UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended July 31, 2010
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ______________ to________________
Commission file number 333-147323
NETVENTORY SOLUTIONS, INC.
(Exact name of registrant as specified in its charter)
Nevada 98-0573252
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8th Floor - 200 South Virginia Street, Reno, NV 89501
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (775) 562-0504
Securities registered under Section 12(b) of the Act:
None N/A
Title of each class Name of each exchange on which registered
Securities registered under Section 12(g) of the Act:
Common Stock, $0.001 par value
(Title of class)
Indicate by checkmark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes [ ] No [X]
Indicate by checkmark if the registrant is not required to file reports pursuant
to Section 13 or 15(d) of the Act. Yes [ ] No [X]
Indicate by checkmark whether the registrant has (1) 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 [ ]
Indicate by checkmark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (ss. 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. [ ]
Indicate by checkmark 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]
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Act). Yes [X] No [ ]
The aggregate market value of voting and non-voting common equity held by
non-affiliates as of November 15, 2010 was approximately $32,000 based upon
640,000 shares held by non-affiliates and a closing market price of $0.05 per
share on January 31, 2009.
As of November 15, 2010, there were 2,140,000 shares of common stock issued and
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Exhibits incorporated by reference are referred to in Part IV.
AVAILABLE INFORMATION
Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports
on Form 8-K and all amendments to those reports that we file with the Securities
and Exchange Commission, or SEC, are available at the SEC's public reference
room at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain
information on the operation of the public reference room by calling the SEC at
1-800-SEC-0330. The SEC also maintains a website at www.sec.gov that contains
reports, proxy and information statements and other information regarding
reporting companies.
TABLE OF CONTENTS
Page
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PART I
ITEM 1. Business 4
ITEM 1A Risk Factors 6
ITEM 2. Properties 13
ITEM 3. Legal Proceedings 13
ITEM 4. Submission of Matters to a Vote of Security Holders 13
PART II
ITEM 5. Market for the Registrant's Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities 13
ITEM 6. Selected Financial Data 14
ITEM 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations 14
ITEM 8. Financial Statements and Supplementary Data 18
ITEM 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure 26
ITEM 9A. Controls and Procedures 26
ITEM 9B. Other Information 27
PART III
ITEM 10. Directors, Executive Officers and Corporate Governance 28
ITEM 11. Executive Compensation 29
ITEM 12. Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters 30
ITEM 13. Certain Relationships and Related Transactions, and Director
Independence 31
ITEM 14. Principal Accountant Fees and Services 31
ITEM 15. Exhibits Financial Statement Schedules 32
Signatures 33
2
PART I
FORWARD LOOKING STATEMENTS.
This annual report contains forward-looking statements. These statements relate
to future events or our future financial performance. In some cases, you can
identify forward-looking statements by terminology such as "may," "should,"
"expects," "plans," "anticipates," "believes," "estimates," "predicts,"
"potential," or "continue" or the negative of these terms or other comparable
terminology. These statements are only predictions and involve known and unknown
risks, uncertainties and other factors, including the risks in the section
entitled "Risk Factors" and the risks set out below, any of which may cause our
or our industry's actual results, levels of activity, performance or
achievements to be materially different from any future results, levels of
activity, performance or achievements expressed or implied by these
forward-looking statements. These risks include, by way of example and not in
limitation:
* the uncertainty that we will not be able to successfully identify and
evaluate a suitable business opportunity;
* risks related to the large number of established and well-financed
entities that are actively seeking suitable business opportunities;
* risks related to the failure to successfully manage or achieve growth
of a new business opportunity; and
* other risks and uncertainties related to our business strategy.
This list is not an exhaustive list of the factors that may affect any of our
forward-looking statements. These and other factors should be considered
carefully and readers should not place undue reliance on our forward-looking
statements.
Forward looking statements are made based on management's beliefs, estimates and
opinions on the date the statements are made and we undertake no obligation to
update forward-looking statements if these beliefs, estimates and opinions or
other circumstances should change. Although we believe that the expectations
reflected in the forward-looking statements are reasonable, we cannot guarantee
future results, levels of activity, performance or achievements. Except as
required by applicable law, including the securities laws of the United States,
we do not intend to update any of the forward-looking statements to conform
these statements to actual results.
The safe harbors of forward-looking statements provided by Section 21E of the
Exchange Act are unavailable to issuers of penny stock. As we issued securities
at a price below $5.00 per share, our shares are considered penny stock and such
safe harbors set forth under the Private Securities Litigation Reform Act of
1995 are unavailable to us.
Our financial statements are stated in United States dollars and are prepared in
accordance with United States generally accepted accounting principles.
In this annual report, unless otherwise specified, all dollar amounts are
expressed in United States dollars and all references to "common stock" refer to
the common shares in our capital stock.
As used in this annual report, the terms "we," "us," "our" and "Netventory" mean
Netventory Solutions, Inc., unless otherwise indicated.
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ITEM 1. BUSINESS.
GENERAL
We were incorporated in the state of Nevada in February 8, 2008 under the name
NetVentory Solutions, Inc. and are engaged in providing online inventory
services to small and medium sized companies. Our goal is to offer comprehensive
inventory management and product fulfillment services to our customers. Our
target clientele will include small to medium sized business owners who demand
convenient and cost effective ways to monitor and control their company's
inventory.
In order to satisfy global demand for online inventory services, we plan to
develop a network of international and domestic resellers, and also retain a
foreign sales force that manages various call centers, which develop client
networks and contact potential customers.
As the popularity of the Internet continues to surge, we plan to capitalize on
the continually maturing marketplace for online inventory management services.
Automated inventory services are becoming an increasingly necessary tool to
reduce costs and increase productivity. From scanning the bar codes on products
stored in warehouses and storage bins, to tracking the cost of goods sold to
customers, inventory management is becoming an essential part of everyday life
for many businesses.
We believe that our company has a strategic advantage over our competition
because our customers have access to a protected local copy of their inventory
at their premises to which they can refer to in the event of a failure in
Internet connectivity. By granting our customers a local copy of their inventory
that is readily available, our customers have the ability to continue with a
project such as an inventory count (despite the lack of internet service),
without disruptions. In addition, once Internet connection is restored, the
local copy will automatically synch with the client's online inventory system,
updating any changes that may have occurred during the interruption. We believe
our unique technology will find a comfortable niche in the online inventory
system business, and will continue to refine our product and related services in
order to meet the needs of small and medium size businesses.
PRODUCTION
Registered subscribers will be able to log into our web site using the access
codes they set up during the registration process. After entering their user
name and password the person will be redirected to a designated secure folder
that contains their customized inventory management system. The infrastructure
of the web site will allow a subscriber to have multiple users online
simultaneously with no limitations on the number of hours of use. The
subscriber's staff will be able to access the same or different elements of
their online inventory management system at the same time if they like. An
access code hierarchy will be available to allow an administrator from the
subscriber firm, to limit or restrict the rights of users within their own
group. In this way sensitive information will be restricted to predetermined
members of the subscriber group.
A prominent feature of our online inventory management system will be to the
ease of access to a client's information. We plan to design an online system
that will be able to harness the growing ubiquity of Internet access. The
portability of the user name and password will allow subscribers to access our
company's web site from anywhere that they have Internet access. Our subscribers
are able to access the inventory via any web-compliant browser on a PC, Laptop
or a PDA.
Our product will enable our clients to manage their inventory and related
logistics. For example, when a shipment of materials arrives at the loading dock
of a client company, the client's staff person can log into the site and enter
the incoming items by product description, quantity and include notes such as
damaged goods for return. The entry will immediately update the existing
inventory for the goods already on hand, change the re-order status and advise
the production department that the goods have been received and are now
available. In another example, a client's sales representative that is visiting
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a customer at the customer's office and needs to check the status of a customer
order, can check from a remote location to see if an item the customer wants is
in stock or to modify an existing order that has not yet shipped. The sales rep
will be able to use a wireless device to access the Internet, log in and
complete any one of these or other tasks thereby help to increase the level of
service the sales rep can give to the customer.
Our online inventory management services will feature a relational database that
will be developed using the open source MYSQL, a relational database management
system, and the PhP programming language, which is a computer scripting language
designed for producing web pages. By using these software development tools we
will be able to keep our costs down and still produce a high quality product.
The customer may opt for a local copy of their inventory hosted on a server at
their premises. If the Internet fails, the local copy is still available for the
customer to use. When the problem is remedied, the local copy will synch with
the online inventory system. This option will be available at an additional fee.
SALES AND MARKETING STRATEGY
The marketing expense will be directed at developing an international and
domestic reseller network. To accomplish this we plan to outsource the task to
an offshore call center. We anticipate spending 75% of the marketing budget in
this manner. The remaining 25% will go towards an online advertising campaign
using the Google Adwords cost-per-click advertising program. Our online ads will
try to drive traffic to our web site.
COMPETITION
The competition to provide customers with online inventory management systems
exists in companies that appear to be at various stages of development and
growth. In the section below we highlight some of the firms that have a presence
on the internet already and are currently marketing their versions of this type
of service.
We believe that there are several categories of software companies offering
online inventory management systems. We have divided our industry segment and
competition into two distinct categories: one where the software company
includes inventory management as part of the larger software product offering;
and the second where the software company specializes in offering this type of
service. Our firm will be in the second category as an inventory management
system specialist.
There are a number of firms that already offer various types of inventory
management services through their web sites. No one company appears to have been
able to establish a dominant position and become the market leader. When we
consider the growth of the internet and the suitability of inventory management
systems to relational database structures we feel that we will be coming to a
market that remains fractured and offers potential for long-term success.
None of these solutions appear to offer the customer the ability to have a local
copy of their inventory on an on-site server. If the customer loses access to
the internet, it is likely that the company will not be able to fulfill orders -
resulting in a loss of business. In addition, there is a significant loss of
productivity. Our system offers this functionality as an add-on service and we
believe that this is a key differentiator between our service and those of our
competition.
EMPLOYEES
As of the date of this Prospectus, we do not have any employees.
5
ITEM 1A. RISK FACTORS.
Much of the information included in this annual report includes or is based upon
estimates, projections or other "forward looking statements". Such "forward
looking statements" involve various risks and uncertainties as outlined below.
We caution the reader that important factors in some cases have affected, and in
the future could materially affect, actual results and cause actual results to
differ materially from the results expressed in any such estimates, projections
or other "forward looking statements".
The securities offered hereby involve a substantial risk of loss. Prospective
investors should carefully consider the risks and uncertainties described below
before making an investment in our securities. The risks and uncertainties
described below are those which management currently believes may significantly
affect us.
1) WE INCURRED HISTORICAL LOSSES AS A RESULT, WE MAY NOT BE ABLE TO GENERATE
PROFITS, SUPPORT OUR OPERATIONS, OR ESTABLISH A RETURN ON INVESTED CAPITAL.
We incurred net losses from our inception, February 8, 2008 to our fiscal year
ended July 31, 2010 in the amount of $77,059. In addition, we expect to increase
our operating expenses to fund our anticipated growth. We cannot assure you that
any of our business strategies will be successful or that significant revenues
or profitability will ever be achieved or, if they are achieved, that they can
be consistently sustained or increased on a quarterly or annual basis.
2) WE EXPECT OUR OPERATING LOSSES TO CONTINUE
We expect to incur increased operating expenses during the next year. The amount
of net losses and the time required for us to reach and sustain profitability
are uncertain. The likelihood of our success must be considered in light of the
problems, expenses, difficulties, and delays frequently encountered in
connection with our business, including, but not limited to the increase in
costs to be incurred for research and development, protection of our
intellectual property and the marketing and delivery of our product. There can
be no assurance that we will ever generate revenue or achieve profitability at
all or on any substantial basis.
3) BECAUSE WE PROVIDE A SUITE OF ON-DEMAND APPLICATIONS THAT MANY OF OUR
CUSTOMERS USE TO MANAGE THEIR CRITICAL BUSINESS PROCESSES, THE MARKET FOR
OUR SERVICE MAY DEVELOP MORE SLOWLY THAN WE EXPECT.
Our success will depend, to a large extent, on the willingness of Small and
Medium Businesses ("SMBs") to accept on-demand services for applications that
they view as critical to the success of their business. Many companies have
invested substantial effort and financial resources to integrate traditional
enterprise software into their businesses and may be reluctant or unwilling to
switch to a different application or to migrate these applications to on-demand
services. Other factors that may affect market acceptance of our application
include:
* the security capabilities, reliability and availability of on-demand
services;
* customer concerns with entrusting a third party to store and manage
their data, especially confidential or sensitive data;
* our ability to minimize the time and resources required to implement
our suite;
* our ability to maintain high levels of customer satisfaction;
* our ability to implement upgrades and other changes to our software
without disrupting our service;
* the level of customization or configuration we offer;
* our ability to provide rapid response time during periods of intense
activity on customer websites; and
* the price, performance and availability of competing products and
services.
6
The market for these services may not develop further, or it may develop more
slowly than we expect, either of which would harm our business.
4) OUR CUSTOMERS ARE SMALL AND MEDIUM-SIZED BUSINESSES, WHICH CAN BE
CHALLENGING TO COST-EFFECTIVELY REACH, ACQUIRE AND RETAIN.
We plan to market and sell our application suite to SMBs. To grow our revenue
quickly, we must add new customers, sell additional services to existing
customers and encourage existing customers to renew their subscriptions.
However, selling to and retaining SMBs can be more difficult than selling to and
retaining large enterprises because SMB customers:
* are more price sensitive;
* are more difficult to reach with traditional marketing campaigns;
* have high churn rates in part because of the nature of their
businesses;
* may lack the staffing to benefit fully from our application suite's
rich feature set;
* often require higher sales, marketing and support expenditures by
vendors that sell to them per revenue dollar; and
* are more vulnerable to negative changes in the general economic
environment that may disrupt continued business operations.
If we are unable to cost-effectively market and sell our service to our target
customers, our ability to grow our revenue quickly and become profitable will be
harmed.
5) OUR LIMITED OPERATING HISTORY MAKES IT DIFFICULT TO EVALUATE OUR CURRENT
BUSINESS AND FUTURE PROSPECTS, AND MAY INCREASE THE RISK OF YOUR
INVESTMENT.
Our company has been in existence since early 2008. Our limited operating
history may make it difficult to evaluate our current business and our future
prospects. We have encountered and will continue to encounter risks and
difficulties frequently experienced by growing companies in rapidly changing
industries. If we do not address these risks successfully, our business will be
harmed, which may increase the risk to an investment in our securities.
6) OUR BUSINESS DEPENDS SUBSTANTIALLY ON CUSTOMERS RENEWING, UPGRADING AND
EXPANDING THEIR SUBSCRIPTIONS FOR OUR SERVICES. ANY DECLINE IN OUR CUSTOMER
RENEWALS, UPGRADES AND EXPANSIONS WOULD HARM OUR FUTURE OPERATING RESULTS.
We will sell our application suite pursuant to service agreements that have a
specific term and are not automatically renewable. Our ability to grow will be
dependent in part on customers purchasing additional subscriptions after the
term of their initial subscriptions. Our customers' renewal rates may decline or
fluctuate because of several factors, including their satisfaction or
dissatisfaction with our services, the prices of our services, the prices of
services offered by our competitors or reductions in our customers' spending
levels. If our customers do not renew their subscriptions for our services,
renew on less favorable terms, or do not purchase additional functionality or
subscriptions, our revenue may grow more slowly than expected or decline and our
profitability and gross margins may be harmed.
7
7) IF OUR SECURITY MEASURES ARE BREACHED AND UNAUTHORIZED ACCESS IS OBTAINED
TO A CUSTOMER'S DATA, WE MAY INCUR SIGNIFICANT LIABILITIES, OUR SERVICE MAY
BE PERCEIVED AS NOT BEING SECURE AND CUSTOMERS MAY CURTAIL OR STOP USING
OUR SUITE.
The services we plan to offer will involve the storage of large amounts of our
customers' sensitive and proprietary information. If our security measures are
breached as a result of third-party action, employee error, malfeasance or
otherwise, and someone obtains unauthorized access to our customers' data, we
could incur significant liability to our customers and to individuals or
businesses whose information was being stored by our customers, our business may
suffer and our reputation will be damaged. Because techniques used to obtain
unauthorized access to, or to sabotage, systems change frequently and generally
are not recognized until launched against a target, we may be unable to
anticipate these techniques or to implement adequate preventive measures. If an
actual or perceived breach of our security occurs, the market perception of the
effectiveness of our security measures could be harmed and we could lose sales
and customers. We do not have, and are likely not to have for the foreseeable
future, insurance that will adequately cover any liability to a customer under
these circumstances.
8) THE MARKET FOR OUR SERVICES IS INTENSELY COMPETITIVE, AND IF WE DO NOT
COMPETE EFFECTIVELY, OUR OPERATING RESULTS MAY BE HARMED.
The markets for online inventory solutions are intensely competitive and rapidly
changing with relatively low barriers to entry. With the introduction of new
technologies and market entrants, we expect competition to intensify in the
future. In addition, pricing pressures and increased competition generally could
result in reduced sales, reduced margins or the failure of our service to
achieve or maintain more widespread market acceptance. We expect to compete to
sell our application suite against existing systems that our potential customers
have already made significant expenditures to install. Competition in our market
is based principally upon service breadth and functionality; service
performance, security and reliability; ability to tailor and customize services
for a specific company, vertical or industry; ease of use of the service; speed
and ease of deployment, integration and configuration; total cost of ownership,
including price and implementation and support costs; professional services
implementation; and financial resources of the vendor.
Many of our actual and potential competitors enjoy substantial competitive
advantages over us, such as greater name recognition, longer operating
histories, more varied products and services and larger marketing budgets, as
well as substantially greater financial, technical and other resources. In
addition, many of our competitors have established marketing relationships and
access to larger customer bases, and have major distribution agreements with
consultants, system integrators and resellers. If we are not able to compete
effectively, our operating results will be harmed.
9) THE MARKET FOR OUR SERVICES IS PRICE SENSITIVE, AND IF THE PRICES WE CHARGE
FOR OUR SERVICES ARE UNACCEPTABLE TO OUR CUSTOMERS, OUR OPERATING RESULTS
WILL SUFFER.
Many of our potential customers are price sensitive, and we have limited
experience with respect to determining the appropriate prices for our services.
As the market for our services matures, or as new competitors introduce new
products or services that compete with ours, we may be unable to renew our
agreements with existing customers or attract new customers at the same price or
based on the same pricing model that we may have previously used. As a result,
it is possible that competitive dynamics in our market may require us to change
our pricing model or reduce our prices, which could negatively impact our
revenue, gross margin and operating results.
10) IF WE DO NOT EFFECTIVELY BUILD AND TRAIN OUR DIRECT SALES FORCE AND OUR
SERVICES AND SUPPORT TEAMS, OUR FUTURE OPERATING RESULTS WILL SUFFER.
We plan to build our direct sales force and our services and support teams both
domestically and internationally to increase our customer base and revenue. We
believe that there is significant competition for direct sales, service and
support personnel with the skills and technical knowledge that we require. Our
ability to achieve significant revenue growth will depend, in large part, on our
success in recruiting, training and retaining sufficient numbers of personnel to
8
support our growth. New hires require significant training and, in most cases,
take significant time before they achieve full productivity. Our recent hires
and planned hires may not become as productive as we expect, and we may be
unable to hire or retain sufficient numbers of qualified individuals in the
markets where we do business. If our efforts to build a direct sales force are
not successful or do not generate a corresponding increase in revenue, our
business will be harmed.
11) IF WE ARE UNABLE TO DEVELOP NEW SERVICES OR SELL OUR SERVICES INTO NEW
MARKETS, OUR REVENUE WILL NOT GROW AS EXPECTED.
Our ability to attract new customers and increase revenue from existing
customers will depend in large part on our ability to enhance and improve our
existing application suite and to introduce new services and sell into new
markets. The success of any enhancement or new service depends on several
factors, including the timely completion, introduction and market acceptance of
the enhancement or service. Any new service we develop or acquire may not be
introduced in a timely or cost-effective manner and may not achieve the broad
market acceptance necessary to generate significant revenue. Any new markets,
into which we attempt to sell our application, including new vertical markets
and new countries or regions, may not be receptive. If we are unable to
successfully develop or acquire new services, enhance our existing services to
meet customer requirements or sell our services into new markets, our revenue
will not grow as expected.
12) BECAUSE WE PLAN TO DEVELOP A GLOBAL ORGANIZATION AND OUR LONG-TERM SUCCESS
DEPENDS, IN PART, ON OUR ABILITY TO EXPAND THE SALES OF OUR SERVICES TO
CUSTOMERS LOCATED OUTSIDE OF THE UNITED STATES, OUR BUSINESS IS SUSCEPTIBLE
TO RISKS ASSOCIATED WITH INTERNATIONAL SALES AND OPERATIONS.
We currently maintain offices outside of the United States and plan to have
sales personnel or independent consultants in several countries throughout the
world. Managing a global organization will be difficult, time consuming and
expensive. In addition, conducting international operations subjects us to risks
that not generally faced in the United States. These risks include:
* localization of our services, including translation into foreign
languages and adaptation for local practices and regulatory
requirements;
* lack of familiarity with and unexpected changes in foreign regulatory
requirements;
* longer accounts receivable payment cycles and difficulties in
collecting accounts; receivable;
* difficulties in managing and staffing international operations;
* fluctuations in currency exchange rates;
* potentially adverse tax consequences, including the complexities of
foreign value added tax systems and restrictions on the repatriation
of earnings;
* dependence on certain third parties, including channel partners with
whom we do not have extensive experience;
* the burdens of complying with a wide variety of foreign laws and legal
standards;
* increased financial accounting and reporting burdens and complexities;
* political, social and economic instability abroad, terrorist related
risks and security concerns in general; and
* reduced or varied protection for intellectual property rights in some
countries.
Operating in international markets also requires significant management
attention and financial resources. The investment and additional resources
required to establish operations and manage growth in other countries may not
produce desired levels of revenue or profitability.
9
13) ASSERTIONS BY A THIRD PARTY THAT WE INFRINGE ITS INTELLECTUAL PROPERTY,
WHETHER SUCCESSFUL OR NOT, COULD SUBJECT US TO COSTLY AND TIME-CONSUMING
LITIGATION OR EXPENSIVE LICENSES.
The software and technology industries are characterized by the existence of a
large number of patents, copyrights, trademarks and trade secrets and by
frequent litigation based on allegations of infringement or other violations of
intellectual property rights. As we face increasing competition and become a
publicly traded company, the possibility of intellectual property rights claims
against us may grow. Our technologies may not be able to withstand any
third-party claims or rights against their use. Additionally, although we have
licensed from other parties proprietary technology covered by patents, we cannot
be certain that any such patents will not be challenged, invalidated or
circumvented. Furthermore, many of our service agreements require us to
indemnify our customers for certain third-party intellectual property
infringement claims, which could increase our costs as a result of defending
such claims and may require that we pay damages if there were an adverse ruling
related to any such claims. These types of claims could harm our relationships
with our customers, may deter future customers from subscribing to our services
or could expose us to litigation for these claims. Even if we are not a party to
any litigation between a customer and a third party, an adverse outcome in any
such litigation could make it more difficult for us to defend our intellectual
property in any subsequent litigation in which we are a named party.
Any intellectual property rights claim against us or our customers, with or
without merit, could be time-consuming, expensive to litigate or settle and
could divert management attention and financial resources. An adverse
determination also could prevent us from offering our suite to our customers and
may require that we procure or develop substitute services that do not infringe.
For any intellectual property rights claim against us or our customers, we may
have to pay damages or stop using technology found to be in violation of a third
party's rights. We may have to seek a license for the technology, which may not
be available on reasonable terms, if at all, may significantly increase our
operating expenses or may require us to restrict our business activities in one
or more respects. As a result, we may also be required to develop alternative
non-infringing technology, which could require significant effort and expense.
14) MATERIAL DEFECTS OR ERRORS IN THE SOFTWARE WE USE TO DELIVER OUR SERVICES
COULD HARM OUR REPUTATION, MAY CAUSE US TO BECOME LIABLE TO OUR CUSTOMERS,
MAY RESULT IN THE LOSS OF EXISTING CUSTOMERS, OR MAY RESULT IN A
SIGNIFICANT COSTS TO US AND IMPAIR OUR ABILITY TO SELL OUR SERVICES.
The software applications underlying our services are inherently complex and may
contain material defects or errors, particularly when first introduced or when
new versions or enhancements are released. We have from time to time found
defects in our service, and new errors in our existing service may be detected
in the future. Any defects that cause interruptions to the availability of our
services could result in:
* a reduction in sales or delay in market acceptance of our services;
* sales credits or refunds to our customers;
* loss of existing customers and difficulty in attracting new customers;
* diversion of development resources;
* harm to our reputation; and
* increased warranty and insurance costs.
Since customers that will use our suite will do so to manage critical aspects of
their business, any errors, defects, disruptions in service or other performance
problems with our suite, whether in connection with the day-to-day operation of
our suite, upgrades or otherwise, could damage our customers' businesses. Any
errors, defects, disruptions in service or other performance related issues
regarding our suite may result in customers electing to terminate or to not
renew any existing subscriptions, or delay or withhold payment to us which may
result in a significant loss for the Company. Customers may also make warranty
claims against us, which could result in an increase in our provision for
doubtful accounts, an increase in collection cycles for accounts receivable or
costly litigation. We do not maintain and do not expect to maintain in the
foreseeable future, insurance to adequately cover these risks.
10
15) GOVERNMENT REGULATION OF THE INTERNET AND E-COMMERCE IS EVOLVING, AND
UNFAVORABLE CHANGES OR OUR FAILURE TO COMPLY WITH REGULATIONS COULD HARM
OUR BUSINESS AND OPERATING RESULTS.
As Internet commerce continues to evolve, increasing regulation by federal,
state or foreign agencies may become more likely. For example, the need for
increased regulation in the area of data privacy, and laws and regulations
applying to the solicitation, collection, processing or use of personal or
consumer information has been suggested by a number of politicians and if
enacted could affect our customers' ability to use and share data, potentially
reducing demand for ERP, CRM and e-commerce solutions and restricting our
ability to store, process and share our customers' data. Any regulation imposing
greater fees for Internet use or restricting information exchange over the
Internet could result in a decline in the use of the Internet and the viability
of Internet-based services, which could harm our business and operating results.
16) WE RELY ON OUR MANAGEMENT TEAM AND NEED ADDITIONAL PERSONNEL TO GROW OUR
BUSINESS, AND THE LOSS OF ONE OR MORE KEY EMPLOYEES OR OUR INABILITY TO
ATTRACT AND RETAIN QUALIFIED PERSONNEL COULD HARM OUR BUSINESS.
Our success and future growth depends to a significant degree on the skills and
continued services of our management team, especially Ronald C. Dela Cruz, our
President. Our future success also depends on our ability to attract, retain and
motivate highly skilled technical, managerial, sales, marketing and service and
support personnel, including members of our management team. Competition for
sales, marketing and technology development personnel is particularly intense in
the software and technology industries. As a result, we may be unable to
successfully attract or retain qualified personnel. Our inability to attract and
retain the necessary personnel could harm our business. We have no employment
agreement or insurance policy insuring the life of our president and thus we are
at risk should he become incapacitated, die, or otherwise voluntarily leave our
employ.
17) BECAUSE OUR DIRECTORS AND OFFICERS OWN 70% OF OUR OUTSTANDING COMMON STOCK,
THEY CAN EXERT SIGNIFICANT INFLUENCE OVER CORPORATE DECISIONS THAT MAY BE
DISADVANTAGEOUS TO MINORITY SHAREHOLDERS.
Our directors and officer collectively own approximately 70% of the outstanding
shares of our common stock. Accordingly, they can exert significant influence in
determining the outcome of all corporate transactions or other matters,
including the election of directors, mergers, consolidations, the sale of all or
substantially all of our assets, and a change in control. The interests of our
directors and officers may differ from the interests of our other shareholders
and thus result in corporate decisions that are disadvantageous to our other
shareholders.
18) CURRENTLY, THERE IS NO PUBLIC MARKET FOR OUR SECURITIES, AND THERE IS NO
ASSURANCE THAT ANY PUBLIC MARKET WILL EVER DEVELOP OR THAT OUR COMMON STOCK
WILL BE QUOTED FOR TRADING AND, EVEN IF QUOTED, THAT A VIABLE, LIQUID
MARKET WITH LOW VOLATILITY WILL DEVELOP.
Currently, our common stock is not listed on any public market, exchange, or
quotation system. Although we are taking steps to enable our common stock to be
publicly traded, a market for our common stock may never develop. We currently
plan to apply for quotation of our common stock on the Over the Counter Bulletin
Board (the "OTC Bulletin Board") upon the effectiveness of the registration
statement of which this prospectus forms a part. However, our shares may never
be traded on the OTC Bulletin Board or if traded, a viable public market may not
materialize. Even if we are successful in developing a public market, there may
not be enough liquidity in such market to enable shareholders to sell their
stock. If our common stock is not quoted on the OTC Bulletin Board or if a
viable public market for our common stock does not develop, investors may not be
able to re-sell the shares of our common stock that they have purchased,
rendering their shares effectively worthless and resulting in a complete loss of
their investment.
11
We are planning to identify a market maker to file an application with the
Financial Industry Regulatory Authority, Inc. ("FINRA") on our behalf so that we
may quote our shares of common stock on the OTC Bulletin Board (which is
maintained by the FINRA) commencing upon the effectiveness of our registration
statement of which this prospectus is a part. We cannot assure you that such
market maker's application will be accepted by the FINRA. We are not permitted
to file such application on our own behalf. If the application is accepted,
there can be no assurances as to whether any market for our shares will develop
or the prices at which our common stock will trade. If the application is
accepted, we cannot predict the extent to which investor interest in us will
lead to the development of an active, liquid trading market. Active trading
markets generally result in lower price volatility and more efficient execution
of buy and sell orders for investors.
In addition, our common stock is unlikely to be followed by any market analysts,
and there may be few institutions acting as market makers for the common stock.
Either of these factors could adversely affect the liquidity and trading price
of our common stock. Until our common stock is fully distributed and an orderly
market develops in our common stock, if ever, the price at which it trades is
likely to fluctuate significantly. Prices for our common stock will be
determined in the marketplace and may be influenced by many factors, including
the depth and liquidity of the market for shares of our common stock,
developments affecting our business, including the impact of the factors
referred to elsewhere in these Risk Factors, investor perception of the Company,
and general economic and market conditions. No assurances can be given that an
orderly or liquid market will ever develop for the shares of our common stock.
19) BECAUSE WE WILL BE SUBJECT TO "PENNY STOCK" RULES ONCE OUR SHARES ARE
QUOTED ON THE OTC BULLETIN BOARD, THE LEVEL OF TRADING ACTIVITY IN OUR
STOCK MAY BE REDUCED.
Broker-dealer practices in connection with transactions in "penny stocks" are
regulated by penny stock rules adopted by the Securities and Exchange
Commission. Penny stocks generally are equity securities with a price of less
than $5.00 (other than securities registered on some national securities
exchanges or quoted on NASDAQ). 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 that 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, if the broker-dealer is the sole market
maker, the broker-dealer must disclose this fact and the broker-dealer's
presumed control over the market, and monthly account statements showing the
market value of each penny stock held in the customer's account. In addition,
broker-dealers who sell these securities to persons other than established
customers and "accredited investors" 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. Consequently, these
requirements may have the effect of reducing the level of trading activity, if
any, in the secondary market for a security subject to the penny stock rules,
and investors in our common stock may find it difficult to sell their shares.
20) WE MAY BE EXPOSED TO POTENTIAL RISKS RESULTING FROM NEW REQUIREMENTS UNDER
SECTION 404 OF THE SARBANES-OXLEY ACT OF 2002.
Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, we will be required,
beginning with our fiscal year ending July 31, 2010, to include in our annual
report our assessment of the effectiveness of our internal control over
financial reporting as of the end of fiscal 2010. Furthermore, our independent
registered public accounting firm will be required to attest to whether our
assessment of the effectiveness of our internal control over financial reporting
is fairly stated in all material respects and separately report on whether it
believes we have maintained, in all material respects, effective internal
control over financial reporting as of December 31, 2009. We have not yet begun
our assessment of the effectiveness of our internal control over financial
reporting and expect to incur additional expenses and diversion of management's
time as a result of performing the system and process evaluation, testing and
remediation required in order to comply with the management certification and
auditor attestation requirements. Further, implementing any appropriate changes
to our internal controls may distract our officers and employees, entail
substantial costs to modify our existing processes and take a significant amount
12
of time to complete. Also, during the course of our testing, we may identify
other deficiencies that we may not be able to remediate in time to meet the
deadline imposed by the Sarbanes-Oxley Act for compliance with the requirements
of Section 404. In addition, if we fail to achieve and maintain the adequacy of
our internal controls, as such standards are modified, supplemented or amended
from time to time, we may not be able to ensure that we can conclude on an
ongoing basis that we have effective internal controls over financial reporting
in accordance with Section 404 of the Sarbanes-Oxley Act. Moreover, effective
internal controls, particularly those related to revenue recognition, are
necessary for us to produce reliable financial reports and are important to help
prevent financial fraud. If we cannot provide reliable financial reports or
prevent fraud, our business and operating results could be harmed, investors
could lose confidence in our reported financial information, and the trading
price of our common stock, if a market ever develops, could drop significantly.
ITEM 2. PROPERTIES.
EXECUTIVE OFFICES
We currently maintain our corporate office at 8th Floor-200 South Virginia
Street, Reno, NV, 89501. We pay a monthly rent of $100 for this space.
ITEM 3. LEGAL PROCEEDINGS.
There are no pending, nor to our knowledge threatened, legal proceedings against
us.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of our security holders during the fourth
quarter of fiscal year 2009.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES.
MARKET FOR SECURITIES
Our Common Stock is traded on the over-the-counter market and quoted on the
OTCBB under the symbol "NTVS" On July 31, 2009, the closing price for our Common
Stock as reported on the OTCBB was unavailable as our Common Stock has not
traded.
The high and the low bid prices for our Common Stock is based on inter-dealer
prices, without retail mark-up, markdown or commission, and may not represent
actual transactions.
The table below sets forth the range of high and low bid information for our
Common Shares as quoted on the OTCBB for each of the quarters during the fiscal
year ended July 31, 2010 (no quotes are available for the previous fiscal year
as our stock has not traded ):
For the Fiscal Year Ended July 31, 2010
For the Quarter ended High Low
--------------------- ---- ---
October 31 N/A N/A
January 31 N/A N/A
April 30 $0.07 $0.07
July 31 N/A N/A
13
HOLDERS OF OUR COMMON STOCK
On November 15, 2010, the shareholders' list of our common stock showed 34
registered shareholder and 2,140,000 shares outstanding.
DIVIDEND POLICY
We have not paid any cash dividends on our common stock and have no present
intention of paying any dividends on the shares of our common stock. Our future
dividend policy will be determined from time to time by our board of directors.
Securities Authorized for Issuance under Equity Compensation Plans
As of July 31, 2010, we had not adopted an equity compensation plan and had not
granted any stock options.
Recent Sales of Unregistered Securities
During the fiscal year ended July 31, 2010 we have not sold any equity
securities not registered under the Securities Act.
Purchases of Equity Securities by the Issuer and Affiliated Purchases
During each month within the fourth quarter of the fiscal year ended July 31,
2008, neither we nor any "affiliated purchaser," as that term is defined in Rule
10b-18(a)(3) under the Exchange Act, repurchased any of our Common Stock or
other securities.
ITEM 6. SELECTED FINANCIAL DATA.
Not Applicable.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION.
The following discussion should be read in conjunction with our audited
financial statements and the related notes that 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. Factors that
could cause or contribute to such differences include those discussed below and
elsewhere in this annual report.
Our financial statements are stated in United States dollars and are prepared in
accordance with United States generally accepted accounting principles.
APPLICATION OF CRITICAL ACCOUNTING ESTIMATES
The preparation of financial statements in conformity with United States
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 year.
The more significant areas requiring the use of estimates include asset
impairment, stock-based compensation, and future income tax amounts. Management
bases its estimates on historical experience and on other assumptions considered
to be reasonable under the circumstances. However, actual results may differ
from the estimates.
ACCOUNTING BASIS
These financial statements are prepared on the accrual basis of accounting in
conformity with accounting principles generally accepted in the United States of
America.
14
FINANCIAL INSTRUMENTS
The Company's financial instruments consist of cash, prepaid expenses, accounts
payable and an amount due to stockholder. The amount due to stockholder is non
interest-bearing. It is management's opinion that the Company is not exposed to
significant interest, currency or credit risks arising from its other financial
instruments and that their fair values approximate their carrying values except
where separately disclosed.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles of the United States 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 year.
The more significant areas requiring the use of estimates include asset
impairment, stock-based compensation, and future income tax amounts. Management
bases its estimates on historical experience and on other assumptions considered
to be reasonable under the circumstances. However, actual results may differ
from the estimates.
LOSS PER SHARE
Net income (loss) per common share is computed based on the weighted average
number of common shares outstanding and common stock equivalents, if not
anti-dilutive. The Company has not issued any potentially dilutive common
shares.
Basic loss per share is calculated using the weighted average number of common
shares outstanding and the treasury stock method is used to calculate diluted
earnings per share. For the years presented, this calculation proved to be
anti-dilutive.
DIVIDENDS
The Company has not adopted any policy regarding payment of dividends. No
dividends have been paid during the period shown.
INCOME TAXES
The Company provides for income taxes using an asset and liability approach.
Deferred tax assets are reduced 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. No provision for income taxes is
included in the statement due to its immaterial amount, net of the allowance
account, based on the likelihood of the Company to utilize the loss
carry-forward.
EXECUTIVE OVERVIEW
We were incorporated in the state of Nevada on February 8, 2008, under the name
NetVentory Solutions, Inc., and are engaged in providing online inventory
services to small and medium sized companies. Our goal is to offer comprehensive
inventory management and product fulfillment services to our customers. Our
target clientele will include small to medium sized business owners who demand
convenient and cost effective ways to monitor and control their company's
inventory.
15
In order to satisfy global demand for online inventory services, we plan to
develop a network of international and domestic resellers, and also retain a
foreign sales force will manage various call centers, which will develop client
networks and contact potential customers.
As the popularity and utility of the Internet as a business tool continues to
increase, we plan to capitalize on the continually maturing marketplace for
online inventory management services. Automated inventory services are becoming
an increasingly necessary tool to reduce costs and increase productivity. From
scanning the bar codes on products stored in warehouses and storage bins, to
tracking the cost of goods sold to customers, inventory management is becoming
an essential part of everyday life for many businesses.
We believe that our company has a strategic advantage over our competition
because our customers will have access to a protected local copy of their
inventory at their premises to which they can refer to in the event of a failure
in Internet connectivity. By granting our customers a local copy of their
inventory that is readily available, our customers will have the ability to
continue with a project such as an inventory count (despite the lack of Internet
service), without disruptions. In addition, once Internet connection is
restored, the local copy will automatically synch with the client's online
inventory system, updating any changes that may have occurred during the
interruption. We believe our unique technology will find a comfortable niche in
the online inventory system business, and will continue to refine our product
and related services in order to meet the needs of small and medium size
businesses.
PLAN OF OPERATION
O Our plan of operation for the 12 months following the date of this prospectus
is to focus on developing a strong network of international and domestic
resellers who will offer our online inventory management services to small and
medium sized companies. Initially, the majority of our revenue will come from
the sales contracts made by the international and domestic resellers. We
anticipate that a portion of our revenue will also come from sales to direct
subscribers of our software. We feel that our marketing strategy of developing
an international and domestic network of resellers will bring us long term
profitability and allow us to grow the business over time.
Over the next 12 months, we anticipate spending approximately $20,000 for
business operations. The budget includes all anticipated costs associated with
technological requirements, professional fees-which include the filing of this
registration statement and future compliance with reporting obligations,
marketing expenses, and also various expenses related to maintaining an office
space.
During this first year of operation, our management team will contribute to the
long-term growth and success of the business by donating their time without
charge to the business. Directors will spend at least 25 to 30 hours per week on
company business.
OFF BALANCE SHEET TRANSACTIONS
We have had no off balance sheet transactions.
SIGNIFICANT EQUIPMENT
We do not intend to purchase any significant equipment for the next twelve
months.
RESULTS OF OPERATIONS
REVENUES
We had no revenues for the period from February 8, 2008 (date of inception),
through July 31, 2010.
16
EXPENSES
Our expenses for the twelve month periods ended July 31, 2010 and 2009, were
$36,158 and $33,714, respectively. During the period from February 8, 2008 (date
of inception), through July 31, 2010, we incurred expenses of $77,059. These
expenses were comprised primarily of office rent, legal expenses, accounting
expenses, SEC filing fees, transfer agent fees, as well as bank fees.
NET INCOME (LOSS)
Our net loss for the twelve-month periods ended July 31, 2010, and 2009, were
$36,158 and $33,714, respectively. During the period from February 8, 2008 (date
of inception), through July 31, 2010, we incurred a net loss of $77,059. This
loss consisted of office rent, legal expenses, accounting expenses, SEC filing
fees, transfer agent fees, as well as bank fees. Since inception, we have sold
2,140,000 shares of common stock.
PURCHASE OR SALE OF EQUIPMENT
We do not expect to purchase or sell any plant or significant equipment.
LIQUIDITY AND CAPITAL RESOURCES
Our balance sheet as of July 31, 2010, reflects assets of $237 in the form of
cash and a website. Since inception, we have sold 2,140,000 shares of common
stock with gross proceeds of $47,000. However, cash resources provided from our
capital formation activities have, from inception, been insufficient to provide
the working capital necessary to operate our Company.
We anticipate generating losses in the near term, and therefore, may be unable
to continue operations in the future. We require additional capital, and we may
have to issue debt or equity or enter into a strategic arrangement with a third
party to obtain such capital. There can be no assurance that additional capital
will be available to us. We currently have no agreements, arrangements, or
understandings with any person to obtain funds through bank loans, lines of
credit, or any other sources.
GOING CONCERN CONSIDERATION
Our registered independent auditors included an explanatory paragraph in their
report on the accompanying financial statements regarding concerns about our
ability to continue as a going concern. Our financial statements contain
additional note disclosures describing the circumstances that lead to this
disclosure by our registered independent auditors.
Due to this doubt about our ability to continue as a going concern, management
is open to new business opportunities which may prove more profitable to the
shareholders of Netventory Solutions, Inc. In the past, 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 unless we locate a prospective new business opportunity through which we
can pursue a new plan of operation. If we are unable to secure adequate capital
to implement our current business plan or to continue our acquisition efforts of
a new business opportunity, our business may fail and our stockholders may lose
some or all of their investment.
Should our original business plan fail, we anticipate that the selection of a
business opportunity in which to participate will be complex and without
certainty of success. Management believes that there are numerous firms in
various industries seeking the perceived benefits of being a publicly registered
corporation. Business opportunities may be available in many different
industries and 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. We can provide no assurance that we will be
able to locate compatible business opportunities.
17
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Silberstein Ungar, PLLC CPAs and Business Advisors
--------------------------------------------------------------------------------
Phone (248) 203-0080
Fax (248) 281-0940
30600 Telegraph Road, Suite 2175
Bingham Farms, MI 48025-4586
www.sucpas.com
To the Board of Directors
Netventory, Inc.
Reno, Nevada
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We have audited the accompanying balance sheets of Netventory Solutions, Inc., a
Nevada Corporation, as of July 31, 2010 and 2009 and the related statements of
operations, stockholders' equity (deficit), and cash flows for the period from
February 8, 2008 (date of inception) through July 31, 2010. 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 Netventory Solutions, Inc., as
of July 31, 2010 and 2009 and the results of its operations and cash flows for
the periods then ended and from February 8, 2008 (date of inception) through
July 31, 2010, in conformity with accounting principles generally accepted in
the United States of America.
The accompanying financial statements have been prepared assuming that
Netventory Solutions, Inc. will continue as a going concern. As discussed in
Note 8 to the financial statements, the Company has incurred losses from
operations, has negative working capital, and is in need of additional capital
to grow its operations so that it can become profitable. 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 8. The
accompanying financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/ Silberstein Ungar, PLLC
----------------------------------
Bingham Farms, Michigan
November 15, 2010
18
Netventory Solutions Inc.
(A Development Stage Company)
Balance Sheets
As of July 31, 2010 and 2009
July 31, July 31,
2010 2009
-------- --------
ASSETS
CURRENT ASSETS
Cash $ 237 $ 9,756
Prepaid expenses -- 5,610
-------- --------
Total Current Assets 237 15,366
-------- --------
OTHER ASSETS
Website 0 9,000
-------- --------
Total Other Assets 0 9,000
-------- --------
Total Assets $ 237 $ 24,366
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
LIABILITIES
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 15,929 $ 6,233
Due to stockholder 14,367 12,034
-------- --------
Total Liabilities 30,296 18,267
-------- --------
STOCKHOLDERS` EQUITY (DEFICIT) (NOTE 4)
Common stock authorized -
100,000,000 common shares with a par value of $0.001
Common stock issued and outstanding -
2,140,000 common shares 2,140 2,140
Additional paid in capital 44,860 44,860
Deficit accumulated during the development stage (77,059) (40,901)
-------- --------
Total Stockholders' Equity (Deficit) (30,059) 6,099
-------- --------
Total Liabilities and Stockholders' Equity (Deficit) $ 237 $ 24,366
======== ========
The accompanying notes are an integral part of these financial statements
19
Netventory Solutions Inc.
(A Development Stage Company)
Statements of Operations
For the Years Ended July 31, 2010 and 2009
For the Period from February 8, 2008 (Inception) to July 31, 2010
Period from
February 8, 2008
Year ended Year ended (Inception) to
July 31, July 31, July 31,
2010 2009 2010
----------- ----------- -----------
REVENUES $ -- $ -- $ --
----------- ----------- -----------
OPERATING EXPENSES
Professional 14,949 19,904 41,152
Consulting 3,250 1,000 4,250
Filing fees 8,810 12,261 21,072
General and administrative 149 549 1,585
----------- ----------- -----------
TOTAL OPERATING EXPENSES 27,158 33,714 68,059
----------- ----------- -----------
LOSS FROM OPERATIONS (27,158) (33,714) (57,960)
OTHER EXPENSES
Impairment charges 9,000 -- 9,000
----------- ----------- -----------
TOTAL OTHER EXPENSES 9,000 -- 9,000
----------- ----------- -----------
LOSS BEFORE PROVISON FOR INCOME TAXES (36,158) (33,714) (77,059)
PROVISION FOR INCOME TAXES -- -- --
----------- ----------- -----------
NET LOSS $ (36,158) $ (33,714) $ (77,059)
=========== =========== ===========
NET LOSS PER SHARE: BASIC AND DILUTED $ (0.00) $ (0.00)
=========== ===========
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 2,140,000 2,140,000
=========== ===========
The accompanying notes are an integral part of these financial statements
20
Netventory Solutions Inc.
(A Development Stage Company)
Statement of Stockholders' Equity (Deficit)
For the Period from February 8, 2008 (Inception) to July 31, 2010
Deficit
accumulated
Additional during the Total
Common Stock paid in development Equity
Shares Amount Capital Stage (Deficit)
------ ------ ------- ----- ---------
Inception, February 8, 2008 -- $ -- $ -- $ -- $ --
Shares issued to founder on
Feb 8, 2008 @$0.01 per share 1,500,000 1,500 13,500 -- 15,000
Private placement at $0.05 per
share on June 30, 2008 640,000 640 31,360 -- 32,000
Net loss for the period ended
July 31, 2008 -- -- -- (7,187) (7,187)
--------- ------ ------- -------- --------
Balance, July 31, 2008 2,140,000 2,140 44,860 (7,187) 39,813
Net loss for the year ended
July 31, 2009 -- -- -- (33,714) (33,714)
--------- ------ ------- -------- --------
Balance, July 31, 2009 2,140,000 2,140 44,860 (40,901) 6,099
Net loss for the year ended
July 31, 2010 -- -- -- (36,158) (36,158)
--------- ------ ------- -------- --------
Balance, July 31, 2010 2,140,000 $2,140 $44,860 $(77,059) $(30,059)
========= ====== ======= ======== ========
The accompanying notes are an integral part of these financial statements
21
Netventory Solutions Inc.
(A Development Stage Company)
Statements of Cash Flows
For the Years Ended July 31, 2010 and 2009 and
For the Period from February 8, 2008 (Inception) to July 31, 2010
Period from
February 8, 2008
Year ended Year ended (Inception) to
July 31, July 31, July 31,
2010 2009 2010
-------- -------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) $(36,158) $(33,714) $(77,059)
Adjustments to reconcile net loss to net
cash used in operating activities:
Impairment charges 9,000 -- 9,000
Changes in assets and liabilities:
(Increase) decrease in prepaid expenses 5,610 (5,610) --
Increase in accounts payable accrued expenses 9,696 6,233 8,363
-------- -------- --------
Net cash used by operating activities (11,852) (33,091) (49,597)
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Website development -- (9,000) (9,000)
-------- -------- --------
Net cash used by investing activities -- (9,000) (9,000)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of common stock -- -- 47,000
Increase in due to stockholder 2,333 11,084 12,034
-------- -------- --------
Net cash provided by financing activities 2,333 11,084 59,034
-------- -------- --------
Increase (decrease) in cash (9,519) (31,007) 237
Cash, beginning of period 9,756 40,763 --
-------- -------- --------
Cash, end of period $ 237 $ 9,756 $ 237
======== ======== ========
Supplemental Cash Flow Information:
Cash paid for interest $ 0 $ 0 $ 0
======== ======== ========
Cash paid for income taxes $ 0 $ 0 $ 0
======== ======== ========
The accompanying notes are an integral part of these financial statements
22
Netventory Solutions Inc.
(A Development Stage Company)
Notes to Financial Statements
July 31, 2010
NOTE 1 - NATURE OF OPERATIONS
Netventory Solutions Inc. ("the Company"), incorporated in the state of Nevada
on February 8, 2008, has business activities in inventory management solutions.
The company has limited operations and is considered to be in the development
stage.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
Development Stage Company
The accompanying financial statements have been prepared in accordance with
generally accepted accounting principles related to development-stage companies.
A development-stage company is one in which planned principal operations have
not commenced or if its operations have commenced, and there has been no
significant revenues there from.
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.
Accounting Basis
The Company uses the accrual basis of accounting and accounting principles
generally accepted in the United States of America ("GAAP" accounting). The
Company has adopted a July 31 fiscal year end.
Cash and Cash Equivalents
Netventory considers all highly liquid investments with maturities of three
months or less to be cash equivalents. At July 31, 2010 and 2009, the Company
had $237 and $9,756 of cash, respectively.
Fair Value of Financial Instruments
The Company's financial instruments consist of accounts payable - trade,
accounts payable - related party, accrued expenses, and notes payable - related
party. The carrying amount of these financial instruments approximates fair
value due either to length of maturity or interest rates that approximate
prevailing market rates unless otherwise disclosed in these financial
statements.
Income Taxes
Income taxes are computed using the asset and liability method. Under the asset
and liability method, deferred income tax assets and liabilities are determined
based on the differences between the financial reporting and tax bases of assets
and liabilities and are measured using the currently enacted tax rates and laws.
A valuation allowance is provided for the amount of deferred tax assets that,
based on available evidence, are not expected to be realized.
Use of Estimates
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 the financial statements and the
reported amount of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Revenue Recognition
The Company recognizes revenue when products are fully delivered or services
have been provided and collection is reasonably assured.
23
Netventory Solutions Inc.
(A Development Stage Company)
Notes to Financial Statements
July 31, 2010
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Basic Income (Loss) Per Share
Basic income (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, 2010.
Stock-Based Compensation
Stock-based compensation is accounted for at fair value in accordance with ASC
Topic 718. There has been no stock-based compensation issued during the period
from February 8, 2009 (date of inception to July 31, 2010 and the Company has
not adopted a stock option plan or granted any stock options in that period.
Recent Accounting Pronouncements
Netventory does not expect the adoption of recently issued accounting
pronouncements to have a significant impact on the Company's results of
operations, financial position or cash flow.
NOTE 3 - ACCRUED EXPENSES
Accrued expenses consisted of the following as of July 31, 2010 and 2009:
2010 2009
------- -------
Accrued accounting fees $ 4,330 $ 1,000
Accrued audit fees 3,700 3,500
Accrued legal fees 7,599 1,733
Accrued transfer fees 300 0
------- -------
Total Accrued Expenses $15,929 $ 6,233
======= =======
NOTE 4 - DUE TO STOCKHOLDER
The amount owing to stockholder is unsecured, non-interest bearing and has no
specific terms of repayment. During the year ended July 31, 2010, an additional
$2,333 was loaned to the company. The total amount due to the shareholder was
$14,367 as of July 31, 2010.
NOTE 5 - STOCKHOLDERS' EQUITY
Common Shares - Authorized
The company has 100,000,000 common shares authorized at a par value of $0.001
per share.
Common Shares - Issued and Outstanding
During the period ended July 31, 2008, the company issued 2,140,000 common
shares for total proceeds of $47,000.
There are 2,140,000 shares of common stock issued and outstanding as of July 31,
2010. As at July 31, 2010, the company has no warrants or options outstanding.
24
Netventory Solutions Inc.
(A Development Stage Company)
Notes to Financial Statements
July 31, 2010
NOTE 6 - INCOME TAXES
The Company provides for income taxes using an asset and liability approach for
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 currently.
Deferred tax assets are reduced 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. In the Company's opinion, it is
uncertain whether they will generate sufficient taxable income in the future to
fully utilize the net deferred tax asset. Accordingly, a valuation allowance
equal to the deferred tax asset has been recorded. The total deferred tax asset
is $16,953, which is calculated by multiplying a 22% estimated tax rate by the
cumulative NOL of $77,059.
NOTE 7 - RELATED PARTY TRANSACTION
As at July 31, 2010, there is a balance owing to a stockholder of the Company in
the amount of $14,367. See Note 4.
The officers and directors of the Company are involved in other business
activities and may, in the future, become involved in other business
opportunities that become available. They may face a conflict in selecting
between the Company and other business interests. The Company has not formulated
a policy for the resolution of such conflicts.
NOTE 8 - GOING CONCERN
The accompanying financial statements have been prepared assuming that the
company will continue as a going concern. As discussed in the notes to the
financial statements, the Company has no established source of revenue. This
raises substantial doubt about the Company's ability to continue as a going
concern. Without realization of additional capital, it would be unlikely for the
Company to continue as a going concern. The financial statements do not include
any adjustments that might result from this uncertainty.
The Company's activities to date have been supported by equity financing. It has
sustained losses in all previous reporting periods with an inception to date
loss of $77,059 as of July 31, 2010. Management continues to seek funding from
its shareholders and other qualified investors to pursue its business plan. In
the alternative, the Company may be amenable to a sale, merger or other
acquisition in the event such transaction is deemed by management to be in the
best interests of the shareholders.
NOTE 9 - SUBSEQUENT EVENTS
The Company has analyzed its operations subsequent to July 31, 2010 through
November 15, 2010 and has determined that it does not have any material
subsequent events to disclose in these in financial statements.
25
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
ITEM 9A. CONTROLS AND PROCEDURES.
DISCLOSURE CONTROLS AND PROCEDURES
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Our management is responsible for establishing and maintaining adequate internal
control over financial reporting. Internal control over financial reporting is
defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange
Act of 1934 as a process designed by, or under the supervision of, the company's
principal executive and principal financial officers and effected by the
company's board of directors, management and other personnel, to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
accounting principles generally accepted in the United States of America and
includes those policies and procedures that:
- Pertain to the maintenance of records that in reasonable detail
accurately and fairly reflect the transactions and dispositions of the
assets of the company;
- Provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance
with accounting principles generally accepted in the United States of
America and that receipts and expenditures of the company are being
made only in accordance with authorizations of management and
directors of the company; and
- Provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use or disposition of the company's
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate. All internal control systems,
no matter how well designed, have inherent limitations. Therefore, even those
systems determined to be effective can provide only reasonable assurance with
respect to financial statement preparation and presentation. Because of the
inherent limitations of internal control, there is a risk that material
misstatements may not be prevented or detected on a timely basis by internal
control over financial reporting. However, these inherent limitations are known
features of the financial reporting process. Therefore, it is possible to design
into the process safeguards to reduce, though not eliminate, this risk.
As of July 31, 2010, our principal executive officer and principal financial
officer assessed the effectiveness of our internal control over financial
reporting based on the criteria for effective internal control over financial
reporting established in Internal Control--Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission ("COSO") and
SEC guidance on conducting such assessments. Based on that evaluation, he
concluded that, during the period covered by this report, such internal controls
and procedures were not effective to detect the inappropriate application of US
GAAP rules as more fully described below. This was due to deficiencies that
existed in the design or operation of our internal controls over financial
reporting that adversely affected our internal controls and that may be
considered to be material weaknesses.
The matters involving internal controls and procedures that our principal
executive officer and principal financial officer considered to be material
weaknesses under the standards of the Public Company Accounting Oversight Board
were: (1) lack of a functioning audit committee due to a lack of a majority of
independent members and a lack of a majority of outside directors on our board
of directors, resulting in ineffective oversight in the establishment and
monitoring of required internal controls and procedures; (2) inadequate
segregation of duties consistent with control objectives; and (3) ineffective
26
controls over period end financial disclosure and reporting processes. The
aforementioned material weaknesses were identified by our principal executive
officer and principal financial officer in connection with the audit of our
financial statements as of July 31, 2010.
Our principal executive officer and principal financial officer believes that
the material weaknesses set forth in items (2) and (3) above did not have an
effect on our financial results. However, our principal executive officer and
principal financial officer believes that the lack of a functioning audit
committee and the lack of a majority of outside directors on our board of
directors result in ineffective oversight in the establishment and monitoring of
required internal controls and procedures, which could result in a material
misstatement in our financial statements in future periods.
This annual report does not include an attestation report of the Company's
registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by the Company's
registered public accounting firm pursuant to temporary rules of the SEC that
permit the Company to provide only the management's report in this annual
report.
As required by Rule 13a-15/15d-15 under the Securities and Exchange Act of 1934,
as amended (the "Exchange Act"), as of July 31, 2009, we carried out an
evaluation of the effectiveness of the design and operation of our disclosure
controls and procedures. This evaluation was carried out under the supervision
and with the participation of our management, our President (Principal Executive
Officer and Principal Financial Officer). Based upon the results of that
evaluation, our management has concluded that, as of July 31, 2009, our
disclosure controls and procedures were effective, in that they provide
reasonable assurance that material information related to our Company required
to be disclosed in the reports that we file or submit under the Exchange Act is
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 management to allow timely decisions on required disclosure.
MANAGEMENT'S REMEDIATION INITIATIVES
In an effort to remediate the identified material weaknesses and other
deficiencies and enhance our internal controls, we have initiated, or plan to
initiate, the following series of measures:
We will create a position to segregate duties consistent with control objectives
and will increase our personnel resources and technical accounting expertise
within the accounting function when funds are available to us. And, we plan to
appoint one or more outside directors to our board of directors who shall be
appointed to an audit committee resulting in a fully functioning audit committee
who will undertake the oversight in the establishment and monitoring of required
internal controls and procedures such as reviewing and approving estimates and
assumptions made by management when funds are available to us.
Management believes that the appointment of one or more outside directors, who
shall be appointed to a fully functioning audit committee, will remedy the lack
of a functioning audit committee and a lack of a majority of outside directors
on our Board.
We anticipate that these initiatives will be at least partially, if not fully,
implemented by December 31, 2010. Additionally, we plan to test our updated
controls and remediate our deficiencies by July 31, 2011.
CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING
There was no change in our internal controls over financial reporting that
occurred during the period covered by this report, which has materially
affected, or is reasonably likely to materially affect, our internal controls
over financial reporting.
ITEM 9B. OTHER INFORMATION.
None.
27
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE EXECUTIVE
OFFICER AND DIRECTORS.
Our officers and directors and their ages and positions are as follows:
Name Age Position
---- --- --------
Ronald C. Dela Cruz 34 President and Director
David Marby 29 Director
BIOGRAPHICAL INFORMATION
Set forth below is a brief description of the background and business experience
of our executive officer and director for the past five years.
RONALD C. DELA CRUZ, PRESIDENT AND BOARD MEMBER.
Mr. Dela Cruz is currently employed as a PhP software developer for CitizensSoft
Inc. in the Philippines where he has worked since February of 2007. Prior to
that he held a similar position as a PhP software developer at the Institute for
Popular Democracy where he worked on web based database management software
products beginning in 2005. In this role, Mr. Dela Cruz was involved in both the
software development and the migration to a web-based platform for users. Prior
to that, from 2002 to 2005, he worked as an independent software developer on
projects related to wireless, multimedia, web development and artificial
intelligence. Mr. Dela Cruz has worked extensively with Java, ASP, PhP, MySQL,
PostgreSQL and C++. Prior to working as a freelance developer he worked for UP
Diliman as a Graduate Research Assistant from June 2000 to April 2002 and at
Software Brewers Inc. in the Philippines from July 1997 to April 1999.
He graduated with a Bachelor's degree in Computer Science / Information
Technology from the Polytechnic University of the Philippines in April 1997.
Since then he has completed 30 units of credit towards his Masters degree in
Computer Science.
COMMITTEES OF THE BOARD OF DIRECTORS
To date, our Board of Directors has not established a nominating and governance
committee, a compensation committee, nor an audit committee.
CODE OF ETHICS
We currently do not have a Code of Ethics.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our
directors, executive officers, and stockholders holding more than 10% of our
outstanding common stock, to file with the Securities and Exchange Commission
initial reports of ownership and reports of changes in beneficial ownership of
our common stock. Executive officers, directors and greater-than-10%
stockholders are required by SEC regulations to furnish us with copies of all
Section 16(a) reports they file. To our knowledge, based solely on review of the
copies of such reports furnished to us for the period ended March 31, 2009, no
Section 16(a) reports required to be filed by our executive officers, directors
and greater-than-10% stockholders were not filed on a timely basis.
28
ITEM 11. EXECUTIVE COMPENSATION.
The particulars of compensation paid to the following persons during the fiscal
period ended July 31, 2010 are set out in the summary compensation table below:
* our Chief Executive Officer (Principal Executive Officer);
* our Chief Financial Officer (Principal Financial Officer);
* each of our three most highly compensated executive officers, other
than the Principal Executive Officer and the Principal Financial
Officer, who were serving as executive officers at the end of the
fiscal year ended July 31, 2010; and
* up to two additional individuals for whom disclosure would have been
provided under the item above but for the fact that the individual was
not serving as our executive officer at the end of the fiscal year
ended July 31, 2010;
(collectively, the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
Non-Equity Nonqualified
Incentive Deferred
Fiscal Year Stock Option Plan Compensation All Other
Ended Salary Bonus Awards Awards Compensation Earnings Compensation Total
Name July 31, ($) ($) ($) ($) ($) ($) ($) ($)
---- ----- ------ ----- ------ ------ ------------ -------- ------------ -----
Mr. Ronald C. Dela 2010 0 0 0 0 0 0 0 0
Cruz (1) 2009 0 0 0 0 0 0 0 0
Notes:
(1) Mr. Dela Cruz has been our President and a Director since we were
incorporated on February 8, 2008.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
Option Awards Stock Awards
---------------------------------------------------------------- ---------------------------------------------
Equity
Incentive
Equity Plan
Incentive Awards:
Plan Market or
Awards: Payout
Equity Number of Value of
Incentive Number Unearned Unearned
Plan Awards; of Market Shares, Shares,
Number of Number of Number of Shares Value of Units or Units or
Securities Securities Securities or Units Shares or Other Other
Underlying Underlying Underlying of Stock Units of Rights Rights
Unexercised Unexercised Unexercised Option Option That Stock That That That
Options Options Unearned Exercise Expiration Have Not Have Not Have Not Have Not
Name Exercisable(#) Unexercisable(#) Options(#) Price($) Date Vested(#) Vested($) Vested(#) Vested($)
---- -------------- ---------------- ---------- ----- ---- --------- --------- --------- ---------
Mr. Ronald -- -- -- -- -- -- -- -- --
C. Dela Cruz
29
OPTION GRANTS AND EXERCISES
There were no option grants or exercises by any of the executive officers named
in the Summary Compensation Table above.
EMPLOYMENT AGREEMENTS
We have not entered into employment and/or consultant agreements with our
Directors and officers.
COMPENSATION OF DIRECTORS
All directors receive reimbursement for reasonable out-of-pocket expenses in
attending board of directors meetings and for promoting our business. From time
to time we may engage certain members of the board of directors to perform
services on our behalf. In such cases, we compensate the members for their
services at rates no more favorable than could be obtained from unaffiliated
parties. Our directors have not received any compensation for the fiscal year
ended July 31, 2010.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS.
BENEFICIAL OWNERSHIP OF HOLDINGS
The table below sets forth the number and percentage of shares of our common
stock owned as of October 26, 2009, by the following persons: (i) stockholders
known to us who own 5% or more of our outstanding shares, (ii) each of our
Directors, and (iii) our officers and Directors as a group. Unless otherwise
indicated, each of the stockholders has sole voting and investment power with
respect to the shares beneficially owned.
Name and Address of Amount and Nature Percentage of
Title of Class Beneficial Owner (2) of Beneficial Ownership Class (1)
-------------- -------------------- ----------------------- ---------
Common Stock Mr. Ronald C. Dela Cruz 750,000 35.0%
Common Stock Mr. David Marby 750,000 35.0%
All officers as
a Group 1,500,000 70.0%
----------
(1) Based on 2,140,000 shares of our common stock outstanding.
30
CHANGES IN CONTROL
There are no existing arrangements that may result in a change in control of the
Company.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS.
The following table sets forth information regarding our equity compensation
plans.
Number of Securities to be Number of Securities
Issued Upon Exercise of Weighted-Average Exercise Remaining Available for
Outstanding Options, Price of Outstanding Options, Future Issuance Under
Warrants and Rights Warrants and Rights Equity Compensation Plans
Plan Category (a) (b) (excluding column (a))
------------- ------------------- ------------------- -------------------------
Equity Compensation Plans -- -- --
Approved by Security
Holders
Equity Compensation Plans Not -- -- --
Approved by Security Holders
Total -- -- --
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE.
Other than the transactions discussed below, we have not entered into any
transaction nor are there any proposed transactions in which any of our
Directors, executive officers, stockholders or any member of the immediate
family of any of the foregoing had or is to have a direct or indirect material
interest.
As at July 31, 2010, there is a balance owing to a stockholder of the Company in
the amount of $14,367.
The officers and directors of the Company are involved in other business
activities and may, in the future, become involved in other business
opportunities that become available. They may face a conflict in selecting
between the Company and other business interests. The Company has not formulated
a policy for the resolution of such conflicts.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
AUDIT FEES
For the year ended July 31, 2010, Maddox Ungar Silberstein, PLLC billed us for
$3,500 in audit fees.
REVIEW FEES
Maddox Ungar Silberstein, PLLC billed us $2,250 for reviews of our quarterly
financial statements in 2010 that are not reported under Audit Fees above.
TAX AND ALL OTHER FEES
We did not pay any fees to Maddox Ungar Silberstein, PLLC for tax compliance,
tax advice, tax planning or other work during our fiscal year ended July 31,
2010
31
PRE-APPROVAL POLICIES AND PROCEDURES
We have implemented pre-approval policies and procedures related to the
provision of audit and non-audit services. Under these procedures, our board of
directors pre-approves all services to be provided by Maddox Ungar Silberstein,
PLLC and the estimated fees related to these services.
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
Exhibit Description
------- -----------
3.1 Certificate of Incorporation of NetVentory Solutions, Inc.
(Attached as an exhibit to our Registration Statement on Form S-1
originally filed with the SEC on September 3, 2008 and incorporated
herein by reference.)
3.2 Bylaws. (Attached as an exhibit to our Registration Statement on
Form S-1 originally filed with the SEC on September 3, 2008 and
incorporated herein by reference.)
31.1 Certification of the Chief Executive and Chief Financial Officer
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1 Certification of Officers pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
the registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
NETVENTORY SOLUTIONS, INC.
By: /s/ Ronald C. Dela Cruz
----------------------------------
Ronald C. Dela Cruz
President and Director
(Principal Executive and Principal
Financial Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
the registrant and in the capacities indicated.
Signatures Title Date
---------- ----- ----
/s/ Ronald C. Dela Cruz President and Director November 15, 2010
------------------------------ (Principal Executive and
Ronald C. Dela Cruz Principal Financial Officer)
/s/ David Marby Director November 15, 2010
------------------------------
David Marby
33