During the year ended December 31, 2008, we filed for inclusion of our common stock on the Over-the-Counter Bulletin Board (“OTC:BB”). Our Common Stock was approved for trading by FINRA for trading on the OTC:BB under the symbol DIII on January 26, 2009. Since being quoted on the OTC:BB, our common stock has not traded.
The payment of dividends is subject to the discretion of our Board of Directors and will depend, among other things, upon our earnings, our capital requirements, our financial condition, and other relevant factors.
We currently do not intend to pay cash dividends in the foreseeable future on the shares of common stock. We intend to reinvest any earnings in the development and expansion of our business. Any cash dividends in the future to common stockholders will be payable when, as and if declared by our Board of Directors, based upon the Board’s assessment of:
| · | our financial condition; |
| · | prior claims of preferred stock to the extent issued and outstanding; and |
| · | other factors, including any applicable laws. |
Therefore, there can be no assurance that any dividends on the common stock will ever be paid. |
Securities Authorized for Issuance under Equity Compensation Plans
We currently do not maintain any equity compensation plans.
Recent Sales of Unregistered Securities
During the fourth quarter of 2008, we did not issue any shares of our common stock
Subsequent Issuances
On January 30, 2009, we authorized the issuance of 100,000 shares of our common stock to Stoecklein Law Group pursuant to its retainer agreement for legal services.
On February 11, 2009, we authorized the issuance of 50,000 shares of our common stock to Berge Abajian as compensation for his board services during the 2009 year.
On February 26, 2009, we authorized the issuance of 20,000 shares of our common stock to Stoecklein Law Group pursuant to a new retainer agreement for legal services during the 2009 year.
We believe that the issuance of the shares was exempt from the registration and prospectus delivery requirements of the Securities Act of 1933 by virtue of Section 4(2). The shares were issued directly by us and did not involve a public offering or general solicitation. The recipients of the shares were afforded an opportunity for effective access to files and records of our company that contained the relevant information needed to make their investment
decision, including our financial statements. We reasonably believe that the recipients, immediately prior to issuing the shares, had such knowledge and experience in our financial and business matters that they were capable of evaluating the merits and risks of their investment. The recipients had the opportunity to speak with our management on several occasions prior to their investment decision. There were no commissions paid on the issuance of the shares.
Issuer Purchases of Equity Securities
We did not repurchase any of our securities during the year ended December 31, 2008.2009.
ITEM 6. SELECTED FINANCIAL DATA
Not applicable.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
OVERVIEW
Diamond Information Institute, Inc. was incorporated in the State of New Jersey in October of 1988 and had minimal activity until 1995 when it began in the business of jewelry manufacturing under the name Diamond Information Institute (d/b/a “Bergio”). Since 1995manufacturing. Diamond has been engaged in the design and manufacture of upscale jewelry from 1995 through its trade nameOctober, 2009. Effective October 19, 2009, as approved at our shareholder meeting on October 8, 2009, we entered into a Share Exchange Agreement with Alba Mineral Exploration, Inc. (“Alba”), a Delaware Corporation (the “Agreement”). Pursuant to the Agreement, Alba agreed to issue our shareholders a total of “Bergio” and2,585,175 shares of common stock in 2002 launched its “Bergio Bridal Collection”. The Company sellsAlba in proportion to approximately 150 independent jewelry retailers acrosstheir holdings in our company. Following the United States and has incurred a significant amount of capital resources in creating brand recognitiontransaction described in the Agreement and other accompanying transactions, our shareholders own 60% of the common stock issued and outstanding in Alba. Also pursuant to the Agreement, Alba acquired all of the assets and liabilities related to our business. As a result of the transaction the company became a wholly-owned subsidiary of Alba, and all of our operations related to the jewelry industry.business we were in were discontinued. Based upon consummation of this Share Purchase Agreement and the subsequent change in control of the Company, the business operations of the Company will change as follows:
OVERVIEW OF CURRENT OPERATIONS
Diamond’s products consistThe Company’s business operations will involve embarking upon a project to make Venture Capital Investments into private and public Companies. Management plans on obtaining the necessary capital for these venture capital investments via borrowings and investments into the Company. The eligible companies qualifying for an investment from the Company will be companies who currently have a dynamic business plan and are nearing completion of
the establishment of that business plan or are currently established businesses with positive cash flow but require additional funding to develop existing markets or expand into new markets. Emphasis will be on businesses with a wide rangevery low overhead and cost of unique styles and designs made from precious metals such as, gold, platinum, and Karat gold,sales thus giving them a large increase in positive cash flow with the injection of new capital into the company. A specific emphasis of the Company will be in the Green Energy as well as diamondsthe renewable energy fields and other precious stones. Diamondthe development of Software as a Service (SAAS) sector. The Company will also be operating a consultancy division to assist existing private companies to go public as well as assisting companies who are already public to restructure and raise additional money from the capital markets. There are numerous projects already submitted which are currently being considered for funding.
The Company plans on using consultants to execute its business plan as much as possible. That way management is able to access the very best in the industry sectors that the Company will be operating in and the Company will not be encumbered with considerable expensive overhead when the marketplace becomes soft as they all do from time to time. Management believes that the Company’s business model should insulate it from major market downturns since the market sector the Company will be operating in will be fee based. Management further believes that when the general market enters a Bear Market phase, there will be the most demand for the services the Company will be providing. As well the consultancy side of the Company’s business, the Company will be able to monitor and assist any companies it invests in to ensure the Company’s investments grow and mature on a timely basis with as little harm from cycles in the specific investment sectors that the Company invests in as possible.
Management believes that regardless of whether the Company is in a Bear cycle or a Bull market run, there will always be a healthy demand for funds and always a need for business management services to assist those who are floundering. Management believes that the Company has the best of both worlds since the Company should prosper from the Bear and Bull Market cycles. The only determinant for the Company in determining how fast it can grow its business will be in the Company’s success in obtaining the necessary funds for deployment into good qualifying business models. Management of the Company looks forward to the future with great anticipation.
Results of Operations
Based upon consummation of the Share Purchase Agreement and the subsequent change in control and business operations, the Company had not yet commenced its planned business operations. A relevant discussion of operational results is therefore not available.
Income Tax (Benefit) Provision
At December 31, 2009, the Company had approximately $1,600,000 of federal net operating tax loss carryforwards expiring at various dates through 2029. The Tax Reform Act of 1986 enacted a complex set of rules which limits a company's ability to utilize net operating loss carryforwards and tax credit carryforwards in periods following an ownership change. These rules define an ownership change as a greater than 50 to 75 product stylespercent change in its inventory, with prices ranging from $400 to $200,000. Additionally, Diamond has manufacturing control over its line asstock ownership within a defined testing period which is generally a three-year period. As a result of having a manufacturing facilitystock which may be issued by us from time to time and the conversion of warrants, options or the result of other changes in New Jersey as well as subcontracts with facilities in Italyownership of our outstanding stock, the Company may experience an ownership change and Bangkok.consequently our utilization of net operating loss carryforwards could be significantly limited.
In September of 2008, Diamond’s S-1 registration statement became effective with the SEC. Diamond believes that in becoming a public company, it will provide the Company increased flexibility in being able to acquire smaller jewelry manufacturers while also being able to consolidate overlapping expenses. It is Diamond’s intention to establish itself as a holding company for the purpose of acquiring established jewelry design and manufacturing firms who possess branded product lines. Branded product lines are products and/or collections whereby the jewelry manufacturers have established their products within the industry through advertising in consumer and trade magazines as well as possibly obtaining federally registered trademarks of their products and collections. This is in line with the Company’s strategy and belief that a brand name can create an association with innovation, design and quality which helps add value to the individual products as well as facilitate the introduction of new products.
Diamond intends to acquire design and manufacturing firms throughout the United States and Europe. If and when Diamond pursues any potential acquisition candidates, it intends to target the top 10% of the world’s jewelry manufactures that have already created an identity and brand in the jewelry industry. Diamond intends to locate potential candidates through its relationships in the industry and expects to structure the acquisition through the payment of cash, which will most likely be provided from third party financing, as well as Diamond’s common stock and not cash generated from Diamond’s operations. In the event, Diamond obtains financing from third parties for any potential acquisitions; Diamond may agree to issue Diamond’s common stock in exchange for the capital received. However, as of the date of this annual report Diamond does not have any binding agreements with any potential acquisition candidates or arrangements with any third parties for financing.
Diamond’s management believes that the jewelry industry competes in the global marketplace and therefore must be adaptable to ensure a competitive measure. Recently the U.S. economy has encountered a slowdown and Diamond anticipates the U.S. economy will most likely remain weak at least through all of 2009. Consumer spending for discretionary goods such as jewelry is sensitive to changes in consumer confidence and ultimately consumer confidence is affected by general business considerations in the U.S. economy. Consumer spending for discretionary spending generally decline during times of falling consumer confidence, which may affect Diamond’s retail sale of its products. U.S. consumer confidence reflected these slowing conditions during the last quarter of 2007 and has been carried forward throughout the year of 2008. Therefore, Diamond intends to make strong efforts to maintain its brand in the industry through its focus on the innovation and design of its products as well as being able to consolidate and increase cost efficiency when possible through acquisitions.
Result of Operations for the Years Ended December 31, 2008 and 2007
The following income and operating expenses tables summarize selected items from the statement of operations for the year ended December 31, 2008 compared to the year ended December 31, 2007.
INCOME:
| | Years Ended December 31, | |
| | 2008 | | | 2007 | |
| | | | | | |
Sales | | $ | 1,385,620 | | | $ | 1,296,585 | |
| | | | | | | | |
Cost of Sales | | | 847,976 | | | | 1,226,561 | |
| | | | | | | | |
Gross Profit | | $ | 537,644 | | | $ | 70,024 | |
| | | | | | | | |
Gross Profit Percentage of Revenue | | | 39 | % | | | 5 | % |
Sales
Sales for the year ended December 31, 2008 were $1,385,620 compared to $1,296,585 for the year ended December 31, 2007. This resulted in an increase of $89,035 or 7% from the comparable period of 2008 to 2007. We experienced a moderate increase in sales during the year ended December 31, 2008 as compared to the comparable period of 2007.
Typically, revenues experience significant seasonal volatility in the jewelry industry. The first two quarters of any given year typically represent approximately 15%-25% of total year revenues, based on historic results. The holiday buying season during the last two quarters of every year typically account for the remainder of annual sales.
Cost of Sales
Cost of sales for the year ended December 31, 2008 was $847,976 a decrease of $378,585, or 31%, from $1,226,561 for the year ended December 31, 2007. Our cost of sales were significantly higher for the year ended December 31, 2007 due to a write-down of approximately $284,000 of inventory to the lower of cost or market value, which we experienced during the six months ended June 30, 2007. The inventory write-down was a result of the refinement of cost and quantity of on hand data attributable to the conversion of the Company’s books and records to new accounting software in the beginning of 2007. We did not record any inventory write-down for the year ended December 31, 2008 and believe the cost of sales expenses are more reflective of what we expect our cost of sales to be going forward.
Gross Profit:
During the year ended December 31, 2008, we experienced a gross profit as a percentage of revenue of 39%, compared to a gross profit as a percentage of revenue of 5% for the year ended December 31, 2007. Our increased gross profit during the year of 2008 was a result of selling lower commodity priced products at higher margins. Also, the inventory write-down mentioned as part of cost of sales added approximately $284,000 to our 2007 cost of sales. Without the inventory write-down in 2007, our pro-forma gross profit percent in 2007 would have been approximately 27%.
OPERATING EXPENSES:
| | Years Ended December 31, | | | Increase/ | |
| | 2008 | | | 2007 | | | (Decrease) | |
| | | | | | | | | |
Selling Expenses | | $ | 368,664 | | | $ | 392,793 | | | | (6 | %) |
| | | | | | | | | | | | |
Total General and Administrative Expenses | | | 1,262,623 | | | | 1,095,549 | | | | 15 | % |
| | | | | | | | | | | | |
Total Operating Expenses | | $ | 1,631,287 | | | $ | 1,488,342 | | | | 10 | % |
| | | | | | | | | | | | |
Net Loss | | $ | (1,106,856 | ) | | $ | (1,171,980 | ) | | | (6 | %) |
Selling Expenses
Total selling expenses were $368,664 for the year ended December 31, 2008, which was approximately a 6% decrease from $392,793 for the year ended December 31, 2007. Selling expenses include advertising, trade show expenses and selling commissions. The decrease in selling expenses during the year ended December 31, 2008 compared to the year ended December 31, 2007 was a result of decreased advertising and travel expenses under the Company’s cost saving programs implemented in 2008.
General and Administrative Expenses
General and administrative expenses were $1,262,623 for the year ended December 31, 2008 versus $1,095,549 for the year ended December 31, 2007. The increase in general and administrative expenses in 2008 is due primarily to an increase in professional fees due to being a publicly-traded company. Included within professional fees in 2008 is a noncash charge related to stock-based compensation of $450,000. Also included in 2008 general and administrative expenses is share-based compensation of $317,500. Total noncash stock-based compensation was $781,500 in 2008 compared to $181,000 in 2007. The $600,500 increase in stock-based compensation was primarily offset by decreases in payroll and payroll taxes from staff reductions.
Loss from Operations
During the year ended December 31, 2008, we had a loss from operations totaling $1,093,643 which was a decrease from $1,418,318 for the same period in 2007, or approximately 23%. The primary contributing factor of our lower loss from operations is higher gross margins on slightly higher sales.
Other Expense / Income
Other Expense / Income is comprised primarily of interest incurred on bank lines of credit, corporate credit cards, term loans and capital leases in connection with operations related to manufacturing and indirect operating expenses offset by miscellaneous income. We attribute the increase in our other expense / income during the year ended December 31, 2008 when compared to the year ended December 31, 2007 as a result of a reduction of interest expense of $17,603 offset by recognizing sales of gold scrap in 2007. Interest expense in 2008 primarily decreased due to lower interest rates on credit lines and credit cards. There were no sales of gold scrap occurring in 2008.
Income Tax (Benefit) Provision
The Company reported an income tax benefit of $89,133 for the year ended December 31, 2008 as compared to an income tax benefit of $331,642 for the year ended December 31, 2007. In 2008, management recorded a full valuation allowance against its deferred tax assets.
Net Loss
The Company incurred a net loss of $1,106,856 for the year ended December 31, 2008 versus a net loss of $1,171,980 for the year ended December 31, 2007. This was a decrease of $65,124, or 6%, in our net loss for the comparable period. Although we experienced higher general and administrative expenses for the year ended December 31, 2008, we were able to decrease our net loss when compared to same period a year ago as a result of decreasing our cost of sales and selling expenses. Our gross margins in 2008 have significantly increased as a result of us selling lower commodity priced products at higher margins. Additionally, in 2007 gross margins were lower due to an inventory adjustment of approximately $284,000. Overall our net loss is primarily attributable to a significant increase in costs associated with the non-cash stock compensation.
Liquidity and Capital Resources
The following table summarizes working capital at December 31, 2008 compared to December 31, 2007.
| | | | | | | | Increase / (Decrease) | |
| | December 31, 2008 | | | December 31, 2007 | | | $ | | | % | |
| | | | | | | | | | | | |
Current Assets | | $ | 2,079,321 | | | $ | 2,074,989 | | | $ | 4,332 | | | | ** | |
| | | | | | | | | | | | | | | | |
Current Liabilities | | $ | 1,996,988 | | | $ | 1,549,538 | | | $ | 447,450 | | | | 28 | % |
| | | | | | | | | | | | | | | | |
Working Capital | | $ | 82,333 | | | $ | 525,451 | | | $ | (443,118 | ) | | | (84 | %) |
**Denotes less than 1%.
As of December 31, 2008, we had a cash overdraft of $7,345, compared to a cash overdraft of $48,144 at December 31, 2007. In 2007, we conducted a private placement offering of our common stock to accredited investors in accordance with SEC regulations and raised approximately $425,000. However, it is anticipated that we will need to sell additional equity or debt securities or obtain credit facilities from financial institutions to meet our long-term liquidity and capital requirements, which include strategic growth through mergers and acquisitions. There is no assurance that we will be able to obtain additional capital or financing in amounts or on terms acceptable to us, if at all or on a timely basis.
Accounts receivable at December 31, 2008 was $713,194 and $692,619 at December 31, 2007, representing an increase of 3%. We typically offer our customers 60, 90 or 120 day payment terms on sales, depending upon the product mix purchased. When setting terms with our customers, we also consider the term of the relationship with individual customers and management’s assessed credit risk of the respective customer, and may at management’s discretion, increase or decrease payment terms based on those considerations.
Inventory at December 31, 2008 was $1,326,989 and $1,333,752 at December 31, 2007. Our management seeks to maintain a very consistent inventory level that it believes is commensurate with current market conditions and manufacturing requirements related to anticipated sales volume. We historically do not have an inventory reserve for slow moving or obsolete products due to the nature of our inventory of precious metals and stones, which are commodity-type raw materials and rise in value based on quoted market prices established in actively trade markets. This allows for us to resell or recast these materials into new products and/or designs as the market evolves.
Accounts payable and accrued expenses at December 31, 2008 were $446,892 compared to $389,798 at December 31, 2007, which represents a 15% increase. In 2008, we negotiated more favorable repayment terms from our suppliers.
We do not typically utilize our shares as a method of payment for our debt but during 2007, we entered into a debt conversion agreement and agreed to issue 100,000 shares of common stock at a fair market value of $1 per share to a vendor as full satisfaction for accounts payable previously due and as pre-payment for future services to be rendered. Of the total $100,000 of common stock issued, approximately $55,000 was to satisfy previous accounts payable balances, and the difference of approximately $45,000 was issued as consideration for future services to be rendered.
Also during 2007, we entered into another debt conversion agreement and agreed to issue 150,000 shares of common stock at fair market value of $1 per share to a vendor as full satisfaction of an accounts payable balance of approximately $150,000. The debt conversion agreement allows for the vendor to purchase for a period of 60 months, 150,000 “Class A” purchase warrants, which have an exercise price of $1.50 per share. As of the year ended December 31, 2008, no “Class A” purchase warrants had been acquired by the vendor.
Bank Lines of Credit and Notes Payable
Our indebtedness is comprised of various bank credit lines, term loans, capital leases and credit cards intended to provide capital for the ongoing manufacturing of our jewelry line, in advance of receipt of the payment from our retail distributors. As of December 31, 2008, we had 2 outstanding term loans. One of our loans is for $150,000 with Columbia Bank, which is payable in monthly installments and matures in April of 2009. The note bears an annual interest rate of 7.25% and as of December 31, 2008, there was an outstanding balance of $20,965. We also have a $300,000 term loan with JPMorgan Chase, which is payable in monthly installments and matures in May 2011. The note bears an annual interest rate of 7.60% and as of December 31, 2008 there was an outstanding balance of $158,320. Both of these notes are collateralized by our assets as well as a personal guarantee by our CEO, Berge Abajian.
In addition to the notes payable, we utilize bank lines of credit to support working capital needs. As of December 31, 2008, we had two lines of credit. One bank line of credit is for $700,000 with Columbia Bank and requires minimum monthly payment of interest only. The interest is calculated at the bank’s prime rate plus 0.75%. As of December 31, 2008, we had an outstanding balance of $699,999 at an effective annual interest rate of 4.00%. Additionally, we have a bank line of credit of $55,000 with JPMorgan Chase Bank, which also requires a monthly payment of interest only. The interest rate is calculated at the bank’s prime rate plus 0.75%. As of December 31, 2008, we had an outstanding balance of $45,793 at an effective annual interest rate of 4.00%. Each credit line renews annually and is collateralized by our assets as well as a personal guarantee by our CEO, Berge Abajian.
In addition to the bank lines of credit and term loans, we have a number of various unsecured credit cards. These credit cards require minimal monthly payments of interest only and as of December 31, 2008 have interest rates ranging from 4.74% to 13.99%. As of December 31, 2008, we have outstanding balances of $164,657.
Satisfaction of our cash obligations for the next 12 months.
For each of the years ended December 31, 2008 and 2007, we have incurred net losses of approximately $1.1 million and $1.2 million, respectively. We have funded our working capital needs primarily from revenues, a private placement equity offering and advances from our CEO and principal stockholder. Our plan is to acquire design and manufacturing companies throughout the United States and Europe. If and when we pursue any potential business acquisitions, we intend to target the top 10% of the world’s jewelry manufacturers that have already created an identity and brand in the jewelry business. We plan to fund these potential business acquisitions from additional equity and/or debt financing, and joint venture partnerships. However, we have no binding agreements or understandings with any potential acquisition targets. There is no assurance that we will be able to obtain additional capital in the amount or, on terms acceptable to us, in the required timeframe.
A critical component of our operating plan impacting our continued existence is to efficiently manage the production of our jewelry lines and successfully develop new lines through our Company or through possible acquisitions and/or mergers. Our ability to obtain capital through additional equity and/or debt financing, and joint venture partnerships will also be important to our expansion plans. In the event we experience any significant problems assimilating acquired assets into our operations or cannot obtain the necessary capital to pursue our strategic plan, we may have to reduce the growth of our operations. This may materially impact our ability to increase revenue and continue our growth.
Over the next twelve months we believe we have the required working capital needs to fund our current operations through revenues. However, any expansion or future business acquisitions will require us to raise capital through an equity offering.
Summary of product and research and development that we will perform for the term of our plan.
We are not anticipating significant research and development expenditures in the near future.
Expected purchase or sale of plant and significant equipment.equipment.
We do not anticipate the purchase or sale of any plant or significant equipment; as such items are not required by us at this time.
Significant changes in the number of employees.employees.
As previously mentioned, weWe currently have 3 full-time employees and 2 part-time employees. We do not anticipate a significant change in the number of full time employees over the next 12 months. None of our employees are subject to any collective bargaining agreements.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, results or operations, liquidity, capital expenditures or capital resources that is deemed material.
Critical Accounting Policies
The Company prepares its financial statements in accordance with accounting principles generally accepted in the United States of America. Preparing financial statements in accordance with generally accepted accounting principles requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reported period.
Accounts Receivable. Management periodically performs a detailed review of amounts due from customers to determine if accounts receivable balances are impaired based on factors affecting the collectability of those balances. Management has provided an allowance for doubtful accounts of approximately $80,000 at December 31, 2008.
Long-Lived Assets. In accordance with Statement of Financial Accounting Standards (“SFAS”) No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, long-lived tangible assets subject to depreciation or amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If an asset is determined to be impaired, the loss is measured by the excess of the carrying amount of the asset over its fair value as determined by an estimate of undiscounted future cash flows. As these factors are difficult to predict and are subject to future events that may alter management’s assumptions, the future cash flows estimated by management in their impairment analyses may not be achieved.
Revenue Recognition. The Company’s management recognizes revenue when realized or realizable and earned. In connection with revenue recorded, the Company establishes a sales returns and allowances reserve for anticipated merchandise to be returned. The estimated percentage of sales to be returned is based on the Company’s historical experience of returned merchandise. Also, management calculates an estimated gross profit margin on returned merchandise deriving a cost for the anticipated returned merchandise also based on the Company’s historical operations.
The Company’s sole revenue producing activity as a manufacturer and distributor of upscale jewelry is affected by movement in fashion trends and customer desire for new designs, varying economic conditions affecting consumer spending and changing product demand by retailers affecting their desired inventory levels.
Therefore, management’s estimation process for merchandise returns can result in actual amounts differing from those estimates. This estimation process is susceptible to variation and uncertainty due to the challenges faced by management to comprehensively discern all conditions affecting future merchandise returns whether prompted by fashion, the economy or customer relationships. Ultimately, management believes historical factors provide the best indicator of future conditions based on the Company’s responsiveness to changes in fashion trends, the cyclical nature of the economy in conjunction with the number of years in business and consistency and longevity of its customer mix.
Recently Issued Accounting Standards
In December 2007,On July 1, 2009, the Accounting Standards Codification (“ASC”) became the Financial Accounting Standards Board (“FASB”) officially recognized source of authoritative U.S. generally accepted accounting principles applicable to all public and non-public non-governmental entities, superseding existing FASB, issued SFAS No. 141 (revised 2007), "Business Combinations" (SFAS 141(R)), which replaces SFAS No. 141, "Business Combinations." SFAS 141(R) retainsAICPA, EITF and related literature. Rules and interpretive releases of the underlying concepts of SFAS 141 in that all business combinations are still required to be accounted for at fair valueSEC under the acquisition methodauthority of federal securities laws are also sources of authoritative GAAP for SEC registrants. All other accounting but SFAS 141(R) changed the method of applying the acquisition method in a number of significant aspects. Acquisition costs will generally be expensed as incurred; noncontrolling interests will be valued at fair value at the acquisition date; in-process research and development will be recorded at fair value as an indefinite-lived intangible asset at the acquisition date; restructuring costs associated with a business combination will generally be expensed subsequentliterature is considered non-authoritative. The switch to the acquisition date; and changesASC affects the away companies refer to U.S. GAAP in deferred tax asset valuation allowances and income tax uncertainties after the acquisition date generally will affect income tax expense. SFAS 141(R) is effective on a prospective basis for all business combinations for which the acquisition date is on or after the beginning of the first annual period subsequent to December 15, 2008, with the exception of the accounting for valuation allowances on deferred taxes and acquired tax contingencies. SFAS 141(R) amends SFAS 109 such that adjustments made to valuation allowances on deferred taxes and acquired tax contingencies associated with acquisitions that closed prior to the effective date of SFAS 141(R) would also apply the provisions of SFAS 141(R). Early adoption is not permitted. We are currently evaluating the effects, if any, that SFAS 141(R) may have on our financial statements and believe it couldaccounting policies. Citing particular content in the ASC involves specifying the unique numeric path to the content through the Topic, Subtopic, Section and Paragraph structure.
FASB ASC Topic 260, “Earnings Per Share.” On January 1, 2009, the Company adopted new authoritative accounting guidance under FASB ASC Topic 260, “Earnings Per Share,” which provides that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method.
FASB ASC Topic 820, “Fair Value Measurements and Disclosures.” New authoritative accounting guidance under ASC Topic 820,”Fair Value Measurements and Disclosures,” affirms that the objective of fair value when the market for an asset is not active is the price that would be received to sell the asset in an orderly transaction, and clarifies and includes additional factors for determining whether there has been a significant decrease in market activity for an asset when the market for that asset is not active. ASC Topic 820 requires an entity to base its conclusion about whether a transaction was not orderly on the weight of the evidence. The new accounting guidance amended prior guidance to expand certain disclosure requirements. The Company adopted the new authoritative accounting guidance under ASC Topic 820 during the first quarter of 2009. Adoption of the new guidance did not significantly impact the Company’s consolidated financial statements.
Further new authoritative accounting guidance (Accounting Standards Update No. 2009-5) under ASC Topic 820 provides guidance for measuring the fair value of a liability in circumstances in which a quoted price in an active market for the identical liability is not available. In such instances, a reporting entity is required to measure fair value utilizing a valuation technique that uses (i) the quoted price of the identical liability when traded as an asset, (ii) quoted prices for similar liabilities or similar liabilities when traded as assets, or (iii) another valuation technique that is consistent with the existing principles of ASC Topic 820, such as an income approach or market approach. The new authoritative accounting guidance also clarifies that when estimating the fair value of a liability, a reporting entity is not required to include a separate input or adjustment to other inputs relating to the existence of a restriction that prevents the transfer of the liability. The forgoing new authoritative accounting guidance under ASC Topic 820 will be effective for the Company’s consolidated financial statements beginning October 1, 2009 and is not expected to have a significant impact if business combinations are consummated. However,on the effect of which is indeterminable as of December 31, 2008.Company’s consolidated financial statements.
In December 2007,FASB ASC Topic 825 “Financial Instruments.” New authoritative accounting guidance under ASC Topic 825,”Financial Instruments,” requires an entity to provide disclosures about the fair value of financial instruments in interim financial information and amends prior guidance to require those disclosures in summarized financial information at interim reporting periods.
FASB ASC Topic 855, “Subsequent Events.” New authoritative accounting guidance under ASC Topic 855, “Subsequent Events,” establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or available to be issued. ASC Topic 855 defines (i) the period after the balance sheet date during which a reporting entity’s management should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, (ii) the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements,
and (iii) the disclosures an entity should make about events or transactions that occurred after the balance sheet date. The new authoritative accounting guidance under ASC Topic 855 became effective for the Company’s financial statements for periods ending after June 15, 2009. Effective February 24, 2010, the FASB issued Financial Accounting Standards Update (“ASU”) No. 160, "Noncontrolling Interests in Consolidated Financial Statements-an amendment of ARB2010-09, “Subsequent Events (Topic 855): Amendments to Certain Recognition and Disclosure Requirements” which revised certain disclosure requirements. ASU No. 51." This statement is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008, with earlier adoption prohibited. This statement requires the recognition of a noncontrolling interest (minority interest) as equity in the consolidated financial statements and separate from the parent's equity. The amount of net income attributable to the noncontrolling interest will be included in consolidated net income on the face of the income statement. It also amends certain of ARB No. 51's consolidation procedures for consistency with the requirements of SFAS 141(R). This statement also includes expanded disclosure requirements regarding the interests of the parent and its noncontrolling interest. We are currently evaluating this new statement and anticipate that the statement will2010-09 did not have a significant impact on the reportingCompany’s consolidated financial statements. The company evaluated subsequent events, which are events or transactions that occurred after December 31, 2009 through the issuance of our results of operations.the accompanying consolidated financial statements.
In March 2008,Management does not believe that any other recently issued but not yet effective accounting pronouncements, if adopted, would have an effect on the FASB issued FASB Statement No. 161, "Disclosures about Derivative Instruments and Hedging Activities." The new standard is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity's financial position, financial performance, and cash flows. This statement is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The Company is currently evaluating the impact of adopting SFAS No. 161 on itsaccompanying consolidated financial statements.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Index to Financial Statements and Financial Statement Schedules appearing on page F-1 through F-22F-23 of this Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
DIAMOND INFORMATION INSTITUTE, INC.
FINANCIAL DISCLOSURESTATEMENTS
DECEMBER 31, 2009
DIAMOND INFORMATION INSTITUTE, INC.
TABLE OF CONTENTS
DECEMBER 31, 2009
Report of Independent Registered Public Accounting Firm F-1
Balance Sheet as of December 31, 2009 F-2
Statements of Operations for the Years Ended
December 31, 2009 and 2008 F-3
Statement of Stockholder’s Equity (Deficit) as of December 31, 2009 F-4
Statements of Cash Flows for the Years Ended December 31, 2009 and 2008 F-5
Notes to the Financial Statements F-6 - F-9
Silberstein Ungar, PLLC CPAs and Business Advisors
Fax (248) 281-0940
30600 Telegraph Road, Suite 2175
Bingham Farms, MI 48025-4586
www.sucpas.com
Report of Independent Registered Public Accounting Firm
To the Board of Directors of
Diamond Information Institute, Inc.
Las Vegas, Nevada
We have audited the accompanying balance sheet of Diamond Information Institute, Inc. (the “Company”) as of December 31, 2009, and the related statements of operations, stockholder’s equity, and cash flows for the year then ended. 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. The financial statements of Diamond Information Institute, Inc. as of and for the year ended December 31, 2008 were audited by other auditors whose report dated March 23, 2009 expressed an unqualified opinion on those financial statements.
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. An audit also 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 Diamond Information Institute, Inc. as of December 31, 2009 and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has no working capital, and has discontinued its operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans with regard to these matters are described in Note 1. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Silberstein Ungar, PLLC
Silberstein Ungar, PLLC
Bingham Farms, Michigan
April 11, 2010
F-1
DIAMOND INFORMATION INSTITUTE, INC.
BALANCE SHEETS
AS OF DECEMBER 31, 2009 and 2008
ASSETS | | December 31, 2009 | | | December 31, 2008 | |
| | | | | | |
Net assets in excess of liabilities of discontinued operations | | $ | -0- | | | $ | 111,954 | |
| | | | | | | | |
Total Assets | | $ | -0- | | | $ | 111,954 | |
| | | | | | | | |
LIABILITIES AND STOCKHOLDER'S EQUITY | | | | | | | | |
Liabilities | | | | | | | | |
Net liabilities in excess of assets of discontinued operations | | $ | -0- | | | $ | -0- | |
| | | | | | | | |
Stockholder's Equity | | | | | | | | |
Common stock, par value $0.001, 25,000,000 shares authorized, 11,813,100 and 11,643,100 shares issued and outstanding | | | 11,814 | | | | 11,643 | |
Additional paid in capital | | | 1,660,535 | | | | 1,599,707 | |
Accumulated deficit | | | (1,672,349 | ) | | | (1,499,396 | ) |
Total Stockholder's Equity | | | -0- | | | | 111,954 | |
| | | | | | | | |
Total Liabilities and Stockholder's Equity | | $ | -0- | | | $ | 111,954 | |
See accompanying notes to financial statements.
F-2
DIAMOND INFORMATION INSTITUTE, INC.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
| | Year Ended December 31, 2009 | | | Year Ended December 31, 2008 | |
| | | | | | |
Net Loss from Discontinued Operations, net of income tax | | $ | (172,953 | ) | | $ | (1,106,856 | ) |
| | | | | | | | |
| | | | | | | | |
NET LOSS PER SHARE: BASIC AND DILUTED (DISCONTINUED OPERATIONS) | | $ | (0.01 | ) | | $ | (0.09 | ) |
| | | | | | | | |
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: BASIC AND DILUTED | | | 11,796,470 | | | | 12,405,723 | |
See accompanying notes to financial statements.
F-3
DIAMOND INFORMATION INSTITUTE, INC.
STATEMENT OF STOCKHOLDER’S EQUITY
AS OF DECEMBER 31, 2009
| | Common stock | | | Additional paid-in | | | Accumulated | | | Deferred | | | | |
| | Shares | | | Amount | | | Capital | | | Deficit | | | Compensation | | | Total | |
| | | | | | | | | | | | | | | | | | |
Balance, January 1, 2008 | | | 18,075,000 | | | $ | 18,075 | | | $ | 825,175 | | | $ | (392,540 | | | $ | (14,307 | ) | | $ | 436,403 | |
Cancellation of common stock outstanding | | | (7,200,000 | ) | | | (7,200 | ) | | | 7,200 | | | | - | | | | - | | | | - | |
Share-based compensation | | | 317,500 | | | | 317 | | | | 317,183 | | | | - | | | | - | | | | 317,500 | |
Amortization of deferred compensation in connection with services rendered | | | - | | | | - | | | | - | | | | - | | | | 14,307 | | | | 14,307 | |
Issuance of common stock for professional services rendered | | | 450,000 | | | | 450 | | | | 449,550 | | | | - | | | | - | | | | 450,000 | |
Private placement offering of common stock | | | 600 | | | | 1 | | | | 599 | | | | - | | | | - | | | | 600 | |
Net loss for the year ended December 31, 2008 | | | - | | | | - | | | | - | | | | (1,106,856 | ) | | | - | | | | (1,106,856 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Balance, December 31, 2008 | | | 11,643,100 | | | | 11,643 | | | | 1,599,707 | | | | (1,499,396 | ) | | | - | | | | (111,954 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Issuance of common stock for professional services rendered | | | 170,000 | | | | 171 | | | | 60,828 | | | | - | | | | - | | | | 60,999 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net loss for the year ended December 31, 2009 | | | - | | | | - | | | | - | | | | (172,953 | ) | | | - | | | | (172,953 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Balance, December 31, 2009 | | | 11,813,100 | | | $ | 11,814 | | | $ | 1,660,535 | | | $ | (1,672,349 | ) | | $ | - | | | $ | -0- | |
See accompanying notes to financial statements.
F-4
DIAMOND INFORMATION INSTITUTE, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
| | Yrear Ended December 31, 2009 | | | Year Ended December 31, 2008 | |
CASH FLOWS FROM DISCONTINUED OPERATIONS | | | | | | |
Net cash flows from discontinued operations | | $ | 0 | | | $ | 0 | |
| | | | | | | | |
Cash, beginning of period | | | 0 | | | | 0 | |
Cash, end of period | | $ | 0 | | | | 0 | |
| | | | | | | | |
See accompanying notes to financial statements.
F-5
DIAMOND INFORMATION INSTITUTE, INC.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2009
NOTE 1 – NATURE OF OPERATIONS AND BUSINESS CONTINUITY
Diamond Information Institute Inc., formerly doing business as Designs by Bergio [the "Company"] was engaged in the product design, manufacturing, distribution of fine jewelry throughout the United States and is headquartered from its corporate office in Fairfield, New Jersey. Based on the nature of operations, the Company's sales cycle experienced significant seasonal volatility with the first two quarters of the year representing 15% - 25% of annual sales and the remaining two quarters representing the remaining portion of annual sales.
Effective October 19, 2009, as approved at our shareholder meeting on October 8, 2009, we entered into a Share Exchange Agreement with Alba Mineral Exploration, Inc. (“Alba”), a Delaware Corporation (the “Agreement”). Pursuant to the Agreement, Alba agreed to issue our shareholders a total of 2,585,175 shares of common stock in Alba in proportion to their holdings in our company. Following the transaction described in the Agreement and other accompanying transactions, our shareholders own 60% of the common stock issued and outstanding in Alba. Also pursuant to the Agreement, Alba acquired all of the assets and liabilities related to our business. As a result of the transaction the company became a wholly-owned subsidiary of Alba, and all of our operations related to the jewelry business we were in were discontinued. See Note 8.
The financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company has incurred losses since inception resulting in an accumulated deficit of $18,299 as of December 31, 2009 and has no operating assets orliabilities and no operations, which raises substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company finding new management to develop a new business that generates profitable operations in the future and/or to obtain the necessary capital to fund a new business plan.
NOTE 2 – SUMMARY OF SIGNIFCANT ACCOUNTING POLICIES
Basis of Presentation
The Company uses the accrual basis of accounting and accounting principles generally accepted in the United States of America (“GAAP” accounting) are the financial statements are presented in US dollars. The Company has adopted a December 31 fiscal year end.
Use of Estimates and Assumptions
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Financial Instruments
The carrying value of the Company's financial instruments approximates their fair value because of the short maturity of these instruments.
F-6
DIAMOND INFORMATION INSTITUTE, INC.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2009
NOTE 3 – SUMMARY OF SIGNIFCANT ACCOUNTING POLICIES (CONTINUED)
Income Taxes
Income taxes are accounted for under the assets and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. Use of net operating loss carryforwards for income tax purposes may be limited by Intertnal Revenue Code section 382 if a change of ownership occurs.
Basic Income (Loss) Per Share
Basic income (loss) per share is calculated by dividing the Company’s net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing the Company’s net income available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. There are no such common stock equivalents outstanding as of December 31, 2009.
Dividends
The Company has not adopted any policy regarding payment of dividends. No dividends have been paid during any of the periods shown.
Impairment of Long-Lived Assets
The Company continually monitors events and changes in circumstances that could indicate carrying amounts of long-lived assets may not be recoverable. When such events or changes in circumstances are present, the Company assesses the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the total of the future cash flows is less than the carrying amount of those assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or the fair value less costs to sell.
Advertising Costs
The Company’s policy regarding advertising is to expense advertising when incurred.
Revenue Recognition
The Company recognizes revenue when products are fully delivered or services have been provided and collection is reasonably assured.
Stock-Based Compensation
Stock-based compensation is accounted for at fair value in accordance with SFAS No. 123 and 123 (R) (ASC 718). To date, the Company has not adopted a stock option plan and has not granted any stock options.
F-7
DIAMOND INFORMATION INSTITUTE, INC.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2009
NOTE 3 – SUMMARY OF SIGNIFCANT ACCOUNTING POLICIES (CONTINUED)
New Authoritative Accounting Guidance
On July 1, 2009, the Accounting Standards Codification (“ASC”) became the Financial Accounting Standards Board (“FASB”) officially recognized source of authoritative U.S. generally accepted accounting principles applicable to all public and non-public non-governmental entities, superseding existing FASB, AICPA, EITF and related literature. Rules and interpretive releases of the SEC under the authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. All other accounting literature is considered non-authoritative. The switch to the ASC affects the away companies refer to U.S. GAAP in financial statements and accounting policies. Citing particular content in the ASC involves specifying the unique numeric path to the content through the Topic, Subtopic, Section and Paragraph structure.
FASB ASC Topic 260, “Earnings Per Share.” On January 1, 2009, the Company adopted new authoritative accounting guidance under FASB ASC Topic 260, “Earnings Per Share,” which provides that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method.
FASB ASC Topic 820, “Fair Value Measurements and Disclosures.” New authoritative accounting guidance under ASC Topic 820,”Fair Value Measurements and Disclosures,” affirms that the objective of fair value when the market for an asset is not active is the price that would be received to sell the asset in an orderly transaction, and clarifies and includes additional factors for determining whether there has been a significant decrease in market activity for an asset when the market for that asset is not active. ASC Topic 820 requires an entity to base its conclusion about whether a transaction was not orderly on the weight of the evidence. The new accounting guidance amended prior guidance to expand certain disclosure requirements. The Company adopted the new authoritative accounting guidance under ASC Topic 820 during the first quarter of 2009. Adoption of the new guidance did not significantly impact the Company’s consolidated financial statements.
Further new authoritative accounting guidance (Accounting Standards Update No. 2009-5) under ASC Topic 820 provides guidance for measuring the fair value of a liability in circumstances in which a quoted price in an active market for the identical liability is not available. In such instances, a reporting entity is required to measure fair value utilizing a valuation technique that uses (i) the quoted price of the identical liability when traded as an asset, (ii) quoted prices for similar liabilities or similar liabilities when traded as assets, or (iii) another valuation technique that is consistent with the existing principles of ASC Topic 820, such as an income approach or market approach. The new authoritative accounting guidance also clarifies that when estimating the fair value of a liability, a reporting entity is not required to include a separate input or adjustment to other inputs relating to the existence of a restriction that prevents the transfer of the liability. The forgoing new authoritative accounting guidance under ASC Topic 820 will be effective for the Company’s consolidated financial statements beginning October 1, 2009 and is not expected to have a significant impact on the Company’s consolidated financial statements.
FASB ASC Topic 825 “Financial Instruments.” New authoritative accounting guidance under ASC Topic 825,”Financial Instruments,” requires an entity to provide disclosures about the fair value of financial instruments in interim financial information and amends prior guidance to require those disclosures in summarized financial information at interim reporting periods.
F-8
DIAMOND INFORMATION INSTITUTE, INC.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2009
NOTE 3 – SUMMARY OF SIGNIFCANT ACCOUNTING POLICIES (CONTINUED)
New Authoritative Accounting Guidance (continued)
FASB ASC Topic 855, “Subsequent Events.” New authoritative accounting guidance under ASC Topic 855, “Subsequent Events,” establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or available to be issued. ASC Topic 855 defines (i) the period after the balance sheet date during which a reporting entity’s management should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, (ii) the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements, and (iii) the disclosures an entity should make about events or transactions that occurred after the balance sheet date. The new authoritative accounting guidance under ASC Topic 855 became effective for the Company’s financial statements for periods ending after June 15, 2009. Effective February 24, 2010, the FASB issued Accounting Standards Update (“ASU”) No. 2010-09, “Subsequent Events (Topic 855): Amendments to Certain Recognition and Disclosure Requirements” which revised certain disclosure requirements. ASU No. 2010-09 did not have a significant impact on the Company’s consolidated financial statements. The company evaluated subsequent events, which are events or transactions that occurred after December 31, 2009 through the issuance of the accompanying consolidated financial statements.
Management does not believe that any other recently issued but not yet effective accounting pronouncements, if adopted, would have an effect on the accompanying consolidated financial statements.
NOTE 4 – RELATED PARTY TRANSACTIONS
The Company received periodic advances from its principal stockholder based upon the Company's cash flow needs. At December 31, 2008, $394,532 was due to the shareholder. Interest expense was accrued at an average annual market rate of interest which was 4.99% at December 31, 2008. No terms for repayment were established.
During 2009, the Company obtained a $100,000 note payable for settlement of IT implementation services to an Advisory Panel member.
NOTE 5 – COMMON STOCK
Articles of Incorporation Amendment and Stock Split - The Company's Certificate of Incorporation, as amended, authorizes the issuance of up to 25,000,000 shares of common stock at a par value of $.001 per share. Over the course of 2007, the Company's Board of Directors ratified two forward stock splits. The first stock split, for 1.725 to 1 and the second for 10,000 to 1.
This resulted in common stock outstanding increasing from 1,000 to 17,250,000 which were all owned by the Company's founder and CEO. The per share data for all periods presented has been retroactively adjusted due to each of the stock splits.
F-9
DIAMOND INFORMATION INSTITUTE, INC.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2009
NOTE 5 – COMMON STOCK (CONTINUED)
Subsequent to the forward stock splits, the Company's founder and CEO transferred a total of 2,250,000 shares to the Company's President and an Advisory Panel member. Upon resignation of the Company’s President and Advisory Panel Member in late 2007, the Company cancelled 2,200,000 of the shares previously issued to those individuals along with, 5,000,000 shares held by the CEO and principal stockholder. These shares were cancelled in February 2008.
The share and per share data for all periods presented has been retroactively adjusted to reflect the stock splits.
Debt Conversions - In April 2007, the Company entered into a Debt Conversion Agreement (the "Agreement") and issued 100,000 shares of common stock at $1 per share to a vendor as full satisfaction for accounts payable previously due and future services to be rendered. Of the total $100,000 of common stock issued, $55,000 was to satisfy previous account payable balances and $45,000 was issued as consideration for future services to be rendered and was reflected in the Deferred Compensation caption of the Stockholders' Equity section of the Balance Sheet, of which approximately $14,000 was expensed in 2008. The shares have a one year restriction from sale or offering.
Restricted Share Issuances - In January 2008, two Advisory Panel members and a Board of Director member received restricted common stock for services to be rendered throughout 2008. The two Advisory Panel members received 50,000 and 100,000 shares, respectively, with a fair value of $1.00 per share or $150,000 while the Board of Director member received 50,000 shares with a fair value of $1.00 per share or $50,000. The share-based compensation expense for the three and nine months ended September 30, 2008 amounted to $25,000 and $175,000, respectively.
Also in January 2008, the Company issued 117,500 shares of restricted common stock with a fair value of $1.00 per share or $117,500 to employees. Shares issued in connection with the Board of Director consent, were dispersed ratably over the first two quarters of 2008 as authorized in the consent. The Share-based Compensation expense for the three and nine months ended September 30, 2008 amounted to $0, and $117,500, respectively.
Additionally, in January and February 2008, the Company sold 600 shares of common stock at $1.00 per share to individual investees.
For the year ended December 31, 2008, the Company issued to its SEC counsel, 450,000 shares of restricted common stock with a fair value of $1.00 per share or $450,000 for services in connection with the effective filing of Form S-1 with the SEC.
In January 2009, the Company agreed to issue its SEC counsel, 100,000 shares of restricted common stock with a fair value of $0.40 per share or $40,000 for services in connection with the effective filing of Form 15c-211 and submittal to FINRA through a market maker. The Share-Based Compensation expense for the three and nine months ended September 30, 2009 amounted to $0 and $40,000, respectively.
F-9
DIAMOND INFORMATION INSTITUTE, INC.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2009
NOTE 5 – COMMON STOCK (CONTINUED)
In February 2009, the Company issued to its CEO 50,000 shares of restricted common stock with a fair value of $0.40 per share or $20,000 for services as a Board of Directors member throughout 2009. The Share-based Compensation expense for the three and nine months ended September 30, 2009 amounted to $5,000 and $15,000, respectively.
In February 2009, the Company issued its SEC counsel 20,000 shares of restricted common stock with a fair value of $0.40 per share or $8,000 for legal services to be provided for the Company’s SEC filings for the 2009 reporting year.
NOTE 6 – COMMITMENTS AND CONTINGENCIES
At December 31, 2009, the Company neither owned nor leased any real or personal property.
NOTE 7 – INCOME TAXES
Deferred income tax assets [liabilities] are as follows:
| | December 31, | | | December 31, | |
| | 2009 | | | 2008 | |
| | | | | | |
Deferred Income Tax Assets: | | | | | | |
Net Operating Loss Carryforwards | | $ | 656,485 | | | $ | 590,514 | |
Allowance for Doubtful Accounts | | | 34,511 | | | | 32,115 | |
Allowance for Sales Returns | | | 13,903 | | | | 52,862 | |
| | | | | | | | |
Totals | | | 704,899 | | | | 675,491 | |
| | | | | | | | |
Deferred Income Tax Liabilities: | | | | | | | | |
Property and Equipment | | $ | (25,925 | ) | | $ | (25,546 | ) |
Sec. 481 Adjustment - Accrual Basis | | | (249,919 | ) | | | (374,879 | ) |
Totals | | | (275,844 | ) | | | (400,425 | ) |
Gross Deferred Tax Asset [Liability] | | | 429,055 | | | | 275,066 | |
| | | | | | | | |
Valuation Allowance for Deferred Taxes | | | (429,055 | ) | | | (275,066 | ) |
Net Deferred Tax Asset [Liability] | | $ | -- | | | $ | -- | |
Reconciliation of the Federal statutory income tax rate to the effective income tax rate is as follows:
| | 2009 | | | 2008 | |
| | | | | | |
U.S. statutory rate | | | (34 | %) | | | (34 | %) |
State income taxes – net of federal benefit | | | 6 | % | | | 6 | % |
Change in valuation allowance and other | | | 28 | % | | | 21 | % |
Effective rate | | | -- | | | | (7 | %) |
F-10
DIAMOND INFORMATION INSTITUTE, INC.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2009
NOTE 7 – INCOME TAXES (CONTINUED)
Effective with the 2008 tax year, management voluntarily elected a change in its method of tax accounting to the accrual basis as required by Section 481 of the Internal Revenue Code (the "IRC"). In management's opinion, based on provisions of the IRC, a voluntary election to the accrual basis of tax reporting should not subject the Company to tax examinations for previous years that income tax returns have been filed and prompt an uncertain tax position in accordance with the ASC Topic No. 740. As a result, no contingent liability has been recorded for the anticipated change in tax reporting. Further, the resulting tax liability from the change in tax accounting method will be reduced by operating losses previously incurred.
At December 31, 2009, the Company had approximately $1,600,000 of federal net operating tax loss carryforwards expiring at various dates through 2029. The Tax Reform Act of 1986 enacted a complex set of rules which limits a company's ability to utilize net operating loss carryforwards and tax credit carryforwards in periods following an ownership change. These rules define an ownership change as a greater than 50 percent point change in stock ownership within a defined testing period which is generally a three-year period. As a result of stock which may be issued by us from time to time and the conversion of warrants, options or the result of other changes in ownership of our outstanding stock, the Company may experience an ownership change and consequently our utilization of net operating loss carryforwards could be significantly limited.
Based upon the net losses historically incurred and, the prospective global economic conditions, management believes that it is not more likely than not that the deferred tax asset will be realized and has provided a valuation allowance of 100% of the deferred tax asset. The valuation allowance increased by approximately $154,000 and $275,000 in the years ended December 31, 2009 and 2008, respectively.
NOTE 8 – DISCONTINUED OPERATIONS
The Company’s former jewelry business, which was discontinued on October 19, 2009 when all assets and liabilities related to this business were acquired by Bergio International, Inc. (formerly known as Alba Mineral Exploration, Inc.) has been accounted for as discontinued operations. The results of operations of this business have been removed from the results of continuing operations for all periods presented. The assets and liabilities of discontinued operations have been reclassified and are segregated in the balance sheets.
NOTE 9 – SUBSEQUENT EVENTS
On February 2, 2010 Bergio International, Inc. (the “Seller”), owner of 100% of the outstanding common shares of the Company, entered into a share purchase agreement (the “Agreement”) with Macau Consultants and Advisory Services Inc. (the “Buyer”). In accordance with the terms and provisions of the Agreement, the Seller sold an aggregate of 11,863,100 shares of common stock of the Company to Buyer in exchange for $225,000. The closing and consummation of the Agreement occurred March 18, 2010. New officers and directors of the Company were apoointed and a change of control of the Company occurred.
In accordance with ASC 855-10, the Company has analyzed its operations subsequent to December 31, 2009 and has determined that it does not have any other material subsequent events to disclose in these financial statements.
F-11
ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
We have had no disagreements with our independent auditors on accounting or financial disclosures. |
ITEM 9A(T). CONTROLS AND PROCEDURES
Our new Chief Executive Officer, Paul Crawford, and PrincipalChief Financial Officer, Berge Abajian,Dennis Atkins, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Report. Based on that evaluation, Mr. AbajianMessrs. Crawford and Atkins concluded that our disclosure controls and procedures are effective in timely alerting himthem to material information relating to us required to be included in our periodic SEC filings and in ensuring that information required to be disclosed by us in the reports that we file or submit under the Act is accumulated and communicated to our management, including our principal executive and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
There were no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or reasonably likely to materially affect, our internal control over financial reporting.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control, as is defined in the Securities Exchange Act of 1934. These internal controls are designed to provide reasonable assurance that the reported financial information is presented fairly, that disclosures are adequate and that the judgments inherent in the preparation of financial statements are reasonable. There are inherent limitations in the effectiveness of any system of internal controls, including the possibility of human error and overriding of controls. Consequently, an effective internal control system can only provide reasonable, not absolute, assurance with respect to reporting financial information.
Our internal control over financial reporting includes policies and procedures that: (i) pertain to maintaining records that in reasonable detail accurately and fairly reflect our transactions; (ii) provide reasonable assurance that transactions are recorded as necessary for preparation of our financial statements in accordance with generally accepted accounting principles and the receipts and expenditures of company assets are made and in accordance with our management and directors authorization; and (iii) provide reasonable assurance regarding the prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on our financial statements.
Our internal control over financial reporting includes policies and procedures that: (i) pertain to maintaining records that in reasonable detail accurately and fairly reflect our transactions; (ii) provide reasonable assurance that transactions are recorded as necessary for preparation of our financial statements in accordance with generally accepted accounting principles and the receipts and expenditures of company assets are made and in accordance with our management and directors authorization; and (iii) provide reasonable assurance regarding the prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on our financial statements.
Management has undertaken an assessment of the effectiveness of our internal control over financial reporting based on the framework and criteria established in the Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based upon this evaluation, management concluded that our internal control over financial reporting was effective as of December 31, 2008.2009.
This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to the temporary rules of the Securities and Exchange Commission that permit the company to provide only management’s report in this annual report.
ITEM 9B. OTHER INFORMATIONAUDIT COMMITTEE
Section 5 – Corporate Governance and Management
Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointments of Principal Officers
(c) Appointment of Officers
On January 8, 2009, Ms. Arpi Abajian was appointed to serve as Diamond’s interim secretary. Ms. Abajian is the wife of our Chief Executive Officer and Sole Director, Mr. Abajian.
Section 8 – Other Information
Item 8.01 Other Events
On January 26, 2009, our common stock was approved for trading by FINRA for trading on the OTC:BB under the symbol “DIII”.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The members of theOur Board of Directors has not established an audit committee. The respective role of the Company will serve until the next annual meeting of stockholders, or until their successors havean audit committee has been elected. The officers serve at the pleasure of theconducted by our Board of Directors. Officers are elected byIn the event the Merger Agreement is not consummated, we intend to establish an audit committee during fiscal year 2010. When established, the audit committee's primary function will be to provide advice with respect to our financial matters and to assist our Board and their terms of office are, except to the extent governed by employment contract, at the discretion of the Board. Information as to the directors and executive officers of the Company is as follows:Directors in fulfilling its oversight
NAME | AGE | POSITION |
Berge Abajian | 48 | Chief Executive Officer, President, current Principal Accounting Officer and Sole Director |
Alfred Sirica (1)
| 47 | Former Chief Executive Officer |
Arpi Abajian (2)
| 46 | Secretary |
(1) | Subsequent to the S-1 Registration Statement becoming effective, Mr. Sirica resigned from his position with the Company. Mr. Abajian agreed to become the Principal Accounting Officer for the Company. |
(2) | On January 8, 2009, the board of directors appointed Ms. Arpi Abajian as the Secretary of the Company. Ms. Abajian is married to our CEO, Mr. Berge Abajian. |
Duties, Responsibilities
responsibilities regarding finance, accounting, and Experiencelegal compliance. The audit committee's primary duties and responsibilities will be to: (i) serve as an independent and objective party to monitor our financial reporting process and internal control system; (ii) review and appraise the audit efforts of our independent accountants; (iii) evaluate our quarterly financial performance as well as its compliance with laws and regulations; (iv) oversee management's establishment and enforcement of financial policies and business practices; and (v) provide an open avenue of communication among the independent accountants, management and our Board of Directors.
ITEM 9B OTHER INFORMATION
Not applicable.
PART III
ITEM 10 | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE |
Following the Share Purchase Agreement: (i) Berge Abajian comes from resigned as the President/Chief Executive Officer/Chief Financial Officer/Treasurer and the sole director of the Company effective as of March 17, 2010; (ii) Arpi Abajian resigned as the Secretary of the Company effective as of March 17, 2010; (iii) Paul Crawford consented to act as the President /Chief Executive Officer and a family background in jewelry manufacturing. The Abajian family started manufacturing jewelry indirector of the 1930’sCompany effective as of March 18, 2010; (iv) Dennis Atkins consented to act as the Chief Financial Officer and Berge entered intoa director of the industryCompany effective as a manufacturer in 1980. From 1980of March 18, 2010; and (v) Merlin Larson consented to 1983, Mr. Abajian servedact as the Secretary and Treasurer of Pyramid Jewelry,and a jewelry manufacturing company. Mr. Abajian established operations of Diamond Information Institute in 1995 and started his “Bergio” brand label over ten years ago. Currently, Mr. Abajian is the chief executive officer, president and sole director of Diamond. the Company effective as of March 18, 2010.
The Bergiobiographies of each of the new directors and officers are set forth below as follows:
NAME AGE POSITION WITH THE COMPANY
___________ ___ _________________________________
Paul Crawford 74 President/Chief Executive Officer and a Director
Dennis Atkins 49 Chief Financial Officer and a Director
Merlin Larson 35 Secretary and Treasurer and a Director
Paul Crawford. Since 1990, Mr. Crawford has been assisting early stage companies in raising capital. He is both a venture capitalist and an entrepreneur and has been working with developing businesses since the late 1970s. In addition to raising capital, Mr. Crawford has started several successful businesses including Celcom. Cellcom was incorporated in Minnesota in 1981 specifically to acquire the first non-wire line was onecellular license in the first phase of the first U.S. cellular phone systems. The initial cellular licenses in the top 75 U.S. cities were opened to introduce yellow diamondsall filers who were then submitted to a series of Federal Communications Commission (FCC) comparative hearings, which is similar to how the F.C.C awards radio and television licenses. The remaining U.S. cellular markets were subsequently placed via a lottery. The deadline for the initial filings in jewelrythe top markets was closed in early 1982. This resulted in Celcom participating in a joint venture with MCI. The Twin Cities cellular system operated as MCI/Celcom and has continued subsequently was renamed Cellular One of the Twin Cities. In 1986 MCI/Celcom sold the Twin Cities non-wireline cellular system
to beMcCaw Communications for approximately $43 million. In July 1998, Mr. Crawford co-founded Commission Junction (CJ). CJ became very profitable in early 2002 and was acquired in December 2003 by ValueClick (VCLK) in a $58 million cash and stock transaction. CJ is a leader in the affiliate marketing/pay-per-sale advertising on the cutting edgeInternet. Starting in late 2007, Mr. Crawford focused on the next generation of jewelry trends. In 2002, the Internet which is a “sea change event” underway today. The porfolio is dominated by Software as a Service (SaaS) services and 4G, Mobile WiMAX and includes five SaaS businesses (Empathic Clinical Suites, MSAFastDraftPRO, CompleteLAW-WEB, Sports Director Online, Bankruptcy Compiler, LocaLoop, Inc.
Mr. Abajian also began productionCrawford is the owner of his Bergio Bridal Collection. Mr. Abajian has a BS in Business Administration from Fairleigh Dickinson University andCrawford Capital Corporation. Crawford Capital Corporation is well known and respectedranked as the 8th largest Twin Cities based venture capital firm in the jewelry industry. Since 2005, Mr. Abajian has served as the Presidentmost recent 2010 Edition of the East Coast branch of the Armenian Jewelry AssociationThe Minneapolis-St. Paul Business Journal. These rankings are based on total capital raised by all reporting firms from their inception through December 31, 2008. Crawford Capital Corporation’s total at that time was $200,000,000+. Paul Crawford and has also served as a Board Member on MJSA (Manufacturing Jewelers and Suppliers of America), New York Jewelry Association, and the 2001-2002 Luxury Show.his wife reside in Minneapolis, MN.
Arpi AbajianDennis Atkins. Mr. Atkins is a Certified Public Accountant with over twenty-five years experience in public accounting. Mr. Atkins has worked at Diamond Information Instituteextensive experience in business and personal tax planning and preparation including the use of offshore domiciles for over 10 years in administrative positions. On January 8, 2009, Diamond appointed Ms. Abajian to serve asincome tax benefit and asset protection, public and private company auditing and business consulting. He has been a member SEC Practice Section and the Company’s interim Secretary until thePublic Company Oversight Board. Mr. Atkins has the resources available to hire a permanent Secretary for the Company. Ms. Abajian is currently married to the Chief Executive Officer and Sole Director of Diamond and does not serveserved on the board of any otherdirectors and as chief financial officer for various private and publicly traded companies. He is a member of the American Institute of Certified Public Accountants and holds licenses in Oklahoma and California. Mr. Atkins holds a Bachelors Degree in Accounting from Oklahoma State University and a Masters Degree in Accountancy from the University of Oklahoma.
ElectionMerlin Larson. During the past five years, Mr. Larson has been involved in the contruction housing industry in Canada. Mr. Larson currently has a building contracting business in Victoria, British Columbia.Mr. Larson gained a wealth of Directorspractical business experience and Officers.knowledge growing up and working on a grain farm and in his father’s business prior to graduating from high school in Vancouver, British Columbia. Mr. Larson studied art at the Art College in Nelson, British Columbia, and earned a nursing degree.
Directors are elected to serve until the next annual meeting of stockholders and until their successors have been elected and qualified. Officers are appointed to serve until the meeting of the Board of Directors following the next annual meeting of stockholders and until their successors have been elected and qualified.
Involvement in Certain Legal Proceedings
No Executive Officerexecutive officer or Directordirector of the Corporation has been the subject of any Order, Judgment, or Decree of any Court of competent jurisdiction, or any regulatory agency permanently or temporarily enjoining, barring suspending or otherwise limiting him from acting as an investment advisor, underwriter, broker or dealer in the securities industry, or as an affiliated person, director or employee of an investment company, bank, savings and loan association, or insurance company or from engaging in or continuing any conduct or practice in connection with any such activity or in connection with the purchase or sale of any securities.
No Executive Officer or Director of the Corporation has been convicted in any criminal proceeding (excluding traffic violations) or is the subject of a criminal proceeding which is currently pending.
No Executive Officer or Director of the Corporation is the subject of any pending legal proceedings.
Employment Agreements and Compensation
During the 2007 year, Diamond entered into employment agreements with its Chief Executive Officer, Berge Abajian, and its then President, Scott Wanstrath. Both agreements were to not take effect until the Company had raised a significant amount of capital. Subsequent to the year ended December 31, 2007, Mr. Wanstrath gave notice of his termination and Mr. Abajian agreed to terminate the employment agreement. As of the date of this filing, the Company does not have any employment agreements in place. The Company intends to draft a new employment agreement with Mr. Abajian during the 2009 year.
On January 20, 2008, Diamond authorized the issuance of 100,000 shares to Mr. Zareh Beylerian in conjunction with Mr. Beylerian being appointed to the Company’s Advisory Panel. The shares were issued in advance for the 2008 fiscal year, in which Mr. Beylerian agreed to serve on Diamond’s Advisory Panel. Nvair Beylerian is Zareh Beylerian’s wife and Mr. Beylerian elected to gift 50,000 shares of the 100,000 issued shares of Diamond’s common stock to her.
On February 20, 2008, Diamond cancelled 2,000,000 shares previously granted to Mr. Ralph Amato and cancelled 200,000 shares previously granted to Mr. Scott Wanstrath. The shares were cancelled as a result of both gentlemen no longer providing services to Diamond and as a result of not fulfilling the terms of their agreements. Mr. Abajian also agreed to cancel 5,000,000 of his shares to reduce some of his ownership position in the Company.
Advisory Panel
On April 2, 2007, Diamond’s Board of Directors approved the establishment of an Advisory Panel to provide on-going advice to the Company’s officers. Under the terms of the resolution adopting the panel, the Board of Directors agreed to issue 50,000 shares of common stock to each panel member as remuneration of their services. Mr. Hagop Baghdadlian and Mr. Zareh Beylerian are the current members on the panel.
Mr. Baghdadlian opened Hagop Baghdadlian LTD, in 1977 as a diamond dealer in New York City. In 2003, Hagop Baghdadlian LTD merged with Cora Diamonds, Inc., a diamond manufacturer and Mr. Baghdadlian became President of Cora International, LLC. Cora International has since become a leading manufacturer of fancy colored diamonds.
Mr. Beylerian is an attorney with over 20 years of law experience. Mr. Beylerian in 2004 formed the firm of Beylerian & Associates, which handles general litigation and commercial matters, bankruptcy, personal injury, immigration, real estate, intellectual property and more.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), requires executive officers and directors, and persons who beneficially own more than ten percent of an issuer's common stock, which has been registered under Section 12 of the Exchange Act, to file initial reports of ownership and reports of changes in ownership with the SEC.
As a company with securities registered under Section 15(d) of the Exchange Act, our executive officers and directors, and persons who beneficially own more than ten percent of our common stock are not required to file Section 16(a) reports.
Code of Ethics
A code of ethics relates to written standards that are reasonably designed to deter wrongdoing and to promote:
(1) | Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; |
(2) | Full, fair, accurate, timely and understandable disclosure in reports and documents that are filed with, or submitted to, the Commission and in other public communications made by an issuer; |
(3) | Compliance with applicable governmental laws, rules and regulations; |
(4) | The prompt internal reporting of violations of the code to an appropriate person or persons identified in the code; and |
(5) | Accountability for adherence to the code. |
We have not adopted a corporate code of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions.
Our decision to not adopt such a code of ethics is a result of having only two officers and one director operating as the management for the Company. We believe that the limited interaction which occurs having such a small management structure for the Company eliminates the current need for such a code, in that violations of such a code would be reported to the party generating the violation.
Corporate Governance
Director Independence
The Board of Directors has concluded that Director, Berge Abajian is not independent in accordance with the director independence standards of the American Stock Exchange.
Nominating Committee
We do not have a Nominating Committee or Nominating Committee Charter. Our Board of Directors performs some of the functions associated with a Nominating Committee. We have elected not to have a Nominating Committee in that we are an initial-stages operating company with limited operations and resources.
Director Nomination Procedures
Generally, nominees for Directors are identified and suggested by the members of the Board or management using their business networks. The Board has not retained any executive search firms or other third parties to identify or evaluate director candidates in the past and does not intend to in the near future. In selecting a nominee for director, the Board or management considers the following criteria:
1. | whether the nominee has the personal attributes for successful service on the Board, such as demonstrated character and integrity; experience at a strategy/policy setting level; managerial experience dealing with complex problems; an ability to work effectively with others; and sufficient time to devote to the affairs of the Company; |
2. | whether the nominee has been the chief executive officer or senior executive of a public company or a leader of a similar organization, including industry groups, universities or governmental organizations; |
3. | whether the nominee, by virtue of particular experience, technical expertise or specialized skills or contacts relevant to the Company’s current or future business, will add specific value as a Board member; and |
4. | whether there are any other factors related to the ability and willingness of a new nominee to serve, or an existing Board member to continue his service. |
The Board or management has not established any specific minimum qualifications that a candidate for director must meet in order to be recommended for Board membership. Rather, the Board or management will evaluate the mix of skills and experience that the candidate offers, consider how a given candidate meets the Board’s current expectations with respect to each such criterion and make a determination regarding whether a candidate should be recommended to the stockholders for election as a Director. During 2008, the Company received no recommendation for Directors from its stockholders.
Audit Committee
Currently, we do not have an Audit Committee. At this time, the board of directors will perform the necessary functions of an Audit Committee, such as: recommending an independent registered public accounting firm to audit the annual financial statements; reviewing the independence of the independent registered public accounting firm; review of the financial statements and other required regulatory financial reporting; and reviewing management’s policies and procedures in connection with its internal control over financial reporting.
Additionally, we do not have a financial expert. We believe the cost related to retaining a financial expert at this time is prohibitive. However, at such time the Company has the financial resources a financial expert will be hired.
Compensation Committee
We currently do not have a compensation committee of the board of directors. Until a formal committee is established our board of directors will review all forms of compensation provided to our executive officers, directors, consultants and employees, including stock compensation. The Board makes all compensation decisions for the Executives and approves recommendation regarding equity awards to all elected officers of Diamond. Decisions regarding the non-equity compensation of other executive officers are made by the Board.
Compensation Philosophy and Objectives
The Board believes that the most effective executive compensation program is one that is designed to reward the achievement of specific annual, long-term and strategic goals by Diamond, and which aligns executives’ interests with those of the shareholders by rewarding performance above established goals, with the ultimate objective of improving shareholder value. As a result of the size of Diamond and only having two executive officers, the Board evaluates both performance and compensation on an informal basis. Upon hiring additional executives, the Board intends on establishing a Compensation Committee to evaluate both performance and compensation to ensure that Diamond maintains its ability to attract and retain superior employees in key positions and that compensation provided to key employees remains competitive relative to the compensation paid to similarly situated executives of our peer companies. The Board believes executive compensation packages, when and if established, provided to the Company’s executives, including the named executive officers, should include both cash and stock-based compensation that reward performance as measured against established goals.
Based on the foregoing objectives, the Board intends to structure Diamond's annual and long-term incentive-based cash and non-cash executive compensation to motivate executives to achieve the business goals set by Diamond and reward the executives for achieving such goals.
Shareholder Communications
Any shareholder communications to the Board should be forwarded to the attention of the Company’s Secretary at our offices at 12 Daniel Road East, Fairfield, New Jersey 07004. Our Secretary will review any communication received from a shareholder, and all material communications from shareholders will be forwarded to the Chairman of the Board, the Board of Directors, or other individual directors as appropriate.
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth the compensation of our executive officers for the years ended December 31, 20082009 and 2007,2008, respectively.
Summary Compensation Table
Name and Principal Position | Year Ended December 31, | Salary | Stock Awards (1) | All Other Compensation | Total |
Berge Abajian | | | | | |
Chief Executive Officer, President, Principal Accounting Officer | 2007 2008 | $63,108 $6,242 | $50,000 $50,000 | $-0- $25,496 (2) | $113,108 $81,738 |
| | | | | |
Scott Wanstrath | | | | | |
Former President | 2007 2008 | $99,225 $-0- | $250,000 (3) $-0- | $-0- $-0- | $349,225 $-0- |
| | | | | |
Alfred Sirica (4) | | | | | |
Former Chief Financial Officer | 2008 | $-0- | $-0- | $-0- | $-0- |
| | | | | |
Arpi Abajian (5) | | | | | |
Secretary | 2008 | $-0- | $25,000 | $-0- (2) | $25,000 |
Name and Principal Position | Year Ended December 31, | Salary | Stock Awards (1) | All Other Compensation | Total |
Berge Abajian Chief Executive Officer, President, Principal Accounting Officer | 2008 2009 | $6,242 $13,413 | $50,000 $20,000 | $25,496 (2) $17,856 (2) | $81,738 $51,269 |
| | | | | |
Alfred Sirica (3) Former Chief Financial Officer | 2008 2009 | $-0- $-0- | $-0- $-0- | $-0- $-0- | $-0- $-0- |
| | | | | |
Arpi Abajian (4) Secretary | 2008 2009 | $-0- $-0- | $25,000 $-0- | $-0- (2) $-0- (2) | $25,000 $-0- |
(1) | The amounts shown in this column reflect the expense recognized for financial statement reporting purposes for the fiscal year ended December 31, 20082009 and 2007,2008, in accordance with FAS 123(R). |
(2) | Other compensation was made up of Mr. Abajian’s car expense and health insurance expenses. Included in this amount was approximately $8,670 for Ms. Abajian’s health insurance expenses. |
(3) | The Company had agreed to issue 250,000 shares of its common stock pursuant to Mr. Wanstrath’s employment agreement. The common shares issued were those held by the Company’s CEO. However, subsequent to the year ended December 31, 2007, Mr. Wanstrath gave notice of his resignation and the Company cancelled 200,000 shares as a result of the agreement not being completed to its full term. |
(4) | Mr. Sirica agreed to serve as Chief Financial Officer during the time in which the Company was going through the review process of its registration statement. Subsequent to the registration statement becoming effective, Mr. Sirica resigned and Mr. Abajian agreed to serve as the Principal Accounting Officer. |
(5)(4) | On January 8, 2009, the board of directors appointed Ms. Arpi Abajian as the Secretary of the Company. On January 20, 2008, the Company authorized shares to be issued to its employees as bonus compensation of which Ms. Abajian received 25,000 shares. The shares were issued during the first two quarters of 2008. |
Employment Agreement
DiamondThe Company currently does not have any employment agreements in place. During 2007, Mr. Abajian had executed an employment agreement and an addendum stating the previously executed employment agreement would not take effect until the Company had received private equity financing. During the first quarter of 2008, Mr. Abajian cancelled the agreement and intends on drafting a new employment agreement after the Company has raised additional capital.
Termination of Employment
There are no compensatory plans or arrangements, including payments to be received from the Company, with respect to any person associated with the Company which would in any way result in payments to any such person because of his resignation, retirement, or other termination of such person’s employment with the Company or its subsidiaries, or any change in control of the Company, or a change in the person’s responsibilities following a change in control of the Company.
Compensation Committee
We currently do not have a compensation committee on the board of directors. Until a formal committee is established our entire board of directors will review all forms of compensation provided to our executive officers, directors, consultants, and employees, including stock compensation.
DIRECTOR COMPENSATION TABLE
Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) |
Berge Abajian 2008 2009 | -0- -0- | -0- 50,000 | (1) -0- -0- | -0- -0- | -0- -0- | -0- -0- | -0- 50,000 |
ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTER |
The following table presents information, to the best of our knowledge, about the beneficial ownership of our common stock as of the date of this Annual Report, held by those persons known to beneficially own more than 5% of our capital stock and by our directors and executive officers. The percentage of beneficial ownership for the following table is based on 11,863,100 shares of common stock outstanding as of the date of this Annual Report. |
Equity AwardsBeneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and does not necessarily indicate beneficial ownership for any other purpose. Under these rules, beneficial ownership includes those shares of common stock over which the stockholder has sole or shared voting or investment power. It also includes (unless footnoted) shares of common stock that the stockholder has a right to acquire within 60 days after April 12, 2010 through the exercise of any option, warrant or other right. The percentage ownership of the outstanding common stock, however, is based on the assumption, expressly required by the rules of the Securities and Exchange Commission, that only the person or entity whose ownership is being reported has converted options or warrants into shares of our common stock. |
Our sole officer and director was also the founder of Diamond and therefore originally owned a total of 15,000,000 shares of our common stock. During the first quarter of 2008, Mr. Abajian agreed to cancel 5,000,000 shares owned by him. As of the date of this filing, he currently owns 10,150,000 shares. Mr. Abajian was issued 100,000 shares of common stock as compensation for serving on our Board of Directors for the 2007 and 2008 fiscal years. On February 11, 2009, Mr. Abajian was issued another 50,000 shares of common stock as compensation in advance for serving on our Board of Directors for the upcoming 2009 fiscal year. None of the shares owned by Mr. Abajian have any registration rights attached to them.
Director Compensation and Other Arrangements
Name and Principal Position | Fees Earned or Paid in Cash | Stock Awards (1) | All Other Compensation | Total |
Berge Abajian, Sole Directors | $-0- | $50,000 | $-0- | $50,000 |
Diamond has agreed to issue 50,000 shares per year as compensation to our board of directors and members of our advisory panel. We anticipate in the future, once additional members are added to the board of directors, that the Company will reimburse all directors for expenses when attending board or committee meetings.Name and Address of Beneficial Owner(1) | Amount and Nature of Beneficial Ownership(1) | Percentage of Beneficial Ownership |
Directors and Officers: | | |
Merlin Larson 2300 W. Sahara Avenue, Suite 800 Las Vegas, Nevada 89102 | 6,852,700 | 57.76% |
Dennis Atkins 2300 W. Sahara Avenue, Suite 800 Las Vegas, Nevada 89102 | 2,000,000 | 16.86% |
Paul Crawford 2300 W. Sahara Avenue, Suite 800 Las Vegas, Nevada 89102 | 2,000,000 | 16.86% |
All executive officers and directors as a group (3 persons) | 10,852,700 | 99.48% |
Beneficial Shareholders Greater than 10% | | |
None | | |
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table presents information, to the best of our knowledge, about the beneficial ownership of our common stock on March 23, 2009, held by those persons known to beneficially own more than 5% of our capital stock and by our directors and executive officers. The percentage of beneficial ownership for the following table is based on 11,813,100 shares of common stock outstanding as of March 23, 2009.
Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and does not necessarily indicate beneficial ownership for any other purpose. Under these rules, beneficial ownership includes those shares of common stock over which the stockholder has sole or shared voting or investment power. It also includes (unless footnoted) shares of common stock that the stockholder has a right to acquire within 60 days after March 23, 2009 through the exercise of any option, warrant or other right. The percentage ownership of the outstanding common stock, however, is based on the assumption, expressly required by the rules of the Securities and Exchange Commission, that only the person or entity whose ownership is being reported has converted options or warrants into shares of our common stock.
Name of Beneficial Owner, Officer or Director (1) | | Number of Shares | | Percent Beneficially Owned (2) | |
Berge Abajian, Chief Executive Officer and Sole Director | | 10,150,000 | | 85.9% | |
Arpi Abajian, Secretary | | 25,000 | | 0.2% | |
Directors and Officers as a Group | | 10,175,000 | | 86.1% | |
(1) | As used in this table, “beneficial ownership” meansUnder Rule 13d-3, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the sole or shared power to vote, or to direct the voting of a security, or the sole or sharedshares; and (ii) investment power, with respectwhich includes the power to a security (i.e.,dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of orthe shares). In addition, shares are deemed to directbe beneficially owned by a person if the dispositionperson has the right to acquire the shares (for example, upon exercise of a security). The address of each person is in the carean option) within 60 days of the Company.
|
(2) | Figures are roundeddate as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person’s actual ownership or voting power with respect to the nearest tenthnumber of a percent. The percentage of beneficial ownership is based on 11,813,100 shares of common stock which does not includeactually outstanding as of the exercisedate of any warrants currently held by selling security holders registered inthis Annual Report. As of the Registration Statement which became effective in September 2008.date of this Annual Report, there are 11,863,100 shares issued and outstanding. |
(3) | On January 8, 2009, the board of directors appointed Ms. Arpi Abajian as the Secretary of the Company.
|
CHANGES IN CONTROL
We are unaware of any contract, or other arrangement or provision, the operation of which may at a subsequent date result in a change of control of our company.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Diamond receives advances from time to time from its CEO, Berge Abajian based upon cash flow needs. As of December 31, 2008 and 2007, $394,532 and $90,289 was due to Mr. Abajian, respectively. Repayment terms have not been established atthe date of this point in time but interest expense is being accrued at an average annual market rateAnnual Report, none of 4.99%. The amount owed to Mr. Abajian has been classified as a current liability.
In addition during 2007, Diamond hired an information technology company, Advanced Integrated Solutions, Inc. to provide consultation and technical support related to certain software applications and technology infrastructure. The information technology company is owned by Mr. Hagop Beledankian, who is also a shareholderour directors, officers or principal stockholders, nor any associate or affiliate of the Company butforegoing, have any interest, direct or indirect, in any transaction or in any proposed transactions, which has a total ownership of less than 1%. Although, Advanced Integrated Solutions is managed by a shareholder of the Company, Diamond believes the terms for the services performed by Advanced Integrated Solutions, were not more favorable than they would have been if performed by an arms-length service provider. During thematerially affected or will materially affect us during fiscal year ended December 31, 2007, we issued 100,000 shares to this information technology company in connection with services rendered and for future services to be performed. At the time of the 100,000 shares being issued, approximately $55,000 was to satisfy previous account payable balances and approximately $45,000 was for future services to be rendered. As of December 31, 2008, the balance was fully amortized.2009.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
(1) AUDIT FEESAudit Fees
The aggregate fees for professional services rendered by MSPC, Certified Public Accountants and Advisors, A Professional Corporation for the audit of our annual financial statements and review of the financial statements included in our Form 10-Q for the period ended September 30, 2008December 31, 2009 or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for fiscal yearsyear ended 2009 and 2008 were $7,500 and 2007$57,500, respectively. The aggregate fees for professional services rendered by Silberstein Ungar, PLLC for the annual audit of our financial statements for the period ended December 31, 2009 were $57,500 and $22,000, respectively.$6,000.
(2) AUDIT-RELATED FEESAudit Related Fees
The aggregate fees by MSPC, Certified Public Accountants and Advisors, A Professional Corporation for assurance and related services by the principal accountant that are reasonably related to the performance of the audit or review of the registrant’s financial statements for the fiscal years 20082009 and 20072008 were $-0- and $-0-, respectively.
(3) TAX FEESTax Fees
The aggregate fees by MSPC, Certified Public Accountants and Advisors, A Professional Corporation for professional services rendered by the principal accountant for the fiscal years 20082009 and 20072008 were $-0- and $-0-, respectively.
(4) ALL OTHER FEESAll Other Fees
The aggregate fees by MSPC, Certified Public Accountants and Advisors, A Professional Corporation for products and services provided by the principal accountant for the fiscal years 20082009 and 20072008 were $-0- and $-0-, respectively.
(5) AUDIT COMMITTEE POLICIES AND PROCEDURES
We do not have an audit committee.
(6) If greater than 50 percent, disclose the percentage of hours expended on the principal accountant's engagement to audit the registrant's financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant's full-time, permanent employees.
Not applicable.
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a)The following exhibits are filed as part of this Annual Report.
1. | The financial statements listed in the "Index to Financial Statements" at page F-1 are filed as part of this report. |
| | | Incorporated by reference |
Exhibit | Exhibit Description | Filed herewith | Form | Period ending | Exhibit | Filing date |
3(i) | Certificate of Incorporation, dated October 24, 1988 | | Form S-1/A | | 3(i) | 08/28/08 |
3(ii) | Amendment to Certificate of Incorporation dated April 12, 2010. | X | | | | |
3(i)(b) | Certificate of Trade Name, dated January 31, 1997 | | Form S-1/A | | 3(i)(b) | 08/28/08 |
3(i)(c) | Certificate of Amendment to the Certificate of Incorporation, dated May 31, 2007 | | Form S-1/A | | 3(i)(c) | 08/28/08 |
3(ii) | Bylaws of Diamond Information Institute, Inc. | | Form S-1/A | | 3(ii) | 08/28/08 |
10.1 | Sample Subscription Agreement for the $25,000 unit offering | | Form S-1/A | | 10.1 | 08/28/08 |
23 | Consent of MSPC, dated March 23, 2009 | X | | | | |
23.1 | Consent of Silberstein Ungar, PLLC | X | | | | |
31 | Certification of Berge Abajian pursuant to Section 302 of the Sarbanes-Oxley Act | X | | | | |
32 | Certification of Berge Abajian pursuant to Section 906 of the Sarbanes-Oxley Act | X | | | | |
2. | Financial statement schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto. |
3. | Exhibits included or incorporated herein: See index to Exhibits. |
(b) Exhibits
| | | Incorporated by reference |
Exhibit | Exhibit Description | Filed herewith | Form | Period ending | Exhibit | Filing date |
3(i) | Certificate of Incorporation, dated October 24, 1988 | | Form S-1/A | | 3(i) | 08/28/08 |
3(i)(b) | Certificate of Trade Name, dated January 31, 1997 | | Form S-1/A | | 3(i)(b) | 08/28/08 |
3(i)(c) | Certificate of Amendment to the Certificate of Incorporation, dated May 31, 2007 | | Form S-1/A | | 3(i)(c) | 08/28/08 |
3(ii) | Bylaws of Diamond Information Institute, Inc. | | Form S-1/A | | 3(ii) | 08/28/08 |
10.1 | Sample Subscription Agreement for the $25,000 unit offering | | Form S-1/A | | 10.1 | 08/28/08 |
23 | Consent of MSPC, dated March 23, 2009 | X | | | | |
31 | Certification of Berge Abajian pursuant to Section 302 of the Sarbanes-Oxley Act | X | | | | |
32 | Certification of Berge Abajian pursuant to Section 906 of the Sarbanes-Oxley Act | X | | | | |
DIAMOND INFORMATION INSTITUTE, INC.