UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended: August 31, 2013
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
For the transition period from ________ to ________
STARK BENEFICIAL, INC.
| Delaware | 27-5213322 | |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
330 Clematis Street, Suite 217,
West Palm Beach, Florida 33401
(800) 341-2684
(Company address)
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 its corporate Web site, if any, every Interactive Data 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 [X] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
| Large accelerated filer [ ] | Accelerated filer [ ] |
| Non-accelerated filer [ ] | Smaller reporting company [X] |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 2,379,935 common shares issued and outstanding as of October 10, 2013
Stark Beneficial, Inc.
FORM 10-Q
INDEX
TABLE OF CONTENTS
| 2 |
PART I – FINANCIAL INFORMATION
Balance Sheet
| August 31, 2013 | May 31, 2013 | |||||||
| (unaudited) | ||||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash | $ | - | $ | - | ||||
| Prepaid expenses | - | 4,750 | ||||||
| Total current assets | - | 4,750 | ||||||
| Total Assets | $ | - | $ | 4,750 | ||||
| Liabilities and Stockholders’ Deficit | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 9,639 | $ | 3,738 | ||||
| Accrued expenses | 5,000 | 5,000 | ||||||
| Due to related parties | 74,364 | 70,941 | ||||||
| Total current liabilities | 89,003 | 79,679 | ||||||
| Stockholders’ Deficit: | ||||||||
| Preferred stock - 20,000,000 authorized $0.001 par value Series B Preferred Stock, 5,000,000 shares designated, issued & outstanding at August 31, 2013 and May 31, 2013 respectively (liquidation value $5,000,000) | 5,000 | 5,000 | ||||||
| Common stock- 300,000,000 authorized $0.001 par value 2,379,935 shares issued & outstanding at August 31, 2013 and May 31, 2013 respectively | 2,380 | 2,380 | ||||||
| Additional paid-in capital | 107,120 | 101,120 | ||||||
| Deficit accumulated since quasi reorganization | (203,503 | ) | (183,429 | ) | ||||
| Total Stockholders’ Deficit | (89,003 | ) | (74,929 | ) | ||||
| Total Liabilities & Stockholders’ Deficit | $ | - | $ | 4,750 | ||||
See condensed notes to unaudited interim financial statements.
| F-1 |
Statements of Operations
(unaudited)
| Three Months Ended August 31, | ||||||||
| 2013 | 2012 | |||||||
| Revenue | $ | - | $ | - | ||||
| Costs & Expenses: | ||||||||
| General & administrative | 20,074 | 6,285 | ||||||
| Total Costs & Expenses | 20,074 | 6,285 | ||||||
| Loss from operations before income taxes | (20,074 | ) | (6,285 | ) | ||||
| Income tax expense | - | - | ||||||
| Net Loss | $ | (20,074 | ) | $ | (6,285 | ) | ||
| Net Loss Per Share - Basic and Diluted | $ | (0.01 | ) | $ | - | |||
| Weighted Average Shares Outstanding (Basic & Diluted) | 2,379,935 | 2,379,935 | ||||||
See condensed notes to unaudited interim financial statements.
| F-2 |
Statements of Cash Flows
(unaudited)
| Three Months Ended August 31, | ||||||||
| 2013 | 2012 | |||||||
| Cash flows from operating activities: | ||||||||
| Net Loss | $ | (20,074 | ) | $ | (6,285 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Fair value of services provided by related parties | 6,000 | 6,000 | ||||||
| Changes in assets and liabilities: | ||||||||
| (Increase) decrease in prepaid expenses | 4,750 | - | ||||||
| Increase (decrease) in accounts payable | 5,901 | 285 | ||||||
| Net Cash used in operating activities: | (3,423 | ) | - | |||||
| Cash flows from financing activities: | ||||||||
| Related party expenses paid on behalf of company | 3,423 | - | ||||||
| Net Cash provided by financing activities: | 3,423 | - | ||||||
| Net Increase (Decrease) in cash | - | - | ||||||
| Cash at beginning of year | - | - | ||||||
| Cash at end of period | $ | - | $ | - | ||||
| Supplemental Disclosure of Cash Flow Information: | ||||||||
| Cash paid for interest | $ | - | $ | - | ||||
| Cash paid for taxes | $ | - | $ | - | ||||
See condensed notes to unaudited interim financial statements.
| F-3 |
CONDENSED NOTES TO Interim FINANCIAL STATEMENTS
FOR THE THREE Months ENDED AUGUST 31, 2013
(UNAUDITED)
1. Nature of Operations, Basis of Presentation and Summary of Significant Accounting Policies
Organization and Nature of Operations
Effective December 31, 2007, Stark Beneficial, inc. (the “Company” “we” “us” “our”) approved and authorized a plan of quasi reorganization and restatement of accounts to eliminate the accumulated deficit and related capital accounts on the Company’s balance sheet. The Company concluded its period of reorganization after reaching a settlement agreement with all of its significant creditors. The Company, as approved by its Board of Directors, elected to state its May 31, 2008, balance sheet as a “quasi reorganization”, pursuant to ASC852. These rules require the revaluation of all assets and liabilities to their current values through a current charge to earnings and the elimination of any deficit in retained earnings by charging paid-in capital. From June 1, 2008 forward, the Company has recorded net income (and net losses) to deficit accumulated since quasi reorganization.
Our current activities are related to seeking new business opportunities. We will use our limited personnel and financial resources in connection with such activities. It may be expected that pursuing a new business opportunity will involve the issuance of restricted shares of common stock.
Basis of Presentation
The interim unaudited Financial Statements presented herein have been prepared by us in accordance with the accounting policies described in our May 31, 2013 audited financial statements included in Form 10-K. Certain information and disclosures normally included in the notes to the annual financial statements have been condensed or omitted from these interim financial statements and therefore, should be read in conjunction with the financial statements and Notes for the fiscal year ended May 31, 2013. The May 31, 2013 balance sheet is derived from those statements.
Use of Estimates
The preparation of these interim unaudited financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related intangible assets, income taxes, insurance obligations, fair value of contributed services and contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other resources. Actual results may differ from these estimates under different assumptions or conditions.
In the opinion of management, the information furnished in these interim financial statements reflect all adjustments necessary for a fair statement of the financial position and results of operations and cash flows as of and for the three month period ended August 31, 2013 and 2012. All such adjustments are of a normal recurring nature. The financial statements do not include some information and notes necessary to conform with annual reporting requirements.
Cash and Cash Equivalents
For the purposes of the unaudited statements of cash flows, the Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.
| F-4 |
stark BENEFICIAL, inc.
CONDENSED NOTES TO Interim FINANCIAL STATEMENTS
FOR THE THREE Months ENDED AUGUST 31, 2013
(UNAUDITED)
Fair Value of Financial Instruments
The Company’s financial instruments, including accounts payable, accrued expenses and related party advances, are carried at historical cost basis. At August 31, 2013, the carrying amounts of these instruments approximated their fair values because of the short-term nature of these instruments.
Net Loss Per Share
Basic earnings per share is computed by dividing income available to common shareholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) for the period. Diluted earnings per share assume that any dilutive securities outstanding are converted. In periods of losses, diluted loss per share is computed on the same basis as basic loss per share as the inclusion of any other potential shares outstanding would be anti-dilutive. The Company did not have any anti-dilutive securities outstanding as of August 31, 2013.
New Accounting Pronouncements
There are no new accounting pronouncements during the three month period ended August 31, 2013, that effect the financial position of the Company or the results of its’ operations. Any Accounting Standard Updates which are not effective until after August 31, 2013, are not expected to have a significant effect on the Company’s financial position or results of its’ operations.
Emerging Growth Company Critical Accounting Policy Disclosure
We qualify as an “emerging growth company” under the 2012 JOBS Act. Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. As an emerging growth company, we can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period.
2. Going Concern
As reflected in the accompanying unaudited financial statements for the three months ended August 31, 2013, the Company had net losses of $20,074. Additionally, at August 31, 2013, the Company had a working capital deficit of $89,003, a deficit accumulated since quasi reorganization of $203,503 and a stockholders’ deficit of $89,003. These factors raise substantial doubt about the Company’s ability to continue as a going concern.
Stark Beneficial currently plans to satisfy its cash requirements for the next 12 months through borrowing from its officer and director or companies affiliated with its officer and director and believes it can satisfy its cash requirements so long as it is able to obtain financing from these affiliated entities.
The unaudited financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
| F-5 |
stark BENEFICIAL, inc.
CONDENSED NOTES TO Interim FINANCIAL STATEMENTS
FOR THE THREE Months ENDED AUGUST 31, 2013
(UNAUDITED)
3. Stockholders’ Deficit
Common Stock
We are currently authorized to issue up to 300,000,000 shares of $0.001 par value common stock. All issued shares of common stock are entitled to vote on a 1 share per 1 vote basis.
October 16, 2007, in exchange for approximately $2,500 of capital investments by Century Capital Partners (“CCP”) we issued 2,100,000 shares of restricted $0.001 par value common stock. Our CEO is the managing member of CCP and has sole voting and dispositive control.
Preferred Stock
On May 23, 2012 we filed a Certificate of Amendment to our Certificate of Incorporation with the State of Delaware to increase the authorized preferred stock from 10,000,000 shares to 20,000,000 shares and to designate 5,000,000 shares as Series B Preferred Stock. Each share of the Series B Preferred Stock entitles the holder thereof to 10 votes on all matters submitted to a vote of shareholders; is convertible into 10 shares of common stock; has equal dividend rights with the common stock and has a $1.00 per share liquidation preference. On May 23, 2012 CCP (a company owned and controlled by our CEO) paid $10,000 to Stark Beneficial in a non-cash exchange for the 5,000,000 shares of Series B Preferred Stock. This payment was made by a reduction of the Due to Related Party balance.
4. Related Party Transactions
Due to Related Parties: Amounts due related parties consist of corporate reinstatement expenses and obligations paid or assumed by affiliates prior to the establishment of a bank account. Such items totaled $31,864 at August 31, 2013. During the three months ended August 31, 2013, legal service fees of $2,500 were billed to the Company by our CEO's spouse through Legal Compliance, LLC. Accrued legal fees of $42,500 were unpaid at August 31, 2013.
Fair value of services and office space: The principal stockholder and CEO provided, without cost to the Company, his services, valued at $1,800 per month which totaled $5,400 for the three months ended August 31, 2013. The principal stockholder also provided, without cost to the Company, office space valued at $200 per month, which totaled $600 for the three months ended August 31, 2013. The total of these expenses of $6,000 for the three months ended August 31, 2013 is reflected in the statement of operations as general and administrative expenses with a corresponding contribution of paid-in capital.
| F-6 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following presentation of management’s discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the Company’s unaudited financial statements, the accompanying unaudited notes thereto and other financial information appearing elsewhere in this report. This section and other parts of this report contain forward-looking statements that involve risks and uncertainties. The Company’s actual results may differ significantly from the results discussed in the forward-looking statements.
Emerging Growth Company Critical Accounting Policy Disclosure
We qualify as an “emerging growth company” under the JOBS Act. As a result, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements. For so long as we are an emerging growth company, we will not be required to:
| ● | have an auditor report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act; |
| ● | comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis); |
| ● | submit certain executive compensation matters to shareholder advisory votes, such as “say-on-pay” and “say-on-frequency;” and |
| ● | disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the CEO’s compensation to median employee compensation. |
In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards.
We will remain an “emerging growth company” for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our total annual gross revenues exceed $1 billion, (ii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, which would occur if the market value of our ordinary shares that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period.
| 3 |
Rule 12b-2 of the Securities Exchange Act of 1934, as amended, defines a Smaller Reporting Company as an issuer that is not an investment company, an asset-backed issuer), or a majority-owned subsidiary of a parent that is not a smaller reporting company and that:
| ● | Had a public float of less than $75 million as of the last business day of its most recently completed second fiscal quarter, computed by multiplying the aggregate worldwide number of shares of its voting and non-voting common equity held by non-affiliates by the price at which the common equity was last sold, or the average of the bid and asked prices of common equity, in the principal market for the common equity; or | |
| ● | In the case of an initial registration statement under the Securities Act or Exchange Act for shares of its common equity, had a public float of less than $75 million as of a date within 30 days of the date of the filing of the registration statement, computed by multiplying the aggregate worldwide number of such shares held by non-affiliates before the registration plus, in the case of a Securities Act registration statement, the number of such shares included in the registration statement by the estimated public offering price of the shares; or |
| ● | In the case of an issuer whose public float as calculated under paragraph (1) or (2) of this definition was zero, had annual revenues of less than $50 million during the most recently completed fiscal year for which audited financial statements are available. |
We qualify as a Smaller Reporting Company. Moreover, as a Smaller Reporting Company and so long as we remain a Smaller Reporting Company, we benefit from similar exemptions and exclusions as an Emerging Growth Company. In the event that we cease to be an Emerging Growth Company as a result of a lapse of the five year period, but continue to be a Smaller Reporting Company, we would continue to be subject to similar exemptions available to Emerging Growth Companies until such time as we were no longer a Smaller Reporting Company.
Overview
Effective December 31, 2007, the Company approved and authorized a plan of quasi reorganization and restatement of accounts to eliminate the accumulated deficit and related capital accounts on the Company’s balance sheet. The Company concluded its period of reorganization after reaching a settlement agreement with all of its significant creditors. The Company, as approved by its Board of Directors, elected to state its May 31, 2008, balance sheet as a “quasi reorganization”, pursuant to ARB 43. These rules require the revaluation of all assets and liabilities to their current values through a current charge to earnings and the elimination of any deficit in retained earnings by charging paid-in capital. From June 1, 2008 forward, the Company has recorded net income (and net losses) to deficit accumulated since quasi reorganization.
Results of Operations
Our current activities are related to seeking new business opportunities. We will use our limited personnel and financial resources in connection with such activities. It may be expected that pursuing a new business opportunity will involve the issuance of restricted shares of common stock. At August 31, 2013, we had $0 of cash assets and $89,003 of current liabilities, $74,364, of which was due to related parties.
We have had no revenues during the three months ended August 31, 2013 or 2012. Our operating expenses for the three months ended August 31, 2013 were $20,074 and for the three months ended August 31, 2012 were $6,285 comprised of general and administrative expenses.
Management believes there exists numerous private operating businesses seeking the perceived benefits of operating as a publicly registered corporation whose common stock trades on the over the counter bulletin board or OTC Markets OTCQB. Perceived benefits may include increasing equity financing options, providing stock options or similar benefits as incentives to key employees, and achieving liquidity (subject to restrictions of applicable statutes), for all shareholders. Management further believes that certain private operating businesses prefer merging into a publicly registered company so as to eliminate the time and expense of conducting an initial public offering.
Although a private entity can file a Form 10 registration statement, this will not, in and of itself, entitle their securities to be quoted on any quotation medium or exchange. Consequently, management believes that the perceived benefits of a merger still outweigh the expenditure involved, including the potential expense of acquiring the publicly registered corporation itself and all legal and accounting expenses.
Owners of these private operating businesses will still incur significant legal and accounting costs in connection with the acquisition of a publicly registered corporation, including the costs of preparing Form 8K’s, 10K’s, 10Q’s and agreements and related reports and documents. The Securities Exchange Act of 1934 specifically requires that within four (4) days of completion of a merger or acquisition transaction with a private operating business, a Form 8-K be filed containing Form 10 information regarding the private operating company, including audited financial statements.
| 4 |
Continuing Operations, Liquidity and Capital Resources
From October 2007 through September 2012, Management related parties have invested $12,500 into the Company, via a reduction of the Due to Related Party balance, in exchange for 2,100,000 shares of common stock and 5,000,000 shares of series B preferred stock since inception. In addition, management has loaned the Company $31,864 for ongoing expenses. While we are dependent upon interim funding provided by management to pay professional fees and expenses, we have no written finance agreement with management to provide any continued funding. As of August 31, 2013 the Company had current liabilities of $89,003, $74,364 of which is due to related parties. In particular, management has loaned the Company $31,864 and the Company’s securities counsel, Laura Anthony, the wife of our officer and director, is owed $42,500 for legal services in connection with general corporate work, the Company’s Registration Statement and preparation and filing of annual and quarterly reports. Although we believe management will continue to fund the Company on an as needed basis, we do not have a written agreement requiring such funding. In addition, future management funding, will more than likely be in the form of loans, for which the Company will be liable to pay back.
The principal stockholder/CEO provided, without cost to the Company, his services, valued at $1,800 per month which totaled $5,400 for each of the quarters ended August 31, 2013 and 2012. The principal stockholder also provided, without cost to the Company, office space valued at $200 per month, which totaled $600 for each of the quarters ended August 31, 2013 and 2012. The total of these expenses was reflected in the statement of operations as general and administrative expenses with a corresponding contribution of paid-in capital.
The Board of Directors of the Company has determined that the best course of action for the Company is to complete a business combination with an existing business. The Company has limited liquidity or capital resources. As of August 31, 2013, the Company had a cash balance of $0. In the event that the Company cannot complete a merger or acquisition and cannot obtain capital needs for ongoing expenses, including expenses related to maintaining compliance with the securities laws and filing requirements of the Securities Exchange Act of 1934, the Company could be forced to cease operations.
Stark Beneficial currently plans to satisfy its cash requirements for the next 12 months through borrowing from its officer and director or companies affiliated with its officer and director and believes it can satisfy its cash requirements so long as it is able to obtain financing from these affiliated entities. Stark Beneficial currently expects that money borrowed will be used during the next 12 months to satisfy the Company’s operating costs, professional fees and for general corporate purposes. The Company may explore alternative financing sources, although it currently has not done so.
Stark Beneficial will use its limited personnel and financial resources in connection with seeking new business opportunities, including seeking an acquisition or merger with an operating company. It may be expected that entering into a new business opportunity or business combination will involve the issuance of a substantial number of restricted shares of common stock. If such additional restricted shares of common stock are issued, the shareholders will experience a dilution in their ownership interest in the Company. If a substantial number of restricted shares are issued in connection with a business combination, a change in control may be expected to occur.
In connection with the plan to seek new business opportunities and/or effecting a business combination, the Company may determine to seek to raise funds from the sale of restricted stock or debt securities. The Company has no agreements to issue any debt or equity securities and cannot predict whether equity or debt financing will become available at acceptable terms, if at all.
There are no limitations in the certificate of incorporation on the Company’s ability to borrow funds or raise funds through the issuance of capital stock to effect a business combination. The Company’s limited resources and lack of recent operating history may make it difficult to borrow funds or raise capital. Such inability to borrow funds or raise funds through the issuance of capital stock required to effect or facilitate a business combination may have a material adverse effect on the Company’s financial condition and future prospects, including the ability to complete a business combination. To the extent that debt financing ultimately proves to be available, any borrowing will subject the Company to various risks traditionally associated with indebtedness, including the risks of interest rate fluctuations and insufficiency of cash flow to pay principal and interest, including debt of an acquired business.
| 5 |
The Company currently has no plans to conduct any research and development or to purchase or sell any significant equipment. The Company does not expect to hire any employees during the next 12 months.
Off Balance Sheet Arrangements
None.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
As a smaller reporting company, we are not required to provide the information in this Item 3.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 as of the end of the period covered by this report (the “Evaluation Date”). Based upon the evaluation, our principal executive officer and principal financial officer concluded as of the Evaluation Date that our disclosure controls and procedures were effective. Disclosure controls are controls and procedures designed to reasonably ensure that information required to be disclosed in our reports filed under the Exchange Act, such as this report, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls include controls and procedures designed to reasonably ensure that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.
There were no significant changes in the Company’s internal controls or in other factors that could significantly affect these controls subsequent to that evaluation, and there were no significant deficiencies or material weaknesses in such controls requiring corrective actions.
Evaluation of and Report on Internal Control over Financial Reporting
The management of the Registrant is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the company’s principal executive and principal financial officers and effected by the company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America and includes those policies and procedures that:
| − | Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company; | |
| − | Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and | |
| − | Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements. |
| 6 |
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Because of the inherent limitations of internal control, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.
Changes in Internal Controls Over Financial Reporting
There were no changes in our internal controls over financial reporting that occurred during the quarterly period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
| 7 |
Stark Beneficial’s officers and directors are not aware of any threatened or pending litigation to which the Company is a party or which any of its property is the subject and which would have any material, adverse effect on the Company.
As a smaller reporting company, we are not required to provide disclosure under this Item 1A.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The following is a list of unregistered securities sold by the Company within the last three years including the date sold, the title of the securities, the amount sold, the identity of the person who purchased the securities, the price or other consideration paid for the securities, and the section of the Securities Act of 1933 under which the sale was exempt from registration as well as the factual basis for claiming such exemption.
In exchange for a capital investment of $10,000 by Corporate Services International on or near May 23, 2012, Stark Beneficial issued to Corporate Services International 5,000,000 shares of its Series B Preferred Stock.
The Company believes that the issuance and sale of the restricted shares was exempt from registration pursuant to Section 4(a)(2) of the Act as privately negotiated, isolated, non-recurring transactions not involving any public solicitation. An appropriate restrictive legend is affixed to the stock certificates issued in such transactions.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures
Not applicable
None.
| 31.1 | Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002* | |
| 32.1 | Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes Oxley Act of 2002* | |
| 101.INS | XBRL Instance Document** | |
| 101.SCH | XBRL Taxonomy Extension Schema Document** | |
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document** | |
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document** | |
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document** | |
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document** |
* Filed Herewith.
** In accordance with Regulation S-T, the XBRL-formatted interactive data files that comprise Exhibit 101 in this Quarterly Report on Form 10-Q shall be deemed “furnished” and not “filed”.
| 8 |
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Stark Beneficial, Inc. | |
| /s/ Michael Anthony | |
| Name: Michael Anthony | |
| Title: President/CEO and Director and Chief Accounting Officer | |
| October 10, 2013 |
| 9 |
31.1 Certification of the Chief Executive Officer and Chief Financial Officer of Stark Beneficial, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Michael Anthony, certify that:
1. I have reviewed this Form 10-Q of Stark Beneficial, 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 in order to make the statements made, in light of the circumstances under which such statements were made, not misleading;
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 and results of operations of the Registrant as of, and for, the periods presented in this report;
4. The Registrant’s other certifying officer(s) and I are 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 Rules 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 our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
5. The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
Date: October 10, 2013
| /s/ Michael Anthony | |
| Michael Anthony | |
| Chief Financial Officer |
32.1 Certification of the Chief Executive Officer and Chief Financial Officer of Stark Beneficial, Inc. pursuant to Section 906 of the Sarbanes Oxley Act of 2002
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Stark Beneficial, Inc. (the “Company”) for the quarter ended August 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned Michael Anthony, Chief Executive Officer and Chief Financial Officer of Stark Beneficial, Inc., certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: October 10, 2013
| /s/ Michael Anthony | |
| Michael Anthony | |
| Chief Executive Officer |