UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended October 31, 2008
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ___________ to __________
NETVENTORY SOLUTIONS, INC.
(Exact name of registrant as specified in charter)
Nevada 333-147323 98-0573252
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
8TH Floor-200 South Virginia Street
Reno, NV 89501
(Address of principal executive offices)
(775) 562-0504
(Registrant's Telephone Number, including Area Code)
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 requirement for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
As of December 15, 2008, 2,140,000 shares of the issuer's common stock, $0.001
par value, were outstanding.
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
INDEX
Page
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets as of October 31, 2008 (unaudited) and
July 31, 2008 (audited) 3
Statements of Operations for the three months ended
October 31, 2008 and the period from inception to
September 30, 2008 (unaudited) 4
Statement of Stockholders' Equity for the period from
inception to October 31, 2008 (unaudited) 5
Statements of Cash Flows for the three months ended
October 31, 2008 and the period from inception to
October 31, 2008 (unaudited) 6
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis or Plan of Operation 14
Item 3. Controls and Procedures 17
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 18
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 18
Item 3. Defaults Upon Senior Securities 18
Item 4. Submission of Matters to a Vote of Security Holders 18
Item 5. Other Information 18
Item 6. Exhibits 18
2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Netventory Solutions Inc.
(A Development Stage Company)
Balance Sheets
As of October 31, 2008 and July 31, 2008
October 31, July 31,
2008 2008
-------- --------
(unaudited) (audited)
ASSET
Cash $ 28,713 $ 40,763
-------- --------
Total Assets $ 28,713 $ 40,763
======== ========
LIABILITIES
Accounts payable and accrued liabilities $ 7,590 $ --
Due to stockholder 950 950
-------- --------
Total Liabilities 8,540 950
-------- --------
STOCKHOLDERS` EQUITY (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 (26,827) (7,187)
-------- --------
Total Stockholders' Equity 20,173 39,813
-------- --------
Total Liabilities and Stockholders' Equity $ 28,713 $ 40,763
======== ========
The accompanying notes are an integral part of these financial statements
3
Netventory Solutions Inc.
(A Development Stage Company)
Statement of Operations (unaudited)
For the Three Months ended October 31, 2008 and
the period from Inception (February 8, 2008) to October 31, 2008
Period from
Inception
Three Months (February 8, 2008) to
October 31, October 31,
2008 2008
---------- ----------
Revenue $ -- $ --
Expenses:
Professional 13,821 20,121
Filing fees 5,590 5,590
General and administrative 229 1,116
---------- ----------
Net (loss) before income taxes (19,640) (26,827)
Provision for income taxes -- --
---------- ----------
Net (loss) $ (19,640) $ (26,827)
========== ==========
Basic and diluted (loss) per common share $ (0.01)
==========
Weighted average number of common shares outstanding 2,140,000
==========
The accompanying notes are an integral part of these financial statements
4
Netventory Solutions Inc.
(A Development Stage Company)
Statement of Stockholders' Equity (unaudited)
For the period from Inception (February 8, 2008) to October 31, 2008
Deficit
Accumulated
Common Shares Additional During
Issued Paid-in Development Total
Shares Amount Capital Stage Equity
------ ------ ------- ----- ------
Balance, February 8, 2008 (date of inception) -- $ -- $ -- $ -- $ --
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) -- -- -- (7,187) (7,187)
--------- ------ ------- -------- --------
Balance, July 31, 2008 2,140,000 2,140 44,860 (7,187) 39,813
Net (loss) -- -- -- (19,640) (19,640)
--------- ------ ------- -------- --------
Balance, October 31, 2008 2,140,000 $2,140 $44,860 $(26,827) $(20,173)
========= ====== ======= ======== ========
The accompanying notes are an integral part of these financial statements
5
Netventory Solutions Inc.
(A Development Stage Company)
Statements of Cash Flows (unaudited)
For the Three Months ended October 31, 2008 and the period from Inception
(February 8, 2008) to October 31, 2008
Period from
Inception
Three Months (February 8, 2008) to
October 31, October 31,
2008 2008
-------- --------
OPERATING ACTIVITIES
Net (loss) $(19,640) $(26,827)
Increase in accounts payable and accrued liabilities 7,590 7,590
-------- --------
Cash used by operating activities (12,050) (19,237)
-------- --------
FINANCING ACTIVITIES
Increase in due to stockholder -- 950
Sale of stock -- 47,000
-------- --------
Cash from financing activities -- 47,950
-------- --------
Increase in cash (12,050) 28,713
Cash, opening 40,763 --
-------- --------
Cash, closing $ 28,713 $ 28,713
======== ========
Supplemental information:
Interest paid $ -- $ --
-------- --------
Taxes paid $ -- $ --
-------- --------
The accompanying notes are an integral part of these financial statements
6
Netventory Solutions Inc.
(A Development Stage Company)
Notes to Financial Statements
October 31, 2008
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 in accordance with SFAS#7 is considered
to be in the development stage.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
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.
BASIS OF PRESENTATION
Certain information and footnote disclosures normally included in annual
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. We believe that the disclosures are
adequate to make the financial information presented not misleading. These
condensed financial statements should be read in conjunction with the audited
consolidated financial statements and the notes thereto for the year ended July
31, 2008. All adjustments were of a normal recurring nature unless otherwise
disclosed. In the opinion of management, all adjustments necessary for a fair
statement of the results of operations for the interim period have been
included. The results of operations for such interim periods are not necessarily
indicative of the results for the full year.
FINANCIAL INSTRUMENTS
The Company's financial instruments consist of amount accounts payable and 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.
7
Netventory Solutions Inc.
(A Development Stage Company)
Notes to Financial Statements
October 31, 2008
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 under Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes." SFAS No. 109 requires the use
of an asset and liability approach in accounting for income taxes.
SFAS No. 109 requires the reduction of deferred tax assets by a valuation
allowance if, based on the weight of available evidence, it is more likely than
not that some or all of the deferred tax assets will not be realized. 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.
NOTE 3 - DUE TO STOCKHOLDER
The amount owing to stockholder is unsecured, non-interest bearing and has no
specific terms of repayment.
NOTE 4 - 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, the company issued 2,140,000 common shares for total proceeds
of $47,000.
As at October 31, 2008, the company has no warrants or options outstanding.
8
Netventory Solutions Inc.
(A Development Stage Company)
Notes to Financial Statements
October 31, 2008
NOTE 5 - INCOME TAXES
The Company provides for income taxes under Statement of Financial Accounting
Standards No. 109, ACCOUNTING FOR INCOME TAXES. SFAS No. 109 requires the use of
an asset and liability approach in accounting for income taxes. Deferred tax
assets and liabilities are recorded based on the differences between the
financial statement and tax bases of assets and liabilities and the tax rates in
effect currently.
SFAS No. 109 requires the reduction of deferred tax assets by a valuation
allowance if, based on the weight of available evidence, it is more likely than
not that some or all of the deferred tax assets will not be realized. 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 $5,902, which is calculated by multiplying a 22% estimated
tax rate by the cumulative NOL of $26,827.
NOTE 6 - RELATED PARTY TRANSACTION
As at October 31, 2008, there is a balance owing to a stockholder of the Company
in the amount of $950.
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 7 - 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.
9
Netventory Solutions Inc.
(A Development Stage Company)
Notes to Financial Statements
October 31, 2008
NOTE 7 - GOING CONCERN (CONTINUED)
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 $26,827 as of October 31, 2008. 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 8 - RECENT ACCOUNTING PRONOUNCEMENTS
Below is a listing of the most recent accounting standards SFAS 150-154 and
their effect on the Company.
STATEMENT NO. 150 - ACCOUNTING FOR CERTAIN FINANCIAL INSTRUMENTS WITH
CHARACTERISTICS OF BOTH LIABILITIES AND EQUITY (ISSUED 5/03)
This Statement establishes standards for how an issuer classifies and measures
certain financial instruments with characteristics of both liabilities and
equity.
STATEMENT NO. 151- INVENTORY COSTS-AN AMENDMENT OF ARB NO. 43, CHAPTER 4 (ISSUED
11/04)
This statement amends the guidance in ARB No. 43, Chapter 4, INVENTORY PRICING,
to clarify the accounting for abnormal amounts of idle facility expense,
freight, handling costs, and wasted material (spoilage). Paragraph 5 of ARB 43,
Chapter 4, previously stated that "...under some circumstances, items such as
idle facility expense, excessive spoilage, double freight and re-handling costs
may be so abnormal ass to require treatment as current period charges...." This
Statement requires that those items be recognized as current-period charges
regardless of whether they meet the criterion of "so abnormal." In addition,
this Statement requires that allocation of fixed production overheads to the
costs of conversion be based on the normal capacity of the production
facilities.
STATEMENT NO. 152 - ACCOUNTING FOR REAL ESTATE TIME-SHARING TRANSACTIONS (AN
AMENDMENT OF FASB STATEMENTS NO. 66 AND 67)
This Statement amends FASB Statement No. 66, ACCOUNTING FOR SALES OF REAL
ESTATE, to reference the financial accounting and reporting guidance for real
estate time-sharing transactions that is provided in AICPA Statement of Position
(SOP) 04-2, ACCOUNTING FOR REAL ESTATE TIME-SHARING TRANSACTIONS.
This Statement also amends FASB Statement No. 67, Accounting FOR COSTS AND
INITIAL RENTAL OPERATIONS OF REAL ESTATE PROJECTS, states that the guidance for
(a) incidental operations and (b) costs incurred to sell real estate projects
does not apply to real estate time-sharing transactions. The accounting for
those operations and costs is subject to the guidance in SOP 04-2.
10
Netventory Solutions Inc.
(A Development Stage Company)
Notes to Financial Statements
October 31, 2008
NOTE 8 - RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED)
STATEMENT NO. 153- EXCHANGES OF NON-MONETARY ASSETS (AN AMENDMENT OF APB OPINION
NO. 29)
The guidance in APB Opinion No. 29, ACCOUNTING FOR NON-MONETARY TRANSACTIONS, is
based on the principle that exchanges of non-monetary assets should be measured
based on the fair value of the assets exchanged. The guidance in that Opinion,
however, includes certain exceptions to the principle. This Statement amends
Opinion 29 to eliminate the exception for non-monetary exchanges of similar
productive assts and replaces it with a general exception for exchanges of
non-monetary assets that do not have commercial substance. A non-monetary
exchange has commercial substance if the future cash flows of the entity are
expected to change significantly as a result of the exchange.
STATEMENT 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.
SFAS NO. 155 ACCOUNTING FOR CERTAIN HYBRID FINANCIAL INSTRUMENTS-AN AMENDMENT OF
FASB STATEMENTS NO. 133 AND 140
This statement amends FASB Statements No. 140, Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities. This statement
resolves issues addressed in Statement 133 Implementation Issue No. D1,
Application of Statement 133 to Beneficial Interests in Securitized Financial
Assets. This statement is effective for all financial instruments acquired or
issued after the beginning of an entity's first fiscal year that begins after
September 15, 2006.
SFAS NO. 156 ACCOUNTING FOR SERVICING OF FINANCIAL ASSETS-AN AMENDMENT OF FASB
STATEMENT NO. 140
This statement amends FASB Statement No. 140 with respect to the accounting for
separately recognized servicing liabilities. An entity should adopt this
statement as of the beginning of its first fiscal year that begins after
September 15, 2006.
SFAS NO. 157 FAIR VALUE MEASUREMENTS
In September 2006, the FASB issued SFAS No. 157, FAIR VALUE MEASUREMENTS, which
defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles, and expands disclosures about fair
value measurements. SFAS No. 157 does not require any new fair value
measurements, but provides guidance on how to measure fair value by providing a
fair value hierarchy used to classify the source of the information. This
statement is effective for us beginning May 1, 2008.
11
Netventory Solutions Inc.
(A Development Stage Company)
Notes to Financial Statements
October 31, 2008
NOTE 8 - RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED)
SFAS NO. 158 EMPLOYERS' ACCOUNTING FOR DEFINED BENEFIT PENSION AND OTHER
POSTRETIREMENT PLANS-AN AMENDMENT OF FASB STATEMENTS NO. 87, 88, 106, AND
132(R))
This statement improves the financial reporting by requiring an employer to
recognize the overfunded or underfunded status of a defined benefit
postretirement plan (other than a multiemployer plan) as an asset or liabilities
in its statement of financial positions and to recognize changes in that funded
status in the year in which the changes occur through comprehensive income of a
business entity. This statement also improves financial reporting by requiring
an employer to measure the funded status of a plan as of the date of its
year-end statement of financial position, with limited exceptions.
SFAS NO. 159 THE FAIR VALUE OPTION FOR FINANCIAL ASSETS AND FINANCIAL
LIABILITIES-INCLUDING AN AMENDMENT OF FASB STATEMENT NO. 115
This statement permits entities to choose to measure many financial instruments
and certain items at fair value. The objective is to improve the financial
reporting by providing entities with the opportunity to mitigate volatility in
reported earnings caused by measuring related assets and liabilities differently
without having to apply complex hedge accounting provisions. This statement is
expected to expand the use of fair value measurement objectives for accounting
for financial instruments. This statement is effective as of the beginning of an
entity's first fiscal year that begins after November 15, 2007.
SFAS NO. 160 NON-CONTROLLING INTEREST IN CONSOLIDATED FINANCIAL STATEMENTS-AN
AMENDMENT OF ARB NO. 51
This statement amends ARB 51 to establish accounting and reporting standards for
the non-controlling interest in a subsidiary and for the deconsolidation of a
subsidiary. It also changes the way the consolidated income statement is
presented for non-controlling interest. This statement improves comparability by
eliminating diversity of methods. This statement also requires expanded
disclosure.
SFAS NO. 161
This statement is intended to enhance the disclosure requirements for derivative
instruments and hedging activities as required by SFAS 133.
SFAS 162
This statement indentifies the sources of accounting principles and the
framework for selecting the principles to by used in the preparation of
financial statements for entities that are presented in conformity with
generally accepted accounting principles in the United States, (the GAAP
hierarchy).
12
Netventory Solutions Inc.
(A Development Stage Company)
Notes to Financial Statements
October 31, 2008
NOTE 8 - RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED)
FIN NO. 48
In June 2006, the FASB issued Interpretation No. 48 ("FIN No. 48"), ACCOUNTING
FOR UNCERTAINTY IN INCOME TAXES--AN INTERPRETATION OF FASB STATEMENT NO. 109,
which clarifies the accounting for uncertainty in income taxes recognized in an
enterprise's financial statements in accordance with SFAS No. 109, ACCOUNTING
FOR INCOME TAXES. The Interpretation provides a recognition threshold and
measurement attribute for the financial statement recognition and measurement of
a tax position taken or expected to be taken in a tax return. Under FIN No. 48,
the Company may recognize the tax benefit from an uncertain tax position only if
it is more likely than not that the tax position will be sustained on
examination by the taxing authorities, based on the technical merits of the
position. The tax benefits recognized in the financial statements from such a
position should be measured based on the largest benefit that has a greater than
50% likelihood of being realized upon ultimate settlement. FIN No. 48 also
provides guidance on de-recognition, classification, interest and penalties,
accounting in interim periods, disclosure, and transition. FIN No. 48 is
effective for us beginning July 1, 2007.
In June 2006, the FASB ratified the Emerging Issues Task Force ("EITF")
consensus on EITF Issue No. 06-2, "Accounting for Sabbatical Leave and Other
Similar Benefits Pursuant to FASB Statement No. 43." EITF Issue No. 06-2
requires companies to accrue the costs of compensated absences under a
sabbatical or similar benefit arrangement over the requisite service period.
EITF Issue No. 06-2 is effective for us beginning July 1, 2007. The cumulative
effect of the application of this consensus on prior period results should be
recognized through a cumulative-effect adjustment to retained earnings as of the
beginning of the year of adoption. Elective retrospective application is also
permitted.
Staff Accounting Bulletin ("SAB") No. 108, Considering the Effects of Prior Year
Misstatements when Quantifying Current Year Misstatements. SAB No. 108 requires
companies to quantify misstatements using both a balance sheet (iron curtain)
and an income statement (rollover) approach to evaluate whether either approach
results in an error that is material in light of relevant quantitative and
qualitative factors, and provides for a one-time cumulative effect transition
adjustment. SAB No. 108.
The FASB has replaced SFAS No. 141 with a new statement on Business Combinations
that changes the way that minority interest is recorded and modified as a
parent's interest in a subsidiary changes.
The adoption of these new Statements is not expected to have a material effect
on the Company's current financial position, results or operations, or cash
flows.
13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This report on Form 10-Q contains forward-looking statements that involve risks
and uncertainties. You should not place undue reliance on these forward-looking
statements. Our actual results could differ materially from those anticipated in
the forward-looking statements for many reasons, including the risks described
in this report, our registration statement on Form S-1 and other filings we make
from time to time with the Securities and Exchange Commission. Although we
believe the expectations reflected in the forward-looking statements are
reasonable, they relate only to events as of the date on which the statements
are made. We do not intend to update any of the forward-looking statements after
the date of this report to conform these statements to actual results or to
changes in our expectations, except as required by law.
This discussion and analysis should be read in conjunction with the unaudited
interim financial statements and notes thereto included in this report and the
audited financials in our registration statement on Form S-1 for the period
ended July 31, 2008.
OVERVIEW
We are a development stage company with limited operations and no revenues from
our business operations. Our auditors have issued a going concern opinion. This
means that our auditors believe there is substantial doubt that we can continue
as an on-going business for the next twelve months. We do not anticipate that we
will generate significant revenues until we have completed our development of
our software and marketing plan to generate customers. Accordingly, we must
raise cash from sources other than our operations in order to implement our
marketing plan.
In our management's opinion, there is a need for wireless network services
enabling the creation of wireless communities. We are focused on developing an
authentication and billing software product, and offering a wireless networking
service for the creation of wireless communities. We intend to enable service
providers, organizations, and individuals to deploy wireless networks, and to
sell subscriptions to end-users to access such wireless networks. Our goal is to
provide users with the ability to roam across Quuibus-powered wireless networks.
A user with a Quuibus account will be able to connect through and roam across
any of our partner wireless networks, similar to the way cellular phone
companies allow their customers to roam across different networks.
To meet our need for cash, we have raised money from the sale of shares which we
registered through a public offering which became effective on September 11,
2007. We have sold 2,140,000 shares of our common stock pursuant to this
offering, which generated $47,000 in gross proceeds. We believe that this will
allow us to begin our product development, market our website, and remain in
business for twelve months. If we are unable to generate revenues after the
twelve months for any reason, or if we are unable to make a reasonable profit
after twelve months, we may have to suspend or cease operations. At the present
time, we have not made any arrangements to raise additional cash, other than
through this offering. Because we raised less than the maximum amount and need
additional funds, we may seek to obtain additional funds through a second public
offering, private placement of securities, or loans.
PLAN OF OPERATION
GENERAL
We were incorporated in the state of Nevada in February 8, 2008, under the name
NetVentory Solutions, Inc. and are engaged in the provision of 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.
14
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 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 will be 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.
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
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 and the PhP programming language.
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.
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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.
RESULTS OF OPERATIONS
During the period from February 8, 2008 (date of inception) through October 31,
2008, we incurred a net loss of $26,827. This loss consisted primarily of
incorporation costs, professional fees and filing 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. We have
leased web hosting space needed for hosting our website at a cost of $240
annually.
REVENUES
We had no revenues for the period from February 8, 2008 (date of inception)
through October 31, 2008.
LIQUIDITY AND CAPITAL RESOURCES
Our balance sheet as of October 31, 2008, reflects assets of $28,713. Cash and
cash equivalents from inception to date have been insufficient to provide the
working capital necessary to operate to date.
Notwithstanding the success of this offering, we anticipate generating losses
and, therefore, may be unable to continue operations in the future. If we
require additional capital, we would have to issue debt or equity or enter into
a strategic arrangement with a third party. 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 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
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 the Company. Historically, we have been able to raise a limited
amount of capital through private placements of our equity stock, but we are
uncertain about our continued ability to raise funds privately. Further, we
believe that our company may have difficulties raising capital until we locate a
prospective business opportunity through which we can pursue our plan of
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operation. If we are unable to secure adequate capital to continue our
acquisition efforts, 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.
OFF-BALANCE SHEET ARRANGEMENTS
We have no off-balance sheet arrangements.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
We have identified the policies described in the footnotes to our financial
statements as critical to our business operations and the understanding of our
results of operations. The impact and any associated risks related to these
policies on our business operations are discussed throughout this section where
such policies affect our reported and expected financial results. Our
preparation of our financial statements requires us to make estimates and
assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of our financial
statements, and the reported amounts of revenue and expenses during the
reporting period. There can be no assurance that actual results will not differ
from those estimates. We consider the accounting policies described in our
financial statement footnotes to be critical because the nature of the estimates
or assumptions is material due to the levels of subjectivity and judgment
necessary to account for highly uncertain matters or the susceptibility of such
matters to change or because the impact of the estimates and assumptions on
financial condition or operating performance is material.
EFFECT OF NEW ACCOUNTING PRONOUNCEMENTS
The adoption of the new accounting pronouncements is not expected to have a
material effect on the Company's current financial position, results or
operations, or cash flows.
ITEM 3. CONTROLS AND PROCEDURES
DISCLOSURE CONTROLS AND PROCEDURES:
Our management evaluated, with the participation of our Chief Executive Officer
and Chief Financial Officer, the effectiveness of the design and operation of
our disclosure controls and procedures as of the end of the period covered by
this Quarterly Report on Form 10-Q. Based on this evaluation, our Chief
Executive Officer and our Chief Financial Officer have concluded that our
disclosure controls and procedures are effective to ensure that information we
are required to disclose in reports that we file or submit under the Securities
Exchange Act of 1934 (i) is recorded, processed, summarized and reported within
the time periods specified in Securities and Exchange Commission rules and
forms, and (ii) is accumulated and communicated to our management, including our
Chief Executive Officer and our Chief Financial Officer, as appropriate, to
allow timely decisions regarding required disclosure. Our disclosure controls
and procedures are designed to provide reasonable assurance that such
information is accumulated and communicated to our management. Our disclosure
controls and procedures include components of our internal control over
financial reporting. Management's assessment of the effectiveness of our
internal control over financial reporting is expressed at the level of
reasonable assurance that the control system, no matter how well designed and
operated, can provide only reasonable, but not absolute, assurance that the
control system's objectives will be met.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING:
There were no changes in our internal control over financial reporting that
occurred during our last fiscal quarter that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We may be involved from time to time in ordinary litigation, negotiation and
settlement matters that will not have a material effect on our operations or
finances. We are not aware of any pending or threatened litigation against us or
our officers and directors in their capacity as such that could have a material
impact on our operations or finances.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS
Exhibit
Number Description
------ -----------
3.1 Certificate of Incorporation of NetVentory Solutions, Inc.
3.2 Bylaws of NetVentory Solutions, Inc.
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.
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SIGNATURE
In accordance with the requirements of the Securities Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
NETVENTORY SOLUTIONS, INC.
Date: December 15, 2008 By: /s/ Ronald C. Dela Cruz
-------------------------------------
Name: Ronald C. Dela Cruz
Title: President and Director
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated:
Date: December 15, 2008 By: /s/ David Marby
-------------------------------------
Name: David Marby
Title: Director
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