UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
(Mark
One)
|
x
|
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For the
fiscal year ended:
December 31,
2009
Or
|
¨
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
Commission
File No. 333-140378
WEBSAFETY,
INC.
(Exact
name of small business issuer as specified in its charter)
|
Nevada
|
20-5150818
|
|
|
(State
or other jurisdiction of incorporation or
organization)
|
(I.R.S.
Employer Identification
No.)
|
2201
W. Royal Lane, Suite 200, Irving, Texas 75063
(Address
of Principal Executive Offices)
(214)
716-6909
(Issuer’s
telephone number)
Blindspot
Alert, Inc.
1
Hampshire Court, Newport Beach, California 92660
(Former
name, former address and former fiscal year, if changed since last
report)
Securities
registered under Section 12(b) of the Exchange Act:
None
Securities
registered under Section 12(g) of the Exchange Act:
Common
stock $.001 par value
(Title of
class)
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.
Yes
¨
No
x
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or 15(d) of the Act.
Yes
¨
No
x
Indicate
by check mark whether issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90
days. Yes
x
No
¨
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Website, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter( during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). Yes
¨
No
x
Indicate
by check mark if disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained herein, and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
¨
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting
company. See definition of “large accelerated filer”, “accelerated
filer”, and “small reporting company” in Rule 12b-2 of the Exchange
Act. (check one)
Large
accelerated filer: .
¨
Accelerated
filer:
¨
Non-accelerated
filer: .
¨
Small
reporting company: .
x
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes
¨
No
x
State
issuer's revenues for its most recent fiscal year: $33,472
The
aggregate market value of the voting and non-voting common equity held by
non-affiliates (affiliates being, for these purposes only, directors, executive
officers and holders of more than 5% of the registrant’s common
stock): $29,412,089 based on 15,480,047 non-affiliate shares
outstanding at $1,90 per share. No bid price was quoted during the
most recently completed fiscal quarter ending September 30, 2010.
As of
April 14, 2010, there were 64,380,047 shares of common stock, $0.001 par value,
outstanding.
Documents
incorporated by reference:
None.
Forward
Looking Statements
This
report contains “forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995 with respect to the financial
condition, results of operations, business strategies, operating efficiencies or
synergies, competitive positions, growth opportunities for existing products,
plans and objectives of management, markets for stock of Websafety, Inc.
formerly known as (“fka”) Blindspot Alert, Inc. (the “Company”) and other
matters. Statements in this report that are not historical facts are
“forward-looking statements” for the purpose of the safe harbor provided by
Section 21E of the Securities Exchange Act of 1934, as amended, (the “Exchange
Act”) and Section 27A of the Securities Act of 1933, as amended. Such
forward-looking statements, including, without limitation, those relating to the
future business prospects, revenues and income of Websafety, Inc. fka Blindspot
Alert, Inc., wherever they occur, are necessarily estimates reflecting the best
judgment of the senior management of Websafety, Inc. fka Blindspot Alert, Inc.
on the date on which they were made, or if no date is stated, as of the date of
this report. These forward-looking statements are subject to risks,
uncertainties and assumptions, including those described in the “Risk Factors”
described below, that may affect the operations, performance, development and
results of our business. Because the factors discussed in this report could
cause actual results or outcomes to differ materially from those expressed in
any forward-looking statements made by us or on our behalf, you should not place
undue reliance on any such forward-looking statements. New factors emerge from
time to time, and it is not possible for us to predict which factors will arise.
In addition, we cannot assess the impact of each factor on our business or the
extent to which any factor, or combination of factors, may cause actual results
to differ materially from those contained in any forward-looking
statements.
You
should understand that the following important factors, in addition to those
discussed in the “Risk Factors” section could affect our future results and
could cause those results to differ materially from those expressed in such
forward-looking statements:
• general
economic conditions;
• the
effectiveness of our planned advertising, marketing and promotional
campaigns;
• anticipated
trends and conditions in the industry in which we operate, including regulatory
changes;
• our
future capital needs and our ability to obtain financing; and
• other
risks and uncertainties as may be detailed from time to time in our public
announcements and filings with the Securities and Exchange Commission
(“SEC”).
Although
we believe that our expectations are reasonable, we cannot assure you that our
expectations will prove to be correct. Should any one or more of these risks or
uncertainties materialize, or should any underlying assumptions prove incorrect,
actual results may vary materially from those described in this report as
anticipated, believed, estimated, expected or intended.
Except to
the extent required by law, we undertake no obligation to publicly update or
revise any forward-looking statements, whether as a result of new information,
future events or any other reason. All subsequent forward-looking statements
attributable to us or any person acting on our behalf are expressly qualified in
their entirety by the cautionary statements contained or referred to herein. In
light of these risks, uncertainties and assumptions, the forward-looking events
discussed in this report may not occur.
2
TABLE
OF CONTENTS
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PAGE
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PART I
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Item
1:
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Business
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4
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Item
1A:
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Risk
Factors
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5
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Item
1B:
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Unresolved
Staff Comments
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7
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Item
2:
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Properties
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7
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Item
3:
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Legal
Proceedings
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7
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Item
4:
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Submission
of Matters to a Vote of Security Holder
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7
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PART II
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Item
5:
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Market
for Registrant’s Common Equity. Related Stockholder Matters and Issuer
Purchases of Equity
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8
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Item
6:
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Selected
Financial Data
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8
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Item
7.
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Management’s
Discussion and Analysis of Financial Condition and Results of
Operation
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9
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Item
7A:
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Quantitative
and Qualitative Disclosures about Market Risk
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11
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Item
8:
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Financial
Statements and Supplementary Data
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11
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Item
9.
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Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosures
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12
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Item
9A(T)
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Controls
and Procedures
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12
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Item
9B
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Other
Information
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13
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Part III
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|||
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Item
10:
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Directors,
Executive Officers and Corporate Governance
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13
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Item
11.
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Executive
Compensation
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15
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Item
12: Item 12.
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Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
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15
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Item
13:
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Certain
Relationships and Related Transactions, and Director
Independence
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15
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Item
14:
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Principal
Accounting Fees and Services
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16
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Part IV
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Item
15:
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Exhibits,
Financial Statement Schedules
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17
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Exhibit
31.1
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Exhibit
31.2
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Exhibit
32.1
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Exhibit
32.2
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3
Business
Development
We were
incorporated on July 3, 2006 in the State of Nevada under the name Promotions on
Wheels Holdings, Inc. We changed our name to Blindspot Alert, Inc. on
December 12, 2008 and to Websafety, Inc. on September 11, 2009. The
Company was originally a developmental stage company with a principal business
objective of offering live promotions and marketing events utilizing unique
custom built mobile displays. On July 21, 2008, we discontinued that
business.
On June
30, 2008, the Company entered into a License Agreement (“License”) with WQN,
Inc., a Texas corporation (“WQN”), which, in consideration for the sum of
$300,000 granted the Company the right to market and sell WQN’s Websafety
software products. The License covered software products that had
been developed by WQN and granted the Company an exclusive right for a period of
12 months to market and sell the software products through the Home Shopping
Network, QVC, Inc., CVS Pharmacy, WalMart, and Walgreens and the non
exclusive right to market and sell the software products
worldwide.
The
License provided for the Company to retain 65% of all revenue received from the
sale of CYBERSAFETY software and to pay 35% of all revenue to the Licensor,
WQN. The License Agreement required Licensor to provide Company
technical and customer support and required Licensor to provide Company with all
future updates of the software.
On July
2, 2009 the Company entered into an asset acquisition agreement with WQN, Inc.
Under the agreement we acquired all of the technology known as Websafety
Technology for approximately 27,000,000 shares of our common stock.
Consequently, the Company no longer has any royalty commitments to WQN under the
June 30, 2008 license agreement.
Management
believes that our products are a timely solution to many of the dangers that
come with the unprecedented access to information and people that is provided by
the internet and cell phones provide.
From June
2008 through December 31, 2009 we refined our website and we commenced revenue
activity in the fourth quarter of 2009. We also intend to market our
products and services through relationships developed with “trusted” sources
consisting of child protection advocacy groups including church, school and
civic organizations. We intend to also explore opportunities to enter into
strategic revenue sharing partnerships with companies having synergy with our
products. These partners may include auto insurers and cell phone
manufacturers.
Business
of Issuer
We focus
on marketing, selling, and distributing a range of Internet software
applications and services for computers and cell phones worldwide. These
software applications allow parents or other caregivers to monitor and be
notified of occurrences of predator advances, cyber bullying, and pornography
received on children’s computers; and cell phone applications that restrict text
messaging while driving and provide location information to parents using GPS
technology. We intend to market our software products under the
WEBSAFETY/CELLSAFETY brand name and the no texting and driving application under
the Blindspot Wireless brand name.
Since our
inception on July 3, 2006 through the end of third quarter of 2009, we have
generated a minimal amount of revenue and have incurred a cumulative net loss of
$2,572,257. During the fourth quarter of 2009, Management determined
that significant revenues have been reached to bring us out of the development
stage. However, we believe that we must raise additional capital of
at least $1,440,000 through the sale of equity for us to sustain operations
through the next twelve (12) months. This amount of capital has been
budgeted to establish our infrastructure and marketing and sales
campaign. We believe that the recurring revenues from sales of
software products eventually will be sufficient to support ongoing
operations. We can provide no assurance that the actual expenses we
incur will not materially exceed our estimates or that cash flow from sales will
be adequate to maintain our business. As a result, our independent
auditors have expressed substantial doubt about our ability to continue as a
going concern as noted in the independent auditor’s report to the financial
statements included in this report.
4
We
currently have a total of ten employees including our Chief Operating
Officer. Our Chief Financial Officer and Chief Executive
Officer/Director works for us on a part-time basis. We also have
three other Directors.
The
Company was organized during 2006 and is at an early stage of operation and has
no substantial revenue. The Company devotes its full resources toward
marketing, selling and distributing the software products. The
Company began receiving revenue from sales of software products during the
fourth quarter of 2009. The Company will need to generate significant
revenues to overcome an accumulated deficit and obtain profitability. The
Company may never achieve profitability. If revenues grow more slowly than
anticipated, or if operating expenses exceed expectations the Company’s
business, results of operations, and financial condition could be materially
adversely affected.
RISKS
RELATING TO OUR BUSINESS
THE
COMPANY HAS A LIMITED OPERATING HISTORY AND FACES SIGNIFICANT RISKS AND
CHALLENGES IN BUILDING THE BUSINESS
As a
result of the Company’s limited operating history, to achieve profitability, the
Company must successfully and timely market and sell its software products.
Although the Company has very concrete and specific marketing and sales programs
to be implemented, the Company cannot guarantee the success of such programs and
alternately, more expensive marketing and sales programs may need to be
implemented. Additionally, although the Company believes that a
strong market exists for the software products, the Company has conducted no
scientific, reliable market surveys but has only performed its own research and
due diligence to ascertain the security concerns of parents and others
responsible for the safety of children. A more scientific analysis
could prove that no market exists for the software products that the Company
intends to market and sell; or, if the market exists, the Company may not be
able to reach the market with the Company’s limited financial resources and
marketing budget. There can be no assurance that the Company will be able to
successfully generate revenues. The Company has no significant
historical basis to assess how it might respond to competitive, economic,
regulatory, or technological challenges. The Company’s business must
be considered in light of the risks and uncertainties frequently encountered by
companies in the very early stages of operations, particularly companies that
operate in new and rapidly developing industries and
marketplaces. The Company’s failure to adequately address these risks
and uncertainties and rapidly respond to adverse developments as they occur
could materially impact the Company’s ability to achieve profitability and, if
profitability is achieved, to sustain a level of operations that will cause
profitability to be sustained. Although the Company intends to hire
numerous people to implement the business of the Company, there is no assurance
that the Company will hire the right people or that future changes will not have
to be made to find the right people to implement the Company’s business
strategy. There is no assurance that the Company’s business strategy
or marketing plans will achieve success.
THE
COMPANY’S RELIANCE ON THE CAPABILITIES OF THE SOFTWARE PRODUCTS
The
Company is heavily dependent upon the capabilities of the software products. The
failure of the software to accomplish the objectives as represented will damper
if not destroy the Company’s marketing.
COMPANY’S
RELIANCE UPON EXECUTIVES AND CONSULTANTS
The
Company’s success is highly dependent upon executive officers and key
consultants identified in this report for critical management decisions and to
implement and pursue the Company’s business and marketing plan. A
loss of any of the executives or consultants through incapacity or for any other
reason could materially adversely impact the ability of the Company to complete
its business and marketing plan and would require the Company to seek the
assistance of other qualified personnel who may not be
available.
5
CHALLENGES
FROM COMPETITION
Although
the Company is unaware of an available product that contains all the
characteristics, features and capabilities of its software products, in the
dynamic, ever changing field of technology, many companies of all sizes and
capabilities are constantly engaged in software
development. With the notoriety given to child molesters, pedophiles
and others causing harm and sometimes death to children, a reasonable assumption
is that many companies are currently engaged in software development activities
that will possess many of the characteristics and capabilities possessed by the
software. In the event another company successfully develops and
markets a competitive product before the Company can establish a significant
presence in its target markets, the Company may never be able to achieve a level
of revenue to sustain the Company’s operations.
RISKS
RELATED TO OUR COMMON STOCK
IF
A MARKET FOR OUR COMMON STOCK DOES NOT DEVELOP, OUR STOCKHOLDERS MAY BE UNABLE
TO SELL THEIR SHARES.
There is
currently a limited market for our common stock and we can provide no assurance
that a more liquid market will develop. If a liquid market does not develop for
our shares, it will be difficult for stockholders to sell their
stock. In such a case, stockholders may find that they are unable to
achieve benefits from their investment.
IF
A MARKET FOR OUR COMMON STOCK DEVELOPS, OUR STOCK PRICE MAY BE
VOLATILE.
If a
market for our common stock develops, the price at which our common stock will
trade may be highly volatile and may fluctuate as a result of a number of
factors, including the number of shares available for sale in the market,
quarterly variations in our operating results, actual or anticipated
announcements of new data, studies, products or services by us or competitors,
regulatory investigations or determinations, acquisitions or strategic alliances
by us or our competitors, recruitment or departures of key personnel, the gain
or loss of significant customers, changes in the estimates of our operating
performance, market conditions in our industry and the economy as a
whole.
APPROXIMATELY
42% OF OUR COMMON STOCK IS CONTROLLED BY A SINGLE STOCKHOLDER WHO HAS THE
ABILITY TO SUBSTANTIALLY INFLUENCE THE ELECTION OF DIRECTORS AND THE OUTCOME OF
MATTERS SUBMITTED TO STOCKHOLDERS.
As of
April 14, 2010, WQN, Inc. directly owns 27,000,000 shares, which represents
approximately 42% of our 64,380,047 shares of outstanding common
stock. As a result, WQN presently and is expected to continue to have
the ability to substantially influence the outcome of issues submitted to our
stockholders. The interests of this stockholder may not always
coincide with our interests or the interests of other stockholders, and it may
act in a manner that advances its best interests and not necessarily those of
other stockholders. One consequence of this substantial stockholder’s
interest is that it may be difficult for investors to remove management of the
Company. It could also deter unsolicited takeovers, including
transactions in which stockholders might otherwise receive a premium for their
shares over then current market prices.
INVESTORS’
INTERESTS IN OUR COMPANY WILL BE DILUTED AND INVESTORS MAY SUFFER DILUTION IN
THEIR NET BOOK VALUE PER SHARE IF WE ISSUE ADDITIONAL SHARES OR RAISE FUNDS
THROUGH THE SALE OF EQUITY SECURITIES.
In the
event that we are required to issue any additional shares or enter into private
placements to raise financing through the sale of equity securities, investors’
interests in our Company will be diluted and investors may suffer dilution in
their net book value per share depending on the price at which such securities
are sold. If we issue any such additional shares, such issuances also
will cause a reduction in the proportionate ownership and voting power of all
other stockholders. Further, any such issuance may result in a change
in our control.
WE
HAVE NEVER PAID CASH DIVIDENDS AND DO NOT INTEND TO DO SO.
We have
never declared or paid cash dividends on our common stock. We
currently plan to retain any earnings to finance the growth of our business
rather than to pay cash dividends. Payments of any cash dividends in
the future will depend on our financial condition, results of operations and
capital requirements, as well as other factors deemed relevant by our board of
directors.
6
WE
NEED ADDITIONAL FINANCING
We will
need additional financing to maintain and expand the business, and such
financing may not be available on favorable terms, if at all. We
intend to finance our business through the private placement and public offering
of equity and debt securities. If we need funds and cannot
raise them on acceptable terms, we may not be able to execute our business plan,
and our shareholders may lose substantially all of their
investment.
TERRORIST
ATTACKS, CONTINUED WAR OR OTHER CIVIL DISTURBANCES COULD LEAD TO FURTHER
ECONOMIC INSTABILITY AND ADVERSELY AFFECT OUR BUSINESS
On
September 11, 2001, the United States was the target of terrorist attacks of
unprecedented scope. The United States is currently engaged in a war
in Iraq and Afghanistan. These attacks and these wars have caused
instability in the marketplace and contributed to a downturn in the global
economy. In the future, there may be armed hostilities, continued
wars, further acts of terrorism and civil disturbances in the United States or
elsewhere, which may further contribute to economic instability in the United
States. Such disturbances could have a material adverse effect on our
business, financial condition and operating results.
On
September 29, 2009, we received comments from the SEC on our Form 10-K for the
year ended December 31, 2008. We responded to all of the comments on November
20, 2009. On January 21, 2010, we received follow-up comments from
the SEC regarding our Form 10-K for the year ended December 31,
2008. We responded to the SEC’s latest comments on April 8,
2010.
As of
March 22, 2010, we entered into a five year lease agreement for 5,502 square
feet of corporate office space located in Irving, Texas. The total
lease payment will be $472,255 over the five year period beginning May 1, 2010
and expiring on April 30, 2015. Total annual lease payments are
$70,609 in the first year, $96,285 in the second year, $99,036 in the third
year, $101,787 in the fourth year and $104,538 in the fifth year. We
expect this space to meet our needs for the foreseeable future.
From time
to time we may be a defendant or plaintiff in various legal proceedings arising
in the normal course of our business. Except as set forth below, we
are currently not a party to any legal proceeding that we believe could have a
material adverse effect on our business, financial condition or operating
results. On August 25, 2009, the Company terminated its
President, Clifton Jolley for cause. In late October 2009, the
Company and Mr. Jolley agreed to go to arbitration which the Company believes
should commence by the end of the third quarter of 2010.
None.
7
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ITEM 5.
|
MARKET FOR
REGISTRANT’S COMMON EQUITY. RELATED STOCKHOLDERS MATTERS AND
ISSUERPURCHASE OF EQUITY
SECURITIES
|
Market
Information
Our
common stock is quoted on the OTCBB under the symbol “WBSI”. The
following table shows the high and low bid prices of our common stock, as quoted
on the OTCBB, by quarter during our last fiscal year when trading
began. These quotes reflect inter-dealer prices, without retail
markup, markdown or commissions and may not represent actual
transactions.
|
High
|
Low
|
|||||||
|
1
st
Quarter (through March 31, 2010)
|
$
|
1.90
|
$
|
0.90
|
||||
|
Year
Ended December 31, 2009
|
||||||||
|
1
st
Quarter
|
$
|
1.60
|
$
|
0.55
|
||||
|
2
nd
Quarter
|
1.60
|
0.10
|
||||||
|
3
rd
Quarter
|
1.00
|
0.10
|
||||||
|
4
th
Quarter
|
1.00
|
1.00
|
||||||
|
Year
Ended December 31, 2008
|
||||||||
|
1
st
Quarter
|
$
|
0.00
|
$
|
0.00
|
||||
|
2
nd
Quarter
|
0.00
|
0.00
|
||||||
|
3
rd
Quarter
|
0.35
|
0.15
|
||||||
|
4
th
Quarter
|
0.55
|
0.50
|
||||||
Holders
As of
April 14, 2010, there were approximately 45 holders of record of our common
stock. This number does not include beneficial owners of common stock
whose shares are held in the names of various dealers, clearing agencies, banks,
brokers and other fiduciaries.
Dividends
We have
never declared or paid any dividends. We anticipate, as our board of
directors deems appropriate, that we will continue to retain all earnings for
use in our business.
Securities
Authorized For Issuance Under Equity Compensation Plans
During
2009 we issued 3,810,000 shares for services and agreed to issue an additional
328,000 shares for services that were issued on January 6, 2010. We
also issued 27,000,000 shares to WQN, Inc. for the purchase of Websafety
Technology. On January 8, 2010, we granted common stock options for
services consisting of 500,000 options to David Sasnett, a member of the Board
of Directors, 900,000 options to Travis Bond, the Chief Operating Officer of the
Company, and 7,000,000 shares to Rowland Day, the Chief Executive Officer and a
member of the Board of Directors.
We are a
smaller reporting company as defined in 17 CFR229.10(f)(I) and are not required
to provide information required by this item, per Item 301 of Regulation S-K (17
CFR 229.201)
8
|
ITEM 7.
|
MANAGEMENT’S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OFOPERATIONS
|
Plan
of Operations
Websafety,
Inc. has the objective of marketing and selling through the internet a range of
software applications and services for computers and cell phones that allow
parents or other caregivers to monitor and be notified of occurrences of
predator advances, cyber bullying and pornography received on children’s
computers. The cell phone application also restricts text messaging while
driving and provides location information to parents through the use of GPS
technology. In June 2008 the Company acquired for $300,000 a worldwide non
exclusive license that permits the Company to sell the proprietary software that
identifies the threats from predators, cyber bullies and transmitters of
pornography. The license also allows for selective exclusivity within certain
markets.
On July
2, 2009 the Company entered into an asset acquisition agreement with WQN, Inc.
Under the agreement we acquired all of the technology known as Websafety
Technology for approximately 27,000,000 shares of our common stock.
Consequently, the Company no longer has any royalty commitments to WQN under the
June 30, 2008 license agreement.
Since our
inception on July 3, 2006 through the end of the third quarter of 2009, we have
generated a minimal amount of revenue. During the fourth quarter of
2009. Management determined that sufficient revenues have been
reached to bring us out of the Development Stage. As such, 2010 will
be the first fiscal year the Company will be fully operational. We
also intend to market the products and services by developing relationships with
“trusted” sources consisting of child protection advocacy groups including
church, school and civic organizations. We intend to also explore
opportunities to enter into strategic revenue sharing partnerships with
companies having synergy with our products. These partners may
include auto insurers and cell phone manufacturers.
In 2009,
we raised $834,000 in new equity funding through the sale of common and
preferred stock, the proceeds of which are being used to implement our plan of
operations. As of December 31, 2009, we have invested an additional $122,815 to
further develop Websafety Technology in pursuit of our marketing plan to
establish brand identity with the Websafety name.
Results
of Operations
For the
year ended 2009 we sustained a net operating loss of $1,927,449 as compared to a
loss of $437,656 for the same twelve month period ended December 31,
2008. In 2009 we had revenues of $33,472 contrasted to 2008 in which
we had no revenues.
The table
below highlights on a line item basis the significant elements of expense during
the two periods that constituted the preponderance of expense
incurred.
|
|
Years Ended December 31,
|
Difference Over
|
||||||||||
|
Expense Category
|
2009
|
2008
|
(Under) 2008
|
|||||||||
|
General
and Administrative:
|
||||||||||||
|
Payroll
|
$
|
179,121
|
S
|
35,164
|
$
|
143,957
|
||||||
|
Insurance
D&O
|
14,562
|
13,500
|
1,062
|
|||||||||
|
Accounting
|
54,709
|
34,125
|
20,584
|
|||||||||
|
Consulting/Contract
|
334,836
|
87,500
|
247,336
|
|||||||||
|
Legal
|
219,943
|
110,242
|
109,701
|
|||||||||
|
Marketing/Website
|
101,906
|
89,094
|
12,812
|
|||||||||
|
Travel
|
63,104
|
46,485
|
16,619
|
|||||||||
|
Commissions
|
54,320
|
-
|
54,320
|
|||||||||
|
Office
Expense & Telephone
|
31,087
|
2,019
|
29,068
|
|||||||||
|
Rent
|
20,061
|
-
|
20,061
|
|||||||||
|
Option
Compensation Expense
|
16,331
|
-
|
16,331
|
|||||||||
|
Other
|
37,707
|
15,289
|
22,418
|
|||||||||
|
Totals
|
$
|
1,127,687
|
$
|
433,418,
|
$
|
694,269
|
||||||
9
In 2009
the Company closed on an asset acquisition agreement with WQN, Inc. Under the
agreement we acquired all of the technology known as Websafety Technology. This
asset purchase, combined with launch of our software products has resulted in a
significant increase in payroll, accounting, legal, consulting and marketing
costs as compared to 2008. We began our initial operations in the fourth quarter
of 2009 and intend on becoming fully operational in 2010, which would result in
increased revenue generation and an expansion of marketing and administrative
activities.
Liquidity
As noted
previously, through December 31, 2009 we raised $834,000 in new equity. To
support planned operations through 2010 and beyond, additional capital will be
required. In that regard it is management’s intent to continue fund raising
efforts to generate the capital required to support expanding
operations.
Recent
Accounting Pronouncements
On
November 5, 2007, the SEC issued FASB ASC 815-10-S99-1 (Prior authoritative
literature: SAB No. 109, Written Loan Commitments Recorded at Fair Value Through
Earnings). ASC 815-10-S99-1 provides guidance on the accounting for
written loan commitments recorded at fair value under generally accepted
accounting principles. Specifically, the ASC 815-10-S99-1 revises the Staff’s
views on incorporating expected net future cash flows related to loan servicing
activities in the fair value measurement of a written loan commitment. ASC
815-10-S99-1, which supersedes SAB 105, Application of Accounting Principles to
Loan Commitments, requires the expected net future cash flows related to the
associated servicing of the loan be included in the measurement of all written
loan commitments that are accounted for at fair value through
earnings. ASC 815-10-S99-1 is effective in fiscal quarters beginning
after December 15, 2007. The adoption of ASC 815-10-S99-1 did not
have a material impact on our financial statements.
In
December 2007, the Financial Accounting Standards Board (“FASB”) issued ASC 805
(Prior authoritative literature: SFAS No. 141(R), Business Combinations, which
replaces SFAS No. 141). ASC 805 establishes principles and requirements for how
an acquirer recognizes and measures in its financial statements the identifiable
assets acquired, the liabilities assumed, any non-controlling interest in the
acquiree and the goodwill acquired. The statement also establishes disclosure
requirements which will enable users to evaluate the nature and financial
effects of the business combination. ASC 805 is effective for calendar year
companies on January 1, 2009. The adoption of ASC 805 did not have a
material impact on our financial statements.
In March
2008, the FASB issued FASB ASC 815-10 (Prior authoritative literature: SFAS No.
161, Disclosures about Derivative Instruments and Hedging Activities, and
amendment of SFAS No. 133). This statement will require additional disclosures
about how and why we use derivative financial instruments, how derivative
instruments and related hedged items are accounted for under ASC 815(Prior
authoritative literature: SFAS No. 133, “Accounting for Derivative Instruments
and Hedging Activities”, as amended and interpreted), and how derivative
instruments and related hedged items affect our financial position, results of
operations, and cash flows. ASC 815-10 is effective for financial statements
issued for fiscal years and interim periods beginning after November 15, 2008;
however early adoption is encouraged, as are comparative disclosures for earlier
periods. . The adoption of ASC 815-10 did not have a material impact
on our financial statements.
In April
2008, the FASB issued ASC 350-30 (Prior authoritative literature: FASB Staff
Position No. 142-3, Determination of the Useful Life of Intangible Assets). ASC
350-30 amends the factors that should be considered in developing renewal or
extension assumptions used to determine the useful life of a recognized
intangible asset under ASC 350(Prior authoritative literature: SFAS No. 142,
“Goodwill and Other Intangible Assets”) and also requires expanded disclosure
related to the determination of intangible asset useful lives. ASC 350-30 is
effective for fiscal years beginning after December 15, 2008. Early adoption is
prohibited. The adoption of ASC 350-30 did not have a material impact
on our financial statements.
In May
2008, the FASB issued ASC 470 (Prior authoritative literature: FSP APB 14-1,
Accounting for Convertible Debt Instruments That May Be Settled in Cash upon
Conversion). ASC 470 requires issuers of convertible debt instruments that may
be settled in cash upon conversion to account separately for the liability and
equity components in a manner that will reflect the entity’s nonconvertible debt
borrowing rate when interest cost is recognized in subsequent periods. ASC 470
is effective for financial statements issued for fiscal years beginning after
December 15, 2008, and interim periods within those fiscal years. The
adoption of ASC 470 did not have a material impact on our financial
statements.
10
In May
2008, the Financial Accounting Standards Board (“FASB”) issued FASB ASC 944
(Prior authoritative literature: FASB Statement 163, "
Accounting for Financial Guarantee
Insurance Contracts—an interpretation of FASB Statement No. 60
). FASB ASC
944 interprets Statement 60 and amends existing accounting pronouncements to
clarify their application to the financial guarantee insurance contracts
included within the scope of that Statement. FASB ASC 944 is
effective for financial statements issued for fiscal years beginning after
December 15, 2008, and all interim periods within those fiscal years. The
adoption of ASC 944 did not have a material effect on the Company’s financial
position, statements of operations, or cash flows at this time.
In May
2009, the FASB issued FASB ASC 855-10 (prior authoritative literature, FSB
No. FAS 165, “Subsequent Events”). FASB ASC 855-10 established general
standards of accounting for and disclosure of events that occur after the
balance sheet date but before financial statements are issued. FASB ASC 855-10
is effective for interim or annual financial periods ending after June 15, 2009.
FASB ASC 855-10 did not have a material effect on our financial position, cash
flows, or results of operations.
In June
2009, the FASB issued FASB ASC 105-10 (prior authoritative literature, FSB No.
FAS 168, “The FASB Accounting Standards Codification and the Hierarchy of
Generally Accepted Accounting Principles—a replacement of FASB Statement No.
162).
FASB ASC 105-10
replaces SFAS 162 and establishes the
FASB Accounting Standards
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 GAAP. FASB ASC
105-10 is effective for financial statements issued for interim and annual
periods ending after September 15, 2009. As such, the Company is
required to adopt this standard in the current period. Adoption of
FASB ASC 105-10 did not have a significant effect on the Company’s financial
statements.
At
December 31, 2009, we have invested our cash in money market accounts and
marketable securities. We consider any liquid investment with an original
maturity of three months or less when purchased to be cash equivalents. We
adhere to an investment policy which requires that all investments be investment
grade quality and no more than ten percent of our portfolio may be invested in
any one security or with one institution.
CONTENTS
|
PAGE
|
|||
|
Report
of Independent Registered Public Accounting Firm
|
F-1 | ||
|
FINANCIAL
STATEMENTS
|
|||
|
Balance
Sheets As Of December 31, 2009 and 2008
|
F-2
|
||
|
Statements
of Operations for the years ended December 31, 2009 and
2008
|
F-3
|
||
|
Statements
of Cash Flows for the years ended December 31, 2009 and
2008
|
F-4
|
||
|
Statements
of Stockholders’ Equity (Deficit) for the years ended December 31, 2007
through 2009
|
F-5
|
11
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the
Board of Directors and
Stockholders
of Websafety, Inc
1
Hampshire Court
Newport
Beach, CA 92660
We have
audited the accompanying balance sheets of Websafety, Inc as of December 31,
2009 and 2008, and the related statements of operations, stockholders’ equity
(deficit), and cash flows for each of the years in the two-year period ended
December 31, 2009. Websafety, Inc’s management is responsible for these
financial statements. Our responsibility is to express an opinion on these
financial statements based on our audits.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the company’s internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Websafety, Inc as of December 31,
2009 and 2008, and the results of its operations and its cash flows for each of
the years in the two-year period ended December 31, 2009 in conformity with
accounting principles generally accepted in the United States of
America.
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 2 to the financial
statements, the Company has a significant accumulated deficit and significant
net losses for the year ending December 31, 2009. These conditions raise
substantial doubt about its ability to continue as a going concern. Management's
plans in regard to these matters are also described in Note 2. The financial
statements do not include any adjustments relating to the recoverability and
classification of asset carrying amounts or the amount and classification of
liabilities that might result should the Company be unable to continue as a
going concern.
EFP
Rotenberg, LLP
Rochester,
New York
April 14,
2010
F-1
WEBSAFETY,
INC..
Formerly
Known as Blindspot Alert, Inc.
|
As of December 31,
|
||||||||
|
2009
|
2008
|
|||||||
|
ASSETS
|
||||||||
|
Current
assets:
|
||||||||
|
Cash
|
$ | 5,748 | $ | 224,269 | ||||
|
Accounts
receivable
|
17,171 | - | ||||||
|
Prepaid
expense
|
- | 7,137 | ||||||
|
Total
current assets
|
22,919 | 231,406 | ||||||
|
Property
and Equipment:
|
||||||||
|
Computer
equipment, computer software and furniture, net
|
14,433 | - | ||||||
|
Software
license and website development, net
|
138,383 | 450,963 | ||||||
|
Total
property and equipment
|
152,816 | 450,963 | ||||||
|
Other
Assets:
|
||||||||
|
Deposits
|
6,820 | - | ||||||
|
WebSafety
Technology, net
|
2,587,580 | - | ||||||
|
Option
to acquire
|
- | 95,000 | ||||||
|
Total
other assets
|
2,594,400 | 95,000 | ||||||
| $ | 2,770,135 | $ | 777,369 | |||||
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
|
Current
liabilities:
|
||||||||
|
Advance
from shareholder
|
$ | - | $ | 1,104 | ||||
|
Accounts
payable
|
233,733 | 37,116 | ||||||
|
Accrued
expense
|
13,868 | 56 | ||||||
|
Deferred
revenue
|
114,740 | - | ||||||
|
Liability
to issue shares
|
103,120 | - | ||||||
|
Total
current liabilities
|
465,461 | 38,276 | ||||||
|
Stockholders'
equity:
|
||||||||
|
Preferred
stock; $.001 par value, 25,000,000 shares
|
||||||||
|
authorized,
4,230,002 and 3,833,335 shares issued and
|
||||||||
|
outstanding
respectively
|
4,230 | 3,832 | ||||||
|
Common
stock; $.001 par value, 300,000,000 shares
|
||||||||
|
authorized,
54,895,714 and 22,300,000 shares issued and
|
||||||||
|
outstanding,
respectively
|
54,896 | 22,300 | ||||||
|
Subscription
receivable
|
- | (200 | ) | |||||
|
Additional
paid in capital
|
4,817,805 | 1,357,968 | ||||||
|
Deficit
accumulated
|
(2,572,257 | ) | (644,807 | ) | ||||
|
Total
stockholders' equity
|
2,304,674 | 739,093 | ||||||
| $ | 2,770,135 | $ | 777,369 | |||||
The
accompanying notes are an integral part of these financial
statements.
F-2
WEBSAFETY,
INC.
Formerly
Known as Blindspot Alert, Inc.
For
the years ended December 31, 2009 and 2008
|
As of December 31,
|
||||||||
|
2009
|
2008
|
|||||||
|
Revenue
|
$ | 33,472 | $ | - | ||||
|
Operating
expenses:
|
||||||||
|
General
and administrative expenses
|
1,127,687 | 433,418 | ||||||
|
Impairment
loss
|
300,000 | - | ||||||
|
Research
& development
|
39,000 | - | ||||||
|
Loss
on option acquire
|
245,000 | - | ||||||
|
Depreciation
and amortization expense
|
249,097 | - | ||||||
|
Total
operating expenses
|
1,960,784 | 433,418 | ||||||
|
(Loss)
from operations
|
(1,927,312 | ) | (433,418 | ) | ||||
|
Other
income (expense):
|
||||||||
|
Interest
income
|
- | - | ||||||
|
Loss
on sale of equipment
|
- | (5,216 | ) | |||||
|
Other
income
|
- | 6,000 | ||||||
|
Interest
expense
|
(137 | ) | (5,022 | ) | ||||
|
Total
other income (expense)
|
(137 | ) | (4,238 | ) | ||||
|
(Loss)
before provision for income taxes
|
(1,927,449 | ) | (437,656 | ) | ||||
|
Provision
for income taxes
|
- | - | ||||||
|
Net
(loss)
|
$ | (1,927,449 | ) | $ | (437,656 | ) | ||
|
Basic
and diluted loss per share
|
$ | (0.059 | ) | $ | (0.024 | ) | ||
|
Basic
and diluted weighted average common shares outstanding
|
32,465,855 | 18,483,333 | ||||||
The
accompanying notes are an integral part of these financial
statements.
F-3
WEBSAFETY,
INC.
Formerly
Known as Blindspot Alert, Inc.
For
the years ended December 31, 2009 and 2008
|
As of December 31,
|
||||||||
|
2009
|
2008
|
|||||||
|
Operating
activities:
|
||||||||
|
Net
loss
|
$ | (1,927,449 | ) | $ | (437,656 | ) | ||
|
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
||||||||
|
Depreciation
and amortization expense
|
249,097 | - | ||||||
|
Stock
compensation expense
|
16,331 | |||||||
|
Stock
issued for services
|
32,500 | 2,400 | ||||||
|
Impairment
charge for WQN License
|
300,000 | - | ||||||
|
Loss
on option expiration
|
245,000 | - | ||||||
|
Loss
on sale of equipment
|
- | 5,216 | ||||||
|
Changes
in operating assets and liabilities:
|
||||||||
|
Decrease
(Increase) in accounts receivable
|
(17,171 | ) | - | |||||
|
Decrease in
prepaid expense
|
7,137 | (7,137 | ) | |||||
|
Decrease
in subscriptions receivable
|
- | - | ||||||
|
Decrease
in advance to shareholder
|
- | - | ||||||
|
Increase
in Deposit
|
(6,820 | ) | - | |||||
|
Increase(decrease)
in advance from shareholder
|
- | - | ||||||
|
Increase in
accounts payable
|
196,617 | 37,116 | ||||||
|
Decrease
in short-term borrowing
|
- | - | ||||||
|
(Decrease)
in lease payable
|
- | (6,000 | ) | |||||
|
Increase in
Deferred revenue
|
114,740 | - | ||||||
|
Increase
in accrued expense
|
116,931 | (4,944 | ) | |||||
|
Net
cash (used in) operating activities
|
(673,087 | ) | (411,005 | ) | ||||
|
Investing
activities:
|
||||||||
|
Purchase
of long term assets
|
(138,530 | ) | (450,963 | ) | ||||
|
Increase(decrease)
investment in option to acquire
|
(150,000 | ) | (95,000 | ) | ||||
|
Net
cash (used in) investing activities
|
(288,530 | ) | (545,963 | ) | ||||
|
Financing
activities:
|
||||||||
|
Proceeds
from borrowing
|
- | - | ||||||
|
Proceeds
from sale of equipment
|
- | 5,026 | ||||||
|
Repayment
of advances from shareholders
|
(1,104 | ) | 7,496 | |||||
|
Proceeds
from stock sales
|
744,200 | 1,168,401 | ||||||
|
Net
cash provided by financing activities
|
743,096 | 1,180,923 | ||||||
|
Net
changes in cash
|
(218,521 | ) | 223,955 | |||||
|
Cash,
beginning of year
|
224,269 | 314 | ||||||
|
Cash,
end of year
|
$ | 5,748 | $ | 224,269 | ||||
|
Interest
paid
|
137 | 22 | ||||||
|
Tax
paid
|
- | - | ||||||
|
Non
Cash Investing and Financing Activities:
|
||||||||
|
Issuance
of common stock for services
|
$ | 32,500 | $ | 2,400 | ||||
|
Voluntary
conversion of shareholders advance to paid in Capital
|
$ | - | $ | 25,000 | ||||
|
Common
stock issued for equipment
|
$ | - | $ | - | ||||
|
Common
stock issued for Websafety Technology
|
$ | 2,700,000 | $ | - | ||||
The
accompanying notes are an integral part of these financial
statements.
F-4
WEBSAFETY,
INC.
Formerly
Known as Blindspot Alert, Inc.
STATEMENTS
OF STOCKHOLDERS' EQUITY (DEFICIT)
For the years ended December 31, 2007
through 2009
|
Additional
|
Total
|
|||||||||||||||||||||||||||||||
|
Preferred Stock
|
Common Stock
|
Subscription
|
Paid-in
|
Accumulated
|
Stockholders'
|
|||||||||||||||||||||||||||
|
Shares
|
Amount
|
Shares
|
Amount
|
Receivable
|
Capital
|
(Deficit)
|
Equity (Deficit)
|
|||||||||||||||||||||||||
|
Balances January
1, 2007
|
- | - | 14,700,000 | 14,700 | 173,600 | (207,151 | ) | (18,851 | ) | |||||||||||||||||||||||
|
Issuance
of preferred stock for cash
|
||||||||||||||||||||||||||||||||
|
June
20, 2008 six issuances t $0.30
|
2,083,336 | 2,083 | 622,917 | 625,000 | ||||||||||||||||||||||||||||
|
July
2, 2008 one issuance at $0.30
|
666,667 | 667 | 199,333 | 200,000 | ||||||||||||||||||||||||||||
|
November
6, 2008 one issuance at$0.30
|
333,333 | 333 | 99,667 | 100,000 | ||||||||||||||||||||||||||||
|
November
13, 2008 one issuance at$0.30
|
83,333 | 83 | 24,917 | 25,000 | ||||||||||||||||||||||||||||
|
December
17, 2008 two issuances at $0.30
|
666,666 | 667 | 199,333 | 200,000 | ||||||||||||||||||||||||||||
|
Issuance
of common stock for cash
|
- | - | ||||||||||||||||||||||||||||||
|
May
1, 2008 six issuances at $0.001
|
2,525,000 | 2,525 | - | 2,525 | ||||||||||||||||||||||||||||
|
June
30, 2008 two issuances t $0.001
|
1,175,000 | 1,175 | - | 1,175 | ||||||||||||||||||||||||||||
|
Acquisition
of Cash in Connection with Recapitalization
|
13,200 | 13,200 | ||||||||||||||||||||||||||||||
|
July
11, 2008 one issuance at $0.001 for services
|
2,400,000 | 2,400 | 2,400 | |||||||||||||||||||||||||||||
|
July
15, 2008 one issuance at $0.001
|
100,000 | 100 | - | 100 | ||||||||||||||||||||||||||||
|
September
18, 2008 two issuances at $.001
|
1,200,000 | 1,200 | - | 1,200 | ||||||||||||||||||||||||||||
|
December
5, 2008 one issuance at $0.001
|
200,000 | 200 | (200 | ) | - | - | ||||||||||||||||||||||||||
|
Voluntary
conversion of shareholder advance to paid in capital
|
25,000 | 25,000 | ||||||||||||||||||||||||||||||
|
Net
loss for the period ended December 31, 2008
|
(437,657 | ) | (437,657 | ) | ||||||||||||||||||||||||||||
|
Balances December
31, 2008
|
3,833,335 | $ | 3,833 | 22,300,000 | $ | 22,300 | $ | (200 | ) | $ | 1,357,967 | $ | (644,808 | ) | $ | 739,092 | ||||||||||||||||
|
Subscription
receivable paid
|
200 | 200 | ||||||||||||||||||||||||||||||
|
Issuance
of preferred stock for cash
|
||||||||||||||||||||||||||||||||
|
May
8, 2009 one issuance at $0.30
|
133,334 | 134 | 39,866 | 40,000 | ||||||||||||||||||||||||||||
|
May
11, 2009 one issuance at $0.30
|
56,667 | 57 | 16,943 | 17,000 | ||||||||||||||||||||||||||||
|
June
4, 2009 four issuances at $0.30
|
40,000 | 40 | 11,960 | 12,000 | ||||||||||||||||||||||||||||
|
Issuance
of preferred stock for cash
|
||||||||||||||||||||||||||||||||
|
September
14, 2009 one issuance at $0.30
|
166,666 | 166 | 49,834 | 50,000 | ||||||||||||||||||||||||||||
|
Issuance
of common stock for services
|
||||||||||||||||||||||||||||||||
|
July
9, 2009 one issuance at $0.01
|
1,800,000 | $ | 1,800 | 16,200 | 18,000 | |||||||||||||||||||||||||||
|
July
9, 2009 one issuance at $0.01
|
1,000,000 | $ | 1,000 | 9,000 | 10,000 | |||||||||||||||||||||||||||
|
September
14, 2009 one issuance at $0.001
|
1,000,000 | $ | 1,000 | - | 1,000 | |||||||||||||||||||||||||||
|
September
14, 2009 one issuance at $0.35
|
10,000 | $ | 10 | 3,490 | 3,500 | |||||||||||||||||||||||||||
|
Issuance
of common stock for WebSafety Technology:
|
||||||||||||||||||||||||||||||||
|
September
14, 2009 one issuance at $0.001
|
27,000,000 | $ | 27,000 | 2,673,000 | 2,700,000 | |||||||||||||||||||||||||||
|
Issuance
of common stock for cash
|
||||||||||||||||||||||||||||||||
|
August
31, 2009 one issuance at $0.35
|
1,000,000 | $ | 1,000 | 349,000 | 350,000 | |||||||||||||||||||||||||||
|
September
14, 2009 one issuance at $0.35
|
100,000 | $ | 100 | 34,900 | 35,000 | |||||||||||||||||||||||||||
|
September
14, 2009 one issuance at $0.35
|
142,857 | $ | 143 | 49,857 | 50,000 | |||||||||||||||||||||||||||
|
October
5, 2009 one issuance at $0.35
|
542,857 | $ | 543 | 189,457 | 190,000 | |||||||||||||||||||||||||||
|
Stock
Compensation Expense
|
16,331 | 16,331 | ||||||||||||||||||||||||||||||
|
Net
loss for the period ended December 31, 2009
|
(1,927,449 | ) | (1,927,449 | ) | ||||||||||||||||||||||||||||
|
Balances December
31, 2009
|
4,230,002 | $ | 4,230 | 54,895,714 | $ | 54,896 | $ | - | $ | 4,817,806 | $ | (2,572,257 | ) | $ | 2,304,674 | |||||||||||||||||
The
accompanying notes are an integral part of these financial
statements.
F-5
WEBSAFETY,
INC.
Formerly
Known as Blindspot Alert, Inc.
NOTES
TO THE FINANCIAL STATEMENTS
Nature
of business and organization
Websafety,
Inc. formerly known as Blindspot Alert, Inc., a Nevada corporation, (hereinafter
referred to as the “Company”) was incorporated in the State of Nevada on July 3,
2006. The Company from inception through June 2008 had been in the
business of offering live promotions and marketing events.
In June
2008 a majority ownership change was made and the business emphasis was shifted
to the marketing and sales through the internet of software and services that
allow parents or other caregivers to monitor and be notified of occurrences of
predator advances, cyber bullying and pornography.
On June
20, 2008, the Company issued 13,200,000 shares of its common stock to Texas
Atlantic Capital Partners, LLC, (“Texas Atlantic”). The issuance of
these shares represented approximately 62% of the then outstanding stock. The
issuance resulted in a change of control and met the definition of a business
combination under paragraph 9, of Statement of Financial Accounting Standards No
141, Business Combinations (FAS 141). Concurrent with the issuance of
the shares to Texas Atlantic, the shareholders elected to cancel certain shares
in order to effect the desired post change in control ownership
ratio.
The
business combination was accounted for under the purchase method of accounting
followed by a recapitalization of the Company. The issuance of the 13,200,000
shares and the cancellation of the 35,500,000 shares of common stock was
retroactively presented in the statements of stockholders’ equity (deficit) as
if the transaction with Texas Atlantic had occurred as of the earliest period
presented (See Note 6).
On June
30, 2008, the Company entered into a License Agreement (“License”) with WQN,
Inc., a Texas corporation (“WQN”), which, in consideration for the sum of
$300,000 granted the Company the right to market and sell WQN’s Websafety
software products.
On July
2, 2009 the Company entered into an asset acquisition agreement with WQN, Inc.
Under the agreement, the Company acquired all of the technology known as
Websafety Technology for 27,000,000 shares of our common stock. Consequently,
the Company no longer has any royalty commitments to WQN under the June 30, 2008
license agreement. As of April 14, 2010, the 27,000,000 common shares owned
directly by WQN, Inc. represents approximately 42% of our 64,380,047 shares of
outstanding common stock.
Use
of estimates
The
preparation of financial statements in conformity with U.S. generally accepted
accounting principles requires management to make certain estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. The Company is subject to uncertainty of future
events, economic, environmental and political factors and changes in the
Company's business environment; therefore, actual results could differ from
these estimates. Accordingly, accounting estimates used in the
preparation of the Company's financial statements will change as new events
occur, more experience is acquired, as additional information is obtained and as
the Company's operating environment changes. Changes are made in
estimates as circumstances warrant. Such changes in estimates and
refinement of estimation methodologies are reflected in the financial
statements.
Cash
and cash equivalents- concentration of risk
Cash and
cash equivalents include interest bearing and non-interest bearing bank
deposits, money market accounts, and short-term instruments with a liquidation
provision of three months or less.
The
Company maintains its cash in institutions insured by the Federal Deposit
Insurance Corporation (FDIC). This government corporation insures
balances up to $250,000 per depositor through December 31, 2013.
Income
taxes
The
Company accounts for its income taxes in accordance with FASB ASC 740 (Prior
authoritative literature: SFAS No. 109), which requires recognition of deferred
tax assets and liabilities for future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax basis and tax credit carry
forwards. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in operations in the period that includes the
enactment date.
F-6
WEBSAFETY,
INC.
Formerly
Known as Blindspot Alert, Inc.
NOTES
TO THE FINANCIAL STATEMENTS
Deferred
income taxes reflect the net tax effects of temporary differences between the
carrying amounts of assets and liabilities for financial statement purposes and
the amounts used for income tax purposes. Significant components of
the Company’s deferred tax liabilities and assets as of December 31, 2009 are as
follows:
|
Deferred
tax assets:
|
||||
|
Accumulated
net operating loss
|
$
|
2,572,257
|
||
|
Income
tax rate
|
34
|
%
|
||
|
874,567
|
||||
|
Less
valuation allowance
|
(874,567
|
)
|
||
|
Net
|
-
|
|||
Through
December 31, 2009, a valuation allowance has been recorded to offset the
deferred tax assets, including those related to the net operating
losses. At December 31, 2009, the Company had approximately
$2,572,257 of federal and state net accumulated operating losses. The
net operating loss carry forwards, if not utilized will begin to expire in 2026.
The utilization of these losses for tax purposes will be limited due to the
operation of Internal Revenue Code Section 382 which restricts the utilization
of net operating loss carry forwards is circumstances where there is a more than
51% change of control in a company.
Reconciliations
of the U.S. federal statutory rate to the actual tax rate for the years ended
December 31, 2009 and 2008 are as follows:
|
2009
|
2008
|
|||||||
|
Federal
statutory income tax rate
|
34.0
|
%
|
34.0
|
%
|
||||
|
State
tax net of federal benefit
|
0.0
|
%
|
0.0
|
%
|
||||
|
34.0
|
%
|
34.0
|
%
|
|||||
|
Increase
in valuation allowance
|
(34.0
|
)%
|
(34.0
|
)%
|
||||
|
Effective
tax rate
|
0.0
|
%
|
0.0
|
%
|
||||
In
accordance with FASB ASC-640-10, prior authoritative literature; FIN 48,
Accounting for Uncertainty in Income Taxes, the Company has evaluated tax
positions taken in the financial statements. Because of the significant net
operating losses sustained, Management does not believe that the Company has any
uncertain federal of state tax position uncertainties at December 31,
2009.
Net
loss per common share
The
Company computes net loss per share in accordance with FASB ASC 260-10 (Prior
authoritative literature: SFAS No. 128, Earnings per Share and SEC Staff
Accounting Bulletin No. 98). Under the provisions of ASC 260-10,
basic net loss per share is computed by dividing the net loss available to
common stockholders for the period by the weighted average number of shares of
common stock outstanding during the period. The calculation of
diluted
net loss
per share gives effect to common stock equivalents; however, potential common
shares are excluded if their effect is anti-dilutive.
Fair
value of financial instruments
The FASB
ASC 320-12-65 (Prior authoritative literature: SFAS No 107, “Disclosures about
Fair Value of Financial Instruments”), requires the determination of fair value
of the Company’s financial assets and liabilities. The estimated fair
values of financial instruments were determined by management using available
market information and appropriate valuation methodologies. The
carrying amounts of financial instruments including cash and advance from
shareholder approximate their fair value because of their short
maturities.
F-7
WEBSAFETY,
INC.
Formerly
Known as Blindspot Alert, Inc.
NOTES
TO THE FINANCIAL STATEMENTS
Revenue
recognition
In
October of 2009 the Company began recognizing revenue from the sales of
Websafety products. Websafety is a comprehensive software package
that gives parents the capability to monitor and protect children against
potentially dangerous emergency situations. Customers purchase annual
subscriber memberships to the Websafety service. Customers may
request a full refund (within 30 days from the date of purchase) for the service
if they are not satisfied. Since revenue is earned over a 12-month
period,
the
Company recognizes 1/12 of sales in the month of sale. The remaining
11/12 of revenue is deferred and recognized equally over an 11-month
period.
The
Company recognizes software license revenue under ASC985-605, formerly Statement
of Position No. 97-2, “Software Revenue Recognition” as amended by Statement of
Position No. 98-9, “Software Revenue Recognition With Respect to Certain
Transactions”, and under ASC 605-25, formerly Emerging Issues Task Force 00-21,
“Revenue Arrangements with Multiple Deliverables”, and related
interpretations.
Accounts
receivable and billing
The
Company conducts sales primarily through the Internet utilizing merchant
services for the processing of customer credit card or other electronic means of
paying. Merchant bank transactions normally settle within two to three
days. As of December 31, 2009, no credit has been extended to “on
account” customers. Because all sales have been booked via credit
card, management does not deem it necessary to record a receivable allowance at
December 31, 2009. We expect trade receivables to increase over time
as our daily sales activity also increases.
Property
and equipment
Property
and equipment consisted primarily of web site development costs, software
licensing fees, computer software and equipment, and furniture and fixtures.
Property and equipment are stated at their historical cost net of accumulated
deprecation and amortization. For the twelve months ended December 31, 2008, no
depreciation or amortization expense was recognized as the Company was not yet
operating and as such the assets were not placed in service. For the twelve
months ended December 31, 2009, assets began to be depreciated and amortized as
operations had commenced. Depreciation on furniture, fixtures and computer
equipment is computed using the 200% DB method over the lesser of the estimated
useful life and the actual life of the related asset. Amortization on
software license and website development is computed using the straight-line
method over the lesser of the estimated useful life and the actual life of the
related asset. Expenditures relating to maintenance, repairs and renewals of
minor items are expensed as incurred.
The
estimated useful lives are as follows:
|
Software
License
|
5
Years
|
|
Web
Site Development
|
3
Years
|
|
Computer
Equipment
|
5
Years
|
|
Furniture
and Fixtures
|
7
Years
|
Web
Site Development Costs:
The
Company has incurred internal web site development costs during the development,
implementation and operational stages. Specific activities include coordination
of design, engineering, initial integration and design modifications, script
writing, web site designs and revisions, application site designs, pre-video
production build/test flash prototype for oversize video browser scaling,
eCommerce engine, etc. These costs were expensed or capitalized in accordance
with FASB ASC 350-40(SOP 98-01, "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use") and FASB ASC 350-50(EITF 00-02,
"Accounting for Web Site Development Costs").
Websafety
Technology:
On July
2, 2009, the Company entered into an agreement with WQN, Inc. to acquire the
software technology, known as “Websafety”. The Company capitalizes software
development costs when technological feasibility has been established for the
software in accordance with ASC 985-20, formerly SFAS No. 86, “Accounting for
the Costs of Computer Software to be sold, leased, or otherwise marketed.” Such
capitalized costs are amortized on a product-by-product basis over their
economic life or the ratio of current revenues to current anticipated revenues
from such software, whichever provides the greater amortization. The Company
periodically reviews the carrying value of capitalized software development
costs and impairments are recognized in the results of operations when the
expected future undiscounted operating cash flow derived from the capitalized
software is less than its carrying value. Should the Company inaccurately
determine when a product reaches technological feasibility or the economic life
of a product, results could differ materially from those reported. The Company
uses what it believes are reasonable assumptions and where applicable,
established valuation techniques in making its estimates.
F-8
WEBSAFETY,
INC.
Formerly
Known as Blindspot Alert, Inc.
NOTES
TO THE FINANCIAL STATEMENTS
Long-Lived
Assets
FASB ASC
360-10 (Prior Authoritative Literature: Statement of Financial Accounting
Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets), requires that we evaluate our long-lived assets for financial
impairment on a regular basis. We evaluate the recoverability of
long-lived assets not held for sale by measuring the carrying amount of the
assets against the estimated undiscounted future cash flows associated with
them. If such evaluations indicate that the future discounted cash
flows of certain long-lived assets are not sufficient to recover the carrying
value of such assets, the assets are adjusted to their fair
values. There was an impairment of $300,000 at December 31, 2009
which pertained to rights and options which management deemed will not provide
any future benefit. There were no impairment adjustments at of December 31,
2008.
Stock
Based Compensation
We follow
the provisions of FASB ASC 718(Prior authoritative literature: SFAS No. 123R,
“Share-Based Payment”). FASB ASC 718 requires recognition in the financial
statements of the cost of employee services received in exchange for an award of
equity instruments over the period the employee is required to perform the
services in exchange for the award (presumptively the vesting period). FASB ASC
718 also requires measurement of the cost of employee services received in
exchange for an equity award based upon the grant-date fair value of the
award.
We
account for non-employee share-based awards in accordance with FASB ASC
505-50(Prior authoritative literature: EITF No. 96-18, “Accounting for Equity
Instruments that are Issued to Other than Employees for Acquisition, or in
Conjunction with Selling Goods or Services”).
The
Company’s accounting policy for equity instruments issued to consultants and
vendors in exchange for goods and services follows the provisions of ASC
505-50. Accordingly, the measurement date for the fair value of the
equity instruments issued is determined at earliest of (i) the date at which a
commitment for performance by the consultant or vendor is reached or (ii) the
date at which the consultant or vendor’s performance is complete. In
the case of equity instruments, issued to consultants, the fair value of the
equity instrument is recognized over the term of the consulting
agreement.
In
accordance with 505-50, each transaction involving the issuance of stock in
exchange for goods or services is analyzed to determine whether the value of the
stock given as consideration on the value of the goods on services received are
the more representation of the value of the underlying
transactions.
Reclassifications
Certain
prior year amounts have been reclassified to conform to the current year
presentation.
The
accompanying financial statements have been prepared assuming the Company will
continue as a going concern, which contemplates the realization of assets and
the satisfaction of liabilities in the normal course of business. The
Company incurred cumulative net losses of approximately $2,572,257 through
December 31, 2009 and has used significant cash in support of its operating
activities raising substantial doubt about the Company’s ability to continue as
a going concern. The Company in 2009 raised additional capital and
will seek additional sources of capital through the issuance of debt or equity
financing, but there can be no assurance the Company will be successful in
accomplishing its objectives.
The
ability of the Company to continue as a going concern is dependent on additional
sources of capital and the success of the Company’s plan. The
financial statements do not include any adjustments to the recoverability and
classification of recorded asset amounts or the amount and classification of
liabilities that might be necessary should the Company be unable to continue as
a going concern.
F-9
WEBSAFETY,
INC.
Formerly
Known as Blindspot Alert, Inc.
NOTES
TO THE FINANCIAL STATEMENTS
For the
year ended December 31, 2009 the Company had only $33,472 revenues. In 2008, the
Company had no revenue. A concentration of credit risks exist due to
the fact that the Company has a limited number of both customers and
vendors. If a number of customers or vendors decided to take their
business elsewhere, the Company could sustain significant losses. As
of December 31, 2009, no credit has been extended to “on account”
customers. Because all sales have been booked via credit card,
management does not deem it necessary to record a receivable allowance at
December 31, 2009.
Property
and equipment consist of the following at December 31, 2009 and
2008:
|
2009
|
2008
|
|||||||
|
Property
and Equipment
|
||||||||
|
Equipment
|
$ | 15,715 | $ | 0 | ||||
|
Software
|
150,963 | 450,963 | ||||||
|
Total
property and equipment before accumulated depreciation
|
156,678 | 450,963 | ||||||
|
Less
accumulated depreciation
|
(13.862 | ) | 0 | |||||
|
Total
property and equipment
|
$ | 152,816 | $ | 450,963 | ||||
Depreciation
expense for fiscal 2009 and 2008 totaled $13,862 and $0,
respectively.
As a
result of the Websafety Technology asset purchase, the Company gained all rights
of ownership to the intellectual property of Websafety
Technology. The Company invested an additional $122,815 to develop
technology to complete the project. On October 1, 2009, the Company
deemed the technology ready to be sold and used by the general
public. The Company recorded the Intangible Asset in the amount of
$2,822,815 and will amortize the asset over a 36 month period.
|
Intangible
assets
|
||||||||
|
Websafety
Technology
|
$ | 2,822,815 | 0 | |||||
|
Total
intangible assets before accumulated amortization
|
2,822,815 | 0 | ||||||
|
Less
accumulated amortization
|
235,235 | 0 | ||||||
|
Total
intangible assets
|
$ | 2,587,580 | 0 | |||||
Amortization
expense for fiscal 2009 and 2008 totaled $235,235 and $0,
respectively.
In
November 2008 the Company entered into an option agreement with Auburg Adams LLC
(AA) a Texas limited liability company to acquire certain software licensing
rights it had contracted pursuant to a licensing agreement entered into with
Essential Security Software, Inc. the developer. The option would have allowed
the Company to secure the rights of Auburg Adams once a payment of $270,000 had
been made. Any payments made pursuant to the terms of the option to acquire were
to be credited to the overall price of the licensing had the option been
exercised. The rights that Auburg Adams had been granted were for the marketing
and sales of software that provides for total digital rights
management enabling users to exercise complete control over email
transmissions and any attachments related to those transmissions to include
restriction of forwarding and timed removal from a recipient
computer. This licensing was to be for an initial five- year period
and would be automatically renewable for periods thereafter. The overall cost
for the rights is $270,000.
F-10
WEBSAFETY,
INC.
Formerly
Known as Blindspot Alert, Inc.
NOTES
TO THE FINANCIAL STATEMENTS
The
option expired on April 1, 2009 without the final payment of $25,000 being made
or the option being renewed or extended notwithstanding the April 1, 2009
expiration date of the original option. A loss on option to acquire
of $245,500 was recorded during the year ended December 31, 2009.
A
principal of Auburg Adams LLC is a minority shareholder in WebSaftey,
Inc.
During
2009 we had the following common and preferred stock issuances.
|
Common Stock-
|
||||||||||
|
Date
|
For Cash or Services
|
Number of Shares
|
Value
|
|||||||
|
July
2009
|
Services
|
2,800,000
|
$
|
28,000
|
||||||
|
August
2009
|
Cash
|
1,000,000
|
350,000
|
|||||||
|
September
2009
|
Services
|
10,000
|
3,500
|
|||||||
|
September
2009
|
Websafety
Technology
|
27,000,000
|
27,000
|
|||||||
|
September
2009
|
Ziglar,
Inc. Agreement*
|
1,000,000
|
1,000
|
|||||||
|
September
2009
|
Cash
|
242,857
|
85,000
|
|||||||
|
October
2009
|
Cash
|
542,857
|
190,000
|
|||||||
|
Total
Common Issuances
|
32,595,714
|
$
|
684,500
|
|||||||
The stock
issuance of 2,800,000 in exchange for services was analyzed in accordance with
ASC 505-50 to determine whether the value of the stock given as consideration or
the value of the services received was more representative of the underlying
value of the transaction. The Company concluded that the value of the
services received were more indicative of the value of the transaction and has
been recorded as such in the accompanying financial statements. The
Board of Directors reviewed each transaction and determined the value of the
services rendered.
On
December 16, 2009, the Company agreed to sell Turningblock Capital, LLC 100,000
of its common stock. On January 6, 2010, these shares were issued to
Turningblock Capital, LLC for $50,000.
*Zig Ziglar Marketing
Agreement
The stock
issuance of 1,000,000 shares in exchange for services from Ziglar, Inc. was
analyzed in accordance with ASC 505-50 to determine whether the value of the
stock given as consideration or the value of the services received was more
representative of the underlying value of the transaction. The
Company concluded that the value of the services received were more indicative
of the value of the transaction and has been recorded as such in the
accompanying financial statements.
|
Preferred Stock- All issuances were for cash at $0.30 per share
|
||||||||
|
Date
|
Number of Shares
|
Value
|
||||||
|
February
2009
|
173,334 | $ | 52,000 | |||||
|
March
2009
|
166,666 | 50,000 | ||||||
|
May
2009
|
56,667 | 17,000 | ||||||
|
Total
Preferred Shares Issued
|
396,668 | $ | 119,000 | |||||
The
preferred shares may be converted at the option of the holder at a conversion
rate of 1.25 common shares for each preferred share.
F-11
WEBSAFETY,
INC.
Formerly
Known as Blindspot Alert, Inc.
NOTES
TO THE FINANCIAL STATEMENTS
In
November 2009, the Board of Directors and Shareholders adopted the 2008 Stock
Option Plan providing for the issuance of up to 10,000,000 shares
to Company officers, directors, employees and to independent contractors
who provide services to the Company.
Options
granted under the 2008 Stock Option Plan vest as determined by the Board of
Directors and terminate after the earliest of the following events: expiration
of the option as provided in the option agreement, 90 days subsequent to the
date of termination of the employee, or ten years from the date of grant (five
years from the date of grant for incentive options granted to an employee who
owns more than 10% of the total combined voting power of all classes stock at
the date of grant). In some instances, granted stock options are
immediately exercisable into restricted shares of common stock, which vest in
accordance with the original terms of the related options. The Company
recognizes compensation expense ratably over the requisite service
period.
The
option price of each share of common stock shall be determined by the Board of
Directors or compensation committee (when one is established), provided that
with respect to incentive stock options, the option price per share shall in all
cases be equal to or greater than 100% of the fair value of a share of common
stock on the date of the grant, except an incentive option granted under
the 2008 Stock Option Plan to a shareholder that owns more than 10% of the total
combined voting power of all classes of stock, shall have an exercise price of
not less than 110% of the fair value of a share of common stock on the date of
grant. No participant may be granted incentive stock options, which would result
in shares with an aggregate fair value of more than $10,000,000 first becoming
exercisable in one calendar year.
In
September 2009, 700,000 stock options with an exercise prices ranging from of
$0.10 to $0.35 were granted to officers of the Company that vest as
follows: 20% at the conclusion of each 12 month period from the 5 year
term. These options carry a grant expiration date of 5 years
after issuance. As of December 31, 2009, 46,667 of the stock options
had vested.
For the
year ended December 31, 2009, the Company recorded compensation costs for
options and shares granted under the plan amounting to $16,331. There
were no stock options or shares granted or outstanding prior to September 30,
2009, therefore no compensation expense was recorded in 2008. A
deduction is not allowed for income tax purposes until nonqualified options are
exercised. The amount of this deduction will be the difference between the fair
value of the Company’s common stock and the exercise price at the date of
exercise. The tax effect of the income tax deduction in excess of the financial
statement expense, if any, will be recorded as an increase to additional paid-in
capital. No tax deduction is allowed for incentive stock options.
Accordingly no deferred tax asset is recorded for GAAP expense related to these
options.
Management
has valued the options at their date of grant utilizing the Black Scholes Merton
option pricing model. The fair value of the underlying shares was
determined based on the closing price of the Company’s publicly-traded shares as
of date of the grant. Further, the expected volatility was
calculated using the historical volatility of the Company’s
stock.
The
risk-free interest rate is based on the implied yield available on U.S. Treasury
issues with an equivalent term approximating the expected life of the options
depending on the date of the grant and expected life of the
options. The expected life of options used was based on the
contractual life of the option granted. The Company determined the
expected dividend rate based on the assumption and expectation that earnings
generated from operations are not expected to be adequate to allow for the
payment of dividends in the near future. The following weighted-average
assumptions were utilized in the fair value calculations for options
granted:
|
|
Twelve months Ended
|
|||
|
|
December
31, 2009
|
|||
|
Expected
dividend yield
|
0 | % | ||
|
Expected
stock price volatility
|
330 | % | ||
|
Risk-free
interest rate (1)
|
2.37 | % | ||
F-12
WEBSAFETY,
INC.
Formerly
Known as Blindspot Alert, Inc.
NOTES
TO THE FINANCIAL STATEMENTS
The
Company has granted stock options to officers and employees as
follows:
|
Date of
|
Shares
|
Exercise
|
Shares Outstanding
|
Expiration
|
Vesting
|
||||||||
|
Grant
|
Granted
|
Price
|
As of 12/31/09
|
Date
|
Date
|
||||||||
|
|
|||||||||||||
|
9/10/09
|
100,000
|
$
|
0.35
|
100,000
|
9/10/2014
|
9/10/2010
|
|||||||
|
9/14/09
|
100,000
|
0.10
|
100,000
|
9/14/2014
|
9/14/2010
|
||||||||
|
9/14/09
|
500,000
|
0.10
|
500,000
|
9/14/2014
|
9/14/2010
|
||||||||
|
Total
|
700,000
|
|
|||||||||||
The
following table summarizes the status of the Company aggregate stock options
granted under the incentive stock option plan:
|
|
|
Number
|
|
|
Weighted
|
|
|
|
|
|
||||||
|
|
|
of Shares
|
|
|
Average
|
|
|
Weighted
|
|
|
|
|||||
|
|
|
Remaining
|
|
|
Intrinsic
|
|
|
Average
|
|
|
Aggregate
|
|
||||
|
Subject to Exercise
|
|
Options
|
|
|
Price
|
|
|
Life (Years)
|
|
|
Value
|
|
||||
|
Outstanding
as of December, 2008
|
-
|
$
|
-
|
-
|
-
|
|||||||||||
|
Granted
– 2009
|
700,000
|
$
|
0.21
|
5.00
|
.
|
$
|
150,000
|
|||||||||
|
Forfeited
– 2009
|
-
|
$
|
-
|
-
|
-
|
|||||||||||
|
Exercised
– 2009
|
-
|
$
|
-
|
-
|
-
|
|||||||||||
|
Outstanding
as of December 31, 2009
|
700,000
|
$
|
0.21
|
5.00
|
$
|
150,000
|
||||||||||
|
Exercisable
as of December 31, 2009
|
0
|
$
|
-
|
-
|
$
|
0.34
|
||||||||||
The
weighted-average grant date fair value of options granted during the year ended
December 31, 2009 was $0.34. The total intrinsic value of options exercised
during the year-ended December 31, 2009 was $ 0.00
The
following table summarizes the status of the Company’s aggregate non-vested
options granted under the 2008 Stock Option Plan.
|
|
|
Number of
|
|
|
|
|||
|
Non-
|
Weighted-
|
|||||||
|
vested
|
Average
|
|||||||
|
Shares
|
Grant-
|
|||||||
|
Subject to
|
Date
|
|||||||
|
Options
|
Fair Value
|
|||||||
|
Non-vested
as of December 31, 2009
|
-
|
$
|
||||||
|
Non-vested
granted — twelve months ended December 31, 2009
|
700,000
|
$
|
0.34
|
|||||
|
Vested — twelve
months ended December 31, 2009
|
-
|
$
|
0.00
|
|||||
|
Forfeited — twelve
months ended December 31, 2009
|
-
|
$
|
||||||
|
Non-vested
as of December 31, 2009
|
700,000
|
$
|
0.35
|
|||||
As of
December 31, 2009, the unrecognized compensation cost related to non-vested
share based compensation arrangements granted under the plan that was
approximately $228,638 The costs are expected to be recognized on a
straight line basis from September 10, 2009 through September 14, 2014. The
total fair value of options and shares vested during the year ended December 31,
2009 was $0.0.
F-13
WEBSAFETY,
INC.
Formerly
Known as Blindspot Alert, Inc.
NOTES
TO THE FINANCIAL STATEMENTS
In the
aggregate, during 2009, the Company paid to related parties $337,340 for
consulting, legal and marketing services as reflected below.
|
Paid To
|
Consulting
|
Legal
Services
|
Marketing
|
Accounting
|
||||||||||||
|
Texas
Atlantic Capital Partners LLC
|
$ | 65,000 | ||||||||||||||
|
Rowland
W. Day II
|
$ | 18,000 | $ | 204,080 | ||||||||||||
|
Robertson
Schwartz Agency
|
$ | 30,000 | ||||||||||||||
|
Robert
J. Salluzzo
|
$ | 10,000 | ||||||||||||||
|
John
R. Williams, Jr.
|
$ | 10,260 | ||||||||||||||
Texas
Atlantic Capital Partners LLC is more than a 10% shareholder in the
Company. Rowland W. Day II is our CEO and more than a 10% shareholder
in the Company. Rusty Robertson is a principal in Robertson Schwartz
Agency. Ms. Robertson was President of Websafety, Inc. through June
30, 2009 and was a member of our Board of Directors. She resigned
from the Board of Directors on January 17, 2010. Robert J. Salluzzo
is a stockholder. John R. Williams, Jr. is our interim Chief Financial
Officer.
The
services that were provided are explained below.
Consulting-
Consulting
services consisted of the coordination of web design and marketing efforts aimed
at product launch to include the evaluation of the appropriate merchant service
agencies to be used as well as working with management relating to general
corporate matters associated with business plan implementation.
Legal-
Rowland Day is the
Company’s SEC attorney and is responsible for all quarterly and annual filings
as well as any other filings required as a result of the actions of the Company.
In addition Mr. Day initiated and provided oversight to the process that
resulted in the name change to Blindspot Alert, Inc. and Websafety,
Inc. The amount listed in the above table for Legal Services includes
$60,142 for expense reimbursement.
Marketing-
Marketing fees
paid relate to the development of a comprehensive marketing plan whose objective
is to build brand and product awareness through planned media and other
exposures.
Accounting-
Accounting fees
paid relates to the review of financial records and preparation of all financial
reporting to the SEC including, audits and preparation of tax
returns.
During
the period ended March 31, 2008, the Company sold all of its equipment to Barry
Van Wie (“BVW”), former CEO in exchange for the settlement of advance from BVW
in the amount of $5,027. These assets had a book value of $10,243 net
of accumulated depreciation. The Company incurred a loss of approximately
$5,200 from the sale.
The
Company as of March 12, 2008, owed $6,000 to Cab-Tive Advertising, Inc. for
unpaid equipment lease fees. The Company and Cab-Tive Advertising
entered into a mutual agreement which provided for an exchange of certain
equipment, and a cancellation of the unpaid lease fees resulting in a recording
of $6,000 of other income in 2008.
The
Company’s corporate headquarters are presently located at 2201 W Royal Lane,
Suite 200, Irving, Texas 75063.
As of
March 22, 2010, we entered into a five year lease agreement for 5,502 square
feet of corporate office space located in Irving, Texas. The total
lease payment will be $472,255 over the five year period beginning May 1, 2010
and expiring on April 30, 2015. Total annual lease payments are
$70,609 in the first year, $96,285 in the second year, $99,036 in the third
year, $101,787 in the fourth year and $104,538 in the fifth year. We
expect this space to meet our needs for the foreseeable future.
F-14
WEBSAFETY,
INC.
Formerly
Known as Blindspot Alert, Inc.
NOTES
TO THE FINANCIAL STATEMENTS
During
2009 we issued 3,810,000 shares for services and agreed to issue an additional
328,000 shares for services that were issued on January 6, 2010. We
also issued 27,000,000 shares to WQN, Inc. for the purchase of Websafety
Technology. On January 8, 2010, we granted common stock options for
services consisting of 500,000 options to David Sasnett, a member of the Board
of Directors, 900,000 options to Travis Bond, the Chief Operating Officer of the
Company, and 7,000,000 shares to Rowland Day, the Chief Executive Officer and a
member of the Board of Directors.
On
November 5, 2007, the SEC issued FASB ASC 815-10-S99-1(Prior authoritative
literature: SAB No. 109, Written Loan Commitments Recorded at Fair Value Through
Earnings). ASC 815-10-S99-1 provides guidance on the accounting for written loan
commitments recorded at fair value under generally accepted accounting
principles. Specifically, the ASC 815-10-S99-1 revises the Staff’s views on
incorporating expected net future cash flows related to loan servicing
activities in the fair value measurement of a written loan commitment. ASC
815-10-S99-1, which supersedes SAB 105, Application of Accounting Principles to
Loan Commitments, requires the expected net future cash flows related to the
associated servicing of the loan be included in the measurement of all written
loan commitments that are accounted for at fair value through
earnings. ASC 815-10-S99-1 is effective in fiscal quarters beginning
after December 15, 2007. The adoption of ASC 815-10-S99-1 did not
have a material impact on our financial statements.
In
December 2007, the Financial Accounting Standards Board (“FASB”) issued ASC
805(Prior authoritative literature: SFAS No. 141(R), Business Combinations,
which replaces SFAS No. 141). ASC 805 establishes principles and requirements
for how an acquirer recognizes and measures in its financial statements the
identifiable assets acquired, the liabilities assumed, any non-controlling
interest in the acquiree and the goodwill acquired. The statement also
establishes disclosure requirements which will enable users to evaluate the
nature and financial effects of the business combination. ASC 805 is effective
for calendar year companies on January 1, 2009. The adoption of ASC 815-10-S99-1
did not have a material impact on our financial statements.
In March
2008, the FASB issued FASB ASC 815-10 (Prior authoritative literature: SFAS No.
161, Disclosures about Derivative Instruments and Hedging Activities, and
amendment of SFAS No. 133). This statement will require additional disclosures
about how and why we use derivative financial instruments, how derivative
instruments and related hedged items are accounted for under ASC 815(Prior
authoritative literature: SFAS No. 133, “Accounting for Derivative Instruments
and Hedging Activities”, as amended and interpreted), and how derivative
instruments and related hedged items affect our financial position, results of
operations, and cash flows. ASC 815-10 is effective for financial statements
issued for fiscal years and interim periods beginning after November 15, 2008;
however early adoption is encouraged, as are comparative disclosures for earlier
periods. The adoption of ASC 815-10-S99-1 did not have a material impact on our
financial statements.
In April
2008, the FASB issued ASC 350-30(Prior authoritative literature: FASB Staff
Position No. 142-3, Determination of the Useful Life of Intangible Assets). ASC
350-30 amends the factors that should be considered in developing renewal or
extension assumptions used to determine the useful life of a recognized
intangible asset under ASC 350(Prior authoritative literature: SFAS No. 142,
“Goodwill and Other Intangible Assets”) and also requires expanded disclosure
related to the determination of intangible asset useful lives. ASC 350-30 is
effective for fiscal years beginning after December 15, 2008. Early adoption is
prohibited. The adoption of ASC 815-10-S99-1 did not have a material impact on
our financial statements.
In May
2008, the FASB issued ASC 470(Prior authoritative literature: FSP APB 14-1,
Accounting for Convertible Debt Instruments That May Be Settled in Cash upon
Conversion). ASC 470 requires issuers of convertible debt instruments that may
be settled in cash upon conversion to account separately for the liability and
equity components in a manner that will reflect the entity’s nonconvertible debt
borrowing rate when interest cost is recognized in subsequent periods. ASC 470
is effective for financial statements issued for fiscal years beginning after
December 15, 2008, and interim periods within those fiscal years. The adoption
of ASC 815-10-S99-1 did not have a material impact on our financial
statements.
In March
2008, the Financial Accounting Standards Board (“FASB”) issued FASB ASC 815-10
(Prior authoritative literature: FASB Statement 161, "
Disclosures about Derivative
Instruments and Hedging Activities—an amendment of FASB Statement No.
133
”). FASB ASC 815-10 requires enhanced disclosures about an
entity’s derivative and hedging activities. This Statement is
effective for financial statements issued for fiscal years and interim periods
beginning after November 15, 2008, with early application encouraged. The
Company has not yet adopted the provisions of ASC 815-10, but does not expect it
to have a material impact on its consolidated financial position, results of
operations or cash flows.
F-15
WEBSAFETY,
INC.
Formerly
Known as Blindspot Alert, Inc.
NOTES
TO THE FINANCIAL STATEMENTS
In May
2008, the Financial Accounting Standards Board (“FASB”) issued FASB ASC 944
(Prior authoritative literature: FASB Statement 163, "
Accounting for Financial Guarantee
Insurance Contracts—an interpretation of FASB Statement No. 60
). FASB ASC
944 interprets Statement 60 and amends existing accounting pronouncements to
clarify their application to the financial guarantee insurance contracts
included within the scope of that Statement. FASB ASC 944 is
effective for financial statements issued for fiscal years beginning after
December 15, 2008, and all interim periods within those fiscal years. ASC 944
has no effect on the Company’s financial position, statements of operations, or
cash flows at this time.
In May
2009, the FASB issued FASB ASC 855-10 (prior authoritative literature, FSB
No. FAS 165, “Subsequent Events”). FASB ASC 855-10 established general
standards of accounting for and disclosure of events that occur after the
balance sheet date but before financial statements are issued. FASB ASC 855-10
is effective for interim or annual financial periods ending after June 15,
2009. FASB ASC 855-10 did not have a material effect on the financial
position, cash flows, or results of operations.
In June
2009, the FASB issued FASB ASC 105-10 (prior authoritative literature, FSB No.
FAS 168, “The FASB Accounting Standards Codification and the Hierarchy of
Generally Accepted Accounting Principles—a replacement of FASB Statement No.
162).
FASB ASC 105-10
replaces SFAS 162 and establishes the
FASB Accounting Standards
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 GAAP. FASB ASC
105-10 is effective for financial statements issued for interim and annual
periods ending after September 15, 2009. As such, the Company is
required to adopt this standard in the current period. Adoption of
FASB ASC 105-10 did not have a significant effect on the Company’s consolidated
financial statements.
F-16
|
ITEM
9.
|
Changes in and Disagreements
with Accountants on Accounting and Financial
Disclosure
|
None.
Our
management with the participation of our Chief Executive Officer and Chief
Financial Officer, evaluated the effectiveness of our disclosure controls and
procedures as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act for
the end of the period covered by this Annual Report on Form 10-K. Based on that
evaluation, our principal executive officer and principal financial officer have
concluded that these controls and procedures are ineffective at December 31,
2009, including those to ensure that information required to be disclosed in
reports filed or submitted under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the rules and
forms of the SEC, and is accumulated and communicated to management, including
the Chief Executive Officer and the Chief Financial Officer, as appropriate, to
allow for timely decisions regarding required disclosure.
It should
be noted that any system of controls, however well designed and operated, can
provide only reasonable, and not absolute, assurance that the objectives of the
system will be met. In addition, the design of any control system is based in
part upon certain assumptions about the likelihood of future
events.
Report of Management on Internal
Control Over Financial Reporting
Management is responsible for
establishing and maintaining adequate internal control over financial reporting
(as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange
Act). Internal control over financial reporting is a process designed
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with accounting principles generally accepted in the United States of
America.
Our
internal control over financial reporting includes those policies and procedures
that (i) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of
the company; (ii) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with
accounting principles generally accepted in the United States of America and
that our receipts and expenditures are being made only in accordance with
authorization of our management and directors; (iii) provide reasonable
assurance regarding prevention or timely detection of the unauthorized
acquisition, use, or disposition of the Company’s assets that could have a
material effect on the financial statements.
Management
assessed our internal control over financial reporting as of December 31, 2009.
Management based its assessment on criteria established in Internal Control –
Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO). Management’s assessment included an evaluation of
the design of our internal control over financial reporting and testing of the
operational effectiveness of those controls.
Based on
this assessment, management has concluded that as of December 31, 2009, our
internal control over financial reporting was ineffective to provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with U.S. generally
accepted accounting principles. We noted that there is a lack of segregation of
certain duties at the Company due to the small number of employees with
responsibility for general administrative and financial matters. This
constitutes a deficiency in financial reporting. We therefore conclude that our
disclosure controls over financial reporting were ineffective as of and for the
year ended December 31, 2009. At this time, management has decided that
considering the employees involved and the control procedures in place, the
risks associated with such lack of segregation of duties are insignificant and
the potential benefits of adding additional employees to clearly segregate
duties do not justify the additional expenses associated with such increases.
Management will periodically reevaluate this situation. If the volume of
business increases and sufficient capital is secured, it is the Company’s
intention to further increase staffing to mitigate the current lack of
segregation of duties within the general, administrative and financial
functions.
This
annual report does not include an attestation report of our independent
registered public accounting firm regarding internal control over financial
reporting. Management’s report was not subject to attestation by our independent
registered public accounting firm pursuant to temporary rules of the SEC that
permit us to provide only management’s report in this annual
report.
12
Changes
in Internal Controls
We have
evaluated, with the participation of our Chief Executive Officer and Chief
Financial Officer, that there have been no changes in our internal control over
financial reporting during our most recent fiscal quarter that have materially
affected, or are reasonably likely to materially affect our internal control
over financial reporting. Inherent limitations exist in any system of control
including the possibility of human error and the potential of overriding
controls. The effectiveness of an internal control system may also be affected
by changes in conditions.
|
ITEM
9B.
|
OTHER
INFORMATION
|
None.
|
ITEM
10.
|
DIRECTORS, EXECUTIVE OFFICERS
AND CORPORATE GOVERNANCE
|
Directors
and Executive Officers
Our
current officers and directors are listed below. Each of our
directors will serve for one year or until their respective successors are
elected and qualified. Our officers serve at the pleasure of the
board of directors.
|
Name
|
Age
|
Position
|
Start of Term
|
|||
|
Rowland
W. Day II
|
54
|
CEO
Director
|
February
25, 2008
|
|||
|
Denton
Jones
|
58
|
Director
|
July
21, 2008
|
|||
|
B
Michael Adler
|
63
|
Director
and Chairman of
the
Board
|
July
2, 2009
|
|||
|
David
W. Sasnett
|
53
|
Director
|
July
2, 2009
|
|||
|
Travis
C Bond
|
52
|
Chief
Operating Officer
|
July
2, 2009
|
|||
|
John
R. Williams, Jr.
|
|
43
|
|
Interim
CFO,
Treasurer
|
|
July
2, 2009
|
Rowland
W. Day II, 55 years of age, Chief Executive Officer and Director.
Mr. Day
is a business corporate lawyer and has practiced law since 1983. Mr.
Day has been the Chairman of the Board of Clearant, Inc. (OTCBB-CLRA) and is
currently a director of RE3W WorldWide and Restaurants on the
Run. Mr. Day was the sole director of Promotions on Wheels Holdings,
Inc. when the change of control occurred with Texas Atlantic Partners and the
license was acquired from WQN, Inc. in April 2008.
Denton
Jones, 58 years of age, Director.
Mr. Jones
has been a private investor for 30 years. He is the manager of Texas
Atlantic Partners, LLC, the holder of 11,800,000 shares of common
stock. Mr. Jones is a director of WQN, Inc. Mr. Jones
requested that he become a director at the time Texas Atlantic Partner became
the largest shareholder of the Company in April 2008.
B
Michael Adler, 63 years of age, Director
Mr. Adler
is founder of two public companies—Intellicall, Inc. and World Quest Networks,
Inc. that have been pioneers in emerging telecommunications and internet
technologies. Mr. Adler has been awarded ten United States patents
that have been integral to telecommunications (answer supervision and automated
collect used by MCI) and the Internet (click-to-talk used by
Google). Mr. Adler is a director of WQN, Inc. and is its CEO and
required that a connection with the acquisition of the WQN, Inc. assets by the
Company that he become a director.
13
David
W. Sasnett, 53 years of age, Director
Mr.
Sasnett currently is a Director and the CFO of Consolidated Water Co. Ltd., a
publicly traded company and has served as Chief Financial Officer for several
publicly traded companies including VoIP, Inc, MasTec, Inc and Catalina
Lighting, Inc. His experience also includes more than 12 years with
the accounting, auditing and consulting firm of Deloitte & Touche,
LLP. Mr. Sasnett is a director of WQN, Inc. Mr. Sasnett
was added as a director based upon his relationship with WQN, Inc. and Messers.
Adler and Jones.
Travis
C Bond, 52 years of age, Chief Operating Officer
Mr. Bond
has been employed in the Direct Sales industry for over 18 years. He
has held corporate positions as VP Sales, VP Marketing, VP Operations and
COO. He has also owned two direct sales support
companies. His consulting firm has worked with over 100 companies
from start-up to revenues exceeding $60,000,000 a year.
John
R. Williams, Jr., 43 years of age, CPA, Chief Financial Officer
Mr.
Williams brings more than 20 years of corporate financial management experience
with both public and private companies. Prior to becoming Controller
of Websafety, he held controller and financial management positions with
companies, such as World Quest Networks, Inc., Ericsson, and Mobile Systems
International. Mr. Williams has significant hands-on experience in
all controllership functions, new systems implementation, managing company
quarterly and annual audit reviews, maintaining banking relationships and
compliance reporting, planning and analyses.
Family
Relationships
There are
no family relationships among any of our directors or executive
officers.
Legal
Proceedings
There
have been no events under any bankruptcy act, no criminal proceedings and no
judgments, injunctions, orders or decrees, including judgments finding
violations of any federal or state securities or commodities law, material to
the evaluation of the ability and integrity of any of our directors, executive
officers, promoters or control persons during the past five years.
Independent
Registered Public Accounting Firm
On August
7, 2009 the Board of Directors dismissed Moore & Associates, Chartered,
Certified Public Accountants. On September 22, 2009, we engaged the
services of Rotenberg & Co., LLP as our independent auditor. On
October 1, 2009 Rotenberg and Company LLP merged with another CPA firm, EFP
Group, to form a new firm. All of the partners and employees of
Rotenberg and Company LLP and EFP Group joined the new firm, EFP Rotenberg
LLP. EFP Rotenberg LLP succeeds Rotenberg and Company LLP as the
independent registered public accounting firm for Websafety, Inc. At no time
have there been any disagreements with any accountants regarding any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure.
On
August 27, 2009, the PCAOB issued PCAOB Release No. 105-2009-006
revoking the registration of Moore & Associates, Chartered Certified
Public Accountants and barring Michael J. Moore, CPA, from being an associated
person of a registered public accounting firm. The PCAOB imposed these sanctions
on the basis of its findings concerning the alleged violations of
Moore & Associates, Chartered Certified Public Accountants and Michael
J. Moore of Section 10(b) of the Securities Exchange Act of 1934 and Rule
10b-5 thereunder, PCAOB rules and auditing standards in auditing the financial
statements, PCAOB rules and quality controls standards, and noncooperation with
a Board investigation. A copy of the PCAOB Release can be accessed at the PCAOB
website at http:www.pcaobus.org.
As a
result of the above action, we may not include the audit reports or consents of
Moore & Associates, Chartered in any filings. Therefore, we engaged our
current auditor to conduct an audit from inception through December 31,
2008.
14
|
ITEM
11.
|
EXECUTIVE
COMPENSATION
|
We pay
our Chief Operating Officer $12,500 per month. Our Chief Executive
Officer and Chief Financial Officer are paid on an as-billed
basis. No compensation of cash or equity has been paid or granted for
the services of our directors.
|
ITEM
12.
|
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
|
The
following table sets forth the securities ownership of our directors, named
executive officers, and any person or group who is known to us to be the
beneficial owner of more than five percent of our voting stock as of April 14,
2010:
|
Title of Class
|
Name and Address of Beneficial Owner
1
|
Amount and Nature of
Beneficial Owner
1
|
Percent of
class
|
|||||||
|
Common
Stock
|
Denton
Jones
2
|
11,800,000
|
18.33
|
%
|
||||||
|
Common
Stock
|
B
Michael Adler
3
|
27,000,000
|
41.94
|
%
|
||||||
|
Common
Stock
|
Rowland
W. Day II
4
|
10,000,000
|
15.53
|
%
|
||||||
|
Common
Stock
|
David
W Sasnett
|
100,000
|
.16
|
%
|
||||||
|
Common
Stock
|
All
directors and executive officers as a group (4 persons)
|
48,900,000
|
75.96
|
%
|
||||||
1
Applicable
percentage ownership is based on 64,380,047 shares of total voting stock
outstanding at April 14, 2010. The number of shares of voting stock
owned are those “beneficially owned” as determined under the rules of the SEC,
including any shares of voting stock as to which a person has sole or shared
voting or investment power and any shares of voting stock which the person has
the right to acquire within sixty days through the exercise of any option,
warrant or right. All addresses are c/o 2201 West Royal Lane, Suite
200, Irving, Texas 75063, unless otherwise noted.
2
Includes
11,800,000 shares owned by Texas Atlantic Capital Partners. Mr. Jones
is the Managing Member of Texas Atlantic Capital Partners.
3
Includes
27,000,000 shares owned by WQN, Inc. Mr. Adler is the CEO
of WQN, Inc. and a director.
4
Includes 5,000,000 shares of common stock that have been issued to Mr.
Day that are subject to certain vesting requirements.
Unless
otherwise indicated, we believe that all persons named in the table have sole
voting and investment power with respect to all Shares beneficially owned by
them. A person is deemed to be the beneficial owner of securities
which may be acquired by such person within sixty days from the date on which
beneficial ownership is to be determined, upon the exercise of options, warrants
or convertible securities. Each beneficial owner’s percentage
ownership is determined by assuming that options, warrants and convertible
securities that are held by such person (but not those held by any other person)
and which are exercisable, convertible or exchangeable within such sixty day
period, have been so exercised, converted or exchanged.
|
ITEM
13.
|
CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE
|
Transactions
with Related Persons
In the
aggregate, during 2009, the Company paid to related parties $337,340 for
consulting, legal and marketing services as reflected below.
|
Paid To
|
Consulting
|
Legal Services
|
Marketing
|
Accounting
|
||||||||||||
|
Texas
Atlantic Capital Partners LLC
|
$
|
65,000
|
||||||||||||||
|
Rowland
W. Day II
|
18,000
|
$
|
204,080
|
|||||||||||||
|
Robertson
Schwartz Agency
|
$
|
30,000
|
||||||||||||||
|
Robert
J. Salluzzo
|
$
|
10,000
|
||||||||||||||
|
John
R. Williams Jr.
|
$
|
10,260
|
||||||||||||||
Denton
Jones, a director of the Company is the manager of Texas Atlantic Capital
Partners LLC , Rowland W. Day II is our CEO and a director and Rusty Schwartz,
was a director and is a principal in Robertson Schwartz Agency. Robert J.
Salluzzo is a stockholder.
The
services that were provided are outlined below.
15
Consulting-
Consulting
services consisted of the coordination of web design and marketing efforts aimed
at product launch to include the evaluation of the appropriate merchant service
agencies to be used as well as working with management relating to general
corporate matters associated with business plan implementation.
Legal-
Legal service consisted
of corporate legal advice, document preparation and the preparation of quarterly
and annual filings as well as other filings required as a result of the actions
of the Company. The amount listed above includes $60,142 for expense
reimbursement.
Marketing-
Marketing services
related to the development of a comprehensive marketing plan whose objective is
to build brand and product awareness through planned media and other
exposures.
Accounting-
Accounting fees
paid relates to the review of financial records and preparation of all financial
reporting to the SEC including, audits and preparation of tax
returns.
Director
Independence
It is our
position that Messers. Adler, Day and Jones are not independent.
|
ITEM
14.
|
PRINCIPAL ACCOUNTING FEES AND
SERVICES
|
The
following table sets forth the aggregate fees billed to us for the fiscal years
ended December 31, 2009 and 2008 by EFP Rotenberg LLP and Moore & Associates
Chartered.
|
|
Fiscal Year
2009
|
Fiscal Year
2008
|
||||||
|
Audit Fees:
|
||||||||
|
EFP
Rotenberg LLP
|
$
|
7050
|
$
|
4500
|
||||
|
Moore
& Associates Chartered
|
$
|
2625
|
$
|
7625
|
||||
|
Audit
Related Fees: EFP Rotenberg LLP
(1)
|
$
|
0
|
$
|
13950
|
||||
(1)
Comment
letter and restatement of 2008
Tax
Fees
There
were no fees paid in either 2009 or 2008 for tax related
matters.
16
|
ITEM
15.
|
EXHIBITS, FINANCIAL STATEMENT
SCHEDULE
|
|
Exhibit No.
|
Description
|
|
|
3.1
|
Amended
and Restated Certificate of Incorporation of Blindspot Alert, Inc., a
Nevada corporation. Incorporated by reference to our current report on
Form 14-C filed with the SEC on December 5, 2008.
|
|
|
10.1
|
Incorporated
by reference to our current report on Form 8-K filed with the SEC on July
25, 2008 License Agreement dated June 30, 2008.
|
|
|
31.1
|
Rule
13a-14(a) Certification of Chief Executive Officer
|
|
|
31.2
|
Rule
13a-14(a) Certification of Chief Financial Officer
|
|
|
32.1
|
Certification
of Chief Executive Officer Pursuant to 18.U.S.C. Section 1350, as Pursuant
to Section 906 of the Sarbanes Oxley Act of
2002
|
|
|
32.2
|
|
Certification
of Chief Financial Officer Pursuant to 18.U.S.C. Section 1350, as Pursuant
to Section 906 of the Sarbanes Oxley Act of
2002
|
17
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
| WEBSAFETY, INC. FKA BLINDSPOT ALERT, INC. | |||
| FKA PROMOTIONS ON WHEELS HOLDINGS, INC. | |||
|
Date: April
14, 2010
|
By:
|
/s/
Rowland W. Day II
|
|
|
Rowland
W. Day II,
|
|||
|
Chief
Executive
Officer
|
|||
Pursuant
to the requirements of the Securities and Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the Registrant and in
the capacities and on the dates indicated:
|
Signature
|
Title(s)
|
Date
|
||
|
/s/ Rowland W. Day
II
|
Chief
Executive Officer
|
April
14, 2010
|
||
|
Rowland
W. Day II
|
||||
|
/s/ John R. Williams,
Jr.
|
Chief
Financial Officer
|
April
14, 2010
|
||
|
John
Williams
|
||||
|
/s/ Denton Jones
|
Director
|
April
14, 2010
|
||
|
Denton
Jones
|
||||
|
/s/ B Michael
Adler
|
Director
|
April
14, 2010
|
||
|
B
Michael Adler
|
18
TABLE OF CONTENTS
Part IItem 1. BusinessItem 1A. Risk FactorsItem 1B. Unresolved Staff CommentsItem 2. Description Of PropertyItem 3. Legal ProceedingsItem 4. Submission Of Matters To A Vote For Security HoldersPart IIItem 5. Market For Registrant S Common Equity. Related Stockholders Matters and Issuerpurchase Of Equity SecuritiesItem 6. Selected Financial DataItem 7. Management S Discussion and Analysis Of Financial Condition and Results OfoperationsItem 7A. Quantitative and Qualitative Disclosures About Market RiskItem 8. Financial Statements and Supplementary DataNote 1. Nature Of Business and Summary Of Significant Accounting PoliciesNote 2. Going ConcernNote 3. Concentration Of Credit RiskNote 4. Property and EquipmentNote 5. Intangible AssetNote 6. Option To Acquire and ExpirationNote 7. Stock IssuancesNote 8. Stock OptionsNote 9. Related Party TransactionsNote 10. Loss on Sale Of EquipmentNote 11. Other IncomeNote 12. FacilitiesNote 13. Subsequent EventsNote 14. Recent PronouncementsItem 9. Changes in and Disagreements with Accountants on Accounting and Financial DisclosureItem 9a(t). Disclosure Controls and ProceduresItem 9B. Other InformationPart IIIItem 10. Directors, Executive Officers and Corporate GovernanceItem 11. Executive CompensationItem 12. Security Ownership Of Certain Beneficial Owners and Management and Related Stockholder MattersItem 13. Certain Relationships and Related Transactions and Director IndependenceItem 14. Principal Accounting Fees and ServicesPart IVItem 15. Exhibits, Financial Statement Schedule