UNITED
STATES SECURITIES AND EXCHANGE
COMMISSION
Washington,
D.C.
General
Form for Registration of Securities of Small
Business
Issuers under Section 12(b) or (g) of the
Securities
Exchange Act of 1934
DIBZ
INTERNATIONAL,
INC.
(Exact
Name of Small Business Issuer in its Charter)
|
Nevada
|
|
71-0874685
|
|
(State
of Incorporation)
|
(Primary
Standard Classification Code)
|
(IRS
Employer ID No.)
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9595
Six
Pines
Bldg
8
Level 2 Suite 8210
The
Woodlands, TX 77380
(Address
of Registrant's Principal Executive Offices) (Zip Code)
Mark
Wood
9595
Six
Pines
Bldg
8
Lvl 2 Suite 8210
The
Woodlands, TX 77380
832-631-6103
(Name,
Address and Telephone Issuer's telephone number)
Securities
to be Registered Under Section 12(b) of the Act: None
Securities
to be Registered Under Section 12(g) of the Act:
Common
Stock
$.001
Par
Value
(Title
of
Class)
PART
I
ITEM
1. MERGER
On
January 27, 2007, the Haystar
Services & Technology, Inc. (“Haystar”), (Dibz-Nevada), a company formed
under the laws of Nevada currently traded on the pink sheets, entered into
a
Share Exchange Agreement (“Agreement:” or“Merger”) with Dibz International, Inc.
(“Dibz-Delaware”), a private operating company formed under the laws of
Delaware. As a result of the Merger, there was a change in control of
the pink sheet entity. In accordance with SFAS No. 141,(Dibz-Nevada) was
the
acquiring entity. While the transaction is accounted for using the purchased
method of accounting in substance the Agreement is a recapitalization of
Haystar's capital structure.
For
accounting purposes, Dibz-Nevada
accounted for the transaction as a reverse merger with Dibz-Delaware being
the“accounting acquirer”. Dibz-Delaware did not recognize goodwill or any
intangible assets in connection with the transaction. Prior to the Agreement,
Dibz-Delaware was a newly formed corporation with no significant assets and
liabilities.
Immediately
prior to the merger,
Dibz-Delaware had 100 shares of common stock outstanding. All of
these common shares were held by Mark Wood, Dibz-Nevada’s Chairman of the Board
and CEO. Effective with the Agreement, Dibz-Nevada acquired 100%
of Dibz-Delaware common shares in consideration for the issuance of
39,474 shares of Series A Preferred Stock of Dibz-Nevada (“Series A
Preferred”). Under the Agreement and prior to such conversion, each
share of Series A Preferred will have the voting rights equal to 5,783
shares of common stock and vote together with the shares of common stock
on all
matters. The Series A Preferred is convertible at the option of the holder
into
common stock at the rate of five hundred seventy eight (578) shares of common
for every one share of Series A Preferred at the option of the
holder. The Agreement was entered for the business purpose of
enhancing shareholder value. Under the terms of the Agreement, the Dibz-Nevada
shareholders retained 1,622,000 shares of common stock (held by 24 holders
of
record) after the cancellation of 3,000,000 shares of common stock by certain
Dibz-Nevada shareholders to facilitate the Agreement. As a result,
Mark Wood the former sole shareholder of Dibz-Delaware became the controlling
shareholder of Dibz-Nevada by holding 39,474 shares of Series A Preferred,
which
represented voting rights equal to 228,278,142 shares of common stock of
Dibz-Nevada. Pursuant to the Agreement Dibz-
Delaware
became
a wholly owned subsidiary of
Dibz-Nevada and Dibz-Nevada changed its name to Dibz International,
Inc.
BUSINESS
Dibz-Delaware
was incorporated on December 28, 2006 under the laws of the State of
Delaware to
provide a simple, easy to use all-in-one Communications Platform to
users of
viral social networks allowing the easy distribution, capturing, cataloging
and
review of personal content utilized on the viral social network sites.
On
January 27, 2007, the Haystar Services & Technology, Inc., a company formed
under the laws of Nevada currently traded on the pink sheets, entered
into a
Share Exchange Agreement with Dibz International, Inc., a private operating
company formed under the laws of Delaware. Pursuant to the Agreement
Dibz-Delaware became a wholly owned subsidiary of Dibz-Nevada and Dibz-Nevada
changed its name to Dibz International, Inc. (“Dibz International”)
Members
of Social Networks create amazingly innovative personal profiles in
an effort to
share information about themselves and create new friends. With this
in mind most users of social networks also communicate through text
messages -
usually without access to the social networks from their cell
phones. And they cannot sort and search those messages or multimedia
files as there are no content management systems available.
Dramatic
increases in on-line advertisement budgets have occurred over the past
several
years. There has been an explosion of web traffic through Web 2.0
business models. Dibz International will offer social networks and
web 2.0 companies an innovative and easy to use communications platform
that
will enhance their users experience on their site.
Market
Opportunity
Social
Networks are among the most
visited sites on the web. Myspace.com and Facebook.com have proven
the
common
interest
of people to
socialize and connect online has deep roots. Dibz will provide a
simple, easy to use all-in-one Communications Platform to users of viral
social
networks allowing the easy distribution, capturing, cataloging and review
of
personal content utilized on the viral social network sites.
"Personal
Content", in terms of social
network members, consists of information of some sort. This information can
be
visual, audible, or textual. Comments, photographs, movies, music, blogs
and
podcasts are all forms of content. Through Dibzs all-in-one
communications platform personal content will be distributed to cell phones,
PDA's, social networks and email addresses - whatever a Dibz member chooses
to
register with the company. The information is then cataloged and
stored for safekeeping and future use and reference of the Dibz
member.
We
believe a large portion of our users
will utilize text messaging as their primary means of
communication. The US Wireless Forecast, 2006 to 2011 report from
Jupiter Research reports 52% of the
US
cell
phone users utilized text messaging
in2006. According to Jupiter Research text messaging is primarily
utilized as a communications medium, with the top two uses of text messaging
cited as “make plans with friends” and “communicating with friends and
family”. Text messaging revenues in the
U.S.
should
approach $9.5 billion by
2011. We believe that Dibz all-in-one communications platform will
greatly simplify the “technology obstacle” for the adoption of cell phones as an
accepted interface to social networks. Combining text messaging,
multi-media messaging, email and video into a single platform will attract
users
to the platform for the simplicity, ease of use and wireless connections
to
social networks.
The
social network market can be divided into two segments: the consumer, or
home
user, market and the business, or corporate, market. Our initial products
target
the consumer market. Both the consumer and the business markets are serviced
by
many of the same popular social networks such as MySpace.Com, Youtube.com,
Linkedin.com and Facebook.com. Our second generation of products will not
only
enhance the consumer market but add business functionality for the corporate
market as well.
The
Dibz Solution
In
order to be viable, our systems must
function as a simple and effective means of communication. In
addition, we believe that many in the consumer or home user market are
seeking
an entertaining experience and a way to express their creativity and
individual
personalities. We believe that consumer users are ready to accept a simple,
all-in-one product that offer users a customizable and entertaining experience
together with security and opt-in/out features.
We
plan
to introduce a innovative approach to enhancing our users’ social network
experience with the launch of our Dibz Platform. Upon launch our Dibz
Platform
will provide the following benefits:
— Variety and Amount of
Personal Content. Our Dibz Platform will offer users access to an extensive
and
continually growing pool of personal content that we believe may become
one of
the largest collections of creative and diverse graphics, sound and multimedia
content available for each individual user.
— Creative Technology.
Once our Dibz Platform is completed and launched our proprietary technology,
which is based on advanced software development standards, will be designed
to
produce robust quality products that provide the functionality packaged
in a
friendly, less technologically-oriented and entertaining
environment.
— Customization. The easy
to use Dibz Platform will enable our users to customize and personalize
the
delivery of and access to their content easily and quickly.
— Flexibility and Ease of
Use for Both Sender and Recipient. We will strive to offer a simple and
intuitive user interface that enables our users to create different experiences
depending on the nature or recipient of the specific content. Users can
easily
change one or more features for a specific communication. Further, recipients
of
Dibz users messages can easily open them using most available web browsers
and
can see all the features without the need for special
software.
Our
Strategy
Our
objective is to become the market leader in communication and content
management
systems for social networks and small business markets. We believe
that our platform will be the only one of it’s kind providing an entertaining
and creative system for Dibz users. Our strategies include
building on our first to market advantage to gain users with the launch of our
Dibz Platform, build advertising revenues through the use of the Dibz
Platform
and seek to convert free users to paying customers through the launch
of new
paid services after the launch of our free services. The key elements
of our
strategy are to:
—
Grow our user community. We believe viral marketing has resulted in hundreds
of
millions of registered users for websites such as MySpace.com and Youtube.com
who spread the word about products and services at relatively low marketing
costs. Dibz Delaware will use viral marketing to potentially do the same
for our
Dibz Platform. For that reason, we expect a significant portion of our
products
and service offering to remain free to the user. Additionally, in order
to
strengthen awareness and increase the size of our user base, we intend
to expand
our marketing methods beyond viral marketing to include advertisements,
media
buying, public relations activities and additional co-branding arrangements
on a
limited and targeted basis.
—
Avoid offensive market tools. Our goal is to design our products and
services to
address users’ aversion to spam, spyware and other perceived offensive Internet
marketing tools, which we believe will encourage more use of the Dibz
Platform
while increasing user loyalty.
—
Develop our advertising revenues. We intend to generate a portion of
our
anticipated revenues by monetizing visitor traffic to our website through
selling paid advertising and sponsored links. In addition, we believe
we can
generate revenues through keyword search advertising. We also intend
to develop
an advertising infrastructure allowing potential advertisers effective
and
economical methods to reach our users. We plan further increase our advertising
force by developing independent sales agents, participating in trade
shows, and
strengthening our brand through other online and offline marketing
activities.
—
Expand product offerings. Once our Dibz Platform is launched we plan
to grow our
revenues through expanding our free product and service offerings and
developing
new paid product and service offerings. We will seek to convert our anticipated
free users into paying customers by marketing paid products and services
to our
anticipated user base and to cross-sell additional products and services
to
these anticipated paying users.
—
Focus on the online user. The Internet allows us to reach potential users
quickly and easily as well as reduces the costs associated with sales
and
distribution of our products and services.
— Acquire
complementary products, technologies or companies. We seek to enhance
our
technology, grow our user base, and diversify our product lines and services
by
exploiting strategic acquisition opportunities. We intend to supplement
our
research and development efforts by acquiring complementary technologies
and
other assets that enhance the features, functionality and performance
of our
products and services. We may also seek to increase our user base or
enhance our
sales and marketing capabilities by acquiring companies in our or similar
markets.
Our
Initial Social Network Products
Today
personal content on Myspace.com and facebook.com is stored on web site
servers
owned by the website. These websites provide amazing content
distribution channels but provide little to no management services for
the users
content. As part of the Dibz Platform, Dibz will introduct widgets
that allow users of MySpace.com and Facebook.com to integrate the Dibz
Platform
into their MySpace or Facebook accounts. For instance comments posted
to a MySpace website are simply displayed. The page owner cannot
search, sort, store, rank, etc. his or her comments. The DIBZ
Platform widget will allow the storage, capturing, cataloging, manipulation
and
review of personal content published on or to the web. The content
can then be sorted, stored, distributed via wireless and viewed
easily. The individual components will be:
Voice
Comments. Users can record, post, play and store voice
comments. The comments may be made public or kept private, depending
upon the user’s personal preferences.
Text
Messaging. Users will receive and reply to text messages generated by
other users. These messages will be stored for future retrieval by
the user and may be posted to social networks on the users behalf if
so
requested.
Multimedia
Messaging. Users will receive and reply to multimedia messages,
including picture and video options. The multimedia messages are
stored for future retrieval by the user and may be posted to social networks
on
the users behalf if so requested.
Email
services. Users will have the ability to generate and reply to email
messages. The email messages are stored for future retrieval by the
user and may be posted to social networks on the users behalf if so
requested.
Calendar
Functions. Users will have the ability to automatically schedule
events such as reminders and notices. These events will automatically
be sent via text messaging, multimedia messages, emails or a combination
of all
based on the users settings for each individual recipient of the
message.
Content
Management. All communication sent or received through the Dibz
platform is stored and organized for easy retrieval by the user.
Friend
Management. The user creates an on-line friends contact book that the
user may group and sort easily. The user then uses these groups,
lists and friends in a innovative and fun way to communicate with their
friends.
Partner
Programs. Programs designed by the company to allow other websites to
partner and participate in our business model will be
introduced.
DIBZ
Services
Once
the
Dibz Platform is launched users of Dibz Platform and users
of MySpace.com and Facebook.com who use the Dibz Platform widget can
manage content such as emails, text messaging, voice comments, and multimedia
messages from the Dibz Platform. The DIBZ Platform will allows the storage,
capturing, cataloging, manipulation and review of personal content sent
throught
the Dibz Platform. Through the upcoming Dibz Platform the users
content can be sorted, stored, distributed from the users P.C or via
wireless
communication and easily viewed.
Dibz
anticipates offering three levels of service; Basic, Enhanced and Premium.
Basic
services will be free to the user and provided by DIBZ upon the initial
launch
of the Dibz Platform. Services should be viral in nature and
targeting viral communities such as MySpace.com and Facebook.com. Enhanced
serviced will be sold on a monthly subscription. Premium services will
be paid
for services with pricing to vary by service. Certain Premium services
may only
be marketed by DIBZ and provided by 3rd party service partners in a revenue
sharing arrangement. Enhanced and Premium services will be launched
at least 120 days after the launch of the Basic Services.
Our
service level offerings are currently planned as follows:
Basic
Level—Free to the user – In beta today and scheduled to launch in Q1
2008:
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·
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Basic
services will be delivered and managed through the DIBZ
Platform. All services can be provided anonymously, via the
Users Dibz ID, so the user doesn’t have to share their personal email or
phone numbers. Basic Level Services
provided:
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o
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Send
and receive web postings via
email
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o
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Send
and receive SMS (text
messages)
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o
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Send
and receive web voice comments via HTML, Wireless Application
Protocol
(WAP) push, or email
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o
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Create
and send Multimedia Messaging Service (MMS) from Dibz website
(images,
audio, video, rich text)
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o
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Create
groups for posting and
messaging.
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o
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Control
SMS usage either on the number of messages received per day or
per
month
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o
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Complete
group management system, send/receive invitations to/from
users
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o
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Reminder
service. Send/receive personal reminders that can be created
up to a year
in advance, that can be sent via SMS and/or
email
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o
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Block
posting or messages by individuals or
groups
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o
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Store
content and comments for up to 6
months
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o
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Store
and retrieve SMS message history sent/received through DIBZ
Platform
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o
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Store
and retrieve emails sent/received through DIBZ
Platform
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o
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Store
and replay voice comment history sent/received through DIBZ
Platform
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o
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View
and show history of multimedia messages sent/received through
DIBZ
Platform
|
Enhanced
Level- estimated service fee of $2.95 to $4.95 per month – Currently scheduled
for summer 2008 introduction:
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·
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Includes
all Basic Level Services
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·
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Public
DID for Voice Comments
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·
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Add
Voice Capabilities to MySpace or other personal web sites for
direct voice
recording to DID service
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·
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Create
voice comments and HTML posts via cell through “speed post”
system
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·
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Allow
direct dial-in usage via cell, PSTN or VoIP
Services
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·
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Voice
comment sent via Wireless Application Protocol (WAP) push and/or
email
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·
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Block
messages from public playback
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·
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Customizable
SMS Service Control; user has the ability to select to send/receive
SMS
messages by individual
|
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·
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View
history and playback voice comments for 1
year
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·
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Store
content and comments for one year
|
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·
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Export
to local hard disk for local
storage
|
Enhanced
Level services may be added or deleted as we launch the Dibz Platform
and gain
user feedback.
Premium
Level— Add Voice Service Options - Currently scheduled for late summer 2008
introduction:
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·
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Includes
all Basic Services and Enhanced Services when
available
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·
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International
Voice Services
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·
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Complete
On-Line management system
|
Premium
Level services may be added or deleted as we launch the Dibz Platform
and gain
user feedback.
Marketing
There
are
currently over 125 million registered users of social networks worldwide.
Initially, the Company’s marketing effort will be focused on capitalizing the
viral nature of these networks by offering a free version the DIBZ
Platform. The Company will advertise the Dibz Platform on social
network sites such as MySpace.com and facebook.com and through search
engines
such as Google and Yahoo. The Company intends to develop a direct marketing
or
“grass roots” campaign that will launch in 3rd quarter 2008 whereby DIBZ will
establish a presence at social venues that our target audience attends,
such as
conferences and concerts.
Our
Revenue Model
The
business model will begin to generate revenue from the first day
of web site
operations, currently anticipated to be in January 2008. Through
the
introduction of a
free
version of the Dibz platform, we anticipate capitalizing on the viral
nature of
our free services to grow our user base. With the anticipated viral
nature and expected popularity of our free services, anticipated
advertisement
revenue will partially offset the cost of corporate operations. We
believe
offering the platform free will accomplish several objectives. They
are:
1)
Accelerated growth of the DIBZ platform
2)
Exponential growth of our own convergent content network
3)
The
development of a valuable consumer database;
4)
Empower the company to promote paid subscriber services
Competition
We
compete with other web based SMS providers, such as
www.textu.org
,
www.onlinetexting.com, www.prombity.com, www.txtdrop.com. None of these
services
at this time offers the capability of the DIBZ Platform, such as storage,
tracking and organizing. There are numerous and well established competitors
in
phone services similar to DIBZ expected Premium and Enhanced Service
offerings.
Skype, Vonage, and Yahoo are examples, but none of these providers offer
the
full range of service DIBZ has, or the management tool the DIBZ Platform
offers
at this time. Some of these potential new competitors have longer
operating histories, greater name recognition, larger customer bases
and
significantly greater financial, technical and marketing resources. We
cannot
guarantee that we will be able to compete successfully against current
or future
competitors or that competitive pressure will not have a material and
adverse
effect on our financial position, results of operations and cash
flows.
RISK
FACTORS
Our
business is subject to numerous risk factors, including the
following:
An
investment in our common stock involves a high degree of risk. You should
carefully consider the risks described below andthe other information in this
prospectus before investing in our common stock. If any of the following risks
occur, our business, operating results and financial condition could be
seriously harmed. Please note that throughout this prospectus, the words“we”,
“our” or “us” refer to the Company and not to the selling
stockholders.
WE
HAVE A
LIMITED OPERATING HISTORY THAT YOU CAN USE TO EVALUATE US, AND THE LIKELIHOOD
OF
OUR SUCCESS MUST BE CONSIDERED IN LIGHT OF THE PROBLEMS, EXPENSES,
DIFFICULTIES,COMPLICATIONS AND DELAYS FREQUENTLY ENCOUNTERED BY A SMALL
DEVELOPING COMPANY.
We
were
incorporated in Delaware on December 28, 2006. We have a limited
amount of assets or financial resources. The likelihood of our success must
be
considered in light of the expenses and difficulties in marketing our website,
recruiting and keeping clients and obtaining financing to meet the needs of
our
plan of operations. Since we have a limited operating history of marketing
our
services to the public over the Internet, we may not be profitable and we may
not be able to generate sufficient revenues to meet our expenses and support
our
anticipated activities.
WE
ARE
DEVELOPING OUR PRODUCT IN A HIGHLY COMPETITIVE MARKET AND WE ARE UNSURE AS
TO
WHETHER OR NOT THERE WILL BE ANY CONSUMER DEMAND FOR OUR PRODUCT.
Some
of
our competitors are much larger and better capitalized than we are. It may
be
that our competitors will better address the same market opportunities that
we
are addressing. These competitors, either alone or with collaborative partners,
may succeed in developing business models that are more effective or have
greater market success than our own. The Company is especially susceptible
to
larger competitors that invest more money in marketing. Moreover, the
market for our products is large but highly competitive. There is
little or no hard data that substantiates the demand for our products or how
this demand will be segmented. It is possible that there will be low
consumer demand for our products, or that interest in our products could decline
or die out, which would cause us to be unable to sustain our
operations.
WE HAVE NOT YET DEVELOPED OUR PROPOSED
PRODUCT, OUR ABILITY TO DEVELOP OUR PRODUCT IS SUBJECT TO SUBSTANTIAL
RISKS.
Internet
social
networks are susceptible to rapidly moving social trends. If our
product is not deemed desirable it is possible that there will be low
consumer
demand for our product. This poses a substantial risk that our
business plan could not be successful.
WE
WILL
REQUIRE FINANCING TO ACHIEVE OUR CURRENT BUSINESS STRATEGY AND OUR INABILITY
TOOBTAIN SUCH FINANCING COULD PROHIBIT US FROM EXECUTING OUR BUSINESS PLAN
AND
CAUSE US TOSLOW DOWN OUR EXPANSION OF OPERATIONS.
We
will
need to raise additional funds through public or private debt or sale of
equity
to achieve our current plan of operations. Such financing may not be available
when needed. Even if such financing is available, it may be on terms that
are
materially adverse to your interests with respect to dilution of book value,
dividend preferences, liquidation preferences, or other terms. Our capital
requirements to implement our business strategy will be significant. We will
need a minimum of $720,000 to continue operations over the next twelve months,
which we do not currently have in our cash reserve. We will also require
additional funds in order to significantly expand our business as set forth
in
our plan of operations. These funds may not be available or, if available,
will
be on commercially reasonable terms satisfactory to us. We may not be able
to
obtain financing if and when it is needed on terms we deem
acceptable.
If
we are
unable to obtain financing on reasonable terms, we could be forced to delay
or
scale back our plans for expansion. In addition, such inability to obtain
financing on reasonable terms may delay the implementation of an upgrade of
our
website, launching of new online-dating related features and the execution
of
our marketing plan o increase our member base.
WE
WILL
REQUIRE ADDITIONAL FINANCING WHICH MAY REQUIRE THE ISSUANCE OF ADDITIONAL
SHARES
WHICH WOULD DILUTE THE OWNERSHIP HELD BY OUR SHAREHOLDERS
We
will
need to raise funds through either debt or sale of our shares in order to
achieve our business goals. Although there areno present plans, agreements,
commitments or undertakings with respect to the sale of additional shares
or
securities convertible into any such shares by us, any shares issued would
further dilute the percentage ownership held by the stockholders.
OUR
FUTURE SUCCESS IS DEPENDENT, IN PART, ON THE PERFORMANCE AND CONTINUED SERVICE
OF MARK WOOD, OUR SOLE OFFICER AND DIRECTOR. WITHOUT HIS CONTINUED SERVICE,
WE
MAY BE FORCED TO INTERRUPT OR EVENTUALLY CEASE OUR OPERATIONS.
We
are
presently dependent to a great extent upon the experience, abilities and
continued services of Mark Wood, our sole officer and director. We currently
do
not have an employment agreement with Mr. Wood. The loss of his services
would delayour business operations substantially.
MARK
WOOD’S CONTROL MAY PREVENT YOU FROM CAUSING A CHANGE IN THE COURSE OF OUR
OPERATIONS AND MAY AFFECT THE PRICE OF OUR COMMON STOCK.
Mark
Wood
beneficially owns approximately 80% of our outstanding Series A Preferred
Stock.
Accordingly, for as long as Mr. Wood continues to own more than 50% of
our
Series A Preferred Stock, he will be able to elect our entire board of
directors, control all matters that require a stockholder vote (such as
mergers,
acquisitions and other business combinations) and exercise a significant
amount
of influence over our management and operations. Therefore, regardless
of the
number of our common shares sold, your ability to cause a change in the
course
of our operations is eliminated. As such, the value attributable to the
right to
vote is limited.
This
concentration of ownership could result in a reduction in value to the common
shares you own because of the ineffectivevoting power, and could have the effect
of preventing us from undergoing a change of control in the future.
OUR
SUCCESS DEPENDS UPON OUR ABILITY TO ATTRACT AND HIRE KEY PERSONNEL. OUR
INABILITY TO HIRE QUALIFIED INDIVIDUALS WILL NEGATIVELY AFFECT OUR BUSINESS,
AND
WE WILL NOT BE ABLE TO IMPLEMENT OR EXPAND OUR BUSINESS PLAN.
Our
business is greatly dependent on our ability to attract key personnel. We will
need to attract, develop, motivate and retain highly skilled technical
employees. Competition for qualified personnel is intense and we may not be
able
to hire or retain qualified personnel. Our management has limited experience
in
recruiting key personnel which may hurt our ability to recruit qualified
individuals. If we are unable to retain such employees, we will not be able
to
implement or expand our business plan.
OUR
MARKET IS CHARACTERIZED BY RAPID TECHNOLOGICAL CHANGE, AND IF WE FAIL TO DEVELOP
AND MARKET NEW TECHNOLOGIES RAPIDLY, WE MAY NOT BECOME PROFITABLE IN THE
FUTURE.
The
internet and the online commerce industry are characterized by rapid
technological change that could render our existing website obsolete. The
development of our web site entails significant technical and business risks.
We
may not be able to successfully use new technologies effectively or adapt our
web site to customer requirements or needs. If our management is unable, for
technical, legal, financial, or other reasons, to adapt in a timely manner
in
response to changing market conditions or customer requirements, we may never
become profitable which may result in the loss of all or part of your
investment.
IF
WE ARE
UNABLE TO PROTECT EFFECTIVELY OUR INTELLECTUAL PROPERTY, THIRD PARTIES
MAY
USE
OUR TECHNOLOGY, WHICH COULD IMPAIR OUR ABILITY TO COMPETE IN OUR
MARKETS.
Our
success will depend on our ability to obtain and protect patents on our
technology (specifically “iDialDirect”) and to protect our trade
secrets. Others may challenge our patents and, as a result, our
patents could be narrowed, invalidated or unenforceable. In addition, our
current and future patent applications may not result in the issuance of patents
in the United States or foreign countries. Competitors might develop products
similar to ours that do not infringe on our patents. In order to protect or
enforce our patent rights, we may initiate interference proceedings,
oppositions, or patent litigation against third parties, such as infringement
suits. These lawsuits could be expensive, take significant time and divert
management's attention from other business concerns. The patent position of
technology firms generally is highly uncertain, involves complex legal and
factual questions, and has recently been the subject of much litigation. No
consistent policy has emerged from the U.S. Patent and Trademark Office or
the
courts regarding the breadth of claims allowed or the degree of protection
afforded under technology patents. In addition, there is a substantial backlog
of applications at the U.S. Patent and Trademark Office, and the approval or
rejection of patent applications may take several years.
We
cannot
guarantee that our management and others associated with us will not improperly
use our patents, trademarks and trade secrets. Further, others may gain access
to our trade secrets or independently develop substantially equivalent
proprietary information and techniques.
WE
DO NOT
EXPECT TO PAY DIVIDENDS AND INVESTORS SHOULD NOT BUY OUR COMMON STOCKEXPECTING
TO RECEIVE DIVIDENDS
We
have
not paid any dividends on our common stock in the past, and do not anticipate
that we will declare or pay any dividends in the foreseeable future.
Consequently, you will only realize an economic gain on your investment in
our
common stock if the price appreciates. You should not purchase our common
stock
expecting to receive cash dividends. Since we do not pay dividends, and if
we
are not successful in having our shares listed or quoted on any exchange
or
quotation system, then you may not have any manner to liquidate or receive
any
payment on your investment. Therefore our failure to pay dividends may cause
you
to not see any return on your investment even if we are successful in our
business operations. In addition, because we do not pay dividends we may
have
trouble raising additional funds which could affect our ability to expand
out
business operations.
THE
CONTINUOUSLY ADJUSTABLE CONVERSION PRICE FEATURE OF OUR CONVERTIBLE
DEBENTURES
COULD REQUIRE US TO ISSUE A SUBSTANTIALLY GREATER NUMBER OF SHARES TO
THE
HOLDERS, WHICH WILL CAUSE DILUTION TO OUR EXISTING STOCKHOLDERS.
Our
obligation to issue shares upon conversion of our convertible securities
under
the January 2007 agreements is essentially limitless. The following
table shows the effect on the number of shares issuable upon full conversion
($450,000 aggregate principal)(without taking into account the 4.99% limitation
or any interest, penalties, events of default or other amounts under the
notes),
in event our common stock price declines by 25%, 50% and 75% from the trading
price at January 25, 2007.
|
|
PRICE
DECREASES
BY
|
|
|
1/25/07
|
25%
|
50%
|
75%
|
|
Common
Stock Price (1)
|
0.05
|
0.0375
|
0.025
|
0.0125
|
|
|
|
|
|
|
|
Conversion
Price (2)
|
0.025
|
0.01875
|
0.0125
|
0.00625
|
|
|
|
|
|
|
|
100%
Conversion Shares
|
18,000,000
|
24,000,000
|
36,000,000
|
72,000,000
|
(1)
Represents the average of the lowest three (3) trading prices for the common
stock during the twenty (20) trading day period prior to January 25, 2007 as
calculated pursuant to the agreements (2) Assuming 50% applicable
percentage
The
issuance of shares upon conversion of the convertible debentures and exercise
of
warrants may result in substantial dilution to the interests of other
stockholders since the holders of such securities may ultimately convert and
sell the full amount issuable on conversion. Although the holders of our
convertible debentures and warrants may not convert and/or exercise such
securities if such conversion or exercise would cause them to own more than
4.99% of our outstanding common stock, this restriction does not prevent them
from converting and/or exercising some of their holdings, selling the stock
and
then converting the rest of their holdings. In this way, the holders of our
convertible debentures, and warrants could sell more than this limit while
never
holding more than this limit. There is no upper limit on the number of shares
that may be issued which will have the effect of further diluting the
proportionate equity interest and voting power of all holders of our common
stock. In addition, the number of shares of common stock issuable upon
conversion
of the outstanding convertible debentures may increase if the market price
of
our stock declines. The sale of these shares may adversely affect the market
price of our common stock.
The
continuously
adjustable conversion feature could also limit our ability to raise capital
at
favorable prices in the future. Investors may find the Company an
unattractive investment because of the dilution in our shares caused by
the
convertible debentures.
OUR COMMON STOCK COULD BE DILUTED IN THE
FUTURE AS A RESULT OF OUR ASSET PURCHASE AGREEMENT WITH
GLOBALNET.
On January
5,
2007, the Company entered into an Asset Purchase Agreement with GlobalNet,
a
Nevada corporation. The Company assumed the $3,000,000 Callable Secured
Convertible Note (the “Note”) from GlobalNet to a third party investor in
exchange for its iDialDirect technology and the right to receive up to
$50,000
worth of services from GlobalNet per month for a period of three
years. Management has expensed the cost of the assumed debt of
$3,000,000 as an acquisition expense due to the uncertainty of the Company’s
ability to realize the future value of these assets. The Note bears
interest at 15% per year and is due on December 29, 2009. The Note is
convertible into the Company’s common stock only after that stock is listed or
quoted on a nationally recognized stock exchange or the OTCBB. The
Note is convertible into common shares at the lesser of (i) 20% of the
average
of the lowest three trading prices of the common stock during the twenty
trading
day period prior to conversion and (ii) $0.10. The
conversion feature of the note could possibly result in a change in control
of
the Company depending on the conversion price of the Note. The Company
has an
option to prepay the Notes in the event that no event of default exists,
there
are a sufficient number of shares available for conversion of the Notes
and the
market price is at or below $.10 per share. Exercise of this option will
stay
all conversions for the following month. The full principal amount of the
Notes
is due upon default under the terms of Notes.
OUR
COMMON STOCK IS CONSIDERED A PENNY STOCK, WHICH IS SUBJECT TO RESTRICTIONS
ON
MARKETABILITY, SO YOU MAY NOT BE ABLE TO SELL YOUR SHARES.
If
our
common stock becomes tradable in the secondary market, we will be subject to
the
penny stock rules adopted by the Securities and Exchange Commission that require
brokers to provide extensive disclosure to their customers prior to executing
trades in penny stocks. These disclosure requirements may cause a reduction
in
the trading activity of our common stock, which in all likelihood would make
it
difficult for our shareholders to sell their securities.
WE
MAY
NOT BE ABLE TO IMPLEMENT SECTION 404 OF THE SARBANES OXLEY ACT OF 2002 ON
A TIMELY BASIS
The
SEC,
as directed by Section 404 of the Sarbanes-Oxley Act, adopted rules
generally requiring each public company to include a report of management on
the
company's internal controls over financial reporting in its annual report on
Form 10-KSBthat contains an assessment by management of the effectiveness of
the
company's internal controls over financial reporting. This requirement will
first apply to our annual report on Form 10-KSB for the fiscal year ending
June
30, 2008. In addition, commencing with our annual report for the fiscal year
ending June 30, 2009 our independent registered accounting firm must attest
to
and report on management's assessment of the effectiveness of our internal
controls over financial reporting.
We
have
not yet developed a Section 404 implementation plan. We have in the past
discovered, and may in the future discover, areas of our internal controls
that
need improvement. How companies should be implementing these new requirements
including internal control reforms to comply with Section 404's
requirements and how independent auditors will apply these requirements and
test
companies' internal controls, is still reasonably uncertain.
We
expect
that we will need to hire and/or engage additional personnel and incur
incremental costs in order to complete the work required by Section 404. We
can not assure you that we will be able to complete a Section 404 plan on a
timely basis. Additionally, upon completion of a Section 404 plan, we
may not be able to conclude that our internal controls are effective, or in
the
event that we conclude that our internal controls are effective, our independent
accountants may disagree with our assessment and may issue a report that is
qualified. Any failure to implement required new or improved controls, or
difficulties encountered in their implementation, could negatively affect our
operating results or cause us to fail to meet our reporting
obligations
ITEM
2. MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OFOPERATIONS
The
following discussion and analysis of our plan of operations should be read
in
conjunction with our financial statements and related notes appearing elsewhere
in this prospectus. This discussion and analysis contain
forward-looking statements that involve risks, uncertainties and
assumptions. Actual results may differ materially from those
anticipated in these forward-looking statements as a result of certain factors,
including, but not limited to, those presented under the heading of “Risk
Factors” and elsewhere in this prospectus.
Overview
Plan
of
Operations
Dibz-Delaware
was incorporated on December 28, 2006 under the laws of the State of Delaware
to
provide a simple, easy to use all-in-one Communications Platform to users
of
viral social networks allowing the easy distribution, capturing, cataloging
and
review of personal content utilized on the viral social network sites.
On
January 27, 2007, the Haystar Services & Technology, Inc., a company formed
under the laws of Nevada currently traded on the pink sheets, entered into
a
Share Exchange Agreement with Dibz International, Inc., a private operating
company formed under the laws of Delaware. Pursuant to the Agreement
Dibz-Delaware became a wholly owned subsidiary of Dibz-Nevada and Dibz-Nevada
changed its name to Dibz International, Inc. (“Dibz International”). We are
developing a social networking platform which will provide a simple, easy
to
use, all-in-one communications platform to users of social
networks. We expect to have our product ready to be marketed in Q4
2007.
Cash on hand as of September 30, 2007
is
adequate to fund operations through October 2007. During October 2007
we received an additional $200,000 of funding under the 6% Convertible
Debentures. We currently have no specific plans for additional
funding; we may however in the future elect to raise funds through equity
or
debt transactions. . We are currently using cash at a rate of $
58,333 per month, for a total use of cash in the next twelve months of
approximately $ 700,000 .
Dibz-Delaware will virally market
our
all-in-one communications platform to users of social networks such as
MySpace.Com andYouTube.Com. Currently we anticipate to generate
revenues from i) advertising agreements with search engines, ii) advertisement
revenues generated by our own direct sales efforts, iii) premium service
offerings iv) new service offerings, and v)potential mergers or acquisitions.
Milestones
Milestones
thru December 31, 2008:
In
November 2007 we released a beta version of the DIBZ Platform. This is
a free
version and will be available to all users from our website. The
Company is currently beta testing the software live on our website located
at
www.dibz.com. In October 2007, the Company received an additional
$200,000 from our investors, under the same terms of the previous three
rounds
of financing.
January
2008 to March 2008
In
late
January 2008 Dibz International will launch version 1.0 of the DIBZ Platform.
This will be the final free version and will be available to users from
our
website. The Company is currently finalizing our beta testing live on
our website located at www.dibz.com. The Company anticipates the
following:
|
·
|
Launch
of Dibz Platform in January
2008.
|
|
·
|
Begin
the development of version 2.0 of the Dibz Platform that will
include
Enhanced and Premium level services as well as API interfaces
for business
applications
|
|
·
|
Launch
of our corporate website.
|
The
Company anticipates hiring a Senior VP of Sales and Marketing for a total
of two
employees and three contractors (2 development and product support) in
Q1
2008. Primary business development will focus on potential
advertisers for our website. Management expects minimal revenues during
this
period.
April
2008 to June 2008
During
this timeframe business development will continue to focus on garnering
new
advertisers for the Company website, and developing and identifying events
for a
direct marketing to our target market audience, users of social networks.
This
will include concerts, conventions and similar venues.
During
this timeframe the Company anticipates a total of 95,000 unique visitors
to our
website, with 10,115 of visitors signing up for free service and a 1%
conversion
rate to Enhanced Services. Projected cash requirements for the period
are
$175,000.
July
2008 – September 2008
New
business development will focus on identified verticals for the Dibz
Platform
business applications, as well as a reseller program for the Dibz Platform
business product. It is anticipated that version 2.0 of the Dibz Platform
will
launch during this timeframe. The Company anticipates a total of
300,000 unique visitors to our website, with 30,115 of visitors signing
up for
free service and a 1% conversion rate to Premium and Enhanced
Services.
October
2008 – December 2008
No
additional staffing is anticipated during this time. During this
timeframe the Company anticipates a total of 900,000 unique visitors
to our
website, with 335,465 of visitors signing up for free service and a 1%
conversion rate to Premium and Enhanced Services.
Results
of
Operations
Dibz-Delaware
is in the development stage and to date has not generated any revenues. The
risks specifically discussed are not the only factors that could affect future
performance and results. This report contains forward-looking statements
concerning us, our business and our operations. Such forward-looking statements
are necessarily speculative and there are certain risks and uncertainties that
could cause actual events or results to differ materially from those referred
to
in such forward-looking statements. We do not have a policy of updating or
revising forward-looking statements and thus it should not be assumed that
silence by our management over time means that actual events or results are
occurring as estimated in the forward-looking statements herein.
As
a
development stage company, we have yet to earn revenues from operations. We
may
experience fluctuations in operating results in future periods due to a variety
of factors, including our ability to obtain additional financing in a timely
manner and on terms favorable to us, our ability to successfully develop our
business model, the amount and timing of operating costs and capital
expenditures relating to the expansion of our business, operations and
infrastructure and the implementation of marketing programs, key agreements,
and
strategic alliances, and general economic conditions specific to our
industry.
As
a
result of limited capital resources and no revenues from operations from its
inception, the Dibz-Delaware has relied on the issuance of equity securities
to
employees and non-employees in exchange for services. Dibz-Delaware's management
enters into equity compensation agreements with non-employees if it is in the
best interest of the Dibz-Delaware under terms and conditions consistent with
the requirements of Financial Accounting Standards No. 123 R, "Share-Based
Compensation." In order to conserve its limited operating capital resources,
the
Dibz-Delaware anticipates continuing to compensate non-employees for services
during the next twelve months. This policy may have a material effect on
Dibz-Delaware's results of operations during the next twelve
months.
Costs
and
Expenses
From our
inception through September 30, 2007, Dibz-Delaware has not generated any
revenues and has incurred cumulative losses of $4,777,083. In addition,
a
significant part of the overall remaining costs are associated principally
with
equity-based compensation to employees and consultants, asset impairment
costs
and professional services rendered.
Product Research and Development
We
do not
anticipate undertaking or incurring any additional material product
research and development activities other than the required Research and
development required to complete our DIBZ technology suite during the next
twelve months.
Acquisition
of Plant and
Equipment and Other Assets
We
do not
anticipate the sale of any material property, plant or equipment during the
next
12 months. We do not anticipate the acquisition of any material
property, plant or equipment during the next 12 months.
Number
of
Employees
From
our inception through
the period ended September 30, 2007, we have principally relied on the
services
of outside consultants and at-will consultants for services. We
currently have no full time employees and no part-time employees. In
order for us to attract and retain quality personnel, we anticipate we
will have
to offer competitive salaries to future employees. We anticipate that
it may become desirable to add full and or part time employees to discharge
certain critical functions during the next 12 months. This projected
increase in personnel is dependent upon our ability to generate revenues
and
obtain sources of financing. There is no guarantee that we will be
successful in raising the funds required or generating revenues sufficient
to
fund the projected increase in the number of employees. As we
continue to expand, we will incur additional cost for personnel.
Liquidity
and Capital Resources
As
of September 30, 2007,
the Company's current liabilities exceeded its current assets by $1,652,997.
From the Company's inception to September 30, 2007 the Company has incurred
an
operating cash flow deficit of $243,724, which has been principally financed
through the issuance of $850,000 of 6% Convertible Debentures in the
first half
of 2007 to various parties on the following dates:
On
January 25, 2007, the
Company entered into a Securities Purchase Agreement (the “Securities Purchase
Agreement”) with New Millennium Capital Partners II, LLC, AJW Qualified
Partners, LLC, AJW Offshore, Ltd and AJ EPartners, LLC (collectively,
the
“Investors”). Under the terms of the Securities Purchase Agreement, the
Investors purchased an aggregate of (1) $450,000 in callable convertible
secured
notes (the “Notes”) and (II) warrants to purchase 4,500,000 shares of the common
stock (the “Warrants”).
The Notes bear interest of 6% and
mature on
January 25, 2010. The notes are convertible into common shares at the
lesser of
(i)the Variable Conversion Price and (ii) the Fixed Conversion price.
The
“Variable Conversion Price” shall mean the Applicable Percentage multiplied by
the average of the lowest three (3) trading prices during the twenty
(20)
Trading Day period prior to conversion. The “Applicable Percentage” means 60%
and the “Fixed Conversion Price” means$0.10.
The Company has an option to prepay
the Notes
in the event that no event of default exists, there are a sufficient
number of
shares available for conversion of the Notes and the market price is
at or below
$.10 per share. Exercise of this option will stay all conversions for
the
following month. The full principal amount of the Notes is due upon
default
under the terms of Notes.
The Company simultaneously issued
to the
Investors warrants to purchase 4,500,000 shares of common stock at
an exercise
price of $0.10 for a period of five years.
The Investors have contractually
agreed to
restrict their ability to convert the Notes and exercise the Warrants
and
receive shares of the Company's common stock such that the number of
shares of
the Company's common stock held by them and their affiliates after
such
conversion or exercise does not exceed 4.90% of the then issued and
outstanding
shares of the Company's common stock.
On April 19, 2007, the Company entered
into a
Securities Purchase Agreement (the “Securities Purchase Agreement”) with New
Millennium Capital Partners II, LLC, AJW Qualified Partners, LLC, AJW
Offshore,
Ltd and AJE Partners, LLC (collectively, the “Investors”). Under the terms of
the Securities Purchase Agreement, the Investors purchased an aggregate
of (1)
$200,000 in callable convertible secured notes (the “Notes”).
The Notes bear interest of 6% and
mature on
April 19, 2010. The notes are convertible into common shares at the
lesser of
(i)the Variable Conversion Price and (ii) the Fixed Conversion price.
The
“Variable Conversion Price” shall mean the Applicable Percentage multiplied by
the average of the lowest three (3) trading prices during the twenty
(20)
Trading Day period prior to conversion. The “Applicable Percentage” means 60%
and the “Fixed Conversion Price” means $0.10.
On June 22, 2007, the Company entered
into a
Securities Purchase Agreement (the “Securities Purchase Agreement”) with New
Millennium Capital Partners II, LLC, AJW Master Fund, Ltd and AJE Partners,
LLC
(collectively, the “Investors”). Under the terms of the Securities Purchase
Agreement, the Investors purchased an aggregate of (1) $200,000 in
callable
convertible secured notes (the “Notes”).
The Notes bear interest of 6% and mature
on
June 22, 2010. The notes are convertible into common shares at the lesser
of (i)
the Variable Conversion Price and (ii) the Fixed Conversion price. The
“Variable
Conversion Price” shall mean the Applicable Percentage multiplied by the average
of the lowest three (3) trading prices during the twenty (20) Trading Day
period
prior to conversion. The “Applicable Percentage” means 60% and the “Fixed
Conversion Price” means $0.10.
Our cash requirements to fund the
operations
of the Company and to continue the development of our product are approximately
$58,000 per month. Cash on hand as of September 30, 2007 is adequate
to fund operations through October 2007. We will need a minimum of
$700,000 to continue operations over the next twelve months, which we
do not
currently have in our cash reserve. We expect to continue to incur
additional losses and negative cash flows from operating activities until
the
third quarter of 2008.
During October 2007, we issued an
additional
$200,000 in 6% Convertible Debentures. We currently have no specific
plans for additional financing, however, in the future we may raise funds
through equity or debt financing. .
We
have
also assumed a $3,000,000 Callable Secured Convertible Note from GlobalNet
Corporation (“GlobalNet”) in exchange for its iDialDirect technology and the
right to receive up to $50,000 of telecommunication services from GlobalNet
per
month for a period of three years ending in January 2010. This
contract will allow us to receive these valuable services without expending
additional cash. The Note bears interest at 15% per year and is due on
December 29, 2009. The Note is convertible into our common stock only
after that stock is listed or quoted on a nationally recognized stock exchange
or the OTCBB. The Note is convertible into common shares at the
lesser of (i) 20% of the average of the lowest three trading prices of the
common stock during the twenty trading day period prior to conversion and
(ii)
$0.10. We have an option to prepay the Notes in the event that no event of
default exists, there are a sufficient number of shares available for conversion
of the Notes and the market price is at or below $.10 per share. Mark
Wood, our Chairman of the Board and Chief Executive Officer, was the CEO
of
GlobalNet until August 2006 and is currently a shareholder of
GlobalNet.
If
we are
unable to obtain any additional funding, we believe that by adjusting our
operations and development to the level of capitalization, we believe we
have
sufficient capital resources to meet projected cash flow deficits. However,
if during that period or thereafter, we are not successful in generating
sufficient liquidity from operations or in raising sufficient capital resources,
on terms acceptable to us, this could have a material adverse effect on our
business, results of operations liquidity and financial condition.
Our
independent registered public accounting firm has stated in their report
on the
Company's June 30, 2007 financial statements that the Company has had
difficulty in generating sufficient cash flow to meet its obligations
and sustain its operations which raises substantial doubts about the
Company's ability to continue as a going concern. The accompanying consolidated
financial statements do not include any adjustments that might result from
the
outcome of this uncertainty.
Off-Balance
Sheet
Arrangements
We
have
not entered into any off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on our financial condition, changes
in
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources and would be considered material
to
investors.
Inflation
It
is the
opinion of the Company that inflation has not had a material effect on its
operations.
Critical
Accounting Policies and
Estimates
The
discussion and analysis of our plan of operations is based upon our consolidated
financial statements, which have been prepared in accordance with accounting
principles generally accepted in the United States of America. The preparation
of our consolidated financial statements requires us to make estimates and
assumptions that affect our reported results of operations and the amount of
reported assets, liabilities and proved oil and gas reserves.
Some
accounting policies involve judgments and uncertainties to such an extent that
there is reasonable likelihood that materially different amounts could have
been
reported under different conditions, or if different assumptions had been used.
Actual results may differ from the estimates and assumptions used in the
preparation of our consolidated financial statements. Described below are the
most significant policies we apply, or intend to apply , in preparing our
consolidated financial statements, some of which are subject to alternative
treatments under accounting principles generally accepted in the United States
of America. We also describe the most significant estimates and assumptions
we
make in applying these policies.
Product
Development
Costs
Research
and development costs are charged to expense as incurred. However, we
account for development costs related to software products to be sold, leased,
or otherwise marketed in accordance with FASB Statement of Financial Accounting
Standards No. 86,
Accounting
for the Costs of Computer Software to Be Sold, Leased, or Otherwise
Marketed
. Software development costs are expensed as incurred until
technological feasibility has been established, at which time such costs are
capitalized until the product is available for general release to customers.
To
date, technological feasibility has not been established for our products,
and,
accordingly, no development costs have been capitalized.
Website
Development Costs
The
Company recognizes website
development costs in accordance with Emerging Issue Task Force ("EITF")
No.
00-02,"Accounting for Website Development Costs." As such, the Company
expenses
all costs incurred that relate to the planning and post implementation
phases of
development of its website. Direct costs incurred in the development
phase are
capitalized and recognized over the estimated useful life. Costs associated
with
repair or maintenance for the website are included in cost of net revenues
in
the current period expenses. During the period ended from December 28,
2006
through June 30, 2007 and for the quarter ended September 30, 2007, the
Company
did not capitalize any costs associated with the website development.
Revenue
Recognition
We
will
recognize revenue when persuasive evidence of an arrangement exists, services
have been rendered, the sales price is fixed or determinable, and collectibility
is reasonable assured. As of September 30, 2007, we did not have any
sales.
Recently
Issued Accounting Standards
Not Yet Adopted
Fair
Value
Measurements.
In September 2006, the FASB issued SFAS
No. 157, “Fair Value Measurements” which defines fair value, establishes a
framework for measuring fair value in generally accepted accounting
principles(“GAAP”), and expands disclosures about fair value measurements. Prior
to this Statement, there were different definitions of fair value and limited
guidance for applying those definitions in GAAP. This Statement provides the
definition to increase consistency and comparability in fair value measurements
and for expanded disclosures about fair value measurements. The
Statement emphasizes that fair value is a market-based measurement, not an
entity-specific measurement. The Statement clarifies that market participant
assumptions include assumptions about risk, i.e. the risk inherent in a
particular valuation technique used to measure fair value and/or the risk
inherent in the inputs to the valuation technique. The Statement expands
disclosures about the use of fair value to measure assets and liabilities in
interim and annual periods subsequent to initial recognition. The disclosures
focus on the inputs used to measure fair value and for recurring fair value
measurements using significant unobservable inputs, the effect of the
measurements on earnings for the period. The Statement is effective for
financial statements issued for fiscal years beginning after November 15, 2007,
and interim periods within those fiscal years. Earlier application is
encouraged, provided that the reporting entity has not yet issued financial
statements for that fiscal year, including the financial statements for an
interim period within that fiscal year. The Company does not expect adoption
of
this standard will have a material impact on its financial position, operations
or cash flows.
Accounting
for Registration Payment
Arrangements.
In December 2006, the FASB issued FSP EITF 00-19-2,
Accounting for Registration Payment Arrangements ("FSP 00-19-2") which
addresses accounting for registration payment arrangements. FSP00-19-2
specifies that the contingent obligation to make future payments or
otherwise transfer consideration under a registration payment arrangement,
whether issued as a separate agreement or included as a provision of a
financial instrument or other agreement, should be separately recognized
and measured in accordance with FASB Statement No. 5, Accounting
for Contingencies. FSP 00-19-2 further clarifies that a financial
instrument subject to a registration payment arrangement should be
accounted for in accordance with other applicable generally accepted
accounting principles without regard to the contingent obligation to
transfer consideration pursuant to the registration
payment arrangement. For registration payment arrangements and
financial instruments subject to those arrangements that were entered into
prior
to the issuance of EITF 00-19-2, this guidance shall be effective for
financial statements issued for fiscal years beginning after December 15, 2006
and interim periods within those fiscal years. The Company has not yet
determined the impact that the adoption of FSP 00-19-2 will have on
its financial statements.
The
Fair Value Option for Financial
Assets and Financial Liabilities.
In February 2007, the
FASB issued SFAS No. 159,“The Fair Value Option for Financial Assets and
Financial Liabilities--including an amendment of FASB Statement No.115”,
permitting entities to choose to measure many financial instruments and certain
other items at fair value. The objective is to improve financial reporting
by
providing entities with the opportunity to mitigate volatility in reported
earnings caused by measuring related assets and liabilities differently without
having to apply complex hedge accounting measurement. The statement
applies to all entities, including not-for profit organizations. Most of the
provisions of this Statement apply only to entities that elect the fair value
option. However, the amendment to SFAS No. 115, “Accounting for Certain
Investments in Debt and Equity Securities”, applies to all entities with
available-for-sale and trading securities. The Company does not expect adoption
of this standard will have a material impact on its financial position,
operations or cash flows.
Noncontrolling
Interests in
Consolidated Financial Statements
. In December 2007, the FASB
issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial
Statements”. SFAS No. 160 amends ARB 51 to establish accounting and reporting
standards for the noncontrolling (minority) interest in a subsidiary
and for the
deconsolidation of a subsidiary. It clarifies that a noncontrolling interest
in
a subsidiary is an ownership interest in the consolidated entity that
should be
reported as equity in the consolidated financial statements. The Company
does
not expect adoption of this standard will have a material impact
on its financial position, operations or cash flows. SFAS No. 160 is
effective for the Company’s fiscal year beginning July 1,
2009.
Business
Combinations
. In December 2007, the FASB issued SFAS” No.
141(R), “Business Combinations”. SFAS No. 141(R) replaces SFAS No.
141 and requires that all assets, liabilities, contingent consideration,
contingencies and in-process research and development costs of an acquired
business be recorded at fair value at the acquisition date; that acquisition
costs generally be expensed as incurred; that restructuring costs generally
be
expensed in periods subsequent to the acquisition date; and that changes
in
accounting for deferred tax asset valuation allowances and acquired income
tax
uncertainties after the measurement period impact income tax expense. SFAS
No.
141(R) is effective for business combinations for which the acquisition date
is
on or after July 1, 2009. The Company does not expect adoption of this
standard will have a material impact on its financial position, operations
or
cash flows as no business combinations are anticipated at this
time.
ITEM
3. DESCRIPTION
OF PROPERTY
Dibz-Delaware
has no properties and at this time has no agreements to acquire any properties.
Dibz-Delaware currently uses the offices of management at no cost to the
Company. Management has agreed to continue this arrangement until the
Dibz-Delawarecompletes an acquisition or merger.
ITEM
4. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT.
The
following table sets forth each person known by us to be the beneficial owner
of
five percent or more of the Company's voting Stock, all directors individually
and all directors and officers of the Company as a group as of September
30, 2007. Except as noted, each person has sole voting and investment power
with
respect to the shares shown.
|
Name
and Address of Beneficial
Owner
|
Amount
of Beneficial
Ownership
|
|
|
|
|
Percentage
of
Class
|
|
|
|
|
|
|
|
|
|
|
|
Mark
Wood, Chairman of the Board and Chief Executive
Officer
|
39,473 shares
of Series A Preferred Stock (1)
|
|
|
|
|
|
78.95
|
%
|
|
9595
Six Pines
|
22,815,394
shares of
common stock
|
|
|
(8
|
)
|
|
|
74.75
|
%
(8)
|
|
Bldg
8
Level 2 Suite8210
|
|
|
|
|
|
|
|
|
|
|
The
Woodlands, TX 77380
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ocean
AvenueAdvisors
Ira
Miller, Principal
|
5,263
shares of Series A Preferred Stock
|
|
|
|
|
|
|
10.53
|
%
(2)
|
|
2361
Campus Drive, Suite 101
Irvine,
CA 92612
|
3,042,014
shares of common stock (8)
|
|
|
|
|
|
|
9.97
|
%
(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
Fairhills
Capital
|
|
|
|
|
|
|
|
|
|
|
Edward
Bronson,
Principal
|
|
|
|
|
|
|
|
|
|
|
1275
Fairhills Drive
Ossining,
NY 10562
|
2,632
shares of Series A Preferred Stock
1,521,296
shares of common stock (8)
|
|
|
|
|
|
|
5.26%
|
(3)
4.98%
(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
Danny
Wainstein
Marjorie
Group
2875
Oceanside Road
Oceanside,
NY 10021
|
2,632
shares of Series A PreferredStock
1,521,296
shares of common stock (8)
|
|
|
|
|
|
|
5.26%
|
(4)
4.98%
(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
Star
Associates LLC
Andrew
Glashow
1224
W
61stStreet
Kansas
City, MO 64113
|
600,000
shares of common stock
|
|
|
|
|
|
|
37.0%
|
(5)
1.97%
(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
David
Hungerford
10715
Potspring Road
Cockysville,
MD 21030
|
200,000
shares of common stock
|
|
|
|
|
|
|
12.3%
|
(6)
0.66%
(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
Steve
Starke
12740
Old
Plank Road
Jacksonville,
FL 32220
|
173,500
shares of common stock
|
|
|
|
|
|
|
10.7%
|
(7)
0.57%
(8)
|
|
(1)
|
On
January 27, 2007, the Company designated 50,000 of its shares of
Preferred
Stock as Series A Preferred Shares, par value $ .001 per share (“Series A
Preferred”). The Series A Preferred are convertible at the option of the
holder into common stock at the rate of five hundred seventy eight
(578)
shares of common for every one share of Series A Preferred at the
option
of the holder. Except as otherwise expressly required by law,
each holder of Series A Preferred shall be entitled to vote on all
matters
submitted to shareholders of the Corporation and shall be entitled
to Five
Thousand Seven Hundred and Eighty Three (5,783) votes of Series A
Preferred Stock owned at the record date for the determination of
shareholders entitled to vote on such matter or, if no such record
date is established, at the date such vote is taken or any written
consent
of shareholders is solicited. Based upon same, Mark Wood is deemed
the
majority shareholder of the Company since he can vote 228,272,359
shares
which would represent over 78.50% of the voting shares of the Company
assuming all preferred shares were converted to common
stock.
|
|
(2)
|
Ocean
Avenue Advisors is the owner of 5,263 Series A Preferred
Shares. Such shares are entitled to vote at the rate of5,783
common shares for each Preferred Share owned. Based upon same,
Ocean Advisors is the owner of a total of 30,435,929 voting shares of
the Company or 10.46% of the outstanding voting shares of the
Company.
|
|
(3)
|
Fairhills
Capital is the owner of 2,632 Series A Preferred Shares. Such
shares are entitled to vote at the rate of 5,783 common shares for
each
Preferred Share owned. Based upon same, Fairhills Capital is
the owner of a total of 15,220,856 voting shares of the Company or
5.23%
of the outstanding voting shares of the
Company.
|
|
(4)
|
Danny
Weinstein is the owner of 2,632 Series A Preferred Shares. Such
shares are entitled to vote at the rate of 5,783common shares for
each
Preferred Share owned. Based upon same, Danny Weinstein is the
owner of a total of 15,220,856 voting shares of the Company or 5.23%
of the outstanding voting shares of the
Company.
|
|
(5)
|
Star
Associates LLC is the owner of 600,000 shares of common
stock. The holders of the 50,000 Series A Preferred Shares are
entitled to vote at the rate of 5,783 common shares for each Preferred
Share owned. Based upon same, Star Associates LLC is the owner
of 0.0021% of the outstanding voting shares of the
Company.
|
|
(6)
|
David
Hungerford is the owner of 200,000 shares of common stock. The
holders of the 50,000 Series A Preferred Shares are entitled to vote
at
the rate of 5,783 common shares for each Preferred Share
owned. Based upon same, David Hungerford is the owner of
0.0007% of the outstanding voting shares of the
Company.
|
|
(7)
|
Steve
Starke is the owner of 173,500 shares of common stock. The
holders of the 50,000 Series A Preferred Shares are entitled to vote
at
the rate of 5,783 common shares for each Preferred Share
owned. Based upon same, Steve Starke is the owner of 0.0006% of
the outstanding voting shares of the
Company.
|
|
(8)
|
The amount assumes conversion
of Series
A Preferred stock into common shares at 578 common shares
for each Series A Preferred
stock
|
ITEM
5. DIRECTORS, EXECUTIVE
OFFICERS, PROMOTERS AND CONTROL PERSONS.
We
have
one Director and Officer as follows:
|
Name
|
Age
|
Positions
and Offices Held
|
|
|
|
|
|
Mark
Wood
|
48
|
Chairman
of the Board and Chief Executive
Officer
|
There
are
no agreements or understandings for the officer or director to resign at
the
request of another person and the above-named officer and director is not
acting
on behalf of nor will act at the direction of any other person.
Set
forth
below is the name of our director and officer, all positions and offices with
the Company held, the period during which he has served as such, and the
business experience during at least the last five years:
Mark
Wood
founded Dibz International, Inc. in December 2006 and serves as our Chairman
of
the Board and Chief Executive Officer. Prior to founding Dibz International,
Inc. Mr. Wood was the Chairman and Chief Executive Officer of GlobalNet
Corporation, a publicly traded telecommunications company recognized as one
of
the top ten telecommunications providers to Latin America. Mr. Wood
founded iDial Networks, Inc. in 1997 and served as Chairman and Chief Executive
Officer from its inception until its merger with GlobalNet in September
2003. During his tenure with iDial Networks the Company received the
prestigious Fast 500 Company Award by Deloitte & Touche in 2003 recognizing
iDial Networks as one of the 500 fastest growing small companies in the
country. Mr. Wood served as Chairman and Chief Executive Officer of
GlobalNet from September 2003 until August 2006, leading the development of
Voice over Internet Protocol technologies and winning two consecutive
telecommunications industry “Best of Show” awards. Mr. Wood has
previously held positions with Apple, Inc., LIN Broadcasting and Intellicall,
Inc.
EMPLOYMENT
AGREEMENT
At
this time, there is no employment agreement with Mr. Wood.
ITEM
6. EXECUTIVE
COMPENSATION
.
The
following table sets forth compensation paid to Mark Wood, Chairman of the
Board
and Chief Executive Officer, and our other executive officer during the period
from December 28, 2006 (inception) through June 30,
2007.
SUMMARY
COMPENSATION TABLE
|
Name
and Principal Position
|
|
Year
|
|
Salary
($)
|
|
Bonus
($)
|
|
Stock
Awards
($)
|
|
All
Other Compensation
($)
|
|
Total
($)
|
|
Mark
Wood
Chairman
of the Board and Chief Executive Officer
|
|
2007
|
|
$ 50,000
|
|
$ -
|
|
$ 100
|
|
$ -
|
|
$ 50,100
|
|
Klaus
Scholz
Chief
Operating Officer
|
|
2007
|
|
$ 80,000
|
|
$ -
|
|
$ -
|
|
$ -
|
|
$ 80,000
|
No
retirement, pension, profit sharing, stock option or insurance programs or
other
similar programs have been adopted by us for the benefit of our
employees.
ITEM
7. CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS.
Dibz-Delaware
has no properties and at this time has no agreements to acquire any properties.
Dibz-Delaware currently uses the offices of management at no cost to the
Company. Management has agreed to continue this arrangement until the
Company completes an acquisition or merger.
We
have
entered into a consulting agreement with Star Associates which is a shareholder
of the Company and is controlled by Andrew Glashow, our former officer and
director. Pursuant to the Agreement, we have paid Star Associates a
total of $30,000for consulting services rendered to date. An
additional $30,000 and 1,000,000 shares of restricted stock will be owed to
Star
Associates when the Company reaches certain milestones.
ITEM
8. DESCRIPTION OF
SECURITIES.
Our
authorized capital stock consists of 50,000,000 shares of Common Stock, par
value $.001 per share, and 1,000,000 shares of Preferred
Stock, par value per share $.001. The Company's Preferred Stock may be divided
into such series as may be established by the Board of Directors.
The
following statements relating to the capital stock set forth the material terms
of our securities; however, reference is made to the more detailed provisions
of, and such statements are qualified in their entirety by reference to, the
Certificate of Incorporation, amendment to the Certificate of Incorporation
and
the By-laws, copies of which are filed as exhibits to this registration
statement.
COMMON
STOCK
Holders
of shares of common stock are entitled to one vote for each share on all
matters
to be voted on by the stockholders. Holders of common stock do not
have cumulative voting rights. Holders of common stock are entitled to
share
ratably in dividends, if any, as may be declared from time to time by the
Board
of Directors in its discretion from funds legally available therefore.
In the
event of a liquidation, dissolution or winding up of the Company, the holders
of
common stock are entitled to share pro rata all assets remaining after
payment
in full of all liabilities. All of the outstanding shares of common stock
are
fully paid and non-assessable. Holders of common stock have no preemptive
rights
to purchase our common stock. There are no conversion or redemption rights
or
sinking fund provisions with respect to the common stock.
The
Board
of Directors does not at present intend to seek stockholder approval prior
to
any issuance of currently authorized stock, unless otherwise required by
law or
stock exchange rules.
As
of September
30, 2007 we have 3,143,296 shares of common stock issued and outstanding.
PREFERRED
STOCK
Preferred
Stock
On
January 27, 2007, the Company designated 50,000 of its shares of Preferred
Stock
as Series A Preferred Shares, par value $.001 per share (“Series A Preferred”).
The Series A Preferred is convertible at the option of the holder into common
stock at the rate of five hundred seventy eight (578) shares of common for
every
one share of Series A Preferred at the option of the holder.
Except
as
otherwise expressly required by law, each holder of Series A
Preferred shall be entitled to vote on all matters submitted to
shareholders of the Corporation and shall be entitled to Five Thousand Seven
Hundred and Eighty Three (5,783)votes of Series A Preferred Stock owned at
the
record date for the determination of shareholders entitled to vote on such
matter or, if no such record date is established, at the date such vote is
taken
or any written consent of shareholders is solicited. Except as
otherwise required by law, the holders of shares of Series A Preferred Stock
shall vote together with the holders of Common Stock on all matters and shall
not vote as a separate class.
The
holders of Series A Preferred Stock shall not be entitled to receive any
preference upon liquidation, dissolution or winding up of the business of the
Corporation, whether voluntary or involuntary, each holder of Series A Preferred
Stock shall share ratably with the holders of the common stock of the
Corporation.
As of
September
30, 2007 we have 47,368 shares of Series A Preferred issued and outstanding.
DIVIDENDS
Dividends,
if any, will be contingent upon our revenues and earnings, if any, capital
requirements and financial conditions. Thepayment of dividends, if any, will
be
within the discretion of our Board of Directors. We presently intend to retain
all earnings,if any, for use in its business operations and accordingly, the
Board of Directors does not anticipate declaring any dividends.
TRANSFER
AGENT
Colonial
Stock Transfer Company, Inc, 66 Exchange Place, Suite 100, Salt Lake City,
Utah
84111_ is the transfer agent for our common stock.
GLOSSARY
Exchange
Act
The
Securities Exchange Act of 1934, as amended.
"Penny
Stock" Security
As
defined in Rule 3a51-1 of the Exchange Act, a "penny stock" security is any
equity security other than a security (i)that is a reported security (ii) that
is issued by an investment company (iii)that is a put or call issued by the
Option Clearing Corporation (iv) that has a price of $5.00 or more (except
for
purposes of Rule 419 of the Securities Act) (v)that is registered on a national
securities exchange (vi) that is authorized for quotation on the NASDAQ Stock
Market, unless other provisions of Rule 3a51-1 are not satisfied, or (vii)
that
is issued by an issuer with (a) net tangible assets in excess of $2,000,000,
if
in continuous operation for more than three years or $5,000,000 if in operation
for less than three years or (b) average revenue of at least $6,000,000 for
the
last three years.
Securities
Act
The
Securities Act of 1933, as amended.
PART
II
ITEM
1. MARKET PRICE FOR COMMON
EQUITY AND RELATED STOCKHOLDER MATTERS.
(A) MARKET
PRICE. Our common stock is currently quoted on the Pink Sheets under
the symbol “HYSR”. Based on our name change we intend to apply for a
new symbol. Our common stock is reported on the over the counter
market in the Pink Sheets as maintained by Pink Sheets, LLC as $.05 but
there is
currently no market for our stock. The quotations for the common
stock traded in the Pink Sheets may reflect inter-dealer prices, without
retail
mark-up, markdown or commission and may not necessary represent actual
transactions. The following table sets forth, in U.S. dollars and in dollars
and
cents (in lieu of fractions), the high and low sales prices for each of
the
calendar quarters indicated, as reported by the National Quotation Bureau
(“Pink
Sheets”). The prices in the table may not represent actual
transactions.
|
Quarter
|
|
High Bid
|
|
|
Low Bid
|
|
|
2005
|
|
|
|
|
|
|
|
Jul
–
Sept
2005
|
|
$
|
.05
|
|
|
$
|
.05
|
|
|
Oct
–
Dec
2005
|
|
$
|
.05
|
|
|
$
|
.05
|
|
|
2006
|
|
|
|
|
|
|
|
|
|
Jan
–
Mar
2006
|
|
$
|
.05
|
|
|
$
|
.05
|
|
|
Apr
–
Jun
2006
|
|
$
|
.05
|
|
|
$
|
.05
|
|
|
Jul
–
Sept 2006
|
|
$
|
.05
|
|
|
$
|
.05
|
|
|
Oct
–
Dec
2006
|
|
$
|
.05
|
|
|
$
|
.05
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
Jan
–
Mar
2007
|
|
$
|
.05
|
|
|
$
|
.05
|
|
|
Apr
–
Jun
2007
|
|
$
|
.05
|
|
|
$
|
.05
|
|
|
Jul
–
Sept
2007
|
|
$
|
.05
|
|
|
$
|
.05
|
|
|
Oct
–
Dec
2007
|
|
$
|
.05
|
|
|
$
|
.05
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
Jan
1, 2008 –
Jan 8, 2008
|
|
$
|
.05
|
|
|
$
|
.05
|
|
The Securities
and Exchange Commission has adopted Rule 15g-9 which establishes the definition
of a "penny stock," for purposes relevant to us, as any equity security that
has
a market price of less than $5.00 per share or with an exercise price of less
than $5.00 per share, subject to certain exceptions. For any transaction
involving a penny stock, unless exempt, the rules require: (i) that a broker
or
dealer approve a person's account for transactions in penny stocks and (ii)
the
broker or dealer receive from the investor a written agreement to the
transaction, setting forth the identity and quantity of the penny stock to
be
purchased. In order to approve a person's account for transactions in penny
stocks, the broker or dealer must (i) obtain financial information and
investment experience and objectives of the person; and (ii) make a reasonable
determination that the transactions in penny stocks are suitable for that person
and that person has sufficient knowledge and experience in financial matters
to
be capable of evaluating the risks of transactions in penny stocks. The broker
or dealer must also deliver, prior to any transaction in a penny stock, a
disclosure schedule prepared by the Commission relating to the penny stock
market, which, in highlight form, (i) sets forth the basis on which the broker
or dealer made the suitability determination and (ii) that the broker or dealer
received a signed, written agreement from the investor prior to the transaction.
Disclosure also has to be made about the risks of investing in penny stocks
in
both public offerings and in secondary trading, and about commissions payable
to
both the broker-dealer and the registered representative, current quotations
for
the securities and the rights and remedies available to an investor in cases
of
fraud in penny stock transactions. Finally, monthly statements have to be sent
disclosing recent price information for the penny stock held in the account
and
information on the limited market in penny stocks.
Rule
144
Shares
In
general, under Rule 144 as currently in effect, a person who has beneficially
owned shares of a company’s common stock for at least one year is entitled to
sell within any three month period a number of shares that does not exceed
1% of
the number of shares of the company’s common stock then outstanding which, in
our case, would equal approximately 16,220 shares of our common stock as
of the
date of this prospectus.
Sales
under Rule 144 are also subject to manner of sale provisions and notice
requirements and to the availability of current public information about
the
company. Under Rule 144(k), a person who is not one of the company’s affiliates
at any time during the three months preceding a sale, and who has beneficially
owned the shares proposed to be sold for at least two years, is entitled
to sell
shares without complying with the manner of sale, public information, volume
limitation or notice provisions of Rule 144.
Series
A
Preferred Shares
On
January 27, 2007, the Company designated 50,000 of its shares of Preferred
Stock
as Series A Preferred Shares, par value $.001 per share (“Series A Preferred”).
The Series A Preferred is convertible at the option of the holder into commons
tock at the rate of five hundred seventy eight (578) shares of common for
every
one share of Series A Preferred at the option of the holder.
Except
as
otherwise expressly required by law, each holder of Series A
Preferred shall be entitled to vote on all matters submitted to
shareholders of the Corporation and shall be entitled to Five Thousand Seven
Hundred and Eighty Three (5,783)votes of Series A Preferred Stock owned at
the
record date for the determination of shareholders entitled to vote on such
matter or, if no such record date is established, at the date such vote is
taken
or any written consent of shareholders is solicited. Except as
otherwise required by law, the holders of shares of Series A Preferred Stock
shall vote together with the holders of Common Stock on all matters and shall
not vote as a separate class.
As of
September
30, 2007 we have 47,368 shares of Series A Preferred issued and outstanding.
Stock Option
Grants
To
date,
we have not granted any stock options.
(B)
HOLDERS. There are 26 holders of our Common Stock. The issued
and outstanding shares of our Common Stock were issued in accordance with the
exemptions from registration afforded by Section 4(2) of the Securities Act
of
1933.
(C)
DIVIDENDS. We have not paid any dividends to date, and has no plans to do so
in
the immediate future.
ITEM
2. LEGAL
PROCEEDINGS.
There
is
no litigation pending or threatened by or against us.
ITEM
3. CHANGES IN AND DISAGREEMENTS
WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIALDISCLOSURE.
We
have
not changed accountants since its formation and there are no disagreements
with
the findings of its accountants.
ITEM
4. RECENT SALES OF UNREGISTERED
SECURITIES.
We
have
sold securities which were not registered as follows:
On
October 25, 2005, we issued a total of 319,520 shares of our common stock to
the
following shareholders for the following:
|
NAME
|
SHARES
|
|
Frank
Alvarez
|
2,000
|
|
Ronald
Bassett
|
1,000
|
|
R
Scott Beebe
|
800
|
|
Anna
Brannon
|
5,000
|
|
Bob
Ciri
|
7,500
|
|
Donald
M Corliss
|
355
|
|
Arthur
Dehart
|
5,000
|
|
David
Floor
|
2,000
|
|
Tyler
Floor
|
1,000
|
|
Keith
D Freadhoff
|
37,865
|
|
Robert
Frojen
|
10,000
|
|
Andrew
Glashow
|
7,500
|
|
James
Hayes
|
73,500
|
|
Kenneth
Kirshner
|
4,500
|
|
Joanne
Ludwig
|
5,000
|
|
David
Novak
|
7,000
|
|
Paula
Pool
|
5,000
|
|
Joe
Py
|
20,000
|
|
Thelma
Ramos
|
10,000
|
|
Mark
Schneider
|
31,000
|
|
Steve
Starke
|
73,500
|
|
Dennis
Young
|
10,000
|
|
TOTAL
|
319,520
|
Such
shares were valued at $0.001, and issued in reliance on the exemption under
Section 4(2) of the Securities Act of 1933, as amended
(the“Act”). These shares of our common stock qualified for exemption
under Section 4(2) of the Securities Act of 1933since the issuance shares
by us
did not involve a public offering. The offering was not a “public offering” as
defined in Section 4(2) due to the insubstantial number of persons involved
in
the deal, size of the offering, manner of the offering and number of shares
offered. We did not undertake an offering in which we sold a high number
of
shares to a high number of investors. In addition, these shareholders had
the
necessary investment intent as required by Section 4(2) since they agreed
to and
received share certificates bearing a legend stating that such shares are
restricted pursuant to Rule 144 of the 1933Securities Act. This restriction
ensures that these shares would not be immediately redistributed into the
market
and therefore not be part of a “public offering.” Based on an analysis of the
above factors, we have met the requirements to qualify for exemption under
Section 4(2) of the Securities Act of 1933 for this transaction.
On
May 4,
2006, we issued 38,500 shares of our common stock to Ed Hines for the
acquisition of Haystar Florida. Such shares were valued at $0.001, and issued
in
reliance on the exemption under Section 4(2) of the Securities Act of 1933,
as
amended (the “Act”).These shares of our common stock qualified for exemption
under Section 4(2) of the Securities Act of 1933 since the issuance shares
by us
did not involve a public offering. The offering was not a “public offering” as
defined in Section 4(2) due to the insubstantial number of persons involved
in
the deal, size of the offering, manner of the offering and number of shares
offered. We did not undertake an offering in which we sold a high number
of
shares to a high number of investors. In addition, this shareholder had the
necessary investment intent as required by Section 4(2) since they agreed
to and
received a share certificate bearing a legend stating that such shares are
restricted pursuant to Rule 144 of the 1933 Securities Act. This restriction
ensures that these shares would not be immediately redistributed into the
market
and therefore not be part of a “public offering.” Based on an analysis of the
above factors, we have met the requirements to qualify for exemption under
Section4(2) of the Securities Act of 1933 for this transaction.
On
May
11, 2006, we issued 100,000 shares to Steve Starke for services performed
on the
company's behalf. Such shares were valued at $0.001, and issued in reliance
on
the exemption under Section 4(2) of the Securities Act of 1933, as amended
(the
“Act”). These shares of our common stock qualified for exemption under Section
4(2) of the Securities Act of 1933 since the issuance shares by us did not
involve a public offering. The offering was not a “public offering” as defined
in Section 4(2) due to the insubstantial number of persons involved in the
deal,
size of the offering, manner of the offering and number of shares offered.
We
did not undertake an offering in which we sold a high number of shares to
a high
number of investors. In addition, this shareholder had the necessary investment
intent as required by Section 4(2) since they agreed to and received a share
certificate bearing a legend stating that such shares are restricted pursuant
to
Rule 144 of the 1933 Securities Act. This restriction ensures that these
shares
would not be immediately redistributed into the market and therefore not
be part
of a “public offering.” Based on an analysis of the above factors, we have met
the requirements to qualify for exemption under Section 4(2) of the Securities
Act of 1933 for this transaction.
On
December 28, 2006, we issued 200,000 shares of our common stock to David
Hungerford for the conversion of a secured promissory note to equity and to
cancel certain stock purchase warrants. Such shares were issued in
reliance on the exemption under Section 4(2) of the Securities Act of 1933,
as
amended (the “Act”). These shares of our common stock qualified for exemption
under Section 4(2) of the Securities Act of 1933 since the issuance shares
by us
did not involve a public offering.
The
offering was not a “public offering” as defined in Section 4(2) due to the
insubstantial number of persons involved in the deal, size of the offering,
manner of the offering and number of shares offered. We did not undertake an
offering in which we sold a high number of shares to a high number of investors.
In addition, this shareholder had the necessary investment intent as required
by
Section 4(2) since they agreed to and received a share certificate bearing
a
legend stating that such shares are restricted pursuant to Rule 144 of the
1933
Securities Act. This restriction ensures that these shares would not be
immediately redistributed into the market and therefore not be part of a “public
offering.” Based on an analysis of the above factors, we have met the
requirements to qualify for exemption under Section 4(2) of the Securities
Act
of 1933 for this transaction.
On
January 4, 2007, we issued 600,000 shares of our common stock to Star Associates
for acquisition related expenses and the conversion of promissory notes to
equity. Such shares were issued in reliance on the exemption under Section
4(2)
of the Securities Act of 1933, as amended (the “Act”). These shares of our
common stock qualified for exemption under Section 4(2) of the Securities
Act of
1933 since the issuance shares by us did not involve a public offering. The
offering was not a “public offering” as defined in Section 4(2) due to the
insubstantial number of persons involved in the deal, size of the offering,
manner of the offering and number of shares offered. We did not undertake
an
offering in which we sold a high number of shares to a high number of investors.
In addition, this shareholder had the necessary investment intent as required
by
Section 4(2) since they agreed to and received a share certificate bearing
a
legend stating that such shares are restricted pursuant to Rule 144 of the
1933
Securities Act. This restriction ensures that these shares would not be
immediately redistributed into the market and therefore not be part of a
“public
offering.” Based on an analysis of the above factors, we have met the
requirements to qualify for exemption under Section 4(2) of the Securities
Act
of 1933 for this transaction.
On
January 29, 2007, we issued 39,473 shares of Series A Preferred Stock to Mark
Wood pursuant to a share exchange agreement between Haystar and Dibz. On such
dated we also issued 5,263 shares of Series A Preferred Stock to Ocean Avenue
Advisors, 2,632 shares of Series A Preferred Stock to Fairhill Capital and
2,632
shares of Series A Preferred Stock to Danny Weinstein for services rendered
to
the Company. Such shares were issued in reliance on the exemption under Section
4(2) of the Securities Act of 1933, as amended (the “Act”). These shares of our
stock qualified for exemption under Section 4(2) of the Securities Act of 1933
since the issuance shares by us did not involve a public offering. The offering
was not a “public offering” as defined in Section 4(2) due to the insubstantial
number of persons involved in the deal, size of the offering, manner of the
offering and number of shares offered. We did not undertake an offering in
which
we sold a high number of shares to a high number of investors. In addition,
this
shareholder had the necessary investment intent as required by Section 4(2)
since they agreed to and received a share certificate bearing a legend stating
that such shares are restricted pursuant to Rule 144 of the 1933 Securities
Act.
This restriction ensures that these shares would not be immediately
redistributed into the market and therefore not be part of a “public offering.”
Based on an analysis of the above factors, we have met the requirements to
qualify for exemption under Section 4(2) of the Securities Act of 1933 for
this
transaction.
We
have
never utilized an underwriter for an offering of our securities. Other than
the
securities mentioned above, we have not issued or sold any
securities.
With
respect to the issuance of all of the shares set forth above, the Company relied
upon Section 4(2) of the Securities Act of1933, as amended for an exemption
from
registration.
ITEM
5. INDEMNIFICATION OF DIRECTORS
AND OFFICERS.
Our
directors and officers are indemnified as provided by the Delaware Statutes
and
our Bylaws. We have been advised that in the opinion of the Securities and
Exchange Commission indemnification for liabilities arising under the Securities
Act is against public policy as expressed in the Securities Act, and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities is asserted by one of our directors, officers, or controlling
persons in connection with the securities being registered, we will, unless
in
the opinion of our legal counsel the matter has been settled by controlling
precedent, submit the question of whether such indemnification is against public
policy to a court of appropriate jurisdiction. We will then be governed by
the
court's decision.
We
have
agreed to indemnify each of our directors and certain officers against certain
liabilities, including liabilities under the Securities Act of 1933. Insofar
as
indemnification for liabilities arising under the Securities Act of 1933 may
be
permitted to our directors, officers and controlling persons pursuant to the
provisions described above, or otherwise, we have been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than our payment of expenses incurred or paid by our
director, officer or controlling person in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, we will, unless in the
opinion of our counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
INSOFAR
AS INDEMNIFICATION FOR LIABILITIES ARISING UNDER THE SECURITIES ACT OF 1933,
ASAMENDED, MAY BE PERMITTED TO DIRECTORS, OFFICERS OR PERSONS CONTROLLING THE
COMPANYPURSUANT TO THE FOREGOING PROVISIONS, IT IS THE OPINION OF THE SECURITIES
AND EXCHANGECOMMISSION THAT SUCH INDEMNIFICATION IS AGAINST PUBLIC POLICY AS
EXPRESSED IN THE ACT AND ISTHEREFORE UNENFORCEABLE.
DIBZ
INTERNATIONAL,
INC.
(A
Development Stage
Company)
Consolidated
Financial Statements
C
O N T E N T S
|
|
|
|
|
|
|
Condensed
Consolidated Financial Statements for the period ending September
30, 2007
(Unaudited)
|
Page
|
|
|
|
|
Condensed Consolidated Balance
Sheet as
of September 30, 2007 and June 30, 2007
|
F-2
|
|
|
|
|
Condensed Consolidated Statement
of
Loss for the three months ended September 30, 2007 and for
period from inception (December 28, 2006) through September 30,2007
|
F-3
|
|
|
|
|
Condensed Consolidated Statement
of
Deficiency In Stockholders' Equity for the period from inception
(December28, 2006) through September 30, 2007
|
F-4
|
|
|
|
|
Condensed Consolidated Statement
of
Cash Flows for the three months ended September 30, 2007 and
for the
period from inception (December 28, 2006) through September 30,
2007
|
F-5
|
|
|
|
|
Notes to Condensed Consolidated
Financial Statements
|
F-6
|
|
|
|
|
|
|
|
|
|
|
Consolidated
Financial Statements as of June 30, 2007
|
|
|
Report of Independent Registered
Public
Accounting Firm
|
F-9
|
|
|
|
|
Consolidated Balance Sheet
as of June
30, 2007
|
F-10
|
|
|
|
|
Consolidated Statement of
Loss for the period from inception (December 28, 2006) through
June 30,2007
|
F-11
|
|
|
|
|
Consolidated Statement of
Deficiency In
Stockholders' Equity for the period from inception (December28,
2006) through June 30, 2007
|
F-12
|
|
|
|
|
Consolidated Statement of
Cash Flows
for the period from inception (December 28, 2006) through June30,
2007
|
F-13
|
|
|
|
|
Notes to Consolidated Financial
Statements
|
F-14
|
|
|
|
|
DIBZ
INTERNATIONAL,
INC.
|
|
|
(A
DEVELOPMENT STAGE
COMPANY)
|
|
|
CONDENSED
CONSOLIDATED
BALANCE
SHEETS
|
|
|
|
|
|
|
September
30,
|
|
|
June
30,
|
|
|
|
2007
|
|
|
2007
|
|
|
ASSETS
|
|
(UNAUDITED)
|
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
|
|
|
Cash
|
$
|
27,902
|
|
|
$
|
238,346
|
|
|
Total
c
urrent
a
ssets
|
|
27,902
|
|
|
|
238,346
|
|
|
FIXED
ASSETS
|
|
|
|
|
|
|
|
|
Fixed
a
ssets,
net of accumulated
depreciation of $1,406 and $852, respectively
|
|
5,236
|
|
|
|
5,380
|
|
|
OTHER
ASSETS
|
|
|
|
|
|
|
|
|
Deferred
f
inancing
c
osts,
net of accumulated
amortization of
$94,965 and
$59,532
,
respectively
|
|
326,767
|
|
|
|
362,200
|
|
|
TOTAL
ASSETS
|
$
|
359,905
|
|
|
$
|
605,926
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND DEFICIENCY IN
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
|
|
|
|
Accrued
l
iabilities
|
$
|
|
|
|
$
|
239,790
|
|
|
Accrued
officer
compensation
|
|
33,323
|
|
|
|
-
|
|
|
Warrant
l
iability
|
|
167,808
|
|
|
|
146,539
|
|
|
Derivative
l
iability
|
|
1,076,101
|
|
|
|
1,334,670
|
|
|
Total
c
urrent
l
iabilities
|
|
|
|
|
|
1,720,999
|
|
|
|
|
|
|
|
|
|
|
|
LONG
TERM
LIABILITIES
|
|
|
|
|
|
|
|
|
Note
p
ayable
–
NIR
|
|
3,000,000
|
|
|
|
3,000,000
|
|
|
Convertible
d
ebentures
6%, net of discount of
$699,863
and
$771,279
,
respectively
|
|
150,137
|
|
|
|
78,721
|
|
|
Total
l
ong
t
erm
l
iabilities
|
|
3,150,137
|
|
|
|
3,078,721
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES
|
|
|
|
|
|
4,799,720
|
|
|
|
|
|
|
|
|
|
|
|
DEFICIENCY
IN STOCKHOLDERS'
EQUITY
|
|
|
|
|
|
|
|
|
Preferred
s
tock,
$0.001 par value per share,
1,000,000 shares authorized,
47,368 and
50,000
shares issued and
outstanding
,
respectively
|
|
47
|
|
|
|
50
|
|
|
Com
mon
s
tock, $0.001
par value per share;
50,000,000 shares authorized;
3,143,296
and
1,622,000 shares issued
and
outstanding
,
respectively
|
|
3,143
|
|
|
|
1,622
|
|
|
Additional
p
aid-
in
c
apital
|
|
302,762
|
|
|
|
304,280
|
|
|
Deficit
accumulated d
uring
d
evelopment
s
tage
|
|
(
4,777,083
|
)
|
|
|
(4,499,746
|
)
|
|
TOTAL
DEFICIENCY IN STOCKHOLDERS'
EQUITY
|
|
(
4,471,131
|
)
|
|
|
(4,193,794
|
)
|
|
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES AND DEFICIENCY
IN STOCKHOLDERS' EQUITY
|
$
|
359,905
|
|
|
$
|
605,926
|
|
See
Notes to Unaudited
C
ondensed
Consolidated
Financial
Statements
|
DIBZ
INTERNATIONAL,
INC.
|
|
|
(A
DEVELOPMENT STAGE
COMPANY)
|
|
|
CONDENSED
CONSOLIDATED
STATEMENT
S
OF
LOSS
|
|
|
FOR
THE THREE MONTHS ENDED
SEPTEMBER 30, 2007 AND
|
|
|
FOR
THE
PERIOD FROM DECEMBER 28, 2006
(INCEPTION) THROUGH
SEPTEMBER
30,
2007
|
|
|
(UNAUDITED)
|
|
|
|
|
Three
Months
Ended
September
30,
2007
|
|
|
Inception
through
September
30,
2007
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES
|
|
|
|
|
|
|
|
|
Depreciation
and
amortization
|
|
$
|
35,987
|
|
|
$
|
96,371
|
|
|
Impairment loss
|
|
|
-
|
|
|
|
3,000,000
|
|
|
General
and
administrative
|
|
|
|
|
|
|
|
|
|
Total
operating
expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS
FROM
OPERATIONS
|
|
|
(
318,020
|
)
|
|
|
(
3,868,277
|
)
|
|
|
|
|
|
|
|
|
|
|
|
OTHER
INCOME (EXPENSE)
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
1,076
|
|
|
|
1,307
|
|
|
Interest
expense and loan discount
fee
|
|
|
(197,693
|
)
|
|
|
(516,203
|
)
|
|
Gain
(l
oss) on derivative
liability
|
|
|
237,300
|
|
|
|
(
393,910
|
)
|
|
Total
other income
(expense)
|
|
|
40,683
|
|
|
|
(
908,806
|
)
|
|
|
|
|
|
|
|
|
|
|
|
NET
LOSS
|
|
$
|
(
277,337
|
)
|
|
$
|
(
4,777,083
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS
PER SHARE
–
Basic
and
fully-diluted
|
|
$
|
(0.16
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED
AVERAGE NUMBER OF SHARES
OUTSTANDING
–
Basic
and fully
diluted
|
|
|
1,704,679
|
|
|
|
|
|
See
Notes to Unaudited C
ondensed
Consolidated
Financial
Statements
|
DIBZ
INTERNATIONAL,
INC.
|
|
|
(A
DEVELOPMENT STAGE
COMPANY)
|
|
|
CONDENSED
CONSOLIDATED
STATEMENT OF
DEFICIENCY IN STOCKHOLDERS
’
EQUITY
|
|
|
FOR
THE PERIOD FROM DECEMBER 28,
2006 (INCEPTION) THROUGH
SEPTEMBER
30,
2007
|
|
|
(UNAUDITED)
|
|
|
|
|
Common
Stock
|
|
|
Preferred
Stock
|
|
|
Common
Stock
|
|
|
Preferred
Stock
|
|
|
Additional
Paid-In
|
|
|
Deficit
Accumulated
During
Development
|
|
|
Total
Deficiency
in
Stockholders
’
|
|
|
Description
|
|
Shares
|
|
|
Shares
|
|
|
Par
|
|
|
Par
|
|
|
C
apital
|
|
|
Stage
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
-
December
28,
2006
|
|
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
o
f
preferred
stock to
Founders
in
exchange
for
services -
December
28,
2006
at
$0.003
per
share
|
|
|
-
|
|
|
|
39,473
|
|
|
|
-
|
|
|
|
39
|
|
|
|
61
|
|
|
|
-
|
|
|
|
100
|
|
|
Issuance
of
preferred
stock
for
services -
January
25,
2007
at
$28.90 per
share
|
|
|
-
|
|
|
|
10,527
|
|
|
|
-
|
|
|
|
11
|
|
|
|
304,219
|
|
|
|
-
|
|
|
|
304,230
|
|
|
Issuance
of
common
stock
in
connection
with
merger
and
recapitalization -January
27,2007 at $0.001
per
share
|
|
|
1,622,000
|
|
|
|
-
|
|
|
|
1,622
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,622
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
l
oss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(4,499,746
|
)
|
|
|
(4,499,746
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
–
June
30,2007
|
|
|
1,622,000
|
|
|
|
50,000
|
|
|
$
|
1,622
|
|
|
$
|
50
|
|
|
$
|
304,280
|
|
|
$
|
(4,499,746
|
)
|
|
$
|
(4,193,794
|
)
|
|
Conversion
of Series A preferred
stock into common stock – September 25, 2007
|
|
|
1,521,296
|
|
|
|
(2,632
|
)
|
|
|
1,521
|
|
|
|
(3
|
)
|
|
|
(1,518
|
)
|
|
|
-
|
|
|
|
-
|
|
|
Net
loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(
277,337
|
)
|
|
|
(
277,337
|
)
|
|
Balance
–
September
30,
2007
|
|
|
3,143,296
|
|
|
|
47,368
|
|
|
$
|
3,143
|
|
|
$
|
47
|
|
|
$
|
302,762
|
|
|
$
|
(
4,777,083
|
)
|
|
$
|
(
4,471,131
|
)
|
See
Notes to Unaudited C
ondensed
Consolidated
Financial
Statements
|
DIBZ
INTERNATIONAL,
INC.
|
|
|
(A
DEVELOPMENT STAGE
COMPANY)
|
|
|
CONDENSED
CONSOLIDATED
STATEMENT
S
OF
CASH
FLOW
|
|
|
FOR
THE THREE MONTHS ENDED
SEPTEMBER 30, 2007 AND
|
|
|
FOR
THE PERIOD FROM DECEMBER 28,
2006 (INCEPTION) THROUGH
SEPTEMBER
30,
2007
|
|
|
(UNAUDITED)
|
|
|
|
|
Three
Months Ended
September
30,
2007
|
|
|
Inception
through September 30,
2007
|
|
|
CASH
FLOWS FROM OPERATING
ACTIVITES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments
to reconcile net
loss to net cash
|
|
|
|
|
|
|
|
|
used
in
operating activities
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
expense
|
|
|
|
|
|
|
|
|
Shares
issued for
services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Gain)
loss on
derivative
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes
in operating
liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued officer compensation
|
|
|
|
|
|
|
|
|
Net
cash used in operating
activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM INVESTING
ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash used in investing
activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM FINANCING
ACTIVITIES
|
|
|
|
|
|
|
|
|
Payments
related to
merger
|
|
|
|
|
|
|
|
|
Costs
of issuance of
debt
|
|
|
|
|
|
|
|
|
Proceeds
from issuance of new
debt
|
|
|
|
|
|
|
|
|
Net
cash provided by
financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
(DECREASE) INCREASE IN
CASH
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH
AND CASH EQUIVALENTS,
BEGINNING OF PERIOD
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH
AND CASH EQUIVALENTS,
END OF PERIOD
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
CASH FLOW
INFORMATION:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON
CASH INVESTING AND
FINANCING
|
|
|
|
|
|
|
|
|
Discount
on convertible
debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See
Notes to Unaudited C
ondensed
Consolidated
Financial
Statements
DIBZ
International,
Inc.
Notes
to Unaudited Condensed
Consolidated Financial Statements
(A
Development Stage
Company)
September
30, 2007
NOTE
1 - ORGANIZATION AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES
Organization
and
Business
DIBZ
International, Inc., formerly known
as Haystar Services and Technology, Inc. (the “Company”, “Haystar” or
“DIBZ”) was formed in March 2002 under the laws of the State of
Nevada.
The
Company is currently in the
development stage as defined by SFAS No. 7. All activities of the Company
to
date relate to its organization, initial funding and share
issuance.
The
unaudited condensed consolidated
financial statements include the accounts of the Company and its wholly-owned
subsidiary, DIBZ International, Inc. a company formed under the laws of
the
State of Delaware (“Dibz-Delaware”). All significant intercompany balances and
transactions have been eliminated in consolidation.
The
accompanying interim financial
statements have been prepared based on accounting principles generally accepted
in the
United States of
America
. In the
opinion of management, all adjustments, consisting of normal recurring
adjustments, necessary for a fair presentation of financial position and
the
results of operations for the interim periods presented have been reflected
herein. The results of operations for interim periods are not necessarily
indicative of the results to be expected for the full year. Notes to
financial statements which would substantially duplicate disclosure contained
in
the audit consolidated financial statements for the most recent fiscal year,
found in the Company’s Form 10SB filed on November 14, 2007, have been
omitted.
Use
of Estimates
The
preparation of financial statements
in conformity with generally accepted accounting principles in the United
States
of America 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 consolidated financial statements and
the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those
estimates.
Cash
and Equivalents
The
Company considers all highly liquid
investments with maturities from date of purchase of three months or less
to be
cash equivalents. Cash and equivalents consist of cash on deposit
with domestic banks and, at times, may exceed federally insured
limits.
Recent
Accounting
Pronouncements
Accounting
for Registration Payment Arrangements.
In December 2006, the
FASB issued FSP
EITF 00-19-2, Accounting for Registration Payment Arrangements ("FSP
00-19-2") which addresses accounting for registration payment arrangements.
FSP00-19-2 specifies that the contingent obligation to make future payments
or otherwise transfer consideration under a registration payment
arrangement, whether issued as a separate agreement or included as a
provision of a financial instrument or other agreement, should be
separately recognized and measured in accordance with FASB Statement No. 5,
Accounting for Contingencies. FSP 00-19-2 further clarifies that a
financial instrument subject to a registration payment arrangement should
be accounted for in accordance with other applicable generally accepted
accounting principles without regard to the contingent obligation to
transfer consideration pursuant to the registration
payment arrangement. For registration payment arrangements and
financial instruments subject to those arrangements that were entered into
prior
to the issuance of EITF 00-19-2, this guidance is effective for financial
statements issued for fiscal years beginning after December 15, 2006 and
interim
periods within those fiscal years. The Company adopted FSP 00-19-2 effective
July 1, 2007. The adoption had no impact on its financial
statements.
The
Fair Value Option for
Financial Assets and Financial Liabilities
. In February
2007, the FASB issued SFAS No. 159,“The Fair Value Option for Financial Assets
and Financial Liabilities--including an amendment of FASB Statement
No.115”,
permitting entities to choose to measure many financial instruments
and certain
other items at fair value. The objective is to improve financial reporting
by
providing entities with the opportunity to mitigate volatility in reported
earnings caused by measuring related assets and liabilities differently
without
having to apply complex hedge accounting measurement. The statement
applies to all entities, including not-for profit organizations. Most
of the
provisions of this Statement apply only to entities that elect the
fair value
option. However, the amendment to SFAS No. 115, “Accounting for Certain
Investments in Debt and Equity Securities”, applies to all entities with
available-for-sale and trading securities. The Company does not expect
adoption
of this standard will have a material impact on its financial position,
operations or cash flows.
Noncontrolling
Interests in
Consolidated Financial Statements
. In December 2007, the FASB
issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial
Statements”. SFAS No. 160 amends ARB 51 to establish accounting and reporting
standards for the noncontrolling (minority) interest in a subsidiary
and for the
deconsolidation of a subsidiary. It clarifies that a noncontrolling
interest in
a subsidiary is an ownership interest in the consolidated entity that
should be
reported as equity in the consolidated financial statements. The Company
does
not expect adoption of this standard will have a material impact
on its financial position, operations or cash flows. SFAS No. 160 is
effective for the Company’s fiscal year beginning July 1, 2009
Business
Combinations
. In December 2007, the FASB issued SFAS” No.
141(R), “Business Combinations”. SFAS No. 141(R) replaces SFAS No.
141 and requires that all assets, liabilities, contingent consideration,
contingencies and in-process research and development costs of an acquired
business be recorded at fair value at the acquisition date; that acquisition
costs generally be expensed as incurred; that restructuring costs generally
be
expensed in periods subsequent to the acquisition date; and that changes
in
accounting for deferred tax asset valuation allowances and acquired
income tax
uncertainties after the measurement period impact income tax expense.
SFAS No.
141(R) is effective for business combinations for which the acquisition
date is
on or after July 1, 2009. The Company does not expect adoption of this
standard will have a material impact on its financial position, operations
or
cash flows as no business combinations are anticipated at this time.
NOTE 2 - GOING
CONCERN
The accompanying
statements have been prepared on a going concern basis, which contemplates
the
realization of assets and the satisfaction of liabilities in the normal
course
of business. As shown in the accompanying financial statements, as of
September 30, 2007, the Company had an accumulated deficit of $4,777,083
and a
working capital deficit of $1,652,997. These factors among others
raise significant doubt about the Company's ability to continue as a
going
concern for a reasonable period of time.
The
Company's existence
is dependent upon management's ability to develop profitable operations and
resolve its liquidity problems. Management anticipates that the
Company will attain profitable status and improve its liquidity through the
continued development, marketing and selling of its products and additional
capital raising efforts. The accompanying financial statements do not
include any adjustments that might result should the Company be unable to
continue as a going concern.
NOTE
3 -
CONVERTIBLE
DEBENTURES
On
January 25, 2007, the Company entered
into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with
New Millennium Capital Partners II, LLC, AJW Qualified Partners, LLC, AJW
Offshore, Ltd and AJE Partners, LLC (collectively, the “Investors”). Under the
terms of the Securities Purchase Agreement, the Investors purchased an
aggregate
of (1) $450,000 in callable convertible secured notes (the “Notes”) and (II)
warrants to purchase 4,500,000 shares of the common stock (the
“Warrants”).
The
Notes bear interest of 6% and mature
on January 25, 2010. The notes are convertible into common shares at the
lesser
of (i)the Variable Conversion Price and (ii) the Fixed Conversion price.
The
“Variable Conversion Price” shall mean the Applicable Percentage multiplied by
the average of the lowest three (3) trading prices during the twenty (20)
Trading Day period prior to conversion. The “Applicable Percentage” means 60%
and the “Fixed Conversion Price” means$0.10.
The
Company has an option to prepay the
Notes in the event that no event of default exists, there are a sufficient
number of shares available for conversion of the Notes and the market price
is
at or below $.10 per share. Exercise of this option will stay all conversions
for the following month. The full principal amount of the Notes is due
upon
default under the terms of Notes.
The
Company
simultaneously issued to the Investors warrants to purchase 4,500,000 shares
of
common stock at an exercise price of $0.10 for a period of five
years.
The
Investors have contractually agreed
to restrict their ability to convert the Notes and exercise the Warrants
and
receive shares of the Company's common stock such that the number of shares
of
the Company's common stock held by them and their affiliates after such
conversion or exercise does not exceed 4.90% of the then issued and outstanding
shares of the Company’s common stock.
In
connection with the issuance of the
convertible debentures, the Company paid fees to third parties in order to
obtain the financing of $267,000 in cash and issued 10,527 shares of Series
A
preferred stock. The preferred stock was valued at $304,230on the
date of issuance. The financing cost of $421,732 was capitalized and
is being amortized over the three-year life of the associated debt.
. The Series A Preferred Shares were valued using the quoted market
price of the underlying 578 shares of common stock which each share of preferred
shares could be converted into.
On
April 19, 2007, the Company entered
into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with
New Millennium Capital Partners II, LLC, AJW Qualified Partners, LLC, AJW
Offshore, Ltd and AJE Partners, LLC (collectively, the “Investors”). Under the
terms of the Securities Purchase Agreement, the Investors purchased an aggregate
of (1) $2,000,000 in callable convertible secured notes (the
“Notes”)
The
Notes bear interest of 6% and mature
on April 19, 2010. The notes are convertible into common shares at the lesser
of
(i)the Variable Conversion Price and (ii) the Fixed Conversion price. The
“Variable Conversion Price” shall mean the Applicable Percentage multiplied by
the average of the lowest three (3) trading prices during the twenty (20)
Trading Day period prior to conversion. The “Applicable Percentage” means 60%
and the “Fixed Conversion Price” means$0.10.
On
June 22, 2007, the Company entered
into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with
New Millennium Capital Partners II, LLC, AJW Master Fund, Ltd and AJE Partners,
LLC (collectively, the “Investors”). Under the terms of the Securities Purchase
Agreement, the Investors purchased an aggregate of (1)$2,000,000 in callable
convertible secured notes (the “Notes”)
The
Notes bear interest of 6% and mature
on June 22, 2010. The notes are convertible into common shares at the lesser
of
(i) theVariable Conversion Price and (ii) the Fixed Conversion price. The
“Variable Conversion Price” shall mean the Applicable Percentage multiplied by
the average of the lowest three (3) trading prices during the twenty (20)
Trading Day period prior to conversion. The “Applicable Percentage” means 60%
and the “Fixed Conversion Price” means$0.10.
The
Company evaluated the convertible
debentures and the warrants under SFAS 133 "Accounting for Derivatives" and
EITF00-19 "Accounting for Derivative Financial Instruments Indexed to and
Potentially Settled in a Company's Own Stock". The Company determined the
convertible debentures contained an embedded derivative for the conversion
option and the warrants qualified as free standing derivatives. The conversion
option allows for an indeterminate number of shares to potentially be issued
upon conversion. This results the Company being unable to determine with
certainty they will have enough shares available to settle any and all
outstanding common stock equivalent instruments. The Company would be required
to obtain shareholder approval to increase the number of authorized shares
needed to share settle those contracts. Because increasing the number of
shares
authorized is outside of the Company's control, this results in these
instruments being classified as liabilities under EITF00-19 and derivatives
under SFAS 133.
The
carrying value of the note at
September 30, 2007 was determined as follows:
|
Face
value of
notes
|
|
$
|
850,000
|
|
|
Less:
Discount for fair value of
derivatives
|
|
|
699,863
|
|
|
Carrying
value at
September
30,
2007
|
|
$
|
150,137
|
|
The
fair values and changes in the
derivative liabilities are as follows:
|
|
|
Inception
|
|
|
June
30,
2007
|
|
|
September
30,
2007
|
|
|
Gain/(Loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Embedded
derivative
|
|
$
|
850,000
|
|
|
$
|
1,481,209
|
|
|
$
|
1,243,909
|
|
|
$
|
237,300
|
|
The
warrants were valued using the Black
Scholes pricing model. The variables used in the valuation of these warrants
were as follows:
|
|
Inception
|
|
June
30,
2007
|
|
September
30,
2007
|
|
Volatility
|
95.28
%
|
|
101.31%
|
|
1
27.52
%
|
|
Discount
Rate
|
4.81
%
|
|
4.89%
|
|
4.
23
%
|
|
Term
in
years
|
3
years
|
|
2.82
years
|
|
2.32
years
|
|
Warrant
date
|
Jan
25,
2007
|
|
Jan
25,
2007
|
|
Jan
25,
2007
|
|
Exercise
Price
|
$0.10
|
|
$0.10
|
|
$0.10
|
|
Stock
price
|
$0.05
|
|
$0.05
|
|
$0.05
|
NOTE
4 – EQUITY
Preferred
Stock
The
Board of Directors has authorized
1,000,000 shares of its preferred stock with a par value of $0.001 per
share.
The
Board of Directors has designated
50,000 shares of Series A Preferred stock. Each share of the Series A Preferred
stock shall be entitled to Five Thousand Seven Hundred and Eighty Three (5,783)
votes on all matters submitted to shareholders for a vote together with the
holders of Common Stock as a single class. 50,000 shares of Series A Preferred
were issued in December 2006 and January 2007.
During the three months
ended September
30, 2007, a shareholder converted 2,632 shares of Series A preferred shares
into
1,521,296 shares of common stock. As of September 30, 2007, there
were 47,368 shares of Series A Preferred stock outstanding.
Each share of the Series
A
Preferred stock is convertible into 578 shares of common stock at the holder's
discretion.
Common
Stock
The
Company is authorized to issue stock
from 50,000,000 shares of common stock with a par value of $0.001 per share.
As
of September 30, 2007, there were 3,143,296 shares of common stock issued
and
outstanding.
In December 2007, the Company issued
a total
of 4,000,000 shares of common stock to two individuals as payment for
consulting
services. The common stock was valued at $200,000 on the date of
issuance.
NOTE
5- WARRANTS
As
of September 30, 2007, there were
4,500,000 outstanding and exercisable warrants to purchase the Company's
common
stock. No warrants were issued, exercised, canceled or expired
during the quarter ended September 30, 2007.
RBSM
LLP
Certified
Public Accountants
Report
of
Independent Registered Public Accounting Firm
Board
of
Directors
DIBZ
International, Inc.
The
Woodlands, Texas
We
have audited the accompanying consolidated balance sheet of DIBZ International,
Inc. ( a development stage company) as of June 30, 2007, and the related
consolidated statements of loss, deficiency in stockholder's equity and cash
flows for period December 28, 2006 (date of inception) through June 30, 2007.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We
have conducted our audit in accordance with auditing standards of the Public
Company Accounting Oversight Board (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 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 DIBZ International
Inc. (a development stage company) at June 30, 2007 and the results
of its operations and its cash flows for the period December 28, 2006 (date
of
inception) through June 30, 2007 in conformity with accounting principles
generally accepted in the United States of America.
The
accompanying consolidated financial statements have been prepared assuming
that
the Company will continue as a going concern. As discussed in Note C
to the Company's financial statements , as of June 30, 2007, the
Company had an accumulated deficit of $4,499,746 and a working
capital deficit of $1,482,653 which raises substantial doubt about
its ability to continue as a going concern. Management's plans in regard to
this
matter are described in Note C. The consolidated financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.
/s/
RBSM LLP
Mclean,
Virginia
August
27, 2007
|
DIBZ
INTERNATIONAL, INC.
|
|
|
(A
DEVELOPMENT STAGE COMPANY)
|
|
|
CONSOLIDATED
BALANCE SHEET
|
|
|
|
|
June
30,
|
|
|
|
|
2007
|
|
|
ASSETS
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
Cash
|
|
$
|
238,346
|
|
|
Total
Current Assets
|
|
|
238,346
|
|
|
FIXED
ASSETS
|
|
|
|
|
|
Fixed
Assets, net of accumulated depreciation of $852
|
|
|
5,380
|
|
|
OTHER
ASSETS
|
|
|
|
|
|
Deferred
Financing Costs, net of accumulated amortization of
$59,532
|
|
|
362,200
|
|
|
TOTAL
ASSETS
|
|
$
|
605,926
|
|
|
|
|
|
|
|
|
LIABILITIES
AND DEFICIENCY IN
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
|
Accrued
Liabilities
|
|
$
|
239,790
|
|
|
Warrant
Liability
|
|
|
146,539
|
|
|
Derivative
Liability
|
|
|
1,334,670
|
|
|
Total
Current Liabilities
|
|
|
1,720,999
|
|
|
|
|
|
|
|
|
LONG
TERM
LIABILITIES
|
|
|
|
|
|
Note
Payable- NIR
|
|
|
3,000,000
|
|
|
Convertible
Debentures 6%, net of discount of $771,279
|
|
|
78,721
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Long Term Liabilities
|
|
|
3,078,721
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES
|
|
|
4,799,720
|
|
|
|
|
|
|
|
|
DEFICIENCY
IN STOCKHOLDERS' EQUITY
|
|
|
|
|
|
Preferred
Stock, $0.001 par value per share, 1,000,000 shares authorized, 50,000
shares issued and outstanding
|
|
|
50
|
|
|
Common
Stock, $0.001 par value per share; 50,000,000 shares authorized;
1,622,000 shares issued and outstanding
|
|
|
1,622
|
|
|
Additional
Paid-In Capital
|
|
|
304,280
|
|
|
Deficit
Accumulated During Development Stage
|
|
|
(4,499,746
|
)
|
|
TOTAL
DEFICIENCY IN STOCKHOLDERS' EQUITY
|
|
|
(4,193,794
|
)
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES AND DEFICIENCY IN STOCKHOLDERS' EQUITY
|
|
$
|
605,926
|
|
See Summary of Significant Accounting Policies and Notes to Consolidated
Financial Statements
|
DIBZ
INTERNATIONAL, INC.
|
|
|
(A
DEVELOPMENT STAGE COMPANY)
|
|
|
CONSOLIDATED
STATEMENT OF LOSS
|
|
|
FOR
THE PERIOD FROM DECEMBER 28, 2006 (INCEPTION) THROUGH JUNE 30,
2007
|
|
|
|
|
|
|
|
Amount
|
|
|
|
|
|
|
|
OPERATING
EXPENSES
|
|
|
|
|
Depreciation
and amortization
|
|
$
|
852
|
|
|
Impairment loss
|
|
|
3,000,000
|
|
|
General
and administrative
|
|
|
549,407
|
|
|
Total
operating expense
|
|
|
3,550,259
|
|
|
|
|
|
|
|
|
LOSS
FROM OPERATIONS
|
|
|
(3,550,259
|
)
|
|
|
|
|
|
|
|
OTHER
INCOME
(EXPENSES)
|
|
|
|
|
|
Interest
income
|
|
|
231
|
|
|
Interest
expense and loan discount fee
|
|
|
(318,508
|
)
|
|
Gain/(Loss)
on derivative liability
|
|
|
(631,210
|
)
|
|
Total
other income (expenses)
|
|
|
(949,487
|
)
|
|
|
|
|
|
|
|
NET
LOSS
|
|
$
|
(4,499,746
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS
PER SHARE - Basic and fully-diluted
|
|
$
|
(3.20
|
)
|
|
|
|
|
|
|
|
WEIGHTED
AVERAGE NUMBER OF SHARES OUTSTANDING - Basic and fully
diluted
|
|
|
1,405,733
|
|
See
Summary of Significant Accounting Policies and Notes to Consolidated Financial
Statements
|
DIBZ
INTERNATIONAL, INC.
|
|
|
(A
DEVELOPMENT STAGE COMPANY)
|
|
|
CONSOLIDATED
STATEMENT OF DEFICIENCY IN STOCKHOLDERS' EQUITY
|
|
|
FOR
THE PERIOD FROM DECEMBER 28, 2006 (INCEPTION) THROUGH JUNE 30,
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
Stock
|
|
|
Preferred
Stock
|
|
|
Common
Stock
|
|
|
Preferred
Stock
|
|
|
Additional
|
|
|
Deficit
Accumulated
During
Development
|
|
|
Total
Deficiency in Stockholders
|
|
|
Description
|
|
Shares
|
|
|
Shares
|
|
|
Balance
|
|
|
Balance
|
|
|
Paid
in Capital
|
|
|
Stage
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
asof December 28,2006
|
|
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of preferred stock to Founders in exchange for
services -December 28, 2006 at $0.003per
share
|
|
|
-
|
|
|
|
39,473
|
|
|
|
-
|
|
|
|
39
|
|
|
|
61
|
|
|
|
-
|
|
|
|
100
|
|
|
Issuance
of preferred stock for services -
January
25, 2007at
$ 28.90 per share
|
|
|
-
|
|
|
|
10,527
|
|
|
|
-
|
|
|
|
11
|
|
|
|
304,219
|
|
|
|
-
|
|
|
|
304,230
|
|
|
Issuance
ofcommon stock in connection with merger and
recapitalization -January 27, 2007 at $0.001per share
|
|
|
1,622,000
|
|
|
|
-
|
|
|
|
1,622
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
1,622
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(4,499,746
|
)
|
|
|
(4,499,746
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
June 30,2007
|
|
|
1,622,000
|
|
|
|
50,000
|
|
|
$
|
1,622
|
|
|
$
|
50
|
|
|
$
|
304,280
|
|
|
$
|
(4,499,746
|
)
|
|
$
|
(4,193,794
|
)
|
See
Summary of Significant Accounting Policies and Notes to Consolidated Financial
Statements
|
DIBZ
INTERNATIONAL, INC.
|
|
|
(A
DEVELOPMENT STAGE COMPANY)
|
|
|
CONSOLIDATED
STATEMENT OF CASH FLOWS
|
|
|
FOR
THE PERIOD FROM DECEMBER 28, 2006 (INCEPTION) THROUGH JUNE 30,
2007
|
|
|
|
|
|
|
|
|
|
Amount
|
|
|
CASH
FLOWS FROM OPERATING ACTIVITES
|
|
|
|
|
Net
loss
|
|
$
|
(4,499,746
|
)
|
|
Adjustments
to reconcile net loss to net cash
|
|
|
|
|
|
used
in operating activities
|
|
|
|
|
|
Depreciation
and amortization expense
|
|
|
852
|
|
|
Shares
issued for services
|
|
|
304,330
|
|
|
Acquisition
costs
|
|
|
151,622
|
|
|
Loss
on derivative
|
|
|
631,209
|
|
|
Asset
impairment
|
|
|
3,000,000
|
|
|
Amortization
of beneficial feature discount
|
|
|
78,721
|
|
|
Amortization
of deferred financing costs
|
|
|
59,533
|
|
|
|
|
|
|
|
|
Changes
in operating assets and liabilities:
|
|
|
|
|
|
Accrued
liabilities
|
|
|
239,790
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash used in
operating activities
|
|
|
(33,689
|
)
|
|
|
|
|
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
Capital
expenditures
|
|
|
(6,231
|
)
|
|
Net
cash used in
investing activities
|
|
|
(6,231
|
)
|
|
|
|
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
Payments
relating to merger
|
|
|
(150,000)
|
|
|
Costs
of issuance of debt
|
|
|
(421,732)
|
|
|
Proceeds
from issuance of new debt
|
|
|
850,000
|
|
|
|
|
|
|
|
|
Net
cash provided by
financing activities
|
|
|
278,268
|
|
|
|
|
|
|
|
|
NET
INCREASE IN CASH
|
|
|
238,346
|
|
|
|
|
|
|
|
|
CASH
AND CASH EQUIVALENTS, BEGINNING OF PERIOD
|
|
|
-
|
|
|
|
|
|
|
|
|
CASH
AND CASH EQUIVALENTS, END OF PERIOD
|
|
$
|
238,346
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
CASH FLOW
INFORMATION:
|
|
|
|
|
|
Cash
paid for interest
|
|
$
|
-
|
|
|
Cash
paid for taxes
|
|
$
|
-
|
|
|
|
|
|
|
|
|
NON
CASH INVESTING AND
FINANCING
|
|
|
|
|
|
Issuance
of preferred stock for services
|
|
|
304,230
|
|
|
Discount
on convertible debt
|
|
|
850,000
|
|
|
Derivative
Liability
|
|
|
773,323
|
|
|
Warrant
Liability
|
|
|
76,677
|
|
|
|
|
|
|
|
|
Acquisitions
|
|
|
|
|
|
Liabilities
assumed
|
|
$
|
3,000,000
|
|
|
|
|
|
|
|
|
Assets
acquired
|
|
$
|
-
|
|
|
Cash
paid
|
|
$
|
(150,000
|
)
|
|
Shares
issued/retained
|
|
$
|
1,622
|
|
|
Acquisition
costs
|
|
$
|
151,622
|
|
|
Assets
impairment
|
|
$
|
3,000,000
|
|
See
Summary of Significant Accounting Policies and Notes to Consolidated Financial
Statements
DIBZ
International,
Inc.
Notes
to Consolidated Financial
Statements
(A
Development Stage
Company)
June
30, 2007
NOTE
A - ORGANIZATION AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES
Organization
and
Business
DIBZ
International, Inc., formerly known
as HAystar Services and Technology, Inc. (the “Company”, “Haystar” or “DIBZ”)
was formed in March 2002 under the laws of the State of
Nevada.
The
Company is currently in the
development stage as defined by SFAS No. 7. All activities of the Company
to
date relate to its organization, initial funding and share
issuance.
The
consolidated financial statements
include the accounts of the Company and its wholly and majority-owned
subsidiary, DIBZ International, Inc., a company formed under the laws of
the
State of Delaware (“DIBZ-Delaware”). All significant inter company balances and
transactions have been eliminated in consolidation.
In
the
opinion of management, all adjustments, consisting of normal recurring
adjustments, necessary for a fair presentation of financial position and the
results of operations for the interim periods presented have been reflected
herein. The results of operations for interim periods are not necessarily
indicative of the results to be expected for the full year.
Merger
and Corporate
Restructure
On
January 27, 2007, DIBZ-Delaware
entered into a Share Exchange Agreement (“Agreement:” or“Merger”) with Haystar,
a public shell company formed under the laws of Nevada currently traded on
the
pink sheets. As a result of the Merger, there was a change in control of
the
public entity. In accordance with SFAS No. 141, Haystar was the acquiring
entity. While the transaction is accounted for using the purchased method
of
accounting in substance the Agreement is a recapitalization of Haystar's
capital
structure.
For
accounting purposes, the Company
accounted for the transaction as a reverse merger with DIBZ-Delaware being
the
“accounting acquirer”. Haystar had no assets or liabilities at the date of the
merger. DIBZ-Delaware paid $150,000 to acquire the shell corporation
and expensed this amount as acquisition costs. DIBZ-Delaware did not
recognize goodwill or any intangible assets in connection with the transaction.
Prior to the Agreement, DIBZ-Delaware was a newly formed corporation with
no
significant assets and liabilities.
Effective
with the Agreement, Haystar
acquired 100% of DIBZ-Delaware's common shares in consideration for the issuance
of39,473 shares of Series A Preferred Stock of Haystar. Each Preferred Share
is
convertible into 578 shares of common stock of Haystar at the option of the
holders. Under the Agreement, prior to such conversion, each preferred share
will have the voting rights equal to 5,783 shares of common stock and vote
together with the shares of common stock on all
matters.
Cash
and Cash
Equivalents
The
Company considers all short term deposits with an original maturity of three
months or less to be cash equivalents. Cash equivalents are carried at cost,
which approximates market value.
Fixed
Assets
Fixed
assets are recorded at cost. Depreciation is computed using the
straight-line method over the estimated useful lives of the assets which range
from five to seven years. The costs of major improvements are
capitalized. Expenditures for maintenance, repairs and minor
improvements that do not extend the useful life are expensed as
incurred. When fixed assets are sold or retired, the cost and related
accumulated depreciation are removed and the resulting gain or loss is included
in results of operations.
Website
Development
Costs
The
Company recognizes website development costs in accordance with Emerging Issue
Task Force ("EITF") No. 00-02,"Accounting for Website Development Costs." As
such, the Company expenses all costs incurred that relate to the planning and
post implementation phases of development of its website. Direct costs incurred
in the development phase are capitalized and recognized over the estimated
useful life. Costs associated with repair or maintenance for the website are
included in cost of net revenues in the current period expenses. During the
period ended from December 28, 2006 through June 30, 2007, the Company did
not
capitalize any costs associated with the website development.
Product
Development
Costs
Research
and development costs are charged to expense as incurred. However, we
account for development costs related to software products to be sold, leased,
or otherwise marketed in accordance with FASB Statement of Financial Accounting
Standards No. 86,
Accounting
for the Costs of Computer Software to Be Sold, Leased, or Otherwise
Marketed
. Software development costs are expensed as incurred until
technological feasibility has been established, at which time such costs are
capitalized until the product is available for general release to customers.
To
date, technological feasibility has not been established for our products,
and,
accordingly, no development costs have been capitalized.
Derivative
Valuation
The
Company evaluated the convertible debentures and the warrants under SFAS 133
"Accounting for Derivatives" and EITF00-19 "Accounting for Derivative Financial
Instruments Indexed to and Potentially Settled in a Company's Own Stock". The
Company determined the convertible debentures contained an embedded derivative
for the conversion option. The conversion option allows for an indeterminate
number of shares to potentially be issued upon conversion. This results in
the
Company being unable to determine with certainty they will have enough shares
available to settle any and all outstanding common stock equivalent instruments.
The Company would be required to obtain shareholder approval to increase the
number of authorized shares needed to share settle those contracts. Because
increasing the number of shares authorized is outside of the Company's control,
this results in these instruments being classified as liabilities under EITF
00-19 and derivatives under SFAS 133. The market value of the derivative
liabilities are estimated using Black-Scholes method.
Income
Taxes
The
financial statements are prepared in conformity with the liability method of
accounting for income taxes whereby deferred income tax assets and liabilities
are determined based on the differences between the financial reporting and
tax
bases of assets and liabilities and are measured using the enacted tax laws
and
rates that will be in effect when the differences are expected to
reverse. A valuation allowance is provided, if necessary, to reduce
deferred income tax assets to their estimated realizable value.
Use
of Estimates
The
preparation of financial statements in conformity with generally accepted
accounting principles in the United States of America 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 consolidated financial statements and the reported amounts of revenues
and
expenses during the reporting period. Actual results could differ
from those estimates.
Recent
Accounting
Pronouncements
Fair
Value
Measurements.
In September 2006, the FASB issued SFAS
No. 157, “Fair Value Measurements”, which defines fair value, establishes a
framework for measuring fair value in generally accepted accounting
principles(“GAAP”), and expands disclosures about fair value measurements. Prior
to this Statement, there were different definitions of fair value and limited
guidance for applying those definitions in GAAP. This Statement provides the
definition to increase consistency and comparability in fair value measurements
and for expanded disclosures about fair value measurements. The
Statement emphasizes that fair value is a market-based measurement, not an
entity-specific measurement. The Statement clarifies that market participant
assumptions include assumptions about risk, i.e. the risk inherent in a
particular valuation technique used to measure fair value and/or the risk
inherent in the inputs to the valuation technique. The Statement expands
disclosures about the use of fair value to measure assets and liabilities in
interim and annual periods subsequent to initial recognition. The disclosures
focus on the inputs used to measure fair value and for recurring fair value
measurements using significant unobservable inputs, the effect of the
measurements on earnings for the period. The Statement is effective for
financial statements issued for fiscal years beginning after November 15, 2007,
and interim periods within those fiscal years. Earlier application is
encouraged, provided that the reporting entity has not yet issued financial
statements for that fiscal year, including the financial statements for an
interim period within that fiscal year. The Company does not expect adoption
of
this standard will have a material impact on its financial position, operations
or cash flows.
Accounting
for Registration Payment
Arrangements.
In December 2006, the FASB issued FSP EITF 00-19-2,
Accounting for Registration Payment Arrangements ("FSP 00-19-2") which
addresses accounting for registration payment arrangements. FSP00-19-2
specifies that the contingent obligation to make future payments or
otherwise transfer consideration under a registration payment arrangement,
whether issued as a separate agreement or included as a provision of a
financial instrument or other agreement, should be separately recognized
and measured in accordance with FASB Statement No. 5, Accounting
for Contingencies. FSP 00-19-2 further clarifies that a financial
instrument subject to a registration payment arrangement should be
accounted for in accordance with other applicable generally accepted
accounting principles without regard to the contingent obligation to
transfer consideration pursuant to the registration
payment arrangement. For registration payment arrangements and
financial instruments subject to those arrangements that were entered into
prior
to the issuance of EITF 00-19-2, this guidance shall be effective for
financial statements issued for fiscal years beginning after December 15, 2006
and interim periods within those fiscal years. The Company has not yet
determined the impact that the adoption of FSP 00-19-2 will have on
its financial statements.
The
Fair Value Option for Financial
Assets and Financial Liabilities
In February 2007, the
FASB issued SFAS No. 159,“The Fair Value Option for Financial Assets and
Financial Liabilities--including an amendment of FASB Statement No.115”,
permitting entities to choose to measure many financial instruments and certain
other items at fair value. The objective is to improve financial reporting
by
providing entities with the opportunity to mitigate volatility in reported
earnings caused by measuring related assets and liabilities differently without
having to apply complex hedge accounting measurement. The statement
applies to all entities, including not-for profit organizations. Most of the
provisions of this Statement apply only to entities that elect the fair value
option. However, the amendment to SFAS No. 115, “Accounting for Certain
Investments in Debt and Equity Securities”, applies to all entities with
available-for-sale and trading securities. The Company does not expect adoption
of this standard will have a material impact on its financial position,
operations or cash flows.
NOTE
B - NOTES TO FINANCIAL
STATEMENTS
(1)
Acquisition
Expense
On
January 5, 2007, the Company entered into an Asset Purchase Agreement (the
“Agreement”) with GlobalNet,Inc. The Company's majority stockholder
is the former CEO of GlobalNet. According to the Agreement, the
Company assumed$3 million of GlobalNet debt and in return is entitled to use
up
to $50,000 worth of services each month provided by GlobalNetfor the next three
years, on non-cumulative basis. In addition the Company received the
“iDialDirect” domain and software which will be used to integrate the technology
in the Company's website. The Company is applying for a patent directly related
to this technology. The lender of the assumed $3,000,000
debt is the same as the lender of the convertible debentures entered into by
DIBZ.
Due
to
the uncertainty of the Company's ability to realize the future value of these
assets, the Company's management believes that more likely than not
the fair value of the acquired intangible asset and the pre-paid services
agreement is below its carrying value. As a result, management
has recorded a non-cash impairment charge of $3,000,000, net of
tax, to reduce the carrying value of the acquired assets to its
estimated value of $0 as of June 30, 2007.
Considerable
management judgment is necessary to estimate fair value. Accordingly, actual
results could vary significantly from managements' estimates.
(2)
Fixed assets,
net
Fixed
assets as of June 30, 2007 consisted of the following:
|
Description
|
|
Life
|
|
|
2007
|
|
|
Equipment
|
|
|
3
|
|
|
$
|
6,232
|
|
|
Less: Accumulated
depreciation
|
|
|
|
|
|
|
(852
|
)
|
|
Fixed
assets, net
|
|
|
|
|
|
$
|
5,380
|
|
(4)
Liquidity
As
shown
in the accompanying consolidated financial statements, the company incurred
a
net loss from continuing operations of$4,499,746 for the period from inception
through June 30, 2007.
(5) Accrued
Expenses
Accrued
expenses as of June 30, 2007 consisted of the following:
|
Description
|
|
Amount
|
|
|
Accrued
interest payable
|
|
$
|
239,790
|
|
(6)
Note Payable
On
January 5, 2007, the Company entered into an Asset Purchase Agreement with
GlobalNet, a Nevada corporation. The Company assumed the $3,000,000 Callable
Secured Convertible Note (the “Note”) from GlobalNet to a third party investor
in exchange for its iDialDirect technology and the right to receive up to
$50,000 worth of services from GlobalNet per month for a period of three
years. Management has expensed the cost of the assumed debt of
$3,000,000 as an acquisition expense due to the uncertainty of the Company's
ability to realize the future value of these assets.
The
Note
bears interest at 15% per year and is due on December 29, 2009. The
Note is convertible into the Company's common stock only after that stock is
listed or quoted on a nationally recognized stock exchange or the
OTCBB. The Note is convertible into common shares at the lesser of
(i) 20% of the average of the lowest three trading prices of the common stock
during the twenty trading day period prior to conversion and (ii) $0.10. The
Company has an option to prepay the Notes in the event that no event of default
exists, there are a sufficient number of shares available for conversion of
the
Notes and the market price is at or below $.10 per share. Exercise of this
option will stay all conversions for the following month. The full principal
amount of the Notes is due upon default under the terms of Notes.
The
Company evaluated the Note under SFAS 133 "Accounting for Derivatives" and
EITF
00-19 "Accounting for Derivative Financial Instruments Indexed to and
Potentially Settled in a Company's Own Stock". The Company determined the Note
contained an embedded derivative for the conversion option. The conversion
option allows for an indeterminate number of shares to potentially be issued
upon conversion. This results in the Company being unable to determine with
certainty they will have enough shares available to settle any and all
outstanding common stock equivalent instruments. The Company would be required
to obtain shareholder approval to increase the number of authorized shares
needed to share settle those contracts.
Because
increasing the number of shares authorized is outside of the Company's control,
this results in these instruments being classified as liabilities under EITF
00-19 and derivatives under SFAS 133.
In
accordance with EITF 00-27, no discount has been recorded for the conversion
feature due to the contingency for being listed on an exchange or the
OTCBB. In the event that the Company becomes listed, the Company will
value the conversion feature and record any debt discount and amortize such
costs as interest expense over the life of the debt in accordance with
EITF00-27. Upon resolution of this contingency, the maximum amount of such
discount is $3,000,000.
(7)
Convertible
Debentures
On
January 25, 2007, the Company entered into a Securities Purchase Agreement
(the
“Securities Purchase Agreement”) with New Millennium Capital Partners II, LLC,
AJW Qualified Partners, LLC, AJW Offshore, Ltd and AJ EPartners, LLC
(collectively, the “Investors”). Under the terms of the Securities Purchase
Agreement, the Investors purchased an aggregate of (1) $450,000 in callable
convertible secured notes (the “Notes”) and (II) warrants to purchase 4,500,000
shares of the common stock (the “Warrants”).
The
Notes
bear interest of 6% and mature on January 25, 2010. The notes are convertible
into common shares at the lesser of (i)the Variable Conversion Price and (ii)
the Fixed Conversion price. The “Variable Conversion Price” shall mean the
Applicable Percentage multiplied by the average of the lowest three (3) trading
prices during the twenty (20) Trading Day period prior to conversion. The
“Applicable Percentage” means 60% and the “Fixed Conversion Price”
means$0.10.
The
Company has an option to prepay the Notes in the event that no event of default
exists, there are a sufficient number of shares available for conversion of
the
Notes and the market price is at or below $.10 per share. Exercise of this
option will stay all conversions for the following month. The full principal
amount of the Notes is due upon default under the terms of Notes.
The
Company simultaneously issued to the Investors warrants to purchase 4,500,000
shares of common stock at an exercise price of $0.10 for a period of five
years.
The
Investors have contractually agreed to restrict their ability to convert the
Notes and exercise the Warrants and receive shares of the Company's common
stock
such that the number of shares of the Company's common stock held by them and
their affiliates after such conversion or exercise does not exceed 4.90% of
the
then issued and outstanding shares of the Company's common stock.
In
connection with the issuance of the convertible debentures, the Company paid
fees to third parties in order to obtain the financing of $267,000 in cash
and
issued 10,527 shares of Series A preferred stock. The preferred stock
was valued at $304,230 on the date of issuance. The financing cost of
$421,732 was capitalized and is being amortized over the three-year life of
the
associated debt. . The Series A Preferred Shares were valued using
the quoted market price of the underlying 578 shares of common stock which
each
share of preferred shares could be converted into.
On
April
19, 2007, the Company entered into a Securities Purchase Agreement (the
“Securities Purchase Agreement”) with New Millennium Capital Partners II, LLC,
AJW Qualified Partners, LLC, AJW Offshore, Ltd and AJE Partners, LLC
(collectively, the “Investors”). Under the terms of the Securities Purchase
Agreement, the Investors purchased an aggregate of (1) $200,000 in callable
convertible secured notes (the “Notes”).
The
Notes
bear interest of 6% and mature on April 19, 2010. The notes are convertible
into
common shares at the lesser of (i)the Variable Conversion Price and (ii) the
Fixed Conversion price. The “Variable Conversion Price” shall mean the
Applicable Percentage multiplied by the average of the lowest three (3) trading
prices during the twenty (20) Trading Day period prior to conversion. The
“Applicable Percentage” means 60% and the “Fixed Conversion Price” means
$0.10.
On
June
22, 2007, the Company entered into a Securities Purchase Agreement (the
“Securities Purchase Agreement”) with New Millennium Capital Partners II, LLC,
AJW Master Fund, Ltd and AJE Partners, LLC (collectively, the “Investors”).
Under the terms of the Securities Purchase Agreement, the Investors purchased
an
aggregate of (1) $200,000 in callable convertible secured notes (the
“Notes”).
The
Notes
bear interest of 6% and mature on June 22, 2010. The notes are convertible
into
common shares at the lesser of (i) the Variable Conversion Price and (ii) the
Fixed Conversion price. The “Variable Conversion Price” shall mean the
Applicable Percentage multiplied by the average of the lowest three (3) trading
prices during the twenty (20) Trading Day period prior to conversion. The
“Applicable Percentage” means 60% and the “Fixed Conversion Price” means
$0.10.
The
Company evaluated the convertible debentures and the warrants under SFAS 133
"Accounting for Derivatives" and EITF00-19 "Accounting for Derivative Financial
Instruments Indexed to and Potentially Settled in a Company's Own Stock". The
Company determined the convertible debentures contained an embedded derivative
for the conversion option and the warrants qualified as free standing
derivatives. The conversion option allows for an indeterminate number of shares
to potentially be issued upon conversion. This results the Company being unable
to determine with certainty they will have enough shares available to settle
any
and all outstanding common stock equivalent instruments. The Company would
be
required to obtain shareholder approval to increase the number of authorized
shares needed to share settle those contracts. Because increasing the number
of
shares authorized is outside of the Company's control, this results in these
instruments being classified as liabilities under EITF00-19 and derivatives
under SFAS 133.
The
carrying value of the note at June 30, 2007 was determined as
follows:
|
Face
value of notes
|
|
$
|
850,000
|
|
|
Less:
Discount for fair value of derivatives
|
|
|
771,279
|
|
|
Carrying
value at June 30, 2007
|
|
$
|
78,721
|
|
The
fair
values and changes in the derivative liabilities are as follows:
|
|
|
Inception
|
|
|
June
30,2007
|
|
|
Gain/(Loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Embedded
derivative
|
|
$
|
850,000
|
|
|
$
|
1,481,209
|
|
|
$
|
631,209
|
|
The
warrants were valued using the Black Scholes pricing model. The variables used
in the valuation of these warrants were as follows:
|
Volatility
|
101.31%
|
|
Discount
Rate
|
4.89%
|
|
Term
in years
|
3
years
|
|
Warrant
date
|
Jan
25, 2007
|
|
Exercise
Price
|
$0.10
|
|
Stock
price
|
$0.05
|
(8)
Capital Stock
Preferred
Stock
The
Board
of Directors has authorized 1,000,000 shares of its preferred stock with a
par
value of $0.001 per share.
The
Board
of Directors has designated 50,000 shares of Series A Preferred stock. Each
share of the Series A Preferred stock shall be entitled to Five Thousand Seven
Hundred and Eighty Three (5,783) votes on all matters submitted to shareholders
for a vote together with the holders of Common Stock as a single class. There
were 50,000 shares of Series A Preferred issued and outstanding. Each share
of
the Series A Preferred stock is convertible into 578 shares of common stock
at
the holder's discretion.
Common
Stock
The
Company is authorized to issue stock from 50,000,000 shares of common stock
with
a par value of $0.001 per share. As of June 30, 2007, there were 1,622,000
shares of common stock issued and outstanding.
(9)
Warrants
As
of
June 30, 2007, there were 4,500,000 outstanding and exercisable warrants to
purchase the Company's common stock. The warrants were issued on
January 25, 2007, have an exercise price of $0.10 and expire five years from
the
date of issuance. No warrants were exercised, canceled or expired
during the period from December 28, 2006 (inception) through June 30,
2007.
(10) Income
Taxes
The
Company has adopted Financial Accounting Standard No. 109 which requires the
recognition of deferred tax liabilities and assets for the expected future
tax
consequences of events that have been included in the financial statement or
tax
returns. Under this method, deferred tax liabilities and assets are determined
based on the difference between financial statements and tax bases of assets
and
liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse. Temporary differences between taxable
income reported for financial reporting purposes and income tax purposes are
insignificant.
At
June
30, 2007, the Company has available for federal income tax purposes a net
operating loss carry forward of approximately$ 4,500,000 expiring in the year
2027 that may be used to offset future taxable income. The Company has provided
a valuation reserve against the full amount of the net operating loss benefit,
since in the opinion of management based upon the earnings history of the
Company; it is more likely than not that the benefits will not be realized.
Due
to significant changes in the Company's ownership, the future use of its
existing net operating losses may be limited. Components of deferred tax assets
as of June 30, 2007 are as follows:
|
Non
current:
|
|
|
|
|
Net
operating loss carry forward
|
|
$
|
1,750,000
|
|
|
Valuation
allowance
|
|
|
(1,750,000
|
)
|
|
Net
deferred tax asset
|
|
$
|
--
|
|
NOTE
C - GOING
CONCERN
The
accompanying statements have been prepared on a going concern basis, which
contemplates the realization of assets and the satisfaction of liabilities
in
the normal course of business. As shown in the accompanying financial
statements, as of June 30,2007, the Company had an accumulated deficit of
$4,499,746 and a working capital deficit of $1,482,653. These factors
among others raise significant doubt about the Company's ability to continue
as
a going concern for a reasonable period of time.
The
Company's existence is dependent upon management's ability to develop profitable
operations and resolve its liquidity problems. Management anticipates
that the Company will attain profitable status and improve its liquidity through
the continued development, marketing and selling of its products and additional
capital raising efforts. The accompanying financial statements do not
include any adjustments that might result should the Company be unable to
continue as a going concern.
PART
III
ITEM
1. INDEX TO
EXHIBITS
3.1
Certificate of Incorporation and Amendments for Dibz International, Inc., a
Nevada corporation (1)
3.2
Bylaws (1)
3.3 Certificate
of Incorporation for Dibz International, Inc., a Delaware corporation
(1)
3.4 Certificate
Of Designation Series A Preferred Stock (1)
10.1 Share
Exchange Agreement between the Company and Dibz International, Inc.
(1)
10.2
Callable
Secured Convertible Note (1)
10.3 Securities
Purchase Agreement (1)
10.4 Callable
Secured Convertible Note (1)
10.5 Callable
Secured Convertible Note (1)
10.6 Callable
Secured Convertible Note (1)
10.7 Callable
Secured Convertible Note (1)
10.8 Stock
Purchase Warrant (1)
10.9 Stock
Purchase Warrant (1)
10.10 Stock
Purchase Warrant (1)
10.11 Stock
Purchase Warrant *
10.12 Asset
Purchase
Agreement with GlobalNet
10.13 Securities Purchase
Agreement
(1)
Filed
with the original Form
10-SB on November 14, 2007 (SEC File Number 000-52793)
SIGNATURES
In
accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this amendment to registration statement to be signed on
its
behalf by the undersigned, thereunto duly authorized.
By: /
s/
Mark
Wood
Mark
Wood
Title:
President/CEO
Dated:
January 22, 2008
Turbo Global Partners (CE) (USOTC:TRBO)
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Turbo Global Partners (CE) (USOTC:TRBO)
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