UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-KSB
o
ANNUAL
REPORT UNDER
SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
For
the
fiscal year ended June 30, 2007
¨
TRANSITION
REPORT UNDER SECTION 13 OR SECTION 15(d) OF THE EXCHANGE
ACT
For
the
transition period from _____ to _____
Commission
file number 000-51968
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(Exact
Name of Small Business Issuer in Its Charter)
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Delaware
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1177
High Ridge Road, Stamford, CT 06905
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20-4378866
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(State
or other jurisdiction of
incorporation
or organization)
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(Address
of principal executive offices)
(zip
code)
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(IRS
Employer
Identification
No.)
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Issuer's
telephone number: (203) 321-1285
Securities
registered under Section 12(b) of the Exchange Act
NONE
Securities
registered pursuant to Section 12(g) of the Exchange Act:
Common
Stock, $.0001 par value
(Title
of
Class)
Check
whether the issuer (1) filed all reports to be filed by Section 13 or 15(d)
of
the Exchange Act during the past 12 months (or for such shorter period that
the
registrant was required to file such reports), and (2) has been subject to
such
filing requirements for the past 90 days. Yes x No
o
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act) Yes x
No
o
For
the
year ended June 30, 2007, the issuer reported no revenues. The registrant’s
equity was not publicly traded during the period covered by this Report and
therefore the aggregate market value of the voting and non-voting common equity
held by non-affiliates of the registrant as of the close of business June 30,
2007 cannot be ascertained.
As
of
June 30, 2007, the registrant had 16,761,597 shares of Common Stock
outstanding.
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PAGE
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PART
I
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ITEM
1
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Description
of Business
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3
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ITEM
2
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Description
of Property
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6
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ITEM
3
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Legal
Proceedings
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6
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ITEM
4
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Submission
of Matters to a Vote of Security Holders
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6
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PART
II
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ITEM
5
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Market
for Registrant’s Common Equity, Related Stockholder Matters and issuer
Purchases of Equity Securities
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7
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ITEM
6
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Management’s
Discussion and Analysis and Results of Operations
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7
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ITEM
7
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Financial
Statements
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15
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ITEM
8
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Changes
In and Disagreements with Accountant on Accounting and Financial
Disclosure
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16
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ITEM
8A
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Controls
and Procedures
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16
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ITEM
8B
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Other
Information
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16
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PART
III
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Submission
of Matters to a Vote of Security Holders
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ITEM
9
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Directors,
Executive Officers, Promoters, Control Persons and Corporate Governance;
Compliance with Section 16(a) of the Exchange Act
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17
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ITEM
10
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Executive
Compensation
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18
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ITEM
11
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Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
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19
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ITEM
12
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Certain
Relationships and Related Transactions
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ITEM
13
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Exhibits
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19
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ITEM
14
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Principal
Accountant Fees and Services
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21
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SIGNATURES
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22
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CERTIFICATIONS
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FORWARD-LOOKING
STATEMENTS
Some
of
the statements under “business”, “Risk Factors,” “Management's Discussion and
Analysis of Financial Condition and Results of Operations,” and elsewhere in
this Annual Report on Form 10-KSB constitute forward-looking statements. These
statements relate to future events or our strategy, future operations, future
financial position, future revenues, projected costs, prospects, and the plans
and objectives of management and involve known and unknown risks, uncertainties
and other factors that may cause our or our industry's actual results, levels
of
activity, performance or achievements to be materially different from any future
results, levels of activity, performance or achievements expressed, implied
or
inferred by these forward-looking statements. Such factors include, among other
things, those listed under "Risk Factors" and elsewhere in this Annual Report.
In some cases, you can identify forward-looking statements by terminology such
as “may,” “will,” “should,” “could,” “would,” “expects,” “plans,” “intends,”
“anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or
the negative of such terms and other comparable terminology.
Although
we believe that the expectations reflected in the forward-looking statements
are
reasonable, we do not know whether we can achieve positive future results,
levels of activity, performance, or goals. Actual events or results may differ
materially. We undertake no obligation to update any of the forward-looking
statements after the date of this Annual Report to conform those statements
to
reflect the occurrence of unanticipated events, except as required by applicable
law.
PART
I
Company
Overview
Aprecia
Inc., (“we”, “Aprecia”, or the “Company”) was formed to become a leading edge
provider of applied artificial intelligence solutions for thoroughbred and
lottery applications. We developed MonitorPlus, an analysis tool designed to
help the thoroughbred racing and lottery industry by providing alerts when
potential wagering fraud or money laundering is detected. We have marketed
our
products through a partner/distributor primarily to regulatory bodies. Our
success was largely dependent on the market acceptance of MonitorPlus, efficient
utilization of our infrastructure, successful ongoing development of advanced
process technologies and generation of sufficient return on research and
development investments. Because of our inability to satisfy these objectives,
we have substantially curtailed our operations and there is substantial doubt
about our ability to continue as a going concern. As a result, we have explored
strategic and financial alternatives, including a sale of the Company. However,
at this time, there is no assurance that we will be successful in our efforts
to
sell Aprecia or obtain additional financing to fund our operations.
We
were
incorporated in the State of Delaware in December 2005.
On
March
6, 2006, we entered into an Asset Purchase Agreement (the “APA”) with Isidore
Sobkowski. Upon entering into the APA, Mr. Sobkowski was appointed as an
executive officer of the Company. Pursuant to the APA, we acquired certain
assets from Mr. Sobkowski relating to software based on open source induction
technology designed to enable the automatic discovery of patterns and the
automatic creation of rules for raw data (the “Assets”). In consideration of the
purchase and sale of the Assets, we issued to Mr. Sobkowski 9,700,000 shares
of
common stock.
Also
on
March 6, 2006, Isidore Sobkowski (our sole executive officer and a director),
Solomon Lax (a director) and a shareholder of our company, which collectively
hold approximately 76% of our outstanding shares of common stock, entered into
a
Shareholder Voting Agreement. Each of the parties agreed to vote their shares
for one director proposed by Mr. Sobkowski, one director proposed by Mr. Lax
and
one director jointly proposed by Mr. Sobkowski and Mr. Lax. Further, each party
to the Shareholder Voting Agreement may only sell an amount of shares equal
to
1% of the total outstanding per quarter unless the other two parties consent
to
a sale in excess of 1% of the total outstanding assuming such sale is legally
valid.
Industry
Background
Because
of the many jobs created by the thoroughbred racing industry, the industry
provides the only form of wagering in the United States that enjoys an exemption
from federal laws that prohibit “wire wagering”. For example, a wager can
legally be placed on a horse race via the Internet. Wagering on thoroughbred
racing is currently permitted in a majority of U.S. states. However, the
Company’s management believed that the current lack of a cyber wagering security
framework threatened the thoroughbred racing industry’s unique wagering
franchise. Illegal wagering activity in recent years, notably the Breeders’ Cup
scandal in November 2002, has raised awareness of the need for a more secure
wagering environment. There are several different ways to wager on thoroughbred
racing. In addition to live on track wagering, most racetracks allow wagers
to
be placed on simulcast races that occur at other tracks. For example, for a
given race, it might be possible to place a wager at Belmont Park in New York
City for a race that is taking place at Hollywood Park in Los Angeles. Wagers
can also be placed at numerous Off Track Betting (“OTB”) parlors around the
country. Finally, the Internet is increasingly serving as a venue for
thoroughbred racing wagering. The increase in remote and cyber wagering presents
a challenge to both the security and integrity of the thoroughbred racing
industry. As new technologies such as handheld wireless wagering devices are
introduced, the demand for security solutions is expected to grow.
Products
and Technology
MonitorPlus
was built to enhance cyber security in the thoroughbred industry by allowing
security scenarios to be applied to wagering activity and then issuing alerts
for suspect activity; such as for fraud detection and anti-money laundering.
MonitorPlus receives wagering information from external sources such as a
database of historical wagers and then evaluates such information. Once a
fraudulent wagering scenario has been created and a source of wagering data
has
been attached, MonitorPlus is able to analyze wagering activity data and produce
alerts. MonitorPlus is based on proven open source induction technology.
MonitorPlus is comprised of two main functional components: a scenario builder
and a scenario execution engine. In addition to wager activity analysis,
MonitorPlus allows analysts to create “what-if” scenarios. For what-if
scenarios, analysts are able to specify a test set of security rules (a “test
scenario”) and view test alerts.
Marketing
and Distribution
We
intended to generate revenue through (i) the licensing of our technology to
parties engaged in the regulation of the thoroughbred racing industry, and
(ii)
the licensing of our technology to third parties which were expected to develop
and sell specifically tailored software solutions for customers based on our
technology. However, we were unable to enter into any meaningful agreement
for
the sale or license of our technology and as a result our operations were not
profitable. We had planned to introduce MonitorPlus to the thoroughbred industry
as an entry point into the marketplace, and then planned to develop
complementary products based on MonitorPlus. However, we were unable to do
either. In addition to the thoroughbred racing market, we believes that there
were other potential markets for our technology, including industries that
could
benefit from pattern detection of security breaches, attempted cyber fraud,
and
cyber risks. We expected to offer up to three additional targeted products
during 2006-2009 that were designed to serve the lottery, casino, banking and
homeland security industries. In addition, we had explored possible acquisitions
in order to facilitate the growth of the Company and our proposed product
offerings. However, we were unable to do either and as of the date of this
Report, there remains substantial doubt as to likelihood of our accomplishing
either goal.
Government
Regulation
Thoroughbred
racing and wagering is permitted in a majority of U.S. States (“U.S. Racing
States”). Each U.S. Racing State regulates racing and wagering independently.
Canada regulates racing and wagering on the federal level. The Association
of
Racing Commissioners International (“RCI”) is an association whose members
include the regulators of U.S. Racing States and Canada.
Intellectual
Property
The
MonitorPlus application was designed as an industry specific application of
open
source induction technology for fraud detection in the thoroughbred industry.
Proprietary design for user screens and user interaction were under construction
but never completed. The underlying algorithm for induction is open source.
The
Company never applied for patent protection and has no intention of doing do.
Research
and Development
Under
the
direction of Mr. Sobkowski, research and development was outsourced to TeraCode,
Inc. of Waltham, Massachusetts. TeraCode maintains an offshore development
facility in Buenos Aires, Argentina. Under contract, TeraCode provided a team
of
developers for the MonitorPlus project. However, as of the date of this Report,
no services are currently being provided to the Company by TeraCode and we
have
no plans to re-engage TeraCode.
Competition
As
of the
date of this Report, we are unaware of any comparable, commercially available
products in the thoroughbred racing industry. Potential competition could come
from home grown systems created by industry stakeholders such as racetracks
or
industry associations.
Risk
Management
We
believed that risk mitigation is a proactive function that preserves asset
value
if properly executed. Accordingly, we had established policies, procedures
and
risk limits to balance the risk/reward relationship of physical and financial
assets, and we took a disciplined approach to the execution of these policies
to
assist in achieving value preservation. Nonetheless, we were unable to preserve
the value of our assets and there is substantial doubt as to our ability to
continue as a going concern.
Employees
As
of
June 30, 2007, we had no full-time employees and one part-time employee, our
President, CEO and Interim CFO, Isidore Sobkowski. No employees are presently
represented by any labor unions. Our relations with Mr. Sobkowski are good.
Subsequent
Events
Related
Party Transactions
In
September 2007, we agreed to provide our CEO, Mr. Sobkowski, with a full release
from all non-compete and non-solicitation clauses in his agreements, either
written and oral, and either explicit and implied, in exchange for full
settlement of any outstanding debts owed to him that are unpaid. In addition,
we
granted the CEO a non-exclusive, worldwide, royalty-free right and license
to
use the MonitorPlus software source code, and all derivative works therof,
in
return for agreement to render reasonable assistance in the winding-down of
the
Compnay’s original business plans. That winding-down continues as of the date of
this Report.
As
of the
date of this Report, we are attempting to sell the Company; however, we can
offer no assurances that we will be successful, or, if we are successful, what
the terms of such sale will be.
ITEM
2. DESCRIPTION OF PROPERTY
In
order
to reduce start-up costs, we are structured as a virtual company. As such,
we do
not currently own or rent any real estate property.
ITEM
3. LEGAL PROCEEDINGS
None.
ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART
II
ITEM
5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The
Untied
States Securities and Exchange Commission (the “SEC”)
declared our first and only registration statement on Form SB-2 effective on
January 29, 2007, and the National Association of Securities Dealers (the
“NASD”) approved our Form 15c2-11 and granted us the stock symbol “ACIA.OB” on
Feb
9, 2007.
While
there were originally three market makers for our common stock at such time,
no
public trading market for our common stock ever developed and one does not
exist
at the time of this Report, nor can we offer any assurance that such a market
will ever exist.
As
of
June 30, 2007, there were approximately 55 holders of record of our common
stock.
Dividends
We
have
never paid any dividends to our equity holders. We has intended to retain our
earnings, if any were ever generated, to support the development of the business
and therefore did not anticipate paying cash dividends. Payment of future
dividends, if any, will be at the discretion of our board of directors after
taking into account various factors, including current financial condition,
operating results and current and anticipated cash needs.
Equity
Compensation Plans
As
of
June 30, 2007, we have not adopted an equity compensation plan under which
our
common stock is authorized for issuance.
Currently,
there are no compensation plans in effect under which our equity securities
are
authorized for issuance that were adopted without the approval of security
holders.
During
the quarter ended June 30, 2007, we did not repurchase any shares as part of
any
publicly announced plans or programs or otherwise.
ITEM
6. MANAGEMENT’S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATIONS.
Results
of Operations
Overview
We
had
partnered with ESI Integrity Inc. so that Aprecia’s MonitorPlus artificial
intelligence based transactional analysis capability would integrate into ESI’s
industry-leading Integrity product to provide alerting of suspicious patterns
and activity. The combined technologies would have had the potential to assist
gaming operators and regulators in controlling the risks associated with fraud
and money laundering as it is related to gaming and lottery. However, this
partnership did not develop as we had planned and consequently there is
substantial doubt as to our ability to continue as a going concern.
In
an
attempt to maximize returns from investments in research and development
(“R&D”), we subcontracted our development work to third parties. To be
successfully incorporated in customers’ end products, we would have had to offer
qualified solutions at a time when customers were developing their design
specifications for their end products. We would have also had to make
significant investments in R&D to expand our product offering and develop
leading-edge products and process technologies to demonstrate advanced
functionality and performance to the end user. Notwithstanding our considerable
efforts, these objectives were never achieved.
Revenues
We
have
not generated revenues from planned principal operations and we are considered
a
development stage company as defined in Statement of Financial (“SFAS”) No. 7.
We originally had planned on becoming involved in the business of identifying
money laundering in various sporting venues, but have since dropped such plans
and are now seeking to sell the Company or obtain additional financings.
However, there is no assurance that we will achieve either goal.
We
intended to generate revenue through (i) the licensing of our technology to
parties engaged in the regulation of the thoroughbred racing industry, and
(ii)
the licensing of our technology to third parties which were expected to develop
and sell specifically tailored software solutions for customers based on our
technology. However, we were unable to enter into any meaningful agreement
for
the sale or license of our technology and as a result our operations were not
profitable. We had planned to introduce MonitorPlus to the thoroughbred industry
as an entry point into the marketplace, and then planned to develop
complementary products based on MonitorPlus. However, we were unable to do
either. In addition to the thoroughbred racing market, we believes that there
were other potential markets for our technology, including industries that
could
benefit from pattern detection of security breaches, attempted cyber fraud,
and
cyber risks. We expected to offer up to three additional targeted products
during 2006-2009 that were designed to serve the lottery, casino, banking and
homeland security industries. In addition, we had explored possible acquisitions
in order to facilitate the growth of the Company and our proposed product
offerings. However, we were unable to do either and as of the date of this
Report, there remains substantial doubt as to likelihood of our accomplishing
either goal.
Costs
and Expenses
Costs
and
expenses were $486,440 for the year ended June 30, 2007 compared to $154,378
for
the year ended June 30, 2006, and consisted primarily of officer’s compensation
and software development. Costs and expenses for the period December 15, 2005
(inception) to June 30, 2007 was $640,818.
Going
Concern
We
incurred net losses of $233,385 for the three months ended September 30, 2007,
and $1,206,475 for the period December 15, 2005 (inception) to September 30,
2007. In addition, we have a working capital deficiency of $958,757 and a
stockholders' deficiency of $915,977 at September 30, 2007. These factors raise
substantial doubt about the Company's ability to continue as a going
concern.
There
can
be no assurance that sufficient funds required for us to sustain operations
will
be generated from operations or that funds will be available from external
sources such as debt or equity financings or other potential sources. The lack
of additional capital resulting from the inability to generate cash flow from
operations or to raise capital from external sources would force the Company
to
substantially curtail or cease operations and would, therefore, have a material
adverse effect on its business. Furthermore, there can be no assurance that
any
such required funds, if available, will be available on attractive terms or
that
they will not have a significant dilutive effect on the Company's existing
stockholders.
The
accompanying financial statements do not include any adjustments related to
the
recoverability or classification of asset-carrying amounts or the amounts and
classification of liabilities that may result should we be unable to continue
as
a going concern.
We
are
attempting to address our lack of liquidity by raising additional funds, either
in the form of debt or equity or some combination thereof. There can be no
assurances that we will be able to raise the additional funds we
requires.
Our
Management continues to meet operating deficits primarily through short-term
borrowings and is attempting to utilize other debt and dilutive and non-dilutive
equity financing alternatives to sustain operations. Whether such financing
will
be available as needed and the ultimate form of such financing is uncertain
and
the effects of this uncertainty could ultimately lead to
bankruptcy.
Accordingly,
as of the date of this Report, we are attempting to sell the Company; however,
we can offer no assurances that we will be successful, or, if we are successful,
what the terms of such sale will be.
Financing
Activities
In
March
2006, we entered into a Securities Purchase Agreement dated as of March 10,
2006, with four investors relating to the issuance and sale, in a private
placement exempt from the registration requirements of the Securities Act of
1933, as amended (the “1933 Act”), of 7% Convertible Debentures in the principal
amount of $500,000. Accrued interest on the convertible debentures as of June
30, 2007 was $45,694. The debentures are collateralized by all of the now owned
and hereafter acquired rights, title and interest of the Company’s assets. The
debentures mature 24 months from the closing. The debentures are convertible
at
the option of the holder into our common stock at the rate of $0.12 per share.
Expenses incurred in connection with the private offering of the debentures
were
$185,000. Such expenses are carried as deferred finance costs and are being
amortized over the term of the debt.
In
May
2007, we sold $187,000 principal of 7% secured promissory notes (the “Notes”)
and 500,000 Class A Common Stock purchase warrants (the “Warrants”)
(collectively, the “Securities”) for an aggregate purchase price of $170,000.
The Notes are due September 2007 and are secured by the Company’s assets. The
Warrants have an exercise price of $0.18 per share and a term of five years.
In
connection with the sale of the Securities, we issued as broker’s fees: (i)
83,111 common stock purchase warrants ($0.18 exercise price, five year term)
and
(ii) a promissory note in the amount of $14,963. In addition, we incurred legal
fees of approximately $30,500 in connection with the sale of the
Securities.
Access
to
capital markets has historically been important to us. Depending on market
conditions, we may issue registered or unregistered securities to raise capital
to fund a portion of our operations. However, as of the date of this Report,
we
are attempting to sell the Company but can offer no assurances that we will
be
successful, or, if we are successful, what the terms of such sale will be.
Liquidity
and Capital Resources
As
of
June 30, 2007, we had $60,624 in cash and equivalents.
This
balance was insufficient to satisfy our cash requirements for the remainder
of
2007 and as such we have had to obtain short-term financing from third parties.
However, such funding is insufficient to fund the Company as a going concern
and
as such we must obtain additional funding in a very short period of time, sell
the Company or cease operations. Our inability to achieve these objectives
will
have a material adverse effect on our operations and finances. If we issue
additional equity and/or debt securities to meet our future capital
requirements, the terms of any future equity financings may be dilutive to
our
stockholders and the terms of any debt financings may contain restrictive
covenants negatively affecting our stockholders. As of the date of this Report,
we have no plans to issue additional equity and/or debt securities and instead
we are attempting to sell the Company. However, we can offer no assurances
that
we will be successful, or, if we are successful, what the terms of such sale
will be.
Off-
Balance Sheet Arrangements
We
do not
have any off balance sheet arrangements that are reasonably likely to have
a
current or future effect on our financial condition, revenues, results of
operations, liquidity or capital expenditures.
Inflation
and Seasonality
The
effect of inflation on our revenue and operating results was not
significant.
Our
business is not seasonal.
Critical
Accounting Estimates
The
preparation of financial statements and related disclosures in conformity with
generally accepted accounting principles in the United States of America
(“GAAP”) requires our Management to make estimates and judgments that affect the
reported amounts of assets, liabilities, revenues, expenses and related
disclosures. Estimates and judgments are based on historical experience,
forecasted future events and various other assumptions that the Company believes
to be reasonable under the circumstances. Estimates and judgments may vary
under
different assumptions or conditions. We evaluate our estimates and judgments
on
an ongoing basis. Management believes the accounting policies below are critical
in the portrayal of our financial condition and results of operations and
require management’s most difficult, subjective or complex
judgments.
Contingencies
The
Company is subject to the possibility of losses from various contingencies.
Considerable judgment is necessary to estimate the probability and amount of
any
loss from such contingencies. An accrual is made when it is probable that a
liability has been incurred or an asset been impaired and the amount of loss
can
re reasonably estimated. The Company accrues a liability and charges operations
for the estimated costs of adjudication or settlement of asserted and unasserted
claims existing as of the balance sheet date.
Income
Taxes
The
Company is required to estimate its provision for income taxes and amounts
ultimately payable or recoverable in numerous tax jurisdictions around the
world. Estimates involve interpretations of regulations and are inherently
complex. Resolution of income tax treatments in individual jurisdictions may
not
be known for many years after completion of any fiscal year. The Company is
also
required to evaluate the realizability of its deferred tax assets on an ongoing
basis in accordance with GAAP, which requires the assessment of the Company’s
performance and other relevant factors when determining the need for a valuation
allowance with respect to these deferred tax assets. Realization of deferred
tax
assets is dependent on the Company’s ability to generate future taxable
income.
Research
and Development
Costs
related to the conceptual formulation and design of products and processes
are
expenses as research and development when incurred. Determining when product
development is complete requires judgment by the Company. The Company deems
development of a product complete once the product has been thoroughly reviewed
and tested for performance and reliability.
Stock-based
Compensation
Under
the
provisions of SFAS No. 123(R), stock-based compensation cost is estimated at
the
grant date based on the fair-value of the award and recognized as expense
ratably over the requisite service period of the award. Determining the
appropriate fair-value model and calculating the fair value of stock-based
awards at the grant date requires considerable judgment, including estimating
stock price volatility, expected option life and forfeiture rates. The Company
develops its estimates based on historical data and market information which
can
change significantly over time. A small change in the estimates used can result
in a relatively large change in the estimated valuation.
The
Company will use the Black-Scholes option valuation model to value employee
stock awards. The Company will estimate stock price volatility based on an
average of its historical volatility and the implied volatility derived from
traded options on the Company’s stock. Estimated option life and forfeiture rate
assumptions will be derived from historical data. For stock based compensation
awards with graded vesting that were granted after 2005, the Company will
recognize compensation expense using the straight-line method.
Recently
Accounting Pronouncements
In
February 2007, the Financial Accounting Standards Board (“FASB”) issued SFAS No.
159, “The Fair Value Option for Financial Assets and Financial Liabilities -
Including an amendment of FASB Statement No. 115.” Under SFAS No. 159, the
Company may elect to measure many financial instruments and certain other items
at fair value on an instrument by instrument basis subject to certain
restrictions. The Company may adopt SFAS No. 159 at the beginning of 2008.
The
impact of the adoption of SFAS No. 159 will be dependent on the extent to which
the Company elects to measure eligible items at fair value.
In
September 2006, the SEC staff issued Staff Accounting Bulletin (“SAB”) No. 108,
“Considering the Effects of Prior Year Misstatements when Quantifying
Misstatements in Current Year Financial Statements.” The Company is required to
adopt SAB No. 108 by the end of 2007 and does not expect the adoption to have
significant impact on the Company’s financial position or results of
operations.
Also
in
September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined
Benefit Pension and Other Postretirement Plans - an amendment of FASB Statements
No. 87, 88, 106 and 132(R).” Under SFAS No. 158, the Company is required to
initially recognize the funded status of a defined benefit postretirement plan
and to provide the required disclosures as of the end of 2007. The Company
does
not expect the adoption of SFAS No. 158 to have a significant impact on its
financial position or results of operations.
Also
in
September 2006, the FASB issued SFAS No. 157, “Fair Value Measurement.” SFAS No.
157 defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles, and expands disclosures about fair
value measurements. SFAS No. 157 applies under other accounting pronouncements
that require or permit fair value measurements. The Company is required to
adopt
SFAS No. 157 effective at the beginning of 2009.
In
June
2006, the FASB issued Interpretation No. 48 (“FIN 48”), “Accounting for
Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109.” FIN
48 contains a two step approach to recognizing and measuring uncertain tax
positions accounted for in accordance with SFAS No. 109. The first step is
to
evaluate the tax position for recognition by determining if the weight of
available evidence indicated it is more likely than not that the position will
be sustained on audit, including resolution of related appeals or litigation
processes, if any. The second step is to measure the tax benefit as the largest
amount which is more than 50% likely of being realized upon ultimate settlement.
The Company is required to adopt FIN 48 effective at the beginning of 2008.
The
Company is evaluating the impact this statement will have on its consolidated
financial statements.
In
May
2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections.”
SFAS No. 154 changes the requirements for the accounting for and reporting
of a
change in accounting principle. The Company adopted SFAS No. 154 at the
beginning of 2007. The adoption of SFAS No. 154 did not impact the Company’s
results of operation and financial condition.
On
February 16, 2006, the FASB issued SFAS 155, “Accounting for Certain Hybrid
Instruments,” which amends SFAS 133, “Accounting for Derivative Instruments and
Hedging Activities,” and SFAS 140, “Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities.” SFAS 155 allows financial
instruments that have embedded derivatives to be accounted for as a whole
(eliminating the need to bifurcate the derivative from its host) if the holder
elects to account for the whole instrument on a fair value basis. SFAS 155
also
clarifies and amends certain other provisions of SFAS 133 and SFAS 140. This
statement is effective for all financial instruments acquired or issued in
fiscal years beginning after September 15, 2006. We do not expect its
adoption of this new standard to have a material impact on our financial
position, results of operations or cash flows.
SFAS
156.
On March 31, 2006 the FASB issued its Statement of Financial Accounting
Standards 156 to amend FASB Statement No. 140 “Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities.” FAS 156
requires an entity to recognize a servicing asset or servicing liability on
its
statement of financial position each time it undertakes an obligation to service
a financial asset. FAS 156’s required effective date of adoption is for the
first fiscal year beginning after September 15, 2006. We do not expect adoption
of this standard will have a material impact on our financial position,
operations or cash flows.
Risk
Factors
There
Is Substantial Doubt As to Our Ability to Continue As a Going Concern Absent
The
Company Being Sold.
As
of
June 30, 2007, we had $60,624 in cash and equivalents.
This
balance was insufficient to satisfy our cash requirements for the remainder
of
2007 and as such we have had to obtain short-term financing from third parties.
However, such funding is insufficient to fund the Company as a going concern
and
as such we must obtain additional funding in a very short period of time, sell
the Company or cease operations. As of the date of this Report, Management
believes that the only viable option for the Company is to sell Aprecia to
a
third party and as such we have started to market the Company for sale. However,
we can offer no assurance that such effort will be success, of if we do indeed
sell the Company, what the terms of such sale would be. Absent the successful
sale of the Company, Management believes that we would have to cease operations,
liquidate the Company and/or file for bankruptcy, all of which would have a
material adverse effect on the Company, its business, operations, finances
and
common stock.
We
Lost Money For The Fiscal Year Ended June 30, 2007 And Since Inception, And
Losses Will Continue In The Future Unless We Sell The
Company.
For
the
fiscal year ended June 30, 2007, we incurred a net loss of $762,986 and for
the
period December 15, 2005 (inception) to June 30, 2007, we incurred a net loss
of
$973,090. We anticipate that we will have to rely on external financing for
all
of our capital requirements. Future losses will continue unless we successfully
implement our business plan or sell the Company. Currently, we are dependent
upon external financing to fund our operations. We have no assurance that any
third party will lend us funds given our current financial condition. If such
funds are not available, we will discontinue entirely our operations unless
we
can sell the Company. If we incur any problems in any of these scenarios, we
will experience significant liquidity and cash flow problems and will have
to
cease operations unless we can sell the Company.
We
Rely On Our CEO And Will Be Harmed If He Leaves.
Our
ability to continue as a going concern until we are able to sell the Company
is
largely dependent on the efforts of Isidore Sobkowski, our President, Chief
Executive Officer and Interim Chief Financial Officer. If he becomes unable
or
unwilling to continue in that role, our prospects for a successful sale will
be
adversely affected.
We
Are Not Able To Generate Sufficient Cash Flows To Fund Our Operations And Make
Adequate Capital Investments.
Our
cash
flow from operations depends primarily on the volume of selling prices and
per
unit manufacturing costs. To develop new product and process technologies,
support future growth, achieve operating efficiencies and maintain product
quality, the Company would had to have made significant capital investments
in
facilities and capital equipment, research and development, and product and
process technology. We have from time to time utilized external sources of
financing. Access to capital markets has historically been very important to
us.
Depending on market conditions, we had planned to issue registered or
unregistered securities to raise capital to fund a portion of our operations.
However, given our current situation, we are unable to generate sufficient
cash
flows to fund our operations, make adequate capital investments or access
capital markets on acceptable terms, and this inability to do so will have
a
material adverse effect on our business and results of operations unless we
can
sell the Company.
There
Currently Is No Public Trading Market For Our Common
Stock.
From
inception, there has been no public trading market for our common stock and
there can be no assurance that an active trading market for our common stock
will ever develop. This could adversely affect shareholders’ ability to sell the
Company’s common stock in short time periods, or possibly at all. In addition,
we believe that factors such as quarterly fluctuations in our financial results
and changes in the overall economy or the condition of the financial markets,
could cause the price of our common stock to fluctuate
substantially.
Our
Net Operating Carryforwards May Be Limited.
Utilization
of the tax benefits of these carry-forwards are subject to limitations imposed
by Section 382 of the Internal Revenue Code. The determination of the
limitations is complex and requires significant judgment and analysis of past
transactions. Accordingly, some portion or all of our carry-forwards may not
be
available to offset any future taxable income.
Product
Development Is Not Possible At This Time.
We
had
planned to develop new products that complemented our traditional products
or
leveraged our underlying design or process technology. However, we were unable
to make significant investments in our product and process technologies. In
light of our present financial problems and the lack of capital, we are not
able
to further develop MonitorPlus or any other products unless and until such
funding is secured or the Company is sold. At this time, we cannot offer any
assurances that either will occur.
Our
Common Stock Is Deemed To Be “Penny Stock”, Which May Make It More Difficult For
Investors To Sell Their Shares Due To Suitability
Requirements.
Although
shares of our common stock have never traded in the public markets and we can
offer no assurances that it ever will, our common stock is nonetheless deemed
to
be “penny stock” as that term is defined in Rule 3a51-1 promulgated under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”). Penny stocks
are stock:
|
· |
With
a price of less than $5.00 per
share;
|
|
· |
That
are not traded on a “recognized” national
exchange;
|
|
· |
Whose
prices are not quoted on a NASDAQ automated quotation system
(NASDAQ-listed stock must still have a price of not less than $5.00
per
share); or
|
|
· |
Stock
in issuers with net tangible assets less than $2,000,000 (if the
issuer
has been in continuous operation for at least three years) or $5,000,000
(if in continuous operation for less than three years), or with average
revenues of less than $6,000,000 for the last three
years.
|
Broker-dealers
dealing in penny stocks are required to provide potential investors with a
document disclosing the risks of penny stocks. Moreover, broker-dealers are
required to determine whether an investment in a penny stock is a suitable
investment for a prospective investor. these requirements may reduce the
potential market for the Company’s common stock by reducing the number of
potential investors. This may make it more difficult for investors in the
Company’s common stock to sell shares to third parties or to otherwise dispose
of them. This could cause our stock price to decline.
Shareholders
should be aware that, according to the SEC, the market for penny stocks has
suffered in recent years from patterns of fraud and abuse. Such patterns include
(i) control of the market for the security by one or a few broker-dealers that
are often related to the promoter or issuer; (ii) manipulation of prices through
prearranged matching of purchases and sales and false and misleading press
releases; (iii) “boiler room” practices involving high-pressure sales tactics
and unrealistic price projections by inexperienced sales persons; (iv) excessive
and undisclosed bid-ask differentials and markups by selling broker-dealers;
and
(v) the wholesale dumping of the same securities by promoters and broker-dealers
after prices have been manipulated to a desired consequent investor losses.
Our
Management is aware of the abuses that have occurred historically in the penny
stock market. Although we do not expect to be in a position to dictate the
behavior of the market or of broker-dealers who participate in the market,
Management will strive within the confines of practical limitations to prevent
the described patterns from being established with respect to our securities.
ITEM
7. FINANCIAL STATEMENTS & SUPPLEMENTAL INFORMATION
INDEX
TO CONDENSED FINANCIAL STATEMENTS
AND
FINANCIAL STATEMENT SCHEDULES
Balance
Sheet as of June 30, 2007
|
|
F-2
|
|
|
|
Statements
of Operations for the years ended June 30, 2007 and June 30,
2006
|
|
F-3
|
|
|
|
Statement
of Stockholders' Equity for the year ended June 30,
2007
|
|
|
|
|
|
Statements
of Cash Flows for the years ended June 30, 2007 and 2006
|
|
|
|
|
|
Notes
to Financial Statements
|
|
|
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board
of
Directors and Stockholders
Aprecia,
Inc.
We
have
audited the accompanying balance sheet of Aprecia, Inc. (a Development Stage
Company) (“the Company”) as of June 30, 2007 and the related statements of
operations, stockholders’ deficiency and cash flows for the year ended June 30,
2007, the period December 15, 2005 (inception) to June 30, 2006 and the period
December 15, 2005 (inception) to June 30, 2007. 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. The Company is not required
to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control
over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion. Also, an audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our 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 Aprecia, Inc. at June 30, 2007,
and
the results of its operations and its cash flows for for the year ended June
30,
2007, the period December 15, 2005 (inception) to June 30, 2006 and the period
December 15, 2005 (inception) to June 30, 2007 in conformity with accounting
principles 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 2 to the financial statements,
the Company has incurred operating losses since inception, has had no revenues
and has not commenced planned principal operations. These factors raise
substantial doubt about the Company’s ability to continue as a going concern.
Management’s plans regarding those matters are also described in Note 2. The
financial statements do not include any adjustments that might result from
the
outcome of this uncertainty.
WOLINETZ,
LAFAZAN & COMPANY, P.C.
Rockville
Centre, New York
November
15, 2007
APRECIA,
INC.
(A
DEVELOPMENT STAGE COMPANY)
BALANCE
SHEET
JUNE
30, 2007
|
Current
Assets:
|
|
|
|
|
|
|
|
Cash
and Cash Equivalents
|
|
$
|
60,624
|
|
|
|
|
|
|
Total
Current Assets
|
|
|
60,624
|
|
|
|
|
|
|
Property
and Equipment, Net
|
|
|
1,908
|
|
|
|
|
|
|
Deferred
Finance Costs, Net
|
|
|
93,812
|
|
|
|
|
|
|
Total
Assets
|
|
$
|
156,344
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS’ DEFICIENCY
|
Current
Liabilities:
|
|
|
|
|
Convertible
Debentures
|
|
$
|
500,000
|
|
Notes
Payable, Net of Unamortized Discount of $37,654
|
|
|
164,306
|
|
Accrued
Expenses
|
|
|
146,252
|
|
Accrued
Liquidated Damages
|
|
|
106,667
|
|
Accrued
Interest
|
|
|
62,737
|
|
|
|
|
|
|
Total
Current Liabilities
|
|
|
979,962
|
|
|
|
|
|
|
Commitments
and Contingencies
|
|
|
|
|
|
|
|
|
|
Stockholders’
Deficiency:
|
|
|
|
|
Preferred
Stock, $.0001 par value; 10,000,000 shares authorized, none issued
and
outstanding
|
|
|
-
|
|
Common
Stock, $.0001 par value; 250,000,000 shares authorized, 16,761,597
issued
and outstanding
|
|
|
1,676
|
|
Additional
Paid-In Capital
|
|
|
153,822
|
|
Deferred
Finance Costs, Net
|
|
|
(6,026
|
)
|
Deficit
Accumulated During the Development Stage
|
|
|
(973,090
|
)
|
|
|
|
|
|
Total
Stockholders’ Deficiency
|
|
|
(823,618
|
)
|
|
|
|
|
|
Total
Liabilities and Stockholders’ Deficiency
|
|
$
|
156,344
|
|
The
accompanying notes are an integral part of these financial
statements.
APRECIA,
INC.
(A
DEVELOPMENT STAGE COMPANY)
STATEMENT
OF OPERATIONS
|
|
For
the Year Ended June 30, 2007
|
|
For
the Period December 15, 2005 (Inception) to June 30, 2006
|
|
For
the Period December 15, 2005 (Inception) to June 30, 2007
|
|
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs
and Expenses:
|
|
|
|
|
|
|
|
|
|
|
Officer’s
Compensation
|
|
|
180,000
|
|
|
60,000
|
|
|
240,000
|
|
Software
Development
|
|
|
167,415
|
|
|
47,570
|
|
|
214,985
|
|
Other
General and Administrative Expenses
|
|
|
139,025
|
|
|
46,808
|
|
|
185,833
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Costs and Expenses
|
|
|
486,440
|
|
|
154,378
|
|
|
640,818
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
from Operations
|
|
|
(486,440
|
)
|
|
(154,378
|
)
|
|
(640,818
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Other
Expenses:
|
|
|
|
|
|
|
|
|
|
|
Amortization
of Deferred Finance Costs
|
|
|
(
112,012
|
)
|
|
(28,264
|
)
|
|
(140,276
|
)
|
Amortization
of Deferred Debt Discount
|
|
|
(22,592
|
)
|
|
-
|
|
|
(
22,592
|
)
|
Interest
Expense
|
|
|
(51,942
|
)
|
|
(10,795
|
)
|
|
(
62,737
|
)
|
Liquidated
Damages
|
|
|
(90,000
|
)
|
|
(16,667
|
)
|
|
(106,667
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total
Other Expenses
|
|
|
(
276,546
|
)
|
|
(55,726
|
)
|
|
(332,272
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net
Loss
|
|
$
|
(
762,986
|
)
|
$
|
(
210,104
|
)
|
$
|
(973,090
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
Average Common Shares
|
|
|
|
|
|
|
|
|
|
|
Outstanding
- Basic and Diluted
|
|
|
16,603,798
|
|
|
15,978,767
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Loss Per Common Share
|
|
$
|
(.05
|
)
|
$
|
(.01
|
)
|
|
|
|
The
accompanying notes are an integral part of these financial
statements.
APRECIA,
INC.
(A
DEVELOPMENT STAGE COMPANY)
STATEMENT
OF STOCKHOLDERS’ DEFICIENCY
FOR
THE PERIOD DECEMBER 15, 2005 (INCEPTION) TO JUNE 30, 2007
|
|
Preferred
Stock
|
|
Common
Stock
|
|
Additional
Paid-In
|
|
Deferred
Finance
|
|
Deficit
Accumulated During the Development
|
|
|
|
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Capital
|
|
Costs
|
|
Stage
|
|
Total
|
|
Common
Stock Issued to Founders
|
|
|
-
|
|
$
|
-
|
|
|
4,510,000
|
|
$
|
451
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
451
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
Stock Issued for Software
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Development
- at Par Value
|
|
|
-
|
|
|
-
|
|
|
9,700,000
|
|
|
970
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
970
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
Stock Issued to a Private
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investor
- at $.024 Per Share
|
|
|
-
|
|
|
-
|
|
|
2,083,333
|
|
|
208
|
|
|
49,792
|
|
|
-
|
|
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commissions
on Sale of Common Stock
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(5,000
|
)
|
|
-
|
|
|
|
|
|
(5,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Loss for the Period
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(210,104
|
)
|
|
(210,104
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
- Julne 30, 2006
|
|
|
-
|
|
|
-
|
|
|
16,293,333
|
|
|
1,629
|
|
|
44,792
|
|
|
-
|
|
|
(210,104
|
)
|
|
(163,683
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
Stock Issued Pursuant to a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Private
Placement at $.12 Per Share
|
|
|
-
|
|
|
-
|
|
|
468,264
|
|
|
47
|
|
|
56,143
|
|
|
-
|
|
|
-
|
|
|
56,190
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
Stock Warrants Issued as
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
Finance Costs on Note
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payable
- 83,111 at $.116 Per Warrant
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
9,641
|
|
|
(9,641
|
)
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt
Discount on Loan Payable
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
43,246
|
|
|
-
|
|
|
-
|
|
|
43,246
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
of Deferred Finance Costs
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
3,615
|
|
|
-
|
|
|
3,615
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Loss For the Year Ended June 30, 2007
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(762,986
|
)
|
|
(762,986
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
- |
|
$
|
-
|
|
|
16,761,597
|
|
$
|
1,676
|
|
$
|
153,822
|
|
$
|
(6,026
|
)
|
$
|
(973,090
|
)
|
$
|
(823,618
|
)
|
The
accompanying notes are an integral part of these financial
statements.
APRECIA,
INC.
(A
DEVELOPMENT STAGE COMPANY)
STATEMENT
OF CASH FLOWS
|
|
For
the Year Ended June 30, 2007
|
|
For
the Period December 15, 2005 (Inception) to June 30, 2006
|
|
For
the Period December 15, 2005 (Inception) to June 30, 2007
|
|
|
|
|
|
|
|
|
|
Cash
Flows from Operating Activities:
|
|
|
|
|
|
|
|
Net
Loss
|
|
$
|
(762,986
|
)
|
$
|
(
210,104
|
)
|
$
|
(973,090
|
)
|
Adjustments
to Reconcile Net Loss to
|
|
|
|
|
|
|
|
|
|
|
Net
Cash (Used) in Operating Activities:
|
|
|
|
|
|
|
|
|
|
|
Amortization
of Debt Discount
|
|
|
22,592
|
|
|
-
|
|
|
22,592
|
|
Amortization
of Deferred Finance Costs
|
|
|
112,012
|
|
|
28,264
|
|
|
140,276
|
|
Depreciation
Expense
|
|
|
954
|
|
|
-
|
|
|
954
|
|
Common
Stock Issued for Software Development
|
|
|
-
|
|
|
970
|
|
|
970
|
|
Changes
in Assets and Liabilities:
|
|
|
|
|
|
|
|
|
|
|
Increase
in Accrued Expenses
|
|
|
117,770
|
|
|
28,482
|
|
|
146,252
|
|
Increase
in Accrued Interest
|
|
|
62,737
|
|
|
-
|
|
|
62,737
|
|
Increase
in Accrued Liquidated Damages
|
|
|
90,000
|
|
|
16,667
|
|
|
106,667
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Cash (Used) in Operating Activities
|
|
|
(356,921
|
)
|
|
(
135,721
|
)
|
|
(492,642
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash
Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
|
|
Purchase
of Equipment
|
|
|
(2,862
|
)
|
|
-
|
|
|
(2,862
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net
Cash Used by Investing Activities
|
|
|
(2,862
|
)
|
|
-
|
|
|
(2,862
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from Financing Activities:
|
|
|
|
|
|
|
|
|
|
|
Decrease
in Stock Subscription Receivable
|
|
|
451
|
|
|
-
|
|
|
451
|
|
Proceeds
from Issuance of Convertible
|
|
|
|
|
|
|
|
|
|
|
Debentures
|
|
|
-
|
|
|
500,000
|
|
|
500,000
|
|
Proceeds
from Issuance of Notes Payable
|
|
|
170,000
|
|
|
-
|
|
|
170,000
|
|
Payments
of Finance Costs
|
|
|
(30,513
|
)
|
|
(
185,000
|
)
|
|
(215,513
|
)
|
Proceeds
from Issuance of Common
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
56,190
|
|
|
50,000
|
|
|
106,190
|
|
Expense
on Sale of Common Stock
|
|
|
-
|
|
|
(5,000
|
)
|
|
(5,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net
Cash Provided by Financial Activities
|
|
|
196,128
|
|
|
360,000
|
|
|
556,128
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase
(Decrease) in Cash
|
|
|
(163,655
|
)
|
|
224,279
|
|
|
60,624
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
- Beginning of Period
|
|
|
224,279
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
- End of Period
|
|
$
|
60,624
|
|
$
|
224,279
|
|
$
|
60,624
|
|
The
accompanying notes are an integral part of these financial
statements.
APRECIA,
INC.
(A
DEVELOPMENT STAGE COMPANY)
STATEMENT
OF CASH FLOWS
(Continued)
|
|
For
the Year Ended June 30, 2007
|
|
For
the Period December 15, 2005 (Inception) to June 30, 2007
|
|
For
the Period December 15, 2005 (Inception) to June 30, 2007
|
|
|
|
|
|
|
|
|
|
Supplemental
Cash Flow Informaiton:
|
|
|
|
|
|
|
|
Cash
Paid for Interest
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
Cash
Paid for Income Taxes
|
|
$
|
-
|
|
$
|
250
|
|
$
|
250
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
Non-Cash Financing Activities:
|
|
|
|
|
|
|
|
|
|
|
Subscription
Receivable on Sale of Common Stock
|
|
$
|
-
|
|
$
|
451
|
|
$
|
451
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
Stock Warrants Issued as
|
|
|
|
|
|
|
|
|
|
|
Deferred
Finance Costs
|
|
$
|
9,641
|
|
$
|
-
|
|
$
|
9,641
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt
Discount Attributable to Common
|
|
|
|
|
|
|
|
|
|
|
Stock
Warrants on Notes Payable
|
|
$
|
43,246
|
|
$
|
-
|
|
$
|
43,246
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
Finance Costs
|
|
$
|
14,960
|
|
$
|
-
|
|
$
|
14,960
|
|
The
accompanying notes are an integral part of these financial
statements.
APRECIA,
INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
NOTE
1
- Summary
of Significant Accounting Policies
Organization
Aprecia,
Inc. (the “Company”), was incorporated on December 15, 2005 under the laws of
the State of Delaware. The Company has selected June 30 as its fiscal year
end.
The
Company has not yet generated revenues from planned principal operations
and is
considered a development stage company as defined in Statement of Financial
Accounting Standards (“SFAS”) No. 7. The Company originally had planned on
becoming involved in the business of identifying money laundering in various
sporting venues. It has since dropped such plans and is now seeking other
business opportunities but has not yet identified any such opportunity. There
is
no assurance, however, that the Company will achieve its objectives or
goals.
Cash
and Cash Equivalents
The
Company considers all highly-liquid investments purchased with a maturity
of
three months or less to be cash equivalents.
Revenue
Recognition
The
Company utilizes the accrual method of accounting.
Advertising
Costs
Advertising
costs will be charged to operations when incurred. The Company did not incur
any
advertising costs during the year ended June 30, 2007, or for the period
December 15, 2005 (inception) through June 30, 2006.
Income
Taxes
The
Company accounts for income taxes using the asset and liability method described
in SFAS No. 109, “Accounting For Income Taxes”, the objective of which is to
establish deferred tax assets and liabilities for the temporary difference
between the financial reporting and the tax bases of the Company’s assets and
liabilities at enacted tax rates expected to be in effect when such amounts
are
realized or settled. A valuation allowance related to deferred tax assets
is
recorded when it is more likely than not that some portion or all of the
deferred tax assets will not be realized.
Loss
Per Share
The
compution of loss per share is based on the number weighted average of common
shares outstanding during the period presented. Diluted loss per common share
is
the same as basic loss per common share as the effect of potentially dilutive
securities (convertible debentures - 4,166,667 shares and common stock warrants
- 583,111 at June 30, 2007 and convertible debentures was - 4,166,667 shares
at
June 30, 2006) are anti-dilutive.
APRECIA,
INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
NOTE
1
- Summary
of Significant Accounting Policies
(Continued)
Accounting
Estimates
The
preparation of financial statements in conformity with generally accepted
accounting principles in the United States of America requires management
to
make estimates and assumptions that affect the reported amounts of assets
and
liabilities, the disclosures of contingent assets and liabilities at the
date of
the financial statements, and the reported amount of revenues and expenses
during the reported period. Actual results could differ from those
estimated.
Fair
Value of Financial Instruments
The
carrying value of cash, notes payable and accrued liabilities approximates
fair
value because of the immediate or short-term maturity of these financial
instruments.
Software
Development
Software
development costs are charged to expense as incurred. The Company incurred
software development costs of $167,415 during the year ended June 30, 2007,
and
$47,570 for the period December 15, 2005 (inception) through June 30,
2006.
Reclassifications
Certain
items in these financial statements have been reclassified to conform to
the
current period presentation.
Recently
Enacted Accounting Standards
SAB
108
In
September 2006, the SEC staff issued Staff Accounting Bulletin No. 108,
Considering the Effects of Prior Year Misstatements when Quantifying
Misstatements in Current Year Financial Statements (“SAB 108”). SAB 108 was
issued in order to eliminate the diversity in practice surrounding how public
companies quantify financial statement misstatements. SAB 108 requires that
registrants quantify errors using both a balance sheet and income statement
approach and evaluate whether either approach results in a misstated amount
that, when all relevant quantitative and qualitative factors are considered,
is
material. The Company has considered the SAB 108 to be not
material.
SFAS
157
In
September 2006, the FASB issued Statement of Financial Accounting Standards
No.
157, Fair Value Measurements (“SFAS 157”). SFAS 157 provides a common definition
of fair value and establishes a framework to make the measurement of fair
value
in generally accepted accounting principles more consistent with comparable.
SFAS 157 also requires expanded disclosures to provide information about
the
extent to which fair value is used to measure assets and liabilities, the
methods and assumptions used to measure fair value, and the effect of fair
value
measures on earnings. SFAS 157 is effective for the Company’s year ended 2008,
although early adoption is permitted. The Company is assessing potential
effects
of SFAS 157 on its financial statements.
APRECIA,
INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
NOTE
2 -
Going
Concern
The
Company incurred net losses of $762,986 for the year ended June 30, 2007,
and
$210,104 for the period December 15, 2005 (inception) to June 30, 2006. In
addition, at June 30, 2007 the Company has a working capital deficiency of
$919,338 and a stockholders’ deficiency of $823,618. These factors raise
substantial doubt about the Company’s ability to continue as a going
concern.
There
can
be no assurance that sufficient funds required during the next year or
thereafter will be generated from operations or that funds will be available
from external sources such as debt or equity financings or other potential
sources. The lack of additional capital resulting from the inability to generate
cash flow from operations or to raise capital from external sources would
force
the Company to substantially curtail or cease operations and would, therefore,
have a material adverse effect on its business. Furthermore, there can be
no
assurance that any such required funds, if available, will be available on
attractive terms or that they will not have a significant dilutive effect
on the
Company’s existing stockholders.
The
accompanying financial statements do not include any adjustments related
to the
recoverability or classification of asset-carrying amounts or the amounts
and
classification of liabilities that may result should the Company be unable
to
continue as a going concern.
The
Company is attempting to address its lack of liquidity by raising additonal
funds, either in the form of debt or equity or some combination thereof.
In
addition, the Company is seeking other business opportunities but has not
yet
identified any such opportunity. There can be no assurances that the Company
will be able to raise the additional funds it requires.
NOTE
3 -
Convertible
Debentures
The
Company entered into a Securities Purchase Agreement dated as of March 10,
2006,
with four investors relating to the issuance and sale, in a private placement
exempt from the registration requirements of the Securities Act of 1933,
as
amended (the “1933 Act”), of 7% Convertible Debentures in the principal amount
of $500,000. Accrued interest on the convertible debentures as of June 30,
2007
was $45,694. The debentures are collateralized by all of the now owned and
hereafter acquired rights, title and interest of the Company’s
assets.
The
debentures mature 24 months from the closing. The debentures are convertible
at
the option of the holder into the Company’s common stock at the rate of $.12 per
share. Expenses incurred in connection with the private offering of the
debentures were $185,000. Such expenses are carried as deferred finance costs
and are being amortized over the term of the debt.
APRECIA,
INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
NOTE
3 -
Convertible
Debentures
(Continued)
Since
a
registration statement covering the underlying common stock was not filed
within
90 days, the Company is required to pay liquidated damages of 2% of the
principal amount of $500,000 per month plus interest at the rate of 18% if
the
Company fails to pay the liquidated damages within seven days. Accordingly,
the
Company has accrued $106,667 in liquidated damages and $12,100 interest on
the
liquidated damages as of June 30, 2007.
NOTE
4 -
Note
Payable
In
May
2007, the Company sold $187,000 principal of 7% secured promissory notes
(the
“Notes”) and 500,000 Class A Common Stock purchase warrants (the “Warrants”)
(collectively, the “Securities”) for an aggregate purchase price of $170,000.
The Notes are due September 2007 and are secured by the Company’s assets. The
Warrants have an exercise price of $.18 per share and a term of 5 years.
In
connection with the sale of the Securities, the Company issued as broker’s fees:
(i) 83,111 common stock purchase warrants ($.18 exercise price, five year
term)
and (ii) a promissory note in the amount of $14,963. In addition, the Company
incurred legal fees of approximately $30,500 in connection with the sale
of the
Securities. These costs are being amortized over the life of the related
debt.
NOTE
5 -
Common
Stock
In
March
2006, the Company sold 4,510,000 shares of common stock valued at $451 to
the
founders of the Company.
In
March
2006, the Company issued 9,700,000 shares of common stock valued at $970
for
software development costs.
In
March
2006, the Company sold 2,083,333 shares of common stock to a private investor
for $50,000, and paid cash commissions of $5,000.
In
October 2006, the Company completed a private placement involving 468,264
shares
of its common stock for gross proceeds of $56,190.
NOTE
6 -
Preferred
Stock
The
Company’s Board of Directors may, without further action by the Company’s
stockholders, from time to time, direct the issuance of any authorized but
unissued or unreserved shares of Preferred Stock in series and at the time
of
issuance, determine the rights, preferences and limitations of each series.
The
holders of the Preferred Stock may be entitled to receive a preference payment
in the event of any liquidaton, dissolution or winding-up of the Company
before
any payment is made to the holders of the Common Stock. Furthermore, the
Board
of Directors could issue Preferred Stock with voting and other rights that
could
adversely affect the voting power of the holders of the Common
Stock.
APRECIA,
INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
NOTE
7
- Related
Party Transactions
Included
in accrued expenses at June 30, 2007 is accrued officer’s compensation of
$90,000.
NOTE
8 -
Commitments
and Contingencies
Legal
Proceedings
From
time
to time, the Company is named in legal actions in the normal course of business.
In the opinion of management, the outcome of these matters, if any, will
not
have a material impact on the financial condition or results of operations
of
the Company.
NOTE
9 -
Income
Taxes
At
June
30, 2007, the Company had net operating loss carry forwards for federal tax
purposes of approximately $1,000,000 which are available to offset future
taxable income, if any, through 2026. Under Federal Tax Law IRC Section 382,
certain significant changes may restrict the utilization of these loss
carry-forwards.
At
June
30, 2007, the Company had a deferred tax asset of approximately $340,000
representing the benefit of its net operating carry-forwards. The Company
has
not recognized the tax benefit because realization of the tax benefit is
uncertain and thus a valuation allowance has been fully provided against
the
deferred tax asset. The difference between the federal Statutory Rate of
34% and
the Company’s effective tax rate of 0% is due to an increase in the valuation of
allowance of approximately $340,000.
NOTE
10 -
Subsequent
Events
Related
Party Transactions
In
September 2007 the Company agreed to provide its CEO with a full release
from
all non-compete and non-solicitation clauses in their agreements, either
written
and oral, and either explicit and implied, in echange for full settlement
of any
outstanding debts owed to the CEO that are unpaid. In addition, the Company
granted the CEO a non-exclusive, worldwide, royalty-free right and license
to
use the Monitor Plus software source code, and all derivative works therof,
in
return for agreement to render reasonable assistance in the winding down
of the
Compnay’s original business plans.
ITEM
8. Changes
In and Disagreements with Accountant on Accounting and Financial
Disclosure
None.
ITEM
8A. Controls and Procedures
An
evaluation was carried out under the supervision and with the participation
of
the Company’s management, including its principal executive officer and
principal financial officer (one person), of the effectiveness of the design
and
operation of the Company’s disclosure controls and procedures (as defined in
Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period
covered by this Report. Based upon that evaluation, the principal executive
officer and principal financial officer (one person) concluded that those
disclosure controls and procedures were effective to ensure that information
required to be disclosed by the Company in the reports that it files or submits
under the Exchange Act is recorded, processed, summarized and reported, within
the time periods specified in the Commission’s rules and forms and that such
information is accumulated and communicated to the Company’s management,
including the principal executive officer and principal financial officer (one
person), as appropriate, to allow timely decision regarding
disclosure.
During
the period covered by this Report, there were no changes in the Company’s
internal control over financial reporting that have materially affected, or
are
reasonably likely to materially affect, the Company’s internal control over
financial reporting.
ITEM
8B. Other Information
None.
PART
III.
ITEM
9. Directors, Executive Officers, Promoters, Control Persons and Corporate
Governance: Compliance with Section 16(a) of the Exchange Act.
Directors
and Executive Officers
The
following persons are our executive officers and directors and hold the offices
set forth opposite their names.
Name
|
|
Age
|
|
Position
|
|
|
|
|
|
Isidore
Sobkowski
|
|
50
|
|
President,
Chief Executive Officer, Interim Chief Financial Officer and
Director
|
|
|
|
|
|
Solomon
Lax
|
|
47
|
|
Director
|
Directors
and Executive Biographies
Isidore
Sobkowski.
Mr.
Sobkowski was the lead cyber security consultant at the National Thoroughbred
Racing Association. An expert in the areas of artificial intelligence,
predictive software and cyber security, Mr. Sobkowski served on the Board of
Directors and as a Member of the Audit Committee of Astea International from
June 2000 through January 2004. He also serves as founder, President and Chief
Executive Officer of Self Service Technologies. Previously, he led a number
of
successful technology companies, including Professional Help Desk (“PHD”). Upon
PHD’s acquisition by Computer Associates, Mr. Sobkowski was employed as a
Division Vice President at Computer Associates. A published author and
international speaker, Mr. Sobkowski received Bachelors and Masters of Science
degrees in Computer Science from The City University of New York as well as
a
professional certification in Artificial Intelligence from New York University.
Solomon
Lax.
Since
1998, Mr. Lax has been a partner in CS Capital Partners LLC, an early stage
venture capital firm. Since 2000 through 2006, Mr. Lax served as a member of
the
Board of Directors of Home Décor Products, an internet retailer. Since 2006, Mr.
Lax has served as Chief Executive Officer of Grace American Capital, LLC, a
specialty finance company. Mr. Lax has also been a principal in Cato Capital
LLC, a registered broker dealer, since 2006.
Board
of Directors
Our
Board
of Directors (“Board”) are elected by the vote of a majority in interest of the
holders of our voting stock and hold office until the expiration of the term
for
which he or she was elected and until a successor has been elected and
qualified.
A
majority of the authorized number of directors constitutes a quorum of the
Board
for the transaction of business. Both of the directors must be present at the
meeting to constitute a quorum. However, any action required or permitted to
be
taken by the Board may be taken without a meeting if all members of the Board
individually or collectively consent in writing to the action.
Directors
may receive compensation for their services and reimbursement for their expenses
as shall be determined from time to time by resolution of the Board. Each of
our
directors currently receives no compensation for their service on our Board.
Section 16(a)
Beneficial Ownership Reporting Compliance
Section
16(a) of the Exchange Act requires that a company’s directors and certain of its
officers file reports of ownership and changes of ownership of such company’s
common stock with the SEC. Based solely on copies of such reports provided
to
us, we believe that all directors and officers filed on a timely basis all
such
reports required of them with respect to stock ownership and changes in
ownership during 2007.
Code
of Ethics
Our
Board
has not adopted a code of ethics that applies to all of our directors, employees
and officers, including our principal executive officer, principal financial
officer, principal accounting officer or controller, or persons performing
similar functions.
Committees
Since
inception, we have never had any audit committee or any other committee of
the
Board.
ITEM
10. Executive Compensation
The
following table summarizes the compensation paid to our Chief Executive Officer
and the two other most highly compensated executive officers for services
rendered in all capacities to us during the years ended June 30, 2006 and
2007.
|
|
Long-Term
Compensation
|
|
|
|
Annual
Compensation
|
|
|
|
Awards
|
|
|
|
|
|
Name
and Principal Position
|
|
Year
|
|
Salary
($)
|
|
Bonus
($)
|
|
Restricted
Stock Awards ($)
|
|
Securities
Underlying Options/SARs (#)
|
|
Non-Equity
Incentive Plan Compensation
|
|
Non-Qualified
Deferred Compensation Earnings
|
|
All
Other Compensation ($)
|
|
Total
Compensation ($)
|
|
Isidore
Sobkowski
|
|
|
2007
|
|
|
180,000
|
(1)
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
91,995
|
|
|
|
|
2006
|
|
|
60,000
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
60,000
|
|
(1)
Of
this amount, $90,000 was paid in cash and the remainder represents accrued
salary, which was ultimately contributed to paid-in capital on September 30,
2007.
As
of
June 30, 2007, we have not entered into any employment agreements with Mr.
Sobkowski or any other individual. Mr.
Sobkowski is not currently receiving any compensation from the Company in
exchange for his services, however, he is reimbursed for out of pocket expenses
he incurs in providing services to the Company
Outstanding
Equity Awards at June 20, 2007
During
2007, Mr. Sobkowski was not granted any options or other equity from the
Company.
ITEM
11. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
Set
forth
below is the ownership, as of June 30, 2007, of the number of shares and
percentage of our common stock beneficially owned by: (i) each of our directors,
(ii) each of our executive officers listed in the above summary compensation
table, (iii) all of our directors and executive officers as a group, and (iv)
all person or entities known to beneficially own more than 5% of our outstanding
common stock.
Title
of Class
|
|
Name
of Beneficial Owner
|
|
Amount
and Nature of
Beneficial
Owner
|
|
Percent
of Class
|
Common
Stock
|
|
Isidore
Sobkowski
|
|
9,700,000
|
|
57.9%
|
Common
Stock
|
|
Solomon
Lax
|
|
2,200,000
|
|
13.1%
|
Common
Stock
|
|
Michael
Hartstein
|
|
960,000
|
|
5.7%
|
Common
Stock
|
|
Eroom
Systems, Inc.
|
|
2,083,333
|
|
12.4%
|
Common
Stock
|
|
All
executive officers and directors as a group
|
|
11,900,000
|
|
71.0%
|
* Indicates
beneficial ownership of less than 1.0% of securities outstanding.
|
(1) |
Unless
otherwise indicated, the address of each beneficial owner is c/o
Aprecia,
Inc., 1177 High Ridge Rd., Stamford, CT
06905.
|
|
(2)
|
Applicable
percentage ownership is based on 16,761,597 shares of common stock
outstanding as of June 30, 2007, together with securities exercisable
or
convertible into shares of common stock within 60 days of June 30,
2007
for each stockholder. Beneficial ownership is determined in accordance
with the rules of the SEC and generally includes voting or investment
power with respect to securities. Shares of common stock that are
currently exercisable or exercisable within 60 days of June 30, 2007,
which are deemed to be beneficially owned by the person holding such
securities for the purpose of computing the percentage of ownership
of
such person, but are not treated as outstanding for the purpose of
computing the percentage ownership of any other person.
|
ITEM
12. Certain Relationships and Related Transactions and Director
Independence
Related
Transactions
None.
Director
Independence
Since
inception, we have never had any independent directors.
ITEM
13. Exhibits and Reports on Form 8-K
|
a.
|
Exhibits
pursuant to Regulation S-K:
|
DESIGNATION
OF EXHIBIT AS SET FORTH IN ITEM 601 OF REGULATION
S-B
|
|
DESCRIPTION
|
|
LOCATION
|
|
|
|
|
|
3.1
|
|
Articles
of Incorporation
|
|
Incorporated
by Reference to the Registration Statement on Form SB-2 filed on
November
13, 2006 (File No. 333-138625).
|
|
|
|
|
|
3.2
|
|
Bylaws
|
|
Incorporated
by Reference to the Registration Statement on Form SB-2 filed on
November
13, 2006 (File No. 333-138625).
|
|
|
|
|
|
4.1
|
|
Securities
Purchase Agreement dated March 10, 2006 by and between the Company
and
Alpha Capital Aktiengesellschaft, Double U Master Fund LP, Tobanna
Enterprises Corp., and CMS Capital
|
|
Incorporated
by Reference to Amendment No. 1 to the Registration Statement on
Form SB-2
filed on December 27, 2006 (File No. 333-138625).
|
|
|
|
|
|
4.2
|
|
7%
Convertible Debenture dated March 10, 2006 issued to Alpha Capital
Aktiengesellschaft
|
|
Incorporated
by Reference to Amendment No. 1 to the Registration Statement on
Form SB-2
filed on December 27, 2006 (File No.
333-138625).
|
DESIGNATION
OF EXHIBIT AS SET FORTH IN ITEM 601 OF REGULATION
S-B
|
|
DESCRIPTION
|
|
LOCATION
|
|
|
|
|
|
4.3
|
|
Registration
Rights Agreement dated March 10, 2006 by and between the Company
and Alpha
Capital Aktiengesellschaft, Double U Master Fund LP, Tobanna Enterprises
Corp., and CMS Capital
|
|
Incorporated
by Reference to Amendment No. 1 to the Registration Statement on
Form SB-2
filed on December 27, 2006 (File No. 333-138625).
|
|
|
|
|
|
4.4
|
|
Security
Agreement dated March 10, 2006 by and between the Company and Alpha
Capital Aktiengesellschaft, Double U Master Fund LP, Tobanna Enterprises
Corp., and CMS Capital and Michael Hartstein, as collateral
agent
|
|
Incorporated
by Reference to Amendment No. 1 to the Registration Statement on
Form SB-2
filed on December 27, 2006 (File No. 333-138625).
|
|
|
|
|
|
4.5
|
|
Collateral
Agent Agreement dated March 10, 2006 by and between the Company and
Alpha
Capital Aktiengesellschaft, Double U Master Fund LP, Tobanna Enterprises
Corp., and CMS Capital and Michael Hartstein, as collateral
agent
|
|
Incorporated
by Reference to Amendment No. 1 to the Registration Statement on
Form SB-2
filed on December 27, 2006 (File No. 333-138625).
|
|
|
|
|
|
4.6
|
|
7%
Convertible Debenture dated March 10, 2006
|
|
Incorporated
by Reference to Amendment No. 1 to the Registration Statement on
Form SB-2
filed on December 27, 2006 (File No. 333-138625).
|
|
|
|
|
|
4.7
|
|
7%
Convertible Debenture dated March 10, 2006
|
|
Incorporated
by Reference to Amendment No. 1 to the Registration Statement on
Form SB-2
filed on December 27, 2006 (File No. 333-138625).
|
|
|
|
|
|
4.8
|
|
7%
Convertible Debenture dated March 10, 2006
|
|
Incorporated
by Reference to Amendment No. 1 to the Registration Statement on
Form SB-2
filed on December 27, 2006 (File No. 333-138625).
|
|
|
|
|
|
10.1
|
|
Asset
Purchase Agreement by and between Isidore Sobkowski and the Company
dated
March 6, 2006
|
|
Incorporated
by Reference to Amendment No. 1 to the Registration Statement on
Form SB-2
filed on December 27, 2006 (File No. 333-138625).
|
|
|
|
|
|
10.2
|
|
Voting
Agreement by and between Michael Hartstein, Solomon Lax and Isidore
Sobkowski
|
|
Incorporated
by Reference to Amendment No. 1 to the Registration Statement on
Form SB-2
filed on December 27, 2006 (File No. 333-138625).
|
|
|
|
|
|
10.3
|
|
Subscription
Agreement by and among the Company, Alpha
Capital Anstalt, and Harborview Master Fund L.P.
|
|
Incorporated
by Reference to the Company’s Current Report of Form 8-K filed on May 30,
2007 (File No. 333-138625).
|
|
|
|
|
|
10.4
|
|
Form
of Warrant issued by the Company to each of Alpha
Capital Anstalt, and Harborview Master Fund L.P.
|
|
Incorporated
by Reference to the Company’s Current Report of Form 8-K filed on May 30,
2007 (File No. 333-138625).
|
|
|
|
|
|
10.5
|
|
Form
of Secured Note issued by the Company to each of Alpha
Capital Anstalt and Harborview Master Fund L.P.
|
|
Incorporated
by Reference to the Company’s Current Report of Form 8-K filed on May 30,
2007 (File No. 333-138625).
|
|
|
|
|
|
10.6
|
|
Consent
Agreement by and among the Company, Alpha
Capital Anstalt, and Harborview Master Fund L.P.
|
|
Incorporated
by Reference to the Company’s Current Report of Form 8-K filed on May 30,
2007 (File No. 333-138625).
|
|
|
|
|
|
31.1
|
|
Certification
of President and Chief Executive Officer (one person) pursuant to
Rule
13a-14(a)/15d-14(a) of the Exchange Act
|
|
Provided
Herewith
|
DESIGNATION
OF EXHIBIT AS SET FORTH IN ITEM 601 OF REGULATION
S-B
|
|
DESCRIPTION
|
|
LOCATION
|
|
|
|
|
|
32.1
|
|
Certification
of President and Chief Executive Officer (one person) pursuant to
18
U.S.C. Section 1350 as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
|
|
Provided
Herewith
|
None.
ITEM
14. Principal Accountant Fees and Services.
Audit
Fees
Audit
fees include fees for audit or review services in accordance with generally
accepted auditing standards and fees for services that generally only our
auditors provide, such as statutory audits and review of documents filed with
the SEC. The aggregate fees, rounded to the nearest thousand dollars, paid
to,
or accrued for Wolinetz, Lafazan & Company, P.C., independent registered
public accountant, for consolidated auditing services to us for the years ended
June 30, 2007 and June 30, 2006 were $24,000 and $15,000, respectively.
Audit
Related Fees
Audit-related
fees include fees for assurance and related services that are traditionally
performed by the our auditors. These services include due diligence on
acquisition targets and consultation in connection with financial and accounting
standards. The aggregate fees, rounded to the nearest thousand dollars, paid
to,
or accrued for Wolinetz, Lafazan & Company, P.C., independent registered
public accountant, for audit-related services to us for the years ended June
30,
2007 and June 30, 2006 were $0.00 and $0.00, respectively.
Tax
Fees
Tax
fees
include fees for services that are performed by professional tax staff other
than in connection with the audit. These services include tax compliance
services, tax planning and tax advice. The aggregate fees, rounded to the
nearest thousand dollars, paid to, or accrued for Wolinetz, Lafazan &
Company, P.C., independent registered public accountant, for tax services to
us
for the years ended June 30, 2007 and June 30, 2006 were $0.00 and $0.00,
respectively.
All
Other Fees
During
the years ended June 30, 2007 and June 30, 2006, the aggregate fees, rounded
to
the nearest thousand dollars, paid to, or accrued for Wolinetz, Lafazan &
Company, P.C., independent registered public accountant, for all other services
were $0.00 and $0.00, respectively.
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, thereunto duly
authorized.
|
|
|
|
APRECIA,
INC.
|
|
|
|
December
12, 2007
|
By: |
/s/
Isidore Sobkowski |
|
Isidore
Sobkowski,
President,
Chief Executive Officer
and
Interim Chief Financial Officer
|
In
accordance with the Exchange Act, this Report has been signed below by the
following persons on behalf of the registrant in and the capacities and on
the
dates indicated.
|
|
|
|
December
12, 2007
|
|
By: |
/s/
Isidore Sobkowski
|
|
|
|
President,
Chief Executive Officer,
Interim
Chief Financial Officer and Director
|
|
|
|
|
|
|
|
|
December
12, 2007
|
|
By: |
/s/
Solomon Lax
|
|
|
|
Director
|