10-K/A 1 g3853.txt AMENDMENT NO. 1 TO FORM 10-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K/A [X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended: December 31, 2008 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT For the transition period from _________ to ________ Commission file number: 333-152535 Buyonate, Inc. (Exact name of registrant as specified in its charter) Nevada 98-0550385 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) Suite 803 - 5348 Vegas Drive Las Vegas, NV 89108 (Address of principal executive offices) (Zip Code) Registrant's telephone number: 1-702-939-6505 Securities registered under Section 12(b) of the Exchange Act: Title of each class Name of each exchange on which registered ------------------- ----------------------------------------- none not applicable Securities registered under Section 12(g) of the Exchange Act: Title of each class Name of each exchange on which registered ------------------- ----------------------------------------- none not applicable Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [X] Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X] Check whether the Issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the past 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 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 (ss. 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. 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. 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 [ ] 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 last 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. Not available Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. 4,810,000 as of February 9, 2010. EXPLANATORY NOTE: This amended Form 10-K is filed in response to advice by the U.S. Securities and Exchange Commission that on August 27, 2009, the PCAOB revoked the registration of our prior auditor, Moore & Associates Chartered and that due to the revocation, a re-audit of the Company's financial statements for the year ended December 31, 2008 would be required. For this purpose, our new auditor, GBH CPAs, PC, has conducted a re-audit of the Company's financial statements for the year ended December 31, 2008, for the period from Inception (July 9, 2007) through December 31, 2007 and for the period from Inception (July 9, 2007) through December 31, 2008. In compliance with the SEC's notification, this report incorporates the re-audited Company financial statements for the year ended December 31, 2008, for the period from Inception (July 9, 2007) through December 31, 2007 and for the period from Inception (July 9, 2007) through December 31, 2008. The Company has also updated its Management's Discussion and Analysis. 2 TABLE OF CONTENTS Page ---- PART I Item 1. Business 4 Item 1A. Risk Factors 7 Item 1B. Unresolved Staff Comments 8 Item 2. Properties 8 Item 3. Legal Proceedings 8 Item 4. Submission of Matters to a Vote of Security Holders 8 PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities 8 Item 6. Selected Financial Data 10 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 14 Item 8. Financial Statements and Supplementary Data 14 Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure 14 Item 9A(T). Controls and Procedures 14 Item 9B. Other Information 16 PART III Item 10. Directors, Executive Officers and Corporate Governance 16 Item 11. Executive Compensation 18 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 20 Item 13. Certain Relationships and Related Transactions, and Director Independence 21 Item 14. Principal Accountant Fees and Services 21 PART IV Item 15. Exhibits, Financial Statement Schedules 22 3 PART I ITEM 1. BUSINESS OUR BUSINESS OVERVIEW OF THE COMPANY We were incorporated on July 9, 2007. We are focused on developing and offering software products for the creation of interactive digital software for children. Our offices are currently located at: Suite 803-5348 Vegas Drive, Las Vegas, NV 89108. Our telephone number is 1-702-939-6505. We have secured a domain name - www.buyonate.com. Objectives We are in the business of selling user-friendly software that creates interactive digital yearbooks for schools. The software allows schools and clubs to create and burn their own interactive digital yearbooks on CD/DVD. Our software makes it simple to upload digital photos, videos, and music to the schools digital yearbook. The software is easy to use and enables both teachers and students to quickly turn their memories into easy to share CD and DVD's. These digital yearbooks are based on their school's events, classes, friends and activities. Our target market is primarily elementary schools, high schools and clubs. Industry Background Internet-based transactions between shoppers and merchants have grown rapidly in recent years. This growth is the result of the penetration of broadband technologies and increased Internet usage and the emergence of compelling commerce opportunities and a growing awareness among shoppers of the convenience and other benefits of online shopping. INDUSTRY ESTIMATES OF THE GROWING INTERNET POPULATION AND INTERNET PENETRATION LEVELS Based on a research report prepared by Morgan Stanley: - We believe that the Internet is still in the early stages of becoming a central communications, information, commerce, and entertainment medium. We estimate there are over 800+ million Internet users worldwide using the Internet an estimated average of 30-45 minutes per day. - We expect the number of Internet users to grow at 10-15% annually for the next several years, with stronger growth in non-US markets. - We believe that usage growth (in part because of ongoing broadband adoption) should continue to be higher (perhaps 20-30%), thus demonstrating compelling underlying growth trends. - Given this relatively robust underlying growth, we continue to believe that the leading Internet companies should, over time, be able to generate strong double-digit top-line growth, and as the financial models scale towards higher long-term margins, should be able to generate even stronger earnings growth -- AKA leverage. Source: Mary Meeker, Brian Pitz, and Brian Fitzgerald, "Internet Trends, "a Morgan Stanley Research Report, http://www.morganstanley.com/institutional/techresearch GROWTH OF ELECTRONIC COMMERCE Forrester Research believes that electronic commerce activity in the United States, fueled by a steady stream of new online shoppers and new product category sales, will grow at a compounded annual growth rate of 19% over the next five years. US online retail reached $175 billion in 2007 and is projected to grow to $335 billion by 2012. Business-to-consumer (B2C) eCommerce continues its double-digit year-over-year growth rate, in part because sales are shifting away from stores. Source: Forrester Research, (C) 2003, Forrester Research, Inc. http://www.forrester.com/rb/search/results.jsp?N=133001+50985+51001 4 MARKETING STRATEGY We market our interactive digital Memories FunBook software with a web-based marketing campaign. This web-based campaign includes the following: E-MAIL MARKETING We have budgeted $5,000 from our marketing budget for an e-mail campaign. Emails will be sent only to those which have asked for or shown an interest in receiving information about our software. CATALOGUE ADVERTISING One of the sources for advertising our Memories FunBook software is by placing ads in software distributor catalogues. These catalogues are distributed to elementary and high schools across Canada and the United States as well as the general public and to retail outlets selling software. Given the ease with which statistics can be collected on the number of times catalogue ads have been successful by users, there is strong evidence that they can be very effective. Nevertheless, it is difficult to determine whether these catalogue ads are more or less effective than other forms of advertising. We have budgeted $5,000 from our marketing campaign for software distributor catalogue advertising. We intend to place ads in catalogues that specifically target parents and children between the ages of 5 to 12. SUBMISSION TO DIRECTORIES AND SEARCH ENGINES We have to submitted our website to directories and search engines in order to increase our presence on the Internet, as well as to get better rankings on search results. There are many directories to which we plan to submit our website for free, such as Google ( http://www.google.com ), Yahoo ( http://www.yahoo.com - regional Yahoos also exist), AltaVista ( http://www.altavista.com ) and Excite ( http://www.excite.com ). There are literally hundreds of such directories where we can list our software at no cost to the company. DISTRIBUTION OF SOFTWARE The price of our software is $499 for a downloadable version or boxed version. According to our business model, the majority of our revenues should come from online sales of our software. We have entered into an agreement with PayPal to act as our credit card merchant. PayPal is a financial company that accepts and clears all customer credit card payments on behalf of participating merchants, such as our company. There are no short or long term contracts or obligations associated with the use of PayPal. PayPal accepts all major credit cards (Visa, MasterCard, Discover, American Express, ECheque, and transfer of funds to and from bank accounts.) PayPal's commission varies between 1.9% to 2.9% + $0.55 per transaction. 5 PayPal rate structure: $0.00 - $3,000.00 2.9% + $0.55 $3,000.01 - $12,000.00 2.5% + $0.55 $12,000.01 - $125,000.00 2.2% + $0.55 $125,000.00 1.9% + $0.55 SOURCES AND AVAILABILITY OF PRODUCTS AND SUPPLIES We resell software from a supplier, YearBook Alive; otherwise there are no constraints on the sources or availability of products and supplies related to our business. DEPENDENCE ON ONE OR A FEW MAJOR CUSTOMERS We sell our software products and services directly to our target market over the internet. Our Memories Funbook software will be priced for mass market consumption. Therefore, we do not anticipate dependence on one or a few major customers for at least the next 12 months or the foreseeable future. OUR TARGET MARKET We plan to market our interactive digital software to elementary aged children between the ages of 5 to 12. The research below is based on students K-12 enrolled in schools throughout the US and Canada. This gives us the opportunity to estimate the number of potential customers within our target market. According to the following surveys in the United States and Canada, our target market in North America is very large: The U.S. Census Bureau's estimate for the number of students in 2003, 75 million people -- more than one-fourth of the U.S. population age 3 and older -- were in school throughout the country. (http://www.census.gov/Press-Release/www/releases /archives/education/005157.html) There are over 150,000 K-12 schools in the US. (http://www.allschoolsandlearning.com ) These numbers do not include online schools. According to Statistics Canada, based on a census conducted in 2006, the number of school aged children under 15 residing in Canada was 5,644,600 (http://www40.statcan.ca/l01/cst01/demo10a.htm). Based on the foregoing information, we believe that attracting only a small percentage of our target market in North America will enable us to operate profitably. There can be no assurance, however, that our software products will appeal to our target market. 6 COMPETITION Buyonate's competition comes from several industry participants which include companies such as Surplus CD- Rom (http://www.surpluscdrom.com) and Rusty and Rosy Learn With Me ( http://www.rustyandrosy.ca ) These companies currently dominate the online children's software market and we expect them to remain the dominant force for the time being. REGULATORY MATTERS We are unaware of and do not anticipate having to expend significant resources to comply with any governmental regulations of our resale of software products. We are subject to the laws and regulations of those jurisdictions in which we plan to sell our product, which are generally applicable to business operations, such as business licensing requirements, income taxes and payroll taxes. In general, the development and operation of our website is not subject to special regulatory and/or supervisory requirements. EMPLOYEES We have no other employees other than our officers and directors. ENVIRONMENTAL LAWS We have not incurred and do not anticipate incurring any expenses associated with environmental laws. ITEM 1A. RISK FACTORS A smaller reporting company is not required to provide the information required by this Item. 7 ITEM 1B. UNRESOLVED STAFF COMMENTS A smaller reporting company is not required to provide the information required by this Item. ITEM 2. PROPERTIES Our offices are currently located at: Suite 803-5348 Vegas Drive, Las Vegas, NV 89108. Our telephone number is 1-702-939-6505. This is a shared office facility, which offers office space, conference and meeting rooms, secretarial and administrative services for approximately $600 annually. We may cancel upon 30 days written notice. This location will serve as our primary executive offices for the foreseeable future. We believe that our office space and facilities are sufficient to meet our present needs and do not anticipate any difficulty securing alternative or additional space, as needed, on terms acceptable to us. ITEM 3. LEGAL PROCEEDINGS We are not a party to any pending legal proceeding. We are not aware of any pending legal proceeding to which any of our officers, directors, or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse to us. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matters were submitted to a vote of the Company's shareholders during the fiscal year ended December 31, 2008. PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES MARKET INFORMATION Our common stock is currently quoted on the OTC Bulletin Board ("OTCBB"), which is sponsored by FINRA. The OTCBB is a network of security dealers who buy and sell stock. The dealers are connected by a computer network that provides information on current "bids" and "asks", as well as volume information. Our shares are quoted on the OTCBB under the symbol "BUYO." The following table sets forth the range of high and low bid quotations for our common stock for each of the periods indicated as reported by the OTCBB. These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions. Fiscal Year Ending December 31, 2008 Quarter Ended High $ Low $ ------------- ------ ----- December 31, 2008 N/A N/A September 30, 2008 N/A N/A June 30, 2008 N/A N/A March 31, 2008 N/A N/A Fiscal Year Ending December 31, 2007 Quarter Ended High $ Low $ ------------- ------ ----- December 31, 2007 N/A N/A September 30, 2007 N/A N/A 8 PENNY 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 market 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 system. 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: (a) contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading; (b) 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 of such duties or other requirements of the securities laws; (c) 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; (d) contains a toll-free telephone number for inquiries on disciplinary actions; (e) defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and (f) 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 statement 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 as to transactions involving penny stocks, and a signed and dated copy of a written suitability statement. These disclosure requirements may have the effect of reducing the trading activity for our common stock. Therefore, stockholders may have difficulty selling our securities. 9 HOLDERS OF OUR COMMON STOCK As of December 31, 2008, we had thirty-six (36) shareholders of record. DIVIDENDS There are no restrictions in our articles of incorporation or bylaws that prevent us from declaring dividends. The Nevada Revised Statutes, however, do prohibit us from declaring dividends where after giving effect to the distribution of the dividend: 1. we would not be able to pay our debts as they become due in the usual course of business, or; 2. our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the rights of shareholders who have preferential rights superior to those receiving the distribution. We have not declared any dividends and we do not plan to declare any dividends in the foreseeable future. SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS We do not have any equity compensation plans. ITEM 6. SELECTED FINANCIAL DATA A smaller reporting company is not required to provide the information required by this Item. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FORWARD-LOOKING STATEMENTS Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words "believes," "project," "expects," "anticipates," "estimates," "intends," "strategy," "plan," "may," "will," "would," "will be," "will continue," "will likely result," and similar expressions. We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of complying with those safe-harbor provisions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse affect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Further information concerning our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC. 10 PLAN OF OPERATION OUR MEMORIES FUNBOOK SOFTWARE We are in the business of selling user-friendly software that creates interactive digital yearbooks for schools. The software allows schools and clubs to create and burn their own interactive digital yearbooks on CD/DVD. Our software makes it simple to upload digital photos, videos, and music to the schools digital yearbook. The software is easy to use and enables both teachers and students to quickly turn their memories into easy to share CD and DVD's. These digital yearbooks are based on their school's events, classes, friends and activities. Our target market is primarily elementary schools, high schools and clubs. OUR TARGET MARKET Our initial target market is the parents of and elementary aged children between the ages of 5 to 12 in the United States and Canada. OUR MISSION Our mission is to take the traditional scrap book and photo album to a new level by using the vast collection of photos, video, audio and text in an interactive, and very easy to use digital software especially designed to appeal to schools, teachers, parents and their children. 11 OUR BUSINESS OBJECTIVES ARE: * To sell interactive digital software that will benefit elementary aged children giving them the opportunity to not just create but also burn their own digital Memories FunBooks on CD/DVD for their friends, family and themselves. This software will be offered to schools as well as the general public targeted for children between the ages of 5 to 12; * To execute our web-based marketing campaign and to create interest in our product; and * To establish a brand name that will be associated with user-friendly interactive digital software. RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2008 AND PERIOD FROM JULY 9, 2007 (INCEPTION) THROUGH DECEMBER 31, 2008 We generated no revenue for the period from July 9, 2007 (Date of Inception) until December 31, 2008. We do not anticipate earning significant and consistent revenues until we are able to successfully market our interactive digital software for children. Our operating expenses were $40,887 for the year ended December 31, 2008, and $40,887 for the period from July 9, 2007 (Inception) until December 31, 2008. Our operating expenses for the year ended December 31, 2008 consisted of $24,608 in general and administrative expenses and $16,279 in professional fees. Our operating expenses for the period from July 9, 2007 until December 31, 2008 consisted of $24,608 in general and administrative expenses and $16,279 in professional fees. 12 We, therefore, recorded a net loss of $40,887 for the year ended December 31, 2008, and $40,887 for the period from July 9, 2007 (Date of Inception) until December 31, 2008. We anticipate our operating expenses will increase as we implement our business plan. The increase will be attributable to expenses to implement our business plan and the professional fees to be incurred in connection with our becoming a reporting company under the Securities Exchange Act of 1934. LIQUIDITY AND CAPITAL RESOURCES We had $13 in current assets consisting solely of cash at December 31, 2008. We had no current liabilities as of December 31, 2008. As such, at December 31, 2008, we had working capital of $13. Funds currently available will not satisfy our working capital requirements for the next twelve months. Estimated funding required during the next twelve month period is $48,100. As of December 31, 2008, we have not had any income from operations. We will require additional funds to implement our plans. These funds may be raised through equity financing, debt financing, or other sources, which may result in the dilution in the equity ownership of our shares. We will also need more funds if the costs of the development of our website costs greater than we have budgeted. We will also require additional financing to sustain our business operations if we are not successful in earning revenues. We currently do not have any arrangements for further financing and we may not be able to obtain financing when required. Our future is dependent upon our ability to obtain financing. The continuation of our business is dependent upon us obtaining further financing, the successful development of our website, a successful marketing and promotion program, attracting and, further in the future, achieving a profitable level of operations. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments. There are no assurances that we will be able to obtain further funds required for our continued operations. We will pursue various financing alternatives to meet our immediate and long-term financial requirements. There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we are not able to obtain the additional financing on a timely basis, we will be unable to conduct our operations as planned, and we will not be able to meet our other obligations as they become due. In such event, we will be forced to scale down or perhaps even cease our operations. 13 PURCHASE OF SIGNIFICANT EQUIPMENT We do not expect to purchase any significant equipment over the twelve months. EMPLOYEES Currently our only employees are our directors and officers. We do not expect any other material changes in the number of employees over the next 12 months. OFF BALANCE SHEET ARRANGEMENTS As of December 31, 2008, there were no significant off balance sheet arrangements. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK A smaller reporting company is not required to provide the information required by this Item. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA See the financial statements annexed to this annual report. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE On August 7, 2009, Board of Directors of the Company dismissed Moore & Associates Chartered, its independent registered public account firm. On the same date, August 7, 2009, the accounting firm of Seale and Beers, CPAs was engaged as the Company's new independent registered public account firm. The Company's Board of Directors and the Audit Committee approved of the dismissal of Moore & Associates Chartered and the engagement of Seale and Beers, CPAs as its independent auditor. None of the reports of Moore & Associates Chartered on the Company's financial statements for either of the past two years or subsequent interim period contained an adverse opinion or disclaimer of opinion, or was qualified or modified as to uncertainty, audit scope or accounting principles, except that the Company's audited financial statements contained in its Form 10-K for the fiscal year ended December 31, 2008 a going concern qualification. On August 7, 2009 the Company engaged Seale and Beers, however, on November 12, 2009, the Board of Directors of the Company dismissed Seale and Beers, CPAs and on the same date, the accounting firm of GBH CPAs, PC was engaged as the Company's new independent registered public accounting firm. The Board of Directors of the Company approved of the dismissal of Seale and Beers, CPAs and the engagement of GBH CPAs, PC as its independent auditor. On August 27, 2009, the PCAOB revoked the registration of our prior auditor, Moore & Associates Chartered, because of violations of PCAOB rules and auditing standards in auditing financial statements, PCAOB rules and quality controls standards and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and for noncooperation with a Board investigation. The Company was notified by the SEC that, a due to the revocation, a re-audit of the Company's financial statements for the year ended December 31, 2008 would be required. For this purpose, GBH CPAs, PC has conducted a re-audit of the Company's financial statements for the year ended December 31, 2008, for the period from Inception (July 9, 2007) through December 31, 2007 and for the period from Inception (July 9, 2007) through December 31, 2008 . In compliance with the SEC's notification, this report incorporates the re-audited Company financial statements for the year ended December 31, 2008, for the period from Inception (July 9, 2007) through December 31, 2007 and for the period from Inception (July 9, 2007) through December 31, 2008. ITEM 9A(T). CONTROLS AND PROCEDURES EVALUATION OF CONTROLS AND PROCEDURES We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of December 31, 2008. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer, Mr. Husni Hassadiyeh, and our Chief Financial Officer, Ms. Inbar Kuta. 14 Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2008, our disclosure controls and procedures are effective. There have been no significant changes in our internal controls over financial reporting during the quarter ended December 31, 2008 that have materially affected or are reasonably likely to materially affect such controls. Disclosure controls and procedures are controls and other 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. LIMITATIONS ON THE EFFECTIVENESS OF INTERNAL CONTROLS Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material error. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving our objectives and our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective at that reasonable assurance level. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the internal control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCING REPORTING This annual report does not include a report of management's assessment regarding internal control over financial reporting or an attestation report of the company's independent registered public accounting firm due to a transition period established by rules of the Securities and Exchange Commission for newly public companies. CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING During the most recently completed fiscal quarter, there has been no change in our internal control over financial reporting that has materially affected or is reasonably likely to materially affect, our internal control over financial reporting. 15 ITEM 9B. OTHER INFORMATION None PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Our executive officers and directors and their respective ages as of December 31, 2008 are as follows: Position Held Date First Elected Name with the Company Age or Appointed ---- ---------------- --- ------------ Mr. Husni Hassadiyeh President and Director 43 July 9, 2007 Ms. Inbar Kuta Secretary, Treasurer 21 July 9, 2007 and Director BUSINESS EXPERIENCE: The following is a brief account of the education and business experience of each director and executive officers, indicating each person's business experience, and the name and principal business of the organization by which they were employed. MR. HUSNI HASSADIYEH Mr. Husni Hassadiyeh, our President, and Director since July 9, 2007, is a registered and licensed oral surgeon in Israel. Mr. Hassadiyeh has devoted and donated many years of his life and dental practice to helping schools on his own time by visiting the schools and providing the students with oral care. He has also organized and been involved with many fund raising activities for schools in Israel for many years. MS. INBAR KUTA Ms. Kuta has been our Secretary, Treasurer and a Director since we were incorporated on July 9, 2007. In 2005, Ms. Kuta founded a small volunteer organization in Israel called Children First, and since then she was its principal owner and manager. Ms. Kuta developed this organization to help support children that have financial hardships and need certain supplies to do well in school. She manages a volunteer support group which solicits donations of products and services such as clothing, note books, pens and pencils, art supplies, and transportation if required to and from schools. She is a graduate of the Chaklayi School in Israel. FAMILY RELATIONSHIPS There are no family relationships among our directors or executive officers. 16 INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS To the best of our knowledge, during the past five years, none of the following occurred with respect to a present director, person nominated to become director, executive officer, or control person: (1) any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; (2) any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) being subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his or her involvement in any type of business, securities or banking activities; and (4) being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated. COMMITTEES OF THE BOARD Our company currently does not have nominating, compensation or audit committees or committees performing similar functions nor does our company have a written nominating, compensation or audit committee charter. Our sole director believes that it is not necessary to have such committees, at this time, because the functions of such committees can be adequately performed by the board of directors. Our company does not have any defined policy or procedural requirements for shareholders to submit recommendations or nominations for directors. The board of directors believes that, given the stage of our development, a specific nominating policy would be premature and of little assistance until our business operations develop to a more advanced level. Our company does not currently have any specific or minimum criteria for the election of nominees to the board of directors and we do not have any specific process or procedure for evaluating such nominees. The sole director on the board of directors, as the case may be, will assess all candidates, whether submitted by management or shareholders, and make recommendations for election or appointment. A shareholder who wishes to communicate with our board of directors may do so by directing a written request addressed to our President and director, Mr. Husni Hassadiyeh, at the address appearing on the first page of this annual report. AUDIT COMMITTEE FINANCIAL EXPERT Our board of directors has determined that we do not have a board member that qualifies as an "audit committee financial expert" as defined in Item 407 of Regulation S-K, nor do we have a Board member that qualifies as "independent" as the term is used in Item 7(d)(3)(iv)(B) of Schedule 14A under the Securities Exchange Act of 1934, as amended, and as defined by Rule 4200(a)(14) of the FINRA Rules. 17 We believe that our board of directors is capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting. The board of directors of our company does not believe that it is necessary to have an audit committee because management believes that the functions of an audit committee can be adequately performed by the sole director. In addition, we believe that retaining an independent director who would qualify as an "audit committee financial expert" would be overly costly and burdensome and is not warranted in our circumstances given the stage of our development and the fact that we have not generated any positive cash flows from operations to date. CODE OF ETHICS As of December 31, 2008, we had not adopted a Code of Ethics for Financial Executives, which would include our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. ITEM 11. EXECUTIVE COMPENSATION SUMMARY COMPENSATION TABLE The table below summarizes all compensation awarded to, earned by, or paid to both to our officers and to our directors for all services rendered in all capacities to us for our fiscal years ended December 31, 2008 and 2007. SUMMARY COMPENSATION TABLE
Non-Equity Nonqualified Name and Incentive Deferred Principal Stock Option Plan Compensation All Other Position Year Salary($) Bonus($) Awards($) Awards($) Compensation($) Earnings($) Compensation($) Total($) -------- ---- --------- -------- --------- --------- --------------- ----------- --------------- -------- Mr. Husni 2007 0 0 0 0 0 0 0 0 Hassadiyeh 2008 0 0 0 0 0 0 0 0 President, Chief Executive Officer, Principal Executive Officer, and Director Ms. Inbar Kuta 2007 0 0 0 0 0 0 0 0 Secretary, 2008 0 0 0 0 0 0 0 0 Treasurer, Chief Financial Officer, Principal Financial Officer, Principal Accounting Officer
18 NARRATIVE DISCLOSURE TO THE SUMMARY COMPENSATION TABLE We have not entered into any employment agreement or consulting agreement with our executive officers. There are no arrangements or plans in which we provide pension, retirement or similar benefits for executive officers. Although we do not currently compensate our officers, we reserve the right to provide compensation at some time in the future. Our decision to compensate officers depends on the availability of our cash resources with respect to the need for cash to further our business purposes. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END The table below summarizes all unexercised options, stock that has not vested, and equity incentive plan awards for each named executive officer as of December 31, 2008. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
Option Awards Stock Awards ---------------------------------------------------------------- ------------------------------------------------ Equity Incentive Equity Plan Incentive Awards: Plan Market or Awards: Payout Equity Number of Value of Incentive Number Unearned Unearned Plan Awards; of Market Shares, Shares, Number of Number of Number of Shares Value of Units or Units or Securities Securities Securities or Units Shares or Other Other Underlying Underlying Underlying of Stock Units of Rights Rights Unexercised Unexercised Unexercised Option Option That Stock That That That Options Options Unearned Exercise Expiration Have Not Have Not Have Not Have Not Name Exercisable(#) Unexercisable(#) Options(#) Price($) Date Vested(#) Vested($) Vested(#) Vested(#) ---- -------------- ---------------- ---------- ----- ---- --------- --------- --------- --------- Mr. Husni -- -- -- -- -- -- -- -- -- Hassadiyeh Ms. Inbar -- -- -- -- -- -- -- -- -- Kuta
STOCK OPTION GRANTS We have not granted any stock options to the executive officers or directors since our inception. 19 DIRECTOR COMPENSATION We do not pay any compensation to our directors at this time. However, we reserve the right to compensate our directors in the future with cash, stock, options, or some combination of the above. We have not reimbursed our directors for expenses incurred in connection with attending board meetings nor have we paid any directors fees or other cash compensation for services rendered as a director in the year ended December 31, 2008. STOCK OPTION PLANS We did not have a stock option plan as of December 31, 2008 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The following table sets forth, as of December 31, 2008 certain information with respect to the beneficial ownership of our common stock by each shareholder known by us to be the beneficial owner of more than 5% of our common stock and by our current sole director and executive officer. The shareholder has sole voting and investment power with respect to the shares of common stock, except as otherwise indicated. Beneficial ownership consists of a direct interest in the shares of common stock, except as otherwise indicated. Name and Address of Amount and Nature of Percentage of Title of Class Beneficial Owner (2) Beneficial Ownership Class (1) -------------- -------------------- -------------------- --------- Common Stock Mr. Husni Hassadiyeh 2,000,000 41.58% Common Stock Ms. Inbar Kuta 2,000,000 41.58% All officers as a Group 4,000,000 83.16% ---------- (1) Based on 4,810,000 shares of our common stock outstanding. As used in this table, "beneficial ownership" means the sole or shared power to vote, or to direct the voting of, a security, or the sole or shared investment power with respect to a security (i.e., the power to dispose of, or to direct the disposition of, a security). In addition, for purposes of this table, a person is deemed, as of any date, to have "beneficial ownership" of any security that such person has the right to acquire within 60 days after such date. (2) The address for Mr. Husni Hassadiyeh is P.O. Box 1329, St. 2, Fureidis, 3898, Israel The address for Ms. Inbar Kuta is 3 Talpiyut St. Karkur-Pardess Hana, Israel, 37000 CHANGES IN CONTROL We are unaware of any contract, or other arrangement or provision of our Articles of Incorporation or Bylaws, the operation of which may at a subsequent date result in a change of control of our company. 20 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE None of our directors or executive officers, nor any proposed nominee for election as a director, nor any person who beneficially owns, directly or indirectly, shares carrying more than 5% of the voting rights attached to all of our outstanding shares, nor any members of the immediate family (including spouse, parents, children, siblings, and in-laws) of any of the foregoing persons has any material interest, direct or indirect, in any transaction over the last two years or in any presently proposed transaction which, in either case, has or will materially affect us. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES Below is the table of Audit Fees (amounts in US$) billed by our auditors in connection with the re-audit of the Company's annual financial statements for the years ended: Financial Statements for the Audit Audit Related Other Year Ended December 31, Services Fees Tax Fees Fees ----------------------- -------- ------------- -------- ---- 2008 $6,000 -- -- -- 2007 $4,000 -- -- -- 21 PART IV ITEM 15. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES Index to Financial Statements Required by Article 8 of Regulation S-X: Audited Financial Statements: F-1 Report of Independent Registered Public Accounting Firm F-2 Consolidated Balance Sheets as of December 31, 2008 and 2007; F-3 Statements of Operations for the year ended December 31, 2008, the period from inception to December 31, 2007, and the period from inception to December 31, 2008; F-4 Statement of Stockholders' Equity for period from inception to December 31, 2008; F-5 Statements of Cash Flows for the year ended December 31, 2008, the period from inception to December 31, 2007, and the period from inception to December 31, 2008; F-6 Notes to Financial Statements Exhibit Number Description ------ ----------- 3.1 Articles of Incorporation, as amended (1) 3.2 Bylaws, as amended (1) 31.1 Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2 Certification of Chief Financial Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1 Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 ---------- (1) Incorporated by reference to the Registration Statement on Form S-1 filed on July 25, 2008. 22 SIGNATURES In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Buyonate, Inc. By: /s/ Husni Hassadiyeh ------------------------------------------- Husni Hassadiyeh, President and Director (Principal Executive Officer) February 11, 2010 In accordance with Section 13 or 15(d) of the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated: By: /s/ Husni Hassadiyeh ------------------------------------------- Husni Hassadiyeh, President and Director (Principal Executive Officer) February 11, 2010 By: /s/ Inbar Kuta ------------------------------------------- Inbar Kuta, Secretary, Treasurer, Principal Accounting Officer, Principal Financial Officer and Director February 11, 2010 23 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors Buyonate, Inc. (A Development Stage Company) Las Vegas, Nevada We have audited the accompanying balance sheets of Buyonate, Inc. (the "Company") (a development stage company) as of December 31, 2008 and 2007, and the related statements of operations, stockholders' equity, and cash flows for the year ended December 31, 2008, and for the periods since inception on July 9, 2007 through December 31, 2007 and since inception on July 9, 2007 through December 31, 2008, respectively. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects the financial position of Buyonate, Inc. as of December 31, 2008 and 2007, and the results of its operations and its cash flows for the year ended December 31, 2008 and for the periods since inception on July 9, 2007 through December 31, 2007 and since inception on July 9, 2007 through December 31, 2008, respectively, in conformity with accounting principles generally accepted in the United States of America. /s/ GBH CPAs, PC ---------------------------- GBH CPAs, PC www.gbhcpas.com Houston, Texas February 10, 2010 F-1 BUYONATE, INC. (A Development Stage Company) Balance Sheets
December 31, December 31, 2008 2007 -------- -------- ASSETS CURRENT ASSETS Cash $ 13 $ 17,000 -------- -------- Total Current Assets 13 17,000 -------- -------- TOTAL ASSETS $ 13 $ 17,000 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ -- $ -- -------- -------- Total Current Liabilities -- -- -------- -------- STOCKHOLDERS' EQUITY Preferred stock, 50,00,000 shares authorized at par value of $0.0001, no shares issued and outstanding -- -- Common stock, 100,000,000 shares authorized at par value of $0.0001, 4,810,000 shares issued and outstanding 481 481 Additional paid-in capital 40,419 40,419 Stock subscription receivable -- (23,900) Deficit accumulated during the development stage (40,887) -- -------- -------- Total Stockholders' Equity 13 17,000 -------- -------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 13 $ 17,000 ======== ========
The accompanying notes are an integral part of these financial statements. F-2 BUYONATE, INC. (A Development Stage Company) Statements of Operations
From Inception on From Inception on For the Year July 9, 2007 July 9, 2007 Ended Through Through December 31, December 31, December 31, 2008 2007 2008 ---------- ---------- ---------- REVENUES $ -- $ -- $ -- OPERATING EXPENSES General and administrative 24,608 -- 24,608 Professional fees 16,279 -- 16,279 ---------- ---------- ---------- Total Operating Expenses 40,887 -- 40,887 ---------- ---------- ---------- LOSS FROM OPERATIONS (40,887 -- (40,887) ---------- ---------- ---------- OTHER EXPENSES Interest expense -- -- -- ---------- ---------- ---------- Total Other Expenses -- -- -- ---------- ---------- ---------- LOSS BEFORE INCOME TAXES (40,887 -- (40,887) INCOME TAX EXPENSE -- -- -- ---------- ---------- ---------- NET LOSS $ (40,887 $ -- $ (40,887) ========== ========== ========== BASIC AND DILUTED LOSS PER SHARE $ (0.01) $ 0.00 ========== ========== WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC AND DILUTED 4,810,000 4,135,000 ========== ==========
The accompanying notes are an integral part of these financial statements. F-3 BUYONATE, INC. (A Development Stage Company) Statements of Stockholders' Equity From Inception on July 9, 2007 through December 31, 2008
Deficit Accumulated Total Common Stock Additional Stock During the Stockholders' ------------------- Paid-In Subscription Development Equity Shares Amount Capital Receivable Stage (Deficit) ------ ------ ------- ---------- ----- --------- Balance, July 9, 2007 -- $ -- $ -- $ -- $ -- $ -- Common stock issued for cash at $0.0001 per share 4,000,000 400 -- -- -- 400 Common stock issued for cash at $0.05 per share 810,000 81 40,419 (23,900) -- 16,600 Net loss from inception through December 31, 2007 -- -- -- -- -- -- --------- ----- -------- -------- --------- -------- Balance, December 31, 2007 4,810,000 481 40,419 (23,900) -- 17,000 Stock subscriptions received -- -- -- 23,900 -- 23,900 Net loss for the year ended December 31, 2008 -- -- -- -- (40,887) (40,887) --------- ----- -------- -------- --------- -------- Balance, December 31, 2008 4,810,000 $ 481 $ 40,419 $ -- $ (40,887) $ 13 ========= ===== ======== ======== ========= ========
The accompanying notes are an integral part of these financial statements. F-4 BUYONATE, INC. (A Development Stage Company) Statements of Cash Flows
From Inception on From Inception on For the Year July 9, 2007 July 9, 2007 Ended Through Through December 31, December 31, December 31, 2008 2007 2008 -------- -------- -------- OPERATING ACTIVITIES Net loss $(40,887) $ -- $(40,887) Adjustments to Reconcile Net Loss to Net Cash Used by Operating Activities: Common stock issued for services -- -- -- -------- -------- -------- Net Cash Used in Operating Activities (40,887) -- (40,887) -------- -------- -------- INVESTING ACTIVITIES -- -- -- -------- -------- -------- FINANCING ACTIVITIES Common stock issued for cash 23,900 17,000 40,900 -------- -------- -------- Net Cash Provided by Financing Activities 23,900 17,000 40,900 -------- -------- -------- NET INCREASE (DECREASE) IN CASH (16,987) 17,000 13 CASH AT BEGINNING OF PERIOD 17,000 -- -- -------- -------- -------- CASH AT END OF PERIOD $ 13 $ 17,000 $ 13 ======== ======== ======== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION CASH PAID FOR: Interest $ -- $ -- $ -- Income Taxes $ -- $ -- $ --
The accompanying notes are an integral part of these financial statements. F-5 BUYONATE, INC. (A Development Stage Company) Notes to Financial Statements December 31, 2008 and 2007 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Business Buyonate, Inc. (the "Company") was incorporated in the State of Nevada on July 9, 2007 to engage in providing user-friendly/child friendly interactive digital software for children between the ages of 5 to 12 years old. Our target market is primarily elementary aged children who wish to capture their school, family and friends memories in a fun and interesting way and to be able to save those memories to watch and play for years to come. At December 31, 2008, the Company had no revenues and limited operations and is accordingly classified as a development stage company. Accounting Basis The basis is accounting principles generally accepted in the United States of America. The Company has adopted a December 31 fiscal year end. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Basic and Diluted Loss per Common Share Basic loss per share is calculated by dividing the Company's net loss applicable to common shareholders by the weighted average number of common shares outstanding during the period. Diluted loss per share is calculated by dividing the Company's net loss by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted average number of shares adjusted for any potentially dilutive debt or equity. There were no such common stock equivalents outstanding as of December 31, 2008 and 2007. For the For the Year Ended Period Ended December 31, December 31, 2008 2007 ----------- ----------- Loss (numerator) $ (40,887) $ -- Shares (denominator) 4,810,000 4,135,000 ----------- ----------- Per share amount $ (0.01) $ -- =========== =========== Advertising Costs The Company's policy regarding advertising is to expense advertising costs when incurred. The Company did not incur any advertising expense during the year ended December 31, 2008 or period ended Decmeber 31, 2007. Cash and Cash Equivalents The Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents to the extent the funds are not being held for investment purposes. F-6 BUYONATE, INC. (A Development Stage Company) Notes to Financial Statements December 31, 2008 and 2007 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Income Taxes The Company uses an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse. The Company reduces the deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The provision for income taxes differs from the amounts which would be provided by applying the statutory federal income tax rate of 39% to the net loss before provision for income taxes for the following reasons: For the From inception Year Ended through December 31, December 31, 2008 2007 -------- -------- Income tax benefit at statutory rate $(15,946) $ -- Change in Valuation allowance 15,946 -- -------- -------- Income tax benefit per books $ -- $ -- ======== ======== Net deferred tax assets consist of the following components as of: December 31, December 31, 2008 2007 -------- -------- NOL Carryover $ 15,946 $ -- Valuation allowance (15,946) -- -------- -------- Net deferred tax asset $ -- $ -- ======== ======== Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards of $40,887 for federal income tax reporting purposes can be subject to annual limitations. The net operating loss carry forwards began expiring in the year ending December 31, 2028. Should a change in ownership occur, net operating loss carry forwards may be limited as to use in future years. F-7 BUYONATE, INC. (A Development Stage Company) Notes to Financial Statements December 31, 2008 and 2007 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Recent Accounting Pronouncements In May 2009, the FASB issued SFAS 165 (ASC 855-10) entitled "Subsequent Events". Companies are now required to disclose the date through which subsequent events have been evaluated by management. Public entities (as defined) must conduct the evaluation as of the date the financial statements are issued, and provide disclosure that such date was used for this evaluation. SFAS 165 (ASC 855-10) provides that financial statements are considered "issued" when they are widely distributed for general use and reliance in a form and format that complies with GAAP. SFAS 165 (ASC 855-10) is effective for interim and annual periods ending after June 15, 2009 and must be applied prospectively. The adoption of SFAS 165 (ASC 855-10) is not expected to have a significant effect on the Company's financial statements. In June 2009, the FASB issued SFAS 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles. ("SFAS 168" pr ASC 105-10) SFAS 168 (ASC 105-10) establishes the Codification as the sole source of authoritative accounting principles recognized by the FASB to be applied by all nongovernmental entities in the preparation of financial statements in conformity with GAAP. SFAS 168 (ASC 105-10) was prospectively effective for financial statements issued for fiscal years ending on or after September 15, 2009 nd interim periods within those fiscal years. The adoption of SFAS 168 (ASC 105-10) is not expected to impact the Company's results of operations or financial condition. The Codification did not change GAAP, however, it did change the way GAAP is organized and presented. With the exception of the pronouncements noted above, no other accounting standards or interpretations issued or recently adopted are expected to have a material impact on the Company's financial position, operations or cash flows. F-8 BUYONATE, INC. (A Development Stage Company) Notes to Financial Statements December 31, 2008 and 2007 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Revenue Recognition We evaluate the recognition of revenue based on the criteria set forth in ASC Topic 985, Software Revenue Recognition. We evaluate and recognize revenue when all four of the following criteria are met: * EVIDENCE OF AN ARRANGEMENT. Evidence of an agreement with the customer that reflects the terms and conditions to deliver products that must be present in order to recognize revenue. * DELIVERY. Delivery is considered to occur when a product is shipped and the risk of loss and rewards of ownership have been transferred to the customer. For web-based services, delivery is considered to occur as the service is provided. For digital downloads that do not have an online service component, delivery is considered to occur generally when the download is made available. * FIXED OR DETERMINABLE FEE. If a portion of the arrangement fee is not fixed or determinable, we recognize revenue as the amount becomes fixed or determinable. * COLLECTION IS DEEMED PROBABLE. Collection is deemed probable if we expect the customer to be able to pay amounts under the arrangement as those amounts become due. If we determine that collection is not probable, we recognize revenue when collection becomes probable (generally upon cash collection). Determining whether and when some of these criteria have been satisfied often involves assumptions and management judgments that can have a significant impact on the timing and amount of revenue we report in each period. For example, for multiple element arrangements, we must make assumptions and judgments in order to (1) determine whether and when each element has been delivered, (2) determine whether undelivered products or services are essential to the functionality of the delivered products and services, (3) determine whether vendor- specific objective evidence of fair value ("VSOE") exists for each undelivered element, and (4) allocate the total price among the various elements we must deliver. Changes to any of these assumptions or management judgments, or changes to the elements in a software arrangement, could cause a material increase or decrease in the amount of revenue that we report in a particular period. Sales transactions may consist of multiple element arrangements which typically would include technical support and other service fees. These multiple element arrangements must be analyzed to determine the relative fair value of each element, the amount of revenue to be recognized upon delivery, if any, and the period and conditions under which deferred revenue should be recognized. The Company entered into a reseller agreement with Yearbook Alive Software Company, its primary vendor, effective July 31, 2008. Under the agreement, the Company is reselling the vendor's products and programs through offline and online markets to individuals, schools, school districts, and state school agencies. Under the terms of the agreement, the Company has the nonexclusive right to market, promote, and resell the software products developed by YearBook Alive, and may set the price of the products for resale. The Company has the right to sell the software without paying a royalty until July 31, 2010. After July 31, 2010, the Company may choose to continue selling the software by paying an annual royalty advance of $100,000. F-9 BUYONATE, INC. (A Development Stage Company) Notes to Financial Statements December 31, 2008 and 2007 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Gross Versus Net Revenue Classification In the normal course of business, the Company acts as a principal with respect to sales to third parties. The Company distributes software on behalf of a third-party software developer. As required by FASB ASC Subtopic 605-45, PRINCIPAL AGENT CONSIDERATIONS, such transactions are recorded on a "gross" or "net" basis depending on whether the Company is acting as the "principal" in the transaction or acting as an "agent" in the transaction. The Company serves as the principal in transactions in which it has substantial risks and rewards of ownership and, accordingly, revenues are recorded on a gross basis. For those transactions in which the Company does not have substantial risks and rewards of ownership, the Company is considered an agent and, accordingly, revenues are recorded on a net basis. To the extent revenues are recorded on a gross basis, any participations and royalties paid to third parties are recorded as expenses so that the net amount (gross revenues less expenses) flows through operating income. To the extent revenues are recorded on a net basis, revenues are reported based on the amounts received, less participations and royalties paid to third parties. In both cases, the impact on operating income is the same whether the Company records the revenues on a gross or net basis. Based on an evaluation of the individual terms of its contract and whether the Company is acting as principal or agent, the Company will record any revenues from the distribution of software on behalf of the third-party software developer on a gross basis. 2. EQUITY TRANSACTIONS On July 9, 2007 (inception), the Company issued 4,000,000 shares of its common stock to its Directors for cash of $400. During December 2007, the Company closed a private placement for 810,000 common shares at a price of $0.05 per share, or an aggregate of $40,500. The Company received $16,600 of the proceeds in 2007 and $23,900 in 2008. 3. SUBSEQUENT EVENT In accordance with SFAS 165 (ASC 855-10) Company management reviewed all material events through February 11, 2010 and there are no material subsequent events to report, except as follows: On February 6, 2010 the Company entered into a stock purchase agreement wherein the majority shareholders of the Company, Mr. Husni Hassadiyeh and Ms. Inbar Kuta, have agreed to sell 4,000,000 shares of the Company's stock for a total of $355,000. F-10