UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
____________________________________________________
FORM
10-K
(Mark
One)
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x
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ANNUAL
REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For
The Fiscal Year Ended December 31, 2008
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o
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TRANSITION
REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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Commission
File No. 000-51886
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SO
ACT NETWORK, INC.
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(Exact
name of issuer as specified in its charter)
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Delaware
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26-3534190
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(State
or other jurisdiction of incorporation or organization)
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(I.R.S. Employer
Identification No.)
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5715
Will Clayton Parkway, #6572
Humble,
TX
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77338
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code: 210-401-7667
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Securities
registered under Section 12(b) of the Exchange Act:
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None.
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Securities
registered under Section 12(g) of the Exchange Act:
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Common
stock, par value $0.001 per share.
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(Title
of class)
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Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.
Yes o No x
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act. Yes o No x
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes x No o
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not
be contained, to the best of registrant’s knowledge, in definitive proxy or
information statements incorporated by reference Part III of this Form 10-K or
any amendment to this Form 10-K. x
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
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Large
accelerated filer
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o
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Accelerated
filer
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o
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Non-accelerated
filer
(Do
not check if a smaller reporting company)
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o
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Smaller
reporting company
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x
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Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act). Yes o No
x
As of the
last business day of the registrant’s most recently completed second fiscal
quarter, there was no public trading market for our common stock.
As of
March 30, 2009, the registrant had 182,284,000 shares issued and
outstanding, respectively.
Documents Incorporated by
Reference:
None.
TABLE
OF CONTENTS
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PART
I
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1 | |
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ITEM
1.
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1 | |
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ITEM
2.
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2 | |
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ITEM
3.
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2 | |
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ITEM
4.
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2 | |
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PART
II
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2 | |
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ITEM
5.
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2 | |
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ITEM
6.
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3 | |
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ITEM
7.
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3 | |
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ITEM
7A.
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6 | |
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ITEM
8.
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F- | |
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ITEM
9.
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7 | |
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ITEM
9A.
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7 | |
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PART
III
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7 | |
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ITEM
10.
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7 | |
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ITEM
11.
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8 | |
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ITEM
12.
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9 | |
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ITEM
13.
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9 | |
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ITEM
14.
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10 | |
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PART
IV
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10 | |
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ITEM
15.
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10 | |
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SIGNATURES
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11 | |
PART
I
ITEM
1. DESCRIPTION OF
BUSINESS
Description
of Our Business
Overview
We were
incorporated in the State of Delaware on December 9, 2005. We are a development
stage company currently creating innovative search technologies within a unique
new type of networking platform. Our technologies and networking platform will
lead to substantial benefits and life improvements to millions of people around
the world by bringing together the solutions and solution makers for many of
earth’s major problems, such as poverty, violence, pollution, energy shortage,
lack of education, inadequate health care, cancer and heart disease, etc. Our
network and agenda therefore are compatible and complementary with the
goals, missions and agenda of President Obama and Change.Org.
We are
conceived as an “Action Oriented Search Engine” (the “Search Engine”) to
connect, encourage, unite and stimulate successful social entrepreneurship. We
are developing a unique proprietary data inter-link between the primary problems
in the world and the best possible solutions being developed globally. These are
solutions that have both the intent and potential to achieve greater safety and
peace by repairing the health of our planet, thereby creating new industries,
jobs and economies of scale.
Our
network is being designed and positioned to become a top web property in all
major global markets. We intend to generate our revenue through low membership
fees from solution makers and problem solvers as well as targeted advertising
from green, eco-friendly companies that will benefit from a highly defined
audience demographic. In addition to providing measurable results to those with
major product and service solutions, it will enhance the overall web experience
for consumer users who will visit for free.
Our
Product
We are
developing a unique proprietary data inter-link between the primary problems in
the world and the best possible solutions being developed globally. Our network
unifies the key elements of successful development for breakthrough solutions to
major problems. To illustrate the potential impact of So Act in actual practice,
contemplate an invention idea that would have a positive impact on the American
energy problem today. Start with the goal to discover a new transportation
device that is “environment neutral” (has no polluting effect and does not
extract anything from the environment). The idea proposed is to invent and build
a car that runs on air. The technology would let you drive 60 miles at 35 mph
with a simple off-the-shelf air compressor. Add a tiny amount of fuel and the
same car will run 800 miles at highway speeds without stopping. There are
enormous benefits to the environment this invention could provide. There’s the
low cost of operation, the decreased need for oil, and the increased jobs and
opportunity that very low cost, zero-pollution, personal transportation would
bring. This actual
technology has existed in a working format for around 20 years.
Innovation moves slowly while our problems increase on earth at a faster pace.
Through networking and an advanced search function, we allow the development and
proliferation of such an invention (or any invention) to occur at a faster pace
thus providing a real benefit to the global economy and people everywhere by
providing a unique development forum and environment where obstacles, barriers
and costs can be reduced and timelines to get to market improved.
Marketing
We plan
to generate revenue from low membership fees from solution makers and problem
solvers as well as targeted advertising from green, eco-friendly companies. We
also plan to benefit from an advertise revenue strategy that taps into a 21
billion dollar market growing at approximately 10 billion dollars a year,
currently dominated by Google and a small handful of other
companies.
We
believe there is a large social and professional demand for our network.
Solution makers around the world face challenges in creating major solutions to
critical world problems. In order to create an effective solution, a solution
maker needs access to abundant of information about a particular major problem
and potential solutions. In addition, developing solutions to major problems is
also a lonely process with many obstacles. Our network unifies the key elements
of successful development for breakthrough solutions to major problems,
meeting the needs to shorten the solution development timeline. Our network and
agenda therefore are compatible and complementary in all respects with the
goals, missions and agenda of President Obama and Change.Org.
1
We expect
to draw our customer bases from two groups of audiences. The first group is
categorized as socially conscious innovators, inventors, scientists, explorers,
investors and creative thinkers developing legitimate world-improving solutions.
The second group is categorized as socially conscious, social investing, social
business, green and eco-friendly companies who can advertise their existing
solutions to highly targeted consumers within our internet
networking.
Competition
Google
and MySpace expect to launch their new web-based network in June 2009 which
contains elements existent in our network. Even though their
products, either on its own or combined together, can be loosely compared to our
network, our network provides additional services by unifying key elements of
successful development for breakthrough solutions to major problems. We are not
aware of any other specific web-based properties that more closely resemble the
business model, identity and features found in our network.
Intellectual
Property
Our
Search Engine and network platform contain several trade secrets. In addition,
we have applied to register our business name So Act with the U.S. Patent and
Trademark Office, which is currently subject to its review.
ITEM
2. DESCRIPTION OF
PROPERTY.
Our
principal business office is located at 5715 Will Clayton Parkway, #6572,
Humble, TX 77338. Our search engine and network platform which are expected to
launch in the end of the second quarter of 2009 are located in a facility in
Albuquerque, New Mexico. The facility is supported by minimal hardware for
100,000 servers with databases scalable to 200 billion web pages.
ITEM 3. LEGAL
PROCEEDINGS.
To the
best of our knowledge, there are no known or pending litigation proceedings
against us..
ITEM
4. SUBMISSION OF
MATTERS TO A VOTE OF SECURITY HOLDERS.
On
October 7, 2008, in accordance with the majority vote of our shareholders in
lieu of a special meeting, we appointed Greg Halpern as the chairman of our
Board of Directors.
On October
15, 2008, in accordance with the majority vote of our shareholders in lieu of a
special meeting, we changed our company name from 43010, Inc. to So Act Network,
Inc. by filing an amendment to the Articles of Incorporation with the Delaware Secretary of
State. The amendment was attached as Exhibit 3.1 to the current report on Form
8-K filed on October 17, 2008 and is incorporated herewith by
reference.
PART
II
ITEM 5. MARKET
FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
Market
Information
There is
presently no public market for our shares of common stock. We anticipate
applying for trading of our common stock on the OTC Bulletin Board upon the
effectiveness of the registration statement of which this prospectus forms
apart. However, we can provide no assurance that our shares of common stock will
be traded on the OTC Bulletin Board or, if traded, that a public market will
materialize.
Holders
As of
March 30, 2009, in accordance with our transfer agent records, we had 42 record
holders of our Common Stock.
Dividends
To date,
we have not declared or paid any dividends on our common stock. We currently do
not anticipate paying any cash dividends in the foreseeable future on our common
stock, when issued pursuant to this offering. Although we intend to retain our
earnings, if any, to finance the exploration and growth of our business, our
Board of Directors will have the discretion to declare and pay dividends in the
future.
Payment
of dividends in the future will depend upon our earnings, capital requirements,
and other factors, which our Board of Directors may deem relevant.
2
Stock
Option Grants
To date,
we have not granted any stock options.
ITEM 6. SELECTED
FINANCIAL DATA.
Not
applicable.
ITEM
7. MANAGEMENT’S
DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The
following plan of operation provides information which management believes is
relevant to an assessment and understanding of our results of operations and
financial condition. The discussion should be read along with our financial
statements and notes thereto. This section includes a number of forward-looking
statements that reflect our current views with respect to future events and
financial performance. Forward-looking statements are often identified by words
like believe, expect, estimate, anticipate, intend, project and similar
expressions, or words which, by their nature, refer to future events. You should
not place undue certainty on these forward-looking statements. These
forward-looking statements are subject to certain risks and uncertainties that
could cause actual results to differ materially from our
predictions.
Overview
We were
incorporated in the State of Delaware as of December 9, 2005. We are a
development stage company currently creating innovative search technologies
within a unique new type of networking platform. Our technologies and networking
platform will lead to substantial benefits and life improvements to millions of
people around the world by bringing together the solutions and solution makers
for many of earth’s major problems, such as poverty, violence, pollution, energy
shortage, lack of education, inadequate health care, cancer and heart disease,
etc. Our network and agenda therefore are compatible and complementary with the
goals, missions and agenda of President Obama and Change.Org.
We are
conceived as an “Action Oriented Search Engine” (A.O.S.E.) to connect,
encourage, unite and stimulate successful social entrepreneurship in innovative
ways by developing a proprietary data inter-link between the primary problems in
the world and possible solutions being developed globally. These are solutions
that have both the intent and potential to achieve greater safety and peace by
repairing the health of our planet, thereby creating new industries, jobs and
economies of scale.
We are
being designed and positioned to become a web property in all major global
markets. We intend to generate revenues through low membership fees from
solution makers and problem solvers as well as targeted advertising from green,
eco-friendly companies that will benefit from a highly defined audience
demographic. In addition to providing measurable results to those with major
product and service solutions, it will dynamically enhance the overall web
experience for consumer users who will visit for free.
Plan
of Operation
We plan
to generate revenue from low membership fees from solution makers and problem
solvers as well as targeted advertising from green, eco-friendly companies. We
also plan to benefit from an advertise revenue strategy that taps into a 21
billion dollar market growing at approximately 10 billion dollars a year,
currently dominated by Google and a small handful of other
companies.
We
believe there is a large social and professional demand for our network. We
expect to draw our customer bases from two groups of audiences. The first group
is categorized as socially conscious innovators, inventors, scientists,
explorers, investors and creative thinkers developing legitimate world-improving
solutions. The second group is categorized as socially conscious, social
investing, social business, green and eco-friendly companies who can advertise
their existing solutions to highly targeted consumers within our internet
networking.
3
During
the next twelve months, we anticipate the need for capital to fund the So Act
Network’s two primary activities. The first need is for the development of the
So Act Network and the intuitive So Act Search Engine and second is for the
maintenance of our regulatory filings and responsibilities which include legal,
accounting and electronic filing services. It is anticipated that the cost to
maintain these activities will be no less than $56,000 and no more than
$108,000. While we will likely seek a second 506D private placement within the
next 12 months, in the meantime we will rely on additional capital infusions
from our CEO, Greg Halpern, until such time that the market provides a positive
outlook for additional funding potential. Mr. Halpern is prepared to continue to
loan money to us as necessary at current prime rate and to continue to accrue
salary that cannot be paid at the present time due to the need to devote any
available funds to the aforementioned requirements. If we are able to launch the
So Act Network as anticipated during the second calendar quarter of 2009, it
expects to generate enough revenue to become cash flow positive by fiscal year
end of 2009.
As of the
date of this filing, we are entering the phase two of the development of the So
Act Network platform and believe it can have an online version for beta testing
on or before June 2009. Development of the final version will then continue on
throughout the summer of 2009 until enough consumer feedback has been obtained
and the appropriate improvements made to achieve a fully functional
network.
As of the
date of this filing, we do not expect to purchase or sell any plant or
significant equipment or increase our number of employees in the next 12
months.
Results
of Operations
The
following tables set forth key components of our results of operations for the
periods indicated, in dollars, and key components of our revenue for the period
indicated, in dollars.
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For
the Years Ended December 31,
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||||||||
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2008
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2007
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|||||||
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Operating
Expenses
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||||||||
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General
and Administrative
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$
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62,210
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$
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1,400
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||||
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Professional
Fees
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11,325
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-
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||||||
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Compensation
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43,549
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-
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||||||
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Total
Operating Expenses
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117,084
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1,400
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||||||
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Loss
from Operations
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(117,084
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)
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(1,400
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)
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||||
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Other
Expense
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||||||||
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Interest
Expense
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(31
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)
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-
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|||||
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Total
Other Expense
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(31
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)
|
-
|
|||||
|
Provision
for Income Taxes
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-
|
-
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||||||
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Net
Loss
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$
|
(117,115
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)
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$
|
(1,400
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)
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||
|
Net
Loss Per Share - Basic and Diluted
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$
|
(0.00
|
)
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$
|
(0.00
|
)
|
||
|
Weighted
average number of shares outstanding
|
||||||||
|
during
the year Basic and Diluted
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38,818,104
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400,000
|
||||||
For
the Fiscal Year Ended December 31, 2008 and for the Fiscal Year Ended December
31, 2007
General and Administrative
Expenses: Our general and administrative expenses were $62,210 for the
fiscal year of 2008 and $1,400 for the fiscal year of 2007, representing an
increase of $60,810 or approximately 4343.57%, as a result of our expenses on
advertising which include the cost of public relations activities, stock issued
for services, and other expenses associated with the private placement
memorandum.
4
Net Loss: Our net loss for
the fiscal year of 2008 was $117,115, compared to $1,400 for fiscal year of
2007. The increase in net loss was the result of the substantial increase in our
operating expenses.
Liquidity
and Capital Resources
We are in
the development state with no operations, have an accumulated deficit of
$256,820 for the period from December 9, 2005 (inception) to December 31, 2008,
and have negative cash flow from operations of $21,914 from inception. As
noted in our Auditor’s Report, our auditor has raise doubt about our ability to
continue as a going concern.
From our
inception through December 31, 2008, our primary source of funds has been the
proceeds of private offerings of our common stock and loans from
stockholders. Our need to obtain capital from outside investors is
expected to continue until we are able to achieve profitable operations, if
ever. There is no assurance that management will be successful in
fulfilling all or any elements of its plans.
For the
fiscal year ended December 31, 2008, we received $18,803 from Greg Halpern, our
principal shareholder. Pursuant to the terms of the loan, the loan is bearing an
annual interest rate of 3.25% and due on demand. As of December 31, 2008, we
still owe $3,803 in principal and $31 in accrued interest.
Recent
Accounting Pronouncements
In
December 2007, the Financial Accounting Standards Board (FASB) issued SFAS No.
160, “Non-controlling
Interests in Consolidated Financial Statements – an amendment of ARB No.
51”. This statement improves the relevance, comparability, and
transparency of the financial information that a reporting entity provides in
its consolidated financial statements by establishing accounting and reporting
standards that require; the ownership interests in subsidiaries held by parties
other than the parent and the amount of consolidated net income attributable to
the parent and to the non-controlling interest be clearly identified and
presented on the face of the consolidated statement of income, changes in a
parent’s ownership interest while the parent retains its controlling financial
interest in its subsidiary be accounted for consistently, when a subsidiary is
deconsolidated, any retained non-controlling equity investment in the former
subsidiary be initially measured at fair value, entities provide sufficient
disclosures that clearly identify and distinguish between the interests of the
parent and the interests of the non-controlling owners. SFAS No. 160
affects those entities that have an outstanding non-controlling interest in one
or more subsidiaries or that deconsolidate a subsidiary. SFAS No. 160
is effective for fiscal years, and interim periods within those fiscal years,
beginning on or after December 15, 2008. Early adoption is prohibited. The
adoption of this statement is not expected to have a material effect on the
Company's financial statements.
In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative
Instruments and Hedging Activities, an amendment of FASB Statement No. 133”
(SFAS 161). This statement is intended to improve transparency in financial
reporting by requiring enhanced disclosures of an entity’s derivative
instruments and hedging activities and their effects on the entity’s financial
position, financial performance, and cash flows. SFAS 161 applies to all
derivative instruments within the scope of SFAS 133, “Accounting for Derivative
Instruments and Hedging Activities” (SFAS 133) as well as related hedged items,
bifurcated derivatives, and non-derivative instruments that are designated and
qualify as hedging instruments. Entities with instruments subject to SFAS 161
must provide more robust qualitative disclosures and expanded quantitative
disclosures. SFAS 161 is effective prospectively for financial statements issued
for fiscal years and interim periods beginning after November 15, 2008,
with early application permitted. We are currently evaluating the disclosure
implications of this statement.
In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles” (SFAS 162”). SFAS 162 identifies the sources
of accounting principles and the framework for selecting principles to be used
in the preparation of financial statements of nongovernmental entities that are
presented in conformity with generally accepted accounting principles in the
United States. This statement shall be effective 60 days following the
SEC’s approval of the Public Company Accounting Oversight Board’s amendments to
AU section 411, The Meaning of Present Fairly in Conformity with Generally
Accepted Accounting Principles. The Company is currently evaluating
the impact of SFAS 162, but does not expect the adoption of this pronouncement
will have a material impact on its financial position, results of operations or
cash flows.
5
In May
2008, the FASB issued SFAS No. 163, “Accounting for Financial Guarantee
Insurance Contracts-an interpretation of FASB Statement No. 60.” Diversity
exists in practice in accounting for financial guarantee insurance contracts by
insurance enterprises under FASB Statement No. 60, Accounting and Reporting by
Insurance Enterprises. This results in inconsistencies in the recognition and
measurement of claim liabilities. This Statement requires that an insurance
enterprise recognize a claim liability prior to an event of default (insured
event) when there is evidence that credit deterioration has occurred in an
insured financial obligation. This Statement requires expanded disclosures about
financial guarantee insurance contracts. The accounting and disclosure
requirements of the Statement will improve the quality of information provided
to users of financial statements. The adoption of FASB 163 is not expected to
have a material impact on the Company’s financial position.
Critical
Accounting Policies and Estimates
Our
financial statements and related public financial information are based on the
application of accounting principles generally accepted in the United States
(“GAAP”). GAAP requires the use of estimates; assumptions, judgments and
subjective interpretations of accounting principles that have an impact on the
assets, liabilities, revenues and expense amounts reported. These estimates can
also affect supplemental information contained in our external disclosures
including information regarding contingencies, risk and financial condition. We
believe our use of estimates and underlying accounting assumptions adhere to
GAAP and are consistently and conservatively applied. We base our estimates on
historical experience and on various other assumptions that we believe to be
reasonable under the circumstances. Actual results may differ materially from
these estimates under different assumptions or conditions. We continue to
monitor significant estimates made during the preparation of our financial
statements.
Use of Estimates: In preparing financial
statements in conformity with generally accepted accounting principles,
management is required to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure of contingent
assets and liabilities at the date of the financial statements and revenues and
expenses during the reported period. Actual results could differ from
those estimates.
Revenue
Recognition: Revenue is recognized when persuasive evidence of
an arrangement exists, delivery has occurred, the fee is fixed or determinable
and collectability is assured. We had no revenue for the twelve
months ended December 31, 2008 and 2007, respectively.
Stock-Based
Compensation:
The
Company accounts for its stock-based compensation under the provisions of SFAS
No.123(R) Accounting for Stock Based Compensation. Under SFAS No. 123(R), the
Company is permitted to record expenses for stock options and other employee
compensation plans based on their fair value at the date of grant. Any such
compensation cost is charged to expense on a straight-line basis over the
periods the options vest. If the options had cashless exercise provisions, the
Company utilizes variable accounting.
6
Common
stock, stock options and common stock warrants issued to other than employees or
directors are recorded on the basis of their fair value, as required by SFAS No.
123(R), which is measured as of the date required by EITF Issue 96-18, Accounting for Equity Instruments
That Are Issued to Other Than Employees for Acquiring, or in Conjunction with
Selling, Goods or Services. In accordance with EITF 96-18, the stock
options or common stock warrants are valued using the Black-Scholes model on the
basis of the market price of the underlying common stock on the valuation date,
which for options and warrants related to contracts that have substantial
disincentives to nonperformance is the date of the contract, and for all
other contracts is the vesting date. Expense related to the options and warrants
is recognized on a straight-line basis over the shorter of the period over which
services are to be received or the vesting period. Where expense must be
recognized prior to a valuation date, the expense is computed under the
Black-Scholes model on the basis of the market price of the underlying common
stock at the end of the period, and any subsequent changes in the market price
of the underlying common stock up through the valuation date is reflected in the
expense recorded in the subsequent period in which that change
occurs.
In
December 2002, the Financial Accounting Standards Board (FASB) issued SFAS No.
148, Accounting for
Stock-Based Compensation-Transition and Disclosure. SFAS No. 148 also
amends the disclosure requirements of SFAS No. 123(R), requiring prominent
disclosure in annual and interim financial statements regarding a company's
method for accounting for stock-based employee compensation and the effect of
the method on reported results.
Off-Balance Sheet
Arrangements
We do not
have any off-balance sheet arrangements, financings, or other relationships with
unconsolidated entities or other persons, also known as “special purpose
entities” (SPEs).
ITEM 7A. QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We are
subject to certain market risks, including changes in interest rates and
currency exchange rates. We have not undertaken any specific actions to
limit those exposures.
7
ITEM
8. FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA.
(A
DEVELOPMENT STAGE COMPANY)
CONTENTS
|
PAGE
|
F-1
- F-2
|
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS
|
|
PAGE
|
F-3
|
BALANCE
SHEETS AS OF DECEMBER 31, 2008 AND AS OF DECEMBER 31,
2007
|
|
PAGE
|
F-4
|
STATEMENTS
OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2008
AND DECEMBER 31, 2007 AND FOR THE PERIOD DECEMBER 9, 2005
(INCEPTION) TO DECEMBER 31, 2008
|
|
PAGE
|
F-5
|
STATEMENT
OF CHANGES IN STOCKHOLDERS’ DEFICIENCY FOR THE PERIOD FROM DECEMBER
9, 2005 (INCEPTION) TO DECEMBER 31, 2008
|
|
PAGE
|
F-6
|
STATEMENTS
OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2008 AND DECEMBER
31, 2007 AND FOR THE PERIOD DECEMBER 9, 2005 (INCEPTION) TO DECEMBER 31,
2008
|
|
PAGES
|
F-7
- F-14
|
NOTES
TO FINANCIAL STATEMENTS
|
 |
Webb
& Company, P.A.
|
|
Certified
Public Accountants
|
REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
To the
Board of Directors of:
So Act
Network, Inc. (F/K/A 43010, Inc.) (A Development Stage Company)
We have
audited the accompanying balance sheet of So Act Network, Inc. (F/K/A 43010,
Inc.) (A Development Stage Company) as of December 31, 2008 and the related
statements of operations, changes in stockholders' deficiency and cash flows for
the year then ended and for the period from December 9, 2005(inception) to
December 31, 2008. The financial statements for the year ended December 31, 2007
were audited by other auditors who issued a report dated February 25, 2008. The
financial statements for the period from December 9, 2005 (inception) to
December 31, 2008 in so far as they relate to amounts for the period through
December 31, 2007, are based solely on the report of the other auditors. 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 audit.
We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides 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 So Act Network, Inc. (F/K/A 43010,
Inc.) (A Development Stage Company) as of December 31, 2008 and the results of
its operations and its cash flows for the year then ended and for the period
December 9, 2005 (inception) through to December 31, 2008 in conformity with
accounting principles generally accepted in the United States of
America.
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 2 to the financial
statements, the Company is in the development stage with no operations, has an
accumulated deficit of $256,820 for the period from December 9, 2005 (Inception)
to December 31, 2008, and has a negative cash flow from operations of $21,914
from inception. These factors raise substantial doubt about the Company's
ability to continue as a going concern. Management's plans concerning these
matters are also described in Note 2. The financial statements do not include
any adjustments that might result from the outcome of this
uncertainty.
/s/WEBB &
COMPANY, P.A.
WEBB
& COMPANY, P.A.
Boynton
Beach, Florida
March 30,
2009
F-1
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
We have
audited the accompanying balance sheets of So Act Network, Inc. (F/K/A 43010,
Inc.) as of December 31, 2007 and the related statements of operations,
stockholders’ equity, and cash flows for the twelve months then ended. These
financial statements are the responsibility of company’s management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We
conducted our audit in accordance with standards of The Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statements presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of So Act Network at December
31, 2007 and the results of its operations and its cash flows for the twelve
months then ended in conformity with U.S. Generally Accepted Accounting
Principles.
Gately
& Associates, L.L.C.
Altamonte
Springs, FL
March 6,
2009
F-2
|
So
Act Network, Inc.
|
||||||||
|
(f/k/a
43010, Inc.)
|
||||||||
|
(A
Development Stage Company)
|
||||||||
|
Balance
Sheets
|
||||||||
|
ASSETS
|
||||||||
|
December
31, 2008
|
December
31, 2007
|
|||||||
|
Current
Assets
|
||||||||
|
Cash
|
$ | 33,950 | $ | - | ||||
|
Prepaid
Expenses
|
359 | - | ||||||
|
Total Current
Assets
|
34,309 | - | ||||||
|
Property
and Equipment, net
|
2,437 | |||||||
|
Intangible
assets
|
275 | - | ||||||
|
Total Assets
|
$ | 37,021 | $ | - | ||||
|
LIABILITIES AND STOCKHOLDERS'
DEFICIENCY
|
||||||||
|
Current
Liabilities
|
||||||||
|
Accounts
payable
|
$ | 860 | $ | - | ||||
|
Accrued
Expenses
|
46,910 | 3,150 | ||||||
|
Loan
payable - related party
|
3,803 | - | ||||||
|
Total
Current Liabilities
|
51,573 | 3,150 | ||||||
|
Commitments
and Contingencies
|
- | - | ||||||
|
Stockholders'
Deficiency
|
||||||||
|
Preferred
stock, $0.001 par value; 10,000,000 shares
authorized,
|
||||||||
|
No
shares issued and outstanding
|
- | - | ||||||
|
Common
stock, $0.001 par value; 250,000,000 shares
authorized,
|
||||||||
|
181,940,000
and 100,000 shares issued and outstanding, respectively
|
181,940 | 100 | ||||||
|
Additional
paid-in capital
|
128,078 | - | ||||||
|
Subscription
receivable
|
(67,750 | ) | - | |||||
|
Deficit
accumulated during the development stage
|
(256,820 | ) | (3,250 | ) | ||||
|
Total
Stockholders' Deficiency
|
(14,552 | ) | (3,150 | ) | ||||
|
Total
Liabilities and Stockholders' Deficiency
|
$ | 37,021 | $ | - | ||||
See accompanying notes to
financial statements.
F-3
|
So
Act Network, Inc.
|
|||||||||||||||||
|
(f/k/a
43010, Inc.)
|
|||||||||||||||||
|
(A
Development Stage Company)
|
|||||||||||||||||
|
Statements
of Operations
|
|||||||||||||||||
|
For
the Years Ended December 31,
|
For
the Period From
December 9,
2005
|
||||||||||||||||
|
2008
|
2007
|
(Inception)
to
December
31, 2008
|
|||||||||||||||
|
Operating
Expenses
|
|||||||||||||||||
|
General
and Administrative
|
$ | 62,210 | $ | 1,400 | $ | 65,460 | |||||||||||
|
Professional
Fees
|
11,325 | - | 11,325 | ||||||||||||||
|
Compensation
|
43,549 | - | 43,549 | ||||||||||||||
|
Total
Operating Expenses
|
117,084 | 1,400 | 120,334 | ||||||||||||||
|
Loss
from Operations
|
(117,084 | ) | (1,400 | ) | (120,334 | ) | |||||||||||
|
Other
Expense
|
|||||||||||||||||
|
Interest
Expense
|
(31 | ) | - | (31 | ) | ||||||||||||
|
Total
Other Expense
|
(31 | ) | - | (31 | ) | ||||||||||||
|
Provision
for Income Taxes
|
- | - | - | ||||||||||||||
|
Net
Loss
|
$ | (117,115 | ) | $ | (1,400 | ) | $ | (120,365 | ) | ||||||||
|
Net
Loss Per Share - Basic and Diluted
|
$ | (0.00 | ) | $ | (0.00 | ) | |||||||||||
|
Weighted
average number of shares outstanding
|
|||||||||||||||||
|
during
the year Basic and Diluted
|
38,818,104 | 400,000 | |||||||||||||||
See accompanying notes to
financial statements.
F-4
|
So
Act Network, Inc.
|
||||||||||||||||||||||||||||||||
|
(f/k/a
43010, Inc.)
|
||||||||||||||||||||||||||||||||
|
(A
Development Stage Company)
|
||||||||||||||||||||||||||||||||
|
Statement
of Changes in Stockholders' Deficiency
|
||||||||||||||||||||||||||||||||
|
Deficit
|
||||||||||||||||||||||||||||||||
|
Accumulated
|
||||||||||||||||||||||||||||||||
|
Preferred
stock
|
Common
stock
|
Additional
|
During
the
|
Total
|
||||||||||||||||||||||||||||
|
paid-in
|
Development
|
Subscription
|
Stockholder's
|
|||||||||||||||||||||||||||||
|
Shares
|
Amount
|
Shares
|
Amount
|
capital
|
Stage
|
Receivable
|
(Deficiency)
|
|||||||||||||||||||||||||
|
Balance,
December 9, 2005 (Inception)
|
- | $ | - | - | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||||||||
|
Stock
issued on acceptance of incorporation expenses
|
- | - | 100,000 | 100 | - | - | - | 100 | ||||||||||||||||||||||||
|
Net
loss for the peiord December 9, 2005 (Inception) to December 31,
2005
|
- | - | - | - | - | (400 | ) | (400 | ) | |||||||||||||||||||||||
|
Balance,
December 31, 2005
|
- | - | 100,000 | 100 | - | (400 | ) | - | (300 | ) | ||||||||||||||||||||||
|
Net
loss
|
- | - | - | - | - | (1,450 | ) | - | (1,450 | ) | ||||||||||||||||||||||
|
Balance,
December 31, 2006
|
- | - | 100,000 | 100 | - | (1,850 | ) | - | (1,750 | ) | ||||||||||||||||||||||
|
Net
loss
|
- | - | - | - | - | (1,400 | ) | - | (1,400 | ) | ||||||||||||||||||||||
|
Balance,
December 31, 2007
|
- | - | 100,000 | 100 | - | (3,250 | ) | - | (3,150 | ) | ||||||||||||||||||||||
|
Common
stock issued for services to founder ($0.001/sh)
|
- | - | 44,900,000 | 44,900 | - | - | - | 44,900 | ||||||||||||||||||||||||
|
Common
stock issued for cash ($0.25/sh)
|
- | - | 473,000 | 473 | 117,777 | - | (67,750 | ) | 50,500 | |||||||||||||||||||||||
|
Common
stock issued for services ($0.25/sh)
|
- | - | 12,000 | 12 | 2,988 | - | - | 3,000 | ||||||||||||||||||||||||
|
Shares
issued in connection with stock dividend
|
- | - | 136,455,000 | 136,455 | - | (136,455 | ) | - | - | |||||||||||||||||||||||
|
In
kind contribution of rent
|
- | - | - | - | 2,913 | - | - | 2,913 | ||||||||||||||||||||||||
|
Accrued
expenses payment made by a former shareholder
|
- | - | - | - | 4,400 | - | - | 4,400 | ||||||||||||||||||||||||
|
Net
loss
|
- | - | - | - | - | (117,115 | ) | - | (117,115 | ) | ||||||||||||||||||||||
|
Balance,
December 31, 2008
|
- | $ | - | 181,940,000 | $ | 181,940 | $ | 128,078 | $ | (256,820 | ) | $ | (67,750 | ) | $ | (14,552 | ) | |||||||||||||||
See accompanying notes to
financial statements.
F-5
|
So
Act Network, Inc.
|
||||||||||||
|
(f/k/a
43010, Inc.)
|
||||||||||||
|
(A
Development Stage Company)
|
||||||||||||
|
Statement
of Cash Flows
|
||||||||||||
|
For
the Years Ended December 31,
|
For
the Period FromDecember 9, 2005
(Inception)
to
|
|||||||||||
|
2008
|
2007
|
December
31,
2008
|
||||||||||
|
Cash
Flows From Operating Activities:
|
||||||||||||
|
Net
Loss
|
$ | (117,115 | ) | $ | (1,400 | ) | $ | (120,365 | ) | |||
|
Adjustments
to reconcile net loss to net cash used in operations
|
||||||||||||
|
Depreciation
|
127 | - | 127 | |||||||||
|
In
kind contribution of rent
|
2,913 | - | 2,913 | |||||||||
|
Stock
issued for services
|
47,900 | - | 48,000 | |||||||||
|
Changes
in operating assets and liabilities:
|
||||||||||||
|
Increase
in prepaid expenses
|
(359 | ) | - | (359 | ) | |||||||
|
Increase
accounts payable
|
860 | - | 860 | |||||||||
|
Increase
in accrued expenses
|
43,760 | 1,400 | 46,910 | |||||||||
|
Net
Cash Used In Operating Activities
|
(21,914 | ) | - | (21,914 | ) | |||||||
|
Cash
Flows From Investing Activities:
|
||||||||||||
|
Register
of trademark
|
(275 | ) | - | (275 | ) | |||||||
|
Purchase
of equipment
|
(2,564 | ) | - | (2,564 | ) | |||||||
|
Net
Cash Used In Investing Activities
|
(2,839 | ) | - | (2,839 | ) | |||||||
|
Cash
Flows From Financing Activities:
|
||||||||||||
|
Proceeds
from stockholder loans
|
18,803 | - | 18,803 | |||||||||
|
Repayment
of stockholder loans
|
(15,000 | ) | - | (15,000 | ) | |||||||
| Accrued Expenses payment made by a former shareholder | 4,400 | 4,400 | ||||||||||
|
Proceeds
from issuance of stock, net of subscriptions receivable
|
50,500 | - | 50,500 | |||||||||
|
Net
Cash Provided by Financing Activities
|
58,703 | - | 58,703 | |||||||||
|
Net
Decrease in Cash
|
33,950 | - | 33,950 | |||||||||
|
Cash
at Beginning of Year
|
- | - | - | |||||||||
|
Cash
at End of Year
|
$ | 33,950 | $ | - | $ | 33,950 | ||||||
|
Supplemental disclosure of cash flow
information:
|
||||||||||||
|
Cash
paid for interest
|
$ | - | $ | - | $ | - | ||||||
|
Cash
paid for taxes
|
$ | - | $ | - | $ | - | ||||||
|
Supplemental disclosure of non-cash investing and
financing activities:
|
||||||||||||
|
Shares
issued in connection with stock dividend
|
$ | 136,455 | $ | 136,455 | ||||||||
|
Stock
sold for subscription
|
$ | 67,750 | $ | - | $ | 67,750 | ||||||
See accompanying notes to
financial statements.
F-6
SO
ACT NETWORK, INC.
(F/K/A
43010, Inc.)
(A DEVELOPMENT STAGE
COMPANY)
NOTES
TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2008 AND
2007
|
NOTE
1
|
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES AND
ORGANIZATION
|
(A)
Organization
So Act
Network, Inc. Inc. (f/k/a 43010, Inc.) (the “Company”) was
incorporated in Delaware on December 9, 2005. The Company is currently in the
development stage and plans to create search technologies within an online
networking platform.
On
October 15, 2008 the Company changed its name to So Act Network,
Inc.
(B) Use of
Estimates
In
preparing financial statements in conformity with generally accepted accounting
principles, management is required to make estimates and assumptions that affect
the reported amounts of assets and liabilities and the disclosure of contingent
assets and liabilities at the date of the financial statements and revenues and
expenses during the reported period. Actual results could differ from
those estimates.
(C) Cash and Cash
Equivalents
For
purposes of the cash flow statements, the Company considers all highly liquid
investments with original maturities of three months or less at the time of
purchase to be cash equivalents.
(D) Property and
Equipment
Property
and equipment are stated at cost, less accumulated
depreciation. Expenditures for maintenance and repairs are charged to
expense as incurred. Depreciation is provided using the straight-line
method over the estimated useful life of three to five years.
(E) Revenue
Recognition
Revenue
is recognized when persuasive evidence of an arrangement exists, delivery has
occurred, the fee is fixed or determinable and collectability is
assured. The Company had no revenue for the twelve months ended
December 31, 2008 and 2007, respectively.
(F) Advertising
Costs
Advertising
costs are expensed as incurred and include the costs of public relations
activities. These costs are included in general and administrative
expenses and totaled $867 and $0 in the years ended December 31, 2008 and 2007,
respectively.
F-7
SO
ACT NETWORK, INC.
(F/K/A
43010, Inc.)
(A DEVELOPMENT STAGE
COMPANY)
NOTES
TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2008 AND
2007
(G) Identifiable Intangible
Assets
As of
December 31, 2008 and 2007, $275 and $0, respectively of costs related to
registering a trademark has been capitalized. It has been determined
that the trademark has an indefinite useful life and not subject to
amortization. However, the trademark will be reviewed for impairment
annually, or more frequently if impairment indicators arise.
(H) Loss Per
Share
Basic and
diluted net loss per common share is computed based upon the weighted average
common shares outstanding as defined by Financial Accounting Standards No. 128,
“Earnings per Share.” As of December 31, 2008 and 2007, respectively,
there were no common share equivalents outstanding.
(I) Income
Taxes
The
Company accounts for income taxes under the Statement of Financial Accounting
Standards No. 109, “Accounting for Income Taxes” (“Statement
109”). Under Statement 109, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled. Under Statement 109, the effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period that
includes the enactment date.
As of
December 31, 2008 and 2007, the Company has a net operating loss carry forward
of approximately $67,942 and $3,250, available to offset future taxable income
through 2028 and 2007, respectively. The valuation allowance at December 31,
2008 and 2007 was $23,100 and $650, respectively. The net change in the
valuation allowance for the period ended December 31, 2008 and 2007 was an
increase of $22,820 and $280, respectively.
(J) Business
Segments
The
Company operates in one segment and therefore segment information is not
presented.
F-8
SO
ACT NETWORK, INC.
(F/K/A
43010, Inc.)
(A DEVELOPMENT STAGE
COMPANY)
NOTES
TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2008 AND
2007
(K) Recent Accounting
Pronouncements
In
December 2007, the Financial Accounting Standards Board (FASB) issued SFAS No.
160, “Noncontrolling Interests
in Consolidated Financial Statements – an amendment of ARB No.
51”. This statement improves the relevance, comparability, and
transparency of the financial information that a reporting entity provides in
its consolidated financial statements by establishing accounting and reporting
standards that require; the ownership interests in subsidiaries held by parties
other than the parent and the amount of consolidated net income attributable to
the parent and to the noncontrolling interest be clearly identified and
presented on the face of the consolidated statement of income, changes in a
parent’s ownership interest while the parent retains its controlling financial
interest in its subsidiary be accounted for consistently, when a subsidiary is
deconsolidated, any retained noncontrolling equity investment in the former
subsidiary be initially measured at fair value, entities provide sufficient
disclosures that clearly identify and distinguish between the interests of the
parent and the interests of the noncontrolling owners. SFAS No. 160
affects those entities that have an outstanding noncontrolling interest in one
or more subsidiaries or that deconsolidate a subsidiary. SFAS No. 160
is effective for fiscal years, and interim periods within those fiscal years,
beginning on or after December 15, 2008. Early adoption is prohibited. The
adoption of this statement is not expected to have a material effect on the
Company's financial statements.
In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative
Instruments and Hedging Activities, an amendment of FASB Statement No. 133”
(SFAS 161). This statement is intended to improve transparency in financial
reporting by requiring enhanced disclosures of an entity’s derivative
instruments and hedging activities and their effects on the entity’s financial
position, financial performance, and cash flows. SFAS 161 applies to all
derivative instruments within the scope of SFAS 133, “Accounting for Derivative
Instruments and Hedging Activities” (SFAS 133) as well as related hedged items,
bifurcated derivatives, and nonderivative instruments that are designated and
qualify as hedging instruments. Entities with instruments subject to SFAS 161
must provide more robust qualitative disclosures and expanded quantitative
disclosures. SFAS 161 is effective prospectively for financial statements issued
for fiscal years and interim periods beginning after November 15, 2008,
with early application permitted. We are currently evaluating the disclosure
implications of this statement.
In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles” (SFAS 162”). SFAS 162 identifies the sources
of accounting principles and the framework for selecting principles to be used
in the preparation of financial statements of nongovernmental entities that are
presented in conformity with generally accepted accounting principles in the
United States. This statement shall be effective 60 days following the
SEC’s approval of the Public Company Accounting Oversight Board’s amendments to
AU section 411, The Meaning of Present Fairly in Conformity with Generally
Accepted Accounting Principles. The Company is currently evaluating
the impact of SFAS 162, but does not expect the adoption of this pronouncement
will have a material impact on its financial position, results of
operations or cash flows.
F-9
SO
ACT NETWORK, INC.
(F/K/A
43010, Inc.)
(A DEVELOPMENT STAGE
COMPANY)
NOTES
TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2008 AND
2007
In May
2008, the FASB issued SFAS No. 163, “Accounting for Financial Guarantee
Insurance Contracts-an interpretation of FASB Statement No. 60.” Diversity
exists in practice in accounting for financial guarantee insurance contracts by
insurance enterprises under FASB Statement No. 60, Accounting and Reporting by
Insurance Enterprises. This results in inconsistencies in the recognition and
measurement of claim liabilities. This Statement requires that an insurance
enterprise recognize a claim liability prior to an event of default (insured
event) when there is evidence that credit deterioration has occurred in an
insured financial obligation. This Statement requires expanded disclosures about
financial guarantee insurance contracts. The accounting and disclosure
requirements of the Statement will improve the quality of information provided
to users of financial statements. The adoption of FASB 163 is not expected to
have a material impact on the Company’s financial position.
(L) Fair Value of Financial
Instruments
The
carrying amounts on the Company’s financial instruments including accounts
payable, accrued expenses, and stockholder loans, approximate fair value due to
the relatively short period to maturity for this instrument.
(M) Stock Based
Compensation
The
Company accounts for its stock-based compensation under the provisions of SFAS
No.123(R) Accounting for
Stock Based Compensation.
Under SFAS No. 123(R), the Company is permitted to record expenses for stock
options and other employee compensation plans based on their fair value at the
date of grant. Any such compensation cost is charged to expense on a
straight-line basis over the periods the options vest. If the options had
cashless exercise provisions, the Company utilizes variable
accounting.
Common
stock, stock options and common stock warrants issued to other than employees or
directors are recorded on the basis of their fair value, as required by SFAS No.
123(R), which is measured as of the date required by EITF Issue
96-18, Accounting for Equity
Instruments That Are Issued to Other Than Employees for Acquiring, or in
Conjunction with Selling, Goods or Services. In accordance with EITF
96-18, the stock options or common stock warrants are valued using the
Black-Scholes model on the basis of the market price of the underlying common
stock on the valuation date, which for options and warrants related to contracts
that have substantial disincentives to nonperformance is the date of the
contract, and for all other contracts is the vesting date. Expense related to
the options and warrants is recognized on a straight-line basis over the shorter
of the period over which services are to be received or the vesting period.
Where expense must be recognized prior to a valuation date, the expense is
computed under the Black-Scholes model on the basis of the market price of the
underlying common stock at the end of the period, and any subsequent changes in
the market price of the underlying common stock up through the valuation date is
reflected in the expense recorded in the subsequent period in which that change
occurs.
In
December 2002, the Financial Accounting Standards Board (FASB) issued SFAS No.
148, Accounting for
Stock-Based Compensation-Transition and Disclosure. SFAS No. 148 also
amends the disclosure requirements of SFAS No. 123(R), requiring prominent
disclosure in annual and interim financial statements regarding a company's
method for accounting for stock-based employee compensation and the effect of
the method on reported results.
|
NOTE
2
|
GOING
CONCERN
|
As
reflected in the accompanying financial statements, the Company is in the
development stage with no operations, has an accumulated deficit of $256,820 for
the period from December 9, 2005 (inception) to December 31, 2008 and has
negative cash flow from operations of $21,914 from inception. This raises
substantial doubt about its ability to continue as a going concern. The ability
of the Company to continue as a going concern is dependent on the Company’s
ability to raise additional capital and implement its business plan. The
financial statements do not include any adjustments that might be necessary if
the Company is unable to continue as a going concern.
Management
believes that actions presently being taken to obtain additional funding and
implement its strategic plans provide the opportunity for the Company to
continue as a going concern.
|
NOTE
3
|
NOTE PAYABLE -
SHAREHOLDER
|
For the
year ended December 31, 2008 the Company received $18,803 from a principal
shareholder. Pursuant to the terms of the loan, the loan is bearing an annual
interest rate of 3.25% and due on demand. As of December 31, 2008, the Company
still owes $3,803 in principal to the principal shareholder and accrued interest
of $31 (See Note 7).
F-10
SO
ACT NETWORK, INC.
(F/K/A
43010, Inc.)
(A DEVELOPMENT STAGE
COMPANY)
NOTES
TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2008 AND
2007
|
NOTE
4
|
PROPERTY AND
EQUIPMENT
|
At
December 31, 2008 property and equipment is as follows:
|
2008
|
||||
|
Website
Development
|
$ | 2,564 | ||
|
Less
accumulated depreciation and amortization
|
(127 | ) | ||
| $ | 2,437 | |||
Depreciation
expense for the years ended December 31, 2008 was $127.
|
NOTE
5
|
STOCKHOLDERS’
DEFICIENCY
|
(A) Common Stock Issued for
Cash
On
December 31, 2005, the Company issued 100,000 shares of common stock for cash of
$100 in exchange for acceptance of the incorporation expenses for the Company.
As a result of the 4 for 1 forward stock split (the “Forward Split”), the
100,000 share were increased to 400,000 shares.
For the
year ended December 31, 2008, the Company issued 473,000 shares of common stock
for cash of $118,250, of which $67,750 was a subscription receivable and
collected in January 2009 (See Note 8(F)). As a result of the Forward Split, the
473,000 shares were increased to 1,892,000 shares.
(B) Stock issued for
Services
On
October 14, 2008, the Company issued 44,900,000 shares of common stock to its
founder having a fair value of $44,900 ($0.001/share) in exchange for services
provided (See Note 7). As a result of the forward split (the “Forward Split”),
the 44,900,000 shares were increased to 179,600,000 shares.
On
November 24, 2008, the Company issued 4,000 shares of common stock having a fair
value of $1,000 ($0.25/share) in exchange for consulting services. As a result
of the Forward Split, the 4,000 shares were increased to 16,000
shares.
On
December 5, 2008, the Company issued 4,000 shares of common stock having a fair
value of $1,000 ($0.25/share) in exchange for consulting services. As a result
of the Forward Split, the 4,000 shares were increased to 16,000
shares.
On
December 20, 2008, the Company issued 4,000 shares of common stock having a fair
value of $1,000 ($0.25/share) in exchange for consulting services. As a result
of the Forward Split, the 4,000 shares were increased to 16,000
shares.
F-11
SO
ACT NETWORK, INC.
(F/K/A
43010, Inc.)
(A DEVELOPMENT STAGE
COMPANY)
NOTES
TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2008 AND
2007
(C) Stock Split Effected in
the Form of a Stock Dividend
On
January 16, 2009, the Company's Board of Directors declared a four-for-one stock
split to be effected in the form of a stock dividend. The stock split
was distributed on January 16, 2009 to shareholders of record. A
total of 136,455,000 shares of common stock were issued. All basic
and diluted loss per share and average shares outstanding information has been
adjusted to reflect the aforementioned stock dividend (See Note
8(B)).
(D)
In Kind Contribution
During
the fourth quarter of 2008, a former stockholder of the company paid $4,400 of
operating expenses on behalf of the company.
During
the fourth quarter of 2008, the principal stockholder contributed office space
with a fair value of $2,913. (See note 7.)
|
NOTE
6
|
COMMITMENTS
|
Employment
Agreement
On
October 13, 2008 the Company executed an employment agreement with its President
and CEO. The term of the agreement is ten years. As
compensation for services, the President will receive a monthly compensation of
$18,000 beginning October 13, 2008. In addition, to the base salary,
the employee is entitled to receive a 10% commission of all sales of the
Corporation. The agreement also calls for the employee to receive
health benefits (See Note 7).
|
NOTE
7
|
RELATED PARTY
TRANSACTIONS
|
On
October 14, 2008, the Company issued 44,900,000 shares of common stock to its
founder having a fair value of $44,900 ($0.001/share) in exchange for services
provided (See Note 5(B)). As a result of the Forward Split, the 44,900,000
shares were increased to 179,600,000 shares.
On
October 13, 2008 the Company executed an employment agreement with its President
and CEO. The term of the agreement is ten years. As
compensation for services, the President will receive a monthly compensation of
$18,000 beginning October 13, 2008. In addition, to the base salary,
the employee is entitled to receive a 10% commission of all sales of the
Corporation. The agreement also calls for the employee to receive
health benefits (See Note 6).
For the
year ended December 31, 2008 the Company received $18,803 from a principal
shareholder. Pursuant to the terms of the loan, the loan is bearing an annual
interest rate of 3.25% and is due on demand. As of December 31, 2008, the
Company still owes $3,803 in principal to the principal shareholder and accrued
interest of $31 (See Note 3).
During
the fourth quarter of 2008, the principal stockholder contributed office space
with a fair value of $2,913. (See note 5(D).)
F-12
SO
ACT NETWORK, INC.
(F/K/A
43010, Inc.)
(A DEVELOPMENT STAGE
COMPANY)
NOTES
TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2008 AND
2007
|
NOTE
8
|
SUBSEQUENT
EVENTS
|
(A) Amendment to Articles of
Incorporation
January
27, 2009 the Company amended its Articles of Incorporation to provide for an
increase in its authorized share capital. The authorized capital stock increased
to 250,000,000 common shares at a par value of $0.001 per share, and 10,000,000
preferred shares at a par value of $0.001 with class and series designations,
voting rights, and relative rights and preferences to be determined by the Board
of Directors of the Company from time to time.
(B) Stock Split Effected in
the Form of a Stock Dividend
On
January 16, 2009, the Company's Board of Directors declared a four-for-one stock
split to be effected in the form of a stock dividend. The stock split
was distributed on January 16, 2009 to shareholders of record. A
total of 136,455,000 shares of common stock were issued. All basic
and diluted loss per share and average shares outstanding information has been
adjusted to reflect the aforementioned stock dividend (See Note 5
(C)).
(C) Consulting
Agreement
On
January 19, 2009, the Company entered into a consulting agreement to construct
social network software for a fee of $150 and $375 an hour. The
contract will remain in place until either party desire to cancel. A
retainer fee of $20,000 has been paid upon the execution of the agreement and
will be used towards the services provided. In addition, on January
14, 2009 the Company issued 20,000 shares in exchange for services valued at
$5,000($0.25/share) As a result of the Forward Split, the 20,000 shares
were increased to 80,000 shares. (See Note
8(E)).
On
January 20, 2009, the Company entered into a service agreement with a transfer
agent to become the Company's transfer agent for the purpose of maintaining
stock ownership and transfer records for the Company.
(D)Stock issued for
Cash
On
January 2, 2009, the Company entered into stock purchase agreements to issue
20,000 shares of common stock for cash of $5,000 ($0.25/share). As a result of
the Forward Split, the 20,000 shares were increased to 80,000
shares.
On
January 3, 2009, the Company entered into stock purchase agreements to issue
2,000 shares of common stock for cash of $500 ($0.25/share). As a result of the
Forward Split, the 2,000 shares were increased to 8,000 shares.
F-13
SO
ACT NETWORK, INC.
(F/K/A
43010, Inc.)
(A DEVELOPMENT STAGE
COMPANY)
NOTES
TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2008 AND
2007
On
January 3, 2009, the Company entered into stock purchase agreements to issue
2,000 shares of common stock for cash of $500 ($0.25/share). As a result of the
Forward Split, the 2,000 shares were increased to 8,000 shares.
On
January 11, 2009, the Company entered into stock purchase agreements to issue
32,000 shares of common stock for cash of $8,000 ($0.25/share). As a result of
the Forward Split, the 32,000 shares were increased to 128,000
shares.
On
January 12, 2009, the Company entered into stock purchase agreements to issue
2,000 shares of common stock for cash of $500 ($0.25/share). As a result of the
Forward Split, the 2,000 shares were increased to 8,000 shares.
On
January 15, 2009, the Company entered into stock purchase agreements to issue
4,000 shares of common stock for cash of $1,000 ($0.25/share). As a result of
the Forward Split, the 4,000 shares were increased to 16,000
shares.
(E) Stock issued for
Services
On
January 12, 2009, the Company issued 4,000 shares of common stock having a fair
value of $1,000 ($0.25/share) in exchange for consulting services. As a result
of the Forward Split, the 4,000 shares were increased to 16,000
shares.
(F) Subscription
Receivable
During
the month of January 2009, $67,750 of stock subscription receivable has been
collected (See Note 5(A)).
F-14
ITEM 9. CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
Our
accountant is Webb
& Company, P.A. Independent Registered Public Accounting Firm. We do
not presently intend to change accountants. At no time have there been any
disagreements with such accountants regarding any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure.
ITEM 9A. CONTROLS AND
PROCEDURES
Evaluation
of Disclosure Controls and Procedures
Pursuant
to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”),
the Company carried out an evaluation, with the participation of the Company’s
management, including the Company’s Chief Executive Officer (“CEO”) and Chief
Financial Officer (“CFO”) (the Company’s principal financial and accounting
officer), of the effectiveness of the Company’s disclosure controls and
procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the
end of the period covered by this report. Based upon that evaluation, the
Company’s CEO and CFO concluded that the Company’s disclosure controls and
procedures are effective to ensure that information required to be disclosed by
the Company in the reports that the Company files or submits under the Exchange
Act, is recorded, processed, summarized and reported, within the time periods
specified in the SEC’s rules and forms, and that such information is accumulated
and communicated to the Company’s management, including the Company’s CEO and
CFO, as appropriate, to allow timely decisions regarding required
disclosure.
Management's
Annual Report on Internal Control Over Financial Reporting.
The
management of the Company is responsible for establishing and maintaining
adequate internal control over financial reporting for the
Company. Our internal control system was designed to, in general,
provide reasonable assurance to the Company’s management and board regarding the
preparation and fair presentation of published financial statements, but because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation
of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
Our
management assessed the effectiveness of the Company’s internal control over
financial reporting as of December 31, 3008. The framework used by
management in making that assessment was the criteria set forth in the document
entitled “ Internal Control – Integrated Framework” issued by the Committee of
Sponsoring Organizations of the Treadway Commission. Based on that assessment,
our management has determined that as of December 31, 3008, the Company’s
internal control over financial reporting was effective for the purposes for
which it is intended.
This
annual report does not include an attestation report of the Company’s registered
public accounting firm regarding internal control over financial reporting.
Management's report was not subject to attestation by the Company's registered
public accounting firm pursuant to temporary rules of the Securities and
Exchange Commission that permit the Company to provide only management's report
in this annual report.
Changes
in Internal Control over Financial Reporting
No change
in our system of internal control over financial reporting occurred during the
period covered by this report, fourth quarter of the fiscal year ended December
31, 2008 that has materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting.
PART
III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS,
PROMOTERS AND CONTROL PERSONS: COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE
ACT
Our sole
executive officer and director and their respective age as of March 25, 2009 is
as follows:
|
NAME
|
AGE
|
POSITION
|
|
Greg
Halpern
|
50
|
President,
Chief Executive Officer, Chief Financial
Officer
|
Set forth
below is a brief description of the background and business experience of our
executive officers and directors for the past five years.
8
Greg
Halpern
Greg
Halpern is the founder and visionary of So Act Network, Inc. Previous to
launching So Act as a commercial venture in October 2008, Mr. Halpern co-founded
“Ultimate Kindness Towards All Living Creatures on Earth” in 2004, an
organization whose purpose was to determine the primary problems in the world
and then locate solutions being developed globally that were intended to achieve
greater safety and peace by repairing the health of our planet, with the
potential to create new industries, jobs and economies of scale. Mr. Halpern has
a history of helping to pioneer innovative new ideas and technologies brought
from conceptualization to reality through small business ventures. In 1998, Mr.
Halpern developed and successfully launched the first and only end-to-end fund
raising exclusively over the internet. CNN featured Mr. Halpern and his 2.5
million dollar Regulation A offering on the Jan Hopkins and Lou Dobbs show. From
2002 to 2007, Mr. Halpern was the Chief Executive Officer of Circle Group
Holdings Inc. (AMEX: CXN) and Z-Trim Holdings Inc. (AMEX: ZTM). Circle Group was
a pioneer of emerging technology companies which provided small business
infrastructure, funding and substantial intellectual capital to bring important
and timely life-changing technologies to market through all early phases of the
commercialization process. Mr. Halpern’s efforts there were focused on acquiring
life changing technologies and bringing these products to the marketplace. With
26 years of experience pioneering emerging technologies, Mr. Halpern has
acquired substantial experience building all aspects of small business
infrastructure, working with computer systems and security technology, public
and private financings of over 35 million dollars, sales and marketing, working
with regulatory agencies such as the FDA and the SEC, manufacturing traditional
goods and technology, inventing, building and securing rights to all aspects of
intellectual property, and testifying in congress on small business
issues.
Term
of Office
Our
directors are appointed for a one-year term to hold office until the next annual
general meeting of our shareholders or until removed from office in accordance
with our bylaws. Our officers are appointed by our board of directors and hold
office until removed by the board
Current
Issues and Future Management Expectations
No board
audit committee has been formed as of the filing of this Annual
Report.
Compliance
With Section 16(A) Of The Exchange Act.
Section
16(a) of the Exchange Act requires the Company’s officers and directors, and
persons who beneficially own more than 10% of a registered class of the
Company’s equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission and are required to
furnish copies to the Company. To the best of the Company’s knowledge, any
reports required to be filed were timely filed in fiscal year ended December 31,
2008.
Code
of Ethics
The
Company has adopted a Code of Ethics applicable to its Chief Executive Officer
and Chief Financial Officer. This Code of Ethics is filed herewith as an
exhibit.
ITEM 11. EXECUTIVE
COMPENSATION
The
following summary compensation table sets forth all compensation awarded to,
earned by, or paid to the named executive officer during the years ended
December 31, 2008, 2007, and 2006 in all capacities for the accounts of our
executive, including the Chief Executive Officer (CEO) and Chief Financial
Officer (CFO):
SUMMARY
COMPENSATION TABLE
|
Name
and Principal Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards
($)
|
Option
Awards
($)
|
Non-Equity
Incentive Plan Compensation ($)
|
Non-Qualified
Deferred Compensation Earnings
($)
|
All
Other Compensation
($)
|
Totals
($)
|
||||||||||||
|
Greg
Halpern,
|
2008
|
$
|
43,548
|
0
|
44,900
|
0
|
0
|
0
|
0
|
$
|
88,448
|
||||||||||
| CEO&CFO |
2007
|
$
|
0
|
0
|
$
|
0
|
0
|
0
|
0
|
0
|
$
|
0
|
|||||||||
|
Michael
Raleigh
|
2008
|
$
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
$
|
0
|
||||||||||
|
CEO
& CFO
|
2007
|
$
|
0
|
0
|
$
|
0
|
0
|
0
|
0
|
0
|
$
|
0
|
|||||||||
|
(1)
|
The
salary stated has been accrued and remains unpaid. In addition to the base
salary, Mr. Greg Halpern shall be entitled to a monthly commission equal
to 10% of all of our sales.
|
9
Option Grants
Table. There were
no individual grants of stock options to purchase our common stock made to the
executive officer named in the Summary Compensation Table through December 31,
2008.
Aggregated
Option Exercises and Fiscal Year-End Option Value Table. There were no stock options
exercised during period ending December 31, 2008 by the executive officer named
in the Summary Compensation Table.
Long-Term Incentive Plan
(“LTIP”) Awards Table.
There were no awards made to a named executive officer in the last
completed fiscal year under any LTIP
Compensation of
Directors
Directors
are permitted to receive fixed fees and other compensation for their services as
directors. The Board of Directors has the authority to fix the compensation of
directors. No amounts have been paid to, or accrued to, directors in such
capacity.
Employment
Agreements
Mr. Greg
Halpern, our President, CEO and CFO, entered into an Employment Agreement with
us on October 13, 2008. The Employment Agreement was attached as
Exhibit 10.1 to the Form 8-K filed on October 17, 2008, and is incorporated here
within by reference.
ITEM 12. SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table provides the names and addresses of each person known to us to
own more than 5% of our outstanding shares of common stock as of March 25,
2009 and by the officers and directors, individually and as a group. Except as
otherwise indicated, all shares are owned directly.
|
Title
of Class
|
Name
and Address
of
Beneficial Owner
|
Amount
and Nature
of
Beneficial Owner
|
Percent
of
Class
(1)
|
|
Common
Stock
|
Greg
Halpern
Address:
11008 Morning Dove Lane
Spring
Grove, IL 60081
|
180,000,000
|
98.75%
|
|
Common
Stock
|
All
executive officers and directors as a group
|
180,000,000
|
98.75%
|
Stock Option
Grants
We have
not granted any stock options to our executive officer since our
incorporation.
ITEM 13. CERTAIN
RELATIONSHIPS AND RELATED TRANSACTION, AND DIRECTOR
INDEPENDENCE
On
October 14, 2008, we issued 44,900,000 shares of common stock of to Mr. Greg
Halpern for his services rendered pursuant to an exemption from registration
under Section 4(2) of the Securities Act of 1933, as
amended. After the completion of a 4 for 1 forward split of our
common stock on January 16, 2009, the 44,900,000 shares were increased to
179,600,000 shares.
On
October 13, 2008, we executed an employment agreement with Mr. Greg Halpern, our
President and CEO. The term of the agreement is ten (10) years. As compensation
for services, Mr. Halpern will receive a monthly compensation of $18,000
beginning October 13, 2008. In addition, to the base salary, Mr. Halpern is
entitled to receive a 10% commission of all of our sales.
For the
year ended December 31, 2008, we received $18,803 from Mr. Greg Halpern, our
principal shareholder. Pursuant to the loan agreement, the loan bears an annual
interest rate of 3.25% and is due on demand. As of December 31, 2008, we still
owe $3,803 in principal and accrued interest of $31.
10
Audit
Fees
For the
Company’s fiscal years ended December 31, 2008 and 2007, we were billed
approximately $1,200
and $1,050 for
professional services rendered for the audit and review of our financial
statements.
Audit Related
Fees
There
were no fees for audit related services for the years ended December 31, 2008
and 2007.
Tax Fees
For the
Company’s fiscal years ended December 31, 2008 and 2007, we were not billed for
professional services rendered for tax compliance, tax advice, and tax
planning.
All Other
Fees
The
Company did not incur any other fees related to services rendered by our
principal accountant for the fiscal years ended December 31, 2008 and
2007.
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
Effective
May 6, 2003, the Securities and Exchange Commission adopted rules that require
that before our auditor is engaged by us to render any auditing or permitted
non-audit related service, the engagement be:
-approved
by our audit committee; or
-entered
into pursuant to pre-approval policies and procedures established by the audit
committee, provided the policies and procedures are detailed as to the
particular service, the audit committee is
informed of each service, and such policies and procedures do not include
delegation of the audit committee's responsibilities to management.
We do not
have an audit committee. Our entire board of directors pre-approves
all services provided by our independent auditors.
The
pre-approval process has just been implemented in response to the new rules.
Therefore, our board of directors does not have records
of what percentage of the above fees were
pre-approved. However, all of the above services and fees were
reviewed and approved by the entire board of directors either before or after
the respective services were rendered.
PART
IV
ITEM 15. EXHIBITS,
FINANCIAL STATEMENT SCHEDULES.
a)
Documents filed as part of this Annual Report
1.
Consolidated Financial Statements
2.
Financial Statement Schedules
3.
Exhibits
14.1 Code
of Ethics
3.1* Amendment
to the Articles of Incorporation Filed on October 15, 2008 with the
Delaware State of Secretary
31.1 Rule
13a-14(a)/ 15d-14(a) Certification of Chief Executive Officer and Chief
Financial Officer
32.1 Section
1350 Certification of Chief Executive Officer and Chief Financial
Officer
*Filed as
Exhibit 3.1 to the Form 8-K filed on October 17, 2009 and incorporated herein by
reference.
11
SIGNATURES
In
accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this Annual Report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Dated:
March 30, 2009
By /s/ Greg
Halpern
Greg
Halpern,
Chief
Executive Officer,
Chief
Financial Officer (Principal Accounting Officer)
In
accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
|
Signature
|
Title
|
Date
|
||
|
/s/
Greg Halpern
|
Chief
Executive Officer,
|
March
30, 2009
|
||
|
Greg
Halpern
|
Chief
Financial Officer (Principal Accounting Officer)
|
|||
12