Such offering price does not have any relationship to any established criteria of value, such as book value or earnings per share. Because we have no significant operating history, the price of our common stock is not based on past earnings, nor is the price of our common stock indicative of the current market value of the assets owned by us. No valuation or appraisal has been prepared for our business and potential business expansion. Our common stock is presently not traded on any market or securities exchange and we have not applied for listing or quotation on any public market.
This prospectus contains forward-looking statements which relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled “Risk Factors,” that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.
While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
Beneficial ownership is determined in accordance with Securities and Exchange Commission rules. Under these rules, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or direct the voting of the security, or investment power, which includes the power to vote or direct the voting of the security. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days. Under the Securities and Exchange Commission rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which he or she may not have any pecuniary beneficial interest. Except as noted below, each person has sole voting and investment power.
None of the selling shareholders is a registered broker-dealer or an affiliate of a registered broker-dealer. Each of the selling shareholders has acquired his, her or its shares pursuant to a private placement solely for investment and not with a view to or for resale or distribution of such securities. The shares were offered and sold to the selling shareholders at a purchase price of $0.05 per share in a private placement held from September 2010 through December 2010, pursuant to the exemption from the registration under the Securities Act provided by Regulation D of the Securities Act. None of the selling shareholders are affiliates or controlled by our affiliates and none of the selling shareholders are now or were at any time in the past an officer or director of ours or any of any of our predecessors or affiliates.
The percentages below are calculated based on 30,631,200 shares of our common stock issued and outstanding. We do not have any outstanding options, warrants or other securities exercisable for or convertible into shares of our common stock.
* Represents less than one percent of the total number of shares of common stock outstanding as of the date of this filing.
We may require the selling shareholders to suspend the sales of the securities offered by this prospectus upon the occurrence of any event that makes any statement in this prospectus, or the related registration statement, untrue in any material respect, or that requires the changing of statements in these documents in order to make statements in those documents not misleading. We will file a post-effective amendment to this registration statement to reflect any material changes to this prospectus.
There has been no market for our securities. Our common stock is not traded on any exchange or on the over-the-counter market. After the effective date of the registration statement relating to this prospectus, we hope to have a market maker file an application with FINRA for our common stock to be eligible for trading on the Over the Counter Bulletin Board. We do not yet have a market maker who has agreed to file such application. There is no guarantee that our common stock will be eligible for trading or quoted on the Over the Counter Bulletin Board.
The selling shareholders will be offering the shares of common stock being covered by this prospectus at a fixed price of $0.10 per share until our shares of common stock are quoted on the Over the Counter Bulletin Board and thereafter at prevailing market prices or privately negotiated prices. The fixed price of $.10 has been arbitrarily determined as the selling price based upon the original purchase price paid by the selling shareholders of $.05 plus an increase based on the fact the shares will be liquid and registered.arbitrary increase.
Once a market has been developed for our common stock, the shares may be sold or distributed from time to time by the selling shareholders directly to one or more purchasers or through brokers or dealers who act solely as agents, at market prices prevailing at the time of sale, at prices related to such prevailing market prices, at negotiated prices or at fixed prices, which may be changed. The distribution of the shares may be effected in one or more of the following methods: (a) ordinary brokerage transactions and transactions in which the broker solicits purchasers; (b) privately negotiated transactions; (c) market sales (both long and short to the extent permitted under the federal securities laws); (d) at the market to or through market makers or into an existing market for the shares; (e) through transactions in options, swaps or other derivatives (whether exchange listed or otherwise); and (f) a combination of any of the aforementioned methods of sale.
In the event of the transfer by any of the selling shareholders of its common shares to any pledgee, donee or other transferee, we will amend this prospectus and the registration statement of which this prospectus forms a part by the filing of a post-effective amendment in order to have the pledgee, donee or other transferee in place of the selling shareholder who has transferred his, her or its shares.
In effecting sales, brokers and dealers engaged by the selling shareholders may arrange for other brokers or dealers to participate. Brokers or dealers may receive commissions or discounts from a selling shareholder or, if any of the broker-dealers act as an agent for the purchaser of such shares, from a purchaser in amounts to be negotiated which are not expected to exceed those customary in the types of transactions involved. Broker-dealers may agree with a selling shareholder to sell a specified number of the shares of common stock at a stipulated price per share. Such an agreement may also require the broker-dealer to purchase as principal any unsold shares of common stock at the price required to fulfill the broker-dealer commitment to the selling shareholder if such broker-dealer is unable to sell the shares on behalf of the selling shareholder. Broker-dealers who acquire shares of common stock as principal may thereafter resell the shares of common stock from time to time in transactions which may involve block transactions and sales to and through other broker-dealers, including transactions of the nature described above. Such sales by a broker-dealer could be at prices and on terms then prevailing at the time of sale, at prices related to the then-current market price or in negotiated transactions. In connection with such resales, the broker-dealer may pay to or receive from the purchasers of the shares commissions as described above.
The selling shareholders and any broker-dealers or agents that participate with the selling shareholders in the sale of the shares of common stock may be deemed to be "underwriters" within the meaning of the Securities Act in connection with these sales. In that event, any commissions received by the broker-dealers or agents and any profit on the resale of the shares of common stock purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act.
From time to time, any of the selling shareholders may pledge shares of common stock pursuant to the margin provisions of customer agreements with brokers. Upon a default by a Selling shareholder, their broker may offer and sell the pledged shares of common stock from time to time. Upon a sale of the shares of common stock, the selling shareholders intend to comply with the prospectus delivery requirements under the Securities Act by delivering a prospectus to each purchaser in the transaction. We intend to file any amendments or other necessary documents in compliance with the Securities Act which may be required in the event any of the selling shareholders defaults under any customer agreement with brokers.
To the extent required under the Securities Act, a post-effective amendment to this registration statement will be filed disclosing the name of any broker-dealers, the number of shares of common stock involved, the price at which the common stock is to be sold, the commissions paid or discounts or concessions allowed to such broker-dealers, where applicable, that such broker-dealers did not conduct any investigation to verify the information set out or incorporated by reference in this prospectus and other facts material to the transaction.
We and the selling shareholders will be subject to applicable provisions of the Exchange Act and the rules and regulations under it, including, without limitation, Rule 10b-5 and, insofar as a selling shareholder is a distribution participant and we, under certain circumstances, may be a distribution participant, under Regulation M. All of the foregoing may affect the marketability of the common stock.
All expenses of the registration statement including, but not limited to, legal, accounting, printing and mailing fees are and will be borne by us. Any commissions, discounts or other fees payable to brokers or dealers in connection with any sale of the shares of common stock will be borne by the selling shareholders, the purchasers participating in such transaction, or both.
Any shares of common stock covered by this prospectus which qualify for sale pursuant to Rule 144 under the Securities Act, as amended, may be sold under Rule 144 rather than pursuant to this prospectus.
Penny Stock Regulations
You should note that our stock is a penny stock. The Securities and Exchange Commission has adopted Rule 15g-9 which generally defines "penny stock" to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and "accredited investors". The term "accredited investor" refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer's account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer's confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock.
Blue Sky Restrictions on Resale
If a selling shareholder wants to sell shares of our common stock under this registration statement in the United States, the selling shareholders will also need to comply with state securities laws, also known as “Blue Sky laws,” with regard to secondary sales. All states offer a variety of exemption from registration for secondary sales. Many states, for example, have an exemption for secondary trading of securities registered under Section 12(g) of the Securities Exchange Act of 1934 or for securities of issuers that publish continuous disclosure of financial and non-financial information in a recognized securities manual, such as Standard & Poor’s. The broker for a selling shareholder will be able to advise a selling shareholder, which states our common stock is exempt from registration with that state for secondary sales.
Any person who purchases shares of our common stock from a selling shareholder under this registration statement who then wants to sell such shares will also have to comply with Blue Sky laws regarding secondary sales.
When the registration statement becomes effective, and a selling shareholder indicates in which state(s) he desires to sell his shares, we will be able to identify whether it will need to register or will rely on an exemption there from.
DESCRIPTION OF SECURITIES
The following description of our capital stock is a summary and is qualified in its entirety by the provisions of our Certificate of Incorporation which has been filed as an exhibit to our registration statement of which this prospectus is a part.
Common Stock
We are authorized to issue 100,000,000 shares of common stock, par value $0.0001, of which 30,631,200 shares are issued and outstanding as of March237,May 9, 2011. Each holder of shares of our common stock is entitled to one vote for each share held of record on all matters submitted to the vote of stockholders, including the election of directors. The holders of shares of common stock have no preemptive, conversion, subscription or cumulative voting rights. There is no provision in our Certificate of Incorporation or By-laws that would delay, defer or prevent a change in control of our Company.
Preferred Stock
We are authorized to issue 5,000,000 shares of preferred stock, par value $0.0001, none of which is issued and outstanding. Our board of directors has the right, without shareholder approval, to issue preferred shares with rights superior to the rights of the holders of shares of common stock. As a result, preferred shares could be issued quickly and easily, negatively affecting the rights of holders of common shares and could be issued with terms calculated to delay or prevent a change in control or make removal of management more difficult. Because we may issue up to 5,000,000 shares of preferred stock in order to raise capital for our operations, your ownership interest may be diluted which results in your percentage of ownership in us decreasing.
Warrants and Options
Currently, there are no warrants, options or other convertible securities outstanding.
INTEREST OF NAMED EXPERTS AND COUNSEL
No expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of the common stock was employed on a contingency basis or had, or is to receive, in connection with the offering, a substantial interest, directly or indirectly, in the registrant or any of its parents or subsidiaries. Nor was any such person connected with the registrant or any of its parents, subsidiaries as a promoter, managing or principal underwriter, voting trustee, director, officer or employee.
DESCRIPTION OF BUSINESS
We were incorporated under the laws of the State of New York on July 13, 2010. We are a development stage company, formed to facilitate the broad-scale recycling of jewelry, and other items containing precious metals in the U.S. and internationally. We intend to utilize consumer oriented advertising efforts to solicit individuals interested in liquidating unwanted jewelry and other items containing precious metals. Through a global platform, we will facilitate an end-to-end consumer solution, from acquisition of the used jewelry through liquidation. Our focus will be on providing a fast, secure and convenient service that will enable the public to discretely sell their precious metals from the comfort and security of their homes or offices. We hope to develop relationships with refineries that will allow us to secure current market prices for all of the precious metals we purchase on a daily basis. From our inception to date, we have not generated any revenues, and our operations have been limited to organizational, start-up, capital formation activities and initial investigations into the design and production of our business. We currently have no employees other than our officers, two of whom are also our directors.
The address of our principal executive office is c/o Mr. Melvin Schlossberg, Gold Swap Inc., 72 Pond Road, Woodbury, NY 11797. Our telephone number is 516-857-0980. We have internet websites at the following URLs: www.bucksforbling.com and www.getmoreforyourgold.com. Information contained on our websites, or which can be accessed through the websites, does not constitute a part of this registration statement.
Process
When someone decides they want us to help them dispose of an item for cash, they will simply contact us through our websites or a toll-free number (that will be set up solely for this purpose), where we will collect basic information that is used to deliver our mail-order kit to them. This kit will include a welcome letter, a Ziploc pouch, a tear free prepaid shipping envelope and a form on which the customer provides their contact information as well as a record of the items being sent. Upon receipt, the sellers fill the kit with the items they wish to sell and send the kit to a refinery, with which we have established a relationship. Each mail-order kit may be tracked via our website and upon its arrival the materials are assessed. The refinery will immediately value the items received based on a variety of factors including metal type, purity and weight, and then issue payment to the seller. If we decide to purchase the item, we send the customer a check within a 72-hour period of appraisal of the items. The customer has a fourteen (14) day period from the date of the check in which they can accept the amount paid for the items and cash the check, or they may return the check to the Company. If the customer cashes the check or fails to return the check before the end of the fourteenth (14) day period, the transaction will be completed and the precious metals will then be refined and sold. If the customer returns the check to the Company within the fourteen (14) day period, the Company will return the items to the customer.
We project that the vast majority of our sales will be made to refineries. While we currently do not have any agreements or arrangements with a refinery, within the next six months, we intend to enter into such agreements. We hope that the refineries we engage will have the knowledge, experience and technical expertise, coupled with a state-of-the art refining facility that will allow them to control their costs and maximize their pricing on purchases. We hope that these low costs will be passed on to us, which, when coupled with current day spot market purchase prices, will help to provide us with a competitive advantage in the marketplace. There is no assurance that we will be able to engage a refinery on terms that will be favorable to us.
Security Measures
We will face the risk of theft from inventory or during shipment to refineries. We will take steps to prevent such theft by implementing comprehensive surveillance and security measures and we will maintain insurance to cover losses resulting from theft or loss. We do not currently have insurance. If and when we are able to obtain insurance, each kit will be insured for up to $500. However, if security measures fail, losses exceed insurance coverage or we are not able to maintain insurance at a reasonable cost, we could incur significant losses from theft, which would substantially harm our business and results of operations.
Marketing
We will utilize direct response advertising and marketing campaigns, including television, radio, print and the Internet to solicit precious metals from the public. The methods of advertising used and the level of advertising investment varies by market as well as by a variety of factors that influence the effectiveness of direct response advertising such as time of year, local or global televised events, etc. Television and radio advertisements can be targeted toward specific demographics based on the type of show and time of day. Internet marketing targets various demographics by advertising on publisher websites, most commonly with banners and contextual banners, focused on generating potential customers by driving traffic to our websites
Competition
The industry for individuals and businesses seeking to extract value from items, such as jewelry, has changed dramatically over the past several years. Historically, liquidation options were limited to pawn shops, garage sales, newspaper and advertisements. With the continued penetration of the Internet, additional avenues such as eBay Inc. and Craigslist have become viable options as well. Although there may be benefits to utilizing one of these options, often they can be time consuming, labor intensive, involve safety risks or a lack of privacy. We believe that our service overcomes all of these drawbacks.
There are several companies that have an approach similar to ours, including Green Bullion Financial Services, LLC (www.Cash4Gold.com), BGC Management, Inc. (Brokengold.com), Lippincott, LLC (goldkit.com), and Postal Gold. We believe that the remainder of the market is highly fragmented and that the majority of the remaining competitors are small pawn shops and jewelry stores that do not view this service as a primary component of their businesses.
The combination of the global economic downturn and the recent increases in precious metal prices have led to a dramatic increase in the number of people wanting to cash in their gold and other precious metal items. Although this has contributed to the revenue growth the industry has experienced recently, it has also resulted in an increase in the number of competitors in the marketplace. Some of these competitors operate without regard to legal requirements or to the overall reputation of the industry by disposing of their customer’s items prior to the prescribed holding periods and by offering extremely low purchase prices for the items to be sold. As a result of these incidents, the media has portrayed the overall industry in a negative light. This has resulted in additional customer scrutiny, increased governmental regulations, and has applied pressure on purchase costs.
Intellectual Property
We do not own any intellectual property rights.
Governmental Regulations
Because of the nature of our business, we will be subject to the Federal Trade Commission’s unfair trade practice rules and various state laws designed to protect consumers including “little” unfair trade practice laws, as well as similar laws and regulations in the other markets in which we will operate. As we expand globally, we will be subject to the laws of each country where we operate. In some countries like the United Kingdom, regulatory bodies are required to pre-approve advertising spots and to investigate complaints from the public.
In addition to general business requirements, some of these laws dictate licensing and/or procedural requirements to operate as well as prescribing mandatory holding periods after acquisition of items before they can be resold and/or liquidated. We will adapt our processes and procedures to comply with these requirements.
The Digital Millennium Copyright Act has provisions that limit, but do not necessarily eliminate, our liability for listing or linking to third-party websites that include materials that infringe copyrights or other rights, so long as we comply with the statutory requirements of this act. The Child Online Protection Act and the Children’s Online Privacy Protection Act restrict the distribution of materials considered harmful to children and impose additional restrictions on the ability of online services to collect information from minors. In the area of data protection, the European Union and many states have passed laws requiring notification to users when there is a security breach for personal data, such as California’s Information Practices Act and Florida regulates secondhand dealers.
Employees
We have no employees other than our executive officers, who are also our directors. All functions including development, strategy, negotiations and administration are currently being provided by our executive officers at rates described below in the Executive Compensation section of this prospectus. Our officers and directors do not work exclusively for us and do not devote all of their time to our operations. Their other activities prevent them from devoting their full-time to our operations. It is expected that Mr. Schlossberg will only be available on a part-time basis and may devote between 20 and 30 hours per week to our operations on an ongoing basis. Mr. Ptalis has other full-time employment obligations which do not preclude him from devoting up to 30 hours per week to the Company’s business.
DESCRIPTION OF PROPERTY
The Company executive offices are located at c/o Melvin Schlossberg, Gold Swap Inc., 72 Pond Road, Woodbury, NY 11797. We are not paying any rent for such space and the Company believes that its current office space will be adequate for the foreseeable future.
LEGAL PROCEEDINGS
There are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company. The Company’s property is not the subject of any pending legal proceedings.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market Information
There has been no market for our securities. Our common stock is not traded on any exchange or on the over-the-counter market. After the effective date of the registration statement relating to this prospectus, we hope to have a market maker file an application with the FINRA for our common stock to be eligible for trading on the Over The Counter Bulletin Board. We do not yet have a market maker who has agreed to file such application. There is no guarantee that our common stock will be eligible for trading or quoted on the Over the Counter Bulletin Board or that a trading market will develop, or, if developed, that it will be sustained. Consequently, a purchaser of our common stock may find it difficult to resell the securities offered herein should the purchaser desire to do so when eligible for public resale.
DIVIDEND POLICY
We have not declared or paid dividends on our Common Stock since our formation, and we do not anticipate paying dividends in the foreseeable future. Declaration or payment of dividends, if any, in the future, will be at the discretion of our Board of Directors and will depend on our then current financial condition, results of operations, capital requirements and other factors deemed relevant by the board of directors. There are no contractual restrictions on our ability to declare or pay dividends.
SHARE CAPITAL
Security Holders
As of March 23,May 9, 2011, there were 30,631,200 common shares issued and outstanding, which were held by 45 stockholders of record.
Transfer Agent
We have not engaged a transfer agent to serve as transfer agent for shares of our common stock. Until we engage such a transfer agent, we will be responsible for all record-keeping and administrative functions in connection with the shares of our common stock.
Admission to Quotation on the OTC Bulletin Board
We intend to have a market maker file an application for our common stock to be quoted on the OTC Bulletin Board. However, we do not have a market maker that has agreed to file such application. If our securities are not quoted on the OTC Bulletin Board, a security holder may find it more difficult to dispose of, or to obtain accurate quotations as to the market value of our securities. The OTC Bulletin Board differs from national and regional stock exchanges in that it
(1) is not situated in a single location but operates through communication of bids, offers and confirmations between broker-dealers, and
(2) securities admitted to quotation are offered by one or more broker-dealers rather than the "specialist" common to stock exchanges.
To qualify for quotation on the OTC Bulletin Board, an equity security must have one registered broker-dealer, known as the market maker, willing to list bid or sale quotations and to sponsor the company listing. If it meets the qualifications for trading securities on the OTC Bulletin Board our securities will trade on the OTC Bulletin Board. We may not now or ever qualify for quotation on the OTC Bulletin Board. We currently have no market maker who is willing to list quotations for our securities.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATION
Certain statements contained in this prospectus, including statements regarding the anticipated development and expansion of our business, our intent, belief or current expectations, primarily with respect to the future operating performance of Gold Swap Inc., and the products we expect to offer and other statements contained herein regarding matters that are not historical facts, are "forward-looking" statements. Future filings with the Securities and Exchange Commission, future press releases and future oral or written statements made by us or with our approval, which are not statements of historical fact, may contain forward-looking statements, because such statements include risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements.
All forward-looking statements speak only as of the date on which they are made. We undertake no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they are made.
Overview
We are focused on the business of direct-from-consumer, procurement and aggregation of precious metals to be recycled. We intend to utilize consumer oriented advertising efforts to solicit individuals interested in liquidating unwanted jewelry and other items containing precious metals. Through a global platform, we will facilitate an end-to-end consumer solution, from acquisition through liquidation. We intend to utilize a low cost, highly scalable and flexible business model that will allows us to quickly and efficiently adapt to entry into new markets, changes in economic conditions, supply and demand levels and other similar factors. With this in mind, we intend on using the proceeds from the sale of 131,200 shares of our common stock, which was offered in a private placement held from September through December 2010, which generated $6,560 in proceeds. As of the date of the prospectus contained in this registration statement we have raised $51,560 from the sale of our common stock. Such funds will not be sufficient to fund our operating expenses over the next twelve months.
Plan of Operation
Over the next twelve months, the Company intends to focus on the following activities:
· | the Company will locate and enter into agreements with one or more refineries; |
· | solicits individuals interested in selling unwanted items containing precious metals; |
· | provides those individuals with the means and materials necessary to send those items in to the refineries; and |
· | derives profits from the spread between the scrap price and the spot price. |
The Company estimates that it will require an approximate minimum of $150,000 in the next 12 months to implement its activities. Such funds will be needed for the following purposes:
Purpose | | Amount | |
Web Site | | $ | 25,000 | |
Marketing | | $ | 70,000 | |
Security and Surveillance | | $ | 10,000 | |
Insurance | | $ | 10,000 | |
Cost of operating as a public company: | | | | |
Legal | | $ | 20,000 | |
Accounting | | | 15,000 | |
Total | | $ | 150,000 | |
Results of Operations
As of March 31, 2011, the Company had $36,157 in cash as compared to $47,480 as of December 31, 2010, the Company had $47,480 in cash.2010. We believe that such funds will not be sufficient to effectuate our plans with respect the Company’s proposed operation as a purchaser of precious metals and second-hand jewelry for refining and resale over the next twelve months. We will need to seek additional capital for the purpose of financing our marketing efforts.
Revenues
The Company is in its development stage and did not generate any revenues during the period from July 13, 2010 (inception) through DecemberMarch 31, 2010.2011
Total operating expenses
TotalFor the three months ended March 31, 2011 total operating expenses
were $11,898 which consisted of legal and professional fees. During period from July 13, 2010 (inception) to December 31, 2010, the total operating expenses were $1,078,505, which include compensation expenses of $1,075,000.The decrease of $1,066,607 to $11,898 in operating expenses was primarily as a result of the compensation expense of $1,075,000 representing the issuance of an aggregate of 21,500,000 shares to the officers and directors in July 2010. These shares were issued as follows: Mr. Schlossberg was issued 20,000,000 shares of our common stock in consideration for his services as an officer to the Company, valued in the amount of $1,000,000; Mr. Ptalis was issued 500,000 shares of our common stock in consideration for his services as an officer of the Company, valued in the amount of $25,000; and Mr. Mats was issued 1,000,000 shares of our common stock in consideration for his services as an officer of the Company, valued in the amount of $50,000. As the Company does not anticipate paying its officers and directors for their services, the shares were issued in consideration for their agreeing to serve as officers and directors of the Company. The shares issued to the directors and officers were valued at $0.05 per share, the same price as the shares purchased by the selling shareholders in the private offering.
Net loss
Net loss for the three month period ended March 31, 2011 was $11,898. During the period from July 13, 2010 (inception) through December 31, 2010, the Company had a net loss of $1,078,505. The decrease in net loss was primarily the result.
Liquidity and Capital Resources
As of DecemberMarch 31, 2010,2011, the Company had a cash balance of $47,480.$36,157. On July 13, 2010, the Company sold an aggregate of 9,000,000 shares of its common stock to 6 founders for a total consideration of $45,000. In September 2010, the Company commenced a private placement for up to 1,000,000 shares of its common stock, of which the Company sold only 131,200 shares and raised $6,560 as of December 31, 2010. The Company believes that such funds will be insufficient to fund its expenses over the next twelve months. There can be no assurance that additional capital will be available to the Company. The Company currently has no agreements, arrangements or understandings with any person to obtain funds through bank loans, lines of credit or any other sources. The officers and directors have orally agreed to lend funds to the Company in the event capital is required for the operations of the Company. Since the Company has no such arrangements or plans currently in effect, its inability to raise funds for the above purposes will have a severe negative impact on its ability to remain a viable company.
We currently have no commitments with any person for any capital expenditures.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Berman & Company, P.A. is our auditors. There have not been any changes in or disagreements with accountants on accounting and financial disclosure or any other matter.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Directors and Executive Officers
Set forth below are the names, ages and present principal occupations or employment, and material occupations, positions, offices or employments for the past five years of our current directors and executive officers.
Name and Business Address | | Age | | Position |
| | | | |
Melvin Schlossberg | | 63 | | Chairman, Chief Executive Officer, President and Director |
Donald Ptalis | | 68 | | Chief Financial Officer and Director |
Vadim Mats | | 26 | | Vice President of Business Development |
Melvin Schlossberg has been our Chairman, Chief Executive Officer, President, Secretary and a director since our inception on July 13, 2010. Since 1988, Mr. Schlossberg has been the founder and manager GEM Studio Inc., a company involved in the development and production of story boards and animatic presentations used in the early stages of commercials and national advertising campaigns.
DanoldDonald Ptalis has been our Chief Financial Officer since July 20, 2010. Mr. Ptalis is the founder and currently a consultant to Plaza Promotions Inc., a company he founded in 2004. Plaza Promotions is a promotional company that provides premiums, POP printing, direct mail, and event marketing to companies in need of these services. Plaza Promotions clientele to this day include many fortune 500 companies. From 1987-1993, Mr. Ptalis was the president and chief financial officer of Desk, Inc., a steelcase dealership with over $31,000,000 in sales, where he was responsible for the daily oversight of the company’s operations. Mr. Ptalis received a Bachelor in Mechanical Engineering from the City College of New York in 1964.
Vadim Mats has been our vice President of Business Development since July 20, 2010. Since June 2010, Mr. Mats has been the chief financial officer of Whalehaven Capital, an investment fund. Prior to joining Whalehaven Capital, Mr. Mats was assistant controller with Eton Park Capital Management, a leading multi strategy fund from July 2007 to December 2009, where he handled various functions and products in the accounting department. From June 2006 to July 2007, Mr. Mats was a fund accountant with The Bank of New York Mellon, where he was responsible for over fifteen funds. Mr. Mats graduated Cum Laude from the Zicklin School of Business at Bernard Baruch College with a Bachelor of business administration degree in finance and investments in May 2006.
There are no familial relationships among any of our officers or directors. None of our directors or officers is a director in any other reporting companies. None of our directors or officers has been affiliated with any company that has filed for bankruptcy within the last fiveten years. The Company is not aware of any proceedings to which any of the Company’s officers or directors, or any associate of any such officer or director, is a party adverse to the Company or any of the Company’s subsidiaries or has a material interest adverse to it or any of its subsidiaries.
Each director of the Company serves for a term of one year or until the successor is elected at the Company's annual shareholders' meeting and is qualified, subject to removal by the Company's shareholders. Each officer serves, at the pleasure of the board of directors, for a term of one year and until the successor is elected at the annual meeting of the board of directors and is qualified.
Auditors; Code of Ethics; Financial Expert
Our independent registered public accounting firm is Berman & Company, P.A.
We do not currently have a Code of Ethics applicable to our principal executive, financial and accounting officers. We do not have a “financial expert” on the board or an audit committee or nominating committee.
Potential Conflicts of Interest
Since we do not have an audit or compensation committee comprised of independent directors, the functions that would have been performed by such committees are performed by our directors. Thus, there is a potential conflict of interest in that our directors and officers have the authority to determine issues concerning management compensation and audit issues that may affect management decisions. We are not aware of any other conflicts of interest with any of our executives or directors.
Director Independence
We are not subject to listing requirements of any national securities exchange or national securities association and, as a result, we are not at this time required to have our board comprised of a majority of “independent directors.” We do not believe that any of our directors currently meet the definition of “independent” as promulgated by the rules and regulations of the American Stock Exchange.
EXECUTIVE COMPENSATION
Since our incorporation on July 13, 2010, Melvin Schlossberg has been our Chairman, President, Chief Executive Officer, Secretary and a director. We have no formal employment or consulting agreement with Mr. Schlossberg. During the period from July 13, 2010 (inception) to December 31, 2010, Mr. Schlossberg was issued 20,000,000 shares of our common stock in consideration for his services as an officer to the Company, valued in the amount of $1,000,000.
Since July 20, 2010, Donald Ptalis has been our Chief Financial Officer and a director. We have no formal employment or consulting agreement with Mr. Ptalis. During the period from July 13, 2010 (inception) to December 31, 2010, Mr. Ptalis was issued 500,000 shares of our common stock in consideration for his services as an officer of the Company, valued in the amount of $25,000.
Since July 20, 2010, Vadim Mats has been our Vice President of Business Development. We have no formal employment or consulting agreement with Mr. Mats. During the period from July 13, 2010 (inception) to December 31, 2010, Mr. Mats was issued 1,000,000 shares of our common stock in consideration for his services as an officer of the Company, valued in the amount of $50,000.
SUMMARY COMPENSATION TABLE
Name and principal position (a) | | Year(1) (b) | | Salary ($) (c) | | | Bonus ($) (d) | | | Stock Awards ($) (e) | | | Option Awards ($) (f) | | | Non-Equity Incentive Plan Compensation ($) (g) | | | Nonqualified Deferred Compensation Earnings ($) (h) | | | All Other Compensation ($) (i) | | | Total ($) (j) | |
Melvin Schlossberg (President, Chief Executive Officer and Secretary) | | 2010 | | | 0 | | | | 0 | | | | 1,000,000 | (1) | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 1,000,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Donald Ptalis (Chief Financial Officer) | | 2010 | | | 0 | | | | 0 | | | | 25,000 | (2) | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 25,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Vadim Mats (VP of Business Development) | | 2010 | | | | | | | | | | | 50,000 | (3) | | | | | | | | | | | | | | | | | | | 50,000 | |
(1) | On July 20, 2010, Mr. Schlossberg was issued 20,000,000 shares of our common stock in consideration for his services as an officer to the Company, valued in the amount of $1,000,000. |
(2) | On July 20, 2010, Mr. Ptalis was issued 500,000 shares of our common stock in consideration for his services as an officer of the Company, valued in the amount of $25,000. |
(3) | Mr. Mats was issued 1,000,000 shares of our common stock in consideration for his services as an officer of the Company, valued in the amount of $50,000. |
Since our incorporation on July 13, 2010, no stock options or stock appreciation rights were granted to any of our directors or executive officers, none of our directors or executive officers exercised any stock options or stock appreciation rights, and none of them hold unexercised stock options. We have no long-term incentive plans.
Outstanding Equity Awards
Our directors and officers do not have unexercised options, stock that has not vested, or equity incentive plan awards.
Compensation of Directors
During the period from July 13, 2010 (inception) to DecemberMarch 31, 2010,2011 , none of our directors received compensation for services rendered in their capacity as a director. However, they were compensated for services rendered in their capacities as officers of the Company.
No arrangements are presently in place regarding compensation to directors for their services as directors or for committee participation or special assignments.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table lists, as of March 23,May 9 , 2011, the number of shares of common stock of our Company that are beneficially owned by (i) each person or entity known to our Company to be the beneficial owner of more than 5% of the outstanding common stock; (ii) each officer and director of our Company; and (iii) all officers and directors as a group. Information relating to beneficial ownership of common stock by our principal shareholders and management is based upon information furnished by each person using “beneficial ownership” concepts under the rules of the Securities and Exchange Commission. Under these rules, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or direct the voting of the security, or investment power, which includes the power to vote or direct the voting of the security. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days. Under the Securities and Exchange Commission rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which he or she may not have any pecuniary beneficial interest. Except as noted below, each person has sole voting and investment power.
The percentages below are calculated based on 30,631,200 shares of our common stock issued and outstanding as of March 23,May 9 , 2011. We do not have any outstanding options, warrants or other securities exercisable for or convertible into shares of our common stock. Unless otherwise indicated, the address of each person listed is c/o Gold Swap Inc., c/o Mr. Melvin Schlossberg, 72 Pond Road, Woodbury, New York 11797.
Name of Beneficial Owner | Title Of Class | Amount and Nature of Beneficial Ownership | Percent of Class |
| | | |
Melvin Schlossberg | Common | 20,000,000 | 65.3% |
| | | |
Donald Ptalis | Common | 500,000 | 1.6% |
| | | |
Vadim Mats | Common | 1,000,000 | 3.26% |
| | | |
Directors and Officers as a Group (3 persons) | Common | 21,500,000 | 70.18% |
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On July 13, 2010, we issued 1,500,000 shares of our common stock to Mrs. Corie Weisblum. These shares were issued in exchange for $$7,500. The shares were issued under Section 4(2) of the Securities Act of 1933, as amended. Mrs. Weisblum is founder of the Company and had access to all of the information which would be required to be included in a registration statement, and the transaction did not involve a public offering.
On July 13, 2010, we issued 1,500,000 shares of our common stock to Mrs. Efrat Finkelstein. These shares were issued in exchange for $$7,500. The shares were issued under Section 4(2) of the Securities Act of 1933, as amended. Mrs. Finkelstein is founder of the Company and had access to all of the information which would be required to be included in a registration statement, and the transaction did not involve a public offering.
On July 13, 2010, we issued 1,500,000 shares of our common stock to Osher Capital Inc., a New York corporation, in which Mr. Arie Kluger is the controlling shareholder. These shares were issued in exchange for $7,500. The shares were issued under Section 4(2) of the Securities Act of 1933, as amended. Mr. Kluger is a founder of the Company and had access to all of the information which would be required to be included in a registration statement, and the transaction did not involve a public offering.
On July 13, 2010, we issued 1,500,000 shares of our common stock to Lifeline Industries, Inc., New York corporation in which Robb Knie is the sole officer and controlling shareholder. These shares were issued in exchange for $7,500. The shares were issued under Section 4(2) of the Securities Act of 1933, as amended. Mr. Knie is a founder of the Company and had access to all of the information which would be required to be included in a registration statement, and the transaction did not involve a public offering.
On July 13, 2010, we issued 1,500,000 shares of our common stock to DPIT1 LLC, a Nevada limited liability company in which Samuel DelPresto is the sole officer and controlling person. These shares were issued in exchange for $7,500. The shares were issued under Section 4(2) of the Securities Act of 1933, as amended. Mr. DelPresto is a founder of the Company and had access to all of the information which would be required to be included in a registration statement, and the transaction did not involve a public offering.
On July 13, 2010, we issued 1,500,000 shares of our common stock to Momona Capital LLC, a New York limited liability company in which Arie Rabinowitz is the sole officer and controlling person. These shares were issued in exchange for $7,500. The shares were issued under Section 4(2) of the Securities Act of 1933, as amended. Mr. Rabinowitz is a founder of the Company and had access to all of the information which would be required to be included in a registration statement, and the transaction did not involve a public offering.
On July 20, 2010, we issued 1,000,000 shares of our common stock to Vadim Mats. These shares were issued in exchange for services rendered as an officer of the Company, valued in the amount of $50,000. The shares were issued under Section 4(2) of the Securities Act of 1933, as amended. Mr. Mats is an officer of the Company and had access to all of the information which would be required to be included in a registration statement, and the transaction did not involve a public offering.
On July 20, 2010, we issued 20,000,000 shares of our common stock to Melvin Schlossberg. These shares were issued in exchange for services rendered as an officer of the Company, valued in the amount of $1,000,000. The shares were issued under Section 4(2) of the Securities Act of 1933, as amended. Mr. Schlossberg is an officer and director of the Company and had access to all of the information which would be required to be included in a registration statement, and the transaction did not involve a public offering.
On July 20, 2010, we issued 500,000 shares of our common stock to Donald Ptalis. These shares were issued in exchange for services rendered as an officer of the Company, valued in the amount of $25,000. The shares were issued under Section 4(2) of the Securities Act of 1933, as amended. Mr. Ptalis is an officer and a director of the Company and had access to all of the information which would be required to be included in a registration statement, and the transaction did not involve a public offering.
EXPENSES OF ISSUANCE AND DISTRIBUTION
We have agreed to pay all expenses incident to the offering and sale to the public of the shares being registered other than any commissions and discounts of underwriters, dealers or agents and any transfer taxes, which shall be borne by the selling shareholders. The expenses which we are paying are set forth in the following table. All of the amounts shown are estimates except the SEC registration fee.
Nature of Expense | | Amount | |
| | | |
Accounting fees and expenses* | | $ | 5,500 | |
| | | | |
SEC registration fee | | $ | 1.52 | |
| | | | |
Legal fees and other expenses* | | $ | 10,000 | |
| | | | |
Total | | $ | 15,501.52 | |
*Estimated Expenses.
LEGAL MATTERS
David Lubin & Associates, PLLC has opined on the validity of the shares of common stock being offered hereby.
EXPERTS
The financial statements included in this prospectus and in the registration statement have been audited by Berman & Company, P.A., an independent registered public accounting firm, to the extent and for the period set forth in their report appearing elsewhere herein and in the registration statement, and are included in reliance upon such report given upon the authority of said firm as experts in auditing and accounting.
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Our By-laws provide to the fullest extent permitted by law, our directors or officers, former directors and officers, and persons who act at our request as a director or officer of a body corporate of which we are a shareholder or creditor shall be indemnified by us. We believe that the indemnification provisions in our By-laws are necessary to attract and retain qualified persons as directors and officers.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the "Act" or "Securities Act") may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable.
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement on Form S-1 under the Securities Act with the SEC for the securities offered hereby. This prospectus, which constitutes a part of the registration statement, does not contain all of the information set forth in the registration statement or the exhibits and schedules which are part of the registration statement. For additional information about us and our securities, we refer you to the registration statement and the accompanying exhibits and schedules. Statements contained in this prospectus regarding the contents of any contract or any other documents to which we refer are not necessarily complete. In each instance, reference is made to the copy of the contract or document filed as an exhibit to the registration statement, and each statement is qualified in all respects by that reference. Copies of the registration statement and the accompanying exhibits and schedules may be inspected without charge (and copies may be obtained at prescribed rates) at the public reference facility of the SEC at Room 1024, 100 F Street, N.E. Washington, D.C. 20549.
You can request copies of these documents upon payment of a duplicating fee by writing to the SEC. You may call the SEC at 1-800-SEC-0330 for further information on the operation of its public reference rooms. Our filings, including the registration statement, will also be available to you on the Internet web site maintained by the SEC at http://www.sec.gov.
FINANCIAL STATEMENTS
Gold Swap Inc.
(A Development Stage Company)
Financial Statements
March 31, 2011
(Unaudited)
CONTENTS
| Page(s) |
Balance Sheets – As of March 31, 2011 (unaudited) and December 31, 2010 | F-1 |
| |
Statements of Operations – Three months ended March 31, 2011 and 2010, and from July 13, 2010 (Inception) to March 31, 2011 (unaudited) | F-2 |
| |
Statements of Cash Flows – Three months ended March 31, 2011 and 2010, and from July 13, 2010 (Inception) to March 31, 2011 (unaudited) | F-3 |
| |
Notes to Financial Statements (unaudited) | F-4 - F-8 |
Gold Swap, Inc. | |
(A Development Stage Company) | |
Balance Sheets | |
| |
| | March 31, 2011 | | | December 31, 2010 | |
| | (Unaudited) | | | | |
Assets |
| | | | | | |
Current Assets | | | | | | |
Cash | | $ | 36,157 | | | $ | 47,480 | |
Total Current Assets | | | 36,157 | | | | 47,480 | |
| | | | | | | | |
Total Assets | | $ | 36,157 | | | $ | 47,480 | |
| | | | | | | | |
Stockholders' Equity |
| | | | | | | | |
Stockholders' Equity | | | | | | | | |
Preferred stock, $0.0001 par value, 5,000,000 shares authorized; | | | | | | | | |
none issued and outstanding | | $ | - | | | $ | - | |
Common stock, $0.0001 par value, 100,000,000 shares authorized; | | | | | | | | |
30,631,200 shares issued and outstanding | | | 3,063 | | | | 3,063 | |
Additional paid-in capital | | | 1,123,497 | | | | 1,123,497 | |
Deficit accumulated during the development stage | | | (1,090,403 | ) | | | (1,078,505 | ) |
Subscriptions receivable | | | - | | | | (575 | ) |
Total Stockholders' Equity | | | 36,157 | | | | 47,480 | |
| | | | | | | | |
Total Liabilities and Stockholders' Equity | | $ | 36,157 | | | $ | 47,480 | |
| | | | | | | | |
See accompanying notes to financial statements
Gold Swap, Inc. | |
(A Development Stage Company) | |
Statements of Operations | |
From July 13, 2010 (Inception) to March 31, 2011 | |
(Unaudited) | |
| | | | | | | | July 13, 2010 | |
| | Three Months ended March 31, | | | (Inception) to | |
| | 2011 | | | 2010 | | | March 31, 2011 | |
| | | | | | | | | |
General and administrative expenses | | $ | 11,898 | | | $ | - | | | $ | 1,090,403 | |
| | | | | | | | | | | | |
Net loss | | $ | (11,898 | ) | | $ | - | | | $ | (1,090,403 | ) |
| | | | | | | | | | | | |
Net loss per common share - basic and diluted | | $ | (0.00 | ) | | $ | - | | | $ | (0.04 | ) |
| | | | | | | | | | | | |
Weighted average number of common shares outstanding | | | | | | | | | | | | |
during the period - basic and diluted | | | 29,992,736 | | | | - | | | | 29,656,703 | |
| | | | | | | | | | | | |
See accompanying notes to financial statements
| |
(A Development Stage Company) | |
Statement of Stockholders' Equity | |
From July 13, 2010 (Inception) to March 31, 2011 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | Additional | | | Deficit Accumulated during | | | | | | Total | |
| | Preferred Stock, $0.0001 Par Value | | | Common Stock, $0.0001 Par Value | | | Paid In | | | Development | | | Subscription | | | Stockholder's | |
| | Shares | | | Amount | | | Shares | | | Amount | | | Capital | | | Stage | | | Receivable | | | Equity | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Stock issued for services - related parties ($0.05/share) | | | - | | | $ | - | | | | 21,500,000 | | | $ | 2,150 | | | $ | 1,072,850 | | | $ | - | | | $ | - | | | $ | 1,075,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Stock issued for cash ($0.005 - $0.05/share) | | | - | | | | - | | | | 9,131,200 | | | | 913 | | | | 50,647 | | | | - | | | | (575 | ) | | | 50,985 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net loss - from July 13, 2010 (inception) to December 31, 2010 | | | - | | | | - | | | | - | | | | - | | | | - | | | | (1,078,505 | ) | | | - | | | | (1,078,505 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance - December 31, 2010 | | | - | | | | - | | | | 30,631,200 | | | | 3,063 | | | | 1,123,497 | | | | (1,078,505 | ) | | | (575 | ) | | | 47,480 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Receipt of prior period subscription | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 575 | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net loss - three months ended March 31, 2011 | | | - | | | | - | | | | - | | | | - | | | | - | | | | (11,898 | ) | | | - | | | | (11,898 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance -March 31, 2011 (unaudited) | | | - | | | $ | - | | | | 30,631,200 | | | $ | 3,063 | | | | 1,123,497 | | | $ | (1,090,403 | ) | | $ | - | | | $ | 35,582 | |
See accompanying notes to financial statements
Gold Swap, Inc. | |
(A Development Stage Company) | |
Statements of Cash Flows | |
From July 13, 2010 (Inception) to March 31, 2011 | |
(Unaudited) | |
| | | | | | | | July 13, 2010 | |
| | Three Months Ended March 31, | | | (Inception) to | |
CASH FLOWS FROM OPERATING ACTIVITIES: | | 2011 | | | 2010 | | | March 31, 2011 | |
Net loss | | $ | (11,898 | ) | | $ | - | | | $ | (1,090,403 | ) |
Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | | | | | | |
Stock issued for services - related parties | | | - | | | | - | | | | 1,075,000 | |
Net Cash Used In Operating Activities | | | (11,898 | ) | | | - | | | | (15,403 | ) |
| | | | | | | | | | | | |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | | | | | |
Proceeds from issuance of common stock | | | 575 | | | | - | | | | 51,560 | |
Net Cash Provided By Financing Activities | | | 575 | | | | - | | | | 51,560 | |
| | | | | | | | | | | | |
Net Increase (Decrease) in Cash | | | (11,323 | ) | | | - | | | | 36,157 | |
| | | | | | | | | | | | |
Cash - Beginning of Period | | | 47,480 | | | | - | | | | - | |
| | | | | | | | | | | | |
Cash - End of Period | | $ | 36,157 | | | $ | - | | | $ | 36,157 | |
| | | | | | | | | | | | |
Supplemental Cash Flow Information: | | | | | | | | | | | | |
Cash Paid During the Period for: | | | | | | | | | | | | |
Income Taxes | | $ | - | | | $ | - | | | $ | - | |
Interest | | $ | - | | | $ | - | | | $ | - | |
| | | | | | | | | | | | |
See accompanying notes to financial statements
Gold Swap Inc.
(A Development Stage Company)
Notes to Financial Statements
March 31, 2011
(Unaudited)
Note 1 Nature of Operations and Summary of Significant Accounting Policies
Nature of Operations
Gold Swap Inc. (the “Company”), was incorporated in the State of New York on July 13, 2010.
The Company intends to purchase precious metals and second-hand jewelry for refining and resale. The Company has not clearly identified how it will operate its business, only that it will explore commercial feasibility.
Development Stage
The Company's financial statements are presented as those of a development stage enterprise. Activities during the development stage primarily include equity based financing and further implementation of the business plan.
Risks and Uncertainties
The Company intends to operate in an industry that is subject to rapid change. The Company's operations will be subject to significant risk and uncertainties including financial, operational, technological, regulatory and other risks associated with a development stage company, including the potential risk of business failure.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles 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.
●estimated fair value of share based payments; and
●estimated 100% valuation allowance for deferred tax assets, due to continuing and expected future losses
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from estimates.
Gold Swap Inc.
(A Development Stage Company)
Notes to Financial Statements
March 31, 2011
(Unaudited)
Cash and Cash Equivalents
The Company considers all highly liquid instruments purchased with a maturity of three months or less and money market accounts to be cash equivalents. The Company had no cash equivalents at March 31, 2011 and December 31, 2010.
The Company minimizes its credit risk associated with cash by periodically evaluating the credit quality of its primary financial institution. The balance at times may exceed federally insured limits. At March 31, 2011 and December 31, 2010, there were no balances that exceeded the federally insured limit.
Share Based Payments
Generally, all forms of share-based payments, including stock option grants, warrants, restricted stock grants and stock appreciation rights, are measured at their fair value on the awards’ grant date, and based on the estimated number of awards that are ultimately expected to vest. Share-based payment awards issued to non-employees for services rendered are recorded at either the fair value of the services rendered or the fair value of the share-based payment, whichever is more readily determinable. The expense resulting from share-based payments are recorded as a component of general and administrative expense.
Earnings per Share
Basic earnings (loss) per share is computed by dividing net income (loss) by weighted average number of shares of common stock outstanding during each period. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period. The Company has no common stock equivalents.
Since the Company reflected a net loss, the effect of considering any common stock equivalents, if outstanding, would have been anti-dilutive. A separate computation of diluted earnings (loss) per share is not presented.
Gold Swap Inc.
(A Development Stage Company)
Notes to Financial Statements
March 31, 2011
(Unaudited)
Recent Accounting Pronouncements
In January 2010, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2010-06, “Improving Disclosures about Fair Value Measurements (“ASU 2010-06”). ASU 2010-06 amends ASC 820, “Fair Value Measurements” ("ASC 820") to require a number of additional disclosures regarding fair value measurements. The amended guidance requires entities to disclose the amounts of significant transfers between Level 1 and Level 2 of the fair value hierarchy and the reasons for these transfers, the reasons for any transfers in or out of Level 3, and information in the reconciliation of recurring Level 3 measurements about purchases, sales, issuances and settlements on a gross basis. The ASU also clarifies the requirement for entities to disclose information about both the valuation techniques and inputs used in estimating Level 2 and Level 3 fair value measurements. The amended guidance was effective for financial periods beginning after December 15, 2009, except the requirement to disclose Level 3 transactions on a gross basis, which becomes effective for financial periods beginning after December 15, 2010. ASU 2010-06 did not have a significant effect on the Company’s financial position or results of operations.
Note 2 Going Concern
As reflected in the accompanying financial statements, the Company has a net loss of $11,898 and a net cash used in operations of $11,898 for the three months ended March 31, 2011.
The ability of the Company to continue as a going concern is dependent on Management's plans, which currently includes commencement of operations and partial reliance upon related party debt or equity.
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.
Note 3 Fair Value
The Company applies the accounting guidance under Financial Accounting Standards Board (“FASB”) ASC 820-10, “Fair Value Measurements”, as well as certain related FASB staff positions. This guidance defines fair value as the price that would be received from m selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact business and considers assumptions that marketplace participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance.
Gold Swap Inc.
(A Development Stage Company)
Notes to Financial Statements
March 31, 2011
(Unaudited)
The guidance also establishes a fair value hierarchy for measurements of fair value as follows:
● Level 1 – quoted market prices in active markets for identical assets or liabilities.
● Level 2 - inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. ● Level 3 – unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
The carrying amounts of the Company’s short-term financial instruments, including cash, approximate fair value due to the relatively short period to maturity for these instruments.
At March 31, 2011 and December 31, 2010, the Company has no instruments that require additional disclosure.
Note 4 Stockholders’ Equity
From July 13, 2010 (inception) to December 31, 2010, the Company issued the following shares:
Type | | Quantity | | | Valuation | | | Value Per Share | |
Cash | | | 9,131,200 | | | $ | 51,560 | | | $ | 0.005 - $0.05 | |
Services - related parties | | | 21,500,000 | | | | 1,075,000 | | | $ | 0.0500 | |
Total | | | 30,631,200 | | | | 1,126,526 | | | | | |
In connection with stock issued for services, the Company determined fair value based upon recent cash offerings with third parties, which was the most readily available evidence.
There are no equity transactions in 2011.
Note 5 Subsequent Events
The Company has evaluated for subsequent events between the balance sheet date, March 31, 2011, through May 5, 2011, and concluded that events or transactions occurring during that period requiring recognition or disclosure have been made.
Gold Swap Inc.
(A Development Stage Company)
Financial Statements
December 31, 2010
CONTENTS
| Page(s) |
Report of Independent Registered Public Accounting Firm | F-1 |
| |
Balance Sheet – As of December 31, 2010 | F-2 |
| |
Statement of Operations – From July 13, 2010 (Inception) to December 31, 2010 | F-3 |
| |
Statement of Changes in Stockholder’s Equity – From July 13, 2010 (Inception) to December 31, 2010 | F-4 |
| |
Statement of Cash Flows – From July 13, 2010 (Inception) to December 31, 2010 | F-5 |
| |
Notes to Financial Statements | F-6 - F-11 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of:
Gold Swap, Inc.
We have audited the accompanying balance sheet of Gold Swap, Inc. as of December 31, 2010, and the related statements of operations, stockholders’ equity and cash flows from July 13, 2010 (Inception) to December 31, 2010. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Gold Swap, Inc. as of December 31, 2010, and the results of its operations and its cash flows from July 13, 2010 (inception) to December 31, 2010, in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has a net loss of $3,505 for the period ended December 31, 2010. This factor raises substantial doubt about the Company’s ability to continue as a going concern. Management’s plan in regards to these matters is also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Berman & Company, P.A.
Boca Raton, Florida
February 16, 2011
551 NW 77th Street Suite 201 • Boca Raton, FL 33487
Phone: (561) 864-4444 • Fax: (561) 892-3715
www.bermancpas.com • info@bermancpas.corn
Registered with the PCAOB • Member AICPA Center for Audit Quality
Member American InstituteNature of Certified Public AccountantsOperations
Member Florida Institute
Gold Swap Inc. (the “Company”), was incorporated in the State of Certified Public AccountantsNew York on July 13, 2010.
The Company intends to purchase precious metals and second-hand jewelry for refining and resale. The Company has not clearly identified how it will operate its business, only that it will explore commercial feasibility.
Development Stage
The Company's financial statements are presented as those of a development stage enterprise. Activities during the development stage primarily include equity based financing and further implementation of the business plan.
Risks and Uncertainties
The Company intends to operate in an industry that is subject to rapid change. The Company's operations will be subject to significant risk and uncertainties including financial, operational, technological, regulatory and other risks associated with a development stage company, including the potential risk of business failure.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles 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.
●estimated fair value of share based payments; and
●estimated 100% valuation allowance for deferred tax assets, due to continuing and expected future losses
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from estimates.
Gold Swap, Inc. | |
(A Development Stage Company) | |
Balance Sheet | |
December 31, 2010 | |
| | | |
Assets |
| | | |
Current Assets | | | |
Cash | | $ | 47,480 | |
Total Current Assets | | | 47,480 | |
| | | | |
Total Assets | | $ | 47,480 | |
| | | | |
Stockholder's Equity |
| | | | |
Stockholder's Equity | | | | |
Preferred stock, $0.0001 par value, 5,000,000 shares authorized; | | | | |
none issued and outstanding | | $ | - | |
Common stock, $0.0001 par value, 100,000,000 shares authorized; | | | | |
30,631,200 shares issued and outstanding | | | 3,063 | |
Additional paid-in capital | | | 1,123,497 | |
Deficit accumulated during the development stage | | | (1,078,505 | ) |
Subscriptions receivable | | | (575 | ) |
Total Stockholder's Equity | | | 47,480 | |
| | | | |
Total Liabilities and Stockholder's Equity | | $ | 47,480 | |
| | | | |
See accompanying notes to financial statements
Gold Swap, Inc. | |
(A Development Stage Company) | |
Statement of Operations | |
From July 13, 2010 (Inception) to December 31, 2010 | |
| | | |
General and administrative expenses | | $ | 1,078,505 | |
| | | | |
Net loss | | $ | (1,078,505 | ) |
| | | | |
Net loss per share - basic and diluted | | $ | (0.04 | ) |
| | | | |
Weighted average number of shares outstanding | | | | |
during the period - basic and diluted | | | 29,656,703 | |
| | | | |
See accompanying notes to financial statements
Gold Swap, Inc. | |
(A Development Stage Company) | |
Statement of Stockholders' Equity | |
From July 13, 2010 (Inception) to December 31, 2010 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | Additional | | | DeficitAccumulated during | | | | | | Total | |
| | Preferred Stock, $0.0001 Par Value | | | Common Stock, $0.0001 Par Value | | | Paid In | | | Development | | | Subscription | | | Stockholder's | |
| | Shares | | | Amount | | | Shares | | | Amount | | | Capital | | | Stage | | | Receivable | | | Equity | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Stock issued for services - related parties ($0.05/share) | | | - | | | $ | - | | | | 21,500,000 | | | $ | 2,150 | | | $ | 1,072,850 | | | $ | - | | | $ | - | | | $ | 1,075,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Stock issued for cash ($0.005 - $0.05/share) | | | - | | | | - | | | | 9,131,200 | | | | 913 | | | | 50,647 | | | | - | | | | (575 | ) | | | 50,985 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net loss - from July 13, 2010 (inception) to December 31, 2010 | | | - | | | | - | | | | - | | | | - | | | | - | | | | (1,078,505 | ) | | | - | | | | (1,078,505 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance - December 31, 2010 | | | - | | | $ | - | | | | 30,631,200 | | | $ | 3,063 | | | $ | 1,123,497 | | | $ | (1,078,505 | ) | | $ | (575 | ) | | $ | 47,480 | |
See accompanying notes to financial statements
Gold Swap, Inc. | |
(A Development Stage Company) | |
Statement of Cash Flows | |
From July 13, 2010 (Inception) to December 31, 2010 | |
| | | |
CASH FLOWS FROM OPERATING ACTIVITIES: | | | |
Net loss | | $ | (1,078,505 | ) |
Adjustments to reconcile net loss to net cash used in operating activities: | | | | |
Stock issued for services - related parties | | | 1,075,000 | |
Net Cash Used In Operating Activities | | | (3,505 | ) |
| | | | |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | |
Proceeds from issuance of common stock | | | 50,985 | |
Net Cash Provided By Financing Activities | | | 50,985 | |
| | | | |
Net Increase in Cash | | | 47,480 | |
| | | | |
Cash - Beginning of Period | | | - | |
| | | | |
Cash - End of Period | | $ | 47,480 | |
| | | | |
Supplemental Cash Flow Information: | | | | |
Cash Paid During the Period for: | | | | |
Income Taxes | | $ | - | |
Interest | | $ | - | |
| | | | |
Supplemental Disclosure of Non-Cash Financing Activity: | | | | |
Stock issued to related parties - in connection with subscription receivable | | $ | 575 | |
| | | | |
See accompanying notes to financial statements
Gold Swap Inc.
(A Development Stage Company)
Notes to Financial Statements
March 31, 2011
(Unaudited)
Cash and Cash Equivalents
The Company considers all highly liquid instruments purchased with a maturity of three months or less and money market accounts to be cash equivalents. The Company had no cash equivalents at March 31, 2011 and December 31, 2010.
The Company minimizes its credit risk associated with cash by periodically evaluating the credit quality of its primary financial institution. The balance at times may exceed federally insured limits. At March 31, 2011 and December 31, 2010, there were no balances that exceeded the federally insured limit.
Share Based Payments
Generally, all forms of share-based payments, including stock option grants, warrants, restricted stock grants and stock appreciation rights, are measured at their fair value on the awards’ grant date, and based on the estimated number of awards that are ultimately expected to vest. Share-based payment awards issued to non-employees for services rendered are recorded at either the fair value of the services rendered or the fair value of the share-based payment, whichever is more readily determinable. The expense resulting from share-based payments are recorded as a component of general and administrative expense.
Earnings per Share
Basic earnings (loss) per share is computed by dividing net income (loss) by weighted average number of shares of common stock outstanding during each period. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period. The Company has no common stock equivalents.
Since the Company reflected a net loss, the effect of considering any common stock equivalents, if outstanding, would have been anti-dilutive. A separate computation of diluted earnings (loss) per share is not presented.
Gold Swap Inc.
(A Development Stage Company)
Notes to Financial Statements
March 31, 2011
(Unaudited)
Recent Accounting Pronouncements
In January 2010, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2010-06, “Improving Disclosures about Fair Value Measurements (“ASU 2010-06”). ASU 2010-06 amends ASC 820, “Fair Value Measurements” ("ASC 820") to require a number of additional disclosures regarding fair value measurements. The amended guidance requires entities to disclose the amounts of significant transfers between Level 1 and Level 2 of the fair value hierarchy and the reasons for these transfers, the reasons for any transfers in or out of Level 3, and information in the reconciliation of recurring Level 3 measurements about purchases, sales, issuances and settlements on a gross basis. The ASU also clarifies the requirement for entities to disclose information about both the valuation techniques and inputs used in estimating Level 2 and Level 3 fair value measurements. The amended guidance was effective for financial periods beginning after December 15, 2009, except the requirement to disclose Level 3 transactions on a gross basis, which becomes effective for financial periods beginning after December 15, 2010. ASU 2010-06 did not have a significant effect on the Company’s financial position or results of operations.
Note 1 Nature of Operations and Summary of Significant Accounting Policies2 Going Concern
As reflected in the accompanying financial statements, the Company has a net loss of $11,898 and a net cash used in operations of $11,898 for the three months ended March 31, 2011.
The ability of the Company to continue as a going concern is dependent on Management's plans, which currently includes commencement of operations and partial reliance upon related party debt or equity.
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.
Note 3 Fair Value
The Company applies the accounting guidance under Financial Accounting Standards Board (“FASB”) ASC 820-10, “Fair Value Measurements”, as well as certain related FASB staff positions. This guidance defines fair value as the price that would be received from m selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact business and considers assumptions that marketplace participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance.
Gold Swap Inc.
(A Development Stage Company)
Notes to Financial Statements
March 31, 2011
(Unaudited)
The guidance also establishes a fair value hierarchy for measurements of fair value as follows:
● Level 1 – quoted market prices in active markets for identical assets or liabilities.
● Level 2 - inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. ● Level 3 – unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
The carrying amounts of the Company’s short-term financial instruments, including cash, approximate fair value due to the relatively short period to maturity for these instruments.
At March 31, 2011 and December 31, 2010, the Company has no instruments that require additional disclosure.
Note 4 Stockholders’ Equity
From July 13, 2010 (inception) to December 31, 2010, the Company issued the following shares:
Type | | Quantity | | | Valuation | | | Value Per Share | |
Cash | | | 9,131,200 | | | $ | 51,560 | | | $ | 0.005 - $0.05 | |
Services - related parties | | | 21,500,000 | | | | 1,075,000 | | | $ | 0.0500 | |
Total | | | 30,631,200 | | | | 1,126,526 | | | | | |
In connection with stock issued for services, the Company determined fair value based upon recent cash offerings with third parties, which was the most readily available evidence.
There are no equity transactions in 2011.
Note 5 Subsequent Events
The Company has evaluated for subsequent events between the balance sheet date, March 31, 2011, through May 5, 2011, and concluded that events or transactions occurring during that period requiring recognition or disclosure have been made.
Gold Swap Inc.
(A Development Stage Company)
Financial Statements
December 31, 2010
CONTENTS
| Page(s) |
Report of Independent Registered Public Accounting Firm | F-1 |
| |
Balance Sheet – As of December 31, 2010 | F-2 |
| |
Statement of Operations – From July 13, 2010 (Inception) to December 31, 2010 | F-3 |
| |
Statement of Changes in Stockholder’s Equity – From July 13, 2010 (Inception) to December 31, 2010 | F-4 |
| |
Statement of Cash Flows – From July 13, 2010 (Inception) to December 31, 2010 | F-5 |
| |
Notes to Financial Statements | F-6 - F-11 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of:
Gold Swap, Inc.
We have audited the accompanying balance sheet of Gold Swap, Inc. as of December 31, 2010, and the related statements of operations, stockholders’ equity and cash flows from July 13, 2010 (Inception) to December 31, 2010. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Gold Swap, Inc. as of December 31, 2010, and the results of its operations and its cash flows from July 13, 2010 (inception) to December 31, 2010, in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has a net loss of $3,505 for the period ended December 31, 2010. This factor raises substantial doubt about the Company’s ability to continue as a going concern. Management’s plan in regards to these matters is also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Berman & Company, P.A.
Boca Raton, Florida
February 16, 2011
551 NW 77th Street Suite 201 • Boca Raton, FL 33487
Phone: (561) 864-4444 • Fax: (561) 892-3715
www.bermancpas.com • info@bermancpas.corn
Registered with the PCAOB • Member AICPA Center for Audit Quality
Nature of Operations
Gold Swap Inc. (the “Company”), was incorporated in the State of New York on July 13, 2010.
The Company intends to purchase precious metals and second-hand jewelry for refining and resale. The Company has not clearly identified how it will operate its business, only that it will explore commercial feasibility.
Development Stage
The Company's financial statements are presented as those of a development stage enterprise. Activities during the development stage primarily include equity based financing and further implementation of the business plan.
Risks and Uncertainties
The Company intends to operate in an industry that is subject to rapid change. The Company's operations will be subject to significant risk and uncertainties including financial, operational, technological, regulatory and other risks associated with a development stage company, including the potential risk of business failure.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles 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.
●estimated fair value of share based payments; and
●estimated 100% valuation allowance for deferred tax assets, due to continuing and expected future losses
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from estimates.
Gold Swap Inc.
(A Development Stage Company)
Notes to Financial Statements
March 31, 2011
(Unaudited)
Cash and Cash Equivalents
The Company considers all highly liquid instruments purchased with a maturity of three months or less and money market accounts to be cash equivalents. The Company had no cash equivalents at March 31, 2011 and December 31, 2010.
The Company minimizes its credit risk associated with cash by periodically evaluating the credit quality of its primary financial institution. The balance at times may exceed federally insured limits. At March 31, 2011 and December 31, 2010, there were no balances that exceeded the federally insured limit.
Share Based Payments
Generally, all forms of share-based payments, including stock option grants, warrants, restricted stock grants and stock appreciation rights, are measured at their fair value on the awards’ grant date, and based on the estimated number of awards that are ultimately expected to vest. Share-based payment awards issued to non-employees for services rendered are recorded at either the fair value of the services rendered or the fair value of the share-based payment, whichever is more readily determinable. The expense resulting from share-based payments are recorded as a component of general and administrative expense.
Earnings per Share
Basic earnings (loss) per share is computed by dividing net income (loss) by weighted average number of shares of common stock outstanding during each period. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period. The Company has no common stock equivalents.
Since the Company reflected a net loss, the effect of considering any common stock equivalents, if outstanding, would have been anti-dilutive. A separate computation of diluted earnings (loss) per share is not presented.
Gold Swap Inc.
(A Development Stage Company)
Notes to Financial Statements
March 31, 2011
(Unaudited)
Recent Accounting Pronouncements
In January 2010, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2010-06, “Improving Disclosures about Fair Value Measurements (“ASU 2010-06”). ASU 2010-06 amends ASC 820, “Fair Value Measurements” ("ASC 820") to require a number of additional disclosures regarding fair value measurements. The amended guidance requires entities to disclose the amounts of significant transfers between Level 1 and Level 2 of the fair value hierarchy and the reasons for these transfers, the reasons for any transfers in or out of Level 3, and information in the reconciliation of recurring Level 3 measurements about purchases, sales, issuances and settlements on a gross basis. The ASU also clarifies the requirement for entities to disclose information about both the valuation techniques and inputs used in estimating Level 2 and Level 3 fair value measurements. The amended guidance was effective for financial periods beginning after December 15, 2009, except the requirement to disclose Level 3 transactions on a gross basis, which becomes effective for financial periods beginning after December 15, 2010. ASU 2010-06 did not have a significant effect on the Company’s financial position or results of operations.
Note 2 Going Concern
As reflected in the accompanying financial statements, the Company has a net loss of $11,898 and a net cash used in operations of $11,898 for the three months ended March 31, 2011.
The ability of the Company to continue as a going concern is dependent on Management's plans, which currently includes commencement of operations and partial reliance upon related party debt or equity.
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.
Note 3 Fair Value
The Company applies the accounting guidance under Financial Accounting Standards Board (“FASB”) ASC 820-10, “Fair Value Measurements”, as well as certain related FASB staff positions. This guidance defines fair value as the price that would be received from m selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact business and considers assumptions that marketplace participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance.
Gold Swap Inc.
(A Development Stage Company)
Notes to Financial Statements
March 31, 2011
(Unaudited)
The guidance also establishes a fair value hierarchy for measurements of fair value as follows:
● Level 1 – quoted market prices in active markets for identical assets or liabilities.
● Level 2 - inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. ● Level 3 – unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
The carrying amounts of the Company’s short-term financial instruments, including cash, approximate fair value due to the relatively short period to maturity for these instruments.
At March 31, 2011 and December 31, 2010, the Company has no instruments that require additional disclosure.
Note 4 Stockholders’ Equity
From July 13, 2010 (inception) to December 31, 2010, the Company issued the following shares:
Type | | Quantity | | | Valuation | | | Value Per Share | |
Cash | | | 9,131,200 | | | $ | 51,560 | | | $ | 0.005 - $0.05 | |
Services - related parties | | | 21,500,000 | | | | 1,075,000 | | | $ | 0.0500 | |
Total | | | 30,631,200 | | | | 1,126,526 | | | | | |
In connection with stock issued for services, the Company determined fair value based upon recent cash offerings with third parties, which was the most readily available evidence.
There are no equity transactions in 2011.
Note 5 Subsequent Events
The Company has evaluated for subsequent events between the balance sheet date, March 31, 2011, through May 5, 2011, and concluded that events or transactions occurring during that period requiring recognition or disclosure have been made.
Gold Swap Inc.
(A Development Stage Company)
Financial Statements
December 31, 2010
CONTENTS
| Page(s) |
Report of Independent Registered Public Accounting Firm | F-1 |
| |
Balance Sheet – As of December 31, 2010 | F-2 |
| |
Statement of Operations – From July 13, 2010 (Inception) to December 31, 2010 | F-3 |
| |
Statement of Changes in Stockholder’s Equity – From July 13, 2010 (Inception) to December 31, 2010 | F-4 |
| |
Statement of Cash Flows – From July 13, 2010 (Inception) to December 31, 2010 | F-5 |
| |
Notes to Financial Statements | F-6 - F-11 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of:
Gold Swap, Inc.
We have audited the accompanying balance sheet of Gold Swap, Inc. as of December 31, 2010, and the related statements of operations, stockholders’ equity and cash flows from July 13, 2010 (Inception) to December 31, 2010. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Gold Swap, Inc. as of December 31, 2010, and the results of its operations and its cash flows from July 13, 2010 (inception) to December 31, 2010, in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has a net loss of $3,505 for the period ended December 31, 2010. This factor raises substantial doubt about the Company’s ability to continue as a going concern. Management’s plan in regards to these matters is also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Berman & Company, P.A.
Boca Raton, Florida
February 16, 2011
551 NW 77th Street Suite 201 • Boca Raton, FL 33487
Phone: (561) 864-4444 • Fax: (561) 892-3715
www.bermancpas.com • info@bermancpas.corn
Registered with the PCAOB • Member AICPA Center for Audit Quality
Member American Institute of Certified Public Accountants
Member Florida Institute of Certified Public Accountants
Gold Swap, Inc. | |
(A Development Stage Company) | |
Balance Sheet | |
December 31, 2010 | |
| | | |
Assets |
| | | |
Current Assets | | | |
Cash | | $ | 47,480 | |
Total Current Assets | | | 47,480 | |
| | | | |
Total Assets | | $ | 47,480 | |
| | | | |
Stockholder's Equity |
| | | | |
Stockholder's Equity | | | | |
Preferred stock, $0.0001 par value, 5,000,000 shares authorized; | | | | |
none issued and outstanding | | $ | - | |
Common stock, $0.0001 par value, 100,000,000 shares authorized; | | | | |
30,631,200 shares issued and outstanding | | | 3,063 | |
Additional paid-in capital | | | 1,123,497 | |
Deficit accumulated during the development stage | | | (1,078,505 | ) |
Subscriptions receivable | | | (575 | ) |
Total Stockholder's Equity | | | 47,480 | |
| | | | |
Total Liabilities and Stockholder's Equity | | $ | 47,480 | |
| | | | |
See accompanying notes to financial statements
Gold Swap, Inc. | |
(A Development Stage Company) | |
Statement of Operations | |
From July 13, 2010 (Inception) to December 31, 2010 | |
| | | |
General and administrative expenses | | $ | 1,078,505 | |
| | | | |
Net loss | | $ | (1,078,505 | ) |
| | | | |
Net loss per share - basic and diluted | | $ | (0.04 | ) |
| | | | |
Weighted average number of shares outstanding | | | | |
during the period - basic and diluted | | | 29,656,703 | |
| | | | |
See accompanying notes to financial statements
Gold Swap, Inc. | |
(A Development Stage Company) | |
Statement of Stockholders' Equity | |
From July 13, 2010 (Inception) to December 31, 2010 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | Additional | | | DeficitAccumulated during | | | | | | Total | |
| | Preferred Stock, $0.0001 Par Value | | | Common Stock, $0.0001 Par Value | | | Paid In | | | Development | | | Subscription | | | Stockholder's | |
| | Shares | | | Amount | | | Shares | | | Amount | | | Capital | | | Stage | | | Receivable | | | Equity | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Stock issued for services - related parties ($0.05/share) | | | - | | | $ | - | | | | 21,500,000 | | | $ | 2,150 | | | $ | 1,072,850 | | | $ | - | | | $ | - | | | $ | 1,075,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Stock issued for cash ($0.005 - $0.05/share) | | | - | | | | - | | | | 9,131,200 | | | | 913 | | | | 50,647 | | | | - | | | | (575 | ) | | | 50,985 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net loss - from July 13, 2010 (inception) to December 31, 2010 | | | - | | | | - | | | | - | | | | - | | | | - | | | | (1,078,505 | ) | | | - | | | | (1,078,505 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance - December 31, 2010 | | | - | | | $ | - | | | | 30,631,200 | | | $ | 3,063 | | | $ | 1,123,497 | | | $ | (1,078,505 | ) | | $ | (575 | ) | | $ | 47,480 | |
See accompanying notes to financial statements
Gold Swap, Inc. | |
(A Development Stage Company) | |
Statement of Cash Flows | |
From July 13, 2010 (Inception) to December 31, 2010 | |
| | | |
CASH FLOWS FROM OPERATING ACTIVITIES: | | | |
Net loss | | $ | (1,078,505 | ) |
Adjustments to reconcile net loss to net cash used in operating activities: | | | | |
Stock issued for services - related parties | | | 1,075,000 | |
Net Cash Used In Operating Activities | | | (3,505 | ) |
| | | | |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | |
Proceeds from issuance of common stock | | | 50,985 | |
Net Cash Provided By Financing Activities | | | 50,985 | |
| | | | |
Net Increase in Cash | | | 47,480 | |
| | | | |
Cash - Beginning of Period | | | - | |
| | | | |
Cash - End of Period | | $ | 47,480 | |
| | | | |
Supplemental Cash Flow Information: | | | | |
Cash Paid During the Period for: | | | | |
Income Taxes | | $ | - | |
Interest | | $ | - | |
| | | | |
Supplemental Disclosure of Non-Cash Financing Activity: | | | | |
Stock issued to related parties - in connection with subscription receivable | | $ | 575 | |
| | | | |
See accompanying notes to financial statements
Gold Swap Inc.
(A Development Stage Company)
Notes to Financial Statements
December 31, 2010
Note 1 Nature of Operations and Summary of Significant Accounting Policies
Nature of Operations
Gold Swap Inc. (the “Company”), was incorporated in the State of New York on July 13, 2010.
The Company intends to purchase precious metals and second-hand jewelry for refining and resale. The Company has not clearly identified how it will operate its business, only that it will explore commercial feasibility.
Development Stage
The Company's financial statements are presented as those of a development stage enterprise. Activities during the development stage primarily include equity based financing and further implementation of the business plan.
Risks and Uncertainties
The Company intends to operate in an industry that is subject to rapid change. The Company's operations will be subject to significant risk and uncertainties including financial, operational, technological, regulatory and other risks associated with a development stage company, including the potential risk of business failure.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles 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.
●estimated fair value of share based payments; and
●estimated 100% valuation allowance for deferred tax assets, due to continuing and expected future losses
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from estimates.
Gold Swap Inc.
(A Development Stage Company)
Notes to Financial Statements
December 31, 2010
Cash and Cash Equivalents
The Company considers all highly liquid instruments purchased with a maturity of three months or less and money market accounts to be cash equivalents. The Company had no cash equivalents at December 31, 2010.
The Company minimizes its credit risk associated with cash by periodically evaluating the credit quality of its primary financial institution. The balance at times may exceed federally insured limits. At December 31, 2010, there were no balances that exceeded the federally insured limit.
Fair Value of Financial Instruments
The carrying amounts of the Company’s short-term financial instruments, including cash, approximate fair value due to the relatively short period to maturity for these instruments.
Share Based Payments
Generally, all forms of share-based payments, including stock option grants, warrants, restricted stock grants and stock appreciation rights, are measured at their fair value on the awards’ grant date, and based on the estimated number of awards that are ultimately expected to vest. Share-based payment awards issued to non-employees for services rendered are recorded at either the fair value of the services rendered or the fair value of the share-based payment, whichever is more readily determinable. The expense resulting from share-based payments are recorded as a component of general and administrative expense.
Earnings per Share
In accordance with accounting guidance now codified as FASB ASC Topic 260, “Earnings per Share,” basic earnings (loss) per share is computed by dividing net income (loss) by weighted average number of shares of common stock outstanding during each period. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period. The Company has no common stock equivalents.
Since the Company reflected a net loss in 2010, the effect of considering any common stock equivalents, if outstanding, would have been anti-dilutive. A separate computation of diluted earnings (loss) per share is not presented.
Gold Swap Inc.
(A Development Stage Company)
Notes to Financial Statements
December 31, 2010
Income Taxes
The Company accounts for income taxes in accordance with accounting guidance now codified as FASB ASC Topic 740, “Income Taxes,” which requires that the Company recognize deferred tax liabilities and assets based on the differences between the financial statement carrying amounts and the tax basis of assets and liabilities, using enacted tax rates in effect in the years the differences are expected to reverse. Deferred income tax benefit (expense) results from the change in net deferred tax assets or deferred tax liabilities. A valuation allowance is recorded when it is more likely than not that some or all deferred tax assets will not be realized.
Accounting guidance now codified as FASB ASC Topic 740-20, “Income Taxes – Intraperiod Tax Allocation,” clarifies the accounting for uncertainties in income taxes recognized in accordance with FASB ASC Topic 740-20 by prescribing guidance for the recognition, de-recognition and measurement in financial statements of income tax positions taken in previously filed tax returns or tax positions expected to be taken in tax returns, including a decision whether to file or not to file in a particular jurisdiction. FASB ASC Topic 740-20 requires that any liability created for unrecognized tax benefits is disclosed. The application of FASB ASC Topic 740-20 may also affect the tax bases of assets and liabilities and therefore may change or create deferred tax liabilities or assets. The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense. At December 31, 2010, the Company did not record any liabilities for uncertain tax positions.
Recent Accounting Pronouncements
In January 2010, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2010-06, “Improving Disclosures about Fair Value Measurements (“ASU 2010-06”). ASU 2010-06 amends ASC 820, “Fair Value Measurements” ("ASC 820") to require a number of additional disclosures regarding fair value measurements. The amended guidance requires entities to disclose the amounts of significant transfers between Level 1 and Level 2 of the fair value hierarchy and the reasons for these transfers, the reasons for any transfers in or out of Level 3, and information in the reconciliation of recurring Level 3 measurements about purchases, sales, issuances and settlements on a gross basis. The ASU also clarifies the requirement for entities to disclose information about both the valuation techniques and inputs used in estimating Level 2 and Level 3 fair value measurements. The amended guidance was effective for financial periods beginning after December 15, 2009, except the requirement to disclose Level 3 transactions on a gross basis, which becomes effective for financial periods beginning after December 15, 2010. ASU 2010-06 did not have a significant effect on the Company’s financial position or results of operations.
Gold Swap Inc.
(A Development Stage Company)
Notes to Financial Statements
December 31, 2010
Note 2 Going Concern
As reflected in the accompanying financial statements, the Company has a net loss of $3,505 from July 13, 2010 (inception) through December 31, 2010
The ability of the Company to continue as a going concern is dependent on Management's plans, which include potential asset acquisitions, mergerscurrently includes commencement or business combinations with other entities, further implementation of its business planoperations and continuing to raise funds through debt or equity raises. The Company will likely relypartial reliance upon related party debt or equity financing in order to ensure the continuing existence of the business.equity.
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.
Note 3 Income Taxes
The Company recognized deferred tax assets and liabilities for both the expected impact of differences between the financial statements and the tax basis of assets and liabilities, and for the expected future tax benefit to be derived from tax losses and tax credit carryforwards. The Company will establish a valuation allowance to reflect the likelihood of realization of deferred tax assets.
The Company has a net operating loss carryforward for tax purposes of approximately $ 3,500 at December 31, 2010, expiring through 2030. Internal Revenue Code Section 382 places a limitation on the amount of taxable income that can be offset by carryforwards after a change in control (generally greater than a 50% change in ownership). Temporary differences, which give rise to a net deferred tax asset, are as follows:
Significant deferred tax assets at December 31, 2010 are approximately as follows:
Gross deferred tax assets: | | | |
Net operating loss carryforwards | | | (1,000 | ) |
Total deferred tax assets | | | 1,000 | |
Less: valuation allowance | | | (1,000 | ) |
Net deferred tax asset recorded | | | - | |
The valuation allowance at July 13, 2010 (inception) was $0. The net change in valuation allowance during the period ended December 31, 2010, was an increase of approximately $3,500.
Gold Swap Inc.
(A Development Stage Company)
Notes to Financial Statements
December 31, 2010
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred income tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based on consideration of these items, management has determined that enough uncertainty exists relative to the realization of the deferred income tax asset balances to warrant the application of a full valuation allowance as of December 31, 2010.
The actual tax benefit differs from the expected tax benefit for the period ended December 31, 2010 (computed by applying the U.S. Federal Corporate tax rate of 34% to income before taxes and 7.1% for State income taxes, a blended rate of 38.69%) as follows:
Expected tax expense (benefit) - Federal | | $ | (341,000 | ) |
Expected tax expense (benefit) – State | | | (77,000 | ) |
Non-deductible stock compensation | | | 417,000 | |
Change in valuation allowance | | | 1,000 | |
Actual tax expense (benefit) | | $ | - | |
Note 4 Fair Value
The Company applies the accounting guidance under Financial Accounting Standards Board (“FASB”) ASC 820-10, “Fair Value Measurements”, as well as certain related FASB staff positions. This guidance defines fair value as the price that would be received from m selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact business and considers assumptions that marketplace participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance.
The guidance also establishes a fair value hierarchy for measurements of fair value as follows:
● Level 1 – quoted market prices in active markets for identical assets or liabilities.
● Level 2 - inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
● Level 3 – unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
At December 31, 2010, the Company has no instruments that require additional disclosure.
Gold Swap Inc.
(A Development Stage Company)
Notes to Financial Statements
December 31, 2010
Note 5 Contingencies
From time to time, the Company may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise that may harm its business. The Company is currently not aware of any such legal proceedings or claims that they believe will have, individually or in the aggregate, a material adverse affect on its business, financial condition or operating results.
Note 6 Stockholders’ Equity
From July 13, 2010 (inception) to December 31, 2010, the Company issued the following shares for cash::
Type | | Quantity | | | Valuation | | | Value Per Share | |
Cash | | | 9,131,200 | | | $ | 51,560 | | | $ | 0.005-$0.05 | |
Services- related parties | | | 21,500,000 | | | | 1,075,000 | | | $ | 0.0500 | |
Total | | | 30,631,200 | | | $ | 1,126,560 | | | | | |
In connection with stock issued for services, the Company determined fair value based upon recent cash offerings with third parties, which was the most readily available evidence.
In connection with the stock issued for cash, 11,500 shares, valued at $575, was recorded as a subscription receivable. The subscription was collected in January 2011.
Note 7 Subsequent Events
The Company has evaluated for subsequent events between the balance sheet date of December 31, 2010 and March 17, 2011, the date the financial statements were issued, and concluded that events or transactions occurring during that period requiring recognition or disclosure have been made.
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the expenses in connection with the issuance and distribution of the securities being registered hereby. All such expenses will be borne by the Company; none shall be borne by any Selling shareholders.
Securities and Exchange Commission registration fee | | $ | 1.52 | |
Legal fees and miscellaneous expenses (*) | | $ | 10,000 | |
Accounting fees and expenses (*) | | $ | 5,500 | |
Total (*) | | $ | 15,501.52 | |
(*) Estimated.
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS
Our officers and directors are indemnified as provided by the New York Business Corporation Law and our bylaws.
Under the New York Business Corporation Law, director immunity from liability to a company or its shareholders for monetary liabilities applies automatically unless it is specifically limited by a company's Certificate of Incorporation. Our Certificate of Incorporation do not specifically limit our directors' immunity. Excepted from that immunity are: (a) a willful failure to deal fairly with the company or its stockholders in connection with a matter in which the director has a material conflict of interest; (b) a violation of criminal law, unless the director had reasonable cause to believe that his or her conduct was lawful or no reasonable cause to believe that his or her conduct was unlawful; (c) a transaction from which the director derived an improper personal profit; and (d) willful misconduct.
Our bylaws provide that we will indemnify our directors and officers to the fullest extent permitted by New York law; provided, however, that we may modify the extent of such indemnification by individual contracts with our directors and officers; and, provided, further, that we shall not be required to indemnify any director or officer in connection with any proceeding, or part thereof, initiated by such person unless such indemnification: (a) is expressly required to be made by law, (b) the proceeding was authorized by our board of directors, (c) is provided by us, in our sole discretion, pursuant to the powers vested in us under New York law or (d) is required to be made pursuant to the bylaws.
Our bylaws also provide that we may indemnify a director or former director of subsidiary corporation and we may indemnify our officers, employees or agents, or the officers, employees or agents of a subsidiary corporation and the heirs and personal representatives of any such person, against all expenses incurred by the person relating to a judgment, criminal charge, administrative action or other proceeding to which he or she is a party by reason of being or having been one of our directors, officers or employees.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and control persons pursuant to the foregoing provisions or otherwise, we have been advised that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy, and is, therefore, unenforceable.
RECENT SALES OF UNREGISTERED SECURITIES
On July 13, 2010, we issued 1,500,000 shares of our common stock to Mrs. Corie Weisblum. These shares were issued in exchange for $7,500. The shares were issued under Section 4(2) of the Securities Act of 1933, as amended. Mrs. Weisblum is founder of the Company and had access to all of the information which would be required to be included in a registration statement, and the transaction did not involve a public offering.
On July 13, 2010, we issued 1,500,000 shares of our common stock to Mrs. Efrat Finkelstein. These shares were issued in exchange for $7,500. The shares were issued under Section 4(2) of the Securities Act of 1933, as amended. Mrs. Finkelstein is founder of the Company and had access to all of the information which would be required to be included in a registration statement, and the transaction did not involve a public offering.
On July 13, 2010, we issued 1,500,000 shares of our common stock to Osher Capital Inc., a New York corporation, in which Mr. Arie Kluger is the controlling shareholder. These shares were issued in exchange for $7,500. The shares were issued under Section 4(2) of the Securities Act of 1933, as amended. Mr. Kluger is a founder of the Company and had access to all of the information which would be required to be included in a registration statement, and the transaction did not involve a public offering.
On July 13, 2010, we issued 1,500,000 shares of our common stock to Lifeline Industries, Inc., New York corporation in which Robb Knie is the sole officer and controlling shareholder. These shares were issued in exchange for $7,500. The shares were issued under Section 4(2) of the Securities Act of 1933, as amended. Mr. Knie is a founder of the Company and had access to all of the information which would be required to be included in a registration statement, and the transaction did not involve a public offering.
On July 13, 2010, we issued 1,500,000 shares of our common stock to DPIT1 LLC, a Nevada limited liability company in which Samuel DelPresto is the sole officer and controlling person. These shares were issued in exchange for $7,500. The shares were issued under Section 4(2) of the Securities Act of 1933, as amended. Mr. DelPresto is a founder of the Company and had access to all of the information which would be required to be included in a registration statement, and the transaction did not involve a public offering.
On July 13, 2010, we issued 1,500,000 shares of our common stock to Momona Capital LLC, a New York limited liability company in which Arie Rabinowitz is the sole officer and controlling person. These shares were issued in exchange for $7,500. The shares were issued under Section 4(2) of the Securities Act of 1933, as amended. Mr. Rabinowitz is a founder of the Company and had access to all of the information which would be required to be included in a registration statement, and the transaction did not involve a public offering.
On July 20, 2010, we issued 1,000,000 shares of our common stock to Vadim Mats. These shares were issued in exchange for services rendered as an officer of the Company, valued in the amount of $50,000. The shares were issued under Section 4(2) of the Securities Act of 1933, as amended. Mr. Mats is an officer of the Company and had access to all of the information which would be required to be included in a registration statement, and the transaction did not involve a public offering.
On July 20, 2010, we issued 20,000,000 shares of our common stock to Melvin Schlossberg. These shares were issued in exchange for services rendered as an officer of the Company, valued in the amount of $1,000,000. The shares were issued under Section 4(2) of the Securities Act of 1933, as amended. Mr. Schlossberg is an officer and director of the Company and had access to all of the information which would be required to be included in a registration statement, and the transaction did not involve a public offering.
On July 20, 2010, we issued 500,000 shares of our common stock to Donald Ptalis. These shares were issued in exchange for services rendered as an officer of the Company, valued in the amount of $25,000. The shares were issued under Section 4(2) of the Securities Act of 1933, as amended. Mr. Ptalis is an officer and a director of the Company and had access to all of the information which would be required to be included in a registration statement, and the transaction did not involve a public offering.
From September 2010 through December 2010, we issued 131,200 shares of common stock to 36 investors in a private placement made pursuant to the exemption from the registration requirements of the Securities Act provided by Regulation D. The consideration paid for such shares was $0.05 per share, amounting in the aggregate to $6,560.
EXHIBITS
The following exhibits are filed as part of this registration statement:
Exhibit | | Description |
3.1 | | Certificate of Incorporation of Registrant* |
| | |
3.2 | | Amendment to Certificate of Incorporation of the Registrant* |
| | |
3.3 | | By-Laws of Registrant* |
| | |
4.1 | | Form of Stock Certificate* |
| | |
5.1 | | Opinion of David Lubin & Associates, PLLC regarding the legality of the securities being registered* |
| | |
10.1 | | Form of Regulation D Subscription Agreement* |
| | |
23.1 | | Consent of Berman & Company, P.A.* |
| | |
23.2 | | Consent of David Lubin & Associates, PLLC (included in Exhibit 5.1) |
* Filed herewithIncorporated by reference to the corresponding exhibit filed with our Registration Statement on Form S-1 on March 30, 2011.
UNDERTAKINGS
The undersigned registrant hereby undertakes:
(a)(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
i. | To include any propectus required by section 10(a)(3) of the Securities Act of 1933; |
ii. | To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement. |
iii. | To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; |
(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(4) Securities Act of 1933 to any purchaser in the initial That, for the purpose of determining liability of the registrant under the distribution of the securities: The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
(i) | Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; |
(ii) | Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; |
(iii) | The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and |
(iv) | Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser. |
(5) That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser, if the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
(6) That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities:
The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
(i) | Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; |
(ii) | Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; |
(iii) | The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and |
(iv) | Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser. |
Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the “Act”) may be permitted to our directors, officers and controlling persons pursuant to the provisions above, or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities, other than the payment by us of expenses incurred or paid by one of our directors, officers, or controlling persons in the successful defense of any action, suit or proceeding, is asserted by one of our directors, officers, or controlling persons in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification is against public policy as expressed in the Securities Act, and we will be governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement on Form S-1 to be signed on its behalf by the undersigned, thereunto duly authorized in the City of New York, State of New York, on March 29,May 10, 2011.
| GOLD SWAP INC. |
| | |
| By: | /s/ Melvin Schlossberg |
| | Name: Melvin Schlossberg |
| | Title: President, Chief Executive Officer Secretary and Director (Principal Executive Officer) |
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POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Melvin Schlossberg, his or her true and lawful attorneys-in-fact, with full power of substitution and re-substitution, for him or her and in his or her name, place and stead, in any and all capacities to sign any and all amendments (including post-effective amendments) to this registration statement and to sign a registration statement pursuant to Section 462(b) of the Securities Act of 1933, and to file the same with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
Date: | | Signature: | | Name: | | Title: |
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March 29,May 10, 2011 | | /s/ Melvin Schlossberg | | Melvin Schlossberg | | Chairman, President, Chief Executive Officer Secretary and Director (Principal Executive Officer) |
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March 29,May 10, 2011 | | /s/ Donald Ptalis | | Donald Ptalis | | Chief Financial Officer and Director (Principal Financial and Accounting Officer) |
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March 29,May 10, 2011 | | /s/ Vadim Mats | | Vadim Mats | | Vice President of Business Development |