UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the fiscal year ended
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission
file number
(Exact Name Of Registrant As Specified In Its Charter)
| (State of Incorporation) | (I.R.S. Employer Identification No.) |
| (Address of Principal Executive Offices) | (ZIP Code) |
Registrant’s
Telephone Number, Including Area Code:
Securities Registered Pursuant to Section 12(g) of The Act: None
Indicate
by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐
Indicate
by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding
12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the registrant’s knowledge, in the definitive proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K. ☐
The aggregate market value of the common stock held by non-affiliates of the registrant as of the last business day of the registrant’s
most recently completed second fiscal quarter was $
On November 30, 2012, the Registrant had shares of common stock issued and outstanding. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.
| Large accelerated filer ☐ | Accelerated filer ☐ | Smaller
reporting company |
EXPLANATORY NOTE:
The current management submitting the following unaudited financial statements were not employed by the Company nor Board members for the financial periods presented below. The current Board of Directors in the best interests of the Shareholders chooses to file the necessary reporting obligations as a Voluntary Reporting Company. These unaudited financial reports are for a period prior to the filing of the FORM 15 dated October 4, 2013 with the SEC. The information is to the best of managements knowledge at the time of the filing.
TABLE OF CONTENTS
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Forward-Looking Statements and Associated Risks
This Annual Report on Form 10-K of Buildablock Corp. (hereinafter the “Company” or the “Registrant”) includes forward-looking statements. The Registrant has based these forward-looking statements on its current expectations and projections about future events. These forward- looking statements are subject to known and unknown risks, uncertainties and assumptions about the Registrant that may cause its actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in this Annual Report on Form 10-K and in the Registrant’s other Securities and Exchange Commission filings. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in the forward-looking statements. For a more detailed discussion of the foregoing risks and uncertainties, see “Risk Factors”.
PART I
ITEM 1. DESCRIPTION OF BUSINESS Back to Table of Contents
The Company, f/k/a HIPSO Multimedia, Inc., a Florida corporation, was incorporated in April 2005. The Company entered into an Asset Purchase Agreement on November 30, 2011, providing for the acquisition of intellectual property rights comprised of an Internet and mobile service platform whose purpose is to empower or capitalize on the growth of the neighborhood, local economy (the “Buildablock Assets”).
Effective March 7, 2012, the Company completed the acquisition of the Buildablock Assets. In connection with the completion of the acquisition, the Company effected a reverse st ck split oft e Company’s outstanding shares of common stock, par value $0.00001, on a one-for-eight (1:8) basis (which occurred on March 7, 2012) and issued an aggregate of 8,755,484 shares of common s to ck effective March 7, 2012, representing 50% of the Company’s then-outstandmg shares, after givmg effect to the one-for-eight reverse stock split and issuance of the shares.
Upon the closing of the transaction, Gary Oberman and Bartek Bulzak were elected to the Company’s Board of Directors, Mr. Oberman was appointed President and Chief Executive Officer and Mr. Bulzak was appointed Chief Technology Officer.
Effective February 24, 2012, the name of the Company was changed to Buildablock Corp.
Business
Summary. Buildablock.com is an Internet service platform whose mission is to act as a transactional catalyst between buyers and sellers while leveraging a growing collection of patented, sophisticated user friendly tools. Growing beyond the scope of aggregation sites or group buying catalogs, Buildablock.com offers consumers maximum value for their purchasing dollar by combining group buying leverage, social media interactivity and automated negotiating tools. Buildablock.com’s dashboard of buying tools and follow-on services represent a new paradigm in supply chain interaction for both retailers and consumers alike. The Company expects that ease of customer acquisition and diverse, recurring revenue streams will combine to return exceptional value to the Company’s shareholders.
Recent Activities. In January 2013, the Company launched its e-commerce website, Buildablock.com and the site is now live and fully integrated.
In the Company’s press release announcing the launch, the Company’s CEO, Gary Oberman, stated, “we are excited by the live launch of our e-commerce website. We believe that group buying using the Buildablock platform is the wave of the future since it provides for negotiated discounting and user empowerment since it is the customer that chooses products for discounting by just uploading them onto our site. As just one example of how our economies of scale work, by consolidating large blocks of fuel buyers that number in the thousands, the Buildablock platform can approach large fuel providers to negotiate fleet pricing for its members. This is a very compelling application of our business model that can provide the opportunity for Buildablock users to save money on gas.”
This press release further stated that the Company had progressed into the marketing phase where initiatives will include merchant awareness programs and buyer incentive campaigns. One such program is its joint venture relationship with Linen Chest, Canada’s leading retailer in home fashion, with over 28 stores. Linen Chest is a very strong Canadian brand with an emerging digital presence that had been looking for an online solution to help drive traffic to its physical stores and increase online sales without the need for deep discounting.
Sheldon Liebner, President of the Linen Chest, was quoted in the Company’s press release, stating, “Buildablock’s unique group bidding methodology ensures maximum traffic through negotiated price management. We had entertained doing business with fixed discounters like Groupon, but found very little user engagement during the sales process, which limits customer loyalty. With Buildablock, our view is that the user experience will be very engaging, which will maintain maximum value to both the buyer and the seller alike. Buildablock users completed several transactions with Linen Chest in the early phase of its live launch, which was easily facilitated and which Linen Chest reports drove new traffic to both its website and physical stores. Buildablock is the only platform we found that delivers high quality, free advertising without degrading our brand. This is very encouraging news for our firm as we transition our way across the digital landscape”.
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From this alliance with Linen Chest, the Company was able to obtain essential user feedback through its soft launch in order to finalize systems and procedures and prepare for its live launch. Buildablock is now focused upon increasing its shopper population through various programs and initiatives. Since Buildablock’s social login requirement is similar to that of other leading social networking sites, the Company expects to gain exposure to the friends networks of new subscribers it gained via marketing efforts already undertaken, which could lead to over 400,000 potential new subscribers by way of referral.
The Company views the social networking element as a key to enhancing the shopper experience and expects to go live with its mobile application in the near future. The Company is intent on increasing the consumer and merchant adoption of the Buildablock platform and remains confident in its ultimate success of its vibrant and exciting e-commerce platform.
A Unique Shopping Platform. Buildablock.com is an online shopping platform that revolutionizes conventional online shopping. The site brings together great ideas, such as group discounts, wish lists, online negotiations, and more, into a unique venue that empowers consumers to save on the items they want from the merchants they choose.
When a Buildablock.com user finds an item he or she likes, whether online or in a retail store, the Buildablock.com user simply posts basic details about it on Buildablock.com and shares the information on social media. The Company calls that action a “Wink”. Then, others with the same interest can join the Wink to form a buyer group. Once a certain number of buyers have joined the Wink, Buildablock.com automatically opens a negotiation with the merchant to win a substantial discount for everyone in the buyer group.
The Buildablock Advantage. Buildablock.com is capable of saving users money when it comes to buying the things users really want to purchase. While arranging terrific deals for users will always be Buildablock.com’s primary objective, Buildablock.com is not one-dimensional. Rather, Buildablock.com empowers both shoppers and merchants, by acting as a mediator between shoppers and merchants.
Employees
We currently have approximately 4 full employees, including our president, and two part-time per diem installers for our Telecommunication Services and equipment.
Patents, Trademarks, Service Marks And Licenses and Other Intellectual Property
On November 30, 2011, the Company, entered into an Asset Purchase Agreement (the “Agreement”) with 3324109 Canada Inc., a Canadian corporation owned by Gary Oberman (“GaryCo”) and 8040397 Canada Inc., a Canadian corporation, owned by Bartek Bulzak (“BulzakCo”), collectively, the “Sellers”, providing for the acquisition by the Company of the Buildablock Assets. The Sellers have conducted no other business other than the development of this platform. The intellectual property was funded l 00% by the respective owners of the Sellers personally. The Agreement provides for the issuance of 4,377,742 shares of the Company’s common stock to each of GaryCo and BulzakCo, for an aggregate of 8,755,484 shares, representing 50% of the Company’s outstanding shares after giving effect to a one-for-eight reverse stock split. On March 7, 2012, the Company completed the acquisition of the Buildablock Assets and the common shares were issued at that time
Major Customers
As of November 30, 2012, the Company had one customer who generated 75% of our revenues.
Government Regulation
The Company’s business is not subject to any governmental regulation.
Recent Developments
Effective March 7, 2012, the Company completed the acquisition of the Buildablock Assets. In connection with the completion of the acquisition, the Company effected a reverse stock split of the Company’s outstanding shares of common stock, par value $0.00001, on a one-for- eight (1:8) basis (which occurred on March 7, 2012) and issued an aggregate of 8,755,484 shares of common stock effective March 7, 2012, representing 50% of the Company’s outstanding shares after giving effect to the one-for-eight reverse stock split and issuance of the shares. The Buildablock Assets were valued at $10,000. Upon the closing of the transaction, Messrs. Gary Oberman and Bartek Bulzak were elected to the Company’s Board of Directors, Mr. Oberman was appointed President and Chief Executive Officer and Mr. Bulzak was appointed Chief Technology Officer. Effective upon the closing of the transaction, Mr. Rene Arbic resigned as President and Chief Executive Officer of the Company. In addition, Mr. Arbic has agreed to resign from the Board within one year of the closing of the transaction.
In addition on April 13, 2012, the Board of Directors approved the sale ofValtech back to some or all of the original shareholders ofValtech for $1.00. This sale occurred on April 30, 2012.
As a result of this sale, the Company on April 13, 2012, became a development stage company, as it continues the development of its social networking platform under the “Buildablock” name.
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ITEM 1A. RISK FACTORS RELATED TO OUR BUSINESS Back to Table of Contents
Investing in our common stock will provide an investor with an equity ownership interest. Shareholders will be subject to risks inherent in our business. The performance of our shares will reflect the performance of our business relative to, among other things, general economic and industry conditions, market conditions and competition. The value of the investment may increase or decrease and could result in a loss. An investor should carefully consider the following factors as well as other information contained in this annual report on Form 10-K for the year ended November 30, 2012.
This annual report on Form 10-K also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of many factors, including the risk factors described below and the other factors described elsewhere in this Form 10-K.
Risk factors related to our business
With the disposition of Valtech, the Company commenced operating in the development stage as it develops its purchased intellectual property. The Company has no revenues and nominal assets other than cash which was raised during May 2012 as part of a private placement. New management has had some preliminary discussions regarding further capitalization of the Company. These plans include the raising of capital through the equity markets to fund future operations and generating adequate revenues for the new business of the Company. Even if the Company raises sufficient capital to support its operating expenses and generates revenues, there can be no assurance that the revenues will be sufficient to enable it to develop business to a level where it will generate profits and cash flows from operations. These matters raise substantial doubt about the Company’s ability to continue as a going concern. However, the accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. 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. new and retain existing customers, generate and sustain a revenue base sufficient to meet operating expenses, and achieve profitability, if ever.
Our auditor has raised doubts about the Company’s ability to continue as a going concern.
The Company has lost money in every quarter since the inception of its business. As of November 30, 2012, our accumulated loss was $1,884,979. In April 2012, the related party loans with the four principal shareholders of the Company were assumed by Valtech, upon the sale back to Valtech along with the accrued interest on those loans. Currently there is a $0 balance due those shareholders. The amount outstanding prior to the sale was $1,928,319. The loans did bear interest at an annual rate of 10% for individual amounts exceeding $150,000 (CDN$). Interest expense for the years ended November 30, 2012 and 2011 were $35,361 and $97,401, respectively, and are reflected in operations from discontinued operations. Accrued interest on these loans prior to the sale was $329,395. The accrued interest along with the notes were sold in April 2012, and the balance is $0 as of November 30, 2012.
The Company may not be successful in implementing its business plan.
While the Company’s business model and strategy of offering “triple play” Telecommunications Services is similar to those being utilized by many existing providers of telecommunication services, the Company may not be successful, for many reasons, including but not limited to insufficient resources to compete in its present market or in expanded markets in Canada or elsewhere. If the assumptions underlying the business model are not valid or if the Company is unable to implement the business plan, achieve predicted levels of market penetration or obtain the desired level of pricing of services for sustained periods, the Company may not be successful. The Company focuses on selling directly to consumers and through hotels and apartment buildings. It may never be able to achieve significant market acceptance, favorable operating results or profitability.
The Company has a concentration of credit risk.
On August 31, 2011, $6,372, or 76% of the Company’s accounts receivable was with three customers. In addition, there was one customer who represented approximately 66% of the revenue for the nine months ended August 31, 2011. This customer is considered a major customer of the Company.
The Company expects that its losses will continue for the foreseeable future.
The Company has incurred losses and experienced negative cash flow from operations since it commenced its Telecommunications Services business. It expects to continue to incur significant losses and negative cash flow from operations for the foreseeable future. If revenue does not grow as it expects or if its ability to raise capital is insufficient or operating expenditures exceed its expectations, then the Company’s business, prospects, financial condition and results of operations will face materially adverse effects.
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Competitive forces may result in the decrease of the price for the Company’s Telecommunication Services.
Prices for communications services have historically decreased over time. The Company expects that prices for its Telecommunications Services may decrease after the market for such services becomes saturated. While the Company believes that the market for Telecommunication Services shall continue to grow, the Company cannot predict with any certainty the number of years before which saturation occurs. At such time that market saturation occurs, the Company may have to reduce prices in order to remain competitive. The inability to sell its Telecommunication Services at desired pricing levels would significantly impair its ability to achieve profitability.
The actual amount and timing of future capital requirements will depend upon a number of factors, including, but not limited to:
| - | the number of new markets it enters and the timing of entry; |
| - | the rate and price at which customers purchase services; |
| - | the level of marketing required to attract and retain customers; and |
| - | opportunities to invest in or acquire complementary businesses. |
Failure to manage growth could have a detrimental effect on the Company’s business.
The Company anticipates that the number and rate of installations for new customers will continue to increase provided that the Company is able to raise sufficient capital. However, rapid growth would place a significant strain on the Company’s management, financial controls, operations, personnel and other resources. If the Company fails to manage its anticipated rapid growth, its business could be materially adversely affected. If the Company is unable to provide its existing customers with adequate service and if it does not institute adequate financial and reporting systems, managerial controls and procedures, its financial condition will be adversely affected. It is currently implementing operational support systems to bill customers, process customer orders and coordinate with vendors and contractors. To manage growth effectively, it must successfully implement these systems on a timely basis and continually expand and upgrade these systems as our operations expand.
The Company’s success depends in large part on its retention of executive officers.
The Company is managed by a small number of executive officers. Competition for qualified executives in the telecommunications industry is intense, and there are a limited number of persons with comparable experience. The Company depends upon its executive officers, and, in particular, Rene Arbic, President and Chief Executive Officer, to execute its business strategy and manage employees. While Company does not have employment agreements with nor does it have “key person” life insurance policies on any of its executive officers, Rene Arbic has an employment agreement with Valtech, the Company’s operating subsidiary. The loss of these key individuals would have a material adverse effect on the Company’s business.
If the Company fails to recruit and hire qualified personnel in a timely manner or to retain its employees, it will not be able to execute its business strategy.
The Company’s strategy is to continue expanding its presence in Montreal and in Quebec Province. It also plans to expand its service areas to other provinces in Canada. In order to execute this strategy, it must identify, hire, train and retain highly qualified technical, sales, marketing and customer service personnel. If it cannot hire and retain a sufficient number of qualified employees, it will not be able to expand as planned. The Company may be unable to identify, hire or retain employees with experience in the telecommunications industry. Any failure to attract suitable employees would adversely affect its business.
The Company may make acquisitions of complementary businesses in the future which may disrupt its business and be dilutive to existing shareholders.
The Company intends to consider acquisitions of businesses in the future. Acquisitions of businesses and technologies involve numerous risks, including the diversion of the attention of management, difficulties in assimilating the acquired operations, loss of key employees from the acquired company and difficulties in transitioning key customer relationships. In addition, acquisitions may result in dilutive issuances of equity securities, the incurrence of additional debt, large one-time expenses and the creation of goodwill or other intangible assets that result in significant amortization expense. Any of these factors could materially harm the Company’s business or operating results.
The Company’s quarterly operating results are likely to fluctuate significantly, causing its stock price to be volatile.
The Company cannot accurately forecast quarterly revenue and operating results, which may fluctuate significantly from quarter to quarter. If quarterly revenue or operating results fall below the expectations of investors or securities analysts, the price of its common stock could fall substantially. Its quarterly revenue and operating results may fluctuate as a result of a variety of factors, many of which are outside our control, including:
| - | the amount and timing of expenditures relating to the rollout of services; |
| - | the rate at which it is able to attract and retain customers; |
| - | the availability of future financing to continue expansion; |
| - | technical difficulties; |
| - | the introduction of new services or technologies by our competitors and |
| - | pressures on the pricing of services. |
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The Company’s principal shareholders and management own a significant percentage of its capital stock and are able to exercise significant influence over the Company.
The Company’s executive officers and directors and principal shareholders together beneficially own a majority of the total common stock of the Company. Accordingly, these stockholders, as a group, will be able to determine the composition of the board of directors and will retain the power to approve all matters requiring shareholder approval and will continue to have significant influence over the Company’s affairs. This concentration of ownership could have the effect of delaying or preventing a change in control of the Company or otherwise discouraging a potential acquirer from attempting to obtain control of our company, which in turn could have a material and adverse effect on the market price of our common stock or prevent our stockholders from realizing a premium over the market prices for their shares of common stock.
Risk factors related to the market for our common stock
There is no assurance that an active trading market will be sustained for our common stock.
Our common stock became eligible for quotation on the FINRA OTCBB under the symbol “HPSO” on August 8, 2008. Further, there can be no assurance regarding the market price of our shares. In addition, the liquidity of any trading market in our common stock, and the market price quoted for the shares of common stock, may be adversely affected by changes in the overall market for securities generally and by changes in our financial performance or prospects for companies in our industry generally. As a result, you cannot be sure that an active trading market will develop or be sustained for our shares.
State blue sky registration; potential limitations on resale of our securities.
It is the intention of the management to seek coverage and publication of information regarding the Company in an accepted publication which permits a manual exemption. This manual exemption permits a security to be distributed in a particular state without being registered if the Company issuing the security has a listing for that security in a securities manual recognized by the state. However, it is not enough for the security to be listed in a recognized manual. The listing entry must contain (1) the names of issuers, officers, and directors, (2) an issuer’s balance sheet, and (3) a profit and loss statement for either the fiscal year preceding the balance sheet or for the most recent fiscal year of operations. Furthermore, the manual exemption is a nonissuer exemption restricted to secondary trading transactions, making it unavailable for issuers selling newly issued securities.
Most of the accepted manuals are those published in Standard and Poor’s, Moody’s Investor Service, Fitch’s Investment Service, and Best’s Insurance Reports, and many states expressly recognize these manuals. A smaller number of states declare that they “recognize securities manuals” but do not specify the recognized manuals. The following states do not have any provisions and therefore do not expressly recognize the manual exemption: Alabama, Georgia, Illinois, Kentucky, Louisiana, Montana, South Dakota, Tennessee, Vermont and Wisconsin.
Dividends unlikely.
We do not expect to pay dividends for the foreseeable future. The payment of dividends, if any, will be contingent upon our future revenues and earnings, capital requirements and general financial condition. The payment of any dividends will be within the discretion of our board of directors. It is our intention to retain all earnings for use in the business operations and accordingly, we do not anticipate that the Company will declare any dividends in the foreseeable future.
Possible Issuance of Additional Securities.
Our Articles of Incorporation authorize the issuance of 100,000,000 shares of common stock, par value $0.00001. As of November 30, 2012, we had 23,937,979 shares of common stock issued and outstanding. We may issue additional shares of common stock in connection with any financing activities, as compensation for services or in connection with any future acquisitions. To the extent that additional shares of common stock are issued, our shareholders would experience dilution of their respective ownership interests in the Company. The issuance of additional shares of common stock may adversely affect the market price of our common stock and could impair our ability to raise additional capital through the sale of our equity securities.
Compliance with Penny Stock Rules.
Our securities are considered a “penny stock” as defined in the Exchange Act and the rules thereunder, since the price of our shares of common stock is less than $5. Unless our common stock will otherwise be excluded from the definition of “penny stock,” the penny stock rules apply with respect to our common stock. The penny stock rules require a broker-dealer prior to a transaction in penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document prepared by the SEC that provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its sales person in the transaction, and monthly account statements showing the market value of each penny stock held in the customer’s account. In addition, the penny stock rules require that the broker-dealer, not otherwise exempt from such rules, must make a special written determination that the penny stock is suitable for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure rules have the effect of reducing the level of trading activity in the secondary market for a stock that becomes subject to the penny stock rules. So long as the common stock is subject to the penny stock rules, it may become more difficult to sell such securities. Such requirements, if applicable, could additionally limit the level of trading activity for our common stock and could make it more difficult for investors to sell our common stock.
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ITEM 1B. UNRESOLVED STAFF COMMENTS Back to Table of Contents
None.
ITEM 2. DESCRIPTION OF PROPERTIES Back to Table of Contents
The Company’s corporate offices are located at 550 Chemin du Golf, Suite 202, Ile des Soeurs, Quebec H3E 1A8. The office building is owned by Canvar Group, which is owned by Peter Varadi, a principal shareholder. The office space is made available to us on a month-to-month basis on a rent-free basis. The Company believes that the office facilities of approximately 2,500 square feet are sufficient for the foreseeable future and that this arrangement will remain in effect.
ITEM 3. LEGAL PROCEEDING Back to Table of Contents
On April 7, 2008, the Company entered into a consulting agreement with Thomas Klein and Arshad Shaw (the “Consultants”), pursuant to which each Consultant was issued 300,000 restricted shares of the Company’s common stock, granted options to purchase 500,000 shares and options to purchase additional shares during the period commencing May 1, 2008 through October 1, 2008. As a result of the failure of Consultants to provide the services required under the consulting agreement, the Company terminated the consulting agreement on August 28, 2008.
The Company commenced a lawsuit against the Consultants and the former transfer agent for its common stock and filed an amended complaint on February 3, 2009, alleging, among other things, non-performance by the Consultants of their obligations under the consulting agreement and their failure to pay for the initial 500,000 options that each exercised.
On August 30, 2009, the Court entered a default judgment against the defendants which provide for an injunction against the transfer agent ordering it not to lift restrictions on the certificates evidencing the 300,000 restricted shares of common stock issued to and the 500,000 shares underlying the options granted to each Consultant. On January 26, 2011, the successor transfer agent cancelled the restricted shares in the Consultants’ names. On March 1, 2011, attorneys for the Consultants filed a motion seeking legal fess from the Company not to exceed
$1,762.50.
The Company is not a party to any other litigation and does not believe that any litigation is pending or threatened.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS Back to Table of Contents
None.
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PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON STOCK AND RELATED STOCKHOLDER MATTER Back to Table of Contents
| (a) | Market Price Information |
The Registrant’s common stock is subject to quotation on the FINRA OTCBB under the symbol BABL. To the best knowledge of the Registrant, there has been no liquid trading market for the Registrant’s common stock since its registration statement was declared effective. The following table shows the high and low bid prices for the Registrant’s common stock during the last three fiscal years as reported by the National Quotation Bureau Incorporated. These prices reflect inter-dealer quotations without adjustments for retail markup, markdown or commission, and do not necessarily represent actual transactions.
| Fiscal 2011 | Fiscal 2010 | Fiscal 2009 | ||||||||||||||||||||||
| High | Low | High | Low | High | Low | |||||||||||||||||||
| First Quarter ended February 28, | $ | 0.18 | $ | 0.06 | $ | 0.12 | $ | 0.04 | $ | 1.29 | $ | 0.09 | ||||||||||||
| Second Quarter ended May 31, | $ | 0.10 | $ | 0.05 | $ | 0.18 | $ | 0.09 | $ | 0.25 | $ | 0.06 | ||||||||||||
| Third Quarter ended August 31, | $ | 0.06 | $ | 0.02 | $ | 0.15 | $ | 0.10 | $ | 0.16 | $ | 0.06 | ||||||||||||
| Fourth Quarter ended November 30, | $ | 0.08 | $ | 0.03 | $ | 0.16 | $ | 0.09 | $ | 0.13 | $ | 0.04 | ||||||||||||
Approximate Number of Holders of Common Stock: On November 30, 2012, there were approximately 25 shareholders of record of our common stock.
Securities Authorized for Issuance Under Equity Compensation Plans
The Registrant’s board of director approved an equity compensation plan under which 3,000,000 shares of our common stock is authorized for issuance. No shares have been issued under such plan as of the filing of this mended annual report for the year ended November 30, 2012.
Dividend Policy
Holders of our common stock are entitled to dividends when, as, and if declared by the Board of Directors, out of funds legally available therefore. There are no restrictions in our articles of incorporation or by-laws that restrict us from declaring dividends.
Recent Sales of Unregistered Securities
| Date
of Issuance |
Name | No.
of Shares |
Consideration | Exemption | ||||
| 02/13/2009 | Dan Ryan | 50,000 | Exercise of options in exchange for $7,000 | Section 4(2) | ||||
| 06/15/2009 | Claude Gendron | 300,000 | For services valued at $48,000 | Section 4(2) | ||||
| 09/05/2009 | Marc Chabot | 250,000 | Private placement valued at $25,000 | Section 4(2) | ||||
| 09/21/2009 | MLCIA Publication | 180,000 | For services valued at $18,900 | Section 4(2) | ||||
| 02/10/2010 | Harold Gervais | 125,000 | For services valued at $7,500 | Section 4(2) | ||||
| 02/10/2010 | Daniel Ringuet | 90,000 | Exercise of options in exchange for $5,400 | Section 4(2) | ||||
| 02/10/2010 | Daniel Ringuet | 10,000 | For services valued at $600 | Section 4(2) | ||||
| 02/10/2010 | Solnex Inc. | 25,000 | For services valued at $1,500 | Section 4(2) | ||||
| 02/23/2010 | Joel Pensley | 500,000 | Exercise of options in exchange for $25,000 | Section 4(2) | ||||
| 04/01/2010 | Claude Gendron | 500,000 | Private placement valued at $24,000 | Section 4(2) | ||||
| 04/08/2010 | Daniel Ringuet | 90,000 | Exercise of options in exchange for $12,600 | Section 4(2) | ||||
| 04/08/2010 | Solnex Inc. | 25,000 | For services valued at $3,500 | Section 4(2) | ||||
| 04/08/2010 | Harold Gervais | 75,000 | For services valued at $10,500 | Section 4(2) | ||||
| 05/21/2010 | Guylain Pelletier | 400,000 | Conversion of $50,000 of debt into equity | Section 4(2) | ||||
| 05/28/2010 | Gaetan Giguere | 80,000 | Conversion of $10,000 of debt into equity | Section 4(2) | ||||
| 06/01/2010 | Michael Price | 200,000 | Conversion of $25,000 of debt into equity | Section 4(2) | ||||
| 06/09/2010 | David Cleale | 160,000 | Conversion of $20,000 of debt into equity | Section 4(2) | ||||
| 06/18/2010 | David Oliver-Trottier | 64,000 | Conversion of $8,000 of debt into equity | Section 4(2) | ||||
| 06/25/2010 | Rene Mathieu | 270,256 | Conversion of $33,800 of debt into equity | Section 4(2) | ||||
| 06/25/2010 | Leandre Vachon | 160,000 | Conversion of $20,000 of debt into equity | Section 4(2) | ||||
| 06/25/2010 | Julee Pare | 80,000 | Conversion of $10,000 of debt into equity | Section 4(2) | ||||
| 07/02/2010 | Charles Rancourt | 200,000 | Conversion of $25,000 of debt into equity | Section 4(2) | ||||
| 07/02/2010 | Jean Boissonneault | 120,000 | Conversion of $15,000 of debt into equity | Section 4(2) | ||||
| 07/22/2010 | Richard Chevenal | 200,000 | Conversion of $25,000 of debt into equity | Section 4(2) | ||||
| 07/15/2010 | Sylvie Vachon | 80,000 | Conversion of $10,000 of debt into equity | Section 4(2) | ||||
| 07/16/2010 | Hugues Pomerleau | 200,000 | Conversion of $25,000 of debt into equity | Section 4(2) | ||||
| 07/16/2010 | Dave Jacques | 80,000 | Conversion of $10,000 of debt into equity | Section 4(2) | ||||
| 08/06/2010 | Eric Lessard | 120,000 | Conversion of $15,000 of debt into equity | Section 4(2) | ||||
| 09/01/2010 | Peter John Burningham | 100,000 | Conversion of $12,500 of debt into equity | Section 4(2) | ||||
| 09/01/2010 | Gilles Lamarche | 150,000 | For services valued at $9,000 | Section 4(2) | ||||
| 09/01/2010 | Benoit Desmeules | 100,000 | For services valued at $6,000 | Section 4(2) | ||||
| 09/01/2010 | Jean-Rene Lemieux | 50,000 | For services valued at $3,000 | Section 4(2) | ||||
| 11/15/2010 | Constellation Asset Management | 570,000 | For services valued at $68,400 | Section 4(2) | ||||
| 11/15/2010 | Jens Dalsgaard | 570,000 | For services valued at $68,400 | Section 4(2) |
The Company believes that the above issuances of restricted shares were exempt from registration pursuant to Section 4(2) of the Act as privately negotiated, isolated, non-recurring transactions not involving any public solicitation. The recipients in each case represented their intention to acquire the securities for investment only and not with a view to the distribution thereof. Appropriate restrictive legends are affixed to the stock certificates issued in such transactions.
| 9 |
Equity Compensation Plans
Securities Authorized for Issuance Under Equity Compensation Plans.
Equity Compensation Plan Information
| Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted-average exercise price of outstanding options, warrants and rights (b) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a) (c) | |||||||||
| Equity compensation plans approved by security holders | -0- | -0- | 3,000,000 | |||||||||
| Equity compensation plans not approved by security holders | -0- | -0- | -0- | |||||||||
| Total | -0- | -0- | 3,000,000 | |||||||||
ITEM 6. SELECTED FINANCIAL DATA Back to Table of Contents
| Operating Results Data: |
2012 |
2011 | ||||||
| Revenues | $ | 0 | $ | 134,422 | ||||
| Net loss | (1,379,032 | ) | (860,465 | ) | ||||
| Net loss per basic common shareholder | (0.01 | ) | (0.01 | ) | ||||
| Basic weighted average common shares | 17,790,270 | 67,167,107 | ||||||
| Financial Position Data: | ||||||||
| Total assets | 372,007 | 35,181 | ||||||
| Total liabilities | 131,963 | 2,611,047 | ||||||
| Stockholders’ deficit | 240,044 | (2,575,866 | ) | |||||
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATIONS AND FINANCIAL CONDITIONS Back to Table of Contents
Forward-Looking Statements
The following discussion contains forward-looking statements. Forward-looking statements give our current expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. They use of words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” and other words and terms of similar meaning in connection with any discussion of future operating or financial performance. From time to time, we also may provide forward-looking statements in other materials we release to the public.
The following discussion should be read in conjunction with our financial statements and the related notes appearing elsewhere in this report. The following discussion contains forward-looking statements reflecting our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to those discussed below and elsewhere in this report, particularly in the section entitled “Risk Factors”.
To the extent that statements in the report are not strictly historical, including statements as to revenue projections, business strategy, outlook, objectives, future milestones, plans, intentions, goals, future financial conditions, future collaboration agreements, the success of the Company’s development, events conditioned on stockholder or other approval, or otherwise as to future events, such statements are forward-looking. The forward-looking statements contained in this annual report are subject to certain risks and uncertainties that could cause actual results to differ materially from the statements made. Other important factors that could cause actual results to differ materially include the following: business conditions and the amount of growth in the Company’s industry and general economy; competitive factors; ability to attract and retain personnel; the price of the Company’s stock; and the risk factors set forth from time to time in the Company’s SEC reports, including but not limited to its annual report on Form 10-K; its quarterly reports on Forms 10-Q; and any reports on Form 8-K.
| 10 |
Overview
In June 2008, we acquired our wholly-owned subsidiary, Valtech Communications Inc. (“Valtech”) in a reverse merger transaction, issuing 40 million restricted shares to the Valtech shareholders.
Valtech offers low-cost, highly reliable triple-play service of Digital Phone, Digital Voice, High-Speed Internet and Digital TV backed by fast, friendly and live customer service (“Telecommunication Services”). Our present plan is to expand our bundled services by providing an end-to- end IPTV solution consisting of IPTV middleware, video on demand, network based PVR, IPTV head ends, content protection, IPTV infrastructure, system integration and IPTV applications such as games. In order to expand our services to include end-to-end IPTV service, the Company is dependent upon its ability to raise sufficient capital to fund its agreement with Ericsson. To date, the Company has been unable to meet its obligations under the Ericsson agreement and at present no agreement with Ericsson has been negotiated and no negotiations with Ericsson are on-going.
We intend to use our limited resources to market our services to new residential and commercial building complexes and existing hotel chains. Further, we intend to market our bundled Telecommunication Services in industry publications and intend to develop our website and promote its presence in order to increase web traffic and possible sales to new clients (www.valtech.ca).
Our management believes that the trend in our business is toward greater convergence to high speed Internet and high definition television. We believe that our bundled Telecommunication Services are competitive in terms of reliability and pricing as compared to the services offered by incumbent operators. Since we have no patent protection, it is possible that a well-funded company could enter the field and diminish our prospective business growth. We face uncertainties regarding our future growth because we must compete on price and quality of service with traditional communications companies with far longer operating histories, more established customer relationships, greater financial, technical and marketing resources, larger customer bases and greater brand or name recognition. Furthermore, companies that may seek to enter our markets may expose us to severe price competition and future technological developments could make us less competitive.
Cash and Cash Equivalents. The Company considers all highly liquid fixed income investments with maturities of three months or less, to be cash equivalents. On November 30, 2012, the Company had $362,007 in cash and cash equivalents. At November 30, 2011, the company had $0 in cash.
Accounts Receivable. Management periodically reviews the current status of existing receivables and management’s evaluation of periodic aging of accounts. The Company accounts receivable for the years ended November 30, 2012 and 2011 were $0 and $26,147 an respectively.
Deferred Costs. Deferred costs as of November 30, 2012 and 2011, are reflected in assets held under discontinued operations. There was $0 and $71,100 charged to operations for amortization expense for the year ended November 30, 2012 and 2011, respectively, which are reflected in discontinued operations.
Revenue Recognition. Through April 30, 2012, the Company through Valtech received revenue from subscribers to its triple play network in which it provided digital TV, voice over internet protocol (VoIP), and high speed internet access, all via fiber optic cable. The Company billed its subscribers on a monthly basis and recognized the monthly revenue based upon the specific plan selected by the subscriber. The Company additionally provided contracted services to wire commercial buildings with fiber optic cable in order to provide for similar services. Valtech was sold on April 30, 2012. For reporting periods ended after April 30, 2012, revenues for Valtech are reported net of operating expenses as gain or loss from discontinued operations.
Buildablock is a development stage company and has not yet recorded any revenues. Buildablock plans to recognize revenue from sales when the following criteria are met: persuasive evidence of an arrangement exists; delivery has occurred; the selling price is fixed or determinable; and collectability is reasonably assured.
Fixed Assets: Fixed assets as of November 30, 2012 and 2011, are reflected in assets held under discontinued operations. There was $0 and $4,997 charged to operations for depreciation expense for the years ended November 30, 2012 and 2011, respectively, which are reflected in discontinued operations.
Results of Operations.
Comparison of the years ended November 30, 2012 and 2011
Revenues: Our revenues for the year ended November 30, 2012 were $0 compared to $134,422for year ended November 30, 2011. The Company’s revenues decreased by $143,422, which represents a 100% decrease from the prior year. The Company’s decrease in revenues is mainly attributable to the sale of Valtech.
Cost of Sales: Cost of Sales for the year ended November 30, 2012 was $0 compared to $301,379 for year ended November 30, 2011. The Company’s cost of sales decrease was $301,379, which represents a 100% decrease from prior year. Thus, the decrease in the cost of sales was directly related to the decrease in wirings and installations as well as equipment.
Depreciation and Amortization: For the year ended November 30, 2012 we recorded $0 in depreciation and amortization expenses compared to $132,490 during the year ended November 30, 2011.
General and Administrative Expenses: General and Administrative Expenses for the year ended November 30, 2012 was $1,121,464 compared to $429,616 for year ended November 30, 2011. The Company’s general and administrative expenses increase was 691,848, which represents a 161% increase from the prior year mainly due to increased non-cash compensation expenses.
| 11 |
Interest Expense: The Company’s interest expense for the year ended November 30, 2012 was $0 compared to $131,402 for year ended November 30, 2010. The decrease of 131,402 were due to the fact that the related party loans with the four principal shareholders of the Company were assumed by Valtech, upon the sale back to Valtech along with the accrued interest on those loans. Currently there is a $0 balance due those shareholders.
Liquidity and Capital Resources
During the year ended November 30, 2012, our net cash increased by 362,007. During the year ended November 30, 2012 and 2011, net cash used in operating activities was $1,083,641and $388,545, respectively. This cash was used to fund our operations for the periods, adjusted for non-cash expenses and changes in operating assets and liabilities.
We had no investing activities in the years ended November 30, 2012 and 2011.
Net cash provided by financing activities was $(1,486,449) during the year ended November 30, 2012 compared to $355,851 net cash provided by financing activities during the year ended November 30, 2011. The net cash provided by financing activities for the year ended November 30, 2012 resulted from proceeds of $1,486,730 related to the issuance of stoc. The net cash provided by financing activities for the year ended November 30, 2011 resulted from proceeds of $355,851 related to the issuance of stock.
The Company has only limited capital. Additional financing is necessary for the Company to continue as a going concern.
Our continued operations will depend on whether we are able to raise additional funds through third parties, such as equity and debt financing, as well as additional loans from our affiliated shareholders. However, there can be no assurance that such additional funds will be available on acceptable terms and there can be no assurance that any additional funding that we do obtain will be sufficient to meet our needs in the long term. We will continue to fund operations from cash on hand and through the similar sources of capital previously described. We can give no assurances that any additional capital that we are able to obtain will be sufficient to fully fund our growth plan.
Current and Future Financing Needs
We have incurred an accumulated deficit of $1,884,979 through November 30, 2012. We have incurred negative cash flow from operations since we started our Telecommunication Services business. We may need to obtain additional funds sooner or in greater amounts than we currently anticipate. Potential sources of financing include strategic relationships, public or private sales of our shares or debt and other sources. We may seek to access the public or private equity markets when conditions are favorable due to our long-term capital requirements. We do not have any committed sources of financing at this time, and it is uncertain whether additional funding will be available when we need it on terms that will be acceptable to us, or at all. If we raise funds by selling additional shares of common stock or other securities convertible into common stock, the ownership interest of our existing stockholders will be diluted. If we are not able to obtain financing when needed, we may be unable to carry out our business plan. As a result, we may have to significantly limit our operations and our business, financial condition and results of operations would be materially harmed.
Effect of Exchange Rate on Cash.
During 2012, the Company reported a loss of $59 due to changes in the exchange rate compared to a gain of $19,689 in 2011. A loss reflects an increase in the value of the Canadian dollar as compared to the United States dollar.
Cash end of Year. The Company’s cash increased by $362,007 to $362,007 at the end of November 30, 2012 compared to an decrease of $13,005 at the end of November 30, 2011.
Off-Balance Sheet Arrangements
As of November 30, 2012 we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated under the Securities Act of 1934.
Contractual Obligations and Commitments
The Company leases its office space from a related party. See also footnote 7 in the consolidated financial statements.
Critical Accounting Policies
Our financial statements are prepared in accordance with accounting principles generally accepted in the United States, which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, the disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The critical accounting policies that affect our more significant estimates and assumptions used in the preparation of our financial statements are reviewed and any required adjustments are recorded on a monthly basis.
| 12 |
Recent Accounting Pronouncements
In May 2011, FASB issued Accounting Standards Update (ASU) No. 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs . FASB ASU 2011-04 amends and clarifies the measurement and disclosure requirements of FASB ASC 820 resulting in common requirements for measuring fair value and for disclosing information about fair value measurements, clarification of how to apply existing fair value measurement and disclosure requirements, and changes to certain principles and requirements for measuring fair value and disclosing information about fair value measurements. The new requirements are effective for fiscal years beginning after December 15, 2011. The Company plans to adopt this amended guidance on October 1, 2012 and at this time does not anticipate that it will have a material impact on the Company’s results of operations, cash flows or financial position.
In June 2011, FASB issued ASU No. 2011-05, Presentation of Comprehensive Income , which amends the disclosure and presentation requirements of Comprehensive Income. Specifically, FASB ASU No. 2011-05 requires that all nonowner changes in stockholders’ equity be presented either in 1) a single continuous statement of comprehensive income or 2) two separate but consecutive statements, in which the first statement presents total net income and its components, and the second statement presents total other comprehensive income and its components. These new presentation requirements, as currently set forth, are effective for the Company beginning October 1, 2012, with early adoption permitted. The Company plans to adopt this amended guidance on October 1, 2012 and at this time does not anticipate that it will have a material impact on the Company’s results of operations, cash flows or financial position.
In September 2011, FASB issued ASU 2011-08, Testing Goodwill for Impairment , which amended goodwill impairment guidance to provide an option for entities to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. After assessing the totality of events and circumstances, if an entity determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, performance of the two-step impairment test is no longer required. This guidance is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011, with early adoption permitted. Adoption of this guidance is not expected to have any impact on the Company’s results of operations, cash flows or financial position.
There were other updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to have a material impact on the Company’s financial position, results of operations or cash flows.
ITEM 7A. QUANTITATIVEAND QUALITATIVE DISCLOSURE ABOUT MARKET RISK Back to Table of Contents
We have not entered into, and do not expect to enter into, financial instruments for trading or hedging purposes.
| 13 |
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Back to Table of Contents
| 14 |
BUILDABLOCK CORP.
(formerly Hipso Multimedia, Inc.
(a development stage company)
CONSOLIDATED BALANCE SHEETS
November 30, 2012 and 2011
(unaudited)
| 11/30/12 | 11/30/11 | |||||||
| (unaudited) | (unaudited) | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash | $ | $ | ||||||
| Current assets held under discontinued operations | ||||||||
| Total Current Assets | ||||||||
| OTHER ASSETS | ||||||||
| Intellectual property | ||||||||
| Total other assets | ||||||||
| Total Assets | ||||||||
| LIABILITY AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| CURRENT LIABILITIES | ||||||||
| Cash overdraft | $ | $ | ||||||
| Accounts payable | ||||||||
| Accrued expenses | ||||||||
| Convertible note payable - third party | ||||||||
| Current liabilities held under discontinued operations | ||||||||
| Total Current Liabilities | ||||||||
| Total Liabilities | ||||||||
| STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| Common stock, par value $, shares authorized, and shares issued and outstanding at November 30, 2012 and 2011, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Additional paid-in capital - options and warrants | ||||||||
| Subscription receivable | ( | ) | ||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Deficit accumulated during the development stage | ( | ) | ||||||
| Accumulated other comprehensive income (loss) | ( | ) | ( | ) | ||||
| Total Stockholders’ Equity (Deficit) | ( | ) | ||||||
| Total Liabilities and Stockholders’ Equity (Deficit) | $ | $ | ||||||
See accompanying notes to consolidated financial statements
| 15 |
BUILDABLOCK CORP.
(formerly Hipso Multimedia, Inc.
(a development stage company)
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
For the Years Ended November 30, 2012 and 2011, and the
Period May 1, 2012, through November 30, 2012 (Development Stage)
(unaudited)
Year Ended | Year Ended | Period 5/1/12 | ||||||||||
| 11/30/12 | 11/30/11 | through 11/30/12 | ||||||||||
| (unaudited) | ||||||||||||
| REVENUE | $ | $ | $ | |||||||||
| COSTS AND EXPENSES | ||||||||||||
| Cost of sales | ||||||||||||
| Depreciation and amortization | ||||||||||||
| Research and development | ||||||||||||
| Administrative expenses | ||||||||||||
| Total costs and expenses | ||||||||||||
| OPERATING LOSS | ( | ) | ( | ) | ( | ) | ||||||
| NON-OPERATING INCOME (EXPENSE) | ||||||||||||
| Interest expense | ( | ) | ||||||||||
| Total Non-Operating Expense | ( | ) | ||||||||||
| NET LOSS FROM CONTINUING OPERATIONS | ( | ) | ( | ) | ( | ) | ||||||
| DISCONTINUED OPERATIONS | ||||||||||||
| Gain (loss) on disposal of subsidiary | ||||||||||||
| Gain (loss) from discontinued operations | ( | ) | ||||||||||
| NET GAIN FROM DISCONTINUED OPERATIONS | ||||||||||||
| NET INCOME (LOSS) | $ | $ | ( | ) | $ | ( | ) | |||||
| NET INCOME PER COMMON SHARE (BASIC) | ||||||||||||
| From continuing operations | $ | ( | ) | $ | ( | ) | ||||||
| From discontinued operations | ||||||||||||
| $ | $ | ( | ) | |||||||||
| Weighted average shares outstanding (BASIC) | ||||||||||||
| NET INCOME PER COMMON SHARE (DILUTED) | ||||||||||||
| From continuing operations | $ | ( | ) | $ | ( | ) | ||||||
| From discontinued operations | ||||||||||||
| $ | $ | ( | ) | |||||||||
| Weighted average shares outstanding (DILUTED) | ||||||||||||
| OTHER COMPREHENSIVE LOSS - CONTINUING OPERATIONS | ||||||||||||
| Comprehensive loss - beginning of period | $ | ( | ) | $ | ( | ) | ||||||
| Cumulative translation adjustments | ( | ) | ( | ) | ||||||||
| Comprehensive loss - end of period | $ | ( | ) | $ | ( | ) | ||||||
The accompanying notes are an integral part of these statements.
| 16 |
BUILDABLOCK CORP.
(formerly Hipso Multimedia, Inc.
(a development stage company)
CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS’ EQUITY (DEFICIT)
For the Years Ended November 30, 2012 and 2011
(unaudited)
| Preferred Stock | Common Stock | Additional Paid-in | Additional Paid-in Capital- | Subscription | Retained Earnings | Deficit Accumulated During the Development | Accumulated Other Comprehensive Income | |||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Warrants | Receivable | (Deficit) | Stage | (Loss) | Total | ||||||||||||||||||||||||||||||||||
| Balance 11/30/09 | $ | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||
| Shares issued for cash | ||||||||||||||||||||||||||||||||||||||||||||
| Shares issued for services | ||||||||||||||||||||||||||||||||||||||||||||
| Exercise of stock options | ||||||||||||||||||||||||||||||||||||||||||||
| Fair value of options granted | ||||||||||||||||||||||||||||||||||||||||||||
| Fair value of rent contributed by major shareholder | ||||||||||||||||||||||||||||||||||||||||||||
| Conversion of liability to paid in capital - related party | ||||||||||||||||||||||||||||||||||||||||||||
| Net loss for the year ended 11/30/10 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Balance 11/30/10 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Shares issued for conversion of loan payable to shareholders | ||||||||||||||||||||||||||||||||||||||||||||
| Shares issued for services, net of shares cancelled for services | ||||||||||||||||||||||||||||||||||||||||||||
| Shares issued for cash | ||||||||||||||||||||||||||||||||||||||||||||
| Fair value of rent contributed by major shareholder | ||||||||||||||||||||||||||||||||||||||||||||
| 17 |
BUILDABLOCK CORP.
(formerly Hipso Multimedia, Inc.
(a development stage company)
CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS’ EQUITY (DEFICIT)
For the Years Ended November 30, 2012 and 2011
(unaudited)
| Additional | Deficit Accumulated | Accumulated Other | ||||||||||||||||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Additional Paid-in | Paid-in Capital- | Subscription | Retained Earnings | During the Development | Comprehensive Income | |||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Warrants | Receivable | (Deficit) | Stage | (Loss) | Total | ||||||||||||||||||||||||||||||||||
| Net loss for the year ended 11/30/11 | ( | ) | ( | ) | ( | |||||||||||||||||||||||||||||||||||||||
| Balance 11/30/11 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Shares issued for services | ||||||||||||||||||||||||||||||||||||||||||||
| Fair value of rent contributed by major shareholder | ||||||||||||||||||||||||||||||||||||||||||||
| Net income for the five months ended 4/30/12 | ( | ) | ||||||||||||||||||||||||||||||||||||||||||
| Balance 4/30/12 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Shares issued for services and accounts payable | ||||||||||||||||||||||||||||||||||||||||||||
| Shares issued for cash | ( | ) | ||||||||||||||||||||||||||||||||||||||||||
| Shares issued for intellectual property | ||||||||||||||||||||||||||||||||||||||||||||
| Fractional shares issued | (
| ( | ) | |||||||||||||||||||||||||||||||||||||||||
| Cash received for shares issued | ||||||||||||||||||||||||||||||||||||||||||||
| Fair value of options granted | ||||||||||||||||||||||||||||||||||||||||||||
| Net loss for the period 5/1/12 through 11/30/12 (development stage) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Balance 11/30/12 | $ | $ | $ | | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||||||
See accompanying notes to consolidated financial statements.
| 18 |
BUILDABLOCK CORP.
(formerly Hipso Multimedia, Inc.
(a development stage company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended November 30, 2012 and 2011, and the
Period May 1, 2012, through November 30, 2012 (Development Stage)
(unaudited)
| Year Ended | Year Ended | Period 5/1/12 through 11/30/12 | ||||||||||
| 11/30/12 | 11/30/11 | (unaudited) | ||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES - CONTINUING OPERATIONS: | ||||||||||||
| Net income (loss) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Adjustments to reconcile net income (loss) to net cash used for operating activities: | ||||||||||||
| Depreciation and amortization | ||||||||||||
| Stock based compensation and shares issued for services | ||||||||||||
| Contributed expenses by management | ||||||||||||
| Changes in operating assets and liabilities: | ||||||||||||
| Accounts receivable | ( | ) | ||||||||||
| Prepaid expenses and other current assets | ||||||||||||
| Accounts payable and accrued expenses | ||||||||||||
| Net cash used for operating activities | ( | ) | ( | ) | ( | ) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||
| Increase (decrease) in cash overdraft | ( | ) | ( | ) | ||||||||
| Cash received for common stock | ||||||||||||
| Loan payable to bank | ||||||||||||
| Loan payable to shareholders | ||||||||||||
| Net cash provided by financing activities | ||||||||||||
| DISCONTINUED OPERATIONS | ||||||||||||
| Operating activities | ( | ) | ||||||||||
| Investing activities | ||||||||||||
| Financing activities | ||||||||||||
| ( | ) | |||||||||||
| EFFECT OF EXCHANGE RATE ON CASH | ( | ) | ||||||||||
| INCREASE (DECREASE) IN CASH | ( | ) | ||||||||||
| CASH, BEGINNING OF YEAR | ||||||||||||
| CASH, END OF PERIOD | $ | |||||||||||
See accompanying notes to financial statements.
| 19 |
BUILDABLOCK CORP.
(formerly
Hipso Multimedia, Inc.
(a development stage company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended November 30, 2012 and 2011, and the
Period May 1, 2012, through November 30, 2012 (Development Stage)
(unaudited)
| Year Ended 11/30/12 | Year Ended 11/30/11 | Period 5/1/12 through 11/30/12 (unaudited) | ||||||||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||||||
| Cash paid for interest | $ | $ | $ | |||||||||
| NONCASH OPERATING AND FINANCING ACTIVITIES: | ||||||||||||
| Conversion of notes payable - related parties for equity | $ | $ | $ | |||||||||
| Common shares issued for intellectual property | $ | $ | $ | |||||||||
See accompanying notes to financial statements.
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BUILDABLOCK CORP.
(formerly Hipso Multimedia, Inc.
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
November 30, 2012 and 2011
(unaudited)
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION
These consolidated unaudited financial statements reflect all adjustments, including normal recurring adjustments which, in the opinion of management, are necessary to present fairly the consolidated operations and cash flows for the periods presented.
Buildablock
Corp. (the “Company”) formerly HIPSO Multimedia, Inc., a Florida corporation, was incorporated in April 2005. As described
in Note 7, the Company entered into an Asset Purchase Agreement on November 30, 2011 providing for the acquisition of intellectual property
rights comprised of an Internet and mobile service platform whose purpose is to empower or capitalize on the growth of the neighborhood,
local economy (the “Buildablock Assets”). The Buildablock Assets are in the development stage. In addition to Buildablock’s
social networking library, the service is enriched by its new “DealWink” engine, a new e-commerce platform that combines
the power of group buying, couponing, and price aggregation, among other things, to drive both value to its customers and opportunity
to the retailer. Effective March 7, 2012, the Company completed the acquisition of the Buildablock Assets. In connection with the completion
of the acquisition, the Company effected a reverse stock split of the Company’s outstanding shares of common stock, par value $,
on a one-for-eight (
On June 5, 2012, the Company formed a Canadian subsidiary, Buildablock Canada Inc. (“Buildablock Canada”). Since inception, Buildablock Canada has had little activity. The Company anticipates that Buildablock Canada will engage in research and development activities.
Effective July 1, 2009, the Company adopted the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 105-10, Generally Accepted Accounting Principles - Overall (“ASC 105-1 0”). ASC 105-10 establishes the FASB Accounting Standards Codification (the “Codification”) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with U.S. GAAP. Rules and interpretive releases of the SEC under authority offederal securities laws are also sources of authoritative U.S. GAAP for SEC registrants. All guidance contained in the Codification carries an equal level of authority. The Codification superseded all existing n·on-SEC accounting and reporting standards. All other non-grandfathered, non-SEC accounting literature not included in the Codification is non-authoritative. The FASB will not issue new standards in the form of Statements, FASB Positions or Emerging Issue Task Force Abstracts. Instead, it will issue Accounting Standards Updates (“ASUs”). The FASB will not consider ASUs as authoritative in their own right. ASUs will serve only to update the Codification, provide background information about the guidance and provide the bases for conclusions on the change(s) in the Codification. References made to FASB guidance throughout this document have been updated for the Codification.
Going Concern
With the disposition of Valtech, the Company commenced operating in the development stage as it develops its purchased intellectual property. The Company has no revenues and nominal assets other than cash which was raised during May 2012 as part of a private placement. New management has had some preliminary discussions regarding further capitalization of the Company. These plans include the raising of capital through the equity markets to fund future operations and generating adequate revenues for the new business of the Company. Even if the Company raises sufficient capital to support its operating expenses and generates revenues, there can be no assurance that the revenues will be sufficient to enable it to develop business to a level where it will generate profits and cash flows from operations. These matters raise substantial doubt about the Company’s ability to continue as a going concern. However, the accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. 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.
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NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its subsidiary. All significant intercompany accounts and transactions have been eliminated in consolidation.
Development Stage Company
The Company is considered to be in the development stage as defined in ASC 915. The Company has devoted substantially all of its efforts to the development of its software platform.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities 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. On an on-going basis, the Company evaluates its estimates, including, but not limited to, those related to investment tax credits, bad debts, income taxes and contingencies. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid debt instruments and other short-term investments with an initial maturity of three months or less to be cash equivalents.
Comprehensive Income
The Company adopted ASC 220-10, “Reporting Comprehensive Income,” (formerly SFAS No. 130). ASC 220-10 requires the reporting of comprehensive income in addition to net income from operations.
Comprehensive income is a more inclusive financial reporting methodology that includes disclosure of information that historically has not been recognized in the calculation of net income.
Fair Value of Financial Instruments
The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, accounts receivable and accounts payable approximate fair value because of the immediate or short-term maturity of these financial instruments. For the loans payable, the carrying amount reported is based upon the incremental borrowing rates otherwise available to the Company for similar borrowings.
Currency Translation
For subsidiaries outside the United States that prepare financial statements in currencies other than the U.S. dollar, the Company translates income and expense amounts at average exchange rates for the year, translates assets and liabilities at year-end exchange rates and equity at historical rates. The Company’s functional currency is the Canadian dollar, while the Company reports its currency in the US dollar. The Company records these translation adjustments as accumulated other comprehensive income (loss). Gains and losses from foreign currency transactions are included in other income (expense) in the results of operations.
Revenue Recognition
Through April 30, 2012, the Company through Valtech received revenue from subscribers to its triple play network in which it provided digital TV, voice over internet protocol (VoIP), and high speed internet access, all via fiber optic cable. The Company billed its subscribers on a monthly basis and recognized the monthly revenue based upon the specific plan selected by the subscriber. The Company additionally provided contracted services to wire commercial buildings with fiber optic cable in order to provide for similar services. Valtech was sold on April 30, 2012. For reporting periods ended after April 30, 2012, revenues for Valtech are reported net of operating expenses as gain or loss from discontinued operations.
Buildablock is a development stage company and has not yet recorded any revenues. Buildablock plans to recognize revenue from sales when the following criteria are met: persuasive evidence of an arrangement exists; delivery has occurred; the selling price is fixed or determinable; and collectability is reasonably assured.
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The Company plans to record as revenue the net amount it retains fr m the sale of produ ts, excluding any applicab e taxes, after remitting the payment to the merchant minus the transaction fees. Revenue will be recorded on a net basis because the Company plans to act as an agent of the merchant in the transaction.
The Company plans that the merchant will be the primary obligor in these transactions,_ will be s bject to inventory risk, and will have latitude in establishing prices. The Company plans to perform a service by actmg as the agent of the merchant which will be responsible for fulfillment, and therefore revenue is planned to be recorded on a net basis.
Accounts Receivable
The Company conducts business and extends credit based on an evaluation of the customers’ financial condition, generally without requiring collateral.
Exposure to losses on receivables is expected to vary by customer due to the financial condition of each customer. The Company monitors exposure to credit losses and maintains allowances for anticipated losses considered necessary under the circumstances. The Company has no allowance for doubtful accounts as of August 31, 2012.
Accounts receivable are generally due within 30 days and collateral is not required. Unbilled accounts receivable represents amounts due from customers for which billing statements have not been generated and sent to the customers.
Income Taxes
The Company accounts for income taxes utilizing the liability method of accounting.Under the liability method, deferred taxes are determined based on differences between financial statement and tax bases of assets and liabilities at enacted tax rates in effect in years in which differences are expected to reverse. Valuation allowances are established, when necessary, to reduce deferred tax assets to amounts that are expected to be realized.
Advertising Costs
The Company expenses the costs associated with advertising as incurred. Advertising expenses for the nine months ended August 31, 2012 and 2011 are included in administrative expenses in the consolidated statements of operations.
Fixed Assets
Fixed
assets are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets; office
and computer equipment -
When assets are retired or otherwise disposed of, the costs and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is recognized in income for the period. The cost of maintenance and repairs is charged to income as incurred; significant renewals and betterments are capitalized. Deduction is made for retirements resulting from renewals or betterments.
Impairment of Long-Lived Assets
Long-lived assets, primarily fixed assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets might not be recoverable. The Company does perform a periodic assessment of assets for impairment in the absence of such information or indicators. Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner in which an asset is used, or a significant adverse change that would indicate that the carrying amount of an asset or group of assets is not recoverable. For long-lived assets to be held and used, the Company recognizes an impairment loss only if its carrying amount is not recoverable through its undiscounted cash flows and measures the impairment loss based on the difference between the carrying amount and estimated fair value.
Basic
net loss per common share is computed using the weighted average number of common shares outstanding. Diluted earnings per share (EPS)
includes additional dilution from common stock equivalents, such as stock issuable pursuant to the exercise of stock options and warrants.
All shares are reflected post
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In 2006, the Company adopted the provisions of ASC 718-10 “Share Based Payments” for its year ended November 30, 2008. The adoption of this principle had no effect on the Company’s operations.
The Company has elected to use the modified-prospective approach method.Under that transition method, the calculated expense in 2006 is equivalent to compensation expense for all awards granted prior to, but not yet vested as of January 1, 2006, based on the grant-date fair values. Stock-based compensation expense for all awards granted after January 1, 2006 is based on the grant-date fair values. The Company recognizes these compensation costs, net of an estimated forfeiture rate, on a pro rata basis over the requisite service period of each vesting tranche of each award.
The Company considers voluntary termination behavior as well as trends of actual option forfeitures when estimating the forfeiture rate. The Company measures compensation expense for its non-employee stock-based compensation under ASC 505-50, “Accounting for Equity Instruments that are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services”. The fair value of the option issued is used to measure the transaction, as this is more reliable than the fair value of the services received. The fair value is measured at the value of the Company’s common stock on the date that the commitment for performance by the counterparty has been reached or the counterparty’s performance is complete. The fair value of the equity instrument is charged directly to expense and additional paid-in capital.
Segment Information
The Company follows the provisions of ASC 280-10, “Disclosures about Segments of an Enterprise and Related Information”. This standard requires that companies disclose operating segments based on the manner in which management disaggregates the Company in making internal operating decisions. As of November 30, 2012 and for the years ended November 30, 2012 and 2011, the Company operates in only one segment and in only one geographical location.
Reclassifications
The Company has reclassified certain amounts in its condensed consolidated statement of operations for the year ended November 30, 2011 to conform with the November 30, 2012 presentation. These reclassifications had no effect on the net loss for the year ended November 30, 2011.
Uncertainty in Income Taxes
The Company follows ASC 740-10, “Accounting for Uncertainty in Income Taxes” (“ASC 740-10”). This interpretation requires recognition and measurement of uncertain income tax positions using a “more-likely-than-not” approach. ASC 740-10 is effective for fiscal years beginning after December 15, 2006. Management has adopted ASC 740-10 for 2009, and they evaluate their tax positions on an annual basis, and has determined that as ofN ovember 30, 2012, no additional accrual for income taxes other than the federal and state provisions is considered necessary.
Fair Value Measurements
In September 2006, the FASB issued ASC 820, Fair Value Measurements. ASC 820 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosure about fair value measurements. This statement is effective for financial statements issued for fiscal years beginning after November 15, 2007. Early adoption is encouraged. The adoption of ASC 820 is not expected to have a material impact on the financial statements.
In February 2007, the FASB issued ASC 825-10, The Fair Value Option for Financial Assets and Financial Liabilities- Including an amendment of ASC 320-10, (“ASC 825-10”) which permits entities to choose to measure many financial instruments and certain other items at fair value at specified election dates. A business entity is required to report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date. This statement is expected to expand the use of fair value measurement. ASC 825-10 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years.
Recent Accounting Pronouncements
In May 2011, FASB issued Accounting Standards Update (ASU) No. 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. ASU 2011-04 amends and clarifies the measurement and disclosure requirements of ASC 820 resulting in common requirements for measuring fair value and for disclosing information about fair value measurements, clarification of how to apply existing fair value measurement and disclosure requirements, and changes to certain principles and requirements for measuring fair value and disclosing information about fair value measurements. The new requirements are effective for fiscal years beginning after December 15, 2011. The Company adopted this amended guidance, which did not have a material impact on the Company’s results of operations, cash flows or financial position.
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In June 2011, FASB issued ASU No. 2011-05, Presentation of Comprehensive Income, which amends the disclosure and presentation requirements of Comprehensive Income. Specifically, ASU No. 2011-05 requires that all nonowner changes in stockholders’ equity be presented either in 1) a single continuous statement_ of compreh nsive income or 2) two separate but consecutive statements, in which the first statement presents total net mcome and its components, and the second statement presents total other comprehensive income and its components.
The Company adopted this amended guidance, which did not have a material impact on the Company’s results of operations, cash flows or financial position.
In September 2011, FASB issued ASU 2011-08, Testing Goodwill for Impairment, which amended goodwill impairment guidance to provide an option for entities to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. After assessing the totality of events and circumstances, if an entity determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, performance of the two-step impairment test is no longer required. This guidance is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011.
There were other updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to have a material impact on the Company’s financial position, results of operations or cash flows.
NOTE 3 - FIXED ASSETS
Fixed
assets as of November 30, 2012 and 2011, are reflected in assets held under discontinued operations. There was $
NOTE 4 - DEFERRED COSTS
Deferred
costs as of November 30, 2012 and 2011, are reflected in assets held under discontinued operations. There was $
NOTE 5 - RELATED PARTY LOANS
In
April 2012, the related party loans with the four principal shareholders of the Company were assumed by Valtech, upon the sale back to
Valtech along with the accrued interest on those loans. Currently there is a $
NOTE 6 – COMMITMENTS
Office Space
The
Company occupies approximately
Service Agreement
In July 2009, the Company’s subsidiary, Valtech Communications, Inc. entered into a written agreement with Groupe Canvar Inc. (a related party through common ownership). The agreement provides for Groupe Canvar, Inc. to provide brochures, price lists, contact information and other literature relating to Valtech Communications, Inc. services to the tenants leasing the apartments or office space in the buildings owned by Groupe Canvar, Inc. In addition, the agreement provides for Valtech Communications, Inc. to install wiring in new and refurbished buildings owned by Groupe Canvar, Inc. to their server for these services. All pricing is at the same terms as those for Valtech Communications, Inc. other customers. The agreement was to expire July 2010, and was extended for another two years through July 2012. This agreement will remain with Valtech in connection with the sale of Valtech in April 2012 (see Note 12).
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Financing Agreement
On
June 15, 20 l 0, the Company entered into an Engagement Agreement with DME Securities LLC (“DME”) to raise $
On
August 18, 20 l 0, the Company executed an equity financing commitment ofup to $
On
October 12, 20 l 0, the Company entered into an agreement with Notre-Dame Capital Inc. to raise $
In
connection with the financing, Notre-Dame Capital Inc. would receive a cash fee equal to
Investor Relation/Public Relation Agreements
The
Company entered into an agreement with Complete Advisory Partners on April 12, 2011 to provide public relation services. The agreement
is for a term of one year but the Company can terminate the services every
The
Company entered into an Investor Relations Agreement with CCG Investor Relations effective July 1, 2012. The Agreement is for a term
of l year. Consideration for the services that CCG Investor Relations will provide is in the form of
Distribution Agreement
On April 11, 2011, the Company signed a long-term distribution agreement with Level Vision Electronics Ltd (“Level”). The five (5) year renewable distribution agreement with Level includes the distribution in North America of its 3-D Television screens technology, including High Definition, LCD screens and computer monitors for commercial applications. The Company was to deploy and bring to market a unique new multimedia solution to enhance the advertising market. This agreement will remain with Valtech in connection with the sale of Valtech in April 2012 (see Note 12).
NOTE 7 - ACQUISITION - BUILDABLOCK
On November 30, 2011, the Company, entered into an Asset Purchase Agreement (the “Agreement”) with 3324109 Canada Inc., a Canadian corporation owned by Gary Oberman (“GaryCo”) and 8040397 Canada Inc., a Canadian corporation, owned by Bartek Bulzak (“BulzakCo”), collectively, the “Sellers”, providing for the acquisition by the Company of the Buildablock Assets. The Sellers have conducted no other business other than the development of this platform. The intellectual property was funded 100% by the respective owners of the Sellers personally. The Agreement provides for the issuance of shares of the Company’s common stock to each of GaryCo and BulzakCo, for an aggregate of shares, representing % of the Company’s outstanding shares after giving effect to a one-for-eight reverse stock split. On March 7, 2012, the Company completed the acquisition of the Buildablock Assets and the common shares were issued at that time (see Note 12).
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NOTE 8 - STOCKHOLDERS’ DEFICIT
Common Stock
As of November 30, 2012, the Company has shares of common stock authorized with a par value of $ per share.
The Company has shares issued and outstanding as of November 30, 2012. During the year ended November 30, 2012, the Company issued:
The
Company issued shares of stock for the acquisition of the Buildablock Assets valued at $
The
Company issued shares of stock for services rendered valued at $
The
Company occupied office space owned by a principal shareholder, and recorded $
The
Company occupied office space owned by a principal shareholder, and recorded $
The
Company issued shares of stock for cash and liability for stock to be issued and shares of stock for services rendered
($
The
Company occupied office space owned by a principal shareholder, and recorded $
The
Company issued shares of stock for cash and liability for stock to be issued and services rendered ($
The
Company occupied office space owned by a principal shareholder, and recorded $
The
Company issued shares of common stock to three of its shareholders to convert $
The Company also cancelled shares of stock to consultants at $ for services to be rendered to the Company back in 2008 (see Note 6).
The
Company also incurred a $
The
Company occupied office space owned by a principal shareholder, and recorded $
Stock Options
The Company accounts for stock-based compensation using the fair value method. The fair value method requires the cost of employee services received for awards of equity instruments, such as stock options and restricted stock, to be recorded at the fair value on the date of the grant. The value of restricted stock awards, based upon market prices, is amortized over the requisite service period.
On July 6, 2012, the Board ofDirectors of the Company adopted the 2012 Equity Incentive Plan (the “2012 Plan”). The 2012 Plan provides for the grant of stock options, stock appreciation rights, restricted stock awards, restricted stock units, performance shares and performance share units to employees, consultants and non-employee directors of the Company and its subsidiaries. The Company has reserved ofits shares for issuance under the 2012 Plan. During the year ended November 30, 2012, the Company issued options under the 2012 Plan.
The estimated fair value of stock options and warrants on the grant date is amortized on a straight line basis over the requisite service period. During the years ended November 30, 2012 and 2011, stock based compensation was $ and $, respectively.
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In February 2010, the Company entered into a few option agreements for the issuance of options relating to various consulting agreements. The Company is obligated to issue to consultants in one agreement options that vest evenly over a 3-month period of time at a $ exercise price. The Company who is receiving the options has agreed to reduce their invoices by the cash required to exercise the options. These options expired in February 2011.
In
another agreement entered into in February 2010, the Company is obligated to issue options evenly over a 6-month period of time
at a $ exercise price. The Company expensed the fair value of these options ($
On August 25, 2008 and October 30, 2008, the Company issued a total of stock options to two consultants. Of these options, vested upon issuance and the remaining options vest March 4, 2009. These options have a -year life and are exercisable at $. These options were issued in the money as the market value of the underlying shares was $ and $, respectively.
The fair value of these options were determined to be the intrinsic value at the date of issuance, or $ ($ per share) and $ ($ per share) on August 25, 2008 and October 30, 2008, respectively. Additionally, the Company did not receive the total required option payments of $ ( options at $).
The Company has expensed the entire amount due to the uncertainty of the collectability of this amount. Of the options, there were options that remained unexercised, however expired in May 2012.
Warrants
The
Company entered into private placement agreements with various individuals through November 30, 2010 for the issuance of shares
of common stock along with warrants. The Company received the proceeds of $
- %; volatility- %. The warrants were issued in November 2010.
The
Company entered into private placement agreements with various individuals for the issuance of shares of common stock along
with warrants. The Company received the proceeds of$
NOTE 9 - PROVISION FOR INCOME TAXES
Deferred income taxes are determined using the liability method for the temporary differences between the financial reporting basis and income tax basis of the Company’s assets and liabilities. Deferred income taxes are measured based on the tax rates expected to be in effect when the temporary differences are included in the Company’s tax return. Deferred tax assets and liabilities are recognized based on anticipated future tax consequences attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax bases.
NOTE 10 - FAIR VALOE MEASUREMENTS
On January 1, 2008, the Company adopted ASC 820. ASC 820 defines fair value, provides a consistent framework for measuring fair value under generally accepted accounting principles and expands fair value financial statement disclosure requirements. ASC 820’s valuation techniques are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect our market assumptions. ASC 820 classifies these inputs into the following hierarchy:
Level 1 inputs: Quoted prices for identical instruments in active markets.
Level 2 inputs: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.
Level 3 inputs: Instruments with primarily unobservable value drivers.
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NOTE 11 - CONCENTRATION OF CREDIT RISK
On
August 31, 2011, $
NOTE 12 - SALE OF VALTECH/ DISPOSITION OF SUBSIDIARY
Effective
March 7, 2012, the Company completed the acquisition of the Buildablock Assets. In connection with the completion of the acquisition,
the Company effected a reverse stock split of the Company’s outstanding shares of common stock, par value $, on a one-for-eight
(
In addition on April 13, 2012, the Board of Directors approved the sale ofValtech back to some or all of the original shareholders ofValtech for $. This sale occurred on April 30, 2012.
As a result of this sale, the Company on April 13, 2012, became a development stage company, as it continues the development of its social networking platform under the “Buildablock” name.
As a result of this transaction, the Company’s financial statements have been prepared with the results of operations and cash flows of this disposed entity shown as discontinued operations. All historical statements have been restated in accordance with GAAP.
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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Back to Table of Contents
Not applicable.
ITEM 9A. CONTROLS AND PROCEDURES Back to Table of Contents
Evaluation of Disclosure Controls and Procedures
Evaluation of disclosure controls and procedures. As of November 30, 2011, the Company’s chief executive officer/chief financial officer conducted an evaluation regarding the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d- 15(e) under the Exchange Act. Based upon the evaluation of these controls and procedures, our chief executive officer/chief financial officer concluded that our disclosure controls and procedures were effective as of the end of the fiscal year 2011.
Management’s Annual Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting and for the assessment of the effectiveness of those internal controls. As defined by the SEC, internal control over financial reporting is a process designed by our principal executive officer/principal financial officer, who is also the sole member of our Board of Directors, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the financial statements in accordance with U.S. generally accepted accounting principles.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management has assessed the effectiveness of our internal control over financial reporting as of November 30, 2011. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control- Integrated Framework. Based on our assessment and those criteria, we have concluded that our internal control over financial reporting was effective as of November 30, 2011.
This annual report does not include an attestation report of the company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only Management’s report in this annual report.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting or in other factors identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during the fourth quarter ended November 30, 2011 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION Back to Table of Contents
None.
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT AND CORPORATE GOVERNANCE Back to Table of Contents
| Name | Age | Title | ||
| Gary Oberman | 51 | President and Director | ||
| Bartek Bulzak | 37 | Chief Technical Officer, Secretary and Director |
Officers are not elected for a fixed term of office but hold office until their successors have been elected.
Gary Oberman. Prior to launching Buildablock as President and CEO, Mr. Oberman served as CEO ofWCCL Networks, a private company and an online book publisher with a large network of commercial websites and publishers of proprietary products that serve popular niches, including the self-help or self-improvement arenas. Mr. Oberman was instrumental in establishing WCCL as one of the largest providers of online self-help content for the Internet, with approximately 1,000,000 in paid Internet downloads. WCCL also owns and operates numerous forums and online radio stations in multiple markets with a network-wide affiliate program consisting of more than 19,000 affiliates, and publishes several online newsletters for each niche with over 400,000 subscribers. From 2002 to 2007, Mr. Oberman served as the COO and co-founder of Budget Conferencing, Inc., a conference calling company. As co-founder, Mr. Oberman maintained the company’s operational growth and prepared for its eventual multi-million dollar sale to Premiere Conferencing, Inc., a $1.2 billion publicly-traded corporation.
Bartek Bulzak. Prior to co-founding Buildablock with Mr. Oberman, Mr. Bulzak served in the role of Chief Technical Officer for Budget Conferencing, Inc., an industry leader and pioneer of online and offline teleconferencing solutions. Mr. Bulzak has created highly innovative conferencing bridges and holds numerous patents in the field of high tech communications. In 2007, in connection with the sale of Budget Conferencing to Premiere Global, a billion dollar multinational company, Mr. Bulzak was appointed to the role of chief transition engineer where he took a lead position ensuring that Premier’s acquisition of Budget Conferencing was accomplished in an efficient and cost-effective manner. Mr. Bulzak’s extensive experience in the design and development of integrated VOiP multimedia communications has enabled his development of multiple online inventions including various proprietary phone-based authentication systems. Mr. Bulzak also has extensive experience in the design and development of scalable e-commerce solutions, high availability cloud-based computing and Payment Card Industry (PCI) Data Security Standards (DSS) compliance. Mr. Bulzak was co-founder of Infinite Loop Inc., a turn-key “paper to PDF” document management software provider which was acquired by William Resources Inc.
We have not adopted a code of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions.
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ITEM 11. EXECUTIVE COMPENSATION Back to Table of Contents
The following table contains the executive compensation to the chief executive officer of the Company for the periods set forth below.
| Summary Compensation Table | ||||||||||||||||||||||||||||
| Annual Compensation | Long Term Compensation Awards | |||||||||||||||||||||||||||
| Salary | Bonus | Other Annual Compensation | Restricted Stock Award(s) | Securities Underlying Options | All Other Compensation | |||||||||||||||||||||||
| Name and Principal Position | Year | ($) | ($) | ($) | ($) | ($) | ($) | |||||||||||||||||||||
| Rene Arbic, CEO | 2012 | * | * | * | * | * | * | |||||||||||||||||||||
| 2011 | 50,770 | — | — | — | — | 50,770 | ||||||||||||||||||||||
| 2010 | 80,000 | — | — | — | — | 80,000 | ||||||||||||||||||||||
| 2009 | 63,744 | — | — | — | — | 63,744 | ||||||||||||||||||||||
| Alex Kestenbaum, CFO | 2011 | — | — | — | — | — | — | |||||||||||||||||||||
| 2010 | — | — | — | — | — | — | ||||||||||||||||||||||
| 2009 | — | — | — | — | — | — | ||||||||||||||||||||||
Rene Arbic became Chief Executive Officer of the Registrant on June 2, 2008. He entered into a one year employment agreement to serve as President of the Registrant’s subsidiary, Valtech, on October 1, 2006 which agreement has been extended and is still in full force. He receives no compensation for serving as President of the Registrant.
Alex Kestenbaum became Chief Financial Officer, Treasurer and Secretary on June 2, 2008 of the Registrant and Chief Financial Officer of Valtech, its subsidiary. He has not entered into a contract with the Registrant and receives no compensation for acting as an officer or director of the Registrant nor for his services to Valtech.
*Amount of compensation is unknown for period ending November 31, 2012.
Outstanding Equity Awards at Fiscal Year-End Table.
As of November 30, 2012, there were no outstanding equity awards for the directors and executive officers of the Company.
Other Compensation.
The Company has no plans that provide for the payment of retirement benefits, or benefits that will be paid primarily following retirement. In addition, there are no contracts, agreements, plans or arrangements that provide for payments to our executive officer in connection with the resignation, retirement or other termination of our executive officer, or a change in control of the Registrant.
Compensation of Directors.
The Company’s board members receive no remuneration.
Director Independence.
The Registrant does not have a nominating committee, compensation committee or executive committee of the board of directors, stock plan committee or any other committees. The Registrant currently has no independent directors.
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS Back to Table of Contents
The table below discloses any person (including any “group”) who is known to the Registrant to be the beneficial owner of more than five (5%) percent of the Registrant’s common stock. As of November 30, 2011, the Registrant had 68,477,765 shares of common stock issued.
| Title of Class | Name and Address of Beneficial Owner | Amount and Nature of Beneficial Owner (1) | Percent of Class (1) | |||||
| Common Stock | Gary Oberman 382 NE 191st Street, #83251 Miami, Florida 33179 | 4,377,742 shares | 16.63 | % | ||||
| Common Stock | Gary Oberman 382 NE 191st Street, #83251 Miami, Florida 33179 | 4,377,742 shares | 16.63 | % | ||||
| Common Stock | All officers and directors as a group (2 people) | 8,755,484 shares | 33.26 | % | ||||
(1) Based on 26,329,383 shares outstanding, including 2,391,404 unissued shares that underlie the currently convertible portion of a debt instrument and outstanding warrants.
None of the above shareholders has the right to acquire additional Shares. Unless otherwise noted below, we believe that all persons named in the table have sole voting and investment power with respect to all shares of common stock beneficially owned by them.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE Back to Table of Contents
As of November 30, 2011, the four principal shareholders of the Company had advanced $1,874,681 to the Company for working capital purposes. These loans bear interest at an annual rate of 10% for individual amounts exceeding $150,000 (CDN$) ($141,870 (US$)). The loans have no specific terms of repayment and are unsecured. Interest expense for the years ended November 30, 2011 and 2010 were $131,402 and $120,775, respectively. Accrued interest on these loans as of November 30, 2011 and 2010 was $285,354 and $157,075, respectively.
As of November 30, 2010, the four principal shareholders of the Company had advanced $1,697,980 to the Company for working capital purposes. These loans bear interest at an annual rate of 10% for individual amounts exceeding $150,000 (CDN$) ($141,870 (US$)). The loans have no specific terms of repayment and are unsecured. Interest expense for the years ended November 30, 2010 and 2009 were $120,775 and $30,879, respectively. Accrued interest on these loans as of November 30, 2010 and 2009 was $157,075 and $34,597, respectively.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES Back to Table of Contents
Independent Public Accountants
The Registrant’s Board of Directors has appointed KBL, LLP, which firm has issued its report on our consolidated financial statements for the years ended November 30, 2011 and 2010.
Principal Accounting Fees
The following table presents the fees for professional audit services rendered by KBL, LLP for the audit of the Registrant’s annual financial statements for the years ended November 30, 2011 and 2010, and fees billed for other services rendered by KBL, LLP during those periods.
| Year Ended | ||||||||
| November 30, 2012 | November 30, 2011 | |||||||
| Audit fees (1) | $ | 0 | $ | 31,000 | ||||
| Audit-related fees (2) | N/A | N/A | ||||||
| Tax fees (3) | N/A | N/A | ||||||
| All other fees | N/A | N/A | ||||||
(1) Audit fees consist of audit and review services, consents and review of documents filed with the SEC.
(2) Audit-related fees consist of assistance and discussion concerning financial accounting and reporting standards and other accounting issues.
(3) Tax fees consist of preparation of federal and state tax returns, review of quarterly estimated tax payments, and consultation concerning tax compliance issues.
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Section 16(a) Compliance
Section 16(a) of the Securities and Exchange Act of 1934 requires the Registrant’s directors and executive officers, and persons who own beneficially more than ten percent (10%) of the Registrant’s Common Stock, to file reports of ownership and changes of ownership with the Securities and Exchange Commission. Copies of all filed reports are required to be furnished to the Registrant pursuant to Section 16(a). Based solely on the reports received by the Registrant and on written representations from reporting persons, the Registrant was informed that the following officers, directors and 10% sharehoders have not filed reports required under Section 16(a): Rene Arbic, Alex Kenstenbaum, Peter Varadi and Morden Lazarus .
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES Back to Table of Contents
(a) The following documents are filed as exhibits to this report on Form 10-K or incorporated by reference herein. Any document incorporated by reference is identified by a parenthetical reference to the SEC filing that included such document.
| (1) | Filed as an exhibit to the registration statement on Form SB-2 and hereby incorporated by reference. |
| (2) | Filed as an exhibit to Amendment No. 2 to the Registration statement on Form SB-2 and hereby incorporated by reference. |
| (3) | Filed as an exhibit to the Annual Report on Form 10-KSB for the fiscal year ended November 30, 2006 and hereby incorporated by reference. |
| (4) | Management contract or compensatory plan or arrangement. |
| (5) | Filed as an exhibit to Form S-8 filed April 2, 2008 and hereby incorporated by reference. |
| (6) | Filed as an exhibit to Form 8K dated June 3, 2008 hereby incorporated by reference. |
| (7) | Referenced on Form 8K dated August 12, 2008 hereby incorporated by reference. |
| (8) | Filed as an exhibit to the Company’s annual report on Form 10-K for the year ended November 30, 2008. |
| (9) | Filed herewith. |
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SIGNATURES Back to Table of Contents
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Buildablock Corp. | ||
| (Registrant) | ||
| Dated: November 30, 2023 | By: | /s/ Ben W. Quick |
| Chief Executive Officer, Chief Financial Officer, and Director (Principal Executive Officer and Principal Financial Officer) |
DISCLAIMER
The management signing the above financial statements was not employed by the Company nor Board members for the financial periods listed above. The current Board of Directors in the best interests of the Shareholders chooses to file the necessary reporting obligations as a Voluntary Reporting Company. These financial reports are prior to the filing of the FORM 15 dated October 4, 2013, with the SEC. The information is to the best of managements knowledge and efforts at the time of the filing.
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