METAWORKS PLATFORMS, INC. - Annual Report: 2015 (Form 10-K)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: December 31, 2015
or
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________________to __________________
Commission file number: 000-55049
REDSTONE LITERARY AGENTS, INC.
(Exact name of registrant as specified in its charter)
Nevada
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N/A
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State or other jurisdiction of
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(I.R.S. Employer
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incorporation or organization
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Identification No.)
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3250 Oakland Hills Court, Fairfield, CA 94534
(Address of principal executive offices and Zip Code)
Registrant’s telephone number, including area code: 707.208.6368
Securities registered pursuant to Section 12(b) of the Act
Title of Each Class
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Name of each Exchange on which registered
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Nil
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N/A
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Securities registered pursuant to Section 12(g) of the Act
Common stock with a par value of $0.001 per share
(Title of Class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
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 x No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act
Large accelerated filer o
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Accelerated filer o
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Non-accelerated filer o
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Smaller reporting company x
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(Do not check if a 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 Act). Yes x No o
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter.
3,000,000 shares of common stock at a price of $5.00 per share for an aggregate market value of $15,000,000.
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date: As of March 29, 2016, there were 6,000,000 shares of common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) Any annual report to security holders; (2) Any proxy or information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or (c) of the Securities Act of 1933. The listed documents should be clearly described for identification purposes (e.g., annual report to security holders for fiscal year ended December 24, 1980). Not Applicable
PART I
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ITEM 1
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BUSINESS
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3
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ITEM 1A
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RISK FACTORS
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5
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ITEM 1B
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UNRESOLVED STAFF COMMENTS
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8
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ITEM 2
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PROPERTIES
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8
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ITEM 3
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LEGAL PROCEEDINGS
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8
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ITEM 4
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MINE SAFETY DISCLOSURES
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8
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PART II
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ITEM 5
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MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
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8
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ITEM 6
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SELECTED FINANCIAL DATA
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9
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ITEM 7
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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9
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ITEM 7A
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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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12
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ITEM 8
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FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
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12
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ITEM 9
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CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
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24
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ITEM 9A
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CONTROLS AND PROCEDURES
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24
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ITEM 9B
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OTHER INFORMATION
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25
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PART III
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ITEM 10
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DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
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25
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ITEM 11
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EXECUTIVE COMPENSATION
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26
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ITEM 12
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
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29
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ITEM 13
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
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30
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ITEM 14
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PRINCIPAL ACCOUNTING FEES AND SERVICES
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31
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PART IV
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ITEM 15
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EXHIBITS, FINANCIAL STATEMENT SCHEDULES
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32
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2
PART I
ITEM 1. BUSINESS
Forward-Looking Statements
This annual report contains “forward-looking statements”. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, statements regarding: the plans, strategies and objections of management for future operations; the future plans or business of our company; future economic conditions or performance; and any statements of assumptions underlying any of the foregoing.
Forward-looking statements may include the words “may,” “could,” “estimate,” “intend,” “continue,” “believe,” “expect” or “anticipate” or other similar words. These forward-looking statements present our estimates and assumptions only as of the date of this report. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the dates on which they are made. Except as required by applicable law, we do not intend, and undertake no obligation, to update any forward-looking statement.
Although we believe the expectations reflected in the forward-looking statements in this report are reasonable, actual results could differ materially from those projected or assumed in any forward-looking statements. All forward-looking statements are subject to change and inherent risks and uncertainties. The factors impacting these risks and uncertainties include, but are not limited to:
·
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our current lack of working capital;
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·
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a possible inability to raise additional financing;
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·
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the fact that our accounting policies and methods are fundamental to how we report our financial condition and results of operations, and they may require our management to make estimates about matters that are inherently uncertain;
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·
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deterioration in general or regional economic conditions;
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·
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adverse state or federal legislation or regulations that increase the costs of compliance;
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·
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inability to efficiently manage our operations; and
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·
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the unavailability of funds for capital expenditures.
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All financial information contained herein is shown in United States dollars unless otherwise stated. Our financial statements are prepared in accordance with United States generally accepted accounting principles.
In this annual report, unless otherwise specified, all references to “shares” refer to shares of common stock in the capital of our company.
As used in this annual report on Form 10-K, the terms “we”, “us” “our” and “RedStone” refer to RedStone Literary Agents Inc., a Nevada corporation, unless otherwise specified.
Corporate Overview
We were incorporated under the laws of the State of Nevada on July 20, 2010 and are considered a development stage company. Following incorporation, we commenced the business of representing authors to publishers.
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On August 28, 2014, pursuant to a transfer agreement dated for reference August 28, 2014, Mary Wolf, our former sole director and officer, sold to James P. Geiskopf, 3,000,000 shares of our common stock for total consideration of $20,000. Mr. Geiskopf paid the $20,000 purchase price for these shares using personal funds. Mr. Geiskopf holds approximately 50% of our issued and outstanding common stock.
Effective August 28, 2014, Mr. Geiskopf was appointed as our president, secretary and treasurer and to our board of directors, and as a result, Ms. Wolf resigned as president, secretary and treasurer. Ms. Wolf resigned as a director of our company on November 17, 2014.
The principal offices of our company are located at 3250 Oakland Hills Court, Fairfield, CA 94534. Our telephone number is 707.208.6368.
Our Current Business
Upon the resignation of Mary Wolf as an officer of our company, we ceased pursuing the business of representing authors to publishers and are now seeking new business opportunities with established business entities to effect a merger or other form of business combination with our company. We anticipate that any new acquisition or business opportunity that we may be party to will require additional financing. There can be no assurance, however, that we will be able to acquire the financing necessary to enable us to pursue our plan of operation and enter into such an agreement. If our company requires additional financing and we are unable to obtain such funds, our business will fail.
Even if we are able to commence a new business opportunity and obtain the necessary funding, there is no assurance that we will be able to generate any revenue, or that any revenue that may be generated will be sufficient to provide a return to our investors.
In implementing a structure for a particular business acquisition or opportunity, we may become a party to a merger, consolidation, reorganization, joint venture or other business combination with another corporation or entity. We may also acquire stock or assets of an existing business. Upon the consummation of a transaction, it is likely that our present management will no longer be in control of our company. In addition, it is likely that some or all of our current management will resign and be replaced by one or more new officers or directors.
We anticipate that the selection of a business opportunity in which to participate will be complex and without certainty of success. We believe that there are numerous firms in various industries seeking the perceived benefits of being a publicly reporting corporation. Business opportunities may be available in many different industries and with businesses at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex. Business opportunities that we believe are in the best interests of our company to pursue may be scarce or we may be unable to obtain opportunities that we want. We can provide no assurance that we will be able to locate compatible business opportunities.
As of the date hereof, we have not entered into any formal written agreements for a business combination or opportunity. When any such agreement is reached, we intend to disclose such an agreement by filing a current report on Form 8-K with the Securities and Exchange Commission (the “SEC”).
Currently, we do not have a source of revenue. We are not able to fund our cash requirements through our current operations. Historically, we have been able to raise a limited amount of capital through private placements of our equity stock, but we are uncertain about our continued ability to raise funds privately. Further, we believe that our company may have difficulties raising capital until we locate a prospective business through which we can pursue our plan of operation. If we are unable to secure adequate capital to continue our acquisition efforts, our shareholders may lose some or all of their investment and our business may fail
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Employees
Our company is currently operated by James Geiskopf, our president, secretary, treasurer and sole director. We do not anticipate hiring employees in the near future.
ITEM 1A. RISK FACTORS
An investment in our common stock involves a number of very significant risks. You should carefully consider the following risks and uncertainties in addition to other information in this report in evaluating our company before purchasing our securities. Our operating results and financial condition could be seriously harmed as a result of the occurrence of any of the following risks. You could lose all or part of your investment due to any of these risks.
Risks Related to Our Business
Business opportunities that we believe are in the best interests of our company may be scarce or we may be unable to obtain the ones that we want. If we are unable to obtain a business opportunity that we believe is in the best interests of our company, we may never recommence operations and will go out of business. If we go out of business, investors will lose their entire investment in our company.
We are, and will continue to be, an insignificant participant in the number of companies seeking a suitable business opportunity or business combination. A large number of established and well-financed entities, including venture capital firms, are actively seeking suitable business opportunities or business combinations which may also be desirable target candidates for us. Virtually all such entities have significantly greater financial resources, technical expertise and managerial capabilities than we do. We are, consequently, at a competitive disadvantage in identifying possible business opportunities and successfully completing a business combination. We will also compete with numerous other small public companies seeking suitable business opportunities or business combinations. If we are unable to obtain a business opportunity that we believe is in the best interests of our company, we may never recommence operations and will go out of business. If we go out of business, investors will lose their entire investment in our company.
The current state of capital markets, particularly for small companies, is expected to reduce our ability to obtain the financing necessary to continue our business. If we cannot raise the funds that we need to continue acquisitions and fund future business opportunities, we will go out of business and investors will lose their entire investment in our company.
Like other smaller companies, we face difficulties in raising capital for our continued operations and to consummate a business opportunity with a viable business. We may not be able to raise money through the sale of our equity securities or through borrowing funds on terms we find acceptable.
We have had negative cash flows from operations and if we are not able to obtain further financing, our business operations may fail.
We had cash and cash equivalents in the amount of $13,870 and a working capital deficit of $68,037 as of December 31, 2015. We anticipate that we will require additional financing while we are seeking a suitable business opportunity or business combination. Further, we anticipate that we will not have sufficient capital to fund our ongoing operations for the next twelve months. We would likely secure any additional financing necessary through a private placement of our common stock. There can be no assurance that any financing will be available to us, or, even if it is, if it will be offered on terms and conditions acceptable to us. Our inability to obtain additional financing in a sufficient amount
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when needed and upon terms and conditions acceptable to us, could have a material adverse effect upon our company. If additional funds are raised by issuing equity securities, dilution to existing or future shareholders will result. If adequate funds are not available on acceptable terms when needed, we may be required to delay, scale back or eliminate the development of any business opportunity that we may acquire.
We do not have any targets for a business combination or other transaction and we have no minimum standards for a business combination.
We have no arrangement, agreement, or understanding with respect to acquiring a business opportunity or engaging in a business combination with any private entity. There can be no assurance that we will successfully identify and evaluate suitable business opportunities or conclude a business combination. We have not established a specific length of operating history or a specified level of earnings, assets, net worth or other criteria which we will require a target business opportunity to have achieved. Accordingly, we may enter into a business combination with a business opportunity having no significant operating history, losses, limited or no potential for earnings, limited assets, negative net worth or other negative characteristics.
RISKS ASSOCIATED WITH OUR COMMON STOCK
Because James Geiskopf controls a large percentage of our voting stock, he has the ability to influence matters affecting our stockholders.
James Geiskopf, our president, secretary, treasurer and sole director, owns 3,000,000 shares of our common stock and controls a majority of the votes attached to our outstanding voting securities. As a result, he has the ability to influence matters affecting our stockholders, including the election of our directors, the acquisition of assets, and the issuance of securities. Because he controls a majority of votes, it would be very difficult for investors to replace our management if they disagree with the way our business is being operated. Because the influence by Mr. Geiskopf could result in management making decisions that are in the best interest of Mr. Geiskopf and not in the best interest of the investors, you may lose some or all of the value of your investment in our common stock.
Because we can issue additional shares of common stock, our stockholders may experience dilution in the future.
We are authorized to issue up to 75,000,000 shares of common stock, of which 6,000,000 shares of common stock were issued and outstanding as of March 29, 2016. Our board of directors has the authority to cause us to issue additional shares of common stock without consent of our stockholders. Consequently, stockholders may experience dilution in their ownership of our stock in the future.
There is currently no established public trading market for our common stock, which makes it difficult for our stockholders to resell their shares.
There is currently no established public trading market for our common stock. There is a limited public market for our common stock through its quotation on the OTCQB operated by the OTC Markets Group. Trading in stocks quoted on the OTCQB is often thin and is characterized by wide fluctuations in trading prices due to many factors that may be unrelated or have little to do with a company's operations or business prospects. Moreover, the OTCQB is not a stock exchange, and trading of securities on the OTCQB is often more sporadic than the trading of securities listed on a national securities exchange like the NASDAQ or the NYSE. Accordingly, stockholders may have difficulty reselling any of our shares. We cannot assure you that there will be a market for our common stock in the future.
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Because we do not intend to pay any cash dividends on our common stock in the near future, our stockholders will not be able to receive a return on their shares unless they sell them.
We do not anticipate paying any cash dividends on our common stock in the near future. The declaration, payment and amount of any future dividends will be made at the discretion of the board of directors, and will depend upon, among other things, our results of operations, cash flows and financial condition, operating and capital requirements, and other factors the board considers relevant. We may never pay any dividends. Unless we pay dividends, our stockholders will not be able to receive a return on their shares unless they sell them.
Our stock is a penny stock. Trading of our stock is restricted by the SEC’s penny stock regulations, which may limit a stockholder’s ability to buy and sell our stock.
Our stock is a penny stock. The SEC has adopted Rule 15g-9 which generally defines “penny stock” to be any equity security that has a market price (as defined in Rule 15g-9) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and “accredited investors”. The term “accredited investor” refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC, which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock.
FINRA sales practice requirements may also limit a stockholder’s ability to buy and sell our stock.
In addition to the “penny stock” rules promulgated by the SEC, the Financial Industry Regulatory Authority (“FINRA”) has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock.
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ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 2. PROPERTIES
Our executive and head office is located at 3250 Oakland Hills Court, Fairfield, CA 94534. The office is provided to us at no cost by James Geiskopf, our president, secretary, treasurer and sole director. We believe our current premises are adequate for our current limited operations and we do not anticipate that we will require any additional premises in the foreseeable future. We anticipate that we will continue to utilize these premises so long as the space requirements of our company do not require a larger facility.
ITEM 3. LEGAL PROCEEDINGS
We know of no material pending legal proceedings to which our company is a party or of which any of our properties is the subject. In addition, we do not know of any such proceedings contemplated by any governmental authorities.
We know of no material proceedings in which any of our directors, officers or affiliates, or any registered or beneficial stockholder, is a party adverse to our company or has a material interest adverse to our company.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
There is currently no established public trading market for our common stock and only a limited public market. Our common stock is not traded on any exchange. Our common stock is quoted on the OTCQB operated by the OTC Markets Group under the trading symbol “RDLA”. Trading in stocks quoted on the OTCQB is often thin and is characterized by wide fluctuations in trading prices due to many factors that may be unrelated or have little to do with a company's operations or business prospects. We cannot assure you that there will be a market for our common stock in the future.
Set forth below are the range of high and low bid quotations for the periods indicated as reported by the OTC Bulletin Board. The market quotations reflect inter-dealer prices, without retail mark-up, mark-down or commissions and may not necessarily represent actual transactions.
Quarter Ended
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High Bid
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Low Bid
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||||||
December 31, 2015
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$ | 5.00 | $ | 5.00 | ||||
September 30, 2015
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$ | 5.00 | $ | 5.00 | ||||
June 30, 2015
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$ | 5.00 | $ | 5.00 | ||||
March 31, 2015
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$ | 5.00 | $ | 5.00 | ||||
December 31, 2014
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$ | 5.00 | $ | 5.00 | ||||
September 30, 2014
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$ | 5.00 | $ | 5.00 | ||||
June 30, 2014
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$ | 5.00 | $ | 5.00 | ||||
March 31, 2014
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$ | 5.00 | $ | 5.00 |
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Transfer Agent
Our shares of common stock are issued in registered form. The transfer agent and registrar for our common stock is currently Pacific Stock Transfer, located at 4045 South Spencer Street, Suite 403, Las Vegas, NV 89119.
Holders of Common Stock
As of March 29, 2016, there were approximately 21 holders of record of our common stock. As of such date, 6,000,000 shares were issued and outstanding.
Dividends
We have not declared any dividends since incorporation and do not anticipate that we will do so in the foreseeable future. Although there are no restrictions that limit our ability to pay dividends on our common stock, our present intention is to retain future earnings, if ever any, for use in our operations and the expansion of our business.
Securities Authorized for Issuance under Equity Compensation Plans
We currently do not have any equity compensation plans.
Recent Sales of Unregistered Securities
Since the beginning of our fiscal year ended December 31, 2015, we have not sold any equity securities that were not registered under the Securities Act of 1933 that were not previously reported in a quarterly report on Form 10-Q or in a current report on Form 8-K.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
None.
ITEM 6. SELECTED FINANCIAL DATA
Not applicable.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with our audited annual financial statements and the related notes thereto for the year ended December 31, 2015 which appear elsewhere in this annual report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. See “Risk Factors”.
Our audited financial statements are stated in United States dollars and are prepared in accordance with United States generally accepted accounting principles.
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Overview
We were incorporated under the laws of the State of Nevada on July 20, 2010 and are considered a development stage company. Following incorporation, we commenced the business of representing authors to publishers. However, as we had not successfully developed our business, we ceased pursuing the business of representing authors to publishers and are now seeking new business opportunities with established business entities to effect a merger or other form of business combination with our company. We anticipate that any new acquisition or business opportunity that we may be party to will require additional financing. There can be no assurance, however, that we will be able to acquire the financing necessary to enable us to pursue our plan of operation and enter into such an agreement. If our company requires additional financing and we are unable to obtain such funds, our business will fail.
Going Concern
Our 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. We have not yet established a source of revenues sufficient to cover our operating costs and to allow us to continue as a going concern. As of December 31, 2015, we had an accumulated deficit of $137,754. Our ability to operate as a going concern is dependent on obtaining adequate capital to fund operating losses until we become profitable.
In its report on our financial statements for the year ended December 31, 2015, our independent registered public accounting firm included an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Results of Operations
Year Ended December 31, 2015 and December 31, 2014
During the fiscal years ended December 31, 2015 and 2014, we did not generate any revenue. We incurred operating expenses of $55,488 and $36,304 for the years ended December 31, 2015 and 2014, respectively, an increase of $19,184. These expenses consisted primarily of professional, consulting and filing fees. Our professional fees increased by $19,449 from $14,247 in 2014 to $33,696 in 2015 due to increased business activity related to assessing alternative business opportunities. Our filing and transfer fees decreased by $8,618 from $17,364 in 2014 to $8,746 in 2015. These fees were higher in 2014 due primarily to filing fees incurred in pursuing a DTC application. Similar fees were not incurred in 2015.
Liquidity and Capital Resources
Working Capital
At
December 31,
2015
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At
December 31,
2014
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Current assets
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$ | 13,870 | $ | 4,663 | ||||
Current liabilities
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4,150 | 17,212 | ||||||
Working capital (deficiency)
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$ | 9,720 | $ | 12,549 |
10
Current Assets
Current assets of $13,870 as at December 31, 2015 and $4,663 as at December 31, 2014 were comprised only of cash and cash equivalents.
Current Liabilities
Current liabilities as at December 31, 2015 were attributable to $4,150 in accounts payable and accrued liabilities (2014: $6,598), $nil in loans payable (2014: $10,614) and $77,757 in loan payable – related party (2014: $nil).
Cash Flow
Year
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Year
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ended
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ended
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December 31,
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December 31,
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2015
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2014
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Net cash used in operating activities
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$ | 50,793 | $ | 29,192 | ||||
Net cash used in investing activities
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- | - | ||||||
Net cash provided by financing activities
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60,000 | 10,190 | ||||||
Net increase (decrease) in cash and cash equivalents
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$ | 9,207 | $ | 19,002 |
Operating Activities
Net cash used in operating activities was $50,793 for the year ended December 31, 2015, as compared to $29,192 used in operating activities for the year ended December 31, 2014, an increase of $21,601. The increase in net cash used in operating activities was primarily due to a $19,184 increase in operating expenses, partially offset for cash flow purposes by a decrease in accounts payable and accrued expenses.
Investing activities used cash of $nil for the years ended December 31, 2015 and December 31, 2014.
Financing Activities
Financing activities provided cash of $60,000 for the year ended December 31, 2015 and $10,190 for the year ended December 31, 2014. The cash from financing activities for 2015 was derived from proceeds of a convertible note in the principal amount of $60,000. This convertible note bears interest at the rate of 1.5% per month. We had accrued interest of $7,143 on this loan as of December 31, 2015. The loan is repayable on demand but such demand will be made no later than nine months from the date the loan was granted.
Non-Cash Financing Transactions
There were no non-cash financing transactions during the year ended December 31, 2015.
Plan of Operations
We expect that we will require $30,000 to $50,000, in addition to our current cash, to fund our operating expenditures for the next twelve months. Projected working capital requirements for the next twelve months are as follows:
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Estimated Working Capital Expenditures During the Next Twelve Months
Operating expenditures
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||||
Evaluation of new business opportunities
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$ | 10,000 to $20,000 | ||
General and administrative
(including professional fees)
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$ | 20,000 to $30,000 | ||
Total
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$ | 30,000 to $50,000 |
General and administrative expenses are expected to include the fees and travel costs we expect to pay in connection with seeking out business opportunities and negotiating and executing definitive agreements for the new business acquisition.
Professional fees are expected to include fees related to complying with public reporting requirements, maintaining our quotation on the OTCQB, and work related to evaluating potential business opportunities, including due diligence work.
Cash Requirements
As we have no cash flow from operations, we will require additional cash resources, including from the sale of equity or debt securities, to meet our planned capital expenditures and working capital requirements for the next 12 months. We estimate that our capital needs over the next 12 months will be $30,000 to $50,000. We expect to require additional cash for general and administrative expenses and to evaluate new business opportunities. We expect to derive such cash through the sale of additional equity or debt securities or by obtaining a credit facility. The sale of additional equity securities will result in dilution to our stockholders. The incurrence of indebtedness will result in debt service obligations, could cause additional dilution to our stockholders, and could require us to agree to financial covenants that could restrict our operations or modify our plans to source a new business opportunity. Financing may not be available in amounts or on terms acceptable to us, if at all. Failure to raise additional funds could cause our company to fail.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to our stockholders.
Not applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See next page.
12
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors
Redstone Literary Agents, Inc.
Fairfield, California
We have audited the accompanying balance sheet Redstone Literary Agents, Inc. as of December 31, 2015 and the related statements of operations, stockholders’ equity/ (deficit) and cash flows for the year ended December 31, 2015. 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 audit.
We conducted our audit 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Redstone Literary Agents, Inc .as of December 31, 2015 and the results of its operations and cash flows for the year ended December 31, 2015 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. The Company has suffered losses from inception and has a limited operating history which raises substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Pritchett, Siler & Hardy, P.C
Pritchett, Siler & Hardy, P.C
Salt Lake City, Utah 84111
March 29, 2016
13
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors
Redstone Literary Agents, Inc.
Fairfield, California
We have audited the accompanying balance sheets of Redstone Literary Agents, Inc.as of December 31, 2014 and 2013 and the related statement of operations, changes in stockholders' deficit and cash flows for the years then ended and from the period from inception (July 20, 2010) through December 31, 2014. 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 audit.
We conducted our audit 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 audit provides 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 Redstone Literary Agents, Inc.as of December 31, 2014 and 2013, and the results of its operations and cash flows for the years then ended and from the period from inception (July 20, 2010) through December 31, 2014 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 suffered losses and negative cash flow from operations which raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to 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.
Wheat Ridge, Colorado
|
|
March 27, 2015
|
___________________________________________________________________________________________________
9605 West 49th Ave. Ste. 200 Wheat Ridge, Colorado 80033 ~ Phone 303-968-3281 ~ Fax 303-456-7488 ~
www.cutlercpas.com
14
RedStone Literary Agents, Inc.
Balance Sheets
December 31,
|
December 31,
|
|||||||
2015
|
2014
|
|||||||
Assets
|
||||||||
Current Assets
|
||||||||
Cash and cash equivalents
|
$ | 13,870 | $ | 4,663 | ||||
Total Current Assets
|
13,870 | 4,663 | ||||||
Total Assets
|
$ | 13,870 | $ | 4,663 | ||||
Liabilities and Stockholders’ Deficit
|
||||||||
Current Liabilities
|
||||||||
Accounts payable and accrued expenses
|
$ | 4,150 | $ | 6,598 | ||||
Current portion of loan payable
|
- | 10,614 | ||||||
Total Current Liabilities
|
4,150 | 17,212- | ||||||
Non-Current Liabilities
|
||||||||
Loan payable
|
77,757 | - | ||||||
Total Liabilities
|
81,907 | 17,212 | ||||||
Stockholders’ Deficit
|
||||||||
Common stock, $0.001 par value, 75,000,000 shares authorized;
|
||||||||
6,000,000 shares issued and outstanding:
|
6,000 | 6,000 | ||||||
Additional paid-in-capital
|
63,717 | 63,717 | ||||||
Deficit accumulated during the development stage
|
(137,754 | ) | (82,266 | ) | ||||
Total Stockholders’ Deficit
|
(68,037 | ) | (12,549 | ) | ||||
Total Liabilities and Stockholders’ Deficit
|
$ | 13,870 | $ | 4,663 |
The accompanying notes are an integral part of these financial statements.
15
RedStone Literary Agents, Inc.
Statement of Operations
Year Ended
December 31,
2015
|
Year Ended
December 31,
2014
|
|||||||
Revenue
|
$ | - | $ | - | ||||
General and administrative expenses
|
||||||||
Professional fees
|
33,696 | 14,247 | ||||||
Consulting fees
|
5,903 | 3,836 | ||||||
Bank charges and interest
|
7,143 | 857 | ||||||
Filing and transfer fees
|
8,746 | 17,364 | ||||||
Total general and administrative expenses
|
55,488 | 36,304 | ||||||
Net loss from operations
|
(55,488 | ) | (36,304 | ) | ||||
Provision for taxes
|
- | - | ||||||
Net loss
|
$ | (55,488 | ) | $ | (36,304 | ) | ||
Loss per common share – Basic and diluted
|
$ | (0.01 | )* | $ | (0.01 | )* | ||
Weighted average number of common shares outstanding, basic and diluted
|
6,000,000 | 6,000,000 |
* Denotes a loss of less than $(0.01) per share.
The accompanying notes are an integral part of these financial statements.
16
RedStone Literary Agents, Inc.
Statement of Changes in Stockholders’ Deficit
Total
|
||||||||||||||||||||
Stock-
|
||||||||||||||||||||
Common Stock
|
Additional
|
holders’
|
||||||||||||||||||
Number of
|
Paid-in
|
Deficit |
Equity /
|
|||||||||||||||||
Shares
|
Amount
|
Capital
|
Accumulated
|
(Deficit)
|
||||||||||||||||
Balance, December 31, 2013
|
6,000,000 | $ | 6,000 | $ | 54,000 | $ | (45,962 | ) | $ | 14,038 | ||||||||||
Debt forgiveness – related party
|
- | - | 9,717 | - | 9,717 | |||||||||||||||
Net loss for the year
|
- | - | - | (36,304 | ) | (36,304 | ) | |||||||||||||
Balance, December 31, 2014
|
6,000,000 | 6,000 | 63,717 | (82,266 | ) | (12,549 | ) | |||||||||||||
Net loss for the year
|
- | - | - | (55,488 | ) | (55,488 | ) | |||||||||||||
Balance December 31, 2015
|
6,000,000 | $ | 6,000 | $ | 63,717 | $ | (137,754 | ) | $ | (68,037 | ) |
The accompanying notes are an integral part of these financial statements.
17
RedStone Literary Agents, Inc.
Statements of Cash Flows
Year Ended
|
Year Ended
|
|||||||
December 31,
|
December 31,
|
|||||||
2015
|
2014
|
|||||||
Cash derived from (used for) Operating activities
|
||||||||
Net loss for the period
|
$ | (55,488 | ) | $ | (36,304 | ) | ||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities
|
- | - | ||||||
Changes in operating assets and liabilities
|
||||||||
Accrued interest
|
7,143 | 614 | ||||||
Accounts payable and accrued expenses
|
(2,448 | ) | 6,498 | |||||
Net cash (used in) operating activities
|
(50,793 | ) | (29,192 | ) | ||||
Investing activities
|
- | - | ||||||
Net cash provided by (used in) investing activities
|
- | - | ||||||
Financing activities
|
||||||||
Proceeds from note
|
60,000 | - | ||||||
Proceeds from loan payable
|
- | 10,000 | ||||||
Proceeds from loan payable-related party
|
- | 190 | ||||||
Net cash provided by financing activities
|
60,000 | 10,190 | ||||||
Net changes in cash and equivalents
|
9,207 | (19,002 | ) | |||||
Cash and equivalents at beginning of the year
|
4,663 | 23,665 | ||||||
Cash and equivalents at end of the year
|
$ | 13,870 | $ | 4,663 | ||||
SUPPLEMENTAL CASH FLOW INFORMATION
|
||||||||
Cash paid in interest
|
$ | - | $ | - | ||||
Cash paid for income taxes
|
$ | - | $ | - | ||||
NON-CASH FINANCING TRANSACTIONS
|
||||||||
Debt forgiveness – related party
|
$ | - | $ | 9,717 |
The accompanying notes are an integral part of these financial statements.
18
RedStone Literary Agents, Inc.
Notes to Financial Statements
For the Years Ended December 31, 2015 and 2014
1. NATURE AND CONTINUANCE OF OPERATIONS
Redstone Literary Agents, Inc. (the “Company”) was incorporated under the laws of State of Nevada, U.S. on July 20, 2010, with an authorized capital of 75,000,000 common shares, having a par value of $0.001 per share. The Company’s year-end is December 31. During the period ended December 31, 2010, the Company commenced operations by issuing shares and developing its publishing service business, focused on representing authors to publishers.
Effective August 28, 2014, Mary Wolf, the Company’s sole director and officer, resigned as President, Secretary and Treasurer of the Company, and James P. Geiskopf was appointed as the President, Secretary, Treasurer, and a director of the Company.
Also on August 28, 2014, pursuant to a transfer agreement dated for reference August 28, 2014, Ms. Wolf sold to Mr. Geiskopf 3,000,000 shares of the Company’s common stock for total consideration of $20,000. Mr. Geiskopf paid the $20,000 purchase price for these shares using personal funds. Mr. Geiskopf holds 50% of the Company’s issued and outstanding common stock.
In November 2014, Ms. Wolf resigned as a director of the Company and the Company ceased pursuing the publishing service business and is now seeking new business opportunities with established business entities to effect a merger or other form of business combination with the Company. There can be no assurance, however, that the Company will be able to acquire the financing necessary to enable it to pursue its plan of operation and enter into such an agreement.
Going Concern
These financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company has incurred losses since inception resulting in an accumulated deficit of $137,754 as at December 31, 2015 and further losses are anticipated in the pursuit of a new business opportunity, raising substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management intends to finance operating costs over the next twelve months with existing cash on hand, loans from directors and/or the private placement of common stock.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America and are presented in US dollars.
Use of Estimates and Assumptions
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates.
The carrying value of cash and accounts payable and accrued liabilities and loans payable approximates their fair value because of the short maturity of these instruments. Unless otherwise noted, it is management’s opinion the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments.
19
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents.
Financial Instruments
Fair value measurements are determined based on the assumptions that market participants would use in pricing an asset or liability. Accounting Standards Codification (“ASC”) 820-10 establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. ASC 820 establishes a fair value hierarchy that prioritizes the use of inputs used in valuation methodologies into the following three levels:
Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets. A quoted price in an active market provides the most reliable evidence of fair value and must be used to measure fair value whenever available.
Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
Level 3: Significant unobservable inputs which reflect a reporting entity’s own assumptions about the assumptions that market participants would use for pricing an asset or liability. For example, level 3 inputs would relate to forecasts of future earnings and cash flows used in a discounted future cash flows method.
The recorded amounts of financial instruments, including cash, accounts payable and accrued expenses and loan from stockholders, approximate their market values as of December 31, 2015 due to the short term maturities of these financial instruments.
Income Taxes
The Company follows the liability method of accounting for income taxes. Under this method, deferred income tax assets and liabilities are recognized for the estimated tax consequences attributable to differences between the financial statement carrying values and their respective income tax basis (temporary differences). The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
At December 31, 2015, a full deferred tax asset valuation allowance has been provided and no deferred tax asset has been recorded.
Dividends
The Company has not adopted any policy regarding payment of dividends. No dividends have been paid during any of the periods shown.
20
Advertising Costs
The Company's policy regarding advertising is to expense advertising when incurred. The Company incurred advertising expense of $0 during the years ended December 31, 2015 and 2014.
Earnings per Share
The Company computes loss per share in accordance with ASC 105, “Earnings per Share” which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. Basic loss per share is computed by dividing net loss available to common stockholders by the weighted average number of outstanding common shares during the period. Diluted loss per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive.
With the exception of the convertible note payable discussed in Note 3, the Company had no potentially dilutive debt or equity instruments issued or outstanding during the years ended December 31, 2015 or 2014.
Reclassifications
Certain amounts previously presented for prior periods have been reclassified. The reclassifications had no effect on net loss, total assets, or total shareholders' deficit.
Recent Accounting Pronouncements
The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on our financial condition or the results of its operations.
3. NOTE PAYABLE
On September 14 2015, the Company entered into a private placement subscription agreement with, and issued an unsecured convertible note (the “Note”) in the principal amount of $73,825 (the “Principal Amount”) to one subscriber. Prior to issuance of the note, the Company was indebted to the subscriber with respect to: (i) a loan in the principal amount of $10,000 made to the Company by the subscriber pursuant to the terms of a loan agreement dated August 28, 2014, and accrued interest thereon of $1,956, for a total amount outstanding of $11,956, and (ii) a loan in the principal amount of $20,000 made to the Company by the subscriber pursuant to the terms of a loan agreement dated February 26, 2015, and accrued interest thereon of $1,869, for a total amount outstanding of $21,869, for total indebtedness in the amount of $33,825 (the “Outstanding Debt”). The purchase price of the Note was paid by (i) settlement of the Outstanding Debt, and (ii) the payment of an additional $40,000 to the Company by the subscriber.
The Note, and accrued interest, will mature five (5) years from the date of issuance and will bear interest at the rate of 18% interest per annum, compounded annually. The Principal Amount, plus any interest accrued thereon, may be converted into shares of common stock of the Company at a conversion price of $0.03 per share.
21
4. RELATED PARTY TRANSACTIONS
In support of the Company’s efforts and cash requirements, it may rely on advances from stockholders until such time as the Company can support its operations through revenue generation, or attain adequate financing through sales of its equity or traditional debt financing. There is no formal written commitment for continued support by stockholders. Amounts represent advances or amounts paid in satisfaction of liabilities.
As of December 31, 2013, the Company had a loan outstanding with the Company’s then principal stockholder in the amount of $9,527, bearing interest at the rate of 4% per annum. The Company’s former principal stockholder advanced a further $190 to the Company during the year ended December 31, 2014, increasing the balance due and payable to her to $9,717.
Effective August 28, 2014, the Company’s former director and principal stockholder forgave the balance of $9,717 due and payable to her by the Company. The gain arising on forgiveness of this liability has been recognized in additional paid in capital.
The Company’s office premises are provided to it at no cost by its sole director and officer. The Company’s sole director and officer did not take any fees for serving as director or officer during the years ended December 31, 2015 or 2014.
5. STOCKHOLDERS’ DEFICIT
Common Stock
The total number of shares of common stock authorized that may be issued by the Company is 75,000,000 shares, having a par value of one tenth of one cent ($0.001) per share. No other class of shares is authorized.
No shares of common stock were issued during the years ended December 31, 2015 or 2014.
As at December 31, 2015, 6,000,000 shares of common stock were issued and outstanding.
Additional Paid in Capital
Effective August 28, 2014, the Company’s former director and principal stockholder forgave the balance of $9,717 due and payable to her by the Company. The gain arising on forgiveness of this liability has been recognized in additional paid in capital.
Stock Options and Warrants
No stock options or warrants were issued or outstanding during the years ended December 31, 2015 or 2014.
6. INCOME TAXES
For the fiscal years 2015 and 2014, there was no provision for income taxes and deferred tax assets have been entirely offset by valuation allowances.
As of December 31, 2015 and 2014, the Company has net operating loss carry forwards of approximately $137,754 and $82,265, respectively. The carry forwards expire through the year 2035. The Company's net operating loss carry forwards may be subject to annual limitations, which could reduce or defer the utilization of the losses as a result of an ownership change as defined in Section 382 of the Internal Revenue Code.
22
6. INCOME TAXES (continued)
The Company's tax expense differs from the "expected" tax expense for Federal income tax purposes (computed by applying the United States Federal tax rate of 34% to loss before taxes), as follows:
For the Years Ended
|
||||||||
December 31,
|
||||||||
2015
|
2014
|
|||||||
Tax expense (benefit) at the statutory rate
|
$
|
(18,866
|
)
|
$
|
(12,343
|
)
|
||
State income taxes, net of federal income tax benefit
|
(3,052
|
)
|
(1,997
|
)
|
||||
Non-deductible items
|
–
|
–
|
||||||
Change in valuation allowance
|
21,918
|
14,340
|
||||||
Total
|
$
|
–
|
$
|
–
|
The tax effects of the temporary differences between reportable financial statement income and taxable income are recognized as deferred tax assets and liabilities. There are no temporary differences in the years ended December 31, 2015 and 2014.
The tax effect of significant components of the Company's deferred tax assets and liabilities at December 31, 2015 and 2014, respectively, are as follows:
December 31,
|
||||||||
2015
|
2014
|
|||||||
Deferred tax assets:
|
||||||||
Net operating loss carryforward
|
$
|
36,258
|
$
|
14,340
|
||||
Stock options
|
–
|
–
|
||||||
Total gross deferred tax assets
|
36,258
|
14,340
|
||||||
Less: Deferred tax asset valuation allowance
|
(36,258
|
)
|
(14,340
|
)
|
||||
Total net deferred tax assets
|
–
|
–
|
||||||
Deferred tax liabilities:
|
||||||||
Depreciation
|
–
|
–
|
||||||
Total deferred tax liabilities
|
–
|
–
|
||||||
Total net deferred taxes
|
$
|
–
|
$
|
–
|
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.
Because of the historical earnings history of the Company, the net deferred tax assets for 2015 were fully offset by a 100% valuation allowance. The valuation allowance for the remaining net deferred tax assets was $36,258 and $14,340 as of December 31, 2015 and 2014, respectively.
7. SUBSEQUENT EVENTS
The Company has evaluated subsequent events from December 31, 2015 to the date the financial statements were issued and has determined that it does not have any material subsequent events to disclose in these financial statements.
23
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
“Disclosure controls and procedures”, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), include controls and procedures designed to ensure that information required to be disclosed in our company’s reports filed under the Exchange Act recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management to allow timely decisions regarding required disclosure.
Our principal executive officer and principal financial officer, who is the sole officer and director of our company, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2015. Based on this evaluation he concluded that, as of December 31, 2015, our disclosure controls and procedures were not effective such that the information relating to us that is required to be disclosed in our SEC reports: (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms; and (ii) is accumulated and communicated to our management, including our principal executive and financial officer, to allow timely decisions regarding required disclosure.
Internal Control over Financial Reporting
Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is a process designed 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. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives. Our sole director and officer conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2015 based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control – Integrated Framework. Based upon such evaluation, our sole director and officer concluded that we did not maintain effective internal control over financial reporting as of December 31, 2014 based on the COSO framework criteria, as more fully described below. This was due to deficiencies that existed in the design or operation of our internal control over financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses.
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; (2) the fact that we only had a single director and officer, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; (3) inadequate segregation of duties consistent with control objectives; and (4) management dominated by a single individual without adequate compensating controls. The aforementioned material weaknesses were identified by our principal executive officer in connection with the review of our financial statements as of December 31, 2015.
24
Management believes that the material weaknesses set forth above did not have an effect on our financial results. However, management believes that the lack of a functioning audit committee and the fact that James Geiskopf is our sole director and officer 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.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the fiscal year ended December 31, 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
None.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Directors and Executive Officers
Directors of our company hold office until the next annual meeting of our stockholders or until their successors have been elected and qualified, or until their death, resignation or removal. The executive officers of our company are appointed by our board of directors and hold office until their death, resignation or removal from office. We currently have only one director and officer, being James Geiskopf, as set out in the following table:
Name
|
Position Held with Our Company
|
Age
|
Date First Elected or Appointed
|
|||
James P. Geiskopf
|
President, Secretary, Treasurer and Director
|
56
|
August 28, 2014
|
Business Experience
The following is a brief account of the education and business experience of our sole director and officer during the past five years, indicating his principal occupation during the period, and the name and principal business of the organizations by which he was employed:
James P. Geiskopf
Mr. Geiskopf currently serves on the board of directors of Electronic Cigarettes International Group, Ltd. (since June 25, 2013) and on the board of directors of bBooth, Inc. (since May 7, 2014), each of which are companies having shares of common stock registered under the Exchange Act. He was the president, secretary, treasurer and a director of Searchbyheadlines.com (now Naked Brand Group Inc.) from December 22, 2011 to July 30, 2012, and the president and director of The Resource Group from 2007 to 2009. From 1986 to 2007, he served as the president and chief executive officer of Budget Rent-a-Car of Fairfield, California. Mr. Geiskopf also served on the board of directors of Suisun Valley Bank from 1986 to 1993 and on the board of directors of Napa Valley Bank from 1991 to 1993.
25
We believe that Mr. Geiskopf is qualified to serve on our board of directors because of his extensive business management and financial expertise derived from his past occupation and his past and current board participation.
Family Relationships
James Geiskopf is currently our sole director and officer.
Involvement in Certain Legal Proceedings
Our sole director and officer has not been involved in any of the following events during the past ten years:
|
(a)
|
any petition under the federal bankruptcy laws or any state insolvency laws filed by or against, or an appointment of a receiver, fiscal agent or similar officer by a court for the business or property of such person, or any partnership in which such person was a general partner at or within two years before the time of such filing, or any corporation or business association of which such person was an executive officer at or within two years before the time of such filing;
|
|
(b)
|
any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offences);
|
|
(c)
|
being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining such person from, or otherwise limiting, the following activities: (i) acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity; engaging in any type of business practice; or (iii) engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of federal or state securities laws or federal commodities laws;
|
|
(d)
|
being the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any federal or state authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph (c)(i) above, or to be associated with persons engaged in any such activity;
|
|
(e)
|
being found by a court of competent jurisdiction (in a civil action), the SEC to have violated a federal or state securities or commodities law, and the judgment in such civil action or finding by the SEC has not been reversed, suspended, or vacated;
|
|
(f)
|
Being found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated;
|
26
|
(g)
|
being the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of: (i) any federal or state securities or commodities law or regulation; or (ii) any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease- and-desist order, or removal or prohibition order; or (iii) any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
|
|
(h)
|
being the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
|
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our executive officers and directors, and persons who own more than 10% of our common stock, to file reports regarding ownership of, and transactions in, our securities with the SEC, and to provide us with copies of those filings. Based solely on the copies of such reports received by us, we believe that all Section 16(a) filing requirements applicable to our executive officers and directors and 10% stockholders were met for the year ended December 31, 2015.
Code of Ethics
We have not adopted a code of ethics because our board of directors believes that our small size does not merit the expense of preparing, adopting and administering a code of ethics. Our board of directors intends to adopt a code of ethics when circumstances warrant.
Committees of Board of Directors
We do not presently have a separately constituted audit committee, compensation committee, nominating committee, or any other committee of our board of directors. Our board of directors does not believe that it is necessary to have such committees because it believes that the functions of such committees can be adequately performed by our board of directors given our current limited operations.
We do not have any defined policy or procedure requirements for our stockholders to submit recommendations or nominations for directors. We do not currently have any specific or minimum criteria for the election of nominees to our board of directors and we do not have any specific process or procedure for evaluating such nominees. Our board of directors assesses all candidates, whether submitted by management or stockholders, and makes recommendations for election or appointment.
A stockholder who wishes to communicate with our board of directors may do so by directing a written request to the address appearing on the first page of this annual report.
27
Our board of directors has determined that it does not have a board member that qualifies as an “audit committee financial expert” as defined in Item 407(d)(5)(ii) of Regulation S-K. Mr. Geiskopf, our sole officer and director, is not “independent” as the term is used by NASDAQ Marketplace Rule 5605(a)(2). We believe that retaining an independent director who would qualify as an “audit committee financial expert” would be overly costly and burdensome and is not warranted in our circumstances given the early stages of our development.
ITEM 11. EXECUTIVE COMPENSATION
Summary Compensation
The particulars of compensation paid to the following persons:
|
(a)
|
all individuals serving as our principal executive officer during the year ended December 31, 2015;
|
|
(b)
|
each of our two most highly compensated executive officers who were serving as executive officers at the end of the year ended December 31, 2015; and
|
|
(c)
|
up to two additional individuals for whom disclosure would have been provided under (b) but for the fact that the individual was not serving as our executive officer at December 31, 2015,
|
who we will collectively refer to as “named executive officers”, for all services rendered in all capacities to our company for the years ended December 31, 2015, 2014 and 2013, are set out in the following table:
Summary Compensation Table
Name
and Principal
Position
|
Year
|
Salary ($)
|
Bonus ($)
|
Stock
Awards ($)
|
Option
Awards ($)
|
Non-Equity
Incentive
Plan
Compensa-
tion ($)
|
Nonqualified
Deferred
Compensation
Earnings ($)
|
All
Other
Compensa-
tion ($)
|
Total ($)
|
James P. Geiskopf (1)
|
2015
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
President, Secretary, Treasurer
|
2014
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
and Director
|
2013
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
(1)
|
Mr. Geiskopf was appointed as president, secretary, treasurer and a director of our company on August 28, 2014.
|
Compensation Discussion and Analysis
We have not entered into any employment agreement or consulting agreement with Mr. Geiskopf, who is currently our only director and officer, nor do we have any arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. Our directors and executive officers may receive stock options at the discretion of our board of directors in the future. We do not have any material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of our board from time to time.
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There are no arrangements or plans in which we provide retirement or similar benefits for our directors or executive officers.
Resignation, Retirement, Other Termination, or Change in Control Arrangements
We have no contract, agreement, plan or arrangement, whether written or unwritten, that provides for payments to our directors or executive officers at, following, or in connection with the resignation, retirement or other termination of our directors or executive officers, or a change in control of our company or a change in our directors’ or executive officers’ responsibilities following a change in control.
Outstanding Equity Awards at Fiscal Year-End
As at December 31, 2015, we had not adopted any equity compensation plan and no stock, options or other equity securities were awarded to our executive officers during the year ended December 31, 2015.
Compensation of Directors
We have no formal plan for compensating our directors for their services as directors. Our directors are entitled to reimbursement for reasonable travel and other out-of-pocket expenses incurred in connection with attendance at meetings of our board of directors.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth, as of March 29, 2016, certain information with respect to the beneficial ownership of our common stock by each stockholder known by us to be the beneficial owner of more than 5% of any class of our voting securities and by each of our current directors, our named executive officers and by our current executive officers and directors as a group.
Name of Beneficial Owner
|
Title of Class
|
Amount and Nature
of Beneficial Ownership (1)
|
Percentage
of Class (2)
|
||||||
James P. Geiskopf
3250 Oakland Hills Court
Fairfield, CA 94534
|
Common Stock
|
3,000,000 / Direct
|
50% | ||||||
All executive officers and directors as a group (1 person)
|
Common Stock
|
3,000,000 | 50% |
(1)
|
Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Common stock subject to options or warrants currently exercisable or exercisable within 60 days, are deemed outstanding for purposes of computing the percentage ownership of the person holding such option or warrants, but are not deemed outstanding for purposes of computing the percentage ownership of any other person. We currently have no convertible securities outstanding.
|
(2)
|
Percentage of common stock is based on 6,000,000 shares of our common stock issued and outstanding as of March 29, 2016.
|
29
Changes in Control
We are unaware of any contract or other arrangement the operation of which may at a subsequent date result in a change in control of our company.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Other than as disclosed below, none of the following parties has, since incorporation, had any material interest, direct or indirect, in any transaction with us or in any presently proposed transaction that has or will materially affect us:
|
(i)
|
any of our directors or officers;
|
|
(ii)
|
any person proposed as a nominee for election as a director;
|
|
(iii)
|
any person who beneficially owns, directly or indirectly, shares carrying more than 5% of the voting rights attached to our outstanding shares of common stock;
|
|
(iv)
|
any of our promoters; and
|
|
(v)
|
any member of the immediate family (including spouse, parents, children, siblings and in- laws) of any of the foregoing persons.
|
On July 20, 2010, we issued a total of 3,000,000 shares of common stock to Mary S. Wolf, our former president, secretary, treasurer and director, for cash at $0.005 per share for a total of $15,000.
We do not currently have any conflicts of interest by or among our current officer, director, key employee or advisors. We have not yet formulated a policy for handling conflicts of interest; however, we intend to do so prior to hiring any additional employees.
We do not currently have an independent director serving on our board of directors.
Compensation for Executive Officers and Directors
For information regarding compensation of our executive officers and directors, see “Executive Compensation”.
Director Independence
We currently act with one director, James P. Geiskopf. Our common stock is quoted on the OTCQB operated by the OTC Markets Group, which does not impose any director independence requirements. Under NASDAQ rule 5605(a)(2), a director is not independent if he or she is also an executive officer or employee of the corporation or was, at any time during the past three years, employed by the corporation. Using this definition of independent director, we currently have no independent directors because Mr. Geiskopf is our president, secretary, treasurer and our sole director.
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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Audit Fees
The following table sets forth the fees billed to our company for the years ended December 31, 2015 and December 31, 2014 for professional services rendered by Cutler & Co., LLC, our independent registered public accounting firm:
Fees
|
2015
|
2014
|
||||||
Audit Fees
|
$ | 11,200 | $ | 7,750 | ||||
Audit Related Fees
|
- | - | ||||||
Tax Fees
|
- | - | ||||||
Other Fees
|
- | - | ||||||
Total Fees
|
$ | 11,200 | $ | 7,750 |
Pre-Approval Policies and Procedures
Our board of directors, which acts as our audit committee, pre-approves all services provided by our independent registered public accountants. All of the above services and fees were reviewed and approved by our board of directors before the respective services were rendered.
Our board of directors has considered the nature and amount of fees billed by our independent registered public accountants and believes that the provision of services for activities unrelated to the audit is compatible with maintaining the independence of our independent registered public accountants.
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PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Exhibit
Number
|
Description
|
|
(3)
|
Articles of Incorporation and Bylaws
|
|
3.1(1)
|
Articles of Incorporation
|
|
3.2(2)
|
Bylaws
|
|
(10)
|
Material Contracts
|
|
10.1(1)
|
Form of Subscription Agreement
|
|
10.2(2)
|
Transfer Agreement
|
|
(16)
|
Letter re Change in Certifying Accountant
|
|
16.1(3)
|
Letter from Ronald R. Chadwick, P.C. dated March 31, 2014
|
|
(31)
|
Rule 13a-14 Certifications
|
|
31.1*
|
Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
(32)
|
Section 1350 Certifications
|
|
32.1*
|
Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
(101)
|
Interactive Data File
|
|
101.INS*
|
XBRL Instance Document
|
|
101.SCH*
|
XBRL Taxonomy Extension Schema
|
|
101.CAL*
|
XBRL Taxonomy Extension Calculation Linkbase
|
|
101.DEF*
|
XBRL Taxonomy Extension Definition Linkbase
|
|
101.LAB*
|
XBRL Taxonomy Extension Label Linkbase
|
|
101.PRE*
|
XBRL Taxonomy Extension Presentation Linkbase
|
*
|
Filed herewith.
|
(1)
|
Filed as an exhibit to our registration statement on Form S-1 on March 30, 2011 and incorporated herein by reference.
|
(2)
|
Filed as an exhibit to our current report on Form 8-K on September 2, 2014 and incorporated herein by reference.
|
(3)
|
Filed as an exhibit to our current report on Form 8-K on April 2, 2014 and incorporated herein by reference.
|
32
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, thereunto duly authorized.
REDSTONE LITERARY AGENTS, INC.
By: /s/ James P. Geiskopf
James P. Geiskopf
President, Secretary, Treasurer and Director
(Principal Executive Officer, Principal Financial
Officer and Principal Accounting Officer)
Date: March 30, 2016
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/ James P. Geiskopf
James P. Geiskopf
President, Secretary, Treasurer and Director
(Principal Executive Officer, Principal Financial
Officer and Principal Accounting Officer)
Date: March 30, 2016
33