Helmer Directional Drilling Corp. - Annual Report: 2010 (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, 2010
Commission File No. 000-53675
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
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(I.R.S. Employer Identification No.)
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Or organization)
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11759 Crystal Avenue, Chino, CA 91710
(Address of Principal Executive Offices)
(909) 465-1030
(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 [ ]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [ ] 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 large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
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[ ] Large accelerated filer
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[ ] Accelerated filer
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[ ] Non-accelerated filer
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[X] Smaller reporting company
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes [X] No [ ]
Aggregate market value of the voting common stock held by non-affiliates of the registrant as of January 25, 2011 was: $-0-
Number of shares of our common stock outstanding as of January 25, 2011 is: 37,000,000
The Company has retained the services of Worldwide Stock Transfer Company to facilitate the processing of the stock certificates. Worldwide Stock Transfer Company is a registrar and transfer agency located at 4045 South Spencer Street, Suite 403, 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 January 25, 2011: 37,000,000 shares of common stock.
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 baseball-type caps that are stylish and unique that caters 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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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, Inc.
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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, 2010, the Company did not generate any revenues and has incurred a cumulative net loss of $261,815. The Company has been unable to raise the necessary capital in order to implement its business and it is necessary for the Company to review other business models and opportunities in order to continue as a going concern. There can be no assurance that we will be able to raise any capital or find a business opportunity that will allow the Company to become operational. 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 this Form 10-K.
3
Exclusive Apparel, 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 report, Exclusive Apparel, Inc. has 37,000,000 shares of $0.001 par value common stock issued and outstanding.
Exclusive Apparel, Inc.’s fiscal year end is December 31.
EMPLOYEES
We have no full time employees. Georgette Mathers, 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 11759 Crystal Ave., Chino, CA 91710. The office space is free of charge and no lease exists. There are currently no proposed programs for the renovation, improvement or development of the facilities currently use.
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, 2010, there were twenty-nine (29) shareholders 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 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 $147,000 and our application to the NASD on Form 211 was approved. The Company now trades on the OTC:BB under the symbol EXLA.
Results of Operation
We did not have any operating income from inception (September 8, 2006) through December 31, 2010. For the year ended December 31, 2010, we recognized a net loss of $29,483, representing the Company’s accrual of general and administrative expenses incurred during the year. Expenses for the year were comprised of costs mainly associated with legal, accounting, and office supplies.
Liquidity and Capital Resources
At December 31, 2010, we had no capital resources and will rely upon the issuance of common stock and additional capital contributions from shareholders to fund administrative expenses.
4
ITEM 8. FINANCIAL STATEMENTS
Our financial statements, together with the report of auditors, are as follows:
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EXCLUSIVE APPAREL, INC.
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2010
Exclusive Apparel, Inc.
Financial Statements Table of Contents
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Page
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6
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of Exclusive Apparel, Inc.
We have audited the accompanying balance sheets of Exclusive Apparel, Inc. as of December 31, 2010 and 2009, and the related statements of operations, stockholders’ equity (deficit) and cash flows for each of the years in the two-year period ended December 31, 2010 and for the period from inception date (September 8, 2006) through December 31, 2010. Exclusive Apparel, Inc.’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.
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 purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Exclusive Apparel, Inc. as of December 31, 2010 and 2009, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2010 and for the period from date of inception (September 8, 2006) through December 31, 2010, 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 2 to the financial statements, these conditions raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern.
/s/ EFP Rotenberg, LLP
EFP Rotenberg, LLP
Rochester, New York
February 9, 2011
F-1
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EXCLUSIVE APPAREL, INC.
(A Development Stage Company)
BALANCE SHEETS
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ASSETS
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December 31, 2010
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December 31, 2009
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Current assets:
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Cash
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$ | - | $ | - | ||||
| Total current assets | - | - | ||||||
| Total assets | $ | - | $ | - | ||||
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LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
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Current liabilities:
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Accounts payable and accrued expenses
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$ | 11,750 | $ | - | ||||
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Advance from shareholder
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57,565 | 39,832 | ||||||
| Total current liabilities | 69,315 | 39,832 | ||||||
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Stockholders' equity (deficit)
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Preferred stock; $.001 par value, 5,000,000 shares
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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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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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(261,815 | ) | (232,332 | ) | ||||
| Total stockholders' equity (deficit) | (69,315 | ) | (39,832 | ) | ||||
| $ | - | $ | - | |||||
The accompanying notes are an integral part of these financial statements.
F-2
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EXCLUSIVE APPAREL, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
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September 8, 2006
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(date of inception)
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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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December 31, 2010
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December 31, 2009
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December 31, 2010
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Revenues
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$ | - | $ | - | $ | - | ||||||
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Operating expenses:
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General and administrative expenses
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29,483 | 23,029 | 261,948 | |||||||||
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Total operating expenses
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29,483 | 23,029 | 261,948 | |||||||||
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(Loss) from operations
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(29,483 | ) | (23,029 | ) | (261,948 | ) | ||||||
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Other income (expenses):
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Interest (expense)
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- | - | - | |||||||||
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Other income
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- | 133 | 133 | |||||||||
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Total other income (expenses)
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- | 133 | 133 | |||||||||
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(Loss) before provision for income taxes
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(29,483 | ) | (22,896 | ) | (261,815 | ) | ||||||
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Provision for income taxes
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- | - | - | |||||||||
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Net (loss)
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$ | (29,483 | ) | $ | (22,896 | ) | $ | (261,815 | ) | |||
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Basic and diluted loss per common share
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$ | (0.00 | ) | $ | (0.00 | ) | ||||||
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Basic and diluted weighted average
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common shares outstanding
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37,000,000 | 37,000,000 | ||||||||||
The accompanying notes are an integral part of these financial statements.
F-3
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EXCLUSIVE APPAREL, INC.
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
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Accumulated
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(Deficit)
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Additional
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during
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Total
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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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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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Balance at September 8, 2006
(Date of Inception) |
- | $ | - | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||||||
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Common shares issued for service at $0.002 per share
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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 (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 at $0.002 per share
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- | - | 20,000,000 | 20,000 | 20,000 | - | 40,000 | |||||||||||||||||||||
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Common shares issued relating to private placement, at $0.01 per share, net of $1,500 of offering costs
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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
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- | - | - | - | - | (163,401 | ) | (163,401 | ) | |||||||||||||||||||
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Balance, December 31, 2007
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- | - | 37,000,000 | 37,000 | 155,500 | (187,889 | ) | 4,611 | ||||||||||||||||||||
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Net (loss) for the year ended December 31, 2008
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- | - | - | - | - | (21,547 | ) | (21,547 | ) | |||||||||||||||||||
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Balance December 31, 2008
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- | - | 37,000,000 | 37,000 | 155,500 | (209,436 | ) | (16,936 | ) | |||||||||||||||||||
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Net (loss) for the year ended December 31, 2009
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- | - | - | - | - | (22,896 | ) | (22,896 | ) | |||||||||||||||||||
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Balance December 31, 2009
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- | - | 37,000,000 | 37,000 | 155,500 | (232,332 | ) | (39,832 | ) | |||||||||||||||||||
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Net (loss) for the year ended December 31, 2010
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- | - | - | - | - | (29,483 | ) | (29,483 | ) | |||||||||||||||||||
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Balance December 31, 2010
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- | $ | - | 37,000,000 | $ | 37,000 | $ | 155,500 | $ | (261,815 | ) | $ | (69,315 | ) | ||||||||||||||
The accompanying notes are an integral part of these financial statements.
F-4
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EXCLUSIVE APPAREL, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOW
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September 8, 2006
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(date of inception)
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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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December 31, 2010
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December 31, 2009
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December 31, 2010
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Operating activities:
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Net loss
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$ | (29,483 | ) | $ | (22,896 | ) | $ | (261,815 | ) | |||
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Adjustments to reconcile net loss to
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net cash used in operating activities:
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Stock issued for services
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- | - | 44,000 | |||||||||
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Changes in operating assets and liabilities:
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(Decrease) increase in accounts payable
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11,750 | (61 | ) | 11,750 | ||||||||
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Net cash (used in) operating activities
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(17,733 | ) | (22,957 | ) | (206,065 | ) | ||||||
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Financing activities:
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Advance to/ from shareholder
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17,733 | 22,882 | 57,565 | |||||||||
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Proceeds from issuance of common stock
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- | - | 148,500 | |||||||||
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Net cash provided by financing activities
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17,733 | 22,882 | 206,065 | |||||||||
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Net change in cash
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- | (75 | ) | - | ||||||||
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Cash, beginning of period
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- | 75 | - | |||||||||
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Cash, end of period
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$ | - | $ | - | $ | - | ||||||
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Non Cash Investing and Financing Activities:
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Issuance of Common Stock for Services
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$ | - | $ | - | $ | 44,000 | ||||||
The accompanying notes are an integral part of these financial statements.
F-5
EXCLUSIVE APPAREL, INC.
(A Development Stage Company)
NOTES TO THE 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 baseball type headwear for women. The goal of the Company 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 as defined by FASB ASC Topic 915-10.
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.
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.
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 general and administrative expenses in the accompanying statement of operations.
As of December 31, 2010 and 2009, there was no advertising cost incurred.
Net loss per common share
The Company computes net loss per share in accordance with ASC Topic 260, “Earnings per Share”. Under the provisions of ASC 260, 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.
Income taxes
The Company accounts for its income taxes in accordance with ASC Topic 740, 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.
F-6
EXCLUSIVE APPAREL, INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
Note 1. Nature of Business and Summary of Significant Accounting Policies -continued
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, 2010 and 2009 are as follows:
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Deferred tax assets:
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2010
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2009
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Net operating loss
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$ | 261,815 | $ | 232,332 | ||||
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Income tax rate
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34 | % | 34 | % | ||||
| 89,017 | 78,993 | |||||||
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Less valuation allowance
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(89,017 | ) | (78,993 | ) | ||||
| $ | - | $ | - | |||||
Through December 31, 2010, a valuation allowance has been recorded to offset the deferred tax assets, including those related to the net operating losses. At December 31, 2010, the Company had approximately $262,000 of federal and state net operating losses. The net operating loss carryforwards, if not utilized will begin to expire in 2025.
Reconciliations of the U.S. federal statutory rate to the actual tax rate for the year ended December 31, 2010 and 2009 is as follows:
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2010
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2009
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U.S. federal statutory income tax rate
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34.0 | % | 34.0 | % | ||||
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State tax - net of federal benefit
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0.0 | % | 0.0 | % | ||||
| 34.0 | % | 34.0 | % | |||||
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Increase in valuation allowance
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(34.0 | %) | (34.0 | %) | ||||
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Effective tax rate
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0.0 | % | 0.0 | % | ||||
Note 2. Going Concern
The Company’s financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has incurred a net operating loss of $261,815 through December 31, 2010. The Company has not commenced its operations, rather, still in the development stages, which raises substantial doubt about the Company’s ability to continue as a going concern.
In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses and seeking equity and/or debt financing. However management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.
The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
Note 3. Property and equipment
As of December 31, 2010 and 2009 the Company does not own any property and/or equipment.
F-7
EXCLUSIVE APPAREL, INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
Note 4. Stockholders’ equity
The Company's articles of incorporation provide for the authorization of seventy million (70,000,000) shares of common stock and five million (5,000,000) shares of preferred stock with par values of $0.001. Common stock holders have all the rights and obligations that normally pertain to stockholders of Nevada corporations. As of December 31, 2010 and 2009 the Company had 37,000,000 shares of common stock issued and outstanding. The Company has not issued any shares of preferred stock.
Note 5. Related party transactions
During the years ended December 31, 2010 and 2009, a shareholder advanced $17,733 and $22,882, respectively, to the Company.
These amounts are reflected as unsecured and non-interest bearing advances with no maturity date. As of December 31, 2010 and 2009, the balance of these amounts was $57,565 and $39,832, respectively.
Note 6. Newly issued pronouncements
The Company has evaluated all recent accounting pronouncements and believes that none of them will have a material effect on the Company’s financial statements.
Note 7. Litigation
As of December 31, 2010 and 2009, the Company is not aware of any current or pending litigation which may affect the Company’s operations.
F-8
ITEM 9A(T). CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
The Company’s management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) that is designed to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedure include, without limitations, controls and procedures designed to ensure that information required to be disclosed by an issurer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
In accordance with Exchange Act Rules 13a-15 and 15d-15, an evaluation was completed by the Company’s President, Secretary and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this Annual Report. Based on that evaluation, the Company’s sole officer concluded that the Company’s disclosure controls and procedures were not effective in providing reasonable assurance that the information required to be disclosed in the Company’s reports filed or submitted under the Exchange Act was recorded, processed, summarized, and reported within the time periods specified in the Commission’s rules and forms.
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:
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·
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Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company;
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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
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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.
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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, 2010 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.
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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, 2010.
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.
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.
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.
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, 2010, 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.
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Name
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Age
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Positions and Offices Held
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Georgette Mathers
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57
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President/Secretary/Director
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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:
Georgette Mathers, 57 years of age, President, Chief Executive Officer, Chief Financial Officer, Secretary and Director.
Ms. Mathers is a corporate paralegal and has worked in the legal profession for over 20 years. Ms. Mathers was appointed to the Board of Directors of the Company on June 11, 2009 and is now the President, Secretary, Treasurer and Chief Financial Officer of the Company.
As of the date of this filing, there has not been any material plan, contract or arrangement (whether or not written) to which Ms. Mathers is a party in connection with this appointment as a director and an officer of this Company.
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No transactions occurred in the last two years to which the Company was a party in which Ms. Mathers had or is to have a direct or indirect material interest.
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.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
To date, we have not filed Form 5 for the year ended December 31, 2010.
ITEM 11. EXECUTIVE COMPENSATION
Since Exclusive Apparel, Inc.’s incorporation on September 8, 2006, the Company has not paid any compensation to any officer, director, or employee. Exclusive Apparel, Inc. does not have any employment agreements. The Board of Directors will determine future compensation and, as approved, employment agreements.
No retirement, pension, profit sharing, stock option or insurance programs or other similar programs have been adopted by the Company 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:
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Name
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Number of Total Shares
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% of Shareholdings
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Georgette Mathers
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22,000,000
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59%
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The address for Ms. Mathers is 11759 Crystal Avenue, Chino, CA 91710.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the year ended December 31, 2010 and 2009, a shareholder advanced $17,733 and $22,882, respectively, to the Company.
These amounts are reflected as unsecured and non-interest bearing advances with no maturity date. As of December 31, 2010 and 2009, the balance of these amounts was $57,565 and $39,832, respectively.
Exclusive Apparel, Inc.’s principal office space is free of charge at the present time. Please refer to the section titled “Description of Property” herein.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Audit Fees
For the Company's fiscal years ended December 31, 2010 and 2009, we were billed $7,500 for professional services rendered from our Independent Registered Public Accountants for the audit and review of our financial statements.
Tax Fees
For the Company's fiscal years ended December 31, 2010 and 2009, we were billed approximately $0 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 years ended December 31, 2010 and 2009.
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PART IV
ITEM 15. EXHIBITS; FINANCIAL STATEMENT SCHEDULE
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Exhibit No.
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Description
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3.1
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Articles of Incorporation of Exclusive Apparel, Inc., a Nevada corporation. Incorporated by reference to our current report on Form SB-2 filed with the SEC on January 30, 2007.
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3.2
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Bylaws of Exclusive Apparel, Inc., a Nevada corporation. Incorporated by reference to our current report on Form SB-2 filed with the SEC on January 30, 2007
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31.1
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Rule 13a-14(a) Certification of Chief Executive Officer and Chief Financial Officer
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32.1
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Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18.U.S.C. Section 1350, as Pursuant to Section 906 of the Sarbanes Oxley Act of 2002
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SIGNATURES
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 hereunto duly authorized.
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EXCLUSIVE APPAREL, INC.
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Date: February 9, 2011
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By: /s/ Georgette Mathers
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Georgette Mathers
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Chief Executive Officer
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Pursuant to the requirements of the Securities and 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:
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Signature
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Title(s)
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Date
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/s/ Georgette Mathers
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Chief Executive Officer and Director
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February 9, 2011
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Georgette Mathers
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(Principal Executive Officer)
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/s/ Georgette Mathers
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Chief Financial Officer and Director
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February 9, 2011
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Georgette Mathers
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(Principal Financial and Accounting Officer)
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