UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
10 /A
General Form for Registration of Securities
Pursuant to Section 12(b) or (g) of the Securities Exchange Act of 1934
Southern
ITS International, Inc.
(Exact name of registrant as specified in its charter)
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Nevada |
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22-3977583 |
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(State or Other Jurisdiction of |
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(I.R.S. Employer |
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Incorporation or Organization) |
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Identification No.) |
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7935 W. Sahara
Ave
Suite 1 03
Las Vegas, NV |
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89117 |
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(Address of Principal Executive Offices) |
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(Zip Code) |
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Registrant’s telephone
number, including area code: (888) 474-5874
Correspondence
to:
Sylvain L. Desrosiers, Chief Executive Officer - 7935 W. Sahara Ave Suite 1 03
Las Vegas, NV 89117
Tel: (888) 474-5874
E-mail: info@sitsint.com
Securities to be registered
under Section 12(b) of the Act: None
Securities to be registered
under Section 12(g) of the Exchange Act:
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Title of each class to be
so registered |
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Name of Exchange on which each
class is to be registered |
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Common Stock, $.001 |
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N/A |
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Indicate by check mark whether
the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company”
in Rule 12b-2 of the Exchange Act. (Check one):
| Large accelerated filer o |
Accelerated filer o |
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| Non-accelerated filer o |
Smaller reporting company x |
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| (Do not check if a smaller reporting company) |
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We are filing this General
Form for Registration of Securities on Form 10 to register our common stock, par value $0.001 per share (the “Common Stock”),
pursuant to Section 12(g) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Once this registration
statement is deemed effective, we will be subject to the requirements of Regulation 13A under the Exchange Act, which will require
us to file annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K, and we will be required
to comply with all other obligations of the Exchange Act applicable to issuers filing registration statements pursuant to Section
12(g) of the Exchange Act.
Unless otherwise noted,
references in this registration statement to “Southern ITS International, Inc.,” the “Company,” “we,”
“our” or “us” means Southern ITS International, Inc.
FORWARD LOOKING STATEMENTS
There are statements
in this registration statement that are not historical facts. These “forward-looking statements” can be identified
by use of terminology such as “believe,” “hope,” “may,” “anticipate,” “should,”
“intend,” “plan,” “will,” “expect,” “estimate,” “project,”
“positioned,” “strategy” and similar expressions. You should be aware that these forward-looking statements
are subject to risks and uncertainties that are beyond our control. For a discussion of these risks, you should read this entire
Registration Statement carefully, especially the risks discussed under “Risk Factors.” Although management believes
that the assumptions underlying the forward looking statements included in this Registration Statement are reasonable, they do
not guarantee our future performance, and actual results could differ from those contemplated by these forward looking statements.
The assumptions used for purposes of the forward-looking statements specified in the following information represent estimates
of future events and are subject to uncertainty as to possible changes in economic, legislative, industry, and other circumstances.
As a result, the identification and interpretation of data and other information and their use in developing and selecting assumptions
from and among reasonable alternatives require the exercise of judgment. To the extent that the assumed events do not occur, the
outcome may vary substantially from anticipated or projected results, and, accordingly, no opinion is expressed on the achievability
of those forward-looking statements. In the light of these risks and uncertainties, there can be no assurance that the results
and events contemplated by the forward-looking statements contained in this Registration Statement will in fact transpire. You
are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. We do not undertake
any obligation to update or revise any forward-looking statements.
ITEM 1. BUSINESS
Company History
The Company was incorporated
in Nevada on September 27, 1984 as Numeric Two Corporation. On July 10, 1985 we changed our name to Beta Tech Robotics, Inc. On
August 28, 1996, we changed our name to Axion Spatial Imaging, Inc. On March 9, 2009, we changed our name to Alco Advanced Technologies,
Inc. Finally, on April 5, 2012, we changed our name to Southern ITS International, Inc.
Business Overview
Southern ITS International, Inc. has successful ly provid ed proprietary
equipment and services to support government regulated
high compliance
industries .
This success is measured by the facts that the equipment and systems installed operated according to contract specifications
and the warranties for said installations were provided by and supported by SITS . Government sectors
(correctional facilities
and programs),
and private sectors,
including gaming and now medical
marijuana and recreational
marijuana (MMJ/MJ),
have had challenges,
but have been brought into the mainstream
and are now subject to stringent
compliance to tough government
regulations.
Southern
ITS International,
Inc. has
historically
developed and
delivered
to the gaming
and corrections
sectors
high compliance
support systems
facilitating
the integration
and implementation
of complementary
technologies.
SITS continues
to deliver
such electronic
security and networking
infrastructures
to those clients.
SITS
is expanding
to deliver
the same
quality
of auditing
and compliance
technology to
the emerging
MMJ/MJ
market sector
that it
delivers
to other high
compliance industries.
Additionally
SITS has and will continue developing
new patent pending
equipment and systems
specifically
addressing MMJ/MJ-related
government and
banking
regulations and requirements .
Specifically, addressing the FinCEN problems related to all cash businesses .
Our market position in the
Security Systems sector and in the MMJ Financial Security Systems sector is in the lower segment of service providers. We do not
enjoy the position of a large service provider or a multi state office system. We market to the Industries through networking,
telephone and print ads and Industry Conventions. We compete on the basis of pricing and flexibility of installation timing.
Greeniosk
Secure
Cash payment
System:
Southern
ITS International,
Inc has
created
the first
payment
to sales
technology
for marijuana
dispensaries
– called
Greeniosk™.
The Greeniosk™
System
provides a legal
and easy
solution to the Bank Depository
problem. Greeniosk
provides a detailed
and complete transaction
record from
“payment-to-sales”
which combined
with
“Seeds-to-Sales”
software
and hardware
not only
keeps the
audit trail
for the
payment but
also for
the management
of the inventory.
Greeniosk™
System
uses a
combination of
hardware and
software
that produces
a complete
record keeping
system
and audit
trail from
the cash purchase
of the client
to the
deposit
at the
bank. Each
transaction
is processed
through a secure,
safe-type
kiosk that
will accept
all types
and denominations
of currency. The Greeniosk™
prints an encrypted bar
code voucher
that is redeemed
at the dispensing
counter to purchase
the product. The
kiosk operation
is simple and only requires
the client to answer
3 qualifying questions.
The Greeniosk™ kiosk
and system
accomplishes
several important
tasks;
it removes
the handling of
cash by
employees, the cash
remains
in a safely
locked kiosk and can
only be removed
by authorized people
or money transport
companies.
When
the currency is
removed from
the Greeniosk™,
or at the
end of the
day the
Greeniosk™ will
print an
audit report
of each deposit.
The Greeniosk™
not only reports the total
and detail
amounts collected,
but also
produces a report of the denomination
of each bill used for
payment. If the bank requires
further documentation,
we can provide
a digital image
file of each
bill inserted
in the
Greeniosk™ and match
the currency
transaction to
the client’s
driver license
and marijuana
card. All
this is loaded
into the Greeniosk™
database
for additional
audit trail and
reporting
purposes. The
vouchers redeemed
by the clients
at the
dispensary counter for
merchandise will
be used to provide
a paper audit
trail process.
One
of the purposes
of the FinCEN
bulletin “Guidance
Clarification
Expectations
of Financial Instructions
Serving
Marijuana
Business”
is to provide
clarity
and to enhance
the availability
of financial services
for the marijuana
business.
The Greeniosk™
System will
allow the Marijuana
businesses
to create the
records and documentation
needed for compliance,
auditing and will
build a trusted relationship
between the
Conventional Banks
and the Marijuana
business
owners.
Although we have filed
for Trademark and Patent protection, there is no guarantee that we can continually preserve and protect our patent. We will continue
with our research and development and try to ensure to keep our edge in the market, but there are no guarantees we will be successful.
Our MMJ financial system
solution does not need to be approved by any government agency and is not endorsed by any government agency. Our system is an
effort to provide clients and banks with enough original transactional, auditable data to begin to meet the requirements of banking
and cash transaction regulators. We are only targeting clients in those states where MMJ operations have already been legalized
by the state legislatures. At this time we have no reason to believe these state laws will be reversed. If the laws are reversed,
our system will have no market.
Phone
& Data Solutions:
Southern
ITS and
the consulting team
it assembles for each job, ensures we have the capacity
to lead
you through
each and
every
step
required
for the complete
design
and installation
of all network
systems. These
steps include
the system specifications,
design, cable
infrastructure
installation, system
installation,
system training
and technical
support.
Southern
ITS Inc
is qualified
and experienced
in all
aspects
of the low
voltage systems
industry.
We have
a firsthand knowledge
of local codes
and an
excellent
rapport with the Mississippi Gaming
Commissio n. This is because we were engaged to repair and replace many Casino systems after Hurricane Katrina devastated the
Southern Mississippi area .
Southern
ITS offers phone
and data products
within 3 categories:
Cable
Infrastructure:
Networking:
| · | Cisco switches and
routers |
IT Tools and Services:
| · | Virtual
Private Networks
(VPN) |
| · | Email to PDA’s
and Mobile
Phones |
Southern
ITS Team
Certifications:
| · | Registered
Communications Distribution Designer
(RCDD) maintained
through Building
Industry
Consulting Services
International
(BICSI). |
| · | MCT-Microsoft
Certified
Trainer |
| · | MCSE-Microsoft
Certified Systems
Engineer |
| · | MCP-Microsoft
Certified Professional |
| · | MCP+I-Microsoft
Certified
Professional
plus Internet |
| · | MCSA-Microsoft
Certified Systems
Administrator |
| · | CNI-Certified
Novell
Instructor |
| · | CNE-Certified
Novell Engineer |
| · | CAN-Certified
Novell
Administrator |
| · | Multimedia Design
and Installation
Certification
(Optical Cabling
Corp) |
System
Integration:
The
benefits
of systems
integration
can
produce efficiency
in overhead
costs such
as time-savings
and cost-savings
that will not only
justify your investment,
but also
allow for cost-effective
expansion
and upgrades.
True
systems
integration
can only
be successfully
implemented with
in-depth
knowledge about
technology
trends,
system
architecture,
as well
as older
technology
currently
utilized. In addition,
design and
implementation experience
is required to develop
an integration
plan that will avoid pitfalls that will
diminish your
return on investment.
Southern ITS uses
its experience
to bring the
power of integration
to benefit
clients . Instead of multiple systems
comprising CCTV, access
control, and
fire alarms
– One. Instead
of multiple employee
databases
and phone systems
– One. Suddenly,
new possibilities
arise where
only challenges
stood before.
Southern
ITS and
its team
has the capacity
to lead
you through
each
and every
step required
for the complete
design
and installation
of all
network systems.
These steps include
the system specifications,
design, cable
infrastructure
installation, system installation,
system training
and technical
support.
Data
Integration:
Southern ITS
uses a vast number of equipment supply
chain s
Our hardware
and software
integration
services
are able
to reduce
both cost
and risk
and deliver
flexibility
to leverage
future technologies.
We evaluate
and select
best-fit
technology
components for a
tailored
solution. Throughout
the design
process, Southern
ITS engineering
team takes
into consideration
all aspects
of the solution life-cycle
including
cost, performance,
energy
efficiency,
regulatory
requirements, custom
configurations,
branding,
logistics, order
fulfillment and support.
Security
Systems
Integration:
Many
organizations’
facility
security
resembles
a patchwork
of various,
independent systems
than invariably
detract
from the
overall
effectiveness
of the system.
Surveillance cameras
may be part analog
and part digital,
each kind
on their own
independent system
requiring
a different
knowledge
base for
each
system. Access
Control may be independent
of the surveillance monitoring systems
or may even
consist of stand-alone
units for each door. Fire
alarms may
also reside on another
monitoring systems.
Many times deficiencies
in a patchwork
of security
measures are
not realized
until it is too late.
Southern ITS
has over three decades
provid ed security integration
services
for facilities
large and
small. Designing,
specifying,
installing, and training brings
fire, access control, and
video surveillance all into
one system, viewable
from a single monitor or tablet
or cell phone for real-time reporting and
response to effectively
document, record, and
most importantly – mitigate
problems before
they start.
Is
your hardware
considered
ancient
technology?
The idea of
ripping out
your existing
analog
system is not only
very impractical,
it is extremely
cost prohibitive. With an integrated
security
system
designed
and install from
Southern ITS, your analog
surveillance matrix
can remain
in place. Our new
playback
software makes archiving
and video data retrieval
easier
and more efficient
compared
to existing
VCR surveillance systems.
At
Southern ITS,
we can provide and install all U.S. and China made brands
of cameras,
analog
and digital
equipment.
Our s ervice will allow us to help
with your
conversion to
digital systems ,
we can also
service
your existing
analog cameras
and analog
systems.
Our c ommitment to technology
enables us to provide quality IP
cameras,
integration
to access
conrol
and player
management software
solutions.
Southern
ITS Security
Integration
software
benefits
and features:
| · | Integrate
access
control, digital
video and intrusion |
| · | Manage
cardholders through
multiple locations |
| · | Real-time
alarm/event
monitoring |
| · | Content-sensitive
help screens |
| · | 64-bit and
32-bit supported operating
systems |
Casino Systems
Integration:
Southern ITS is committed to the
mission of providing total systems integration to casinos worldwide by maintaining cost effectiveness while providing the best
possible voice, data, surveillance, audio/visual and fire detection equipment available. We are represented throughout
the world by leading individuals within the digital surveillance and IT integration industry.
Today, we are helping clients
to make the transition to a digital video recording solution and integrating our solutions with other features of business
such as POS and access control. We’ve succeeded to ease the burden of this major investment by offering systems that work
off the facility’s current analog matrix while ensuring all the superior benefits and efficiencies of a digital recording
system. Furthermore we’ve enhanced the usefulness of such a powerful upgrade. From our Fail Over protection to tablet enabled
live monitoring; our offering puts you in the winner’s circle for a comprehensive risk management strategy.
We desire to be your one source
for all of your video surveillance needs whether that is consulting and management, complete systems, or quality surveillance
hardware. Every employee at Southern ITS boasts an extensive background within the security industry and is ready to deliver the
parts, service, and experience you need to get the job done right. Contact us today for a free consultation on how we can best
service your needs.
In addition to our hardware and
software offerings, we also offer full solutions that alleviate the monumental tasks of installing and servicing a powerful security
solution. Southern ITS provides :
System
Design:
We take
the hard
work out
of probably
the most
difficult
job in a
project.
A good
System
Design
is crucial
to the success of the
job.
At
Southern ITS,
we believe
in making
the design
as simple
as we
can, to
allow you
the business owner
to evaluate
the viability
of what
the integrator
is doing.
We also
want to make sure that all
levels of the project
understand
what is going on. So, we use simple language
and explain
what connects
to where
using latest technology
in design techniques
to complete the task.
80%
of a good job is the design,
so why compromise?
Regardless
of the complexity
or how much integration,
Southern ITS
can ensure
an easy
transition via:
| · | Simple line Drawings
so you
can understand. |
| · | Migration
between
systems
explained. |
| · | Final
drawings
as complex
as you
need. |
| · | Future
expansion
explained
easier using
latest techniques
in drawings. |
Project
Management:
Southern ITS
provides Project Management
to specific
target
markets.
The casino
industry for
instance
is just one market
that has
recognized
that Southern
ITS’ experience
with their needs
is essential to the
successful migration
from Analog
to Digital
Technology for Video Recording
and Surveillance.
Regardless
of what industry
you are in,
we have the talented
staff to assist you
in ensuring
your project
meets its target.
| · | Many
years
of providing
Casino Services , |
| · | Experience
in a range
of institutional
provisions covering
Airports, Correctional
facilities and
Law
Enforcement
in addition to Casino
projects , |
| · | Saving
of vital
resources
within your
business by
letting our
staff do all
the hard work for you. |
Facilities
Management:
What
do you
do if something
malfunctions?
Who
do you
call? Let
your staff
or tenants call
us and we will
coordinate the
service
call through to
completion.
One
single point of
contact,
one phone
number and one
account every
month – there
is no easier way!
| · | No confusion for
your tenants
to whom do they call |
| · | You
get one account every
month for everything |
| · | No need
to search
for someone
to repair
your services,
we do all
the work |
| · | If
you want to upgrade,
all the hassles
are handled
by Southern
ITS to save you
the confusion of inviting
new vendors
pedaling
their products |
| · | Need
to add a new
building or office
area, one
phone call,
you tell us what
you want
and we do the
rest. |
| · | Detailed
report
available
on existing
systems, so that
you know exactly
what is wrong
and can take appropriate
action to rectify
any
problems before
they occur. |
| · | Simply
put, “Southern ITS
can fix your
problems
with no hassles and no bias to a particular
product”. |
Emerging Growth Company
We are an emerging growth company under the
JOBS Act. We shall continue to be deemed an emerging growth company until the earliest of:
| · |
(a) the last day of the fiscal year of the issuer during which it had total annual gross revenues of $1,000,000,000 (as such amount is indexed for inflation every 5 years by the Commission to reflect the change in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics, setting the threshold to the nearest 1,000,000) or more; |
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(b) the last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities of the issuer pursuant to an effective IPO registration statement; |
| · |
(c) the date on which such issuer has, during the previous 3-year period, issued more than $1,000,000,000 in non-convertible debt; or |
| · |
(d) the date on which such issuer is deemed to be a ‘large accelerated filer’, as defined in section 240.12b-2 of title 17, Code of Federal Regulations, or any successor thereto.’. |
As an emerging growth
company we are exempt from Section 404(b) of Sarbanes Oxley. Section 404(a) requires Issuers to publish information in their annual
reports concerning the scope and adequacy of the internal control structure and procedures for financial reporting. This statement
shall also assess the effectiveness of such internal controls and procedures. Section 404(b) requires that the registered accounting
firm shall, in the same report, attest to and report on the assessment on the effectiveness of the internal control structure and
procedures for financial reporting.
As an emerging growth
company we are also exempt from Section 14A (a) and (b) of the Securities Exchange Act of 1934 which require the shareholder approval
of executive compensation and golden parachutes.
We have elected to use
the extended transition period for complying with new or revised accounting standards under Section 102(b)(2) of the Jobs Act,
that allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and
private companies until those standards apply to private companies. As a result of this election, our financial statements may
not be comparable to companies that comply with public company effective dates.
ITEM 1A: RISK FACTORS
You should carefully
consider the following risk factors and other information included in this Form 10. If any of the following risks actually occur,
our business, financial condition or results of operations could be materially and adversely affected and you may lose some or
all of your investment. The trading price of our common stock could decline due to any of these risks, and you could lose all
or a part of your investment. We cannot assure any investor that we will successfully address these risks. Prospective investors
should carefully consider the following risk factors:
Risk Factors
The following factors
are the most significant factors that can impact year-to-year comparisons and may affect the future performance of our businesses.
New risks may emerge, and management cannot predict those risks or estimate the extent to which they may affect our financial performance.
We are an "emerging growth company,"
and we cannot be certain if the reduced reporting requirements applicable to emerging growth companies will make our common stock
less attractive to investors.
We are an "emerging growth
company," as defined in the Jumpstart Our Business Startups Act, or the JOBS Act. For as long as we continue to be an
emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other
public companies that are not emerging growth companies, including not being required to comply with the auditor attestation
requirements of Section 404 of the Sarbanes- Oxley Act, delay compliance with new or revised accounting standards that
have different effective dates for public and private companies until they are made applicable to private companies, reduced
disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the
requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute
payments not previously approved. We could be an emerging growth company for up to five years, although we could lose that
status sooner if our revenues exceed $1 billion, if we issue more than $1 billion in non-convertible debt in a
three year period, or if the market value of our common stock held by non-affiliates exceeds $700 million as of any
June 30 before that time, in which case we would no longer be an emerging growth company as of the following
December 31. We cannot predict if investors will find our common stock less attractive because we may rely on these
exemptions. We have decided to take advantage of the exemptions provided to emerging growth companies and as a result our
financial statements may not be comparable to companies that comply with public company effective dates. In addition, some
investors might find our common stock less attractive as a result, there may be a less active trading market for our common
stock and our stock price may be more volatile.
The Company has generated revenues, but
no profits, to date.
The Company has generated limited revenues
to date. The business model of the Company involves significant costs of services, resulting in a low margin on revenues. The
addition of administrative costs increase total operating expenses incurred by the Company and have not yet resulted in
a net profit . The Company hopes that as its business expands and that the scale of the enterprise would result in a
higher operating margin and a net operating profit .
We have a history of operating losses and
there can be no assurance we will be profitable in the future. There is substantial doubt about the Company’s ability to
continue as a going concern.
The Company may be dependent on sales of our
equity securities and debt financing to meet our cash requirements for the future proposed expansion of operations. The Company
had losses from operations totaling $470,583 for the fiscal year ended December 31, 2014. As of December 31, 2014, we had an accumulated
deficit of $8,150,905. The Company needs to maintain a steady operating structure, ensuring that expenses are contained such that
profits are consistently achieved. In order to expand the Company’s business, the Company would likely require additional
financing. Management of the Company must continually develop and refine its strategies and goals in order to execute the business
plan of the Company on a broad scale and expand the business.
Lack of Adequate Capital will impair
growth.
One of the biggest challenges facing the Company
will be in securing adequate capital to continue to expand its business and increase operations. Secondarily, an ongoing challenge
remains the maintenance of an efficient operating structure and business model. The Company must keep its expenses and the costs
of employees at a minimum in order to generate a profit from the revenues that it receives from its clients. Third, in order to
expand, the Company will need to continue implementing effective sales and marketing strategies to reach and forge new business
relationships. The Company has devised its initial sales, marketing and advertising strategies, however, the Company will need
to continue refinement of these strategies and also skillfully implement these plans in order to achieve ongoing and long-term
success in its business. Fourth, the Company must continuously identify, attract, solicit and manage employee talent, which requires
the Company to consistently recruit, incent and monitor various employees. High employee turnover or attrition is a significant
risk for the Company, as it requires expending substantial resources to locate and train new personnel and also to replace personnel
for clients. These tasks require significant time and attention from the Company’s management, and employees may nevertheless
become dissatisfied with their respective tenure with the Company.
Company has conducted limited Advertising
and Marketing to Date.
Due to financial constraints, the
Company has to date conducted limited advertising and marketing to reach customers. In addition, the Company has not yet
located the sources of funding to develop the Company on a broader scale through acquisitions or other major partnerships. If
the Company were unable to locate such financing and/or later develop strong and reliable sources of potential new business
relationships and a means to efficiently reach new business partners and customers, it is unlikely that the Company will be
able to develop its proposed expanded operations and business plan. Moreover, the above assumes that the Company’s
services are consistently met with client satisfaction in the marketplace and exhibit steady success amongst the potential
customer base, neither of which is reasonably predictable or guaranteed.
Question of Going
Concern from Auditors
Our auditors have questioned our ability to
continue operations as a “going concern.” Investors may lose all of their investment if we are unable to continue operations
and generate revenues. We hope to obtain significant revenues from future product sales. In the absence of significant
sales and profits, we may seek to raise additional funds to meet our working capital needs, principally through the additional
sales of our securities. However, we cannot guarantee that we will be able to obtain sufficient additional funds when
needed, or that such funds, if available, will be obtainable on terms satisfactory to us. As a result, substantial doubt exists
about our ability to continue as a going concern.
Legal Issues related to dealing in MMJ
Market area.
We are providing a financial solution and
data tracking system to legal MMJ businesses. We are not dealing in any manner with the direct production or direct distribution
of MMJ. We are actually working with State and Local agencies to demonstrate how our system will benefit the MMJ businesses and
benefit the tax reporting and collection of state and local taxes. There is a risk that the states may change the MMJ laws and
reverse the legality of the MMJ business. We have no way to estimate the probability of this reversal happening.
No assurance of continued market acceptance.
There is no assurance that the Company’s
services or solutions will continued to meet with market acceptance. Moreover, there is no assurance that these services and solutions
will continue to have any competitive advantages. Also, there is no assurance that the market reception will be positive.
Our business is sensitive to reductions
in discretionary consumer spending.
Our business may be adversely affected by weak
economic conditions experienced in the United States as we will be highly dependent on discretionary spending consumers .
We are not able to predict the length or severity of any economic climate. Changes in discretionary consumer spending or consumer
preferences brought about by factors such as increased or continuing high unemployment, continuing high energy and automobile fuel
prices, perceived or actual deterioration in general economic conditions, the protracted disruption in the housing markets, the
availability of credit, perceived or actual decline in disposable consumer income and wealth (including declines resulting from
increases in various tax rates) and changes in consumer confidence in the economy may continue to reduce customer demand for the
leisure activities we offer and adversely affect our revenues and cash flow.
The Company is an early-stage company with a limited operating
history, and as such, any prospective investor may have difficulty in assessing the Company’s profitability or performance.
Because the Security System Market is volatile
and unpredictable as to future revenues and because we have just entered into providing Security System services to the MMJ segment
of the Market, we consider our Company a s an early-stage company with a limited operating history in this new market.
I t will be difficult for any investor to assess the performance of the Company or to determine whether the Company will
meet its projected business plan. The Company has limited financial results upon which an investor may judge its potential. As
a company still in the early stages of marketing to a new segment , the Company may in the future experience under-capitalization,
shortages, setbacks and many of the problems, delays and expenses encountered by any early-stage business. An investor will be
required to make an investment decision based solely on the Company management’s history, its projected operations in light
of the risks, the limited operations and financial results of the Company to date, and any expenses and uncertainties that may
be encountered by one engaging in the Company’s industry.
The Company is an early-stage organization
and has a correspondingly small financial and accounting organization. Being a public company may strain the Company's resources,
divert management’s attention and affect its ability to attract and retain qualified officers and directors.
The Company is an early-stage company with
no developed finance and accounting organization and the rigorous demands of being a public company require a structured and developed
finance and accounting group. T he Company will be subject to the reporting requirements of the Securities Exchange
Act of 1934 , upon effectiveness of the Form 10 . However, the requirements of these laws and the rules and regulations promulgated
there under entail significant accounting, legal and financial compliance costs which may be prohibitive to the Company as it develops
its business plan, services and scope. These costs have made, and will continue to make, some activities more difficult, time consuming
or costly and may place significant strain on its personnel, systems and resources.
The Securities Exchange Act requires, among
other things, that companies maintain effective disclosure controls and procedures and internal control over financial reporting.
In order to maintain the requisite disclosure controls and procedures and internal control over financial reporting, significant
resources and management oversight are required. As a result, management’s attention may be diverted from other business
concerns, which could have a material adverse effect on the development of the Company's business, financial condition and results
of operations.
These rules and regulations may also make
it difficult and expensive for the Company to obtain director and officer liability insurance. If the Company is unable to obtain
adequate director and officer insurance, its ability to recruit and retain qualified officers and directors, especially those
directors who may be deemed independent, will be significantly curtailed.
The Company is an early-stage company and
has little experience in being a public company.
The Company is an early-stage company and as
such has little experience in managing a public company. Such lack of experience may result in the Company experiencing difficulty
in adequately operating and growing its business. Further, the Company may be hampered by lack of experience in addressing the
issues and considerations which are common to growing companies. If the Company’s operating or management abilities consistently
perform below expectations, the Company’s business is unlikely to thrive.
The failure or inability to perform under
client contracts could result in damage to the Company’s reputation and give rise to legal claims against the Company.
If clients are not satisfied with the level
of performance, the reputation of the Company in the industry may suffer, which could have a material adverse effect on the business,
financial condition, results of operations, and cash flows of the Company.
Reliance on third party agreements and relationships
is necessary for development of the Company's business.
Our operations will depend on a number
of third parties and contractual relationships therewith. We contract with third parties to manufacture the security
equipment and we also contract with third parties to install certain segments of the equipment and security systems. We
will have limited control over these third parties. We will probably not have many long-term agreements with many of them
because each security job is bid and contracted separately . There can be no assurance that existing such agreements will
not be terminated or that they will be renewed in the future on terms acceptable to us, or that we will be able to enter into
additional such agreements. Our inability to preserve and expand the necessary contractual relations with third parties would
likely materially adversely affect our business, results of operations and financial condition. We also will rely on a
variety of technology license s from third parties. Our loss of or inability to maintain or obtain upgrades to any of
these technology licenses could result in delays. These delays could materially adversely affect our business, results of
operations and financial condition, until equivalent technology could be identified, licensed or developed and integrated.
Moreover, we may occasionally use third parties in connection with our work on the Internet site. In addition, we do not own
a gateway onto the Internet. Instead, we now and presumably always will rely on a network operating center to connect our Web
site to the Internet. Overall, our inability to maintain satisfactory relationships with the requisite third parties on
acceptable commercial terms, or the failure of such third parties to maintain the quality of services they provide at a
satisfactory standard, could materially adversely affect our business, results of operations and financial condition. The
uncertain factors relating to the Company’s reliance on third party agreements and outside service providers increases
the risk to potential investors in this Company. The Company will need strong third party relationships and partnerships in
order to develop and grow its business. The Company will be substantially dependent on these strategic partners and third
party relationships.
The Company depends on its management team
to manage its business effectively.
The Company's future success is dependent in
large part upon its ability to understand and develop the business plan and to attract and retain highly skilled management, operational
and executive personnel. In particular, due to the relatively early stage of the Company's business, its future success is highly
dependent on its officers, to provide the necessary experience and background to execute the Company's business plan. The loss
of any officer’s services could impede, particularly initially as the Company builds a record and reputation, its ability
to develop its objectives, and as such would negatively impact the Company's possible overall development.
Government regulation s could negatively
impact the business.
The Company’s business segments may be
subject to various government regulations in the jurisdictions in which they operate. Due to the potential wide scope of the Company’s
operations, the Company could be subject to regulation by various political and regulatory entities, including various local and
municipal agencies and government sub-divisions. The Company may incur increased costs necessary to comply with existing and newly
adopted laws and regulations or penalties for any failure to comply. The Company’s operations could be adversely affected,
directly or indirectly, by existing or future laws and regulations relating to its business or industry.
Regulations that affect the security systems
are usually on a state-by-state basis. Each state has different regulations regarding the recording and data storage requirements
of security systems. Additionally, each state has different licensing criteria for security system installers. Regarding the state-by
state regulations for the MMJ security systems, each state has different customer data that is required to be captured and stored
and reported. Regarding the financial reporting by MMJ businesses to banks, that is controlled by the FDIC and we are committed
to keep upgrading our security system reporting software to ensure compliance with federal reporting regulations. We have been
able in the past to keep abreast with changing state and federal regulations and have committed to keep abreast with future regulation
requirements. As noted earlier, state laws which legalized the MMJ business may be reversed in the future, at which point there
is no market for our MMJ security systems.
The Company does not intend to pay dividends to its stockholders,
so investors will not receive any return on investment in the Company prior to selling their interest in it.
The Company does not project paying dividends
but anticipates that it will retain future earnings for funding the Company’s growth and development. Therefore, investors
should not expect the Company to pay dividends in the foreseeable future. As a result, investors will not receive any return on
their investment prior to selling their Shares in the Company, if and when a market for such Shares develops. Furthermore, even
if a market for the Company’s securities does develop, there is no guarantee that the market price for the shares would be
equal to or more than the initial per share investment price paid by any investor. There is a possibility that the Shares could
lose all or a significant portion of their value from the initial price paid in this offering.
The recently enacted JOBS Act will also
allow the Company to postpone the date by which it must comply with certain laws and regulations intended to protect investors
and to reduce the amount of information provided in reports filed with the SEC.
The recently enacted JOBS Act is intended to
reduce the regulatory burden on “emerging growth companies. The Company meets the definition of an emerging growth company
and so long as it qualifies as an “emerging growth company,” it will, among other things:
-be exempt from the provisions of Section 404(b)
of the Sarbanes-Oxley Act requiring that its independent registered public accounting firm provide an attestation report on the
effectiveness of its internal control over financial reporting;
-be exempt from the “say on pay”
provisions (requiring a non-binding shareholder vote to approve compensation of certain executive officers) and the “say
on golden parachute” provisions (requiring a non-binding shareholder vote to approve golden parachute arrangements for certain
executive officers in connection with mergers and certain other business combinations) of the Dodd-Frank Act and certain disclosure
requirements of the Dodd-Frank Act relating to compensation of its chief executive officer;
-be permitted to omit the detailed compensation
discussion and analysis from proxy statements and reports filed under the Securities Exchange Act of 1934 and instead provide a
reduced level of disclosure concerning executive compensation; and
-be exempt from any rules that may be adopted
by the Public Company Accounting Oversight Board requiring mandatory audit firm rotation or a supplement to the auditor’s
report on the financial statements.
The Company intends to take advantage of some
or all of the reduced regulatory and reporting requirements that will be available to it so long as it qualifies as an “emerging
growth company”. The Company has elected not to opt out of the extension of time to comply with new or revised financial
accounting standards available under Section 102(b) of the JOBS Act. Among other things, this means that the Company's independent
registered public accounting firm will not be required to provide an attestation report on the effectiveness of the Company's internal
control over financial reporting so long as it qualifies as an emerging growth company, which may increase the risk that weaknesses
or deficiencies in the internal control over financial reporting go undetected. Likewise, so long as it qualifies as an emerging
growth company, the Company may elect not to provide certain information, including certain financial information and certain information
regarding compensation of executive officers that would otherwise have been required to provide in filings with the SEC, which
may make it more difficult for investors and securities analysts to evaluate the Company. As a result, investor confidence in the
Company and the market price of its common stock may be adversely affected.
The Company may face significant competition
from companies that serve these similar industries.
The Company may face competition from other
companies that offer similar services. Some of these potential competitors may have longer operating histories, greater brand recognition,
larger client bases and significantly greater financial, technical and marketing resources than the Company possesses. These advantages
may enable such competitors to respond more quickly to new or emerging trends and changes in customer preferences. These advantages
may also allow them to engage in more extensive market research and development, undertake extensive far-reaching marketing campaigns,
adopt more aggressive pricing policies and make more attractive offers to potential customers, employees and strategic partners.
The Company believes that its current and anticipated solutions are, and will be, sufficiently different from existing competition,
and that there is limited to no competition in its local area. However, it is nevertheless possible that potential competitors
may have or may rapidly acquire significant market share. Increased competition may result in price reductions, reduced gross margin
and loss of market share. The Company may not be able to compete successfully, and competitive pressures may adversely affect its
business, results of operations and financial condition.
No formal market survey has been conducted.
No independent marketing survey has been performed
to determine the potential demand for the Company’s services over the longer term. The Company has conducted no marketing
studies regarding whether its business would continue to be marketable. No assurances can be given that upon marketing, sufficient
customer markets and business segments can be developed to sustain the Company's operations on a continued basis.
The Company has authorized the issuance
of preferred stock with certain preferences.
The board of
directors of the Company is authorized to issue up to 10,000,000 shares of $0.001 par value preferred stock. The board of directors
has the power to establish the dividend rates, liquidation preferences, and voting rights of any series of preferred stock, and
these rights may be superior to the rights of holders of the Shares. The board of directors may also establish redemption and conversion
terms and privileges with respect to any shares of preferred stock. Any such preferences may operate to the detriment of the rights
of the holders of the Shares, and further, could be used by the board of directors as a device to prevent a change in control of
the Company. As of the date of this report the Company has 10,0000,000 shares of Series A Preferred Stock designated and 5,000,000
issued and outstanding. The Series A Preferred Stock has a voting right of 500:1. Every One (1) share of Preferred Series A Stock
has the voting power of 500 common shares. Except as otherwise required by law, each share of outstanding Series A Preferred Stock
shall entitle the holder thereof to vote on each matter submitted to a vote of the stockholders of the Corporation.
The Company does not maintain certain insurance,
including errors and omissions and indemnification insurance.
The Company has limited capital and, therefore,
does not currently have a policy of insurance against liabilities arising out of the negligence of its officers and directors and/or
deficiencies in any of its business operations. Even assuming that the Company obtained insurance, there is no assurance that such
insurance coverage would be adequate to satisfy any potential claims made against the Company, its officers and directors, or its
business operations. Any such liability which might arise could be substantial and may exceed the assets of the Company. The certificate
of incorporation and by-laws of the Company provide for indemnification of officers and directors to the fullest extent permitted
under Nevada law. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers
and controlling persons, it is the opinion of the Securities and Exchange Commission that such indemnification is against public
policy, as expressed in the Act, and is therefore, unenforceable.
Intellectual property and/or trade secret
protection may be inadequate.
The Company has applied for intellectual property
or trade secret protection on some aspects of its business. The Company has plans to obtain additional patents, copyright, trademarks
and/or service marks on some of its solutions and services. Regardless, there can be no assurance that the Company can obtain effective
protection against unauthorized duplication or the introduction of substantially similar solutions and services.
The Company is subject to the potential
factors of market and customer changes.
The business of the Company is susceptible
to rapidly changing preferences of the marketplace and its customers. The needs of customers are subject to constant change. Although
the Company intends to continue to develop and improve its services to meet changing customer needs of the marketplace, there can
be no assurance that funds for such expenditures will be available or that the Company's competition will not develop similar or
superior capabilities or that the Company will be successful in its internal efforts. The future success of the Company will depend
in part on its ability to respond effectively to rapidly changing trends, industry standards and customer requirements by adapting
and improving the features and functions of its services.
Our Officers and Directors Have the
Ability to Exercise Significant Influence over Matters Submitted for Stockholder Approval and Their Interests May Differ From Other
Stockholders
Our executive officers
and directors, whether acting alone or together, may have significant influence in determining the outcome of any corporate transaction
or other matter submitted to our stockholders for approval, including mergers, acquisitions, consolidations and the sale of all
or substantially all of our assets, and also the power to prevent or cause a change in control. The interests of these executive
officers and directors may differ from the interests of the other stockholders.
ITEM 2. FINANCIAL INFORMATION
CAUTIONARY STATEMENT
REGARDING FORWARD-LOOKING STATEMENTS
This report on Form
10 contains "forward-looking statements" that involve risks and uncertainties. You should not place undue reliance on
these forward-looking statements. Our actual results could differ materially from those anticipated in the forward-looking statements
for many reasons, including the risks described in this Form 10 and other filings we make with the Securities and Exchange Commission.
Although we believe the expectations reflected in the forward-looking statements are reasonable, they relate only to events as
of the date on which the statements are made. We do not intend to update any of the forward-looking statements after the date of
this report to conform these statements to actual results or to changes in our expectations, except as required by law.
The following discussion
and analysis of financial condition and results of operations is based upon, and should be read in conjunction with our audited
financial statements and related notes thereto included elsewhere in this Form 10 .
We have incurred losses since our inception and cannot
assure you that we will achieve profitability.
The Company has an accumulated deficit
of $8,150,905 and $7,680,322 as of December 31, 2014 and 2013, respectively. The extent of our future operating losses and
the timing of profitability are highly uncertain and we may never achieve or sustain profitability. We cannot assure you that we
will ever generate sufficient revenues from our operations to achieve profitability. If revenues grow slower than we anticipate,
or if operating expenses exceed our expectations or cannot be adjusted accordingly, we may not ever achieve profitability and the
value of your investment could decline significantly.
These factors create a substantial doubt
about our ability to continue as a going concern and our auditors have included a going concern qualification in their report on
our audited financial statements.
Management’s Discussion and Analysis
of Financial Condition and Results of Operation.
Revenues
In 2014 our revenue was $508,035 compared
to $1,775,697 in 2013 or a reduction of $1,267,662. The main reason for the decline was the loss of various clients.
Cost of Sales
In 2014 our cost of sales as a percentage
of revenues was 56.6% as compares to 68.5% in the previous year. Our costs decreased as we had fewer jobs and we were able to maintain
a slightly higher profitablilty.
Operating Expenses
In 2014 our expenses were $518,329 compared
to $535,602 or a reduction of $17,239 The main area of reduction of expenses was in general and administrative as with less revenue
we incurred less overhead.The electronic security integration business is cyclical and requires a long sales cycle.
With the launch of Greeniosk secure payment, SITS will be able to build a monthly recurrent revenue base.
Liquidity and Capital Resources
At December 31, 2014 we had a negative
working capital of $2,0 28 , 653 and cash used in operations of $162,300. Net ca s h provided by financial sources
was $83,324.
Going Concern
As of the date of this registration
statement, there is doubt about our ability to continue as a going concern as we have not generated sufficient cash flow to fund
our business operations. The financial statements included in this registration statement have been prepared on the going
concern basis, which assumes that we will be able to realize our assets and discharge our obligations in the normal course of business.
If we are not to continue as a going concern, we would likely not be able to realize our assets at values comparable to the carrying
value or the fair value estimates reflected in the balances set out in our financial statements.
Our future success and viability, therefore,
are dependent upon our ability to generate capital financing. The failure to generate sufficient revenues or raise additional capital
may have a material and adverse effect upon us and our stockholders.
Because we have incurred losses from
operations since inception, in their report on our audited financial statements for the latest fiscal year, our independent auditors
included an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern.
Management’s plan for continuing
and growing operations is to seek additional lines of credit. At the time of filing the Form 10 we had received verbal statements
of interest and verbal promises of additional financing from one investor. Management, on a daily basis, is actively seeking additional
investor sources to finance operations and growth. Management has also signed interest forbearance agreements with existing lenders
and has converted some interest amounts due into shares of stock. The operating needs of the company for the next 12 months is
approximately $200,000 and additional funds are needed to achieve the desired growth.
Critical Accounting
Policies
Use of estimates
The preparation of financial
statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Accordingly, actual results could differ
from those estimates. Such estimates include management’s assessments of the carrying value of certain assets, useful lives
of assets, and related depreciation and amortization methods applied.
Accounts Receivable
and Allowance for Doubtful Accounts
Accounts receivable
related to the products and services sold are recorded at the time revenue is recognized, and are presented on the balance sheet
net of allowance for doubtful accounts. The ultimate collection of the receivable may not be known for several months after services
have been provided and billed.
The Company has established
an allowance for doubtful accounts based upon factors pertaining to the credit risk of specific customers, analyses of current
and historical cash collections, and the aging of receivables. Delinquent accounts are written-off when the likelihood for collection
is remote and/or when the Company believes collection efforts have been fully exhausted and the Company does not intend to devote
any additional efforts in an attempt to collect the receivable. The Company adjusts their allowance for doubtful accounts balance
on a quarterly basis.
Furniture Fixtures
& Equipment
Furniture fixtures and
equipment are recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged
to operations as incurred. Depreciation of furniture fixtures and equipment is computed by the straight-line method (after taking
into account their respective estimated residual values) over the assets estimated useful life of five (3) years for equipment,
(5) years for automobile, and (7) years for furniture and fixtures. Upon sale or retirement of computer equipment, the related
cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in statements of operations.
Automobiles
Automobiles are recorded
at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged to operations as
incurred. Depreciation of automobiles is computed by the straight-line method (after taking into account their respective estimated
residual values) over the assets estimated useful life of five (5) years. Upon sale or retirement of automobiles, the related cost
and accumulated depreciation are removed from the accounts and any gain or loss is reflected in statements of operations.
Revenue Recognition
The Company follows
paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company will recognize revenue
when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the
following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services
have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.
In addition, the Company records allowances for accounts receivable that are estimated to not be collected.
Impairment of
long-lived assets
The Company follows
paragraph 360-10-05-4 of the FASB Accounting Standards Codification for its long-lived assets.
The Company assesses
the recoverability of its long-lived assets by comparing the projected undiscounted net cash flows associated with the related
long-lived asset or group of long-lived assets over their remaining estimated useful lives against their respective carrying amounts.
Impairment, if any, is based on the excess of the carrying amount over the fair value of those assets. Fair value is generally
determined using the asset’s expected future discounted cash flows or market value, if readily determinable. If long-lived
assets are determined to be recoverable, but the newly determined remaining estimated useful lives are shorter than originally
estimated, the net book values of the long-lived assets are depreciated over the newly determined remaining estimated useful lives.
The Company determined
that there were no impairments of long-lived assets as of December 31, 2014 and 2013.
Commitments and
contingencies
The Company follows
subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Liabilities for
loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is
probable that a liability has been incurred and the amount of the assessment can be reasonably estimated.
Income taxes
The Company follows Section 740-10-30
of the FASB Accounting Standards Codification, which requires recognition of deferred tax assets and liabilities for the expected
future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred
tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities
using enacted tax rates in effect for the fiscal year in which the temporary differences are expected to be recovered or settled.
Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the
assets will not be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income
in the period that includes the enactment date.
The Company adopted
section 740-10-25 of the FASB Accounting Standards Codification (“Section 740-10-25”) with regards to uncertainty in
income taxes. Section 740-10-25 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 Section 740-10-25, 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. Section 740-10-25 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
assets and/or liabilities for unrecognized income tax benefits according to the provisions of Section 740-10-25.
Net income (loss)
per share
The Company computes
basic and diluted earnings per share amounts pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic
earnings per share is computed by dividing net income (loss) available to common shareholders, by the weighted average number of
shares of common stock outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted earnings
per share is computed by dividing net income (loss) available to common shareholders by the diluted weighted average number of
shares of common stock during the period. The diluted weighted average number of common shares outstanding is the basic weighted
number of shares adjusted as of the first day of the year for any potentially diluted debt or equity.
There were no potentially
dilutive shares outstanding as of December 31, 2014 and December 31, 2013, respectively.
Recently Issued Accounting Pronouncements
We do not expect the adoption of any recently issued accounting
pronouncements to have a significant effect on our financial position or results of operations.
Quantitative and Qualitative Disclosures
About Market Risk.
We have not utilized
any derivative financial instruments such as futures contracts, options and swaps, forward foreign exchange contracts or interest
rate swaps and futures. We believe that adequate controls are in place to monitor any hedging activities. We do not have any borrowings
and, consequently, we are not affected by changes in market interest rates. We do not currently have any sales or own assets and
operate facilities in countries outside the United States and, consequently, we are not affected by foreign currency fluctuations
or exchange rate changes. Overall, we believe that our exposure to interest rate risk and foreign currency exchange
rate changes is not material to our financial condition or results of operations.
Off-Balance Sheet Arrangements
We have not entered
into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial
condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital
resources and would be considered material to investors.
ITEM 3. PROPERTIES
At
present,
time we
have
2 offices,
one in D'Iberville,
Mississippi with office
space
and a large
warehouse.
Our headquarters'
office
is in Las
Vegas,
Nevada
and consists
solely of office
space.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain
information, as of January XX, 2015, with respect to the beneficial ownership (1) of the Company’s outstanding Common Stock
by (i) any holder of more than five (5%) percent; (ii) the Company’s executive officer and directors; and (iii) the Company’s
directors and executive officer as a group. Except as otherwise indicated, each of the stockholders listed below has sole voting
and investment power over the shares beneficially owned. Unless otherwise indicated, the address of each stockholder listed in
the table is correct. As of the date of this Registration Statement, there are 19,134,708 shares of common stock issued and outstanding.
| Name and Address (1) |
Shares Beneficially Owned |
Class of Shares |
Voting Rights |
Percentage of Class (2) |
Sylvain
Desrosiers
Chief Executive Officer and Chairman |
10,413,788
5,000,000 |
Common
Series A Preferred(3) |
1:1
500:1 |
54%
100% |
William Noll
Chief Financial Officer |
2,000,000 |
Common |
1:1 |
10% |
|
All directors and executive Officers (2
persons) |
12,413,788
5,000,000 |
Common
Series A Preferred(3) |
1:1
500:1 |
64%
100% |
1) Unless
noted otherwise, the address for all persons listed is c/o the Company at 7935 W. Sahara Ave Suite 1 03 , Las Vegas,
NV 89117.
2) The
above percentages are based on 19,134,708 shares of common stock, 5,000,000
shares of Series A Preferred Stock outstanding as January 01 , 2015.
3)
Series A Preferred Stock has a voting right of 500:1. Every One (1) share of Preferred Series A Stock has the voting power of 500
common shares. Except as otherwise required by law, each share of outstanding Series A Preferred Stock shall entitle the holder
thereof to vote on each matter submitted to a vote of the stockholders of the Corporation.
This table is based
upon information derived from our stock records. We believe that each of the shareholders named in this table has sole or shared
voting and investment power with respect to the shares indicated as beneficially owned; except as set forth above, applicable percentages
are based upon 19,134,708 shares of common stock outstanding as of the date of this registration statement on Form 10.
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the name,
age, and position of each executive officer and director of the Company:
| Name |
|
Age |
|
Position(s) |
| |
|
|
|
|
| Sylvain Desrosiers |
|
50 |
|
Chief Executive Officer and Chairman of the Board of Directors |
| William Noll |
|
68 |
|
Chief Financial Officer/Treasurer |
Sylvain Desrosiers, Chief Executive Officer
and Chairman of the Board of Directors
Mr. Desrosiers has specialized in
technology, electronic security, compliance and auditing for the gaming industry for almost three decades. Mr. Desrosiers
founded and led several very successful businesses during his career; including Imaging Technologies Systems, Inc. one of the
first companies to specialize in identification cards. He also co-founded AXS Technologies; an access control company.
That technology was sold to Integral Technologies, Inc. Mr. Desrosiers also founded Port Scanning Services, Inc., Emap, Inc.
and Gaming Entertainment International, Inc. For the past 5 years Mr. Desrosiers has been the CEO of SITS,
directing marketing, operations and contacting investors .
William W. Noll, Chief Financial Officer / Treasurer
Mr. Noll has an MBA in Finance, having attended
Boston University and Bridgeport University. He was a regional manager in the international public accounting firm of Laventhol
& Horwath. Laventhol & Horwath included clients many of the large hotels, real estate developers and hospitals in Southern
California, including the Ritz Carlton and other brand names. After Laventhol closed, he was controller and acting CFO for a large
500 bed hospital in Los Angeles. Following that, he became senior vice president of operations of Medical Capital Management, Inc.,
a large commercial financing firm in Southern California for fifteen years. He was responsible for underwriting loans, managing
and performing due diligence audits of prospective clients and filing securities reports with federal and state securities divisions.
He also was on the board of directors of Medical Capital Management, Inc. When that firm closed in 2009, he subsequently became
chief financial officer of Port Scanning Services and Gaming Entertainment International. For the past five years Mr. Noll has
functioned as the CFO of SITS, performing the accounting, federal tax filing, financial statement preparation and other financial
related functions.
Mr. Noll has developed and helped place many
public offerings in the U.S. and Asian markets. He also managed and monitored the sale of securities in many Asian markets. Through
these public offerings, he helped his last firm raise billions of dollars. He was a major contributor in helping his last firm
increase their portfolio size by 500% within seven years. He is well versed and has kept current with U.S. and International
financial reporting and financial regulations and trends. He is also experienced with the governmental reporting and record
keeping requirements related to international trade and transactions.
Mr. Noll has over thirty years of executive
level financial and business operational experience. He was V.P. of Financial Operations for Medical Capital Corporation from 1996
until the end of 2009. From 2010 to the present, Mr. Noll has worked as the CFO of Port Scanning Services, Inc. In consideration
of Mr. Noll’s wealth of experience, the Company appointed him a member of the Board of Directors.
Employees
We
currently have as employ ees Mr. Desrosiers and Mr. Noll. At the current time we engage experienced consultants to match
the requirements of the security installation jobs that need to be completed. As the business grows we will be more cash flow positive
and will hire additional staff as employees . Mr. Desrosiers
is the Chief Executive Officer of the Company. There is a formal employment agreement between the Company and Mr. Desrosiers
and Mr. Noll. Neither has drawn any salary payments yet.
Significant Employees: None.
Family Relationships: None.
Involvement in Certain Legal Proceedings:
No officer, director,
or persons nominated for such positions, promoter or significant employee has been involved in the last ten years in any of the
following:
| • |
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; |
| |
|
| • |
Any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); |
| |
|
| • |
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 involvement in any type of business, securities or banking activities; and |
| |
|
| • |
Being found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated. |
The Board of Directors
acts as the Audit Committee and the Board has no separate committees. The Company has no qualified financial expert at this time
because it has not been able to hire a qualified candidate. Further, the Company believes that it has inadequate financial resources
at this time to hire such an expert. The Company intends to continue to search for a qualified individual for hire.
Code of Ethics: We do not currently have
a code of ethics.
ITEM 6. EXECUTIVE COMPENSATION
The following table
provides information as to cash compensation of all officers of the Company, for each of the Company’s last two fiscal years.
SUMMARY COMPENSATION TABLE
| Name and principal position |
Year |
Salary |
Stock Awards |
Option Awards |
Non-Equity Incentive Plan Compensation Earnings |
Nonqualified
Deferred Compensation Earnings |
All Other Compensation |
Total |
|
Sylvain Desrosiers
Chief Executive Officer and Chairman of the
Board of Directors |
2014 |
$ 0 |
$ 0 |
$0 |
$0 |
$0 |
$ 0 |
$0 |
| |
2013 |
$ 0 |
$ 0 |
$0 |
$0 |
$0 |
$ 0 |
$0 |
|
William W. Noll
Chief Financial Officer |
2014 |
$ 0 |
$ 0 |
$0 |
$0 |
$0 |
$ 0 |
$0 |
| |
2013 |
$ 0 |
$ 0 |
$0 |
$0 |
$0 |
$ 0 |
$0 |
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Related Party Transactions
Except as otherwise indicated herein, there
have been no related party transactions, or any other transactions or relationships required to be disclosed pursuant to Item 404
of Regulation S-K.
Director Independence
At this time the Company
does not have a policy that it’s directors or a majority be independent of management as the Company has at this time only
one director. It is the intention of the Company to implement a policy that a majority of the Board member be independent of the
Company’s management as the members of the board of director’s increases. A Director is considered independent if the
Board affirmatively determines that the Director (or an immediate family member) does not have any direct or indirect material
relationship with the Company or its affiliates or any member of senior management of the Company or his or her affiliates. The
term “affiliate” means any corporation or other entity that controls, is controlled by, or under common control with
the Company, evidenced by the power to elect a majority of the Board of Directors or comparable governing body of such entity.
The term “immediate family member” means spouse, parents, children, siblings, mothers- and fathers-in-law, sons- and
daughters-in law, brothers- and sisters-in-laws and anyone (other than domestic employees) sharing the Director’s home.
Committees: Audit Committee Financial
Expert.
The Company does not currently have an Audit Committee.
ITEM 8. LEGAL PROCEEDINGS
There are presently
no material, pending legal proceedings to which the Company is a party or as to which any of its property is subject, and no such
proceedings are known to the Company to be threatened or contemplated against it.
ITEM 9. MARKET PRICE OF AND DIVIDENDS
ON THE COMPANY’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
(a) Market Information
The Company’s
Common Stock is quoted on the OTC Pink Sheets under the under the symbol “SITS.” The following table sets forth the
quarterly high and low sale prices for our common shares for the last two completed fiscal years. Quotations on the OTC Pink Sheets
reflect bid and ask quotations, may reflect inter-dealer prices, without retail markup, markdown or commission, and may not represent
actual transactions.
| |
|
High |
|
Low |
| December 31, 2014 |
$ |
0.09 |
$ |
0.08 |
| September 30, 2014 |
$ |
0.21 |
$ |
0.18 |
| June 30, 2014 |
$ |
0.61 |
$ |
0.51 |
| March 31, 2014 |
$ |
0.30 |
$ |
0.25 |
| |
|
|
|
|
| December 31, 2013 |
$ |
0.18 |
$ |
0.15 |
| September 30, 2013 |
$ |
0.15 |
$ |
0.12 |
| June 30, 2013 |
$ |
0.09 |
$ |
0.08 |
| March 31, 2013 |
$ |
0.17 |
$ |
0.12 |
Holders
As of January 01, 2015,
there were approximately 19,134,708 share s and 66 share holders of record of our common stock. The common stock figure does
not take into account those shareholders whose certificates are held in the name of broker-dealers or other nominees.
Dividends.
The Company has not
paid any cash dividends to date and does not anticipate or contemplate paying dividends in the foreseeable future. It is the present
intention of management to utilize all available funds for the development of the Company’s business.
Securities Authorized for Issuance
under Equity Compensation Plans.
None.
Reverse Stock
Splits
On
July
17, 2014,
the Company
enacted
a 1-for-50
reverse
stock
split. The Company
has adjusted
all periods
presented for
the effects
of the stock
split.
ITEM 10. RECENT SALES OF UNREGISTERED
SECURITIES
None.
ITEM 11. DESCRIPTION OF REGISTRANT’S
SECURITIES TO BE REGISTERED
Authorized Capital Stock
The authorized capital
stock of the Company consists of 50,000,000 shares of Common Stock, par value $.001 per share, (the "Common Stock"),
of which there are 19,134,708 issued and outstanding. There are also 10,000,000 shares of Preferred Stock, (the “Preferred
Stock”) par value $.001 per share, which have been designated as Series A Preferred Stock, of which there are 5,000,000 issued
and outstanding. The following summarized the important provisions of the Company’s capital stock.
Common Stock
Holders of shares of
common stock are entitled to one vote for each share on all matters to be voted on by the stockholders. Holders of common stock
do not have cumulative voting rights. Holders of common stock are entitled to share ratably in dividends, if any, as may be declared
from time to time by the Board of Directors in its discretion from funds legally available. In the event of a liquidation, dissolution
or winding up of the company, the holders of common stock are entitled to share pro rata all assets remaining after payment in
full of all liabilities. All of the outstanding shares of common stock are fully paid and non-assessable.
Holders of common stock have no preemptive
rights to purchase the Company’s common stock. There are no conversion or redemption rights or sinking fund provisions with
respect to the common stock.
Preferred Stock
The board of
directors of the Company is authorized to issue up to10,000,000 shares of $0.001 par value preferred stock. The board of directors
has the power to establish the dividend rates, liquidation preferences, and voting rights of any series of preferred stock, and
these rights may be superior to the rights of holders of the Shares. The board of directors may also establish redemption and conversion
terms and privileges with respect to any shares of preferred stock. Any such preferences may operate to the detriment of the rights
of the holders of the Shares, and further, could be used by the board of directors as a device to prevent a change in control of
the Company. As of the date of this report the Company has 10,0000,000 shares of Series A Preferred Stock designated and 5,000,000
Series A Preferred Stock issued and outstanding. The Series A Preferred Stock has a voting right of 500:1. Every One (1) share
of Preferred Series A Stock has the voting power of 500 common shares. Except as otherwise required by law, each share of outstanding
Series A Preferred Stock shall entitle the holder thereof to vote on each matter submitted to a vote of the stockholders of the
Corporation.
Dividends
We have not paid any
dividends on our common stock and do not presently intend to pay cash dividends prior to the consummation of a business combination.
The payment of cash dividends in the future, if any, will be contingent upon our revenues and earnings, if any, capital requirements
and general financial condition subsequent to consummation of a business combination, if any. The payment of any dividends subsequent
to a business combination, if any, will be within the discretion of our then existing board of directors. It is the present intention
of our board of directors to retain all earnings, if any, for use in our business operations and, accordingly, the board of directors
does not anticipate paying any cash dividends in the foreseeable future.
Transfer Agent
| |
Pacific Stock Transfer Company
4045 South Spencer Street, Suite 403
Las Vegas, NV 89119
Tel: 702-361-3033
Fax: 702-433-1979 |
Debt Securities.
Other Securities to be Registered: None.
ITEM 12. INDEMNIFICATION OF DIRECTORS
AND OFFICERS
Section 78.7502 of the
Nevada Revised Statutes permits a corporation to indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, except
an action by or in the right of the corporation, by reason of the fact that he is or was a director, officer, employee or agent
of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against expenses, including attorneys’ fees, judgments,
fines and amounts paid in settlement actually and reasonably incurred by him in connection with the action, suit or proceeding
if he:
(a) is not liable pursuant
to Nevada Revised Statute 78.138, or
(b) acted in good faith
and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful.
In addition, Section
78.7502 permits a corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact
that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against
expenses, including amounts paid in settlement and attorneys’ fees actually and reasonably incurred by him in connection
with the defense or settlement of the action or suit if he:
(a) is not liable pursuant
to Nevada Revised Statute 78.138; or
(b) acted in good faith
and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation.
To the extent that a
director, officer, employee or agent of a corporation has been successful on the merits or otherwise in defense of any action,
suit or proceeding referred to above, or in defense of any claim, issue or matter, the corporation is required to indemnify him
against expenses, including attorneys’ fees, actually and reasonably incurred by him in connection with the defense.
Section 78.752 of
the Nevada Revised Statutes allows a corporation to purchase and maintain insurance or make other financial arrangements on
behalf of any person who is or was a director, officer, employee or agent of the corporation or is or was serving at the
request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise for any liability asserted against him and liability and expenses incurred by him in his capacity
as a director, officer, employee or agent, or arising out of his status as such, whether or not the corporation has the
authority to indemnify him against such liability and expenses.
Other financial arrangements made by a corporation
pursuant to Section 78.752 may include the following:
(a) the creation of
a trust fund;
(b) the establishment
of a program of self-insurance;
(c) the securing of
its obligation of indemnification by granting a security interest or other lien on any assets of the corporation; and
(d) the establishment
of a letter of credit, guaranty or surety.
No financial arrangement
made pursuant to Section 78.752 may provide protection for a person adjudged by a court of competent jurisdiction, after exhaustion
of all appeals, to be liable for intentional misconduct, fraud or a knowing violation of law, except with respect to the advancement
of expenses or indemnification ordered by a court.
Any discretionary indemnification
pursuant to NRS 78.7502, unless ordered by a court or advanced pursuant to an undertaking to repay the amount if it is determined
by a court that the indemnified party is not entitled to be indemnified by the corporation, may be made by the corporation only
as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper
in the circumstances. The determination must be made:
(a) by the stockholders;
(b) by the board of
directors by majority vote of a quorum consisting of directors who were not parties to the action, suit or proceeding;
(c) if a majority vote
of a quorum consisting of directors who were not parties to the action, suit or proceeding so orders, by independent legal counsel
in a written opinion, or
(d) if a quorum consisting
of directors who were not parties to the action, suit or proceeding cannot be obtained, by independent legal counsel in a written
opinion.
Under our Articles of
Incorporation, our directors are not liable for monetary damages for breach of fiduciary duty, except in connection with (i) acts
or omissions that involve intentional misconduct by the director or a knowing violation of law by the director, (ii) conduct violating
the Nevada Revised Statutes, or (iii) any transaction from which the director will personally receive a benefit in money, property
or services to which the director is not legally entitled
Our Articles of Incorporation
and Bylaws require us to indemnify our directors against reasonable expenses incurred by the individual in advance of final disposition
of the proceeding, without regard to the limitations in Nevada Revised Statute 78.7502, or any other limitation that may hereafter
be enacted, to the extent such limitation may be disregarded if authorized by the Articles of Incorporation, to the full extent
and under all circumstances permitted by applicable law.
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA
We set forth below a list of our audited
financial statements included in this Registration Statement on Form 10. *
*The financial statements follows page 44
to this Registration Statement on Form 10.
ITEM 14. CHANGES IN AND DISAGREEMENTS
WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
On December 16,
2014, the Company’s Board of Directors approved the engagement of Terry L. Johnson, CPA, as the Company's independent
accountant effective immediately to audit the Company’s financial statements and to perform reviews of interim
financial statements. During the fiscal years ended December 31, 2013 and 2014, through December 16, 2014, neither the
Company nor anyone acting on its behalf consulted with Terry L. Johnson, CPA regarding: (i) either the application of any
accounting principles to a specific completed or contemplated transaction of the Company, or the type of audit opinion that
might be rendered by Terry L. Johnson, CPA on the Company's financial statements; or (ii) any matter that was either the
subject of a disagreement with Terry L. Johnson, CPA or a reportable event with respect to Terry L. Johnson, CPA.
There are not and have not been any disagreements
between the Company and its accountants on any matter of accounting principles, practices or financial statement disclosure .
On approximately April 30, 2015 we were
advised that Terry L. Johnson was no longer reviewing financial statements and no longer providing Opinions under PCAOB guidelines.
We are in the process of engaging another PCAOB approved auditor and anticipate signing the engagement letter by the middle of
June, 2015 .
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements.
The financial statements and related notes are included
as part of this Form 10 registration statement is indexed in the appendix on page F-1 through F-15.
(b) Exhibits.
| Exhibit Number |
Description of Exhibits |
| 3.1 ** |
Articles of Incorporation |
| 3.2 ** |
By-laws |
| 3.3 * |
Amendment to Articles |
| 3.4 * * |
Certificate of Designation |
| 23.1 ** |
Consent of Independent Auditor |
*Filed herewith.
** Previously filed.
SIGNATURES
Pursuant
to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this Form 10/A
registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.
| |
|
| Date: May
27, 2015 |
Southern ITS International, Inc. |
| |
|
| |
By: /s/ Sylvain Desrosiers |
| |
Sylvain Desrosiers, Chief Executive Officer (Principal Executive Officer) |
INDEX
TO FINANCIAL STATEMENTS
| Report of Independent Registered Public Accounting Firm |
F-1 |
| |
|
|
Balance Sheets
As of December 31, 2014 and December 31, 2013 |
F-2 |
| |
|
|
Statements of Operations
For the years ended December 31, 2014 and December 31, 2013 |
F-3 |
| |
|
|
Statement of Stockholders’ Equity
From inception (March 26, 2008) to December 31, 2014 |
F-4 |
| |
|
|
Statements of Cash Flows
For the years ended December 31, 2014 and December 31, 2013 |
F-5 |
| |
|
| Notes to Financial Statements |
F-6 - F-15 |
Terry L. Johnson, CPA
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors
Southern ITS International, Inc.
We have audited the accompanying balance
sheets of Southern ITS International, Inc.. as of December 31, 2014 and 2013 and the statements of operations, stockholders’
equity, and cash flows for the years ended December 31, 2014 and 2013. 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 audit.
Management’s
Responsibility for Financial Statements
Management is
responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting
principles generally accepted in the United State of America; this includes the design, implementation and maintenance of internal
control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether
due to fraud or error.
Auditor’s
Responsibility
Our responsibility
is to express an opinion on these consolidated 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 audit to obtain reasonable assurance about whether the consolidated 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 audits 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 also includes examining, on a test
basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial
statement presentation. We believe that our audits provide a reasonable basis for our opinion.
Opinion
In our opinion, the financial statements
referred to above present fairly, in all material respects, the financial position of Southern ITS International, Inc. as of December
31, 2014 and 2013 and the results of its operations and its cash flows for the years ended December 31, 2014 and 2013 in conformity
with accounting principles generally accepted in the United States.
Emphasis of
Matter
The accompanying financial statements
have been prepared assuming the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the
Company has a minimum cash balance available for payment of ongoing operating expenses, has experienced losses from operations
since inception, and it does not have a source of revenue sufficient to cover its operating costs. These factors raise substantial
doubt about the Company’s ability to continue as a going concern. Management’s plans in this regard are described in
Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Terry L. Johnson, CPA
Casselberry, Florida
March 23, 2015
| SOUTHERN ITS INTERNATIONAL, INC. |
| CONSOLIDATED BALANCE SHEETS |
| (Audited) |
| | |
| |
|
| | |
| December
31, | | |
| December
31, | |
| | |
| 2014 | | |
| 2013 | |
| Assets: | |
| | | |
| | |
| Current Assets | |
| | | |
| | |
| Cash and Cash Equivalents | |
$ | 20,994 | | |
$ | 99,970 | |
| Accounts Receivable, net | |
| — | | |
| 20,386 | |
| Advances to Non-Related Parties | |
| 10,000 | | |
| 10,000 | |
| Prepaids | |
| 673,150 | | |
| — | |
| Total Current Assets | |
| 704,144 | | |
| 130,356 | |
| | |
| | | |
| | |
| Fixed Assets: | |
| | | |
| | |
| Furniture and Equipment | |
| 5,808 | | |
| 5,808 | |
| Accumulated Depreciation | |
| (2,360 | ) | |
| (1,531 | ) |
| Total Fixed Assets | |
| 3,448 | | |
| 4,277 | |
| | |
| | | |
| | |
| Total Assets | |
$ | 707,592 | | |
$ | 134,633 | |
| | |
| | | |
| | |
| Liabilities and Stockholders' Deficit: | |
| | | |
| | |
| | |
| | | |
| | |
| Current Liabilities | |
| | | |
| | |
| Accounts Payable & Accrued Expenses | |
$ | 128,829 | | |
$ | 32,424 | |
| Accrued Interest | |
| 387,882 | | |
| 325,557 | |
| Convertible Notes Payable- Related Party | |
| 294,712 | | |
| 262,320 | |
| Convertible Notes Payable | |
| 155,000 | | |
| 155,000 | |
| Notes Payable- Related Party | |
| 96,205 | | |
| 105,752 | |
| Notes Payable | |
| 220,000 | | |
| 150,000 | |
| Derivative Liability | |
| 1,453,618 | | |
| 1,376,358 | |
| Total Current Liabilities | |
| 2,736,246 | | |
| 2,407,411 | |
| | |
| | | |
| | |
| Non-Current Liabilities: | |
| | | |
| | |
| Convertible Notes Payable- Related Party | |
| — | | |
| 33,392 | |
| Total Non-Current Liabilities | |
| — | | |
| 33,392 | |
| | |
| | | |
| | |
| Total Liabilities | |
| 2,736,246 | | |
| 2,440,803 | |
| | |
| | | |
| | |
| Stockholders' Equity: | |
| | | |
| | |
| Preferred Stock, Par value $0.001, Authorized 10,000,000 shares | |
| | | |
| | |
| Issued 5,000,000 shares respectively | |
| 5,000 | | |
| 5,000 | |
| Common Stock, Par value $0.001, Authorized 50,000,000 shares | |
| | | |
| | |
| Issued 19,134,708 and 3,764,348 respectively | |
| 19,135 | | |
| 3,764 | |
| Paid-In Capital | |
| 6,098,117 | | |
| 5,365,388 | |
| Deficit Accumulated During Development Stage | |
| (8,150,905 | ) | |
| (7,680,322 | ) |
| Total Stockholders' Equity | |
| (2,028,653 | ) | |
| (2,306,170 | ) |
| | |
| | | |
| | |
| Total Liabilities and Stockholders' Equity | |
$ | 707,592 | | |
$ | 134,633 | |
| | |
| | | |
| | |
| The accompanying notes are an integral part of these financial statements. | |
| SOUTHERN ITS INTERNATIONAL, INC. |
| CONSOLIDATED STATEMENTS OF OPERATIONS |
| (Audited) |
| | |
| |
|
| | |
For the Years Ended |
| | |
December 31, |
| | |
2014 | |
2013 |
| Revenues | |
$ | 508,035 | | |
$ | 1,775,697 | |
| Costs of Services | |
| 287,653 | | |
| 1,216,236 | |
| | |
| | | |
| | |
| Gross Margin | |
| 220,382 | | |
| 559,461 | |
| | |
| | | |
| | |
| Operating Expenses: | |
| | | |
| | |
| Consulting | |
| 141,693 | | |
| 106,353 | |
| Professional Fees | |
| 39,511 | | |
| 48,327 | |
| Wages | |
| 82,679 | | |
| 79,679 | |
| General and Administrative | |
| 254,446 | | |
| 301,243 | |
| Total Operating Expenses | |
| 518,329 | | |
| 535,602 | |
| | |
| | | |
| | |
| Operating Income (Loss) | |
| (297,947 | ) | |
| 23,859 | |
| | |
| | | |
| | |
| Other Income (Expense): | |
| | | |
| | |
| Interest Expense | |
| (95,396 | ) | |
| (90,132 | ) |
| Derivative Expense | |
| (77,260 | ) | |
| (1,376,358 | ) |
| Interest Income | |
| 20 | | |
| — | |
| Total Other Income (Expense) | |
| (172,636 | ) | |
| (1,466,490 | ) |
| | |
| | | |
| | |
| Net Income (Loss) Before Taxes | |
| (470,583 | ) | |
| (1,442,631 | ) |
| | |
| | | |
| | |
| Income Tax Provision | |
| — | | |
| — | |
| | |
| | | |
| | |
| Net Income (Loss) | |
$ | (470,583 | ) | |
$ | (1,442,631 | ) |
| | |
| | | |
| | |
| Loss per Share, Basic & | |
| | | |
| | |
| Diluted | |
$ | (0.02 | ) | |
$ | (0.24 | ) |
| | |
| | | |
| | |
| Weighted Average Shares | |
| | | |
| | |
| Outstanding | |
| 19,134,708 | | |
| 5,918,194 | |
The accompanying notes are an integral
part of these financial statements.
| SOUTHERN ITS INTERNATIONAL, INC. |
| CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT) |
| (Audited) |
| | |
| | | |
| | | |
| | | |
| | | |
| Common | | |
| Additional | | |
| | | |
| Total | |
| | |
| Preferred | | |
| Preferred | | |
| Common | | |
| Common | | |
| Stock | | |
| Paid in | | |
| Accumulated | | |
| Stockholders' | |
| | |
| Shares | | |
| Stock | | |
| Shares | | |
| Stock | | |
| Issuable | | |
| Capital | | |
| Deficit | | |
| Equity (Deficit) | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net Loss Inception (March 26, 2008) to | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| 12/31/2008 | |
| — | | |
$ | — | | |
| — | | |
$ | — | | |
| — | | |
$ | — | | |
$ | (282,194 | ) | |
$ | (282,194 | ) |
| Stock issued at inception | |
| — | | |
| — | | |
| 5,771.44 | | |
| 6 | | |
| — | | |
| 93,515 | | |
| — | | |
| 93,521 | |
| Net Loss for year ended December 31, 2009 | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (457,774 | ) | |
| (457,774 | ) |
| Balance December 31, 2009 | |
| — | | |
| — | | |
| 5,771 | | |
| 6 | | |
| — | | |
| 93,515 | | |
| (739,968 | ) | |
| (646,447 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Stock issued for services | |
| — | | |
| — | | |
| 133.33 | | |
| 0 | | |
| — | | |
| 13,000 | | |
| — | | |
| 13,000 | |
| Stock issued for debt reduction | |
| — | | |
| — | | |
| 400 | | |
| 0 | | |
| — | | |
| 22,748 | | |
| — | | |
| 22,748 | |
| Net Loss for year ended December 31, 2010 | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (211,081 | ) | |
| (211,081 | ) |
| Balance December 31, 2010 | |
| — | | |
| — | | |
| 6,305 | | |
| 6 | | |
| — | | |
| 129,263 | | |
| (951,049 | ) | |
| (821,780 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Stock issued for services | |
| — | | |
| — | | |
| 26,666.67 | | |
| 27 | | |
| — | | |
| 2,999,973 | | |
| — | | |
| 3,000,000 | |
| Stock issued for debt reduction | |
| — | | |
| — | | |
| 10,406.67 | | |
| 10 | | |
| — | | |
| 19,990 | | |
| — | | |
| 20,000 | |
| Net loss for year ended December 31, 2011 | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (3,137,881 | ) | |
| (3,137,881 | ) |
| Balance December 31, 2011 | |
| — | | |
| — | | |
| 43,378 | | |
| 43 | | |
| — | | |
| 3,149,226 | | |
| (4,088,930 | ) | |
| (939,661 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Stock issued pursuant to share exchange- addendum was | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| later executed on April 30, 2013 | |
| — | | |
| — | | |
| 4,000,000 | | |
| 4,000 | | |
| — | | |
| (4,000 | ) | |
| — | | |
| — | |
| Stock issuable pursuant to addendum to share
exchange agreement | |
| — | | |
| — | | |
| — | | |
| — | | |
| 20,000 | | |
| 2,080,000 | | |
| — | | |
| 2,100,000 | |
| Stock issued for debt reduction | |
| — | | |
| — | | |
| 2,920,000 | | |
| 2,920 | | |
| — | | |
| 70,080 | | |
| — | | |
| 73,000 | |
| Stock issued for services | |
| — | | |
| — | | |
| 969.52 | | |
| 1 | | |
| — | | |
| 2,882 | | |
| — | | |
| 2,883 | |
| Net loss for year ended December 31, 2012 | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (2,148,761 | ) | |
| (2,148,761 | ) |
| Balance December 31, 2012 | |
| — | | |
| — | | |
| 6,964,348 | | |
| 6,964 | | |
| 20,000 | | |
| 5,298,188 | | |
| (6,237,691 | ) | |
| (912,539 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Stock cancelled per addendum to share exchange
agreement | |
| — | | |
| — | | |
| (4,000,000 | ) | |
| (4,000 | ) | |
| — | | |
| 4,000 | | |
| — | | |
| — | |
| Stock issued per addendum to share exchange | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| agreement | |
| — | | |
| — | | |
| 400,000 | | |
| 400 | | |
| (20,000 | ) | |
| 19,600 | | |
| — | | |
| — | |
| Preferred stock for services | |
| 5,000,000 | | |
| 5,000 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 5,000 | |
| Stock for services | |
| — | | |
| — | | |
| 400,000 | | |
| 400 | | |
| — | | |
| 43,600 | | |
| — | | |
| 44,000 | |
| Net loss for year ended December 31, 2013 | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (1,442,631 | ) | |
| (1,442,631 | ) |
| Balance December 31, 2013 | |
| 5,000,000 | | |
| 5,000 | | |
| 3,764,348 | | |
| 3,764 | | |
| — | | |
| 5,365,388 | | |
| (7,680,322 | ) | |
| (2,306,170 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Stock cancelled J. Bell per agreement | |
| — | | |
| — | | |
| (400,000 | ) | |
| (400 | ) | |
| — | | |
| (19,600 | ) | |
| — | | |
| (20,000 | ) |
| Reverse split (50 to 1) adjustment | |
| — | | |
| — | | |
| (79,640 | ) | |
| (79 | ) | |
| — | | |
| 79 | | |
| — | | |
| — | |
| Stock issued for debt reduction | |
| — | | |
| — | | |
| 3,100,000 | | |
| 3,100 | | |
| — | | |
| — | | |
| — | | |
| 3,100 | |
| Stock issued for services | |
| — | | |
| — | | |
| 12,750,000 | | |
| 12,750 | | |
| — | | |
| 752,250 | | |
| — | | |
| 765,000 | |
| Net loss for year ended December 31, 2014 | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (470,583 | ) | |
| (470,583 | ) |
| Balances December 31, 2014 | |
| 5,000,000 | | |
| $
5 ,000 | | |
| 19,134,708 | | |
$ | 19,135 | | |
| — | | |
$ | 6,098,117 | | |
$ | (8,150,905 | ) | |
$ | (2,028,653 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| The accompanying notes are an integral part of these financial statements. |
| SOUTHERN ITS INTERNATIONAL, INC. |
| CONSOLIDATED STATEMENTS OF CASH FLOWS |
| (Audited) |
| | |
For the Year Ended |
| | |
December 31, |
| | |
2014 | |
2013 |
| CASH FLOWS FROM OPERATING ACTIVITIES: | |
| | | |
| | |
| Net Income (Loss) for the Period | |
$ | (470,583 | ) | |
$ | (1,442,631 | ) |
| Adjustments to reconcile net loss to net cash | |
| | | |
| | |
| provided by operating activities: | |
| | | |
| | |
| Depreciation and amortization | |
| 829 | | |
| 830 | |
| Stock issued for services | |
| 93,000 | | |
| 49,000 | |
| Changes in Operating Assets and Liabilities | |
| | | |
| | |
| Increase in accounts payable & accrued expenses | |
| 96,405 | | |
| 9,935 | |
| Increase in accrued interest | |
| 62,325 | | |
| 70,103 | |
| Increase (decrease) in accounts receivable, net | |
| (20,386 | ) | |
| 15,164 | |
| Prepaid expenses | |
| (1,150 | ) | |
| — | |
| Derivative expense | |
| 77,260 | | |
| 1,376,358 | |
| Net Cash Used in Operating Activities | |
| (162,300 | ) | |
| 78,759 | |
| | |
| | | |
| | |
| CASH FLOWS FROM FINANCING ACTIVITIES: | |
| | | |
| | |
| Proceeds from convertible notes to related party | |
| 22,871 | | |
| 2,100 | |
| Payments on note payable to related party | |
| (9,547 | ) | |
| (2,100 | ) |
| Proceeds from note payable | |
| 70,000 | | |
| — | |
| Net Cash Provided by Financing Activities | |
| 83,324 | | |
| — | |
| | |
| | | |
| | |
| Net (Decrease) Increase in Cash | |
| (78,976 | ) | |
| 78,759 | |
| Cash at Beginning of Period | |
| 99,970 | | |
| 21,211 | |
| Cash at End of Period | |
$ | 20,994 | | |
$ | 99,970 | |
| | |
| | | |
| | |
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |
| Cash paid during the year for: | |
| | | |
| | |
| Interest | |
$ | — | | |
$ | 20,000 | |
| Franchise and Income Taxes | |
$ | — | | |
$ | — | |
| | |
| | | |
| | |
| SUPPLEMENTAL
DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | |
| | | |
| | |
| Accounts Payable Satisfied through Contributed Capital | |
| | | |
| | |
| and Property and Equipment | |
$ | — | | |
$ | — | |
| The accompanying notes are an integral part of these financial statements. |
|
|
SOUTHERN ITS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2014 AND DECEMBER 31,
2013
(Audited)
NOTE 1 – NATURE AND DESCRIPTION OF BUSINESS
Southern ITS International, Inc. (formerly
Alco Advanced Technologies, Inc.) (“Company”) was incorporated in the State of Nevada on September 27, 1984. On March
21, 2012, the Company changed its name from Alco Advanced Technologies, Inc. to Southern ITS International, Inc.
The Company executed a share exchange
with Southern ITS Corporation (“SIC”) (“the Subsidiary”) in which the result was SIC becoming a wholly-owned
subsidiary of the Company. Refer to Note 9 for more information.
The Company's operations consist of providing
turnkey integration of electronic security systems for various types of industries, such as transportation, gaming and other secure
operations in both government and private sectors. The integration includes surveillance, access control, network infrastructure,
data communications and fire and burglar alarm systems. Today, security technologies are evolving rapidly and require remote access
through various networks, firewalls and internet security. Surveillance systems and access control are all network-dependent and
work best for the end user when they are completely integrated. The Company's mission is to provide a complete integration of the
various electronic security systems with the computer networks that they are dependent upon and ensuring that the systems will
remain secure from potential cyber attack.
On July 17, 2014, the Company enacted
a 1-for-50 reverse stock split. The Company has adjusted all periods presented for the effects of the stock split.
On August 15, 2014, the Company amended its articles of incorporation
to decrease its authorized shares of common stock from Two Hundred Fifty Million (250,000,000) shares to Fifty Million (50,000,000)
shares, with a par value of $0.001. The Company remains to have Ten Million (10,000,000) preferred shares with par value of $0.001
authorized. The Company designated 10,000,000 Series A Preferred Stock which have preferred voting rights equal to 500 votes for
each 1 preferred share.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The Company’s financial statements
have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
The accompanying audited financial statements
have been prepared in accordance with accounting principles generally accepted in The United States of America and the rules and
regulations of the Securities and Exchange Commission for interim financial information. Accordingly, they do not include
all the information necessary for a comprehensive presentation of financial position and results of operations.
It is management's opinion, however,
that all material adjustments (consisting of normal and recurring adjustments) have been made which are necessary for a fair financial
statements presentation. The results for the interim period are not necessarily indicative of the results to be expected
for the year.
Restatement of Financial Statements
Certain amounts in the prior
period financial statements have been adjusted to conform to the current period presentation pursuant to a 1 for 50 reverse stock
split on, see Note 14.
Basis of Consolidation
The accompanying consolidated financial
statements include all of the accounts of the Company and SIC as of December 31, 2014 and December 31, 2013 for the periods then
ended. All intercompany balances and transactions have been eliminated.
Use of estimates
The preparation of financial statements
in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period.
Such estimates and assumptions impact,
among others, the valuation allowance for deferred tax assets, due to continuing and expected future losses, and share-based payments.
Making estimates requires management
to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation
or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate
could change in the near term due to one or
more future confirming events. Accordingly,
the actual results could differ significantly from estimates.
Cash and cash equivalents
The Company considers all highly liquid
instruments purchased with a maturity of three months or less to be cash equivalents.
The Company minimizes its credit risk
associated with cash by periodically evaluating the credit quality of its primary financial institution. The balance at times may
exceed federally insured limits.
Allowance for Doubtful Accounts
The Company evaluates the collectability
of its accounts receivable based on a combination of factors. In circumstances where it is aware of a specific customers ability
to meet its financial obligations, it records a specific reserve to reduce the amounts recorded to what it believes will be collected.
For all other customers, it recognizes reserves for bad debts based on historical experience. The company had an allowance for
doubtful account balance of $0 and $158,695 at December 31, 2014 and December 31, 2013.
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 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 establishes a framework for measuring fair value in accounting principles generally accepted
in the United States of America (U.S. 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 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 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 observable inputs and not corroborated by market data. |
The carrying amount of the Company’s
financial assets and liabilities, such as cash, prepaid expenses and accrued expenses approximate their fair value because of the
short maturity of those instruments.
The Company does not have any
assets or liabilities measured at fair value on a recurring or a non-recurring basis, consequently, the Company did not have any
fair value adjustments for assets and liabilities measured at fair value at December 31, 2014 and December 31, 2013; no gains or
losses are reported in the consolidated statements of operations that are attributable to the change in unrealized gains or losses
relating to those assets and liabilities still held at the reporting date ended December 31, 2014 and December 31,2013.
Property and Equipment
Property and equipment is stated at
cost, less accumulated depreciation on a straight line basis over the estimated useful lives of 5 to 7 years. Maintenance and repairs
are charged to operations when incurred. Betterment and renewals are capitalized when deemed material. When property and equipment
are sold or otherwise disposed of, the asset account and related accumulated depreciation account are relieved, and any gain or
loss is included in operations.
Intangible Assets
Valuation of intangible assets include
significant estimates and assumptions such as estimating future cash flows from product sales, developing appropriate discount
rates, estimating probability rates for the successful completion of projects, continuation of customer relationships and renewal
of customer contracts, and approximating the useful lives of the intangible assets acquired.
Long Lived Assets
The Company reviews the recover-ability
of the carrying value of identified intangibles and other long-lived assets, including fixed assets, whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be recoverable. Recover-ability of these assets is determined
based upon the forecasted undiscounted future net cash flows expected to result from the use of such asset and its eventual disposition.
The Company’s estimate of future cash flows is based upon, among other things, certain assumptions about expected future
operating performance, growth rates and other factors. The actual cash flows realized from these assets may vary significantly
from its estimates due to increased competition, changes in technology, fluctuations in demand, consolidation of its customers
and reductions in average selling prices. If the carrying value of an asset is determined not to be recoverable from future operating
cash flows, the asset is deemed impaired and an impairment loss is recognized to the extent the carrying value exceeds the estimated
fair market value of the asset.
Revenue recognition
The Company follows paragraph 605-10-S99-1
of the FASB Accounting Standards Codification for revenue recognition. The Company will recognize revenue when it is realized or
realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met:
(i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer,
(iii) the sales price is fixed or determinable, and (iv) the collectability is reasonably assured. There are no price incentives
and the product can only be returned if defective. As the Company does not believe defective merchandise is likely an allowance
has not been recognized. Revenue is recognized on a gross basis with corresponding costs of goods as a reduction to revenue in
cost of sales. The Company’s subsidiary earned the majority of the Company’s revenues in 2012 from installing network
surveillance systems. The Company applies the percentage-of-completion revenue recognition principles of accounting when recording
revenues for ongoing projects.
Risks and uncertainties
The Company operates in an industry
that is subject to rapid change. The Company's operations are subject to significant risk and uncertainties including financial
and operational risks including the potential risk of business failure. Also, see Note 3 regarding going concern matters.
Segment information
During 2014 & 2013, the Company
only operated in one segment; therefore, segment information has not been presented.
Share based payments
Generally, all forms of share-based
payments, including stock option grants, restricted stock grants and stock appreciation rights, are measured at their fair value
on the awards’ grant date, and based on the estimated number of awards that are ultimately expected to vest. Share-based
payment awards issued to non-employees for services rendered are recorded at either the fair value of the services rendered or
the fair value of the share-based payment, whichever is more readily determinable. The expense resulting from share-based payments
are recorded as a component of general and administrative expense.
Earnings per share
In accordance with accounting guidance
now codified as FASB ASC Topic 260, “Earnings per Share,” Basic earnings per share (“EPS”) is computed
by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the period,
excluding the effects of any potentially dilutive securities. Diluted EPS gives effect to all dilutive potential of shares of common
stock outstanding during the period including stock options or warrants, using the treasury stock method (by using the average
stock price for the period to determine the number of shares assumed to be purchased from the exercise of stock options or warrants),
and convertible debt or convertible preferred stock, using the if-converted method. Diluted EPS excludes all dilutive potential
of shares of common stock if their effect is anti-dilutive. At September 30, 2014, there were 30,166,314 potential dilutive shares
outstanding which relate to the outstanding warrants with exercise prices below the closing trading price of the Company’s
stock as of December 31, 2014.
Income Taxes
The Company accounts for income taxes
in accordance with accounting guidance now codified as FASB ASC Topic 740, “Income Taxes,” which requires that
the Company recognize deferred tax liabilities and assets based on the differences between the financial statement carrying amounts
and the tax bases of assets and liabilities, using enacted tax rates in effect in the years the differences are expected to reverse.
Deferred income tax benefit (expense) results from the change in net deferred tax assets or deferred tax liabilities. A valuation
allowance is recorded when it is more likely than not that some or all deferred tax assets will not be realized.
Accounting guidance now codified as
FASB ASC Topic 740-20, “Income Taxes – Intra-period Tax Allocation,” clarifies the accounting for uncertainties
in income taxes recognized in accordance with FASB ASC Topic 740-20 by prescribing guidance for the recognition, de-recognition
and measurement in financial statements of income tax positions taken in previously filed tax returns or tax positions expected
to be taken in tax returns, including a decision whether to file or not to file in a Particular jurisdiction. FASB ASC Topic 740-20
requires that any liability created for unrecognized tax benefits is disclosed. The application of FASB ASC Topic 740-20 may also
affect the tax bases of assets and liabilities and therefore may change or create deferred tax liabilities or assets.
Subsequent events
The Company follows the guidance in
Section 855-10-50 of the FASB Accounting Standards Codification for the disclosure of subsequent events. The Company will evaluate
subsequent events through the date when the financial statements were issued. Pursuant to ASU 2010-09 of the FASB
Accounting Standards Codification, the Company as an SEC filer considers its financial statements issued when they are widely distributed
to users, such as through filing them on EDGAR.
Recent accounting pronouncements
On
January 15, 2014—The Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2011-08, Intangibles—Accounting
for Goodwill (Topic 350):. The Update simplifies the accounting
alternative, if elected, to goodwill existing as of the beginning of the period of adoption and any new goodwill recognized in
annual periods beginning after December 15, 2014.
In April 2013, the FASB issued ASU No.
2010-17, "Revenue Recognition – Milestone Method (Topic 605): Milestone Method of Revenue Recognition" (codified
within ASC 605 - Revenue Recognition). ASU 2013-45 provides guidance on defining a milestone and determining when it may be
appropriate to apply the milestone method of revenue recognition for construction contracts.
Company 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 financial statements.
NOTE 3 - GOING CONCERN
The Company’s financial statements
are prepared using generally accepted accounting principles applicable to a going concern which contemplates the realization of
assets and liquidation of liabilities in the normal course of business. As reflected in the accompanying financial statements,
the Company has an accumulated deficit of $8,150,905 from inception (September 27, 1984) to December 31, 2014. Its ability to continue
as a going concern is dependent upon the ability of the Company to generate profitable operations in the future and/or to obtain
the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come
due. Management intends to address the going concern issue by funding future operations through the sale of equity capital and
by director loans, if needed.
The Company is in the development stage
and anticipates that it will be able to have profitable operations in the near future. The Company believes its current available
cash, along with anticipated revenues, will be sufficient to meet its cash needs for the near future. There can be no assurance
that future financing will be available in amounts or terms acceptable to the Company, if at all.
These conditions raise substantial doubt
about the Company’s ability to continue as a going concern. The ability of the Company to continue its operations is dependent
on Management's plans, which include the raising of capital through debt and/or equity markets with some additional funding from
other traditional financing sources, including term notes, until such time that funds provided by operations are sufficient to
fund working capital requirements.
The Company may need to incur additional
liabilities with certain related parties to sustain the Company’s existence.
These financial statements do not include
any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary
should the Company be unable to continue as a going concern.
In response to these problems, management
has taken the following actions:
seeking
additional debt and/or equity financing,
continue
with development and implementation of the business plan,
assess
business markets and related opportunities so that more significant revenues can be generated, and
allocation
of sufficient resources to continue with sales representation and marketing efforts.
NOTE 4 – REVERSE STOCK SPLIT
On August 4, 2014, the Company executed a reverse stock split
whereby the holders of stock in the Company, Southern ITS International, Inc., received one (1) post reverse stock-split
share of common stock, $0.001 par value per share, in exchange for every fifty (50) shares of common stock (in effect, a 1
for 50 reverse split). Prior to the reverse stock split the Company had 168,217,400 shares of common stock outstanding. As a
result of the 1 for 50 reverse stock-split, the Company had 3,284,708 post reverse-split common shares issued and
outstanding. The Company has adjusted the equity statement and equity portion of the balance sheet to retroactively account
for the reverse stock split as if it occurred at inception.
NOTE 5 – PREPAIDS
The prepaid asset recorded at December 31, 2014, was the
result of the following employment agreements, plus prepaid rent of $1,150.
Employment agreement with CFO
On August 30, 2014, the Company executed
an employment agreement with its CFO and Treasurer, William Noll whereby the Company issued Mr. Noll 2,000,000 post reverse-split
shares of common stock for five (5) years services. As of the date of the executed employment agreement, the value of the 2,000,000
post reverse-split shares of common stock were valued at $0.06 per share which resulted in a valuation of $120,000. The Company
recorded the unearned portion of the employment contract value as a prepaid expense which as of September 30, 2014 was $110,000.
Employment agreement with CEO
On August 30, 2014, the Company executed
an employment agreement with its CEO, Sylvain Desrosiers, whereby the Company issued Mr. Desrosiers 10,000,000 post reverse-split
shares of common stock for five (5) years services. As of the date of the executed employment agreement, the value of the 10,000,000
post reverse-split shares of common stock were valued at $0.06 per share which resulted in a valuation of $600,000. The Company
recorded the unearned portion of the employment contract value as a prepaid expense which as of September 30, 2014 was $560,000.
As of December 31, 2014, and December 31, 2013, the registrant
had a prepaid balance of $673,150 and $-0- which are derived from the uncompleted portion of the consulting agreements with the
Company.
NOTE 6 – ACCOUNTS RECEIVABLE
The Company had the following accounts receivable balances
as of December 31, 2014 and December 31, 2013
| | |
December
31,
2014 | |
December 31,
2013 |
| | |
| | | |
| | |
Accounts Receivable
| |
$ | 0 | | |
$ | 167,671 | |
| Less: Allowance for Doubtful Accounts | |
| — | | |
| (147,285 | ) |
| Total | |
$ | 31,197 | | |
$ | 20,386 | |
| | |
| | | |
| | |
In the year ended December 31, 2014,
the Company recorded $-0- of bad debt expense. In the year ended December 31, 2013 the Company recorded $8,103 of bad debt expense.
As of December 31, 2014, the Company had fully reduced the accounts receivable balance with the allowance for doubtful account
balance due to the certainty of non-collection of receivables. Therefor the Company wrote off the accounts receivable and allowance
for doubtful accounts balances to zero.
NOTE 7 – FIXED ASSETS
At December 31, 2014 and December 31,
2013 the Company has the following fixed assets:
| | |
| |
|
| | |
December 31, 2014 | |
December 31, 2013 |
| Furniture and Equipment | |
$ | 5,808 | | |
$ | 5,808 | |
| Less Accumulated Depreciation | |
| (2,360 | ) | |
| (1,531 | ) |
| Fixed Assets, net | |
$ | 3,448 | | |
$ | 4,277 | |
Depreciation expense for the year ended
December 31, 2014 was $829. Depreciation expense for the year ended December 31, 2013 was $830.
NOTE 8 – NOTES PAYABLE
The company has unsecured notes payable and convertible notes
payable to related parties and non-related parties at December 31, 2014 and December 31, 2013 under the following general terms:
Convertible notes payable to related parties
Between May 12, 2008 and December 29,
2011, the Company entered into multiple convertible promissory notes, all of which have identical terms, with Bonavel Development,
S.A. for a total amount of $130,820. The notes bear 10% interest per annum and have a maturity date two years subsequent to the
executed loan date. The convertible note’s principle and accrued interest may at any time be converted into shares of the
Company’s stock at a conversion rate fixed at $0.025 per share. As of December 31, 2014, there is a principle balance outstanding
in the amount of $37,820 with accrued interest of $44,102. Of the total amount of $130,820 in principle, $93,000 was converted
into stock of the Company, all of which occurred prior to January 1, 2013. As of December 31, 2014 and 2013, the Company recorded
a derivative liability of $164,005 which was calculated using the Black Scholes Model.
Between November 2, 2009 and December
21, 2012, the Company entered into multiple convertible promissory notes, all of which have identical terms, with Alco Scanning
Services, Inc. for a total amount of $348,643. The notes bear 10% interest per annum and have a maturity date three years subsequent
to the executed loan date. The convertible note’s principle and accrued interest may at any time be converted into shares
of the Company’s stock at a conversion rate fixed at $0.025 per share. As of December 31, 2014, there is a principle balance
outstanding in the amount of $257,892 with accrued interest of $113,993. Of the total amount of $348,643 in principle, $90,751
was repaid with cash, all of which occurred prior to January 1, 2013. As of December 31, 2014, no principle has been converted
into shares of stock in the Company. As of December 31, 2014 and 2013, the Company recorded a derivative liability of $744,500
which was calculated using the Black Scholes Model.
Convertible notes payable to non-related parties
On April 20, 2009, the Company entered
into a convertible promissory note with Katherine Loren Armagnac in the amount of $30,000 with interest of 10% per annum, unsecured,
and due April 20, 2010. The note is convertible into common shares of the Company at a fixed conversion price of $2.50 per share.
The note is in default. As of December 31, 2014, no principle has been converted into shares of stock in the Company. The Company
did not record derivative liability pertaining to this note because the conversion price is greater than the fair market stock
price as of December 31, 2014.
On February 11, 2009, the Company entered
into a convertible promissory note with Charles P. Garrison in the amount of $50,000 with interest of 10% per annum, unsecured,
and due February 11, 2010. The note is convertible into common shares of the Company at a fixed conversion price of $2.50 per share.
The note is in default. As of December 31, 2014, no principle has been converted into shares of stock in the Company. The Company
did not record derivative liability pertaining to this note because the conversion price is greater than the fair market stock
price as of December 31, 2014.
On June 8, 2009, the Company entered
into a convertible promissory note with Steven R. Hammond in the amount of $75,000 with interest of 10% per annum, unsecured, and
due June 8, 2009. The note is convertible into common shares of the Company at a fixed conversion price of $2.50 per share. The
note is in default. As of December 31, 2014, no principle has been converted into shares of stock in the Company. The Company did
not record derivative liability pertaining to this note because the conversion price is greater than the fair market stock price
as of December 31, 2014.
On December 12, 2014, the Company entered
into a convertible promissory note with Erik Miller in the amount of $50,000 with interest of 10% per annum, unsecured,
and due December 12, 2015. The convertible note’s principle and accrued interest may at any time be converted into shares
of the Company’s stock at a conversion rate equal to 50% of the closing bid price on the date of the conversion notice. As
of December 31, 2014, no principle has been converted into shares of stock in the Company. As of December 31, 2014 and 2013, the
Company recorded a derivative liability of $77,260 which was calculated using the Black Scholes Model.
On June 3, 2009, the Company entered
into a convertible promissory note with Marflu S.A. for a total amount of $150,000. The note bears 10% interest per annum and has
a maturity date of June 3, 2014. The convertible note’s principle and accrued interest may at any time be converted into
shares of the Company’s stock at a conversion rate fixed at $0.025 per share. As of December 31, 2014, there is a principle
balance outstanding in the amount of $150,000 with accrued interest of $83,697. As of December 31, 2014, no principle has been
converted into shares of stock in the Company. As of December 31, 2014 and 2013, the Company recorded a derivative liability of
$467,853 which was calculated using the Black Scholes Model.
Notes payable to related parties
On December 31, 2008, the Company entered into a loan with
Alberto Surijon for a total amount of $108,205. The note bears 10% interest per annum and has a maturity date of December 31, 2011.
As of December 31, 2014, there is a principle balance outstanding in the amount of $96,205 with accrued interest of $52,342. Of
the total amount of $108,205 in principle, $12,000 was repaid with cash, all of which occurred prior to January 1, 2013.
Notes payable to non-related parties
On August 29, 2014, the Company entered into a security and
promissory note agreement with Infinity International Holdings, LLC in the amount of $20,000 with a fixed interest payment of $20,000
interest due within 60 days and incremental additional interest of $5,000 due every 30 days. The proceeds were used to complete
the Rocky Gap Project. As of December 31, 2014, the Company has paid $37,750 in interest.
The following table summarized the Company’s notes
payable and convertible notes payable balances as of December 31, 2014 and 2013;
| | |
December
31,
2014 | |
December 31, 2013 |
| 1. Convertible notes payable to related parties bearing | |
| | | |
| | |
| interest at 10%, payable on demand. Note is in default. | |
$ | 294,711 | | |
$ | 295,712 | |
| 2. Convertible notes payable to non-related parties | |
| | | |
| | |
| bearing 10% payable in two years. Note is in default. | |
| 155,000 | | |
| 155,000 | |
| 3. Notes payable to related parties bearing interest | |
| | | |
| | |
| at 10% payable upon demand. Note is in default. | |
| 96,205 | | |
| 105,752 | |
| 4. Notes payable to non-related parties bearing interest | |
| | | |
| | |
| at 10% payable on demand. Note is in default. | |
| 220,001 | | |
| 150,000 | |
| Total | |
| 765,917 | | |
| 706,464 | |
| |
| | | |
| | |
| Less current portion | |
| (765,917 | ) | |
| (673,072 | ) |
| Due after one year | |
$ | — | | |
$ | 33,392 | |
The Company had an accrued interest balance on the notes
payable in the amount of $387,882 and $325,557 as of December 31, 2014 and December 31, 2013.
The convertible note holders may convert at any time to common
shares at a fixed price of $.001 per share. The Company did not reflect bifurcation in the financials as the terms of all the convertible
notes issued expired as of December 31, 2012.
Conversion of Notes Payable
In the year ended December 31, 2014, two non-related party
note holders converted a total of $16,000 of principle debt and $1,500 of accrued interest on said debt into 3,100,000 post reverse-split
shares of common stock. There were no conversions of debt in the year ended December 31, 2013.
Notes in Default
Possible events constituting default are as follows:
- Failure to pay upon demand
- If we make an assignment for the benefit of creditors
- Bankruptcy or Insolvency
- Any merger, liquidation, dissolution or winding up of business
unless any successor expressly assumes the obligation
- Effectuate a reverse split of common stock prior to the
consent of the note holders
The Company has $155,000 of convertible notes payable to
three non-related parties which are in default. The Company has $148,400 in notes payable to non-related parties which are in default.
The Company has $105,752 of notes payable to related parties which are in default. Of the $271,670 outstanding in convertible notes
payable to related parties, $216,200 is in default. In the event of default, the note holder at any time can declare the entire
principle and accrued interest immediately due and payable.
NOTE 9 – SHARE EXCHANGE AGREEMENT
On April 17, 2012, the Company issued
200,000,000 post reverse-split shares of common stock to the sole equity owner of Southern ITS Corporation (SIC) for 100% of the
issued and outstanding shares of capital stock in SIC. This executed share exchange agreement resulted in SIC becoming a wholly-owned
subsidiary of the Company.
Addendum to Share Exchange Agreement
On April 30, 2013, the Company entered
into an addendum with SIC to amend its previously executed share exchange agreement on April 17, 2012. The addendum includes a
mutually agreed upon revaluation of the consideration paid to acquire SIC whereby the new valuation will be 400,000 post reverse-split
shares instead of 4,000,000 post reverse-split shares of common stock. The Company was returned the initial 400,000 post reverse-split
shares from SIC which they then canceled. The Company then issued a new certificate for 400,000 post reverse-split to the president
of SIC in September of 2013. The Company has restated its prior year comparative financial information to account for this revaluation.
On March 18, 2014, the company entered
into an addendum with SIC to amend its previous agreement and SIC returned 400,000 post reverse-split shares of common stock to
the treasury.
Goodwill
On April 17, 2012, SIC had assets of
$126,450, liabilities of $0, and retained earnings of $168,376. The share exchange agreement resulted in the Company recording
goodwill of $1,973,550. This was calculated from taking the closing reverse-split stock price on the date of the share exchange
agreement, $5.25 on April 17, 2013, times the amended consideration paid of 400,000 post reverse-split shares, minus assets received
of $126,450. The Company later impaired the goodwill asset which is described in Note 9.
NOTE 10 – IMPAIRMENT OF GOODWILL
The Company’s stock exchange with
SIC resulted in the recording a goodwill in the amount of $1,973,550. At December 31, 2012 the Company’s test of goodwill
resulted in the write off of $1,973,550 which was recorded in the statements of operations.
NOTE 11 – RELATED PARTY TRANSACTIONS
Employment agreements with CFO/Treasurer
On August 31, 2014, the Company executed
an employment agreement with its CFO and Treasurer, William Noll whereby the Company issued Mr. Noll 2,000,000 post reverse-split
shares of common stock for five (5) years services. As of the date of the executed employment agreement, the value of the 2,000,000
post reverse-split shares of common stock were valued at $0.06 per share which resulted in a valuation of $120,000. The Company
recorded the unearned portion of the employment contract value as a prepaid expense which as of December 31, 2014 was $110,000.
Employment agreement with CEO
On August 31, 2014, the Company executed
an employment agreement with its CEO, Sylvain Desrosiers, whereby the Company issued Mr. Desrosiers 10,000,000 post reverse-split
shares of common stock for five (5) years services. As of the date of the executed employment agreement, the value of the 10,000,000
post reverse-split shares of common stock were valued at $0.06 per share which resulted in a valuation of $600,000. The Company
recorded the unearned portion of the employment contract value as a prepaid expense which as of December 31, 2014 was $550,000.
Convertible Notes Payable- Related
Parties
As of December 31, 2014 and 2013, the
Company has convertible notes payable with one related party company which is 100% owned by our chief executive officer. The notes
bear interest of 10% and are convertible into shares of the Company at a fixed conversion rate of $0.025 per share. The convertible
notes payable to related parties balance at December 31, 2014 and December 31, 2013 are $294,712 and $295,712. Of the balances
as of December 31, 2014 and 2013, $294,712 and $216,200 is in default. The note holder may convert to common shares at a fixed
price of $.025 per share.
Notes Payable to Related Parties
As of December 31, 2014 and 2013, the
Company has two notes payable with two companies that share an officer of the Company. The notes bear interest of 10% and are currently
in default. The notes payable to related parties balance at December 31, 2014 and December 31, 2013 are $96,205 and $105,752.
Stock issued to Officers
In September of 2013, the Company issued 400,000 post reverse-split
common shares and 5,000,000 preferred shares to Sylvain Desrosiers for services completed by December 31, 2013. Mr. Sylvain is
a Director of the Company.
In September of 2014, the Company issued 12,000,000 post
reverse-split shares of common stock - 2,000,000 to our CFO and 10,000,000 to our CEO, pursuant to separate five (5) year employment
agreements for executive services to be provided.
Addendum to Share Exchange Agreement
On April 30, 2013, the Company entered into an addendum with
SIC to amend its previously executed share exchange agreement. The addendum includes a mutually agreed upon revaluation of the
consideration paid to acquire SIC whereby the new valuation will be 400,000 post reverse-split shares. The Company was returned
the initial 400,000 post reverse-split shares from Jason Bell whom is the President of the Company and previous sole shareholder
of SIC. The 400,000 post reverse-split shares were then canceled and Mr. Bell was issued a new certificate for 400,000 post reverse-split
common shares. This agreement was reversed on March 18, 2014 and Mr. Bell returned the 400,000 post reverse-split common shares
to the treasury.
Cancelled Shares
In the year ended December 31, 2014,
the Company cancelled 400,000 post reverse-split outstanding common shares to an officer of the Company for failing to provide
contracted services.
NOTE 12 - STOCKHOLDERS’ EQUITY
Common and preferred stock authorized
On April 15, 2014, the Company amended
its articles of incorporation to decrease its authorized shares of common stock from Five Hundred Million (500,000,000) shares
to Two Hundred Fifty Million (250,000,000) shares with par value of $0.001. On August 15, 2014, the Company amended its articles
of incorporation to decrease its authorized shares of common stock from Two Hundred Fifty Million (250,000,000) shares to Fifty
Million (50,000,000) shares, with a par value of $0.001.
The Company remains to have Ten Million
(10,000,000) preferred shares with par value of $0.001 authorized. The Company designated 10,000,000 Series A Preferred Stock which
have preferred voting rights equal to 500 votes for each 1 preferred share.
Common and preferred stock issued
On August 4, 2014, the Company enacted
a 1-for-50 reverse stock split. The Company has adjusted all periods presented for the effects of the stock split.
For the year ended December 31, 2013,
the Company issued 5,000,000 preferred shares and 400,000 post reverse-split common shares to a director of the Company for services
completed prior to December 31, 2013. The Company valued the preferred shares at par $0.001, which resulted in an expense of $5,000.
The Company valued the 400,000 post reverse-split common shares at the closing stock price on the date of issuance, September 3,
2013 at $0.11, which resulted in an expense of $44,000. The Company also issued 400,000 post reverse-split common shares to Jason
Bell, the President of Company, pursuant to the addendum to the Share Exchange Agreement described in Note 10.
At December 31, 2013, the Company had
3,764,348 post reverse-split common shares outstanding and had 5,000,000 preferred shares outstanding.
In the year ended December 31, 2014,
the Company cancelled 400,000 post reverse-split shares of common stock to an officer of the Company for failing to provide contracted
services. The Company also issued 3,100,000 post reverse-split shares of common stock for the reduction of $1,600 of notes payable
and $1,600 of accrued interest on convertible notes payable. The Company also issued 12,000,000 post reverse-split shares of common
stock, 2,000,000 to our CFO and 10,000,000 to our CEO, pursuant to separate five (5) year employment agreements for executive services
to be provided. The 12,000,000 post reverse-split shares were valued at the date of the agreement, $0.06, which resulted in an
expense of $720,000 being recognized over the life of the employment agreements with the unearned portion recorded as a prepaid
expense.
Stock Warrants
Included in two of our outstanding convertible
notes payable are warrants to purchase our stock. They are as follows,
Warrant 1: 1,000,000 warrants
to purchase our stock at an exercise price of $0.05 per share with a 10 year life from May 1, 2010, expiring May 1, 2020.
Warrant 2: 300,000 warrants to
purchase our stock at an exercise price of $0.10 per share with a 5 year life from January 30, 2010, expiring on January 30, 2015.
| | |
| |
Weighted | |
| |
|
| Warrants | |
| |
Average | |
| |
Warrants |
| Exercisable | |
Exercise | |
Remaining | |
| |
Exercisable |
| December 31, | |
Price ($) per | |
Contractual | |
Exercised | |
December 31, |
| 2013 | |
Share | |
Life | |
Warrants | |
2014 |
| | | | |
| | | |
| | | |
| | | |
| | |
| | 1,300,000 | | |
| ($0.05 - $0.10) | | |
| 4.75 years | | |
| — | | |
| 1,300,000 | |
NOTE 13 - CONTINGENCIES
From time to time, the Company may become
involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject
to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm its business.
Alco has no pending or threatened legal proceedings or administrative actions either by or against
the issuer that could have a material effect on the issuer's
business, financial condition, or operations and any current,
past or pending trading suspensions by a securities regulator.
NOTE 14 – SUBSEQUENT EVENTS
Management has evaluated subsequent
events pursuant to the requirements of ASC Topic 855 and has determined that no material subsequent events exist.
| |
ROSS MILLER
Secretary of State
204
North Carson Street, Suite 'I Carson City, Nevada 8970-4620 (775) 684 5708
Website:www.nvsos.gov |
Certificate
of Amendment
(PURSUANT
TO NRS 78.385 AND
78.390) .
USE BLACK INK
ONLY - DO NOT HIGHLIGHT ABOVE SPACE IS FOR OFFICE USE ONLY
Certificate
of Amendment to Articles of Incorporation
For Nevada Profit Corporations
(Pursuant
to NRS 78.385 and 78.390 - After Issuance of Stock)
1.
Name of corporation:
Alco Advanced Technologies, Inc,
2.
The articles have been amended as follows: (provide
article numbers,
if available) Article One is amended in its entirety to read as
follows:
1.
Name of Corporation: The name of the Corporation is Southern ITS International, Inc. Article Two is amended in its
entirety to read as follows:
2.
Shares: The total number of shares of all classes of which the Corporation
is Five Hundred Ten Million (510,000,000), consisting of Five Hundred Million (500,000,000 shares) of common stock, $0.001
par [continued on Attachment Page]
3.
The vote by which the stockholders
holding shares in the corporation entitling them to exercise a
least a majority of the voting power, or such greater proportion of the voting power as may be required in the case of a vote by
classes or series, or as may be required by the provisions of the articles
of incorporation* have voted in favor of the amendment is:
63.7%
4.
Effective date of filing: (optional) 4/5/12
,
(must not be later than 90 days after the
certificate is filed)
5.
Signature required)
X
Sylvain L. Desrosiers
Signature
of Officer
*It
any proposed amendment would alter or change any preference or any relative or other right given to any class or series of outstanding
shares, then the amendment must be approved by the vote, in addition to the affirmative vote otherwise required, of the
holders of shares representing a majority of the voting power of each class or series affected by the amendment regardless to limitations
or restrictions on the voting power thereof.
IMPORTANT:
Failure to include any of the above information and submit with
the proper fees may cause this filing to be rejected.
Nevada
Secretary of State Amend Profit-After
form
must be accompanied by appropriate fees. Revised:
3-6-09
Alco
Advanced Technologies. Inc.
Certificate of
Amendment to Articles of Incorporation
Attachment Page
(continued
from above) value per share (the "Common Stock") and Ten Million (10,000,000) shares of preferred stock, $0.001
par value per share (the "Preferred Stock").
The board of directors is
also authorized to determine or alter the rights, preferences, privileges and restrictions granted to or imposed upon any wholly
unissued series of Preferred Shares and, within the limits and restrictions stated in any
resolution or resolutions of the board of directors originally fixing the number of
shares constituting any series, to increase or decrease (but not below the number of shares of any such series then outstanding)
the number of shares of any series subsequent to the issue of shares of that series.
As of the effective
date of this Amendment, there shall be a I – for - 300 Reverse Split of the issued
and outstanding shares of Common Stock, such that each Three hundred (300) shares of Common
Stock. $0.001 par value, issued and outstanding immediately prior to the effective date (the "Old Common Stock")
shall be recombined, reclassified and changed into One (1) share of the corporation's Common
Stock, $0.001 par value (the "New Common Stock"), with any fractional interest rounded up to the nearest whole
share; every Three Hundred (300) shares of Old Common Stock outstanding on the effective
date of this amendment shall be automatically converted into One (1) share of New Common Stock and, in lieu of fractional
shares, each share so converted shall be rounded up to the next highest number of full shares
of New Common Stock; provided that no Stockholder of record as of the effective date of the reverse split shall have fewer
than One Hundred (100) shares of New Common Stock."
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