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Securities
registered under Section 12(b) of the Exchange Act:
Title
of each class
Name
of each exchange on which registered
None
Not Applicable
Securities
registered under Section 12(g) of the Exchange Act:
Common Stock, par
value $0.001
(Title
of class)
Check
whether the Issuer (1) filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act during the past 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. Yes [
] No [ X ]
Check if
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 [ ]
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes
[ ] No [X]
State
issuer’s revenue for its most recent fiscal year. $5,850
State the
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the average bid and asked price of such
common equity, as of a specified date within the past 60
days. $1,603,775 as of September 9, 2008
State the
number of shares outstanding of each of the issuer’s classes of common equity,
as of the latest practicable date. 5,345,917 Common Shares as
of September 9, 2008.
Transitional
Small Business Disclosure Format (Check One): Yes: __; No X
We were
incorporated as a Delaware corporation on May 10, 1998 under the name
Environmental Monitoring and Testing Corporation. Since our
incorporation, we provided electronic filing services to companies that are
required to electronically file disclosure information with the Securities and
Exchange Commission "SEC."
The
Company filed a Form 8-K with the Securities and Exchange Commission and changed
its name to Netchoice, Inc., effective February 3, 2005.
Subsequent
to the reporting period, the Company filed a Form 8-K with the Securities and
Exchange Commission and changed its name to Xstream Mobile Solutions Corp.
effective December 19, 2005.
We do not
own any interest in a patent, trademark, license, franchise, concession, or
royalty agreement.
Employees
We
currently have three full-time administrative employees. Our
employees are not represented by labor unions or collective bargaining
agreements. Our key employees are Mr. Michael See, founder, Chief Executive
Officer, Chief Financial Officer and Chairman of the Board of Directors, Mr.
Joseph F. Johns, III, Director and President, and Mrs. Cynthia See,
Director and Secretary.
Government
Regulation
We are
not aware of any existing or probable governmental regulation that will have a
material impact on our company.
3
We are
not subject to any compliance with environmental laws.
Research
and Development
We did
not incur any research or development expenditures during the fiscal years ended
September 30, 2006 or 2005.
Compliance
with Environmental Laws
We did
not incur any costs in connection with the compliance with any federal, state,
or local environmental laws.
We are
not a party to any pending legal proceeding. We are not aware of any
pending legal proceeding to which any of our officers, directors, or any
beneficial holders of 5% or more of our voting securities are adverse to us or
have a material interest adverse to us.
Our agent
for service of process in Delaware is The Corporation Trust
Company.
Item 4: Submission of Matters to a
Vote of Security Holders
No
matters have been submitted to our security holders for a vote, through the
solicitation of proxies or otherwise, during the fourth quarter of the fiscal
year ended September 30, 2006.
PART II
Item 5: Market for Common Equity
and Related Stockholder Matters
Market
Information
Our
common stock is currently quoted on the Pink Sheets, which is sponsored by the
National Association of Securities Dealers (“NASD”). The Pink Sheets
is a network of security dealers who buy and sell stock. The dealers
are connected by a computer network that provides information on current "bids"
and "asks", as well as volume information. Our shares are quoted on
the Pink Sheets under the symbol “XMSC.PK”
The
following table sets forth the range of high and low bid quotations for our
Common Stock for each of the periods indicated as reported by the NASD Pink
Sheets. These quotations reflect inter-dealer prices, without retail
mark-up, mark-down or commission and may not represent actual
transactions.
The
Securities Exchange Commission has adopted rules 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 such 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 Commission, which: (a) contains a
description of the nature and level of risk in the market for penny stocks in
both public offerings and secondary trading; (b) contains 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 a violation to such duties or other
requirements of Securities' laws; (c) contains a brief, clear, narrative
description of a dealer market, including bid and ask prices for penny stocks
and significance of the spread between the bid and ask price; (d) contains a
toll-free telephone number for inquiries on disciplinary actions; (e) defines
significant terms in the disclosure document or in the conduct of trading in
penny stocks; and (f) contains such other information and is in such form as the
Commission shall require by rule or regulation. The broker-dealer also must
provide, prior to effecting any transaction in a penny stock, the customer: (a)
with bid and offer quotations for the penny stock; (b) the compensation of the
broker-dealer and its salesperson in the transaction; (c) 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 (d) 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 our stock if it becomes subject to these penny stock
rules. Therefore, because our common stock is subject to the penny stock rules,
stockholders may have difficulty selling our securities.
5
Holders
of Our Common Stock
As of
September 30, 2006, we had approximately 366 holders of record of our common
stock and several other stockholders hold shares in street name.
Dividends
There are
no restrictions in our articles of incorporation or bylaws that restrict us from
declaring dividends. The Delaware Revised Statutes, however, do
prohibit us from declaring dividends where, after giving effect to the
distribution of the dividend:
1.
We
would not be able to pay our debts as they become due in the usual course
of business; or
2.
Our
total assets would be less than the sum of our total liabilities, plus the
amount that would be needed to satisfy the rights of shareholders who have
preferential rights superior to those receiving the
distribution.
Securities
Authorized for Issuance under Equity Compensation Plans
We
currently do not have any equity compensation plans in place.
Recent
Sales of Unregistered Securities; Use of Proceeds from Registered
Securities
The
Company sold 804,597 shares of its common stock at $.80 per share as of
September 30, 2006. Each share sold was accompanied by a warrant to
purchase one additional share for $1.00 until the expiration date, July 31,2007.
Item 6. Management’s Discussion
and Analysis or Plan of Operation
Forward-Looking
Statements
Certain
statements, other than purely historical information, including estimates,
projections, statements relating to our business plans, objectives, and expected
operating results, and the assumptions upon which those statements are based,
are “forward-looking statements” within the meaning of the Private Securities
Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933
and Section 21E of the Securities Exchange Act of 1934. These
forward-looking statements generally are identified by the words “believes,”“project,”“expects,”“anticipates,”“estimates,”“intends,”“strategy,”“plan,”“may,”“will,”“would,”“will be,”“will continue,”“will likely result,” and
similar expressions. We intend such forward-looking statements to be covered by
the safe-harbor provisions for forward-looking statements contained in the
Private Securities Litigation Reform Act of 1995, and are including this
statement for purposes of complying with those safe-harbor provisions.
Forward-looking statements are based on current expectations and assumptions
that are subject to risks and uncertainties which may cause actual results to
differ materially from the forward-looking statements. Our ability to predict
results or the actual effect of future plans or strategies is inherently
uncertain. Factors which could have a material adverse affect on our operations
and future prospects on a consolidated basis include, but are not
limited
6
to:
changes in economic conditions, legislative/regulatory changes, availability of
capital, interest rates, competition, and generally accepted accounting
principles. These risks and uncertainties should also be considered in
evaluating forward-looking statements and undue reliance should not be placed on
such statements. We undertake no obligation to update or revise publicly any
forward-looking statements, whether as a result of new information, future
events or otherwise. Further information concerning our business, including
additional factors that could materially affect our financial results, is
included herein and in our other filings with the SEC.
Results
of Operations
We are
currently in the communications business specializing in entertainment, safety
and security. Since this time, we have attempted to identify and
evaluate other business and technology opportunities in order to proceed with an
active business operation. At the present time, we have not identified any other
business and/or technology opportunities that our management believes are
consistent with the best interest of the company. Our plan of operations is to
continue our attempts to identify and evaluate other business and technology
opportunities in order to proceed with an active business
operation.
We
currently have forecasted the expenditure of approximately $20,000 during the
next twelve months in order to remain in compliance with the Securities Exchange
Act of 1934 and to identify additional business and/or technology for
acquisition. We can provide no assurance that we will be successful in acquiring
other businesses or technology due to our limited working capital. We anticipate
that if we are successfully able to identify any technology or business for
acquisition, we will require additional financing in order for us to complete
the acquisition. We can provide no assurance that we will receive additional
financing if sought.
We do not
anticipate purchasing any real property or significant equipment in the next
twelve months.
We have
three (3) employees at this time. We do not anticipate hiring any
additional employees until such time as we are able to acquire any additional
businesses and/or technology.
We did
not earn significant revenues for the year ended September 30, 2006 and no
revenues were earned during the same period in 2005. We hope that our
earnings will increase as our name is established in the market for our
products.
We
incurred operating expenses in the amount of $531,405 for the twelve months
ended September 30, 2006, compared to operating expenses of $17,750 for the
twelve months ended September 30, 2005. Our operating expenses for the
twelve month period ended September 30, 2006 were primarily attributable to
selling, general and administrative expenses of $531,091 and depreciation of
$314. Our operating expenses for the twelve month period ended September30, 2005 were primarily attributable to selling, general and administrative
expenses of $17,750.
We have
incurred a net loss of $1,139,854 for the twelve months ended September 30,2006, compared to $17,750 for the twelve months ended September 30,2005.
7
Liquidity
and Capital Resources
As of
September 30, 2006, we had total current assets of $178,421 and total assets in
the amount of $183,630. Our total current liabilities as of September30, 2006 were $139,344. As a result, on September 30, 2006, we had
working capital of $44,286.
We are
not certain as to whether our current cash balance will be sufficient to fund
our operations for the next twelve (12) months, as well as meet the requirements
for promotion our products. In order to support our working capital
needs and to provide for previously unanticipated legal expenses, we are
considering the possibility of raising additional capital as well as other
strategic options.
We may
require additional capital for our operational activities and our ability to
raise capital through future issuances of common stock is unknown. Obtaining
additional financing and attaining profitable operations are necessary for us to
continue operations. These factors, among others, raise substantial doubt about
our ability to continue as a going concern. The audited financial statements do
not include any adjustments that may result from the outcome of these
aforementioned uncertainties.
Critical
Accounting Policies
Our
consolidated financial statements are prepared in accordance with accounting
principles generally accepted in the United States of America (“GAAP”).
These accounting principles require us to make certain estimates,
judgments and assumptions. We believe that the estimates, judgments
and assumptions upon which we rely are reasonably based upon information
available to us at the time that these estimates, judgments and assumptions are
made. These estimates, judgments and assumptions can affect the
reported amounts of assets and liabilities as of the date of the financial
statements, as well as the reported amounts of revenue and expenses during the
periods presented. To the extent there are material differences
between these estimates, judgments and assumptions and actual results, our
financial statements will be affected.
In many
cases, the accounting treatment of a particular transaction is specifically
dictated by GAAP and does not require management's judgment in its
application. There are also areas in which management's judgment in
selecting among available alternatives would not produce a materially different
result. Our senior management has reviewed these critical accounting
policies and related disclosures. See Notes to Condensed Consolidated Financial
Statements, which contain additional information regarding our accounting
policies and other disclosures required by GAAP.
Recently
Issued Accounting Pronouncements
In
September 2006, the SEC released Staff Accounting Bulletin No. 108, “Considering
the Effects of Prior Year Misstatements when Quantifying Misstatements in
Current Year Financial Statements” (SAB 108). SAB 108 provides interpretive
guidance on the SEC’s views regarding the process of quantifying materiality of
financial statement misstatements. SAB 108 is effective for fiscal years ending
after November 15, 2006. The adoption of this accounting pronouncement is not
expected to have a material effect on the consolidated financial
statements.
8
In
September 2006, the FASB issued FAS 157, Fair Value Measurements. This standard
defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles, and expands disclosures about fair
value measurements. This statement is effective for financial statements issued
for fiscal years beginning after November 15, 2007. Earlier application is
encouraged. The adoption of this accounting pronouncement is not expected to
have a material effect on the consolidated financial statements.
In July
2006, the FASB issued Interpretation No. 48 (FIN No. 48), Accounting for
Uncertainty in Income Taxes. This interpretation requires recognition and
measurement of uncertain income tax positions using a “more-likely-than-not”
approach. The provisions of FIN No. 48 are effective for fiscal years beginning
after December 15, 2006. The adoption of this accounting pronouncement is not
expected to have a material effect on the consolidated financial
statements.
In March
2006, the FASB issued FAS 156 (SFAS No. 156), Accounting for Servicing of
financial Assets - an amendment of FASB Statement No. 140. This standard
clarifies when to separately account for servicing rights, requires servicing
rights to be separately recognized initially at fair value, and provides the
option of subsequently accounting for servicing rights at either fair value or
under the amortization method. The standard is effective for fiscal years
beginning after September 30, 2006 but can be adopted early as long as financial
statements for the fiscal year in which early adoption is elected, including
interim statements, have not yet been issued. The adoption of this accounting
pronouncement is not expected to have a material effect on the consolidated
financial statements.
In
February 2006, the FASB issued FAS 155 (SFAS No. 155), Accounting for Certain
Hybrid Financial Instruments - an amendment of FASB Statements No. 133 and 140.
This statement permits fair value re-measurement for any hybrid financial
instrument that contains an embedded derivative that would otherwise have to be
accounted for separately. The new statement also requires companies to identify
interests in securitized financial assets that are freestanding derivatives or
contain embedded derivatives that would have to be accounted for separately,
clarifies which interest-and principal-only strips are subject to Statement No.
133, and amends Statement No. 140 to revise the conditions of a qualifying
special purpose entity due to the new requirement to identify whether interests
in securitized financial assets are freestanding derivatives or contain embedded
derivates. This statement is effective for all financial instruments acquired or
issued after the beginning of an entity’s first fiscal year that begins after
September 30, 2006, but can be adopted early as long as financial statements for
the fiscal year in which early adoption is elected, including interim
statements, have not yet been issued. The adoption of this accounting
pronouncement is not expected to have a material effect on the consolidated
financial statements.
In May
2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections —
a replacement of Accounting Principles Board Opinion (“APB”) Opinion No. 20 and
FASB Statement No. 3. This statement applies to all voluntary changes in
accounting principle and changes required by an accounting pronouncement where
no specific transition provisions are included. SFAS No. 154 requires
retrospective application to prior periods’ financial statements of changes in
accounting principle, unless it is impracticable to determine either the
period-specific effects or the cumulative effect of the change. Retrospective
application is limited to the direct effects of the change; the indirect effects
should be recognized in the period of the change. This statement carries forward
without change the guidance contained in APB Opinion No. 20 for reporting the
correction of an error in previously issued financial
9
statements
and a change in accounting estimate. However, SFAS No. 154 redefines restatement
as the revising of previously issued financial statements to reflect the
correction of an error. The provisions of SFAS No. 154 are effective for
accounting changes and corrections of errors made in fiscal periods that begin
after December 15, 2005, although early adoption is permitted. The adoption of
this accounting pronouncement did not have a material effect on the consolidated
financial statements.
In March
2005, the FASB issued Interpretation No. 47 (FIN No. 47), Accounting for
Conditional Asset Retirement Obligations, and Interpretation of FASB Statement
No. 143. This interpretation clarifies the timing for recording certain asset
retirement obligations required by FASB Statement No. 143, Accounting for Asset
Retirement Obligations. The provisions of FIN No. 47 are effective for years
ending after December 15, 2005. The adoption of this accounting pronouncement
did not have a material effect on the consolidated financial
statements.
In
December 2004, the FASB issued SFAS No. 153, “Exchanges of Nonmonetary Assets,
an amendment of APB Opinion No. 29.” SFAS No. 153 is based on the principle that
exchanges of nonmonetary assets should be measured based on the fair value of
the assets exchanged. APB Opinion No. 29, “Accounting for Nonmonetary
Transactions,” provided an exception to its basic measurement principle (fair
value) for exchanges of similar productive assets. Under APB Opinion No. 29, an
exchange of a productive asset for a similar productive asset was based on the
recorded amount of the asset relinquished. SFAS No. 153 eliminates this
exception and replaces it with an exception of exchanges of nonmonetary assets
that do not have commercial substance. The provisions of this Statement are
effective for nonmonetary asset exchanges occurring in fiscal periods beginning
after June 15, 2005. The adoption of this accounting pronouncement did not have
a material effect on the consolidated financial statements.
In
November 2004, the FASB issued SFAS No. 151, “Inventory Costs, an amendment of
Accounting Research Bulletin No. 43, Chapter 4.” SFAS No. 151 requires that
abnormal amounts of idle facility expense, freight, handling costs and wasted
materials (spoilage) be recorded as current period charges and that the
allocation of fixed production overhead to inventory be based on the normal
capacity of the production facilities. SFAS No. 151 was effective for the fiscal
year beginning on October 1, 2005. The adoption of this accounting pronouncement
did not have a material effect on the consolidated financial
statements.
We have
audited the accompanying balance sheets of Xstream Mobile Solutions Corp. (the
“Company”) as of September 30, 2006 and 2005, and the related statements of
operations, stockholders’ equity (deficit) and cash flows for each of the years
in the two-year period ended September 30, 2006 and 2005. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We
conducted our audits in accordance with standards of the Public Company
Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audits included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of Xstream Mobile Solutions
Corp. as of September 30, 2006 and 2005, and the results of its operations and
its cash flows for each of the years in the two-year period ended September 30,2006 in conformity with accounting principles generally accepted in the United
States of America.
The
accompanying financial statements have been prepared assuming the Company will
continue as a going concern. As discussed in Note 6 to the financial statements,
unless the Company is successful in generating new sources of revenue, or
obtaining debt or equity financing, or restructuring its business, the Company
is likely to deplete its working capital during 2007. These matters raise
substantial doubt about the Company’s ability to continue as a going concern.
Management’s plan in regard to these matters is also described in Note 6. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
The
Company was incorporated on May 10, 1998, under the laws of the State of
Delaware. The business purpose of the Company was originally to
engage in environmental monitoring and testing. However, on December31, 2001, the Company liquidated its operating assets. The Company
has adopted a fiscal year ending September 30.
NOTE
2
-
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Use of
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 disclosures 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.
Cash and Cash
Equivalents
The
Company considers all highly liquid debt instruments and other short-term
investments with an initial maturity of three months or less to be cash
equivalents.
Start-up
Costs
In
accordance with the American Institute of Certified Public Accountants Statement
of Position 98-5, “Reporting
on the Costs of Start-up Activities,”the Company expenses all costs
incurred in connection with the start-up and organization of the
Company.
Common Stock Issued for
Other Than Cash
Services
purchased and other transactions settled in the Company’s common stock are
recorded at the estimated fair value of the stock issued if that value is more
readily determinable than the fair value of the consideration
received.
NOTE
2
-
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)
Equipment
The cost
of office and computer equipment is capitalized and depreciated over its useful
life using the straight-line method of depreciation. For all
equipment presently owned the estimated useful life is 60
months. Repairs that substantially extend the useful life of the
assets are capitalized and those that do not are charged to
operations. Depreciation expense for the year ended
September 30, 2006 was $314.
Income
Taxes
The
income tax benefit is computed on the pretax loss based on the current tax law.
Deferred income taxes are recognized for the tax consequences in future years of
differences between the tax basis of assets and liabilities and their financial
reporting amounts at each year-end based on enacted tax laws and statutory tax
rates. The Company has not established a provision due to the losses
sustained.
Earnings (Loss) Per Share of
Common Stock
Historical
net (loss) per common share is computed using the weighted average number of
common shares outstanding. Diluted earnings per share (EPS) include additional
dilution from common stock equivalents, such as stock issuable pursuant to the
exercise of stock options and warrants. Common stock equivalents were not
included in the computation of diluted earnings per share when the Company
reported a loss because to do so would be antidilutive for periods
presented.
The
following is a reconciliation of the computation for basic and diluted
EPS:
NOTE
2
-
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)
Earnings (Loss) Per Share of
Common Stock (Continued)
Options
and warrants outstanding to purchase stock were not included in the computation
of diluted EPS because inclusion would have been antidilutive.
There are
warrants outstanding to purchase 804,597 shares of common stock at September 30,2006. Each warrant allows the stockholder to purchase one share for
$1.00 until expiration on July 31, 2007. Approximately 95,216 warrants were
exercised in 2007 and the rest expired.
NOTE
3
-
STOCKHOLDERS’ EQUITY
(DEFICIT)
As of
September 30, 2006the Company has 2,018,222 shares of its common stock issued
and 1,623,370 shares outstanding.
On
December 3, 2004, the Company increased the authorized number of shares of
common stock from 30,000,000 shares to 90,000,000 shares and changed the par
value from $0.01 to $0.001.
On
January 6, 2006, the Company approved the issuance of 75,000 shares to fulfill a
commitment to former directors, the issuance of 3,450,000 shares in exchange for
$259,750 of current debt, and 80,000,000 shares as a right to acquire the rights
to telecomm software, which is now beyond the due-diligence
phase. The 80,000,000 shares were cancelled as the due-diligence
expired (see below).
On
January 31, 2006, the Company effectuated a reverse split of 1 for 8 shares of
its common stock. The 89,709,000 issued became 11,213,625
issued with 10,913,772 shares outstanding.
The
Company sold 804,597 shares of its common stock at $.80 per share for a total of
$643,641 as of September 30, 2006. Each share sold was accompanied by
a warrant to purchase one additional share for $1.00 until the expiration date,
July 31, 2007(see note 2).
Preferred
Stock
On
December 3, 2004the Company changed the number of Preferred Stock from one
class of stock consisting of 10,000,000 shares with a par value of $0.01 to
three separate series of preferred stock and changed the par value to
$0.001. They are as follows:
Preferred
Stock Series A
990,000
shares with a par value of $0.001 per share, participating, voting and
convertible with a liquidation value of $1,000 each.
9,000,000
shares with a par value of $0.001 per share, participating; voting and
convertible with a liquidation value of $3 each.
Preferred Stock Series
C
10,000
shares with a par value of $0.001 per share, with a liquidation value of $10
each.
All
preferred stock series A, B and C are convertible to 4,000 common shares as well
as 4,000 votes for each share held. In addition, in all cases, the
holders of the Preferred Stock C will vote cumulatively at least fifty one
percent (51%) of all votes cast regardless of the amount of series C shares
issued, at any meeting of shareholders or any major issue put before the Company
for voting of shareholders.
NOTE
4
- INCOME
TAXES
The net
deferred tax assets in the accompanying balance sheet include benefit of
utilizing net operating losses of approximately $3,220,115 (at September 30,2006). However due to the uncertainty of utilizing the net operating losses, an
offsetting valuation allowance of 100% has been established.
NOTE
5
- RELATED PARTY
TRANSACTIONS
Certain
stockholders provide leased space to the Company for office and computer
operations. The rental total is $2,349 per month with a total of
$13,930 of such expense incurred as of September 30, 2006.
An
affiliated company of which a stockholder is a principal has contracted with the
Company to provide programming services and technical communications support for
its operations. The total charged to the Company for these services
for a five-month period was $43,805 as of September 30, 2006.
NOTE
6
- GOING
CONCERN
As shown
in the accompanying financial statements, the Company has sustained net
operating losses for the year ended September 30, 2006 and 2005, and has
sustained large accumulated deficits.
The
Company’s future success is dependent upon its ability to achieve profitable
operations and generate cash from operating activities. At September 30, 2006
there is substantial doubt whether this can happen. There is no guarantee that
the Company will be able to generate revenues in the near future.
The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
NOTE
7
- SUBSEQUENT
EVENTS
On
October 6, 2006the Company approved the issuance of 1,417,992 shares of its
common stock to acquire Xstream Mobile Solutions, Inc., an Illinois
company. The Company also approved the issuance of 700,000 shares as
compensation for services to the Company.
F -
10
Item 8: Changes In and Disagreements with
Accountants on Accounting and Financial Disclosure
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.
We
carried out an evaluation of the effectiveness of the design and operation of
our disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) as of September 30, 2005. This evaluation
was carried out under the supervision and with the participation of our former
Chief Executive Officer and Chief Financial Officer, Mr. Michael
See. Based upon that evaluation, our Director, Chief Executive and
Chief Financial Officer, concluded that our disclosure controls and procedures
are effective. There have been no significant changes in our internal
controls or in other factors, which could significantly affect internal controls
subsequent to the date we carried out our evaluation.
Disclosure
controls and procedures are controls and other procedures that are designed to
ensure that information required to be disclosed in our reports filed or
submitted under the Exchange Act are recorded, processed, summarized and
reported, within the time periods specified in the Securities and Exchange
Commission's rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that information
required to be disclosed in our reports filed under the Exchange Act are
accumulated and communicated to management, including our Chief Executive
Officer and Chief Financial Officer, to allow timely decisions regarding
required disclosure.
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 the Company 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. Additionally, controls
can be circumvented by the individual acts of some persons, by collusion of two
or more people, or by management override of the internal control. 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.
Item 9: Directors, Executive Officers,
Promoters and Control Persons; Compliance with Section
16(a) of the Exchange Act
The
following information sets forth the names of our directors and executive
officers, their ages and their present positions with the Company as of
September 30, 2006. The directors serve for a term of one year
or until the next annual meeting of the shareholders. Each officer
serves at the discretion of the Board of Directors.
Name
Age
Office(s) Held
Michael
See
54
Chief
Executive Officer, Chief Financial Officer, and
Director
Joseph
F. Johns, III
52
President
and Director
Cynthia
See
47
Secretary
and Director
Set forth
below is a brief description of the background and business experience of our
current executive officer and director.
Michael See. Mr.
See began his career in Sales and Marketing in 1981 and held various management
positions. Since 1991, Mr. See has acted as an entrepreneur in the
financial and wealth management areas primarily in insurance, real estate,
stocks and trading. Mr. See’s clients and associates have included
University of Chicago, KLM, Natural World, Beverly Sassoon, Frank Tarkenton,
Nick Parisi and Ed Bachrach. Mr. See is a motivational speaker and
financial educator. Mr. See had his own radio show called “Dollars
& Sense” which aired across the U.S.A., dealing in understanding financial
programs .Mr. See has launched several cable television shows specializing in
financial matters.
Joseph F. Johns,
III. Mr. Johns since 1985 has been the President and CEO of
The Sterling Group, a worldwide provider of media products and services. Mr.
Johns has Designed Software applications for many high-end corporations such as
Northern Trust, Hansen technologies and many more. Joe has extensive experience
in the microwave telecommunication industry, having been employed by Andrew
Corporation in management for almost 10 years. Mr. Johns also owns AVMUSIC Plus,
Inc., a retail outlet of professional audiovisual equipment. Mr.
Johns has specialized in computers and cellular audio, digital, visual and
communication technology throughout his career.
Cynthia See. Ms.
See attended DePaul University in Chicago and has been President of Trendsetter
Menswear, Inc., an Illinois corporation since 1989. Ms. See has
traveled extensively throughout the United States with her husband,
participating in corporate training seminars for executives on marketing,
promotion and motivational speaking.
Term
of Office
Our
Directors are appointed for a one-year term to hold office until the next annual
general meeting of our shareholders, until they resign or until removed from
office in accordance with our bylaws. Our officers are appointed by
our board of directors and hold office until removed by the board.
13
Family
Relationships
There is
a family relationship between or among the directors, executive officers or
persons nominated or chosen by us to become directors or executive
officers. Michael See, the company’s Chief Executive Officer, Chief
Financial Officer and Director is married to Cynthia See, the company’s
Secretary and Director. In addition, Michael See and Joseph F. Johns,
III, are first cousins.
Involvement
in Certain Legal Proceedings
To the
best of our knowledge, during the past five years, none of the
following occurred with respect to a
present or former director or executive officer: (1) any
bankruptcy petition filed by or against any business of which such
person was a general partner or executive officer either
at the time of the bankruptcy or within two
years prior to that time; (2) any
conviction in a criminal proceeding or being
subject to a pending criminal
proceeding (excluding traffic violations and
other minor offenses); (3) being subject to any order,
judgment or decree, not subsequently reversed, suspended
or vacated, of any court of any competent jurisdiction, permanently or
temporarily enjoining, barring, suspending or otherwise limiting his involvement
in any type of business, securities or banking activities;
and (4) being found
by a court of competent jurisdiction (in a civil
action), the SEC or the
Commodities Futures Trading Commission to have violated
a federal or state securities or commodities law, and the judgment has not been
reversed, suspended or vacated.
Committees
We
currently do not have an audit committee, compensation committee, nominating
committee, executive committee, Stock Plan Committee, or any other
committees. There has been no need to delegate functions to these
committees due to the fact that our operations are at a very early stage to
justify the effort and expense of creating and maintaining these
committees.
Audit
Committee
We do not
have a separately-designated standing audit committee. The entire
board of directors performs the functions of an audit committee, but no written
charter governs the actions of the board of directors when performing the
functions of that would generally be performed by an audit committee. The board
of directors approves the selection of our independent accountants and meets and
interacts with the independent accountants to discuss issues related to
financial reporting. In addition, the board of directors reviews the scope and
results of the audit with the independent accountants, reviews with management
and the independent accountants our annual operating results, considers the
adequacy of our internal accounting procedures and considers other auditing and
accounting matters including fees to be paid to the independent auditor and the
performance of the independent auditor.
We do not
have an audit committee financial expert because of the size of our company and
our board of directors at this time. We believe that we do not require an audit
committee financial expert at this time because we retain outside consultants
who possess these attributes.
Reviewed
and discussed the audited financial statements with management,
and
2.
Reviewed
and discussed the written disclosures and the letter from our independent
auditors on the matters relating to the auditor's
independence.
Based
upon the board of directors’ review and discussion of the matters above, the
board of directors authorized inclusion of the audited financial statements for
the year ended September 30, 2006 to be included in this Annual Report on Form
10-KSB and filed with the Securities and Exchange Commission.
Significant
Employees
We do not
have any significant employees other than our officers and
directors.
Section
16(a) of the Securities Exchange Act of 1934 requires the Company’s directors
and executive officers and persons who beneficially owns more than ten percent
of a registered class of the Company’s equity securities to file with the SEC
initial reports of ownership and reports of change in ownership of common stock
and other equity securities of the Company. Officers, directors and
greater than ten percent shareholders are required by SEC regulations to furnish
the Company with copies of all Section 16(a) forms they file. To our
knowledge, the following persons have failed to file, on a timely basis, the
identified reports required by Section 16(a) of the Exchange Act during fiscal
year ended September 30, 2006:
Name
and principal position
Number
of
late
reports
Transactions
not
timely
reported
Known
failures to
file
a required form
Michael
See
CEO,
CFO, and Director
0
0
0
Joseph
F. Johns, III
President
and Director
0
0
0
Cynthia
See
Secretary
and Director
0
0
0
Code
of Ethics
We have
not adopted a Code of Ethics for Financial Executives, which include our
principal executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions, as required by
sections 406 and 407 of the Sarbanes-Oxley Act of 2002.
The
following table sets forth the compensation paid to the Chief Executive Officer
and other Executive Officers and key persons in total annual salary and bonus,
for all services rendered in all capacities to the company, for the fiscal years
ended September 30 2006 and 2005:
15
Summary Compensation
Table
SUMMARY
COMPENSATION TABLE
Name
and
principal
Position
Year
Salary ($)
Bonus
($)
Stock
Awards
($)
Option
Awards
($)
Non-Equity
Incentive
Plan
Compensation
($)
Nonqualified
Deferred
Compensation
Earnings
($)
All
Other
Compensation
($)
Total
($)
Michael
See
CEO,
CFO and Director
2006
2005
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Joseph
F. Johns, III
President,
Director
2006
2005
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Cynthia
See
Secretary
and Director
2006
2005
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Patricia
Waite
Former
Sole Officer and Director
2006
2005
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Stock
Options/SAR Grants
There
were no grants of stock options or stock appreciation rights made during the
fiscal year ended September 30, 2006 to our executive officers and
directors. There were a total of 0 stock options outstanding as at
September 30, 2006.
Long-Term
Incentive Plans
There are
no arrangements or plans in which we provide pension, retirement or similar
benefits for directors or executive officers, except that our directors and
executive officers may receive stock options at the discretion of our board of
directors. 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, except that stock options may be granted at the discretion
of our board of directors.
We have
no plans or arrangements in respect of remuneration received or that may be
received by our executive officers to compensate such officers in the event of
termination of employment (as a result of resignation, retirement, change of
control) or a change of responsibilities following a change of control, where
the value of such compensation exceeds $60,000 per executive
officer.
16
Item 11: Security Ownership of Certain
Beneficial Owners and Management and related Stockholder
Matters
The
following table sets forth, as of September 30, 2006, the beneficial ownership
of our common stock by each executive officer and director, by each person known
by us to beneficially own more than 5% of the our common stock and by the
executive officers and directors as a group. Except as otherwise indicated, all
shares are owned directly and the percentage shown is based on 5,345,917
shares of common stock issued and outstanding on September 9,2008.
Item 12: Certain Relationships
and Related Transactions
None of
our directors or executive officers, nor any proposed nominee for election as a
director, nor any person who beneficially owns, directly or indirectly, shares
carrying more than 5% of the voting rights attached to all of our outstanding
shares, nor any members of the immediate family (including spouse, parents,
children, siblings, and in-laws) of any of the foregoing persons has any
material interest, direct or indirect, in any transaction during the last two
years or in any presently proposed transaction which, in either case, has or
will materially affect us.
The
aggregate fees billed by our auditors for professional services rendered in
connection with a review of the financial statements included in our quarterly
reports on Form 10-Q and the audit of our annual consolidated financial
statements for the fiscal years ended September 30, 2006 and 2005 were $9,069
and approximately $12,855 respectively.
Audit-Related
Fees
Our
auditors did not bill any additional fees for assurance and related services
that are reasonably related to the performance of the audit or review of our
financial statements.
Tax
Fees
The
aggregate fees billed by our auditors for professional services for tax
compliance, tax advice, and tax planning were $0 and $0 for the fiscal years
ended September 30, 2006 and 2005.
All
Other Fees
The
aggregate fees billed by our auditors for all other non-audit services, such as
attending meetings and other miscellaneous financial consulting, for the fiscal
year ended September 30, 2006 was $0.
18
SIGNATURES
In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
