UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB /A
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2005
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 0-49632
SOLANEX MANAGEMENT INC.
(Name of small business issuer in its charter)
| Nevada | 98-0361151 |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| Suite 440 | 1(888) 678-9446 |
| 1555 E. Flamingo Road | (Issuer's phone number) |
| Las Vegas, Nevada 89119 | |
| (Address of principal executive offices) |
Securities registered under Section 12(b) of the Exchange
Act:
None
Securities registered under Section 12(g) of the Exchange
Act:
100,000,000 shares of common stock, par value $0.001 per share
Check whether the issuer is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act [ ]
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 registrant was required
to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. (1) Yes [X]
No [ ] (2) 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 this Form 10-KSB or any
amendment to this Form 10-KSB. [X]
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act
Yes [ ] No
[ X ]
State issuer’s revenues for its most recent fiscal year: $nil
State the aggregate market value of the voting and non-voting
common equity held by non-affiliates computed by
reference to the price at
which the common equity was sold, or the average bid and asked price of such
common
equity, as of a specified date within the past 60 days. (See
definition of affiliate in Rule 12b-2 of the Exchange Act).
Aggregate market value of non-voting common equity held by non-affiliates as of December 31, 2005: N/A
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date.
Outstanding shares of common stock as of March 31, 2006:
11,033,730
Outstanding shares of preferred stock as of March 31, 2006: Nil
Documents incorporated by reference: None
Transitional Small Business Disclosure Format: Yes [ ] No [X]
INDEX to Annual Report on Form 10-KSB
Solanex Management
Inc.
For the Year Ended December 31, 2005
2
PART I
ITEM 1. DESCRIPTION OF BUSINESS
CORPORATE BACKGROUND
Solanex Management Inc. ("Solanex" or
the "Company") was incorporated under the laws of the State of Nevada on October
12, 2000 under the name EcoSoil Management Inc. The Company changed its name to
Solanex Management Inc. on December 6, 2001. To date, Solanex's only activities
have been organizational, directed at acquiring its principal asset, raising its
initial capital and developing its business plan. The Company has no employees
and no capitalized assets and its management will devote only a portion of their
time to the affairs of the Company.
On October 12, 2000 the Company acquired a license to certain technology and intellectual property from a group of investors and the developer of the technology, Colin V. Hall. The license granted a non-exclusive right to manufacture, market and sell a thermal destructor for on site soil remediation to industrial, petrochemical and site remediation organizations. The intellectual property acquired included all licensing, modification, marketing, distribution and sales rights worldwide in perpetuity. Under the terms of the Agreement and License of Intellectual Property Rights (the Remediator agreement), Mr. Hall was compensated two thousand ($2,000) dollars plus one million five hundred thousand (1,500,000) shares of Solanex common stock and the investors, a group of ten individuals, were compensated an aggregate of two million (2,000,000) shares of Solanex common stock. The license granted a royalty payable to Colin Hall in the amount of seven (7) per cent of gross revenue derived from the sale or use of the soil Remediator. Solanex has not commenced commercial operations, has generated no revenues, has no full-time employees, owns no real estate and has valued the intellectual property rights at $nil on its balance sheet for accounting purposes.
The Remediator agreement contemplated that the license may be revoked if Solanex did not manufacture at least one soil Remediator within 3 years of the licensing date. The Company did not meet the manufacturing requirement and the Agreement and License of Intellectual Property Rights entered into October 12, 2000 by Colin V. Hall and Solanex Management Inc. has subsequently been renewed on a month to month basis.
The original agreement has been supplemented with a joint venture agreement between Solanex Management Inc. and EcoTech Waste Management Inc. (EcoTech) whereby Solanex contracted out services which include but are not limited to product manufacturing, delivery, inventory maintenance, developing a customer base, identifying potential jobs for quotation, website and marketing materials development to EcoTech. Colin Hall is a principal of EcoTech Waste Management Inc. In consideration for the services provided by EcoTech, the Company is required to pay $100,000 to EcoTech over the life of the contract (3 years). At December 31, 2005 the Company has paid $85,500 and has accrued as payable $14,500. Both parties continue to renegotiate their agreement. The Company is also reviewing additional complementary technology and ventures for potential acquisition.
Subsequent to December 31, 2005, the Company continued negotiations to acquire a license to market a portable steam injection system to service small oil fields with the objective redeveloping the Company’s Remediator technology into the steam generation technology by Echo Tech Waste Management Systems, Inc., the company’s joint venture partner in the development of the Remediator high temperature burner technology.
3
The Board of Directors is reviewing and implementing the next steps of the Company’s business strategy, which may include taking the Company into the resource sector by way of actively seeking mineral resource property opportunities being brought to the attention of the Company in its efforts at marketing the Remediator technology to the resource sector.
Funding Its Business Plan
The expenses of
implementing the Company's business plan will exceed the Company's current
available funds. The Company will have to obtain additional funding through an
offering of its securities or through capital contributions from its
stockholders. To date, the Company has financed $100,000 of product development
expenses by extended trade accounts payable and has settled $80,000 of the
accounts payable by the issuance of 2,000,000 shares of its common stock. The
Company settled additional accounts and loans payable in the amount of $117,269
for the issuance of 2,931,730 shares. The Company has raised a further $54,659
by way of loans to the Company at December 31, 2005. No commitments to provide
additional funds have been made by management or stockholders. Accordingly,
there can be no assurance that any additional funds will be available on terms
acceptable to the Company or at all. Subsequent to December 31, 2005 the Company
issued 1,000,000 shares of common stock for proceeds to the Company of $100,000.
The Company’s funding requirement for a prototype will be provided by its joint venture partner, EcoTech Waste Management Inc., as part of the Joint Venture Agreement with EcoTech Waste Management Inc. (www.etwm.ca). Solanex estimates that it will require $75,000 to create a working prototype steam injection system to be sold, rented or leased to a project on a weekly, monthly or annual basis.
Competition
Many of Solanex's potential competitors
have longer operating histories, larger customer or user bases, greater brand
recognition and significantly greater financial, marketing and other resources
than Solanex has as it attempts to enter the marketplace. In addition, existing
competitors may be acquired by, receive investments from, or enter into other
commercial relationships with, larger well-established and well-financed
companies. Competitors have and may continue to adopt aggressive pricing or
availability policies and devote substantially more resources to technology and
methodology development than Solanex.
Intellectual Property
The Company recognizes the
need to file patents, trademarks and trade names on the unique features of the
technology. The Company currently holds no such registrations of any
intellectual property the Company believes could be applied for and which should
be applied for once funding is available.
Government Regulation
There are no specific
government regulations known to us, other than standard business practice, law
and conduct, which might effect us in following our business plan. The use of
the Company's products may be subject to regulation by one or more U.S. federal
agencies, including the Federal Trade Commission and the Environmental
Protection Agency. These activities also may be regulated by various agencies of
the states, localities and foreign countries in which potential applications of
the technology are located.
4
Numerous U.S. federal and state government agencies have demonstrated significant activity in promoting environmental protection and enforcing other regulatory and disclosure statutes. Additionally, it is possible that new laws and regulations may be enacted with respect to soil remediation. The adoption of such laws or regulations and the applicability of existing laws and regulations may impair the Company’s growth and result in a decline in the Company's prospects.
Employees
Currently, the Company has no employees
and relies solely upon its officer and director to provide management and
further its affairs. Management will devote only a portion of their time to the
affairs of the Company
ITEM 2. DESCRIPTION OF PROPERTY
The Company currently maintains an office in two locations. The Company’s USA address is 1555 East Flamingo Road, #440, in Las Vegas, Nevada, and is the official address for the Company. Additionally, the Company has a working office on the 14th floor, 777 Hornby Street, Vancouver, British Columbia. Mr. Hall, the President of the Company, works out of this office and may be contacted at (604) 681-9383.
ITEM 3. LEGAL PROCEEDINGS
The Company is not party to any pending legal proceeding or litigation and none of its property is the subject of any pending legal proceeding. Further, the Company is not aware of any legal proceedings contemplated against it or its property.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to the stockholders for approval during the year ended December 31, 2005.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
No change since previous filing
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Special Note Regarding Forward Looking Statements
Certain
statements in this report and elsewhere (such as in other filings by the Company
with the Securities and Exchange Commission ("SEC"), press releases,
presentations by the Company of its management and oral statements) may
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Words such as "expects,"
"anticipates," "intends," "plans," "believes," "seeks," "estimates" and "should"
and variations of these words and similar expressions, are intended to identify
these forward-looking statements. Actual results may materially differ from any
forward-looking statements. Factors that might cause or contribute to such
differences include, among others, competitive pressures
5
and constantly changing technology and market acceptance of the Company's products and services. The Company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements, which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
Plan of Operation
For the 2005 fiscal year, the
company incurred a loss in the amount of $78,151 compared to a loss of $116,609
in the previous year. Both years losses are a result of organizational expenses
and expenses associated with setting up a company structure to begin
implementing its business plan.
The Company is in the process of evaluating its business potential and incurred costs of $14,500 during the year ended December 31, 2005 to that end ($nil during 2004). The Company anticipates that until these procedures are completed, it will not generate revenues, and may continue to operate at a loss thereafter, depending upon the performance of the business.
At the fiscal year ended December 31, 2003, the Company had spent $85,500 ($14,500 for 2005) for an accumulated total of $100,000 towards the research and development of the soil Remediator.
During the period from October 12, 2000 (date of incorporation) through December 31, 2005, the Company received no revenues.
The Company has no commitments for capital expenditures. In the process of carrying out its business plan, the Company may determine that it cannot raise sufficient capital to support its business on acceptable terms, or at all.
Liquidity and Capital Resources
The Company remains
in its developmental stage and, since inception, has experienced no significant
change in liquidity or capital resources or shareholders' equity. The Company
expects to carry out its plan of business as discussed above. The officers and
directors of the Company will serve without compensation until the Company
successfully pursues a source of revenue.
Since the Company does not anticipate generating significant revenues over the next year, it intends to depend upon equity financing through private placement offerings of its common stock to fund the implementation of its business plan. Over the longer term, two to five years, the Company expects to fund its operations through a combination of revenues from the operation of its business and through additional equity financing. To date, the Company has generated $nil revenue.
The Company will need additional capital to carry out its business plans. No commitments to provide additional funds have been made by management or other stockholders or investors. Accordingly, there can be no assurance that any additional funds will be available on terms acceptable to the Company or at all.
6
ITEM 7. FINANCIAL STATEMENTS
SOLANEX MANAGEMENT INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
(Stated in U.S. Dollars)
7
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Directors of
Solanex Management
Inc.
(A Development Stage Company)
We have audited the accompanying balance sheets of Solanex Management Inc. (a development stage company) as of December 31, 2005 and 2004, and the related statements of operations, cash flows, and stockholders’ deficiency for each of the years ended December 31, 2005 and 2004, and for the cumulative period from October 12, 2000 (date of inception) to December 31, 2005. 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.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an audit to obtain reasonable assurance 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 Solanex Management Inc. as of December 31, 2005 and 2004, and the results of its operations and its cash flows for each of the years ended December 31, 2005 and 2004, and for the period from October 12, 2000 (date of inception) to December 31, 2005, in conformity with accounting principles generally accepted in the United States of America.
The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1(b) to the financial statements, the Company has suffered recurring losses from operations, has negative cash flows, has a stockholders’ deficiency and is dependent upon obtaining adequate financing to fulfil its development activities. These factors raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also discussed in Note 1(b). The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
| Vancouver, Canada | /s/ “Morgan & Company” |
| May 8, 2006 | Chartered Accountants |
| Tel: (604) 687-5841 |  |
P.O. Box 10007 Pacific Centre |
| Fax: (604) 687-0075 | Sute 1488 - 700 West Georgia Street | |
| www.morgan-cas.com | Vancouver, B.C. V7Y 1A1 |
8
SOLANEX MANAGEMENT INC.
(A Development Stage Company)
BALANCE SHEETS
(Stated in U.S. Dollars)
| DECEMBER 31 | ||||||
| 2005 | 2004 | |||||
| ASSETS | ||||||
| Current | ||||||
| Cash | $ | 15,430 | $ | 37,643 | ||
| LIABILITIES | ||||||
| Current | ||||||
| Accounts payable and accrued liabilities | $ | 92,329 | $ | 72,391 | ||
| Loans payable (Note 5) | 54,659 | 33,659 | ||||
| 146,988 | 106,050 | |||||
| STOCKHOLDERS’ DEFICIENCY | ||||||
| Capital Stock (Note 6) | ||||||
| Authorized: | ||||||
| 100,000,000 common shares, par value of $0.001 per share | ||||||
| 20,000,000 preferred shares, par value of $0.001 per share | ||||||
| Issued and outstanding: | ||||||
| 9,658,730 common shares (2004 – 7,528,025) | 9,659 | 7,528 | ||||
| Additional paid-in capital | 197,380 | 114,283 | ||||
| Share Subscriptions Received (Note 7) | 15,000 | 85,228 | ||||
| Deficit Accumulated During The Development Stage | (353,597 | ) | (275,446 | ) | ||
| (131,558 | ) | (68,407 | ) | |||
| $ | 15,430 | $ | 37,643 | |||
The accompanying notes are an integral part of the financial statements
9
SOLANEX MANAGEMENT INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(Stated in U.S. Dollars)
| CUMULATIVE | |||||||||
| PERIOD | |||||||||
| FROM | |||||||||
| INCEPTION | |||||||||
| OCTOBER 12 | |||||||||
| YEARS ENDED | 2000 TO | ||||||||
| DECEMBER 31 | DECEMBER 31 | ||||||||
| 2005 | 2004 | 2005 | |||||||
| Revenue | $ | - | $ | - | $ | - | |||
| Expenses | |||||||||
| Administration | 13,178 | 38,658 | 70,136 | ||||||
| Consulting fees | 16,919 | 17,290 | 34,209 | ||||||
| Feasibility study | - | - | 9,250 | ||||||
| Foreign exchange loss | 438 | 1,949 | 2,387 | ||||||
| Office and rent | 16,878 | 40,446 | 82,484 | ||||||
| Organization expenses | - | - | 6,228 | ||||||
| Professional fees | 16,238 | 18,266 | 48,903 | ||||||
| Technology cost | 14,500 | - | 100,000 | ||||||
| 78,151 | 116,609 | 353,597 | |||||||
| Net Loss For The Period | $ | (78,151 | ) | $ | (116,609 | ) | $ | (353,597 | ) |
| Basic And Diluted Loss Per Share | $ | (0.01 | ) | $ | (0.02 | ) | |||
| Weighted Average Number Of Shares Outstanding | 8,065,079 | 7,522,828 | |||||||
The accompanying notes are an integral part of the financial statements
10
SOLANEX MANAGEMENT INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Stated in U.S. Dollars)
| CUMULATIVE | |||||||||
| PERIOD FROM | |||||||||
| INCEPTION | |||||||||
| OCTOBER 12 | |||||||||
| YEARS ENDED | 2000 TO | ||||||||
| DECEMBER 31 | DECEMBER 31 | ||||||||
| 2005 | 2004 | 2005 | |||||||
| Cash Flows From Operating Activities | |||||||||
| Net loss for the period | $ | (78,151 | ) | $ | (116,609 | ) | $ | (353,597 | ) |
| Adjustments To Reconcile Net Loss To Net Cash Used | |||||||||
| By Operating Activities | |||||||||
| Expenses not paid with cash | 438 | 1,949 | 7,387 | ||||||
| Change in accounts payable | 19,938 | 56,856 | 187,598 | ||||||
| Cash Used In Operating Activities | (57,775 | ) | (57,804 | ) | (158,612 | ) | |||
| Cash Flows From Financing Activities | |||||||||
| Share subscriptions | 15,000 | 85,228 | 15,000 | ||||||
| Issuance of common stock | - | - | 89,998 | ||||||
| Loans payable | 21,000 | 12,000 | 71,431 | ||||||
| Cash Provided By Financing Activities | 36,000 | 97,228 | 176,429 | ||||||
| Foreign Exchange Effect On Cash | (438 | ) | (1,949 | ) | (2,387 | ) | |||
| (Decrease) Increase In Cash | (22,213 | ) | 37,475 | 15,430 | |||||
| Cash, Beginning Of Period | 37,643 | 168 | - | ||||||
| Cash, End Of Period | $ | 15,430 | $ | 37,643 | $ | 15,430 | |||
| Supplemental Disclosure Of Cash Flow Information | |||||||||
| Interest paid | $ | - | $ | - | $ | - | |||
| Income taxes paid | - | - | - | ||||||
| Non-Cash Financing Activities | |||||||||
| Stock issued for the acquisition of technology | |||||||||
| $ | - | $ | - | $ | 3,500 | ||||
| Stock issued on conversion of promissory note | |||||||||
| - | 16,772 | 16,772 | |||||||
| Stock issued for organization of the Company | |||||||||
| - | - | 1,500 | |||||||
| Stock issued to settle payables | - | - | 95,269 | ||||||
The accompanying notes are an integral part of the financial statements
11
SOLANEX MANAGEMENT INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS’ DEFICIENCY
PERIOD FROM OCTOBER 12, 2000 (DATE OF INCEPTION) TO DECEMBER 31,
2005
(Stated in U.S. Dollars)
| DEFICIT | ||||||||||||||||||
| CAPITAL STOCK | ACCUMULATED | |||||||||||||||||
| ADDITIONAL | SHARE | DURING THE | ||||||||||||||||
| COMMON | PAID-IN | SUBSCRIPTIONS | DEVELOPMENT | |||||||||||||||
| SHARES | AMOUNT | CAPITAL | RECEIVED | STAGE | TOTAL | |||||||||||||
| Balance, October 12, 2000 | ||||||||||||||||||
| (Date of inception) | - | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||
| Stock issued for $1,500 of | ||||||||||||||||||
| organization expenses | 1,500,000 | 1,500 | - | - | - | 1,500 | ||||||||||||
| Stock issued for technology | 3,500,000 | 3,500 | - | - | - | 3,500 | ||||||||||||
| Net loss for the period | - | - | - | - | (10,758 | ) | (10,758 | ) | ||||||||||
| Balance, December 31, 2000 | 5,000,000 | 5,000 | - | - | (10,758 | ) | (5,758 | ) | ||||||||||
| Net loss for the year | - | - | - | - | (470 | ) | (470 | ) | ||||||||||
| Balance, December 31, 2001 | 5,000,000 | 5,000 | - | - | (11,228 | ) | (6,228 | ) | ||||||||||
| Net loss for the year | - | - | - | - | (26,972 | ) | (26,972 | ) | ||||||||||
| Balance, December 31, 2002 | 5,000,000 | 5,000 | - | - | (38,200 | ) | (33,200 | ) | ||||||||||
| Stock issued for cash | 477,000 | 477 | 4,293 | - | - | 4,770 | ||||||||||||
| Stock issued for accounts | - | |||||||||||||||||
| payable | 2,381,725 | 2,382 | 92,887 | - | 95,269 | |||||||||||||
| Stock cancelled | (750,000 | ) | (750 | ) | 750 | - | - | - | ||||||||||
| Net loss for the year | - | - | - | - | (120,637 | ) | (120,637 | ) | ||||||||||
| Balance, December 31, 2003 | ||||||||||||||||||
| 7,108,725 | 7,109 | 97,930 | - | (158,837 | ) | (53,798 | ) | |||||||||||
| Stock issued on conversion | ||||||||||||||||||
| of promissory notes | 419,300 | 419 | 16,353 | - | - | 16,772 | ||||||||||||
| Share subscriptions | - | - | - | 85,228 | - | 85,228 | ||||||||||||
| Net loss for the year | - | - | - | - | (116,609 | ) | (116,609 | ) | ||||||||||
| Balance, December 31, 2004 | 7,528,025 | 7,528 | 114,283 | 85,228 | (275,446 | ) | (68,407 | ) | ||||||||||
12
SOLANEX MANAGEMENT INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS’ DEFICIENCY (Continued)
PERIOD FROM OCTOBER 12, 2000 (DATE OF INCEPTION) TO DECEMBER 31,
2005
(Stated in U.S. Dollars)
| DEFICIT | ||||||||||||||||||
| CAPITAL STOCK | ACCUMULATED | |||||||||||||||||
| ADDITIONAL | SHARE | DURING THE | ||||||||||||||||
| COMMON | PAID-IN | SUBSCRIPTIONS | DEVELOPMENT | |||||||||||||||
| SHARES | AMOUNT | CAPITAL | RECEIVED | STAGE | TOTAL | |||||||||||||
| Balance, December 31, 2004 | 7,528,025 | $ | 7,528 | $ | 114,283 | $ | 85,228 | $ | (275,446 | ) | $ | (68,407 | ) | |||||
| Stock issued on conversion | ||||||||||||||||||
| of share subscriptions | 2,130,705 | 2,131 | 83,097 | (85,228 | ) | - | - | |||||||||||
| Share subscriptions | - | - | - | 15,000 | - | 15,000 | ||||||||||||
| Net loss for the year | - | - | - | - | (78,151 | ) | (78,151 | ) | ||||||||||
| Balance, December 31, 2005 | 9,658,730 | $ | 9,659 | $ | 197,380 | $ | 15,000 | $ | (353,597 | ) | $ | (131,558 | ) | |||||
The accompanying notes are an integral part of the financial statements
13
SOLANEX MANAGEMENT INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2005 AND 2004
(Stated in U.S. Dollars) Development Stage Company)
1. NATURE OF OPERATIONS AND GOING CONCERN
a) Development Stage Company
Solanex Management Inc. (the "Company") was incorporated in the State of Nevada on October 12, 2000, under the name EcoSoil Management Corp., and is in its early developmental stage. The Company changed its name to Solanex Management Inc. on December 6, 2001. To date, the Company's only activities have been organizational, directed at acquiring a principal asset, raising initial capital and developing its business plan.
b) Going Concern
Since inception, the Company has suffered recurring losses, net cash outflows from operations, and at December 31, 2005, has a working capital deficiency of $131,558 (2004 - $68,407). The Company expects to continue to incur substantial losses as it develops its business plan. Since inception, the Company has funded operations through common stock issuances and accounts payable in order to meet its strategic objectives. Management believes that sufficient funding will be available to meet its business objectives including anticipated cash needs for working capital and is currently evaluating several financing options. However, there can be no assurance that the Company will be able to obtain sufficient funds to continue the development of, and if successful, to commence the sale of its products under development. As a result of the foregoing, there exists substantial doubt about the Company's ability to continue as a going concern. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.
2. SIGNIFICANT ACCOUNTING POLICIES
a) Technology Development Costs
The costs to acquire and develop new technology and enhancements to existing technology are expensed as incurred until such time as technological feasibility is demonstrated.
b) 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 periods. Actual results could differ from these estimates.
c) Basic and Diluted Loss Per Share
The Company computes loss per share in accordance with SFAS No. 128 – “Earnings Per Share”. Under the provisions of SFAS No. 128, basic loss per share is computed using the weighted average number of common stock outstanding during the period. Diluted loss per share is computed using the weighted average number of common and potentially dilutive common stock outstanding during the period. The basic and diluted loss per share are the same as any exercise of options or warrants would be anti-dilutive.
d) Foreign Currency Translation
The Company’s functional currency is the U.S. dollar. Transactions in foreign currency are translated into U.S. dollars as follows:
monetary items at the rate prevailing at the balance sheet
date;
non-monetary items at the historical exchange rate;
revenue and
expense at the average rate in effect during the applicable accounting period.
14
SOLANEX MANAGEMENT INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2005 AND 2004
(Stated in U.S. Dollars)
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
e) Income Taxes
The Company has adopted Statement of Financial Accounting Standards No. 109 – “Accounting for Income taxes” (SFAS 109). This standard requires the use of an asset and liability approach for financial accounting, and reporting on income taxes. If it is more likely than not that some portion or all of a deferred tax asset will not be realized, a valuation allowance is recognized.
f) Financial Instruments
The Company’s financial instruments consist of cash, accounts payable, and loans payable.
Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest or credit risks arising from these financial instruments. The fair value of these financial instruments approximate their carrying values, unless otherwise noted.
g) Stock Based Compensation
In December 2002, the Financial Accounting Standards Board issued Financial Accounting Standard No. 148, “Accounting for Stock-Based Compensation – Transition and Disclosure” (“SFAS No. 148”), an amendment of Financial Accounting Standard No. 123 “Accounting for Stock-Based Compensation” (“SFAS No. 123”). The purpose of SFAS No. 148 is to: (1) provide alternative methods of transition for an entity that voluntarily changes to the fair value based method of accounting for stock-based employee compensation, (2) amend the disclosure provisions to require prominent disclosure about the effects on reported net income of an entity’s accounting policy decisions with respect to stock-based employee compensation, and (3) require disclosure of those effects in interim financial information. The disclosure provisions of SFAS No. 148 were effective for the Company from the year ended December 31, 2004.
The Company has elected to account for stock-based employee compensation arrangements in accordance with the provisions of Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees”, (“APB No. 25”) and comply with the disclosure provisions of SFAS No. 123, as amended by SFAS No. 148 as described above. In addition, in accordance with SFAS No. 123, the Company applies the fair value method using the Black-Scholes option-pricing model in accounting for options granted to consultants. Under APB No. 25, compensation expense for employees is recognized based on the difference, if any, on the date of grant between the estimated fair value of the Company’s stock and the amount an employee must pay to acquire the stock. Compensation expense is recognized immediately for past services and pro-rata for future services over the option-vesting period. To December 31, 2005, the Company has not granted any stock options.
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SOLANEX MANAGEMENT INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2005 AND 2004
(Stated in U.S. Dollars)
3. RECENT ACOUNTING PRONOUNCEMENTS
a) In December 2004, FASB issued Statement of Financial Accounting Standards No. 123 (“SFAS 123”), “Share-Based Payment”. This Statement requires that the cost resulting from all share-based transactions be recorded in the financial statements. The Statement establishes fair value as the measurement objective in accounting for share-based payment arrangements and requires all entities to apply a fair-value-based measurement in accounting for share-based payment transactions with employees. The Statement also establishes fair value as the measurement objective for transactions in which an entity acquires goods or services from non-employees in share-based payment transactions. The Statement replaces FASB Statement No. 123 “Accounting for Stock-Based Compensation” and supersedes APB Opinion No. 25 “Accounting for Stock Issued to Employees”. The provisions of this Statement will be effective for the Company beginning with its fiscal year ending 2006. The Company has determined that the adoption of SFAS 123 does not have an impact on its results of operations or financial position.
b) In December 2004, FASB issued SFAS No. 153, “Exchanges of Nonmonetary Assets - An Amendment of APB Opinion No. 29”. The guidance in APB Opinion No. 29, “Accounting for Nonmonetary Transactions”, is based on the principle that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged. The guidance in that Opinion, however, included certain exceptions to that principle. SFAS No. 153 amends Opinion No. 29 to eliminate the exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. A nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. The provisions of SFAS No. 153 are effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. Early application is permitted and companies must apply the standard prospectively. The adoption of this standard is not expected to have a material effect on the Company’s results of operations or financial position.
4. LICENSE AND TECHNOLOGY RIGHTS
On October 12, 2000, the Company acquired a license to certain technology and intellectual property from Colin V. Hall, the developer of the technology, and a group of investors. The license granted a non-exclusive right to manufacture, market and sell a thermal destructor for site remediation to industrial, petrochemical and site remediation organizations. The intellectual property assets acquired include all licensing, modification, marketing, distribution and sales rights worldwide in perpetuity. Under the terms of the Agreement and Assignment of Intellectual Property Rights, a cash payment of $2,000 was made on behalf of the Company and the Company issued 3,500,000 shares of common stock.
On October 1, 2002, the Company entered into a joint venture agreement (the “Agreement”) with EcoTech Waste Management Systems (1991) Inc. (“EcoTech”) to design the systems for Remediator and provide marketing and business concept expertise. Under the terms of the Agreement, EcoTech will evaluate, improve and complete the assets of the Company, and market and/or find customers for the assets of the Company. Furthermore, EcoTech will search for, recommend and advise the Company on the acquisition of further technology, complementary to the current business direction and assets of the Company. In consideration for the services provided by EcoTech, the Company is required to pay $100,000 to EcoTech over the life of the contract (3 years), in cash or shares.
As of December 31, 2005, the Company had paid $85,500 to EcoTech, and the remaining $14,500 is included in accounts payable and accrued liabilities. This agreement is being renegotiated by both parties.
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SOLANEX MANAGEMENT INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2005 AND 2004
(Stated in U.S. Dollars)
5. LOANS PAYABLE
Of the $54,659 (2004 - $33,659) in loans payable, $24,659 (2004 - $21,659) are convertible into 616,475 (2004 – 541,475) common shares at $0.04 per share at the option of the creditor, and $30,000 (2004 - $12,000) are convertible into common shares at a mutually agreed upon price per share at the option of the creditor. The loans are due on demand and accrue interest at the Royal Bank of Canada prime rate plus 2% per annum.
Subsequent to December 31, 2005, $10,000 of loans payable was converted into 250,000 common shares at $0.04 per share.
6. CAPITAL STOCK
On September 30, 2005, the Company recorded the issuance of 2,130,705 common shares at $0.04 per share in settlement of share subscriptions received by the Company on October 1, 2004.
Subsequent to the year end, on January 31, 2006, the Company issued 1,000,000 shares of common stock at $0.10 per share pursuant to a private placement in the amount of $100,000.
7. SHARE SUBSCRIPTIONS RECEIVED
On November 22, 2005, the Company received $15,000 in subscriptions for 375,000 shares of common stock at $0.04 per share. Subsequent to December 31, 2005, the common shares were issued.
8. STOCK OPTIONS
On July 21, 2004, the Company registered its Performance Stock Plan (the “Plan”), under the Securities Act of 1933 (the “Act”), for up to 1,000,000 stock options, which may be granted to employees, directors and consultants. The Company has not granted any stock options since inception and there were no stock options outstanding as of December 31, 2005.
9. RELATED PARTY TRANSACTIONS
An individual who became a director of the Company on December 7, 2001, received $2,000 cash and 1,500,000 shares, post split, of Company common stock pursuant to the acquisition of technology.
Colin V. Hall, the Company’s President and the developer of the Company’s technology, together with EcoTech Waste Management Inc., a company of which he is a principal, owned 36.2% (2004 – 46.0%) of the issued and outstanding shares of the Company as of December 31, 2005.
As of December 31, 2005, $14,500 (2004 - $Nil) was owing to EcoTech for services performed during the year. This amount is included in accounts payable and accrued liabilities.
The Company currently has no employees and relies upon its officers and directors to further its affairs. The officers and directors provide services to the Company without any compensation.
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SOLANEX MANAGEMENT INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2005 AND 2004
(Stated in U.S. Dollars)
10. INCOME TAXES
A reconciliation of statutory federal income tax rates to the Company’s effective tax rate is as follows:
| 2005 | 2004 | |||||
| Expected tax recovery at 34% | $ | (26,600 | ) | $ | (39,600 | ) |
| Change in valuation allowance | 26,600 | 39,600 | ||||
| Income tax provision | $ | - | $ | - |
The Company was not taxable in 2005 and 2004.
Deferred tax assets at December 31 were as follows:
| 2005 | 2004 | |||||
| Gross tax deferred asset | ||||||
| Operating loss carryforwards | $ | 120,200 | $ | 93,600 | ||
| Valuation allowance | (120,200 | ) | (93,600 | ) | ||
| Net deferred tax asset | $ | - | $ | - |
The Company has net operating losses carried forward of approximately $354,000 (2004 - $275,000) and has provided a full valuation allowance due to the uncertainty of the utilization of the benefits of these losses.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
There are no reportable disagreements on accounting or financial disclosure issues.
ITEM 8A. CONTROLS AND PROCEDURES
(a) Evaluation of disclosure controls and procedures
Our President and Principal Executive Officer and our Chief Financial Officer evaluated our “disclosure controls and procedures” (as defined in Rule 13a-14 (c) of the Exchange Act) as of the end of the small business issuer’s most recent fiscal year. Our Officers have concluded that our disclosure controls and procedures are effective and designed to ensure that information required to be disclosed by our Company in its periodic reports that are required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated, recorded, processed, summarized and reported, and that such information is accumulated and communicated to our Company's CEO and CFO as appropriate to allow timely decisions to be made regarding required disclosure.
(b) Changes in internal controls.
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Subsequent to the date of their evaluation, management initiated procedures to ensure that reports are filed within the appropriate time periods specified by the SEC. Other than these procedures, there were no corrective actions taken by our Company or other changes made to these internal controls. Our Company's management does not believe there were changes in other factors that could affect these controls subsequent to the date of the evaluation.
ITEM 8 B. OTHER INFORMATION
No information to report during the fourth quarter of the year covered by this Form 10-KSB
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
This table sets forth the name, age and position of each director and executive officer of the Company:
| NAME | AGE | POSITION |
| Colin Hall | 61 | President, Secretary, Treasurer and Director |
ITEM 10. EXECUTIVE COMPENSATION
No officer or director of the Company has received any remuneration from the Company.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth as of December 31, 2005 certain information known to the Company regarding the beneficial ownership of the Company's common stock, and as adjusted to reflect the share ownership for (i) each executive officer or director of the Company who beneficially owns shares; (ii) each stockholder known to the Company to beneficially own five percent or more of the outstanding shares of its common stock; and (iii) all executive officers and directors as a group. The Company believes that the beneficial owners of the common stock listed below, based on information furnished by such owners, have sole investment and voting power with respect to such shares, subject to community property laws where applicable.
| Number of | Percentage of | |
| Name | Shares Held | Shares Owned |
| Colin Hall | 1,500,000 | 15.5% |
| 4567 Prospect Road | ||
| North Vancouver, B.C., V7N 3M1, CANADA | ||
| EcoTech Waste Management | 2,000,000 | 20.7% |
| 7588 Winston Street | ||
| Burnaby, BC V5Z 4C2, CANADA | ||
| Piers VanZiffle | 750,000 | 7.8% |
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| 1125 W 49TH AVE | ||
| Vancouver, BC CANADA | ||
| ALL EXECUTIVE OFFICERS AND | 1,500,000 | 15.5% |
| DIRECTORS AS A GROUP (1 person) |
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
No change since previous filing.
PART IV
ITEM 13. EXHIBITS
Exhibits: None
Reports on Form 8-K: None
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Table of Audit Fees (amounts in Cdn$) billed by Morgan & Company in connection with the audit of the Company’s annual financial statements for the years ended:
| Financial Statements for the Year Ended December 31 |
Audit Services |
Audit Related Fees |
Tax Fees |
Other Fees |
| 2005 | $7,000 | 0 | 0 | 0 |
| 2004 | $8,250 | 0 | 0 | 0 |
| 2003 | $3,317 | 0 | 0 | 0 |
| 2002 | $2,205 | 0 | 0 | 0 |
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.
| SOLANEX MANAGEMENT INC. | ||
| Date: August 8, 2008 | By: | /s/ Colin Hall |
| Colin Hall: President | ||
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 in the capacities and on the dates indicated.
| By: /s/ Colin Hall | Date: August 8, 2008 | |
| Colin Hall, Director |
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