THC Therapeutics, Inc. - Annual Report: 2009 (Form 10-K)
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-K
[X]
|
ANNUAL
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For
the fiscal year ended July 31, 2009
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[ ]
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TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT
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For
the transition period from _________ to ________
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Commission
file number: 333-145794
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Aviation Surveillance Systems,
Inc.
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(Exact
name of registrant as specified in its charter)
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Nevada
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26-0164981
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(State
or other jurisdiction of incorporation or organization)
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(I.R.S.
Employer Identification No.)
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7437 S. Eastern Ave., #307
Las Vegas, Nevada
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89123-1538
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(Address
of principal executive offices)
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(Zip Code)
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Registrant’s
telephone number: 702-885-3072
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Securities
registered under Section 12(b) of the Exchange Act:
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Title
of each class
|
Name
of each exchange on which registered
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none
|
not applicable
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Securities
registered under Section 12(g) of the Exchange Act:
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Title
of each class
|
Name
of each exchange on which registered
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none
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not applicable
|
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes [ ] 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
[ ] No
[X]
Check
whether the Issuer (1) filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act during the past 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
[ ]
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 (§ 229.405 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
[X]
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. Yes
[ ] No [X]
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
Large
accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes [ X] No [
]
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. $1,407,006.60
Indicate
the number of shares outstanding of each of the registrant’s classes of common
stock, as of the latest practicable date. 16,488,825 as of October 27,
2009.
Page
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PART I
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3 | ||
3 | ||
3 | ||
4 | ||
4 | ||
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4 | |
PART II
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5 | ||
7 | ||
7 | ||
8 | ||
8 | ||
8 | ||
9 | ||
10 | ||
PART III
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10 | ||
12 | ||
13 | ||
14 | ||
14 |
PART IV
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15 |
PART I
Item 1. Business
We are a
Nevada corporation, formed May 1, 2007.
Our
original plan of operations was to offer unique “princess” tea parties and other
themed birthday parties and special event parties for children. The
development of our planned operations was severely delayed, however, by certain
unexpected personal and professional constraints on the time of our sole
officer, Anusha Kumar. Due to our continuing difficulties in this
regard, we eventually determined that our original plan of operations was no
longer workable as a practical and logistical matter.
On May
11, 2009, we changed our name to Aviation Surveillance Systems,
Inc. Concurrently with our name change, we suspended pursuit of our
former plan of operations and began investigating new business
opportunities.
Employees
We have
no employees. We conduct our business through agreements with consultants and
other independent third party vendors.
Research
and Development Expenditures
We have
not incurred any research or development expenditures since our
incorporation.
Subsidiaries
We have
neither formed, nor purchased any subsidiaries since our
incorporation.
Patents
and Trademarks
We do not
currently have any patents or trademarks registered with the U.S. Patent and
Trademark Office.
Government
Regulation and Supervision
We are
not currently subject to direct federal, state or local regulation other than
regulations applicable to businesses generally. Management is unaware
of any existing or probable governmental regulations which would materially
affect our business.
Item 1A. Risk Factors.
A smaller
reporting company is not required to provide the information required by this
Item.
Item 1B. Unresolved Staff Comments
A smaller
reporting company is not required to provide the information required by this
Item.
Item 2. Properties
We do not
own or lease any real property.
Item 3. Legal Proceedings
We are
not a party to any pending legal proceeding. We are not aware of any pending
legal proceeding to which any of our officers, directors, or any beneficial
holders of 5% or more of our voting securities are adverse to us or have a
material interest adverse to us.
Item 4. Submission of Matters to a Vote of
Security Holders
No
matters were submitted to a vote of the Company's shareholders during the fiscal
year ended July 31, 2009.
PART II
Item 5. Market for Registrant’s Common
Equity and Related Stockholder Matters and Issuer Purchases of Equity
Securities
Market
Information
Our
common stock is currently quoted on the OTC Bulletin Board (“OTCBB”), which is
sponsored by FINRA. The OTCBB is a network of security dealers who buy and sell
stock. The dealers are connected by a computer network that provides information
on current "bids" and "asks", as well as volume information. Our shares are
quoted on the OTCBB under the symbol “ASUV.”
The
following table sets forth the range of high and low bid quotations for our
common stock for each of the periods indicated as reported by the OTCBB. These
quotations reflect inter-dealer prices, without retail mark-up, mark-down or
commission and may not necessarily represent actual transactions.
Fiscal
Year Ending July 31, 2009
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Quarter
Ended
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High
$
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Low
$
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July
31, 2009
|
.25
|
.25
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April
30, 2009
|
.25
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.25
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January
31, 2009
|
.25
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.25
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November
30, 2008
|
.25
|
.25
|
The last
sales price per share of our common stock was $0.30 on June 20,
2008.
Penny
Stock
The SEC
has adopted rules that regulate broker-dealer practices in connection with
transactions in penny stocks. Penny stocks are generally equity securities with
a market price of less than $5.00, other than securities registered on certain
national securities exchanges or quoted on the NASDAQ system, provided that
current price and volume information with respect to transactions in such
securities is provided by the exchange or system. The penny stock rules require
a broker-dealer, prior to a transaction in a penny stock, to deliver a
standardized risk disclosure document prepared by the SEC, that: (a) contains a
description of the nature and level of risk in the market for penny stocks in
both public offerings and secondary trading; (b) contains a description of the
broker's or dealer's duties to the customer and of the rights and remedies
available to the customer with respect to a violation of such duties or other
requirements of the securities laws; (c) contains a brief, clear, narrative
description of a dealer market, including bid and ask prices for penny stocks
and the significance of the spread between the bid and ask price; (d) contains a
toll-free telephone number for inquiries on disciplinary actions; (e) defines
significant terms in the disclosure document or in the conduct of trading in
penny stocks; and (f) contains such other information and is in such form,
including language, type size and format, as the SEC shall require by rule or
regulation.
The
broker-dealer also must provide, prior to effecting any transaction in a penny
stock, the customer with (a) bid and offer quotations for the penny stock; (b)
the compensation of the broker-dealer and its salesperson in the transaction;
(c) the number of shares to which such bid and ask prices apply, or other
comparable information relating to the depth and liquidity of the market for
such stock; and (d) a monthly account statement showing the market value of each
penny stock held in the customer's account.
In
addition, the penny stock rules require that prior to a transaction in a penny
stock not otherwise exempt from those 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 acknowledgment of the receipt
of a risk disclosure statement, a written agreement as to transactions involving
penny stocks, and a signed and dated copy of a written suitability
statement.
These
disclosure requirements may have the effect of reducing the trading activity for
our common stock. Therefore, stockholders may have difficulty selling our
securities.
Holders
of Our Common Stock
As of
October 27, 2009, we had 16,488,825 shares of our common stock issued and
outstanding, held by 32 shareholders of record.
Dividends
There are
no restrictions in our articles of incorporation or bylaws that prevent us from
declaring dividends. The Nevada Revised Statutes, however, do
prohibit us from declaring dividends where after giving effect to the
distribution of the dividend:
1. we
would not be able to pay our debts as they become due in the usual course of
business, or;
2. our
total assets would be less than the sum of our total liabilities plus the amount
that would be needed to satisfy the rights of shareholders who have preferential
rights superior to those receiving the distribution.
We have
not declared any dividends and we do not plan to declare any dividends in the
foreseeable future.
Securities
Authorized for Issuance under Equity Compensation Plans
We do not
have any equity compensation or incentive plans.
Recent
Sales of Unregistered Securities
None.
Item 6. Selected Financial Data
A smaller
reporting company is not required to provide the information required by this
Item.
Item 7. Management’s Discussion and Analysis of
Financial Condition and Results of Operations
Forward-Looking
Statements
Certain
statements, other than purely historical information, including estimates,
projections, statements relating to our business plans, objectives, and expected
operating results, and the assumptions upon which those statements are based,
are “forward-looking statements” within the meaning of the Private Securities
Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. These forward-looking
statements generally are identified by the words “believes,” “project,”
“expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,”
“will,” “would,” “will be,” “will continue,” “will likely result,” and similar
expressions. We intend such forward-looking statements to be covered by the
safe-harbor provisions for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995, and are including this statement for
purposes of complying with those safe-harbor provisions. Forward-looking
statements are based on current expectations and assumptions that are subject to
risks and uncertainties which may cause actual results to differ materially from
the forward-looking statements. Our ability to predict results or the actual
effect of future plans or strategies is inherently uncertain. Factors which
could have a material adverse affect on our operations and future prospects on a
consolidated basis include, but are not limited to: changes in economic
conditions, legislative/regulatory changes, availability of capital, interest
rates, competition, and generally accepted accounting principles. These risks
and uncertainties should also be considered in evaluating forward-looking
statements and undue reliance should not be placed on such statements. We
undertake no obligation to update or revise publicly any forward-looking
statements, whether as a result of new information, future events or otherwise.
Further information concerning our business, including additional factors that
could materially affect our financial results, is included herein and in our
other filings with the SEC.
Results
of Operations for the years ended July 31, 2009 and 2008
We have
not earned significant revenues since the inception of our business and we
earned no revenues during the fiscal year ended July 31, 2009. We
incurred expenses and net losses in the amount of $68,790 for the year
ended July 31, 2009. We incurred expenses and net losses in the
amount of $15,709 for the year ended July 31, 2008. We incurred
total expenses and net losses in the amount of $ 84,735 from our inception
on May 1, 2007 through the fiscal year ended July 31, 2009.
Our
losses are attributable to operating expenses and interest expense, together
with a lack of any revenues.
Liquidity
and Capital Resources
As of
July 31, 2009, we had current assets in the amount of $1,638 consisting
entirely of cash. Our current liabilities as of July 31, 2009,
were $70,148. Thus, we had working capital deficit of $68,510 as of July
31, 2009.
Going
Concern
We have
not attained profitable operations and are dependent upon obtaining financing to
pursue future or expanded operations. We have incurred cumulative net losses of
$84,735 since our inception and require capital for our contemplated operational
and marketing activities to take place. Our ability to raise additional capital
through the future issuances of the common stock is unknown. The obtainment of
additional financing, the successful development of our contemplated plan of
operations, and our transition, ultimately, to the attainment of profitable
operations are necessary for us to continue operations. For these
reasons, our auditors stated in their report that they have substantial doubt we
will be able to continue as a going concern.
Purchase
or Sale of Equipment
We do not
expect to purchase or sell any plant or significant equipment.
Personnel
Ms.
Anusha Kumar, our President, CEO, CFO and sole Director, is currently devoting
approximately 1 to 2 hours per week to meet our needs. We
currently have no other employees. We currently do not have specific
plans to increase our number of employees.
Off
Balance Sheet Arrangements
As of
July 31, 2009, there were no off balance sheet arrangements.
Item 7A. Quantitative and Qualitative Disclosures
About Market Risk
A smaller
reporting company is not required to provide the information required by this
Item.
Item 8. Financial Statements and Supplementary
Data
See the
financial statements annexed to this annual report.
Item 9. Changes In and Disagreements with
Accountants on Accounting and Financial
Disclosure
No events
occurred requiring disclosure under Item 307 and 308 of Regulation S-K during
the fiscal year ending July 31, 2009.
Item 9A(T). Controls and Procedures
Disclosure
controls and procedures are controls and other procedures that are designed to
ensure that information required to be disclosed in company reports filed or
submitted under the Securities Exchange Act of 1934 (the “Exchange Act”) is
recorded, processed, summarized and reported, within the time periods specified
in the Securities and Exchange Commission’s rules and forms. Disclosure controls
and procedures include without limitation, controls and procedures designed to
ensure that information required to be disclosed in company reports filed or
submitted under the Exchange Act is accumulated and communicated to management,
including our chief executive officer and treasurer, as appropriate to allow
timely decisions regarding required disclosure.
As
required by Rules 13a-15 and 15d-15 under the Exchange Act, our chief executive
officer and chief financial officer carried out an evaluation of the
effectiveness of the design and operation of our disclosure controls and
procedures as of July 31, 2009. Based on their evaluation, they concluded that
our disclosure controls and procedures were effective.
Our
internal control over financial reporting is a process designed by, or under the
supervision of, our chief executive officer and chief financial officer and
effected by our board of directors, management and other personnel, to provide
reasonable assurance regarding the reliability of our financial reporting and
the preparation of our financial statements for external purposes in accordance
with generally accepted accounting principles. Internal control over financial
reporting includes policies and procedures that pertain to the maintenance of
records that in reasonable detail accurately and fairly reflect the transactions
and dispositions of our assets; provide reasonable assurance that transactions
are recorded as necessary to permit preparation of our financial statements in
accordance with generally accepted accounting principles, and that our receipts
and expenditures are being made only in accordance with the authorization of our
board of directors and management; and provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use or disposition
of our assets that could have a material effect on our financial
statements.
Under the
supervision and with the participation of our management, including our chief
executive officer, we conducted an evaluation of the effectiveness of our
internal control over financial reporting based on the criteria established in
Internal Control – Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (“COSO”). Based on this evaluation
under the criteria established in Internal Control – Integrated Framework, our
management concluded that our internal control over financial reporting was
effective as of July 31, 2009.
This
annual report does not include an attestation report of our registered public
accounting firm regarding internal control over financial reporting.
Management’s report was not subject to attestation by our registered public
accounting firm pursuant to temporary rules of the Securities and Exchange
Commission that permit us to provide only management’s report in this annual
report.
During
the most recently completed fiscal quarter, there has been no change in our
internal control over financial reporting that has materially affected or is
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
The
following information sets forth the names of our current directors and
executive officers, their ages as of July 31, 2009 and their present
positions.
Name
|
Age
|
Office(s)
|
Anusha
Kumar
|
30
|
President,
CEO, CFO, Treasurer, Secretary,
Director
|
Set forth
below is a brief description of the background and business experience of our
executive officers and directors.
Anusha Kumar is our President,
CEO, CFO, Secretary, Treasurer and sole director. As President, Ms. Kumar is
responsible for the day-to-day management of the Company.
Ms. Kumar
holds a B.A. in psychology from the University of Nevada, Las Vegas and is
currently a practicing nurse. Ms. Kumar has experience in the sales,
childcare, banking, event planning, and administrative
fields. Immediately prior to undertaking nursing studies, Ms. Kumar
worked in the children’s mental health field, performing youth counseling and
behavioral intervention services for a private foster care agency.
Directors
Our
bylaws authorize no less than one (1) director. We currently have two
Directors.
Term
of Office
Our
Directors are appointed for a one-year term to hold office until the next annual
general meeting of our shareholders or until removed from office in accordance
with our bylaws. Our officers are appointed by our board of directors
and hold office until removed by the board.
Family
Relationships
There are
no family relationships between or among the directors, executive officers or
persons nominated or chosen by us to become directors or executive
officers.
Involvement
in Certain Legal Proceedings
To the
best of our knowledge, during the past five years, none of the
following occurred with respect to a
present or former director, executive officer, or employee: (1) any
bankruptcy petition filed by or against any business of which such
person was a general partner or executive officer either
at the time of the bankruptcy or within two
years prior to that time; (2) any conviction in a
criminal proceeding or being subject to a
pending criminal
proceeding (excluding traffic violations and
other minor offenses); (3) being subject to any order,
judgment or decree, not subsequently reversed, suspended
or vacated, of any court of competent jurisdiction, permanently or
temporarily enjoining, barring, suspending or otherwise limiting his or her
involvement in any type of business, securities or banking
activities; and (4) being found
by a court of competent jurisdiction (in a civil
action), the SEC or the
Commodities Futures Trading Commission to have violated
a federal or state securities or commodities law, and the judgment has not been
reversed, suspended or vacated.
Audit
Committee
We do not
have a separately-designated standing audit committee. The entire Board of
Directors performs the functions of an audit committee, but no written charter
governs the actions of the Board when performing the functions of what would
generally be performed by an audit committee. The Board approves the selection
of our independent accountants and meets and
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Exchange Act requires our directors and executive officers and
persons who beneficially own more than ten percent of a registered class of the
Company’s equity securities to file with the SEC initial reports of ownership
and reports of changes in ownership of common stock and other equity securities
of the Company. Officers, directors and greater than ten percent
beneficial shareholders are required by SEC regulations to furnish us with
copies of all Section 16(a) forms they file. To the best of our
knowledge based solely on a review of Forms 3, 4, and 5 (and any amendments
thereof) received by us during or with respect to the year ended June 30, 2006,
the following persons have failed to file, on a timely basis, the identified
reports required by Section 16(a) of the Exchange Act during fiscal year ended
June 30, 2009:
Name
and principal position
|
Number
of
late
reports
|
Transactions
not
timely
reported
|
Known
failures to
file
a required form
|
Anusha
Kumar
|
0
|
0
|
0
|
Code
of Ethics
As of
July 31, 2009, we had not adopted a Code of Ethics for Financial Executives,
which would include our principal executive officer, principal financial
officer, principal accounting officer or controller, or persons performing
similar functions.
Item 11. Executive Compensation
Summary
Compensation Table
The table
below summarizes all compensation awarded to, earned by, or paid to both to our
officers and to our directors for all services rendered in all capacities to us
for our fiscal years ended July 31, 2009 and 2008.
SUMMARY
COMPENSATION TABLE
|
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Name
and
principal
position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards
($)
|
Option
Awards
($)
|
Non-Equity
Incentive
Plan
Compensation
($)
|
Nonqualified
Deferred
Compensation
Earnings
($)
|
All
Other
Compensation
($)
|
Total
($)
|
|
Anusha
Kumar,
CEO,
CFO, President, Secretary-Treasurer, & Director
|
2009
2008
|
0
0
|
0
0
|
0
0
|
0
0
|
0
0
|
0
0
|
0
0
|
0
0
|
Narrative
Disclosure to the Summary Compensation Table
We have
not entered into any employment agreement or consulting agreement with our
executive officers. There are no arrangements or plans in which we
provide pension, retirement or similar benefits for executive
officers. Our executive officers currently do not receive any cash or
other compensation.
Outstanding
Equity Awards at Fiscal Year-End
The table
below summarizes all unexercised options, stock that has not vested, and equity
incentive plan awards for each named executive officer as of July 31,
2009.
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END
|
|||||||||
OPTION
AWARDS
|
STOCK
AWARDS
|
||||||||
Name
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
Equity
Incentive
Plan
Awards:
Number
of
Securities
Underlying
Unexercised
Unearned
Options
(#)
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
Number
of
Shares
or
Shares
of
Stock
That
Have
Not
Vested
(#)
|
Market
Value
of
Shares
or
Shares
of
Stock
That
Have
Not
Vested
($)
|
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Shares
or
Other
Rights
That
Have
Not
Vested
(#)
|
Equity
Incentive
Plan
Awards:
Market
or
Payout
Value
of
Unearned
Shares,
Shares
or
Other
Rights
That
Have
Not
Vested
(#)
|
Anusha
Kumar
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
Compensation
of Directors Table
The table
below summarizes all compensation paid to our directors for our last completed
fiscal year.
DIRECTOR
COMPENSATION
|
|||||||
Name
|
Fees
Earned or
Paid
in
Cash
($)
|
Stock
Awards
($)
|
Option
Awards
($)
|
Non-Equity
Incentive
Plan
Compensation
($)
|
Non-Qualified
Deferred
Compensation
Earnings
($)
|
All
Other
Compensation
($)
|
Total
($)
|
Anusha
Kumar
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
Narrative
Disclosure to Compensation of Directors Table
We do not
pay any compensation to our directors at this time.
Stock
Option Plans
We have
not adopted any stock option or incentive plans.
Item 12. Security Ownership of Certain Beneficial
Owners and Management and Related
Stockholder
Matters
The
following table sets forth certain information known to us with respect to the
beneficial ownership of our Common Stock as of October 27, 2009, by (1) all
persons who are beneficial owners of 5% or more of our voting securities, (2)
each director, (3) each executive officer, and (4) all directors and executive
officers as a group. The information regarding beneficial ownership of our
common stock has been presented in accordance with the rules of the Securities
and Exchange Commission. Under these rules, a person may be deemed to
beneficially own any shares of capital stock as to which such person, directly
or indirectly, has or shares voting power or investment power, and to
beneficially own any shares of our capital stock as to which such person has the
right to acquire voting or investment power within 60 days through the exercise
of any stock option or other right. The percentage of beneficial ownership as to
any person as of a particular date is calculated by dividing (a) (i) the number
of shares beneficially owned by such person plus (ii) the number of shares as to
which such person has the right to acquire voting or investment power within 60
days by (b) the total number of shares outstanding as of such date, plus any
shares that such person has the right to acquire from us within 60 days.
Including those shares in the tables does not, however, constitute an admission
that the named stockholder is a direct or indirect beneficial owner of those
shares. Unless otherwise indicated, each person or entity named in the table has
sole voting power and investment power (or shares that power with that person’s
spouse) with respect to all shares of capital stock listed as owned by that
person or entity.
Except as
otherwise indicated, all Shares are owned directly and the percentage shown is
based on 16,488,825 Shares of Common Stock issued and outstanding as of October
27, 2009.
Title
of Class
|
Name
and address of beneficial owner
|
Number
of Shares of Common Stock
|
Percentage
of Common Stock (1)
|
Common
Stock
|
Anusha
Kumar
7437
S. Eastern Ave., #307
Las
Vegas, Nevada
|
11,798,803
|
71.56%
|
Common
Stock
|
All
Officers and Directors as a Group (one person)
|
11,798,803
|
71.56%
|
Common
Stock
|
Other
5% Holders
|
None
|
None
|
Other
than the shareholders listed above, we know of no other person who is the
beneficial owner of more than five percent (5%) of our common
stock.
Item 13. Certain Relationships and Related
Transactions, and Director Independence
Except as
provided below, none of our directors or executive officers, nor any proposed
nominee for election as a director, nor any person who beneficially owns,
directly or indirectly, shares carrying more than 5% of the voting rights
attached to all of our outstanding shares, nor any members of the immediate
family (including spouse, parents, children, siblings, and in-laws) of any of
the foregoing persons has any material interest, direct or indirect, in any
transaction over the last two years or in any presently proposed transaction
which, in either case, has or will materially affect us.
1.
|
On
July 27, 2007, the Company borrowed $1,000 from its President, Anusha
Kumar, under the terms of a Promissory Note of the same
date. The Promissory Note payable to Ms. Kumar was due on July
31, 2009, accrues interest at 8% per annum until paid, and is
unsecured.
|
Item 14. Principal Accounting Fees and
Services
Below is
the table of Audit Fees (amounts in US$) billed by our auditor in connection
with the audit of the Company’s annual financial statements for the years
ended:
Financial
Statements for the Year Ended July 31
|
Audit
Services
|
Audit
Related Fees
|
Tax
Fees
|
Other
Fees
|
2009
|
$3500 |
$0
|
$0
|
$0
|
2008
|
$3500 |
$0
|
$0
|
$0
|
PART IV
Item 15. Exhibits, Financial Statements
Schedules
Index to
Financial Statements Required by Article 8 of Regulation S-X:
Audited
Financial Statements:
|
|
F-1
|
Report
of Independent Registered Public Accounting Firm
|
F-2
|
Consolidated
BalaBalance Sheets as of July 31, 2009 and
2008
|
F-3
|
Statements
of Operations for the years ended July 31, 2009 and 2008 and period from
inception to July 31, 2009
|
F-4
|
Statement
of Stockholders’ Equity (Deficit) for period from inception to July 31,
2009
|
F-5
|
Statements
of Cash Flows for the years ended July 31, 2009 and 2008 and period from
inception to July 31, 2009
|
F-6
|
Notes
to Financial Statements
|
Exhibit
Number
|
Description
|
3.1
|
Articles
of Incorporation (1)
|
3.2
|
Bylaws
(1)
|
1
|
Incorporated
by reference to Registration Statement on Form SB-2 filed August 30,
2007.
|
SIGNATURES
In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Aviation
Surveillance Systems, Inc.
By:
|
/s/Anusha
Kumar
|
Anusha
Kumar
President,
Chief Executive Officer,
Chief
Financial Officer and sole Director
|
|
November
12, 2009
|
In accordance with Section 13 or 15(d)
of the Exchange Act, 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/Anusha
Kumar
|
Anusha
Kumar
President,
Chief Executive Officer,
Chief
Financial Officer and sole Director
|
|
November 12, 2009
|
Maddox Ungar Silberstein,
PLLC CPAs and Business
Advisors
Phone
(248) 203-0080
Fax (248)
281-0940
30600
Telegraph Road, Suite 2175
Bingham
Farms, MI 48025-4586
www.maddoxungar.com
To the
Board of Directors of
Aviation
Surveillance Systems, Inc.
Las
Vegas, Nevada
We have
audited the accompanying balance sheets of Aviation Surveillance Systems, Inc.
(formerly Fairytale Ventures Inc.) as of July 31, 2009 and 2008, and the
related statements of operations, stockholders’ equity (deficit), and cash flows
for the years then ended and for the period from May 1, 2007 (inception) through
July 31, 2009. These financial statements are the responsibility of the
Company’s management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We
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 audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. The Company has determined
that it is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included
consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting. Accordingly, we express no such
opinion. An audit includes examining on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Aviation Surveillance Systems, Inc.
(formerly Fairytale Ventures Inc.) as of July 31, 2009 and 2008, and the results
of its operations and cash flows for the periods then ended and for the period
from May 1, 2007 (inception) through July 31, 2009, 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 4 to the financial
statements, the Company has not received revenue from sales of products or
services, has a working capital deficit, and has incurred losses from
operations. These factors raise substantial doubt about the Company’s ability to
continue as a going concern. Management’s plans with regard to these matters are
described in Note 4. The accompanying financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ Maddox Ungar
Silberstein, PLLC
Maddox
Ungar Silberstein, PLLC
Bingham
Farms, Michigan
November
11, 2009
AVIATION
SURVEILLANCE SYSTEMS, INC
(Formerly
Fairytale Ventures, Inc.)
(A Development Stage company)
Balance Sheets
ASSETS
|
||||||||
July
31,
2009
|
July
31,
2008
|
|||||||
CURRENT
ASSETS
|
||||||||
Cash
|
$ | 1,638 | $ | 9,075 | ||||
Total
Current Assets
|
1,638 | 9,075 | ||||||
TOTAL
ASSETS
|
$ | 1,638 | $ | 9,075 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT)
|
||||||||
CURRENT
LIABILITIES
|
||||||||
Notes
payable - related party
|
$ | 1,000 | $ | 1,000 | ||||
Accounts
payable and accrued expenses
|
69,148 | 7,712 | ||||||
Total
Current Liabilities
|
70,148 | 8,712 | ||||||
STOCKHOLDERS'
EQUITY (DEFICIT)
|
||||||||
Preferred
stock - $0.001 par value; 10,000,000 shares
|
||||||||
authorized;
no shares issued and outstanding
|
- | - | ||||||
Common
stock - $0.001 par value; 90,000,000 shares
|
||||||||
authorized;
16,488,825 shares issued and outstanding
|
16,489 | 16,489 | ||||||
Additional
paid-in capital
|
(264 | ) | (264 | ) | ||||
Deficit
accumulated during the development stage
|
(84,735 | ) | (15,862 | ) | ||||
Total
Stockholders' Equity (Deficit)
|
(68,510 | ) | 363 | |||||
TOTAL
LIABILITIES AND
|
||||||||
STOCKHOLDERS'
EQUITY (DEFICIT)
|
$ | 1,638 | $ | 9,075 | ||||
The accompanying notes are an integral part of
these financial statements.
AVIATION
SURVEILLANCE SYSTEMS, INC
(Formerly
Fairytale Ventures, Inc.)
(A Development Stage company)
Statements of Operations
From
Inception
|
|||||||||
on
May 1,
|
|||||||||
For
the Year Ended
|
2007
Through
|
||||||||
July
31,
|
July
31,
|
||||||||
2009 | 2008 | 2009 | |||||||
REVENUES
|
$ | - | $ | - | $ | 200 | |||
COST
OF GOODS SOLD
|
- | - | - | ||||||
GROSS
MARGIN
|
- | - | 200 | ||||||
OPERATING
EXPENSES
|
|||||||||
General
and administrative
|
68,790 | 15,629 | 84,772 | ||||||
Total
Operating Expenses
|
68,790 | 15,629 | 84,772 | ||||||
OTHER
EXPENSES
|
|||||||||
Interest
Expense
|
83 | 80 | 163 | ||||||
NET
LOSS BEFORE INCOME TAXES
|
(68,873 | ) | - | (84,735 | ) | ||||
INCOME
TAX EXPENSE
|
- | - | - | ||||||
NET
LOSS
|
$ | (68,873 | ) | $ | (15,709 | ) | $ | (84,735 | ) |
BASIC
LOSS PER SHARE
|
$ | (0.00 | ) | $ | (0.00 | ) | |||
WEIGHTED
AVERAGE NUMBER
|
|||||||||
OF
SHARES OUTSTANDING
|
16,488,825 | 16,488,825 |
The accompanying notes are an integral part of
these financial statements.
AVIATION
SURVEILLANCE SYSTEMS, INC
(Formerly
Fairytale Ventures, Inc.)
(A Development Stage company)
Statement of Stockholders' Equity
(Deficit)
Accumulated
|
|||||||||||||
Additional
|
During
the
|
||||||||||||
Common
Stock
|
Paid-In
|
Development
|
|||||||||||
Shares
|
Amount
|
Capital
|
Stage
|
Total
|
|||||||||
Balance
May 1, 2007
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||
Contributed
capital
|
-
|
-
|
300
|
-
|
300
|
||||||||
Shares
issued for cash
|
|||||||||||||
on
May 14, 2007
|
11,798,803
|
11,799
|
(7,799)
|
-
|
4,000
|
||||||||
Shares
issued for cash
|
|||||||||||||
on
June 22, 2007
|
4,690,022
|
4,690
|
7,235
|
-
|
11,925
|
||||||||
Net
loss from inception
|
|||||||||||||
through
July 31, 2007
|
-
|
-
|
-
|
(153)
|
(153)
|
||||||||
Balance,
July 31, 2007
|
16,488,825
|
16,489
|
(264)
|
(153)
|
16,072
|
||||||||
Net
loss for the year
|
|||||||||||||
ended
July 31, 2008
|
-
|
-
|
-
|
(15,709)
|
(15,709)
|
||||||||
Balance,
July 31, 2008
|
16,488,825
|
|
16,489
|
|
(264)
|
|
(15,862)
|
|
363
|
||||
Net
loss for year ended
|
|||||||||||||
ended
July 31, 2009
|
-
|
-
|
-
|
(68,873)
|
(68,873)
|
||||||||
Balance,
July 31, 2009
|
16,488,825
|
$
|
16,489
|
$
|
(264)
|
$
|
(84,735)
|
$
|
(68,510)
|
The accompanying notes are an integral part of
these financial statements.
AVIATION
SURVEILLANCE SYSTEMS, INC
(Formerly
Fairytale Ventures, Inc.)
(A Development Stage company)
Statements of Cash Flows
From
Inception
|
||||||||||||
on
May 1,
|
||||||||||||
For
the Year Ended
|
2007
Through
|
|||||||||||
July
31,
|
July
31,
|
|||||||||||
2009 | 2008 |
2009
|
||||||||||
OPERATING
ACTIVITIES
|
||||||||||||
Net
loss
|
$ | (68,873 | ) | $ | (15,709 | ) | $ | (84,735 | ) | |||
Adjustments
to reconcile net loss to
|
||||||||||||
net
cash used by operating activities:
|
||||||||||||
Changes
in operating assets and liabilities:
|
||||||||||||
Increase
(decrease) in accounts payable
|
||||||||||||
and
accrued expenses
|
61,436 | 7,712 | 69,148 | |||||||||
Net
Cash Used in
|
||||||||||||
Operating
Activities
|
(7,437 | ) | (7,997 | ) | (15,587 | ) | ||||||
INVESTING
ACTIVITIES
|
- | - | - | |||||||||
FINANCING
ACTIVITIES
|
||||||||||||
Proceeds
from common stock issued
|
- | - | 16,225 | |||||||||
Increase
in notes payable-related parties
|
- | - | 1,000 | |||||||||
Net
Cash Provided by
|
||||||||||||
Financing
Activities
|
- | - | 17,225 | |||||||||
NET
INCREASE (DECREASE) IN CASH
|
(7,437 | ) | (7,997 | ) | 1,638 | |||||||
CASH
AT BEGINNING OF PERIOD
|
9,075 | 17,072 | - | |||||||||
CASH
AT END OF PERIOD
|
$ | 1,638 | $ | 9,075 | $ | 1,638 | ||||||
SUPPLEMENTAL
DISCLOSURES OF
|
||||||||||||
CASH
FLOW INFORMATION
|
||||||||||||
CASH
PAID FOR:
|
||||||||||||
Interest
|
$ | - | $ | - | $ | - | ||||||
Income
Taxes
|
$ | - | $ | - | $ | - |
The accompanying notes are an integral part of
these financial statements.
AVIATION
SURVEILLANCE SYSTEMS, INC.
(Formerly
Fairytale Ventures, Inc.)
(A
Development Stage Company)
Notes to
Financial Statements
July 31,
2009 and 2008
NOTE 1 –
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Nature of
Business
Aviation
Surveillance Systems, Inc., formerly known as Fairytale Ventures, Inc. (the
Company) was incorporated in the State of Nevada on May 1, 2007. The Company
was engaged in the principal business activity of providing
on-location themed birthday parties and other special event parties for
children. Since the corporate name change on April 20, 2009, the Company has
been seeking new opportunities or a possible merger with an operating firm.
The Company has not realized significant revenues to date and therefore is
classified as a development stage company.
Use of
Estimates
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenue and expenses during the reporting period. Actual results could differ
from those estimates.
Basic (Loss) per Common
Share
Basic
(loss) per share is calculated by dividing the Company’s net loss applicable to
common shareholders by the weighted average number of common shares during the
period. Diluted earnings per share is calculated by dividing the Company’s net
income available to common shareholders by the diluted weighted average number
of shares outstanding during the year. The diluted weighted average number of
shares outstanding is the basic weighted number of shares adjusted for any
potentially dilutive debt or equity. There are no such common stock equivalents
outstanding as of July 31, 2009.
For
the
Year
Ended
July
31,
2009
|
For
the
Year
Ended
July
31,
2008
|
|||||||
Loss
(numerator)
|
$ | (68,873 | ) | $ | (15,709 | ) | ||
Shares
(denominator)
|
16,488,825 | 16,488,825 | ||||||
Per
share amount
|
$ | (0.00 | ) | $ | (0.00 | ) |
Revenue
Recognition
The
Company recognizes revenue when products are fully delivered or services have
been provided and collection is reasonably assured.
Comprehensive
Income
The
Company has no component of other comprehensive income. Accordingly, net income
equals comprehensive income for the periods ended July 31, 2009 and
2008.
AVIATION
SURVEILLANCE SYSTEMS, INC.
(Formerly
Fairytale Ventures, Inc.)
(A
Development Stage Company)
Notes to
Financial Statements
July 31,
2009 and 2008
NOTE 1 –
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)
Advertising
Costs
The
Company’s policy regarding advertising is to expense advertising when incurred.
The Company had not incurred any advertising expense as of July 31, 2009 and
2008.
Cash and Cash
Equivalents
For
purposes of the Statement of Cash Flows, the Company considers all highly liquid
instruments purchased with a maturity of three months or less to be cash
equivalents to the extent the funds are not being held for investment
purposes.
Income
Taxes
The
Company provides for income taxes under Statement of Financial Accounting
Standards No. 109, Accounting for Income Taxes. SFAS No. 109 requires the use of
an asset and liability approach in accounting for income taxes. Deferred tax
assets and liabilities are recorded based on the differences between the
financial statement and tax bases of assets and liabilities and the tax rates in
effect when these differences are expected to reverse. The Company’s predecessor
operated as entity exempt from Federal and State income taxes.
SFAS No.
109 requires the reduction of deferred tax assets by a valuation allowance if,
based on the weight of available evidence, it is more likely than not that some
or all of the deferred tax assets will not be realized.
The
provision for income taxes differs from the amounts which would be provided by
applying the statutory federal income tax rate of 39% to the net loss before
provision for income taxes for the following reasons:
July
31
2009
|
July
31,
2008
|
||
Income
tax expense at statutory rate
|
$ (26,838)
|
$ (6,129)
|
|
Common
stock issued for services
|
-
|
-)
|
|
Valuation
allowance
|
(26,838)
|
(6,129)
|
|
Income
tax expense per books
|
$ -
|
$ -
|
Net
deferred tax assets consist of the following components as of:
July
31,
2009
|
July
31,
2008
|
||
NOL
carryover
|
$ (33,047)
|
$ (6,209)
|
|
Valuation
allowance
|
(33,047)
|
(6,209)
|
|
Net
deferred tax asset
|
$ -
|
$ -
|
AVIATION
SURVEILLANCE SYSTEMS, INC.
(Formerly
Fairytale Ventures, Inc.)
(A
Development Stage Company)
Notes to
Financial Statements
July 31,
2009 and 2008
NOTE 1 –
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)
Income Taxes
(Continued)
Due to
the change in ownership provisions of the Tax Reform Act of 1986, net operating
loss carry forwards $84,735 for federal income tax reporting purposes are
subject to annual limitations. Should a change in ownership occur net operating
loss carry forwards may be limited as to use in future years.
Impairment of Long-Lived
Assets
The
Company continually monitors events and changes in circumstances that could
indicate carrying amounts of long-lived assets may not be recoverable. When such
events or changes in circumstances are present, the Company assesses the
recoverability of long-lived assets by determining whether the carrying value of
such assets will be recovered through undiscounted expected future cash flows.
If the total of the future cash flows is less than the carrying amount of those
assets, the Company recognizes an impairment loss based on the excess of the
carrying amount over the fair value of the assets. Assets to be disposed of are
reported at the lower of the carrying amount or the fair value less costs to
sell.
Accounting
Basis
The basis
is accounting principles generally accepted in the United States of
America. The Company has adopted a July 31 fiscal year
end.
Inventory
The
Company accounts for inventory of raw materials and finished goods on a cost
basis. The inventory is maintained on a first in- first out (FIFO)
basis.
Stock-based
compensation.
As of
July 31, 2009, the Company has not issued any share-based payments to its
employees. The Company adopted SFAS No. 123-R effective
January 1, 2006 using the modified prospective method. Under this
transition method, stock compensation expense includes compensation expense for
all stock-based compensation awards granted on or after January 1, 2006,
based on the grant-date fair value estimated in accordance with the provisions
of SFAS No. 123-R.
Recent Accounting
Pronouncements
In May
2009, the FASB issued FAS 165, “Subsequent Events”. This
pronouncement establishes standards for accounting for and disclosing subsequent
events (events which occur after the balance sheet date but before financial
statements are issued or are available to be issued). FAS 165 requires and
entity to disclose the date subsequent events were evaluated and whether that
evaluation took place on the date financial statements were issued or were
available to be issued. It is effective for interim and annual periods ending
after June 15, 2009. The adoption of FAS 165 did not have a material impact on
the Company’s financial condition or results of operation.
AVIATION
SURVEILLANCE SYSTEMS, INC.
(Formerly
Fairytale Ventures, Inc.)
(A
Development Stage Company)
Notes to
Financial Statements
July 31,
2009 and 2008
NOTE 1 –
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)
Recent Accounting
Pronouncements (Continued)
In June
2009, the FASB issued FAS 166, “Accounting for Transfers of Financial Assets” an
amendment of FAS 140. FAS 140 is intended to improve the relevance,
representational faithfulness, and comparability of the information that a
reporting entity provides in its financial statements about a transfer of
financial assets: the effects of a transfer on its financial position, financial
performance , and cash flows: and a transferor’s continuing involvement, if any,
in transferred financial assets. This statement must be applied as of the
beginning of each reporting entity’s first annual reporting period that begins
after November 15, 2009. The Company does not expect the adoption of FAS 166 to
have an impact on the Company’s results of operations, financial condition or
cash flows.
In June
2009, the FASB issued FAS 167, “Amendments to FASB Interpretation No. 46(R)”.
FAS 167 is intended to (1) address the effects on certain provisions of FASB
Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest
Entities, as a result of the elimination of the qualifying
special-purpose entity concept in FAS 166, and (2) constituent concerns about
the application of certain key provisions of Interpretation 46(R), including
those in which the accounting and disclosures under the Interpretation do not
always provided timely and useful information about an enterprise’s involvement
in a variable interest entity. This statement must be applied as of the
beginning of each reporting entity’s first annual reporting period that begins
after November 15, 2009. The Company does not expect the adoption of FAS 167 to
have an impact on the Company’s results of operations, financial condition or
cash flows.
In June
2009, the FASB issued FAS 168, “The FASB Accounting Standards Codification and
the Hierarchy of Generally Accepted Accounting Principles”. FAS 168 will become
the source of authoritative U.S. generally accepted accounting principles (GAAP)
recognized by the FASB to be applied by nongovernmental entities. Rules and
interpretive releases of the Securities and Exchange Commission (SEC) under
authority of federal securities laws are also sources of authoritative GAAP for
SEC registrants. On the effective date of this Statement, the Codification will
supersede all then-existing non-SEC accounting and reporting standards. All
other nongrandfathered non-SEC accounting literature not included in the
Codification will become nonauthoritative. This statement is effective for
financial statements issued for interim and annual periods ending after
September 15, 2009.The Company does not expect the adoption of FAS 168 to have
an impact on the Company’s results of operations, financial condition or cash
flows.
In April
2009, the FASB issued FSP No. FAS 157-4, “Determining Fair Value When the Volume
and Level of Activity for the Asset or Liability Have Significantly Decreased
and Identifying Transactions That Are Not Orderly” (“FSP FAS
157-4”). FSP FAS 157-4 provides guidance on estimating fair value
when market activity has decreased and on identifying transactions that are not
orderly. Additionally, entities are required to disclose in interim
and annual periods the inputs and valuation techniques used to measure fair
value. This FSP is effective for interim and annual periods ending
after June 15, 2009. The Company does not expect the adoption of FSP
FAS 157-4 will have a material impact on its financial condition or results of
operation.
AVIATION
SURVEILLANCE SYSTEMS, INC.
(Formerly
Fairytale Ventures, Inc.)
(A
Development Stage Company)
Notes to
Financial Statements
July 31,
2009 and 2008
NOTE 1 –
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)
Recent Accounting
Pronouncements (Continued)
In
October 2008, the FASB issued FSP No. FAS 157-3, “Determining the Fair Value of
a Financial Asset When the Market for That Asset is Not Active,” (“FSP FAS
157-3”), which clarifies application of SFAS 157 in a market that is not
active. FSP FAS 157-3 was effective upon issuance, including prior
periods for which financial statements have not been issued. The
adoption of FSP FAS 157-3 had no impact on the Company’s results of operations,
financial condition or cash flows.
In
December 2008, the FASB issued FSP No. FAS 140-4 and FIN 46(R)-8, “Disclosures
by Public Entities (Enterprises) about Transfers of Financial Assets and
Interests in Variable Interest Entities.” This disclosure-only FSP
improves the transparency of transfers of financial assets and an enterprise’s
involvement with variable interest entities, including qualifying
special-purpose entities. This FSP is effective for the first
reporting period (interim or annual) ending after December 15, 2008, with
earlier application encouraged. The Company adopted this FSP
effective January 1, 2009. The adoption of the FSP had no impact
on the Company’s results of operations, financial condition or cash
flows.
In
December 2008, the FASB issued FSP No. FAS 132(R)-1, “Employers’ Disclosures
about Postretirement Benefit Plan Assets” (“FSP FAS 132(R)-1”). FSP
FAS 132(R)-1 requires additional fair value disclosures about employers’ pension
and postretirement benefit plan assets consistent with guidance contained in
SFAS 157. Specifically, employers will be required to disclose
information about how investment allocation decisions are made, the fair value
of each major category of plan assets and information about the inputs and
valuation techniques used to develop the fair value measurements of plan assets.
This FSP is effective for fiscal years ending after December 15,
2009. The Company does not expect the adoption of FSP FAS 132(R)-1
will have a material impact on its financial condition or results of
operation.
In
September 2008, the FASB issued exposure drafts that eliminate qualifying
special purpose entities from the guidance of SFAS No. 140, “Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities,” and FASB Interpretation 46 (revised December 2003),
“Consolidation of Variable Interest Entities − an
interpretation of ARB No. 51,” as well as other
modifications. While the proposed revised pronouncements have not
been finalized and the proposals are subject to further public comment, the
Company anticipates the changes will not have a significant impact on the
Company’s financial statements. The changes would be effective March
1, 2010, on a prospective basis.
AVIATION
SURVEILLANCE SYSTEMS, INC.
(Formerly
Fairytale Ventures, Inc.)
(A
Development Stage Company)
Notes to
Financial Statements
July 31,
2009 and 2008
NOTE 1 –
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)
Recent Accounting
Pronouncements (Continued)
In
June 2008, the FASB issued FASB Staff Position EITF 03-6-1, Determining Whether Instruments
Granted in Share-Based Payment Transactions Are Participating Securities,
(“FSP EITF 03-6-1”). FSP EITF 03-6-1 addresses whether instruments granted in
share-based payment transactions are participating securities prior to vesting,
and therefore need to be included in the computation of earnings per share under
the two-class method as described in FASB Statement of Financial Accounting
Standards No. 128, “Earnings per Share.” FSP EITF 03-6-1 is effective for
financial statements issued for fiscal years beginning on or after
December 15, 2008 and earlier adoption is prohibited. We are not required
to adopt FSP EITF 03-6-1; neither do we believe that FSP EITF 03-6-1 would have
material effect on our consolidated financial position and results of
operations if adopted.
In
May 2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 163,
“Accounting for Financial Guarantee Insurance Contracts-and interpretation of
FASB Statement No. 60”. SFAS No. 163 clarifies how Statement 60
applies to financial guarantee insurance contracts, including the recognition
and measurement of premium revenue and claims liabilities. This statement also
requires expanded disclosures about financial guarantee insurance contracts.
SFAS No. 163 is effective for fiscal years beginning on or after December 15,
2008, and interim periods within those years. SFAS No. 163 has no effect on the
Company’s financial position, statements of operations, or cash flows at this
time.
In May
2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 163,
“Accounting for Financial Guarantee Insurance Contracts-and interpretation of
FASB Statement No. 60”. SFAS No. 163 clarifies how Statement 60
applies to financial guarantee insurance contracts, including the recognition
and measurement of premium revenue and claims liabilities. This statement also
requires expanded disclosures about financial guarantee insurance contracts.
SFAS No. 163 is effective for fiscal years beginning on or after December 15,
2008, and interim periods within those years. SFAS No. 163 has no effect on the
Company’s financial position, statements of operations, or cash flows at this
time.
In May
2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 162,
“The Hierarchy of Generally Accepted Accounting Principles”. SFAS No.
162 sets forth the level of authority to a given accounting pronouncement or
document by category. Where there might be conflicting guidance between two
categories, the more authoritative category will prevail. SFAS No. 162 will
become effective 60 days after the SEC approves the PCAOB’s amendments to AU
Section 411 of the AICPA Professional Standards. SFAS No. 162 has no effect on
the Company’s financial position, statements of operations, or cash flows at
this time.
In March 2008, the Financial Accounting Standards Board, or FASB, issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities—an amendment of FASB Statement No. 133. This standard requires companies to provide enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under Statement 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. This Statement is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The Company has not yet adopted the provisions of SFAS No. 161, but does not expect it to have a material impact on its consolidated financial position, results of operations or cash flows.
AVIATION
SURVEILLANCE SYSTEMS, INC.
(Formerly
Fairytale Ventures, Inc.)
(A
Development Stage Company)
Notes to
Financial Statements
July 31,
2009 and 2008
NOTE 1 –
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)
Recent Accounting
Pronouncements (Continued)
In
December 2007, the SEC issued Staff Accounting Bulletin (SAB) No. 110 regarding
the use of a "simplified" method, as discussed in SAB No. 107 (SAB 107), in
developing an estimate of expected term of "plain vanilla" share options in
accordance with SFAS No. 123 (R), Share-Based Payment. In particular,
the staff indicated in SAB 107 that it will accept a company's election to use
the simplified method, regardless of whether the company has sufficient
information to make more refined estimates of expected term. At the time SAB 107
was issued, the staff believed that more detailed external information about
employee exercise behavior (e.g., employee exercise patterns by industry and/or
other categories of companies) would, over time, become readily available to
companies. Therefore, the staff stated in SAB 107 that it would not expect a
company to use the simplified method for share option grants after December 31,
2007. The staff understands that such detailed information about employee
exercise behavior may not be widely available by December 31, 2007. Accordingly,
the staff will continue to accept, under certain circumstances, the use of the
simplified method beyond December 31, 2007. The Company currently uses the
simplified method for “plain vanilla” share options and warrants, and will
assess the impact of SAB 110 for fiscal year 2009. It is not believed that this
will have an impact on the Company’s consolidated financial position, results of
operations or cash flows.
In
December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements—an amendment of ARB No. 51. This
statement amends ARB 51 to establish accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the deconsolidation of a
subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an
ownership interest in the consolidated entity that should be reported as equity
in the consolidated financial statements. Before this statement was issued,
limited guidance existed for reporting noncontrolling interests.
As a
result, considerable diversity in practice existed. So-called minority interests
were reported in the consolidated statement of financial position as liabilities
or in the mezzanine section between liabilities and equity. This statement
improves comparability by eliminating that diversity. This statement is
effective for fiscal years, and interim periods within those fiscal years,
beginning on or after December 15, 2008 (that is, January 1, 2009, for entities
with calendar year-ends). Earlier adoption is prohibited. The effective date of
this statement is the same as that of the related Statement 141 (revised 2007).
The Company will adopt this Statement beginning March 1, 2009. It is not
believed that this will have an impact on the Company’s consolidated financial
position, results of operations or cash flows.
AVIATION
SURVEILLANCE SYSTEMS, INC.
(Formerly
Fairytale Ventures, Inc.)
(A
Development Stage Company)
Notes to
Financial Statements
July 31,
2009 and 2008
NOTE 1 –
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)
Recent Accounting
Pronouncements (Continued)
In
December 2007, the FASB, issued FAS No. 141 (revised 2007), Business
Combinations’. This Statement replaces FASB Statement No. 141,
Business Combinations, but retains the fundamental requirements in
Statement 141. This Statement establishes principles and
requirements for how the acquirer: (a) recognizes and measures in its financial
statements the identifiable assets acquired, the liabilities assumed, and any
noncontrolling interest in the acquiree; (b) recognizes and measures the
goodwill acquired in the business combination or a gain from a bargain purchase;
and (c) determines what information to disclose to enable users of the financial
statements to evaluate the nature and financial effects of the business
combination. This statement applies prospectively to business combinations for
which the acquisition date is on or after the beginning of the first annual
reporting period beginning on or after December 15, 2008. An entity may not
apply it before that date. The effective date of this statement is the same as
that of the related FASB Statement No. 160, Noncontrolling Interests in
Consolidated Financial Statements. The Company will adopt this
statement beginning March 1, 2009. It is not believed that this will have an
impact on the Company’s consolidated financial position, results of operations
or cash flows.
In
February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
Assets and Liabilities—Including an Amendment of FASB Statement No.
115. This standard permits an entity to choose to measure many
financial instruments and certain other items at fair value. This option is
available to all entities. Most of the provisions in FAS 159 are elective;
however, an amendment to FAS 115 Accounting for Certain Investments in Debt and
Equity Securities applies to all entities with available for sale or trading
securities. Some requirements apply differently to entities that do not report
net income. SFAS No. 159 is effective as of the beginning of an entity’s first
fiscal year that begins after November 15, 2007. Early adoption is permitted as
of the beginning of the previous fiscal year provided that the entity makes that
choice in the first 120 days of that fiscal year and also elects to apply the
provisions of SFAS No. 157 Fair Value Measurements. The Company will
adopt SFAS No. 159 beginning March 1, 2008 and is currently evaluating the
potential impact the adoption of this pronouncement will have on its
consolidated financial statements.
In
September 2006, the FASB issued SFAS No. 157; Fair Value Measurements This
statement defines fair value, establishes a framework for measuring fair value
in generally accepted accounting principles (GAAP), and expands disclosures
about fair value measurements. This statement applies under other accounting
pronouncements that require or permit fair value measurements, the Board having
previously concluded in those accounting pronouncements that fair value is the
relevant measurement attribute. Accordingly, this statement does not require any
new fair value measurements. However, for some entities, the application of this
statement will change current practice. This statement is effective for
financial statements issued for fiscal years beginning after November 15, 2007,
and interim periods within those fiscal years. Earlier application is
encouraged, provided that the reporting entity has not yet issued financial
statements for that fiscal year, including financial statements for an interim
period within that fiscal year.
AVIATION
SURVEILLANCE SYSTEMS, INC.
(Formerly
Fairytale Ventures, Inc.)
(A
Development Stage Company)
Notes to
Financial Statements
July 31,
2009 and 2008
NOTE
1 – SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Recent Accounting
Pronouncements (Continued)
The
Company adopted this statement March 1, 2008, and it is not believed that this
will have an impact on the Company’s consolidated financial position, results of
operations or cash flows.
NOTE
2. COMMON
STOCK
On May
14, 2007, the Company received $4,000 from its founders for 7,374,252 shares of
its common stock. On June 22, 2007, the Company completed an unregistered
private offering under the Securities Act of 1933, as amended, relying upon the
exemption from registration afforded by Rule 504 of Regulation D promulgated
there under. The Company sold 2,931,265 shares of its $0.001 par
value common stock at a price of $0.004 per share for $11,925 in
cash.
On July
21, 2008, the Company’s shares of common stock were forward split on the basis
of 1.84356289 shares for 1.
On May 1,
2009, the Company’s shares of common stock were forward split on the basis of
1.6 shares for 1. The forward stock split has been recognized in the Company’s
financial statements on a retroactive basis.
NOTE
3. RELATED
PARTY TRANSACTIONS
The
Company has recorded expenses paid on its behalf of $300 by related parties as a
contribution to capital.
The
Company has a note payable to a shareholder for $1,000. The note payable is due
on July 31, 2009, accrues interest at 8% per annum and is unsecured. The
shareholder has verbally agreed to extend the payment due date of the note
for one additional year.
NOTE 4.
GOING
CONCERN
The
accompanying financial statements have been prepared in conformity with
generally accepted accounting principle, which contemplate continuation of the
Company as a going concern. However, the Company has accumulated
deficit of $22,319 as of July 31, 2009. The Company currently has
limited liquidity, and has not completed its efforts to establish a stabilized
source of revenues sufficient to cover operating costs over an extended period
of time.
Management
anticipates that the Company will be dependent, for the near future, on
additional investment capital to fund operating expenses The Company intends to
position itself so that it may be able to raise additional funds through the
capital markets. In light of management’s efforts, there are no assurances that
the Company will be successful in this or any of its endeavors or become
financially viable and continue as a going concern.
NOTE 5. SUBSEQUENT EVENTS
The Company has
analyzed its operations subsequent to July 31, 2009 through November 12, 2009
and has determined that it does not have any material subsequent events to
disclose in these financial statements.