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Gulf West Security Network (GWSN)

Filed: 8 Dec 14, 12:00am

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-K 

(Mark One) 
[ X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 

 

For the year ended September 30, 2014

 OR
[ ]TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

SMOOFI, INC.

 (Exact name of registrant as specified in its charter)

 

Commission file number: 333-193220

 

Nevada46-3876675 

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer Identification No.) 
   

204 S. La Esparanza, Suite B

San Clemente, CA

92672 
(Address of principal executive offices)(Zip Code) 

 

Registrant’s telephone number, including area code:

(949) 973-0684

 

Securities registered pursuant to Section 12(b) of the Act:

  
Title of each className of each exchange on which registered
NoneNone

 

Securities registered pursuant to Section 12(g) of the Act:

 

Common Stock, par value $0.001 per share

 

Indicate by check mark if the registrant is a well-known seasoned issuer as defined in Rule 405 of the Securities Act.  Yes [ ]    No [x]

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes [x]  No [ ]

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes [ ]     No [X ]

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes [ ]      No [x]

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.   [ ]

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  (Check one):

    
 Large accelerated filer [ ]Accelerated filer [ ] 
    
 Non-accelerated filer [ ] (Do not check if a smaller reporting company)Smaller reporting company [x] 

 

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Act).  Yes [ ]      No   [x]

 

As of March 31, 2014 (last business day of the registrant’s most recently completed second fiscal quarter), the aggregate market value of the voting common stock held by non-affiliates of the Registrant (without admitting that any person whose shares are not included in such calculation is an affiliate) was approximately $297,325.

 

As of December 8, 2014, there were 10,128,600 shares of common stock outstanding.

 

DOCUMENTS INCORPORATED BY REFERENCE 

None.

 

 

 

 Table of Contents 
Part I Page
   
Item 1Business3
Item 1ARisk Factors11
Item 1BUnresolved Staff Comments21
Item 2Properties21
Item 3Legal Proceedings21
Item 4Submission of Matters to a Vote of Security Holders21
   
Part II  
   
Item 5Market for Registrant’s Common Equity and Related Stockholder Matters22
Item 6Selected Financial Data25
Item 7Management’s Discussion and Analysis of Financial Condition and Results of Operations25
Item 7AQuantitative and Qualitative Disclosure about Market Risk29
Item 8Financial Statements and Supplementary Data30
Item 9Changes in and Disagreements with Accountants on Accounting and Financial Disclosures40
Item 9AControls and Procedures40
   
Part III  
   
Item 10Directors, Executive Officers of the Registrant42
Item 11Executive Compensation44
Item 12Security Ownership of Certain Beneficial Holders and Management45
Item 13Certain Relationships and Related Transactions46
Item 14Principal Accountant Fees and Services46
   
Part IV  
   
Item 15Exhibits, Financial Statement Schedules48
   
Signatures 49

 

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FORWARD LOOKING STATEMENTS

 

 

There are statements in this registration statement that are not historical facts. These “forward-looking statements” can be identified by use of terminology such as “believe,” “hope,” “may,” “anticipate,” “should,” “intend,” “plan,” “will,” “expect,” “estimate,” “project,” “positioned,” “strategy” and similar expressions. You should be aware that these forward-looking statements are subject to risks and uncertainties that are beyond our control. For a discussion of these risks, you should read this entire Registration Statement carefully, especially the risks discussed under “Risk Factors.” Although management believes that the assumptions underlying the forward looking statements included in this Registration Statement are reasonable, they do not guarantee our future performance, and actual results could differ from those contemplated by these forward looking statements. The assumptions used for purposes of the forward-looking statements specified in the following information represent estimates of future events and are subject to uncertainty as to possible changes in economic, legislative, industry, and other circumstances. As a result, the identification and interpretation of data and other information and their use in developing and selecting assumptions from and among reasonable alternatives require the exercise of judgment. To the extent that the assumed events do not occur, the outcome may vary substantially from anticipated or projected results, and, accordingly, no opinion is expressed on the achievability of those forward-looking statements. In the light of these risks and uncertainties, there can be no assurance that the results and events contemplated by the forward-looking statements contained in this Registration Statement will in fact transpire. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. We do not undertake any obligation to update or revise any forward-looking statements.

 

 

 PART I

 

ITEM 1 BUSINESS

 

Overview

SmooFi, Inc. ("SmooFi,” the “Company,” "we," or "us.”) was incorporated under the laws of the State of Nevada on October 15, 2013, at which time it acquired a business plan and website from Mr. Derek Cahill. As of February 24, 2014, we had one employee, our president and chief executive officer Mr. Clarke. During the period October 15, 2013 (date of inception) through September 30, 2014, Mr. Clarke devoted between five (5) hours per week to over thirty (30) hours per week as necessary for the business. For calendar year 2014, Mr. Clarke has committed to devote at least twenty (20) hours a week to us but may increase that number as necessary to further develop the business. As of this date and through calendar year 2015, Mr. Clarke will continue to provide these services at no cost to the Company. In addition to his relationship with the Company, Mr. Clarke provides his services to an unrelated business upon which he is compensated by as an employee.

 

The Company issued 500,000 shares of its common stock to Mr. Clarke as founder’s shares. Following our formation, we issued an additional 7,250,000 shares of our common stock to Mr. Cahill, in exchange for a business plan along with a website. The cost incurred by Mr. Cahill for the business plan and professional services in preparing it was approximately $72,500 which is the value placed upon the shares issued to pay Mr. Cahill.

 

The Company

We are an emerging growth company as defined in Section 2(a)(19) of the Securities Act. Pursuant to Section 107 of the Jumpstart Our Business Startups Act, we may take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards, meaning that we can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have chosen to take advantage of the extended transition period for complying with new or revised accounting standards applicable to public companies to delay adoption of such standards until such standards are made applicable to private companies. Accordingly, our financial statements may not be comparable to the financial statements of public companies that comply with such new or revised accounting standards.

 

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SmooFi plans to focus on an online market and community connecting local resources with local need. The goal is to provide a market value for basic services by aggregating these low cost services within each local market. This will maximize value for both the person or company requesting the service and for the person or company providing the service. For example, even a “stay at home mom” or “retired baby boomer” could earn an extra $5 to $100 a day by simply dropping off meals for seniors, walking a pet or home based technical support. A service provider, such as a gardener or pet caretaker can now see the exact people requesting service within a specific ZIP Code or address and what day and time they want the service. This allows the gardener or pet caretaker to optimize their work schedule and earn more income by mowing more lawns or walking more pets in the same day which allows the service requestor to receive the service on the exact day and time they want.

 

SmooFi is targeted for busy individuals, families and for people who need tasks completed at odd hours of the day. SmooFi also works great for any type of service from technical services (HDTV to computers), auto services (dings & windshields), home services (meals to pets to babysitting), real-estate services (notaries to gardening), transportation services (packages to people), personal services (exercise to haircuts), and much more. SmooFi also works great for non-profit organizations, institutions, city services and corporate services such as city parades, corporate events, non-profit activities (beach cleanup, meals on wheels, etc.) and others.

 

SmooFi works by simply listing your service on Smoofi.com by location, date, time, price, service type, service ranking and provider history. The first person who can provide that service on that date, at that time and meets the service ranking and history requirements will get the project. No bidding, no waiting a week for an auction to close, no shifting through 10 people to try to determine the best person. SmooFi creates an online service community where members track service provider history, including rankings, reliability, on time, etc. and creates an automated service request around this ranking and history.

 

SmooFi also provides an online webspace (Web 2.0 features) for each user. This allows the Service Requestor to track and manage all their services in one place, on one website. For example, keep grocery lists, medication lists, kid and family schedules, pick up places, and more all on your own SmooFi site. You determine who can see what information or log into your account. SmooFi keeps a complete audit trail of current and future service requests, costs and allows you to make payment to service providers via credit card or directly from your bank account. Service providers can now receive credit card payment for services they use to have to get cash for. Plus these funds will be automatically transferred into their bank account.

 

SmooFi also allows you to receive mobile alerts when your service provider (such as a pet walker) arrives at your house and when they leave your house. SmooFi will also keep an audit trail of all your services, such as every time a meal is dropped off at your Grandpa’s house or Grandpa’s diabetes medication is delivered or when you pet is picked up and dropped off at the house.

 

SmooFi is a great tool for both service requestors and service providers. Service providers benefit by having online access to view service requests in their community by location, date, time and service request type. This allows service providers to group or aggregate their services and maximize their revenue opportunities. SmooFi also provides each service provider their own website to track and manage service requests and bids. SmooFi will also notify each service provider by email or mobile alert of new service requests within their saved search request and via mobile text messaging let the Service Requestor know when they arrived and when they completed a service. SmooFi will also allow service providers to accept credit card payments both via Smoofi and via their own website, eliminating the problem of tracking down payment for services at a later time.

 

SmooFi solves a number of market problems:

 

1) Matching local resources with local need.

2) Ability to aggregate small services and small transaction fees for basic services.

3) Provides funds and job opportunities for people with mixed schedules.

4) Provides online community to rank and compare service providers.

5) Provides Service Requestors online space for to track and manage service requests, receive mobile alerts of completed services, list services by data & time, and more.

6) Provides Service Providers online space to track service requests and accept credit card payments.

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Aging Demographics – Market Pressure on Service Industry

 

SmooFi also recognizes that as the baby boomer population grows older there will be increased pressure on local communities and family members to provide basic services at all hours of the day.. This can have a tremendous impact on personal goals, family life, community funds, environmental impacts (multiple/un-needed trips) or even employee productivity.

 

SmooFi GeoCalendar

 

SmooFi technology is based both on geographic location services (GIS) and mobile technology. A service request or service provider has the ability to list, search, track and manage services by geographic location, day & time and service type. SmooFi calls this technology GeoCalendar.

 

SmooFi will have all the basic online community features for the family or individual who needs help including a dedicated website for each family or individual to list and track their schedules, medication, transportation requirements, service requests, etc. By listing this information, a demand is created in the market place for these services. Helpers can quickly match their availability via innovative Geographic Information Calendar or (GeoCalender). The site will also connect users via mobile phone, sending text message reminders, alerts, arrival and departure times, grocery lists, etc. (via text message back to the system) and integrated services to rank and track service requests and service providers.

 

SmooFi will also have all the basic online community features for the service provider, including a detailed online profile (gender, availability, rate, ZIP Code), pictures, videos, and more. But the service provider will also have access to online website to view, track and manage the family or individual they are helping. For example, they could view the family or individual website to see class schedules, grocery list, pet pictures, etc. The service provider could also text back to the website and alert others (such as family members) on arrival time, departure time, confirm medication has been taken, etc. The text will also become part of the individual or family member website creating an online audit trail of the persons care or service, even though the service maybe provided by 1 or even one hundred different service providers throughout the years.

 

Later versions of SmooFi also create a push model for Non-Profit Organizations, City Organizations or Athletic Organizations to push requests out to the community for support. SmooFi GeoCalendar will differentiate between paying activities and non-profit activities. But in some cases non-profit or even city events may pay minimum wage for basic services (security, crowd control, parade clean-up, etc.). City organizations and non-profits currently find it hard to find basic resources to help within the community and often end up paying for these services. This later version of SmooFi will also allow people to participate in non-profit events and get the word out about special events in the local community. Services that can be Aggregated and Pushed by Location, Organization, Community, Service Type, or Date & Time.

 

 ·Meal Delivery (seniors / special needs)

 

 ·At Home Care

 

 ·Baby Sitting

 

 ·Non-Profit

 

 ·Organizations

 

 ·City Events (parades, conferences, etc.)

 

 ·Clean-Up / Waste

 

 ·Management

 

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 ·Gardening

 

 ·Corporate Events Youth Groups

  

 ·Pickup / Drop-off Services (library books, videos, etc.)

 

 ·Athletic Organizations / Events

 

 ·Medications Grocery List

 

 ·Pet Services (dog walking, pet cleaning)

 

 ·Real Estate Services (loan documents, notary, house management)

 

 ·House Sitting

 

 ·Transportation Services Copy & Printing Services

 

 ·Laundry Services (dry cleaning, uniforms)

 

 ·Personal Organizers

 

 ·Court Services (notary, legal documents)

 

 ·Ticket and Event Services (ticket pickup/drop-off, parking, etc)

 

 ·Exercise, Diet, Nutrition

 

 ·Events / Activities

 

 ·Technology Services (HDTV Support / Repair, computer repair)

 

 ·Shipping Services (cars, boxes, people)

 

 ·Home Repairs / Home Hair Cuts

 

 ·Auto Repairs (dings, windshields, etc.)

 

 ·Lessons (Piano, 2nd language, tutoring, etc.)

 

SmooFi Revenue Model – Online & Mobile Advertising

 

SmooFi maximizes the utilization of the web portal to push local advertisements both on the website and on mobile text messages and email alerts. These advertisements will be geared both to the service provider and the service requester and towards the service that is being provided and the ZIP Code they live in.

 

For example, a service request for someone to wash my dog will result in an online service request on SmooFi. When the service requestor submits the request, they may see an advertisement for dog food. When the service provider logs in and views the requested service, they may see an advertisement for dog shampoo or local pet store.

 

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Also, the service requestor will receive a mobile alert when the service provider shows up at the house to walk the dog and when they leave. This mobile alert will have a mobile text advertisement such as information on a local pet store. When I approve payment online, the service provider will receive a mobile alert that the payment is made, the service provider advertisement maybe a local supply shop or additional pet walking requests from the website.

 

SmooFi technology combines online market, community and geographic information services with mobile text messaging, advertising and mobile geographic information services. Even local coupons or coupon codes can also be sent to mobile phones and integrated with each service request. Advertisers can also narrow down their advertisement by ZIP Code, service type, or day and time.

 

SmooFi target market is to tap into urban communities where many people have mixed schedules and/or want to earn extra income for weekend or general expenses. For example, many people are involved in multi-tiered marketing programs such as Juice Plus, Pampered Chef, Avon and others. Many people just want extra income to offset personal expenses. In other cases baby boomers are working at Macy’s, Crate & Barrel, as kindergarten teachers, pet walkers and many other jobs. There’s an underlying market and demand for these services. In many cases, people are necessarily happy with products such as Juice Plus or Pampered Chef, but it’s a means to an end. With SmooFi, people could find paid services they enjoy such as basic gardening, meal delivery, pet care, home computer / HDTV repair services and more. Whatever their interest, there’s a way to make additional revenue.

 

SmooFi “Get & Share” – Viral Marketing

An existing open source technology is “Get & Share”, an easy way to right click on any SmooFi service request and paste it on your MySpace, YouTube, FaceBook, iGoogle or other web community site. This technology allows SmooFi to let users grab SmooFi service requests and paste them on their most popular site. In doing so, if a Service Provider clicks on the link and accepts the Service Request from the SmooFi site, a credit will be provided back to this user. This will create a Viral Marketing program for SmooFi and extend their MySpace and FaceBook accounts allowing them to book and manage basic services both for income OR for personal or family use.

 

SmooFi Payment Engine

Similar to Google Checkout or PayPal, Smoofi payment engine will allow service providers to accept credit card transactions, either on the Smoofi website, on their own website or via email. Initially Smoofi may utilize Google’s Checkout API or PayPal’s API to handle financial transactions brining security and name brand to Smoofi’s services. Over time there is a great opportunity to create a customized payment transaction engine dedicated to the service industry.

 

Smoofi Revenue Model

 

Smoofi has the following revenue models, each will morph into a different revenue model as the site gains traction.

 

1) Transaction Fees – SmooFi will receive $1 for each transaction from the service requestor upon listing of the available job.. Users can pay fees via credit card once the transaction fee.

a. Viral Marketing – A $.25 credit will be provided back to those users who place SmooFi “Get & Share” ads on their Facebook pages and/or other community websites when a Service Provider clicks their link and accepts the service terms.

 

2) Keyword Advertising – using Google Adwords or Yahoo Marketing, Smoofi can provide online advertisements and mobile text message advertisements.

a. SmooFi Advertising Engine – Over time Smoofi will develop its own advertising engine where advertisers can bid on key terms at the ZIP Code level and determine if they want online or mobile text messages or both.

b. The advantage of SmooFi advertising engine is I know the exact address and interest of the service requestor. I can provide targeted ads, such as an advertisement for PetCo to all people requesting dog walks.

 

3) Credit Card Transactions – using Google Checkout and/or PayPal, Smoofi will be able to generate revenue via credit card transactions.

a. Credit Card Transaction Engine – developing a custom transaction engine with a major bank or partnering with Google Checkout, Smoofi intends to have their own proprietary credit card transaction engine for service providers.

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4) Mobile Text Messaging Services – using mobile text messaging (or emails) to notify the user of arrival and departure times of service providers will allow for targeted advertising by service type and ZIP Code.

 

5) Membership Fees – there will be no membership fees in the first version of Smoofi, but over time service providers may be charged an annual membership fee ($25 to $100) to join Smoofi. The benefits are more business, online and mobile alerts, online and mobile directions, online payment gateway to accept credit card transactions.

 

Plan of Operations

 

SmooFi will leverage two major marketing, branding and PR programs. First, SmooFi will focus on key markets such as California to launch the product. Secondly SmooFi will expand to other markets as the product is proven and tested. SmooFi will use both AM Radio advertising to target people in traffic during peak times who have limited time and need basic services completed at specific dates and time and are willing to pay a $1.00 for this service. SmooFi will also leverage Web 2.0 services to create viral marketing program throughout the web integrating SmooFi services with other major community websites such as MySpace and FaceBook.

 

Target Market

 

Activities transcend markets: in-home visits, transportation, meals, store runs, (baby) sitting, tutoring, pet care, tutoring, chaperon, and more. Target market applies to individuals or families with someone that is:

• Senior or Elderly

• Special Needs – autistic kids (autism on the rise), mental / brain injuries (brain injuries on the rise),

• School Kids (K-12)

• Pets

• Babies (0 to 5)

• Etc.

 

PR PR PR is the way to get the word out!

Helper Target Market

The consumer target market needs to match the helpers:

• Job seekers

• Care givers

• Pet sitters

• Baby sitters

• Stay at home moms

• Part time employees

• Non-profit organizations

MySpace, YouTube, Monster, HotJobs, Career Builder, etc. advertise for thousands of part time jobs!

 

Competitive Conditions

There are many similar online and offline technologies similar to SMOOFI such as Craig’s List, Kudzu, eBay Auctions, Penny Saver, and others. But there are no online websites that focus only on the service industry as an eCommerce / classifieds / auction marketplace. Craig’s List does not have an eCommerce or credit card system and there is no member feedback or rating system.

 

SmooFi targets the underlining service industry, setting up a system for online services by ZIP Code that service providers can quickly qualify and identify leads by price, location and service type. Service requestors can quickly list services and find qualified candidates based on feedback rating, length of membership, and pay via credit card. Smoofi is safe, secure, easy to use, and self-regulating community based on an eBay type rating system.

 

Market Demand

 

Demographics - A Growing Problem for the Service Industry The historical trend of the older population growing at a faster pace than the total population will continue well into the 21st Century.

 

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Intellectual Property

 

We have no patents or trademarks.

 

Government Regulation and Industry Standards

 

There are an increasing number of laws and regulations in the United States and abroad pertaining to communications and commerce on the Internet. In addition, a number of legislative and regulatory proposals are under consideration by federal, state, local and foreign governments. Laws or regulations may be adopted with respect to the Internet relating to liability for information retrieved from or transmitted over the Internet, user privacy, taxation and the quality of products and services. Moreover, the application to the Internet of existing laws governing issues such as intellectual property ownership and infringement, pornography, obscenity, libel, gaming, employment and personal privacy is uncertain and developing. Any such legislation or regulation, or the application or interpretation of existing laws, may decrease the growth in the use of the Internet in general, prevent us from delivering our content in different parts of the world and increase our costs of selling products or otherwise operating our business.

 

Furthermore, legislation regulating online content could limit the growth in use of the Internet generally and decrease the overwhelming acceptance of the Internet as an advertising and e-commerce medium.

 

Websites typically place identifying data, or cookies, on a user's hard drive without the user's knowledge or consent. We and many other Internet companies will use cookies for a variety of different reasons, including the collection of data derived from the user's Internet activity. Any reduction or limitation in the use of cookies could limit the effectiveness of our sales and marketing efforts. Most currently available Web browsers allow users to remove cookies at any time or to prevent cookies from being stored on their hard drive.

 

Some privacy advocates and governmental bodies have suggested limiting or eliminating the use of cookies. In addition, the European Union and many countries within the EU have adopted privacy directives or laws that strictly regulate the collection and use of information regarding Internet users that is identifiable to particular individuals. Privacy legislation has been proposed in the US as well, and the US Federal Trade Commission has taken action against website operators that do not comply with state privacy policies. These and other governmental efforts may limit our ability to target advertising or collect and use information regarding the use of our websites. Fears relating to a lack of privacy could also result in a reduction in the number of our users and subscribers which could harm our business and financial results.

 

Employees

 

As of December 8, 2014, we had one employee which serves as our president, and chief executive officer, Mr. Clarke. During calendar year ending December 31, 2015 (dependent on financing and available working capital), Mr. Clarke will devote at least twenty (20) hours a week to us and may increase the number of hours as necessary. Mr. Clarke is allowed to devote this time to our Company as he is not limited or restricted from being involved with us by his current employer.  Mr. Clarke is under no contractual agreement with the Company. However, our president, and chief executive officer’s current plan is to provide all administrative and planning work as well as perform the basic coding for software and initial marketing efforts on his own without any cash compensation while he seeks other sources of funding for the Company and its business plan.

 

Mr. Clarke has been initially compensated through the form of common stock or equity in the Company, and will continue to forego cash payments for his services until the Company is profitable. Beyond Mr. Clarke’s services, we have currently been working with an independent software development firm, which has been utilized on an “as needed” basis, and we may in the future use other independent contractors and consultants to assist in many aspects of our business on an “as needed” or per project basis pending adequate financial resources being available or their ability to defer payment for their services.

 

There is no written employment contract or agreement in place with our president, and chief executive officer.

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Property

 

Our office and mailing address is 204 S La Esparanza, Suite B, San Clemente, CA 92672. The space is provided to us by Mr. Clarke. Mr. Clarke incurs no incremental costs as a result of our using the space. Therefore, he does not charge us for its use. There is no written lease agreement.

 

Litigation

 

We are not party to any pending, or to our knowledge, threatened litigation of any type.

 

(c) Reports to security holders.

 

(1) To the extent required by federal and state law, the Company will deliver an annual report to security holders.

 

(2) The Company will file reports with the SEC. The Company will be a reporting company and will comply with the requirements of the Exchange Act.

 

(3) The public may read and copy any materials the Company files with the SEC at the SEC's Public Reference Room at 100 F. Street, N.E., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Additionally, the SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, which can be found at http://www.sec.gov.  

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ITEM 1.A  RISK FACTORS

 

An investment in the Company is highly speculative in nature and involves an extremely high degree of risk.

 

 

Risks Related to the Business

 

 1.SmooFi has virtually no financial resources. Our independent registered auditors’ report includes an explanatory paragraph stating that there is substantial doubt about our ability to continue as a going concern.

 

SmooFi is an early stage company and has virtually no financial resources. We had a cash balance of $74,787, as of September 30, 2014. We have working capital deficit of $67,397 and a stockholders’ equity of $7,098 at September 30, 2014. Our independent registered auditors included an explanatory paragraph in their opinion on our financial statements as of and for the period ended September 30, 2014 that states that Company losses from operations raise substantial doubt about its ability to continue as a going concern. We may seek additional financing. The financing sought may be in the form of equity or debt financing from various sources as yet unidentified. No assurances can be given that we will generate sufficient revenue or obtain the necessary financing to continue as a going concern.

 

Our current resources and source of funds, which primarily consist of friends and family debt and equity investments from unaffiliated third parties, are sufficient to keep our business operations functioning for the next twelve months. We do not have a formal agreement with our president and chief executive officer to fund the Company’s working capital needs; however our president and chief executive officer’s current plan is to do almost of the work on his own without cash compensation while he seeks other sources of funding. The Company has started the development of an initial design and framework of its proposed portal platform through Mr. Clarke’s efforts, as well as through the efforts of a software development firm which the Company has been working with on an as “needed basis.”  We currently spend between $5,000 and $10,000 per month in operational expenses. We have not generated any revenues from our business, and our expenses will be accrued and deferred until sufficient financing is obtained or our president and chief executive officer or others who know our president and chief executive officer loans the necessary funds to pay for these expenses. No assurances can be given that we will be able to receive funds from our president and chief executive officer or others to continue our operations beyond a month-to-month basis.

 

2. SmooFi is and will continue to be completely dependent on the services of our president and chief executive officer, Sean Clarke, the loss of whose services may cause our business operations to cease, and we will need to engage and retain qualified employees and consultants to further implement our strategy.

 

SmooFi’s operations and business strategy are completely dependent upon the knowledge and business connections of Mr. Clarke our president and chief executive officer. He is under no contractual obligation to remain employed by us. If he should choose to leave us for any reason or if he becomes ill and is unable to work for an extended period of time before we have hired additional personnel, our operations will likely fail. Even if we are able to find additional personnel, it is uncertain whether we could find someone who could develop our business along the lines described in this prospectus. We will fail without the services of Mr. Clarke or an appropriate replacement(s).

  

We intend to acquire key-man life insurance on the life of Mr. Clarke naming us as the beneficiary when and if we obtain the resources to do so and if he is insurable. We have not yet procured such insurance, and there is no guarantee that we will be able to obtain such insurance in the future. Accordingly, it is important that we are able to attract, motivate and retain highly qualified and talented personnel and independent contractors.

 

Mr. Clarke’s current employment does not limit or restrict him from being involved with our Company, and his employment allows him the flexibility to provide at least 20 hours per week to our Company.

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3. Because we have only recently commenced business operations, we face a high risk of business failure.

 

We were formed in October 2013. All of our efforts to date have related to developing our business plan and beginning business activities. Through September 30, 2014, we had no operating revenues. We face a high risk of business failure. The likelihood of the success of the Company must be considered in light of the expenses, complications and delays frequently encountered in connection with the establishment and expansion of new businesses and the competitive environment in which the Company will operate. There can be no assurance that future revenues from sales of the Company’s products and services will occur or be significant enough or that we will be able to sell its products and services at a profit, if at all. Future revenues and/or profits, if any, will depend on many various factors, including, but not limited to both initial and continued market acceptance of the Company’s products and services and the successful implementation of its planned growth strategy.

 

The Company has acquired and commenced internally developing our website products. We may not be able to acquire or internally develop additional products in the future because of a lack of available funds or financing to do so. In order for us to develop or acquire additional products, we may need to secure the necessary financing. In the early stages of our operations, we will continue to keep costs to a minimum. The cost to develop our business plan as currently outlined may be in excess of $100,000. We will need additional funds to market the product. If we are unable to obtain adequate funding or financing, the Company faces the ultimate likelihood of business failure. There are no assurances that we will be able to raise any funds or establish any financing program for the Company’s growth.

 

4. We may not have or ever have the resources or ability to implement and manage growth strategy.

 

Although the Company expects to experience growth based on being able to implement its business plan, actual operations may never occur because the business plan may never be implemented because of lack of funds to do so. If the Company’s business plan and growth strategy are implemented, of which no assurances can be given, a significant strain on the Company’s management, operating systems and/or financial resources will be imposed. Failure by the Company’s management to manage this growth, if it occurs, or unexpected difficulties encountered during growth, could have a material adverse impact on the Company’s results of operations or financial condition.

 

The Company’s ability to operate profitable product lines (if we are able to establish any product or product lines at all) will depend upon a number of factors, including (i) identifying distribution channels, (ii) generating sufficient funds from our then existing operations or obtaining third-party financing or additional capital to develop new product lines, (iii) the Company’s management team and its financial and accounting controls and (iv) staffing, training and retaining of skilled personnel, if any at all. Certain of these factors will be beyond the Company’s control and may be adversely affected by the economy or actions taken by competing companies. Moreover, potential products that may meet the Company’s product focus and other criteria for developing new products or services, if we are able to develop or acquire at all, are believed to be limited. There can be no assurance that the Company will be able to execute and manage a growth strategy effectively or at all.

 

5. We may not be successful in hiring technical personnel because of the competitive market for qualified technical people.

 

The Company's future success depends largely on its ability to attract, hire, train and retain highly qualified technical personnel to provide the Company's services. Competition for such personnel is intense. There can be no assurance that the Company will be successful in attracting and retaining the technical personnel it requires to conduct and expand its operations successfully and to differentiate itself from its competition. The Company's results of operations and growth prospects could be materially adversely affected if the Company were unable to attract, hire, train and retain such qualified technical personnel.

 

-12-
 

 

6. Our reliance on referrals from outside contacts to develop business may not be effective.

 

The Company initially will rely on our president and chief executive officer, Mr. Clarke, for a majority of its leads and believes that independent outside sales reps will also be an important source of sales referrals in the foreseeable future. However, as is typical within the industry, there are no contractual requirements that an outside sales person use or recommend the Company's professional services in connection with product sales. We currently have no contracts or agreements in place with any outside sales professional. No assurances can be given that using independent outside sales reps will result in any meaningful numbers of sales leads or referrals.

  

7. We will face competition from companies with significantly greater resources and name recognition.

 

The markets in which the Company will operate are characterized by intense competition from several types of solution and technical service providers. The Company expects to face further competition from new market entrants and possible alliances among competitors in the future as the convergence of information processing and telecommunications continues. Many of the Company's current and potential competitors have significantly greater financial, technical, marketing and other resources than the Company. As a result, they may be better able to respond or adapt to new or emerging technologies and changes in client requirements or to devote greater resources to the development, marketing and sales of their services than the Company. There can be no assurance that the Company will be able to compete successfully. The Company expects to encounter intense competition in the Internet/software industry. The Company will also compete for revenues with other Internet software providers. In addition, the Company will be faced with numerous competitors, both strategic and financial, in attempting to obtain competitive products. Many actual and potential competitors we believe are part of much larger companies with substantially greater financial, marketing and other resources than the Company, and there can be no assurance that the Company will be able to compete effectively against any of its future competitors.

 

8. There are significant potential conflicts of interest.

 

Our personnel will be required to commit substantial time to our affairs and, accordingly, these individual(s) (particularly our president and chief executive officer) may have conflicts of interest in allocating management time among various business activities. In the course of other business activities, certain key personnel (particularly our president and chief executive officer) may become aware of business opportunities which may be appropriate for presentation to us, as well as other entities with which they are affiliated. As such, there may be conflicts of interest in determining to which entity a particular business opportunity should be presented.

 

We cannot provide assurances that our efforts to eliminate the potential impact of conflicts of interest will be effective.

 

9. Following the effective date of our Registration Statement, of which this prospectus is a part, we will be subject to the periodic reporting requirements of Section 15(d) of the Exchange Act that will require us to incur audit fees and legal fees in connection with the preparation of such reports. These additional costs could reduce or eliminate our ability to earn a profit.

 

Following the effective date of our registration statement of which this prospectus is a part, we will be required to file periodic reports with the SEC pursuant to the Exchange Act and the rules and regulations promulgated thereunder. In order to comply with these requirements, our independent registered public accounting firm will have to review our financial statements on a quarterly basis and audit our financial statements on an annual basis. Moreover, our legal counsel will have to review and assist in the preparation of such reports. The costs charged by these professionals for such services cannot be accurately predicted at this time because factors such as the number and type of transactions that we engage in and the complexity of our reports cannot be determined at this time and will have a major affect on the amount of time to be spent by our auditors and attorneys. However, the incurrence of such costs will obviously be an expense to our operations and thus have a negative effect on our ability to meet our overhead requirements and earn a profit. We may be exposed to potential risks resulting from any new requirements under Section 404 of the Sarbanes-Oxley Act of 2002. If we cannot provide reliable financial reports or prevent fraud, our business and operating results could be harmed, investors could lose confidence in our reported financial information, and the trading price of our common stock, if a market ever develops, could drop significantly.

-13-
 

 

10. Our internal controls may be inadequate, which could cause our financial reporting to be unreliable and lead to misinformation being disseminated to the public.

 

Our management is responsible for establishing and maintaining adequate internal control over our financial reporting. As defined in Exchange Act Rule 13a-15(f), internal control over financial reporting is a process designed by, or under the supervision of, the principal executive and principal financial officer and effected by the board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

 

 -pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;

 

 -provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and/or directors of the Company; and

 

 -provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the financial statements.

 

Our internal controls may be inadequate or ineffective, which could cause our financial reporting to be unreliable and lead to misinformation being disseminated to the public. Investors relying upon this misinformation may make an uninformed investment decision.

 

11. The costs of being a public company could result in us being unable to continue as a going concern.

 

As a public company, we will have to comply with numerous financial reporting and legal requirements, including those pertaining to audits, quarterly reporting and internal controls. The costs of this compliance could be significant. If our revenues are insufficient, and/or we cannot satisfy many of these costs through the issuance of our shares, we may be unable to satisfy these costs through the normal course of business which would result in our being unable to continue as a going concern.

 

12. Having only one director limits our ability to establish effective independent corporate governance procedures and increases the control of our president and chief executive officer.

 

We have only one director who also serves as our president and chief executive officer. Accordingly, we cannot establish board committees comprised of independent members to oversee functions like compensation or audit issues. In addition, currently a vote of board members is decided in favor of the chairman (who is our president, and chief executive officer), which gives him complete control over all corporate issues.

 

Until we have a larger board of directors that would include some independent members, if ever, there will be limited oversight of our president and chief executive officer’s decisions and activities and little ability for minority shareholders to challenge or reverse those activities and decisions, even if they are not in the best interests of minority shareholders.

 

-14-
 

 

Risks Related to Our Common Stock

 

13. Shareholders may be diluted significantly through our efforts to obtain financing and satisfy obligations through issuance of additional shares of our common stock.

 

We have no committed source of financing. Wherever possible, our board of directors will attempt to use non-cash consideration to satisfy obligations. In many instances, we believe that the non-cash consideration will consist of restricted shares of our common stock. Our board of directors has authority, without action or vote of the shareholders, to issue all or part of the authorized (200,000,000) shares. In addition, if a trading market develops for our common stock, we may attempt to raise capital by selling shares of our common stock, possibly at a discount to market. These actions will result in dilution of the ownership interests of existing shareholders, further dilute common stock book value, and that dilution may be material.

 

14. The interests of shareholders may be hurt because we can issue shares of our common stock to individuals or entities that support existing management with such issuances serving to enhance existing management’s ability to maintain control of our company.

 

Our board of directors has authority, without action or vote of the shareholders, to issue all or part of the authorized but unissued common shares. Such issuances may be issued to parties or entities committed to supporting existing management and the interests of existing management which may not be the same as the interests of other shareholders. Our ability to issue shares without shareholder approval serves to enhance existing management’s ability to maintain control of our company.

 

15. Our articles of incorporation provide for indemnification of officers and directors at our expense and limit their liability that may result in a major cost to us and hurt the interests of our shareholders because corporate resources may be expended for the benefit of officers and/or directors.

 

Our Articles of Incorporation at Article X provide for indemnification as follows: "No director or officer of the Corporation shall be personally liable to the Corporation or any of its stockholders for damages for breach of fiduciary duty as a director or officer; provided, however, that the foregoing provision shall not eliminate or limit the liability of a director or officer: (i) for acts or omissions which involve intentional misconduct, fraud or knowing violation of law; or (ii) the payment of dividends in violation of Section 78.300 of the Nevada Revised Statutes. Any repeal or modification of an Article by the stockholders of the Corporation shall be prospective only, and shall not adversely affect any limitation of the personal liability of a director or officer of the Corporation for acts or omissions prior to such repeal or modification."

 

We have been advised that, in the opinion of the SEC, indemnification for liabilities arising under federal securities laws is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification for liabilities arising under federal securities laws, other than the payment by us of expenses incurred or paid by a director, officer or controlling person in the successful defense of any action, suit or proceeding, is asserted by a director, officer or controlling person in connection with our activities, 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 indemnification by us is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. The legal process relating to this matter if it were to occur is likely to be very costly and may result in us receiving negative publicity, either of which factors is likely to materially reduce the market and price for our shares, if such a market ever develops.

 

-15-
 

 

16. Currently, there is no established public market for our securities, and there can be no assurances that any established public market will ever develop or that our common stock will be quoted for trading and, even if quoted, it is likely to be subject to significant price fluctuations.

 

Prior to the date of this prospectus, there has not been any established trading market for our common stock, and there is currently no established public market whatsoever for our securities. We have not found a market maker. There can be no assurance that we will find a market maker willing to file an application with FINRA on our behalf and if we do that the market maker’s application will be accepted by FINRA nor can we estimate as to the time period that the application will require. We are not permitted to file such application on our own behalf. If the application is accepted, there can be no assurances as to whether

 

 (i)any market for our shares will develop;

 

 (ii)the prices at which our common stock will trade; or

 

 (iii)the extent to which investor interest in us will lead to the development of an active, liquid trading market. Active trading markets generally result in lower price volatility and more efficient execution of buy and sell orders for investors.

 

If we become able to have our shares of common stock quoted on the OTCBB, we will then try, through a broker-dealer and its clearing firm, to become eligible with the Depository Trust Company ("DTC") to permit our shares to trade electronically. If an issuer is not “DTC-eligible,” then its shares cannot be electronically transferred between brokerage accounts, which, based on the realities of the marketplace as it exists today (especially the OTC Markets), means that shares of a company will nofferot be traded (technically the shares can be traded manually between accounts, but this takes days and is not a realistic option for companies relying on broker dealers for stock transactions - like all companies on the OTC Markets. What this boils down to is that while DTC-eligibility is not a requirement to trade on the OTC Markets, it is a necessity to process trades on the OTC Markets if a company’s stock is going to trade with any volume. There are no assurances that our shares will ever become DTC-eligible or, if they do, how long it will take.

 

In addition, our common stock is unlikely to be followed by any market analysts, and there may be few institutions acting as market makers for our common stock. Either of these factors could adversely affect the liquidity and trading price of our common stock. Until our common stock is fully distributed and an orderly market develops in our common stock, if ever, the price at which it trades is likely to fluctuate significantly. Prices for our common stock will be determined in the marketplace and may be influenced by many factors, including the depth and liquidity of the market for shares of our common stock, developments affecting our business, including the impact of the factors referred to elsewhere in these Risk Factors, investor perception of the Company and general economic and market conditions. No assurances can be given that an orderly or liquid market will ever develop for the shares of our common stock.

 

Because of the anticipated low price of the securities being registered, many brokerage firms may not be willing to effect transactions in these securities. Purchasers of our securities should be aware that any market that develops in our stock will be subject to the penny stock restrictions.

 

-16-
 

 

17. If we were designated a shell your ability to resell your shares would be limited.

 

All of the presently outstanding shares of our common stock are "restricted securities" as defined under Rule 144 promulgated under the Securities Act and may only be sold pursuant to an effective registration statement or an exemption from registration, if available. The SEC has adopted final rules amending Rule 144 which have become effective on February 15, 2008. Pursuant to the new Rule 144, one year must elapse from the time a “shell company,” as defined in Rule 405 of the Securities Act and Rule 12b-2 of the Exchange Act, ceases to be a “shell company” and files a Form 8-K addressing Item 5.06 with such information as may be required in a Form 10 Registration Statement with the SEC, before a restricted shareholder can resell their holdings in reliance on Rule 144. The Form 10 information or disclosure is equivalent to the information that a company would be required to file if it were registering a class of securities on Form 10 under the Exchange Act. Under amended Rule 144, restricted or unrestricted securities that were initially issued by a reporting or non-reporting shell company or a company that was at any time previously a reporting or non-reporting shell company, can only be resold in reliance on Rule 144 if the following conditions are met:

 

1) the issuer of the securities that was formerly a reporting or non-reporting shell company has ceased to be a shell company;

2) the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act;

3) the issuer of the securities has filed all reports and material required to be filed under Section 13 or 15(d) of the Exchange Act, as applicable, during the preceding twelve months (or shorter period that the Issuer was required to file such reports and materials), other than Form 8-K reports; and

4) at least one year has elapsed from the time the issuer filed the current Form 10 type information with the SEC reflecting its status as an entity that is not a shell company.

 

At the present time, we are not classified as a “shell company” under Rule 405 of the Securities Act Rule 12b-2 of the Exchange Act. To the extent the Company is designated a shell you would be unable to sell your shares under Rule 144.

 

18. Any market that develops in shares of our common stock will be subject to the penny stock regulations and restrictions pertaining to low priced stocks that will create a lack of liquidity and make trading difficult or impossible.

 

The trading of our securities, if any, will be in the over-the-counter market which is commonly referred to as the OTCBB as maintained by FINRA. As a result, an investor may find it difficult to dispose of, or to obtain accurate quotations as to the price of our securities.

 

Rule 3a51-1 of the Exchange Act establishes the definition of a "penny stock," for purposes relevant to us, as any equity security that has a minimum bid price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to a limited number of exceptions which are not available to us. It is likely that our shares will be considered to be penny stocks for the immediately foreseeable future. This classification severely and adversely affects any market liquidity for our common stock.

 

For any transaction involving a penny stock, unless exempt, the penny stock rules require that a broker or dealer approve a person's account for transactions in penny stocks and the broker or dealer receive from the investor a written agreement to the transaction setting forth the identity and quantity of the penny stock to be purchased. In order to approve a person's account for transactions in penny stocks, the broker or dealer must obtain financial information and investment experience and objectives of the person and make a reasonable determination that the transactions in penny stocks are suitable for that person and that that person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.

 

-17-
 

 

The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the SEC relating to the penny stock market, which, in highlight form, sets forth:

 

 -the basis on which the broker or dealer made the suitability determination, and

 

 -that the broker or dealer received a signed, written agreement from the investor prior to the transaction.

 

Disclosure also has to be made about the risks of investing in penny stock in both public offerings and in secondary trading and commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Additionally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.

 

Because of these regulations, broker-dealers may not wish to engage in the above-referenced necessary paperwork and disclosures and/or may encounter difficulties in their attempt to sell shares of our common stock, which may affect the ability of selling shareholders or other holders to sell their shares in any secondary market and have the effect of reducing the level of trading activity in any secondary market. These additional sales practice and disclosure requirements could impede the sale of our securities, if and when our securities become publicly traded. In addition, the liquidity for our securities may decrease, with a corresponding decrease in the price of our securities. Our shares, in all probability, will be subject to such penny stock rules for the foreseeable future and our shareholders will, in all likelihood, find it difficult to sell their securities.

 

19. The market for penny stocks has experienced numerous frauds and abuses that could adversely impact investors in our stock.

 

Company management believes that the market for penny stocks has suffered from patterns of fraud and abuse. Such patterns include:

 

 -Control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer;

 

 -Manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases;

 

 -"Boiler room" practices involving high pressure sales tactics and unrealistic price projections by sales persons;

 

 -Excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and

 

 -Wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the inevitable collapse of those prices with consequent investor losses.

 

-18-
 

 

20. Any trading market that may develop may be restricted by virtue of state securities “Blue Sky” laws that prohibit trading absent compliance with individual state laws. These restrictions may make it difficult or impossible to sell shares in those states.

 

There is currently no established public market for our common stock, and there can be no assurance that any established public market will develop in the foreseeable future. Transfer of our common stock may also be restricted under the securities or securities regulations laws promulgated by various states and foreign jurisdictions, commonly referred to as “Blue Sky” laws. Absent compliance with such individual state laws, our common stock may not be traded in such jurisdictions. Because the securities registered hereunder have not been registered for resale under the blue sky laws of any state, the holders of such shares and persons who desire to purchase them in any trading market that might develop in the future, should be aware that there may be significant state blue sky law restrictions upon the ability of investors to sell the securities and of purchasers to purchase the securities. These restrictions prohibit the secondary trading of our common stock. We currently do not intend to and may not be able to qualify securities for resale in at least 17 states which do not offer manual exemptions (or may offer manual exemptions but may not to offer one to us if we are considered to be a shell company at the time of application) and require shares to be qualified before they can be resold by our shareholders. Accordingly, investors should consider the secondary market for our securities to be a limited one. See also “Plan of Distribution-State Securities-Blue Sky Laws.”

 

21. Our board of directors (consisting of one person, our president and chief executive officer) has the authority, without stockholder approval, to issue preferred stock with terms that may not be beneficial to common stockholders and with the ability to affect adversely stockholder voting power and perpetuate their control over us.

 

Our articles of incorporation allow us to issue shares of preferred stock without any vote or further action by our stockholders. Our board of directors has the authority to fix and determine the relative rights and preferences of preferred stock. Our board of directors also has the authority to issue preferred stock without further stockholder approval, including large blocks of preferred stock. As a result, our board of directors could authorize the issuance of a series of preferred stock that would grant to holders the preferred right to our assets upon liquidation, the right to receive dividend payments before dividends are distributed to the holders of common stock and the right to the redemption of the shares, together with a premium, prior to the redemption of our common stock.

 

22. The ability of our founder, president, and chief executive officer to control our business may limit or eliminate minority shareholders’ ability to influence corporate affairs.

 

Mr. Cahill, and our president, and chief executive officer, Mr. Clarke beneficially own an aggregate of 76.5% of our outstanding common stock assuming the sale of all shares being registered. Because of their beneficial stock ownership, our founder and president, and chief executive officer will be in a position to continue to elect our board of directors, decide all matters requiring stockholder approval and determine our policies. The interests of our founder and president, and chief executive officer may differ from the interests of other shareholders with respect to the issuance of shares, business transactions with or sales to other companies, selection of officers and directors and other business decisions. The minority shareholders would have no way of overriding decisions made by our president and chief executive officer. This level of control may also have an adverse impact on the market value of our shares because our president and chief executive officer may institute or undertake transactions, policies or programs that may result in losses, may not take any steps to increase our visibility in the financial community and/or may sell sufficient numbers of shares to significantly decrease our price per share.

 

-19-
 

 

23. All of our presently issued and outstanding common shares are restricted under Rule 144 of the Securities Act, as amended. When the restriction on any or all of these shares is lifted, and the shares are sold in the open market, the price of our common stock could be adversely affected.

 

All of the presently outstanding shares of common stock (9,550,000 shares) are "restricted securities" as defined under Rule 144 promulgated under the Securities Act and may only be sold pursuant to an effective registration statement or an exemption from registration, if available. Rule 144 provides in essence that a person who is not an affiliate and has held restricted securities for a prescribed period of at least six (6) months if purchased from a reporting issuer or twelve (12) months (as is the case herein) if purchased from a non-reporting Company, may, under certain conditions, sell all or any of his shares without volume limitation, in brokerage transactions. Affiliates, however, may not sell shares in excess of 1% of the Company’s outstanding common stock every three months. As a result of revisions to Rule 144 which became effective on February 15, 2008, there is no limit on the amount of restricted securities that may be sold by a non-affiliate (i.e., a stockholder who has not been an officer, director or control person for at least 90 consecutive days) after the restricted securities have been held by the owner for the aforementioned prescribed period of time. A sale under Rule 144 or under any other exemption from the Act, if available, or pursuant to registration of shares of common stock of present stockholders, may have a depressive effect upon the price of the common stock in any market that may develop.

 

24. We do not expect to pay cash dividends in the foreseeable future.

 

We have never paid cash dividends on our common stock. We do not expect to pay cash dividends on our common stock at any time in the foreseeable future. The future payment of dividends directly depends upon our future earnings, capital requirements, financial requirements and other factors that our board of directors will consider. Since we do not anticipate paying cash dividends on our common stock, return on your investment, if any, will depend solely on an increase, if any, in the market value of our common stock.

 

25. Because we are not subject to compliance with rules requiring the adoption of certain corporate governance measures, our stockholders have limited protection against interested director transactions, conflicts of interest and similar matters.

 

The Sarbanes-Oxley Act of 2002, as well as rule changes proposed and enacted by the SEC, the New York and American Stock Exchanges and the Nasdaq Stock Market, as a result of Sarbanes-Oxley, require the implementation of various measures relating to corporate governance. These measures are designed to enhance the integrity of corporate management and the securities markets and apply to securities that are listed on those exchanges or the Nasdaq Stock Market. Because we are not presently required to comply with many of the corporate governance provisions and because we chose to avoid incurring the substantial additional costs associated with such compliance any sooner than legally required, we have not yet adopted these measures.

 

Because none of our directors (currently one person) are independent directors, we do not currently have independent audit or compensation committees. As a result, these directors have the ability, among other things, to determine their own level of compensation. Until we comply with such corporate governance measures, regardless of whether such compliance is required, the absence of such standards of corporate governance may leave our stockholders without protections against interested director transactions, conflicts of interest, if any, and similar matters and investors may be reluctant to provide us with funds necessary to expand our operations.

 

We intend to comply with all corporate governance measures relating to director independence as and when required. However, we may find it very difficult or be unable to attract and retain qualified officers, directors and members of board committees required to provide for our effective management as a result of Sarbanes-Oxley Act of 2002. The enactment of the Sarbanes-Oxley Act of 2002 has resulted in a series of rules and regulations by the SEC that increase responsibilities and liabilities of directors and executive officers. The perceived increased personal risk associated with these recent changes may make it more costly or deter qualified individuals from accepting these roles.

 

-20-
 

 

26. You may have limited access to information regarding our business because our obligations to file periodic reports with the SEC could be automatically suspended under certain circumstances.

 

We will become subject to certain informational requirements of the Exchange Act, as amended and we will be required to file periodic reports (i.e., annual, quarterly and material events) with the SEC which will be immediately available to the public for inspection and copying. In the event during the year that our registration statement becomes effective, these reporting obligations may be automatically suspended under Section 15(d) of the Exchange Act if we have less than 300 shareholders and do not file a registration statement on Form 8-A (of which we have no current plans to file). If this occurs after the year in which our registration statement becomes effective, we will no longer be obligated to file such periodic reports with the SEC and access to our business information would then be even more restricted. After this registration statement on Form S-1 becomes effective, we may be required to deliver periodic reports to security holders as proscribed by the Exchange Act, as amended.  However, we will not be required to furnish proxy statements to security holders and our directors, officers and principal beneficial owners will not be required to report their beneficial ownership of securities to the SEC pursuant to Section 16 of the Exchange Act until we have both 500 or more security holders and greater than $10 million in assets. This means that access to information regarding our business and operations will be limited.

 

27. We are an emerging growth company within the meaning of the Securities Act, and as a consequence of taking advantage of certain exemptions from reporting requirements that are available to emerging growth companie,; our financial statements may not be comparable to companies that comply with public company effective dates.

We are an emerging growth company as defined in Section 2(a)(19) of the Securities Act of 1933, as amended (the “Securities Act”). Pursuant to Section 107 of the Jumpstart Our Business Startups Act, we may take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards, meaning that we can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have chosen to take advantage of the extended transition period for complying with new or revised accounting standards applicable to public companies to delay adoption of such standards until such standards are made applicable to private companies. Accordingly, our financial statements may not be comparable to the financial statements of public companies that comply with such new or revised accounting standards.

For all of the foregoing reasons and others set forth herein, an investment in our securities in any market that may develop in the future involves a high degree of risk.

 

 

ITEM 1B. UNRESOLVED STAFF COMMENTS

 

 None.

 

ITEM 2. PROPERTIES

 

The Company utilizes rented offices at 204 S La Esparanza, Suite B, San Clemente, CA 92672.

 

ITEM 3. LEGAL PROCEEDINGS

 

We have no outstanding, material legal proceedings.

 

ITEM 4. (REMOVED AND RESERVED)

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PART II

 

ITEM 5MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCAHSES OF EQUITY SECURITIES

 

(a) Market Information.

 

The Company’s common stock is currently quoted on the OTC Markets and OTC Bulletin Board under the symbol “SMFI”.   The following table sets forth the high and low per share sales prices for our common stock for each of the quarters as reported by the OTC Markets.

 

Quarter Ended High Low
           
 December 31, 2012  N/A   N/A 
 March 31, 2013   N/A   N/A 
 June 30, 2013   N/A   N/A 
 September 30, 2013   N/A  N/A 
 December 31, 2013   N/A  N/A 
 March 31, 2014   N/A  N/A 
 June 30, 2014   N/A  N/A 
 September 30, 2014  $2.25  $1.35 
           

 

The closing price of our common stock as reported on the OTC Markets on December 8, 2014, was $1.50.

 

Description of Securities

 

The Company is authorized by its Certificate of Incorporation to issue an aggregate of 205,000,000 shares of capital stock, of which 200,000,000 are shares of common stock, par value $0.001 per share (the "Common Stock") and 5,000,000 are shares of preferred stock, par value $0.001 per share (the “Preferred Stock”). As of December 8, 2014, 10,128,600 shares of Common Stock were issued and outstanding.

 

Preferred Stock

 

Our certificate of incorporation authorizes the issuance of 5,000,000 shares of preferred stock with designations, rights and preferences determined from time to time by our board of directors. No shares of preferred stock have been designated, issued or were outstanding as of December 8, 2014. Accordingly, our board of directors is empowered, without stockholder approval, to issue up to 5,000,000 shares of preferred stock with voting, liquidation, conversion, or other rights that could adversely affect the rights of the holders of the common stock. Although we have no present intention to issue any shares of preferred stock, there can be no assurance that we will not do so in the future.

 

Among other rights, our board of directors may determine, without further vote or action by our stockholders:

 

 -the number of shares and the designation of the series;

 

 -whether to pay dividends on the series and, if so, the dividend rate, whether dividends will be cumulative and, if so, from which date or dates, and the relative rights of priority of payment of dividends on shares of the series;

 

 -whether the series will have voting rights in addition to the voting rights provided by law and, if so, the terms of the voting rights;

 

-22-
 

 

 

 -whether the series will be convertible into or exchangeable for shares of any other class or series of stock and, if so, the terms and conditions of conversion or exchange;

 

 -whether or not the shares of the series will be redeemable and, if so, the dates, terms and conditions of redemption and whether there will be a sinking fund for the redemption of that series and, if so, the terms and amount of the sinking fund; and

 

 -the rights of the shares of the series in the event of our voluntary or involuntary liquidation, dissolution or winding up and the relative rights or priority, if any, of payment of shares of the series.

 

We presently do not have plans to issue any shares of preferred stock. However, preferred stock could be used to dilute a potential hostile acquirer. Accordingly, any future issuance of preferred stock or any rights to purchase preferred shares may have the effect of making it more difficult for a third party to acquire control of us. This may delay, defer or prevent a change of control in our Company or an unsolicited acquisition proposal. The issuance of preferred stock also could decrease the amount of earnings attributable to, and assets available for distribution to, the holders of our common stock and could adversely affect the rights and powers, including voting rights, of the holders of our common stock.

 

Common Stock

 

Our certificate of incorporation authorizes the issuance of 200,000,000 shares of common stock. There are 10,128,600 shares of our common stock issued and outstanding at December 8, 2014. The holders of our common stock:

 

 -have equal ratable rights to dividends from funds legally available for payment of dividends when, as and if declared by the board of directors;

 

 -are entitled to share ratably in all of the assets available for distribution to holders of common stock upon liquidation, dissolution or winding up of our affairs;

 

 -do not have preemptive, subscription or conversion rights, or redemption or access to any sinking fund; and

 

 -are entitled to one non-cumulative vote per share on all matters submitted to stockholders for a vote at any meeting of stockholders

 

See also Plan of Distribution regarding negative implications of being classified as a “Penny Stock.”

 

Authorized but Un-issued Capital Stock

 

Nevada law does not require stockholder approval for any issuance of authorized shares. These additional shares may be used for a variety of corporate purposes, including future public offerings to raise additional capital or to facilitate corporate acquisitions.

 

One of the effects of the existence of un-issued and unreserved common stock (and/or preferred stock) may be to enable our board of directors to issue shares to persons friendly to current management, which issuance could render more difficult or discourage an attempt to obtain control of our board by means of a merger, tender offer, proxy contest or otherwise, and thereby protect the continuity of our management and possibly deprive the stockholders of opportunities to sell their shares of our common stock at prices higher than prevailing market prices.

 

The description of certain matters relating to the securities of the Company is a summary and is qualified in its entirety by the provisions of the Company's Certificate of Incorporation and By-Laws.

 

-23-
 

 

In order to qualify for listing on the Nasdaq SmallCap Market, a company must have at least (i) net tangible assets of $4,000,000 or market capitalization of $50,000,000 or net income for two of the last three years of $750,000; (ii) public float of 1,000,000 shares with a market value of $5,000,000; (iii) a bid price of $4.00; (iv) three market makers; (v) 300 shareholders and (vi) an operating history of one year or, if less than one year, $50,000,000 in market capitalization. For continued listing on the Nasdaq SmallCap Market, a company must have at least (i) net tangible assets of $2,000,000 or market capitalization of $35,000,000 or net income for two of the last three years of $500,000; (ii) a public float of 500,000 shares with a market value of $1,000,000; (iii) a bid price of $1.00; (iv) two market makers; and (v) 300 shareholders.

 

If, after a business combination, we do not meet the qualifications for listing on the Nasdaq SmallCap Market. On April 7, 2000, the Securities and Exchange Commission issued a clarification with regard to the reporting status under the Securities Exchange Act of 1934 of a non-reporting company after it acquired a reporting “blank check” company. This letter clarified the Commission’s position that such Company would not be a successor issuer to the reporting obligation of the “blank check” company by virtue of Exchange Act Rule 12g-3(a).

 

We intend that any merger we undertake would not be deemed a “back door” registration since we would remain the reporting company and the Company that we merge with would not become a successor issuer to our reporting obligations by virtue of Commission Rule 12g-3(a).

 

 

(b) Holders

 

As of December 8, 2014, there were approximately 38 holders of record of our common stock.

 

(c) Dividends.

 

The Registrant has not paid any cash dividends to date and does not anticipate or contemplate paying dividends in the foreseeable future. It is the present intention of management to utilize all available funds for the development of the Registrant's business.

 

(d) Securities Authorized for Issuance under Equity Compensation Plans .

 

None.  

 

(e) Recent Sale of Unregistered Securities 

 

In October 2013, the Company issued 7,250,000 shares of our common stock to Derek Cahill as consideration for the purchase of a business plan along with a website. The acquisition of the business plan and website was valued at $72,500.

 

In October 2013, the Company completed a private placement where it issued 1,800,000 shares of its common stock to accredited investors for $18,000.

 

In April 2014, we completed a public offering whereby we sold 578,600 shares of our common stock at $0.125 per share for total gross proceeds of $72,325.

 

We relied upon Section 4(2) of the Securities Act of 1933, as amended for the above issuances. We believed that Section 4(2) was available because:

 

 None of these issuances involved underwriters, underwriting discounts or commissions;
   
 We placed restrictive legends on all certificates issued;
   
 No sales were made by general solicitation or advertising;
   
 Sales were made only to accredited investors

 

-24-
 

 

In connection with the above transactions, we provided the following to all investors:

 

 Access to all our books and records.
   
 Access to all material contracts and documents relating to our operations.
   
 The opportunity to obtain any additional information, to the extent we possessed such information, necessary to verify the accuracy of the information to which the investors were given access.

 

The Company’s Board of Directors has the power to issue any or all of the authorized but unissued Common Stock without stockholder approval. The Company currently has no commitments to issue any shares of common stock.

 

 

ITEM 6. SELECTED FINANCIAL DATA

 

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

ITEM 7MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

 

This discussion summarizes the significant factors affecting the operating results, financial condition, liquidity and cash flows of the Company and its subsidiaries for the fiscal years ended September 30, 2014 and 2013. The discussion and analysis that follows should be read together with the section entitled “Forward Looking Statements” and our consolidated financial statements and the notes to the consolidated financial statements included elsewhere in this annual report on Form 10-K.

 

Except for historical information, the matters discussed in this section are forward looking statements that involve risks and uncertainties and are based upon judgments concerning various factors that are beyond the Company’s control. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in this report.

 

Company Overview

 

SmooFi plans to be an online marketplace for services that includes service requestors and service providers. Service requestors (people requesting a service) name their own price, date and time for any service. A service requestor can also select qualifying criteria such as number of reviews or review rankings of a service provider. The first service provider who can provide that service, on that date, at that time and meets the service ranking requirements will get the project. No bidding, no waiting a week for an auction to close, no shifting through bidders.

 

SmooFi plans to match up daily job requests and fills market demand for service requests throughout their local city. SmooFi combines an online marketplace and online community that connects local resources with local need. The goal is to create jobs and provide a market value for basic services by aggregating these low cost services within each local market. This will maximize value for both the person or company requesting the service and for the person or company providing the service.

 

As an example, a service requestor may place a listing on SmooFi to walk their dog at 7pm on Saturday October 14th AND service provider must have at least 10 reviews (jobs) completed by SmooFi. The first service provider who has 10 reviews that accepts this service to walk the dog wins the job. If the service provider doesn’t show for the service, their service review will be lowered, if they do a good job, they will get a higher service review by the service requestor.

 

SmooFi can be used for hundreds of types of services including:

 ·Pet walking

 

 ·Car washes

 

 ·House cleaning

 

 ·Grocery and other delivery services

 

 ·Education, Music or other lessons

 

 ·Lawn mowing

 

 ·Data input

 

 ·Moving services

 

 ·And much more..

 

-25-
 

 

Additionally, SmooFi creates an online service community where members track service provider history, including rankings, reliability, on time, etc. and creates an automated service request around this ranking and history.

 

SmooFi keeps a complete audit trail of current and future service requests, costs and allows you to make payment to service providers via credit card or directly from your bank account through third party payment providers such as PayPal. Service providers can now receive credit card payment for services they use to have to get cash for. Plus these funds will be automatically transferred into their bank account.

 

Recently Issued Accounting Pronouncements

 

Refer to the notes to the financial statements for a complete description of recent accounting standards which we have not yet been required to implement and may be applicable to our operation, as well as those significant accounting standards that have been adopted during the current year.

 

Critical Accounting Policies

 

The preparation of our financial statements in conformity with accounting principles generally accepted in the United States of America ("US GAAP") requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of expenses during the reporting period. On an ongoing basis, we evaluate our estimates which are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. The result of these evaluations forms the basis for making judgments about the carrying values of assets and liabilities and the reported amount of expenses that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions. The following accounting policies require significant management judgments and estimates.

 

We base our estimates on historical experience and various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. There can be no assurance that actual results will not differ from these estimates.

 

 

Results of Operations

 

October 15, 2013 (date of inception) to September 30, 2014

 

Revenue

 

Revenues were $12,000 for October 15, 2013 (date of inception) to September 30, 2014 related to the outsource placement.

 

Cost of Sales

 

Cost of Sales were $9,500 for October 15, 2013 (date of inception) to September 30, 2014 which were related to the cost associated with providing the outsource placement services.

 

Development, General and Administrative Expenses

 

Development, general and administrative expenses were $147,413 from October 15, 2014 (date of inception) to September 30, 2014.  The expenses consisted primarily of $55,017 for website, $18,500 from dues and subscription and software development $62,318 for professional fees.

 

-26-
 

 

Interest Expense and Other

 

Interest expense was $10,814 for October 15, 2013 (date of inception) to September 30, 2014 which related to interest accrued on borrowings.

 

 

Liquidity and Capital Resources

 

The following is a summary of the Company's cash flows provided by (used in) operating, investing, and financing activities for October 15, 2013 (date of inception) to September 30, 2014:

 

  October 15, 2013 (inception) to September 30,
  2014
Operating Activities $(63,543)
Investing Activities  (1,995)
Financing Activities  140,325 
Net Effect on Cash $74,787 

 

 

Since acquiring the business plan and website, most of our resources and work have been devoted to planning our business, web site development, mobile application development, implementing systems and controls, and completing our registration statement. When those procedures are done, which we believe will occur over the next few months, we will primarily work on our intended service offerings as well further internal development of software for which we have developed our initial framework of and completed some coding of this software. We believe that the work needed to initiate and complete our software development, attract developers, and initiate our marketing plans, including the development of a saleable product suite, will range between $80,000 and $100,000 if outside contractors and experts are used. If we are able to secure funding to outsource these procedures, of which there are no assurances, we can commence the launch of our intended services and software products to the public. If we are only able to use internal resources only (primarily consisting of the services of our president and chief executive officer), the process will take much longer and our initial launch may be limited to a much smaller target market. If we are unable to raise any funds, the development costs would have to be provided by our president and chief executive officer to the extent that he is capable and willing to provide such funds. While we have engaged the services of an established software development firm which we use on an as “needed basis” their function and assistance is limited by our availability of financing.  Our goal would be to have software product available, services available, multiple sales channels and a comprehensive corporate website up and running within one year, but there is no way of estimating what the likelihood of achieving that goal would be.

 

Private capital, if sought, we believe will be sought from former business associates of our president and chief executive officer or through private investors referred to us by those same business associates. To date, we have sold 1,800,000 shares of our common stock for $18,000 through a private placement and we sold 578,600 shares of our common stock at $0.125 per share for total gross proceeds of $72,325 through a public placement.

 

If a market for our shares ever develops, of which there can be no assurances, we may use restricted shares of our common stock to compensate employees/consultants and independent contractors wherever possible. We cannot predict the likelihood or source of raising capital or funds that may be needed to complete the development of our business plan and its stages as outlined above.

 

-27-
 

 

We are a public company and have incurred and will continue to incur additional significant expenses for legal, accounting and related services. We are subject to the reporting requirements of the Exchange Act of 1934, we will incur ongoing expenses associated with professional fees for accounting, legal and a host of other expenses including annual reports and proxy statements, if required. We estimate that these costs will range up to $50,000 per year over the next few years and may be significantly higher if our business volume and transactional activity increases but should be lower during our first year of being public because our overall business volume (and financial transactions) will be lower, and we will not yet be subject to the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 until we exceed $75 million in market capitalization (if ever). These obligations will certainly reduce our ability and resources to expand our business plan and activities. We hope to be able to use our status as a public company to increase our ability to use noncash means of settling outstanding obligations (i.e. issuance of restricted shares of our common stock) and compensate independent contractors who provide professional services to us, although there can be no assurances that we will be successful in any of these efforts. We will also reduce compensation levels paid to management (if we attract or retain outside personnel to perform this function) if there is insufficient cash generated from operations to satisfy these costs.

 

We hope to be able to use our status as a public company to enable us to use non-cash means of settling obligations and compensate persons and/or firms providing services to us, although there can be no assurances that we will be successful in any of those efforts. However, these actions, if successful, will result in dilution of the ownership interests of existing shareholders, may further dilute common stock book value, and that dilution may be material. Such issuances may also serve to enhance existing management’s ability to maintain control of SmooFi because the shares may be issued to parties or entities committed to supporting existing management. SmooFi may offer shares of its common stock to settle a portion of the professional fees incurred in connection with its registration statement. No negotiations have taken place with any professional and no assurances can be made as to the likelihood that any professional will accept shares in settlement of obligations due them.

 

As of September 30, 2014, we owed $87,531 in connection with organizational costs, professional services related to this offering, business and framework development costs incurred. We have not entered into any formal agreements, written or oral, with any vendors or other providers for payment of services or expenses and to our as “needed basis” software development firm as further described below. There are no other significant liabilities at September 30, 2014.

 

As of September 30, 2014, the Company had one note payable issued and outstanding with a total principle of $50,000 and accrued interest of $4,652. The notes are due on December 31, 2014 and have an interest rate of 12%. The proceeds are being used for basic working capital purposes and costs associated with this offering.

 

Going Concern

 

We have sufficient working capital currently and may secure additional working capital through loans or sales of common stock. Nevertheless, our auditor has issued a "going concern" qualification as part of his opinion in the Audit Report dated December 8, 2014 for the period from October 15, 2013 (inception) to September 30, 2014.

 

Off-Balance Sheet Arrangements

 

We have no outstanding off-balance sheet guarantees, interest rate swap transactions or foreign currency contracts. We do not engage in trading activities involving non-exchange traded contracts.

 

-28-
 

 

Critical Accounting Policies

 

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses and related disclosures of contingent assets and liabilities in the financial statements and accompanying notes. The SEC has defined a company's critical accounting policies as the ones that are most important to the portrayal of the company's financial condition and results of operations, and which require the company to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. We believe that our estimates and assumptions are reasonable under the circumstances; however, actual results may vary from these estimates and assumptions. We have identified in Note 1 - "Summary of Accounting Policies" to the Financial Statements contained in this Report certain critical accounting policies that affect the more significant judgments and estimates used in the preparation of the financial statements.

 

Recent Accounting Pronouncements

 

There are no recently issued accounting pronouncements that the Company has yet to adopt that are expected to have a material effect on its financial position, results of operations, or cash flows. As new accounting pronouncements are issued, the Company will adopt those that are applicable under the circumstances.

 

 

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

-29-
 

 

ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 

 

SmooFi, Inc.

September 30, 2014

 

 

TABLE OF CONTENTS

 

 

Contents 
 Page
  
Report of Independent Registered Public Accounting Firm31
  
Balance Sheet at September 30, 201432
  
Statement of Operations for the Period October 15, 2013 (inception) to September 30, 201433
  
Statement of Stockholders’ Equity for the Period October 15, 2013 (inception) to September 30, 201434
  
Statement of Cash Flows for the Period October 15, 2013 (inception) to September 30, 201435
  
Notes to the Financial Statements36
  

 

 

-30-
 

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

  

To the Board of Directors and Stockholders

SmooFi, Inc.

 

We have audited the accompanying balance sheet of SmooFi, Inc. (“Company”) as of September 30, 2014 and the related statement of operations, changes in stockholders’ equity and cash flows for the period from October 15, 2013 (inception) to September 30, 2014. 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 audits include 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 statements presentation. We believe that our audit provides a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of SmooFi, Inc. as of September 30, 2014, and the result of its operations and its cash flows for the period from October 15, 2013 (inception) to September 30, 2014 in conformity with U.S. generally accepted accounting principles.

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has had minimal revenues and earnings since inception. These conditions, among others, raise substantial doubt about the Company’s ability to continue as a going concern. Management's plans concerning these matters are also described in Note 3, which includes achieving profitable operations and raising additional funds through financing. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

 

/s/ TAAD, LLP

December 8, 2014

Walnut, CA. 91789

 

-31-
 

 

SmooFi, Inc.

Balance Sheet

September 30, 2014

 

 

 

ASSETS    
     
CURRENT ASSETS:    
Cash $74,787 
     
OTHER ASSETS:    
Intangible asset  74,495 
TOTAL ASSETS $149,282 
     
LIABILITIES AND STOCKHOLDERS’ EQUITY    
     
CURRENT LIABILITIES:    
Accrued expenses $87,531 
Note payable and accrued interest payable  54,653 
TOTAL LIABILITIES  142,184 
     
     
STOCKHOLDERS’ EQUITY:    
Preferred stock, $0.001 par value; 5,000,000 shares authorized; none issued or outstanding  —   
Common stock, $0.001 par value; 200,000,000 shares authorized; 10,128,600 shares issued and outstanding  10,129 
Additional paid in capital  152,696 
Accumulated deficit  (155,727)
TOTAL STOCKHOLDERS’ EQUITY  7,098 
     
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $149,282 

 

 

 

The accompanying notes are an integral part of these financial statements.

 

-32-
 

 

SmooFi, Inc.

Statement of Operations

For the Period October 15, 2013 (inception) through September 30, 2014

 

 

  October 15, 2013 (inception) through September 30, 2014
  Revenue $12,000 
  Cost of sales  (9,500)
  Gross Profit  2,500 
  Operating expense:    
General and administrative expenses  (147,413)
Loss from operations  (144,913)
Interest expense  (10,814)
Loss before provision for income tax  (155,727)
Provision for income taxes  —   
     
Net loss $(155,727)
Basic and diluted loss per share $(0.02)
Weighted average common shares outstanding – basic and diluted  9,752,422 

 

 

 

The accompanying notes are an integral part of these financial statements.

-4-
 

 

-33-
 

 

SmooFi, Inc.

Statement of Changes in Stockholders’ Equity

For the Period October 15, 2013 (inception) through September 30, 2014

 

 

 

             
 

Common

Stock

 Common Stock Amount Additional Paid-in-capital Accumulated Deficit Total
Balance - October 15, 2013 (date of inception)-$-$-$-$-
Shares issued for business plan and website on October 15, 20137,250,000 7,250 65,250 - 72,500
Shares issued for founder’s shares500,000 500 (500) - -
Shares issued in private placement completed on October 29, 20131,800,000 1,800 16,200 - 18,000
Shares issued for cash on April 16, 2014578,600 579 71,746   72,325
Net loss- - - (155,727) (155,727)
Balance - September 30, 201410,128,600$10,129$152,696$(155,727)$7,098

 

-34-
 

 

 

SmooFi, Inc.

Statement of Cash Flows

For the Period October 15, 2013 (inception) through September 30, 2014

 

 

CASH FLOW FROM OPERATING ACTIVITIES:    
Net loss $(155,727)
Change in operating assets and liabilities:    
Increased in accrued expenses  87,531 
Increased in interest payable  4,653 
     
Net Cash Used in Operating Activities  (63,543)
     
CASH FLOW FROM INVESTING ACTIVITIES:    
Purchase of Intangibles  (1,995)
Net Cash Used in Investing Activities  (1,995)
     
CASH FLOW FROM FINANCING ACTIVITIES:    
Proceeds from the issuance of note payable  200,000 
Repayment of note payable  (100,000)
Repayment of note payable - related party  (50,000)
Issuance of common stock for cash  90,325 
Net Cash Provided by Financing Activities  140,325 
     
CHANGE IN CASH  74,787 
CASH AT BEGINNING OF PERIOD  —   
CASH AT END OF PERIOD $74,787 
     
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION    
     
Cash paid for:    
Interest $6,197 
Income taxes $—   
     
Non-cash investing and financing activities:    
Intangibles acquired $72,500 

 

 

The accompanying notes are an integral part of these financial statements.  

-35-
 

 

SmooFi, Inc.

NOTES TO FINANCIAL STATEMENTS

September 30, 2014

NOTE 1 – ORGANIZATION

 

SmooFi, Inc. (the Company) was incorporated under the laws of the State of Nevada on October 15, 2013. The Company issued 7,250,000 shares of its common stock to our founder, Derek Cahill, as consideration for the purchase of a business plan along with website.

 

The Company will acquire and/or develop and market software and services that will significantly enhance the performance and functionality of the Internet services used by small to medium sized businesses. The Company’s products and services will use proprietary technology that will enable users to work collaboratively to obtain substantial improvements in performance, reliability and usability.

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America.   All references to Generally Accepted Accounting Principles (“GAAP”) are in accordance with The FASB Accounting Standards Codification (“ASC”) and the Hierarchy of Generally Accepted Accounting Principles.

 

Cash Equivalents

 

For purposes of the balance sheet and statement of cash flows, the Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents.

 

Stock-based Compensation

 

The Company follows ASC 718-10, Stock Compensation, which addresses the accounting for transactions in which an entity exchanges its equity instruments for goods or services, with a primary focus on transactions in which an entity obtains employee services in share-based payment transactions. ASC 718-10 requires measurement of the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). Incremental compensation costs arising from subsequent modifications of awards after the grant date must be recognized. The Company has not adopted a stock option plan and has not granted any stock options.

 

Use of Estimates and Assumptions

 

Preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. The Company has adopted the provisions of ASC 260.

 

Loss per Share

 

The basic loss per share is calculated by dividing the Company’s net loss available to common shareholders by the weighted average number of common shares during the year. The diluted loss per share is calculated by dividing the Company’s net loss available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. Diluted earnings (loss) per share are the same as basic earnings (loss) per share due to the lack of dilutive items in the Company.

 

-36-
 

 

Fair Value Measurements and Disclosures

 

ASC Topic 820 defines fair value, establishes a framework for measuring fair value, establishes a three-level valuation hierarchy for disclosure of fair value measurement and enhances disclosure requirements for fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows:

 

Level 1 - Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

 

Level 2 - Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

 

Level 3 - Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

 

The Company’s adoption of fair value measurements and disclosures did not have a material impact on the financial statements and financial statement disclosures

 

Income Taxes

 

Income taxes are provided in accordance with ASC 740, Income Taxes. A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carry forwards. Deferred tax expense (benefit) results from the net change during the year of deferred tax assets and liabilities.

 

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

 

No provision was made for Federal or State income taxes.

 

Advertising

 

Advertising will be expensed in the period in which it is incurred. There have been no advertising expenses for the reporting period presented.

  

Intangible Assets

 

Intangible assets with finite lives are amortized over their estimated useful life. The Company monitors conditions related to these assets to determine whether events and circumstances warrant a revision to the remaining amortization period. The Company tests its intangible assets with finite lives for potential impairment whenever management concludes events or changes in circumstances indicate that the carrying amount may not be recoverable. The original estimate of an asset's useful life and the impact of an event or circumstance on either an asset's useful life or carrying value involve significant judgment. The Company has not started amortizing the intangible asset until the official launch of its website.

 

Revenue Recognition

 

The Company recognizes revenue in accordance with ASC 605, Revenue Recognition. ASC 605 requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services rendered; (3) the fee is fixed and determinable; and (4) collectability is reasonably assured.

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Recently Issued Accounting Pronouncements

In June 2014, the FASB issued ASU 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements. ASU 2014-10 eliminates the distinction of a development stage entity and certain related disclosure requirements, including the elimination of inception-to-date information on the statements of operations, cash flows and stockholders' equity. The amendments in ASU 2014-10 will be effective prospectively for annual reporting periods beginning after December 15, 2014, and interim periods within those annual periods, however early adoption is permitted. The Company adopted ASU 2014-10 since the quarter ended May 31, 2014, thereby no longer presenting or disclosing any information required by Topic 915.

The Company reviewed all recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the SEC and they did not or are not believed by management to have a material impact on the Company's present or future financial statements.

 

NOTE 3 – GOING CONCERN

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As reflected in the accompanying financial statements, the Company had a negative working capital of $67,397 and an accumulated deficit of $155,727 at September 30, 2014. 

 

While the Company is attempting to generate revenues from services or software products, the Company’s cash position may not be significant enough to support the Company’s daily operations. Management believes that the actions presently being taken to further implement its business plan and generate additional products and revenues provide the opportunity for the Company to continue as a going concern. While the Company believes in the viability of its strategy to realize revenues and in its ability to raise additional funds, there can be no assurances to that effect. The Company’s ability to continue as a going concern is dependent upon its ability to achieve profitable operations or obtain adequate financing.

 

The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

 

NOTE 4 – NOTES PAYABLE

 

As of September 30, 2014, the Company had a total of one notes payable issued and outstanding with a total principle of $50,000 and accrued interest of $4,653. The notes are due on December 31, 2014 and have an interest rate of 12%.

 

NOTE 5 – SHARE CAPITAL

 

The Company is authorized to issue 200,000,000 shares of common stock and 5,000,000 shares of preferred stock. The Company issued 500,000 shares of its common stock to its president and chief executive officer as founder shares. The Company issued 7,250,000 shares of our common stock to Derek Cahill, our majority shareholder, as consideration for the purchase of a business plan along with a website. The acquisition of the business plan and website was valued at $72,500.

 

On October 29, 2013, the Company completed a private placement where it issued 1,800,000 shares of its common stock to accredited investors for $18,000.

 

On April 16, 2014, we completed a public offering whereby we sold 578,600 shares of our common stock at $0.125 per share for total gross proceeds of $72,325.

 

At September 30, 2014, there are 10,128,600 shares of common stock issued and outstanding.

 

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NOTE 6 – COMMITMENTS

 

The Company is obligated to certain professionals for $5,000 per month for a year related to the building of its website and mobile applications on a month to month basis. The Company in its capacity is solely obligated for these fees.

 

NOTE 7 – INCOME TAXES

 

As of September 30, 2014, the Company had net operating loss carry forwards of $155,727 that may be available to reduce future years’ taxable income through 2033.

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  As of September 30, 2014
     
Deferred tax assets:    
Net operating tax carryforwards $60,734 
Other  —   
Gross deferred tax assets  60,734 
Valuation allowance  (60,734)
     
Net deferred tax assets $—   

 

Realization of deferred tax assets is dependent upon sufficient future taxable income during the period that deductible temporary differences and carryforwards are expected to be available to reduce taxable income. As the achievement of required future taxable income is uncertain, the Company recorded a 100% valuation allowance due to the management determined that it is more likely than not that the U.S. federal and state deferred tax assets as of September 30, 2014 will not be realized.

 

Reconciliation between the provision for income taxes and the expected tax benefit using the federal statutory rate of 34% and state statutory rate of 5.0% for 2014 is as follows:

 

  2014
Income tax benefit at federal statutory rate  -34.00%
State income tax benefit, net of effect on federal taxes  -5.00%
Increase in valuation allowance  39.00%
Income tax expense  —   
     

 

 

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ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 

There are not and have not been any disagreements between the Company and its accountants on any matter of accounting principles, practices or financial statement disclosure.

 

ITEM 9A. CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures: We conducted an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. The term "disclosure controls and procedures", as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as amended ("Exchange Act"), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by the company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC`s rules and forms. Disclosure controls and procedures also include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.

 

Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded as of September 30, 2014, that our disclosure controls and procedures are effective at a reasonable assurance level and are designed to provide reasonable assurance that the controls and procedures will meet their objectives. However, it should be noted that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

 

Management's Report on Internal Control Over Financial Reporting: Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.  The internal controls for the Company are provided by executive management's review and approval of all transactions.  Our internal control over financial reporting also includes those policies and procedures that:

 

(1)pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;
  
(2)provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that our receipts and expenditures are being made only in accordance with the authorization of our management; and
  
(3)provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

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Management assessed the effectiveness of the Company's internal control over financial reporting as of September 30, 2014. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework. Management's assessment included an evaluation of the design of our internal control over financial reporting and testing of the operational effectiveness of these controls.

 

Based on this assessment, management has concluded that as of September 30, 2014, our internal control over financial reporting was effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles.

 

This annual report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only management's report in this annual report.

 

Changes in Internal Control over Financial Reporting

 

There were no changes in the Company’s internal control over financial reporting that occurred during the last fiscal quarter that have materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

ITEM 9B OTHER INFORMATION

 

None.

 

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PART III

 

ITEM 10                      DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

 

Directors

 

 

 The following table contains information as of September 30, 2014 as to each Director of the Company:

NameAgeTitle
Sean Clarke37President, CEO, principal executive officer, treasurer, chairman, principal financial officer and principal accounting officer

 

Sean Clarke – Mr. Sean Clarke has served as Chief Executive Officer, Chief Financial Officer, President, Secretary and Treasurer of SmooFi since inception on October 11, 2013. He oversees operations, accounting and financial aspects of the company to accomplish strategic, marketing and visionary actions. Mr. Clarke has also been the sole officer of EPunk, Inc. (Ticker: PUNK) from June 2013 through present. He provides financial and management services for small to medium-sized companies. He provides CEO services to these companies, which includes operational advice, accounting, supply chain management, preparation of security filings, and advice regarding compliance, and corporate governance.

 

At EPunk, Inc., he worked to oversee accounting and audit functions resulting in a successful cost containment strategy. Through a strategic alliance and trilateral agreement he helped accomplish the resolution of a half million dollars in rapidly accruing corporate debt. He oversaw the transition of technology from the prior officers, and worked closely with board members and shareholders to clean up the books and restructure the company. He streamlined operations, worked with auditors/attorney’s to keep up on the SEC filings and bring the company into good standing with creditors, vendors and customers.

 

In January 2008, Mr. Clarke graduated with a Master of Business Administration from the University San Diego where he earned a 3.65 GPA, and was a member of Net Impact an organization for corporate to community relations. He was one of the first in his cohort to graduate with a master spanning three full-time semesters. Mr. Clarke holds a Bachelor of Science in Business Administration with an emphasis in Finance from Chapman University May 2002. Mr. Clarke was a Provost’s scholarship winner from 2000 through 2002.

 

From 2010 through June 2013, Mr. Clarke worked privately as an accountant for Global Properties Corp. He refined existing accounting systems, instituted internal controls and worked in direct support of the Director, board members and primary shareholders. He conducted accounting, bookkeeping, tax and AR/AP services as well as various marketing and IT functions. In 2010, he served as a Controller/Comptroller for hire at a South Orange County accounting firm (Omega Accounting Solutions). He administered financial reporting, budgeting and payroll services for small businesses. He implemented and revised accounting systems, and accounting software solutions across functional departments. During which time, he orchestrated two cost containment strategies resulting in the turnaround of two key clients. He also established AIA government compliant billing and payroll processes.

 

In 2009, as a contractor, Mr. Clarke functioned as the sole On-Site IT Administration and Payable Accountant for a $275M organization that conducting nondestructive testing for major utilities (Anatec-LMT). He coordinated with the Network Administrator to manage a $1.5M network of servers and operational technology.

 

Mr. Clarke started his career in sales at Yellow Book USA 2000-2006, (Ticker: YELL.L) in West Covina, CA. As an Assistant Sales Manager, he oversaw a twenty-person sales team responsible for $15M in annual sales. He facilitated management and recruitment, training, forecasting, and internal reporting responsibilities. He administered a budget, and coordinated with major vendors to contain costs, implement new technology, and ensure product quality. He served in the retention of key accounts, and represented the division at local and superior court levels.

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Mr. Clarke’s IT skills include, but are not limited to virtual private networking, enterprise resource management software like Agresso. Hardware and software configuration and implementation, as well as specific applications like Adobe, QuickBooks and the MS Office suite.

 

Family Relationships.  

None.

Involvement in Certain Legal Proceedings

 

No executive officer or director has been involved in the last ten years in any of the following:

·Any bankruptcy petition filed by or against any business or property of such person, or of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;
·Any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
·Being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities;
·Being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;
·Being the subject of or a party to any judicial or administrative order, judgment, decree or finding, not subsequently reversed, suspended or vacated relating to an alleged violation of any federal or state securities or commodities law or regulation, or any law or regulation respecting financial institutions or insurance companies, including but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail, fraud, wire fraud or fraud in connection with any business entity; or
·Being the subject of or a party to any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act, any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

 

Board Committees and Audit Committee Financial Expert

 

We do not currently have a standing audit, nominating or compensation committee of the board of directors, or any committee performing similar functions. Our board of directors performs the functions of audit, nominating and compensation committees. As of the date of this prospectus, no member of our board of directors qualifies as an “audit committee financial expert” as defined in Item 407(d)(5) of Regulation S-K promulgated under the Securities Act.

 

Director Nominations

 

As of September 30, 2014, we did not affect any material changes to the procedures by which our shareholders may recommend nominees to our board of directors. We have not established formal procedures by which security holders may recommend nominees to the Company’s board of directors.

 

Code of Ethics

 

We have adopted a code of ethics that applies to our principal executive officers, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A copy of our code of ethics may be obtained free of charge by contacting us at the address or telephone number listed on the cover page hereof.

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ITEM 11. EXECUTIVE COMPENSATION

 

Summary Compensation Table

 

The following table shows, for the period from October 15, 2013 (inception) to September 30, 2014, compensation awarded to or paid to, or earned by, our Chief Executive Officer (the “Named Executive Officer”).

          
SUMMARY COMPENSATION TABLE
Name
and 
principal
position 
(a)
Year 
(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)

1 Sean Clarke

CEO, CFO and Director

 2014--------

 

1Mr. Clarke received 500,000 shares of common stock of the Company as founder shares. The Company does not intend on issuing any additional shares to Mr. Clarke for organizational services or for his activities as an officer or director for the foreseeable future.

 

Narrative disclosure to Summary Compensation

 

There is no formal employment arrangement with Mr. Clarke at this time. Mr. Clarke’s compensation has not been fixed or based on any percentage calculations. He will make all decisions determining the amount and timing of his compensation and, for the immediate future, has elected not to receive any compensation which permits us to meet our financial obligations.

 

Equity Awards

Grants of Plan-Based Awards Table

 

None of our named executive officers received any grants of stock, option awards or other plan-based awards during the period ended September 30, 2014 except as stated above. The Company has no activity with respect to these awards.

 

Options Exercised and Stock Vested Table

 

None of our named executive officers exercised any stock options, and no restricted stock units, if any, held by our named executive officers vested during the period ended September 30, 2014. The Company has no activity with respect to these awards.

 

Outstanding Equity Awards at Fiscal Year-End Table

 

None of our named executive officers had any outstanding stock or option awards as of September 30, 2014 that would be compensatory to the officer. The Company has not issued any awards to its named executive officers. The Company and its Board of Directors may grant awards as it sees fit to its employees as well as key consultants.

 

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Compensation of Directors

 

During our fiscal year ended September 30, 2014, we did not provide compensation to any of our directors for serving as our director. We currently have no formal plan for compensating our directors for their services in their capacity as directors, although we may elect to issue stock options to such persons from time to time. Directors are entitled to reimbursement for reasonable travel and other out-of-pocket expenses incurred in connection with attendance at meetings of our board of directors. Our board of directors may award special remuneration to any director undertaking any special services on our behalf other than services ordinarily required of a director.

 

Compensation Committee Interlocks and Insider Participation

 

Our board of directors is comprised of Sean Clarke, our President and Chief Executive Officer. The entire board of directors performs the functions that would be performed by a compensation committee. All of the directors participate in deliberations concerning the compensation paid to executive officers.

 

Compensation Committee Report

 

Our board of directors has reviewed and discussed the Compensation Discussion and Analysis in this report with management. Based on its review and discussion with management, the board of directors recommended that the Compensation Discussion and Analysis be included in this Annual Report on Form 10-K for the fiscal year ended September 30, 2014. The material in this report is not deemed filed with the SEC and is not incorporated by reference in any of our filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made on, before, or after the date of this Report on Form 10-K and irrespective of any general incorporation language in such filing.

 

Submitted by the board of directors:

Sean Clarke

 

 ITEM 12SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

 

The following table sets forth, as of December 8, 2014, certain information with regard to the record and beneficial ownership of the Company’s common stock by (i) each person known to the Company to be the record or beneficial owner of 5% or more of the Company’s common stock, (ii) each director of the Company, (iii) each of the named executive officers, and (iv) all executive officers and directors of the Company as a group:

 

 

   
Name of Beneficial Owner(1)

Number

of Shares(2)

Percentage of Outstanding Shares of Common Stock (2)
   
Derek Cahill7,250,00071.6%
   
Sean Clarke(3)500,0004.9%

All officers and directors

as a group (one person)

500,0004.9%

 

 (1)

Except as otherwise indicated, the address of each beneficial owner is c/o SmooFi, Inc., 204 S La Esparanza, Suite B, San Clemente, CA 92672.

 

 (2)Applicable percentage ownership is based on 10,128,600 shares of common stock outstanding as of December 8, 2014, together with securities exercisable or convertible into shares of common stock within 60 days of November 30, 2014.  The percent of common stock owned is calculated using the sum of (A) the number of shares of common stock owned and (B) the number of warrants and options of the Beneficial Owner that are exercisable within 60 days, as the numerator, and the sum of (Y) the total number of shares of common stock outstanding (and the number of warrants and options of the Beneficial Owner that are exercisable within 60 days, as the denominator.

 

 (3)Officer and director of the Company. Mr. Clarke received 500,000 founder’s shares of the Company on October 15, 2013.

 

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

 

The only promoters of SmooFi would be Mr. Clarke, president, and chief executive officer, and principal financial officer.  

 

Our office and mailing address is 1031 Calle Recodo, Suite B, San Clemente, CA 92673. The space is provided to us by Mr. Clarke. Mr. Clarke incurs no incremental costs as a result of our using the space. Therefore, he does not charge us for its use. There is no written lease agreement.

 

The Company issued 500,000 shares of its common stock to its president, and chief executive officer, Mr. Clarke, and chief financial officer for founder’s shares.

 

Corporate Governance and Director Independence.

 

The Company has not:

 

 established its own definition for determining whether its directors and nominees for directors are “independent” nor has it adopted any other standard of independence employed by any national securities exchange or inter-dealer quotation system, though our current director would not be deemed to be “independent” under any applicable definition given that he is an officer of the Company; nor
   
 established any committees of the board of directors.

 

Given the nature of the Company’s business, its limited stockholder base and the current composition of management, the board of directors does not believe that the Company requires any corporate governance committees at this time. 

 

As of the date hereof, the entire board serves as the Company’s audit committee.

 

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

 

Independent Public Accountants

 

On December 18, 2013, we engaged TAAD, LLP (“TAAD”) our new independent registered public accounting firm. The appointment of TAAD was approved by our Board of Directors. During the fiscal year ended September 30, 2014, we did not consult with TAAD on (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that may be rendered on the Company's financial statements, and TAAD did not provide either a written report or oral advice to the Company that was an important factor considered by the Company in reaching a decision as to any accounting, auditing, or financial reporting issue; or (ii) the subject of any disagreement, as defined in Item 304 (a)(1)(iv) of Regulation S-K and the related instructions, or a reportable event within the meaning set forth in Item 304(a)(1)(v) of Regulation S-K.

 

Audit Fees

 

During the year ended September 30, 2014, the Company paid TAAD approximately $5,450 for auditing services they performed throughout those years.

 

Tax Fees

 

During the year ended September 30, 2014, our principal accountant did not render services to us for tax compliance, tax advice or tax planning.

 

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All Other Fees

 

During the year ended September 30, 2014, there were no fees billed for products and services provided by the principal accountant other than those set forth above.

 

Policy on Audit Committee Pre-Approval of Audit and Permissible Non-audit Services of Independent Auditors

 

Consistent with SEC policies regarding auditor independence, the Audit Committee has responsibility for appointing, setting compensation and overseeing the work of the independent auditor.  In recognition of this responsibility, the Audit Committee has established a policy to pre-approve all audit and permissible non-audit services provided by the independent auditor.

 

1.Audit services include audit work performed of financial statements, as well as work that generally only the independent auditor can reasonably be expected to provide, including statutory audits, and attest services and consultation regarding financial accounting and/or reporting standards.

 

2.Audit-Related services are for assurance and related services that are reasonably related to the audit or review of our financial statements.

 

3.Tax services include all services performed by the independent auditor’s tax personnel except those services specifically related to the audit of the financial statements, and includes fees in the areas of tax compliance, tax planning, and tax advice.

 

4.Other Fees are those associated with products or services not captured in the other categories.

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PART IV

 

ITEM 15                      EXHIBITS, FINANCIAL STATEMENT SCHEDULES

 

(a)The following documents are filed as a part of this Report:

 

1.Financial Statements.   The following financial statements of SmooFi, Inc. are included in Item 8:

 

Report of Independent Registered Public Accounting Firm.

 

Balance Sheet as of September 30, 2014.

 

Statement of Operations for the period from inception through September 30, 2014.

 

Statements of Stockholders’ Equity for the period from inception through September 30, 2014.

 

Statements of Cash Flows for the period from inception through September 30, 2014.

 

Notes to Financial Statements. 

  

2.Financial Statement Schedule(s):

 

 All schedules are omitted for the reason that the information is included in the financial statements or the notes thereto or that they are not required or are not applicable.

 

3.Exhibits:

 

 3.1 Articles of Incorporation (1)
 3.2 By-Laws(1)
 10.1 Form Note Agreement (1)
 14.1 Code of Ethics (1)
 31 Certification of Chief Executive Officer and Principal Financial Officer required under Rule 13a-14(a)/15d-14(a) under the Exchange Act.*
 32 Certification of Chief Executive Officer and Principal Financial Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

 

* Filed herewith.

(1) Incorporated herein by reference from the Company’s Form S-1/A filed with the Securities and Exchange Commission on February 24, 2014.

 

 

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SIGNATURES

 

In accordance with Section 12 of the Securities Exchange Act of 1934, the registrant caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.

 

December 8, 2014SMOOFI, INC.
  
  
 By: /s/ Sean Clarke
 Name: Sean Clarke
 Title:   President and Chief Financial Officer

 

POWER OF ATTORNEY

 

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. Each person whose signature appears below constitutes and appoints Peng Keong Lim his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, 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 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 and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, 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 and agents, or any of them, or their or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

 

 

Signature Title Date
     
     

/ s/ Sean Clarke

Sean Clarke

 CEO, President, Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) and Director December 8, 2014
     

 

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