Document/Exhibit Description Pages Size
1: 10KSB Annual Report -- Small Business 36± 122K
2: EX-21 Exhibit 21.1 1 3K
3: EX-31 Exhibit 31.1 2± 7K
4: EX-31 Exhibit 31.2 2± 7K
5: EX-32 Exhibit 32.1 2± 6K
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 September 30, 2006
------------------
OR
[ ] 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 0-20769
--------
Cable & Co. Worldwide, Inc.
(Exact name of Registrant as specified in its charter)
Delaware 22-3341195
------------------------------- -----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
600 Lexington Ave., 10th floor, New York, NY 10022
----------------------------------------------------
(Address of Principal Executive Offices with Zip Code)
Registrant's telephone number, including area code (212) 752-9700
-------------
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
None None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.01 par value
---------------------------------
("Common Stock")
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.
Yes No X
---- ----
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not 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-K or any
amendment to the Form 10-K. [ ]
Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2) Yes No X
---- ----
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
stock was sold, or the average bid and asked prices of such common equity,
as of the last business day of the Registrant's most recently completed
second fiscal quarter.
The aggregate market value of the Registrant's Common Stock held by
non-affiliates of the Registrant as of January 11, 2007, was $1,788,000.
Indicate the number of shares outstanding of each of the Registrant's
classes of common stock, as of the latest practicable date.
As of January 11, 2007, there were 1,498,612,518 shares of the Registrant's
Common Stock outstanding.
PART I.
CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements of Cable & Co. Worldwide, Inc. (the "Company")
included in this Report, including matters discussed under the captions
"Legal Proceedings" in Part I, Item 3, "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in Part II,
Item 7 are "forward-looking statements." Forward-looking statements
include statements about the business strategies of Cable & Co. Worldwide,
Inc., and other statements that are not historical facts. The words
"anticipate," "estimate," "project," "intend," "expect," "believe,"
"forecast" and similar expressions are also intended to identify the
forward-looking statements, but some of these statements may use other
phrasing. These forward-looking statements are not guarantees of future
performance and are subject to a number of risks, uncertainties and other
factors that could cause the Company's actual results, performance or
achievements to differ materially from those expressed or implied by these
forward-looking statements. These factors include, among other things:
- we may be unable to implement key elements of our business
strategy;
- we may have insufficient capital to acquire additional
businesses;
- we may be unable to retain key personnel;
Many of these factors are beyond our ability to control or predict, and
readers are cautioned not to put undue reliance on such forward-looking
statements. We disclaim any obligation to update or revise publicly or
otherwise any forward-looking statements to reflect subsequent events, new
information or future circumstances, except as required by law.
ITEM 1. OVERVIEW
Cable & Co. Worldwide, Inc. (the "Company" or "Cable"), is currently a
dormant company with no revenues or operations.
History
The Company, which was incorporated November 10, 1994, was a manufacturer,
designer, importer and wholesaler of men's shoes. In 1997, the Company
began to experience financial distress and filed for bankruptcy chapter 11
protection in the Southern District of New York. Shortly after its filing,
the Company ceased all operations. While its bankruptcy filing was active,
the Company turned over title to all of its assets to its secured lender
Heller Financial, Inc. ("Heller"). As there were no remaining assets for
the creditors, the bankruptcy court closed the Company's case on June 3,
1999. The creditors received notice from the bankruptcy court that their
claims were valueless and were eliminated. As a result of the court's
action, the only Company liabilities that survived were those that were not
submitted as claims in the bankruptcy, of which there was only one.
Subsequent to the court notice, Company management reaffirmed the sole
remaining liability. The Company ceased all operations and has remained in
a dormant state since such date. During this period, the Company had no
operations, no revenues and no employees. Recently, the Company began
negotiating with an unaffiliated operating entity with a view towards
commencing operations in the dental and healthcare marketplaces. The
Company has identified certain investments and is in the process of
securing funds to acquire those investments and commence operations.
Although the Company has since acquired LifeHealth Care, Inc., in May 2006,
there is no guarantee that the Company will secure the necessary financing
to operate the assets or to acquire additional assets.
-2-
On October 17, 2005, a majority of shareholders passed a resolution to
increase the number of authorized common shares to 250,000,000. On January
30, 2006 the holders of a majority of the outstanding common stock of the
Company passed a resolution to increase the number of authorized common
shares from 250,000,000 to 1,500,000,000. The purpose of these resolutions
was to create a sufficient number of shares of common stock to allow the
Company to settle its last remaining liability and to commence operations.
Between October 17, 2005 and May 19, 2006, the Company issued 1,454,773,547
shares of common stock in exchange for consulting and other services, the
elimination of debt and to acquire a subsidiary LifeHealth Care, Inc. The
market value used to value the stock issued ranged from $0.005 to $0.002
for the consulting and board services provided and the acquisition of
LifeHealth Care, Inc. The stock issued is all restricted stock subject to
SEC regulation 144. The sole creditor of the Company accepted an offer by
the Company to convert the entire amount owed, including accrued, but
unpaid interest, ($485,985) by the Company into common stock. Under this
settlement, the Company issued 194,396,464 common shares in full
satisfaction of all claims of this creditor. This was the only known
outstanding obligation of the Company. The Company believes that the
combination of the extinguishment of debt in June 2005 along with the
settlement with the final remaining creditor, will allow the Company to
pursue its efforts to commence operations.
On March 28, 2006 the Company acquired all the Stock of LifeHealth Care,
Inc. (LHC) a Delaware corporation by issuing 600,000,000 shares of the
Company's common stock. LHC's value was set at $1,200,000 based on the
market value of the Company's shares issued. LHC is a startup company
focused on dental and healthcare marketplace. LHC has no revenue and will
require a significant amount of financing in order to commence operations.
The Company does not have access to the necessary financing at this time.
If financing is not obtained, LHC will not be able to commence operations.
As of the date of acquisition, LHC had incurred cumulative losses of
approximately $71,000. There is no certainty that even with financing, LHC
will be able to commence operations or obtain profitable status.
DESCRIPTION OF OUR SUBSIDIARIES AND INVESTMENTS
All subsidiaries and investments were delivered to Heller Financial, Inc.
in full satisfaction of amounts due by the Company to Heller in 1999. The
Company has no subsidiaries or investments at this time.
EMPLOYEES
As of January 11, 2007, the Company employed no employees.
The Company cannot be assured of being able to attract qualified employees
in the future.
ITEM 2. PROPERTIES
The Company's principal executive offices are located at c/o Gersten Savage
LLC 600 Lexington Avenue, 10th floor, New York City, NY 10022, at no cost.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
-3-
PART II.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The common stock was suspended from trading on the Nasdaq National
Market because the Company no longer had any assets. Since its stock was
delisted, the common stock has been traded on the "pink sheets" or over-
the-counter-market under the symbol CCWW.PK. The "pink sheets" is an over-
the-counter market which provides significantly less liquidity than
established stock exchanges or the Nasdaq National Market, and quotes for
stocks included in the "pink sheets" are not listed in the financial
sections of newspapers as are those for established stock exchanges and the
Nasdaq National Market. The following table sets forth, for the periods
indicated the high and low closing sales prices for our common stock.
[Download Table]
High Low
----------- -----------
Common Stock Fiscal 2005
------------------------
1st Quarter. . . . . . . . . . . . . . . . . . $.009 $.009
2nd Quarter. . . . . . . . . . . . . . . . . . $.009 $.009
3rd Quarter. . . . . . . . . . . . . . . . . . $.009 $.009
4th Quarter. . . . . . . . . . . . . . . . . . $.009 $.009
1st Quarter. . . . . . . . . . . . . . . . . . $.0027 $.0010
2nd Quarter. . . . . . . . . . . . . . . . . . $.0055 $.0020
3rd Quarter. . . . . . . . . . . . . . . . . . $.0030 $.0007
4th Quarter. . . . . . . . . . . . . . . . . . $.001 $.0003
The closing price of our common stock on January 11, 2007 was $0003.
As of January 11, 2007, there were approximately 140 holders of record of
common stock.
The Company has never declared or paid any cash dividends on the common
stock. The Company does not anticipate declaring or paying any dividends on
the common stock in the foreseeable future. The Company currently intends
to retain future earnings, if any, to finance the expansion of its
business.
EQUITY COMPENSATION PLAN INFORMATION
The Company does not maintain any stock option or other equity compensation
plan at the date hereof.
ITEM 6. SELECTED FINANCIAL DATA
Selected Financial Information
[Enlarge/Download Table]
Statement of
Operations Data Years ended September 30,
-------------------------------------------------------------------
2002 2003 2004 2005 2006
------------ ------------ ------------ ------------ ------------
Revenues $ 0 $ 0 $ 0 $ 0 $ 0
Total operating
expenses 0 0 0 0 0
Net (loss)/income (34,545) (38,226) (42,300) (51,809) (1,120,666)
Income (loss)/
per share ($0.00) ($0.00) ($0.00) ($0.00) ($0.0)
-4-
[Enlarge/Download Table]
Balance Sheet Data As of September 30,
-------------------------------------------------------------------
2002 2003 2004 2005 2006
------------ ------------ ------------ ------------ ------------
Total assets $ 0 $ 0 $ 0 $ 0 $1,273,477
Short term
liabilities 358,650 396,876 439,176 490,985 118,088
Net working
capital (358,650) (396,876) (439,176) (490,985) (115,541)
Stockholders'
equity (deficit) ($358,650) ($396,876) ($439,176) ($490,985) ($1,155,389)
[Enlarge/Download Table]
Quarters Ended
-------------------------------------------------------------------
2002 2003 2004 2005 2006
------------ ------------ ------------ ------------ ------------
Revenues $ - $ - $ - $ - $ -
Loss from
continuing
operations 6,088 97,801 987,556 29,221 1,120,666
Interest Expense - - - - -
Net income (loss) (6,088) (97,801) (987,556) (29,221) (1,120,666)
Net income
(loss)per
share - basic
and diluted (0.00) (0.00) (0.00) (0.00) (0.00)
Weighted average
common stock
outstanding
basic and
diluted 202,314,349 257,610,435 1,216,578,635 1,498,612,518 795,558,539
-5-
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
BACKGROUND AND HISTORY
The Company, which was incorporated November 10, 1994, was a manufacturer,
designer, importer and wholesaler of men's shoes. In 1997, the Company
began to experience financial distress and filed for bankruptcy chapter 11
protection in the Southern District of New York. Shortly after its filing,
the Company ceased all operations. While its bankruptcy filing was active,
the Company turned over title to all of its assets to its secured lender
Heller Financial, Inc. ("Heller"). As there were no remaining assets for
the creditors, the bankruptcy court closed the Company's case on June 3,
1999. The creditors received notice from the bankruptcy court that their
claims were valueless and were eliminated. As a result of the court's
action, the only Company liabilities that survived were those that were not
submitted as claims in the bankruptcy, of which there was only one.
Subsequent to the court notice, Company management reaffirmed the sole
remaining liability. The Company ceased all operations and has remained in
a dormant state since such date. During this period, the Company had no
operations, no revenues and no employees. Recently, the Company began
negotiating with an unaffiliated operating entity with a view towards to
commencing operations in the dental and healthcare marketplaces. The
Company has identified certain investments and is in the process of
securing funds to acquire those investments and commence operations.
Although the Company acquired LifeHealth Care, Inc in May 2006, there is no
guarantee that the Company will secure the necessary financing to operate
the assets or to acquire additional assets.
On October 17, 2005, a majority of shareholders passed a resolution to
increase the number of authorized common shares to 250,000,000. On January
30, 2006 the holders of a majority of the outstanding common stock of the
Company passed a resolution to increase the number of authorized common
shares from 250,000,000 to 1,500,000,000. The purpose of these resolutions
was to create a sufficient number of shares of common stock to allow the
Company to settle its last remaining liability and to commence operations.
Between October 17, 2005 and May 19, 2006, the Company issued 1,454,773,547
shares of common stock in exchange for consulting and other services, the
elimination of debt and to acquire a subsidiary LifeHealth Care, Inc. The
market value used to value the stock issued ranged from $0.005 to $0.002
for the consulting and board services provided and the acquisition of
LifeHealth Care, Inc. The stock issued is all restricted stock subject to
SEC regulation 144. The sole creditor of the Company accepted an offer by
the Company to convert the entire amount owed, including accrued, but
unpaid interest, ($485,985) by the Company into common stock. Under this
settlement, the Company issued 194,396,464 common shares in full
satisfaction of all claims of this creditor. This was the only known
outstanding obligation of the Company. The Company believes that the
combination of the extinguishment of debt in June 2005 along with the
settlement with the final remaining creditor, will allow the Company to
pursue its efforts to commence operations.
On March 28, 2006 the Company acquired all the Stock of LifeHealth Care,
Inc. (LHC) a Delaware corporation by issuing 600,000,000 shares of the
Company's common stock. LHC's value was set at $1,200,000. LHC is a
startup company focused on dental and healthcare marketplace. LHC has no
revenue and will require a significant amount of financing in order to
commence operations. The Company does not have access to the necessary
financing at this time. If financing is not obtained, LHC will not be able
to commence operations. As of the date of acquisition, LHC had incurred
cumulative losses of approximately $71,000. There is no certainty that
even with financing, LHC will be able to commence operations or obtain
profitable status.
-6-
CRITICAL ACCOUNTING POLICIES
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to
make estimates and assumptions that affect the reported amounts of assets
and liabilities, 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.
GOODWILL VALUATION
Goodwill represents the excess of the purchase price over the fair market
value of net assets acquired. The process of determining goodwill requires
judgment. Evaluating goodwill for impairment involves the determination of
the fair market value of our reporting units. Inherent in such fair market
value determinations are certain judgments and estimates, including the
interpretation of current economic indicators and market valuations, and
our strategic plans with regard to our operations. To the extent additional
information arises or our strategies change, it is possible that our
conclusion regarding goodwill impairment could change, which could have a
material effect on our financial position and results of operations. For
those reasons, we believe that the accounting estimate related to goodwill
impairment is a critical accounting estimate.
The Company reviews goodwill annually (or more frequently under certain
conditions) for impairment in accordance with SFAS No. 142, goodwill and
other intangible assets. The Company performed its annual impairment test
of goodwill as of September 30, 2006 and determined that goodwill was not
impaired. While the Company believes that no impairment existed as of
September 30, 2006, there can be no assurances that future economic or
financial developments might not lead to an impairment of goodwill.
INTANGIBLE ASSETS
Intangible assets, excluding goodwill, are stated on the basis of cost and
are amortized on a straight-line basis over estimated lives of three to ten
years. Intangible assets with indefinite lives are not amortized but are
evaluated for impairment annually unless circumstances dictate otherwise.
Management periodically reviews intangible assets for impairment based on
an assessment of undiscounted future cash flows, which are compared to the
carrying value of the intangible assets. Should these cash flows not
equate to or exceed the carrying value of the intangible, a discounted cash
flow model is used to determine the extent of any impairment charge
required. There are no intangible assets recorded on the books of the
Company as of September 30, 2006.
INCOME TAXES
The Company accounts for its income taxes using SFAS No. 109, "ACCOUNTING
FOR INCOME TAXES", which requires the recognition of deferred tax
liabilities and assets for expected future tax consequences of events that
have been included in the financial statements or tax returns. Under this
method, deferred tax liabilities and assets are determined based on the
difference between the financial statement and tax bases of assets and
liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse.
-7-
RESULTS OF OPERATIONS
FISCAL 2006 COMPARED TO FISCAL 2005
REVENUES
The Company had no revenues or operations in either 2005 or 2006.
COST OF SALES
The Company had no cost of sales or operations in either 2005 or 2006.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
The Company recognized $1,115,666 in administrative expenses in 2006
primarily related to efforts to revive the Company. Most of the expenses
were paid through the issuance of stock. Certain expenses were paid in
cash on behalf of the Company. There was only $5,000 in expenses incurred
during the 2004 as efforts to revive the Company were just starting.
AMORTIZATION AND DEPRECIATION
The Company had $5,000 in amortization expense and no depreciation expense
in 2006 from the amortization of its intangible asset. The Company had
$0.0 in amortization and depreciation expense 2005 as it had no assets.
INTEREST EXPENSE
Interest expense of $0 was recorded fiscal 2006, as compared to interest
expense of $46,809 during fiscal 2005. The decrease in interest expense in
fiscal 2006 was the result of the conversion of the only interest accruing
obligation into the Company's common stock.
PROVISION FOR INCOME TAXES
The company had no income tax expense in either 2005 or 2006.
NET INCOME
The Company recognized net losses of $1120,666, during fiscal 2006 as
compared to $51,809 during the prior year for an overall increase in net
loss of $1,068,857. The increase in the loss was due to the efforts to
revive the Company.
-8-
FISCAL 2005 COMPARED TO FISCAL 2004
REVENUES
The Company had no revenues or operations in either 2004 or 2005.
COST OF SALES
The Company had no cost of sales or operations in either 2004 or 2005.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
The Company recognized $5,000 in administrative expenses in 2005 primarily
related to efforts to revive the Company. The expenses were paid in cash
on behalf of the Company. There were no expenses incurred during 2004 as
the Company was dormant.
AMORTIZATION AND DEPRECIATION
The Company had no revenues or operations in either 2004 or 2005.
INTEREST EXPENSE
Interest expense of $46,809 was recorded fiscal 2005, as compared to
interest expense of $42,300 during fiscal 2004. The increase in interest
expense in fiscal 2005 was the result of the compounding of interest on the
Company's only obligation which remained unpaid.
PROVISION FOR INCOME TAXES
The Company had no income tax expense in either 2004 or 2005.
NET INCOME
The Company recognized net losses of $51,809, during fiscal 2005 as
compared to $42,300 during the prior year for an overall increase in net
loss of $9,509. The increase in the loss was due to the efforts to revive
the Company and the compounding of interest.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
The Company, which was incorporated November 10, 1994, was a manufacturer,
designer, importer and wholesaler of men's shoes. In 1997, the Company
began to experience financial distress and filed for bankruptcy chapter 11
protection in the Southern District of New York. Shortly after its filing,
the Company ceased all operations. While its bankruptcy filing was active,
the Company turned over title to all of its assets to its secured lender
Heller Financial, Inc. ("Heller"). As there were no remaining assets for
the creditors, the bankruptcy court closed the Company's case on June 3,
1999. The creditors received notice from the bankruptcy court that their
claims were valueless and were eliminated. As a result of the court's
action, the only Company liabilities that survived were those that were not
submitted as claims in the bankruptcy, of which there was only one.
Subsequent to the court notice, Company management reaffirmed the sole
remaining liability. The Company ceased all operations and has remained in
a dormant state since such date. During this period, the Company had no
operations, no revenues and no employees. Recently, the Company began
negotiating with an unaffiliated operating entity with a view towards to
commencing operations in the dental and healthcare marketplaces. The
Company has identified certain investments and is in the process of
securing funds to acquire those investments and commence operations.
Although the Company acquired LifeHealth Care, Inc in May 2006, there is no
guarantee that the Company will secure the necessary financing to operate
the assets or to acquire additional assets.
-9-
On October 17, 2005, a majority of shareholders passed a resolution to
increase the number of authorized common shares to 250,000,000. On January
30, 2006 the holders of a majority of the outstanding common stock of the
Company passed a resolution to increase the number of authorized common
shares from 250,000,000 to 1,500,000,000. The purpose of these resolutions
was to create a sufficient number of shares of common stock to allow the
Company to settle its last remaining liability and to commence operations.
Between October 17, 2005 and May 19, 2006, the Company issued 1,454,773,547
shares of common stock in exchange for consulting and other services, the
elimination of debt and to acquire a subsidiary LifeHealth Care, Inc. The
market value used to value the stock issued ranged from $0.005 to $0.002
for the consulting and board services provided and the acquisition of
LifeHealth Care, Inc. The stock issued is all restricted stock subject to
SEC regulation 144. The sole creditor of the Company accepted an offer by
the Company to convert the entire amount owed, including accrued, but
unpaid interest, ($485,985) by the Company into common stock. Under this
settlement, the Company issued 194,396,464 common shares in full
satisfaction of all claims of this creditor. This was the only known
outstanding obligation of the Company. The Company believes that the
combination of the extinguishment of debt in June 2005 along with the
settlement with the final remaining creditor, will allow the Company to
pursue its efforts to commence operations.
On March 28, 2006 the Company acquired all the Stock of LifeHealth Care,
Inc. (LHC) a Delaware corporation by issuing 600,000,000 shares of the
Company's common stock. LHC's value was set at $1,200,000 based on the
market value of the Company's shares issued. LHC is a startup company
focused on dental and healthcare marketplace. LHC has no revenue and will
require a significant amount of financing in order to commence operations.
The Company does not have access to the necessary financing at this time.
If financing is not obtained, LHC will not be able to commence operations.
As of the date of acquisition, LHC had incurred cumulative losses of
approximately $71,000. There is no certainty that even with financing, LHC
will be able to commence operations or obtain profitable status.
The following table is a summary of contractual obligations recorded as of
September 30, 2006.
[Enlarge/Download Table]
Payments due by period
--------------------------------------------------------------
Less than More than
Contractual Obligations Total 1 Year 1-3 years 3-5 years 5 years
------------ ----------- ----------- ----------- -----------
Long-Term Debt
Obligations $ 0 $ 0 $ 0 $ 0 $ 0
Operating Lease
Obligations 0 0 0 0 0
Purchase Obligations 0 0 0 0 0
Employment Contracts 0 0 0 0 0
------------ ----------- ----------- ----------- -----------
Total $ 0 $ 0 $ 0 $ 0 $ 0
============ =========== =========== =========== ===========
FUTURE COMMITMENTS
The Company has no assets and is reliant on certain shareholders and
investors to support its cash requirements and operations. The Company has
identified certain investments and is in the process of reviewing and
exploring the availability of funds required to acquire those investments
and commence operations. There can be no assurance that the Company will
secure the necessary financing to acquire and operate the assets.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company does not hold market risk sensitive instruments for trading
purposes.
-10-
Cable & Co. Worldwide, Inc.
TABLE OF CONTENTS
-----------------
PAGE
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM F-1
FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets F-2
Condensed Consolidated Statements of Operations F-3
Condensed Consolidated Statements of Stockholders'
Equity (Deficit) F-4
Condensed Consolidated Statements of Cash Flows F-5
Notes to Financial Statements F-6 F-13
-11-
/Letterhead/
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
---------------------------------------------------------
To the Board of Directors and Stockholders
Cable & Co. Worldwide, Inc.
New York, NY
We have audited the accompanying consolidated balance sheet of Cable & Co.
Worldwide, Inc. (the Company) as of September 30, 2006 and the related
consolidated statements of operations, stockholders' equity (deficit) and
cash flows for the years ended September 30, 2006 and 2005. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the PCAOB
(United States). Those standards require that we plan and perform the
audits 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. Accordingly, we express no such opinion.
An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes 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 accompanying consolidated financial statements referred
to above present fairly, in all material respects, the consolidated
financial position of Cable & Co. Worldwide, Inc. at September 30, 2006 and
the results of their operations and their cash flows for the years ended
September 30, 2006 and 2005, in conformity with accounting principles
generally accepted in the United States.
The accompanying consolidated financial statements have been prepared
assuming that Cable & Co. Worldwide, Inc. will continue as a going concern.
As discussed in Note 7 to the consolidated financial statements, Cable &
Co. Worldwide, Inc. has suffered recurring losses from operations and has a
net capital deficiency that raises substantial doubt about the company's
ability to continue as a going concern. Management's plans in regard to
these matters are also described in Note 7. The consolidated financial
statements do not include any adjustments that might result from the
outcome of this uncertainty.
/S/ Chisholm, Bierwolf & Nilson LLC
Chisholm, Bierwolf & Nilson LLC
Bountiful, Utah
January 11, 2007
-F1-
Cable & Co. Worldwide, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2006
[Download Table]
ASSETS 2006
------------
Current assets:
Prepaid $ 348
------------
Total current assets 348
Other assets:
Deposit $ 2,200
Intellectual property, net 95,000
Patent 6,730
Goodwill 1,169,199
------------
Total other assets 1,273,129
------------
Total assets $ 1,273,477
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Lliabilities:
---------------------
Accrued liabilities $ 32,870
Due to shareholder 85,218
------------
Total current liabilities 118,088
------------
Total liabilities 118,088
Total long term liabilities 85,218
Commitments, Contingencies and Other Matters --
Total liabilities 118,088
Stockholders' Equity:
Preferred Stock, $.01 par value;
authorized 1,500,000 shares; no shares issued -
Common stock, $0.01 par value,1,500,000,000
shares authorized; 1,498,612,518 and 43,838,971
shares issued and outstanding 14,986,125
Prepaid expenses (300,000)
Additional paid-in capital 3,847,981
Accumulated deficit (17,378,717)
------------
Total Stockholders' Equity (Deficit) 1,155,389
------------
Total Liabilities and Stockholders' Equity $ 1,273,477
============
The accompanying notes are an integral part of these financial statements
-F2-
Cable & Co. Worldwide, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED SEPTEMBER 30, 2006 AND 2005
[Download Table]
2006 2005
------------ ------------
Revenues $ 0 $ 0
Professional fees 1,107,043 -
General & administrative expenses 13,623 5,000
------------ ------------
Total selling, general and administration expenses 1,120,666 5,000
------------ ------------
Loss from continuing operations (1,120,666) 5,000
Other (income) and expenses:
Interest expense - 46,809
------------ ------------
Total other (income) and expenses - 46,809
------------ ------------
Loss from operations before income tax (1,120,666) (46,809)
Provision for income taxes - -
------------ ------------
Net (loss) ($1,120,666) ($51,809)
============ ============
Income (Loss) Per Share Basic and Diluted:
Net Income (Loss) per share ($0.00) ($0.00)
============ ============
Weighted Average Common Stock Outstanding:
Basic and diluted 795,558,539 43,838,971
============ ============
The accompanying notes are an integral part of these financial statements
-F3-
Cable & Co. Worldwide, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
YEARS ENDED SEPTEMBER 30, 2006 AND 2005
[Enlarge/Download Table]
Preferred Shares Common Stock Prepaid
Shares Amount Shares Amount Expenses
--------- --------- ------------- ------------ -----------
Year Ended September
30, 2004: - $ - 43,838,971 $438,390 $ -
Net (loss) for the
year ended
September 30, 2005 - - - - -
--------- --------- ------------- ----------- -----------
Balance, September
30, 2005 - - 43,838,971 438,390 -
Shares issued for debt
relief - - 194,396,464 1,943,965 (1,457,980)
Shares issued for
acquisition of
LifeHealth Care, Inc. - - 600,000,000 6,000,000 -
Issuance of common
stock for services 660,377,083 6,603,770 (300,000)
Net (loss) for the
year ended September
30, 2006
--------- --------- ------------- ------------ -----------
Balance,
September 30, 2006 - $ - 1,498,612,518 $14,986,125 (300,000)
========= ========= ============= ============ ===========
[Download Table]
Additional
Paid-in Accumulated
Capital Deficit Total
------------ ------------- ------------
Year Ended September
30, 2004: $15,328,676 (16,206,242) ($439,176)
Net (loss) for the
year ended
September 30, 2005 - (51,809) (51,809)
------------ ------------- ------------
Balance, September
30, 2005 15,328,676 ($16,258,051) ($490,985)
Shares issued for debt
relief (1,457,980) - 485,985
Shares issued for
acquisition of
LifeHealth Care, Inc. (4,800,000) - 1,200,000
Issuance of common
stock for services (5,222,715) - 1,081,055
Net (loss) for the
year ended September
30, 2006 - (1,120,666) (1,120,666)
------------ ------------- ------------
Balance,
September 30, 2006 $3,847,981 ($17,378,717) $ 1,155,389
============ ============= ============
The accompanying notes are an integral part of these financial statements
-F4-
Cable & Co. Worldwide, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED SEPTEMBER 30, 2006 AND 2005
[Download Table]
2006 2005
------------ ------------
Cash Flows from Operating Activities:
Net (loss) ($1,120,666) ($51,809)
Shares issued for services 1,081,056 -
Amortization 5,000 -
Changes in assets and liabilities
Increase in prepaid expenses (348) -
Increase in accrued liabilities 29,870 -
Increase in accrued interest - 46,809
------------ ------------
Net Cash Provided by (Used) in Operating Activities (5,088) (5,000)
Cash Flows from Investing Activities:
Net Cash Provided by (Used in) Investing Activities - -
------------ ------------
Cash Flows from Financing Activities:
Proceeds from shareholder 5,088 5,000
------------ ------------
Net Cash Provided by (Used in) Financing Activities 5,088 5,000
Net Increase (decrease) in Cash and Cash Equivalents - -
Cash and Cash Equivalents, Beginning 0 0
------------ ------------
Cash and Cash Equivalents, Ending $ 0 $ 0
============ ============
Supplemental Disclosure of Cash Flow Information:
Cash paid during the year for interest $ - $ -
============ ============
Cash Paid during the year for income taxes $ - $ -
============ ============
Shares issued for debt relief 486,985 -
============ ============
Shares issued in advance for services 300,000 -
============ ============
Shares issued for the acquisition of
LifeHealth Care, Inc. 1,200,000 -
============ ============
The accompanying notes are an integral part of these financial statements
-F5-
Cable & Co. Worldwide, Inc.
NOTES TO FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION AND PRINCIPAL ACTIVITIES OF THE GROUP
The Company, which was incorporated November 10, 1994, was a manufacturer,
designer, importer and wholesaler of men's shoes. In 1997, the Company
began to experience financial distress and filed for bankruptcy chapter 11
protection in the Southern District of New York. Shortly after its filing,
the Company ceased all operations. While its bankruptcy filing was active,
the Company turned over title to all of its assets to its secured lender
Heller Financial, Inc. ("Heller"). As there were no remaining assets for
the creditors, the bankruptcy court closed the Company's case on June 3,
1999. The creditors received notice from the bankruptcy court that their
claims were valueless and were eliminated. As a result of the court's
action, the only Company liabilities that survived were those that were not
submitted as claims in the bankruptcy, of which there was only one.
Subsequent to the court notice, Company management reaffirmed the sole
remaining liability. The Company ceased all operations and has remained in
a dormant state since such date. During this period, the Company had no
operations, no revenues and no employees. Recently, the company began
taking steps to commence operations. The company has identified certain
investments and is in the process of securing funds to acquire those
investments and commence operations. There is no guarantee that the
company will secure the necessary financing to acquire or operate the
assets. In the year 2000, the Company changed its year end from December
31 to September 30. Since the year end change was prior to any of the
periods reported on in these financial statements, and since there were no
operations of any kind during the periods reported on in these financial
statements, no pro-forma December 31 financial statements are included.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements have been prepared in accordance with accounting
principles generally accepted in the United States and incorporate the
following significant accounting policies:
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to
make estimates and assumptions that affect the reported amounts of assets
and liabilities, 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.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of the Company's cash and cash equivalents, receivables,
accounts payable and accrued liabilities approximate carrying value based
on their effective interest rates compared to current market prices.
-F6-
GOODWILL
The Company adopted Statement of Financial Accounting Standards No. 142
(SFAS 142), Goodwill and Other Intangible Assets. Goodwill and other
intangible assets with indefinite lives must be tested for impairment on an
annual basis. The Company performs this annual impairment test at fiscal
year end for goodwill.
SFAS 142 requires the Company to compare the fair value of the reporting
unit to its carrying amount on an annual basis to determine if there is
potential goodwill impairment. If the fair value of the reporting unit is
less than its carrying value, an impairment loss is recorded to the extent
that the fair value of the goodwill within the reporting unit is less than
its carrying value. SFAS 142 also requires the Company to compare the fair
value of an intangible asset to its carrying amount. If the carrying amount
of the intangible asset exceeds its fair value, an impairment loss is
recognized. Fair values for goodwill and other indefinite-lived intangible
assets are determined based on discounted cash flows or market multiples as
appropriate.
The Company's goodwill represents the excess acquisition cost over the fair
value of the tangible and identified intangible net assets of LifeHealth
Care, Inc. acquired in 2006. For the year ended September 30, 2006, the
Company applied what it believes to be the most appropriate valuation
methodology for the reporting unit. If the Company had utilized different
valuation methodologies, the impairment test results could differ. There
was no impairment of goodwill for the year ended September 30, 2006.
INTANGIBLE ASSETS
Intangible assets, excluding goodwill, are stated on the basis of cost and
are amortized on a straight-line basis over estimated life of ten years.
Intangible assets with indefinite lives are not amortized but are evaluated
for impairment annually unless circumstances dictate otherwise. Management
periodically reviews intangible assets for impairment based on an
assessment of undiscounted future cash flows, which are compared to the
carrying value of the intangible assets. Should these cash flows not
equate to or exceed the carrying value of the intangible, a discounted cash
flow model is used to determine the extent of any impairment charge
required. At September 30, 2005 and 2006 the amortization expense on
intangible assets amounted to $5,000 and $0, respectively. The patent
costs relate to a patent application. The patent has not been granted.
When the patent is granted, the amount will be amortized. If the
application is denied, the amount will be written off.
STOCK-BASED COMPENSATION
In December 2004, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 123R, "Share-Based
Payment." This standard replaced SFAS No. 123, "Accounting for Stock-Based
Compensation" and supersedes Accounting Principles Board ("APB") Opinion
No. 25, "Accounting for Stock Issued to Employees." The standard requires
companies to recognize all share-based payments to employees, including
grants of employee stock options, in the financial statements based on
their fair values on the grant date and is effective for annual periods
beginning after June 15, 2005. The Company recognized expense of $0 for the
year ended September 30, 2006 for employee stock options that vested during
fiscal 2006 or 2005. There were no employee stock options granted,
outstanding or vested in fiscal 2006 or 2005.
SFAS No. 123, "Accounting for Stock-Based Compensation" ("SFAS No. 123"),
encouraged but did not require companies to record stock-based compensation
plans using a fair value based method. The Company chose to account for
stock-based compensation using the intrinsic value based method described
in APB Opinion No. 25, "Accounting for Stock Issued to Employees" for
accounting periods ending before July 1, 2005. Accordingly, compensation
lost for stock options is measured as the excess, if any, of the quoted
market price of the Company's common stock at the date of the grant over
the amount an employee must pay to acquire the stock. There were no
employee stock options granted, outstanding or vested in fiscal 2006 or
2005.
-F7-
INCOME TAXES
The Company accounts for its income taxes using SFAS No. 109, "ACCOUNTING
FOR INCOME TAXES", which requires the recognition of deferred tax
liabilities and assets for expected future tax consequences of events that
have been included in the financial statements or tax returns. Under this
method, deferred tax liabilities and assets are determined based on the
difference between the financial statement and tax bases of assets and
liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse.
NET INCOME (LOSS) PER SHARE
Basic net income per share is computed by dividing net income by the
weighted average number of common shares outstanding. Diluted net income
per share is computed by dividing net income by the weighted average number
of common shares outstanding and dilutive potential common shares which
includes the dilutive effect of stock options and warrants. Dilutive
potential common shares for all periods presented are computed utilizing
the treasury stock method. There were no stock options or warrants
outstanding during the reporting periods.
[Download Table]
Loss Shares Per Share
(Numerator) (Denominator) Amount
------------ ------------ ------------
For the year ended September 30, 2006:
(loss) to common stockholders $(1,120,666) 795,558,539 $ (.00)
============ ============ ============
For the year ended September 30, 2005:
(loss) to common stockholders $ (51,809) 43,838,971 $ (.00)
============ ============ ============
CAPITAL STRUCTURE AND SECURITY RIGHTS
Common Stock - The Company was initially authorized to issue 50,000,000
shares of common stock, par value $.01 per share. All common shares are
equal to each other with respect to voting, and dividend rights, and are
equal to each other with respect to liquidations rights. On October 17,
2005, a majority of shareholders passed a resolution to increase the number
of authorized common shares to 250,000,000. On January 30, 2006 the
holders of a majority of the outstanding common stock of the Company passed
a resolution to increase the number of authorized common shares from
250,000,000 to 1,500,000,000. The purpose of these resolutions was to
create a sufficient number of shares of common stock to allow the Company
to settle its last remaining liability and to commence operations.
Preferred Stock - The Company has authorization to issue 1,500,000 shares
of preferred stock, par value $.01 per share.
RECENTLY ISSUED ACCOUNTING STANDARDS
In June 2005, the FASB issued Statement of Financial Accounting Standard
No. 154, ACCOUNTING CHANGES AND ERROR CORRECTIONS, ("SFAS 154"). SFAS 154
replaces Accounting Principle Bulletin No. 20 ("APB 20"), and Statement of
Financial Accounting Standard No. 3, REPORTING ACCOUNTING CHANGES IN
INTERIM FINANCIAL STATEMENTS ("SFAS 3"), and applies to all voluntary
changes in accounting principle, and changes the requirements for
accounting for and reporting of a change in accounting principle. APB 20
previously required that most voluntary changes in accounting principle be
recognized by including in net income of the period of change a cumulative
effect of changing to the new accounting principle, whereas SFAS 154
requires retrospective application to prior periods' financial statements
of a voluntary change in accounting principle unless it is impracticable.
SFAS 154 enhances the consistency of financial information between periods.
SFAS 154 is effective for fiscal years beginning after December 15, 2005.
Our adoption of SFAS 154 is not expected to have a material impact on our
results of operations or financial position.
-F8-
In July 2006, the FASB issued FASB Interpretation No. 48, ACCOUNTING FOR
UNCERTAINTY IN INCOME TAXES (FIN 48), which, among other things, requires
applying a "more likely than not" threshold to the recognition and
derecognition of tax positions. The provisions of FIN 48 will be effective
for us on October 1, 2007. We are currently evaluating the impact of
adopting FIN 48 on the financial statements, but we do not expect its
adoption to have a significant transition effect.
In December 2004, the FASB issued SFAS No. 153, "EXCHANGES OF NONMONETARY
ASSETS AN AMENDMENT OF APB OPINION NO. 29", based on the principle that
exchanges of nonmonetary assets should be measured based on the fair value
of the assets exchanged. The guidance in that opinion, however, included
certain exceptions to that principle. This statement amends Opinion 29 to
eliminate the exception for nonmonetary exchanges of similar productive
assets and replaces it with a general exception for exchanges of
nonmonetary assets that do not have commercial substance. This statement is
effective during fiscal periods beginning after June 15, 2005.The adoption
of SFAS 153 is not expected to have a material impact on the Company's
financial statements.
In December 2004, the FASB issued SFAS No. 152, "ACCOUNTING FOR REAL ESTATE
TIME-SHARING TRANSACTIONS AN AMENDMENT OF FASB STATEMENTS NO. 66 AND 67",
to reference the financial accounting and reporting guidance for real
estate time-sharing transactions that is provided in AICPA Statement of
Position (SOP) 04-2, "Accounting for Real Estate Time-Sharing
Transactions". This Statement also amends FASB Statement No. 67,
"ACCOUNTING FOR COSTS AND INITIAL RENTAL OPERATIONS OF REAL ESTATE
PROJECTS", to state that the guidance for (a) incidental operations and (b)
costs incurred to sell real estate projects does not apply to real estate
time-sharing transactions. The accounting for those operations and costs is
subject to the guidance in SOP 04-2. This statement is effective during
fiscal years beginning after June 15, 2005. The adoption of SFAS 152 is not
expected to have a material impact on the Company's financial statements.
In November 2004, the FASB issued SFAS No. 151, "INVENTORY COSTS", an
amendment of ARB No. 43, Chapter 4 (SFAS 151), to clarify that abnormal
amounts of idle facility expense, freight, handling costs, and wasted
material (spoilage) should be recognized as current period charges, and
that fixed production overheads should be allocated to inventory based on
normal capacity of production facilities. This statement is effective for
inventory costs incurred during fiscal years beginning after June 15, 2005.
The adoption of SFAS 151 is not expected to have a material impact on the
Company's financial statements.
In December 2004, the FASB issued SFAS No. 123(R), "SHARE-BASED PAYMENT".
This Statement revises SFAS No. 123, "ACCOUNTING FOR STOCK-BASED
COMPENSATION" and supersedes APB Opinion No. 25, "ACCOUNTING FOR STOCK
ISSUED TO EMPLOYEES" SFAS No. 123(R) focuses primarily on the accounting
for transactions in which an entity obtains employee services in share-
based payment transactions. SFAS No. 123(R) requires companies to recognize
in the statement of operations the cost of employee services received in
exchange for awards of equity instruments based on the grant-date fair
value of those awards. This Statement is effective as of the first
reporting period that begins after June 15, 2005. The Company has evaluated
the provisions of SFAS 123(R) and determined that the share based employee
compensation programs are a valuable instrument in retaining and rewarding
employees and as a result, the Company will appropriately expense the costs
of administering share based compensation programs as required by SFAS
123(R).
-F9-
In May 2005, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 154 ("SFAS No. 154"), "ACCOUNTING
CHANGES AND ERROR CORRECTIONS." This statement requires entities that
voluntarily make a change in accounting principle to apply that change
retrospectively to prior periods' financial statements, unless this would
be impracticable. SFAS No. 154 supersedes APB Opinion No. 20, "ACCOUNTING
CHANGES," which previously required that most voluntary changes in
accounting principle be recognized by including in the current period's net
income the cumulative effect of changing to the new accounting principle.
SFAS No. 154 also makes a distinction between "retrospective application"
of an accounting principle and the "restatement" of financial statements to
reflect the correction of an error. SFAS No. 154 applies to accounting
changes and error corrections that are made in fiscal years beginning after
December 15, 2005. Management has adopted these provisions.
In February 2006, the FASB issued SFAS Statement No. 155, "ACCOUNTING FOR
CERTAIN HYBRID FINANCIAL INSTRUMENTS--AN AMENDMENT OF FASB STATEMENTS NO.
133 AND 140" ("SFAS 155"). This Statement amends FASB Statements No. 133,
Accounting for Derivative Instruments and Hedging Activities, and No. 140,
Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities. This Statement resolves issues addressed
in Statement 133 Implementation Issue No. D1, "APPLICATION OF STATEMENT 133
TO BENEFICIAL INTERESTS IN SECURITIZED FINANCIAL ASSETS." This Statement
permits fair value re-measurement for any hybrid financial instrument that
contains an embedded derivative that otherwise would require bifurcation,
clarifies which interest-only strips and principal-only strips are not
subject to the requirements of Statement 133, establishes a requirement to
evaluate interests in securitized financial assets to identify interests
that are freestanding derivatives or that are hybrid financial instruments
that contain an embedded derivative requiring bifurcation, clarifies that
concentrations of credit risk in the form of subordination are not embedded
derivatives and amends Statement 140 to eliminate the prohibition on a
qualifying special-purpose entity from holding a derivative financial
instrument that pertains to a beneficial interest other than another
derivative financial instrument. SFAS 155 is effective for all financial
instruments acquired or issued for the Company for fiscal year begins after
September 15, 2006. The adoption of this standard is not expected to have
a material effect on the Company's results of operations or financial
position.
In July 2006, the FASB issued FASB Interpretation No. 48, "ACCOUNTING FOR
UNCERTAINTY IN INCOME TAXES - AN INTERPRETATION OF FASB STATEMENT NO. 109"
("FIN 48"). FIN 48 clarifies the accounting for uncertainty in income taxes
recognized in the financial statements and prescribes a recognition
threshold and measurement attribute for the financial statement recognition
and measurement of a tax position taken in a tax return. The adoption of
this standard is not expected to have a material effect on the Company's
results of operations or financial position.
In September 2006, the FASB issued SFAS No. 157, "FAIR VALUE MEASUREMENTS"
("SFAS 157"). While SFAS 157 formally defines fair value, establishes a
framework for measuring fair value and expands disclosure about fair value
measurements, it does not require any new fair value measurements. SFAS 157
applies under other accounting pronouncements that require or permit fair
value measurements. SFAS 157 is required to be adopted effective January 1,
2008 and the Company does not presently anticipate any significant impact
on its consolidated financial position, results of operations or cash
flows.
In September 2006, the FASB issued SFAS No. 158, "EMPLOYERS' ACCOUNTING FOR
DEFINED BENEFIT PENSION AND OTHER POSTRETIREMENT PLANS - AN AMENDMENT OF
FASB STATEMENTS NO. 87, 88, 106 AND 132(R)" ("SFAS 158"). SFAS 158 requires
an employer to recognize the funded status of its defined benefit pension
and other postretirement plans as an asset or liability in its statement of
financial position and to recognize changes in the funded status in the
year in which the changes occur through other comprehensive income. The
funded status of a plan is measured as the difference between plan assets
at fair value and the benefit obligation, which is represented by the
projected benefit obligation for pension plans and the accumulated
postretirement benefit obligation for other postretirement plans. SFAS 158
requires the recognition, as a component of other comprehensive income, net
of tax, of the gains or losses and prior service costs or credits that
arise during the period but are not recognized as a component of net
periodic benefit cost in accordance with existing accounting principles.
-F10-
Amounts required to be recognized in accumulated other comprehensive
income, including gains and losses and prior service costs or credits are
adjusted as they are subsequently recognized as components of net periodic
benefit cost pursuant to the recognition and amortization provisions of
existing accounting principles. In addition, SFAS 158 requires plan assets
and obligations to be measured as of the date of the employer's year-end
statement of financial position as well as the disclosure of additional
information about certain effects on net periodic benefit cost for the next
fiscal year from the delayed recognition of the gains or losses and prior
service costs or credits.
The Company is required to adopt those provisions of SFAS 158 attributable
to the initial recognition of the funded status of the benefit plans and
disclosure provisions as of December 31, 2006. Those provisions of SFAS 158
applicable to the amortization of gains or losses and prior service costs
or credits from accumulated other comprehensive income to the net periodic
benefit cost are required to be applied on a prospective basis effective
January 1, 2007. The Company does not anticipate that the adoption of SFAS
158 will have any impact on its consolidated financial statements.
RECLASSIFICATIONS
Certain amounts from prior years have been reclassified to conform to the
2006 presentation.
NOTE 3. INTANGIBLE ASSET
The components of amortized intangible asset as of September 30, 2006 is as
follows
[Download Table]
CE Designation Gross Carrying Amount $ 100,000
Accumulated Amortization (5,000)
------------
Net Carrying Amount $ 95,000
Patent Cost 6,730
------------
Total Net Carrying Amount $ 101,730
============
Amortization expense for intangible assets was $5,000 and $0 for the years
ended September 30, 2006 and 2005 respectively. The patent costs relate to
a patent application. The patent has not been granted. When the patent is
granted, the amount will be amortized. If the application is denied, the
amount will be written off.
NOTE 4. RELATED PARTY TRANSACTION
In 1997, the Company began to experience financial distress and filed for
bankruptcy chapter 11 protection in the Southern District of New York.
Shortly after its filing, the Company ceased all operations. While its
bankruptcy filing was active, the Company turned over title to all of its
assets to its secured lender Heller Financial, Inc. ("Heller"). Heller
sold all the assets. There was a significant shortfall between the amount
owed by the Company and the proceeds from the sale of assets. As there
were no remaining assets for the remaining creditors, Judge Burton Lifland
closed the Company's case on June 3, 1999. The creditors received notice
from the bankruptcy court that their claims were valueless and were
eliminated. As a result of the court's action, the only Company
liabilities that survived were those that were not submitted as claims in
the bankruptcy, of which there was only one. Subsequent to the court
notice, Company management reaffirmed the sole remaining liability. In
accordance with Statement of Financial Accounting Standard No. 140,
"ACCOUNTING FOR TRANSFERS AND SERVICES OF FINANCIAL ASSETS AND
EXTINGUISHMENTS OF LIABILITIES," paragraph 16 (b), and as a result of the
court's order, all other obligations were extinguished June 4, 1999.
Subsequent to this date, the Company went into an extended period of
dormancy. During this period, the sole remaining creditor continued its
efforts to collect the amount owed by the Company. The one remaining
obligation's face amount was $252,780 in 1998 and continued to accrue
interest. The total amount owed at September 30, 2005 including accrued
interest is $485,985. The Company settled this obligation, in full on
November 7, 2005 by issuing stock, as more fully described in footnote 8.
-F11-
During the year a shareholder of the Company advanced the Company $5,088 to
pay for operating costs. This amount is non-interest bearing, unsecured,
and due on demand, however the shareholder has agreed not to demand
payments for one year. In fiscal 2005, the shareholder advanced $3,351 to
the Company under the same terms. The same shareholder advanced $85,218 to
LifeHealth Care, Inc. prior to its being acquired by the Company. The
terms of the advance to LifeHealth Care, Inc. are the same.
NOTE 5. INCOME TAXES
The Company filed its final tax returns for the year 1998. It has not
filed tax returns for any period since 1998. The ability of the Company to
utilize all or part of its operating tax loss caryforwards or its
charitable contribution carryforwards to reduce any tax obligation in the
future has not been determined. In addition, at this time, the Company has
no operations and no possibility of producing taxable income to utilize any
such operating tax loss caryforward or charitable contribution
carryforward. For both reasons, no tax asset has been recorded since the
Company believes at this time it is more likely than not that that the
amounts will not be realized. The Company has adopted FASB 109 to account
for income taxes. The Company currently has no issues that create timing
differences that would mandate deferred tax expense. Net operating losses
would create possible tax assets in future years. Due to the uncertainty as
to the utilization of net operating loss carry forwards an evaluation
allowance has been made to the extent of any tax benefit that net operating
losses may generate. No provision for income taxes has been recorded due
to the net operating loss carryforward of $1,318,000 as of September 30,
2006 that will be offset against further taxable income. No tax benefit
has been reported in the financial statements.
Deferred tax assets and the valuation account as of September 30, 2006 and
2005 are as follows:
[Download Table]
2006 2005
------------ ------------
Deferred tax asset:
Net operating loss carryforward $ 457,160 $ 76,160
Valuation allowance (457,160) (76,160)
------------ ------------
$ - $ -
============ ============
The components of income tax expense are as follows:
[Download Table]
2006 2005
------------ ------------
Current Federal Tax $ - $ -
Current State Tax - -
Change in NOL benefit (381,000) (17,340)
Change in allowance 381,000 17,340
------------ ------------
$ - $ -
============ ============
-F12-
The Company has incurred losses that can be carried forward to offset
future earnings if conditions of the Internal Revenue Codes are met. These
losses are as follows:
[Download Table]
Expiration
Year of Loss Amount Date
-----------------------------------------------------------------
2000 $ 28,000 2020
2001 31,000 2021
2002 34,000 2022
2003 38,000 2023
2004 42,000 2024
2005 51,000 2025
2006 1,120,000 2026
NOTE 6. COMMITMENTS, CONTINGENCIES AND OTHER MATTERS
LITIGATION
The Company has been inactive for over seven years. Based on searches
performed in various jurisdictions that the Company previously operated in,
no asserted or pending litigations were discovered. Inquiries of former
officers and directors revealed no known litigation, either pending,
suspended or possible. There can be no assurance that there are no
potential or possible litigations in the jurisdictions searched or other
jurisdictions not searched. Based on currently available information, we
believe that there are no pending claims that will have a material adverse
effect on the Company's operating results or financial position.
NOTE 7. GOING CONCERN
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company has negative capital
and has had recurring operating losses for the past several years and is
dependent upon financing to continue operations. The financial statements
do not include any adjustments that might result from the outcome of
uncertainty. It is management's plan to continue to implement their
strategy to commence operations. As the Company's revenues are established,
management expects to report net income possibly within one year of
acquiring an operating company. With the commencement of operations,
management believes they will generate sufficient funds to support
operations. Officers will continue to support operations as needed for any
shortfalls in cash flows.
-F13-
ITEM 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
ITEM 9A. Controls and Procedures
The Company mainta