-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TMBIQdVP/BTJthxKjRmhIbbDjscJz6YahzgEiXjuzhqYMPlcWeXfu5GbtZ0Z5FDH ry1PmMP80uImaoc5LP92Og== 0001165527-08-000368.txt : 20080709 0001165527-08-000368.hdr.sgml : 20080709 20080709110844 ACCESSION NUMBER: 0001165527-08-000368 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20080531 FILED AS OF DATE: 20080709 DATE AS OF CHANGE: 20080709 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GOLDEN KEY INTERNATIONAL INC CENTRAL INDEX KEY: 0001080627 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 000000000 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-53027 FILM NUMBER: 08944226 BUSINESS ADDRESS: STREET 1: 44-457 SAN RAFAEL AVE STREET 2: UNIT 1 CITY: PALM DESERT STATE: CA ZIP: 92260 10-K 1 g2452.txt ANNUAL REPORT FOR THE YEAR ENDED 5-31-08 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURUTIES EXCHANGE ACT OF 1934 For the fiscal year ended May 31, 2008 Commission file number 333-142037 Golden Key International Inc. (Exact Name of Registrant as Specified in Its Charter) Delaware 33-0944402 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 3113 Goldsmith Street San Diego, CA 92106 (619) 564-8110 (Address of Principal Executive Offices, Zip Code & Telephone Number) Karen Batcher Batcher, Zarcone & Baker LLP 4190 Bonita Road Bonita, CA 91902 (619) 475-7882 (Name, Address and Telephone Number of Agent for Service) Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to section 12(g) of the Act: Common Stock, $.001 par value Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [X] Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act Yes [ ] No [X] Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [X] (Do not check if a smaller reporting Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [X] No [ ] As of May 31, 2008, the registrant had 4,451,667 shares of common stock issued and outstanding. No market value has been computed based upon the fact that no active trading market had been established as of May 31, 2008. GOLDEN KEY INTERNATIONAL INC. TABLE OF CONTENTS Page No. -------- Part I Item 1. Business 3 Item 1A. Risk Factors 7 Item 2. Properties 11 Item 3. Legal Proceedings 11 Item 4. Submission of Matters to a Vote of Securities Holders 11 Part II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 12 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 13 Item 8. Financial Statements and Supplementary Data 16 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 26 Item 9A. Controls and Procedures 26 Part III Item 10. Directors and Executive Officers 26 Item 11. Executive Compensation 27 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 29 Item 13. Certain Relationships and Related Transactions 29 Item 14. Principal Accounting Fees and Services 29 Part IV Item 15. Exhibits 30 Signatures 30 2 PART I CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING INFORMATION Certain statements in this annual report on Form 10-K contain or may contain forward-looking statements that are subject to known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These forward-looking statements were based on various factors and were derived utilizing numerous assumptions and other factors that could cause our actual results to differ materially from those in the forward-looking statements. These factors include, but are not limited to, our ability to consummate a merger or business combination, economic, political and market conditions and fluctuations, government and industry regulation, interest rate risk, U.S. and global competition, and other factors. Most of these factors are difficult to predict accurately and are generally beyond our control. You should consider the areas of risk described in connection with any forward-looking statements that may be made herein. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. Readers should carefully review this annual report in its entirety, including but not limited to our financial statements and the notes thereto. Except for our ongoing obligations to disclose material information under the Federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events. For any forward-looking statements contained in any document, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. ITEM 1. BUSINESS GENERAL INFORMATION Golden Key International, Inc. was incorporated on February 18, 1999 in the State of Delaware. Through its wholly-owned subsidiary, Deep Rooted, Inc., a Delaware corporation, the company intends to become a leading cross-platform community portal provider. The company will target communities 5,000 and larger in population and is developing a platform for uniting organizations, government, chambers of commerce, corporate enterprises and non-profit groups through "community-based" sites. Deep Rooted community portal applications can be deployed as business to employee, business to business or city to city. We are a development stage company with no revenues or profits. Our principal executive office address is 3113 Goldsmith Street, San Diego, CA 92106. The principal executive office and telephone number are provided by the officer of the corporation. Our fiscal year end is May 31. As of May 31, 2008 we had generated no revenues. We have been issued an opinion by our auditor that raises substantial doubt about our ability to continue as a going concern based on our current financial position. We have a total of 20,000,000 authorized preferred shares with a par value of $0.0001 per share with none of those shares issued and outstanding as of May 31, 2008. We have a total of 80,000,000 authorized common shares with a par value of $0.0001 per share with 4,451,667 common shares issued and outstanding as of May 31, 2008. 3 We completed a form SB-2 Registration Statement under the Securities Act of 1933 with the U.S. Securities and Exchange Commission registering 870,000 shares of our common stock in connection with an offering of the 870,000 shares at a price of $0.15 per share. Of the shares registered, 370,000 were registered for sale by existing shareholders, and 500,000 were registered for sale by the Company to raise funds to pursue our business plan. The offering expired on October 23, 2007 and we had sold 81,667 of the shares offered by the Company for funds of $12,250. BUSINESS DEVELOPMENT Golden Key International, Inc. was incorporated in Delaware on February 18, 1999, and our fiscal year-end is May 31. The company's administrative offices are located 3113 Goldsmith Street, San Diego, CA 92106. The telephone number is (619) 564-8110. Golden Key has no revenues and limited operations. We have sustained losses since inception, February 18, 1999, to May 31, 2008 of $48,672 and rely solely upon the sale of securities and loans from our corporate officers and directors for funding. Golden Key has never declared bankruptcy, been in receivership, or involved in any kind of legal proceeding. PRINCIPAL PRODUCTS, SERVICES AND THEIR MARKETS Realizing the need to consolidate the management of Intranet information and applications to reside under a single web site, portals provide a new and effective media for community information. Golden Key, through its wholly owned subsidiary, Deep Rooted, Inc., a Delaware corporation, intends to develop, launch and market a gateway community portal application supporting "community-based" sites for local and regional communities. Online users and subscribers will be able to select from our menu of communication applications including but not limited to: message boards, classifieds, employment opportunities, searchable "link" directories, knowledge databases, as well as provide informational websites for a point and click community service gateway. Our target markets are communities with a population of 5,000 people. We will offer community portal applications servicing government agencies, chambers of commerce, corporate and retail enterprises and non-profit groups and associations through "community-based" sites. Our company's objective is to create a community portal database providing benefits to interface immediately with each other while capturing the benefits of targeting a larger community market. Management has experience in developing online commercial websites. Management does not have specific experience in the formulation of community portal applications. We intend to develop, test and integrate a user friendly community portal application that includes easy to use online tools that will enable the user to create, update and manage their informational sites on a "community-based" site. Detailed informational pages can be created to further integrate the message of the user. The benefit to our public customer is the consolidation of information and resources into a user friendly community based site. This platform will enable the user to search the database for any government agency, chamber of commerce, corporate and retail enterprises and non-profit groups and associations as well as accessing searchable "link" directories and knowledge databases. Our website will operate as the main catalyst for community interaction. Our pricing and sales structure for Deep Rooted is to maximize monthly revenue generated from subscription fees and advertisement sales. Comparative community portals charge between $100 and $200 a month for membership subscriptions. The 4 majority of entities subscribe to the lower price option. Our sales plan is to offer a better solution for online listings at a competitive price. We intend to offer the following pricing plans under the following membership package: BASIC MEMBER LISTING: FREE This service will provide a free basic listing for a community group, agency or business. It will contain the name and contact information, email link, choice of menu placement whether a business, club, agency or organization. DELUXE MEMBER LISTING: $75 PER YEAR This service will provide name and contact information, email link, website link, detailed description, two images (photo, logo, graphic) choice of menu placement. The Deluxe listing includes everything that comes with the Free listing plus it allows for a detailed description and two images. DELUXE PLUS ONE MEMBER LISTING: $200 INITIAL FEE AND $150 ANNUAL RENEWAL This service will provide the same as the Deluxe Member Listing but will also include a one page website that is linked to the Deluxe Listing. Management of website content will be handled by each member, so images and graphics can be added. A built in search engine will enable visitors to find members by name or associated key words. Although we intend to implement our business plan through the foreseeable future and will do our best to mitigate the risks associated with our business plan, there can be no assurance that such efforts will be successful. If we are incapable of executing our business plan we would then investigate reasonable business options available to retain value for our shareholders. This could possibly be achieved by offering the leads generated on our web site or through other efforts to other firms. We could continue making progress on our business plan by developing alternatives such as limiting the scope of the services we offer clients to reduce costs, adjusting or reducing our in-house marketing costs, or reducing the costs for the development of our web site, and adjusting our timeline for the delivery of our services. If only partial funding is received we intend to follow our twelve month time frame, but in a reduced capacity. The level or reduction of our business operations could be commensurate with any given level of funding. We could decrease the number of services we offer, number of clients we handle, reduce in-house marketing efforts, and adjust our general overhead to any partial funding conditions. COMPETITIVE BUSINESS CONDITIONS AND STRATEGY Our competitors for our targeted market have longer operating histories, larger customer bases, and greater brand recognition than Golden Key. Major competitors are community websites, such as local and national media operators, web developers, search engine companies, such as Ask.com as well as any other businesses that promote the ability to provide local community information. We are not aware of any significant barriers to our entry into the market, however, at this time, we have no sales or share of this market. SOURCES AND AVAILABILITY OF RAW MATERIALS We will utilize our management's background in computers and network systems to offer our web site on the Internet without the use of major suppliers of raw materials. 5 DEPENDENCE ON ONE OR A FEW MAJOR CUSTOMERS We will not depend on any one or a few major customers. Management has experience in the management of online marketing services in the United States. PATENTS AND TRADEMARKS As of the date of this filing, we have secured our Internet domain name www.deeprooted.ca. We have not applied for copyright protection for our software. We are considering filing for copyright protection of our name and logo, however, as of the date of this filing we have taken no steps to file for copyright protection, and have no set date for that possible filing. GOVERNMENT CONTROLS, APPROVAL AND LICENSING REQUIREMENTS We are not required to apply for or have any government approval for our products or services. RESEARCH AND DEVELOPMENT ACTIVITIES AND COSTS We have expended no funds for research and development costs since inception. COMPLIANCE WITH ENVIRONMENTAL LAWS We are not aware of any environmental regulations that could directly affect our operations, but no assurance can be given that environmental regulations will not, in the future, have a material adverse impact on our business. EMPLOYEES AND EMPLOYMENT AGREEMENTS We have only one employee, our officer who devotes 5 hours per week to manage the affairs of the company. The officer intends to work on a full time basis when Golden Key raises capital per our business plan. REPORTS TO SECURITY HOLDERS We will voluntarily make available an annual report including audited financials on Form 10-K to security holders. We will file the necessary reports with the SEC pursuant to the Exchange Act, including but not limited to, the report on Form 8-K, annual reports on Form 10-K, and quarterly reports on Form 10-Q. The public may read and copy any materials filed with the SEC at the SEC's Public Reference Room at 100 F Street NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements, and other electronic information regarding Golden Key and filed with the SEC at http://www.sec.gov. 6 ITEM 1A. RISK FACTORS WE LACK AN OPERATING HISTORY AND HAVE LOSSES WHICH WE EXPECT TO CONTINUE INTO THE FUTURE WHICH CAN LEAD TO THE FAILURE OF OUR BUSINESS Our date of incorporation is February 18, 1999 and we have had no revenues and nominal operations to date. Our cumulative net loss since inception to May 31, 2008 was $64,030. The Company does not have adequate funding to allow us to continue our operations in full and expand our markets without further funding or revenues. We will continue to incur losses in the future and there is no assurance that we will generate significant revenues or become profitable. OUR AUDITOR HAS EXPRESSED SUBSTANTIAL DOUBT AS TO OUR ABILITY TO CONTINUE AS A GOING CONCERN. The Company's ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Based on our financial history since inception, our auditor has expressed substantial doubt as to our ability to continue as a going concern. We are a development stage company that has generated no revenues and we have incurred a net loss of $64,030 as of May 31, 2008. If we cannot generate sufficient revenue from the sale of our products, we may not be able to implement our business plan and may be forced to cease our business activities. 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 have no significant assets or financial resources. 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 starting a new business enterprise and the highly competitive environment in which we will operate. Since we have a limited operating history of marketing our services to the public over the Internet, we cannot assure you that our business will be profitable or that we will ever generate sufficient revenues to meet our expenses and support our anticipated activities. THE FACT THAT WE HAVE GENERATED NO REVENUES SINCE OUR INCORPORATION RAISES SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN, AS INDICATED IN OUR INDEPENDENT AUDITORS' REPORT IN CONNECTION WITH CONSOLIDATED FINANCIAL STATEMENTS. We have generated no revenues since our inception. Since we are still in the early stages of developing our company and because of the lack of operating history at May 31, 2008, our independent auditors' report includes an explanatory paragraph about our ability to continue as a going concern. We will, in all likelihood, continue to incur operating expenses without significant revenues until our products and service gain significant popularity. We will not be able to expand our operations beyond current levels without generating significant revenues from our offering, operations or obtaining further financing. Our only source of funds has been the sale of our common stock and loans from our director. We cannot assure that we will be able to generate enough interest in the sale and development of our community portals. If we cannot attract a significant customer base, we will not be able to generate any 7 significant revenues or income. In addition, if we are unable to establish and generate material revenues, or obtain adequate future financing, our business will fail and you may lose some or all of your investment in our common stock. These circumstances raise substantial doubt about our ability to continue as a going concern as described in an explanatory paragraph to our independent auditors' report on the financial statements for the period ended May 31, 2008. WE MAY REQUIRE ADDITIONAL FUNDING TO ACHIEVE OUR CURRENT BUSINESS STRATEGY AND OUR INABILITY TO OBTAIN SUCH FUNDING COULD PROHIBIT US FROM EXECUTING OUR BUSINESS PLAN AND CAUSE US TO SLOW DOWN OUR PLAN OF OPERATIONS. We will need to raise additional funds. Such financing may not materialize. Our capital requirements to implement our business strategy will be significant. We will need an estimated $75,000 to continue operations over the next twelve months in order to fully implement our strategy. No assurance can be given that the total funds required to significantly expand our operations will be available. If we are unable to obtain funding, we could be forced to delay or scale back our plans for expansion. In addition, such inability to obtain funding could have a material adverse effect on our business, operating results, or financial condition. OUR FUTURE SUCCESS IS DEPENDENT, IN PART, ON THE PERFORMANCE AND CONTINUED SERVICE OF NORM BLAIR, 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 Norm Blair, our sole officer and director. The loss of his services could have a material adverse effect on our business, financial condition or results of operation. 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 with internet experience. 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. AS AN INTERNET COMPANY, WE ARE IN AN INTENSELY COMPETITIVE INDUSTRY AND ANY FAILURE TO TIMELY IMPLEMENT OUR BUSINESS PLAN COULD DIMINISH OR SUSPEND OUR DEVELOPMENT AND POSSIBLY CEASE OUR OPERATIONS. The online community industry is highly competitive and has few barriers to entry. Our main competitors include community online newspapers, existing community portal sites and online directory companies, such as the Yellow Pages. We can provide no assurance that additional competitors will not enter and setup online community portals. There are numerous other companies that currently offer similar services that have established user bases that are significantly larger than ours, and that have access to greater capital. If we are unable to efficiently and effectively institute our business plan as a result of intense 8 competition or a saturated market, we may not be able to continue the development and enhancement of our web site and become profitable. IF WE ARE UNABLE TO ESTABLISH A LARGE USER BASE WE MAY HAVE DIFFICULTY ATTRACTING ADVERTISERS TO OUR WEB SITE, WHICH WILL HINDER OUR ABILITY TO GENERATE ADVERTISING REVENUES, WHICH MAY AFFECT OUR ABILITY TO EXPAND OUR BUSINESS OPERATIONS AND OUR USER BASE. An integral part of our business plan and marketing strategy requires us to establish a large internet user base by selling several community franchises. We will only be able to attract advertisers to our network of web sites and begin to generate significant advertising revenues if we can obtain a large enough audience to compete with other media. If for any reason our portals are ineffective at attracting site visitors or if we are unable to continue to develop and update our web site to keep community interests satisfied with our service, our user base may decrease and our ability to generate advertising revenues may decline. 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 industry is characterized by rapid technological change that could render our existing web site and technology obsolete. The development of our web sites entails significant technical and business risks. We can give no assurance that we will 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 AND PURCHASE INTERNET DOMAIN NAMES UNDER OUR BRAND NAME, OUR EFFORTS TO INCREASE PUBLIC RECOGNITION OF OUR BRAND MAY BE IMPAIRED. Our market strategy and branding is based on developing a recognized brand for the company. The acquisition and maintenance of domain names generally is regulated by governmental agencies and their designees. The regulation of domain names is subject to change. The relationship between regulations governing domain names and laws protecting trademarks and similar proprietary rights is unclear. Therefore, we may be unable to prevent third parties from acquiring domain names that are similar to our domain name, and infringing upon or otherwise decreasing the value of any future trademarks or other proprietary rights that we may develop. We may need to bring legal claims to enforce or protect such intellectual property rights. Any litigation, whether successful or unsuccessful, could result in substantial costs and diversions of resources. Any claims, by or against us, could be time consuming and costly to defend or litigate, divert our attention and resources and result in the loss of goodwill associated with our trade names. BECAUSE WE DO NOT HAVE SUFFICIENT INSURANCE TO COVER OUR BUSINESS LOSSES, WE MIGHT HAVE UNINSURED LOSSES, INCREASING THE POSSIBILITY THAT YOU WOULD LOSE YOUR INVESTMENT We may incur uninsured liabilities and losses as a result of the conduct of our business. We do not currently maintain any comprehensive insurance. Even if we obtain such insurance in the future, we may not carry sufficient insurance coverage to satisfy potential claims. We do not carry any business interruption insurance. Should uninsured losses occur, any purchasers of our common stock could lose their entire investment. 9 BECAUSE WE CAN ISSUE ADDITIONAL COMMON SHARES, PURCHASERS OF OUR COMMON STOCK MAY INCUR IMMEDIATE DILUTION AND MAY EXPERIENCE FURTHER DILUTION. We are authorized to issue up to 80,000,000 common shares, of which 4,451,667 are issued and outstanding. Our board of directors has the authority to cause our company to issue additional shares of common stock without the consent of any of our shareholders. Consequently, our shareholders may experience more dilution in their ownership of our company in the future. OUR DIRECTOR/OFFICER BENEFICIALLY OWNS 89% OF THE OUTSTANDING SHARES OF OUR COMMON STOCK. IF HE CHOOSES TO SELL HIS SHARES IN THE FUTURE, IT MIGHT HAVE AN ADVERSE EFFECT ON THE PRICE OF OUR STOCK. Due to the controlling amount of his share ownership in our company, if our sole director/officer decides to sell his shares in the public market, the market price of our stock could decrease and all shareholders suffer a dilution of the value of their stock. If our director/officer decides to sell any of his common stock, he will be subject to Rule 144 under the 1933 Securities Act. OUR DIRECTOR/OFFICER BENEFICIALLY OWNS 89% OF THE OUTSTANDING SHARES OF OUR COMMON STOCK. HE WILL CONTROL AND MAKE CORPORATE DECISIONS THAT MAY DIFFER FROM THOSE THAT MAY BE MADE BY THE OTHER SHAREHOLDERS. Due to the controlling amount of his share ownership in our company, our sole director/officer will have a significant influence in determining the outcome of all corporate transactions, including the power to prevent or cause a change in control. His interests may differ from the interests of the other stockholders and thus result in corporate decisions that are disadvantageous to other shareholders. WE DO NOT EXPECT TO PAY DIVIDENDS AND INVESTORS SHOULD NOT BUY OUR COMMON STOCK EXPECTING 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 our business operations. OUR STOCK IS A PENNY STOCK. TRADING OF OUR STOCK MAY BE RESTRICTED BY THE SECURITIES AND EXCHANGE COMMISSION'S PENNY STOCK REGULATIONS WHICH MAY LIMIT A STOCKHOLDER'S ABILITY TO BUY AND SELL OUR STOCK. Our stock is a penny stock. The Securities and Exchange Commission has adopted Rule 15g-9 which generally defines "penny stock" to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and "accredited investors". The term "accredited investor" refers generally to institutions with assets in excess of $5,000,000 or individuals 10 with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer's account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer's confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock. FINRA SALES PRACTICE REQUIREMENTS MAY ALSO LIMIT A STOCKHOLDER'S ABILITY TO BUY AND SELL OUR STOCK. In addition to the "penny stock" rules promulgated by the Securities and Exchange Commission (see above and the "Market for Common Equity and Related Stockholder Matters" section at for discussions of penny stock rules), FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer's financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares. ITEM 2. PROPERTIES Our principal executive office address is 3113 Goldsmith Street, San Diego, CA 92106. The principal executive office and telephone number are provided by the officer of the corporation. We do not have any investments or interests in any real estate. We do not invest in real estate mortgages, nor do we invest in securities of, or interests in, persons primarily engaged in real estate activities. ITEM 3. LEGAL PROCEEDINGS We are not currently involved in any legal proceedings nor do we have any knowledge of any threatened litigation. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matters were submitted to a vote of security holders during the fiscal year ended May 31, 2008. 11 PART II ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS Our common stock was listed on the OTC Bulletin Board on February 8, 2008. The symbol is GKYI. There has been no active trading and no high or low bid prices. Of the 4,451,667 shares of common stock outstanding as of May 31, 2008, 4,000,000 shares are owned by Norm Blair, our officer and director, and may only be resold in compliance with Rule 144 of the Securities Act of 1933. As of May 31, 2008, we have 4,451,667 shares of $0.0001 par value common stock issued and outstanding held by 50 shareholders of record. The stock transfer agent for our securities is Transfer Online, Inc., 317 SW Alder Street, 2nd Floor, Portland, OR 97204. DIVIDENDS We have never declared or paid any cash dividends on our common stock. For the foreseeable future, we intend to retain any earnings to finance the development and expansion of our business, and we do not anticipate paying any cash dividends on our common stock. Any future determination to pay dividends will be at the discretion of the Board of Directors and will be dependent upon then existing conditions, including our financial condition and results of operations, capital requirements, contractual restrictions, business prospects, and other factors that the board of directors considers relevant. SECTION RULE 15(g) OF THE SECURITIES EXCHANGE ACT OF 1934 The Company's shares are covered by Section 15(g) of the Securities Exchange Act of 1934, as amended that imposes additional sales practice requirements on broker/dealers who sell such securities to persons other than established customers and accredited investors (generally institutions with assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouses). For transactions covered by the Rule, the broker/dealer must make a special suitability determination for the purchase and have received the purchaser's written agreement to the transaction prior to the sale. Consequently, the Rule may affect the ability of broker/dealers to sell our securities and also may affect your ability to sell your shares in the secondary market. Section 15(g) also imposes additional sales practice requirements on broker/dealers who sell penny securities. These rules require a one page summary of certain essential items. The items include the risk of investing in penny stocks in both public offerings and secondary marketing; terms important to in understanding of the function of the penny stock market, such as "bid" and "offer" quotes, a dealers "spread" and broker/dealer compensation; the broker/dealer compensation, the broker/dealers duties to its customers, including the disclosures required by any other penny stock disclosure rules; the customers rights and remedies in causes of fraud in penny stock transactions; and, FINRA's toll free telephone number and the central number of the North American Administrators Association, for information on the disciplinary history of broker/dealers and their associated persons. 12 SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS We do not have any equity compensation plans and accordingly we have no securities authorized for issuance thereunder. SECTION 16(a) Based solely upon a review of Form 3 and 4 furnished by us under Rule 16a-3(d) of the Securities Exchange Act of 1934, we are not aware of any individual who failed to file a required report on a timely basis required by Section 16(a) of the Securities Exchange Act of 1934. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS We did not purchase any of our shares of common stock or other securities during the year ended May 31, 2008. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS We have generated no revenues since inception and have incurred $64,030 in expenses through May 31, 2008. The following table provides selected financial data about our company for the year ended May 31, 2008. Balance Sheet Data: 5/31/08 ------------------- ------- Cash $ 3,320 Total assets $ 3,320 Total liabilities $ 17,700 Shareholders' equity $(14,380) We had $12,250 in cash provided by financing activities for the year ended May 31st, 2008. Cash provided by financing since inception was $400 from the sale of shares to our officer and director, $37,000 resulting from the sale of our common stock to 46 independent investors pursuant to Regulation S, category 3 of Rule 903 of the Securities Act of 1933, as amended (the "Act") and $12,250 from the sale of our common stock to 4 independent investors pursuant to the shares registered by the Form SB-2 Registration Statement. We incurred operating expenses of $15,358 and $8,780 for the years ended May 31, 2008 and 2007, respectively. These expenses consisted of general operating expenses incurred in connection with the day to day operation of our business and the preparation and filing of our registration statement and required reports. LIQUIDITY AND CAPITAL RESOURCES Our cash in the bank at May 31, 2008 was $3,320, total assets were $3,320 and outstanding liabilities were $17,700. Our director has agreed to provide additional funding that will enable us to maintain a positive cash flow needed to pay for our current level of operating expenses over the next twelve months, 13 which would include miscellaneous office expenses, bookkeeping and audit fees and website costs. There are no formal commitments or arrangements with our director to advance or loan funds. There are no terms regarding repayment of any loan or capital contribution. We are a development stage company and have generated no revenue to date. We estimate our current cash balance of $3,320, along with loans from our director, will be sufficient for office expenses and fees. We anticipate that we will need approximately $8,000 through 2008 or until we are able to receive additional funding or generate revenues. These fees are estimated to be $6,000 for accounting and legal fees and $2,000 for website development costs. OFF-BALANCE SHEET ARRANGEMENTS We have no off-balance sheet arrangements. BUSINESS OPERATIONS OVERVIEW As of the date of this filing, we have taken the following steps: developed our business plan, researched community portals and e-commerce templates, developed system for gathering community data, secured the Internet domain name www.deeprooted.ca and initiated the first phase of our online community portal. We were able to raise minimal funding of $12,250 in our recent offering, far less than our projected budget of $75,000. Our director has verbally agreed to loan the company funds to continue operations in this limited scenario until sales will support operations or until we receive additional funding. Our director will implement the website as well as conduct sales and marketing on a limited scale. If we have not yet generated revenues sufficient to sustain modified business operations, we may have to raise additional monies through sales of our equity securities or through loans from banks or third parties to continue our business plans, however, no such plans are currently anticipated. There is no guarantee we will be successful in implementing our modified business plan. Proposed Milestones to Implement Modified Business Operations 3RD QUARTER, 2008 Begin build out of our dedicated web based system. The build-out will consist of completing database programs. Begin initial contact for partner/banner ads to be included on the website Contact several ad sponsors for the ad sponsor sections of the web portal to increase traffic to site as well as achieve advertising revenue. Orchestrate minimum marketing and sales to community portal markets. 4TH QUARTER, 2008 Continue to contact several ad sponsors for the ad sponsor sections of the web portal to increase traffic to site as well as achieve advertising revenue. Beta test with several affiliates in a real world scenario. The Company plans to work with community affiliates to establish a formal focus group on how to improve the services and products of Deep Rooted. We plan to offer our services to a select group to test market our web portal services. We will offer the 14 services for free at no risk for a period of 6 months, and will demonstrate to the clients how to upload their community advertising and listings. In order to meet all of our business plan goals, we need to receive funding or generate revenue. We will face considerable risk in each of our business plan steps, such as longer than anticipated lead time necessary for us to complete our website and marketing plan, and a shortfall of funding due to our inability to raise capital. If no funding is received during the next twelve months, we may utilize one or more options such as use existing cash in the bank, funds loaned by our director, or we might ask our shareholders for funds. Neither our director nor our shareholders have any formal commitments, arrangements or legal obligations to advance or loan funds to Golden Key. To date, there has been $17,700 in loans from the director, with no specific terms of repayment. 15 ITEM 8. FINANCIAL STATEMENTS Chang G. Park, CPA, Ph. D. * 2667 CAMINO DEL RIO S. PLAZA B * SAN DIEGO * CALIFORNIA 92108-3707* * TELEPHONE (858)722-5953 * FAX (858) 761-0341 * FAX (858) 764-5480 * E-MAIL changgpark@gmail.com * - -------------------------------------------------------------------------------- Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders Golden Key International, Inc. We have audited the accompanying consolidated balance sheets of Golden Key International, Inc. and subsidiary (the "Company") as of May 31, 2008 and 2007 and the related consolidated statements of operations, changes in shareholders' equity and cash flows for the years then ended and for the period from February 18, 1999 (inception) through May 31, 2008. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Golden Key International, Inc. and subsidiary as of May 31, 2008 and 2007, and the result of its operations and its cash flows for the years then ended in conformity with U.S. generally accepted accounting principles. The financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the consolidated financial statements, the Company's losses from operations raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. /s/ Chang Park - -------------------------- CHANG G. PARK, CPA July 3, 2008 San Diego, CA. 92108 Member of the California Society of Certified Public Accountants Registered with the Public Company Accounting Oversight Board 16 GOLDEN KEY INTERNATIONAL, INC. (A Development Stage Company) Consolidated Balance Sheets - --------------------------------------------------------------------------------
As of As of May 31, 2008 May 31, 2007 ------------ ------------ ASSETS CURRENT ASSETS Cash $ 3,320 $ 6,428 -------- -------- TOTAL CURRENT ASSETS 3,320 6,428 -------- -------- TOTAL ASSETS $ 3,320 $ 6,428 ======== ======== LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT) CURRENT LIABILITIES Loan from director $ 17,700 $ 17,700 -------- -------- TOTAL CURRENT LIABILITIES 17,700 17,700 -------- -------- TOTAL LIABILITIES 17,700 17,700 STOCKHOLDERS' EQUITY (DEFICIT) Preferred Stock, ($0.0001 par value, 20,000,000 shares authorized: -0- shares issued and outstanding as of May 31, 2008 and 2007, respectively) -- -- Common stock, ($0.0001 par value, 80,000,000 shares authorized; 4,451,667 and 4,370,000 shares issued and outstanding as of May 31, 2008 and 2007, respectively.) 445 437 Additional paid-in capital 49,205 36,963 Deficit accumulated during development stage (64,030) (48,672) -------- -------- TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (14,380) (11,272) -------- -------- TOTAL LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT) $ 3,320 $ 6,428 ======== ========
See Notes to the Consolidated Financial Statements 17 GOLDEN KEY INTERNATIONAL, INC. (A Development Stage Company) Consolidated Statements of Operations - --------------------------------------------------------------------------------
February 18, 1999 Year Ended Year Ended (inception) Ended Ended through May 31, May 31, May 31, 2008 2007 2008 ---------- ---------- ---------- REVENUES $ -- $ -- $ -- GENERAL & ADMINISTRATIVE EXPENSES 15,358 8,780 64,030 ---------- ---------- ---------- TOTAL GENERAL & ADMINISTRATIVE EXPENSES 15,358 8,780 64,030 ---------- ---------- ---------- NET INCOME (LOSS) $ (15,358) $ (8,780) $ (64,030) ========== ========== ========== BASIC EARNINGS (LOSS) PER SHARE $ (0.00) $ (0.00) ========== ========== WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 4,419,536 4,370,000 ========== ==========
See Notes to the Consolidated Financial Statements 18 GOLDEN KEY INTERNATIONAL, INC. (A Development Stage Company) Consolidated Statement of Changes in Stockholders' Equity From February 18, 1999 (inception) through May 31, 2008 - --------------------------------------------------------------------------------
Deficit Accumulated Common Additional During Common Stock Paid-in Development Stock Amount Capital Stage Total ----- ------ ------- ----- ----- Beginning balance 2/18/1999 -- $ -- $ -- $ -- $ -- Net lncome, May 31, 1999 -- -- ---------- -------- ------- -------- -------- BALANCE, MAY 31, 1999 -- -- -- -- -- ---------- -------- ------- -------- -------- Net lncome, May 31, 2000 -- -- ---------- -------- ------- -------- -------- BALANCE, MAY 31, 2000 -- -- -- -- -- ---------- -------- ------- -------- -------- Stock issued for cash on November 30, 2000 @ $0.0001 per share 4,000,000 400 -- 400 Stock issued for cash on January 30, 2001 @ $0.10 per share 240,000 24 23,976 24,000 Net loss, May 31, 2001 (7,165) (7,165) ---------- -------- ------- -------- -------- BALANCE, MAY 31, 2001 4,240,000 424 23,976 (7,165) 17,235 ---------- -------- ------- -------- -------- Net loss, May 31, 2002 (10,020) (10,020) ---------- -------- ------- -------- -------- BALANCE, MAY 31, 2002 4,240,000 424 23,976 (17,185) 7,215 ---------- -------- ------- -------- -------- Net loss, May 31, 2003 (2,070) (2,070) ---------- -------- ------- -------- -------- BALANCE, MAY 31, 2003 4,240,000 424 23,976 (19,255) 5,145 ---------- -------- ------- -------- -------- Net loss, May 31, 2004 (3,777) (3,777) ---------- -------- ------- -------- -------- BALANCE, MAY 31, 2004 4,240,000 424 23,976 (23,032) 1,368 ---------- -------- ------- -------- -------- Net loss, May 31, 2005 (6,420) (6,420) ---------- -------- ------- -------- -------- BALANCE, MAY 31, 2005 4,240,000 424 23,976 (29,452) (5,052) ---------- -------- ------- -------- -------- Stock issued for cash on July 22, 2005 @ $0.10 per share 80,000 8 7,992 8,000 Stock issued for cash on September 8, 2005 @ $0.10 per share 50,000 5 4,995 5,000 Net loss, May 31, 2006 (10,440) (10,440) ---------- -------- ------- -------- -------- BALANCE, MAY 31, 2006 4,370,000 437 36,963 (39,892) (2,492) ---------- -------- ------- -------- -------- Net loss, May 31, 2007 (8,780) (8,780) ---------- -------- ------- -------- -------- BALANCE, MAY 31, 2007 4,370,000 437 36,963 (48,672) (11,272) ---------- -------- ------- -------- -------- Stock issued for cash on October 23, 2007 @ $0.15 per share 81,667 8 12,242 12,250 Net loss, May 31, 2008 (15,358) (15,358) ---------- -------- ------- -------- -------- BALANCE, MAY 31, 2008 4,451,667 $ 445 $49,205 $(64,030) $(14,380) ========== ======== ======= ======== ========
See Notes to the Consolidated Financial Statements 19 GOLDEN KEY INTERNATIONAL, INC. (A Development Stage Company) Consolidated Statements of Cash Flows - --------------------------------------------------------------------------------
February 18, 1999 Year Ended Year Ended (inception) Ended Ended through May 31, May 31, May 31, 2008 2007 2008 -------- -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $(15,358) $ (8,780) $(64,030) Increase (decrease) in accounts payable -- -- -- -------- -------- -------- NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (15,358) (8,780) (64,030) CASH FLOWS FROM INVESTING ACTIVITIES NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES -- -- -- CASH FLOWS FROM FINANCING ACTIVITIES Increase in loan from director -- 10,000 17,700 Issuance of common stock 8 -- 445 Additional paid in capital 12,242 -- 49,205 -------- -------- -------- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 12,250 10,000 67,350 -------- -------- -------- NET INCREASE (DECREASE) IN CASH (3,108) 1,220 3,320 CASH AT THE BEGINNING OF YEAR 6,428 5,208 -- -------- -------- -------- CASH AT THE END OF YEAR 3,320 6,428 $ 3,320 ======== ======== ======== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Interest paid $ -- $ -- $ -- ======== ======== ======== Income taxes paid $ -- $ -- $ -- ======== ======== ========
See Notes to the Consolidated Financial Statements 20 GOLDEN KEY INTERNATIONAL, INC. (A Development Stage Company) Notes to the Consolidated Financial Statements As of May 31, 2008 NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS Golden Key International, Inc. (the "Company") was incorporated under the laws of the State of Delaware on February 18, 1999. The Company has minimal operations and in accordance with SFAS #7, the Company is considered a development stage company. The Company has issued 4,451,667 shares of $0.0001 par value common stock. The Company operates through its wholly owned subsidiary: Deep Rooted, Inc. a Delaware corporation. The Company through its subsidiary Deep Rooted, Inc. plans to build an internet business that caters to travelers by allowing them to plan their own trips. This includes things like booking accommodation, activities and transportation as well as obtaining general information about the area of choice. The Companies activities to date have been limited to capital formation, organization, set-up of a website, and development of its business plan and a target customer market. NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ACCOUNTING METHOD The Company's consolidated financial statements are prepared using the accrual method of accounting. The Company has elected a May 31, year-end. BASIS OF CONSOLIDATION The consolidated financial statements include the accounts of Golden Key International, Inc., the parent Company, and it's wholly owned subsidiary Deep Rooted, Inc., a Delaware corporation. All subsidiaries are wholly owned subsidiaries. All significant inter-company balances and transactions have been eliminated in consolidation. CASH EQUIVALENTS The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. ACCOUNTS RECEIVABLE The Company considers accounts receivable to be fully collectible; accordingly, no allowances for doubtful accounts are required. If amounts become non-collectible, they will be charged to operations when that determination is made. 21 GOLDEN KEY INTERNATIONAL, INC. (A Development Stage Company) Notes to the Consolidated Financial Statements As of May 31, 2008 NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) ESTIMATES AND ADJUSTMENTS The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. In accordance with FASB 16 all adjustments are normal and recurring. BASIC EARNINGS PER SHARE In February 1997, the FASB issued SFAS No. 128, "Earnings Per Share", which specifies the computation, presentation and disclosure requirements for earnings (loss) per share for entities with publicly held common stock. SFAS No. 128 supersedes the provisions of APB No. 15, and requires the presentation of basic earnings (loss) per share and diluted earnings (loss) per share. The Company has adopted the provisions of SFAS No. 128 effective February 18, 1999 (inception). Basic net loss per share amounts is computed by dividing the net loss by the weighted average number of common shares outstanding. Diluted earnings per share are the same as basic earnings per share due to the lack of dilutive items in the Company. INCOME TAXES Income taxes are provided in accordance with Statement of Financial Accounting Standards No. 109 (SFAS 109), Accounting for Income Taxes. A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carryforwards. Deferred tax expense (benefit) results from the net change during the year of deferred tax assets and liabilities. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion of all or the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS In February 2006, the FASB issued SFAS No. 155, "Accounting for Certain Hybrid Financial Instruments-an amendment of FASB Statements No. 133 and 140" to simplify and make more consistent the accounting for certain financial 22 GOLDEN KEY INTERNATIONAL, INC. (A Development Stage Company) Notes to the Consolidated Financial Statements As of May 31, 2008 NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) instruments. SFAS No. 155 amends SFAS No. 133 "Accounting for Derivative Instruments and Hedging Activities", to permit fair value re-measurement for any hybrid financial instrument with an embedded derivative that otherwise would require bifurcation, provided that the whole instrument is accounted for on a fair value basis. SFAS NO. 155 amends SFAS NO. 140, "Accounting for the Impairment or disposal of Long-Lived Assets" to allow a qualifying special-purpose entity to hold a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument. SFAS No. 155 applies to all financial instruments acquired or issued after the beginning of an entity's first fiscal year that begins after September 15, 2006, with earlier application allowed. In March 2006, the FASB issued SFAS No. 156 "Accounting for Servicing of Financial Assets, an amendment of FASB Statement NO. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities". This statement requires all separately recognized servicing assets and servicing liabilities be initially measured at fair value, if practicable, and permits for subsequent measurement using either fair value measurement with changes in fair value reflected in earning or the amortization and impairment requirement of Statement No. 140. The subsequent measurement of separately recognized servicing assets and servicing liabilities at fair value eliminates the necessity for entities that manage the risks inherent in servicing assets and servicing liabilities with derivatives t qualify for hedge accounting treatment and eliminates the characterization of declines in fair value as impairments or direct write-downs. SFAS No. 156 is effective for an entity's first fiscal year beginning after September 15, 2006. These statements are not expected to have a significant effect on the Company's future reported financial position or results of operations. NOTE 3. GOING CONCERN The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company generated net losses of $64,030 during the period from February 18, 1999 (inception) to May 31, 2008. This condition raises substantial doubt about the Company's ability to continue as a going concern. The Company's continuation as a going concern is dependent on its ability to meet its obligations, to obtain additional financing as may be required and ultimately to attain profitability. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. 23 GOLDEN KEY INTERNATIONAL, INC. (A Development Stage Company) Notes to the Consolidated Financial Statements As of May 31, 2008 NOTE 4. RELATED PARTY TRANSACTIONS Norm Blair, the sole officer and director of the Company may, in the future become involved in other business opportunities as they become available; thus, he may face a conflict in selecting between the Company and his other business opportunities. The Company has not formulated a policy for the resolution of such conflicts. While the Company is seeking additional capital, Mr. Blair has advanced funds to the Company to pay for any costs incurred by it. These funds are interest free and there is no maturity date. The balance due to Mr. Blair was $17,700 on May 31, 2008. NOTE 5. INCOME TAXES As of May 31, 2008 ------------------ Deferred tax assets: Net operating tax carryforwards $21,770 Other 0 ------- Gross deferred tax assets 21,770 Valuation allowance 21,770 ------- Net deferred tax assets $ 0 ======= Realization of deferred tax assets is dependent upon sufficient future taxable income during the period that deductible temporary differences and carryforwards are expected to be available to reduce taxable income. As the achievement of required future taxable income is uncertain, the Company recorded a valuation allowance. NOTE 6. SCHEDULE OF NET OPERATING LOSSES 1999 Net Operating Income $ 0 2000 Net Operating Loss (7,165) 2001 Net Operating Loss (10,020) 2002 Net Operating Loss (2,070) 2003 Net Operating Loss (3,777) 2004 Net Operating Loss (6,420) 2005 Net Operating Loss (10,440) 2006 Net Operating Loss (8,780) 2007 Net Operating Loss (15,358) -------- 2008 Net Operating Loss $(64,030) ======== As of May 31, 2008 the Company has net operating loss carryforwards of approximately $64,030. Net operating loss carryforward expires twenty years from the date the loss was incurred. 24 GOLDEN KEY INTERNATIONAL, INC. (A Development Stage Company) Notes to the Consolidated Financial Statements As of May 31, 2008 NOTE 7. STOCK TRANSACTIONS Transactions, other than employees' stock issuance, are in accordance with paragraph 8 of SFAS 123. Thus issuances shall be accounted for based on the fair value of the consideration given up or received; whichever is more readily determinable. Transactions with employees' stock issuance are in accordance with paragraphs (16-44) of SFAS 123. These issuances shall be accounted for based on the fair value of the consideration received or the fair value of the equity instruments issued, or whichever measure is deemed more reliable. On November 30, 2000, the Company issued 4,000,000 shares of common stock at $.0001 per share for cash valued at $400. In January 30, 2001, the Company issued 240,000 shares of common stock at $.10 per share for cash valued at $24,000. On July 22, 2005, the Company issued 80,000 shares of common stock at $.10 per share for cash valued at $8,000. On September 8, 2005, the Company issued 50,000 shares of common stock at $.10 per share for cash valued at $5,000. On October 23, 2007 the Company issued 81,667 shares of common stock at $.15 per share for cash valued at $12,250. As of May 31, 2008, the Company had 4,451,667 shares of common stock issued and outstanding. NOTE 8. STOCKHOLDERS EQUITY The stockholders' equity section of the Company contains the following class of capital stock as of May 31, 2008: * Preferred Stock, $0.0001 per share: 20,000,000 shares authorized: -0- shares issued and outstanding. * Common stock, $0.0001 par value: 80,000,000 shares authorized: 4,451,667 shares issued and outstanding. 25 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON FINANCIAL DISCLOSURE None. ITEM 9A. CONTROLS AND PROCEDURES Under the supervision and with the participation of our management, including our principal executive officer and the principal financial officer, we have conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as of the end of the period covered by this report. Based on this evaluation, our principal executive officer and principal financial officer concluded as of the evaluation date that our disclosure controls and procedures were effective such that the material information required to be included in our Securities and Exchange Commission reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms relating to our company, including any consolidating subsidiaries, and was made known to us by others within those entities, particularly during the period when this report was being prepared. Additionally, there were no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the evaluation date. We have not identified any significant deficiencies or material weaknesses in our internal controls, and therefore there were no corrective actions taken. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS The director and officer of Golden Key, whose one year term will expire on 02/20/2009, or at such time as his successor(s) shall be elected and qualified is as follows: Name & Address Age Position Date First Elected Term Expires - -------------- --- -------- ------------------ ------------ Norm Blair 50 President, 02/25/2000 02/20/2009 3113 Goldsmith St. Secretary, San Diego, CA 92106 Treasurer, Director The foregoing person may be deemed a "promoter" of Golden Key, as that term is defined in the rules and regulations promulgated under the Securities and Exchange Act of 1933. Directors are elected to serve until the next annual meeting of stockholders and until their successors have been elected and qualified. Officers are appointed to serve until the meeting of the board of directors following the next annual meeting of stockholders and until their successors have been appointed and qualified. Our director/officer currently handles a minor amount of administrative functions and has been responsible for completing the first two phases of our business model. Our officer/director currently devotes 5 hours per week to the business of the company and intends to work on a full time basis when we raise capital of $75,000. Currently Mr. Blair does not have an employment agreement with the company. No executive officer or director of the corporation has been the subject of any order, judgment, or decree of any court of competent jurisdiction, or any regulatory agency permanently or temporarily enjoining, barring, suspending or 26 otherwise limiting him from acting as an investment advisor, underwriter, broker or dealer in the securities industry, or as an affiliated person, director or employee of an investment company, bank, savings and loan association, or insurance company or from engaging in or continuing any conduct or practice in connection with any such activity or in connection with the purchase or sale of any securities. No executive officer or director of the corporation has been convicted in any criminal proceeding (excluding traffic violations) or is the subject of a criminal proceeding which is currently pending. No executive officer or director of the corporation is the subject of any pending legal proceedings. NORM BLAIR - WORK HISTORY Golden Key International, Inc., San Diego, CA. - From 2000 to current date, Mr. Blair serves as director and officer of Golden Key International, Inc. Deep Rooted, Inc., San Diego, CA. - From 2001 to current date, Mr. Blair serves as sole director and officer of Deep Rooted, Inc., A Delaware corporation and wholly owned subsidiary of Golden Key International, Inc. Mr. Blair has been responsible for formulating and initially implementing the company's website for community portal services. Deep Rooted Consulting - From 2003 through 2005, Mr. Blair, through his solely owned consulting company, provided online and design consulting to businesses and service directed organizations. Yen Brothers Food Service - From 1984 to 1999, Mr. Blair contracted food sales. Mr. Blair graduated in 1980 with a degree in Business Administration from Acadia University, Nova Scotia. CODE OF ETHICS We do not currently have a code of ethics, because we have only limited business operations and only one director and officer, we believe a code of ethics would have limited utility. We intend to adopt such a code of ethics as our business operations expand and we have more directors, officers and employees. ITEM 11. EXECUTIVE COMPENSATION Currently our officer and director is not being compensated for his services during the development stage of our business operations. He is reimbursed for any out-of-pocket expenses he incurs on our behalf. In addition, in the future, we may approve payment of salaries for our officers and directors, but currently, no such plans have been approved. We also do not currently have any benefits, such as health insurance, life insurance or any other benefits available to our employees. In addition, our officer and director is not party to any employment agreements. 27 SUMMARY COMPENSATION TABLE
Change in Pension Value and Non-Equity Nonqualified Incentive Deferred All Name and Plan Compen- Other Principal Stock Option Compen- sation Compen- Position Year Salary Bonus Awards Awards sation Earnings sation Totals - ------------ ---- ------ ----- ------ ------ ------ -------- ------ ------ Norm Blair 2008 0 0 0 0 0 0 0 0 CEO, 2007 0 0 0 0 0 0 0 0 President, 2006 0 0 0 0 0 0 0 0 Director 2005 0 0 0 0 0 0 0 0
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
Option Awards Stock Awards ----------------------------------------------------------------- ---------------------------------------------- Equity Incentive Equity Plan Incentive Awards: Plan Market or Awards: Payout Equity Number of Value of Incentive Number Unearned Unearned Plan Awards; of Market Shares, Shares, Number of Number of Number of Shares Value of Units or Units or Securities Securities Securities or Units Shares or Other Other Underlying Underlying Underlying of Stock Units of Rights Rights Unexercised Unexercised Unexercised Option Option That Stock That That That Options (#) Options (#) Unearned Exercise Expiration Have Not Have Not Have Not Have Not Name Exercisable Unexercisable Options (#) Price Date Vested(#) Vested Vested Vested - ---- ----------- ------------- ----------- ----- ---- --------- ------ ------ ------ Norm Blair 0 0 0 0 0 0 0 0 0
DIRECTOR COMPENSATION
Change in Pension Value and Fees Non-Equity Nonqualified Earned Incentive Deferred Paid in Stock Option Plan Compensation All Other Name Cash Awards Awards Compensation Earnings Compensation Total ---- ---- ------ ------ ------------ -------- ------------ ----- Norm Blair 0 0 0 0 0 0 0
28 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth information on the ownership of Golden Key's voting securities by our officer, director and major shareholder as well as those who own beneficially more than five percent of our common stock as of the date of this prospectus: Title of Amount & Percent Class Name & Address Nature of owner Owned ----- -------------- --------------- ----- Common Norm Blair 4,000,000 (a) 89% 3113 Goldsmith St San Diego, CA 92106 Total Shares Owned by the Officer & Director 4,000,000 89% - ---------- (a) Mr. Blair received 4,000,000 shares of the company's common stock on February 19, 1999 for $400. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The principal executive office and telephone number are provided by Mr. Blair, the officer of the corporation. The costs associated with the use of the telephone and mailing address were deemed to be immaterial as the telephone and mailing address were almost exclusively used by him for other business purposes. On February 19, 1999, the Company issued 4,000,000 shares of its $0.0001 par value common stock to Mr. Norm Blair, the officer and director of the company in exchange for cash in the amount of $400. Mr. Blair, our sole officer and director, is the only "promoter" of Golden Key International, as that term is defined in the rules and regulations promulgated under the Securities and Exchange Act of 1933. Mr. Blair has loaned the company $17,700 for which there are no specific terms of repayment and the loan collects no interest. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES The total fees charged to the company for audit services, including quarterly reviews, were $8,500 for audit-related services were $Nil, for tax services were $Nil and for other services were $Nil during the year ended May 31, 2008. For the year ended May 31, 2007, the total fees charged to the company for audit services, including quarterly reviews, were $7,000, for audit-related services were $Nil, for tax services were $Nil and for other services were $Nil. 29 PART IV ITEM 15. EXHIBITS The following exhibits are included with this filing: Exhibit Number Description ------ ----------- 3(i) Articles of Incorporation* 3(ii) Bylaws* 31 Sec. 302 Certification of CEO/CFO 32 Sec. 906 Certification of CEO/CFO - ---------- * Included in our SB-2 filing under Commission File Number 333-142037. SIGNATURES In accordance with Section 13 or 15(d) of the Securities Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. July 8, 2008 Golden Key International, Inc., Registrant By: /s/ Norm Blair ---------------------------------------- Norm Blair, Sole Director, President, Chief Executive Officer, Principal Accounting Officer, Chief Financial Officer 30 EX-31 2 ex31.txt SECTION 302 CERTIFICATION EXHIBIT 31 CERTIFICATION Pursuant to 18 U.S.C. 1350 (Section 302 of the Sarbanes-Oxley Act of 2002) I, Norm Blair, Chief Executive Officer and Chief Financial Officer of Golden Key International Inc., certify that: 1. I have reviewed this Annual Report on Form 10-K of Golden Key International Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: July 8, 2008 By: /s/ Norm Blair --------------------------------------------------- Norm Blair Chief Executive Officer and Chief Financial Officer EX-32 3 ex32.txt SECTION 906 CERTIFICATION EXHIBIT 32 CERTIFICATION Pursuant to 18 U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of 2002) In connection with the Annual Report on Form 10-K of Golden Key International Inc. (the "Company") for the year ended May 31, 2008, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), Norm Blair, as Chief Executive Officer and Chief Financial Officer of the Company, hereby certifies, pursuant to 18 U.S.C. ss.1350, as adopted pursuant to ss.906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: July 8, 2008 By: /s/ Norm Blair --------------------------------- Norm Blair Chief Executive Officer Chief Financial Officer This certification accompanies each Report pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002 and shalL not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of ss.18 of the Securities Exchange Act of 1934, as amended. A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----