The 10K:
Results of operations
Revenues
The Company is a development stage technology Company that had only $1,510 in operating revenues for the fiscal year ended December 31, 2004 and no revenues for the fiscal year ended December 31, 2003. EZ2 companies, Inc. purchased controlling interest in Edgar Filing.net, by purchasing 45,344,208 shares of common stock on May 25, 2004 for the sum of $155,560. The Company is in negotiation with several potential partners for its technology in each Internet area, and hopes that such partnerships will allow third parties to expend the marketing funds to launch these platforms nationally. The Company also has purchased assets and continues to seek asset purchases that allow the Company to create partnerships with companies, or to acquire assets of existing companies that have registered users, which would enable the Company to market its service offerings directly to those users.
Expenses
Total operating expenses for the fiscal year ended December 31, 2004 were approximately $692,000 for the fiscal year ended December 31, 2004, and approximately $44,000 for the fiscal year ended December 31, 2003. Professional fees were approximately $35,000 for the fiscal year ended December 31, 2004, as compared to approximately $17,000 for the fiscal year ended December 31, 2003. Salaries and officer's compensation were approximately $280,000 for the fiscal year ended December 31, 2004, as compared with zero for the year ended December 31, 2003. Additional selling, general and administration costs were approximately $377,000 for the fiscal year ended December 31, 2004, which included approximately $176,000 in advertising, $80,000 in consulting and $36,000 in rent expense, as compared with approximately $27,000 in total selling, general and administrative expenses for the fiscal year ended December 31, 2003.
These expenses are primarily driven by expansion in staff and support as the Company attempts to launch its technologies and internet portal sites; including advertising, marketing and selling expenses related thereto, as compared to last year's expenses which were primarily attributable to maintaining reporting requirements and searching for business opportunities for the Company's shareholders.
Interest Expenses
The Company incurred interest expense of approximately $29,000 related to its note payable to a stockholder for the fiscal year ended December 31, 2004, compared with zero in 2003.
Liquidity and Capital Resources
At December 31, 2004, our total assets consisted of fixed and intangible assets of approximately $168,000, and prepaid expenses of approximately $305,000. The prepaid expenses arose from consulting agreements and service agreements entered into during the year, in which the Company paid for services to be delivered over a two-year period with common stock. The Company issued approximately 29,450,000 shares in exchange for these services. At the same date, the Company had working capital deficit of approximately $265,000. Since the acquisition of the controlling interest Company by EZ 2 Companies.com, Inc., and the subsequent change of business plan, the Company has relied upon a demand credit facility from a shareholder of the Company. No assurances can be given that our revised business plan will succeed or that this shareholder will support the cash requirements of the Company indefinitely.
The following table lists the future payments required on our debt and any other contractual obligations as of December 31, 2004:
OBLIGATIONS Total 1 year or less 1-3 years 4-5 years More than 5 years Bridge Loan (1) $375,542 375,542 -- -- -- Operating Leases (2) $302,434 81,389 129,726 84,852 6,467
Total Obligations $677,976 $456,931 $129,726 $84,852 $6,467
1. Represents bridge loan from shareholder
2. Represents operating lease payments for office equipment and contractual rent obligations for office space
Net Loss
Our fiscal year ended December 31, 2004 resulted in a net loss of approximately $719,000, compared to net loss of $44,000 for the fiscal year ended December 31, 2003. The loss increase was due to a rise in advertising and consulting expenses, professional fees and officers' compensation as we moved into full-scale development of our Internet technology.
The weighted average number of common shares outstanding in each period yielded a loss per share of $0.01 for the fiscal year ended December 31, 2004 versus $0.00 for fiscal year ended December 31, 2003.
Critical Accounting Policies
The Company's accounting policies are more fully described in Note 2 of the consolidated financial statements. As discussed in Note 2, the preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions about the future events that affect the amounts reported in the consolidated financial statements and the accompanying notes. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual differences could differ from these estimates under different assumptions or conditions. The Company believes that the following addresses the Companys most critical accounting policies:
Income Taxes:
We account for income taxes in accordance with Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes. (SFAS No. 109). Under SFAS 109, deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assts will be reflected on the balance sheet when it is determined that it is more likely than not that the asset will be realized. A valuation allowance has currently been recorded to reduce our deferred tax asst to $0. Accordingly, our potential deferred tax asset of $0 at December 31, 2004, may never be realized if we do not become profitable.
Revenue Recognition:
The Company will recognize revenue for services when those services are delivered, and receives payment via credit card settlement for all services currently offered by the Companys web businesses. The prevailing accounting guidance to be applied by the Company in its businesses with respect to the presentation of revenue on a gross versus a net basis is contained in Staff Accounting Bulletin No. 101, Revenue Recognition in Financial Statements, as later clarified by Emerging Issues Task Force No. 99-19, Reporting Revenue Gross as a Principal versus Net as an Agent (EITF 99-19). The consensus of this literature is that the presentation of revenue as the gross amount billed to a customer because it has earned revenue from the sale of goods or services or the net amount retained (that is, the amount billed to a customer less the amount paid to a supplier) because it has earned a commission or fee is a matter of judgment that depends on the relevant facts and circumstances. The Company has some web businesses in which it would act as an agent, such as ez2vacation.com, and others in which it would be a principal with credit risk and direct revenues, such as ez2ask.com.
Intangible Assets:
Our long-lived assets include intangible assets and as of December 31, 2004 had a net balance of $152,777. We amortize other intangible assets over their estimated economic useful lives. We must record an impairment charge on these assets when we determine that their carrying value may not be recoverable. The carrying value is not recoverable if it exceeds the undiscounted future cash flows resulting from the use of the asset and its eventual disposition. Based on the existence of one or more indicators of impairment, we measure any impairment of intangible assets based on a projected discounted cash flow method using a discount rate determined by our management to be commensurate with the risk inherent in our business model. Our estimates of future cash flows attributable to our other intangible assets require significant judgment based on our historical and anticipated results and are subject to many factors. Different assumptions and judgments could materially affect the calculation of the fair value of the other intangible assets, which could trigger impairment.
May 02, 2005
Someone tell me - How closely did this match your expectations?
I'm a new investor and this is the first 10K filed on one of my stocks. Any opinioins would be appreciated.
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