UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended September 30, 2006
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[] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________ to __________
Commission File Number 1-32522
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Trafalgar Resources, Inc.
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(Exact name of registrant as specified in charter)
Utah 91-0974149
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State or other jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization
6867 South 700 West, Suite A, Midvale, Utah 84047
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (801) 748-1114
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Securities registered pursuant to section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None N/A
------------------ -----------------------------------------
Securities registered pursuant to section 12(g) of the Act:
Class "A" Voting Common Stock, no par value
-------------------------------------------
(Title of class)
Check whether the Issuer (1) filed all reports required to be filed by section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
(1) Yes [X] No [ ] (2) Yes[X] No [ ]
Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure will 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-KSB or any amendment to
this Form 10-KSB. [ ]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [X] No [ ]
State issuer's revenues for its most recent fiscal year: $-0-
State the aggregate market value of the voting stock held by nonaffiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of a specified date within the past 60
days: The Registrant's shares trade on the pink sheet with no ask and only a bid
price. The bid on December 26, 2006, was $1.55 giving the shares held by
non-affiliates a market value of $388,940.
As of December 26, 2006, the Registrant had 5,250,929 shares of common stock
issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the following documents if incorporated by reference and the part
of the Form 10-KSB (e.g., part I, part II, etc.) into which the document is
incorporated: (1) Any annual report to security holders; (2) Any proxy or other
information statement; and (3) Any prospectus filed pursuant to rule 424(b) or
(c) under the Securities Act of 1933: NONE
PART I
ITEM 1. DESCRIPTION OF BUSINESS
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
-------------------------------------------------
This periodic report contains certain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 with respect to
the financial condition, results of operations, business strategies, operating
efficiencies or synergies, competitive positions, growth opportunities for
existing products, plans and objectives of management. Statements in this
periodic report that are not historical facts are hereby identified as
"forward-looking statements."
BUSINESS
--------
The Company was incorporated under the laws of the state of Utah on October 25,
1972, under the name of Electronic Agricultural Machinery Development
Corporation. In 1974, the Company changed its name to Zenith Development
Corporation. In 1980, the Company changed its name to Alternative Energy
Resources, Inc. In 2004, the Company changed its name to Trafalgar Resources,
Inc.
Initially, the Company sought to develop and market inventions, including an
asparagus harvester, a hot water saving device and a gas alert signal.
Ultimately, none of the inventions were successful and they were abandoned. The
Company ceased to conduct any business and has not conducted any business during
the last three years.
Currently, the Company is in the process of investigating potential business
ventures which, in the opinion of management, will provide a source of eventual
profit to the Company. Such involvement may take many forms, including the
acquisition of an existing business or the acquisition of assets to establish
subsidiary businesses. All risks inherent in new and inexperienced enterprises
are inherent in the Company's business.
The Company is not currently conducting any business, nor has it conducted any
business for several years. Therefore, it does not possess products or services,
distribution methods, competitive business positions, or major customers. The
Company does not possess any unexpired patents or trademarks and any and all of
its licensing and royalty agreements from the inventions it sought to market in
the past have since expired, and are not currently valid. The Company does not
employ any employees.
The selection of a business opportunity in which to participate is complex and
risky. Additionally, as the Company has only limited resources, it may be
difficult to find good opportunities. There can be no assurance that the Company
will be able to identify and acquire any business opportunity which will
ultimately prove to be beneficial to the Company and its shareholders. The
Company will select any potential business opportunity based on management's
business judgment.
2
The activities of the Company are subject to several significant risks which
arise primarily as a result of the fact that the Company has no specific
business and may acquire or participate in a business opportunity based on the
decision of management which potentially could act without the consent, vote, or
approval of the Company's shareholders. The risks faced by the Company are
further increased as a result of its lack of resources and its inability to
provide a prospective business opportunity with significant capital.
ITEM 2. DESCRIPTION OF PROPERTIES
The Company owns no properties and utilizes space on a rent-free basis in the
office of its principal shareholder, Anthony Brandon Escobar. This arrangement
is expected to continue until such time as the Company becomes involved in a
business venture which necessitates its relocation, as to which no assurances
can be given. The Company has no agreements with respect to the maintenance or
future acquisition of the office facilities, however, if a successful
merger/acquisition is negotiated, it is anticipated that the office of the
Company will be moved to that of the acquired company.
The Company is not actively engaged in conducting any business. Rather, the
Company is in the process of investigating potential business ventures which, in
the opinion of management, will provide a source of eventual profit to the
Company. Therefore, the Company does not presently intend to invest in real
estate or real estate securities, nor has it formulated any investment policies
regarding investments in real estate, real estate mortgages, or securities of or
interests in persons engaged in real estate activities.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
No matters were submitted to a vote of shareholders of the Company during the
fourth quarter of the fiscal year ended September 30, 2006.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's common stock is quoted on the "Pink Sheets" under the symbol
"TFLG." Set forth below are the high and low bid prices for the Company's Common
Stock for the respective quarters. Although the Company's common stock is quoted
on the "Pink Sheets," it has traded sporadically with no real volume and there
is currently no ask price. Consequently, the information provided below may not
be indicative of the Company's common stock price under different conditions.
Quarter Ended High Bid Low Bid
------------- -------- -------
September 2006 $2.00 $1.50
June 2006 $2.00 $0.99
March 2006 $1.01 $0.05
December 2005 $1.01 $0.10
September 2005 $0.02 $0.02
June 2005 $0.02 $0.02
March 2005 $0.02 $0.02
December 2004 $0.02 $0.02
3
September 2004 $0.02 $0.02
June 2004 $0.02 $0.02
March 2004 $0.02 $0.02
At December 26, 2006, the bid price for the Company's Common Stock was $1.55
with no ask. All prices listed herein reflect inter-dealer prices, without
retail mark-up, mark-down or commissions and may not represent actual
transactions.
Since its inception, the Company has not paid any dividends on its Common Stock,
and the Company does not anticipate that it will pay dividends in the
foreseeable future. At December 26, 2006, the Company had approximately 232
shareholders.
Recent Sales of Unregistered Securities
The Company had no sales of securities in 2006. On May 14, 2004, the Company
authorized the sale of 5,000,000 shares of unregistered Class "A" Voting Common
Stock to the directors and officers of the Company for $40,000, as follows:
Anthony Brandon Escobar - 4,937,500 shares for $39,500 Sean Escobar - 31,250
shares for $250 Anthony Coletti - 31,250 shares for $250
This sale of the Company's common stock was for the purpose of raising operating
capital for the Company.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Plan of Operation.
The Company is in the process of investigating potential business ventures
which, in the opinion of management, will provide a source of eventual profit to
the Company. Such involvement may take many forms, including the acquisition of
an existing business or the acquisition of assets to establish subsidiary
businesses. The Company's management does not expect to remain involved as
management of any acquired business.
As the Company possesses limited funds, the Company will be extremely limited in
its attempts to locate potential business situations for investigation. The
Company intends to commence, on a limited basis, the process of investigating
possible merger and acquisition candidates, and believes that the Company's
status as a publicly-held corporation will enhance its ability to locate such
potential business ventures. No assurance can be given as to when the Company
may locate suitable business opportunities and such opportunities may be
difficult to locate; however, the Company intends to actively search for
potential business ventures for the foreseeable future.
Management anticipates that due to its lack of funds, and the limited amount of
its resources, the Company may be restricted to participation in only one
potential business venture. This lack of diversification should be considered a
substantial risk because it will not permit the Company to offset potential
losses from one venture against gains from another.
4
Business opportunities, if any arise, are expected to become available to the
Company principally from the personal contacts of its officers and directors.
While it is not expected that the Company will engage professional firms
specializing in business acquisitions or reorganizations, such firms may be
retained if funds become available in the future, and if deemed advisable.
Opportunities may thus become available from professional advisors, securities
broker-dealers, venture capitalists, members of the financial community, and
other sources of unsolicited proposals. In certain circumstances, the Company
may agree to pay a finder's fee or other form of compensation, including perhaps
one-time cash payments, payments based upon a percentage of revenues or sales
volume, and/or payments involving the issuance of securities, for services
provided by persons who submit a business opportunity in which the Company shall
decide to participate, although no contracts or arrangements of this nature
presently exist. The Company is unable to predict at this time the cost of
locating a suitable business opportunity.
The analysis of business opportunities will be undertaken by or under the
supervision of the Company's management, none of whom is a professional analyst
and none of whom have significant general business experience. Among the factors
which management will consider in analyzing potential business opportunities are
the available technical, financial and managerial resources; working capital and
financial requirements; the history of operation, if any; future prospects; the
nature of present and anticipated competition; potential for further research,
developments or exploration; growth and expansion potential; the perceived
public recognition or acceptance of products or services; name identification,
and other relevant factors.
It is not possible at present to predict the exact matter in which the Company
may participate in a business opportunity. Specific business opportunities will
be reviewed and, based upon such review, the appropriate legal structure or
method of participation will be decided upon by management. Such structures and
methods may include, without limitation, leases, purchase and sale agreements,
licenses, joint ventures; and may involve merger, consolidation or
reorganization. The Company may act directly or indirectly through an interest
in a partnership, corporation or reorganization. However, it is most likely that
any acquisition of a business venture the Company would make would be by
conducting a reorganization involving the issuance of the Company's restricted
securities. Such a reorganization may involve a merger (or combination pursuant
to state corporate statutes, where one of the entities dissolves or is absorbed
by the other), or it may occur as a consolidation, where a new entity is formed
and the Company and such other entity combine assets in the new entity. A
reorganization may also occur, directly or indirectly, through subsidiaries, and
there is no assurance that the Company would be the surviving entity. Any such
reorganization could result in loss of control of a majority of the shares. The
Company's present directors may be required to resign in connection with a
reorganization.
The Company may choose to enter into a venture involving the acquisition of or
merger with a company which does not need substantial additional capital but
desires to establish a public trading market of its securities. Such a company
may desire to consolidate its operations with the Company through a merger,
reorganization, asset acquisition, or other combination, in order to avoid
possible adverse consequences of undertaking its own public offering. (Such
consequences might include expense, time delays or loss of voting control.) In
the event of such a merger, the Company may be required to issue significant
additional shares, and it may be anticipated that control over the Company's
affairs may be transferred to others.
5
As part of their investigation of acquisition possibilities, the Company's
management may meet with executive officers of the business and its personnel;
inspect its facilities; obtain independent analysis or verification of the
information provided, and conduct other reasonable measures, to the extent
permitted by the Company's limited resources and management's limited expertise.
Generally, the Company intends to analyze and make a determination based upon
all available information without reliance upon any single factor as
controlling.
In all likelihood, the Company's management will be inexperienced in the areas
in which potential businesses will be investigated and in which the Company may
make an acquisition or investment. Thus, it may become necessary for the Company
to retain consultants or outside professional firms to assist management in
evaluating potential investments. The Company can give no assurance that it will
be able to find suitable consultants or managers. The Company has no policy
regarding the use of consultants, however, if management, in its discretion,
determines that it is in the best interests of the Company, management may seek
consultants to review potential merger or acquisitions candidates. There are
currently no contracts or agreements between any consultant and any companies
that are searching for "shell" companies with which to merge.
It may be anticipated that the investigation of specific business opportunities
and the negotiation, drafting and execution of relevant agreements, disclosure
documents and other instruments will require substantial management time and
attention, and substantial costs for accountants, attorneys and others. Should a
decision thereafter be made not to participate in a specific business
opportunity, it is likely that costs already expended would not be recoverable.
It is likely, in the event a transaction should eventually fail to be
consummated, for any reason, that the costs incurred by the Company would not be
recoverable. The Company's officers and directors are entitled to reimbursement
for all expenses incurred in their investigation of possible business ventures
on behalf of the Company, and no assurance can be given that if the Company has
available funds they will not be depleted in such expenses.
Based on current economic and regulatory conditions, management believes that it
is possible, if not probable, for a company like the Company, without assets or
many liabilities, to negotiate a merger or acquisition with a viable private
company. The opportunity arises principally because of the high legal and
accounting fees and the length of time associated with the registration process
of "going public". However, should any of these conditions change, it is very
possible that there would be little or no economic value for anyone taking over
control of the Company.
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
As of September 30, 2006, the Company had $4,911 in cash and liabilities of
$100. The Company has only incidental ongoing expenses primarily associated with
maintaining its corporate status and maintaining the Company's reporting
obligations to the Securities and Exchange Commission. Current management has
indicated a willingness to help support the Company's ongoing expenses through
the purchase of securities of the Company.
6
For the twelve months ended September 30, 2006, the Company had $10,198 in
expenses related to maintaining its corporate status, paying accounting and
legal fees. Expenses were higher than in previous years as the Company completed
audits and accounting work and filed documents with the Securities and Exchange
Commission to be a reporting issuer. Management anticipates only nominal
continuing expenses related to investigating business opportunities and legal
and accounting cost. For the year ended September 30, 2006, the Company had a
net loss of $10,298 compared to a loss of $12,314 for the year ended September
30, 2005.
Since inception the Company has not generated significant revenue, and it is
unlikely that any revenue will be generated until the Company locates a business
opportunity with which to acquire or merge. Management of the Company will be
investigating various business opportunities. These efforts may cost the Company
not only out of pocket expenses for its management but also expenses associated
with legal and accounting costs. There can be no guarantee that the Company will
receive any benefits from the efforts of management to locate business
opportunities.
Management does not anticipate employing any employees in the future until a
merger or acquisition can be accomplished. Management will continue to rely on
outside consultants to assist in its corporate filing requirements.
RESULTS OF OPERATIONS
---------------------
The Company has not had any revenue since inception. The Company continues to
suffer a small loss related to maintaining its corporate status and reporting
obligations.
ITEM 7. FINANCIAL STATEMENTS
The financial statements of the Company are set forth immediately following the
signature page to this Form 10-KSB.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
The Company has had no disagreements with its certified public accountants with
respect to accounting practices or procedures or financial disclosure.
a) On or about January 1, 2006, Smith & Company, the principal accountant for
Trafalgar Resources, Inc. (the "Company") changed its accounting practice from a
corporation to a professional limited liability company named Child, Van Wagoner
& Bradshaw, PLLC. As this is viewed as a separate legal entity, the Company
dismissed Smith & Company as principal accountant and engaged Child, Van Wagoner
& Bradshaw, PLLC, as the Company's principal accountant for the Company's fiscal
year ending September 30, 2006 and the interim periods for 2005 and 2006. The
decision to change principal accountants was approved by the Audit Committee of
the Company's Board of Directors and subsequently approved by the Board of
Directors.
None of the reports of Smith & Company, on the Company's financial statements
for either of the past two years or subsequent interim period contained an
adverse opinion or disclaimer of opinion, or was qualified or modified as to
uncertainty, audit scope or accounting principles.
7
There were no disagreements between the Company and Smith & Company, for the two
most recent fiscal years and any subsequent interim period through January 18,
2006 (date of dismissal) on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which, if not
resolved to the satisfaction of Smith & Company, would have caused them to make
reference to the subject matter of the disagreement in connection with its
report. Further, Smith & Company has not advised the Registrant that:
1) internal controls necessary to develop reliable financial statements did not
exist; or
2) information has come to the attention of Smith & Company which made it
unwilling to rely upon management's representations, or made it unwilling to be
associated with the financial statements prepared by management; or
3) the scope of the audit should be expanded significantly, or information has
come to the attention of Smith & Company that they have concluded will, or if
further investigated might, materially impact the fairness or reliability of a
previously issued audit report or the underlying financial statements, or the
financial statements issued or to be issued covering the fiscal year ended
September 30, 2005.
(b) On or about January 18, 2006 the Registrant engaged Child, Van Wagoner &
Bradshaw, PLLC as its principal accountant to audit the Registrant's
financial statements as successor to Smith & Company. During the Registrant's
two most recent fiscal years or subsequent interim period, the Registrant has
not consulted with the entity of Child, Van Wagoner & Bradshaw, PLLC regarding
the application of accounting principles to a specific transaction, either
completed or proposed, or the type of audit opinion that might be rendered on
the Registrant's financial statements, nor did the entity of Child, Van Wagoner
& Bradshaw, PLLC provide advice to the Registrant, either written or oral, that
was an important factor considered by the Registrant in reaching a decision as
to the accounting, auditing or financial reporting issue.
Further, during the Registrant's two most recent fiscal years or subsequent
interim period, the Registrant has not consulted the entity of Child, Van
Wagoner & Bradshaw, PLLC on any matter that was the subject of a disagreement or
a reportable event.
ITEM 8A. CONTROLS AND PROCEDURES
(a) Evaluation of disclosure controls and procedures. We believe our disclosure
controls and procedures (as defined in Sections 13a-14c and 15d- 14c of the
Securities Exchange Act of 1934, as amended) are adequate, based on our
evaluation of such disclosure controls and procedures within 90 days of this
filing.
(b) Changes in internal controls. There were no significant changes in our
internal controls or in other factors that could significantly affect these
controls subsequent to the date of their evaluation.
ITEM 8B. OTHER INFORMATION
None
8
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
The following table sets forth as of December 26, 2006, the name, age, and
position of each executive officer and director and the term of office of each
director of the Company.
Name Age Position Director of Officer Since
---- --- -------- -------------------------
Anthony B. Escobar 32 President and 2004
Director
Sean Escobar 26 Vice President and
Director 2004
Anthony Coletti 36 Secretary and
Treasure and Director 2004
Set forth below is certain biographical information regarding the Company's
executive officers and directors.
Anthony Brandon Escobar, age 32, has been a Director of the Company since March
5, 2004, and has been President of the Company since March 12, 2004. In addition
to his management position with the Company, he graduated from the University of
Utah in 2001 with a Bachelor of Science degree in Communications. Mr. Escobar
has been self-employed owning and operating Absolute Laboratories, Inc., that
distributes dietary supplements to health food stores and pharmacies. Mr.
Escobar is also a licensed real estate agent.
Sean Escobar, age 26, has been a Director of the Company since March 5, 2004,
and has been Vice President of the Company since March 12, 2004. In addition to
his management position with the Company, he has worked as an independent
contractor as a nutritional product sales representative primarily for Isagenix
International, Inc.
Anthony Coletti, age 36, has been a Director of the Company since March 5, 2004,
and has been Secretary and Treasurer of the Company since March 12, 2004. In
addition to his management position with the Company, he graduated from the
University of Utah in 1993 with a Bachelor of Arts degree in Marketing. Mr.
Coletti has worked in the field of ophthalmology as a Glaucoma Specialty Sales
Representative for Alcon Laboratories and has managed a territory including the
states of Utah, Idaho, Montana and Wyoming, where he has worked with over 240
physicians.
Anthony Brandon Escobar and Sean Escobar are brothers and Anthony Coletti is the
brother-in-law to Anthony Brandon Escobar and Sean Escobar.
Except as indicated below, to the knowledge of management, during the past five
years, no present or former director, or executive officer of the Company:
9
(1)filed a petition under the federal bankruptcy laws or any state
insolvency law, nor had a receiver, fiscal agent or similar officer appointed by
a court for the business or property of such person, or any partnership in which
he was a general partner at or within two years before the time of such filing,
or any corporation or business association of which he was an executive officer
at or within two years before the time of such filing;
(2)was convicted in a criminal proceeding or named subject of a pending
criminal proceeding (excluding traffic violations and other minor offenses);
(3)was the subject of any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining him from or otherwise limiting, the
following activities:
(i) acting as a futures commission merchant, introducing broker,
commodity trading advisor, commodity pool operator, floor broker, leverage
transaction merchant, associated person of any of the foregoing, or as an
investment advisor, underwriter, broker or dealer in securities, or as an
affiliate person, director or employee of any investment company, or engaging in
or continuing any conduct or practice in connection with such activity;
(ii) engaging in any type of business practice; or
(iii)engaging in any activity in connection with the purchase or sale
of any security or commodity or in connection with any violation of federal or
state securities laws or federal commodities laws;
(4) was the subject of any order, judgment, or decree, not subsequently
reversed, suspended, or vacated, of any federal or state authority barring,
suspending, or otherwise limiting for more than 60 days the right of such person
to engage in any activity described above under this Item, or to be associated
with persons engaged in any such activity;
(5) was found by a court of competent jurisdiction in a civil action or by
the Securities and Exchange Commission to have violated any federal or state
securities law, and the judgment in such civil action or finding by the
Securities and Exchange Commission has not been subsequently reversed,
suspended, or vacated.
(6) was found by a court of competent jurisdiction in a civil action or by
the Commodity Futures Trading Commission to have violated any federal
commodities law, and the judgment in such civil action or finding by the
Commodity Futures Trading Commission has not been subsequently reversed,
suspended or vacated.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
The three directors of the Company each filed their form 3 late. The Company is
not aware of any other late reports filed by officers, directors and ten percent
shareholders.
10
ITEM 10. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following tables set forth certain summary information concerning the
compensation paid or accrued for each of the Company's last three completed
fiscal years to the Company's or its principal subsidiaries' chief executive
officer and each of its other executive officers that received compensation in
excess of $100,000 during such period (as determined at September 30, 2006, the
end of the Company's last completed fiscal year):
Long Term Compensation
----------------------
Annual Compensation Awards Payouts
Other Restricted
Name and Annual Stock Options LTIP All other
Principal Position Year Salary Bonus($) Compensation Awards /SARs Payout Compensation
------------------ ---- ------ -------- ------------ ------ ------- ------ ------------
Anthony B. Escobar 2006 $-0- -0- -0- -0- -0- -0- -0-
President and CEO
2005 -0- -0- -0- -0- -0- -0- -0-
Spencer Kim Haws 2004 -0- -0- -0- -0- -0- -0- -0-
President and CEO
-----------------
Cash Compensation
There was no cash compensation paid to any director or executive officer of the
Company during the fiscal years ended September, 2006, 2005, and 2004. There are
no agreements or understandings with respect to the amount of remuneration that
officers and directors are expected to receive in the future. Management takes
no salaries from the Company and does not anticipate receiving any salaries in
the foreseeable future. No present prediction or representation can be made as
to the compensation or other remuneration which may ultimately be paid to the
Company's management, since upon the successful consummation of a business
opportunity, substantial changes may occur in the structure of the Company and
its salaries or other forms of compensation which cannot presently be
anticipated. Use of the term "new management" is not intended to preclude the
possibility that any of the present officers or directors of the Company might
be elected to serve in the same or similar capacities upon the Company's
decision to participate in one or more business opportunities.
The Company's management may benefit directly or indirectly by payments of
consulting fees, payment of finders fees to others from consulting fees, sales
of insider's stock positions in whole or part to the private company, the
Company or management of the Company, or through the payment of salaries, or any
other methods of payments through which insiders or current investors receive
funds, stock, or other assets or anything of value whether tangible or
intangible. There are no plans, proposals, arrangements or understandings with
respect to the sale of additional securities to affiliates, current shareholders
or others prior to the location of a business opportunity.
Bonuses and Deferred Compensation
None.
Compensation Pursuant to Plans.
None.
Pension Table
None.
11
Other Compensation
None.
Compensation of Directors.
None.
Termination of Employment and Change of Control Arrangement
There are no compensatory plans or arrangements, including payments to be
received from the Company, with respect to any person named in Cash Compensation
set out above which would in any way result in payments to any such person
because of his resignation, retirement, or other termination of such person's
employment with the Company or its subsidiaries, or any change in control of the
Company, or a change in the person's responsibilities following a changing in
control of the Company.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of December 26, 2006, the name and the number
of shares of the Company's Common Stock, no par value, held of record or
beneficially by each person who held of record, or was known by the Company to
own beneficially, more than 5% of the 5,250,929 issued and outstanding shares of
the Company's Common Stock, and the name and shareholdings of each director and
of all officers and directors as a group.
Title
of Name of Amount and Nature of Percentage
Class Beneficial Owner Beneficial Ownership(1) of Class
----- ---------------- -------------------- ----------
Class "A" Voting Anthony Brandon Escobar 4,937,500 94.03%
Common Stock President
8124 S. Grambling Way
Sandy, Utah 84094
OFFICERS AND DIRECTORS:
Class "A" Voting Anthony Brandon Escobar ----------See Above----------
Common Stock
Class "A" Voting Sean Escobar 31,250 00.59%
Common Stock Vice President
10344 Silver Willow Dr.
Sandy, Utah 84070
Class "A" Voting Anthony Coletti 31,250 00.59%
Common Stock Secretary/Treasurer
7036 Derek Hollow Cove
Midvale, Utah 84047
All Officers
and Directors
as a Group (3 person) 5,000,000 95.22%
(1) Indirect and Direct ownership are referenced by an "I" or "D",
respectively. All shares owned directly are owned beneficially and of record and
such shareholder has sole voting, investment, and dispositive power, unless
otherwise noted.
12
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TRANSACTIONS WITH MANAGEMENT AND OTHERS.
During the fiscal year ended September 30, 2006, there were no material
transactions, or series of similar transactions, since the beginning of the
Company's last fiscal year, or any currently proposed transactions, or series of
similar transactions, to which the Company was or is to be party, in which the
amount involved exceeds $60,000, and in which any director or executive officer,
or any security holder who is known by the Company to own of record or
beneficially more than 5% of any class of the Company's common stock, or any
member of the immediate family of any of the foregoing persons, has an interest.
On May 14, 2004, the Company authorized the sale of 5,000,000 shares of
unregistered Class "A" Voting Common Stock to the directors and officers of the
Company for $40,000, as follows:
Anthony Brandon Escobar - 4,937,500 shares for $39,500 Sean Escobar -
31,250 shares for $250 Anthony Coletti - 31,250 shares for $250
This sale of the Company's common stock was for the purpose of raising operating
capital for the Company. At the time of the transaction the Company had no money
to pay for keeping the corporate status or paying ongoing legal and accounting
expenses.
INDEBTEDNESS OF MANAGEMENT
There were no material transactions, or series of similar transactions, since
the beginning of the Company's last fiscal year, or any currently proposed
transactions, or series of similar transactions, to which the Company was or is
to be a party, in which the amount involved exceeds $60,000 and in which any
director or executive officer, or any security holder who is known to the
Company to own of record or beneficially more than 5% of any class of the
Company's common stock, or any member of the immediate family of any of the
foregoing persons, has an interest.
TRANSACTIONS WITH PROMOTERS
There have been no transactions between the Company and promoters during the
last fiscal year.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a)(1)FINANCIAL STATEMENTS. The following financial statements are included in
this report:
Title of Document Page
----------------- ----
Report of Independent Registered Public Accounting Firm F-1
Balance Sheet F-2
13
Statements of Operations F-3
Statements of Shareholders' Equity F-4
Statements of Cash Flows F-5
Notes to Financial Statements F-6
(a)(2)FINANCIAL STATEMENT SCHEDULES. The following financial statement schedules
are included as part of this report:
None.
(a)(3)EXHIBITS. The following exhibits are included as part of this report:
SEC
Exhibit Reference
Number Number Title of Document Location
------- --------- ----------------- -------------
Item 3 Articles of Incorporation and Bylaws
3.01 3 Articles of Incorporation Incorporated
by reference*
3.02 3 Bylaws Incorporated
by reference*
Item 4 Instruments Defining the Rights of Security Holders
------- ---------------------------------------------------
4.01 4 Specimen Stock Certificate Incorporated
by reference*
31.01 31 CEO certification Pursuant
to 18 USC Section 1350, as
adopted pursuant to Section 302
of Sarbanes-Oxley Act of 2002 This Filing
31.02 31 CFO certification Pursuant
to 18 USC Section 1350, as
adopted pursuant to Section 302
of Sarbanes-Oxley Act of 2002 This Filing
32.01 32 CEO Certification pursuant to
section 906 This Filing
32.02 32 CFO Certification pursuant to
Section 906 This Filing
* Incorporated by reference from the Company's registration statement on Form
10-SB filed with the Commission, SEC file no. 1-32522.
14
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Information required by Item 9(e) of Schedule 14A
1) Audit Fees - The aggregate fees incurred for each of the last two fiscal
years for professional services rendered by our principal accountant for the
audit of our annual financial statements and review of our quarterly financial
statements is approximately $5,250 and $4,600 for each of the years ending
September 30, 2006 and 2005.
2) Audit-Related Fees. $0 and $0. 3) Tax Fees. $500 and $500. 4) All Other Fees.
$0.
5) Not applicable. 6) Not Applicable.
SIGNATURES
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 and on the dates indicated:
Trafalgar Resources, Inc.
Date: December 28, 2006 By: /s/ Anthony B. Escobar
--------------------------------------
Anthony Brandon Escobar, President and
Director
(Principal Executive Officer)
By: /s/ Anthony Coletti
---------------------------------------
Anthony Coletti, Principal Accounting
Officer
In accordance with the Securities Exchange Act of 1934, this report has
been signed by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Anthony B. Escobar
--------------------
Anthony Brandon Escobar Director December 28, 2006
/s/ Sean Escobar
-------------------- Director December 28, 2006
Sean Escobar
/s/ Anthony Coletti
-------------------- Director December 28, 2006
Anthony Coletti
15
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Officers and Directors
Trafalgar Resources, Inc.
Salt Lake City, Utah
We have audited the accompanying balance sheet of Trafalgar Resources, Inc. ( a
Utah development stage company) as of September 30, 2006, and the related
statements of operations, changes in stockholders' equity, and cash flows for
the years ended September 30, 2006 and 2005, and for the period from October 1,
2003 (date of re-entering development stage) to September 30, 2006. 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 of America). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. The company is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audit included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Trafalgar Resources, Inc. as of
September 30, 2006, and the results of its operations, changes in stockholders'
equity and its cash flows for the years ended September 30, 2006 and 2005, and
for the period from October 1, 2003 (date of re-entering development stage) to
September 30, 2006, in conformity with accounting principles generally accepted
in the United States of America.
/s/ Child, Van Wagoner & Bradshaw, PLLC
Certified Public Accountants
Salt Lake City, Utah
October 23, 2006
5296 South Commerce Drive, Suite 300
Salt Lake City, Utah 84107-5370
Telephone: (801)281-4700
Fascimile: (801) 281-4701
www.cpaone.net
F-1
TRAFALGAR RESOURCES, INC.
BALANCE SHEET
September 30,
2006
----------
ASSETS
CURRENT ASSETS
Cash $ 4,911
Prepaid expenses 0
----------
TOTAL CURRENT ASSETS 4,911
----------
$ 4,911
==========
LIABILITIES AND
SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 0
Payable to officer 0
Income taxes payable 100
----------
TOTAL CURRENT LIABILITIES 100
Contingent liabilities (Note 4) 0
----------
TOTAL LIABILITIES 0
SHAREHOLDERS' EQUITY
Common stock no par value, 100,000,000
shares authorized; 5,250,929
shares issued at September 30, 2006 137,413
Retained Deficit (103,925)
Deficit from re-entering development stage (28,677)
----------
TOTAL SHAREHOLDERS' EQUITY 4,811
----------
$ 4,911
==========
See Accountants' Report and Notes to Financial Statements.
F-2
TRAFALGAR RESOURCES, INC.
STATEMENTS OF OPERATIONS
Period from
re-entering
Year Ended development stage to
September 30, September 30, September 30,
2006 2005 2006
-------------- -------------- ---------------
Income $ 0 $ 2 $ 2
Cost of Sales $ 0 $ 0 $ 0
-------------- -------------- ---------------
GROSS PROFIT 0 2 2
Expenses
Gen and Admin 10,198 12,216 28,379
-------------- -------------- ---------------
10,198 12,216 28,379
-------------- -------------- ---------------
(LOSS) BEFORE TAXES (10,198) (12,214) (28,377)
PROVISION FOR TAXES 100 100 300
-------------- -------------- ---------------
NET (LOSS) $ (10,298) $ (12,314) $ (28,677)
-------------- -------------- ---------------
(LOSS) PER COMMON SHARE Basic and fully diluted loss
per weighted average common share outstanding $ (0.00) $ (0.00)
Weighted average number of common
Shares outstanding (Note 2) 5,250,929 5,250,929
-------------- --------------
See Accountants' Report and Notes to Financial Statements.
F-3
TRAFALGAR RESOURCES, INC.
STATEMENTS OF SHAREHOLDERS' EQUITY
(DEFICIT) Period from re-entering development stage
to September 30, 2006 and years ended
September 30, 2005 and 2006
Deficit
from
re-entering
Common Stock Retained Development
Shares Amount Deficit Stage
------------- ------------- ------------- -------------
Balances at September 30, 2004 250,929 $ 97,413 $ (103,925) $ (6,065)
Stock issued for cash 5,000,000 40,000
Net loss for year (12,314)
------------- ------------- ------------- -------------
Balances at September 30, 2005 5,250,929 137,413 (103,925) (18,379)
Net loss for year (10,298)
------------- ------------- ------------- -------------
Balances at September 30, 2006 5,250,929 $ 137,413 $ (103,925) $ (28,677)
============= ============= ============= =============
See Accountants' Report and Notes to Financial Statements.
F-4
TRAFALGAR RESOURCES, INC.
STATEMENTS OF CASH FLOWS
Period from
re-entering
development
Year Ended Stage to
September 30, September 30, September 30,
2006 2005 2006
-------------- -------------- ---------------
OPERATING ACTIVITIES
Net (Loss) $ (10,298) $ (12,314) $ (28,677)
Adjustments to reconcile net (loss)
to net cash required by operating
activities:
Interest - non cash 0 0 0
Changes in operating assets and liabilities:
Prepaid Expenses 0 0 0
Accounts Payable (426) (406) (5,269)
Income taxes payable 0 (1,324) (1,143)
-------------- -------------- ---------------
NET CASH REQUIRED BY
OPERATING ACTIVITIES (10,724) (14,044) (35,089)
FINANCING ACTIVITIES
Loans 0 (10,321) 0
Stock Sold 0 40,000 40,000
-------------- -------------- ---------------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 0 29,679 40,000
-------------- -------------- ---------------
NET INCREASE /(DECREASE)
IN CASH (10,724) 15,635 4,911
CASH AT BEGINNING OF PERIOD $ 15,635 $ 0 $ 0
-------------- -------------- ---------------
CASH AT END OF PERIOD $ 4,911 $ 15,635 $ 4,911
============== ============== ===============
CASH PAID FOR TAXES $ 100 $ 1,424 $ 1,524
============== ============== ===============
CASH PAID FOR INTEREST $ 0 $ 376 $ 490
============== ============== ===============
See Accountants' Report and Notes to Financial Statements.
F-5
TRAFALGAR RESOURCES, INC.
Notes to Financial Statements
September 30, 2006 and 2005
NOTE 1: ORGANIZATION AND HISTORY
Organization
The Company was incorporated in the State of Utah on October 25, 1972 as
Electronic Agricultural Machinery Development Corporation. On January 25, 1974
the name was changed to Zenith Development Corporation. On April 17, 1980 the
name was changed to Alternative Energy Resources, Inc. ("AER")
On April 6, 2004 the name was changed to Trafalgar Resources, Inc.
Nature of Operations
In 1972 the Company was originally organized for the purpose of inventing and
developing a selective asparagus harvester. The fourth prototype demonstrated in
1976 was very successful. In 1977 the harvester was licensed to Acurex
Corporation of Mountain View California ("Acurex"). Acurex continued to develop
the machine for about four years, investing more than one million dollars in the
project. However, migrant farm workers have been plentiful and there has been
little motivation for the asparagus growers to mechanize. Because of this Acurex
lost interest in the project and as time passed, all of the Acurex employees
with any knowledge of the harvester moved on to other employment. Since 1983
their minimum royalty obligations to the Company have not been met and Acurex
has lost its exclusive right to manufacture and sell the product. Since that
time AER has continued to develop the harvester by making it smaller and less
expensive to manufacture. Significant progress was made during the harvest of
1988 by updating it with the latest electronic sensing technology. Field testing
was done in May and June of 1989 which was very successful. In the spring of
1995 the Asparagus Growers Commission had a study done on four different
technologies by Battelle Memorial Institute Pacific Northwest Laboratories.
However, an economic study of these technologies done by Washington State
University determined that none of the technologies including the Haws Harvester
were profitable.
In 1979 the Hot Water Saver was invented. This is an energy conservation measure
that slowly pushes the unused heat, that remains in the pipes after each hot
water draw, back into the water heater tank. Two U.S. patents, and one worldwide
patent were issued to Kim Haws which he assigned to AER. After five years of
research and development including a study by the Battelle Memorial Institute
funded by the U.S. Department of Energy, the Company licensed this technology to
Metlund Enterprises of Stockton, California. Several thousand of these units
were sold by Metlund but as the energy conservation efforts subsided sales
dropped and Metlund went out of business.
In 1984 the Gas Alert Signal was invented. It is a flashing or beeping knob that
clamps on the valve handle of a compressed gas cylinder. It is used to open and
close the valve and reminds the user to close the valve when gas is not being
used. One U.S. patent was issued in May, 1987. In 1985, AER designed and
manufactured 500 audio units and sold them while test marketing the product. In
October, 1987, the Company entered into a licensing agreement with Benzco Inc.
of LeGrand Oregon ("Benzco"). One of the most obvious marketing channels for
this product is welding supply distributors. However, the Company encountered
resistance from such distributors because a significant part of their income is
derived from the sale of compressed gas and this product would dramatically
reduce its consumption. Benzco found it a real challenge to penetrate this
market through other channels. They have since discontinued production and are
no longer in business. None of the products have been successful. All of the
patents relating to these products have expired.
The Company is currently looking for new business opportunities. Management
intends to provide working capital loans as needed.
The Company re-entered the development stage on October 1, 2003.
F-6
TRAFALGAR RESOURCES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
September 30, 2006 and 2005
NOTE 1: ORGANIZATION AND HISTORY (continued)
Going Concern Items
The Company's financial statements have been presented on the basis that it is a
going concern, which contemplates the realization of assets and satisfaction of
liabilities in the normal course of business.
The Company's continued existence is dependent on its ability to generate
sufficient cash flow to cover operating expenses, to repay its obligations and
to invest in future operations. Management has prepared the following plan to
address the Company's ability to continue as a going concern.
The Company intends to look for a new business venture. Management has committed
to provide working capital loans as needed.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Estimates
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts of assets and liabilities, as well as footnote disclosures
included in the financial statements and accompanying notes. Actual results may
differ from those estimates and such differences may be material to the
financial statements.
Cash and Cash Equivalents
The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents.
Concentrations of Risk
The Company maintains its cash in bank deposit accounts at high credit quality
financial institutions. The balances, at times, may exceed federally insured
limits.
Financial Instruments
Statement of Financial Accounting Standards (SFAS) No. 107, " Disclosures about
Fair Value of Financial Instruments" requires disclosure of the fair value of
financial instruments held by the Company. SFAS 107 defines the fair value of a
financial instrument as the amount at which the instrument could be exchanged in
a current transaction between willing parties. The following methods and
assumptions were used to estimate fair value:
The carrying amount of cash equivalents, prepaid expenses, accounts payable and
payable to officer approximate fair value due to their short-term nature.
Income Taxes
Income taxes consist of federal income and state franchise taxes. The Company
has elected a September 30 fiscal year-end for both accounting and income tax
purposes.
The Company accounts for income taxes under the provisions of Statement of
Financial Accounting Standards No.109 (SFAS No. 109), "Accounting for Income
Taxes," which requires the use of the liability method of accounting for
deferred income taxes.
F-7
TRAFALGAR RESOURCES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
September 30, 2006 and 2005
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Basic Income (Loss) Per Common Share
Basic income (loss) per common share is computed based on the weighted average
number of common shares outstanding during the period. As of September 30, 2006
and 2005, there were no common stock equivalents. Therefore, the basic and fully
diluted income (loss) per share is the same in 2006 and 2005.
Basic and fully diluted net loss per common share, calculated in accordance with
SFAS 128, were $(.00) and $(.00) for the years ended September 30, 2006 and 2005
respectively. Weighted average common shares outstanding were 5,250,929, and
5,250,929 for years ended September 30, 2006 and 2005, respectively.
Revenue Recognition
Revenues are recognized on the accrual basis when services are performed.
Advertising
The Company follows the policy of charging the costs of advertising to expense
as incurred.
New Accounting Pronouncements
In May 2004, the Emerging Issues Task Force of the FASB came to a consensus
regarding EITF 02-14 "Whether an Investor Should Apply the Equity Method of
Accounting to Investments Other Than Common Stock". The consensus of the task
force is that the equity method of accounting is to be used for investments in
common stock or in-substance common stock, effective for reporting periods
beginning after September 15, 2004. The Company currently has no equity
investments, and therefore no impact will be made on the financial statements of
the Company.
In November 2004, the FASB issued Statement No. 151, "Inventory Costs". SFAS No.
151 requires that items such as idle facility expense, excessive spoilage,
double freight, and rehandling costs be recognized as current period charges and
that allocation of fixed production overheads to the costs of conversion be
based on the normal capacity of the production facilities. The statement is
effective for fiscal periods beginning after June 15, 2005. The Company believes
that the application of SFAS No. 151 will have no significant impact on the
financial statements.
In December 2004, the FASB issued Statement No. 153, "Exchange of Non-Monetary
Assets". SFAS No. 153 confirms that exchanges of non-monetary assets are to be
measured based on the fair value of the assets exchanged, except for exchanges
of non-monetary assets that do not have commercial substance. Those transactions
are to be measured at entity specific values. The Company believes that the
application of SFAS No. 153 will have no significant impact on the financial
statements, as the Company has no immediate plans for the exchange of
non-monetary assets.
In December 2004, the FASB issued SFAS No. 123 (revised 2004), "Share-Based
Payment," which amends SFAS No. 123, "Accounting for Stock-Based Compensation."
SFAS No. 123, as revised, requires public entities to measure the cost of
employee services received in exchange for
F-8
TRAFALGAR RESOURCES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
September 30, 2006 and 2005
an award of equity instruments based on the grant-date fair value of the award.
The cost will be recognized over the period during which an employee is required
to provide service in exchange for the award. No compensation cost is recognized
for equity instruments for which employees do not render the requisite service.
The effective date for the Company is the first reporting period beginning after
December 15, 2005. Management expects that the application of SFAS No. 123
(revised 2004) may have an adverse effect on its results of operations in the
future, should the Company choose to compensate its employees with equity
instruments of the Company.
In May 2005, the FASB issued SFAS No. 154 "Accounting Changes and Error
Corrections - a replacement of APB Opinion No. 20 and FASB Statement No. 3".This
Statement replaces APB Opinion No. 20, Accounting Changes, and FASB Statement
No. 3, Reporting Accounting Changes in Interim Financial Statements, and changes
the requirements for the accounting for and reporting of a change in accounting
principle. This Statement applies to all voluntary changes in accounting
principle. It also applies to changes required by an accounting pronouncement in
the unusual instance that the pronouncement does not include specific transition
provisions. When a pronouncement includes specific transition provisions, those
provisions should be followed. The effective date for the Company is for fiscal
years beginning after December 15, 2005. The Company believes that SFAS No. 154
will have no significant impact on the financial statements.
F-9
TRAFALGAR RESOURCES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
September 30, 2006 and 2005
NOTE 3: INCOME TAXES
Deferred taxes are provided on a liability method whereby deferred tax assets
are recognized for deductible temporary differences and operating loss and tax
credit carryforwards and deferred tax liabilities are recognized for taxable
temporary differences. Temporary differences are the differences between the
reported amounts of assets and liabilities and their tax bases. Deferred tax
assets are reduced by a valuation allowance when, in the opinion of management,
it is more likely than not that some portion or all of the deferred tax assets
will not be realized. Deferred tax assets and liabilities are adjusted for the
effects of changes in tax laws and rates on the date of enactment.
The income tax expense (benefit) for the year ending September 30, differs from
the amount computed at the federal statutory rates as follows:
2006 2005
---------- ------------
Income tax expense (benefit) at
federal statutory rate of 35% $ (3,569) $ (4,275)
State taxes 100 100
Valuation allowance 3,569 4,275
---------- ------------
$ 100 $ 100
========== ============
Deferred tax assets for the year ending September 30 are composed primarily of
the following:
Net Operating Loss Carryforward $ 12,144
Valuation allowance (12,144)
----------
$ 0
==========
At September 30, 2006, the Company had a net operating loss carry forward of
approximately $34,800 that may be offset against future taxable income through
2026. These losses will start to expire in the year 2011 through 2026. No tax
benefit has been reported in the financial statements because the Company
believes that it is more likely than not that the carryforwards will expire
unused. The utilization of future losses may be limited under various provisions
of the Internal Revenue Code pertaining to continuity of business operations
limits and substantial changes in ownership. Accordingly, the potential tax
benefits of the loss carryforwards are offset by a valuation allowance of the
same amount. The valuation allowance increased in 2006 by approximately $3,569.
NOTE 4: COMMITMENTS, CONTINGENCIES AND LEGAL MATTERS
Management of the Company has conducted a diligent search and concluded that
there were no commitments, contingencies, legal matters pending, or liabilities
at September 30, 2006 other than as disclosed in the financial statements.
NOTE 5: RELATED PARTY TRANSACTIONS
The Company paid interest in the amounts of $ 0 and $ 94 to the Company's
President for the years ended September 30, 2006 and 2005 respectively for money
advanced to the Company.
F-10