UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the Fiscal Year Ended December 31, 2003
OR
[ ] TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (No Fee Required)
Commission File No. 000-32695
Amaru, Inc.
------------------------
(Name of Small Business Issuer in its Charter)
Nevada 88-0490089
-------------------------------- -------------------------------------
State or other jurisdiction I.R.S. Employer Identification Number
of incorporation or organization
112 Middle Road, #08-01 Middland House, Singapore 188970
------------------------------------------------------- --------
Address of principal executive office Zip Code
Issuer's telephone number: (65) 6332 9287
--------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT
Common Stock, $0.001 Par Value
------------------------------
(Title of Class)
Check whether the issuer: (1) filed all reports required by Section 13 or 15(d)
of the Exchange Act during the past 12 months, and (2) has been subject to such
filing requirements for the past ninety (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 registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of the Form 10-KSB or any
amendment to this Form 10-KSB. [X]
The Company's revenues for Fiscal Year ended December 31, 2003 were $0.00.
As of February 15, 2004, 1,957,500 shares of Common Stock were outstanding and
there was no trading market for the Common Stock. The Number of shares held by
non-affiliates was 157,500 shares.
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
DOCUMENTS INCORPORATED BY REFERENCE
None.
PART I
Item 1. Description of Business.
-----------------------
Amaru, Inc. (the "Company") was incorporated under the laws of the
state of Nevada in September, 1999. The Company's corporate offices are located
at 112 Middle Road, #08-01 Midland House, Singapore 188970; telephone (65) 6332
9287. The Company's previous address was 610 Newport Center Drive, Suite 1400,
Newport Beach, California 92660. The Company was organized for the purposes of
creating a corporate vehicle to locate and acquire an operating business entity
which management believes is a suitable acquisition candidate. The Company has
been in the developmental stage since inception and has no operating history
other than organizational matters.
The Company had no operating business in fiscal year 2003. The Company
did not intend to develop its own operating business but instead was seeking to
effect a merger (a "Merger") with a corporation which owned an operating
business and wished to undertake a Merger for its own corporate purposes (a
"Merger Target"), generally related to achieving liquidity for its stockholders.
The primary activity of the Company in fiscal year 2003 involved seeking a
Merger Target.
As of February 25, 2004 (the "Closing Date"), Amaru, Inc. (the
"Company") acquired M2B World Pte Ltd., a Singapore corporation ("M2B World") in
exchange for 19,500,000 newly issued "restricted" shares of common voting stock
of the Company and 143,000 "restricted" Series A Convertible Preferred Stock
shares to the M2B World shareholders on a pro rata basis for the purpose of
effecting a tax-free reorganization pursuant to sections 351, 354 and
368(a)(1)(B) of the Internal Revenue Code of 1986, as amended ("IRC") pursuant
to the Agreement and Plan of Reorganization (the "Reorganization Agreement") by
and between the Company, M2B World and M2B World shareholders. As a condition of
the closing of the share exchange transaction, certain shareholders of the
Company cancelled a total of 1,457,500 shares of common stock. Each one (1)
ordinary share of M2B World has been exchanged for 1.3636363 shares of the
Company's Common Stock and 100 shares of the Company's Series A Convertible
Preferred Stock. Each share of newly issued Company's Series A Convertible
Preferred Stock can be converted to 38.461538 shares of the Company's common
stock. Following the Closing Date, there were 20,000,000 shares of the Company's
Common Stock outstanding and 143,000 shares of the Company's Series A
Convertible Preferred Stock outstanding. Immediately prior to the Closing ,
there were 500,000 shares issued and outstanding.
M2B World is in the business of broadband entertainment and
education-on-demand, streaming via computers, television sets, PDAs (Personal
Digital Assistant) and in the near future through third generation devices; and
the provision of broadband services. Its business includes channel and program
sponsorship (advertising and branding); online subscriptions, channel/portal
development (digital programming services); content aggregation and syndication;
broadband consulting services and E-commerce.
Pursuant to the Agreement, the Board of Directors of the Company
resigned and is to be replaced with the designee of M2B World set forth in Item
9, effective approximately on the tenth day following the mailing of this
informational statement, and the current officers resigned upon the Closing
Date. The sole director of the Company prior to the Closing was Sahra Partida.
In fiscal year 2003, the Board of Directors has elected to begin
implementing the Company's principal business purpose, which was at that time to
locate a Merger Target and consummate a Merger.
In addition, Sahra M. Partida, who served as the Company's officer and
director until February, 2003, also serves as the sole director and officer of
four other companies (identified in Part III, Item 9 below) that contemplate the
same business activities as the Company did and thus competed directly with the
Company. As a result, there may have been a conflict of interest with respect to
prospective Merger Targets and presenting the corporate opportunity to the
Company. In general, officers and directors of a corporation incorporated under
the laws of the State of Nevada are required to present certain business
opportunities to such corporation. As a result of Ms. Partida's business
associations with multiple companies she had and will have conflicting
interests. Therefore, the Company has agreed that with respect to conflicts of
interest amongst these companies related to the allocation of opportunities to
negotiate and Merge with Merger Targets, the Company will waive any conflict or
claim related to Ms. Partida's fiduciary duty.
1
Item 2. Description of Property
-----------------------
The Company neither owned nor leased any real property in fiscal year
2003. Pursuant to an oral agreement with Ms. Iwona Alami, the Company's majority
stockholder and legal counsel, the Company utilized the office space of her
lawfirm as its principal executive office. Such office was located at 610
Newport Center Drive, Suite #1400, Newport Beach, California 92660. Following
the closing of the transaction with M2B World Pte., Ltd. in February, 2004, the
Company's principal executive offices are located at 112 Middle Road, #08-01
Middland House, Singapore 188970.
The Company has not invested in any real property at this time nor does
the Company intend to do so. The Company has no formal policy with respect to
investments in real estate or investments with persons primarily engaged in real
estate activities.
Item 3. Legal Proceedings
-----------------
We are not a party to any material pending legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
No matter was submitted to a vote of stockholders in the fourth quarter
of 2003.
PART II
Item 5. Market for Company's Common Equity and Related Stockholder Matters
------------------------------------------------------------------
NO PUBLIC MARKET
The Company's Common Stock is currently not traded on any public trading
market. Management intends to file an application with National Association of
Securities Dealers, Inc. to initiate the quotation of its common stock on NASD's
over-the-counter market (the "Bulletin Board") pursuant to Rule 15c2-11 of the
Securities Exchange Act of 1934. No assurances can be given that NASD will
approve the Company's application.
The authorized capital stock of the Company consists of 25,000,000
shares, of which 20,000,000 shares have been designated Common Stock, $0.001 par
value, and 5,000,000 shares of Preferred Stock, $0.001 par value. At December
31, 2003, there were 1,957,500 shares of Common Stock outstanding and held of
record by 32 stockholders. Following the closing of the transaction with M2B
World, there were 20,000,000 shares of the Company's Common Stock outstanding
and 143,000 shares of the Company's Series A Convertible Preferred Stock
outstanding. In addition, in February, 2004, the Company approved the amendment
to its articles of incorporation increasing its authorized capital stock to up
to 200 million shares of common stock. The Company anticipated that such
amendment will be filed in April of 2004.
DIVIDENDS
The Company does not expect to pay any dividends at this time. The
payment of dividends, if any, will be contingent upon the Company's revenues and
earnings, if any, capital requirements, and general financial condition. The
payment of any dividends will be within the discretion of the Company's Board of
Directors and may be subject to restrictions under the terms of any debt or
other financing arrangements that the Company may enter into in the future. The
Company presently intends to retain all earnings, if any, for use in the
Company's business operations and accordingly, the Board does not anticipate
declaring any dividends in the foreseeable future.
RECENT SALES OF UNREGISTERED SECURITIES
In September, 1999, Liliana Partida and Iwona Alami, the Company's
founders and majority shareholders acquired 900,000 shares of Common Stock each
for the consideration of $900 each in connection with the formation of the
Company. Liliana Partida paid for the shares issued to her in cash; Iwona Alami
rendered legal services to the Company as consideration for the shares issued to
her. The shares were issued without registration in reliance upon the exemption
provided by Section 4(2) of the Securities Act.
2
Commencing May 1, 2000, and ending August 20, 2000, the Company
conducted an offering of its Common Stock (the "Private Placement"), in reliance
upon the exemption from registration set forth in Section 4(2) of the Securities
Act and Regulation D (Rule 506) promulgated under the Securities Act. The
Company offered on a "best efforts" basis directly and through its officers and
directors and through broker-dealers who are members of the National Association
of Securities Dealers, Inc., a maximum of 150,000 shares of Common Stock at an
offering price of $0.03 per share, to investors who were "accredited investors"
as defined in the Securities Act. An aggregate of 152,500 shares of Common Stock
were sold in the Private Placement to a total of 29 accredited investors for
gross proceeds of $4,575 (the maximum offering was increased by the Company). In
August, 2000, the Company issued 5,000 shares of its Common Stock for paralegal
services rendered to the Company.
The Company is one of the following six companies in which investors in
the Private Placement were required to make an equal investment: New Pacific,
Inc., Corniche Corporation, ForSale.com, Inc., Rio Ventures, Inc., and
Allonline.com.
Item 6. Management's Discussion and Analysis or Plan of Operation
---------------------------------------------------------
Plan of Operation
Statements contained in this Plan of Operation of this Annual Report on
Form 10-KSB include "forward-looking statements" within the meaning of Section
27A of the Securities Act of 1933 as amended (the "Securities Act") and Section
21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act").
Forward-looking statements involve known and unknown risks, uncertainties and
other factors which could cause the actual results of the Company, performance
(financial or operating) or achievements expressed or implied by such
forward-looking statements not to occur or be realized. Such forward-looking
statements generally are based upon the Company's best estimates of future
results, general merger and acquisition activity in the marketplace, performance
or achievement, current conditions and the most recent results of operations.
Forward-looking statements may be identified by the use of forward-looking
terminology such as "may," "will," "project," "expect," "believe," "estimate,"
"anticipate," "intends," "continue", "potential," "opportunity" or similar
terms, variations of those terms or the negative of those terms or other
variations of those terms or comparable words or expressions. (See the "RISK
FACTORS" section below for a description of certain of the known risks and
uncertainties of the Company.)
General
In fiscal year 2003, our plan was to seek, investigate, and if such
investigation warrants, consummate a merger or other business combination,
purchase of assets or other strategic transaction (i.e. Merger) with a
corporation, partnership, limited liability company or other business entity (a
"Merger Target") desiring the perceived advantages of becoming a publicly
reporting and publicly held corporation.
Our auditors have included an explanatory paragraph in their report for
the year ended December 31, 2003, indicating that certain conditions raise
substantial doubt regarding our ability to continue as a going concern. The
financial statements included in this Form 10-KSB do not include any adjustment
to asset values or recorded amounts of liabilities that might be necessary in
the event we are unable to continue as a going concern. If we are in fact unable
to continue as a going concern, shareholders may lose their entire investment in
our common stock.
Selecting a Merger Target was complex and involved a high degree of
risk. Because of general economic conditions, rapid technological advances being
made in some industries, and shortages of available capital, management believes
that there are numerous entities seeking the benefits of being a publicly-traded
corporation. Many potential Merger Targets are in industries that have
essentially not presented well in the conventional IPO market, regardless of
their financial success, and suffer from low initial valuations. The perceived
benefits of being a publicly traded corporation may include facilitating or
improving the terms on which additional equity financing may be sought,
providing liquidity (subject to restrictions of applicable statutes and
regulations) for the principals of a business, creating a means for providing
incentive stock options or similar benefits to key employees, providing
liquidity (subject to restrictions of applicable statutes and regulations) for
all stockholders, and other items. Potential Merger Targets may exist in many
different industries and at various stages of development, all of which renders
the task of comparative investigation and analysis of such Merger Targets
extremely difficult and complex.
3
We offered owners of Merger Targets the opportunity to acquire a
controlling ownership interest in a public company at substantially less cost
than is required to conduct an initial public offering. Nevertheless, we have
not conducted any specific market research and we are not aware of statistical
data which would support the perceived benefits of a Merger or acquisition
transaction for the owners of a Merger Target.
Transaction with M2B World
As of February 25, 2004 (the "Closing Date"), Amaru, Inc. acquired M2B
World Pte Ltd., a Singapore corporation ("M2B World") in exchange for 19,500,000
newly issued "restricted" shares of common voting stock of the Company and
143,000 "restricted" Series A Convertible Preferred Stock shares to the M2B
World shareholders on a pro rata basis for the purpose of effecting a tax-free
reorganization pursuant to sections 351, 354 and 368(a)(1)(B) of the Internal
Revenue Code of 1986, as amended ("IRC") pursuant to the Agreement and Plan of
Reorganization (the "Reorganization Agreement") by and between the Company, M2B
World and M2B World shareholders. As a condition of the closing of the share
exchange transaction, certain shareholders of the Company cancelled a total of
1,457,500 shares of common stock. In connection with the transaction, the
Company paid $30,000 for consulting services. Each one (1)ordinary share of M2B
World has been exchanged for 1.3636363 shares of the Company's Common Stock and
100 shares of the Company's Series A Convertible Preferred Stock. Each share of
newly issued Company's Series A Convertible Preferred Stock can be converted to
38.461538 shares of the Company's common stock. Following the Closing Date,
there were 20,000,000 shares of the Company's Common Stock outstanding and
143,000 shares of the Company's Series A Convertible Preferred Stock
outstanding. Immediately prior to the Closing , there were 500,000 shares issued
and outstanding.
M2B World is in the business of broadband entertainment and
education-on-demand, streaming via computers, television sets, PDAs (Personal
Digital Assistant) and in the near future through third generation devices; and
the provision of broadband services. Its business includes channel and program
sponsorship (advertising and branding); online subscriptions, channel/portal
development (digital programming services); content aggregation and syndication;
broadband consulting services and E-commerce.
Pursuant to the Agreement, the Board of Directors of the Company
resigned and is to be replaced with the designee of M2B World set forth in Item
9, effective approximately on the tenth day following the mailing of this
informational statement, and the current officers resigned upon the Closing
Date.
Following the closing of the transaction with M2B World, there were
20,000,000 shares of the Company's Common Stock outstanding and 143,000 shares
of the Company's Series A Convertible Preferred Stock outstanding.
Selection and Evaluation of Merger Targets
Our management, which in fiscal year 2003, consisted of Ms. Partida,
had complete discretion and flexibility in identifying and selecting a
prospective Merger Target with the assistance of our legal counsel or other
consultants, as we deemed necessary.
In connection with its evaluation of a prospective Merger Target,
management conducted a due diligence review which encompassed, among other
things, meeting with incumbent management and inspection of facilities, as well
as a review of financial, legal and other information which was made available
to us.
Under the Federal securities laws, public companies must furnish
stockholders certain information about significant acquisitions, which
information may require audited financial statements for an acquired company
with respect to one or more fiscal years, depending upon the nature of the
specific acquisition. We filed Form 8-K in March, 2004 with respect to the
acquisition of M2B World.
We sought our Merger Targets from all known sources and anticipated
that various prospective Merger Targets would be brought to our attention from
various non-affiliated sources, including securities broker-dealers, investment
bankers, venture capitalists, bankers, other members of the financial community
and affiliated sources, including, possibly, our executive officer, director and
his affiliates. We did not plan to and we did not pay a finder's fee or
commission to our current officer and director or any entity with which he is
affiliated for such service.
4
In analyzing prospective Merger Targets, management considered, among
other factors, such matters as;
o the available technical, financial and managerial resources;
o working capital and other financial requirements;
o the current Wall Street and other market and analyst's
valuations of similarly situated companies;
o history of operation, if any;
o prospects for the future;
o present and expected competition;
o the quality and experience of management services which may be
available and the depth of that management;
o the potential for further research, development or
exploration;
o specific risk factors not now foreseeable but which then may
be anticipated to impact the proposed activities of the
company;
o the potential for growth or expansion;
o the potential for profit;
o the perceived public recognition or acceptance of products,
services or trades; and
o name recognition.
There can be no assurance that the return on an investment in our
securities will be realized, and or that there will be a market for the
Company's stock.
Tax Considerations in Structuring of a Merger
As a general rule, Federal and state tax laws and regulations have a
significant impact upon the structuring of Mergers. We typically evaluate the
possible tax consequences of any prospective Merger and we endeavor to structure
a Merger so as to achieve the most favorable tax treatment to us, the Merger
Target and our respective stockholders. There can be no assurance that the
Internal Revenue Service or relevant state tax authorities will ultimately
assent to our tax treatment of a particular consummated Merger. To the extent
the Internal Revenue Service or any relevant state tax authorities ultimately
prevail in recharacterizing the tax treatment of a Merger, there may be adverse
tax consequences to us, the Merger Target and our respective stockholders.
Merger Target
We were subject to intense competition in the business of seeking a
Merger with a Merger Target. Such competition is from other entities having
business strategies similar to ours. Many of these entities, including venture
capital partnerships and corporations, other blind pool companies, large
industrial and financial institutions, small business investment companies and
wealthy individuals, are well-established and have extensive experience in
connection with identifying and effecting Mergers directly or through
affiliates. Many of these competitors possess greater financial, technical,
human and other resources than us.
Equipment and Employees
In fiscal year 2003, we had no operating business and thus no equipment
and no employees other than our president, who does not receive a salary.
5
Expenses for Year Ended December 31, 2003
Net cash used in operating activities for the twelve months ended
December 31, 2003 was ($18,037) compared to ($652) for the twelve months ended
December 31, 2002. Net cash provided from financing activities for the twelve
months ended December 31, 2003 was $19,790 compared to $657 for the twelve
months ended December 31, 2002. During the twelve months ended December 31,
2003, the Company had no revenues. The Company received a loan from a\ related
party in the amount of 19,790.
The expenses of $16,090 for the twelve months ended December 31, 2003
and $7,544 for the twelve months ended December 31, 2002 resulted primarily from
accounting/auditing, legal and general administrative expenses relating to the
Company's quarterly and annual filings with the Commission. The Company incurred
substantial expenses, including expenses for professional and other services in
January and February of 2004 in connection with its acquisition of M2B World.
Item 7. Financial Statements
--------------------
See the Financial Statements and related Report of
Independent Certified Public Accountants included herewith as pages F-1 through
F-9.
6
AMARU, INC.
(A DEVELOPMENT-STAGE COMPANY)
TABLE OF CONTENTS
PAGE
----
INDEPENDENT AUDITORS' REPORT OF MENDOZA BERGER & CO., LLP F-1
FINANCIAL STATEMENTS
Balance Sheet F-2
Statements of Operations F-3
Statements of Stockholders' Equity (Deficit) F-4
Statements of Cash Flows F-5
Notes to Financial Statements F-6
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders
Amaru, Inc.
We have audited the accompanying balance sheets of Amaru, Inc. (a Nevada
corporation) (a development stage company) as of December 31, 2003 and
2002, and the related statements of operations, shareholders' equity
(deficit), and cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits. The financial statements of Amaru, Inc. as of December 31, 2001 and
from inception (September 1, 1999) through December 31, 2001 were audited by
another auditor, whose report dated May 3, 2002 on these statements included an
explanatory paragraph that describes the Company's recurring losses, negative
working capital and shareholders' capital deficiency which raised substantial
doubt as to the Company's ability to continue as a going concern as discussed in
the notes to the financial statements.
We conducted our audits 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. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Amaru, Inc. as of December 31,
2003 and 2002 and the results of its operations and cash flows for the years
then ended in conformity with accounting principles generally accepted in the
United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in the notes to the
financial statements, the Company has been in the development stage since its
inception, sustained losses and has used capital raised through the issuance of
stock to fund activities, which raises substantial doubt as to its ability to
continue as a going concern. Management's plans concerning these matters are
also described in the notes to the financial statements. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
Mendoza Berger & Company, LLP
Irvine, California
March 15, 2004
F-1
AMARU, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
AS OF DECEMBER 31, 2003 AND 2002
DECEMBER DECEMBER
31, 2003 31, 2002
--------- ---------
ASSETS
Current assets
Cash held in trust account $ 1,757 $ 4
--------- ---------
Total assets $ 1,757 $ 4
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 8,014 $ 9,961
Loan from M2B World 19,790 --
Shareholder loans 657 657
--------- ---------
Total current liabilities 28,461 10,618
Shareholders' equity
Preferred stock (par value $0.001) 5,000,000 shares
authorized none issued -- --
Common stock (par value $0.001) 20,000,000 shares
authorized; 1,957,500 shares issued and
outstanding at December 31, 2003 and December 31, 2002,
respectively 1,958 1,958
Paid in capital 4,342 4,342
Deficit accumulated during development stage (33,004) (16,914)
--------- ---------
Total shareholders' equity (deficit) (26,704) (10,614)
--------- ---------
Total liabilities and shareholders' equity $ 1,757 $ 4
========= =========
The accompanying notes to the financial statements are an integral
part of this statement
F-2
AMARU, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002 AND
CUMULATIVE FROM INCEPTION (SEPTEMBER 1, 1999) TO DECEMBER 31, 2003
CUMULATIVE FROM
FOR THE FOR THE INCEPTION
YEAR ENDED YEAR ENDED SEPTEMBER 1,
DECEMBER DECEMBER 1999 TO DECEMBER
31, 2003 31, 2002 31, 2003
------------ ------------ ------------
Income $ -- $ -- $ --
Accounting and auditing fees 4,675 440 6,935
Legal fees 9,900 6,000 21,540
Corporate registration fees 1,515 1,104 4,529
------------ ------------ ------------
Total expenses 16,090 7,544 33,004
------------ ------------ ------------
Loss before income taxes (16,090) (7,544) (33,004)
Income taxes -- -- --
------------ ------------ ------------
Net loss $ (16,090) $ (7,544) $ (33,004)
============ ============ ============
Net loss per share $ (0.008) $ (0.004)
============ ============
Weighted average number of common
shares outstanding 1,957,500 1,957,500
============ ============
The accompanying notes to financial statements are an integral
part of this statement
F-3
AMARU, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT)
FROM INCEPTION SEPTEMBER 1, 1999 TO DECEMBER 31, 2003
COMMON STOCK
------------------------------------- DEFICIT TOTAL
Number of Par value Additional ACCUMULATED STOCKHOLDERS'
shares $(0.001) Paid-in DURING EQUITY
capital DEVELOPMENT (DEFICIT)
STAGE
----------- ----------- ----------- ----------- -----------
Common stock issued for
cash at par value
September 1, 1999 900,000 $ 900 $ -- $ -- $ 900
Common stock issued for
legal services at par
value September 1, 1999 900,000 900 -- -- 900
Net loss during period -- -- (1,982) (1,982)
----------- ----------- ----------- ----------- -----------
Balance at December 31, 1999 1,800,000 1,800 -- (1,982) (182)
Common stock issued for cash
$0.03 per share 152,500 153 4,197 -- 4,350
Net loss -- -- (3,725) (3,725)
----------- ----------- ----------- ----------- -----------
Balance at December 31, 2000 1,952,500 1,953 4,197 (5,707) 443
Shares issued for filing
services of $150 January
1, 2001 valued at $0.03
per share 5,000 5 145 -- 150
Net loss -- -- (3,663) (3,663)
----------- ----------- ----------- ----------- -----------
Balance at December 31, 2001 1,957,500 1,958 4,342 (9,370) (3,070)
Net loss -- -- (7,544) (7,544)
----------- ----------- ----------- ----------- -----------
Balance at December 31, 2002 1,957,500 1,958 4,342 (16,914) (10,614)
Net loss -- -- (16,090) (16,090)
----------- ----------- ----------- ----------- -----------
Balance at December 31, 2003 1,957,500 $ 1,958 $ 4,342 $ (33,004) $ (26,704)
=========== =========== =========== =========== ===========
The accompanying notes to financial statements are an integral part of this statement
F-4
AMARU, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002 AND
CUMULATIVE FROM INCEPTION SEPTEMBER 1, 1999 TO DECEMBER 31, 2003
CUMULATIVE FROM
FOR THE FOR THE INCEPTION
YEAR ENDED YEAR ENDED SEPTEMBER 1,
DECEMBER DECEMBER 1999 TO DECEMBER
31, 2003 31, 2002 31, 2003
------------ ------------ ------------
CASH FLOW FROM OPERATING ACTIVITIES
Net (loss) $ (16,090) (7,544) (33,004)
Adjustment to reconcile net (loss) to net
cash
Shares issued for legal and filing
services -- -- 1,050
Decrease in operating assets-
Accounts receivable -- 67 --
Increase (decrease) in operating liabilities-
Accounts payable (1,947) 6,824 8,014
------------ ------------ ------------
Cash flow from operating activities (18,037) (653) (23,940)
CASH PROVIDED FROM FINANCING ACTIVITIES
Shareholder loans -- 657 657
Loan from M2B World 19,790 19,790
Proceeds from sale of stock -- -- 5,250
------------ ------------ ------------
Total provide from financing activities 19,790 657 25,697
Cash flow from all activities 1,753 4 1,757
Cash balance at beginning of period 4 -- --
------------ ------------ ------------
Cash balance at end of year $ 1,757 $ 4 $ 1,757
============ ============ ============
The accompanying notes to financial statements are an integral part of this statement
F-5
AMARU, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2003 AND
FOR THE PERIOD FROM INCEPTION SEPTEMBER 1, 1999 TO DECEMBER 31, 2003
GENERAL
Amaru, Inc. ("the Company") is a Nevada corporation incorporated
September 1, 1999. The Company is in the development stage and its
intent is to operate as a capital market access corporation and to
acquire one or more existing businesses through merger or acquisition.
The Company has had no business activity to date.
The accompanying financial statements, which have been prepared in
conformity with accounting principles generally accepted in the United
States of America, contemplates the continuation of the Company as a
going concern. However, the Company has been in the development stage
since its inception (September 1, 1999), sustained losses and has used
capital raised through the issuance of stock and loans to fund
activities. Continuation of the Company as a going concern is
contingent upon establishing and achieving profitable operations. Such
operations will require management to secure additional financing for
the Company in the form of debt or equity.
Management believes that actions currently being taken to revise the
Company's funding requirements will allow the Company to continue its
development stage operations. However, there is no assurance that the
necessary funds will be realized by securing debt or through stock
offerings.
BASIS OF PRESENTATION
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from
those estimates.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company is expensing all start up expenses in accordance with AICPA
Statements of Position 98-5.
The Company uses the asset and liability method of accounting for
income taxes. The Company has not recorded the tax benefit of the net
operating loss carry-forward since realization is not certain.
Earnings per share is computed using the weighted average number of
common shares outstanding. The Company has no shares that are dilutive.
F-6
INCOME TAXES
The components of the deferred tax asset is as follows:
December December
31, 2003 31, 2002
--------- ---------
Deferred tax assets:
Net operating loss carry-forward $ 11,200 $ 5,700
Valuation allowance (11,200) (5,700)
--------- ---------
Net deferred tax assets $ -- $ --
========= =========
The Company had available approximately $33,000 and $16,900 of unused
Federal net operating loss carry-forwards at December 31, 2003 and
2002, respectively, that may be applied against future taxable income.
These net operating loss carry-forwards expire for Federal purposes in
2023. There is no assurance that the Company will realize the benefit
of the net operating loss carry-forwards.
SFAS No. 109 requires a valuation allowance to be recorded when it is
more likely than not that some or all of the deferred tax assets will
not be realized. At December 31, 2003 and 2002, valuations for the full
amount of the net deferred tax asset were established due to the
uncertainties as to the amount of the taxable income that would be
generated in future years.
Reconciliation of the differences between the statutory tax rate and
the effective income tax rate is as follows:
December December
31, 2003 31, 2002
--------- ---------
Statutory federal tax (benefit) rate (34.0)% (34.0)%
Valuation allowance 34.0% 34.0%
--------- ---------
Effective income tax rate 0.00% 0.00%
========= =========
EQUITY TRANSACTIONS
In September 1999, the Company issued 900,000 shares of common stock to
its President in exchange for cash of $900.
In September 1999, the Company issued 900,000 shares of common stock in
exchange for legal services valued at $900.
In connection with private placements of its common stock, the Company
has issued an aggregate of 152,500 shares of common stock in exchange
for cash aggregating $4,350 and an additional 5,000 shares of common
stock for services valued at $150.
RELATED-PARTY TRANSACTIONS
During the years ended December 31, 2003 and 2002, the Company received
legal services from a stockholder that aggregated $9,900 and $6,000
respectively. As of December 31, 2003, the Company owes the stockholder
$7,074 for related services, and such amount is included in accounts
payable in the accompanying balance sheet.
The officers and directors of the Company receive no compensation for
Company activity and the Company has reflected no expense in the
statement of operations.
The Company has no rented office space but uses the offices of one of
the shareholders at no cost to the Company.
The loan from M2B World Pte Ltd. ("M2B") is not evidenced by a note,
bears no interest and is due on demand.
F-7
SUBSEQUENT EVENT
The Company entered into and executed an "Agreement and Plan of
Reorganization" with M2B World Pte Ltd., a Singapore corporation
("M2B") as of February 25, 2004. Pursuant to the terms of the
agreement, the Company will acquired all of the outstanding shares of
common stock of M2B in exchange for the issuance of approximately 19.5
million shares of common stock of the Company and 143,000 of preferred
stock, which contains the right to convert to common stock at
approximately 38.46 shares of common stock for each share of preferred
stock (5,500,000 shares). Prior to the execution of the agreement two
stockholders cancelled 728,750 shares each (1,451,500) to facilitate
the transaction. The Company received a loan from M2B World in the
amount of $19,790.
Subsequent to the execution of the agreement the shareholders of M2B
owned 97% of the Company.
F-8
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
---------------------------------------------------------------
The Board of Directors of the Company approved the engagement of
Mendoza, Berger & Co. LLP. ("MB") on November 17, 2003 to serve as the Company's
independent public auditor and to conduct the audit of the Company's financial
statements for the fiscal year 2003. The decision resulted from the fact that
William D. Lindberg, the Company's previous auditor resigned for personal
reasons.
The audit reports provided by the Company's previous auditor, William D.
Lindberg, C.P.A., for the previous fiscal years did not contain any adverse
opinion or disclaimer of opinion nor was any report modified as to uncertainty,
audit scope or accounting principles. There have been no past disagreements
between the Company and William D. Lindberg, C.P.A., on any matter of accounting
principles or practices, financial statement disclosure or auditing, scope or
procedure.
Item 8a. Controls and Procedures
--------------------------------
Our President and Treasurer/Chief Financial Officer (the "Certifying Officer")
is responsible for establishing and maintaining disclosure controls and
procedures and internal controls and procedures for financial reporting for the
Company. The Certifying Officer has designed such disclosure controls and
procedures and internal controls and procedures for financial reporting to
ensure that material information is made known to him, particularly during the
period in which this report was prepared. The Certifying Officer has evaluated
the effectiveness of the Company's disclosure controls and procedures and
internal controls and procedures for financial reporting as of December 31, 2003
and believes that the Company's disclosure controls and procedures and internal
controls and procedures for financial reporting are effective based on the
required evaluation. There have been no significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of their evaluation, 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 following table sets forth information concerning the sole director
and executive officer of the Company:
Name Age Title
---- --- ------
Sahra Partida 28 President, Secretary, Treasurer and Director
SAHRA PARTIDA, has been the director and officer of the
Company until February, 2004. Ms. Partida has had six years experience
in accounting, sales, marketing and
secretarial corporate services. For the last 5 years, Ms. Partida has been
employed in various administrative, sales and accounting positions at Physicians
Group (1996-97); Apogee Sound (1997-98); Radian (1999-00) and Passione, Inc.
(2000-present). Ms. Partida is a niece of Liliana Partida, the majority
shareholder of the Company.
The Company currently has no employees.
The following chart summarizes certain information concerning the blank
check companies with which Ms. Partida is or has been a director and which have
filed or intend to file a registration statement with the SEC, as of this date.
COMPANY NAME
SEC FILE NUMBER STATE 10SB FILE DATE
--------------- ----- --------------
New Pacific, Inc. Nevada May 3, 2001 *
ForSale.com, Inc. Nevada May 3, 2001
Corniche Corporation Nevada May 3, 2001
Allonline.com Nevada May 3, 2001
Rio Ventures, Inc. Nevada May 3, 2001
* Ms. Partida resigned as an officer and director of that company in January,
2002.
Following the closing of the acquisition of M2B World, the Company's officer and
director resigned and the new officer and director was appointed.
Set forth below is the names of the person who currently constitutes the Board
of Directors, together with information concerning such person. Each elected
director will serve until the Company's next annual meeting of shareholders or
until his successor shall be duly elected and shall qualify.
COLIN BINNY: Age 49, has served as the executive chairman and director of M2B
World since 2000. Mr Binny held various senior management positions with local
and global companies over the last 25 years. He is currently the Executive
Chairman of M2B World, one of the leading broadband content providers in Asia.
Mr Binny is also the Chairman of M2B Media Group and the Chairman of Metromedia
Productions, a regional event company. From 1996 through 1999, Mr Binny was the
President and CEO of UTV International (Singapore). Mr Binny obtained his marine
engineering diploma from the Singapore Polytechnic in 1975.
EXECUTIVE OFFICERS
Mr. Binny will serve as the Company's Chief Executive Officer, Chief
Financial Officer and Secretary.
The Company does not currently have standing audit, nominating or
compensation committees of the Board of Directors, or committees performing
similar functions.
The Company has not adopted yet the code of ethics for its chief Chief Executive
Officer and Chief Financial Officer following the acquisition with M2BWorld, but
intends to adopt the code of ethics on its next meeting of the Board of
Directors.
Item 10. Executive Compensation
----------------------
Sahra Partida was the sole officer and director of the Company in
fiscal year 2003. She did not receive any compensation for her services as the
director and/or officer of the Company in fiscal years 2000 and 2001. In August,
2000, the Company issued 5,000 shares of common stock for cash to Ms. Byman,
prior officer and director.
Item 11. Security Ownership of Certain Beneficial Owners and Management
--------------------------------------------------------------
The following table sets forth the
beneficial ownership of the Company's Common Stock and Preferred Stock as of
February 25, 2004 by each person known to the Company to own more than five
percent (5%) of the Company's Common Stock and by each of the Company's current
directors and nominees for election as directors, and by all directors and
officers of the Company as a group. The table has been prepared based on
information provided to the Company by each shareholder and gives effect to the
issuance of shares pursuant to the Agreement.
COMMON STOCK
AMOUNT AND NATURE
NAME AND OF BENEFICIAL PERCENT
ADDRESS OWNERSHIP (2) OF CLASS (2)
------- ------------- ------------
Colin Binny (1) 4,527,972
Chief Executive Officer, Indirect (2) 22.64%
President, Chief Financial
Officer, Secretary and Director
M2B Media Pte Ltd (1) 4,527,972(2) 22.64%
Direct
Asian Venture Group Pte Ltd 1,597,902 7.98%
80 Robinson Road #17-02 Direct
Singapore 068898
Asian Technology 2,303,322 11.52%
Resources Sdn Bhd Direct
FSBM Plaza 3539 Jalan Teknokrat 7
63000 Cyberjaya
Selangor Darul Ehsan
Malasia
Capital Hills Assets Limited 1,560,315 7.80%
Offshore Incorporations Limited Direct
P.O. Box 957 Offshore Incorporations
Centre
Tortola, British Virgin Islands
Wong Peng Koon 1,634,615 8.17%
64 Bayshore Road, #08-02 Direct
Singapore 469984
Ho Pong Chong 1,560,315 7.80%
Block 46 Lengkok Bahru, #11-263 Direct
Singapore 138687
Lily Lee 1,486,014 7.43%
30 Dover Rise, #01-11 Direct
Singapore 138687
Chua Leong Hin 1,263,112 6.32%
Block 116 Jurong East Direct
Street 13, #17-390
Singapore
Shone Michael John 1,857,517 9.29%
5 CD Goodwood Hill Direct
Singapore 258904
Sahra Partida(3) 0 *%
former Director, Direct
President, Chief Financial
Officer and Secretary
c/o 610 Newport Center Dr.
Suite 1400, Newport Beach
California 92660
All Directors and Officers
as a Group (1 person) 4,527,972 22.64%
-------------------------------
* Less than 1%
PREFERRED STOCK - SERIES A CONVERTIBLE PREFERRED STOCK (3)
AMOUNT AND NATURE
NAME AND OF BENEFICIAL PERCENT
ADDRESS OWNERSHIP (5) OF CLASS
------- ------------- ------------
Colin Binny (1) 26,000
Chief Executive Officer, Indirect (2) 18.18%
President, Chief Financial
Officer, Secretary and Director
M2B Media Pte Ltd (1) 26,000(2) 18.18%
Direct
Asian Venture Group Pte Ltd 19,500 13.64%
80 Robinson Road #17-02 Direct
Singapore 068898
Phua Sui Ling 35,750 25.00%
Block 96 Toa Payoh Direct
Lorong 3, #15-34, Singapore 310096
Annie Lin 35,750 25.00%
36 Hartley Grove Direct
Singapore 457897
Sahra Partida 0 *%
former Director, Direct
President, Chief Financial
Officer and Secretary
c/o 610 Newport Center Dr.
Suite 1400, Newport Beach
California 92660
All Directors and Officers
as a Group (1 person) 26,000 22.64%
-------------------------------
* Less than 1%
As used in this table, "beneficial ownership" is determined in accordance with
the rules of the Securities and Exchange Commission and generally includes
voting or investment power with respect to the shares shown. Except as indicated
by footnote and subject to community property laws where applicable, to the
Company's knowledge the stockholders named in the table have sole voting and
investment power with respect to all shares of Common Stock shown as
beneficially owned by them.
(1) C/o Amaru, Inc. address: 112 Middle Road, #08-01 Middle House,
Singapore 188970. Based on the total of 20,000,000 shares of common
stock outstanding as of February 27, 2004.
(2) Based on a total of 4,527,927 shares of common stock of Amaru, Inc.
held by Mr. Binny and his wife, Chew Bee Lian, indirectly as 100%
shareholders of M2B Media Pte Ltd and 26,000 shares of Series A
Convertible Preferred Stock. Upon conversion of 26,000 shares of Series
A Preferred Stock, M2B Media Pte Ltd and Mr. Binny and his wife,
indirectly, will be entitled to 1,000,000 shares of common stock of the
Company.
(3) Each share of Series Convertible A Preferred Stock is convertible to
38.461538 shares of the Company's common stock.
The Company intends to file an amendment to its Articles of Incorporation to
increase its authorized capital to 200,000,000 shares of common stock upon the
effectiveness of the Schedule 14C which has been mailed to its shareholders.
The following table presents certain information regarding beneficial
ownership of the Company's common stock as of December 31,2003. A certain
beneficial owner is defined as: (i) each person known by the Company to be the
beneficial owner of more than 5% of the outstanding shares of common stock, (ii)
each director and executive officer of the Company, and (iii) all directors and
executive officers as a group. Unless otherwise indicated, each person in the
table has sole voting and investment power as to the shares shown.
SHARES PERCENT
BENEFICIALLY OF CLASS
NAME OWNED OUTSTANDING
---------------------------------- ------------- -----------
Sahra Partida (1) 0 0%
President, Treasurer
Secretary and Director
Iwona Alami(1) 900,000 46%
Liliana Partida (1) 900,000 46%
Officers and Directors as 0 0
a Group (2 persons)
------------------------
* Less than 1%
(1) C/o Company's address: 610 Newport Center Drive, Suite#1400, Newport
Beach, California, 92660.
Based on 1,957,500 shares of Common Stock outstanding as of December
31, 2003.
Item 12. Certain Relationships and Related Transactions
----------------------------------------------
In fiscal year 2003, the Company had no operating business and engaged
in no transactions in which Ms. Partida has had any direct or indirect material
interest.
In addition to the Company, Ms. Partida serves as the director and
officer of other companies that contemplate the same business activities as the
Company and thus compete directly with the Company. Including the Company, these
companies are listed in Item 9 above. As a result and Ms. Partida will have a
conflict of interest with respect to prospective Merger Targets and presenting
the corporate opportunity to the Company. In general, officers and directors of
a corporation incorporated under the laws of the State of Nevada are required to
present certain business opportunities to such corporation, and the laws of the
state of Nevada further provide rights and remedies to shareholders in the event
such duty is breached. As a result of Ms. Partida's business associations with
multiple companies she will have conflicting interests. Therefore, the Company
has agreed that with respect to conflicts of interest amongst these companies
related to the allocation of opportunities to negotiate and Merge with Merger
Targets, the Company will waive any conflict or claim related to Ms. Partida's
fiduciary duty.
Use of Office Space Leased by Our Management
The Company did not own or leased any real property in fiscal year 2003.
Pursuant to an oral agreement with The Law Offices of Iwona J. Alami, Esq., a
firm controlled by a stockholder, we utilized the office space and related
facilities of such firm as our principal executive office at no charge.
Item 13. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
Exhibit Number Description
-------------- -----------
Exhibit Number Description
-------------- -----------
2.1 Agreement and Plan of Reorganization with M2B World Pte
Ltd.**
3.1 Articles of Incorporation*
3.2 Bylaws*
4.1 Form of Subscription Agreement executed by investors in the
Private Placement*
31 Certification of Chief Executive Officer and Chief
Financial Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act
32 Certification of Chief Executive Officer and Chief
Financial Officer Pursuant to Section 906 of the
Sarbanes-Oxley Act
--------------------------------
* Previously filed with the Securities and exchange Commission on Form 10-SB.
**Previously filed with the Securities and Exchange Commission on Form 8-K.
(b) Reports on Form 8-K
Report on Form 8-K waw filed during the fourth quarter of 2003 (Item 5).
ITEM 14. PRINCIPAL FEES AND SERVICES.
Set forth below are fees paid to the Company's independent accountants for the
past two years for the professional services performed for the Company.
Audit Fees: We agreed to pay Mendoza Berger & Company LLP a total of $2,500 for
professional services rendered in connection with performance of our independent
audit for the year ending December 31, 2002.
We agreed to pay Mendoza Berger & Company LLP a total of $1,000 for
professional services rendered in connection with performance of our independent
audit for the year ending December 31, 2003.
Audit Related Fees: None
Tax Fees: None
We agreed to pay Mendoza Berger & Company LLP a total of $1,500 for
professional services rendered in connection with the reviews of the March 31,
2003, June 30, 2003 and September 30, 2003, Forms 10-QSB.
Signatures
----------
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Amaru, Inc.
By /s/
--------------------------------------------
Colin Binny, President, Secretary and
Treasurer
Date:3/30/04
Pursuant to the requirements of the Exchange Act, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
By /s/ Colin Binny
--------------------------------------------
Colin Binny, President, Secretary and
Treasurer
Date: 3/30/04