions (LED lighting, OLED lighting and others). Product selection for users
is influenced several factors, including overall cost, visual and physical
product features, as well as regulatory and environmental factors. With rapid
advancements in the performance, efficiency and cost of LED-based solutions,
traditional light sources, such as incandescent lamps and fluorescent lamps, are
beginning to be replaced by advanced technologies with lower overall costs over
their life spans. Furthermore, the energy-efficient nature of LED makes it an
environmentally friendly light source and its compact size has given the design
of lighting fixtures with much more flexibilities and possibilities. A-Plus
believes that our innovative LED lighting solutions are well positioned to
increasingly displace traditional lightings in our targeted
markets.
A-Plus international Ltd. offers a broad portfolio of LED lighting
solutions. Our LED lighting products include outdoor lights, indoor white
lights, and indoor accent lights. We also offer LED-based
signage, head-up displays (HUDs) and tail lights for cars. These
products are marketed under Xodtec and Danhui (primarily in Taiwan and China
market) brands. End-users utilize our lighting products for interior and
exterior lighting to provide illumination and to create accent visual effects
which are superior to traditional lighting sources.
We
organize our company by business divisions and functional divisions, each with a
specific function and market focus, in order to accelerate the adoption of our
LED lighting solutions in a number of markets. Strong links with our sales
outlets enable us to educate a broad audience about the benefits of our LED
lighting solutions. These relationships also allow us to increasingly sell our
LED lighting solutions to end markets and quickly collect market responses. We
believe that we can advance our goal of becoming one of the leading providers of
energy-efficient lighting solutions by investing in our technology position,
developing new innovative products, and leveraging the strengths of our sales
outlets.
The Lighting
Industry
According
to the Freedonia Group, the estimated global lighting industry revenue of $120
billion in 2012 is divided between two major product categories, fixtures and
light lamp. The fixtures category includes all apparatuses, fixtures and
systems, while light lamps consist of the replaceable devices that emit light.
Fixtures are constructed from metal, glass or plastic and are available in a
range of decorative styles for residential, commercial and industrial
applications. Traditional light lamps include incandescent, fluorescent, halogen
and HID products. For energy consumption concerns, traditional incandescent
lamps are being prohibited by more and more countries. For residential
applications within the general illumination market, inexpensive halogen lamps
and traditional fluorescent tubes are preferred choice, but expensive compact
fluorescent lamps (CFLs) are getting more popular. For commercial applications,
more expensive and durable fluorescent and HID bulbs and fixtures have the
largest market share.
In most
Asian countries, lighting manufacturers sell products through either
manufacturer’s representatives, electrical supply representatives or an internal
sales force to electrical wholesale distributors. The distributors then
market products to electrical contractors and other end-users. Representatives
also have direct contact with lighting designers, electrical engineers,
architects and general contractors that influence buying decisions. The
manufacturer’s representatives often provide value added services, such as
product promotion or design and implementation assistance. The ability of
smaller companies to compete against larger more established rivals is heavily
rooted in their capacity to leverage their unique product portfolios and
customer service to garner maximum productivity from each
representative.
Historically, large global competitors focused almost exclusively
on the general illumination market because of their advantage in purchasing
power, manufacturing volume and distribution efficiency, while smaller industry
participants generally competed in niche markets primarily by offering
specialized products and superior customer service to their regions. However,
the evolution of solid state lighting solutions has enabled smaller companies to
penetrate and compete in the larger general illumination
market.
LED Lighting Industry
Trends
LEDs are
semiconductor-based devices that emit light. As the cost of LEDs decreases and
their performance improves, we expect that they will continue to compete more
effectively in the general illumination market versus traditional lighting.
According to the survey made by Strategies Unlimited, there were over $1.86
billion of LED lighting products sold in 2008 and the compound annual growth
rate (CAGR) during 2009 to 2012 will be around 28% -- a figure which is
forecasted to grow to $5 billion by 2012. Specialist in Business Information
(SBI), another market research company, even predicts to grow up to $14 billion
in 2013. The Company believes the LED lighting industry may experience the
following trends:
Technological innovations expand LED
functionalities
. Since its introduction in the 1960s, LED has offered an
increasingly wide variety of colored lighting. The initial applications of LEDs
included traffic lights, automotive brake lights and indicator lights. In the
mid-1990s, LEDs became capable of emitting blue light. In 1993, GaN series blue
light LED was developed, white light LED then become a feasible
product.
White
light refers to the light obtained by mixing many lights of different colors,
such as second wavelength long light (blue light + yellow light) or third
wavelength light (blue light + green light + red light). White light LED
technology can effectively save energy and reduce the emission of carbon dioxide
when use in general lighting. Thus, with the increasing awareness in
environmental protection, lighting devices using white light LED as the light
source will proliferate dramatically.
Advancements in LEDs’ performance
stimulate adoption in general lighting
. Technological advancements in LED
lighting have resulted in a new breed of LEDs that can meet specifications
previously only satisfied by traditional lighting sources. LED lighting
solutions were historically regarded as expensive in relation to their delivered
light output.
In an
effort to lower energy consumption, lighting companies are focused on increasing
the luminous flux -- lumens per watt. Traditional incandescent lighting sources
can produce between 10 and 35 lumens per watt, while fluorescent and HID light
sources can produce output near 100 lumens per watt. Today’s LEDs have
overwhelmed incandescent performance and are exceeding 100 lumens per watt,
making them comparable to and even exceeding fluorescent and HID light
sources.
Unique capabilities of LEDs broaden
applications and create new lighting alternatives
. Key LED features,
including quality of light output, long life, low power consumption, low heat
output and full digital control are accelerating adoption and expanding market
opportunities. Additional attributes, including design flexibility,
color-changing effects, digital dimming capabilities, remote control, smaller
size and rapid start-up time are creating new lighting applications for LEDs in
commercial, architectural, residential, and entertainment markets.
High energy costs and conservation
efforts drive LED adoption
. According to a statistics, lighting
applications contribute about 22% of all energy consumption. High energy costs
have resulted in increased demand for more energy-efficient lighting solutions,
which has inspired a natural shift to LEDs. LED lighting technology is
inherently more energy-efficient and can result in more than 80% and 50% in
power savings over traditional incandescent and fluorescent solutions,
respectively. In addition, unlike other alternatives such as compact fluorescent
bulbs (CFL), LED lighting solutions are free of hazardous materials such as
mercury, which can be harmful to the environment.
Regulatory influences spur market
adoption of energy-efficient LED lighting
. Government regulations, such
as initiatives by the United States Department of Energy and the Environmental
Protection Agency’s EnergyStar Certification Program, are driving adoption of
more energy-efficient lighting solutions. EnergyStar sets industry-wide
international standards for lighting products that outline efficiency and
performance criteria, helping manufacturers promote their products and consumers
better understand lighting products. Legislation and the trend
toward environmental consciousness are critical drivers of
lighting demand, as governments, industry associations, and industrial and
residential consumers move toward employing lighting solutions that comply with
regulatory requirements, conserve energy and present no threat to the
environment when disposed.
Our Competitive
Advantages
We
believe the following strengths of our company provide us with competitive
advantages in the marketplace:
Industry leading, energy-efficient
and environmentally conscious lighting solutions.
In addition to our
robust line-up of Ares series white light LED products, we have added a variety
of color-changing lighting solutions -- the Venus series. Further, we have
recently introduced our Apollo series of outdoor lighting solutions The Apollo
series street lamps have been installed in several locations since March 2008.
According to our recent measurement, the luminous decay over 1 year is less than
2%.
Proprietary technologies
. We
own proprietary technology on the remote control chip and digital dimming. These
technologies allow us to continue developing featured and robust indoor lighting
products. We plan to continue making strategic investments in intellectual
property through ongoing engineering expenditures, industry partnerships,
licensing arrangements and the pursuit of complementary businesses, such as
energy-saving control companies. These initiatives are designed to allow us to
enhance our intellectual property portfolio, improve existing products, rapidly
introduce new products to fill identified needs, and address new applications
and markets. We believe our ability to successfully develop and produce new
products will allow us to magnify our market opportunity and enhance our market
position.
Reliable, high quality and cost
competitive products.
We design, manufacture and sell high quality,
reliable, and cost competitive products. For example, our color-changing accent
light solutions are designed to allow home users using remote controller to
changing colors or setting control schemes. We achieve this by embedding our
proprietary remote control chip into our light products. To guarantee reliable
and high quality products, we produce our products in ISO 9001-accredited
factories. To deliver cost competitive solutions, we invest in technology
advancements, leverage purchasing volume, capitalize on strategic vendor
relationships and migrate high volume products to our automated manufacturing
process.
Wide range of LED lighting
solutions.
We offer a wide range of LED lighting solutions to the market.
This includes over 50 distinct product types targeted at four distinct markets.
We have expanded our LED product lines to include a range of white light
solutions for commercial, residential and entertainment lighting applications.
We believe the combination of our broad product line, our extensive engineering
and manufacturing know-how, and deep knowledge of our target markets are highly
valued by customers and are key to our ongoing success.
Experienced management team.
Our senior management team includes individuals with diverse backgrounds
and broad experience. We are led by our Chief Executive Officer, Mike Chou, an
industry veteran with over 27 years of IT industry experience and our Chief
Technology Officer, Ming Yu, with over 17 years of industrial control,
networking, and LED design experience. Our management team has demonstrated the
ability to drive organic growth and pursue the operational excellence of the
company.
Our Growth
Strategy
Our
objective is to become one of the leading providers of energy-efficient lighting
solutions. Key elements of our growth strategy include:
Capitalizing on opportunities in our
target markets.
We believe there is a growing need for unique advanced
lighting solutions across our target markets, which include applications in the
commercial, architectural, residential, entertainment, signage and consumer
markets. We expect to continue to introduce innovative LED
Lighting products as we believe there exists significant
opportunities to grow market share. By introducing new products and expanding
sales of existing products, we believe that we can significantly improve
operational efficiency by reducing our cost of materials, components and
manufacturing. Expanding our products and increasing our sales also allow us to
gain additional leverage from sales representatives within our distribution
network.
Expanding our white light LED
product line-up
. Based on our proprietary technologies on the LED
lighting product design, we are expanding our white light LED product line-up
for general illumination. We believe our Ares series of white light LED lighting
products have some of the most unique features and one of the highest efficacy
levels in the industry. We also incorporate digital dimming function which works
perfectly. We expect that our white light LED solutions will be highly
attractive alternatives to traditional lighting solutions and other competitive
LED offerings and will eventually provide a significant portion of our future
revenue.
Expanding our color-changing LED
product line-up
. Based on our proprietary control technology, our
existing accent lighting products can allow users to change colors or brightness
by using remote controller or switch. We are expanding our accent LED product
line-up by providing some luminaries which are designed to fit into the modern
living environment. We believe our Ares series of accent lighting products have
some of the most unique features which can revolute the life styles of most
families.
Developing and protecting our
intellectual property.
We have devoted significant resources to building
an advanced research and development team for developing complimentary
intellectual property to expand our portfolio of advanced lighting technologies.
Securing and defending intellectual property related to the design, manufacture
and application of advanced lighting technology is expected to be a key element
of our existing and future business. We believe that our growing intellectual
property portfolio will create licensing opportunities in the future and intend
to explore these potential opportunities. The strength of our intellectual
property portfolio allows us to compete on the basis of our technology, which we
believe gives us an advantage over many of our larger competitors.
Leveraging the strength of our
distribution network.
We have an independent global sales and
distribution network. In Taiwan, we have over 200 franchised stores and service
stations selling our products to end users directly. We are copying the
successful model to the international markets and expect to nominate over 30
distributors in over 20 countries. We expect these and other industry
relationships will be a significant source of operational leverage as we
introduce new products and scale our business.
Products
We offer
a wide range of LED lighting solutions. Our company is organized by business
divisions, each with a specific function or sales territory in order to broaden
the adoption of our LED lighting solutions. By combining the efforts of all of
these business divisions, we are able to offer complete solutions to our
customers and leverage synergies across market segments. Our products are
marketed primarily under Xodtec and Danhui brands. End-users utilize our
products for interior and exterior lighting to provide illumination and/or
create ambience and unique visual effects superior to traditional lighting.
The
following table provides a summary overview of our products:
PRODUCT
TYPE
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TARGET
MARKET(S)
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FEATURES
/
BENEFITS
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Apollo
series outdoor LED
Lighting
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Street
lamps, garden, and architectural lighting
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Extended life, low
energy consumption, low maintenance cost, thermal
efficiency, light weight
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Ares
series indoor white light
LED
Lighting
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Commercial,
architectural, institutional, hospitality, and residential
lighting
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Extended
life, low energy consumption, size, white light, fixed-color
and dimmable, fit standard incandescent fixtures
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Venus
series indoor color-changing LED
Lighting
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Residential
and entertainment lighting
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Extended
life, low energy consumption, fit standard incandescent fixtures, remote
or switch dimmable/control color- changing
capabilities
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Shinex
series general LED lighting
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Signage,
car head-up display, car tail light, and gaming console
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High
resolution (signage), easy to install (head-up display)
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Competition
The
Company currently faces competition from both traditional lighting companies
that provide general lighting products, such as fluorescent and compact
fluorescent lighting, and from companies that are engaged in providing LED
lighting products. In general, we compete with both groups on the basis of
design, innovation, costs, safety issues, sales and marketing, and selling
price.
We
compete with traditional lighting companies in the general illumination market.
Our LED lighting products tend to be alternatives to traditional lighting
sources for applications within the commercial market. In these markets, we
compete on the basis of energy savings, lamp life and durability.
Additionally,
we compete with LED lighting companies that offer competing LED lighting
products. In these markets, we compete on the basis of design, innovation, light
quality, safety issues, price, product quality and brightness.
We
believe that we can compete favorably in our markets, based on the following
factors:
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unique
and proprietary technologies;
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wide
range of high-quality product
offerings;
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ability
to offer standard and custom products that meet customers’ needs at a
competitive cost;
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capability
to provide total lighting solutions, including lamps, luminaries, and
implementation to fulfilling customers’
demand;
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excellence
in customer service and support;
and
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recruitment
and retention of qualified personnel, particularly
engineers.
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We expect
our markets to remain competitive and to reflect rapid technological evolution
and continuously evolving customer and regulatory requirements. Our ability to
remain competitive depends in part upon our success in developing new and
enhanced advanced lighting solutions and introducing these systems at
competitive prices on a timely basis.
Sales and
Marketing
We
believe our sales and marketing efforts have established our reputation for
providing innovative solutions that meet our customers’ needs in a timely,
cost-efficient manner. Our ability to leverage our distribution network
will be an important factor in our continued success. The sales and marketing of
our products largely depends upon the type of offering, location and target
market.
The
breakdown of our LED lighting Products’ sales and marketing coverage by market
is as follows:
Market Application
s
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Description
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Architectural
garden, and public lighting
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We
currently market and sell our Apollo series of LED outdoor lighting
products and solutions through our sales teams and individual lighting
agencies. The independent lighting agencies approach government,
constructors, and public lighting design houses by learning their demands
and providing our lighting product specifications to
them
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Commercial
and residential lighting
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We
market and sell our indoor lighting products through our franchised
stores, service stations, and interior decorator to end users. We believe
these distribution outlets allows us to better serve our customers, as
well as offer services such as the bundling of product and
installation.
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We have
recently reorganized our international sales organization to more aggressively
penetrate global markets outside of Taiwan. This team is approaching local
distributors in each country by introducing our successful model in Taiwan to
them. We expect this approach can allow us to penetrate into international
markets successfully and expands our business scale.
The
breakdown of our LED lighting Products, Energy efficiency solution, and
localization service, the total sales and marketing coverage by market is as
follows:
Market
Applications
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Description
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Architectural
garden, and public lighting
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We
currently market and sell our Apollo series of LED outdoor lighting
products and solutions through our sales teams, franchise channels, public
project management channels. Public project management channels approach
government, constructors, and public lighting design houses by learning
their demands and providing our lighting product specifications to
them.
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Commercial
and residential lighting
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We
market and sell our indoor lighting products through our franchised
stores, service stations, and interior decorator to end users. We believe
these distribution outlets allows us to better serve our customers, as
well as offer services such as the bundling of product and
installation.
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Energy
efficiency solution.
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Our
energy efficiency solution including energy efficiency engineering and
program management. We offer a full spectrum of engineering and total
solution services required to complete facility energy management
projects. We are one of the few in this region capable of integrating
energy saving opportunity assessment, program design, program management,
implementation with turn-key engineering and construction services, and
performance contract with financial solution arrangement. The solution is
tailor-made to meet the customer’s best interest.
Our
service including commercial office buildings, college and high school
campuses, hospitals, hotels, retail stores, high technology, light
industrial, and water/wastewater treatment facilities.
In
addition to, facility energy use optimization assessment, we also built up
its energy saving technical competence in areas such as power metering and
management, chillers and chiller plants, HVAC systems, automated
electricity demand management systems, and air compressors. Two potential
energy optimization products, one for air compressors and one for facility
automated demand management system, are also under development and
expected to be commercialized in the near future.
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Localization
Service
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Our
globalization services span industries worldwide and include adaptation of
marketing strategies to regional requirements specialized in energy saving
and IT sectors, such as energy saving industry, energy sources, material,
gas industry, automobile, lighting, pollution.
Our
localization service follow the localization process of adapting software
and accompanying materials to suit a target-market locale with the goal of
making the product "transparent" to that locale, so that native users
would interact with it as if it were developed there and for that locale
alone.
Our
software localization solutions are geared specifically for software
targeting global markets. We assist software developers deliver
professional and culturally sensitive localized software faster to the
market than their competition, at a competitive price.
Our
hardware experienced localization solution helps leading hardware and
equipment manufacturers deliver professionally localized products faster
to the market than their competition and at a competitive
price.
|
Manufacturing and
Suppliers
We
produce our advanced lighting solutions through outsourced manufacturing and
assembly. For LED lighting systems, we engineer and design our products, while
much of the manufacturing is performed by select qualified vendors. All LEDs
used in our LED lighting products and systems are purchased from manufacturers
third-party in Asia and the United States.
Many of
our core components and sub-assemblies are purchased from third party suppliers.
We have selected suppliers based on their ability to consistently produce these
products per our specifications, ensuring the best quality product at the most
cost effective price.
Research and Product
Development
The
general focus of our research and development team is the design and integration
of electronics, optics and thermal management solutions to create advanced
lighting products. Through these efforts, we seek to enhance our existing
products, design new products and develop solutions for customer applications.
We believe that our responsiveness to customer demands differentiates us from
many of our competitors, as we rapidly introduce new
products
to address market needs. We intend to expand our research and development team
as we believe that increased levels of spending on research and development will
be necessary to successfully develop advanced lighting products that will have
the brightness of traditional lighting systems while being offered at acceptable
prices.
Employees
As of
April 24, 2009, we have approximately 50 employees. We enjoy good employee
relations. None of our employees are members of any labor union, and we are not
a party to any collective bargaining agreement.
CORPORATE
INFORMATION
The
Company's corporate headquarters are located at 335 W. Spring Mountain Road,
#18, Las Vegas, Nevada 89102.
The
Company’s Taipei, Taiwan headquarters are located at 2F., No.139, Jian 1st Rd.,
Jhonghe City, Taipei County 235, Taiwan (R.O.C.). The Company's telephone number
is (886) 2 – 2228-6276.
RISK FACTORS
Investing
in the Company's common stock involves a high degree of risk. Prospective
investors should carefully consider the risks described below, together with all
of the other information included or referred to in this Current Report on Form
8-K, before purchasing shares of the Company's common stock. There are numerous
and varied risks, known and unknown, that may prevent the Company from achieving
its goals. The risks described below are not the only ones the Company will
face. If any of these risks actually occur, the Company's business, financial
condition or results of operation may be materially adversely affected. In such
case, the trading price of the Company's common stock could decline and
investors in the Company's common stock could lose all or part of their
investment.
Risks
Specific to Us
Downturns
in general economic and market conditions could materially and adversely affect
our business.
Lighting
industry, especially residential lighting market is greatly affected by the
economic downturns. The sale of our lighting products is related to
the quantity of new building construction and renovation. Decline in housing
transactions causes less demand for lighting products and conservative shopping
habits learned during economic downturns means people have less desires to try
advanced LED lighting products.
In
addition, our outdoor lighting products are mainly sold through government
tender bids and installed in public areas such as parks, rapid railway stations,
highways and other public buildings will likely be materially. If these
municipalities have less funds budgeted fro these projects as a result of
general economic conditions, sales of our outdoor lighting products the
government budgeting which is inevitably influenced by general economic
downturns.
If
our lighting solutions do not gain expected market acceptance, prospects for our
sales revenue and profit may be affected.
The
public’s relative unfamiliarity with LED lighting products may slow their market
acceptance. Potential customers for our advanced lighting systems may be
reluctant to adopt these as alternatives to traditional lighting technologies
because of their higher initial cost to achieve comparable light
output
Obstacles
to widespread adoption of LED lighting solutions include the comparatively high
cost of high brightness white LEDs and the need for further advances in
brightness, light quality, efficiency and the predicted life of the LEDs before
they require replacement. The future development of the attractiveness to
potential customers may depend on such innovation of high quality
LEDs.
If we are not able to compete effectively with other competitors,
our prospects for future growth will be jeopardized.
There is
significant competition in the lighting industry with more established companies
We are not only competing with other LED lighting solution providers but also
with companies offering traditional lighting products, which are usually more
established and have greater resources to devote to research and development,
manufacturing and marketing than we have.
White light is the most popularly utilized light in our
environment and therefore the white light market is the most attracted market to
large companies such as General Electric, Osram and Philips Electronics. These
companies have advantages of global marketing capabilities and substantially
greater resources to devote to research over than companies with scope like
us.
Our
competitors may promote lighting solutions which are more readily accepted by
customers than our products and maybe required to reduce the prices of our
products in order to remain competitive.
If critical components become unavailable or contract
manufacturers delay their production, our business will be negatively
impacted.
Stability
of component supply is crucial to determine our manufacturing process. As some
critical components, such as LEDs, are supplied by certain third party component
manufacturers, we may be unable to acquire necessary amounts of key components
at competitive prices.
Outsourcing
the production of certain parts and components is one way to reduce
manufacturing costs. We have selected these particular manufacturers based on
their ability to consistently produce these products according to our
requirements and ensure the best quality product at the most cost effective
price. Contrarily, the loss of all or one of these suppliers or delays in
obtaining shipments could have a adverse effect on our operations until an
alternative supplier could be found, if one may be located at
all. This may cause us to breach our contracts and lose
sales.
If our contract manufacturers fail to meet our requirements for
quality, quantity and timeliness, our business growth could be
harmed.
We design
and procure key components (such as LEDs) and outsource our products to contract
manufacturers. These manufacturers procure most of the raw materials for us and
provide all necessary facilities and labor to manufacture our products. If these
companies are to terminate their agreements with us without adequate notice, or
fail to provide the required capacity and quality on a timely basis, we would be
unable to process and deliver our lighting products to our
customers.
If
we fail to successfully manage our relationships with our distributors and
customers, we could lose revenues.
Most of
our products are sold through our distributors and franchise stores, which other
provide the first-line technical support to end-users. If these distributors and
franchised stores do not feel confident about our products/supports, they may
seek to change their terms with us, or alter their ordering patterns with us
which there could be a significant impact on our revenue and
profits.
Our products could contain defects or they may be installed or
operated incorrectly, which could reduce sales of those products or result in
claims against us.
Although
we have experienced quality control and assurance personnel and established
thorough quality assurance practices to ensure good product quality, defects
still may be found in the future in our existing or future
products.
End-users
could lose their confidence in our products and company when they unexpectedly
use defective products. This could result in loss of revenue, loss of profit
margin, or loss of market share. Moreover, these defects could cause us to incur
significant warranty, support and repair costs, and harm our relationship with
our customers.
If
we are unable to recruit and retain qualified personnel, our business could be
harmed.
Our
growth and success highly depend on qualified personnel. So we are inevitable to
make all efforts to recruit and retain skilled technical, sales, marketing,
managerial, manufacturing, and administrative personnel. Competitions among the
industry could cause us difficultly to recruit or retain a sufficient number of
qualified technical personnel, which could harm our ability to develop new
products. If we are unable to attract and retain necessary key talents, it
definitely will harm our ability to develop competitive product and keep good
customers and could adversely affect our business and operating
results.
Risks Related to the Securities
Markets and Investments in Our Common Stock
Because our
common stock is quoted on the "OTCBB," your ability to sell your shares in the
secondary trading market may be limited.
Our
common stock is currently quoted on the over-the-counter market on the OTC
Electronic Bulletin Board. Consequently, the liquidity of our common stock is
impaired, not only in the number of shares that are bought and sold, but also
through delays in the timing of transactions, and coverage by security analysts
and the news media, if any, of our company. As a result, prices for shares of
our common stock may be lower than might otherwise prevail if our common stock
was quoted and traded on Nasdaq or a national securities
exchange.
Because our
shares are "penny stocks," you may have difficulty selling them in the secondary
trading market.
Federal
regulations under the Securities Exchange Act of 1934 regulate the trading of
so-called "penny stocks," which are generally defined as any security not listed
on a national securities exchange or Nasdaq, priced at less than $5.00 per share
and offered by an issuer with limited net tangible assets and revenues. Since
our common stock currently is quoted on the "OTCBB" at less than $5.00 per
share, our shares are "penny stocks" and may not be traded unless a disclosure
schedule explaining the penny stock market and the risks associated therewith is
delivered to a potential purchaser prior to any trade.
In
addition, because our common stock is not listed on Nasdaq or any national
securities exchange and currently is quoted at and trades at less than $5.00 per
share, trading in our common stock is subject to Rule 15g-9 under the Securities
Exchange Act. Under this rule, broker-dealers must take certain steps prior to
selling a "penny stock," which steps include:
|
•
|
obtaining
financial and investment information from the
investor;
|
|
•
|
obtaining
a written suitability questionnaire and purchase agreement signed by the
investor; and
|
|
•
|
providing
the investor a written identification of the shares being offered and the
quantity of the shares.
|
If these
penny stock rules are not followed by the broker-dealer, the investor has no
obligation to purchase the shares. The application of these comprehensive rules
will make it more difficult for broker-dealers to sell our common stock and our
shareholders, therefore, may have difficulty in selling their shares in the
secondary trading market.
Our stock price
may be volatile and your investment in our common stock could suffer a decline
in value.
As of
April 20, 2009, there have been no trading activities in the Company’s common
stock. There can be no assurance that a market will ever develop in
the Company’s common stock in the future. If a market does not
develop then investors would be unable to sell any of the Company’s common stock
likely resulting in a complete loss of any funds therein invested
.
Should a
market develop, the price may fluctuate significantly in response to a number of
factors, many of which are beyond our control. These factors
include:
|
•
|
acceptance
of our products in the industry;
|
|
•
|
announcements
of technological innovations or new products by us or our
competitors;
|
|
•
|
government
regulatory action affecting our products or our competitors' products in
both the United States and foreign
countries;
|
|
•
|
developments
or disputes concerning patent or proprietary
rights;
|
|
•
|
economic
conditions in the United States or
abroad;
|
|
•
|
actual
or anticipated fluctuations in our operating
results;
|
|
•
|
broad
market fluctuations; and
|
|
•
|
changes
in financial estimates by securities
analysts.
|
A registration of
a significant amount of our outstanding restricted stock may have a negative
effect on the trading price of our stock.
At April
20, 2009,shareholders of the Company had approximately 18,035,000 post-split
adjusted shares of restricted stock, or 92.3% of the outstanding common stock.
If we were to file a registration statement including all of these shares, and
the registration is allowed by the SEC, these shares would be freely tradable
upon the effectiveness of the planned registration statement. If investors
holding a significant number of freely tradable shares decide to sell them in a
short period of time following the effectiveness of a registration statement,
such sales could contribute to significant downward pressure on the price of our
stock.
We
do not intend to pay any cash dividends in the foreseeable future and,
therefore, any return on your investment in our capital stock must come from
increases in the fair market value and trading price of the capital
stock.
We have
not paid any cash dividends on our common stock and do not intend to pay cash
dividends on our common stock in the foreseeable future. We intend to retain
future earnings, if any, for reinvestment in the development and expansion of
our business. Any credit agreements, which we may enter into with institutional
lenders, may restrict our ability to pay dividends. Whether we pay cash
dividends in the future will be at the discretion of our board of directors and
will be dependent upon our financial condition, results of operations, capital
requirements and any other factors that the board of directors decides is
relevant. Therefore, any return on your investment in our capital stock must
come from increases in the fair market value and trading price of the capital
stock.
We
may issue additional equity shares to fund the Company's operational
requirements which would dilute your share ownership.
The
Company's continued viability depends on its ability to raise capital. Changes
in economic, regulatory or competitive conditions may lead to cost increases.
Management may also determine that it is in the best interest of the Company to
develop new services or products. In any such case additional financing is
required for the Company to meet its operational requirements. There can be no
assurances that the Company will be able to obtain such financing on terms
acceptable to the Company and at times required by the Company, if at all. In
such event, the Company may be required to materially alter its business plan or
curtail all or a part of its operational plans as detailed further in
Management's Discussion and Analysis in this Form 8-K. While the Company
currently has no offers to sell it securities to obtain financing, sale or the
proposed sale of substantial amounts of our common stock in the public markets
may adversely affect the market price of our common stock and our stock price
may decline substantially. In the event that the Company is unable to raise or
borrow additional funds, the Company may be required to curtail significantly
its operational plans as further detailed in Requirements for Additional Capital
in the Management Discussion and Analysis of this Form 8-K.
The
Company’s proposed Amended Articles of Incorporation authorize the issuance of
up to 225,000,000 total shares of Common Stock without additional approval by
shareholders. As of April 20, 2009, we had 18,075,000 post-split adjusted shares
of common stock outstanding, and warrants and options convertible to post-split
adjusted 1,500,000 shares of common stock outstanding.
Because our
common stock is quoted only on the OTCBB, your ability to sell your shares in
the secondary trading market may be limited.
Our
common stock is quoted only on the OTCBB. Consequently, the liquidity
of our common stock is impaired, not only in the number of shares that are
bought and sold, but also through delays in the timing of transactions, and
coverage by security analysts and the news media, if any, of our company. As a
result, prices for shares of our common stock may be different than might
otherwise prevail if our common stock was quoted or traded on a national
securities exchange such as the New York Stock Exchange.
Large amounts of
our common stock will be eligible for resale under Rule 144.
As of
April 20, 2009, approximately 16,700,000 of the 18,075,000 issued and
outstanding post-split shares of the Company's common stock are restricted
securities as defined under Rule 144 of the Securities Act of 1933, as amended
(the “Act”) and under certain circumstances may be resold without registration
pursuant to Rule 144.
Approximately
1,950,000 shares of our post-split adjusted restricted shares of common stock
are held by non-affiliates who may avail themselves of the public information
requirements and sell their shares in accordance with Rule 144. As a result,
some or all of these shares may be sold in accordance with Rule 144 potentially
causing the price of the Company's shares to decline.
In
general, under Rule 144, a person (or persons whose shares are aggregated) who
has satisfied a six month holding period may, under certain circumstances, sell
within any three-month period a number of securities which does not exceed the
greater of 1% of the then outstanding shares of common stock or the average
weekly trading volume of the class during the four calendar weeks prior to such
sale. Rule 144 also permits, under certain circumstances, the sale of
securities, without any limitation, by a person who is not an Affiliate, as such
term is defined in Rule 144(a)(1), of the Company and who has satisfied a one
year holding period. Any substantial sale of the Company's common stock pursuant
to Rule 144 may have an adverse effect on the market price of the Company's
shares. This filing will satisfy certain public information requirements
necessary for such shares to be sold under Rule 144.
However,
since the Company has previously indicated in its filings with the Commission
that it is a shell company, as that term is defined under the Securities Act,
pursuant to Rule 144, shareholders must wait at least one year from the date of
the filing of this Form 8-K to avail themselves of Rule 144 unless we file a
registration statement for the sale of such shares prior thereto.
The requirements
of complying with the Sarbanes-Oxley act may strain our resources and distract
management
We are
subject to the reporting requirements of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), and the Sarbanes-Oxley Act of 2002. the costs
associated with these requirements may place a strain on our systems and
resources. The Exchange Act requires that we file annual, quarterly and current
reports with respect to our business and financial condition. The Sarbanes-Oxley
Act requires that we maintain effective disclosure controls and procedures and
internal controls over financial reporting. Historically, as a private company
we have maintained a small accounting staff, but in order to maintain and
improve the effectiveness of our disclosure controls and procedures and internal
control over financial reporting, significant additional resources and
management oversight will be required. This includes, among other things,
retaining independent public accountants. This effort may divert management's
attention from other business concerns, which could have a material adverse
effect on our business, financial condition, results of operations and cash
flows. In addition, we may need to hire additional accounting and financial
persons with appropriate public company experience and technical accounting
knowledge, and we cannot assure you that we will be able to do so in a timely
fashion.
Our executive
officers, directors and principal stockholders control our business and may make
decisions that are not in our stockholders' best
interests.
As of
April 20, 2009 our officers, directors, and principal stockholders, and their
affiliates, in the aggregate, beneficially owned approximately 75% of the
outstanding shares of our common stock on a fully diluted basis. As a result,
such persons, acting together, have the ability to substantially influence all
matters submitted to our stockholders for approval, including the election and
removal of directors and any merger, consolidation or sale of all or
substantially all of our assets, and to control our management and affairs.
Accordingly, such concentration of ownership may have the effect of delaying,
deferring or preventing a change in discouraging a potential acquirer from
making a tender offer or otherwise attempting to obtain control of our business,
even if such a transaction would be beneficial to other
stockholders.
Sales of
additional equity securities may adversely affect the market price of our common
stock and your rights in the Company may be reduced.
We expect
to continue to incur drug development and selling, general and administrative
costs, and in order to satisfy our funding requirements, we may need to sell
additional equity securities. Our stockholders may experience substantial
dilution and a reduction in the price that they are able to obtain upon sale of
their shares. Also, any new securities issued may have greater rights,
preferences or privileges than our existing common stock which may adversely
affect the market price of our common stock and our stock price may decline
substantially.
2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATIONS
The
following discussion and plan of operations should read in conjunction with the
financial statements and the notes to those statements included in this 8-K.
This discussion includes forward-looking statements that involve risk and
uncertainties. As a result of many factors, such as those set forth under “
Risk Factors
,” actual results
may differ materially from those anticipated in these forward-looking
statements.
Acquisition and
Reorganization
On April
20, 2009, the Acquisition of APlus was completed, and the business of APlus
International, Ltd. was adopted as our business. As such, the following
Management Discussion is focused on the current and historical operations of
APlus, and excludes the prior operations of The Registrant.
Overview
A-Plus
International Ltd. designs, manufactures, markets and sells advanced LED
lighting solutions. We offer a broad range of technically innovative outdoor,
indoor white light, color-changing and fixed-color lighting solutions that are
used for applications in commercial, architectural, residential, hospitality,
entertainment and consumer markets. We believe that we offer one of the broadest
portfolios of advanced LED lighting solutions. Our LED products include street
lights, wall wash lights, floor lights, light strips, and down
lights.
We
generate revenue from selling our products into commercial, architectural and
residential markets. Commercial sales include applications of our fixtures,
system and lamp (light bulb) products in the architectural, retail, hospitality,
entertainment, signage and consumer markets.
Revenue
Revenue
is derived from sales of our advanced lighting products. These products consist
of solid-state LED lighting systems and controls. We also design, market and
sell LED lighting solutions.
Besides
LED Lighting related business, some of our revenue comes from our professional
project management service such as localization and energy saving and efficient
solution services.
Cost of Goods
Sold
Our cost
of goods sold consists primarily of labor-related overhead such as R&D
professionals, designers, administrative personals. We project management
services based on customer orders. Besides our in house resources, we also out
source part of projects to support such demand.
Gross
Profit
Our gross
profit has been and will continue to be affected by a variety of factors,
including changing of the foreign exchange rates for exporting, out sourcing
cost to support project demands, and average sales prices of our products,
including fluctuations in the cost of our purchased components, sales price and
the product life cycle.
Operating
Expenses
Operating
expenses consist primarily of salaries and associated costs for employees in
finance, human resources, sales, information technology and administrative
activities. In addition, operating expenses include charges relating to
accounting, legal, insurance and stock-based compensation under Statement of
Financial Accounting Standards No. 123(R), “Share-Based
Payment.”
Revenue
The
following is a summary of our operating results for the periods
indicated:
|
|
Year Ended December 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
Change
|
|
|
%
|
|
Localization
Service
|
|
|
852,926
|
|
|
|
413,854
|
|
|
|
439,072
|
|
|
|
106.09
|
%
|
LED
Lamps
|
|
|
93,017
|
|
|
|
0
|
|
|
|
93,017
|
|
|
|
100.00
|
%
|
Lighting
Control System
|
|
|
257,817
|
|
|
|
0
|
|
|
|
257,817
|
|
|
|
100.00
|
%
|
Authorization
of Management Control System
|
|
|
364,807
|
|
|
|
0
|
|
|
|
364,807
|
|
|
|
100.00
|
%
|
Software
Engineering
|
|
|
15,328
|
|
|
|
0
|
|
|
|
15,328
|
|
|
|
100.00
|
%
|
GPS
|
|
|
406,630
|
|
|
|
478,357
|
|
|
|
(71,727
|
)
|
|
|
(14.99
|
%)
|
Energy-saving
monitoring system
|
|
|
508,890
|
|
|
|
0
|
|
|
|
508,890
|
|
|
|
100.00
|
%
|
Chart
Control System
|
|
|
153,280
|
|
|
|
0
|
|
|
|
153,280
|
|
|
|
100.00
|
%
|
Total
|
|
|
2,652,695
|
|
|
|
892,211
|
|
|
|
1,760,484
|
|
|
|
197.32
|
%
|
Revenue
from our localization translation service was approximately $852,926 in 2008, as
compared to approximately $413,854 for 2007. This increase of $439,072, or
106.09%, is attributable to actively in market development of European and
Japanese market. After the increased sales volume, our labor resource allocation
is more efficient than the year 2007, resulted higher margin in 2008. Before
2008, our research and development team was in the development stage for
Management Control system and lighting control system. The main system
architecture completed in 2008, the pattern allows the systems generate revenue
starting in 2008. Our invention pattern in LED control chips received in March
11,, 2008 (Patent Number 2008.3.11-2026.5.18). The patent was successfully used
in commercial products; this reflects intelligent lighting control to be
profitable in the year of 2008.
Gross
Profit and Cost of Goods Sold
|
|
Year
Ended December 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
Change
|
|
|
%
|
|
Revenue
|
|
|
2,652,695
|
|
|
|
892,211
|
|
|
|
1,760,484
|
|
|
|
197.32
|
%
|
Cost
of sales
|
|
|
843,106
|
|
|
|
611,067
|
|
|
|
232,039
|
|
|
|
37.97
|
%
|
Gross
profit
|
|
|
1,809,589
|
|
|
|
281,144
|
|
|
|
1,528,445
|
|
|
|
|
|
Gross
margin %
|
|
|
68.22
|
%
|
|
|
31.51
|
%
|
|
|
|
|
|
|
|
|
Gross
profit for 2008 and 2007 was $1,809,589 and $281,144, respectively. Gross
margins increased 68.22% from 31.51% in 2007 to approximately
36.71%increased.
Production
costs in 2008 increased to approximately $843,106, or 31.78% of revenue, as
compared $611,067, or 68.48% of revenue, in 2007.
Operating
Loss and Expenses
|
|
Year
Ended December 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
Change
|
|
|
%
|
|
Operating
expenses
|
|
|
652,067
|
|
|
|
605,316
|
|
|
|
46,751
|
|
|
|
7.72
|
%
|
Research
and development expenses
|
|
|
690
|
|
|
|
65,738
|
|
|
|
(65,048
|
)
|
|
|
(98.95
|
%)
|
Total
operating expenses
|
|
|
652,757
|
|
|
|
671,054
|
|
|
|
(18,297
|
)
|
|
|
(2.73
|
%)
|
Operating
income(loss)
|
|
|
1,156,832
|
|
|
|
(389,910
|
)
|
|
|
1,546,742
|
|
|
|
396.69
|
%
|
Operating
Expenses
Our
research and development for management Control system and lighting control
system, the main system architecture completed in 2008, the research expenses
decreased from $65,738 to $690, or $65,048, 98.95% decreased.
The
pattern allows the systems generate revenue starting in 2008. The increased for
trade show and travel expenses were approximately $28,858 and $28,953 due to the
main business objective in the market development. Excluding the impact of
manpower needs, increase in salary$61,286, health insurance benefits$5,079,
retirement benefits, approximately$ 13,709.
Depreciation for fixed Asset and
unamortized expense decrease
approximately $35,538 and
$5,878
Professional
service expenses were higher in 2007 compare to 2008, due to higher expenses in
financial and patent consulting cost in 2007, approximately decreased $18,507 in
2008.
In 2007,
some of our LED lighting product research was terminated due to a strategic
decision change, some of the existing related costs resulted in higher expenses
in 2007, approximately decreased $20,211 in 2008 compare to 2007.
Non-operating income and
expenses
|
|
Year
Ended December 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
Change
|
|
|
%
|
|
Operating
income(loss)
|
|
|
1,156,832
|
|
|
|
(389,910
|
)
|
|
|
1,546,742
|
|
|
|
396.69
|
%
|
Non-operating
income and gains
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
220
|
|
|
|
49
|
|
|
|
171
|
|
|
|
348.98
|
%
|
Foreign
exchange gain
|
|
|
43
|
|
|
|
63
|
|
|
|
(20
|
)
|
|
|
(31.75
|
%)
|
Rent
income
|
|
|
2,920
|
|
|
|
17,577
|
|
|
|
(14,657
|
)
|
|
|
(83.39
|
%)
|
Miscellaneous
|
|
|
1,417
|
|
|
|
0
|
|
|
|
1,417
|
|
|
|
100.00
|
%
|
|
|
|
4,600
|
|
|
|
17,689
|
|
|
|
(13,089
|
)
|
|
|
(74.00
|
%)
|
Non-operating
expenses and losses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expenses
|
|
|
(6,177
|
)
|
|
|
(11,426
|
)
|
|
|
5,249
|
|
|
|
-45.94
|
%
|
Provision
for loss on inventories
|
|
|
(7,440
|
)
|
|
|
0
|
|
|
|
(7,440
|
)
|
|
|
100.00
|
%
|
Foreign
exchange loss
|
|
|
(78
|
)
|
|
|
(138
|
)
|
|
|
60
|
|
|
|
-43.48
|
%
|
Miscellaneous
expenses
|
|
|
(951
|
)
|
|
|
(5,179
|
)
|
|
|
4,228
|
|
|
|
-81.64
|
%
|
|
|
|
(14,646
|
)
|
|
|
(16,743
|
)
|
|
|
2,097
|
|
|
|
-12.52
|
%
|
Income
(loss) before income tax
|
|
|
1,146,786
|
|
|
|
(388,964
|
)
|
|
|
1,535,750
|
|
|
|
394.83
|
%
|
income
tax expense
|
|
|
(185,062
|
)
|
|
|
0
|
|
|
|
(185,062
|
)
|
|
|
100.00
|
%
|
Net
income (loss)
|
|
|
961,724
|
|
|
|
(388,964
|
)
|
|
|
1,350,688
|
|
|
|
347.25
|
%
|
Miscellaneous
Income
Income in
the amount of $1,417 was derived as sales bonuses from Milengo Inc, a famous
localization company in the Unites States. Milengo Inc. is the US
alliance company for Targetek Technology Co., Ltd, they pay the sales bonus to
Targetek.
Interest
The
interest payments have been reduced $5,249 or (45.94%) in 2008 than in 2007 due
to the decrease in the principal amount of the loan.
Provision
for loss on inventories
Due to a
decrease in selling price, there is a loss of $7,440 for the fiscal year 2008
compared to the fiscal year 2007.
(Non-operating
expenses and losses) Miscellaneous expenses
There is
a $4,228 penalty in 2008 due as a result of terminations of the
rental contract of our Taipei office. Our office was relocated to Dunhua South
Road, Taipei.
Income Tax
We have
provided a full valuation allowance against income tax benefits resulting from
losses incurred and accumulated on operations.
Net
Income
Integrated
above reasons, net profit after tax increased $1,350,688 in 2008 compare to
2007.
Earnings Before Interest,
Taxes, Depreciation and Amortization (EBITDA)
Earnings
before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP
(Generally Accepted Accounting Principle) financial measure provided as
additional information to investors. EBITDA is an alternative method for
assessing our financial condition and operating results. EBITDA is not in
accordance with, or a substitute for, GAAP, and may be different from or
inconsistent with non-GAAP financial measures used by other companies. However,
we believe that EBITDA may provide additional information with respect to our
performance and ability to meet future debt service, capital expenditures and
working capital requirements.
Whenever
we refer to a non-GAAP financial measure we will present the most directly
comparable financial measure calculated and presented in accordance with GAAP,
along with a reconciliation of the differences between the non-GAAP financial
measures we reference with such comparable GAAP financial measure.
The
following table reconciles the GAAP measure net loss to the non-GAAP financial
measure EBITDA:
|
|
Year
Ended December 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
Change
|
|
|
%
|
|
Net
income (loss)
|
|
|
961,724
|
|
|
|
(388,964
|
)
|
|
|
1,350,688
|
|
|
|
347.25
|
%
|
Plus:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
6,177
|
|
|
|
11,426
|
|
|
|
(5,249
|
)
|
|
|
(45.94
|
%)
|
Depreciation
|
|
|
21,092
|
|
|
|
56,629
|
|
|
|
(35,537
|
)
|
|
|
(62.75
|
%)
|
Various
amortization
|
|
|
6,045
|
|
|
|
11,923
|
|
|
|
(5,878
|
)
|
|
|
(49.30
|
%)
|
Taxes
|
|
|
185,062
|
|
|
|
0
|
|
|
|
185,062
|
|
|
|
100.00
|
%
|
EBITDA
|
|
|
1,180,100
|
|
|
|
(308,986
|
)
|
|
|
1,489,086
|
|
|
|
481.93
|
%
|
For the year ended December 31, 2008, EBITDA was
USD1,180,100 compared to -USD308,986 in 2007. The increase was primarily due to
an increase in gross profit in 2008. Additionally, the increase was in
taxes.
CRITICAL ACCOUNTING POLICIES
AND ESTIMATES
The
financial statements are prepared in conformity with U.S. generally accepted
accounting principles. Major accounting policies are summarized as
follows:
Foreign
Currency Translation
The
carrying amounts of the Company’s assets, liabilities, equity and results of
operations have been translated from the New Taiwan dollar, which is the
Company’s functional currency, into the U.S. dollar using the current rate
method.
Cash
Equivalents
For the
purpose of the statement of cash flows, the Company considers all highly liquid
investments to be cash equivalents.
Accounts
Receivable and Allowance for Doubtful Accounts
Accounts
receivable are carried at their estimated collectible amounts. Trade
credit is generally extended on a short-term basis, thus accounts receivable do
not bear interest, although a finance charge may be applied to such receivables
that are past due. Bad debts are provided on the allowance method based on
historical experience and management’s evaluation of outstanding accounts
receivable.
Inventory
Inventory
of finished goods is stated at the lower of cost (weighted average method) or
market.
Fixed
Assets
All fixed
assets are stated at cost. Significant renewals and improvements are
treated as capital expenditures and maintenance and repairs are charged to
expense as incurred.
Depreciation
is provided on straight-line method based on the estimated useful lives and
salvage values of the assets, ranging from 2 to 5 years.
Revenue,
Costs and Expenses
Revenues
are recognized when the earning process is substantially completed and they are
realized or realizable. Costs and expenses are recognized as
incurred.
Research
and Development Costs
Research
and development costs are expensed as incurred.
Taxes
Collected from Customers
The
Company presents revenue net of sales, use, and excise taxes collected from
customers.
Shipping
and Handling Costs
The
Company’s policy is to classify shipping and handling costs as part of operating
expenses in the statements of income.
Advertising
Advertising
costs are expensed as incurred.
Income
Taxes
Current -
The Company follows the practice of providing for income taxes based on amounts
reportable for income tax purposes.
Deferred
- The recognition of income and expenses in different periods for financial
accounting and tax purposes gives rise to timing difference that result in
deferred taxes.
Uncertain
Tax Positions
Management
has elected to defer the application of FAS FIN 48, Accounting for Uncertain Tax
Positions, in accordance with FSP FIN 48-3. The Company will continue to
follow FAS 5, Accounting for Contingencies, until it adopts FIN 48.
Use
of Estimates
The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect certain reported amounts and disclosures. Accordingly, actual
results could differ from those estimates.
Not
applicable.
RECENT ACCOUNTING
PRONOUNCEMENTS
In May
2008, the FASB released SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles”. This statement identifies the sources of accounting
principles and the framework for selecting the accounting principles used in the
preparation of financial statements of nongovernmental entities that are
presented in conformity with generally accepted accounting principles in the
United States. SFAS No. 162 is effective 60 days after the SEC’s approval of the
Public Company Accounting Oversight Board amendments to AU Section 411, “The
Meaning of Present Fairly in Conformity with Generally Accepted Accounting
Principles”. The Company does not expect the implementation of this
guidance to have a material impact on the financial statements.
In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments
and Hedging Activities-an amendment of FASB Statement No. 133”. SFAS No. 161
gives financial statement users better information about the reporting entity's
hedges by providing for qualitative disclosures about the objectives and
strategies for using derivatives, quantitative data about the fair value of and
gains and losses on derivative contracts, and details of credit-risk-related
contingent features in their hedged positions. SFAS No. 161 is effective for
financial statements issued for fiscal years beginning after November 15, 2008
and interim periods within those years. The Company does not expect the adoption
of SFAS No. 161 to have a material effect on the financial
statements.
In
February 2007, the FASB released SFAS No. 159, “The Fair Value Option for
Financial Assets and Financial Liabilities”. The standard is effective for
fiscal years beginning after November 15, 2007. The standard provides entities
the ability, on an elective basis, to report most financial assets and financial
liabilities at fair value, with corresponding gains and losses recognized in
current earnings. The Company did not elect the fair value option under SFAS No.
159 as of January 1, 2008 for any of our financial assets and liabilities that
were not already fair valued. The Company will consider applying the fair value
option to future transactions as provided by the standard. The Company does not
expect SFAS No. 159 to have a material impact on the financial
statements.
In
December 2007, the FASB released SFAS No. 141(R), “Business Combinations”. This
standard revises and enhances the guidance set forth in SFAS No. 141(R) by
establishing a definition for the “acquirer,” providing additional guidance on
the recognition of acquired contingencies and non-controlling interests, and
broadening the scope of the standard to include all transactions involving a
transfer in control, irrespective of the consideration involved in the transfer.
SFAS No. 141(R) is effective for business combinations for which the acquisition
date occurs in a fiscal year beginning on or after December 15, 2008. Although
the standard will not have any impact on the current financial statements,
application of the new guidance could be significant to the Company in the
context of future merger and acquisition activity.
In
December 2007, the FASB released SFAS No. 160, “Non-controlling Interests in
Consolidated Financial Statements-an amendment of ARB No. 51”. This statement
amends ARB 51 to establish accounting and reporting standards for the
non-controlling interest in a subsidiary and for the deconsolidation of a
subsidiary. It clarifies that a non-controlling interest in a subsidiary is an
ownership interest in the consolidated entity that should be reported as equity
in the consolidated financial statements. SFAS No. 160 is effective for fiscal
years, and interim periods within those fiscal years, beginning on or after
December 15, 2008. The Company does not expect the standard to have a material
impact on the financial statements.
OFF-BALANCE SHEET
ARRANGEMENTS
We do not
have any off-balance sheet arrangements that have or are reasonably likely to
have a current or future effect on our financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity, capital
expenditures or capital resources that are material to our
investors.
3. DESCRIPTION OF
PROPERTY
Following
the Exchange, our United States address will be located at 3305 W. Spring
Mountain Road, #48, Las Vegas, Nevada 89102. Our corporate headquarters are
comprised of 15,000 square feet located in Jhonghe City, Taipei County, Taiwan
under a lease which expires in 15
th
, March,
2012 at a monthly rental of US $9,257 per month..
4. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The
following table summarizes certain information regarding the beneficial
ownership (as such term is defined in Rule 13d-3 under the Securities Exchange
Act of 1934) of outstanding Common Stock as of April 24, 2009 (after giving
effect to the Exchange) by (i) each person known by us to be the beneficial
owner of more than 5% of the outstanding APlus Common Stock, (ii) each of our
directors, (iii) each of our named executive officers (as defined in Item
402(a)(3) of Regulation S-B under the Securities Act), and (iv) all executive
officers and directors as a group. Except as indicated in the footnotes below,
the security and stockholders listed below possess sole voting and investment
power with respect to their shares.
Name
and Address of Beneficial Owner
|
Amount
and Nature of Beneficial Owner (1)
|
Percent
of Class (2)
|
Yao-Ting
Su(3)
|
1,550,000
|
8.3%
|
Xodtec
Technology Co. Ltd
|
2,100,000
|
11.2%
|
Up-Tech
Technology Co. Ltd
|
5,000,000
|
26.7%
|
Targetek
Technology Co. Ltd
|
1,900,000
|
10.5%
|
Radiant
Sun Development S.A.
|
3,500,000
|
18.7%
|
All
Directors and Executive Officers as a Group (1 person)
|
1,550,000
|
8.3%
|
(1)
"Beneficial Owner" means having or sharing, directly or indirectly (i) voting
power, which includes the power to vote or to direct the voting, or (ii)
investment power, which includes the power to dispose or to direct the
disposition, of shares of the common stock of an issuer. The definition of
beneficial ownership includes shares, underlying options or warrants to purchase
common stock, or other securities convertible into common stock, that currently
are exercisable or convertible or that will become exercisable or convertible
within 60 days. Unless otherwise indicated, the beneficial owner has sole voting
and investment power.
(2) For
each shareholder, the calculation of percentage of beneficial ownership is based
upon 18,075,000 shares of Common Stock outstanding as of April 24,
2009, and shares of Common Stock subject to options, warrants and/or conversion
rights held by the shareholder that are currently exercisable or exercisable
within 60 days, which are deemed to be outstanding and to be beneficially owned
by the shareholder holding such options, warrants, or conversion rights. The
percentage ownership of any shareholder is determined by assuming that the
shareholder has exercised all options, warrants and conversion rights to obtain
additional securities and that no other shareholder has exercised such
rights.
5.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
The
following table sets forth information regarding the members of the Company’s
board of directors and its executive officers. All of the Company’s executive
officers and directors were appointed on December 6, 2007, the effective date of
the Acquisition. All directors hold office until the first annual meeting of the
stockholders of the Company and until the election and qualification of their
successors or their earlier removal or retirement.
Officers
are elected annually by the board of directors and serve at the discretion of
the board.
Name
|
Age
|
Title
|
Yao-Ting
Su
|
45
|
Chairman
of the Board of Directors
|
Chao-Wu
Chou
|
51
|
Chief
Executive Officer; Director
|
Hui-Yu
Che
|
43
|
Chief
Financial Officer,
Director
|
Yao-Tin (Curtis)
Su.
Mr. Su serves as the Company’s Chairman of the Board of
Directors. Simultaneously therewith and since 2007 Mr. Su has served
as the Chairman of the Company’s subsidiary Xodtec Technology Co., Ltd. and from
1997 as the Chief Executive Officer of another of the Company’s other
subsidiaries Targetek Technology Co. Ltd. Mr. Su received a Bachelors
Degree from Soochow University (Taipei, Taiwan) and was the Valedictorian of the
Air Defense Missile School of the United States Army in Fort Bliss,
Texas. Mr. Su also served in the Army of Taiwan from 1979 to
1981.
Chao-Wu (Mike)
Chou
. Mr. Chou serves as our Chief Executive Officer and
Director. Simultaneously therewith and since December 2008, Mr. Chou
serves as the Chief Executive Officer of the Company’s subsidiary Xodtec
Technology Co., Ltd. where he is responsible for the formulation and execution
of corporate strategies, integration of resources and setting and achieving
sales revenues and profit goals. Prior thereto and from July 2003,
Mr. Chou served as the Senior Vice-President of Elitegroup Computer Systems Co.,
Ltd. Mr. Chou received a Masters Degree from National Chiao Tung
University (Taiwan) and his Bachelors Degree from National Taiwan University of
Science and Technology.
Hui-Yu (Rachel)
Che.
Ms. Che serves as the Company’s Chief Financial Officer
and Director. Simultaneously and since 2001, Ms. Che has served as
the Chief Financial Officer of the Company’s subsidiary Targetek Technology Co.,
Ltd. Ms. Che is a certified public accountant and has a degree from
National Chung Hsing University.
AUDIT
COMMITTEE. The Company intends to establish an audit committee, which will
consist of independent directors. The audit committee's duties would be to
recommend to the Company's board of directors the engagement of independent
auditors to audit the Company's financial statements and to review its
accounting and auditing principles. The audit committee would review the scope,
timing and fees for the annual audit and the results of audit examinations
performed by the internal auditors and independent public accountants, including
their recommendations to improve the system of accounting and internal controls.
The audit committee would at all times be composed exclusively of directors who
are, in the opinion of the Company's board of directors, free from
any relationship which would interfere with the exercise of independent judgment
as a committee member and who possess an understanding of financial statements
and generally accepted accounting principles.
COMPENSATION
COMMITTEE. Our board of directors does not have a standing compensation
committee responsible for determining executive and director
compensation. Instead, the entire board of directors fulfills this
function, and each member of the Board participates in the determination.
Given the small size of the Company and its Board and the Company's
limited resources, locating, obtaining and retaining additional independent
directors is extremely difficult. In the absence of independent directors,
the Board does not believe that creating a separate compensation committee would
result in any improvement in the compensation determination process.
Accordingly, the board of directors has concluded that the Company and its
stockholders would be best served by having the entire board of directors act in
place of a compensation committee. When acting in this capacity, the Board
does not have a charter.
In
considering and determining executive and director compensation, our board of
directors reviews compensation that is paid by other similar public companies to
its officers and takes that into consideration in determining the compensation
to be paid to the Company’s officers. The board of directors also
determines and approves any non-cash compensation to any employee. The Company
does not engage any compensation consultants to assist in determining or
recommending the compensation to the Company’s officers or employees.
6. EXECUTIVE
COMPENSATION
Summary
Compensation Table
The
following table sets forth all of the compensation awarded to, earned by or paid
to (i) each individual serving as our principal executive officer during our
last completed fiscal year; and (ii) each other individual that served as an
executive officer at the conclusion of the fiscal year ended December 31, 2008
and who received in excess of $100,000 in the form of salary and bonus during
such fiscal year (collectively, the Named Executives).
Name
and
Principal
Position
|
|
Year
|
|
Salary
|
|
Bonus
|
|
|
Option
Awards
|
|
Non-Equity
Incentive Plan Compensation
|
|
All
Other Compensation
|
|
Total
|
Yao-Ting
Su (1)
|
|
|
2009
|
|
-
|
|
-
|
|
|
-
|
|
-
|
|
-
|
|
-
|
Chao-Wu
Chou (2)
|
|
|
2009
|
|
-
|
|
-
|
|
|
-
|
|
-
|
|
-
|
|
-
|
Hui-Yu
Che (3)
|
|
|
2009
|
|
-
|
|
-
|
|
|
-
|
|
-
|
|
-
|
|
-
|
Adam
Borges dos Santos
|
|
|
2009
|
|
-
|
|
-
|
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
|
2008
|
|
-
|
|
-
|
|
|
-
|
|
-
|
|
-
|
|
-
|
Carlo
Giusto
|
|
|
2008
|
|
-
|
|
-
|
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
|
2007
|
|
-
|
|
-
|
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
|
2006
|
|
-
|
|
-
|
|
|
-
|
|
-
|
|
-
|
|
-
|
Compensation
Policy
. Our Company’s executive compensation plan is based on attracting
and retaining qualified professionals who possess the skills and leadership
necessary to enable our Company to achieve earnings and profitability growth to
satisfy our stockholders. We must, therefore, create incentives for these
executives to achieve both Company and individual performance objectives through
the use of performance-based compensation programs. No one component is
considered by itself, but all forms of the compensation package are considered
in total. Wherever possible, objective measurements will be utilized to quantify
performance, but many subjective factors still come into play when determining
performance.
Compensation
Components
. As an early-stage development company, the main elements of
our compensation package consist of base salary, stock options and
bonus.
Base
Salary
. As we continue to grow and financial conditions improve, these
base salaries, bonuses and incentive compensation will be reviewed for possible
adjustments. Base salary adjustments will be based on both individual and
Company performance and will include both objective and subjective criteria
specific to each executive’s role and responsibility with the
Company.
COMPENSATION OF
DIRECTORS
At this
time, directors receive no remuneration for their services as directors of the
Company, nor does the Company reimburse directors for expenses incurred in their
service to the Board of Directors. The Company does not expect to pay any fees
to its directors for the 2008 fiscal year.
EMPLOYMENT AGREEMENTS, TERMINATION OF
EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENTS
On April
21, 2009, the Company entered into employment agreements with its three
executive officers, Yao-Ting (Curtis) Su, Chairman; Chao-Wu (Mike) Chou,
Chief Executive Officer and Hui-Yu (Rachel) Che, Chief Financial Officer. They
agreements provide for a three year term with minimum annual base salaries of
$55,000 if determined to be appropriate by the Board. In addition, the
agreements provide for bonuses according to the following schedule:
1.
|
Year-end
bonus: Minimum of $7,500 will be paid on Jan. 10 of every year during the
validity of the agreements.
|
2.
|
Performance
bonus: Based on the actual performance, the company will pay up to $70,000
on Feb. 10 of every year during the validity of the
agreements.
|
The
agreements do not include any terms which show the company should reimburse to
the two executive officers when the employment agreement terminated. When the
company has any change-in-control arrangement, the company will revise the
agreement and the un-paid salary or bonus will be calculated and paid on a pro
rata basis.
7. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS
Currently,
we have no independent directors on our Board of Directors, and therefore have
no formal procedures in effect for reviewing and pre-approving any transactions
between us, our directors, officers and other affiliates. We will use our best
efforts to insure that all transactions are on terms at least as favorable to
the Company as we would negotiate with unrelated third parties.
8. DESCRIPTION OF
SECURITIES
COMMON
STOCK
Number of Authorized and Outstanding
Shares
. The Company's Articles of Incorporation authorizes the issuance
of 75,000,000 shares of Common Stock, $.001 par value per share, of which
6,016,668 post-split adjusted shares were outstanding on April 24,
2009. On April 20, 2009 the Company’s Board of Directors have
authorized an amendment to the Articles of Incorporation to increase the number
of authorized shares of common stock from 75,000,000 to 225,000,000 and
concurrently affecting a three for one (3:1) forward-split of the Registrant’s
issued and outstanding shares of Common Stock.
Voting Rights
. Holders of
shares of Common Stock are entitled to one vote for each share on all matters to
be voted on by the stockholders. Holders of Common Stock have no cumulative
voting rights. Accordingly, the holders of in excess of 50% of the aggregate
number of shares of Common Stock outstanding will be able to elect all of the
directors of the Company and to approve or disapprove any other matter submitted
to a vote of all stockholders.
Other
. No shareholder has any
preemptive right or other similar right to purchase or subscribe for any
additional securities issued by the Company, and no shareholder has any right to
convert the common stock into other securities. No shares of common stock are
subject to redemption or any sinking fund provisions. All the outstanding shares
of the Company's common stock are fully paid and non-assessable. Subject to the
rights of the holders of the preferred stock, if any, the Company's shareholders
of common stock are entitled to dividends when, as and if declared by the Board
from funds legally available therefore and, upon liquidation, to a pro-rata
share in any distribution to shareholders. The Company does not anticipate
declaring or paying any cash dividends on the common stock in the foreseeable
future.
Preferred
Stock
The
proposed amendment to the Company's Articles of Incorporation authorizes the
issuance of 10,000,000 shares of Preferred Stock, par value $0.001 per share,
subject to any limitations prescribed by law, without further vote or action by
the stockholders, to issue from time to time shares of preferred stock in one or
more series. Each such series of Preferred Stock shall have such number of
shares, designations, preferences, voting powers, qualifications, and special or
relative rights or privileges as shall be determined by the Company's board of
directors, which may include, among others, dividend rights, voting rights,
liquidation preferences, conversion rights and preemptive rights.
Transfer
Agent
Shares of
Common Stock are registered at the transfer agent and are transferable at such
office by the registered holder (or duly authorized attorney) upon surrender of
the Common Stock certificate, properly endorsed. No transfer shall be registered
unless the Company is satisfied that such transfer will not result in a
violation of any applicable federal or state securities laws. The Company's
transfer agent for its Common Stock is Island Stock Transfer, 100 Second Avenue
South, Suite 705S, St. Petersburg, Florida 33701, Telephone (727)
289-0010.
Penny Stock
The
Commission has adopted rules that define a “penny stock” as equity securities
under $5.00 per share which are not listed for trading on Nasdaq (unless the
issuer (i) has a net worth of $2,000,000 if in business for more than three
years or $5,000,000 if in business for less than three years or (ii) has had
average annual revenue of $6,000,000 for the prior three years). The Company's
securities are characterized as penny stock, and therefore broker-dealers
dealings in the securities are subject to the disclosure rules of transactions
involving penny stock which require the broker-dealer, among other things, to
(i) determine the suitability of purchasers of the securities and obtain the
written consent of purchasers to purchase such securities and (ii) disclose the
best (inside) bid and offer prices for such securities and the price at which
the broker-dealer last purchased or sold the securities. The additional
requirements imposed upon broker-dealers discourage them from engaging in
transactions in penny stocks, which reduces the liquidity of the Company's
securities. The Company's common stock is currently quoted on the OTC Bulletin
Board under the symbol SPEV.OB.
PART II.
1. MARKET
INFORMATION
Currently
the Company’s common shares are listed on the Over-the-Counter Bulletin Board
(OTCBB) under the ticker symbol “SPEV”. However, as of the date of
this report there have been no trading activities in the Company’s common
stock. There can be no assurance that a market will ever develop in
the Company’s common stock in the future. If a market does not
develop then investors would be unable to sell any of the Company’s common stock
likely resulting in a complete loss of any funds therein invested
.
Since our
inception, we have not paid any dividends on our Common Stock, and we do not
anticipate that we will pay any dividends in the foreseeable future. We intend
to retain any future earnings for use in our business. At April 20,
2009, we had approximately 52 shareholders of record.
2. LEGAL
PROCEEDINGS
The
Company is not a party to any pending legal proceedings, and no such proceedings
are known to be contemplated.
No
director, officer, or affiliate of the Company and no owner of record or
beneficial owner of more than 5.0% of the securities of the Company, or any
associate of any such director, officer or security holder is a party adverse to
the Company or has a material interest adverse to the Company in reference to
pending litigation.
3.
CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
Not
applicable.
4. RECENT
ISSUANCES OF UNREGISTERED SECURITIES BY THE REGISTRANT
Since
inception of the Company in November 29, 2006, we have sold unregistered
securities to the following shareholders.
On
December 11, 2006 we issued 9,000,000 shares of Common Stock to Carlo
Giusto, who at the time was the Registrant’s sole officer and director in
exchange of the payment of $9,000, or $0.001 per share.
On April
20, 2009, the Registrant authorized the issuance of 5,333,334 shares in
connection with the execution of a Share Exchange Agreement with the
equity-holders of APlus International, Ltd. (the “Exchange”)and the issuance of
111,667 shares of Common Stock for services rendered to a finder in connection
with the Exchange
On April
22, 2009 the Registrant entered into a Financial Advisory Agreement with Unise
Investment Corp. to provide financial consulting services in consideration for
111,667 shares of Common Stock.
On April
23, 2009, the Registrant sold warrants exercisable into 200,000 shares of Common
Stock at the exercise price of $0.65 per share and expiring in 6 months,
warrants exercisable into 500,000 shares of Common Stock at the exercise price
of $1.00 per share and expiring in 2 years and warrants exercisable into 800,000
shares of Common Stock at the exercise price of $1.50 per share and expiring in
2 years.
Except as
noted above, the sales of the securities identified above were made pursuant to
privately negotiated transactions that did not involve a public offering of
securities and, accordingly, we believe that these transactions were exempt from
the registration requirements of the Securities Act pursuant to Section 4(2)
thereof and rules promulgated thereunder. In addition, we believe that the 8%
Promissory Note is commercial paper and is exempt from the registration
requirements of the Securities Act under Section 3(a)3 thereof. Each of the
above-referenced investors in our stock represented to us in connection with
their investment that they were “accredited investors” (as defined by Rule 501
under the Securities Act) and were acquiring the shares for investment and not
distribution, that they could bear the risks of the investment and could hold
the securities for an indefinite period of time. The investors received written
disclosures that the securities had not been registered under the Securities Act
and that any resale must be made pursuant to a registration or an available
exemption from such registration. All of the foregoing securities are deemed
restricted securities for purposes of the Securities Act.
5.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
Pursuant
to our certificate of incorporation and bylaws, we may indemnify an officer or
director who is made a party to any proceeding, because of his position as such,
to the fullest extent authorized by Nevada Revised Statutes, as the same exists
or may hereafter be amended. In certain cases, we may advance expenses incurred
in defending any such proceeding.
To the
extent that indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers or persons controlling our company pursuant
to the foregoing provisions, we have been informed that, in the opinion of the
SEC, such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable. If a claim for indemnification
against such liabilities (other than the payment by us of expenses incurred or
paid by a director, officer or controlling person of our company in the
successful defense of any action, suit or proceeding) is asserted by any of our
directors, officers or controlling persons in connection with the securities
being registered, we will, unless in the opinion of our counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by us is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of that issue.
ITEM 4.01 CHANGES IN
REGISTRANT’S CERTIFYING ACCOUNTANT.
See
“Information Required Pursuant to Form 10-SB” II(3) “
Changes In and Disagreements with
Accountants
,” which discussion is incorporated herein by
reference.
ITEM 5.01 CHANGES IN CONTROL
OF REGISTRANT.
Please
see the discussion of “
Closing
of Exchange
”
and “
Recent
Financings
”
in Item 2.01, which discussion is incorporated herein by
reference.
ITEM 5.02
DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT
OF PRINCIPAL OFFICERS.
On April
20, 2009, Mr. Adam Borges Dos Santos resigned from his role as the Registrant’s
sole principal officer and director.
Yao-Ting
(Curtis) Su was elected as the Registrant’s Chairman. Chao-Wu (Mike) Chou was
elected as Chief Executive Officer and Director, and Hui-Yu (Rachel) Che was
elected as Chief Financial Officer and Director.
ITEM 5.03
AMENDMENTS TO ARTICLES OF INCORPORATION OR BYLAWS; CHANGE IN FISCAL
YEAR.
On April
20, 2009, the shareholders of the Registrant authorized an amendment to the
Registrant’s Articles of Incorporation to change the name of the corporation to
Xodtec Group USA, Inc. and to increase the Registrant’s authorized capital stock
to 235,000,000 shares of which 225,000,000 will be common stock, par value
$0.001 per share and 10,000,000 shares will be “blank check” preferred stock,
par value $0.001 per share.
ITEM 5.06
CHANGE IN SHELL COMPANY STATUS.
As
described in Item 2.01 above, which is incorporated by reference into this Item
5.06, we ceased being a shell company (as defined in Rule 12b-2 under the
Exchange Act of 1934, as amended) upon completion of the Exchange.
PART III.
ITEM 9.01
FINANCIAL STATEMENTS AND EXHIBITS.
(a)
Financial statements:
As
a result of the Exchange described in Item 2.01, the registrant is filing the
audited financial statement information of APlus International, Ltd.’s principal
operating subsidiaries, Xodtec Technology Co., Ltd., UP-Tech Technology Co.,
Ltd. and Targetek Technology Co., Ltd. as Exhibits 99.1, 99.2 and 99.3 to this
current report.
(b)
Pro forma financial
information:
The unaudited pro forma consolidated financial information
regarding the registrant and APlus International, Ltd. is attached to this
current report as Exhibit 99.4.
(c)
Shell company transactions:
Reference is made to the disclosure set forth under Item 2.01 of this
report, which disclosure is incorporated herein by reference.
(d)
Exhibits:
Exhibit
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Description
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Agreement and Plan of Share
Exchange, by and among Sparking Events, Inc., APlus International, Ltd.,
and the Shareholders of APlus International, Ltd. dated as of December 6,
2007.
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Amended
Articles of Incorporation of Sparking Events, Inc.
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Articles
of Organization of APlus International, Ltd.
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Operating
Agreement of APlus International, Ltd. dated April 1,
2009
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4.1
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Form
of Warrant
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4.2
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Registration
Rights Agreement
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Employment
Agreement between Sparking Events, Inc. and Yao-Ting Su dated
April 23, 2009.
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Employment
Agreement between Sparking Events, Inc. and Chao-Wu Chou dated April
23, 2009.
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10.3
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Employment
Agreement between Sparking Events, Inc. and Hui-Yu Che
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Securities
Exchange Agreement between APlus International, Ltd. and. Xodtec
Technology Co., Ltd. dated April 1, 2009
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Securities
Exchange Agreement between APlus International, Ltd. and Targetek
Technology Co., Ltd. dated April 1, 2009
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Securities
Exchange Agreement between APlus International, Ltd. and UP Technology
Co., Ltd. dated April 1, 2009
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Agent
Sales Contract between UP-Technology Co., Ltd. and Anteya Technology
Corporation
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Service
Agreement between Targetek Co., Ltd. and Welocalize Inc. dated October 20,
2007
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Engagement Agreement
between APlus International, Ltd. and Dragonfly Capital LLC dated
April 8, 2009
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Financial
Advisory Agreement between Sparking Events, Inc. and Unise Investment
Corp. dated April 22, 2009
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Consent
from Brock, Schechter & Polakoff, LLP
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Audited
financial statements of Xodtec Technology Co., Ltd. for the period ended
December 31, 2008.
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Audited
financial statements of UP-Tech Technology Co., Ltd. for the period ended
December 31, 2008.
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Audited
financial statements of Targetek Technology Co., Ltd. for the period ended
December 31, 2008.
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Unaudited
Pro Forma Consolidated Financial
Statements
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In
accordance with the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
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SPARKING
EVENTS, INC.
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Date:
April 24, 2009
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/s/
Chao-Wu Chou
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By:
Chao-Wu Chou, Chief Executive
Officer
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