TEXHOMA ENERGY INC - 10KSB - 20040113 - RESULTS_OF_OPERATIONS
RESULTS OF OPERATIONS
As of the company's fiscal yearend, September 30, 2003 the company had no
significant business operations and generated no material revenues from
operations. The company generated expenses totaling $592,865 of which $175,000
was for officers compensation, $369,300 was for consulting services, $20,380 for
was professional services, and $28,185 was for other general and administrative
expenses.
During the fiscal year, the company's only revenues was $25,000 earned from
management services provided to DCP an affiliated and legally distinct party.
During the period, the company filed a patent application on its intellectual
properties at a cost of $8338. During the period, the company finished the
redesign of the packaging for the four games the company gained the exclusive
rights for via a management agreement with DCP, Limited, an affiliated company
and began marketing those products through sales reps towards the end of the
period. During the period, the company solicited outside consultation from
unrelated and unaffiliated parties to assist the company in the development of
its business and marketing plan at a non-monetary cost in the form of the
issuance of common stock. The Board of Directors approved a total of $344,000 of
such stock issuances for such compensation during the period.
During the year, in an attempt to expand its product line the company began
exploring the opportunities to acquire an established company or enter into
license agreements with interactive educational companies who's products were
different but philosophies were similar to Make Your Move, Inc.'s. As of the
Company's fiscal yearend, the company had not acquired a company or entered into
any license agreements. The Company plans to continue exploring the
opportunities to acquire an established company or enter into license agreements
during the first or second quarter of the Company's fiscal year of 2004.
11
PRODUCT RESEARCH AND DEVELOPMENT AND PRODUCT LAUNCH
As of the company's fiscal yearend September 30, 2003, the company had finished
the development of the company's board games and began marketing those games
through sales reps towards the end of the period. During the period the company
generated $0 in revenues from sales. The Company plans to finish the development
of its online game site and do a launch of the site during the second quarter of
the company's fiscal year, yearend September 30, 2004. During the period, the
company filed a patent application on its proposed game system called the
"Nemesys" Over the next twelve months the Company anticipates that it will
continue to generate research and development expenses related to its proposed
product line.
Over the next twelve months the Company anticipates that in order to complete
its research and development and do a full launch of its product line, the
company will have to raise approximately $2 million. Upon the successful raise
of $2 million the company anticipates a launch of its completed board games and
proposed online game site in 2004 followed by a launch of its proposed game
system in 2005.
PLANTS AND EQUIPMENT
The Company does not presently own any plants or equipment and over the next
twelve months the Company has no plans to purchase any plants or equipment.
EMPLOYEES
Upon the successful capital raise of $2 million the Company expects to
significantly increase its number of employees from currently one fulltime
employee to ten full time employees over the next twelve months.
ITEM 7. FINANCIAL STATEMENTS
The full text of the company's audited financial statements for the fiscal years
ended September 30, 2003 and 2002 are attached to this filing as Exhibit 11.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
12
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT
As of September 30, 2003, the following are the ages of the directors and
executive officers of the Company.
Directors: Age:
Luther Mack 64
Edward McCaffery 41
John Metzker 64
Henry Rolling 38
Executive Officers: Age:
Henry Rolling, President/Secretary/Controller 38
The directors and executive officers of the company were as of September 30,
2003:
Henry Rolling CEO, President, Secretary, Controller, Director 9/30/2002
Dr. Luther Mack, Jr. Director 9/30/2002
Edward McCaffery Director 9/30/2002
John Metzker Director. 9/30/2002
The directors of the Company serve for a term of one year. Each director has
served for the following periods during the Company's fiscal year 2003 ending
September 30:
Luther Mack was elected a director on September 30, 2002 and has served for a
period of 12 months.
Henry Rolling was elected a director on September 30, 2002 and has served for a
period of 12 months.
Edward McCaffery was elected a director on September 30, 2002 and has served for
a period of 3 months.
John Metzker was elected a director on September 30, 2002 and has served for a
period of 3 months.
HENRY L. ROLLING - CEO, President, Secretary, Controller, Director
From June 30, 2001 to present - Mr. Henry Rolling (Mr. Rolling) is the CEO,
President, Secretary and Controller of Make Your Move, Inc.
From 1996 to 1999 - Mr. Rolling served as the President of DCP Limited, a board
game manufacturer.
From 1994 to 1996 Mr. Rolling served as the Vice President of Doubles Chess
Partners, a general partnership that produced the Doubles Chess board game.
Henry L. Rolling is the founder of DCP, Ltd. - doing business as DCP Games. Mr.
Rolling is the co-creator of the games in the Doubles Classic Series (Doubles
Chess, Doubles Checkers, and Doubles Backgammon), and the developer of Cube
Checkers. Mr. Rolling served as the President and CEO of DCP Ltd., and he was
responsible for overseeing and participating in all aspects of the business,
including financing, manufacturing, marketing, and strategic planning. While
playing the position of outside linebacker in the NFL Mr. Rolling received his
B.A. degree in Economics from the University of Nevada. Mr. Rolling also
received his M.S. degree in Economics from the University of Nevada. Mr. Rolling
13
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH
SECTION 16(a) OF THE EXCHANGE ACT - continued
played outside linebacker in the National Football League for nine years with
the Tampa Bay Buccaneers, San Diego Chargers, and the Los Angeles Rams. It was
also during this time that Mr. Rolling started marketing and selling Doubles
Chess, which led to the formation of DCP Limited.
LUTHER MACK, JR. - Director
From 1989 to the present Luther Mack (Mr. Mack) has been the President and CEO
of Mack and Associates, a company that owns and operates eight McDonald
restaurants.
Mr. Mack brings an extensive business background to the company. Mr. Mack owned
KXRI Fox Television in Reno and eight McDonalds Restaurants. Mr. Mack serves on
the boards of Wells Fargo Bank Reno and Harveys Hotel and Casino Properties. Mr.
Mack is the former chairman of the Reno Airport Authority. Mr. Mack is a
frequent guest lecturer for the University of Nevada, Reno Business Department.
Mr. Mack has received an honorary doctorate degree from the University of
Nevada, Reno.
EDWARD McCAFFERY - Director
From 1987 to the present Mr. McCaffery has been the President of Brunsonbilt
Construction & Development Co., Ltd.
Mr. McCaffery has over 15 years of experience as a developer and custom
homebuilder. He is co-owner and partner of Brunsonbuilt Construction &
Development Co., Ltd. where he is responsible for all aspects of management
including finance, accounting, marketing, estimating, contract negotiation, and
project development and completion. Mr. McCaffery is a licensed general
contractor in the State of Nevada. He is a member of the Architectural Control
Committee for both the Caughlin Ranch Homeowners' Association and Somersett
Homes. He also has served on the Board of Directors of the Builders' Council of
the Builders' Association of Nevada, Bishop Manogue High School, Reno National
Little League and the Caughlin Ranch Homeowners' Association. Mr. McCaffery
received his Masters of Business Administration in International Business from
the University of San Diego and his Bachelors of Business Administration in
Accounting from the University of Nevada.
JOHN METZKER - Director
From 2001 to the present, Mr. Metzker has been the Chairman and President of
Metzker Johnson Group, LLC.
From 1998 to 2001 Mr. Metzker was the President and Founder of the Tamarack
Casino Corporation.
From 1995 to 1998 Mr. Metzker was a property developer.
Mr. Metzker has over 40 years of experience in business. He currently is the CEO
and Chairman of the Metzker Johnson Group, LLC, a commercial real estate
company. Mr. Metzker is the former owner of four hotel casino properties in Reno
and Las Vegas Nevada. Mr. Metzker is a former member of the Airport Authority
Committee in Reno, NV and has served on the board for a number of companies
throughout Northern Nevada. Mr. Metzker received his B.S. degree from Duke
University.
14
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH
SECTION 16(a) OF THE EXCHANGE ACT - continued
Mr. John Metzker who currently serves as a Director of company is the
father-in-law of Mr. Henry Rolling who currently serves as the President,
Secretary, Controller and as a director for the Company.
During the year, the company hired Larry Hinderks as the Company's CEO and
Chairman and Alice Heiman has the company's Chief Sales Officer. Larry Hinderks
resigned from serving as the Company's CEO and Chairman in March of 2003 for
personal reasons and Alice Heiman resigned from serving as the Company's Chief
Sales Officer in April of 2003.
During the year, Kristin Rolling resigned from serving as the company's
Secretary and Controller in March of 2003 for personal reasons. Mrs. Rolling is
married to Henry Rolling the company's President. During the year, Stuart Brown
resigned from serving on the company's board of Directors in February of 2003
for personal reasons.
ITEM 10. EXECUTIVE COMPENSATION
During fiscal year 2003, the company paid the following compensation to the
Company's officers and directors:
---------------------------------------------------------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Name and Year Salary ($) Bonus ($) Other Annual Restricted Securities LTIP Payouts All Other
Principle Compensation Stock Underlying ($) Compensation
Position ($) Award(s) ($) Options/SARs ($)
(#)
---------------------------------------------------------------------------------------------------------------------------------
CEO 2003 $43,749 $0 $31,550 0 $0 $0
Henry Rolling ------
------
A 2003 $0 $0 $0 $0 0 $0 $0
President ------
Henry Rolling ------
B 2003 $0 $0 $0 0 $0 $0
Secretary, ------
Controller ------
Kristin Rolling
C 2003 $0 $0 $0 $0 0 $0 $0
Director
Luther Mack
D 2003 $0 $0 $0 $0 0 $0 $0
Director
Edward
McCaffery
E 2003 $0 $0 $0 $0 0 $0 $0
Director
John Metzker
---------------------------------------------------------------------------------------------------------------------------------
Other Executive Compensation: None
Management Compensations:
As of the Company's fiscal yearend, September 30, 2003, the Company generated
$25,000 in revenues from management services for DCP an affiliated and legally
distinct party.
Compensation of Directors: None
15
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of September 30, 2003, the company's directors, officers and over 5% of the
shareholders held beneficially the following shares of common stock or
beneficial interest. Numbers of shares have been adjusted to reflect the 10 for
1 forward split effective June 30, 2001.
Name Title Common Shares % Class
--------------------------------------------------------------------------------
The Rolling Group 7,287,850 52%
a.k.a. Henry L. Rolling, CEO,
President, Secretary Controller, Director
Luther Mack, Jr., Director 298,600 2%
Ed McCaffery, Director 892,000 6%
John Metzker, Director 170,000 1.2%
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Management Agreement With DCP Limited
On November 1, 2001 the board of directors of MYM and DCP Limited voted to enter
into a management agreement and further voted to make it effective June 30,
2002. On November 1, 2001, MYM and DCP entered into a management agreement
whereby MYM would manage and purchase games from DCP and resell them to the
general public. MYM's Board of Directors voted that the 100,000 post split
shares of MYM common stock previously issued for the acquisition of DCP be
retained by DCP, for the "future opportunity to combine" DCP's games Cube
Checkers, Doubles Chess, Doubles Checkers or Doubles Backgammon and related
products into the Company's proposed game technology i.e. proposed game system
and related products or proposed online game site and related products. The
future opportunity begins when MYM has developed its proposed game technology
and is ready to incorporate the proposed product line. DCP is an affiliated
company. The company has no direct or indirect ownership interest in DCP.
The company provided management services for DCP Limited during the company's
entire fiscal year, yearend September 30, 2003. As of the Company's fiscal
yearend, the Company had generated $25,000 in revenues from management services
for DCP an affiliated and legally distinct party.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
31. Certification
32. Certification pursuant to 18 U.S.C. 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
(b) Reports on Form 8-K
None
16
SIGNATURES
In accordance with Section 13 or 15 (d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, there unto
duly authorized.
Dated: January 12, 2003 Make Your Move, Inc.
Registrant
By /s/Henry L. Rolling
--------------------------------
Henry L. Rolling
President
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 and Capacity
By /s/Henry L. Rolling
-------------------------------
Henry L. Rolling January 12, 2003
Chief Executive Officer
President, Secretary, Controller
Chairman of the Board and Director
By /s/Luther Mack, Jr.
-------------------------------
Luther Mack, Jr. January 12, 2003
Director
By /s/Edward McCaffery
-------------------------------
Edward McCaffery January 12, 2003
Director
By /s/John Metzker
-------------------------------
John Metzker January 12, 2003
Director
17
EXHIBIT 11
MAKE YOUR MOVE, INC.
FINANCIAL STATEMENTS
SEPTEMBER 30, 2003
TABLE OF CONTENTS
PAGE
INDEPENDENT AUDITOR'S REPORT F-1
BALANCE SHEET F-2
STATEMENTS OF OPERATIONS F-3
STATEMENTS OF CASH FLOWS F-4
STATEMENTS OF STOCKHOLDERS' EQUITY F-5
NOTES TO FINANCIAL STATEMENTS F-6
1
INDEPENDENT AUDITOR' REPORT
To the Board of Directors and Stockholders
Make Your Move, Inc.
Reno, Nevada
We have audited the accompanying balance sheet of Make Your Move, Inc. (a Nevada
corporation in the development stage) as of September 30, 2003, and the related
statements of operations, changes in stockholders' equity, and cash flows for
each of the years in the two year period then ended., and for the period from
September 30, 1998 (inception) to September 30, 2003, 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 audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Make Your Move, Inc. as of
September 30, 2003 and the results of its operations and its cash flows for each
of the years in the two year period then ended. in conformity with auditing
standards generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 5 to the financial
statements, the Company has suffered substantial recurring losses and has a
negative working capital and equity as of September 30, 2003. It is dependent
upon its shareholders for all cash flow requirements, presently. This condition
raises substantial doubt about its ability to continue as a going concern.. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
Braverman & Company, P.C.
Prescott, Arizona
January 6, 2004
2
F-1
MAKE YOUR MOVE, INC.
( a Development Stage Company)
BALANCE SHEET
SEPTEMBER 30, 2003
ASSETS
CURRENT ASSETS-none $ -
--------------
OTHER ASSETS
Accrued management fees-related party 31,250
Other assets 10,956
--------------
$ 42,206
==============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable-trade $ 14,327
Accrued compensation 43,749
Shareholder advances 7,271
--------------
TOTAL CURRENT LIABILITIES 65,348
--------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, par value $.001, 1,000,000
shares authorized, none issued -
Common stock, par value $.001, 50,000,000
shares authorized, 13,959,600 issued and
outstanding 13,960
Paid-in capital 662,430
Contributed capital 620,004
(Deficit) accumulated during the development stage (1,319,536)
--------------
Total Stockholders' Equity (23,142)
--------------
$ 42,206
==============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
F-2
3
MAKE YOUR MOVE, INC.
( a Development Stage Company)
STATEMENTS OF OPERATIONS
Cumulative
from
September 30,
Year Ended 1998
September 30 (Inception)
--------------------------- to
2003 2002 September 30, 2003
REVENUES-related party $ 25,000 $ 6,250 $ 31,250
------------- ------------- ------------------
EXPENSES
General and administrative 592,865 473,814 1,260,943
Research and development 14,550 89,843
------------- ------------- ------------------
Total expenses 592,865 488,364 1,350,786
------------- ------------- ------------------
NET (LOSS) $ (567,865) $ (482,114) $ (1,319,536)
============= ============= ==================
NET (LOSS) PER SHARE $ (0.04) $ (0.05)
============= =============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 12,682,683 10,692,950
============= =============
correction needed for eps 2003
as shares o/s increased by 762,000
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
F-3
4
MAKE YOUR MOVE, INC.
(a Development Stage Company)
STATEMENTS OF CASH FLOWS
Cumulative
from
September 30,
Year Ended 1998
September 30 (Inception)
----------------------------- to
2003 2002 September 30, 2003
----------------------------- -------------------
OPERATING ACTIVITIES
Net ( loss) $ (567,865) $ (482,114) $ (1,319,536)
Adjustments to reconcile net loss to
net cash used by operating activities:
Common stock issued for services 344,000 267,390 626,390
Contributed capital 194,258 232,418 620,004
Changes in operating assets and liabilities:
Increase in accrued management fees (25,000) (6,250) (31,250)
Increase in accrued compensation 43,749 43,749
Increase (decrease) in accounts payable 13,962 (10,924) 14,327
-------------- -------------- -------------------
Net Cash Provided (Used) by Operating Activities 3,105 520 (46,315)
-------------- -------------- -------------------
INVESTING ACTIVITIES
Increase in other assets (10,956) - (10,956)
-------------- -------------- -------------------
Net Cash (Used) by Investing Activities (10,956) - (10,956)
-------------- -------------- -------------------
FINANCING ACTIVITIES
Shareholder advances 7,271 - 7,271
Proceeds from sale of common stock 50,000
-------------- -------------- -------------------
Net Cash Provided by Financing Activities 7,271 - 57,271
-------------- -------------- -------------------
NET INCREASE IN CASH (580) 520 (0)
CASH AT BEGINNING OF PERIOD, 580 60 -
-------------- -------------- -------------------
CASH AT END OF PERIOD $ (0) $ 580 $ (0)
============== ============== ===================
SUPPLEMENTAL CASH FLOWS INFORMATION
Common stock cancelled in a stock exchange for
lack of consideration to be received $ (300,000)
==============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
F-4
5
MAKE YOUR MOVE, INC.
( a Development Stage Company)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(Deficit)
Accumulated
Common Stock Receivable During the
------------------------ Paid-in Contributed From Development
Shares Amount Capital Capital Shareholder Stage Total
------------------------ --------- ---------- ----------- ----------- ----------
Balances, at inception - $ - $ - $ - $ - $ - $ -
------------------------ --------- ---------- ----------- ----------- ----------
Balances, September 30, 1998 - - - - - - -
Issuance of stock at $.005 per share, October 5, 1998 10,000,000 10,000 40,000 50,000
Net (loss) for the year (50,485) (50,485)
------------------------ --------- ---------- ----------- ----------- ----------
Balances, September 30, 1999 10,000,000 10,000 40,000 - - (50,485) (485)
Net (loss) for the year (485) (485)
------------------------ --------- ---------- ----------- ----------- ----------
Balances, September 30, 2000 10,000,000 10,000 40,000 - (50,970) (970)
Shares issued at $.15 per share, June 30, 2001:
For compensation 100,000 100 14,900 15,000
For acquisition 2,000,000 2,000 298,000 (300,000) -
Contributed capital 193,328 193,328
Net (loss) for the year (218,587) (218,587)
------------------------ --------- ---------- ----------- ----------- ----------
Balances, September 30, 2001 12,100,000 12,100 352,900 193,328 (300,000) (269,557) (11,229)
Shares issued at $.15 per share for consulting services:
January 7, 2002 6,000 6 894 900
June 15, 2002 1,731,600 1,732 258,008 259,740
July 7, 2002 45,000 45 6,705 6,750
Cancellation of outstanding shares, November 2001 (2,000,000) (2,000) (298,000) 300,000 -
Contributed capital 232,418 232,418
Net (loss) for the year (482,114) (482,114)
------------------------ --------- ---------- ----------- ----------- ----------
Balances, September 30, 2002 11,882,600 11,883 320,507 425,746 - (751,671) 6,465
Shares issued for consulting services
at $.50 per share, November 19, 2002 500,000 500 249,500 250,000
at $.15 per share, January 1, 2003 125,000 125 18,625 18,750
at $.025 per share, July 1, 2003 762,000 762 18,288 19,050
at $.23 per share, September 22, 2003 190,000 190 43,510 43,700
at $.025 per share, September 22, 2003 500,000 500 12,000 12,500
Contributed capital 194,258 194,258
Net (loss) for the year (567,865) (567,865)
------------------------ --------- ---------- ----------- ----------- ----------
Balances, September 30, 2003 13,959,600 $ 13,960 $ 662,430 $ 620,004 $ - $(1,319,536) $ (23,142)
============== ========= ========= ========== =========== =========== ==========
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
F-5
6
MAKE YOUR MOVE, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2003
NOTE 1 - THE COMPANY AND ITS SIGNIFICANT ACCOUNTING POLICIES
The Company
Make Your Move, Inc. (the Company or MYM), formerly Pacific Sports Enterprises,
Inc. was incorporated in Nevada on September 28, 1998. In April 2001, the
principal shareholder of the Company sold the majority of its outstanding stock
of the Company for $50,000, and an agreement for the acquired group to provide
the Company with the management required by it to further the development of
computerized game technology being sought after at that time. The agreement
resulted in the Company replacing its existing president/Chairman of the Board
with an individual who was the developer of a series of board, computerized, and
online games, and related products. His company, DCP, Ltd., (DCP) has agreed
with MYM to pay for the incurred management services.
On June 30, 2001, the Company issued 100,000 post-split shares of its $.001 par
value common stock to DCP for the rights to integrate DCP's games and products
into one or more of the products being developed, utilizing game platform,
computerized, and online game technologies. This transaction was valued at $.15
per share or $15,000.
The Company has been in the development stage since inception and has no earned
revenues to date. In accordance with SFAS #7 it is a development stage company.
Its fiscal year end is September 30.
Use of Estimates and Assumptions
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts and the disclosure of
contingent amounts in the Company's financial statements and the accompanying
notes. Actual results could differ from those estimates.
Cash Equivalents
The Company considers all highly liquid investments with the original maturities
of three months or less to be cash equivalents.
Fair Value of Financial Instruments
Statement of Financial Accounting Standards No. 107, disclosures about fair
value of financial instruments, defines the fair value of a financial instrument
as the amount at which the instrument could be exchanged in a current
transaction between willing parties. The carrying values of the Company's
financial instruments, which are accounts receivable and payable approximate
fair values due to the short-term maturities of such instruments.
Patent Costs
Included in other assets are legal fees totaling $8,338, incurred in connection
with certain patent applications relating to the Company's intellectual
properties. Such costs will be amortized ratably over the economic life
associated with the related properties, commencing with the year in which the
letters patent are received.
7
Loss Per Share
Net loss per share is provided in accordance with Statement of Financial
Accounting Standards No. 128 (SFAS No.128) "Earnings Per Share". Basic loss per
share is computed by dividing net loss available to common stockholders by the
weighted average number of common shares outstanding during the period.
NOTE 2 - INCOME TAXES
Income taxes are provided for using the liability method of accounting in
accordance with Statement of Financial Accounting Standards No. 109 "Accounting
for Income Taxes". A deferred tax asset or liability is recorded for all
temporary difference between financial and tax reporting of which depreciation
is the most significant. Deferred tax expense (benefit) results from the net
change during the year of deferred tax assets and liabilities. Valuation
allowances are established, when necessary, to reduce deferred tax assets to the
amount expected to more likely than not realized in future tax returns. Tax law
and rate changes are reflected in income in the period such changes are enacted.
Since inception, the Company has sustained operating losses. For income tax
purposes these operating losses constitute mostly start-up costs, which may be
amortized over 60 months or permanently capitalized at the point business
commences. Approximately $387,000 of the $1,316,000 of operating losses to date
is not deductible since that amounted resulted from capital contributions for
mainly contributed services. The Company has net operating losses of $150,000
which will begin expiring over 20 years in 2019, if unused.
The provision for federal income taxes differs from that computed by applying
federal statutory rates to income (loss) before federal income tax expense, as
indicated in the following analysis: 2002 2003
Expected tax benefit at 34% rate $ (163,919) $ (193,074)
Reduction for non-deductible items 59,500 44,625
Increase in deferred tax asset valuation 104,419 148,449
---------- ----------
Income tax expense for the year -0- -0-
========== ==========
The net deferred tax assets include the following components as of September 30,
2002 and 2003:
On June 19, 2001, the Company entered into an investment banking agreement for a
minimum period of 6 months, to assist the Company in raising up to $15,000,000
of convertible preferred stock and/or implementing a business combination. The
Company advanced a total of $17, 500 as of September 30, 2001, which was
contributed by the principal shareholder to the Company. If the Company is
successful in raising additional equity, total compensation, less the retainer,
is applicable of 6 percent of total equity placements and warrants equal to one
percent of the fully diluted shareholder interest of the Company, after the
effect of the issuance of the all equity securities with a strike price equal to
the implied sale price per share in the placement, with a term of 5 years, and
8
INVESTMENT BANKING AGREEMENT - continued
piggy-back rights after the completion of an initial public offering. In the
case of a business combination, a fee payable in cash of 3 percent of the total
enterprise value will apply, less the retainer.
The investment banker is also entitled to receive reimbursement for up to $3,500
per month, excluding any legal fees and costs, without prior written permission
of the Company. As of September 30, 2003, the investment banking firm has not
provided any financing or successful business combinations, therefore the
Company does not believe it will utilize these services after that date.
NOTE 4 - RELATED PARTY TRANSACTIONS
Management Agreement
Effective June 30, 2001, the Company entered into a 5 year agreement with DCP to
provide management services for DCP and become the exclusive agent for the sales
of DCP products. Management services shall commence July 1, 2002, at the rate of
$25,000 per year. As of September 30, 2003 management fees totaled $31,250, all
of which past due. The payment of this indebtedness is guaranteed by the
Company's president in the event of non-payment, and it is not otherwise offset
by accrued royalties as further described below.
The Company has agreed to pay DCP royalties on a sliding scale basis from 10%
down to 5% based on the Company's gross sales relating to DCP's products.
Ownership of certain of the DCP products will transfer to the Company if total
gross sales reach 10 million dollars within the contract period.
Contributed Capital
The majority of the approximately $620,000 of contributed capital as of
September 30, 2003, was contributed by the president of the Company in the form
of the fair value for his services of $385,000, contributions of cash by the
Board of Directors of $57,500, and the balance for out of pocket costs by the
president and an affiliate, the Rolling Group, to cover a variety of the
Company's financial requirements such as office overhead, research and
development, legal fees, investment banking, and accounting and audit.
Advances
In addition to amounts contributed to the capital of the Company, the president
has advanced certain personal funds required to be returned to him without
interest and collateral. As of September 30, 2003 the balance advanced by him
was $14,771.
NOTE 5 - COMMON STOCK TRANSACTIONS
The Board of Directors approved various common stock issuances totally 2,077,000
shares during the year involving consulting services provided to the Company by
certain individuals and companies. The valuation of the shares issued was
determined by the Board of Directors, and those shares for which Form S-8 were
filed with the Securities and Exchange Commission, enabling those underlying
shares to become free trading, were valued at the average of the last 5 days
trading prices on the OTC electronic bulletin board as of the date of issuance.
Included in the S-8 filing were a commencement bonus for 500,000 shares issued
to a public relations and investor communications firm in November 2003, valued
at $.50 per share, and 190,000 shares valued at $.23 per share, issued in
9
COMMON STOCK TRANSACTIONS - continued
satisfaction of an agreement entered into in December 2002, for production and
media services. Included in the 1,387,000 balance of shares issued, were
1,262,000 shares valued at $31,550 issued to the Rolling Group, an affiliated
entity owned by the president of the Company.
NOTE 6 - GOING CONCERN
The Company's financial statements have been presented on the basis that it is a
going concern, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. The Company's ability to
continue in existence is dependent on its ability to develop additional sources
of capital, and/or achieve profitable operations. The accompanying financial
statements do not include any adjustments that might result from the outcome of
these uncertainties. Management's plan is to acquire an operating business using
a private placement of the Company's common stock as further described in Note
7- subsequent events, below.
NOTE 7 - NON QUALIFYING STOCK PLAN
In September 2003, the Board of Directors approved a non qualifying stock plan
for management employees only wherein up to 15 million shares of the Company's
common stock is to be reserved for issuance. In October 2003, the Company issued
8,618, 125 common shares under the plan, including 6 million shares in
connection with a proposed acquisition reported below as a subsequent event, and
registered them pursuant to the filing of a Form S-8 with the Securities and
Exchange Commission. Because the stock plan was designated for employees only,
and all of the shares registered in the S-8 were issued to non employees, the
entire issuance is being retracted in January 2004.
NOTE 8 - SUBSEQUENT EVENTS
Investment Banking Agreement
In November 2003, the Company entered into an agreement with another investment
banking company to privately place equity securities of the Company with which
to acquire a California based company. The Company is required to pay to the
investment banker various fees, initially including 300,000 restricted common
shares of stock and out of pocket expenses up to $15,000. Should the investment
banker raise the equity financing contemplated, it will receive 7% of the equity
funded, as well as success warrants to purchase up to 7% of the Company's common
stock on substantially the same terms as those of the investor. In addition, the
Company will pay $75,000 plus 1% of the total transaction value as an M&A
completion fee at the closing of acquisition transaction contemplated to occur
in February 2004, for an estimated purchase price of approximately 11 million
dollars. The transaction will be treated as a purchase for financial accounting
purposes in accordance with SFAS # 141.
In contemplation of this proposed acquisition for cash, the Company has
incorporated a wholly owned subsidiary, Educational Technology, Inc., in order
to effect a taxable reverse triangular merger with the target company.
The Company paid to the target company, a non refundable fee of $25,000 in
connection with a binding agreement to enable the Company to perform due
diligence, and determine its capability and interest to acquire the target
company for a period of 75 days ending February 4, 2004, which may be extended
until the end of February 2004. If the acquisition is finalized, the fee will
become part of the purchase price paid for the target company's common stock. If
the acquisition is unsuccessful, the fee will be expensed.
10
License Agreement
On October 7, 2003 the Company entered into a license agreement and plan of
reorganization for downloadable technology. The Board of Directors of the
Company approved and issued 11 million restricted shares of Common stock for the
license, including 6 million shares to the
License Agreement
member of a limited liability company (LLC) affiliated with the licensor, who
represented it had a 50 percent ownership interest in the company which owned
the technology.
On January 7, 2004, the managing member of the company who sold the 50 percent
interest in its company to the licensor's affiliated LLC, informed Make Your
Move, Inc. that the license agreement it entered into on October 7, 2003, should
be cancelled immediately, as the terms of the agreement entered into by the
licensor's affiliated LLC with them were not complied with, resulting in the
cancellation of that underlying agreement. Accordingly, the Company is presently
pursing the return of the 11 million shares issued in connection with
acquisition of the license agreement for cancellation pursuant to certain
misrepresentations by the licensor.
11
EXHIBIT 31
CERTIFICATION
I, Henry L. Rolling, Chief Executive Officer, Chief Financial Officer and
President, certify that:
1. I have reviewed this annual report on Form 10-KSB of Make Your Move, Inc.;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiary, is made known to us by others within that
entity, particularly during the period in which this annual report is
being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this annual report ( the "Evaluation Date"); and
c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's Board of Directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
January 12, 2004
/s/ Henry L. Rolling
----------------------------------------------
Make Your Move, Inc., Chairman, President,
Chief Executive Officer and
Chief Financial Officer
EXHIBIT 32
CERTIFICATION PURSUANT TO
18 U.S.C. 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Make Your Move, Inc. (the "Company") on
Form 10-KSB for the period ended September 30, 2003, as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, Henry
L. Rolling, Chief Executive Officer and Chief Financial Officer of the Company,
certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:
The Report fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934; and
The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.
Date: January 12, 2004 /s/ Henry L. Rolling
--------------------------
By: Henry L. Rolling,
Chief Executive Officer and
Chief Financial Officer
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