UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 2010
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____
COMMISSION FILE NUMBER 000-51714
SMARTLINX INC.
(Exact name of registrant as specified in its charter)
| NEVADA | 74-3152432 |
| State or other jurisdiction of incorporation or organization | (I.R.S. Employer Identification No.) |
| 1400 Kennedy Blvd. | |
| Union City, NJ | 07087 |
| (Address of principal executive offices) | (Zip Code) |
| Registrant's telephone number, including area code | (201) 751-0602 |
| Securities registered under Section 12(b) of the Act: | NONE. |
| Securities registered under Section 12(g) of the Act: | Common Stock, $0.001 Par Value Per Share. |
Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined by 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 whether the registrant has submitted
electronically and posted on it’s corporate Web site, if any, every Interactive
Date File required to be submitted and posted pursuant to Rule 405 of Regulation
S-T (§232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files).
Yes [ ] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) 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. [X]
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.
| Large accelerated filer [ ] | Accelerated filer [ ] | |
| Non-accelerated filer [ ] | (Do not check if a smaller reporting company) | Smaller reporting company [X] |
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Act).
Yes [ ]
No [X]
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter: $120,000 as of September 30, 2009, based on a price of $0.02 per share, being the last price at which the Registrant sold shares of its common stock prior to that date.
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. As of July 12, 2010, the Registrant had 59,085,000 shares of common stock outstanding.
CAUTIONARY NOTE ON UNAUDITED FINANCIAL STATEMENTS
The financial statements included in this Annual Report on Form 10-K for the year ended March 31, 2010 (the “Annual Report”) have not been audited or reviewed by the Company’s independent registered public accounting firm (the “Auditor”). As a result, this Annual Report is deficient.
Upon the Company receiving audited financial statements, the Company plans to file an amendment to this Annual Report incorporating the audited financial statements for the year ended March 31, 2010, the certification required by Section 906 of the Sarbanes Oxley Act of 2002 and any other amendments to this Annual Report necessitated by the audited financial statements.
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SMARTLINX INC.
ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED MARCH 31, 2010
TABLE OF CONTENTS
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PART I
The information in this discussion contains forward-looking statements. These forward-looking statements involve risks and uncertainties, including statements regarding the Company's capital needs, business strategy and expectations. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "expect," "plan," "intend," "anticipate," "believe," "estimate,” "predict," "potential" or "continue,” the negative of such terms or other comparable terminology. Actual events or results may differ materially. In evaluating these statements, you should consider various factors, including the risks described below, and, from time to time, in other reports the Company files with the United States Securities and Exchange Commission (the “SEC”). These factors may cause the Company's actual results to differ materially from any forward-looking statement. The Company disclaims any obligation to publicly update these statements, or disclose any difference between its actual results and those reflected in these statements.
As used in this Annual Report, the terms “we,” “us,” “our,” “Smartlinx,” and the “Company” mean Smartlinx Inc. and its subsidiaries unless otherwise indicated. All dollar amounts in this Annual Report are expressed in U.S. dollars, unless otherwise indicated.
ITEM 1. BUSINESS.
Overview
We were incorporated on March 10, 2005, under the laws of the State of Nevada under the name “Cignus Ventures Inc.” On October 13, 2009, we changed our name from “Cignus Ventures Inc.” to “Smartlinx Inc.” (the “Name Change”). Concurrent with the Name Change, we completed a 2.7 -for-1 forward spit of our common stock. Upon completion of the stock split, our authorized capital increased from 100,000,000 shares of common stock, par value $0.001 per share, to 270,000,000 shares of common stock, par value of $0.001 per share.
On October 7, 2009, we completed the acquisition of Smartlinx VoIP Networks Private Limited (“Smartlinx VoIP”) under the terms of a share purchase agreement dated August 20, 2009 (the “Share Purchase Agreement”) among Smartlinx VoIP, the Company, Smartlinx Acquisition Corp, our former wholly owned subsidiary, David K. Ryan, our sole executive officer, director and majority shareholder at the time of entering into the Share Purchase Agreement, and Citiglobal Ltd. (“Citiglobal”). Under the terms of the Share Purchase Agreement, Citiglobal transferred us all of its right, title and interest in Smartlinx VoIP in consideration of: (i) 3,250,000 pre-split (8,775,000 post-split) shares of our common stock; and (ii) warrants to acquire 4,250,000 (11,475,000 post-split) pre-split shares of our common stock at an exercise price of $0.02 per pre-split ($0.0074 per post split) share until October 6, 2011.
Concurrently, Citiglobal purchased 10,000,000 pre-split (27,000,000 post-split) shares of our common stock from Mr. Ryan for aggregate proceeds of $10,000. In addition, Mr. Ryan resigned as our Chief Executive Officer, Chief Financial Officer, President, Secretary, Treasurer and Director. Following Mr. Ryan’s Resignation, Abraham Joy was appointed as our Chief Executive Officer, Chief Financial Officer, President, Secretary, Treasurer and Director. We also appointed Job Thomas and Sunder Raj to our Board of Directors.
As a result of our acquisition of Smartlinx VoIP, we are engaged as a start-up company that provides: (a) live video based tutoring services that utilizes a video enabled model and our “Live Tutor” website (“Live Tutor”); and (b) technical support and back office services for Voice-Over Internet Protocol (“VoIP”) telephony services.
Live Tutor
Live Tutor delivers individualized and group based supplemental education to students using a video based system through our Live Tutor Virtual Learning Environment. Through this fee based service, we are able to deliver tutoring and instruction in real time. Our initial focus is to implement Live Tutor Services in India.
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We currently provide Live Tutor services through our Live Tutor website. Our on-line tutoring services provide students with real-time, live video based content delivered on Personal Computers. As our Live Tutor services provide live on-line tutoring, a student will need to have broadband access for our Live Tutor services.
We are also in the process of developing our Live Tutor Virtual Learning Environment. Our Live Tutor Virtual Learning Environment is a virtual classroom service, equipped with audio and video infrastructure, being developed by us. Our Live Tutor Virtual Learning Environment service unitizes our Live Tutor Learning Management System (“Live Tutor LMS”) and Live Tutor Connect service (“Live Tutor Connect”). Live Tutor LMS is a learning management system that provides education institutions with the platform to develop their own learning programs, register students and teachers, manage schedules, maintain a learning calendar and store data. Live Tutor LMS is a customized and enhanced implementation of the MOODLE platform, an open source software for producing internet based courses and websites. Live Tutor Connect allows for hosting live interactive virtual classes, which allows instructors to interact with students through audio-video, chat, questions and answers, share presentations, documents and desktops screens online. Live Tutor Connect is a Windows based custom-built application software, tightly integrated to Live Tutor LMS and is designed to work even in low bandwidth conditions without having a need for expensive leased lines for Internet access.
Broadband Services of BSNL
In order to facilitate the deployment of Live Tutor Services, we entered into an agreement dated January 27, 2009 with Bharat Sanchar Nigam Limited (“BSNL”), a broadband service provider in India, to provide broadband access to prospective customers and assist us in marketing Live Tutor to its existing customers. In consideration of BSNL providing us with access to their customers, BSNL is entitled to: (i) 40% of our gross revenue from providing tutoring services to students in India; and (ii) 20% of our gross revenue from providing tutoring services to overseas students. The term of this agreement is for three years. BSNL may terminate the agreement if we do not satisfy the following roll out obligations: (i) a minimum of 50,000 customers with minimum gross revenue payable to BSNL of Rs. 12,000,000 by January 27, 2010; and (ii) a minimum of 200,000 customers with minimum gross revenue payable to BSNL of Rs. 60,000,000 by January 27, 2011.
The agreement was amended whereby BSNL agreed to amend our roll out obligations of Live Tutor. As a result, we are now required to have a minimum of 500 customers by March 31, 2010 and are not required to have minimum gross revenues. The parties have also agreed to review the terms of the roll out provisions subsequent to March 31, 2010.
Pilot Implementation Agreement with the Polsani Group
On November 25, 2009, we entered into an agreement for the pilot implementation of Live Tutor Virtual Learning Environment (the “Pilot Implementation Agreement”) with the Polsani Group, a business group based in India that, among other things, provides services in the education industry. Under the terms of the Pilot Implementation Agreement, we have agreed to provide the Polsani Group with its Live Tutor Virtual Learning Environment, including its Live Tutor LMS and Live Tutor Connect, at each of the Polsani Group’s educational institutions in Hyderabad, Karimnagar and Lingapur, India. In consideration of providing these services, the Polsani Group has agreed to pay us:
| (a) |
75,000 Rs. for three years of the Live Tutor Virtual Learning Environment, by June 1, 2010; and |
| (b) |
10 Rs. per hour of Live Tutor Connect. |
The parties of the Pilot Implementation Agreement have also agreed to meet every 15 days to review the progress of the implementation of the Live Tutor Virtual Learning Environment. The term of the agreement will continue until it is terminated by either of the parties.
As of the date of this Annual Report, we have commenced our pilot Live Tutor Virtual Learning Environment in one of the Polsani Group’s schools. Due to delays in the Polsani Group’s roll out plan, we have not received the initial payment of 75,000 Rs.
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VoIP Technical Support
We are also engaged in the business of providing technical support and back office services to small and medium sized businesses in India with respect to VoIP monitoring services.
Our SmartRMS IP telephony monitoring services is a service that remotely monitors and handles voice, video, data and multiple applications over a web based interface. We provide our customers with the following IP telephony services:
| - |
Evaluate the impact of IP telephony on our customers’ environment. |
| - |
Assist customers in evaluating the benefits and viability of an IP telephony system. |
| - |
Implement IP telephony systems, including designing detail project plans, phase implementation and integration with our customers’ existing infrastructure. |
| - |
Provide round-the clock IP telephony support to our customers. |
As of March 31, 2010, we have primarily provided support services to Nettlinx Limited, a provider of broadband VoIP services.
Customers
For our Live Tutor business, we are reliant on our agreement with BSNL to generate customers. If BSNL terminates its agreement with us, we may lose a substantial majority of our customer base. We are actively seeking out additional customers for Live Tutor. However, there are no assurances that we will be successful in attracting new customers.
For our VoIP telephony services, we are reliant on our principal customer, Nettlinx Limited. We are actively seeking additional customers for our VoIP telephony services. However, there is no assurance that we will be successful in attracting new customers.
Competition
We face significant competition in each of our business segments. The competition focuses on price, quality of service and/or product, reputation and location.
Live Tutor. We believe that the key competitive factors in our market are technology, expertise and capabilities, brand recognition, content, instructional methodology and access to capital.
We compete in the tutoring market against both traditional providers of educational services and other online tutoring providers:
| - |
Individual Tutors. We compete with individual home tutors. In most geographic areas, individual tutors have the largest share of the tutoring market. We may also compete with state and local education agencies that fund individual tutoring. |
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| |
| - |
Online Providers. We compete with several companies that currently participate in the online tutoring market. Further, we expect that some existing tutoring companies, and others, will begin to distribute their services over the Internet in the near future. We believe that our services differ from those currently offered by these companies. Other online providers currently do not provide live online tutoring services to their students. There are a variety of tutoring models, though they differ from ours, compete with us for market share. |
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| |
| - |
New Entrants. As Internet and broadband services become more widely deployed in the primary, secondary and higher secondary school market, we expect new and as yet unidentified companies to enter the market. |
VoIP Technical Support. The markets for network monitoring and IP telephony monitoring services are competitive and subject to rapid technological change. Service providers are continually introducing new solutions and products into these markets and enhancing their network monitoring and IP telephony monitoring solutions and productions. We believe that our primary competition in this business segment is from traditional VoIP service providers such as Sify, Net4India, Youtele and WorldPhone as well as outsourced service companies such as Keross, Ice Net Technologies, Net Hertz. We also compete with other private and public companies who have invested in various aspects of network monitoring and IP telephony monitoring services and other service solutions. A number of our competitors have longer operating histories, significantly greater human resources and financial resources than us.
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Government Regulation
There are an increasing number of laws and regulations pertaining to the Internet. In addition, there are a number of legislative and requirements regarding children’s privacy, copyrights and taxation. Other laws or regulations may be adopted with respect to online content regulation, user privacy, pricing, restrictions on email solicitations, taxation and quality of products and services. Any new legislation or regulation, or the application or interpretation of existing laws, may decrease the growth in the use of the Internet, which could in turn decrease the demand for our service, increase our cost of doing business or otherwise have a material adverse effect on our prospects and revenues.
Research and Development Activities
We have not incurred any research and development expenditures since our inception.
Patents and Trademarks
We do not own, either legally or beneficially, any patents. We currently own the following trademarks in India: (i) “Live Tutor” under trademark number 1745989; and (ii) “Smartlinx” under trademark number 1479330.
Employees
Other than our executive officers and directors, we have ten (10) employees.
ITEM 1A. RISK FACTORS.
The following are some of the important factors that could affect our financial performance or could cause actual results to differ materially from estimates contained in our forward-looking statements. We may encounter risks in addition to those described below. Additional risks and uncertainties not currently known to us, or that we currently deem to be immaterial, may also impair or adversely affect our business, financial condition or results of operation.
We have an operating deficit and have incurred losses since inception.
To date, our operations have not been profitable. We have not earned any significant revenues to date and there is no assurance that we will be able to do so in the near future. In addition there is no assurance that our ongoing expenditures will exceed our estimates over the next twelve months. We may never be able to achieve profitability.
In addition, we do not currently have the financial resources to complete our plan of operation over the next twelve months. Accordingly, we will need to obtain additional financing in order to meet our financial obligations over the next twelve months. However, there is no assurance that we will be able to obtain additional financing. If further financing is not available or obtainable, our ability to meet our financial obligations and pursue our plan of operations will be substantially limited and investors may lose a substantial portion or all of their investment.
We have limited operating history and as a result there are risks of a new business venture.
Smartlinx VoIP was formed on November 3, 2006 and, as such, it has a very short operating history upon which future performance may be assessed.
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Potential investors should be aware of the difficulties normally encountered by a new enterprise and the high rate of failure of such enterprises. The potential for future success must be considered in light of the problems, expenses, difficulties complications and delays encountered in connection with the development of a business in the area in which we intend to operate and in connection with the formation and commencement of operations of a new business in general. These include, but are not limited to, unanticipated problems relating to research and development programs, marketing, approvals by government agencies, competition and additional costs and expenses that may exceed current estimates. There is no history upon which to base any assumption as to the likelihood that our business will prove to be successful, and there can be no assurance that we will generate any operating revenues or ever achieve profitable operations.
We are reliant on our agreement with BSNL to generate customers for Live Tutor. If BSNL terminates its agreement with us, our business may fail.
On January 27, 2009, we entered into an agreement with BSNL to provide Live Tutor to the customers of BSNL. Under the terms of the agreement, we are required to meet certain rollout obligations and to pay BSNL forty percent (40%) of our gross revenues for tutoring services providing to students in India and twenty percent (20%) of our gross revenues for tutoring services provided to overseas students. The agreement was amended whereby BSNL agreed to amend our roll out obligations of Live Tutor. As a result, we are now required to have a minimum of 500 customers by March 31, 2010 are not required to have minimum gross revenues. If we are unable to meet these obligations to BSNL, BSNL may terminate its agreement with us. Termination of the agreement may cause us to lose a substantial majority of our customer base and cause our business to fail.
Our VoIP Technical Support services are reliant on hiring and retaining qualified IT personnel. If we are unable to hire or retrain qualified IT personnel, our business may fail.
Our business is reliant on our ability to attract, train, retain and motivate qualified IT personnel. In the current marketplace, there is significant competition to retain qualified IT personnel. There is also a shortage of qualified personnel in this field and we compete with other companies the limited number of IT personnel. If we are unable to hire or retain qualified IT personnel, our business may fail.
Our promotion and marketing of our websites may not result in generation of significant revenue which may cause our business to fail.
We believe that successful marketing, development and promotion of our websites are crucial to our success in attracting business. If our marketing and promotion is not successful in developing strong public recognition of our websites, then we may not be able to earn significant revenues and our business may fail.
Unauthorized disclosure of sensitive or confidential client and customer data, whether through breach of our computer systems or otherwise, could expose us to protracted and costly litigation and cause us to lose clients which may result in our going out of business and for our stockholders to lose their investment.
We may be required to collect and store sensitive data in connection with our services, including names, addresses, social security numbers, credit card account numbers, checking and savings account numbers and payment history records, such as account closures and returned checks. If any person, including any of our employees, penetrates our network security or otherwise misappropriates sensitive data, we could be subject to liability for breaching contractual confidentiality provisions and/or privacy laws, which would devastate our business, and may result in stockholders losing their investment.
Competition in the tutoring industry and the VoIP technical support industry is intense and our competitors have greater financial resources and development capabilities than we have, and we may not have the resources necessary to successfully compete with them.
Our business plan involves providing online tutoring services and VoIP technical support. These business areas are highly competitive. There are numerous companies that provide online tutoring services and/or VoIP technical support that compete in this market, most of whom have greater financial resources and more expertise in this business than we do. Our ability to develop our business will depend on our ability to successfully market our services in this highly competitive environment. We cannot guarantee that we will be able to do so successfully.
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Our products may become obsolete and unmarketable if we are unable to respond adequately to rapidly changing technology and customer demands.
Our products may quickly become obsolete and unmarketable. Our future success will depend on our ability to adapt to technological advances, anticipate customer demands, develop new products and enhance our current products on a timely and cost-effective basis. We may be unsuccessful in responding to technological developments and changing customer needs. In addition, our applications and services offerings may become obsolete due to the adoption of new technologies or standards.
We may experience technical or other difficulties that could delay or prevent the development, introduction or marketing of new products or enhanced versions of existing products. Also, we may not be able to adapt new or enhanced services to emerging industry standards, and our new products may not be favorably received by our target market.
The loss of our executive officers or directors, could adversely affect our business.
Our success depends largely upon the efforts, abilities, and decision-making of our sole executive officers and directors. The loss of any of these individuals would have an adverse effect on our business prospects. We do not currently maintain "key-man" life insurance and there is no contract in place assuring the services our executive officers and directors for any length of time. In the event that we should lose our sole officer or directors and we are unable to find suitable replacements, we may not be able to develop our business, in which case investors might lose all of their investment.
One stockholder owns a majority of our common stock and may act, or prevent certain types of corporate actions, to the detriment of other stockholders.
Citiglobal Ltd. owns 35,775,000 common shares and holds a warrant to acquire 11,475,000 shares at an exercise price of $0.0074 per share until October 6, 2011. Accordingly, Citiglobal beneficially owns approximately 67.0% of our issued and outstanding common stock. Accordingly, our majority shareholder may exercise significant influence over all matters requiring stockholder approval, including the election of a majority of the directors and the determination of significant corporate actions. This concentration could also have the effect of delaying or preventing a change in control that could otherwise be beneficial to our stockholders.
If we issue additional shares of common stock in the future this may result in dilution to our existing stockholders.
Our board of directors has the authority to issue additional shares of common stock up to the authorized capital stated in the articles of incorporation. Our board of directors may choose to issue some or all of such shares to provide additional financing in the future. The issuance of any such shares may result in a reduction of the book value or market price of the outstanding shares of our common stock. It will also cause a reduction in the proportionate ownership and voting power of all other stockholders.
The trading price of our common stock may be volatile, with the result that an investor may not be able to sell any shares acquired at a price equal to or greater than the price paid by the investor.
Our common shares are quoted on the OTC Bulletin Board under the symbol "SMLK.” Companies quoted on the OTC Bulletin Board have traditionally experienced extreme price and volume fluctuations. In addition, our stock price may be adversely affected by factors that are unrelated or disproportionate to our operating performance. Market fluctuations, as well as general economic, political and market conditions such as recessions, interest rates or international currency fluctuations may adversely affect the market price of our common stock. In addition, to date, there has been no trading volume for our shares on the OTC Bulletin Board. As a result of this potential volatility and potential lack of a trading market, an investor may not be able to sell any of our common stock that they acquire that a price equal or greater than the price paid by the investor.
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Because our stock is a penny stock, stockholders will be more limited in their ability to sell their stock.
The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the Nasdaq system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or quotation system.
Because our securities constitute "penny stocks" within the meaning of the rules, the rules apply to us and to our securities. The rules may further affect the ability of owners of shares to sell our securities in any market that might develop for them. As long as the trading price of our common stock is less than $5.00 per share, the common stock will be subject to rule 15g-9 under the Securities Exchange Act of 1934 (the “Exchange Act”). The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the SEC, that:
| 1. |
contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading; |
| 2. |
contains a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to a violation to such duties or other requirements of securities laws; |
| 3. |
contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price; |
| 4. |
contains a toll-free telephone number for inquiries on disciplinary actions; |
| 5. |
defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and |
| 6. |
contains such other information and is in such form, including language, type, size and format, as the SEC shall require by rule or regulation. |
The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with: (a) bid and offer quotations for the penny stock; (b) the compensation of the broker-dealer and its salesperson in the transaction; (c) the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and (d) a monthly account statements showing the market value of each penny stock held in the customer's account. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those 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 acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitably statement. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our stock.
ITEM 2. PROPERTIES.
Our principal office is located at 1400 Kennedy Blvd., Union City, New Jersey 07087.
We also have an operations office located at 5-9-22, 3rd Floor, My Home Sarovar Plaza, Secretariat Road, Saifabad, Hyderabad – 500 063, India, consisting of approximately 960 square feet, which we rent at a cost of Rs. 49,440 (approximately $1,000 US) per month.
ITEM 3. LEGAL PROCEEDINGS.
We are not a party to any legal proceedings and, to our knowledge, no other legal proceedings are pending, threatened or contemplated.
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PART II
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ITEM 5. |
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. |
Market Information
Our shares of common stock are currently quoted on the OTC Bulletin Board under the symbol “SMLK.” The high and low bid information for our common stock for the fiscal years ended March 31, 2010 and 2009 as reported by the OTC Bulletin Board were:
| QUARTER | HIGH ($) | LOW ($) |
| December 31, 2009 | 0.50 | 0.50 |
| March 31, 2010 | 0.71 | 0.10 |
No information on the high and low prices for our shares was available from the OTC Bulletin Board prior to the quarter ended December 31, 2009.
Quotations provided by the OTCBB reflect inter-dealer prices, without retail mark-up, markdown or commission and may not represent actual transactions.
Holders
As of July 12, 2010, there were 59,085,000 shares of our common stock issued and outstanding that are held of record by 18 registered stockholders. We believe that a number of stockholders hold stock on deposit with their brokers or investment bankers registered in the name of stock depositories.
Dividends
We have not declared any dividends on our common stock since our inception. There are no dividend restrictions that limit our ability to pay dividends on our common stock in our Articles of Incorporation or Bylaws. Our governing statute, Chapter 78 of the Nevada Revised Statute (“NRS”), does provide limitations on our ability to declare dividends. Section 78.288 of the NRS prohibits us from declaring dividends where, after giving effect to the distribution of the dividend:
| (a) |
we would not be able to pay our debts as they become due in the usual course of business; or |
| (b) |
our total assets would be less than the sum of our total liabilities plus the amount that would be needed, if we were to be dissolved at the time of distribution, to satisfy the preferential rights upon dissolution of stockholders who may have preferential rights and whose preferential rights are superior to those receiving the distribution (except as otherwise specifically allowed by our Articles of Incorporation). |
Recent Sales Of Unregistered Securities
Other than as disclosed in our Current Reports and Quarterly Reports, we have not completed any recent sales of unregistered securities.
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ITEM 7. |
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. |
PLAN OF OPERATION
We plan to launch Live Tutor as a value added service of BSNL, which will provide us with the brand image of BSNL and the use of its network. We plan to initially target the existing subscribers of BSNL in the southern states of Andhra Pradish, Tamilmadu, Karnataka and Kerala. These states of India represent almost 50% of the existing subscriber base of BSNL.
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Subject to our ability to obtain additional financing, we plan to launch our Kindergarten to Grade 12 service during the second quarter of our fiscal year ending March 31, 2011. If successful, we plan to implement our vocational education, higher education and value added services in the first quarter of our 2012 fiscal year.
The following table sets out our anticipated launch dates in the following states of India.
| State | Year | Quarter |
| Andhra Pradesh | 2010-11 | Second Quarter |
| Tamilnadu | 2010-11 | Second Quarter |
| Karnataka | 2010-11 | Second Quarter |
| Kerala | 2010-11 | Second Quarter |
| International | 2010-11 | Second Quarter |
| Maharashtra | 2010-11 | Second Quarter |
| Gujarat | 2010-11 | Second Quarter |
| Rajasthan | 2010-11 | Third Quarter |
| Madhya Pradesh | 2010-11 | Third Quarter |
| Haryana | 2010-11 | Third Quarter |
| Punjab | 2010-11 | Third Quarter |
| Delhi | 2010-11 | Third Quarter |
| Jammu & Kashmir | 2010-11 | Third Quarter |
| Himachal Pradesh | 2010-11 | Third Quarter |
| Uttaranchal | 2010-11 | Third Quarter |
| Uttar Pradesh | 2010-11 | Third Quarter |
| Orissa | 2010-11 | Fourth Quarter |
| Chhattisgarh | 2010-11 | Fourth Quarter |
| West Bengal | 2010-11 | Fourth Quarter |
| Bihar | 2010-11 | Fourth Quarter |
| Jharkhand | 2010-11 | Fourth Quarter |
| Sikkim | 2010-11 | Fourth Quarter |
| Assam | 2010-11 | Fourth Quarter |
| North East States | 2010-11 | Fourth Quarter |
In order to facilitate the expansion of our customer base, we plan to form relationships in each of the BSNL telecom’s district in order to promote our service and assist us in the registration and retention of customers. We anticipate that our promotional plan will utilize the network and brand name of BSNL. We also anticipate that we will be relying on the BSNL customer care centers and BSNL officials for public relations and other media interactions.
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Development of our Live Tutor Services
In addition to the anticipated launch of Live Tutor in the states listed above, we also plan on further developing our Live Tutor services as follows:
| 1. |
Upgrade Web Interface: We are in the process of developing Live Tutor’s web interface in order to meet various business processing requirements. We anticipate that this will assist students and teachers in a seamless delivery of content. | |
| 2. |
New Delivery System: We have developed a new delivery system that includes video, voice and whiteboard features called “Live Tutor Connect”. Live Tutor Connect is an application that allows for hosting live interactive virtual classes, which allows instructors to interact with students through audio-video, chat, questions and answers, share presentations, documents and desktops screens online. Live Tutor Connect is a Windows based custom-built application software, tightly integrated to Live Tutor Learning Management System and is designed to work even in low bandwidth conditions without having a need for expensive leased lines for Internet access. | |
| 3. |
Learning Management System: We are in the process of developing our Live Tutor Learning Management System (“LMS”) in order to manage the delivery of tutoring services to students. Live Tutor LMS allows us to create learning programs, manage schedules, maintain a learning calendar and store data. In addition, we anticipate that our Live Tutor LMS will integrate with Live Tutor Connect under a single login for registered users to access data, attend classes, manage content and interact with peers. Live Tutor LMS is customized and enhanced implementation of the open source MOODLE platform. MOODLE is an open source software for producing internet based courses and web sites. | |
| 4. |
Research & Development: We plan to continue research and development in order to make Live Tutor compatible with current technological trends and any future technology changes, including: | |
| • |
Devices – Mobile handsets, handheld PDA’s, net books; | |
| • |
Compatibility with new operating systems on personal computers and other delivery devices; | |
| • |
Deliver learning on low cost PC’s and thin clients; | |
| • |
Operate on low bandwidths; and | |
| • |
Operate on 3G and other wireless networks. | |
Cash Requirements Over The Next Twelve Months
We anticipate that we will incur over the next twelve months the following expenses:
| Category | Planned Expenditures Over the Next Twelve Months |
| Capital Expenditure | $700,000 |
| Research and Development | $300,000 |
| Product Launch Expense | $250,000 |
| General and Administrative(1) | $870,000 |
| TOTAL | $2,120,000 |
Note:
| (1) |
Includes legal and accounting expenses associated with our reporting requirements under the Securities Exchange Act of 1934. |
Our cash on hand as of March 31, 2010 is $21,258. As such, we do not have sufficient cash to meet the anticipated costs of completing plan of operation or meeting our financial obligations over the next twelve months. Therefore, we will require additional financing. There is no assurance that we will be able to acquire such additional financing on terms that are acceptable to us, or at all.
13
RESULTS OF OPERATIONS
Under generally accepted accounting principles, the acquisition of Smartlinx VoIP has been accounted for as a recapitalization of the Company and Smartlinx VoIP has been treated as the acquiring entity for accounting and financial reporting purposes. As such, our consolidated financial statements are presented as a continuation of the operations of Smartlinx VoIP and not the Company. The financial information provided below for the year ended March 31, 2009 represent the operations of Smartlinx VoIP. The operations of the Company are included from the effective date of the acquisition, October 7, 2009.
Summary of Year End Results
| Year Ended | Year Ended | Percentage | |||||||
| March 31, 2010 | March 31, 2009 | Increase / | |||||||
| (unaudited) | (unaudited) | (Decrease) | |||||||
| Revenue | $ | 24,174 | $ | 26,866 | (10.0)% | ||||
| Expenses | (294,602 | ) | (62,251 | ) | 373.2% | ||||
| Other Items | (16,561 | ) | (7,376 | ) | 124.5% | ||||
| Net Loss | $ | (286,989 | ) | $ | (42,761 | ) | 571.1% |
Revenues
During the year ended March 31, 2010, we earned revenues from our VoIP technical support services of $24,174 compared to $26,866 during the year ended March 31, 2009. There is no assurance that we will be able to generate similar revenues in the future or that it will earn significant revenues from our Live Tutor services.
Operating Expenses
The major components of our expenses for the years ended March 31, 2010 and 2009 are outlined in the table below:
| Year Ended | Year Ended | Percentage | |||||||
| March 31, 2010 | March 31, 2009 | Increase / | |||||||
| (unaudited) | (unaudited) | (Decrease) | |||||||
| Direct cost of customer equipment | $ | 4,604 | $ | 3,110 | 48.0% | ||||
| Direct cost of VoIP and Live Tutor services | 45,116 | 14,203 | 217.7% | ||||||
| Amortization | 2,866 | 1,751 | 63.7% | ||||||
| Professional fees | 146,483 | 549 | 26,581.8% | ||||||
| Selling, general and administrative | 95,533 | 42,638 | 124.1% | ||||||
| Total | $ | 294,602 | $ | 62,251 | 373.2% |
Our operating expenses were $294,602 for the year ended March 31, 2010 and $62,251 for the year ended March 31, 2009. The increase in operating expenses is primarily a result of an increase in direct cost of VoIP and Live Tutor services, professional fees and selling, general and administration expenses.
Our direct costs of VoIP and Live Tutor services increased from $14,203, during the year ended March 31, 2009, to $45,116, during the year ended March 31, 2010. The increase is primarily due to personnel costs in connection with Live Tutor platform development and testing.
14
Direct cost of computer equipment consists of the original purchase price of equipment.
The significant increase in professional fees from $549, during the year ended March 31, 2009, to $146,483, during the year ended March 31, 2010, is a result of legal and accounting fees in connection with our acquisition of Smartlinx VoIP and meeting our ongoing reporting obligations under the Exchange Act.
LIQUIDITY AND CAPITAL RESOURCES
| Cash Flows | ||||||
| Year Ended | Year Ended | |||||
| March 31, 2010 | March 31, 2009 | |||||
| (unaudited) | (unaudited) | |||||
| Net Cash (Used In) Provided By Operating Activities | $ | (196,588 | ) | $ | (32,449 | ) |
| Net Cash Used In Investing Activities | (20,610 | ) | (13,628 | ) | ||
| Net Cash Provided By Financing Activities | 203,649 | 49,101 | ||||
| Net Increase in Cash During Period | $ | 15,589 | $ | 1,776 |
| Working Capital | |||||||||
| At March 31, 2010 | At March 31, 2009 | Percentage | |||||||
| (unaudited) | (unaudited) | Increase / (Decrease) | |||||||
| Current Assets | $ | 22,772 | $ | 8,300 | 174.4% | ||||
| Current Liabilities | (431,825 | ) | (128,050 | ) | 237.2% | ||||
| Working Capital Deficit | $ | (409,053 | ) | $ | (119,750 | ) | 241.6% |
As at March 31, 2010, we had cash on hand of $21,258. Our working capital deficit increased from $119,750, as at March 31, 2009, to $408,942, as at March 31, 2010. The increase in our working capital deficit is primarily due to an increase in accounts and loans payable as a result of our lack of capital to meet ongoing expenditures.
Under the terms of a loan agreement with Nettlinx Limited (“Nettlinx”), Nettlinx agreed to loan us 10,000,000 Rupees (approximately $200,000 USD) at a rate of 6% per annum. The loan from Nettlinx is unsecured and repayable by November 20, 2012 or such date that is mutually agreed. As of March 31, 2010, the outstanding balance on the unsecured loan from Nettlinx is $138,446.
During the year ended March 31, 2010, we entered into a loan agreement with a third party company whereby the third party company has agreed to lend us up to $25,000. The loan will bear interest at a rate of 6% per annum and is due on or before March 4, 2012.
During the year ended March 31, 2010, we completed the following equity financings:
| (a) |
On September 30, 2009, we issued 6,750,000 post split units for proceeds of $50,000. Each unit consists of one share and one warrant, with each warrant entitling the holder to purchase an additional share of common stock at a price of $0.0074 per share until September 29, 2011; and |
| (b) |
On November 24, 2009, we issued 360,000 post-split units for proceeds of $200,000. Each unit consists of one share and one warrant, with each warrant entitling the holder to purchase an additional share of common stock at a price of $0.60 per share until November 23, 2011. |
Financing Requirements
Our current operating funds are not sufficient to meet our current obligations. Therefore, we will need to obtain additional financing in order to continue our operations
On March 11, 2010 our Board of Directors approved a private placement offering (the "Foreign Offering") of up to 5,000,000 units (the “Units”) at a price of $0.40 US per Unit, with each Unit consisting of one share of our common stock and one share purchase warrant. Each warrant entitles the holder to purchase an additional share of common stock exercisable at a price of $0.50 US per share for a two-year period from the date of issuance. The Foreign Offering will be made to persons who are not “U.S. Persons” as defined in Regulation S of the Securities Act of 1933.
15
Under the Foreign Offering, we may pay a commission or finders fee to duly licensed brokers and investment dealers of up to 10% of the cash proceeds of the offering and issue warrants to purchase up to 10% of the number of Units sold in the offering on the same terms as the placed warrants.
We intend to use the proceeds of the Foreign Offering to implement our plan of operation and for general working capital purposes. There is no assurance that the Foreign Offering or any part of it will be completed
OFF-BALANCE SHEET ARRANGEMENTS
None.
CRITICAL ACCOUNTING POLICIES
We have identified certain accounting policies, described below, that are most important to the portrayal of our current financial condition and results of operations.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from these estimates.
Foreign Currency Translation
Our functional currency is the U.S. dollar. Accordingly, monetary assets and liabilities denominated in a foreign currency are translated at the exchange rate in effect at the balance sheet date while non-monetary assets and liabilities are translated at historical rates. Revenue and expense items denominated in a foreign currency are translated at exchange rates prevailing when such items are recognized in the statement of operations. Exchange gains and losses arising on translation of foreign currency items are included in the statement of operations.
16
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Unaudited Annual Financial Statements, including:
17
SMARTLINX INC.
(formerly Cignus Ventures Inc.)
CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. Dollars)
March 31, 2010 and 2009
(Unaudited & Unreviewed)
SMARTLINX INC.
(formerly Cignus Ventures Inc.)
CONSOLIDATED BALANCE SHEETS
(Expressed in U.S. Dollars)
(Unaudited & Unreviewed)
| March 31, | March 31, | |||||
| 2010 | 2009 | |||||
| ASSETS | ||||||
| Current Assets | ||||||
| Cash (Note 4) | $ | 21,258 | $ | 5,669 | ||
| Receivables | 1,103 | 2,631 | ||||
| Prepaid expenses | 411 | - | ||||
| Deferred tax asset, less valuation allowance $249,309 (2008- $41,593) (Note 5) | - | - | ||||
| Total Current Assets | 22,772 | 8,300 | ||||
| Deposit | 11,215 | 9,584 | ||||
| Equipment, net of accumulated amortization (Note 6) | 14,326 | 8,789 | ||||
| Intangible (Note 7) | 15,046 | - | ||||
| Total Assets | $ | 63,359 | $ | 26,673 | ||
| LIABILITIES AND STOCKHOLDERS’ DEFICIENCY | ||||||
| Current Liabilities | ||||||
| Accounts payable and accrued liabilities | $ | 197,100 | $ | 4,916 | ||
| Accounts payable and accrued liabilities –related parties (Note 8) | 7,155 | - | ||||
| Loans Payable (Note 8 and 9) | 227,570 | 123,134 | ||||
| Total Current Liabilities | 431,825 | 128,050 | ||||
| Commitments and Contractual Obligations (Note 14) | ||||||
| Stockholders’ Deficiency | ||||||
| Common stock (Note 10) | ||||||
| Authorized 270,000,000 common shares with a par value of $0.001 per share |
||||||
| Issued and outstanding March 31, 2010 -59,085,000 March 31, 2009 -49,950,000 |
59,085 | 2,223 | ||||
| Additional paid-in capital | 2,670 | 10,540 | ||||
| Accumulated other comprehensive income (loss): | ||||||
| Foreign currency cumulative translation adjustment | (8,626 | ) | 20,466 | |||
| Deficit | (421,595 | ) | (134,606 | ) | ||
| Total Stockholders’ Deficiency | (368,466 | ) | (101,377 | ) | ||
| Total Liabilities and Stockholders’ Deficiency | $ | 63,359 | $ | 26,673 | ||
| History and Organization (Note 1) | ||||||
| Going Concern (Note 2) |
The accompanying notes are an integral part of these consolidated financial statements.
F-2
SMARTLINX INC.
(formerly Cignus Ventures Inc.)
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Expressed in U.S. Dollars)
(Unaudited & Unreviewed)
| 2010 | 2009 | |||||
| REVENUE | ||||||
| Customer Equipment | $ | 5,146 | $ | 9,651 | ||
| Telephone services | 19,028 | 17,215 | ||||
| 24,174 | 26,866 | |||||
| EXPENSES | ||||||
| Direct cost of customer equipment | 4,604 | 3,110 | ||||
| Direct cost of telephone services | 45,116 | 14,203 | ||||
| Amortization | 2,866 | 1,751 | ||||
| Professional fees | 146,483 | 549 | ||||
| Selling, general and administrative | 95,533 | 42,638 | ||||
| 294,602 | 62,251 | |||||
| LOSS BEFORE OTHER ITEM AND INCOME TAXES | (270,427 | ) | (35,385 | ) | ||
| Interest expense | (17,462 | ) | (7,376 | ) | ||
| Interest income | 901 | - | ||||
| LOSS BEFORE INCOME TAXES | (286,989 | ) | (42,761 | ) | ||
| Provision for income taxes | - | - | ||||
| NET LOSS | (286,989 | ) | (42,761 | ) | ||
| OTHER COMPREHENSIVE INCOME (LOSS) | ||||||
| Foreign currency translation adjustment | (29,092 | ) | 25,351 | |||
| COMPREHENSIVE LOSS | $ | (316,081 | ) | $ | (17,410 | ) |
| BASIC AND DILUTED NET LOSS PER SHARE | $ | (0.01 | ) | $ | (4.28 | ) |
| WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING | 54,307,480 | 10,000 |
The accompanying notes are an integral part of these consolidated financial statements.
F-3
SMARTLINX INC.
(formerly Cignus Ventures Inc.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in U.S. Dollars)
(Unaudited & Unreviewed)
| 2010 | 2009 | |||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||
| Net loss for the year | $ | (286,989 | ) | $ | (42,761 | ) |
| Adjustments to reconcile net loss to cash used in operating activities: | ||||||
| Amortization | 2,866 | 1,751 | ||||
| Interest expense | - | 7,377 | ||||
| Change in operating assets and liabilities: | ||||||
| Decrease (increase) in receivables | 1,835 | (110 | ) | |||
| Increase in prepaid expenses | (387 | ) | - | |||
| Increase in accounts payable and accrued liabilities , | 73,981 | 1,294 | ||||
| Increase in accounts payable and accrued liabilities –related parties | 343 | - | ||||
| Increase in accrued interest payable | 11,763 | - | ||||
| Net cash used in operating activities | (196,588 | ) | (32,449 | ) | ||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||
| Equipment purchases | (6,315 | ) | (2,868 | ) | ||
| Intangible | (14,190 | ) | - | |||
| Purchase of deposit | (105 | ) | (10,760 | ) | ||
| Net cash used in investing activities | (20,610 | ) | (13,628 | ) | ||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||
| Cash acquired from Smartlinx VOIP Networks Private Limited | 5,325 | - | ||||
| Increase in loans payable | 11,325 | 49,101 | ||||
| Issuance of common stock for cash | 200,000 | - | ||||
| Net cash provided by financing activities | 203,649 | 49,101 | ||||
| EFFECT OF FOREIGN CURRENCY TRANSLATION ON CASH DURING THE YEAR | 29,138 | (1,248 | ) | |||
| NET INCREASE IN CASH | 15,589 | 1,776 | ||||
| CASH, BEGINNING OF YEAR | 5,669 | 3,893 | ||||
| CASH, END OF YEAR | $ | 21,258 | $ | 5,669 |
Supplemental Disclosure with Respect to Cash Flows (Note 13)
The accompanying notes are an integral part of these consolidated financial statements.
F-4
SMARTLINX INC.
(formerly Cignus Ventures
Inc.)
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIENCY
(Expressed in U.S.
Dollars)
(Unaudited & Unreviewed)
| Common Stock | Accumulated | |||||||||||||||||
| Other | ||||||||||||||||||
| Number | Additional | Comprehensive | ||||||||||||||||
| of Shares | Par Value | Paid-in Capital | Income (Loss) | Deficit | Total | |||||||||||||
| Sale of common stock for cash, August 21, 2006 | 49,950,000 | $ | 2,223 | $ | - | $ | - | $ | - | $ | 2,223 | |||||||
| Net loss | (41,543 | ) | (41,543 | ) | ||||||||||||||
| Balance, March 31, 2007 | 49,950,000 | 2,223 | (41,543 | ) | (39,320 | ) | ||||||||||||
| Interest expense | 3,163 | 3,163 | ||||||||||||||||
| Foreign currency translation adjustment | (4,885 | ) | (4,885 | ) | ||||||||||||||
| Net loss | (50,302 | ) | (50,302 | ) | ||||||||||||||
| Balance, March 31, 2008 | 49,950,000 | 2,223 | 3,163 | (4,885 | ) | (91,845 | ) | (91,344 | ) | |||||||||
| Interest expense | 7,377 | 7,377 | ||||||||||||||||
| Foreign currency translation adjustment | 25,351 | 25,351 | ||||||||||||||||
| Net loss | (42,761 | ) | (42,761 | ) | ||||||||||||||
| Balance, March 31, 2009 | 49,950,000 | 2,223 | 10,540 | 20,466 | (134,606 | ) | (101,377 | ) | ||||||||||
| Recapitalization, October 7, 2009 | 8,775,000 | 56,502 | (207,510 | ) | (151,008 | ) | ||||||||||||
| Issuance of units for cash at $0.56 per unit, November 24, 2009 | 360,000 | 360 | 199,640 | 200,000 | ||||||||||||||
| Foreign currency translation adjustment | (29,092 | ) | (29,092 | ) | ||||||||||||||
| Net loss | (286,989 | ) | (286,989 | ) | ||||||||||||||
| Balance, March 31, 2010 | 59,085,000 | $ | 59,085 | $ | 2,670 | $ | (8,626 | ) | $ | (421,595 | ) | $ | (368,466 | ) | ||||
The accompanying notes are an integral part of these consolidated financial statements.
F-5
| SMARTLINX INC. |
| (formerly Cignus Ventures Inc.) |
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
| (Expressed in U.S. Dollars) |
| March 31, 2010 |
| (Unaudited & Unreviewed) |
| 1. | HISTORY AND ORGANIZATION OF THE COMPANY |
Smartlinx Inc. (formerly Cignus Ventures Inc.) (“the Company”) was incorporated in the State of Nevada, U.S.A., on March 10, 2005. On March 21, 2005, the Company formed a wholly-owned subsidiary, known as CVI Exploration Ltd. (“CVI”), a company incorporated in British Columbia, Canada. The Company and CVI were formed for the purpose of acquiring exploration and development stage natural resource properties. Effective October 7, 2009, the Company acquired 100% of the issued and outstanding shares of Smartlinx VoIP Networks Private Limited (“Smartlinx VoIP”), a company in the business of providing support services to Nettlinx, a related party, who provides broadband Voice over Internet Protocol (“VoIP”) telephone services. Smartlinx also sells the equipment related to the VoIP telephone services and is developing live video based tutoring services using a video enabled model and the Company’s Live Tutor website. The Company has abandoned its mineral exploration business in order to focus its resources on the development of Smartlinx VoIP’s business. CVI was dissolved by the British Columbia Registrar of Companies. |
|
Effective October 7, 2009, the Company acquired 100% of the issued and outstanding shares of Smartlinx VoIP from Citiglobal Ltd. (“Citiglobal”) in exchange for an aggregate of 8,775,000 shares of the Company’s common stock and warrants to acquire 4,250,000 shares of the Company’s common stock at an exercise price of $0.02 per share for a period of two years from the date of issuance. Concurrently, Citiglobal purchased 27,000,000 shares of the Company’s common stock from David K. Ryan, the former sole executive officer and director of the Company, for aggregate proceeds of $10,000. Completion of the acquisition resulted in the former sole shareholder of Smartlinx VoIP holding the majority of the Company’s issued and outstanding common stock. As a result, the transaction was accounted for as a recapitalization of Smartlinx VoIP. |
|
The consolidated financial statements of the Company prior to October 7, 2009 are those of Smartlinx VoIP. The Company’s date of incorporation is considered to be August 21, 2006, the date of inception of Smartlinx VoIP. Effective October 13, 2009, the Company changed its name from Cignus Ventures Inc. to Smartlinx Inc. |
|
These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Smartlinx VoIP. All inter-company balances and transactions have been eliminated on consolidation. |
|
These unaudited and unreviewed financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America for interim financial information. The accompanying unaudited and unreviewed financial statements do not include all information and footnote disclosures required for an annual set of financial statements prepared under United States of America generally accepted accounting principles. In the opinion of management, all adjustments (consisting solely of normal recurring accruals) considered necessary for a fair presentation of financial position, results of operations and cash flows as at March 31, 2010 and for all periods presented, have been included. |
F-6
| SMARTLINX INC. |
| (formerly Cignus Ventures Inc.) |
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
| (Expressed in U.S. Dollars) |
| March 31, 2010 |
| (Unaudited & Unreviewed) |
| 2. | GOING CONCERN |
These financial statements have been prepared with the on-going assumption that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. However, certain conditions noted below raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to the amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue as a going concern. |
|
The operations of the Company have primarily been funded by the sale of common stock and loans received. Continued operations of the Company are dependent on the Company’s ability to complete equity financings or generate profitable operations in the future. Management’s plan in this regard is to secure additional funds through future equity financings. Such financings may not be available or may not be available on reasonable terms to the Company. |
|
| 3. | SIGNIFICANT ACCOUNTING POLICIES |
The financial statements of the Company have been prepared in conformity with generally accepted accounting principles in the United States of America and are stated in U.S. dollars. The significant accounting policies adopted by the Company are as follows: |
|
| (a) Basis of preparation | |
The accompanying financial statements are reported in US Dollars (USD). The Indian Rupee (INR) is the functional currency for the Company. The translation of the functional currency into USD is performed for assets and liabilities using the exchange rates in effect at the balance sheet date and for revenues, costs and expenses using weighted average exchange rates prevailing during the reporting periods. Adjustments resulting from the translation of functional currency financial statements to reporting currency are accumulated and reported as accumulated other comprehensive income, a separate component of shareholder’s equity. |
|
| (b) Foreign currency translation | |
Transactions in foreign currency are recorded at the exchange rate prevailing on the date of transaction. Monetary assets and liabilities denominated in foreign currencies are expressed in functional currency at the exchange rates in effect at the balance sheet date. Revenues, costs and expenses are recorded using exchange rates prevailing on the date of transaction. Gain or losses resulting from foreign currency transactions are included in the statement of operations. |
|
| (c) 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 amounts reported in the financial statement and accompanying notes. Theses estimates are based on information available as of date of the financial statements. Actual results, therefore, could differ from those estimates. |
F-7
| SMARTLINX INC. |
| (formerly Cignus Ventures Inc.) |
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
| (Expressed in U.S. Dollars) |
| March 31, 2010 |
| (Unaudited & Unreviewed) |
| 3. | SIGNIFICANT ACCOUNTING POLICIES (continued) |
| (d) Cash and cash equivalents | |
The company considers all highly liquid instruments with a maturity of three months or less when purchased to be cash equivalents. Cash and claims to cash that are restricted as to withdrawal or used in ordinary course of business are classified as restricted cash and cash equivalents under other current assets. |
|
| (e) Receivables | |
Receivables are primarily amounts due from customers. They are stated at their estimated net realizable value. No allowance has been provided for the receivables as of March 31, 2010 and 2009. |
|
| (f) Equipment | |
Equipment is stated at historical cost, less accumulated depreciation and re-stated in USD using the closing exchange rate. |
|
Equipment costing less than US $100 is depreciated fully in the year of purchase. Depreciation is provided on a straight line basis at the following rates: |
Computer Equipment –20%
Furniture & Fixtures – 5%
(g) Intangible
Intangibles are stated at historical cost and restated in USD using the closing exchange rate. Capitalized amounts relate to development costs of the Company’s Live Tutor software during the application development stage. No depreciation is provided for as the software has not begun to generate revenues.
(h) 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 expenses (benefit) result from the net change during the period 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 or all of 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.
F-8
| SMARTLINX INC. |
| (formerly Cignus Ventures Inc.) |
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
| (Expressed in U.S. Dollars) |
| March 31, 2010 |
| (Unaudited & Unreviewed) |
| 3. | SIGNIFICANT ACCOUNTING POLICIES (continued) |
(i) Revenue recognition |
|
Operating revenues consists of telephony support services revenues and customer equipment (which enables the telephony services). The point in time at which revenues are recognized is determined in accordance with ASC 605-10 and 605-50 formerly Staff Accounting Bulletin No. 104, Revenue Recognition, and Emerging Issues Task Force Consensus No. 01-9, Accounting for Consideration Given by a Vendor to a Customer (Including a Reseller of the Vendor’s Products) (“EITF No. 01-9”). Revenues are recorded as follows: |
Telephony support services revenue - The Company provides support services to Nettlinx that earns telephony service revenues. The support services is a fixed monthly fee and is recognized at the end of each month once the service has been provided and collection is reasonably estimated.
Customer equipment - Customer equipment consists of revenues from sales of equipment directly to customers, and is earned once the equipment has been delivered, and collection is reasonably estimated.
(j) Direct cost of telephony services
Direct costs of telephony services consists of personnel costs. For the years ended March 31, 2010 and 2009, these personnel costs amounted to $45,116 and $14.203, respectively.
(k) Direct cost of customer equipment
Direct cost of customer equipment consists of the original purchase price of the equipment. For the ended March 31, 2010 and 2009, these costs amounted to $4,604 and $3,110, respectively.
(l) Fair value of financial instruments
The Company's financial instruments consist of cash, receivables, prepaid expenses, deposit, accounts payable and accrued liabilities, accounts payable and accrued liabilities – related parties and loans payable. The Company’s financial instruments are exposed to currency risks as they are denominated in Indian Rupees. The Nettlinx loan has a fixed interest rate term, and accordingly the Company does not believe it has significant interest rate risk. The Company’s deposit is with a major Indian bank and has a fixed interest rate of 8% and matures on February 13, 2012. The Company believes its credit risk is low as it maintains cash in reputable banks in India, and monitors its receivables regularly. The fair value of these financial instruments approximates their carrying values, unless otherwise noted.
The Company measures the fair value of financial assets and liabilities based on the guidance of ASC 820 formerly SFAS No. 157, “Fair Value Measurements,” which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The Company adopted the provisions of ASC 820 for financial assets and liabilities, as well as for any other assets and liabilities that are carried at fair value on a recurring basis as well as for non-financial assets and liabilities that are required to be measured at fair value. The adoption of the provisions of ASC 820 did not materially impact the Company’s financial position and results of operations.
F-9
| SMARTLINX INC. |
| (formerly Cignus Ventures Inc.) |
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
| (Expressed in U.S. Dollars) |
| March 31, 2010 |
| (Unaudited & Unreviewed) |
| 3. | SIGNIFICANT ACCOUNTING POLICIES (continued) |
(l) Fair value of financial instruments (continued) |
|
ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value: |
Level 1 – quoted prices in active
markets for identical assets or liabilities
Level 2 – quoted prices for
similar assets and liabilities in active markets or inputs that are observable
Level 3 – inputs that are unobservable (for example cash flow modeling
inputs based on assumptions)
The Company’s cash and deposit are classified within Level 1 of the fair value hierarchy because it is valued using quoted market prices in active markets.
(m) Net loss per share
Basic net loss per share is computed by dividing the net loss for the period by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share takes into consideration shares of common stock outstanding (computed under basic earnings per share) and potentially dilutive shares of common stock. As of March 31, 2010 and 2009, there were no potentially dilutive securities outstanding.
(n) Comprehensive income (loss)
The Company has adopted ASC 220 formerly SFAS 130 “Reporting of Comprehensive Income,” which establishes guidelines for the reporting and display of comprehensive income (loss) and its components in financial statements. Comprehensive income (loss) includes foreign currency translation adjustments.
(o) Recoverability of Long Lived Assets
Generally accepted accounting principles in the United States of America require that the recoverable amount of an asset, including equipment, should be estimated whenever there is an indication that the asset may be impaired. The company, at each balance sheet date and whenever indications of impairment arise, evaluates the recoverability of the carrying amount of its long lived assets through an assessment of the estimated future undiscounted cash flows related to those assets. In the event that assets are found to be carried at amounts, which are in excess of estimates gross future cash flows, the carrying value of the related asset or group of assets is reduced by which the carrying value exceeds the fair value.
F-10
| SMARTLINX INC. |
| (formerly Cignus Ventures Inc.) |
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
| (Expressed in U.S. Dollars) |
| March 31, 2010 |
| (Unaudited & Unreviewed) |
| 3. | SIGNIFICANT ACCOUNTING POLICIES (continued) |
| (p) Recent accounting pronouncements | |
During the third quarter of 2009, the Company adopted the FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles in accordance with FASB ASC Topic 105,”Generally Accepted Accounting Principles”(the Codification). The Codification has become the source of authoritative U.S. generally accepted accounting principles (GAAP) recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission (SEC) under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. Effective with the Company’s adoption on July 1, 2009, the Codification has superseded all prior non-SEC accounting and reporting standards. All other non-grandfathered non-SEC accounting literature not included in the Codification has become non-authoritative. As the adoption of the Codification only affected how specific references to GAAP literature have been disclosed in the notes to the Company’s financial statements, it did not result in any impact on the Company’s results of operations, financial condition, or cash flows. |
|
In September 2009, the FASB issued authoritative guidance regarding multiple-deliverable revenue arrangements. This guidance addresses how to separate deliverables and how to measure and allocate consideration to one or more units of accounting. Specifically, the guidance requires that consideration be allocated among multiple deliverables based on relative selling prices. The guidance establishes a selling price hierarchy of (1) vendor-specific objective evidence, (2) third-party evidence and (3) estimated selling price. This guidance is effective for annual periods beginning after June 15, 2010 but may be early adopted as of the beginning of an annual period. The Company is currently evaluating the effect that this guidance will have on its financial position and results of operations. |
|
In January 2010, the FASB issued ASU 2010-06, Fair Value Measurements and Disclosures (Topic 820), Improving Disclosures about Fair Value Measurements, amending ASC 820. ASU 2010-06 requires entities to provide new disclosures and clarify existing disclosures relating to fair value measurements. The new disclosures and clarifications of existing disclosures are effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in Level 3 fair value measurements, which are effective for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal years. The Company is currently evaluating the impact of ASU 2010-06, but does not expect its adoption to have a material impact on the Company’s financial position or results of operations. |
|
In February 2010, the FASB issued ASU 2010-09, Subsequent Events (Topic 855), amending ASC 855. ASU 2010-09 removes the requirement for an SEC filer to disclose a date relating to its subsequent events in both issued and revised financial statements. ASU 2010-09 also eliminates potential conflicts with the SEC’s literature. Most of ASU 2010-09 is effective upon issuance of the update. The Company adopted ASU 2010- 09 in February 2010, and its adoption did not have a material impact on the Company’s financial reporting and disclosures. |
|
| (q) Reclassifications | |
Certain amounts reported in the prior periods have been reclassified to conform to the current period’s presentation. |
F-11
| SMARTLINX INC. |
| (formerly Cignus Ventures Inc.) |
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
| (Expressed in U.S. Dollars) |
| March 31, 2010 |
| (Unaudited & Unreviewed) |
| 4. | CASH |
Cash consists of: |
| March 31, | March 31, | ||||||
| 2010 | 2009 | ||||||
| Cash on hand | $ | 2,292 | $ | 2,076 | |||
| Cash at bank | 18,966 | 3,593 | |||||
| $ | 21,258 | $ | 5,669 |
Restricted Cash and cash equivalents
The Company does not have any cash and cash equivalents that are pledged with any authority or institution and are restricted for use. The Company currently has a deposit with an Indian bank for 500,000 (USD $11,215) Rupees with 8% interest, which matures on February 13, 2012.
F-12
| SMARTLINX INC. |
| (formerly Cignus Ventures Inc.) |
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
| (Expressed in U.S. Dollars) |
| March 31, 2010 |
| (Unaudited & Unreviewed) |
| 5. | DEFERRED INCOME TAXES |
Income tax benefits attributable to losses from United States of America operations was $Nil for the years ended March 31, 2010 and 2009, and differed from the amounts computed by applying the United States of America federal income tax rate of 34 percent to pretax losses from development stage activities as a result of the following: |
| Year Ended | Year Ended | ||||||
| March 31, | March 31, | ||||||
| 2010 | 2009 | ||||||
| Loss for the year | $ | (286,989 | ) | $ | (42,761 | ) | |
| Computed "expected" tax benefit | $ | (97,576 | ) | $ | (14,539 | ) | |
| Foreign tax rate differentials | 5,065 | 1,326 | |||||
| Change in valuation allowance | 92,511 | 13,213 | |||||
| Income tax recovery | $ | - | $ | - |
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at March 31, 2010 and 2009, is presented below:
| 2010 | 2009 | ||||||
| Deferred tax assets: | |||||||
| Net operating loss carry forwards – US | $ | 157,230 | $ | - | |||
| Net operating loss carry forwards – India | 92,079 | 41,593 | |||||
| Valuation allowance | (249,309 | ) | (41,593 | ) | |||
| Total deferred tax assets | $ | - | $ | - |
The valuation allowance for deferred tax assets as of March 31, 2010 and 2009 was $249,309 and $41,593, respectively. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.
The losses in India may be carried forward to 2030 and the losses in the United States expire through to 2025.
F-13
| SMARTLINX INC. |
| (formerly Cignus Ventures Inc.) |
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
| (Expressed in U.S. Dollars) |
| March 31, 2010 |
| (Unaudited & Unreviewed) |
| 6. | EQUIPMENT |
| Accumulated | ||||||||||
| Cost | Amortization | Net | ||||||||
| March 31, 2010 | ||||||||||
| Computer equipment | $ | 20,372 | $ | 6,613 | $ | 13,759 | ||||
| Furniture and fixtures | 666 | 99 | 567 | |||||||
| $ | 21,038 | $ | 6,712 | $ | 14,326 | |||||
| March 31, 2009 | ||||||||||
| Computer equipment | $ | 11,805 | $ | 3,532 | $ | 8,273 | ||||
| Furniture and fixtures | 575 | 59 | 516 | |||||||
| $ | 12,380 | $ | 3,591 | $ | 8,789 |
| 7. | INTANGIBLE |
| Accumulated | ||||||||||
| Cost | Amortization | Net | ||||||||
| March 31, 2010 | ||||||||||
| Live Tutor software | $ | 15,046 | $ | - | $ | 15,046 | ||||
| March 31, 2009 | ||||||||||
| Live Tutor software | $ | - | $ | - | $ | - |
| 8. | LOAN PAYABLE |
During the year ended March 31, 2010, a loan was granted from a third party company totaling $25,000. The loan bears interest at 6% per annum and is due March 4, 2012. Interest accrued to date totals $111. Interest expense included in the statement of operations for the year ended March 31, 2010 totaled $111. |
F-14
| SMARTLINX INC. |
| (formerly Cignus Ventures Inc.) |
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
| (Expressed in U.S. Dollars) |
| March 31, 2010 |
| (Unaudited & Unreviewed) |
| 9. | RELATED PARTY TRANSACTIONS |
| Nettlinx | |
The Company has entered into transactions with Nettlinx as follows: |
| Year | Year | ||||||
| Ended | Ended | ||||||
| March 31, | March 31, | ||||||
| 2010 | 2009 | ||||||
| Sales to Nettlinx | $ | 19,028 | $ | 26,866 | |||
| Purchases from Nettlinx | $ | 4,604 | $ | - | |||
| Rent to Nettlinx | $ | 19,905 | $ | - | |||
| Unsecured loan from Nettlinx | $ | 138,446 | $ | 123,134 | |||
The Unsecured loan from Nettlinx is a line of credit up to INR 10,000,000 (USD $222,074). The loan bore an interest rate of 6% per annum and was payable at the November 18, 2009. During the quarter ended December 31, 2009, the loan was extended and is payable on or before November 18, 2012. The net amount outstanding as of March 31, 2010 was INR 6,234,221 (USD $138,446) which includes interest payable of INR 429,612 (USD $9,541). The net amount outstanding as of March 31, 2009 was INR 6,423,910 (USD $123,134). Nettlinx waived the required payment of interest for the year ended March 31, 2009. The Company has accounted for the interest expense as a shareholder contribution and it is included in additional paid-in capital as of March 31, 2010 and 2009.
The Company has reviewed its related party transactions and balances and has concluded that these transactions are measured at the exchange amounts and under normal commercial terms and that the transactions would have been the same had the parties been non-related.
Receivables
At March 31, 2010, included in receivables is INR 23,287 (USD $517) owed from a director and officer to Smartlinx VoIP for travel expenses. Amounts due to and from officers and directors are unsecured, non-interest bearing and due on demand.
Accounts payable and accrued liabilities
At March 31, 2010, included in accounts payable and accrued liabilities –related party is $6,871 owed to a former officer and director of the Company. Amounts due to and from officers and directors are unsecured, non-interest bearing and due on demand.
At March 31, 2010, included in accounts payable and accrued liabilities –related party is INR 12,786 (USD $284) owed to a director and officer of Smartlinx VoIP for reimbursement of travel expenses. Amounts due to and from officers and directors are unsecured, non-interest bearing and due on demand.
F-15
| SMARTLINX INC. |
| (formerly Cignus Ventures Inc.) |
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
| (Expressed in U.S. Dollars) |
| March 31, 2010 |
| (Unaudited & Unreviewed) |
| 9. | RELATED PARTY TRANSACTIONS (continued) |
Loans payable |
|
During the year ended August 31, 2007, two non-interest bearing loans were granted from a stockholder totaling $13,500. The loans are unsecured and due on demand. On December 31, 2007, the Company agreed to begin paying interest on these loans at 10% per annum. During the year ended August 31, 2008, several additional loans were granted from the same stockholder totaling $18,000. During the year ended August 31, 2009, several additional loans were granted from the same stockholder totaling $22,550. During the year ended March 31, 2010, an additional loan was granted from the same stockholder totaling $200. The loans are unsecured, bear interest at 10% per annum and are due on demand. Interest accrued to date totals $9,763. Interest expense included in the statement of operations for the year ended March 31, 2010 totaled $2,845. |
|
| 10. | COMMON STOCK |
The Company’s articles of incorporation allow it to issue up to 270,000,000 shares of common stock, par value $0.001 and 100,000,000 shares of preferred stock, par value $0.001. Effective October 13, 2009, the Company effected a stock split of its common stock by issuing 2.7 new shares for every one old share. Except as otherwise stated to the contrary in these financial statements, all references to shares and prices per share have been adjusted to give retroactive effect to the stock split. |
|
On August 21, 2006, the Company issued 49,950,000 shares of common stock for total proceeds of INR 100,000 (USD $2,223). |
|
On October 7, 2009 the Company acquired all the issued and outstanding stock of Smartlinx VoIP, which was accounted for as a recapitalization of the Company (Note 1) in exchange for 8,775,000 shares of common stock and warrants to acquire 11,475,000 shares of the Company’s common stock at an exercise price of $0.0074 per share for a period of two years from the date of issuance. The issued number of shares of common stock is that of the Company with adjustments made for differences in par value between the Company and Smartlinx VoIP. |
|
On November 24, 2009 the Company issued 360,000 units at a price of $0.555556 per unit, for total proceeds of $200,000 in a private placement transaction. Each unit consists of one share of the Company’s common stock and one share purchase warrant. Each share purchase warrant entitled the holder to purchase one additional share of the Company’s common stock at a price of $0.60 per share for a period of two years from the date of closing. |
F-16
| SMARTLINX INC. |
| (formerly Cignus Ventures Inc.) |
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
| (Expressed in U.S. Dollars) |
| March 31, 2010 |
| (Unaudited & Unreviewed) |
| 11. | WARRANTS |
| Weighted Average | |||||||
| Number | Exercise Price | ||||||
| Warrants outstanding, March 31, 2009 | - | $ | - | ||||
| Granted | 18,585,000 | 0.02 | |||||
| Exercised | - | - | |||||
| Expired | - | - | |||||
| Warrants outstanding, March 31, 2010 | 18,585,000 | $ | 0.02 |
A summary of warrants outstanding at March 31, 2010 is as follows:
| Date | Issued | Outstanding | Exercise Price | Expiry Date |
| September 30, 2009 | 6,750,000 | 6,750,000 | $ 0.0074 | September 29, 2011 |
| October 7, 2009 | 11,475,000 | 11,475,000 | $ 0.0074 | October 6, 2011 |
| November 24, 2009 | 360,000 | 360,000 | $ 0.6000 | November 23, 2011 |
| 12. | SEGMENT INFORMATION |
|
The Company’s operations will be conducted in one reportable segment being the business of providing technical support and back office services for Voice Over Internet Protocol (“VOIP”) and on-line tutoring services in India. |
||
| 13. | COMMITMENTS AND CONTRACTUAL OBLIGATIONS |
|
On January 27, 2009, Smartlinx VoIP entered into an agreement with Bharat Sanchar Nigam Limited (“BSNL”), a broadband service provider in India, to provide broadband access to prospective customers and to assist Smartlinx VoIP in marketing Live Tutor to existing customers of BSNL. Live Tutor delivers individualized and group based supplemental education to students using a video based system through a Live Tutor Virtual Learning Environment. In consideration of BSNL providing access to their customers, BSNL is entitled to: |
||
| (a) | 40% of our gross revenue from providing tutoring services to students in India; and |
|
| (b) | 20% of our gross revenue from providing tutoring services to overseas students. |
|
The term of the agreement is for three years. BSNL may terminate the agreement if Smartlinx VoIP does not satisfy the following roll out obligations: (i) a minimum of 50,000 customers with minimum gross revenue payable to BSNL of INR 12,000,000 (USD $266,488) by January 27, 2010; and (ii) a minimum of 200,000 customers with minimum gross revenue payable to BSNL of INR 60,000,000 (USD $1,332,442) by January 27, 2011. The agreement has been amended whereby BSNL agreed to amend the roll out obligations of Live Tutor. Under the amended agreement, Smartlinx VoIP is required to have a minimum of 500 customers by March 31, 2010 and is not required to have minimum gross revenues. The parties also agreed to review the terms of the roll out provisions subsequent to March 31, 2010. |
||
F-17
| SMARTLINX INC. |
| (formerly Cignus Ventures Inc.) |
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
| (Expressed in U.S. Dollars) |
| March 31, 2010 |
| (Unaudited & Unreviewed) |
| 13. | COMMITMENTS (continued) |
|
On November 25, 2009, Smartlinx VoIP entered into an agreement for the pilot implementation of live tutor virtual learning environment (the “Pilot Implementation Agreement”) with the Polsani Group, a business group based in India that, among other things, provides services in the education industry. Under the terms of the Pilot Implementation Agreement, Smartlinx has agreed to provide the Polsani Group with its Live Tutor Virtual Learning Environment, including its Live Tutor Management System and Live Tutor Connect, at each of the Polsani Group’s educational institutions in Hyderabad, Karimnagar and Lingapur, India. In consideration of providing these services, the Polsani Group has agreed to: |
||
| (a) | pay INR 75,000 (USD $1,666), for three years of the Live Tutor Virtual Learning Environment, by June 1, 2010; and |
|
| (b) | pay INR 10 (USD $0.22) per hour of Live Tutor Connect. |
|
On March 25, 2010, Smartlinx VoIP entered into an agreement for VoIP support services with Nettlinx. In consideration of these services, Nettlinx has agreed to pay INR 80,000 (US $1,777) per month for 12 months. |
||
| 14. | SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS |
|
| Year | Year | ||||||
| Ended | Ended | ||||||
| March 31, | March 31, | ||||||
| 2010 | 2009 | ||||||
| Cash paid for: | |||||||
| Interest | $ | 4,940 | $ | - | |||
| Income taxes | $ | - | $ | - | |||
Non-cash Transactions
Investing and financing activities that do not have an impact on current cash flows are excluded from the statement of cash flows.
During the period from inception (August 12, 2006) to March 31, 2010, the Company issued 8,775,000 common shares for the acquisition of Smartlinx VoIP.
During the year ended March 31, 2009, the Company accrued interest expense of $7,377 on the Nettlinx loan as additional paid in capital.
There were no other significant non-cash transactions for the years ended March 31, 2010 and 2009.
F-18
|
ITEM 9. |
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. |
None.
ITEM 9AT. CONTROLS AND PROCEDURES.
Disclosure Controls and Procedures
We carried out an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of March 31, 2010 (the “Evaluation Date”). This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of the Evaluation Date as a result of the material weaknesses in internal control over financial reporting discussed below.
Disclosure controls and procedures are those controls and procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act are recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
Notwithstanding the assessment that our internal control over financial reporting was not effective and that there were material weaknesses as identified in this report, we believe that our financial statements contained in our Annual Report on Form 10-K for the year ended March 31, 2010 fairly present our financial condition, results of operations and cash flows in all material respects.
Management's Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, for the Company.
Internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of its management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.
Management recognizes that there are inherent limitations in the effectiveness of any system of internal control, and accordingly, even effective internal control can provide only reasonable assurance with respect to financial statement preparation and may not prevent or detect material misstatements. In addition, effective internal control at a point in time may become ineffective in future periods because of changes in conditions or due to deterioration in the degree of compliance with our established policies and procedures.
A material weakness is a significant deficiency, or combination of significant deficiencies, that results in there being a more than remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected.
Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, management conducted an evaluation of the effectiveness of our internal control over financial reporting, as of the Evaluation Date, based on the framework set forth in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on its evaluation under this framework, management concluded that our internal control over financial reporting was not effective as of the Evaluation Date.
18
Management assessed the effectiveness of the Company’s internal control over financial reporting as of Evaluation Date and identified the following material weaknesses:
Insufficient Resources: We have an inadequate number of personnel with requisite expertise in the key functional areas of finance and accounting.
Inadequate Segregation of Duties: We have an inadequate number of personnel to properly implement control procedures.
Management is committed to improving its internal controls and will (1) continue to use third party specialists to address shortfalls in staffing and to assist the Company with accounting and finance responsibilities, (2) increase the frequency of independent reconciliations of significant accounts which will mitigate the lack of segregation of duties until there are sufficient personnel and (3) may consider appointing outside directors and audit committee members in the future.
Due to the nature of this material weakness, there is a more than remote likelihood that misstatements which could be material to the annual or interim financial statements could occur that would not be prevented or detected.
This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management's report in this annual report.
Changes in internal control over financial reporting
There were no changes in our internal control over financial reporting that occurred during the fiscal year ended March 31, 2010 that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.
Limitations on the effectiveness of controls and procedures
Our management, including our Chief Executive Officer and the Chief Financial Officer, do not expect that the our controls and procedures will prevent all potential errors or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.
ITEM 9B. OTHER INFORMATION.
None.
19
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
The following tables set forth information regarding our executive officers and directors:
| Name | Age | Positions |
| Abraham Joy | 35 |
Chief Executive Officer, Chief Financial Officer, President, Secretary, Treasurer and Director |
| Job Thomas | 47 |
Director |
| Sunder Raj | 47 |
Director |
Set forth below is a brief description of the background and business experience of each of the listed executive officers and directors for at least the past five years.
Abraham Joy was appointed as our Chief Executive Officer, Chief Financial Officer, President, Secretary, Treasurer and as a member of our Board of Directors on October 7, 2009. Mr. Joy is a managing director of ETC Investments & Consulting Pvt. Ltd. in India. He is also an independent Consultant for International Project Development. Prior to working at ETC Investments & Consulting Pvt. Ltd. in India, Mr. Joy was a management director of ETC GmbH, in Germany. Mr. Joy started his career in Human Resources Training at Warner Bros. Movie World, Germany after obtaining a Business Management education from the International Business School in Lippstadt, Germany and West Virginia University, USA.
Job Thomas was appointed as a member of our Board of Directors on October 7, 2009 and is a director and Chief Financial Operating Officer of Smartlinx VoIP. Mr. Thomas has over 25 years of IT exposure and has worked in various managerial positions. Prior to his appointment to Smartlinx VoIP, Mr. Thomas was the regional business systems manager of Hindustan Coca-Cola Bottling Company Limited, India. Mr. Thomas obtained a Bachelor of Science (Mathematics) from Calicut University in 1983 and a PG Diploma (Personnel Management & Industrial Relations) from St. Joseph’s College of Business Administration in 1985.
Sunder Raj was appointed as a member of our Board of Directors on October 7, 2009 and is a director of Smartlinx VoIP. In 1986, Mr. Raj co-founded CS Software Enterprise Limited and acted as Executive Director and CEO. During his tenure as CS Software Enterprise Limited, Mr. Raj was responsible for the overall business strategy, developing business plans and goals and management of project teams. Mr. Raj obtained a Bachelor of Engineering from Osmania University in 1983 and a Master of Technology in Electrical Engineering from the Indian Institute of Technology in 1985.
Term of Office
Members of our board of directors are appointed to hold office until the next annual meeting of our stockholders or until his or her successor is elected and qualified, or until he or she resigns or is removed in accordance with the provisions of the Nevada Revised Statutes (the “NRS”). Our officers are appointed by our board of directors and hold office until removed by the board.
Significant Employees
We have no significant employees other than our officers and directors.
Committees of the Board Of Directors
Our audit committee presently consists of our directors and officers. We do not have a compensation committee, nominating committee, an executive committee of our board of directors, stock plan committee or any other committees.
Our board of directors perform the functions of a nominating committee and oversees the process by which individuals may be nominated to our board of directors. The current size of our board of directors does not facilitate the establishment of a separate committee. We hope to establish a separate nominating committee consisting of independent directors, if the number of our directors is expanded.
20
Audit Committee Financial Expert
We have no audit committee financial expert serving on our audit committee. We believe the cost related to retaining a financial expert at this time is prohibitive. Further, because of our start-up operations, we believe the services of a financial expert are not warranted.
Code of Ethics
We adopted a Code of Ethics applicable to our Chief Executive Officer, Chief Financial Officer, Corporate Controller and certain other finance executives, which is a “code of ethics” as defined by applicable rules of the SEC. Our Code of Ethics is attached as an exhibit to our Quarterly Report on Form 10-QSB for the quarter ended May 31, 2006. If we make any amendments to our Code of Ethics other than technical, administrative, or other non-substantive amendments, or grant any waivers, including implicit waivers, from a provision of our Code of Ethics to our Chief Executive Officer, Chief Financial Officer, Corporate Controller, or certain other finance executives, we will disclose the nature of the amendment or waiver, its effective date and to whom it applies in a Current Report on Form 8-K filed with the SEC.
Compliance With Section 16(a) Of The Securities Exchange Act
Section 16(a) of the Exchange Act requires our executive officers and directors, and persons who own more than 10% of a registered class of our securities (“Reporting Persons”), to file reports of ownership and changes in ownership with the SEC. Reporting Persons are required by SEC regulations to furnish us with copies of all forms they file pursuant to Section 16(a). Based solely on our review of such reports received by the Company, we believe that, during the year ended March 31, 2010, all Reporting Persons complied with all Section 16(a) filing requirements applicable to them.
ITEM 11. EXECUTIVE COMPENSATION.
Summary Compensation Table
The following table sets forth total compensation paid to or earned by our named executive officers, as that term is defined in Item 402(m)(2) of Regulation S-K during the fiscal years ended March 31, 2010 and 2009:
| SUMMARY COMPENSATION TABLE | |||||||||
Name & Principal Position |
Year End March 31, |
Salary ($) |
Bonus ($) |
Stock Awards ($) |
Option Awards ($) |
Non- Equity Incentive Plan Compen- sation ($) |
Nonqualified Deferred Compen- sation Earnings ($) |
All Other Compen- sation ($) |
Total ($) |
| Abraham Joy(1) CEO, CFO, President, Secretary, Treasurer and Director |
2010 2009 |
$0 $0 |
$0 $0 |
$0 $0 |
$0 $0 |
$0 $0 |
$0 $0 |
$0 $0 |
$0 $0 |
| David K. Ryan(2) Former President, Former Secretary, Former Treasurer, Former CEO & Former CFO and Former Director |
2010 2009 |
$0 $0 |
$0 $0 |
$0 $0 |
$0 $0 |
$0 $0 |
$0 $0 |
$0 $0 |
$0 $0 |
Notes:
| (1) |
Abraham Joy was appointed as our CEO, CFO, President, Secretary, Treasurer and a Director on October 7, 2009. Pursuant to the terms of a verbal agreement, we pay Mr. Joy $5,000 per month. |
| (2) |
David K. Ryan resigned as our CEO, CFO, President, Secretary, Treasurer and a Director on October 7, 2009. |
21
Outstanding Equity Awards At Fiscal Year End
As at March 31, 2010, we had no outstanding equity awards.
Director Compensation
The following table sets forth the compensation paid to our directors during our March 31, 2010 fiscal year, other than directors who were also named executive officers as that term is defined in Item 402(m)(2).
Name |
Fees Earned or Paid in Cash ($) |
Stock Awards ($) |
Option Awards ($) |
Non-Equity Incentive Plan Compensation ($) |
Nonqualified Deferred Compensation Earnings ($) |
All Other Compensation ($) |
Total ($) |
| Job Thomas(1) | $0 | $0 | $0 | $0 | $0 | $23,366 | $23,366 |
| Sunder Raj(2) | $0 | $0 | $0 | $0 | $0 | $6,283 | $6,283 |
Notes:
| (1) |
Job Thomas Thekkekkara was appointed as a member of our Board of Directors on October 7, 2009. Pursuant to the terms of an employment agreement between Mr. Thomas and Smartlinx VoIP, Mr. Thomas is paid Rs. 1,140,000 (approximately $23,900) per annum. |
| (2) |
Nyayapathi Sunder Raj was appointed as a member of our Board of Directors on October 7, 2009. Pursuant to the terms of an employment agreement between Mr. Raj and Smartlinx VoIP, Mr. Raj is paid Rs. 360,000 (approximately $7,500) per annum. |
|
ITEM 12. |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. |
EQUITY COMPENSATION PLANS
We have no equity compensation plans (including individual compensation arrangements) under which our equity securities are authorized for issuance.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth certain information concerning the number of shares of our common stock owned beneficially as of July 12, 2010 by: (i) each person (including any group) known to us to own more than five percent (5%) of any class of our voting securities, (ii) each of our directors and each of our named executive officers, and (iii) officers and directors as a group. Unless otherwise indicated, the shareholders listed possess sole voting and investment power with respect to the shares shown.
22
Title of Class |
Name and Address of Beneficial Owner |
Amount and Nature of Beneficial Ownership |
Percentage of Common Stock(1) |
| DIRECTORS AND OFFICERS | |||
| Common Stock | Abraham Joy Chief Executive Officer, Chief Financial Officer, President, Secretary, Treasurer and Director |
Nil(2) | Nil |
| Common Stock | Job Thomas Thekkekkara Director |
Nil(3) | Nil |
| Common Stock | Nyayapathi Sunder Raj Director |
Nil(4) | Nil |
| Common Stock | All Officers and Directors
as a Group (3 persons) |
Nil | Nil |
| 5% STOCKHOLDERS | |||
| Common Stock |
Citiglobal Ltd. 6th Floor, Newton Tower Sir William Newton Street, Port Louis, Republic of Mauritius |
47,250,000(5) (direct) |
67.0% |
| (1) |
Under Rule 13d-3, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person’s actual ownership or voting power with respect to the number of shares of common stock actually outstanding as of July 12, 2010. As at July 12, 2010, we have 59,085,000 shares of common stock issued and outstanding. |
| (2) |
Mr. Joy owns an 8% interest in Citiglobal. As such, Mr. Joy does not have any voting or investment power over the shares owned by Citiglobal. |
| (3) |
Mr. Thomas owns a 8% interest in Citiglobal. As such, Mr. Thomas does not have any voting or investment power over the shares owned by Citiglobal. |
| (4) |
Mr. Raj owns a 8% interest in Citiglobal. As such, Mr. Raj does not have any voting or investment power over the shares owned by Citiglobal. |
| (5) |
Those shares denoted as being beneficially owned by Citiglobal Ltd. consists of: (i) 35,775,000 shares of common stock; and (ii) warrants to purchase 11,475,000 shares of common stock at an exercise price at an exercise price of $0.0074 per share until October 6, 2011. |
CHANGES IN CONTROL
We are not aware of any arrangement that might result in a change in control in the future.
23
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Except as described below, none of the following parties has, in the last two years, had any material interest, direct or indirect, in any transaction with us or in any presently proposed transaction that has or will materially affect us:
Acquisition of Smartlinx VoIP
Under the terms of the Share Purchase Agreement, we issued 3,250,000 pre-split (8,775,000 post-split) shares of our common stock and 4,250,000 pre-split (11,475,000 post-split) warrants to Citiglobal, a beneficial holder of more than five percent of our outstanding shares, for all the issued and outstanding shares of Smartlinx VoIP. In addition, Mr. Ryan, our former sole executive officer and director, transferred 10,000,000 pre-split (27,000,000 post-split) shares of common stock owned by him to Citiglobal for an aggregate purchase price of $10,000.
Our executive officers and directors own an interest in Citiglobal as follows: (i) Mr. Joy owns an 8% interest in Citiglobal; (ii) Mr. Thomas owns a 8% interest in Citiglobal; and (iii) Mr. Raj owns a 8% interest in Citiglobal. Accordingly, none of our directors or officers have any voting or investment power over the shares of our common stock owned by Citiglobal.
DIRECTOR INDEPENDENCE
Our common stock is quoted on the OTC Bulletin Board inter-dealer quotation system, which does not have director independence requirements. Under NASDAQ Rule 5605(a)(2), a director is not considered to be independent if he or she is also an executive officer or employee of the corporation. In applying this definition, we have determined that Mr. Thomas and Mr. Raj are independent directors. Mr. Joy, our sole executive officer, does not qualify as an independent member of our Board of Directors.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
The aggregate fees billed for the two most recently completed fiscal years ended March 31, 2010 and 2009 for professional services rendered by the principal accountant for the audit of our annual financial statements and review of the financial statements included in our Quarterly Reports on Form 10-Q and services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for these fiscal periods were as follows.
| Year Ended March 31, 2010 | Year Ended March 31, 2009 | |
| Audit Fees | $21,250 | $12,000 |
| Audit-Related Fees | - | - |
| Tax Fees | - | - |
| All Other Fees | - | - |
| Total | $21,250 | $12,000 |
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PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
| Exhibit | |
| Number | Description of Exhibit |
| 2.1 | Agreement and Plan of Merger dated September 14, 2009 between the Company (as parent surviving company) and Smartlinx Acquisition Corp. (as subsidiary merging entity).(6) |
|
|
|
| 3.1 | Articles of Incorporation.(1) |
|
|
|
| 3.2 | Certificate of Merger.(6) |
|
|
|
| 3.3 | Articles of Merger between the Company (as surviving entity) and Smartlinx Acquisition Corp. (as merging entity), with surviving entity changing its name to “Smartlinx Inc.” (6) |
|
|
|
| 3.4 | Certificate of Change Pursuant to NRS 78.209 increasing the authorized capital of common stock to 270,000,000 shares, par value $0.001 per share.(6) |
|
|
|
| 3.5 | Bylaws, as amended.(1) |
|
|
|
| 4.1 | Form of Share Certificate.(1) |
|
|
|
| 10.1 | Interim Agreement dated June 29, 2009 between the Company and Smartlinx VOIP Networks Private Limited.(3) |
|
|
|
| 10.2 | Share Purchase Agreement dated August 20, 2009 among Smartlinx VOIP Networks Private Limited, the Company, Smartlinx Acquisition Corp., David K. Ryan and Citiglobal Ltd.(4) |
|
|
|
| 10.3 | Agreement for Provision of Video Tutor Services to Broadband Subscribers of BSNL dated January 27, 2009 between Smartlinx VOIP Networks Private Limited and the Broadband Subscribers of Bharat Sanchar Nigam Limited.(5) |
|
|
|
| 10.4 | Loan Agreement dated November 20, 2006 between Nettlinx Limited and Smartlinx VOIP Networks Private Limited.(5) |
|
|
|
| 10.5 | Employment Agreement dated June 1, 2009 between Smartlinx VOIP Networks Private Limited and Sunder Raj Nyayapathi.(5) |
|
|
|
| 10.6 | Employment Agreement dated October 5, 2006 between Smartlinx VOIP Networks Private Limited and Job Thomas Thekkekkara.(5) |
|
|
|
| 10.7 | Agreement for Pilot Implementation of Live Tutor Virtual Learning Environment dated November 25, 2009 between Smartlinx VOIP Networks Private Limited and Polsani Group.(7) |
| 10.8 | |
| 14.1 | Code of Ethics.(2) |
| 21.1 | |
| 31.1 | |
| 99.1 | Audit Committee Charter.(8) |
Notes:
| (1) |
Filed with the SEC as an exhibit to our Registration Statement on Form SB-2 originally filed on November 25, 2005, as amended. | |
| (2) |
Previously filed as an exhibit to our Quarterly Report on Form 10-QSB filed with the SEC on July 11, 2006. | |
| (3) |
Previously filed as an exhibit to our Quarterly Report on Form 10-Q filed with the SEC on July 15, 2009. | |
| (4) |
Previously filed as an exhibit to our Current Report on Form 8-K filed with the SEC on August 24, 2009. | |
| (5) |
Previously filed as an exhibit to our Current Report on Form 8-K filed with the SEC on October 13, 2009. | |
| (6) |
Previously filed as an exhibit to our Current Report on Form 8-K filed with the SEC on October 19, 2009. | |
| (7) |
Previously filed as an exhibit to our Current Report on Form 8-K filed with the SEC on December 2, 2009. | |
| (8) |
Previously filed as an exhibit to our Annual Report on Form 10-K filed with the SEC on December 15, 2009. |
25
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| SMARTLINX INC. | ||
| Date: July 12, 2010 | ||
| By: | /s/ Abraham Joy | |
| ABRAHAM JOY | ||
| Chief Executive Officer, Chief Financial Officer, | ||
| President, Secretary and Treasurer | ||
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| Date: | July 12, 2010 | By: | /s/ Abraham Joy | |
| ABRAHAM JOY | ||||
| President, Secretary, Treasurer, Chief Executive Officer, Chief Financial Officer and Director | ||||
| (Principal Executive Officer and Principal Accounting Officer) | ||||
| Date: | July 12, 2010 | By: | /s/ Job Thomas | |
| JOB THOMAS | ||||
| Director | ||||
| Date: | July 12, 2010 | By: | /s/ Sunder Raj | |
| SUNDER RAJ | ||||
| Director |
LIST OF SUBSIDIARIES
| Name of Subsidiary | Jurisdiction of Incorporation |
| 1. Smartlinx VoIP Networks Private Limited | India |
CERTIFICATIONS
I, Abraham Joy, certify that;
| (1) |
I have reviewed this Annual Report on Form 10-K of Smartlinx 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)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) 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 my 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 fourth fiscal quarter 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 the 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 14, 2010 | |
| /s/ Abraham Joy | ||
| By: | ABRAHAM JOY | |
| Title: | Chief Executive Officer and | |
| Chief Financial Officer |