10-Q 1 sols_10q.htm QUARTERLY REPORT 10Q




UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q


 x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2012

 

OR


o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from  __________  to __________.


Commission File Number: 333-174581


SOLLENSYS CORP.

(Exact name of registrant as specified in its charter)

 

 Nevada

 

80-0651816

(State or other jurisdiction of incorporation or organization)

 

 (I.R.S. Employer Identification No.)

  

 

  

1 Hampshire Court

Newport Beach, CA

 

92660

 (Address of principal executive offices)

 

(Zip Code)


Registrant’s telephone number, including area code (949) 642-7816


HEALTH DIRECTORY, INC.

6312 Seven Corners Center, # 303, Falls Church, VA. 22044

(Former Name or Former Address if Changed Since Last Report)


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 Website, 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 [  ]  No [X]


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

 

 Large accelerated filer

[  ]

 Accelerated filer

[  ]

 

 

 

 

 Non-accelerated filer

[  ] (Do not check if a smaller reporting company)

 Smaller reporting company

[X]


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes [  ]  No [X]


As of November 7, 2012, there were 495,075,386 shares of Common Stock, par value $0.0001 per share, outstanding.



 



  

1





 

SOLLENSYS CORP.


QUARTERLY REPORT ON FORM 10-Q

SEPTEMBER 30, 2012


TABLE OF CONTENTS

 

 

PAGE

 

 

PART 1 - FINANCIAL INFORMATION

 

 

 

Item 1. Financial Statements (Unaudited)

4

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

5

Item 3. Quantitative and Qualitative Disclosures About Market Risk

7

Item 4. Controls and Procedures

7

 

 

PART II - OTHER INFORMATION

8

 

 

Item 1. Legal Proceedings

8

Item 1A. Risk Factors

8

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

8

Item 3. Defaults Upon Senior Securities

8

Item 4. Mine Safety Disclosures

8

Item 5. Other Information

8

Item 6. Exhibits

8

 

 

SIGNATURES

9


























  

2





 

CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION

 

This Quarterly Report on Form 10-Q (this “Report”) contains “forward-looking statements”. Forward-looking statements discuss matters that are not historical facts. Because they discuss future events or conditions, forward-looking statements may include words such as “anticipate,” “believe,” “estimate,” “intend,” “could,” “should,” “would,” “may,” “seek,” “plan,” “might,” “will,” “expect,” “predict,” “project,” “forecast,” “potential,” “continue” negatives thereof or similar expressions. Forward-looking statements speak only as of the date they are made, are based on various underlying assumptions and current expectations about the future and are not guarantees. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, level of activity, performance or achievement to be materially different from the results of operations or plans expressed or implied by such forward-looking statements.

 

We cannot predict all of the risks and uncertainties. Accordingly, such information should not be regarded as representations that the results or conditions described in such statements or that our objectives and plans will be achieved and we do not assume any responsibility for the accuracy or completeness of any of these forward-looking statements. These forward-looking statements are found at various places throughout this Report and include information concerning possible or assumed future results of our operations, including statements about potential acquisition or merger targets; business strategies; future cash flows; financing plans; plans and objectives of management; any other statements regarding future acquisitions, future cash needs, future operations, business plans and future financial results, and any other statements that are not historical facts.

 

These forward-looking statements represent our intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors. Many of those factors are outside of our control and could cause actual results to differ materially from the results expressed or implied by those forward-looking statements. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than we have described. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Report. All subsequent written and oral forward-looking statements concerning other matters addressed in this Report and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this Report.

 

Except to the extent required by law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, a change in events, conditions, circumstances or assumptions underlying such statements, or otherwise.

 

CERTAIN TERMS USED IN THIS REPORT


When this report uses the words “we,” “us,” “our,” and the “Company,” they refer to Sollensys Corp.  “SEC” refers to the Securities and Exchange Commission.














3





 

PART I - FINANCIAL INFORMATION

 

Item 1. Financial Statements.


Condensed Balance Sheets (Unaudited) at September 30, 2012 and March 31, 2012

F-2

 

 

Condensed Statements of Operations for the six and three months ended September 30, 2012 and 2011, and for the period from September 29, 2010 (inception) through September 30, 2012 (unaudited)

F-3

 

 

Condensed Statement of Stockholders’ Deficit for the period from September 29, 2010 (inception) through September 30, 2012 (unaudited)

F-4

 

 

Condensed Statements of Cash Flows for the six months ended September 30, 2012 and 2011, and for the period from September 29, 2010 (inception) through September 30, 2012 (unaudited)

F-5

 

 

Notes to the Condensed Financial Statements (unaudited)

F-6












4






SOLLENSYS CORP.

(FORMERLY KNOWN AS HEALTH DIRECTORY, INC.)

(A Development Stage Company)

Condensed Balance Sheets

(Unaudited)


 

 

 

September 30, 2012

 

 

 

March 31, 2012

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Assets

 

 

 

 

 

 

 

 Current assets

 

 

 

 

 

 

 

     Cash

 

$

-

 

 

$

7,813

     Prepaid Expenses

 

 

20,275

 

 

 

-

 

 

 

 

 

 

 

 

          Total current assets

 

 

20,275

 

 

 

7,813

 

 

 

 

 

 

 

 

               Total assets

 

$

20,275

 

 

$

7,813

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Liabilities and stockholders' deficit

 

 

 

 

 

 

 

 Current liabilities:

 

 

 

 

 

 

 

     Accrued expenses

 

$

31,429

 

 

$

23,706

     Advances from stockholder

 

 

54,342

 

 

 

-

 

 

 

 

 

 

 

 

          Total current liabilities

 

 

85,771

 

 

 

23,706

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

               Total Liabilities

 

 

85,771

 

 

 

23,706

 

 

 

 

 

 

 

 

 Stockholders' deficit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     Preferred stock: $0.001 par value: 25,000,000 shares authorized;

 

 

 

 

 

 

 

          none issued or outstanding

 

 

-

 

 

 

-

     Common stock: $0.001 par value: 1,500,000,000 shares authorized;

 

 

 

 

 

 

 

          500,075,386 and 495,075,386 shares issued and outstanding, respectively

 

 

500,075

 

 

 

495,075

     Additional paid-in capital

 

 

(377,016)

 

 

 

(405,005)

     Deficit accumulated during the development stage

 

 

(188,555)

 

 

 

(105,963)

 

 

 

 

 

 

 

 

          Total stockholders' deficit

 

 

(65,496)

 

 

 

(15,893)

 

 

 

 

 

 

 

 

               Total liabilities and stockholders' deficit

 

$

20,275

 

 

$

7,813



See accompanying notes to the condensed financial statements.




F-1






SOLLENSYS CORP.

(FORMERLY KNOWN AS HEALTH DIRECTORY, INC.)

(A Development Stage Company)

Condensed Statement of Operations

(Unaudited)


 

 

 

 For the Three Months

 

 

 For the Three Months

 

 

 For the Six Months

 

 

 For the Six Months

 

 

 

 Ended  

 

 

 Ended  

 

 

 Ended  

 

 

 Ended  

 

 

 

September 30, 2012

 

 

September 30, 2011

 

 

September 30, 2012

 

 

September 30, 2011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Revenues

 

$

-

 

$

-

 

$

-

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 General and administrative expenses

 

 

8,443

 

 

1,975

 

 

10,087

 

 

3,169

 

 Professional fees

 

 

64,868

 

 

7,161

 

 

72,505

 

 

13,780

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Total operating expenses

 

 

73,311

 

 

9,136

 

 

82,592

 

 

16,949

 

 

 

 

 

 

 

 

 

 

 

 

 

 Loss before taxes

 

 

(73,311)

 

 

(9,136)

 

 

(82,592)

 

 

(16,949)

 

 

 

 

 

 

 

 

 

 

 

 

 

 Income tax provision

 

 

-

 

 

-

 

 

-

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 Net loss

 

$

(73,311)

 

$

(9,136)

 

$

(82,592)

 

$

(16,949)

 

 

 

 

 

 

 

 

 

 

 

 

 

 Net loss per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 - Basic and diluted

 

$

(0.00)

 

$

(0.00)

 

$

(0.00)

 

$

(0.00)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Weighted average common shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 - basic and diluted

 

 

496,488,386

 

 

363,385,386

 

 

495,785,886

 

 

363,385,386



See accompanying notes to the condensed financial statements.




F-2






SOLLENSYS CORP.

(FORMERLY KNOWN AS HEALTH DIRECTORY, INC.)

(A Development Stage Company)

Condensed Statement of Stockholders' Equity (Deficit)

For the Period from September 29, 2010 (Inception) through September 30, 2012

(Unaudited)


 

 

 

 

 

 

Deficit

 

 

 

 

 Common Stock, $0.001 Par Value

 

 Additional

 

Accumulated

 

 Total

 

 

 Number of

 

 

 

 Paid-in

 

during the

 

 Stockholders'

 

 

 Shares

 

 Amount

 

 Capital

 

Development Stage

 

 Equity (Deficit)

 

 

 

 

 

 

 

 

 

 

 

 

 

 Balance, September 29, 2010 (inception)

 

263,380,000

 

$

263,380

 

$

(261,380)

 

$

-

 

$

2,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Contribution to capital

 

 

 

 

-

 

 

100

 

 

-

 

 

100

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Shares issued at $0.00038 per share for cash

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 from December 1, 2010 through March 31, 2011

 

100,005,386

 

 

100,005

 

 

(62,035)

 

 

-

 

 

37,970

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Net loss

 

 

 

 

 

 

 

 

 

 

(9,175)

 

 

(9,175)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Balance, March 31, 2011

 

363,385,386

 

 

363,385

 

 

(323,315)

 

 

(9,175)

 

 

30,895

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Shares issued to officer for compensation valued

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 at $0.00038 per share on December 1, 2011

 

131,690,000

 

 

131,690

 

 

(81,690)

 

 

 

 

 

50,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Net loss

 

 

 

 

 

 

 

 

 

 

(96,788)

 

 

(96,788)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Balance, March 31, 2012

 

495,075,386

 

 

495,075

 

 

(405,005)

 

 

(105,963)

 

 

(15,893)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Contribution of Capital

 

 

 

 

 

 

 

27,989

 

 

-

 

 

27,989

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Shares issued to officer for compensation valued

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 at $0.001 per share on September 4, 2012

 

5,000,000

 

 

5,000

 

 

-

 

 

-

 

 

5,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Net loss

 

 

 

 

 

 

 

 

 

 

(82,592)

 

 

(82,592)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Balance, September 30, 2012

 

500,075,386

 

$

500,075

 

$

(377,016)

 

$

(188,555)

 

$

(65,496)



See accompanying notes to the condensed financial statements.

 



F-3






SOLLENSYS CORP.

(FORMERLY KNOWN AS HEALTH DIRECTORY, INC.)

(A Development Stage Company)

Condensed Statement of Cash Flows

(Unaudited)


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 For the Period from

 

 

 

 For the Six Months

 

 

 

 For the Six Months

 

 

 

September 29, 2010

 

 

 

 Ended  

 

 

 

 Ended

 

 

 

 (inception) through

 

 

 

September 30, 2012

 

 

 

September 30, 2011

 

 

 

September 30, 2012

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

 

 Net loss

 

$

(82,592)

 

 

$

(16,949)

 

 

$

(188,555)

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

 

 

 

     Common share issued for compensation

 

 

5,000

 

 

 

-

 

 

 

57,000

     Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

          Prepaid expenses

 

 

(20,275)

 

 

 

-

 

 

 

(20,275)

          Accrued expenses

 

 

7,723

 

 

 

4,541

 

 

 

31,429

 

 

 

 

 

 

 

 

 

 

 

 

 Net cash used in operating activities

 

 

(90,144)

 

 

 

(12,408)

 

 

 

(120,401)

 

 

 

 

 

 

 

 

 

 

 

 

 Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

 

 

     Shareholder advances

 

 

54,342

 

 

 

-

 

 

 

54,342

     Capital contribution

 

 

27,989

 

 

 

-

 

 

 

28,089

     Collection of stock subscription receivable

 

 

-

 

 

 

13,070

 

 

 

13,070

     Proceeds from sale of common stock

 

 

-

 

 

 

-

 

 

 

24,900

 

 

 

 

 

 

 

 

 

 

 

 

 Net cash provided by financing activities

 

 

82,331

 

 

 

13,070

 

 

 

120,401

 

 

 

 

 

 

 

 

 

 

 

 

 Net change in cash

 

 

(7,813)

 

 

 

662

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 Cash, beginning of period

 

 

7,813

 

 

 

25,000

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 Cash, end of period

 

$

-

 

 

$

25,662

 

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

 Supplemental disclosure of cash flows information:

 

 

 

 

 

 

 

 

 

 

 

     Interest paid

 

$

-

 

 

$

-

 

 

$

-

     Income tax paid

 

$

-

 

 

$

-

 

 

$

-



See accompanying notes to the condensed financial statements.




F-4






SOLLENSYS CORP.

(Formerly known as Health Directory, Inc.)

(A Development Stage Company)

September 30, 2012 and 2011

Notes to the Condensed Financial Statements

(Unaudited)



Note 1 - Organization and Operations


Sollensys Corp. (fka Health Directory, Inc. or the “Company”), a development stage company, was incorporated on September 29, 2010 under the laws of the State of Nevada. Initial operations have included organization and incorporation, target market identification, marketing plans, and capital formation. A substantial portion of the Company’s activities has involved developing a business plan and establishing contacts and visibility in the marketplace. The Company has not generated any revenues since inception.


Effective July 30, 2012, the holder of 3,000,000 shares, or approximately 79.8% of Sollensys Corporation, (the “Company”) then outstanding voting securities, executed a written consent in accordance with Section 78.320 of the NRS, approving the amendment to the Articles of Incorporation to change the Company’s name to Sollensys Corp. and increase the common shares authorized to 1,500,000,000 and increase the preferred shares authorized to 25,000,000, and to split each outstanding share of common stock into 131.69 shares of common stock. All share and per share amounts have been restated to give effect to the stock split. The Company’s name was changed in anticipation of merging with Sollensys Corporation - a South Korean corporation.


Note 2 - Summary of Significant Accounting Policies


Basis of Presentation


The accompanying unaudited interim financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) to Form 10-Q and Article 8 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements.  The unaudited interim financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented.  Interim results are not necessarily indicative of the results for the full year. The Balance Sheet at March 31, 2012 has been derived from the audited financial statements. These unaudited interim financial statements should be read in conjunction with the financial statements of the Company for the year ended March 31, 2012 and notes thereto contained in the Company’s Annual Report on Form 10-K filed with the SEC on June 28, 2012.


Development Stage Company


The Company is a development stage company as defined by section 915-10-20 of the FASB Accounting Standards Codification. The Company is still devoting substantially all of its efforts on establishing the business and its planned principal operations have not commenced. All losses accumulated since inception have been considered as part of the Company's development stage activities.


Use of Estimates and Assumptions


The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reporting amounts of revenues and expenses during the reporting period.




F-5






SOLLENSYS CORP.

(Formerly known as Health Directory, Inc.)

(A Development Stage Company)

September 30, 2012 and 2011

Notes to the Condensed Financial Statements

(Unaudited)



The Company’s significant estimates and assumptions include the fair value of financial instruments and the assumption that the Company will be a going concern.  Those significant accounting estimates or assumptions bear the risk of change due to the fact that there are uncertainties attached to those estimates or assumptions, and certain estimates or assumptions are difficult to measure or value.


Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable in relation to the financial statements taken as a whole 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 sources.


Management regularly evaluates the key factors and assumptions used to develop the estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such evaluations, if deemed appropriate, those estimates are adjusted accordingly.  


Actual results could differ from those estimates.


Fair Value of Financial Instruments


The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and has adopted paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments.  Paragraph 820-10-35-37 of the FASB Accounting Standards Codification establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, paragraph 820-10-35-37 of the FASB Accounting Standards Codification establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels.  The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs.  The three (3) levels of fair value hierarchy defined by paragraph 820-10-35-37 of the FASB Accounting Standards Codification are described below:


Level 1

 

Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.

 

 

 

Level 2

 

Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.

 

 

 

Level 3

 

Pricing inputs that are generally unobservable inputs and not corroborated by market data.


Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.


The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs.  If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.


The carrying amounts of the Company’s financial assets and liabilities, such as cash and accrued expenses, approximate their fair values because of the short maturity of these instruments.




F-6






SOLLENSYS CORP.

(Formerly known as Health Directory, Inc.)

(A Development Stage Company)

September 30, 2012 and 2011

Notes to the Condensed Financial Statements

(Unaudited)



Transactions involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated.


It is not, however, practical to determine the fair value of advances from stockholders due to their related party nature.


Income Taxes Provision


The Company adopted the provisions of paragraph 740-10-25-13 of the FASB Accounting Standards Codification. Paragraph 740-10-25-13.addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements.  Under paragraph 740-10-25-13, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.  The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement.  Paragraph 740-10-25-13 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures.  The Company had no material adjustments to its liabilities for unrecognized income tax benefits according to the provisions of paragraph 740-10-25-13.


The estimated future tax effects of temporary differences between the tax basis of assets and liabilities are reported in the accompanying consolidated balance sheets, as well as tax credit carry-backs and carry-forwards. The Company periodically reviews the recoverability of deferred tax assets recorded on its consolidated balance sheets and provides valuation allowances as management deems necessary.


Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In addition, the Company operates within multiple taxing jurisdictions and is subject to audit in these jurisdictions. In management’s opinion, adequate provisions for income taxes have been made for all years. If actual taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary.


Uncertain Tax Positions


The Company did not take any uncertain tax positions and had no adjustments to unrecognized income tax liabilities or benefits pursuant to the provisions of Section 740-10-25 for the period ended September 30, 2012.


Net Income (Loss) per Common Share


Net income (loss) per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification.   Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period.  Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the period to reflect the potential dilution that could occur from common shares issuable through contingent shares issuance arrangement, stock options or warrants.


There were no potentially outstanding dilutive shares for the three and six months ended September 30, 2012 or 2011.




F-7






SOLLENSYS CORP.

(Formerly known as Health Directory, Inc.)

(A Development Stage Company)

September 30, 2012 and 2011

Notes to the Condensed Financial Statements

(Unaudited)



Recently Issued Accounting Pronouncements


Management does not believe that any recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying consolidated financial statements.


Note 3 - Going Concern


The accompanying condensed financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.


As reflected in the accompanying condensed financial statements, the Company had a deficit accumulated during the development stage at September 30, 2012, and a net loss and net cash used in operating activities for the fiscal year then ended, respectively, with no revenues earned since inception. These factors raise substantial doubt about the Company’s ability to continue as a going concern.


While the Company is attempting to commence operations and generate revenues, the Company’s cash position may not be significant enough to support the Company’s daily operations. Management intends to raise additional funds by way of a public or private offering. Management believes that the actions presently being taken to further implement its business plan and generate revenues provide the opportunity for the Company to continue as a going concern. While the Company believes in the viability of its strategy to increase revenues and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and generate revenues.


The condensed financial statements do not include any adjustments related 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.


Note 4 - Related Party Transactions and Employment Agreement


Free Office Space


The Company has been provided office space by its Chief Executive Officer at no cost. The management determined that such cost is nominal and did not recognize the rent expense in its financial statement.


Employment Agreement


The Company entered into an employment agreement (“Employment Agreement”) with its president and chief executive officer (“Employee”) commencing May 1, 2011, which requires that the Employee be paid a minimum of $500 per month for three (3) years from date of signing. Either the employee or the Company has the right to terminate the Employment Agreement upon thirty (30) days’ notice to the other party. This agreement was terminated on July 18, 2012.


Pursuant to the Employment Agreement the Company recorded $1,500 and $2,500 for the six months ended September 30, 2012 and 2011, respectively.




F-8






SOLLENSYS CORP.

(Formerly known as Health Directory, Inc.)

(A Development Stage Company)

September 30, 2012 and 2011

Notes to the Condensed Financial Statements

(Unaudited)



Advances from Stockholder


From time to time, stockholder of the Company advances funds to the Company for working capital purpose. Those advances are unsecured, non-interest bearing and due on demand.


Advances from stockholder at September 30, 2012 and March 31, 2012, consisted of the following:


 

 

September 30, 2012

 

 

March 31, 2012

 

 

 

 

 

 

 

 

 

 

Advances from stockholder

 

$

54,342

 

 

$

-

 

 

 

 

 

 

 

 

 

 

Total

 

$

54,342

 

 

$

-

 

 

 

 

 

 

 

 



Note 5 - Stockholders’ Equity


Shares Authorized


The total number of shares of all classes of stock which the Company is authorized to issue is 1,525,000,000 shares of which 25,000,000 shares shall be Preferred Stock, par value $0.001 per share, and 1,500,000,000 shares shall be Common Stock, par value $0.001 per share.


Common Stock

On September 29, 2010, the Company issued 263,380,000 common shares to its Chief Executive Officer at the par value of $0.000008 per share or $2,000 for compensation upon formation of the Company.


For the period from December 1, 2010 through December 31, 2010, the Company sold 33,185,880 shares of its common stock at $0.00038 per share or $12,600 in aggregate to 10 individuals.


For the period from January 1, 2011 through March 31, 2011, the Company sold 66,819,506 shares of its common stock at $0.00038 per share or $25,370 in aggregate to 25 individuals.


On December 1, 2011, the Company issued 131,690,000 common shares to its Chief Executive Officer at $0.00038 per share or $50,000 for compensation.


On July 18, 2012, in a private transaction, 3,000,000 shares of common stock, which represented 79.8% of the issued and outstanding shares of common stock, were sold to Middle East Ventures FZE for the total price of $25,000.  This resulted in a change in control of the Company.  In connection with this transaction, also on July 18, 2012, Humaira Haider resigned from her position as Chief Executive Officer of the Company and Rowland W. Day was appointed as the new President and sole director of the Company as well as Chief Executive Officer of the Company, Secretary, and Chief Financial Officer.


On July 30, 2012, the Company effectuated a forward 131.69-to-1 stock split of common shares.


On September 4, 2012, the Company issued 5,000,000 shares of restricted common stock to its officer at $0.001 per share or $5,000 for services.



F-9






SOLLENSYS CORP.

(Formerly known as Health Directory, Inc.)

(A Development Stage Company)

September 30, 2012 and 2011

Notes to the Condensed Financial Statements

(Unaudited)



Payments Received from Stock Subscription Receivable


On April 6, 2011, April 7, 2011 and April 13, 2011, payments of $13,070 in the aggregate were received from the sale of 261,400 of the 759,400 shares sold from December 1, 2010 through March 31, 2011. Since these payments were received prior to the issuance of these financial statements, they were reflected as an asset on the balance sheet as of March 31, 2011.


Capital Contribution


In October 2010, the Company’s Chief Executive Officer contributed $100 for the general working capital to the Company.


On July 24, 2012, $27,989 in advance from shareholder were converted to capital and recorded as contribution to paid-in capital.


Note 6 - Share Acquisition Agreement


On September 30, 2012 a Share Acquisition Agreement (“Agreement”) was entered into for the acquisition of all of the outstanding shares of Sollensys Corporation, a South Korean Corporation (“Sollensys Korea”) by the Registrant. Pursuant to the Agreement, the Registrant intends to acquire all of the outstanding shares of Sollensys Korea by issuing approximately 200,000,000 million shares of the Registrant’s common stock. Upon issuance of the 200,000,000 common shares, the shareholders of Sollensys Korea will own approximately 40% of the Registrant. The closing of the Agreement is subject to the audit of Sollensys Korea’s financial statements for the past two fiscal years, approval by the shareholders of Sollensys Korea and other standard terms and conditions.  The parties intend to close the transaction by approximately December 2012.



















F-10






Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.


The following discussion provides information which management believes is relevant to an assessment and understanding of our results of operations and financial condition. The discussion should be read along with our financial statements and notes thereto contained elsewhere in this Report. The following discussion and analysis contains forward-looking statements, which involve risks and uncertainties. Our actual results may differ significantly from the results, expectations and plans discussed in these forward-looking statements.

 

Overview


We were incorporated in the State of Nevada on September 29, 2010 as Health Directory, Inc. and were based in Falls Church, VA. On August 27, 2012 our name was changed to Sollensys Corp. and we are now located in Newport Beach, California.


We were originally developing our health related online directory.  We have decided to suspend the development of our website at this time to pursue another business opportunity.


On September 30, 2012, we entered into a share purchase agreement with a Korean company that is developing touch screen panels (“TSP”) for use in consumer products.  The Korean company is a development stage company and we believe that its acquisition could lead to a more viable economic opportunity for the Company.  We are revising our business plan and working to expand our operations within the manufacturing of touch screen panels.  This transaction has not closed as of the date of this report.


We do not consider ourselves to be a blank check company.  We have a specific business plan and have moved forward implementing it with our proposed acquisition.

 

We anticipate that depending on market conditions and our plan of operations, we may incur operating losses in the foreseeable future after the closing of the acquisition. Therefore, our auditors have raised substantial doubt about our ability to continue as a going concern.


Business Strategy and Objectives


Our objective, after the closing of the acquisition, is to become the leading touch screen panel manufacturer. The Company expects to accomplish this objective by retaining key personnel, raising sufficient operating capital and developing next generation TSP’s.

 

Products and Services

 

Upon the closing of the acquisition we will produce TSP of various sizes for use in many consumer products, including but not limited to computer and mobile devices.

 

Market Opportunity

 

The worldwide market for TSP was estimated at $3.6B in 2008 increasing to $9.0B by 2014.  By the end of 2012, more than 80% of the worldwide mobile phone market will use TSP.  Because of the growth prospects, we believe the completion of the acquisition represents a unique economic opportunity for the Company.

 

Competition

 

Upon completion of the acquisition, we will compete with companies that are substantially larger, more advanced technologically, with greater resources than we will have.


We plan to hire engineers that are capable of creating new TSP technologies that will compete with these larger competitors in the world markets.

 

Employees

 

As of November 15, 2012, we do not have any employees.




5






Results of Operations


Revenues and Cost of Revenues.  We have not generated any revenue or incurred any related cost of revenue to date. We are in the formation stage as our business was formed on September 29, 2010 and no revenue activities have yet begun.

 

General and Administrative.  General and administrative expenses for the three and six month period ended September 30, 2012 were $8,443 and $10,087 respectively. The expense relates to office supplies and computer maintenance.


Professional Fees. Professional fees for the three month and six month period ended September 30, 2012 was $64,865 and $72,505 respectively. The expense relates to legal and accounting fees as a result of being a public company.


Liquidity and Capital Resources

 

Our cash and cash equivalents totaled approximately $0 at September 30, 2012 and $7,813 at March 31, 2012.

 

Net Cash Used in Operating Activities. Cash used in operating activities for the six months ended September 30, 2012 was $90,144.


Net Cash Provided By/Used in Investing Activities. We did not use cash in investing activities for the six months ended September 30, 2012.


Net Cash Provided By Financing Activities. Cash generated from financing activities for the six months ended September 30, 2012 was $82,331.


Critical Accounting Policies


The accompanying condensed financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.


As reflected in the accompanying condensed financial statements, the Company had a deficit accumulated during the development stage at September 30, 2012, and a net loss and net cash used in operating activities for the fiscal year then ended, respectively, with no revenues earned since inception. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

 

While the Company is attempting to commence operations and generate revenues, the Company’s cash position may not be significant enough to support the Company’s daily operations. Management intends to raise additional funds by way of a public or private offering.  Management believes that the actions presently being taken to further implement its business plan and generate revenues provide the opportunity for the Company to continue as a going concern. While the Company believes in the viability of its strategy to increase revenues and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and generate revenues.


Recent Accounting Pronouncements


Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying consolidated financial statements.


Off-balance sheet arrangements


At September 30, 2012, we did not have any material commitments for capital expenditures or have any transactions, obligations or relationships that could be considered off-balance sheet arrangements.





6






Item 3. Quantitative and Qualitative Disclosures about Market Risk.


Not applicable to smaller reporting companies.


Item 4. Controls and Procedures.


Disclosure controls and procedures. Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”), the Company carried out an evaluation, with the participation of the Company’s management, including the Company’s principal executive officer and principal financial officer of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Company’s principal executive officer and principal financial officer concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.


Changes in internal control over financial reporting. There have been no changes in our internal control over financial reporting that occurred during the quarter covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

 

 

 

 

 

 

 

 

 

 

 

 





7





PART II - OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS.


We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.


ITEM 1A. RISK FACTORS.


Not required for smaller reporting companies.


ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.


On December 1, 2011, the Company issued 1,000,000 common shares to its Chief Executive Officer at $0.05 per share or $50,000 for compensation.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.


There were no reportable events under this Item 3 during the quarterly period ended September 30, 2012.


ITEM 4.  MINE SAFETY DISCLOSURES.


Not applicable.


ITEM 5. OTHER INFORMATION.


There were no reportable events under this Item 5 during the quarterly period ended September 30, 2012.

 

ITEM 6. EXHIBITS.

 

(a)  Exhibits

 

Exhibit Number

  

Description

31.1

  

Certification of Principal Executive Officer and Principal Financial Officer of the Registrant pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1

  

Certification of Principal Executive Officer and Principal Financial Officer of the Registrant pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

 

8






SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

SOLLENSYS CORP.

 

 

 

Date:  November 19, 2012

By:

/s/ Rowland W. Day

 

 

Rowland W. Day, President

 

 

(Duly authorized officer, Principal Executive Officer and Principal Financial Officer)

 

 































 



9