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3: EX-32.1 Certification per Sarbanes-Oxley Act (Section 906) HTML 8K
Securities
registered pursuant to Section 12(b) of the Exchange Act: None
Securities
registered pursuant to Section 12(g) of the Exchange Act
Common
stock, par value $0.0001 per share
(Title of
Class)
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 this
Form 10-K. x
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,”“accelerated filer,” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one)
Large accelerated filer ¨
Accelerated filer ¨
Non-accelerated filer ¨
Smaller reporting company x
The
issuer’s revenues for its most recent fiscal year: $0
As of May31, 2009, the aggregated
market value of the common stock held by non-affiliates was approximately
$294,00 based upon the price at which the common shares were purchased by
the Company from existing shareholders in May 2008.
As of May31, 2009, there were 23,051,993 shares of the Company’s common stock issued and
outstanding.
This
Annual Report on Form 10-K and the documents incorporated herein by reference
contain forward-looking statements that have been made pursuant to the
provisions of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements are based on current expectations, estimates and
projections about our industry, management beliefs, and assumptions made by
management. Words such as “anticipates,”“expects,”“intends,”“plans,””believes,”“seeks,”“estimates,” variations of such words
and similar expressions are intended to identify such forward-looking
statements. These statements are not guarantees of future performance and are
subject to certain risks, uncertainties and assumptions that are difficult to
predict; therefore, actual results and outcomes may differ materially from what
is expressed or forecasted in any such forward-looking statements.
Unless
otherwise noted, references in this Form 10-K to “MCE” the “Company,”“we,”“our” or “us” means Modern City Entertainment, Inc., a Washington
corporation.
FORWARD
LOOKING STATEMENTS
There are
statements in this registration statement that are not historical facts. These
“forward-looking statements” can be identified by use of terminology such as
“believe,”“hope,”“may,”“anticipate,”“should,”“intend,”“plan,”“will,”“expect,”“estimate,”“project,”“positioned,”“strategy” and similar
expressions. You should be aware that these forward-looking statements are
subject to risks and uncertainties that are beyond our control. For a
discussion of these risks, you should read this entire Registration Statement
carefully. Although management believes that the assumptions underlying
the forward looking statements included in this Registration Statement are
reasonable, they do not guarantee our future performance, and actual results
could differ from those contemplated by these forward looking statements. The
assumptions used for purposes of the forward-looking statements specified in the
following information represent estimates of future events and are subject to
uncertainty as to possible changes in economic, legislative, industry, and other
circumstances. As a result, the identification and interpretation of data and
other information and their use in developing and selecting assumptions from and
among reasonable alternatives require the exercise of judgment. To the extent
that the assumed events do not occur, the outcome may vary substantially from
anticipated or projected results, and, accordingly, no opinion is expressed on
the achievability of those forward-looking statements. In the light of
these risks and uncertainties, there can be no assurance that the results and
events contemplated by the forward-looking statements contained in this
Registration Statement will in fact transpire. You are cautioned not to place
undue reliance on these forward-looking statements, which speak only as of their
dates. We do not undertake any obligation to update or revise any
forward-looking statements.
Modern
City Entertainment Inc. (formerly Azul Studios International Inc.) (the
“Company”) was incorporated on September 23, 1996 under the laws of the state of
Texas. In July 1999 the Company changed its jurisdiction to the State
of Washington through a merger agreement with Realty Technologies Inc.
(RTI). That business was subsequently renamed to Equinta Corp and the
business was sold. The Company then changed the name of the Company to eCourier
Corps Inc. (ECC) and commenced the development of a business model in the
courier business which was subsequently abandoned. In December
2004, the Board of Directors of the Company were presented with a business plan
and opportunity to acquire all right, title and interest to a business plan by
the name of Azul Studios. In April 2004 the Board of Directors
revised and approved the business plan, and commenced operations with limited
success under the name “Azul Studios International Inc.”
On
February 28, 2007, Modern City Entertainment Inc. (formerly Azul Studios
International Inc.) entered into an agreement for the acquisition of Modern City
Entertainment LLC (“MCE”), a Miami based development stage independent movie
Company, which is in the business of acquiring, producing and distributing
feature films internationally. The Company currently has the rights
to six screenplays and is in the process of securing financing for the
development of its first production. On February 28, 2007, a shareholder of the
Company entered into an agreement with the unit holders of MCE, whereby that
shareholder tendered 19,071,546 of the common shares held in the Company to be
held in trust for the unit holders of MCE in exchange for the transfer of 99% of
the issued and outstanding units of MCE to the Company. This
transaction was accounted for as a reverse acquisition. The shares were issued
December 12, 2007.
The
initial screenplay being developed is a movie called “Padre Pio The Signs of
Heaven” which is a real life journey through the life, beliefs and miraculous
events in the life of Padre Pio. It is management’s intention to
produce this using the highest quality of effects to capture the compelling
realism of his life and thereby capture the imagination of audiences
worldwide.
Reports
to Security Holders
The
public may read and copy any materials filed by us with the SEC at the SEC's
Public Reference Room at 100 F Street, N.E., Room 1580, Washington, D.C. The
public may obtain information on the operation of the SEC's Public Reference
Room by calling the SEC at 1-800-SEC-0330. We will be an electronic filer and
the SEC maintains an Internet site that contains reports, proxy and information
statements, and other information regarding issuers that file electronically
with the SEC which may be viewed at http://www.sec.gov/
..
The
following table sets forth information relating to each of the Company's offices
as of December 31, 2008. The total net book value of the Company's
premises and equipment (furniture, fixtures and equipment) at December 31, 2008
was $1,184.
The
Company is not a party to any legal proceedings, and no such proceedings are
known to be contemplated. No director, officer or affiliate of the Company, and
no owner of record or beneficial owner of more than 5.0% of the securities of
the Company, or any associate of any such director, officer or security holder
is known to be a party adverse to the Company or has a material interest adverse
to the Company in reference to pending litigation.
Item
4. Submission of Matters to a Vote of Security
Holders
Item
5. Market for Common Equity and Related Stockholder
Matters
No public
trading market exists for the Company's securities. No assurance can be given
that an active trading market will develop in the foreseeable future. No
dividends have been paid to date and the Company's Board of Directors does not
anticipate paying dividends in the foreseeable future.
As of
December 31, 2008, the Company had 23,051,993 shares of common stock
outstanding, par value $0.0001, held by approximately 490 shareholders of
record.
During
the year ended December 31, 2008, the Company purchased 11,766,466
shares of its outstanding common stock from 15 existing shareholders.
The Company did not issue any unregistered securities during the
year.
On July21, 2007, the Company issued 2,073,600 shares at a price of $0.25 per share to
accredited investors within the US pursuant to a Regulation 506 exemption from
Registration.
On August20, 2007, the Company issued 256,200 shares at a price of $1.00 per share to
accredited investors within the US pursuant to a Regulation 506 exemption from
Registration,
On
February 28, 2007, a shareholder of the Company entered into an agreement with
the unit holders of MCE, whereby that shareholder tendered 19,071,546 of the
common shares held in the Company to be held in trust for the unit holders of
MCE in exchange for the transfer of 99% of the issued and outstanding units of
MCE to the Company. This transaction was accounted for as a reverse
acquisition. The shares were issued December 12, 2007.
Item
6. Management’s Discussion and Analysis or Plan of
Operation
The
following is a discussion and analysis of the Company's financial position and
results of operation and should be read in conjunction with the information set
forth under Item 1 – Description of Business and the consolidated
financial statement and notes thereto appearing elsewhere in this report.
Certain statements contained in this Annual Report on Form 10-K, including
without limitation, statements containing the words "believes,""anticipates,""estimates,""expects," and words of similar import, constitute "forward looking
statements." You should not place undue reliance on these forward looking
statements. Our actual results could differ materially from those anticipated in
these forward looking statements for many reasons, including the risks faced by
us described in the Annual Report and in other documents we file with the
Securities and Exchange Commission.
GENERAL
The
Company is in the process of building upon the developing business of its newly
acquired subsidiary Modern City Entertainment LLC. The Company is
currently seeking equity financing in order to fund production of the Company’s
initial screen play called Padre Pio, Signs of Heaven. To date, no operating
revenues have been generated. The Company's operations to date have
consumed substantial amounts of cash. The Company's negative cash
flow from operations is expected to continue and to accelerate in the
foreseeable future as the Company develops its initial production.
The
Company was in the development stage through December 31, 2007, however during
2008 the Company commenced certain film production activities and paid certain
expenditures related to costs associated with actual filming. Due to the
commencement of these activities, the Company no longer considers itself in the
development stage despite not earning revenues. Revenue for the film industry
are generally not recognized until after certain distribution or licensing
arrangements are executed, a process that may take a significant amount of time
to complete even after a film project has been concluded and is ready for
distribution.
-6-
On
February 28, 2007, a shareholder of the Company entered into an agreement with
the unit holders of MCE, whereby that shareholder tendered 19,071,546 of the
common shares held in the Company to be held in trust for the unit holders of
MCE in exchange for the transfer of 99% of the issued and outstanding units of
MCE to the Company. This transaction was accounted for as a reverse
acquisition. The shares were issued December 12, 2007.
During
the year ended December 31, 2007 and to date, the primary source of capital has
been loans from existing shareholders, and equity sales. Upon the acquisition of
Modern City Entertainment LLC, on February 28, 2007, the Company’s consolidated
cash balance was increased to $757,906 comprised of the cash balance in the
Company’s subsidiary Company. Since that time, the Company has made equity sales
of $518,400 at $0.25 per share and an additional $256,200 sold at $1.00 per
share. It is management’s intention to secure additional equity financings by
way of further private placements of the Company’s common stock.
The
Company's continued existence as a going concern is ultimately dependent upon
its ability to secure funding on an ongoing basis. The Company will
be seeking investment capital for the development of its initial screenplay, and
the marketing of that screenplay once complete. There can be no assurance that
such additional funding will be available on acceptable terms, if at
all.
The
Company incurred a loss from operations of $74,567 compared to a loss of
$154,731 in the previous fiscal year. The previous year loss reflects
expenditures as the Company had increased spending in order to focus upon the
development of another area of activity, which has been successfully consummated
with the acquisition of Modern City Entertainment LLC. Current year
expenditures represent expenditures related to general and administrative costs
and salary. The reduction in the current year loss compared with 2007 is
primarily due to the capitalization of film production costs.
LIQUIDITY
AND CAPITAL RESOURCES
At
December 31, 2008the Company had a working capital balance of
$346,538. This is the result of the acquisition of Modern City
Entertainment LLC, and subsequent equity financings.
During
the year ended December 31, 2008 and to date, the primary source of capital has
been loans from existing shareholders, and equity sales. Upon the acquisition of
Modern City Entertainment LLC, on February 28, 2007, the Company’s consolidated
cash balance was increased to $757,906 comprised of the cash balance in the
Company’s subsidiary Company. Since that time, the Company has made equity sales
of $518,400 at $0.25 per share and an additional $256,200 sold at $1.00 per
share. It is management’s intention to secure additional equity financings by
way of further private placements of the Company’s common stock.
During
the year ended December 31, 2008, the Company completed a purchase of
approximately 11.6 million of its outstanding shares for a total of $150,000.
The shares were subsequently cancelled.
The
Company is in the process of taking its securities up to trade on the OTCBB
which management believes will facilitate the future financing of the Company,
from new and existing shareholders.
Item
7A. Quantitative and Qualitative Disclosures About Market
Risk.
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the
Board of Directors
Modern
City Entertainment, Inc.
Fort
Lauderdale, Florida
We have
audited the accompanying consolidated balance sheets of Modern City
Entertainment, Inc. as of December 31, 2008 and 2007 and the related
consolidated statements of operations, changes in stockholders' equity and cash
flows for each of the two years then ended. These consolidated
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We
conducted our audits in accordance with the standards of the Public Company
Accounting 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 audit 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 purposes 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 amount and disclosures in the consolidated 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 consolidated financial statements referred to above present fairly,
in all material respects, the financial position of Modern City Entertainment,
Inc. as of December 31, 2008 and 2007, and the results of their operations and
their cash flows for each of the two years then ended, 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 1 to the financial
statements, the Company has not yet achieved profitable operations, has
accumulated losses and expects to incur further losses. These
conditions raise substantial doubt about its ability to continue as a going
concern. Management’s plans regarding those matters also are
described in Note 1. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
Modern
City Entertainment, Inc. (formerly Azul Studios International Inc.) (the
“Company”) was incorporated on September 23, 1996 under the laws of the State of
Texas as Alvin Consulting Inc. On July 15, 1999, the stockholders of
the Company approved a merger with a newly incorporated company in the State of
Washington and the surviving company, Realty Technologies Inc., operates under
the laws of the State of Washington. On August 12, 1999 stockholders
of the Company approved an amendment to the articles of the Company changing its
name to Equinta Corp. On April 10, 2000, the stockholders of the
Company approved a change to the articles of the Company changing its name to
Courier Corps Inc. On May 16, 2000, the stockholders the Company
approved a change in the name of the Company to eCourierCorps Inc. On
March 12, 2004, the Company changed its name to Azul Studios International Inc.
and adopted a business plan to develop a group of boutique hotels catering to
the professional photographers and film artists. In July 2004 the
Company incorporated Azul Studios Properties S.L., in Barcelona, Spain, a
wholly-owned subsidiary. The Company also incorporated a wholly-owned
corporation, Azul Media Inc., in the State of Washington on March 8,2005. The Company intended to develop a group of professional
photographic studios in select locales around the world. On June 29,2006, the Company sold all of the issued and outstanding shares of its
wholly-owned subsidiary, Azul Studios Property, S.L.. On February 28,2007, the Company agreed to acquire Modern City Entertainment LLC (“MCE”), a
Miami based development stage independent movie company, which is in the
business of acquiring, producing and distributing feature films internationally
(Note 8). Currently the Company has no revenue.
The
Company was a development stage company as defined under Statement of Financial
Accounting Standards (“FAS”) No. 7 through the year ended December 31,2007. Prior to April 1, 2000, the Company developed and sold the
rights to a web based internet application in the real estate
industry. During 2008, the company commenced incurring production
costs related to the production of the aforementioned screenplay.
These
financial statements have been prepared in accordance with generally accepted
accounting principles applicable to a going concern, which assumes that the
Company will be able to meet its obligations and continue its operations for its
next fiscal year. Realization values may be substantially different
from carrying values as shown and these financial statements do not give effect
to adjustments that would be necessary to the carrying values and classification
of assets and liabilities should the Company be unable to continue as a going
concern. At December 31, 2008, the Company had not yet achieved
profitable operations, has accumulated losses of approximately $500,000 since
its recapitalization, and expects to incur further losses in the development of
its business, all of which casts substantial doubt about the Company’s ability
to continue as a going concern. The Company’s ability to continue as
a going concern is dependent upon its ability to generate future profitable
operations and/or to obtain the necessary financing to meet its obligations and
repay its liabilities arising from normal business operations when they come
due. Management considers that the Company will be able to obtain
additional funds by equity financing and/or related party advances, however
there is no assurance of additional funding being
available.
Note
2 Summary
of Significant Accounting Policies
The
financial statements of the Company have been prepared in accordance with
accounting principles generally accepted in the United States of
America. Because a precise determination of many assets and
liabilities is dependent upon future events, the preparation of financial
statements for a period necessarily involves the use of estimates which have
been made using careful judgment. Actual results may vary from these
estimates.
-14-
The
financial statements have, in management’s opinion, been properly prepared
within the framework of the significant accounting policies summarized
below:
Principles
of Consolidation
The
consolidated financial statements included the accounts of the Company and its
wholly-owned subsidiary, Azul Media Inc. All significant
inter-company transactions and balances have been eliminated on
consolidation.
Impairment
of Long-lived Assets
The
Company reports the impairment of long-lived assets and certain identifiable
intangibles in accordance with FAS No. 144, “Accounting for the Impairment of
Long-lived Assets”. Certain long-lived assets held by the Company are
reviewed for impairment whenever assets or changes in circumstances indicate the
carrying amount of an asset may not be recoverable. Accordingly, an
impairment loss is recognized in the year it is determined.
Income
Taxes
The
Company uses the asset and liability method of accounting for income taxes
pursuant to FAS, No. 109 “Accounting for Income Taxes”. Deferred tax
assets and liabilities are recognized for future tax consequences attributable
to differences between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases. Deferred tax
assets and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to
be recovered or settled. When necessary, a valuation allowance is
recorded to reduce tax assets to an amount for which realization is more likely
than not. The effect of changes in tax rates is recognized in the
period in which the rate change occurs.
Basic
and Diluted Loss Per Share
The
Company reports basic loss per share in accordance with the FAS No. 128,
“Earnings Per Share”. Basic loss per share is computed using the
weighted average number of shares outstanding during the
period. Diluted loss per share includes the potentially dilutive
effect of outstanding debt and stock options which are convertible into common
shares. Diluted loss per share has not been provided as it would be
anti-dilutive.
Property
and Equipment
Property
and equipment are stated at cost. Depreciation is provided over the
estimated useful lives of the related assets using the straight-line
method.
Financial
Instruments
The
carrying value of the Company’s financial instruments, consisting of cash and
accounts payable and accrued liabilities approximate their fair value due to the
short term maturity of such instruments. Due to related parties and
loans payable to stockholders also approximate fair value. Unless otherwise
noted, it is management’s opinion that the Company is not exposed to significant
interest, currency or credit risks arising from these financial
instruments.
Stock-based
Compensation
The
Company has a stock-based compensation plan, which is described in Note
5. Under this plan, all stock based payments to non-employees are
accounted for using a fair value based method of accounting. No
compensation expense is recognized when the stock options are granted to
employees or directors. Consideration received from employees,
directors or consultants on exercise of stock options is credited to share
capital. If stock is repurchased from employees, directors or
consultants, the excess of the consideration paid over the carrying amount of
the stock is charged to deficit. On the granting of stock options to
employees or directors the Company has elected to provide pro forma disclosure
on their fair value.
-15-
Revenue
Recognition and Production Costs
The
Company recognizes revenue in accordance with Securities and Exchange
Commission Staff Accounting Bulletin No. 104, "Revenue Recognition.” and also
adheres to AICPA Statement of Position 00-2 "Accounting by Producers or
Distributors of Films" which specifically addresses the film industry. SOP 00-2
states that an entity should recognize revenue from a sale or licensing
arrangement of a film when all of the following conditions are met:
a.
Persuasive
evidence of a sale of licensing arrangement with a customer
exists
b.
The
film is complete and, in accordance with the terms of the arrangement, has
been delivered or is available for immediate and unconditional
delivery.
c.
The
license period of the arrangement has begun and the customer can begin its
exploitation, exhibition, or sale.
d.
The
arrangement fee is fixed or
determinable.
e.
Collection
of the arrangement fee is reasonably
assured.
Production
costs incurred are capitalized and will be recognized as expenses when the
related revenue is recognized.
Reclassification
Certain
accounts in the prior-year financial statements have been reclassified for
comparative purposes to conform with the presentation in the current-year
financial statements.
Recent
Accounting Pronouncements
The
Financial Accounting Standards Board (“FASB”) has recently issued several new
accounting pronouncements which may apply to the company.
In
December 2007, the FASB issued SFAS No. 141 (revised 2007) “Business
Combinations” ("FASB No. 141(R)") FASB No. 141(R) retains
the fundamental requirements of the original pronouncement requiring that the
purchase method be used for all business combinations. FASB No.
141(R) defines the acquirer as the entity that obtains control of one or more
businesses in the business combination, establishes the acquisition date as the
date that the acquirer achieves control and requires the acquirer to recognize
the assets acquired, liabilities assumed and any non-controlling interest at
their fair values as of the acquisition date. FASB No. 141(R) also requires that
acquisition-related costs be recognized separately from the
acquisition. FASB No. 141(R) is effective for the Company for the
fiscal year 2010. The Company is currently assessing the impact of
FASB No. 141(R) on its consolidated financial position and results of
operations.
In
December 2007, the FASB issued Statement No. 160, "Noncontrolling Interests in
Consolidated Financial Statements an amendment of ARB No. 51 ("FASB No.
160")." The objective of FASB No. 160 is to improve the relevance,
comparability, and transparency of the financial information that a reporting
entity provides in its consolidated financial statements by establishing
accounting and reporting standards for the Noncontrolling interest in a
subsidiary and for the deconsolidation of a subsidiary. This
Statement applies to all entities that prepare consolidated financial
statements, except not-for-profit organizations. FASB No. 160 amends ARB 51 to
establish accounting and reporting standards for the Noncontrolling interest in
a subsidiary and for the deconsolidation of a subsidiary. It also
amends certain of ARB 51'sconsolidation procedures for consistency with the
requirements of FASB No. 141 (R). This Statement is effective for fiscal years,
and interim periods within those fiscal years, beginning on or after December15, 2008 (that is, January 1, 2009, for entities with calendar
year-ends). Earlier adoption is prohibited. The effective
date of this Statement is the same as that of the related
Statement141(R). FASB No. 160 will be effective for the Company's
fiscal 2010. This Statement shall be applied prospectively as of the
beginning of the fiscal year in which this Statement is initially applied,
except for the presentation and disclosure requirements. The
presentation and disclosure requirements shall be applied retrospectively for
all periods presented.
-16-
In March
2008, the FASB issued SFAS No. 161, "Disclosures about Derivative Instruments
and Hedging Activities" ("SFAS No. 161"). SFAS No. 161 amends and
expands the disclosure requirement for FASB Statement No. 133, "Derivative
Instruments and Hedging Activities" ("SFAS No. 133"). It
requires enhanced disclosure about (i) how and why an entity uses derivative
instruments, (ii) how derivative instruments and related hedged items are
accounted for under SFAS No. 133 and its related interpretations, and (iii) how
derivative instruments and related hedged items affect an entity's financial
position, financial performance, and cash flows. SFAS No. 161 is
effective for the Company as of January 1, 2009.
In April
2008, the FASB issued FSP 142-3, "Determination of the Useful Life of Intangible
Assets", (FSP 142-3). FSP 142-3 amends the factors that should be considered in
developing renewal or extension assumptions used to determine the useful life of
a recognized intangible asset under SFAS No. 142, "Goodwill and Other Intangible
Assets". FSP 142-3 is effective for fiscal years beginning after December 15,2008. The Company is currently assessing the impact of FSP142-3 on
its consolidated financial position and results of operations.
In
May 2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally Accepted
Accounting Principles." SFAS No. 162 identifies the sources of accounting
principles and provides entities with a framework for selecting the principles
used in preparation of financial statements that are presented inconformity with
GAAP. The current GAAP hierarchy has been criticized because it is
directed to the auditor rather than the entity, it is complex, and it ranks FASB
Statements of Financial Accounting Concepts, which are subject to the same level
of due process as FASB Statements of Financial Accounting Standards, below
industry practices that are widely recognized as generally accepted but that are
not subject to due process. The Board believes the GAAP hierarchy
should be directed to entities because it is the entity (not its auditors) that
is responsible for selecting accounting principles for financial statements that
are presented in conformity with GAAP. The adoption of FASB 162 is
not expected to have a material impact on the Company's consolidated financial
position and results of operations.
In May,
2008 the FASB issued FASB Staff Position (FSP) APB 14-1, "Accounting
for Convertible Debt Instruments That May Be Settled in Cash upon Conversion
(Including Partial Cash Settlement)." APB 14-1 requires the issuer to separately
account for the liability and equity components of convertible debt instruments
in a manner that reflects the issuer's nonconvertible debt borrowing rate. The
guidance will result in companies recognizing higher interest expense in the
statement of operations due to amortization of the discount that results from
separating the liability and equity components. APB 14-1 will be effective for
financial statements issued for fiscal years beginning after December 15, 2008,
and interim periods within those fiscal years. The Company is
currently evaluating the impact of adopting APB 14-1 on its consolidated
financial statements.
In June
2008, the FASB issued FSP No. EITF 03-6-1, "Determining Whether Instruments
Granted in Share-Based Payment Transactions Are Participating Securities". This
FASB Staff Position (FSP) addresses whether instruments granted in share-based
payment transactions are participating securities prior to vesting and,
therefore, need to be included in the earnings allocation in computing earnings
per share (EPS) under the two-class method described in paragraphs 60
and 61 of FASB Statement No. 128, Earnings per
Share. This FSP provides that unvested share-based payment awards
that contain non forfeitable rights to dividends or dividend equivalents
(whether paid or unpaid) are participating securities and shall be included in
the computation of EPS pursuant to the two-class method. The
provisions of FSP No. 03-6-1 shall be effective for financial statements issued
for fiscal years beginning after December 15, 2008, and interim periods within
those years. All prior-period EPS data presented shall be adjusted
retrospectively (including interim financial statements, summaries of earnings,
and selected financial data) to conform to the provisions of this FSP. Early
application is not permitted. The provisions of FSP No. 03-6-1 are
effective for the Company retroactively in the first quarter ended March 31,2009. The Company is currently assessing the impact of FSP No. EITF
03-6-1 on the calculation and presentation of earnings per share in its
consolidated financial statements.
In
October 2008, the FASB issued FSP FAS No. 157-3, “Determining the Fair Value of
a Financial Asset When the Market for That Asset is Not Active.” This
FSP clarifies the application of SFAS No. 157, “Fair Value Measurements,” in a
market that is not active. The FSP also provides examples for
determining the fair value of a financial asset when the market for that
financial asset is not active. FSP FAS No. 157-3 was effective upon
issuance, including prior periods for which financial statements have not been
issued. The impact of adoption was not material to the Company’s
consolidated financial condition or results of operations.
-17-
In
September 2008, the FASB issued EITF Issue No. 08-5 (“EITF No. 08-5”), “Issuer’s
Accounting for Liabilities Measured at Fair Value with a Third-Party Credit
Enhancement.” This FSP determines an issuer’s unit of accounting for
a liability issued with an inseparable third-party credit enhancement when it is
measured or disclosed at fair value on a recurring basis. FSP EITF
No. 08-5 is effective on a prospective basis in the first reporting period
beginning on or after December 15, 2008. The Company is currently
assessing the impact of FSP EITF No. 08-5 on its consolidated financial position
and results of operations.
In
September 2008, the FASB issued FSP FAS No. 133-1, “Disclosures about Credit
Derivatives and Certain Guarantees: An Amendment of FASB Statement No. 133 and
FASB Interpretation No. 45; and Clarification of the Effective Date of FASB
Statement No. 161.” This FSP amends FASB Statement No. 133,
“Accounting for Derivative Instruments and Hedging Activities,” to require
disclosures by sellers of credit derivatives, including credit derivatives
embedded in a hybrid instrument. The FSP also amends FASB
Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others,” to require
and additional disclosure about the current status of the payment/performance
risk of a guarantee. Finally, this FSP clarifies the Board’s intent
about the effective date of FASB Statement No. 161, “Disclosures about
Derivative Instruments and Hedging Activities.” FSP FAS No. 133-1 is
effective for fiscal years ending after November 15, 2008. The
Company is currently assessing the impact of FSP FAS No. 133-1 on its
consolidated financial position and results of operations.
The
Company has reviewed all recently issued, but not yet effective, accounting
pronouncements and does not believe the future adoption of any such
pronouncements will cause a material impact on its financial condition or the
results of its operations.
Note
3 Property
and Equipment
The
Company’s property and equipment are as follows as of December 31:
2008
Accumulated
Cost
Depreciation
Net
Computer
equipment
$
1,690
$
507
$
1,183
2007
Accumulated
Cost
Depreciation
Net
Computer
equipment
$
1,690
$
138
$
1,552
Depreciation
expense for the year ended December 31, 2008 and 2007 was $338 and $169,
respectively.
-18-
Note
4 Capital
Stock
Reverse
Split
Effective
December 30, 2005, the Company reverse split its issued common stock on the
basis of one new share for two old shares and the Articles of Incorporation of
the Company was amended to reduce the authorized shares of common stock of the
Company from 100,000,000 to 50,000,000. The number of shares referred to in
these financial statements has been restated wherever applicable to give
retroactive effect to the reverse stock split.
The
retroactive restatement of the issued common shares is required by the
Securities and Exchange Commission’s Staff Accounting Bulletin, Topic
4c.
Common
Stock and Stock Equivalent Transactions
On
February 28, 2007, a shareholder of the Company entered into an agreement with
the unit holders of MCE, whereby that shareholder tendered 19,071,546 of the
common shares held in the Company to be held in trust for the unit holders of
MCE in exchange for the transfer of 99% of the issued and outstanding units of
MCE to the Company. This transaction is expected to be accounted for
as a reverse acquisition.
In June12, 2007, the Company approved the adoption of a 2007 employee and director
stock option plan for the issuance of up to 2,100,000 options to acquire common
stock of the Company at a price of $0.25 per share. The Company
further approved the issuance of 1,000,000 options out of the 2,100,000 to
acquire stock, to certain officers and directors of the Company at the price of
$0.25 per share.
On July21, 2007, the Company issued 2,073,600 shares at a price of $0.25 per share to
accredited investors within the US pursuant to a Regulation 506 exemption from
Registration.
On August20, 2007, the Company issued 256,200 shares at a price of $1.00 per share to
accredited investors within the US pursuant to a Regulation 506 exemption from
Registration,
In June
2008, the Company completed the purchase of 11,766,446 of its outstanding common
shares from existing shareholders for $150,000. The shares were subsequently
cancelled.
Stock
Option Plan and Stock-based Compensation
In June
2003, the Board of Directors approved a stock option plan for the Company which
provides for allocation of options to purchase up to 375,000 common shares of
the Company. The Board of Directors also approved the issuance of
options to a director to acquire up to 125,000 common shares of the Company at
$0.50 per share. The options have a term of ten years expiring in
June 2013.
In March
2004, the Board of Directors approved the issuance of options to a director of
the Company to acquire up to 125,000 shares of common stock at $0.50 per
share. The options vest over a period of two years evenly every 3
months from the date of issuance and once vested may be exercised at any time up
to ten years expiring in March, 2014. At March 31, 2006, these
options were all exercisable.
The
Company does not record compensation expense on the granting of stock options to
employees. In accordance with FAS No. 123R “Share-Based Payment”,
disclosure of pro forma net loss and net loss per share is required and is
calculated by determining the fair value of the options using fair value option
pricing models. The Company has determined the fair value of vested
employee stock options using the fair value method.
-19-
The fair
value for these stock options was estimated at the date of grant using the
following weighted average assumptions:
Expected
volatility
490
%
Dividend
yield
0
%
Weighted
average expected life of stock options
10
yrs
Risk-free
interest rate
4.04
%
Share
Purchase Warrants
At
December 31, 2007, 312,715 share purchase warrants are
outstanding. Each warrant entitles the holder to purchase an
additional common share of the Company at $0.50 per share until September 30,2007. The warrants expired without any related exercise.
Note
5 Income
Taxes
The
following table summarizes the significant components of the Company’s future
tax assets:
2008
2007
Future
tax assets
Non-capital
loss carry-forward
$
575,378
$
550,378
Valuation
allowance for deferred tax asset
(575,378
)
(550,378
)
$
-
$
-
The
amount taken into income as future tax assets must reflect that portion of the
income tax loss carry-forwards that is more likely-than-not to be realized from
future operations. The Company has chosen to provide an allowance of
100% against all available income tax loss carry-forwards, regardless of their
time of expiry.
As at
December 31, 2008, the Company has accumulated non-capital losses totaling
approximately $1,526,470, which are available to reduce taxable income in future
taxation years. These losses expire beginning in 2017. The
potential benefit of these losses, if any, has not been recorded in the
financial statements.
Note
6 Completion
of Acquisition of Assets
As
disclosed in the Company’s 8-K dated May 3, 2007, on April 28, 2007, the
Registrant entered into an agreement for the acquisition of 99% of the issued
and outstanding units of Modern City Entertainment LLC, an independent motion
picture company. Effective December 12, 2007 the agreement was
finalized and consideration of shares were issued as per the agreement as
described below.
-20-
The units
acquired by Modern City Entertainment Inc. were acquired from each of the
following individuals;
Mr.
William Erurth, (President and Director of the Registrant subsequent to the
acquisition)
Mr. Scott
Rosenfelt
Mr. Ron
Stone
Mr.
Christian Ramirez
Mr. David
Hold
Mr. Mark
Geohhegan
Mr. Joe
Greco (Director of the registrant, subsequent to the acquisition
transaction)
Mr. &
Mrs. Marc & Robin Kesselman
Mr. Frank
Pierce (Director of the registrant subsequent to the acquisition
transaction)
Mr.
William Lindsay
Mr. Joe
Sollecito (Director of the registrant subsequent to the acquisition
transaction)
The
consideration paid for the acquisition was 19,071,546 common shares of the
registrant issued to each of the Class “A” unit holders and Class “B” unit
holders on a pro-rata basis, calculated with each Class “B” unit equal to 10
Class “A” by an existing shareholder of the Registrant.
-21-
Item
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
The
Company has had no disagreements with Accountants on accounting and financial
disclosure matters or otherwise.
Item
9A. Controls and Procedures.
As
required by Rule 13a-15 under the Securities Exchange Act of 1934, as of the end
of the period covered in this report, we carried out an evaluation of the
effectiveness of the design and operation of our disclosure controls and
procedures as of December 31, 2008. This evaluation was carried out under
the supervision and with the participation of our President who concluded, that
because of the material weakness in our internal control over financial
reporting described below that, our disclosure controls and procedures were not
effective as of December 31, 2008. A material weakness is a deficiency or
a combination of deficiencies in internal controls over financial reporting such
that there is a reasonable possibility that a material misstatement of our
annual or interim financial statements will not be prevented or detected on a
timely basis.
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 Securities Exchange Act of 1934 is 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 that Act is
accumulated and communicated to management, including our principal executive
officer and our principal financial officer, as appropriate, to allow timely
decisions regarding required disclosure.
Our
management is also responsible for establishing internal control over financial
reporting as defined in Rules 13a-15(f) and 15(d)-15(f) under the Securities
Exchange Act of 1934.
Our
internal controls over financial reporting are intended to be designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with U.S. generally accepted accounting principles. Our internal controls over
financial reporting are expected to include those policies and procedures that
management believes are necessary that:
(i)
pertain to the maintenance of records that, in reasonable detail, accurately and
fairly reflect the transactions and dispositions of our assets;
(ii)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that our receipts and expenditures are being made
only in accordance with authorizations of our management and directors;
and
(iii)
provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of our assets that could have a
material effect on the financial statements.
As of
December, 31, 2008, management assessed the effectiveness of the our internal
controls over financial reporting (ICFR) based on the criteria set forth in the
Internal Control-Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO).
Based on
that assessment, management concluded that, during the period covered by this
report, such internal controls and procedures were not effective as of December31, 2008 and that material weaknesses in ICFR existed as more fully described
below.
-22-
As
defined by Auditing Standard No. 5, “An Audit of Internal Control Over Financial
Reporting that is Integrated with an Audit of Financial Statements and Related
Independence Rule and Conforming Amendments,” established by the Public Company
Accounting Oversight Board ("PCAOB"), a material weakness is a deficiency or
combination of deficiencies that result in a more than a remote likelihood that
a material misstatement of annual or interim financial statements will not be
prevented or detected. In connection with the assessment described above,
management identified the following control deficiencies that represent material
weaknesses as of December 31, 2008:
(1)
Lack of an independent audit committee or audit committee financial
expert. Although our board of directors serves as the audit committee it
has no independent directors. Further, we have not identified an audit committee
financial expert on our board of directors. These factors are counter to
corporate governance practices as defined by the various stock exchanges and may
lead to less supervision over management.
(2)
Inadequate staffing and supervision within our bookkeeping operations. We have
only a single employee involved in bookkeeping functions. This prevents us from
segregating duties within our internal control system. The inadequate
segregation of duties is a weakness because it could lead to the untimely
identification and resolution of accounting and disclosure matters or could lead
to a failure to perform timely and effective reviews which may result in a
failure to detect errors in spreadsheets, calculations, or assumptions used to
compile the financial statements and related disclosures as filed with the
Securities and Exchange Commission.
Our
management determined that these deficiencies constituted material
weaknesses.
Due to
our small size and a lack of personnel resources, we are not able to, and do not
intend to, immediately take any action to remediate these material
weaknesses. However, we will implement further controls as circumstances
permit. We will engage a consultant to review our financial reporting process.
The consultant’s first tasks will be to serve as a second reviewer for all
filings and also to assist us in remaining current with our required filings
during the fiscal year ending December 31, 2009. Notwithstanding the assessment
that our ICFR was not effective and that there were material weaknesses as
identified herein, we believe that our consolidated financial statements
contained in this Annual Report fairly present our financial position, results
of operations and cash flows for the years covered thereby in all material
respects.
There was
no change in our internal control over financial reporting that occurred during
the fourth quarter of our fiscal year ended December 31, 2008 that has
materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.
This
Annual Report does not include an attestation report of the company's registered
public accounting firm regarding internal control over financial reporting.
Management's report was not subject to attestation by the company's registered
public accounting firm pursuant to temporary rules of the Securities and
Exchange Commission that permit us to provide only management’s report in this
Annual Report.
Reference
is made to the response to Item 9A above.
-23-
PART
III
Item
10. Directors, Executive Officers, Promoters and Control Persons;
Compliance With Section 16(a) of the Exchange Act
The
following table sets forth the names and ages of, and all positions and offices
held by, each of the Company’s directors and its executive officers. Also set
forth are the dates the Company’s directors were initially elected to the Board
of Directors , a summary of each identified person’s business experience during
the last five years and any directorship(s) held in other companies with
securities registered under Section 12 or subject to the requirements of Section
15(d) of the Securities Exchange Act of 1934, as amended.
Mr. Bill Erfurth comes to
filmmaking from a non-traditional background. From November, 1981 to
the present, Mr. Erfurth has been affiliated with the Miami-Dade Police
Department in Miami, Florida. Mr. Erfurth was promoted to Lieutenant
in 1997 and assigned as Commander of The Tactical Narcotics Team
(TNT). This unit became the most productive unit in the Miami-Dade
Police Department’s history, and recognized nationally as one of the top units
in the country. As leader of TNT, Mr. Erfurth was responsible for the
supervision of 130 officers, and a multi-million dollar
budget. Currently, Mr. Erfurth is assigned as the Commander of
a Multi-Agency Violent Crime Task Force, (S.T.I.N.G.) Street Tactics
Intervention Group. In 1995 Mr. Erfurth hosted a new
radio show. The show, Copnet - the Police Radio Network became a nationally
syndicated radio program, airing in 100 markets, and the first syndicated show
of its kind to be hosted by active police officers. “Copnet” aired for nine
years, winning three Achievements in Radio Awards. In 2001, while still working
on the radio show, Mr. Erfurth, was approached by the Discovery Channel and the
BBC to do an eight-part mini-series about the TNT police unit entitled The Real
Miami Vice. On location filming with TNT lasted for four months. Upon completion
of filming, Mr. Erfurth traveled to London to work with the editors on the final
cut. The show still airs currently on both networks.In 2002, Mr. Erfurth became
a Consultant and Technical Advisor for Bad Boys II. His Tactical Narcotics Team
was featured in the movie. Mr. Erfurth served as Technical Advisor to Producer
Jerry Bruckheimer, and Director Michael Bay. To this day, Mr. Erfurth
maintains an active and regular association with Bruckheimer Films, Disney
Studios, Sony Pictures, Warner Brothers, and Michael Bay Films, providing
Consultant, Technical Advisor, and Research & Development services for major
studio productions.
Mr. Frank Pierce Mr. Pierce
enlisted in the United States Coast Guard in 1955 and was honorably discharged
in 1959. After his military service Mr. Pierce was employed by the Miami Springs
Police Department from 1959 to 1965. Later in 1965 Mr. Pierce joined the
Miami-Dade Police Department and served there until June 30,2001. Officially retired from Police duty now for the last five
years, Mr. Pierce has become a successful Real Estate Investor and Venture
Capitalist.
Mr. Joseph
Greco Writer/Director Joseph Greco’s feature film debut,
Canvas, stars Academy Award winner Marcia Gay Harden, Emmy Award winner Joe
Pantoliano. The film premiered at the Hamptons International Film
Festival and has been heralded by critics and audiences alike. Canvas
has since won the Audience Award, Best Dramatic Performance Award for Joe
Pantoliano, and a Best Director Award for Mr. Greco at the Ft. Lauderdale
International Film Festival. The project is slated for
release in 2007.
-24-
Mr. Greco
was born in Hollywood, Florida and graduated
Florida State University’s School of Motion Picture, Television and
Recording Arts. While at FSU, Mr. Greco attended into the Film School’s
London Film Study Program.
After
graduating from film school, Joseph Greco worked under the auspices of film
director James Cameron at Lightstorm Entertainment during the making of
Titanic. Greco worked at THX, Lucasfilm on such projects as Star Wars
Episodes I & II, and went on to supervise the color timing and printing of
The Legend of Bagger Vance, The Contender and The Academy Award winning film
Shrek in Rome, Italy. Greco has produced, directed & edited
several corporate projects for The Walt Disney Company.
Mr. Greco
is a member of the Directors Guild of America.
Mr. Joe Sollecito enlisted in
the United States Coast Guard Reserves in 1980 and served as a Hospital
Corpsman/EMT until 1987. In 1987, Mr. Sollecito joined the Miami-Dade
Fire Department. Mr. Sollecito founded United Sleep Diagnostics, Inc
in January of 2000, a South Florida company specializing in the diagnosis and
treatment of Sleep Disorders. Under his direction, United Sleep
Diagnostics has grown from a small company performing ambulatory sleep testing,
to currently one of the largest independent sleep testing companies in South
Florida, with multiple freestanding and hospital-based
facilities. Mr. Sollecito currently lives in South Florida where he
divides his time as a Lieutenant for Miami Dade Fire Rescue, CEO of United Sleep
Diagnostics, Real Estate Investor, and Board Executive for Modern City
Entertainment LLC.
Publishing
titan Jerry Powers
founded Ocean Drive magazine in the early nineties, bringing the fashion
industry to South Beach while spearheading the success of the regional magazine
market. Throughout his many years in publishing, Powers launched a variety of
titles for regional markets, including Vegas, Michigan Avenue and Atlanta Peach
among countless others. Today, Powers’ focus has shifted from publishing to the
entertainment industry with the launch of his new consulting and marketing firm,
Power Play, based in Miami.
The
directors named above will serve until the next annual meeting of the Company's
stockholders. Thereafter, directors will be elected for one-year terms at the
annual stockholders' meeting. Officers will hold their positions at the pleasure
of the board of directors, absent any employment agreement, of which none
currently exists or is contemplated. There is no arrangement or understanding
between the directors and officers of the Company and any other person pursuant
to which any director or officer was or is to be selected as a director or
officer. The officers will serve at will.
The
directors and officers of the Company will devote such time to the Company's
affairs on an "as needed" basis. As a result, the actual amount of time which
they will devote to the Company's affairs is unknown and is likely to vary
substantially from month to month.
Board of
Directors Committees and Other Information
All Directors hold
office until the next annual meeting
of stockholders and until
their successors have been
duly elected and qualified. Officers are
appointed by and serve at the discretion of the Board of Directors.
The Board
of Directors currently has no committees. As and when required by law, it
will establish Audit Committee and
a Compensation Committee. The Audit Committee
will oversee the actions taken by our independent auditors and review our
internal financial and accounting controls and
policies. The Compensation Committee will be
responsible for determining salaries, incentives
and other forms of compensation for
our officers, employees
and consultants and will administer our
incentive compensation and benefit plans, subject to full
board approval. The Audit Committee Charter and the Compensation
Committee Charter asattached hereto as Exhibit to this filing. The
functions of the Audit Committee
and the Compensation Committee are currently performed by the Board of
Directors.
Director
Compensation
Our directors do
not receive cash for their services. The
Company does not
provide additional compensation for committee participation or special
assignments of the Board of Directors, but may enter into
separate consulting agreements with individual directors at
times.
With
the exception of Mr. Erfurth, who has an employment contract providing a
monthly compensation of $3,000USD per month paid by the Company’s
subsidiary Modern City Entertainment LLC. Executive officers of
the Company currently do not receive any remuneration in their
capacity as Company executive officers.
The following table sets forth information concerning the compensation for
services to the Company from businesses of which the Director or Executive
officer exercised significant influence, for the years ended December 31,2008 and 2007.
Summary
Compensation Table
Annual
Compensation
Long
Term
Compensation
Awards
Name
and Principal Position
Fiscal
Year
Accounting,
administration
and
office expenses (1)
Legal
Fees (2)
$
Consulting
Fees
(1)
$
Investor
Relations
Fees
(1)
$
Stock
Options
#
All
Other compensations
$
William
Erfurth
President
2008
-
-
36,000*
-
-
-
2007
-
-
36,000*
-
-
* Mr.
Erfurth has agreed to defer his compensation until the Company begins to earn
revenues.
Stock
Options
The
following table sets forth certain information with respect to stock options
granted to the named officers and outstanding at December 31, 2008
Name
Options
Granted
%
of Total Options Granted to Employees in Fiscal Year 2004
We have
adopted a code of ethics that applies to all of our executive officers,
directors and employees. Code of ethics codifies the business and ethical
principles that govern all aspects of our business. This document will be made
available in print, free of charge, to any shareholder requesting a copy in
writing from the Company. A copy of our code of ethics is filed
herein.
-26-
Item
12. Security Ownership of Certain Beneficial Owners
and Management and related Stockholder Matters
The
following table sets forth, as of the date of this Form , the number of shares
of Common Stock owned of record and beneficially by executive officers,
directors and persons who hold 5.0% or more of the outstanding common Stock of
the Company. Also included are the shares held by all executive officers and
directors as a group.
Shareholders
/ Beneficial Owners/
Percentage
Number
of Shares
Mr.
Bill Erfurth (15.5%) – President – MCE
3,563,875
Mr.
& Mrs. Kesselman (12.5%)
2,889,629
Mr.
Ron Stone (9.2%)
2,123,061
Mr.
William Lindsay (8.6%)
1,926,419
Mr.
Christian Ramirez (9.2%)
2,119,061
Mr.
Frank Pierce (10.4%)
2,408,023
Directors
and executive officers as a group
5,971,898
Item
13. Certain Relationships and Related
Transactions
During
the years ended December 31, 2008 and 2007, no officer, director, or affiliate
of the Company has or proposes to have any direct or indirect material interest
in any asset proposed to be acquired by the Company through security holdings,
contracts, options, or otherwise.
The
Company has adopted a policy under which any consulting or finder's fee that may
be paid to a third party or affiliate for consulting services to assist
management in evaluating a prospective business opportunity would be paid in
stock or in cash. Any such issuance of stock would be made on an ad hoc
basis. Accordingly, the Company is unable to predict whether or in
what amount such a stock issuance might be made.
For the
year ended December 31, 2007, the Company's principal accountant
billed $10,800 in fees for the audit of the Company’s annual financial
statements and review of financial statements included in the Company’s Form
10-QSB, plus accruals of $7,500.
The
Company's principal accountant did bill $500 of tax fees
during the years ended December 31, 2008 and 2007.
-27-
All
Other Fees
The
Company's principal accountant did not bill any other fees during the years
ended December 31, 2008 and 2007.
Percentage
of Hours Expended
All hours expended on
the principal accountant's engagement to
audit the
Company's financial statements for the most recent fiscal year were
attributable to work performed by persons that are the
principal accountant's full-time, permanent employees.
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
