Helmer Directional Drilling Corp. - Annual Report: 2008 (Form 10-K)
U.S.
SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For
the fiscal year ended December 31, 2008
Commission
File No.333-140305
EXCLUSIVE
APPAREL, INC.
(Exact
name of small business issuer as specified in its charter)
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Nevada
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20-5567127
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(State
or other jurisdiction of incorporation or organization)
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(I.R.S.
Employer Identification No.)
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6555
W. Gary Avenue, Las Vegas, Nevada 89139
(Address
of Principal Executive Offices)
(702)
242-9501
(Issuer’s
telephone number)
(Former
name, address and fiscal year, if changed since last report)
Securities
registered pursuant to Section 12(b) of the Act: None
Securities
registered pursuant to Section 12(g) of the Act: Common Stock, $0.001 par
value
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 twelve months (or for such shorter periods that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Check if
there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B not contained in this form, and no disclosure will be contained,
to the best of the 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. [ ]
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act): Yes
[X] No [ ]
Revenues
for year ended December 31, 2008: $-0-
Aggregate
market value of the voting common stock held by non-affiliates of the registrant
as of March 27, 2009 was: $-0-
Number of
shares of our common stock outstanding as of March 27, 2009 is:
37,000,000
The
Company has retained the services of Pacific Stock Transfer Company to
facilitate the processing of the stock certificates. Pacific Stock
Transfer Company is a registrar and transfer agency located at 500 East Warm
Springs Road, Suite 240, Las Vegas, Nevada 89119 having a telephone number of
(702) 361-3033
State the
number of shares outstanding of each of the issuer’s classes of common equity,
as of March 27, 2009: 37,000,000 shares of common stock at $.001 par
value.
2
PART
I
ITEM
1. DESCRIPTION
OF BUSINESS
GENERAL
Exclusive
Apparel, Inc., Inc. (“Company”) was incorporated in the State of Nevada on
September 8, 2006. Exclusive Apparel, Inc., Inc. is a developmental stage
company with a principal business objective of offering premium baseball cap
type headwear for women with exquisite taste and extravagant appetites as
exclusive accessories to differentiate themselves. Exclusive Apparel,
Inc is committed to producing exclusive ball-type caps that are stylish and
unique, and that cater to a more progressive clientele. The company
will focus on baseball hat type headwear before it expands to belts, handbags
and other similar accessories.
Exclusive
Apparel, Inc. is a development stage company that has not significantly
commenced its planned principal operations. Exclusive Apparel, Inc. operations
to date have been devoted primarily to startup and development activities, which
include the following:
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1.
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Formation
of the Company;
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2.
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Development
of the Exclusive Apparel, Inc. business
plan;
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3.
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Conducted
research on potential markets;
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4.
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Identified
contract designer, graphic artist, sewing manufacturer, screen printer and
embroider to design and manufacturer our
products.
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5.
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Formulated
multi-faceted marketing plan and marketing campaign in an effort to
introduce our products to the market on a broader
scope;
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6.
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Formulated
pilot programs for prospective
markets;
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7.
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Finalized
sketches and chose fabric and materials for initial pilot
production;
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8.
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Identified
appropriate distribution channels utilizing independent sales
representatives and middlemen.
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Exclusive
Apparel, Inc., Inc. is attempting to become operational. In order to generate
revenues, Exclusive Apparel, Inc. must address the following areas:
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1.
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Develop and Implement a
Marketing Plan: In order to penetrate our targeted market,
Exclusive Apparel, Inc. will use a multi-faceted marketing plan that
includes a high-end website, exclusive catalogs, and a target specific
marketing campaign directed to design consultants that cater to
celebrities and higher-end income
clients.
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3
Phase II
of the marketing effort will commence once we have gained recognition among
celebrities and the more affluent fashionable consumer. The phase II
plan will consist of exploiting the appropriate distribution channels using
independent representatives who are experienced in accessory sales to high-end
boutiques and upscale department stores. These independent representatives work
as middlemen between Exclusive Apparel and the retailer. They are
aggressive in that they will go directly to the retailers, work applicable trade
shows, send samples and CAD sheets, and work directly with other accessory
representatives to penetrate their desired retail
accounts. Independent Representatives are paid a commission that is
typically 15% plus expenses. Sales representatives will have a set
monthly budget for samples and supplies provided by Exclusive
Apparel.
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2.
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Tailoring our website:
Exclusive Apparel, Inc. has secured a web site domain located at
www\\exclusiveapparel.biz. The site is currently under
construction and upon securing additional funding, the Company has plans
to enhance the web site.
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Since our
inception on September 8, 2006 to December 31, 2008, the Company did not
generate any significant revenues and has incurred a cumulative net loss of
$185,271. The Company believes that raising $150,000 through the sale of common
equity is sufficient for the company to become operational and sustain
operations through the next twelve (12) months. The capital raised has been
budgeted to establish our infrastructure and to become a fully reporting
company. We believe that the recurring revenues from sales of services
eventually will be sufficient to support ongoing operations. Unfortunately,
there can be no assurance that the actual expenses incurred will not materially
exceed our estimates or that cash flow from sales will be adequate to maintain
our business. As a result, our independent auditors have expressed substantial
doubt about our ability to continue as a going concern in the independent
auditors’ report to the financial statements included in the registration
statement.
Exclusive
Apparel, Inc., Inc. currently has one officer and one director. This individual
allocates time and personal resources to Exclusive Apparel, Inc. on a part-time
basis.
As of the
date of this prospectus, Exclusive Apparel, Inc. has 37,000,000 shares of $0.001
par value common stock issued and outstanding.
Exclusive
Apparel, Inc., Inc. has administrative offices located at 6555 W. Gary Avenue,
Las Vegas, Nevada 89139.
Exclusive
Apparel, Inc., Inc.’s fiscal year end is December 31.
EMPLOYEES
We have
no full time employees. Sharon M. Lynch, our President, Secretary and
Treasurer has agreed to allocate a portion of her time to our activities without
compensation.
ITEM
2. DESCRIPTION
OF PROPERTY
Exclusive
Apparel, Inc. uses an administrative office located at 6555 W. Gary Avenue, Las
Vegas, Nevada 89139. A family member provides the office space free of charge
and no lease exists. There are currently no proposed programs for the
renovation, improvement or development of the facilities currently
use.
4
Exclusive
Apparel, Inc. management does not currently have policies regarding the
acquisition or sale of real estate assets primarily for possible capital gain or
primarily for income. Exclusive Apparel, Inc. does not presently hold any
investments or interests in real estate, investments in real estate mortgages or
securities of or interests in persons primarily engaged in real estate
activities.
ITEM
3. LEGAL
PROCEEDINGS
There is
no litigation pending or threatened by or against us.
ITEM
4. SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART
II
ITEM
5. MARKET
FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
On
December 31, 2008, there was one shareholder of record of our common
stock. Our shares of common stock have never been traded on any
recognized stock exchange.
DIVIDENDS
We intend
to retain future earnings to support our growth. Any payment of cash
dividends in the future will be dependent upon: the amount of funds legally
available therefore; our earnings; financial condition; capital requirements;
and other factors which our Board of Directors deems relevant.
ITEM
7. MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Plan of
Operation
On
February 27, 2007 we received approval from the Securities and Exchange
Commission of our Registration Statement on Form SB-2 wherein we registered
15,000,000 shares of our $.001 common stock in order to raise $150,000.00 as our
initial capital prior to filing an application with the NASD on Form 211 to be
listed on a public exchange. To date we have raised the $147,000.00
and are working on completing and submitting the Form 211 to the
NASD.
Results
of Operation
We did
not have any operating income from inception (September 8, 2006) through
December 31, 2008. For the year ended December 31, 2008, we
recognized a net loss of $37,318. Some general and administrative
expenses during the quarter were accrued. Expenses for the quarter
were comprised of costs mainly associated with legal, accounting, and
office.
Liquidity
and Capital Resources
At
December 31, 2008, we had no capital resources and will rely upon the issuance
of common stock and additional capital contributions from shareholders to fund
administrative expenses.
5
ITEM
8. FINANCIAL
STATEMENTS
Our
financial statements, together with the report of auditors, are as
follows:
EXCLUSIVE
APPAREL, INC.
FINANCIAL
STATEMENTS
AS
OF DECEMBER 31, 2008
Exclusive
Apparel, Inc.
Financial
Statements Table of Contents
6
MOORE
& ASSOCIATES, CHARTERED
ACCOUNTANTS AND
ADVISORS
PCAOB
REGISTERED
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the Board of Directors
Exclusive
Apparel, Inc.
(A
Development Stage Company)
We have
audited the accompanying balance sheets of Exclusive Apparel, Inc. (A
Development Stage Company) as of December 31, 2008 and 2007, and the related
statements of operations, stockholders’ equity (deficit) and cash flows for the
years ended December 31, 2008 and 2007 and from inception on September 8, 2006
through December 31, 2008. These financial statements are the responsibility of
the Company’s management. Our responsibility is to express an opinion
on these financial statements based on our audits.
We
conduct our audits in accordance with standards of the Public Company Accounting
Oversight Board (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. 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 financial statements referred to above present fairly, in all
material respects, the financial position of Exclusive Apparel, Inc. (A
Development Stage Company) as of December 31, 2008 and 2007, and the related
statements of operations, stockholders’ equity and cash flows for the years
ended December 31, 2008 and 2007 and from inception on September 8, 2006 through
December 31, 2008, in conformity with accounting principles generally accepted
in the United States of America.
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has an accumulated deficit of $185,271, which
raises substantial doubt about its ability to continue as a going
concern. Management’s plans concerning these matters are also
described in Note 1. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/
Moore & Associates, Chartered
Moore
& Associates, Chartered
Las
Vegas, Nevada
March 23,
2009
6490 West Desert Inn Rd, Las
Vegas, NV 89146 (702) 253-7499 Fax (702) 253-7501
7
EXCLUSIVE
APPAREL, INC.
(A
Development Stage Company)
BALANCE SHEETS
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ASSETS
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December
31, 2008
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December
31, 2007
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||||||
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Current
assets:
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||||||||
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Cash
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$ | 575 | $ | 4,611 | ||||
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Total current assets
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575 | 4,611 | ||||||
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Inventories
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$ | 23,665 | $ | 39,936 | ||||
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Total assets
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23,665 | 39,936 | ||||||
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Total assets
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$ | 24,240 | $ | 44,547 | ||||
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LIABILITIES
AND STOCKHOLDERS' EQUITY
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Current
liabilities:
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||||||||
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Accounts
payable and accrued expenses
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$ | 61 | $ | - | ||||
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Advance
from shareholder
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16,950 | - | ||||||
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Total current liabilities
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17,011 | - | ||||||
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Stockholders'
equity
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Preferred
stock; $.001 par value, 5,000,000 shares
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||||||||
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authorized,
zero shares issued and outstanding
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- | - | ||||||
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Common
stock; $.001 par value, 70,000,000 shares
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||||||||
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authorized,
37,000,000 shares issued and outstanding
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37,000 | 37,000 | ||||||
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Additional
paid in capital
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155,500 | 155,500 | ||||||
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Accumulated
(deficit) during development stage
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(185,271 | ) | (147,953 | ) | ||||
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Total stockholders' equity
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7,229 | 44,547 | ||||||
| $ | 24,240 | $ | 44,547 | |||||
The
accompanying notes are an integral part of these financial
statements.
8
EXCLUSIVE
APPAREL, INC.
(A
Development Stage Company)
STATEMENTS OF OPERATIONS
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September
8, 2006
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||||||||||||
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(date
of inception)
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||||||||||||
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For
the year ended
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For
the year ended
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through
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||||||||||
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December
31, 2008
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December
31, 2007
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December
31, 2008
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||||||||||
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Revenues
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$ | - | $ | - | $ | - | ||||||
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Operating
expenses:
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||||||||||||
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General
and administrative expenses
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37,318 | 123,465 | 185,271 | |||||||||
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Total
operating expenses
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37,318 | 123,465 | 185,271 | |||||||||
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(Loss)
from operations
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(37,318 | ) | (123,465 | ) | (185,271 | ) | ||||||
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Other
income (expenses):
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||||||||||||
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Interest
(expense)
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- | - | - | |||||||||
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Other
(expense)
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- | - | - | |||||||||
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Total
other income (expenses)
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- | - | - | |||||||||
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(Loss)
before provision for income taxes
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(37,318 | ) | (123,465 | ) | (185,271 | ) | ||||||
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Provision
for income taxes
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- | - | - | |||||||||
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Net
(loss)
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$ | (37,318 | ) | $ | (123,465 | ) | $ | (185,271 | ) | |||
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Basic
and diluted loss per common share
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$ | (0.001 | ) | $ | (0.01 | ) | $ | (0.01 | ) | |||
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Basic
and diluted weighted average
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||||||||||||
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common
shares outstanding
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37,000,000 | 31,555,732 | 30,177,092 | |||||||||
The
accompanying notes are an integral part of these financial
statements.
9
EXCLUSIVE
APPAREL, INC.
(A
Development Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
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Accumulated
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||||||||||||||||||||||||||||
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(Deficit)
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||||||||||||||||||||||||||||
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Additional
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during
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Total
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||||||||||||||||||||||||||
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Preferred
Stock
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Common
Stock
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Paid-in
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development
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Stockholders'
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||||||||||||||||||||||||
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Shares
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Amount
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Shares
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Amount
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Capital
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stage
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Equity
(Deficit)
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||||||||||||||||||||||
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Balance
at September 8, 2006
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||||||||||||||||||||||||||||
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(Date
of Inception)
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- | - | - | - | - | - | - | |||||||||||||||||||||
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Common
shares issued for service
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||||||||||||||||||||||||||||
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at
$0.002 per share on September 9, 2006
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- | - | 2,000,000 | 2,000 | 2,000 | - | 4,000 | |||||||||||||||||||||
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Net
(loss) for the period September 8, 2006
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||||||||||||||||||||||||||||
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(inception)
to December 31, 2006
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- | - | - | - | - | (24,488 | ) | (24,488 | ) | |||||||||||||||||||
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Balance,
December 31, 2006
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- | - | 2,000,000 | 2,000 | 2,000 | (24,488 | ) | (20,488 | ) | |||||||||||||||||||
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Common
shares issued for service
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at
$0.002 per share on January 12, 2007
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- | - | 20,000,000 | 20,000 | 20,000 | - | 40,000 | |||||||||||||||||||||
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Common
shares issued relating to private placement,
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||||||||||||||||||||||||||||
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at
$0.01 per share, net of $1,500 of offering costs
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||||||||||||||||||||||||||||
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on
April 12, 2007
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- | - | 15,000,000 | 15,000 | 133,500 | - | 148,500 | |||||||||||||||||||||
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Net
(loss) for the year ended December 31, 2007
|
- | - | - | - | - | (123,465 | ) | (123,465 | ) | |||||||||||||||||||
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Balance,
December 31, 2007
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- | - | 37,000,000 | 37,000 | 155,500 | (147,953 | ) | 44,547 | ||||||||||||||||||||
|
Net
(loss) for the year ended December 31, 2008
|
- | - | - | - | - | (37,318 | ) | (37,318 | ) | |||||||||||||||||||
|
Balance
December 31, 2008
|
- | - | 37,000,000 | 37,000 | 155,500 | (185,271 | ) | 7,229 | ||||||||||||||||||||
The
accompanying notes are an integral part of these financial
statements.
10
EXCLUSIVE
APPAREL, INC.
(A
Development Stage Company)
STATEMENTS OF CASH FLOW
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September
8, 2006
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||||||||||||
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(date
of inception)
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||||||||||||
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For
the year ended
|
For
the year ended
|
through
|
||||||||||
|
December
31, 2008
|
December
31, 2007
|
December
31, 2008
|
||||||||||
|
Operating
activities:
|
||||||||||||
|
Net
loss
|
$ | (37,318 | ) | $ | (123,465 | ) | $ | (185,271 | ) | |||
|
Adjustments
to reconcile net loss to
|
||||||||||||
|
net
cash used in operating activities:
|
||||||||||||
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Stock
issued for services
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- | 40,000 | 44,000 | |||||||||
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Changes
in operating assets and liabilities:
|
||||||||||||
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Decrease
(increase) in inventories
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16,271 | (39,936 | ) | (23,665 | ) | |||||||
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Increase
in accounts payable
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61 | - | 61 | |||||||||
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(Decrease)
in accrued expenses
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- | (2,800 | ) | - | ||||||||
|
Net
cash (used in) operating activities
|
(20,986 | ) | (126,201 | ) | (164,875 | ) | ||||||
|
Financing
activities:
|
||||||||||||
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Advance
to/ from shareholder
|
16,950 | (18,033 | ) | 16,950 | ||||||||
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Proceeds
from issuance of common stock
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- | 148,500 | 148,500 | |||||||||
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Net
cash provided by financing activities
|
16,950 | 130,467 | 165,450 | |||||||||
|
Net
change in cash
|
(4,036 | ) | 4,266 | 575 | ||||||||
|
Cash,
beginning of period
|
4,611 | 345 | - | |||||||||
|
Cash,
end of period
|
$ | 575 | $ | 4,611 | $ | 575 | ||||||
|
Non
Cash Investing and Financing Activities:
|
||||||||||||
|
Issuance
of Common Stock for services
|
$ | - | $ | 40,000 | $ | 44,000 | ||||||
The
accompanying notes are an integral part of these financial
statements.
11
EXCLUSIVE
APPAREL, INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
Note
1. Nature of Business and Summary of Significant Accounting
Policies
The
summary of significant accounting policies is presented to assist in the
understanding of the financial statements. The financial statements
and notes are representations of management. These accounting
policies conform to accounting principles generally accepted in the United
States of America and have been consistently applied in the preparation of the
financial statements.
Nature
of business and organization
Exclusive
Apparel, Inc., a Nevada corporation, (hereinafter referred to as the “Company”
was incorporated in the State of Nevada on September 8, 2006. The
Company is high end clothing and apparel business that is dedicated to produce
stylish and unique ball type headwear for women. The goal of Exclusive Apparel,
Inc., is to expand to belts, handbags, and other accessories. The Company's
operation has been limited to general administrative operations and is
considered a development stage company in accordance with Statement of Financial
Accounting Standards No. 7.
Management
of Company
The
Company filed its articles of incorporation with the Nevada Secretary of State
on September 8, 2006, indicating Sharon M. Lynch as the
incorporator. The company filed its initial list of officers and
directors with the Nevada Secretary of State on September 8, 2006, indicating
it’s President as Sharon M. Lynch.
Estimates
The
preparation of financial statements in conformity with U.S. generally accepted
accounting principles requires management to make certain estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. The Company is subject to uncertainty of future
events, economic, environmental and political factors and changes in the
Company's business environment; therefore, actual results could differ from
these estimates. Accordingly, accounting estimates used in the
preparation of the Company's financial statements will change as new events
occur, more experience is acquired, as additional information is obtained and as
the Company's operating environment changes. Changes are made in
estimates as circumstances warrant. Such changes in estimates and
refinement of estimation methodologies are reflected in the
statements.
Going
Concern
The
accompanying financial statements have been prepared assuming the Company will
continue as a going concern, which contemplates the realization of assets and
the satisfaction of liabilities in the normal course of business. The
Company has incurred recurring losses through December 31, 2008 and has not
commenced its operations, rather, still in the development stages, raising
substantial doubt about the Company’s ability to continue as a going
concern. The Company will seek additional sources of capital through
the issuance of debt or equity financing, but there can be no assurance the
Company will be successful in accomplishing its objectives.
The
ability of the Company to continue as a going concern is dependent on additional
sources of capital and the success of the Company’s plan. The
financial statements do not include any adjustments that might be necessary if
the Company is unable to continue as a going concern.
Cash
and cash equivalents
Cash and
cash equivalents include interest bearing and non-interest bearing bank
deposits, money market accounts, and short-term instruments with a liquidation
provision of three month or less.
12
Note
1. Nature of Business and Summary of Significant Accounting Policies
-continued
Revenue
recognition
The
Company has no revenues to date from its operations. Once revenues
are generated, management will establish a revenue recognition
policy.
Advertising
costs
Advertising
costs are generally expensed as incurred and are included in selling and
marketing expenses in the accompanying statement of operations.
As of
December 31, 2008 and 2007, there was no advertising costs
incurred.
Inventories
Inventories
are stated at the lower of cost or market. During the year ended
December 31, 2008, approximately $16,000 of damaged inventory that became
obsolete were written off. As of December 31, 2008, inventories
approximately consisted of the following: designed T-shirts $3,665 and blank
T-shirts $20,000.
Fair
value of financial instruments
The
Financial Accounting Standards Board’s Statement 107, “Disclosures about Fair
Value of Financial Instruments”, requires the determination of fair value of the
Company’s financial assets and liabilities. The estimated fair values
of financial instruments were determined by management using available market
information and appropriate valuation methodologies. The carrying
amounts of financial instruments including cash and advance from shareholder
approximate their fair value because of their short maturities.
Income taxes
The
Company accounts for its income taxes in accordance with Statement of Financial
Accounting Standards No. 109, which requires recognition of deferred tax assets
and liabilities for future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and
their respective tax bases and tax credit carry forwards. 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. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in operations in
the period that includes the enactment date.
Deferred
income taxes reflect the net tax effects of temporary differences between the
carrying amounts of assets and liabilities for financial statement purposes and
the amounts used for income tax purposes. Significant components of
the Company’s deferred tax liabilities and assets as of December 31, 2008 are as
follows:
|
Deferred
tax assets:
|
||||
|
Net
operating loss
|
$ | 185,271 | ||
|
Income
tax rate
|
34 | % | ||
| 62,992 | ||||
|
Less
valuation allowance
|
(62,992 | ) | ||
| $ | - | |||
Through
December 31, 2008, a valuation allowance has been recorded to offset the
deferred tax assets, including those related to the net operating
losses. At December 31, 2008, the Company had approximately $185,000
of federal and state net operating losses. The net operating loss
carryforwards, if not utilized will begin to expire in 2025.
13
Note
1. Nature of Business and Summary of Significant Accounting Policies
-continued
Reconciliations
of the U.S. federal statutory rate to the actual tax rate for the year ended
December 31, 2008 is as follows:
|
2008
|
||||
|
U.S.
federal statutory income tax rate
|
34.0 | % | ||
|
State
tax - net of federal benefit
|
0.0 | % | ||
| 34.0 | % | |||
|
Increase
in valuation allowance
|
(34.0 | %) | ||
|
Effective
tax rate
|
0.0 | % | ||
Net
loss per common share
The
Company computes net loss per share in accordance with SFAS No. 128, Earnings
per Share (SFAS 128) and SEC Staff Accounting Bulletin No. 98 (SAB
98). Under the provisions of SFAS 128 and SAB 98, basic net loss per
share is computed by dividing the net loss available to common stockholders for
the period by the weighted average number of shares of common stock outstanding
during the period. The calculation of diluted net loss per share
gives effect to common stock equivalents; however, potential common shares are
excluded if their effect is antidilutive.
Comprehensive
income
The
Company accounts for comprehensive income (loss) in accordance with SFAS No. 130
"Reporting Comprehensive income" which requires comprehensive income (loss) and
its components to be reported when a company has items of comprehensive income
(loss). Comprehensive income (loss) includes net income (loss) plus
other comprehensive income (loss). There are no differences or reconciling items
between net income and comprehensive income for the years ended December 31,
2008 and 2007.
Note
2. Concentration of credit risk
A
significant amount of the Company’s assets and resources are dependent on the
financial support of the shareholders, should the shareholders determine to no
longer finance the operations of the company, it may be unlikely for the company
to continue.
The
Company maintains its cash in institutions insured by the Federal Deposit
Insurance Corporation (FDIC). This government corporation insured
balances up to $100,000 through October 13, 2008. As of October 14,
2008 all non-interest bearing transaction deposit accounts at an FDIC-insured
institution, including all personal and business checking deposit accounts that
do not earn interest, are fully insured for the entire amount in the deposit
account. This unlimited insurance coverage is temporary and will
remain in effect for participating institutions until December 31,
2009.
All other
deposit accounts at FDIC-insured institutions are insured up to at least
$250,000 per depositor until December 31, 2009. On January 1, 2010,
FDIC deposit insurance for all deposit accounts, except for certain retirement
accounts, will return to at least $100,000 per depositor. Insurance
coverage for certain retirement accounts, which include all IRA deposit
accounts, will remain at $250,000 per depositor.
Note
3. Property and equipment
As of
December 31, 2008 the Company does not own any property and/or
equipment.
14
Note
4. Stockholders’ equity
The
Company has 70,000,000 shares authorized and 37,000,000 shares issued and
outstanding as of December 31, 2008. The issued and outstanding
shares were as follows:
On
September 9, 2006 the Company issued 2,000,000 common shares at $0.002 par value
to Sharon M. Lynch, the Company’s president/ shareholder for services
provided.
On
January 12, 2007 the Company issued 20,000,000 common shares at $0.002 par value
to Sharon M. Lynch, the Company’s president/ shareholder for services
provided.
The
Company initiated a Private Placement in March 2007 for the sale of 15,000,000
shares of common stock to investors at $0.01 per share. As of April 30,
2007, all subscriptions have been received from 28 investors, raising $148,500
in proceeds, net of $1,500 of offering costs. There were no common stocks issued
during 2008.
Note
5. Related party transactions
On
January 12, 2007, the Company issued 20,000,000 shares of common stock to its
president/ shareholder for service provided valued at approximately
$40,000.
During
the year ended December 31, 2007, the Company purchased $42,000 of inventories
from LVNV Apparel, LLC, a company related by common ownership.
During
the year ended December 31, 2008 and 2007 the Company paid consulting fee of
$650 and $9,500, repsectively, to an individual related to a stockholder of the
Company.
During
the year ended December 31, 2008, the Company paid officer’s compensation of
$2,000 to its president/ shareholder for services provided.
During
the year ended December 31, 2008, advance from shareholders was approximately
$13,000.
Note
6. Newly issued pronouncements
In
December 2007, the SEC issued Staff Accounting Bulletin (SAB) No. 110 regarding
the use of a "simplified" method, as discussed in SAB No. 107 (SAB 107), in
developing an estimate of expected term of "plain vanilla" share options in
accordance with SFAS No. 123 (R), Share-Based Payment. In particular,
the staff indicated in SAB 107 that it will accept a company's election to use
the simplified method, regardless of whether the company has sufficient
information to make more refined estimates of expected term. At the time SAB 107
was issued, the staff believed that more detailed external information about
employee exercise behavior (e.g., employee exercise patterns by industry and/or
other categories of companies) would, over time, become readily available to
companies. Therefore, the staff stated in SAB 107 that it would not expect a
company to use the simplified method for share option grants after December 31,
2007. The staff understands that such detailed information about employee
exercise behavior may not be widely available by December 31, 2007. Accordingly,
the staff will continue to accept, under certain circumstances, the use of the
simplified method beyond December 31, 2007. The Company currently uses the
simplified method for “plain vanilla” share options and warrants, and will
assess the impact of SAB 110 for fiscal year 2009. It is not believed that this
will have an impact on the Company’s financial position, results of
operations or cash flows.
15
Note
6. Newly issued pronouncements – continued
In
June 2008, the FASB issued FASB Staff Position EITF 03-6-1, Determining Whether Instruments
Granted in Share-Based Payment Transactions Are Participating Securities,
(“FSP EITF 03-6-1”). FSP EITF 03-6-1 addresses whether instruments granted in
share-based payment transactions are participating securities prior to vesting,
and therefore need to be included in the computation of earnings per share under
the two-class method as described in FASB Statement of Financial Accounting
Standards No. 128, “Earnings per Share.” FSP EITF 03-6-1 is effective for
financial statements issued for fiscal years beginning on or after
December 15, 2008 and earlier adoption is prohibited. We are not required
to adopt FSP EITF 03-6-1; neither do we believe that FSP EITF 03-6-1 would have
material effect on our financial position and results of
operations if adopted.
In May
2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 163,
“Accounting for Financial Guarantee Insurance Contracts-and interpretation of
FASB Statement No. 60”. SFAS No. 163 clarifies how Statement 60
applies to financial guarantee insurance contracts, including the recognition
and measurement of premium revenue and claims liabilities. This statement also
requires expanded disclosures about financial guarantee insurance contracts.
SFAS No. 163 is effective for fiscal years beginning on or after December 15,
2008, and interim periods within those years. SFAS No. 163 has no effect on the
Company’s financial position, statements of operations, or cash flows at this
time.
In May
2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 162,
“The Hierarchy of Generally Accepted Accounting Principles”. SFAS No.
162 sets forth the level of authority to a given accounting pronouncement or
document by category. Where there might be conflicting guidance between two
categories, the more authoritative category will prevail. SFAS No. 162 will
become effective 60 days after the SEC approves the PCAOB’s amendments to AU
Section 411 of the AICPA Professional Standards. SFAS No. 162 has no effect on
the Company’s financial position, statements of operations, or cash flows at
this time.
In March
2008, the Financial Accounting Standards Board, or FASB, issued SFAS No. 161,
Disclosures about Derivative Instruments and Hedging Activities—an amendment of
FASB Statement No. 133. This standard requires companies to provide
enhanced disclosures about (a) how and why an entity uses derivative
instruments, (b) how derivative instruments and related hedged items are
accounted for under Statement 133 and its related interpretations, and (c) how
derivative instruments and related hedged items affect an entity’s financial
position, financial performance, and cash flows. This Statement is effective for
financial statements issued for fiscal years and interim periods beginning after
November 15, 2008, with early application encouraged. The Company has not yet
adopted the provisions of SFAS No. 161, but does not expect it to have a
material impact on its financial position, results of operations or
cash flows.
In
December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements—an amendment of ARB No. 51. This
statement amends ARB 51 to establish accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the deconsolidation of a
subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an
ownership interest in the consolidated entity that should be reported as equity
in the consolidated financial statements. Before this statement was issued,
limited guidance existed for reporting noncontrolling interests. As a result,
considerable diversity in practice existed. So-called minority interests were
reported in the consolidated statement of financial position as liabilities or
in the mezzanine section between liabilities and equity. This statement improves
comparability by eliminating that diversity. This statement is effective for
fiscal years, and interim periods within those fiscal years, beginning on or
after December 15, 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 Statement 141 (revised 2007). The Company
will adopt this Statement beginning March 1, 2009. It is not believed that this
will have an impact on the Company’s financial position, results of operations
or cash flows.
16
Note
6. Newly issued pronouncements – continued
In
December 2007, the FASB, issued FAS No. 141 (revised 2007), Business
Combinations’. This Statement replaces FASB Statement No. 141,
Business Combinations, but retains the fundamental requirements in
Statement 141. This Statement establishes principles and
requirements for how the acquirer: (a) recognizes and measures in its financial
statements the identifiable assets acquired, the liabilities assumed, and any
noncontrolling interest in the acquiree; (b) recognizes and measures the
goodwill acquired in the business combination or a gain from a bargain purchase;
and (c) determines what information to disclose to enable users of the financial
statements to evaluate the nature and financial effects of the business
combination. This statement applies prospectively to business combinations for
which the acquisition date is on or after the beginning of the first annual
reporting period beginning on or after December 15, 2008. An entity may not
apply it before that date. The effective date of this statement is the same as
that of the related FASB Statement No. 160, Noncontrolling Interests in
Consolidated Financial Statements. The Company will adopt this
statement beginning March 1, 2009. It is not believed that this will have an
impact on the Company’s financial position, results of operations or cash
flows.
In
February 2007, the FASB, issued SFAS No. 159, The Fair Value Option for
Financial Assets and Liabilities—Including an Amendment of FASB Statement No.
115. This standard permits an entity to choose to measure many
financial instruments and certain other items at fair value. This option is
available to all entities. Most of the provisions in FAS 159 are elective;
however, an amendment to FAS 115 Accounting for Certain Investments in Debt and
Equity Securities applies to all entities with available for sale or trading
securities. Some requirements apply differently to entities that do not report
net income. SFAS No. 159 is effective as of the beginning of an entity’s first
fiscal year that begins after November 15, 2007. Early adoption is permitted as
of the beginning of the previous fiscal year provided that the entity makes that
choice in the first 120 days of that fiscal year and also elects to apply the
provisions of SFAS No. 157 Fair Value Measurements. The Company will
adopt SFAS No. 159 beginning March 1, 2008 and is currently evaluating the
potential impact the adoption of this pronouncement will have on its financial
statements.
In
September 2006, the FASB issued SFAS No. 157, Fair Value
Measurements This statement defines fair value, establishes a
framework for measuring fair value in generally accepted accounting principles
(GAAP), and expands disclosures about fair value measurements. This statement
applies under other accounting pronouncements that require or permit fair value
measurements, the Board having previously concluded in those accounting
pronouncements that fair value is the relevant measurement attribute.
Accordingly, this statement does not require any new fair value measurements.
However, for some entities, the application of this statement will change
current practice. This statement is effective for financial statements issued
for fiscal years beginning after November 15, 2007, and interim periods within
those fiscal years. Earlier application is encouraged, provided that the
reporting entity has not yet issued financial statements for that fiscal year,
including financial statements for an interim period within that fiscal year.
The Company will adopt this statement March 1, 2008, and it is not believed that
this will have an impact on the Company’s financial position, results
of operations or cash flows.
Note
7. Litigation
As of
December 31, 2008, the Company is not aware of any current or pending litigation
which may affect the Company’s operations.
17
ITEM
9. CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
Our
accountant is Moore & Associates, Chartered, Certified Public
Accountants. We do not presently intend to change
accountants. At no time have there been any disagreements with such
accountant regarding any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure.
ITEM
9A. CONTROLS
AND PROCEDURES
Management’s
Report On Internal Control Over Financial Reporting
Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting. Internal control over financial
reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the
Securities Exchange Act of 1934 as a process designed by, or under the
supervision of, the company’s principal executive and principal financial
officers and effected by the company’s board of directors, management and other
personnel, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with accounting principles generally accepted in the
United States of America and includes those policies and procedures
that:
|
|
-
|
Pertain
to the maintenance of records that in reasonable detail accurately and
fairly reflect the transactions and dispositions of the assets of the
company;
|
|
|
-
|
Provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with accounting
principles generally accepted in the United States of America and that
receipts and expenditures of the company are being made only in accordance
with authorizations of management and directors of the company;
and
|
|
|
-
|
Provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the company’s assets that
could have a material effect on the financial
statements.
|
Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate. All internal control
systems, no matter how well designed, have inherent
limitations. Therefore, even those systems determined to be effective
can provide only reasonable assurance with respect to financial statement
preparation and presentation. Because of the inherent limitations of
internal control, there is a risk that material misstatements may not be
prevented or detected on a timely basis by internal control over financial
reporting. However, these inherent limitations are known features of the
financial reporting process. Therefore, it is possible to design into
the process safeguards to reduce, though not eliminate, this risk.
As of
December 31, 2008 management assessed the effectiveness of our internal control
over financial reporting based on the criteria for effective internal control
over financial reporting established in Internal Control--Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission
("COSO") and SEC guidance on conducting such assessments. Based on
that evaluation, they concluded that, during the period covered by this report,
such internal controls and procedures were not effective to detect the
inappropriate application of US GAAP rules as more fully described
below. This was due to deficiencies that existed in the design or
operation of our internal controls over financial reporting that adversely
affected our internal controls and that may be considered to be material
weaknesses.
18
The
matters involving internal controls and procedures that our management
considered to be material weaknesses under the standards of the Public Company
Accounting Oversight Board were: (1) lack of a functioning audit committee due
to a lack of a majority of independent members and a lack of a majority of
outside directors on our board of directors, resulting in ineffective oversight
in the establishment and monitoring of required internal controls and
procedures; (2) inadequate segregation of duties consistent with control
objectives; and (3) ineffective controls over period end financial disclosure
and reporting processes. The aforementioned material weaknesses were
identified by our Chief Executive Officer in connection with the review of our
financial statements as of December 31, 2008.
Management
believes that the material weaknesses set forth in items (2) and (3) above did
not have an effect on our financial results. However, management
believes that the lack of a functioning audit committee and the lack of a
majority of outside directors on our board of directors results in ineffective
oversight in the establishment and monitoring of required internal controls and
procedures, which could result in a material misstatement in our financial
statements in future periods.
This
annual report does not include an attestation report of the Corporation's
registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by the
Corporation's registered public accounting firm pursuant to temporary rules of
the SEC that permit the Corporation to provide only the management's report in
this annual report.
Management’s
Remediation Initiatives
In an
effort to remediate the identified material weaknesses and other deficiencies
and enhance our internal controls, we have initiated, or plan to initiate, the
following series of measures:
We will
create a position to segregate duties consistent with control objectives and
will increase our personnel resources and technical accounting expertise within
the accounting function when funds are available to us. And, we plan
to appoint one or more outside directors to our board of directors who shall be
appointed to an audit committee resulting in a fully functioning audit committee
who will undertake the oversight in the establishment and monitoring of required
internal controls and procedures such as reviewing and approving estimates and
assumptions made by management when funds are available to us.
Management
believes that the appointment of one or more outside directors, who shall be
appointed to a fully functioning audit committee, will remedy the lack of a
functioning audit committee and a lack of a majority of outside directors on our
Board.
We
anticipate that these initiatives will be at least partially, if not fully,
implemented by September 30, 2009. Additionally, we plan to test our
updated controls and remediate our deficiencies by September 30,
2009.
ITEM
9B. CHANGES IN INTERNAL CONTROL
OVER FINANCIAL REPORTING
There
were no changes in our internal control over financial reporting (as such term
is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the most
recent fiscal quarter that have materially affected, or are 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 on Form 10-K.
19
PART
III
ITEM
10. DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS: COMPLIANCE WITH SECTION 16(A)
OF THE EXCHANGE ACT
The
directors and officers as of December 31, 2008, are set forth
below. The directors hold office for their respective term and until
their successors are duly elected and qualified. Vacancies in the
existing Board are filled by a majority vote of the remaining
directors. The officers serve at the will of our Board of
Directors
|
Name
|
Age
|
Positions and Offices
Held
|
|
Sharon
M. Lynch
|
43
|
President/Secretary/Director
|
BUSINESS
EXPERIENCE
Set forth
below is the name of our director and officer, all positions and offices held,
the period during which he has served as such, and the business experience
during at least the last five years:
Sharon M. Lynch, President,
Cheif Executive Officer, Chief Financial Officer, Chief Accounting Officer,
Secretary, Treasurer, and Director:
Sharon
Lynch is a graduate of The Fashion Institute of Design and Merchandising in Los
Angeles and has 20 years of experience in sales and marketing of wholesale and
retail apparel and accessories. Ms. Lynch has worked for prestigious
companies such as Nike, Inc., Ellen Tracy, Inc. and St. John
Knits. From 1987 to 1991 she held a position as an account executive
for Ellen Tracy and was responsible for the Nordstrom account which consisted of
working with 26 buyers to cover 70 plus retail stores
nationwide. These duties included showroom sales, merchandising
seminars for groups of ten to two hundred sales associates. She also effectively
maintained sell-through of goods, co-op advertising and markdown allowances for
key accounts. From 1991 to 1995, Ms. Lynch held a position as Product
Developer for Nike, Inc. in Beaverton, Oregon. In this position, she
was responsible for the following: execution of the development of
promotional apparel and accessories for the sports marketing division from
initial concept to production confirmation, collaboration with R & D and
marketing to establish quality products on short timelines to meet profitable
price-points, negotiating price and timelines with selected vendors and
contractors to stay within budget constraints and was directly responsible for
forecasting project costs and purchasing goods and services with regard to
sports marketing and apparel product marketing business plans. From
1995 to 1998, Ms. Lynch worked for World Wide Golf Events and directed turnkey
golf events from conception to completion. These duties included the
design and development of marketing materials to promote start-up golf event
coordination, acquiring procurement for corporate and charitable golf
tournaments and securing sponsor participation from companies such as Microsoft,
Fluor Daniels, Comp USA, Cubic Balance, Cobra Golf, Ashworth, Avid and
Nike.
In 1998,
Ms. Lynch left the industry on a full time basis to raise a family and is now
returning to launch Exclusive Apparel, Inc.
CERTAIN
LEGAL PROCEEDINGS
No
director, nominee for director, or executive officer has appeared as a party in
any legal proceeding material to an evaluation of his ability or integrity
during the past five years.
20
COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT
To date,
we have not filed Form 5 for the year ended December 31, 2008.
ITEM
11. EXECUTIVE
COMPENSATION
Since
Exclusive Apparel, Inc., Inc.’s incorporation on September 8, 2006, Exclusive
Apparel, Inc. has not paid any compensation to any officer, director, or
employee. Upon securing minimum placement proceeds, Exclusive Apparel, Inc. has
budgeted $2,000 per month as compensation for Mrs. Sharon M.
Lynch. Exclusive apparel does not have employment agreements. The
Board of Directors will determine future compensation and, as appropriate,
employment agreements executed.
No
retirement, pension, profit sharing, stock option or insurance programs or other
similar programs have been adopted by us for the benefit of our
employees.
ITEM
12. SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
We have
issued a total of 22,000,000 shares of our common stock to the following persons
for services:
|
Name
|
Number
of Total Shares
|
%
of Shareholdings
|
|
Sharon
M. Lynch
|
22,000,000
|
59%
|
The
address for Ms. Lynch is 2620 Regatta Drive, Suite 102, Las Vegas, Nevada
89128.
ITEM
13. CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
On
September 9, 2006 Sharon M. Lynch, President, Secretary, Treasurer, and
Director, received 2,000,000 shares of Exclusive Apparel, Inc., Inc. common
stock, par value $0.001 per share, for services.
All
shares issued to Mrs. Sharon M. Lynch were at a par price per share of
$0.001. The price of the common stock issued to Mrs. Sharon M. Lynch was
arbitrarily determined and bore no relationship to any objective criterion of
value. At the time of the issuance, Exclusive Apparel, Inc. was recently formed
or in the process of being formed and possessed no assets.
On
September 12, 2006 Sharon M. Lynch, President, Secretary, Treasurer, and
Director, received 20,000,000 shares of Exclusive Apparel, Inc., Inc. common
stock, par value $0.001 per share, for services.
All
shares issued to Mrs. Sharon M. Lynch were at a par price per share of
$0.001. The price of the common stock issued to Mrs. Sharon M. Lynch was
arbitrarily determined and bore no relationship to any objective criterion of
value. At the time of the issuance, Exclusive Apparel, Inc. possessed
no assets.
During
the year ended December 31, 2007, the Company purchased $42,000 of inventories
from LVNV Apparel, LLC, a company related by common ownership.
During
the year ended December 31, 2007, the Company paid consulting fee of $9,500 to
an individual related to a stockholder of the Company.
21
During
the year ended December 31, 2008 and 2007 the Company paid consulting fee of
$650 and $9,500, respectively, to an individual related to a stockholder of the
Company.
During
the year ended December 31, 2008, the Company paid officer’s compensation of
$2,000 to its president/ shareholder for services provided.
During
the year ended December 31, 2008, advance from shareholders was approximately
$13,000.
Exclusive
Apparel, Inc., Inc.’s principal office space is free of charge at the present
time. Please refer to the section titled “Description of Property”
herein.
PART
IV
ITEM
14. EXHIBITS
AND REPORTS ON FORM 8-K
(a) The
following documents are filed as part of this report:
1. Financial
statements; see index to financial statements and schedules in Item 8
herein.
2 Financial
statement schedules; see index to financial statements and schedules in Item 8
herein.
3. Exhibits:
The
following exhibits are filed with this Form 10-K and are identified by the
numbers indicated; see index to exhibits immediately following financial
statements and schedules of this report.
EXHIBIT
INDEX
3.1 Articles
of Incorporation (1)
3.2 By-laws (1)
|
(1)
|
Incorporated
by reference to our Form SB-2 (SEC File No.
333-140305).
|
ITEM
15. PRINCIPAL
ACCOUNTANT FEES AND SERVICES
Audit
Fees
For the
Company's fiscal year ended December 31, 2008, we were billed $8,750 for year
end 2008 for professional services rendered for the audit and review of our
financial statements.
Tax
Fees
For the
Company's fiscal year ended December 31, 2008, we were billed approximately
$0.00 for 2008, respectively, for professional services rendered for tax
compliance, tax advice, and tax planning.
All Other
Fees
The
Company did not incur any other fees related to services rendered by our
principal accountant for the fiscal year ended December 31, 2008.
22
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, there unto duly authorized.
EXCLUSIVE
APPAREL, INC.
By: /s/ Sharon
M. Lynch
SHARON
M. LYNCH
President,
Chief Executive Officer,
Chief
Financial Officer,
Secretary
and Director
By: /s/ Sharon
M. Lynch
SHARON
M. LYNCH
Principal
Accounting Officer
Dated: March
27, 2009
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
By: /s/ Sharon
M. Lynch
President,
Chief Executive
Officer, Dated: March
27, 2009
Chief
Financial Officer, Secretary
And
Director
By: /s/ Sharon
M. Lynch
Principal
Accounting
Officer Dated: March
27, 2009
23