x
|
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For
the fiscal year ended December 31,
2008
|
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For
the transition period from _____________ to
_____________
|
Delaware
|
41-2102385
|
|
(STATE
OR OTHER JURISDICTION OF
INCORPORATION
OR ORGANIZATION)
|
(I.R.S.
EMPLOYER IDENTIFICATION NO.)
|
Large accelerated filer o | Accelerated filer o |
Non-accelerated
filer o
(Do not check if a smaller reporting
company)
|
Smaller reporting company x |
Page | |
PART
I
|
5
|
Item 1. Businses. |
5
|
Item 1A. Risk Factors |
5
|
Item 1B. Unresolved Staff Comments |
10
|
Item 2. Properties. |
11
|
Item 3. Legal Proceedings. |
11
|
Item 4. Submission of Matters to a Vote of Security Holders. |
11
|
PART II |
11
|
Part 5. Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. |
11
|
Item 6. Selected Financial Data. |
14
|
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operation. |
14
|
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. |
21
|
Item 8.
Financial Statements and Supplementary Data.
|
22
|
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Dosclosure. |
44
|
Item 9A. Controls and Procedures. |
44
|
Item 9B. Other Information. |
44
|
PART III |
45
|
Item 10. Directors, Executive Officers and Corporate Governance. |
45
|
Item 11. Executive Compensation. |
46
|
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. |
47
|
Item 13. Certain Relationships and Related Transactions, and Director Independence |
47
|
Item 14. Principal Accounting Fees and Services. |
48
|
PART IV |
49
|
Item 15. Exhibits and Financial Statement Schedules. |
49
|
●
|
our
ability to maintain a large, demographically attractive reader base for
ValueRich Magazine or subscriber base for
iValueRich.com;
|
●
|
our
ability to maintain attractive advertising
rates;
|
●
|
our
ability to attract and retain advertisers and sponsors;
and
|
●
|
our
ability to provide effective advertising delivery and measurement
systems.
|
Yahoo
Finance
|
||||||||||
Quarter
Ended
|
High
|
Low
|
||||||||
December
31, 2008
|
$ | 0.30 | $ | 0.06 | ||||||
September
30, 2008
|
$ | 0.35 | $ | 0.08 | ||||||
June
30, 2008
|
$ | 0.48 | $ | 0.16 | ||||||
March
31, 2008
|
$ | 0.80 | $ | 0.11 | ||||||
December
31, 2007
|
$ | 1.50 | $ | 0.20 | ||||||
September
30, 2007
|
$ | 3.00 | $ | 0.92 | ||||||
June
30, 2007
|
$ | N/A | $ | N/A | ||||||
March
31, 2007
|
$ | N/A | $ | N/A |
·
|
Level
1 inputs to the valuation methodology are quoted prices (unadjusted) for
identical assets or liabilities in active
markets.
|
·
|
Level
2 inputs to the valuation methodology include quoted prices for similar
assets and liabilities in active markets, and inputs that are observable
for the asset or liability, either directly or indirectly, for
substantially the full term of the financial
instrument.
|
·
|
Level
3 inputs to the valuation methodology are unobservable and significant to
the fair value measurement.
|
Fair
Value
As
of
December
31, 2008
|
Fair
Value Measurements at
December
31, 2008
Using
Fair Value Hierarchy
|
|||||
Assets
|
Level
1
|
Level
2
|
Level
3
|
|||
Investments
in marketable securities
|
$1,957,993
|
$1,957,993
|
-
|
-
|
Income
(Loss)
|
Shares
|
Per-Share
|
||||||
(Numerator)
|
(Denominator)
|
Amount
|
||||||
For
the Year Ended December 31, 2008:
|
|
|
|
|
|
|||
Basic
and diluted EPS
|
|
|
|
|
||||
Income
(loss) to common stockholders
|
$ |
(1,010,595)
|
8,488,504
|
$
|
(0.12)
|
|||
For
the Year Ended December 31, 2007:
|
|
|
|
|
|
|||
Basic
and diluted EPS
|
|
|
|
|
||||
Income
(loss) to common stockholders
|
$ |
(1,747,987)
|
7,215,794
|
$
|
(0.24)
|
December
31, 2008
|
December
31, 2007
|
|||||||
Options | 100,000 | 100,000 | ||||||
Warrants | 1,185,715 | 2,376,494 | ||||||
Convertible notes | 67,000 | 134,000 | ||||||
Total | 1,352,715 | 2,610,494 |
Page | |
Report of Independent Registered Public Accounting Firm |
18
|
Financial Statements: | |
Balance Sheets as of December 31, 2008 and 2007 |
19
|
Statements of Operations and Other Comprehensive Loss for the years ended December 31, 2008 and 2007 |
20
|
Statements of Stockholders' Equity for the years ended December 31, 2008 and 2007 |
21
|
Statements of Cash Flows for the years ended December 31, 2008 and 2007 |
22
|
Notes to Financial Statements |
23
|
2008
|
2007
|
|||||||
ASSETS
|
||||||||
CURRENT
ASSETS
|
||||||||
Cash
and cash equivalents
|
$ | 920,908 | $ | 3,568,535 | ||||
Trade
accounts receivable
|
1,713 | - | ||||||
Prepaid
consulting
|
23,333 | 75,000 | ||||||
Investments
in marketable securities
|
1,957,993 | - | ||||||
TOTAL
CURRENT ASSETS
|
2,903,947 | 3,643,535 | ||||||
PROPERTY
AND EQUIPMENT, net of accumulated depreciation
|
113,547 | 57,173 | ||||||
JOINT
VENTURE
|
- | 278,560 | ||||||
TOTAL
ASSETS
|
$ | 3,017,494 | $ | 3,979,268 | ||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
CURRENT
LIABILITIES
|
||||||||
Accounts
payable and accrued expenses
|
$ | 240,757 | $ | 302,690 | ||||
Deferred
revenue
|
45,000 | - | ||||||
Derivative
liability
|
- | 100,000 | ||||||
Convertible
notes payable, current portion
|
25,000 | 40,500 | ||||||
Convertible
shareholder notes payable
|
- | 70,000 | ||||||
Shareholder
note payable
|
9,500 | 9,500 | ||||||
TOTAL
CURRENT LIABILITIES
|
320,257 | 522,690 | ||||||
CONVERTIBLE
NOTES PAYABLE, net of current portion
|
- | 9,500 | ||||||
TOTAL LIABILITIES
|
320,257 | 532,190 | ||||||
COMMITMENTS AND CONTINGENCIES
|
- | - | ||||||
STOCKHOLDERS'
EQUITY
|
||||||||
Common
stock; $0.01 par value; 100,000,000 shares authorized;
|
||||||||
8,669,670
and 8,276,542 shares issued and outstanding as
|
||||||||
of
December 31, 2008 and December 31, 2007 respectively
|
86,696 | 82,765 | ||||||
Additional
paid-in capital
|
7,175,789 | 7,026,966 | ||||||
Accumulated
other comprehensive income
|
108,000 | - | ||||||
Accumulated
deficit
|
(4,673,248 | ) | (3,662,653 | ) | ||||
TOTAL
STOCKHOLDERS' EQUITY
|
2,697,237 | 3,447,078 | ||||||
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
|
$ | 3,017,494 | $ | 3,979,268 | ||||
For
The Year Ended
|
||||||||
2008
|
2007
|
|||||||
REVENUE
|
$ | 76,583 | $ | 1,227,694 | ||||
COST
OF REVENUE
|
7,331 | 1,040,992 | ||||||
GROSS
PROFIT
|
69,252 | 186,702 | ||||||
OPERATING
EXPENSES
|
||||||||
Salaries
and wages
|
505,089 | 1,157,155 | ||||||
Selling,
general and administrative expenses
|
329,190 | 271,466 | ||||||
Professional
fees
|
369,754 | 506,848 | ||||||
Financing
costs
|
- | 15,032 | ||||||
Depreciation
|
40,859 | 30,542 | ||||||
TOTAL
OPERATING EXPENSES
|
1,244,892 | 1,981,043 | ||||||
LOSS
FROM OPERATIONS
|
(1,175,640 | ) | (1,794,341 | ) | ||||
OTHER
INCOME (EXPENSES):
|
||||||||
Interest
expense
|
(3,002 | ) | (59,881 | ) | ||||
Dividend
and interest income
|
64,446 | - | ||||||
Loss
on extinguishment of debt
|
1,400 | - | ||||||
Loss
on impairment of joint venture
|
(278,560 | ) | - | |||||
Unrealized
gain (loss) on marketable securities
|
119,066 | - | ||||||
Realized
gain (loss) on sale of marketable securities
|
249,691 | - | ||||||
Other
income (expenses)
|
12,004 | 106,235 | ||||||
TOTAL
OTHER INCOME (EXPENSES)
|
165,045 | 46,354 | ||||||
LOSS
BEFORE PROVISION FOR INCOME TAXES
|
(1,010,595 | ) | (1,747,987 | ) | ||||
INCOME
TAX BENEFIT
|
- | - | ||||||
NET
LOSS
|
$ | (1,010,595 | ) | $ | (1,747,987 | ) | ||
NET
LOSS PER SHARE - BASIC AND DILUTED
|
$ | (0.12 | ) | $ | (0.24 | ) | ||
WEIGHTED
AVERAGE COMMON EQUIVALENT
|
||||||||
SHARES
OUTSTANDING - BASIC AND DILUTED
|
8,488,504 | 7,215,794 | ||||||
NET
LOSS
|
$ | (1,010,595 | ) | $ | (1,747,987 | ) | ||
OTHER
COMPREHENSIVE INCOME
|
||||||||
Unrealized
gain on marketable securities
|
108,000 | - | ||||||
COMPREHENSIVE
LOSS
|
$ | (902,595 | ) | $ | (1,747,987 | ) | ||
Common
Stock
|
Additional Paid-in |
Accumulated Other |
Accumulated
|
Total Stockholders' |
||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Income
|
Deficit
|
Equity
|
|||||||||||||||||||
Balance,
January 1, 2007
|
6,492,644 | $ | 64,926 | $ | 2,039,559 | $ | - | $ | (1,914,666 | ) | $ | 189,819 | ||||||||||||
Exercise
of warrants at $2 per share
|
41,668 | 417 | 83,336 | - | 83,753 | |||||||||||||||||||
Deferred
financing cost
|
- | - | 12,572 | - | 12,572 | |||||||||||||||||||
Shares
issued for Initial Public Offering at $3.50 per share
|
1,617,230 | 16,172 | 5,644,134 | - | 5,660,306 | |||||||||||||||||||
Joint
venture agreement issuance of stock
|
100,000 | 1,000 | 102,000 | - | 103,000 | |||||||||||||||||||
Value
of options issued for joint venture agreement
|
- | - | 75,560 | - | 75,560 | |||||||||||||||||||
Shares
issued for web development
|
25,000 | 250 | 28,500 | - | 28,750 | |||||||||||||||||||
Fund
raising costs
|
- | - | (958,695 | ) | - | (958,695 | ) | |||||||||||||||||
Net
loss for the year ended December 31, 2007
|
- | - | - | (1,747,987 | ) | (1,747,987 | ) | |||||||||||||||||
Balance,
December 31, 2007
|
8,276,542 | 82,765 | 7,026,966 | - | (3,662,653 | ) | 3,447,078 | |||||||||||||||||
Shares
of common stock issued for consulting services
|
290,000 | 2,900 | 85,600 | 88,500 | ||||||||||||||||||||
Shares
of common stock issued in repayment of note payable
|
128,128 | 1,281 | 51,951 | 53,232 | ||||||||||||||||||||
Value
of warrants granted to settle convertible note
payable
|
9,818 | 9,818 | ||||||||||||||||||||||
Value
of warrants granted for consulting services
|
29,954 | 29,954 | ||||||||||||||||||||||
Shares
of common stock canceled
|
(25,000 | ) | (250 | ) | (28,500 | ) | (28,750 | ) | ||||||||||||||||
Unrealized
gain on marketable securities
|
108,000 | 108,000 | ||||||||||||||||||||||
Net
loss for the year ended December 31, 2008
|
(1,010,595 | ) | (1,010,595 | ) | ||||||||||||||||||||
Balance,
December 31, 2008
|
8,669,670 | $ | 86,696 | $ | 7,175,789 | $ | 108,000 | $ | (4,673,248 | ) | $ | 2,697,237 |
2008
|
2007
|
|||||||
CASH
FLOW FROM OPERATING ACTIVITIES:
|
||||||||
Net
loss
|
$ | (1,010,595 | ) | $ | (1,747,987 | ) | ||
Adjustment
to reconcile net loss to net cash
|
||||||||
used
in operating activities:
|
||||||||
Depreciation
expense
|
40,858 | 30,542 | ||||||
Loss
on disposition of fixed assets
|
- | 4,908 | ||||||
Marketable
securities received for consulting services
|
(15,000 | ) | - | |||||
Unrealized
gain on trading securities
|
(119,066 | ) | - | |||||
Common
stock issued for services
|
88,500 | - | ||||||
Loss
on impairment of joint venture
|
278,560 | - | ||||||
Expenses
incurrred in repayment of note payable
|
22,232 | - | ||||||
Value
of warrants granted as payment of interest expense on note
payable
|
9,818 | - | ||||||
Value
of warrants granted for consulting services
|
29,954 | - | ||||||
Gain
on write-off of derivative liability
|
(100,000 | ) | - | |||||
Changes
in operating assets and liabilities:
|
||||||||
Accounts
receivable
|
(1,713 | ) | 21,285 | |||||
Prepaid
consulting
|
51,667 | 31,533 | ||||||
Accounts
payable and accrued expenses
|
(55,933 | ) | 148,490 | |||||
Deferred
revenue
|
- | (80,580 | ) | |||||
Net
cash used in operating activities
|
(780,718 | ) | (1,591,809 | ) | ||||
CASH
FLOW FROM INVESTING ACTIVITIES:
|
||||||||
Cash
paid for joint venture
|
- | (100,000 | ) | |||||
Marketable
securtities
|
(1,670,927 | ) | - | |||||
Purchase
of fixed assets
|
(125,982 | ) | (9,177 | ) | ||||
Net
cash used in investing activities
|
(1,796,909 | ) | (109,177 | ) | ||||
CASH
FLOW FROM FINANCING ACTIVITIES:
|
||||||||
Proceeds
from stock issuances
|
- | 4,731,511 | ||||||
Proceeds
from warrant conversion
|
- | 83,753 | ||||||
Repayments
of shareholder notes payable
|
(70,000 | ) | (425,642 | ) | ||||
Officer
advances (payments), net
|
- | (62,167 | ) | |||||
Net
cash provided by (used in) financing activities
|
(70,000 | ) | 4,327,455 | |||||
NET
INCREASE (DECREASE) IN CASH AND
|
||||||||
CASH
EQUIVALENTS
|
(2,647,627 | ) | 2,626,469 | |||||
CASH
AND CASH EQUIVALENTS, Beginning of period
|
3,568,535 | 942,066 | ||||||
CASH
AND CASH EQUIVALENTS, End of period
|
$ | 920,908 | $ | 3,568,535 | ||||
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION:
|
||||||||
Cash
paid for:
|
||||||||
Interest
|
$ | - | $ | 58,193 | ||||
Income
taxes
|
$ | - | $ | - | ||||
SUPPLEMENTAL
DISCLOSURE OF NON-CASH INVESTING AND FINANCING:
|
||||||||
Conversion
of convertible shareholders' notes payable
|
$ | 53,232 | $ | - | ||||
Warrants
issued in repayment of note payable
|
$ | 9,818 | $ | 206,089 | ||||
Change
in fair value fo securities available for sale
|
$ | 108,000 | $ | - |
3
years
|
||
Furniture and fixtures
|
5
years
|
|
Leasehold improvements
|
Lesser
of lease life or economic life
|
·
|
Level
1 inputs to the valuation methodology are quoted prices (unadjusted) for
identical assets or liabilities in active
markets.
|
·
|
Level
2 inputs to the valuation methodology include quoted prices for similar
assets and liabilities in active markets, and inputs that are observable
for the asset or liability, either directly or indirectly, for
substantially the full term of the financial
instrument.
|
·
|
Level
3 inputs to the valuation methodology are unobservable and significant to
the fair value measurement.
|
Fair
Value
As
of
December
31, 2008
|
Fair
Value Measurements at
December
31, 2008
Using
Fair Value Hierarchy
|
|||||
Assets
|
Level
1
|
Level
2
|
Level
3
|
|||
Investments
in marketable securities
|
$1,957,993
|
$1,957,993
|
-
|
-
|
Income
(Loss)
|
Shares
|
Per-Share
|
||||||
(Numerator)
|
(Denominator)
|
Amount
|
||||||
For
the Year Ended December 31, 2008:
|
|
|
|
|
|
|||
Basic
and diluted EPS
|
|
|
|
|
||||
Income
(loss) to common stockholders
|
$ |
(1,010,595)
|
8,488,504
|
$
|
(0.12)
|
|||
For
the Year Ended December 31, 2007:
|
|
|
|
|
|
|||
Basic
and diluted EPS
|
|
|
|
|
||||
Income
(loss) to common stockholders
|
$ |
(1,747,987)
|
7,215,794
|
$
|
(0.24)
|
December
31, 2008
|
December
31, 2007
|
|||
Options |
100,000
|
100,000
|
||
Warrants |
1,185,715
|
2,376,494
|
||
Convertible notes |
67,000
|
134,000
|
||
Total |
1,352,715
|
2,610,494
|
(a)
|
Issue
to the Company 400,000 shares of Bodisen Biotech common stock to the
Company up front;
|
(b)
|
Issue
to the Company options to purchase 400,000 shares of its common stock. The
options will be exercisable at $0.70 per share and will have an exercise
period of 5 years;
|
(c)
|
Pay
the Company $10,000 per month for the 24-month consulting period, equaling
a total of $120,000 per year.
|
December 31, 2008 | December 31, 2007 | |||||||||||||||
Cost | Fair Value | Cost |
Fair
Value
|
|||||||||||||
Available-for-sale securities | $ | 600,000 | $ | 168,000 | $ | - | $ | - | ||||||||
Mutual Funds | 1,249,431 | 1,331,571 | - | - | ||||||||||||
Common Stock | 421,497 | 458,422 | - | - | ||||||||||||
Total marketable securities | $ | 1,730,928 | $ | 1,957,393 | $ | - | $ | - |
2008
|
2007
|
|||||||
Gross realized gains from sale of trading securities | $ | 281,551 | $ | - | ||||
Gross realized losses from the sale of trading securities | (31,860 | ) | - | |||||
Dividend and interest income | 64,446 |