As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 2/15/08  Matinee Media Corp                10KSB      12/31/07    5:692K                                   Merrill Corp-MD/FA

Document/Exhibit                   Description                      Pages   Size 

 1: 10KSB       Annual and Transition Reports of Small Business     HTML    439K 
                          Issuers                                                
 2: EX-31.1     Certification per Sarbanes-Oxley Act (Section 302)  HTML     11K 
 3: EX-31.2     Certification per Sarbanes-Oxley Act (Section 302)  HTML     11K 
 4: EX-32.1     Certification per Sarbanes-Oxley Act (Section 906)  HTML     11K 
 5: EX-32.2     Certification per Sarbanes-Oxley Act (Section 906)  HTML     11K 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-KSB

 

x  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2007

 

o  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                     to                     

 

Commission File Number: 000-50004

 

Filtering Associates, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

 

 (Registrant’s Former Address and Telephone Number, if Changed Since Last Report)

 

Securities registered under Section 12(b) of the Act:

 

 

Securities registered under Section 12(g) of the Act:

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x  Yes    o  No

 

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B is not contained in this form, and no disclosure will be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. x

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  x    No  o

 

State issuer’s revenues for its most recent fiscal year. $0.

 

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of a specified date within the past 60 days. (See definition of affiliate in Rule 12b-2 of the Exchange Act.) As of February 14, 2008, approximately $20,238 based on the bid price of the Company’s common stock, which the Company believes is an accurate measure for calculating the aggregate market value.

 

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date. As of February 8, 2008, there were 2,873,000 shares of the issuer’s $.001 par value common stock issued and outstanding.

 

Documents incorporated by reference. There are no annual reports to security holders, proxy information statements, or any prospectus filed pursuant to Rule 424 of the Securities Act of 1933 incorporated herein by reference.

 

Transitional Small Business Disclosure format (check one):               o  Yes       x  No

 

 

PART I

 

Item 1. Description of Business.

 

Our Background.  We were incorporated in Nevada on July 10, 2001. We were originally formed to be a reseller of Internet content filtering and blocking software. In 2003, our management changed and we began marketing USB flash memory drives by means of our website. In 2005, we began researching potential acquisitions or other suitable business partners which will assist us in realizing our business objectives. In June 2005, we signed a term sheet pursuant to a proposed reverse merger with Hawaii Biotech, Inc. However, the proposed merger was terminated in October 2005, and we began looking for another merger or acquisition candidate. We are no longer operating the Internet content filtering business or the USB flash drive business.

 

Our Business.  On April 13, 2006, we executed a definitive agreement to merge with Matinee Media Corporation, a Texas corporation (“MMC”). MMC’s principal source of revenue will be from the purchase, development and resale of direct and indirect interests in the rights to construct FM radio broadcast facilities, or construction permits, granted by the Federal Communications Commission. The definitive merger agreement contemplates our merger with MMC, whereby we will be the surviving entity, shares of MMC will be converted to shares of our common stock, and we will change our name to Matinee Media Corporation. Other material terms of the agreement require MMC to have at the close funding with gross proceeds of not less than $6.0 million, shareholder approval by shareholders of both entities, and that we cancel 1,665,272 shares of our outstanding common stock held by certain of our officers and directors. After giving effect to the merger, our stockholders would own approximately 8% of the surviving entity.  On December 18, 2006, we executed the first amendment to the merger agreement. On May 31, 2007, we executed the second amendment to the merger agreement. On September 17, 2007, we executed the third amendment to the merger agreement.

 

Recent Developments.  We scheduled a stockholders meeting for February 8, 2008.  At such meeting, our stockholders approved the merger with MMC.  MMC held its respective shareholders meeting on February 8, 2008.  At such meeting, the MMC shareholders approved the merger with us.  As closing conditions were met, we consummated the merger with MMC on February 11, 2008.  We changed our name to Matinee Media Corporation.

 

Our Products.  We currently are not selling any products.

 

Our Website.  We own the domain www.filterdrive.com , and our website is currently down.

 

Our Target Markets and Marketing Strategy.  We are not currently marketing any products.

 

Our Competition.  If we do not complete the merger transaction discussed herein, we may look for another merger or acquisition target. We cannot guaranty that we will merge with MMC or any other third party, or enter into any similar transaction, or that in the event that we acquire another entity, this acquisition will increase the value of our common stock. The competition for locating potential merger or acquisition candidates is intense. We may not be able to compete successfully against current or future. Our competitors vary in size and in the scope and breadth of the services they can offer to potential merger or acquisition candidates. We encounter competition from a variety of companies.

 

Government Regulation.  We are subject to federal, state and local laws and regulations applied to businesses generally, such as payroll taxes on the state and federal levels. In general, our publications are not subject to particular regulatory requirements. We believe that we are in conformity with all applicable laws in all relevant jurisdictions. We may be prevented from operating if our activities are not in compliance and must take action to comply with any federal, state, or local regulation.

 

Our Intellectual Property.  We do not presently own any patents, trademarks, licenses, concessions or royalties. We cannot guaranty, however, that any patents will be issued for the product or that, if issued, the breadth or degree of protection of these patents will be adequate to protect our interests. In addition, we cannot guaranty that others will not independently develop substantially equivalent proprietary information or obtain access to our know-how. Further, we cannot guaranty that others will not be issued patents which may prevent the sale of our products or require licensing and the payment of significant fees or royalties by us in order for us to be able to carry on our business. Finally, we cannot guaranty that the products of others will not infringe any patents issued to or licensed by us. Defense and prosecution of patent claims can be expensive and time consuming, even in those instances in which the outcome is favorable to us. If the outcome is adverse, it could subject us to significant liabilities to third parties, require us to obtain licenses from third parties or require us to cease our marketing activities.

 

We own the Internet domain name www.filterdrive.com. Under current domain name registration practices, no one else can obtain an identical domain name, but someone might obtain a similar name, or the identical name with a different suffix, such as “.org”, or with a country designation. The regulation of domain names in the United States and in foreign countries is subject to change, and we could be unable to prevent third parties from acquiring domain names that infringe or otherwise decrease the value of our domain names.

 

1

 

Our Research and Development.  We are not currently conducting any research and development activities. We do not anticipate conducting such activities in the near future. If we generate significant revenues, we may expand our product line by entering into distribution relationships with third party manufacturers.

 

Employees.  As of December 31, 2007, we have no employees, other than our sole officer and director. We anticipate that we will not hire any employees in the next six months, unless we complete the merger with MMC.

 

Our Facilities.  Our executive, administrative and operating offices are approximately 300 square feet and are located at 1495 Belleau Road, Glendale, California 91206 . We believe that our current offices are sufficient to meet our current and future needs.

 

Risk Factors.  Investing in our common stock involves a high degree of risk. Any potential investor should carefully consider the risks and uncertainties described below before purchasing any shares of our common stock. The risks described below are those we currently believe may materially affect us.

 

Risks Related to our Business:

 

We have a limited operating history upon which an evaluation of our prospects can be made.

 

We were incorporated in July 2001 and have been unable to begin revenue producing operations. Our lack of operating history makes an evaluation of our business and prospects very difficult. Our prospects must be considered speculative, considering the risks, expenses, and difficulties frequently encountered in the establishment of a new business. We cannot be certain that our business will be successful or that we will generate significant revenues.

 

During the past year, our operations have been limited to attempting to close the proposed merger with MMC. If we are unable to conclude the transaction, then we may not be able to continue operations.

 

On April 13, 2006, we executed a definitive agreement to merge with MMC. Since that time, we have not conducted any operations other than attempting to complete the merger with MMC. We cannot assure you that the merger will be consummated. If we do not complete the merger with MMC, we may look for another merger or acquisition target. We cannot guaranty that we will merge with MMC or any other third party, or enter into any similar transaction, or that in the event that we acquire another entity, this acquisition will increase the value of our common stock.

 

We have incurred a net loss since inception and expect to incur net losses for the foreseeable future.

 

As of December 31, 2007, our net losses since inception were approximately $524,858.  We have not generated any revenues to date.  We expect to incur significant operating and capital expenditures and, as a result, we expect significant net losses in the future.  We will need to generate significant revenues to achieve and maintain profitability.  We may not be able to generate sufficient revenues to achieve profitable operations.

 

Our future success is highly dependent on the ability of management to locate and attract a suitable acquisition.

 

The nature of our operations is highly speculative and there is a consequent risk of loss of your investment. The success of our plan of operation will depend to a great extent on the operations, financial condition and management of the MMC. We cannot assure you that we will be successful in completing the merger with MMC. In the event we complete the merger with MMC, the success of our operations may be dependent upon management of MMC and numerous other factors beyond our control.

 

We anticipate that we will need to raise additional capital to continue operations. Our failure to raise additional capital will significantly affect our ability to continue operations.

 

To conclude an acquisition of the type described herein and to continue operations until that time, we will be required to raise additional funds. We do not know if we will be able to acquire additional financing. Our failure to obtain additional funds would significantly limit or eliminate our ability to continue current activities.

 

We depend on the efforts and abilities of our officer and director to close the merger with MMC and manage our operations.

 

We do not have an employment agreement with our sole officer and director. Our ability to close the merger with MMC will depend on the continued services of David Choi, our sole officer and director. The loss of services provided by David Choi would be particularly detrimental to us because, among other things, he is our sole officer and director.

 

2

 

statements indicating the market value of each penny stock held in the customer’s account. In addition, the penny stock rules require that, prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for a stock that becomes subject to the penny stock rules. If our common stock becomes subject to the penny stock rules, holders of our shares may have difficulty selling those shares.

 

Item 2. Description of Property.

 

Property held by us. As of the date specified in the following table, we held the following property:

 

Property		December 31, 2006			December 31, 2007
Cash and cash equivalents		$	2,853		$	0

 

Our Facilities.  Our executive, administrative and operating offices are approximately 300 square feet and are located at 1495 Belleau Road, Glendale, California 91206. We believe that our current offices are sufficient to meet our current and future needs.

 

Item 3. Legal Proceedings.

 

There are no legal actions pending against us nor are any legal actions contemplated by us at this time.

 

Item 4. Submission of Matters to Vote of Security Holders.

 

Not applicable.

 

PART II

 

Item 5. Market Price for Common Equity and Related Stockholder Matters.

 

Market Information.  In April 2004, our common stock became eligible for quotation on the Over-the-Counter Bulletin Board under the symbol “FLTG”. As of March 28, 2007, no shares of our common stock have traded.

 

Reports to Security Holders.  We are a reporting company with the Securities and Exchange Commission, or SEC. The public may read and copy any materials filed with the SEC at the SEC’s Public Reference Room at 450 Fifth Street N.W., Washington, D.C. 20549. The public may also obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of that site is http://www.sec.gov.

 

We are authorized to issue 50,000,000 shares of $.001 par value common stock and 5,000,000 shares of $.001 par value preferred stock. We have 2,873,000 shares of our common stock issued and outstanding as of December 31, 2007.

 

The approximate number of holders of record of shares of our common stock is 17. There are no outstanding options or warrants to purchase, or securities convertible into, shares of our common stock. As of December 31, 2007, there were 67,460 shares that could be sold pursuant to Rule 144 promulgated pursuant to the Securities Act of 1933.

 

Rule 144 provides, among other things, that persons holding restricted securities for a period of one year may each sell, assuming all of the conditions of Rule 144 are satisfied, in brokerage transactions every three months an amount of restricted securities equal to one percent of our outstanding shares of common stock, or the average weekly reported volume of trading during the four calendar weeks preceding the filing of a notice of proposed sale, which ever is more. Rule 144 also provides that, after holding such securities for a period of two years, a nonaffiliate of the company may sell those securities without restriction, other than the requirement that we are current with respect to our information reporting requirements. There are no outstanding options or warrants to purchase, or securities convertible into, shares of our common stock.

 

Dividends.  There have been no cash dividends declared on our common stock. Dividends are declared at the sole discretion of our Board of Directors.  Each shareholder of our common stock is entitled to a pro rata share of cash distributions made to shareholders, including dividend payments. The holders of our common stock are entitled to one vote for each share of record on all matters to be voted on by shareholders. There is no cumulative voting with respect to the election of our directors or any other matter. Therefore, the holders of more than 50% of the shares voted for the election of those directors can elect all of the directors. The holders of our common stock are entitled to receive dividends when, as and if declared by our Board of Directors from funds legally available therefore. Cash dividends are at the sole discretion of our Board of Directors. In the event of our liquidation, dissolution or winding up, the holders of common stock are entitled to share ratably in all assets remaining available for distribution to them after payment of our liabilities and after provision has been made for each class of stock, if any, having any preference in relation to our common stock. Holders of shares of our common stock have no conversion, preemptive or other

 

4

 

subscription rights, and there are no redemption provisions applicable to our common stock.

 

Equity Compensation Plans.  We have no securities authorized for issuance under any equity compensation plans.

 

Recent Sales of Unregistered Securities.  We did not sell any equity securities within the last three (3) years that were not registered under the Securities Act.

 

Use of Proceeds of Registered Securities.  There were no sales or proceeds during the calendar year ended December 31, 2007, for the sale of registered securities.

 

Penny Stock Regulation.  Shares of our common stock are subject to rules adopted by the Securities and Exchange Commission that regulate broker-dealer practices in connection with transactions in “penny stocks”. Penny stocks are generally equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the Nasdaq system, provided that current price and volume information with respect to transactions in those securities is provided by the exchange or system).  The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, deliver a standardized risk disclosure document prepared by the Securities and Exchange Commission, which contains the following:

 

	·		a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading;
	·		a description of the broker’s or dealer’s duties to the customer and of the rights and remedies available to the customer with respect to violation to such duties or other requirements of securities’ laws;
	·		a brief, clear, narrative description of a dealer market, including “bid” and “ask” prices for penny stocks and the significance of the spread between the “bid” and “ask” price;
	·		a toll-free telephone number for inquiries on disciplinary actions;
	·		definitions of significant terms in the disclosure document or in the conduct of trading in penny stocks; and
	·		such other information and is in such form (including language, type, size and format), as the Securities and Exchange Commission shall require by rule or regulation.

 

Prior to effecting any transaction in penny stock, the broker-dealer also must provide the customer the following:

 

	·		the bid and offer quotations for the penny stock;
	·		the compensation of the broker-dealer and its salesperson in the transaction;
	·		the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and
	·		monthly account statements showing the market value of each penny stock held in the customer’s account.

 

In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitably statement. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for a stock that becomes subject to the penny stock rules. Holders of shares of our common stock may have difficulty selling those shares because our common stock will probably be subject to the penny stock rules.

 

Item 6. Management’s Discussion and Analysis of Financial Condition or Plan of Operation.

 

This following information specifies certain forward-looking statements of management of the company. Forward-looking statements are statements that estimate the happening of future events and are not based on historical fact. Forward-looking statements may be identified by the use of forward-looking terminology, such as “may”, “shall”, “could”, “expect”, “estimate”, “anticipate”, “predict”, “probable”, “possible”, “should”, “continue”, or similar terms, variations of those terms or the negative of those terms. The forward-looking statements specified in the following information have been compiled by our management on the basis of assumptions made by management and considered by management to be reasonable. Our future operating results, however, are impossible to predict and no representation, guaranty, or warranty is to be inferred from those forward-looking statements.

 

The assumptions used for purposes of the forward-looking statements specified in the following information represent estimates of future events and are subject to uncertainty as to possible changes in economic, legislative, industry, and other circumstances. As a result, the identification and interpretation of data and other information and their use in developing and selecting assumptions from and among reasonable alternatives require the exercise of judgment. To the extent that the assumed events do not occur, the outcome may vary substantially from anticipated or projected results, and, accordingly, no opinion is expressed on the achievability of those forward-looking statements. We cannot guaranty that any of the assumptions relating to the forward-looking statements specified in the following information are accurate, and we assume no obligation to update any such forward-looking statements.

 

5

 

Critical Accounting Policy and Estimates.  Our Management’s Discussion and Analysis of Financial Condition and Results of Operations section discusses our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America.  The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgments, including those related to revenue recognition, accrued expenses, financing operations, and contingencies and litigation.  Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.  The most significant accounting estimates inherent in the preparation of our financial statements include estimates as to the appropriate carrying value of certain assets and liabilities which are not readily apparent from other sources.  These accounting policies are described at relevant sections in this discussion and analysis and in the notes to the financial statements included in our Annual Report on Form 10-KSB for the fiscal year ended December 31, 2007.

 

During the past year, our business strategy has been to complete the merger with Matinee Media Corporation, a Texas corporation (“MMC”).  On April 13, 2006, we executed a definitive agreement to merge with MMC. MMC’s principal source of revenue will be from the purchase, development and resale of direct and indirect interests in the rights to construct FM radio broadcast facilities, or construction permits, granted by the Federal Communications Commission. The definitive merger agreement contemplates our merger with MMC, whereby we will be the surviving entity, shares of MMC will be converted to shares of our common stock, and we will change our name to Matinee Media Corporation.  Other material terms of the agreement require MMC to have closed funding with gross proceeds of not less than $6.0 million, shareholder approval by shareholders of both entities, and that we cancel 1,665,272 shares of our outstanding common stock held by certain of our former officers and directors. After giving effect to the merger, our stockholders would own approximately 8% of the surviving entity.

 

On December 18, 2006, we executed the first amendment to the definitive merger agreement with MMC. The terms of the amendment account for the proposed merger of MMC with US Farm and Ranch Supply Company, Inc. (d/b/a USFR Media Group), which was expected to close prior to the merger between us and MMC. The amendment also provided that the merger with MMC would close on or before June 1, 2007. As of March 28, 2007, USFR had terminated its merger negotiations with MMMC. On May 31, 2007, we executed the second amendment to the definitive merger agreement with MMC.  The second amendment provided, among other things, that the merger with MMC would close on or before September 30, 2007.  On September 17, 2007, we executed the third amendment to the definitive merger agreement with MMC.  The third amendment provided that the merger with MMC would close on or before February 29, 2008.

 

We scheduled a stockholders meeting for February 8, 2008.  At such meeting, our stockholders approved the merger with MMC.  MMC held its respective shareholders meeting on February 8, 2008.  At such meeting, the MMC shareholders approved the merger with us.  As closing conditions were met, we consummated the merger with MMC on February 11, 2008.  We changed our name to Matinee Media Corporation.

 

For the Years Ended December 31, 2007 and 2006:

 

Results of Operations.

 

Revenue.  For the years ended December 31, 2007 and 2006, and from our inception on July 10, 2001 through December 31, 2006, we have realized no revenues. We do not anticipate that we will generate any revenues as our business objective is to complete the merger with MMC.

 

Operating Expenses.  For the year ended December 31, 2007, our total operating expenses were $91,930.  This amount was represented by $55,967 in legal and accounting expenses, $27,500 in compensation expense, $1,994 in consulting expense and $5,401 in general and administrative expenses. This is in comparison to our operating expenses of $115,967 for the year ended December 31, 2006, which was represented by $74,107 in legal and accounting expenses, $32,000 in compensation expense, $4,380 in consulting expenses and $5,480 in general and administrative expenses.  We anticipate that we will continue to incur significant general and administrative expenses related to our proposed merger with MMC. Our net loss for the period from our inception on July 10, 2001 through December 31, 2007 was $534,790.

 

Liquidity and Capital Resources. Our total current assets were $) as of December 31, 2007.  We believe that our available cash is not sufficient to pay our day-to-day expenditures and we will have to rely on advances and contributions from our principal shareholder to continue operating.  During the first two months of 2008, our principal shareholder has loaned us $2,377 to pay certain expenses. The loans are interest free and due on demand.

 

Our current liabilities were $213,193 as of December 31, 2007, of which $134,343 was represented by accounts payable, $1,600 in income taxes payable, and $77,250 due to certain former officers and certain current shareholders. We had no other liabilities and no long term commitments or contingencies as of December 31, 2007.

 

Our Plan of Operation for the Next Twelve Months. Our plan of operation for the next twelve months is to complete the proposed merger with MMC. MMC was incorporated in the State of Texas on October 12, 2005. MMC’s principal source of revenue is expected to be from the purchase, development and resale of direct and indirect interest in the rights to construct FM radio broadcast facilities, or construction permits, granted by the Federal Communications Commission.

 

6

 

We have no cash as of December 31, 2007. In the opinion of management, available funds will not satisfy our working capital requirements for the next twelve months and we will have to rely on contributions and advances from our principal shareholder to continue operating.  We believe that our principal shareholder will assist us in continuing to operate because he owns a significant percentage of our stock.  Assuming we do not complete the transaction with MMC, we believe that our monthly costs will remain consistent over the next twelve months because we do not intend to hire any more employees over the next twelve months.  Other than anticipated monthly costs and the costs of our proposed merger with MMC, we are not aware of any other known trends, events or uncertainties, which may affect our future liquidity.

 

Our forecast for the period for which our financial resources will be adequate to support our operations involves risks and uncertainties and actual results could fail as a result of a number of factors. We will need to raise additional capital to continue our operations. We intend to pursue capital through public or private financing as well as borrowings and other sources, such as our principal shareholder. We cannot guaranty that additional funding will be available on favorable terms, if at all. If adequate funds are not available, then our ability to expand our operations may be significantly hindered. If adequate funds are not available, we believe that our principal shareholder will contribute funds to pay for our expenses to achieve our objectives over the next twelve months. However, our principal shareholder is not committed to contribute funds to pay for our expenses.

 

We are not currently conducting any research and development activities. We do not anticipate conducting such activities in the near future.

 

We do not anticipate that we will purchase or sell any significant equipment. We will not hire additional employees or independent contractors other than professionals related to our proposed merger with MMC.

 

Because we have limited operations and assets, we may be considered a shell company as defined in Rule 12b-2 of the Securities Exchange Act of 1934. Accordingly, we have checked the box on the cover page of this report that specifies we are a shell company.

 

Off-Balance Sheet Arrangements. There are no off balance sheet arrangements.

 

Item 7. Financial Statements

 

The financial statements required by Item 7 are presented in the following order:

 

FILTERING ASSOCIATES, INC.

(A Development Stage Company)

TABLE OF CONTENTS

 

Financial Statements and Notes
Report of Independent Registered Public Accounting Firm	F-1
Balance Sheet as of December 31, 2007	F-2
Statements of Operations for the years ended December 31, 2007 and 2006, and the periods July 10, 2001 (inception) through December 31, 2007	F-3
Statement of Stockholders’ Equity (Deficit) for the period July 10, 2001 (inception) through December 31, 2007	F-4
Statements of Cash Flows for the years ended December 31, 2007 and 2006, and the periods July 10, 2001 (inception) through December 31, 2007	F-5
Notes to Financial Statements	F-7

 

7

 

FILTERING ASSOCIATES, INC.

(A Development Stage Company)

STATEMENTS OF CASH FLOWS

 

								Period July
								10, 2001
								(Inception)
		Years Ended						Through
		December 31,						December 31,
		2007			2006			2007
Cash flows from operating activities
Net loss		$	(91,930	)	$	(116,767	)	$	(524,858	)
Adjustments to reconcile net loss to net cash used in operating activities:
Donated rent by officer		4,200			4,200			27,183
Accrued compensation to officer		19,500			—			19,500
Compensation provided in exchange for additional paid-in capital		8,000			32,000			166,670
Depreciation expense		—			688			15,678
Increase (decrease) in liabilities
Increase in accounts payable		41,977			59,722			134,343
Increase in income tax payable		—			800			1,600
Increase in due to related parties		—			—			1,060
Net cash used in operating activities		(18,253		)	(19,357		)	(158,824		)
Cash flows from investing activities
Purchase of computer equipment		—			—			(15,678		)
Net cash used in investing activities		—			—			(15,678		)
Cash flows from financing activities
Proceeds from related party advances		15,400			21,510			56,690
Proceeds from issuance of common stock		—			—			117,650
Issuance costs		—			—			(14,928		)
Additional paid-in capital contributed by stockholder		—			—			15,090
Net cash provided by financing activities		15,400			21,510			174,502
Net increase (decrease) in cash and cash equivalents		(2,853		)	2,153			—
Cash and cash equivalents, beginning of period		2,853			700			—
Cash and cash equivalents, end of period		$	—		$	2,853		$	—

 

The accompanying notes are an integral part of these financial statements.

 

F-5

 

FILTERING ASSOCIATES, INC.

(A Development Stage Company)

 

NOTES TO FINANCIAL STATEMENTS

 

DECEMBER 31, 2007

 

NOTE 1 – COMPANY OPERATIONS

 

Filtering Associates, Inc. (the “Company”) was incorporated in the state of Nevada on July 10, 2001.  The Company is currently a development stage company under the provisions of the Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards (“SFAS”) No. 7.  The Company is in the process of developing a marketing plan to initiate the distribution of computer peripheral devices.  The Company currently has not generated any revenues from its distribution operations.

 

Going Concern – The Company has experienced net losses since its inception and had an accumulated deficit of $524,858 at December 31, 2007.  Such losses are attributable to cash and non-cash losses resulting from costs incurred in the development of the Company’s services and infrastructure.

 

As discussed in Note 6, the Company merged with Matinee Media Corporation in February 2008, pursuant to the terms of the Agreement and Plan of Merger which was executed on April 13, 2006.

 

The accompanying financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

Reclassification – Certain reclassifications have been made to conform prior period financial statement amounts to the current period presentation for comparative purposes.

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Cash and Cash Equivalents – For purposes of the balance sheets and statements of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three (3) months or less to be cash equivalents.

 

Accounting Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

 

Property and Equipment – Property and equipment are stated at cost.  Depreciation is computed using the straight-line method over the estimated useful lives of the assets which are three years for computer equipment.  Repairs and maintenance to property and equipment are expensed as incurred.  When property and equipment is retired or disposed of, the related costs and accumulated depreciation are eliminated from the accounts and any gain or loss on such disposition is reflected in income.

 

F-7

 

Long-Lived Assets – The Company accounts for its long-lived assets in accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.”  SFAS No. 144 requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the historical cost carrying value of an asset may no longer be appropriate.  The Company assesses recoverability of the carrying value of an asset by estimating the future net cash flows expected to result from the asset, including eventual disposition.  If the future net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset’s carrying value and the fair value or disposable value.  As of December 31, 2007, the Company does not believe there has been any impairment of its long-lived assets.

 

Income Taxes – The Company accounts for income taxes in accordance with the provisions of Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes” (SFAS 109), which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and the tax basis of assets and liabilities using enacted rates in effect for the periods in which the differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.  Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

 

Fair Value of Financial Instruments – SFAS No. 107, “Disclosure about Fair Value of Financial Instruments” requires entities to disclose the fair value of financial instruments, both assets and liabilities recognized and not recognized on the balance sheet, for which it is practicable to estimate fair value.  SFAS No. 107 defines fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties.  As of December 31, 2007, the carrying value of cash and cash equivalents approximated fair value due to the short-term nature of such instruments.

 

Loss Per Share of Common Stock – The Company follows Statement of Financial Accounting Standards No. 128, “Earnings Per Share” (SFAS No. 128) that requires the reporting of both basic and diluted earnings (loss) per share.  Basic earnings (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares  outstanding for the period.  The calculation of diluted earnings (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. In accordance with SFAS No. 128, any anti-dilutive effects on net earnings (loss) per share are excluded.  For the years ended December 31, 2007 and 2006, there were no common stock equivalents.

 

Issuances Involving Non-Cash Consideration – All issuances of the Company’s stock for non-cash consideration have been assigned a dollar amount equaling either the market value of the shares issued or the value of consideration received whichever is more readily determinable.  The majority of the non-cash consideration received pertains to services rendered by officers and have been valued at the estimated value of the services rendered.

 

Recent Accounting Pronouncements

 

SFAS No. 157 - In September 2006, the FASB issued Statement 157, Fair Value Measurements. This Statement defines fair value, establishes a framework for measuring fair value in generally

 

F-8

 

accepted accounting principles (GAAP), and expands disclosures about fair value measurements. This Statement applies under other accounting pronouncements that require or permit fair value measurements, the Board having previously concluded in those accounting pronouncements that fair value is the relevant measurement attribute. Accordingly, this Statement does not require any new fair value measurements. However, for some entities, the application of this Statement will change current practice. This Statement is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. Earlier application is encouraged, provided that the reporting entity has not yet issued financial statements for that fiscal year, including financial statements for an interim period within that fiscal year. The Company has evaluated the impact of the adoption of SFAS 157, and does not believe the impact will be significant to the Company’s overall results of operations or financial position.

 

SFAS No. 158 - In September 2006, the FASB issued Statement No. 158 Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans—an amendment of FASB Statements No. 87, 88, 106, and 132(R). This Statement improves financial reporting by requiring an employer to recognize the overfunded or underfunded status of a defined benefit postretirement plan (other than a multiemployer plan) as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur through comprehensive income of a business entity or changes in unrestricted net assets of a not-for-profit organization. This Statement also improves financial reporting by requiring an employer to measure the funded status of a plan as of the date of its year-end statement of financial position, with limited exceptions. An employer with publicly traded equity securities is required to initially recognize the funded status of a defined benefit postretirement plan and to provide the required disclosures as of the end of the fiscal year ending after December 15, 2006. An employer without publicly traded equity securities is required to recognize the funded status of a defined benefit postretirement plan and to provide the required disclosures as of the end of the fiscal year ending after June 15, 2007. The Company has evaluated the impact of the adoption of SFAS 158, and does not believe the impact will be significant to the Company’s overall results of operations or financial position.

 

SAB No. 108 - In September 2006, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 108 (SAB No. 108), “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements.” The guidance in SAB No. 108 requires Companies to base their materiality evaluations on all relevant quantitative and qualitative factors. This involves quantifying the impact of correcting all misstatements, including both the carryover and reversing effects of prior year misstatements, on the current year financial statements. The Company has adopted this standard.

 

SFAS No. 159 - In February 2007, the FASB issued Statement No. 159, The Fair Value Option for Financial Assets and Financial Liabilities—Including an amendment of FASB Statement No. 115. This Statement permits entities to choose to measure many financial instruments and certain other items at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. This Statement is expected to expand the use of fair value measurement, which is consistent with the Board’s long-term measurement objectives for accounting for financial instruments. This Statement applies to all entities, including not-for-profit organizations. Most of the provisions of this Statement apply only to entities that elect the fair value option.

 

F-9

 

However, the amendment to FASB Statement No. 115, Accounting for Certain Investments in Debt and Equity Securities, applies to all entities with available-for-sale and trading securities. Some requirements apply differently to entities that do not report net income. This Statement is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. Early adoption is permitted as of the beginning of a fiscal year that begins on or before November 15, 2007, provided the entity also elects to apply the provisions of FASB Statement No. 157, Fair Value Measurements. No entity is permitted to apply this Statement retrospectively to fiscal years preceding the effective date unless the entity chooses early adoption. The choice to adopt early should be made after issuance of this Statement but within 120 days of the beginning of the fiscal year of adoption, provided the entity has not yet issued financial statements, including required notes to those financial statements, for any interim period of the fiscal year of adoption. This Statement permits application to eligible items existing at the effective date (or early adoption date). The Company has evaluated the impact of the implementation of SFAS No. 159 and does not believe the impact will be significant to the Company’s overall results of operations or financial position.

 

NOTE 3 – PROPERTY AND EQUIPMENT

 

Property and equipment consist of the following at December 31, 2006:

 

Computer equipment		$	15,678
Less: accumulated depreciation		(15,678		)
		$	—

 

NOTE 4 – INCOME TAXES

 

The Company accounts for income taxes under Statement of Financial Accounting Standards No. 109 (SFAS 109).  This statement mandates the liability method of accounting for deferred income taxes and permits the recognition of deferred tax assets subject to an ongoing assessment of realizability.

 

The components of the Company’s income tax provision for the years ended December 31, 2007 and 2006 and the period from July 10, 2001 (inception) through December 31, 2007 consist of:

 

								Period
								July 10, 2001
								(Inception)
		Years Ended December 31,						Through
								December 31,
		2007			2006			2007
Current income tax expense		$	—		$	—		$	—
Deferred income tax benefit from capitalization of start-up costs for tax purposes		(31,900		)	(43,400		)	(143,900		)
Change in valuation allowance		31,900			43,400			143,900
		$	—		$	—		$	—

 

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Item 8. Changes in and Disagreements with Accountants.

 

There have been no changes in or disagreements with our accountants since our formation required to be disclosed pursuant to Item 304 of Regulation S-B, except that on March 30, 2005, we changed auditors as reported on our Form 8-K filed on April 5, 2005.

 

Item 8A. Controls and Procedures.

 

	(a)	Evaluation of Disclosure Controls and Procedures. In September 2006, we carried out an evaluation under the supervision and with the participation of our former management of the effectiveness of our disclosure controls and procedures. Based upon that evaluation, our former management concluded that as of September 30, 2006, our disclosure controls and procedures, subject to the various limitations on effectiveness set forth below under the heading, “LIMITATIONS ON THE EFFECTIVENESS OF INTERNAL CONTROLS,” were not effective in ensuring that (i) information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and (ii) information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our former management, as appropriate to allow timely decisions regarding required disclosure.  The deficiencies in disclosure controls and procedures relate to the deficiencies in our internal control over financial reporting noted below.   Our new management carried out an evaluation of the effectiveness of our disclosure controls and procedures. Based upon our new management’s evaluation of those controls and procedures performed as of December 31, 2007, the date of this report, our chief executive officer and the principal financial officer concluded that our disclosure controls and procedures were effective.
	(b)	Changes in internal control over financial reporting. We are currently a small company with limited staff and financing. During the six months ended June 30, 2006, we inadvertently omitted the amounts owed for legal services during the subject period because the bills were not sent to the correct address. We have taken steps to correct this omission in this and future reports. Specifically, in December 2006, we appointed David Choi as our sole officer. Mr. Choi has significant experience in business and financial matters. We believe that this will enable us to have our quarterly reports prepared accurately going forward.

 

LIMITATIONS ON THE EFFECTIVENESS OF INTERNAL CONTROLS.

 

Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting necessarily prevent all fraud and material error. An internal control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within us have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.

 

PART III

 

Item 9. Directors, Executive Officers, Promoters and Control Persons and Corporate Governance; Compliance with Section 16(a) of the Exchange Act.

 

Executive Officers and Directors.     Our officers and directors are elected by the stockholders for a term of one year and serves until his or her successor is elected and qualified. Our officers and directors are elected by the board of directors for a term of one year and serves until his or her successor is duly elected and qualified, or until he or she is removed from office. The board of directors has no nominating, audit or compensation committee.

 

The following table sets forth information regarding our executive officer and directors.

 

Name		Age		Position
David Y. Choi		41		President, Secretary, Treasurer, Director

 

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David Y. Choi.  Dr. Choi was appointed as our sole officer and director in December 2006. Dr. Choi has served as an assistant professor at Loyola Marymount University in Los Angeles, California, since 2003. Prior to that, and from 2001 to 2003, he served as Director of Strategy for Titan Corporation, and from 2000 to 2001, as a manager at Diamond Cluster International. In 1999, Dr. Choi was a fellow at the Harvard Business School.  Dr. Choi holds a bachelor’s degree and a master’s degree in Industrial Engineering earned in 1989 and 1990, respectively, both from the University of California at Berkeley, and doctorate in management from University of California at Los Angeles, earned in 1997. Dr. Choi is not an officer or director of any other reporting company.

 

There are no orders, judgments, or decrees of any governmental agency or administrator, or of any court of competent jurisdiction, revoking or suspending for cause any license, permit or other authority to engage in the securities business or in the sale of a particular security or temporarily or permanently restraining any of our officers or directors from engaging in or continuing any conduct, practice or employment in connection with the purchase or sale of securities, or convicting such person of any felony or misdemeanor involving a security, or any aspect of the securities business or of theft or of any felony. Nor are any of the officers or directors of any corporation or entity affiliated with us so enjoined.

 

Section 16(a) Beneficial Ownership Reporting Compliance . We believe that our officers, directors, and principal shareholders have filed all reports required to be filed on, respectively, a Form 3 ( Initial Statement of Beneficial Ownership of Securities ), a Form 4 ( Statement of Changes of Beneficial Ownership of Securities ), or a Form 5 ( Annual Statement of Beneficial Ownership of Securities ).

 

Code of Ethics. We have not adopted a code of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. We will prepare and adopt a code of ethics after we close the merger with MMC.

 

Nominating Committee. We have not adopted any procedures by which security holders may recommend nominees to our Board of Directors.

 

Audit Committee and Financial Expert. Because our board of directors currently consists of only one member and we do not have the resources to expand our management at this time, we do not have an audit committee, nor do we have a financial expert on our board of directors as that term is defined by Item 401(e)2.

 

Item 10. Executive Compensation

 

Any compensation received by our officers, directors, and management personnel will be determined from time to time by our board of directors.  Our sole officer and director will be reimbursed for any out-of-pocket expenses incurred on our behalf.

 

Summary Compensation Table. The table set forth below summarizes the annual and long-term compensation for services in all capacities to us payable to our principal executive officer and our only other executive officer during the years ending December 31, 2007 and 2006.

 

Name and Principal Position

Year Ended

Salary $

Bonus $

Stock Awards $

Option Awards $

Non-Equity Incentive Plan Compensation $

Nonqualified Deferred Compensation Earnings $

All Other Compensation $

Total $

David Choi, president, secretary, treasurer

2007

None

None

None

None

None

None

None

None

Kevin Frost, president*

2006

None

None

None

None

None

None

None

None

Edward Wiggins, treasurer, acting secretary*

2006

None

None

None

None

None

None

None

None

 

   *resigned all offices in December 2006.

 

Employment Contracts.  We do not have any employment agreements.

 

Outstanding Equity Awards at Fiscal Year-end.  As of the year ended December 31, 2007, our named executive officers had no unexercised options, stock that has not vested or equity incentive plan awards.

 

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No Equity Compensation Plans.  As of the year ended December 31, 2007, we had no securities authorized for issuance under any equity compensation plans.

 

Stock Options/SAR Grants . No grants of stock options or stock appreciation rights were made since our date of incorporation on July 10, 2001.

 

Long-Term   Incentive Plans . There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. We do not have any material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers.

 

Director Compensation.  Our directors received no compensation for their service as directors during the fiscal year ended December 31, 2007.

 

Item 11. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

 

The following table sets forth certain information regarding the beneficial ownership of our common stock as of December 31, 2007, by each person or entity known by us to be the beneficial owner of more than 5% of the outstanding shares of common stock, each of our directors and named executive officers, and all of our directors and executive officers as a group.

 

		Shares Beneficially Owned Prior to Offering
Name and Address		Number of Shares		Percent of Class
Directors, Executive Officers and 5% Holders:
David Choi President, CEO, Chief Financial Officer, Secretary and Director 1495 Belleau Road Glendale, CA 91206		8,000		*
Kevin Frost 101 W. Avenida Gaviota, Suite A San Clemente, CA 92672		1,128,000	(1)	39.3	%
Edward Wiggins 101 W. Avenida Gaviota, Suite A San Clemente, CA 92672		435,000	(1)	15.1	%
Alpine Opportunity Fund Limited c/o Walkers (BVI) Walkers Chambers, POB, 92 Road Town, Tortuga, British Virgin Islands		425,000	(1)	14.8	%
Peter G. Geddes P.O. Box 5303 Beverly Hills, CA 90212		335,000	(1)	11.7	%
All directors and executive officers, as a group (1 person)		8,000		*

 

*                                         Represents beneficial ownership of less than 1%.

 

Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. In accordance with Securities and Exchange

 

Commission rules, shares of our common stock which may be acquired upon exercise of stock options or warrants which are currently exercisable or which become exercisable within 60 days of the date of the table are deemed beneficially owned by the optionees.  Subject to community property laws, where applicable, the persons or entities named in the table above have sole voting and investment power with respect to all shares of our common stock indicated as beneficially owned by them.

 

Changes in Control.  Our   management is not aware of any arrangements which may result in “changes in control” as that term is defined by the provisions of Item 403(c) of Regulation S-B, other than the merger with MMC.

 

Item 12. Certain Relationships and Related Transactions, and Director Independence.

 

Related party transactions.  During the years ended December 31, 2007 and 2006, we have utilized office space provided by Mr. Frost, formerly our president, director and currently also a stockholder, and Mr. Choi, our president and director. Mr. Frost and Mr. Choi have each

 

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