UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
ANNUAL REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 2004
Azonic Corporation
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(Name of small business issuer in its charter)
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Nevada 0-28315 84-1517404
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(State or other jurisdiction of (Commission File Number) (IRS Employer Identification No.)
incorporation)
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7 Dey Street, Suite #900, New York, New York 10007
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(Address of principal executive offices)
Issuer's telephone number: (212) 962-4400
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Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act: Common Stock,
$.001 par value (Title of class)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the issuer was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes [X] No [_]
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of issuer's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [ ]
State issuer's revenues for its most recent fiscal year: $ 0
As of March 31, 2004, 1,200,000 shares of the Company's Common Stock, $.001 par
value per share, were held by non-affiliates, which, based upon market closing
price on March 22, 2004, of $.50 had a value of $600,000.
The number of shares of Common Stock of the registrant outstanding as of March
31, 2004, were 24,000,000.
TABLE OF CONTENTS
PART I PAGE
Item 1. Description of Business 4
Item 2. Description of Property 10
Item 3. Legal Proceedings 10
Item 4. Submission of Matters to a Vote of Security Holders 10
PART II
Item 5. Market for Common Equity and Related Stockholder Matters 11
Item 6. Management's Discussion and Analysis or Plan of Operation 12
Item 7. Financial Statements 14
Item 8. Changes in and Disagreements With Accountants on Accounting 14
and Financial Disclosure
Item 8a. Controls and Procedures 15
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act 15
Item 10. Executive Compensation 17
Item 11. Security Ownership of Certain Beneficial Owners and Management 18
Item 12. Certain Relationships and Related Transactions 19
Item 13. Exhibits and Reports on Form 8-K 19
Item 14. Principal accountant fees and services 19
SIGNATURES 20
3
FORWARD-LOOKING STATEMENTS
This report contains certain forward-looking statements and information relating
to Azonic that are based on the beliefs of its management as well as assumptions
made by and information currently available to its management. When used in this
report, the words "anticipate", "believe", "estimate", "expect", "intend",
"plan" and similar expressions, as they relate to Azonic or its management, are
intended to identify forward-looking statements. These statements reflect
management's current view of Azonic concerning future events and are subject to
certain risks, uncertainties and assumptions, including among many others: a
general economic downturn; a downturn in the securities markets; a general lack
of interest for any reason in going public by means of transactions involving
public blank check companies; federal or state laws or regulations having an
adverse effect on blank check companies, Securities and Exchange Commission
regulations which affect trading in the securities of "penny stocks," and other
risks and uncertainties. Should any of these risks or uncertainties materialize,
or should underlying assumptions prove incorrect, actual results may vary
materially from those described in this report as anticipated, estimated or
expected. Readers should realize that Azonic is in the development stage, with
only very limited assets, and that for Azonic to succeed requires that it either
originate a successful business (for which it lacks the funds) or acquire a
successful business. Azonic's realization of its business aims as stated herein
will depend in the near future principally on the successful completion of its
acquisition of a business, as discussed below.
PART I
ITEM 1 - DESCRIPTION OF BUSINESS
CHANGE OF CONTROL
In May 2003, Azonic underwent a change of control. Shareholders of
Azonic sold, for cash, an aggregate of 5,700,000 shares of the 6,000,000 shares
of common stock issued and outstanding. These shares were sold to Carriage House
Capital Corp. in an arm's-length transaction. No officer, director or
significant shareholder of Azonic had any interest in or to or relationship with
Carriage House Capital Corp., either prior to or following the purchase. In
connection with such stock purchase, J.R. Nelson, the sole officer and director,
resigned from all such positions. As of June 13, 2003, Mr. Kevin C. Baer was
appointed Secretary and Jeffery R. Richards was appointed CFO of the Company. As
of June 13, 2003, Howard Baer was appointed as director and Chairman of the
Board.
On September 22, 2003, a change in control of the Registrant occurred
whereby Infinity Capital Group, Inc. of New York, New York purchased 4,500,000
shares of common stock of the registrant and L&M Specialties, Inc. of Carlsbad
California purchased 1,200,000 shares of common stock of the registrant from
Carriage House Capital Corp. of Tempe, Arizona. As a result of the change of
control, Mr. Kevin C. Baer resigned as Secretary, Jeffery R. Richards resigned
as CFO of the Registrant and Howard Baer resigned as Chairman of the Board and
Director as of October 15, 2003.
4
As a result of the change of control, the Board of Directors of the
Registrant had approved to change the corporate office from Littleton, Colorado
to 7 Day Street, New York, New York 10007.
On March 23, 2004, the following Amendment to the Articles of
Incorporation was made effective through an Information Statement pursuant to
Section 14 of the Securities Exchange Act of 1934:
The approval was to amend Article 5 of the Certificate of Incorporation
of Azonic by increasing the number of authorized shares from 50,000,000 shares
of common stock to 100,000,000 shares of common stock, with a par value of
$0.001 per share, and correspondingly increase the number of issued and
outstanding shares of common stock held by each stockholder of record, on a
four-for-one (4-1) forward split basis.
BACKGROUND
Azonic was incorporated in the state of Colorado on May 1, 1996 as
Grand Canyon Ventures Two, Incorporated. The Company changed its name to Azonic
Engineering Corporation ("Azonic Colorado") on June 23, 1998. On November 12,
1999, it was redomiciled to the state of Nevada by merging into its wholly owned
subsidiary Azonic Corporation ("Azonic" or "Company"), a Nevada corporation,
which now is the name of the Company.
NEW BUSINESS PLAN
As of March 29, 2004, the Company adopted a new Business Plan.
OVERVIEW
Azonic Corp., (herein referred as "Azonic" or "the Company"), is
incorporated in the State of Nevada and is currently operating from its
corporate headquarters in New York City, New York. Azonic's goal is to become a
telecommunication service provider that uses sales/marketing channels and
financing/managerial techniques to provide up-to-date telecommunication
technologies. With such trends in our world such as globalization, people rely
more and more on telecommunication for business, personal communication needs
and pleasure. Over the past decade, the numbers of Internet service subscribers
and wireless phone users have seen tremendous growth. In more recent years,
wireless and satellite devices and other broadband Internet equipment were
introduced to the public and have become widely popular. Telecommunication
expenses are becoming a bigger and bigger percentage of household and business
disposable income. Azonic intends to enter this market and will initially act as
a marketer of value-added products and services as a reseller.
INDUSTRY
Although the U.S. telecommunications industry has been in transition
recently, management believes there are a few promising sub-sectors within the
industry. VOIP, or Voice Over Internet Protocol, is among the fastest growing
telecommunication services. According to a study by Insight Research, VOIP-based
services could grow from $13 billion in 2002 to approximately $197 billion in
2007.
5
VOIP is an alternative telephony that can replace services provided by
traditional telephone network. VOIP works by taking the audio signal of
telephone calls and translating it into digital data packets - a process called
packet switching. The packets are then transmitted via the Internet in the same
way as other data such as emails. These digital packets are then reassembled
back into analog audio streams at the call's destination. Unlike traditional
telephone networks, VOIP does not use dedicated circuits for each telephone
call. Instead, the same VOIP network can be shared by multiple users for voice
and data transmission simultaneously. This type of network sharing is more
efficient and can generate significant cost savings to end-users.
VOIP calls may take various forms. The "digitization" process can take
place at the customer's home. A device called digital phone adapter is used to
hook up a regular telephone with a broadband Internet connector, usually a cable
or DSL modem. When a call is placed, the voice signal is digitized and
transmitted through the broadband Internet. Because this type of VOIP service
requires broadband Internet access, it is also referred to as "cable telephony".
Broadband Internet subscribers in the U.S. reached 17.4 million in 2002 and have
since then seen strong growth as multimedia content, such as streaming video and
audio, grows more and more popular over the Internet. The total number of
broadband subscribers is projected to reach 49 million in 2007.(1)
In addition, VOIP calls may be carried via calling cards. Customer
accounts are represented by sets of PIN numbers - a series of numbers with 8 to
15 digits. Before a call is connected, a set of PIN numbers must be keyed in by
the call placer or automatically by a number recognition program at the call
originator's local phone switch. The call is then connected and timed; usage is
deducted from the value of the calling card. VOIP calling cards offer
competitive domestic and international long distance rates at acceptable voice
quality. Azonic management estimates VOIP rates on average are 30-70% lower than
those offered by long distance companies such as AT&T and Sprint.
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1 Leichtman Research Group, November 2002
PRODUCT
Azonic plans to launch two product lines initially. The first product
line is to offer residential and business customers with local and/or long
distance phone services. Customers who already have broadband Internet access
simply need to purchase a digital phone adapter and plug it into their cable/DSL
modems and then hook up their telephone sets or fax machines with the adapter
the same way as plugging the phone cord into a phone jack. Digital phone adapter
is a device the size of a cigarette box and will be offered by Azonic to
purchase or lease. After a few straightforward step-by-step installations and
settings, customers can make and receive phone calls the same way as with
traditional telephone services. Azonic plans to charge residential customers $35
per month for unlimited local and long distance service package and $25 per
month for local only services. All package include "features" such as call
waiting, caller ID, call forwarding, three-way calling and voicemail. Azonic
intends to also offer international long distance service to customers at
compelling rates. For business customers, service packages include unlimited
local and long distance calls, a free fax line and all the abovementioned
features and cost $50 per month.
6
The second product line planned by Azonic is prepaid calling card
service. Calling cards take either of two forms. The first form is a physical
card with a face value of $20 or $50 and is distributed at gas stations,
convenient stores or other local shops. Customers can buy these cards, follow
the instructions printed on the back of cards and make domestic and
international long distance calls at payphones, regular residential phones or
cellular phones. The second form is just a PIN number which can be programmed
into the customer's telephone. When long distance calls are placed, the usage is
deducted from the value of the calling card. Customers may choose to either
buy-as-use or set up automatic programs to buy new cards and charge their credit
cards each time a card is used up. Azonic intends to offer both forms of
service.
BUSINESS STRATEGY
Initially, Azonic will focus on reselling of VOIP services to
capitalize on the potential growth of the industry, because of the minimal entry
capital requirements. The Company is in the process of negotiation with several
of VOIP service providers to purchase their services at wholesale prices and
resell to end users such as consumers and businesses.
In the intermediate to long-term, Azonic may seek acquisitions in the
VOIP services field that will enhance or expand the Company's product lines.
There are many emerging hard and soft technologies and business models in the
telecommunication industry. The Company will seek opportunities that provide
value-added products and services to customers and at the same time build
shareholder value.
COMPETITION
Azonic may compete with traditional telephone service providers, VOIP
providers and other resellers. Management believes VOIP services bare pricing
advantages over traditional phone. Traditional phone services are liable for
various taxes and regulatory charges while for VOIP services at this time, users
only need to pay regular sales taxes. Among the existing services in the market,
VOIP packages represent 25-50% savings over traditional phone service packages
(refer to table on the next page). For those consumers and businesses that are
already Broadband Internet subscribers, these savings often mean they can
receive "very low cost broadband Internet long distance service" by switching
from traditional telephone to VOIP service. Azonic believes VOIP services
possess great potential for residential customers and small businesses due to
the cost-conscious nature of these groups.
7
CURRENT COMPETITORS
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SEE NOTE BELOW: Verizon AT&T Talk America IDT Vonage
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Basic Plan
Offering Price $17 19.99 22.95 N/A $15
Final Bill* $25 $31 $35 N/A $17
Unlimited Local and Regional
Offering Price 35.99 25.99 38.95 N/A 25
Final Bill* $48 $37 $42 N/A $27
Unlimited Local and Long Distance
Offering Price 59.99 49.99 49.95 39.99 $35
Final Bill* $85 $70 $70 $54 $37
Business Unlimited plus Fax
Offering Price 89.98 75 85 N/A 49.99
Final Bill* $120 $100 $110 N/A $55
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* Prices are estimated according to federal and regulatory charges and fees and
federal and local sales taxes.
Note: Due to constantly changing offerings by each of the companies and many
variables, these may not represent current offerings by the companies, or actual
billings.
Azonic will face competition from other VOIP service providers,
particularly at the initial stage when Azonic's plan is to resell VOIP services.
Resellers typically contract with wholesalers to buy "usage" at discount and
resell telephone packages at higher retail prices. Due to the minimum barrier to
entry, competition among resellers can potentially be ferocious. However, the
Company believes the VOIP market is largely undeveloped and market share
acquisition in the early stage tend to possess "first come first serve"
characteristic. By introducing and educating customers about VOIP services,
Azonic hopes to obtain a stable and loyal customer base. Additionally, Azonic
believes the Company's competitive advantage lies in management's extensive
experience in sales and marketing and strong relationships within the
telecommunication industry.
MARKETING
The Company plans to launch a marketing campaign targeting the more
cost conscious and price sensitive residential and small business markets.
Management plans to utilize three marketing tools: newspaper, fax and Internet
based advertisements. Internet based advertising will include both emails and
banner ads and links through other websites and will target mostly consumers.
The purpose is to create awareness of Azonic's website
(http://www.azoniccorp.com) where the Companies services are detailed and
consumers can choose and sign up for different service packages online. In spite
of the recent regulation on Spam email and the undergoing debate on banner and
pop-up ads, Internet based advertising is by far the most cost effective method
for product introduction. The population of individuals who are becoming
technologically savvy is increasing worldwide, and is more acceptant of new
innovative products and services. For a growing larger percentage of these
individuals, the Internet is the medium of choice, and they are spending more
time online relative to television and radio.
8
Optin fax will focus on small businesses. Fax is more cost effective
than mass mailing and, according to management's past successful experiences,
serves the same purpose: to deliver to potential customers a hardcopy of
Azonic's product introduction. Newspaper advertisement, although generally more
costly, will add to optin fax and Internet advertising to enhance Azonic's brand
awareness. The Company plans to invest $10,000 in marketing and the budget is
expected to be spent over the first 4 months. After this initial introductory
period, the Company plans to take advantage of cash inflows from customers and
to increase marketing budgets.
PLAN OF OPERATION
Azonic plans to acquire its initial customers in summer 2004, and will
attempt to add new customers to both residential and business category in each
month thereafter.
Residential services package rates range from $25 to $35 averaging $30.
Business packages average $50. Prepaid cards/services retail at average price of
$30. Based on undergoing negotiations with wholesalers, Azonic estimates overall
gross margin of 25%. The Company plans pay 40% of gross profits to sales staff
as commissions. The company intends to keep a modest operation and estimates
monthly Office and Miscellaneous Expenses to start at $2,000 per month with
$3,000 the maximum.
NEED FOR ADDITIONAL FINANCING
The Company does not have capital sufficient to meet the Company's cash
needs, to carry out its business plan. The Company will have to seek loans or
equity placements to cover such cash needs. Lack of its existing capital may be
a sufficient impediment to prevent it from accomplishing the goal of completing
its business plan. There is no assurance, however, that without funds it will
ultimately allow registrant to complete a business combination. Once a business
combination is completed, the Company's needs for additional financing are
likely to increase substantially. The Company will need to raise additional
funds to conduct its business activities in the next twelve months. Management
has no current plan to seek capital in the form of loans or stock private
placements at this time.
No commitments to provide additional funds have been made by management
or other stockholders. Accordingly, there can be no assurance that any
additional funds will be available to the Company to allow it to cover its
expenses as they may be incurred.
9
Irrespective of whether the Company's cash assets prove to be
inadequate to meet the Company's operational needs, the Company might seek to
compensate providers of services by issuances of stock in lieu of cash.
The Company has no plans for any research and development in the next
twelve months. The Company has no plans at this time for purchases or sales of
fixed assets which would occur in the next twelve months.
The Company expects to hire three employees in the next twelve months,
however, if it achieves a business growth, it may acquire or add employees of an
unknown number in the next twelve months.
The Company's auditor has issued a "going concern" qualification as
part of his opinion in the Audit Report. There is substantial doubt about the
ability of the Company to continue as a "going concern." The Company has a start
up business, limited capital of $7,500 in cash, no other assets, and no capital
commitments. The effects of such conditions could easily be to cause the
Company's bankruptcy, except there are no assets to liquidate in Bankruptcy.
ITEM 2 - DESCRIPTION OF PROPERTY
The Company does not own property. The Company's mailing address is 7
Dey Street, Suite #900, New York, New York 10007.
ITEM 3 - LEGAL PROCEEDINGS
The Company is not a party to any legal proceedings, nor does
management believe that any such proceedings are contemplated.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Special meeting of shareholders held on January 30, 2004 the
shareholders elected Greg Laborde and Karl Nelson directors of the Corporation.
The shareholders also approved the appointment of Larry O'Donnell, CPA, P.C. as
auditor for the fiscal year ending March 31, 2004. There were 4,500,000 shares
represented in person and no shares were represented by proxy. Each of the
directors elected received 100% of the votes of the shares present. There were
no votes recorded against any of the directors elected at the meeting.
10
PART II
ITEM 5 - MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
(a) During the fiscal year ended March 31, 2004, the Common Shares were
quoted under symbol "AZOO" on the Pink Sheets operated by the National Quotation
Bureau, but few transactions have taken place, and there is no active market for
the Common Shares at this time (Prior to 4 for 1 forward split on January 31,
2004, the stock was quoted as AZOI).
2002 FISCAL YEAR (4/1/02 TO 3/31/03)
No reliable quotes available due to inactivity in Pink Sheets.
2003 FISCAL YEAR (4/1/03 TO 3/31/04)
High Low
1st Quarter .95 .95
2nd Quarter 1.00 1.00
3rd Quarter 1.00 1.00
4th Quarter 2.00 .50
There currently is a limited public market for Azonic's common stock in
the pink, and no assurance can be given that a market will develop or that a
shareholder ever will be able to liquidate his investment without considerable
delay, if at all. If a market should develop, the price may be highly volatile.
Unless and until Azonic's common shares are quoted on the NASDAQ system or
listed on a national securities exchange, it is likely that the common shares
will be defined as "penny stocks" under the Exchange Act and SEC rules
thereunder. The Exchange Act and penny stock rules generally impose additional
sales practice and disclosure requirements upon broker-dealers who sell penny
stocks to persons other than certain "accredited investors" (generally,
institutions with assets in excess of $5,000,000 or individuals with net worth
in excess of $1,000,000 or annual income exceeding $200,000, or $300,000 jointly
with spouse) or in transactions not recommended by the broker-dealer.
For transactions covered by the penny stock rules, the broker-dealer
must make a suitability determination for each purchaser and receive the
purchaser's written agreement prior to the sale. In addition, the broker-dealer
must make certain mandated disclosures in penny stock transactions, including
the actual sale or purchase price and actual bid and offer quotations, the
compensation to be received by the broker-dealer and certain associated persons,
and deliver certain disclosures required by the SEC. So long as Azonic's common
shares are considered "penny stocks", many brokers will be reluctant or will
refuse to effect transactions in Azonic's shares, and many lending institutions
will not permit the use of penny stocks as collateral for any loans.
(b) As of March 31, 2004, there were 35 shareholders of record of the
Registrant's common stock.
(c) The Registrant has neither declared nor paid any cash dividends on
its common stock, and it is not anticipated that any such dividend will be
declared or paid in the foreseeable future.
Effective August 11, 1993, the Securities and Exchange Commission (the
"Commission") adopted Rule 15g-9, which established the definition of a "penny
stock," for purposes relevant to the Company, as any equity security that has a
market price of less than $5.00 per share or with an exercise price of less than
$5.00 per share, subject to certain exceptions. For any transaction involving a
penny stock, unless exempt, the rules require: (i) that a broker or dealer
approve a person's account for transactions in penny stocks; and (ii) that 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 (i) obtain financial information and
investment experience and objectives of the person; and (ii) make a reasonable
determination that the transactions in penny stocks are suitable for that person
and that person has sufficient knowledge and experience in financial matters to
be capable of evaluating the risks of transactions in penny stocks. The broker
or dealer must also deliver, prior to any transaction in a penny stock, a
11
disclosure schedule prepared by the Commission relating to the penny stock
market, which, in highlight form, (i) sets forth the basis on which the broker
or dealer made the suitability determination; and (ii) states 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 about
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. Finally, 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.
Dividends
The Company has not paid any dividends to date, and has no plans to do
so in the immediate future.
ITEM 6 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Twelve month period ending March 31, 2004 and March 31, 2003
The Company had no revenues in 2003 fiscal year or 2004 fiscal year.
The Company adopted a new business plan in March 2004 which it is pursuing in
VOIP marketing. The Company incurred general and administrative expenses of
$18,886 in fiscal 2003 compared to no expenses in fiscal 2002. The loss on
operations was ($18,886) in fiscal 2003 compared to none in fiscal 2002. Loss
per share in fiscal 2003 was nominal compared to none in 2002 fiscal year.
The trend of losses can be expected to continue until the Company is
able to generate revenue in excess of expenses.
LIQUIDITY AND CAPITAL RESOURCES
At year end, the Company had no operating capital or other liquid
assets at year end and is reliant upon advances from shareholders or loans to
pay any expenses incurred. The Company had no commitments from any person for
advances or loans. Its only source for capital could be sale or licensing of the
patent the company holds, loans, or private placements of common stock.
The Company remains in the development stage and, since inception, has
experienced significant liquidity problems and has no significant capital
resources now at March 31, 2004.
Need for Additional Funding
The Company is unable to carry out any plan of business without
funding. The Company cannot predict to what extent its current lack of liquidity
and capital resources will impair the business operations whether it will incur
further operating losses. There is no assurance that the Company can continue as
a going concern without substantial funding, for which there is no source.
The Company estimates it will require $30,000 to $40,000 to cover
legal, accounting, transfer and miscellaneous costs of being a reporting company
in the next fiscal year. The Company will have a cash shortfall for current
annual costs of at least $30,000 to $40,000, for which it has no source except
shareholder loans or contributions, none of which have been committed.
12
The Company does not have capital sufficient to meet the Company's cash
needs, including the costs of compliance with the continuing reporting
requirements of the Securities Exchange Act of 1934. The Company will have to
seek loans or equity placements to cover such cash needs. Lack of its existing
capital may be a sufficient impediment to prevent it from accomplishing the goal
of successfully executing its business plan. The Company will need to raise
additional funds to conduct its business activities in the next twelve months.
No commitments to provide additional funds have been made by management
or other stockholders. Accordingly, there can be no assurance that any
additional funds will be available to the Company to allow it to cover its
expenses as they may be incurred.
Irrespective of whether the Company's cash assets prove to be
inadequate to meet the Company's operational needs, the Company might seek to
compensate providers of services by issuances of stock in lieu of cash.
The Company has no plans for any research and development in the next
twelve months. The Company has no plans at this time for purchases or sales of
fixed assets which would occur in the next twelve months.
The Company has no expectation or anticipation of significant changes
in number of employees in the next twelve months, except for plans for a part
time salesperson. It may add full or part time employees of an unknown number in
the next twelve months.
Going concern qualification: The Company has incurred significant
losses from operations for the year ended March 31, 2004, and such losses are
expected to continue. In addition, the Company has no working capital. The
foregoing raises substantial doubt about the Company's ability to continue as a
going concern. Management's plans include seeking additional capital and/or debt
financing or the possible sale of the Company. There is no guarantee that
additional capital and/or debt financing will be available when and to the
extent required, or that if available, it will be on terms acceptable to the
Company. The consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
13
The Company has the following capital commitments for leases and
equipment:
Capital Commitments: NONE
Equipment: NONE
Office Premises
The Company shares its premises located at 7 Dey Street, Suite #900,
New York, New York 10007, with Infinity Capital, Inc. its major shareholder. The
Company pays no rent for the premises.
ITEM 7 - FINANCIAL STATEMENTS
The response to this item is submitted as a separate section of this
report beginning on page F-1.
ITEM 8 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Effective on May 22, 2003, Levine, Hughes & Mithuen, Inc. was dismissed
as the principal accountant engaged to audit the financial statements of Azonic
Corporation (the "Company"). The Board of Directors approved the termination of
the relationship. Levine, Hughes & Mithuen, Inc. performed the audits of the
Company's financial statements for the fiscal years ended March 31, 2002. During
these periods and the subsequent interim period prior to their dismissal, there
were no disagreements with Levine, Hughes & Mithuen, Inc. on any matter of
accounting principles or practices, financial statement disclosure or auditing
scope or procedure, which disagreements if not resolved to Levine, Hughes &
Mithuen, Inc.'s satisfaction would have caused Levine, Hughes & Mithuen, Inc. to
make reference to this subject matter of the disagreements in connection with
Levine, Hughes & Mithuen, Inc.'s report, nor were there any "reportable events"
as such term is defined in Item 304(a)(1)(iv) of Regulation S-K, promulgated
under the Securities Exchange Act of 1934, as amended ("Regulation S-K").
The audit reports of Levine, Hughes & Mithuen, Inc. for the Company's
fiscal years ended March 31, 2001 and 2002 did not contain an adverse opinion,
or a disclaimer of opinion, or qualification or modification as to uncertainty,
audit scope, or accounting principles.
The Company requested Levine, Hughes & Mithuen, Inc. to furnish it with
a letter addressed to the Securities and Exchange Commission stating whether it
agrees with the statements made above by the Company. A copy of such letter,
dated September 5, 2003, is filed with the Form 8-K filed with the Securities
and Exchange Commission on September 11, 2003.
Effective on May 22, 2003, the Company engaged Larry O'Donnell, CPA, PC
to audit the Company's financial statements. Prior to its engagement, the
Company had not consulted with Larry O'Donnell, CPA, PC with respect to: (i) the
application of accounting principles to a specified transaction, either
completed or proposed; (ii) the type of audit opinion that might be rendered on
the Company's financial statements; or (iii) any matter that was either the
subject or disagreement (as defined in Item 304(a)(1)(iv) of Regulation S-K) or
a reportable event (as described in Item 304(a)(1)(iv) of Regulation S-K.
Board of Directors of the Company approved the change in accountants
described herein.
14
ITEM 8a - CONTROLS AND PROCEDURES
The management of the Company has evaluated the effectiveness of the
issuer's disclosure controls and procedures as of a date within 90 days prior to
the filing date of the report (evaluation date) and has concluded that the
disclosure controls and procedures are adequate and effective based upon their
evaluation as of the evaluation date.
There were no significant changes in internal controls or in other
factors that could significantly affect internal controls subsequent to the date
of the most recent evaluation of such, including any corrective actions with
regard to significant deficiencies and material weaknesses.
PART III
ITEM 9 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
The current Executive officers of Registrant at March 31, 2004 are:
NAME POSITION HELD TENURE
---- ------------- ------
Greg Laborde Chairman and CEO Annual
Karl Nelson V.P. Marketing & Business Development Annual
The persons who are directors of the Registrant at March 31, 2004 are:
NAME AGE
---- ---
Greg Laborde 39
Karl Nelson 41
Business Experience
The following is a brief account of the business experience during at
least the past five years of the persons designated to be new directors and
officers of the Registrant, indicating the principal occupation and employment
during that period by each, and the name and principal business of the
organizations by which they were employed.
Greg Laborde, Chairman & CEO
Mr. Laborde has over 17 years of experience on Wall Street in areas of
investment banking, trading and sales and financial consulting. Starting from
1986, Mr. Laborde worked in corporate finance at a number of New York City based
investment banks including Drexel Burnham Lambert, Lehman Brothers, Gruntal &
Co. and Whale Securities. During his Wall Street tenure, Mr. Laborde was
involved in over 20 public and private financing transactions totaling over 100
million dollars. In 1999, he founded and took public Origin Investment Group, a
Business Development Company that was involved in investing in IT related
business. In later December 2001, Origin completed a merger with International
Wireless, Inc., a private company involved in developing visual intelligence
software solutions for wireless and mobile devices. Mr. Laborde holds a
Bachelor's Degree of Science from Lafayette College. Mr. Laborde is 39 years
old. Mr. Laborde has been the CEO, President and Director of Azonic since
October 2003.
15
Karl Nelson, Vice President, Marketing & Business Development
Mr. Nelson worked on Wall Street from 1985 to 1994 in the areas of
investment banking, sales and trading with firms including Lehman Brothers,
Shearson, Gruntal & Rosenkrantz & Co. His experience in investment banking
included helping bring public numerous emerging market and biopharmaceutical
companies through private placements and IPO's.
Mr. Nelson has eight years experience in the Telecom Industry, with six
years as President and Founder of International Service Group Inc. (ISG). ISG
was a company that developed international voice communications routes in Africa
and Asia as well as a "214" licensed switched based reseller of wholesale
minutes. International Service Group Inc. set up Cisco based telecom
infrastructure in various countries, via satellite and local earthstations,
voice traffic was sent from the U.S to these countries.
ISG sold their bandwidth to both wholesale and retail telecom providers
including the largest multi national telecom providers down to prepaid calling
card providers. Mr. Nelson's responsibilities included marketing both to the
wholesale and retail markets via many different media outlets including flyers,
newspapers, magazines, subway advertisement, retail sales outlets, private
labeling, and other joint venture advertising. Sales revenue increased from
$50,000 to $2.1 million over a seven year period.
Mr. Nelson attended Dartmouth College.
No appointee for a director position has been found guilty of any civil
regulatory or criminal offense or is currently the subject of any civil
regulatory proceeding or any criminal proceeding.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange
Act") requires that the Company's officers and directors, and persons who own
more than ten percent of the registered class of the Company's equity
securities, file reports of ownership and changes in ownership with the
Securities and Exchange Commission. Officers, directors and greater than ten
percent stockholders are required by regulation to furnish to the Company copies
of all Section 16(a) forms they file.
16
The following persons failed to file forms on a timely basis during the
past two fiscal years as required under Section 16(a) as follows:
Greg Laborde 1x Form 3 (late filing)
Karl Nelson 1x Form 3 (late filing)
Conflicts of Interest
Members of the Company's management are associated with other firms
involved in a range of business activities. Consequently, there are potential
inherent conflicts of interest in their acting as officers and directors of the
Company. Insofar as the officers and directors are engaged in other business
activities, management anticipates it will devote only a minor amount of time to
the Company's affairs.
The Company's Board of Directors has adopted a policy that the Company
will not seek a merger with, or acquisition of, any entity in which any officer
or director serves as an officer or director or in which they or their family
members own or hold a controlling ownership interest. Although the Board of
Directors could elect to change this policy, the Board of Directors has no
present intention to do so.
There can be no assurance that management will resolve all conflicts of
interest in favor of the Company.
ITEM 10- EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION
Cash Compensation.
Compensation paid for all services provided up to March 31, 2004 (1) to
each of our executive officers and (2) to all officers as a group.
------------------------ --------- ---------- -------- -------------- ----------- ---------------- -------------------------
Name and Principal Year Salary Bonus Consulting Number of Securities Long Term Compensation/
Position Fees/Other Shares Underlying Option
Fees ($) Options/
SARS (#)
------------------------ --------- ---------- -------- -------------- ----------- ---------------- -------------------------
Greg Laborde, Chairman 2001 $0 0 $0 0 0 0
and CEO
2002 $0 0 $0 0 0 0
2003 $0 0 $0 0 0 0
------------------------ --------- ---------- -------- -------------- ----------- ---------------- -------------------------
Karl Nelson, Vice 2001 $0 0 $0 0 0 0
President
2002 $0 0 $0 0 0 0
2003 $0 0 $0 0 0 0
------------------------ --------- ---------- -------- -------------- ----------- ---------------- -------------------------
Officers as a Group 2001 $0 0 $0 0 0 0
2002 $0 0 $0 0 0 0
2003 $0 0 $0 0 0 0
------------------------ --------- ---------- -------- -------------- ----------- ---------------- -------------------------
17
SUMMARY COMPENSATION TABLE OF DIRECTORS
(to March 31, 2004)
----------------------- ------------ -------------- ------------- --------------- -------------------- ---------------------------
Name Year Annual Meeting Consulting Number of Option Securities Underlying
Retainer Fees ($) Fees/Other Shares Exercised Options/SARS (#)
Fees ($) Fees ($)
----------------------- ------------ -------------- ------------- --------------- -------------------- ---------------------------
Greg Laborde, Director 2001 0 0 0 0 0
2002 0 0 0 0 0
2003 0 0 0 0 0
----------------------- ------------ -------------- ------------- --------------- -------------------- ---------------------------
Karl Nelson, Director 2002 0 0 0 0 0
2003 0 0 0 0 0
2003 0 0 0 0 0
----------------------- ------------ -------------- ------------- --------------- -------------------- ---------------------------
The Company formed an Audit Committee on March 24, 2004. Members are
the two current Board Members. All Committee Members are independent Directors
as defined by the Sarbanes-Oxley Act of 2002.
The Corporation is a small business filer and has until July 31, 2005
to form an audit committee as defined by the Sarbanes-Oxley Act of 2002. The
Audit committee has yet to hire a "qualified financial expert" as defined by the
Sarbanes-Oxley Act of 2002.
The Company has not adopted an Integrity and Ethics Policy.
ITEM 11 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table shows the share ownership of officers, directors
and 5% or greater shareholders as of March 31, 2004.
---------------------------------------------------------- ----------------------------- -----------------------------
Name and Address of Beneficial Ownership Amount and Nature of Percent of Class
Beneficial Ownership
---------------------------------------------------------- ----------------------------- -----------------------------
Infinity Capital Group, Inc. (1) 18,000,000 75%
(beneficially Greg Laborde, Chairman and CEO)
7 Dey Street, Suite #900
New York, New York 10007
---------------------------------------------------------- ----------------------------- -----------------------------
L & M Specialties, Inc. 4,800,000 20%
7 Dey Street, Suite #900
New York, New York 10007
---------------------------------------------------------- ----------------------------- -----------------------------
Karl Nelson, Vice President, Marketing and Business 0 0%
Development and Director
7 Dey Street, Suite #900
New York, New York 10007
========================================================== ============================= =============================
Directors as a Group (1 person) 18,000,000 75%
========================================================== ============================= =============================
(1) Mr. Laborde owns 100% of the common stock of Infinity Capital Group, Inc.
("Infinity Capital") and he is the President, CEO and Chairman of the Board of
Infinity Capital.
18
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The officers and directors of the Company approved a resolution to
forward split the common shares of the Company on a four shares for one basis
effective March 23, 2004 based upon a majority of the shareholders giving their
written consent to such action.
ITEM 13 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits filed with this annual report.
Exhibit No. Description
----------- -----------
3.1 Bylaws (1)
31.1 Section 302 Certification (CEO)
31.2 Section 302 Certification (CFO)
32.1 Section 906 Certification (CEO)
32.2 Section 906 Certification (CFO)
(1)Incorporated by reference from the exhibits included with the
Company's prior Report on Form 10SB12G filed with the Securities and Exchange
Commission, dated December 1, 1999.
(b) Reports on Form 8-K
The Company filed reports on Form 8Ks in 2003 as follows:
8K filed 6/10/03
8K filed 9/11/03
8K filed 10/03/03
8K/A filed 10/16/03
8K filed 3/31/04
ITEM 14 - PRINCIPAL ACCOUNTANT FEES AND SERVICES
General. Larry O'Donnell, CPA, P.C. ("O'Donnell") is the Company's
principal auditing accountant firm. The Company's Board of Directors has
considered whether the provision of audit services is compatible with
maintaining O'Donnell's independence.
Audit Fees. O'Donnell billed for the following professional services:
$270 for the fiscal periods ending June 31, 2003, September 30, 2003 and
December 31, 2003; $1,000 for the audit of the annual financial statement of the
Company for the fiscal year ended March 31, 2004.
Levine, Hughes & Mithuen, Inc. ("LHM") billed the Company for the
following professional services: $1,500 for the audit of the annual financial
statement of the Company for the fiscal year ended March 31, 2002 and March 31,
2003.
Audit Related Fees. LHM billed the Company for the following
professional services: $750 for the review of the interim financial statements
included in quarterly reports on Form 10-QSB for the periods ended June 30,
2002, September 30, 2002, and December 31, 2002.
19
All Other Fees. There were no tax fees or other fees in 2001, 2002 or
2003 charged by any Auditing or other accounting firm.
The Company's Board acts as the audit committee and had no
"pre-approval policies and procedures" in effect for the auditors' engagement
for the audit year 2002 and 2003.
The auditors' full time employees performed all audit work.
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized. Azonic Corporation
Date: May 21, 2004 By:/s/Greg Laborde
-----------------------------
Greg Laborde, Chairman and CEO
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Date: May 21, 2004 By:/s/Greg Laborde
-----------------------------
Greg Laborde, Chairman and CEO
Date: May 21, 2004 By:/s/Karl Nelson
-----------------------------
Karl Nelson, Vice President
DIRECTORS:
Date: May 21, 2004 By:/s/Greg Laborde
-----------------------------
Greg Laborde
Date: May 21, 2004 By:/s/Karl Nelson
-----------------------------
Karl Nelson
20
Index to Financial Statements:
INDEPENDENT AUDITOR'S REPORT.............................................. F-1
BALANCE SHEET as of March 31, 2004........................................ F-2
STATEMENTS OF OPERATIONS for fiscal years ended March 31, 2004 and 2003
and from Inception (May 1, 1996) through March 31, 2004....................F-3
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
from Inception (May 1, 1996) through March 31, 2004....................... F-4
STATEMENTS OF CASH FLOWS for fiscal years ended March 31, 2004 and 2003
and from Inception (May 1, 1996) through March 31, 2004....................F-5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ............................ F-6 -F-7
NOTES TO FINANCIAL STATEMENTS......................................... F-7 - F-8
21
Larry O'Donnell, CPA, P.C.
Telephone (303)745-4545 2228 South Fraser Street
Unit 1
Aurora, Colorado 80014
INDEPENDENT AUDITOR'S REPORT
To the Shareholders
Azonic Corporation
I have audited the accompanying balance sheet of Azonic Corporation (a
development stage company) as of March 31, 2004, and the related statements of
operations, shareholders' equity and cash flows for the year then ended March
31, 2004.These financial statements are the responsibility of the Company's
management. My responsibility is to express an opinion on these financial
statements based on our audit. The financial statements of Azonic Corporation (a
development stage company) for the period from May 1, 1996 (Date of Inception)
to March 31, 2002 , were audited by other auditors whose report dated May 3,
2002, expressed an unqualified opinion on those statements.
I conducted my audit in accordance with auditing standards generally accepted in
the United States of America. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. I believe that my audit provides a reasonable basis for
my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Azonic Corporation (a development
stage company), as of March 31, 2004, and the results of its operations and cash
flows for the year ended March 31, 2004 in conformity with accounting principles
generally accepted in the United States of America.
/s/ Larry O'Donnell, CPA, P.C.
Aurora, Colorado
May 3, 2004
F-1
AZONIC CORPORATION
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
March 31, 2004
ASSETS
Current assets
Cash $ 7,500
Property and equipment -
Other assets -
-----------
$ 7,500
===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 1,284
Notes payable-related party 25,102
-----------
26,386
Shareholders' equity:
Preferred stock, $.001 par value; 5,000,000 shares authorized;
no shares issued and outstanding -
Common stock, $.001 par value; 50,000,000 shares authorized;
24,000,000 shares issued and outstanding 24,000
Additional paid-in capital (deficit) (23,700)
Deficit accumulated during the development stage (19,186)
-----------
Total shareholders' equity (18,886)
-----------
$ 7,500
===========
See accompanying independent auditors' report and notes to
financial statements.
F-2
AZONIC CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
For the Years Ended March 31, 2004 and 2003 and
the Period from May 1, 1996 (Date of Inception) to
March 31, 2004
Year Ended Year Ended May 1, 1996
March 31, March 31, (Inception) to
2004 2003 March 31, 2004
---------------- --------------- ------------------
Revenues $ - $ - $ -
Costs and expenses:
Amortization - - 50
General and administrative 18,886 $ (19,136)
---------------- --------------- ------------------
Loss from operations $ (18,886) $ - $ (19,186)
----------------- --------------- ----------------
Loss per common share $ - $ - $ -
================ =============== ===============
Weighted average shares outstanding 24,000,000 24,000,000 12,916,000
================ =============== ===============
See accompanying independent auditors' report and notes to
financial statements.
F-3
AZONIC CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF SHAREHOLDERS' EQUITY
Period from May 1, 1996 (Date of Inception) to March 31, 2004
Accumulated
Additional Deficit Total
Number of Par Value Paid-In From Shareholders'
Shares Amount Capital Inception Equity
Balance at May 1, 1996 - $ - $ - $ - $-
Issuance of common stock for
costs and services at $.00005
per share, May 1, 1996 4,000,000 4,000 (3,950) - 50
Net loss - - - (9) (9)
--------------- ------------- ------------- ------------- -------------
Balance at March 31, 1997 4,000,000 4,000 (3,950) (9) 41
Net loss - - - (10) (10)
--------------- ------------- ------------- ------------- -------------
Balance at March 31, 1998 4,000,000 4,000 (3,950) (19) 31
Net loss - - - (31) (31)
--------------- ------------- ------------- ------------- -------------
Balance at March 31, 1999 4,000,000 4,000 (3,950) (50) -
Issuance of common stock for
services at $.00005 per share,
August 10, 1999 20,000,000 20,000 (19,750) - 250
Net loss - - - (250) (250)
--------------- ------------- ------------- ------------- -------------
Balance at March 31, 2000 24,000,000 24,000 (23,700) (300) -
Net loss - - - - -
--------------- ------------- ------------- --------------- -------------
Balance at March 31, 2001 24,000,000 24,000 (23,700) (300) -
Net loss - - - - -
--------------- ------------- ------------- ------------- -------------
Balance at March 31, 2002 24,000,000 24,000 (23,700) (300) -
Net loss - - - - -
--------------- ------------- ------------- ------------- -------------
Balance at March 31, 2003 24,000,000 24,000 (23,700) (300) -
Net loss - - - (18,886) (18,886)
--------------- ------------- ------------- -------------- --------------
Balance at March 31, 2004 24,000,000 $ 24,000 $ (23,700) $ (19,186) $ ( 18,886)
=============== ============= ============= ============== =============
See accompanying independent auditors' report and notes to
financial statements.
F-4
AZONIC CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
For the Years Ended March 31, 2004 and 2003 and
the Period from May 1, 1996 (Date of Inception) to March 31, 2004
Year Ended Year Ended May 1, 1996
March 31, March 31, (Inception) to
2004 2003 March 31, 2004
---------------- --------------- ----------------
Cash flows from operating activities:
Net loss $ (18,886) $ - $ (19,186)
Adjustments to reconcile net loss to net cash
provided by operating activities
Amortization - - 50
Non-cash services - - 250
Increase in accounts payable 1,284 - 1,284
---------------- --------------- ---------------
Net cash used by operating activities (17,602) - (17,602)
----------------- --------------- ----------------
Cash flows from investing activities - - -
---------------- --------------- ---------------
Cash flows from financing activities
Proceeds from notes payable-related parties 25,102 - 25,102
----------------- --------------- ---------------
Net change in cash 7,500 - 7,500
Cash, beginning of period - - -
---------------- --------------- ---------------
Cash, end of period $ 7,500 $ - $ 7,500
================ =============== ===============
Supplemental disclosures of cash flow information:
Noncash investing and financing activities:
Common stock issued for organization
costs and services $ - $ - $ 300
---------------- --------------- ---------------
See accompanying independent auditors' report and notes to
financial statements.
F-5
AZONIC CORPORATION
(A DEVELOPMENT STAGE COMPANY)
FOOTNOTES to FINANCIAL STATEMENTS
For the Years Ended March 31, 2004 and 2003 and
the Period from May 1, 1996 (Date of Inception) to March 31, 2004
NOTE 1 ORGANIZATION AND NATURE OF OPERATIONS
The financial statements presented are those of Azonic Corporation (the
"Company"). The Company is a development stage company since planned business
operations have not commenced. As of March 29, 2004, the Company adopted a new
business plan. The Company's plan is to become a telecommunication service
provider that provides up-to-date telecommunication technologies including Voice
Over Internet Protocol, VOIP. Its principal executive offices are located in New
York, New York.
The Company was initially incorporated in the state of Colorado on May 1, 1996
as Grand Canyon Ventures Two, Incorporated. The Company changed its name to
Azonic Engineering Corporation on June 23, 1998. On November 12, 1999, it was
redomiciled in the State of Nevada by merging into its wholly-owned subsidiary,
Azonic Corporation, which now is the name of the Company. As a result of the
merger, the Company has changed the par value of its common stock to $.001. The
accompanying financial statements have been restated to reflect this change.
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Income Taxes
The Company provides for income taxes using the asset and liability method as
prescribed by Statement of Financial Accounting Standards ("SFAS") No. 109,
Accounting for Income Taxes. Under the asset and liability method, deferred tax
assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amount of
existing assets and liabilities and their respective tax bases. Deferred tax
assets and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to
be recovered or settled. Additionally, a valuation allowance is established when
necessary to reduce deferred income tax assets to the amounts expected to be
realized. Under Statement 109, the effect on deferred tax assets and liabilities
of a change in tax rates is recognized in income in the period that includes the
enactment date.
Loss Per Common Share
Loss per common share is computed using the weighted average number of common
shares outstanding during each period.
F-6
AZONIC CORPORATION
(A DEVELOPMENT STAGE COMPANY)
FOOTNOTES to FINANCIAL STATEMENTS
For the Years Ended March 31, 2004 and 2003 and
the Period from May 1, 1996 (Date of Inception) to March 31, 2004
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Statement of Cash Flows
For purposes of the statement of cash flows, the Company considers all highly
liquid instruments with an original maturity of three months or less cash
equivalents.
Comprehensive Income
Statement of Financial Accounting Standards No. 130, Reporting Comprehensive
Income, requires total comprehensive income be reported in the accompanying
financial statements. The Company had no items of comprehensive income at March
31, 2004 and 2003.
NOTE 3 INCOME TAXES
As of March 31, 2004, the Company had net operating loss carryforwards of $300,
which expire in varying amounts from 2012 to 2015. Generally, these operating
losses are available to offset future federal and state taxable income.
NOTE 4 RELATED PARTY TRANSACTIONS
Prior the year ended March 31, 2004 the Company's corporate offices were located
in the personal residence of a shareholder and board member on a rent-free
basis. Furthermore, all legal and accounting costs are paid for or provided
without charge to the Company by Nordstrom, Forbes and Lincoln ("NFL"), a
corporate entity for which the Company's president is also a shareholder and its
president. These costs paid for by NFL totaled $1,500 for the year ended March
31, 2003.
During the year ended March 31, 2004 control of the Company was changed. All
expenses of the Company were paid by Infinity Capital Group, Inc., a corporate
entity for which the current president is also a shareholder and its president.
This company also loaned the company $7,500. The Company executed a promissory
note for the expenses and loan. The note bears interest at 4% and is due March
31, 2005.
NOTE 5 SHAREHOLDERS' EQUITY
Preferred Stock
No shares of the Company's preferred stock have been issued as of March 31,
2003. Dividends, voting rights and other terms, rights and preferences have not
been designated. The Company's board of directors may establish these provisions
from time to time.
F-7
AZONIC CORPORATION
(A DEVELOPMENT STAGE COMPANY)
FOOTNOTES to FINANCIAL STATEMENTS
For the Years Ended March 31, 2004 and 2003 and
the Period from May 1, 1996 (Date of Inception) to March 31, 2004
NOTE 5 SHAREHOLDERS' EQUITY (continued)
Common Stock
In May 1996, the Company issued one million shares of its common stock at
$.00005 per share in exchange for services performed and costs advanced to
organize the Company. In August 1999, the board of directors authorized the
Company to issue five million shares of its common stock at $.00005 per share to
the Company's president in exchange for services valued at $250.
Forward stock split
The financial statements have been adjusted to reflect a four for one forward
stock split on March 23, 2004.
F-8