Deltron, Inc.
(A Development Stage
Company)
Interim Consolidated Statements of Cash Flows
(Unaudited)
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Cumulative
from
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Inception
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(September
14,
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2005) to
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Three Months
Ended December 31,
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December
31,
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2009
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2008
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2009
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OPERATING
ACTIVITIES
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Loss for the period
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$
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(7,791)
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$
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(5,188)
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$
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(105,642)
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Adjustments to reconcile net
loss to net cash
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used in
operations:
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Impairment of development
costs
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-
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-
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12,514
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Changes in Operating Assets
and Liabilities:
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Increase (decrease) in accounts
payable and
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accrued
liabilities
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130
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788
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1,458
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Net Cash Used in Operating
Activities
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(7,661)
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(4,400)
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(91,670)
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INVESTING
ACTIVITIES
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Development costs
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-
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-
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(12,514)
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Property purchased
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-
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-
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(40,657)
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Net Cash Used in Investing
Activities
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-
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-
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(53,171)
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FINANCING
ACTIVITIES
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Advances from (payments to)
related party
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4,585
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-
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46,850
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Common stock issued for
cash
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-
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-
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105,900
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Net Cash Provided by (used in)
Financing
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Activities
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4,585
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-
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152,750
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INCREASE (DECREASE) IN CASH
AND CASH
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EQUIVALENTS
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(3,076)
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(4,400)
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7,909
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CASH AND CASH EQUIVALENTS AT
BEGINNING
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OF PERIOD
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10,985
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23,541
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-
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CASH AND CASH EQUIVALENTS AT
END OF
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PERIOD
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$
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7,909
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$
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19,141
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$
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7,909
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Supplemental Cash Flow
Disclosures:
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Cash paid for:
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Interest expense
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$
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-
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$
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-
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$
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-
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Income taxes
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$
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-
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$
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-
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$
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-
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- The Accompanying
Notes Are An Integral Part Of These Financial Statements -
7
Deltron, Inc.
(A Development Stage
Company)
Notes to Interim Consolidated Financial Statements
December 31, 2009
(Unaudited)
1.
Organization
and Description of Business
Deltron, Inc. (the “Company”) is a Nevada corporation incorporated
on September 14, 2005. It is based in San Jose, Costa Rica. The
Company incorporated a wholly owned subsidiary, Deltron Holdings Corporation
S.A., in San Jose, Costa Rica on November 17, 2005.
The
Company is a development stage company that intended to engage principally in
the acquisition and development of rental housing properties in the district of
San Isidro de Heredia, Costa Rica. To date, the Company’s activities have
been limited to its formation, the raising of equity capital and the acquisition
and development of property
(Note 4)
.
The
Company recently decided to refocus its business strategy towards identifying
and pursuing options regarding the development of a new business plan and
direction. The Company entered into a Letter of Intent with Blu Vu Deep Oil
& Gas Exploration (Blu Vu). The companies plan to enter into a
definitive agreement under which Deltron will acquire Blu Vu in exchange for
stock of Deltron in the form of a merger.
2.
Significant
Accounting Policies
Basis of Consolidation
These consolidated financial statements presented are those of the
Company and its wholly-owned subsidiary, Deltron Holdings Corporation S.A.
All intercompany balances and transactions have been eliminated.
Basis of Presentation
The accounting
and reporting policies of the Company conform to U.S. generally accepted
accounting principles (US GAAP) applicable to development stage companies.
Use of Estimates
The
preparation of financial statements in conformity with United States 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 amount of revenues and expenses during the reporting
period. Actual results could differ from those estimates. The
Company’s periodic filings with the Securities and Exchange Commission include,
where applicable, disclosures of estimates, assumptions, uncertainties and
markets that could affect the financial statements and future operations of the
Company.
Cash and Cash Equivalents
Cash and cash equivalents include cash in banks, money market
funds, and certificates of term deposits with maturities of less than three
months from date of purchase, which are readily convertible to known amounts of
cash and which, in the opinion of management, are subject to an insignificant
risk of loss in value. The Company had $7,909 and $10,985 in cash and cash
equivalents at December 31 and September 30, 2009, respectively.
8
Deltron, Inc.
(A Development Stage
Company)
Notes to Interim Consolidated Financial Statements
December 31, 2009
(Unaudited)
2.
Significant
Accounting Policies
– Continued
Start-Up
Costs
In accordance
with FASC 720-15-20 “
Start-up Activities,
” the Company expenses all costs
incurred in connection with the start-up and organization of the Company.
Risks and Uncertainties
The
Company operates in the real estate development and property rental industry
that is subject to significant risks and uncertainties, including financial,
operational, technological and other risks associated with operating a real
estate development and property rental business, including the potential risk of
business failure.
Earning (Loss) Per Share of Common Stock
The
Company has adopted FASC 260-10-20,
“Earnings per Share,”
(“EPS”) which
requires presentation of basic and diluted EPS on the face of the income
statement for all entities with complex capital structures and requires a
reconciliation of the numerator and denominator of the basic EPS computation to
the numerator and denominator of the diluted EPS computation. In the
accompanying financial statements, basic loss per common share is computed by
dividing net loss by the weighted average number of shares of common stock
outstanding during the period.
The
Company has no potentially dilutive securities, such as options or warrants,
currently issued and outstanding.
Comprehensive Income (Loss)
FASC Topic No. 220,
“Comprehensive Income”,
establishes
standards for reporting and display of comprehensive income and its components
in a full set of general-purpose financial statements. From inception
(September 14, 2005) to December 31, 2009, the Company had no items of other
comprehensive income. Therefore, net loss equals comprehensive loss from
inception (September 14, 2005) to December 31, 2009.
Concentrations of Credit Risk
The
Company’s financial instruments that are exposed to concentrations of credit
risk primarily consist of its cash and cash equivalents and related party
payables. The Company places its cash and cash equivalents with financial
institutions of high credit worthiness. At times, its cash and cash
equivalents with a particular financial institution may exceed any applicable
government insurance limits. The Company’s management plans to assess the
financial strength and credit worthiness of any parties to which it extends
funds, and as such, it believes that any associated credit risk exposures are
limited.
Foreign Currency Translations
The
Company’s functional currency is the Costa Rican Colon. The Company’s reporting
currency is the U.S. dollar. All transactions initiated in Costa Rican
Colones are translated into U.S. dollars in accordance with FASC 830-10-20,
"Foreign Currency Translation" as follows:
i)
Monetary assets and liabilities at the rate of exchange in effect
at the balance sheet date;
ii)
Equity at historical rates; and
iii)
Revenue and expense items at the average rate of exchange
prevailing during the period.
9
Deltron, Inc.
(A Development Stage
Company)
Notes to Interim Consolidated Financial Statements
December 31, 2009
(Unaudited)
2.
Significant
Accounting Policies
- Continued
Foreign Currency Translations
- Continued
Adjustments arising from such translations are deferred until
realization and are included as a separate component of stockholders’ equity
(deficit) as a component of comprehensive income or (loss). Therefore,
translation adjustments are not included in determining net income (loss) but
reported as other comprehensive income (loss).
For foreign currency transactions, the Company translates these
amounts to the Company’s functional currency at the exchange rate effective on
the invoice date. If the exchange rate changes between the time of
purchase and the time actual payment is made, a foreign exchange transaction
gain or loss results which is included in determining net income (loss) for the
period. No significant realized exchange gains or losses were recorded since
September 14, 2005 (inception) to December 31, 2009
Revenue Recognition
The
Company recognizes revenue from the sale of products and services in accordance
with the Securities and Exchange Commission Staff Accounting Bulletin No. 104
(“SAB 104”),
“Revenue Recognition in Financial Statements.”
Revenue
will consist of rental income and will be recognized only when all of the
following criteria have been met:
i)
Persuasive evidence for an agreement exists;
ii)
Delivery has occurred;
iii)
The
fee is fixed or determinable; and
iv)
Revenue is reasonably assured.
Recent Accounting Pronouncements
In
June 2009 the FASB established the Accounting Standards Codification
("Codification" or "ASC") as the source of authoritative accounting principles
recognized by the FASB to be applied by nongovernmental entities in the
preparation of financial statements in accordance with generally accepted
accounting principles in the United States ("GAAP"). Rules and interpretive
releases of the Securities and Exchange Commission ("SEC") issued under
authority of federal securities laws are also sources of GAAP for SEC
registrants. Existing GAAP was not intended to be changed as a result of the
Codification, and accordingly the change did not impact our financial
statements. The ASC does change the way the guidance is organized and
presented.
Statement of Financial Accounting Standards ("SFAS") SFAS No. 165
(ASC Topic 855),
"Subsequent Events"
, SFAS No. 166 (ASC Topic 810),
"Accounting for Transfers of Financial Assets-an Amendment of FASB Statement
No. 140"
, SFAS No. 167 (ASC Topic 810),
"Amendments to FASB
Interpretation No. 46(R)"
, and SFAS No. 168 (ASC Topic
105),
"The FASB Accounting Standards Codification and the Hierarchy of
Generally Accepted Accounting Principles-a replacement of FASB Statement No.
162"
were recently issued. SFAS No. 165, 166, 167, and 168 have no current
applicability to the Company or their effect on the financial statements would
not have been significant.
10
Deltron, Inc.
(A Development Stage
Company)
Notes to Interim Consolidated Financial Statements
December 31, 2009
(Unaudited)
2.
Significant
Accounting Policies
– Continued
Recent
Accounting Pronouncements
- Continued
Accounting Standards Update ("ASU") ASU No. 2009-05 (ASC Topic
820), which amends Fair Value Measurements and Disclosures - Overall, ASU No.
2009-13 (ASC Topic 605), Multiple-Deliverable Revenue Arrangements, ASU No.
2009-14 (ASC Topic 985), Certain Revenue Arrangements that include Software
Elements, and various other ASU's No. 2009-2 through ASU No. 2009-15 which
contain technical corrections to existing guidance or affect guidance to
specialized industries or entities were recently issued. These updates have no
current applicability to the Company or their effect on the financial statements
would not have been significant.
3.
Capital Stock
Authorized Stock
The
Company has authorized 100,000,000 common shares with a par value of $0.001 per
share. Each common share entitles the holder to one vote, in person or
proxy, on any matter on which action of the stockholder of the corporation is
sought.
Share Issuances
From inception of the Company (September 14, 2005) to December 31,
2009, the Company has issued 500,000 common shares at $0.01 per share and
5,045,000 common shares at $0.02 per share, resulting in total proceeds of
$105,900 and 5,545,000 common shares issued and outstanding at December 31, 2009
and 2008. Of these shares, 400,000 were issued to a director of the Company,
400,000 were issued to a former director and officer, 1,000,000 were issued to
the spouse of a director of the Company, and 3,745,000 were issued to
independent investors.
4.
Property
On
March 29, 2006, through our wholly-owned subsidiary Deltron Holdings Corporation
S.A., a property was purchased for $40,657. The funds to purchase the property
were loaned to Deltron Holdings Corporation S.A., by a director of the Company.
5.
Related Party Balances and Transactions
As
of December 31 and September 30, 2009, the Company was obligated to a director
of the Company, for a non-interest bearing demand loan with a balance of $46,850
and $42,265, respectively. The Company plans to pay the loan back as cash
flows become available.
11
Deltron, Inc.
(A Development Stage
Company)
Notes to Interim Consolidated Financial Statements
December 31, 2009
(Unaudited)
6.
Provision for Income Taxes
The Company recognizes the tax effects of transactions in the year
in which such transactions enter into the determination of net income,
regardless of when reported for tax purposes. Deferred taxes are provided in the
financial statements under FASC 718-740-20 to give effect to the resulting
temporary differences which may arise from differences in the bases of fixed
assets, depreciation methods, allowances, and start-up costs based on the income
taxes expected to be payable in future years.
Development stage deferred tax assets arising as a result of net
operating loss carryforwards have been offset completely by a valuation
allowance due to the uncertainty of their utilization in future periods.
Operating loss carryforwards generated during the period from September 14, 2005
(date of inception) through December 31, 2009 of approximately $105,642 will
begin to expire in 2025. Accordingly, deferred tax assets of approximately
$36,800 were offset by the valuation allowance that increased by approximately
$3,000 and $1,100 during the three months ended December 31, 2009 and 2008,
respectively.
The Company follows the provisions of uncertain tax positions as
addressed in FASC 740-10-65-1. The Company recognized approximately no increase
in the liability for unrecognized tax benefits.
The Company has no tax position at December 31, 2009 for which the
ultimate deductibility is highly certain but for which there is uncertainty
about the timing of such deductibility. The Company recognizes interest accrued
related to unrecognized tax benefits in interest expense and penalties in
operating expenses. No such interest or penalties were recognized during the
periods presented. The Company had no accruals for interest and penalties at
December 31, 2009. The Company’s utilization of any net operating loss carry
forward may be unlikely as a result of its intended development stage
activities.
7.
Going Concern and Liquidity Considerations
The
accompanying audited consolidated financial statements have been prepared
assuming that the Company will continue as a going concern, which contemplates,
among other things, the realization of assets and satisfaction of liabilities in
the normal course of business. As at December 31, 2009, the Company had a
working capital deficiency of $40,399 and an accumulated deficit of $105,642.
The Company intends to fund operations through equity financing
arrangements, which may be insufficient to fund its capital expenditures,
working capital and other cash requirements for the year ending September 30,
2010.
The
ability of the Company to emerge from the development stage is dependent upon,
among other things, obtaining additional financing to continue operations, and
development of its business plan.
In
response to these problems, management intends to raise additional funds through
public or private placement offerings.
These factors, among others, raise substantial doubt about the
Company’s ability to continue as a going concern. The accompanying audited
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
12
Deltron, Inc.
(A Development Stage
Company)
Notes to Interim Consolidated Financial Statements
December 31, 2009
(Unaudited)
8.
Subsequent Events
The
Company has evaluated subsequent events from the balance sheet date through
February 4, 2010 and determined there are no other items to disclose.
13
ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Forward-Looking Statements
Except for historical information, this report contains
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such
forward-looking statements involve risks and uncertainties, including, among
other things, statements regarding our business strategy, future revenues and
anticipated costs and expenses. Such forward-looking statements include,
among others, those statements including the words “expects,” “anticipates,”
“intends,” “believes” and similar language. Our actual results may differ
significantly from those projected in the forward-looking statements.
Factors that might cause or contribute to such differences include, but
are not limited to, those discussed herein as well as in the “Description of
Business – Risk Factors” section in our Annual Report on Form 10-K for the year
ended September 30, 2009. You should carefully review the risks described
in our Annual Report and in other documents we file from time to time with the
Securities and Exchange Commission. You are cautioned not to place undue
reliance on the forward-looking statements, which speak only as of the date of
this report. We undertake no obligation to publicly release any revisions to the
forward-looking statements or reflect events or circumstances after the date of
this document.
Although we believe that the expectations reflected in these
forward-looking statements are based on reasonable assumptions, there are a
number of risks and uncertainties that could cause actual results to differ
materially from such forward-looking statements.
All references in this Form 10-Q to the “Company,” “Deltron,”
“we,” “us,” or “our” are to Deltron, Inc.
Results of
Operations
We
are a development stage corporation. We have generated no revenues from
our business operations since inception and have incurred $105,642 in expenses
through December 31, 2009.
The
following table provides selected financial data about our company as of
December 31, 2009 and September 30, 2009.
Balance Sheet Data
December
31, 2009
September
30, 2009
Cash
and cash equivalents
$
7,909
$
10,985
Total
assets
$
48,566
$
51,642
Total
liabilities
$
48,308
$
43,593
Shareholders’
equity
$
258
$
8,049
Net
cash provided by financing activities since inception through December 31, 2009
was $152,750, consisting of $105,900 raised from the sale of our common stock
and $46,850 advanced from a director and former officer of the company.
Plan of
Operation
Our auditors have
issued a going concern opinion on our September 30, 2009, audited financial
statements, refer to note 7. This means that there is substantial doubt that we
can continue as an ongoing business for the next twelve months unless we obtain
additional capital to pay for our expenses. This is because we have not
generated any revenues and there is no assurance we will ever reach this point.
14
Accordingly, we must
raise sufficient capital from other sources. Our only other source for cash at
this time is investments by others and loans from a director. We must raise cash
to stay in business.
We are a development
stage company that has no operations, no revenue, no financial backing and
limited assets. We had originally planned to develop our property in San
Jose, Costa Rica, to rent two three-bedroom apartments to middle income
families. Recently, the Company has decided to redirect its business focus
towards identifying and pursuing options regarding the development of a new
business plan and direction. The Company is currently seeking ventures of
merit for corporate participation as a means of enhancing stockholder value.
This may involve sales of equity or debt securities in merger or
acquisition transactions.
On October 22, 2009,
the Company entered into a Letter of Intent with Blu Vu Deep Oil & Gas
Exploration (Blu Vu). The companies plan to enter into a definitive
agreement under which Deltron will acquire Blu Vu in exchange for stock of
Deltron in the form of a merger.
We do not currently
engage in any product research and development and have no plans to do so in the
foreseeable future. We have no present plans to purchase or sell any plant
or significant equipment. We also have no present plans to add employees
although we may do so in the future if we engage in any merger or acquisition
transactions.
Liquidity and
Capital Resources
Our cash and cash equivalents balance as of December 31, 2009 was
$7,909.
We are
a development stage company and currently have no operations.
We do
not have sufficient funds on hand to pursue our business objectives for the near
future or to commence operations without seeking additional funding. We
currently do not have a specific plan of how we will obtain such funding.
Loans to the Company
We received $46,850
in loans from Mr. Phillips, a director and former officer of the company.
This amount owed to Mr. Phillips is non-interest bearing, unsecured, and
due on demand.
We have
minimal operating costs and expenses at the present time due to our limited
business activities. We will, however, be required to raise additional
capital over the next twelve months to meet our current administrative expenses,
and, additionally, we may do so in connection with or in anticipation of
possible acquisition transactions. This financing may take the form of
additional sales of our equity or debt securities to, or loans from, our
majority stockholder, or from our sole officer and director. There is no
assurance that additional financing will be available from these or other
sources, or, if available, that it will be on terms favorable to us.
Off-Balance Sheet Arrangements
We have never entered into any off-balance sheet financing
arrangements and have not formed any special purpose entities. We have not
guaranteed any debt or commitments of other entities or entered into any options
on non-financial assets.
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
15
Not applicable.
ITEM 4T.
CONTROLS AND PROCEDURES
Evaluation of Our Disclosure Controls
Under the supervision and with the participation of our senior
management, including our chief executive officer and chief financial officer,
Randall Fernandez, we conducted an evaluation of the effectiveness of the design
and operation of our disclosure controls and procedures, as defined in Rules
13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), as of the end of the period covered by this quarterly
report (the “Evaluation Date”). Based on this evaluation, our chief executive
officer and chief financial officer concluded as of the Evaluation Date that our
disclosure controls and procedures were effective such that the information
relating to us, required to be disclosed in our Securities and Exchange
Commission (“SEC”) reports (i) is recorded, processed, summarized and reported
within the time periods specified in SEC rules and forms, and (ii) is
accumulated and communicated to our management, including our chief executive
officer and chief financial officer, as appropriate to allow timely decisions
regarding required disclosure.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial
reporting that occurred during the quarter ended December 31, 2009 that have
materially affected or are reasonably likely to materially affect our internal
control over financial reporting.
PART II – OTHER INFORMATION
ITEM 1.
LEGAL PROCEEDINGS
In the ordinary course of our business, we may from time to time
become subject to routine litigation or administrative proceedings which are
incidental to our business. We are not a party to nor are we aware of any
existing, pending or threatened lawsuits or other legal actions involving
us.
ITEM 1A.
RISK FACTORS
Not applicable.
ITEM 2.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
We did not issue any equity securities during the quarter ended
December 31, 2009.
ITEM 3.
DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5.
OTHER INFORMATION
Not applicable.
16
ITEM 6.
EXHIBITS
Exhibit No.
Description
31.1 / 31.2
Rule 13(a)-14(a)/15(d)-14(a) Certification of Principal Executive
and Financial Officer
32.1 / 32.2
Rule 1350 Certification of Principal Executive and Financial
Officer
17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
DELTRON, INC.
Dated: February 9, 2010
By:
/s/
Randall Fernandez
Randall
Fernandez
President, Principal Executive and Financial Officer
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