UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
10
General Form for Registration of Securities
Pursuant to Section 12(b) or (g) of the Securities Exchange Act of 1934
Southern
ITS International, Inc.
(Exact name of registrant as specified in its charter)
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Nevada |
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22-3977583 |
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(State or Other Jurisdiction of |
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(I.R.S. Employer |
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Incorporation or Organization) |
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Identification No.) |
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7935 W. Sahara
Avenue
Suite 103
Las Vegas, NV |
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89117 |
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(Address of Principal Executive Offices) |
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(Zip Code) |
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Registrant’s telephone
number, including area code: (888) 474-5874
Correspondence
to:
Sylvain L. Desrosiers, Chief Executive Officer - 7935 W. Sahara Ave Suite 103
Las Vegas, NV 89117
Tel: (888) 474-5874
E-mail: info@sitsint.com
Securities to
be registered under Section 12(b) of the Act: None
Securities to be registered
under Section 12(g) of the Exchange Act:
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Title of each class to be
so registered |
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Name of Exchange on which each
class is to be registered |
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Common Stock, $.001 |
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N/A |
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Indicate by check mark whether
the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company”
in Rule 12b-2 of the Exchange Act. (Check one):
| Large accelerated filer o |
Accelerated filer o |
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| Non-accelerated filer o |
Smaller reporting company x |
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| (Do not check if a smaller reporting company) |
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We are filing this General
Form for Registration of Securities on Form 10 to register our common stock, par value $0.001 per share (the “Common Stock”),
pursuant to Section 12(g) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Once this registration
statement is deemed effective, we will be subject to the requirements of Regulation 13A under the Exchange Act, which will require
us to file annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K, and we will be required
to comply with all other obligations of the Exchange Act applicable to issuers filing registration statements pursuant to Section
12(g) of the Exchange Act.
Unless otherwise noted,
references in this registration statement to “Southern ITS International, Inc.,” the “Company,” “we,”
“our” or “us” means Southern ITS International, Inc.
FORWARD LOOKING STATEMENTS
There are statements
in this registration statement that are not historical facts. These “forward-looking statements” can be identified
by use of terminology such as “believe,” “hope,” “may,” “anticipate,” “should,”
“intend,” “plan,” “will,” “expect,” “estimate,” “project,”
“positioned,” “strategy” and similar expressions. You should be aware that these forward-looking statements
are subject to risks and uncertainties that are beyond our control. For a discussion of these risks, you should read this entire
Registration Statement carefully, especially the risks discussed under “Risk Factors.” Although management believes
that the assumptions underlying the forward looking statements included in this Registration Statement are reasonable, they do
not guarantee our future performance, and actual results could differ from those contemplated by these forward looking statements.
The assumptions used for purposes of the forward-looking statements specified in the following information represent estimates
of future events and are subject to uncertainty as to possible changes in economic, legislative, industry, and other circumstances.
As a result, the identification and interpretation of data and other information and their use in developing and selecting assumptions
from and among reasonable alternatives require the exercise of judgment. To the extent that the assumed events do not occur, the
outcome may vary substantially from anticipated or projected results, and, accordingly, no opinion is expressed on the achievability
of those forward-looking statements. In the light of these risks and uncertainties, there can be no assurance that the results
and events contemplated by the forward-looking statements contained in this Registration Statement will in fact transpire. You
are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. We do not undertake
any obligation to update or revise any forward-looking statements.
ITEM 1. BUSINESS
Company History
The Company was incorporated
in Nevada on September 27, 1984 as Numeric Two Corporation. On July 10, 1985 we changed our name to Beta Tech Robotics, Inc. On
August 28, 1996, we changed our name to Axion Spatial Imaging, Inc. On March 9, 2009, we changed our name to Alco Advanced Technologies,
Inc. Finally, on April 5, 2012, we changed our name to Southern ITS International, Inc.
Business Overview
Southern ITS International, Inc. has been successful
in providing proprietary equipment and services to support government regulated
high compliance
industries. Government sectors
(correctional facilities
and programs), and
private sectors,
including gaming and
now medical
marijuana
and recreational
marijuana (MMJ/MJ),
have
had challenges,
but have been brought into the mainstream
and are now subject to stringent
compliance
to tough government
regulations.
Southern
ITS International,
Inc. has
historically
developed and
delivered
to the gaming
and corrections
sectors
high compliance
support systems
facilitating
the integration
and implementation
of complementary
technologies.
SITS continues
to deliver
such electronic
security and networking
infrastructures
to those clients.
SITS
is expanding
to deliver
the same
quality
of auditing
and compliance
technology to
the emerging
MMJ/MJ
market sector
that it
delivers
to other high
compliance industries.
Additionally
SITS is developing
new patent pending
equipment and systems
specifically
addressing MMJ/MJ-related
government and
banking
regulations and requirements.
Greeniosk
Secure
Cash payment
System:
Southern
ITS International,
Inc has
created
the first
payment
to sales
technology
for marijuana
dispensaries
– called
Greeniosk™.
The Greeniosk™
System
provides a legal
and easy
solution to the Bank Depository
problem. Greeniosk
provides a detailed
and complete transaction
record from
“payment-to-sales”
which combined
with
“Seeds-to-Sales”
software
and hardware
not only
keeps the
audit trail
for the
payment but
also for
the management
of the inventory.
Greeniosk™
System
uses a
combination of
hardware and
software
that produces
a complete
record keeping
system
and audit
trail from
the cash purchase
of the client
to the
deposit
at the
bank. Each
transaction
is processed
through a secure,
safe-type
kiosk that
will accept
all types
and denominations
of currency. The Greeniosk™
prints an encrypted bar
code voucher
that is redeemed
at the dispensing
counter to purchase
the product. The
kiosk operation
is simple and only requires
the client to answer
3 qualifying questions.
The Greeniosk™ kiosk
and system
accomplishes
several important
tasks;
it removes
the handling of
cash by
employees, the cash
remains
in a safely
locked kiosk and can
only be removed
by authorized people
or money transport
companies.
When
the currency is
removed from
the Greeniosk™,
or at the
end of the
day the
Greeniosk™ will
print an
audit report
of each deposit.
The Greeniosk™
not only reports the total
and detail
amounts collected,
but also
produces a report of the denomination
of each bill used for
payment. If the bank requires
further documentation,
we can provide
a digital image
file of each
bill inserted
in the
Greeniosk™ and match
the currency
transaction to
the client’s
driver license
and marijuana
card. All
this is loaded
into the Greeniosk™
database
for additional
audit trail and
reporting
purposes. The
vouchers redeemed
by the clients
at the
dispensary counter for
merchandise will
be used to provide
a paper audit
trail process.
One
of the purposes
of the FinCEN
bulletin “Guidance
Clarification
Expectations
of Financial Instructions
Serving
Marijuana
Business”
is to provide
clarity
and to enhance
the availability
of financial services
for the marijuana
business.
The Greeniosk™
System will
allow the Marijuana
businesses
to create the
records and documentation
needed for compliance,
auditing and will
build a trusted relationship
between the
Conventional Banks
and the Marijuana
business
owners.
Phone
& Data Solutions:
With
our combined experience
of over
70 years,
Southern ITS and its team has
the capacity
to lead you through each and every
step required
for the complete
design and
installation of all
network systems.
These steps
include the system
specifications,
design, cable
infrastructure
installation, system
installation, system
training and
technical
support.
Southern
ITS Inc
is highly
qualified
and experienced
in all
aspects
of the low
voltage systems
industry. We have
a firsthand knowledge
of local codes
and an
excellent
rapport with local agencies
such
as the Mississippi Gaming Commission.
Southern
ITS offers phone
and data products
within 3 categories:
Cable
Infrastructure:
Networking:
| · | Cisco switches and
routers |
IT Tools
and Services:
| · | Virtual
Private Networks
(VPN) |
| · | Email to PDA’s
and Mobile
Phones |
Southern
ITS Team
Certifications:
| · | Registered
Communications Distribution Designer
(RCDD) maintained
through Building
Industry
Consulting Services
International
(BICSI). |
| · | MCT-Microsoft
Certified
Trainer |
| · | MCSE-Microsoft
Certified Systems
Engineer |
| · | MCP-Microsoft
Certified Professional |
| · | MCP+I-Microsoft
Certified
Professional
plus Internet |
| · | MCSA-Microsoft
Certified Systems
Administrator |
| · | CNI-Certified
Novell
Instructor |
| · | CNE-Certified
Novell Engineer |
| · | CAN-Certified
Novell
Administrator |
| · | Multimedia Design
and Installation
Certification
(Optical Cabling
Corp) |
System
Integration:
The
benefits
of systems
integration
can
produce efficiency
in overhead
costs such
as time-savings
and cost-savings
that will not only
justify your investment,
but also
allow for cost-effective
expansion
and upgrades.
True
systems
integration
can only
be successfully
implemented with
in-depth
knowledge about
technology
trends,
system
architecture,
as well
as older
technology
currently
utilized. In addition,
design and
implementation experience
is required to develop
an integration
plan that will avoid pitfalls that will
diminish your
return on investment.
Southern
ITS uses
its expert
knowledge
and experience
to bring the
power of integration
to your
benefit.
Instead
of multiple systems
comprising CCTV,
access
control,
and fire
alarms – One.
Instead of multiple employee
databases
and phone systems
– One. Suddenly,
new possibilities
arise where
only challenges
stood before.
With
our combined
experience
of over
70 years,
Southern ITS
and its
team has
the capacity
to lead you through
each
and every
step required
for the complete
design and
installation of
all network
systems.
These steps include
the system specifications,
design, cable
infrastructure
installation, system
installation, system
training and
technical
support.
Data
Integration:
Southern ITS
leverages
our strong
supply chain
relationships
with unmatched
knowledge
of the technology
to maximize
IT infrastructure
ROI for enterprises
of all
sizes. Our
hardware
and software
integration
services
are able
to reduce
both cost and risk and
deliver flexibility
to leverage future
technologies.
We evaluate and
select
best-fit
technology
components for a
tailored
solution. Throughout
the design
process, Southern
ITS engineering
team takes
into consideration
all aspects
of the solution life-cycle
including
cost, performance,
energy
efficiency,
regulatory
requirements, custom
configurations,
branding,
logistics, order
fulfillment and support.
Security
Systems
Integration:
Many
organizations’
facility
security
resembles
a patchwork
of various,
independent systems
than invariably
detract
from the
overall
effectiveness
of the system.
Surveillance cameras
may be part analog
and part digital,
each kind
on their own
independent system
requiring
a different
knowledge
base for
each
system. Access
Control may be independent
of the surveillance monitoring systems
or may even
consist of stand-alone
units for each door. Fire
alarms may
also reside on another
monitoring systems.
Many times deficiencies
in a patchwork
of security
measures are
not realized
until it is too late.
Thankfully,
Southern ITS
has over
three decades
of combined
experience
providing security
integration
services
for facilities
large and
small. Designing,
specifying,
installing, training,
and even
monitoring with our managed services
brings fire,
access
control, and video surveillance
all into one system,
viewable from a single
monitor or tablet or cell phone for
real-time
reporting
and response to effectively
document, record,
and most importantly –
mitigate problems
before
they start.
Is
your hardware
considered
ancient
technology? The idea of ripping
out your existing
analog
system is not only
very impractical,
it is extremely
cost prohibitive. With an integrated
security
system
designed
and install from
Southern ITS, your analog
surveillance matrix
can remain
in place. Our new
playback
software makes archiving
and video data retrieval
easier
and more efficient
compared
to existing
VCR surveillance systems.
At
Southern ITS,
we carry
over 35
brands
of cameras,
analog
and digital
equipment.
Our strategic
leading
hardware
partners such
allow us to not only
help with your
conversion to
digital,
we also
service your
existing
cameras
and analog
systems.
Commitment to technology
has us on
the forefront
of IP cameras,
integration
to access
control
and player
management software
solutions.
Southern
ITS Security
Integration
software
benefits
and features:
| · | Integrate
access
control, digital
video and intrusion |
| · | Manage
cardholders through
multiple locations |
| · | Real-time
alarm/event
monitoring |
| · | Content-sensitive
help screens |
| · | 64-bit and
32-bit supported operating
systems |
Casino Systems
Integration:
Southern
ITS is committed
to the mission
of providing total
systems
integration
to casinos worldwide
by maintaining
cost effectiveness
while providing the highest
end of voice, data,
surveillance,
audio/visual and fire
detection
available.
We are represented
throughout the world by leading
individuals within
the digital
surveillance and
IT integration
industry.
Today,
we are
the leading
force in
helping casinos
make the move
to a digital
video recording
solution and
integrating
our solutions
with other features
of your business such
as POS and access
control.
We’ve
succeeded
to ease the burden
of this major investment by offering
systems
that work off the facility’s
current
analog
matrix while ensuring
all the superior benefits
and efficiencies
of a digital
recording
system. Furthermore
we’ve enhanced
the usefulness of such
a powerful upgrade.
From our Fail Over protection
to tablet enabled
live monitoring; our offering puts
you in the winner’s circle
for a comprehensive
risk management
strategy.
We
desire to
be your
one source
for all
of your
video surveillance
needs
whether that
is consulting and
management,
complete
systems,
or quality
surveillance
hardware.
Every employee
at Southern ITS
boasts an extensive
background
within the security
industry and is ready
to deliver the parts,
service, and
experience
you need
to get the job done right. Contact
us today for a
free consultation on how
we can
best service
your needs.
In
addition to
our hardware
and software
offerings,
we also
offer
full solutions that alleviate
the monumental
tasks of installing
and servicing
a powerful security
solution. Southern ITS lends
our expertise
and vast knowledge through:
System
Design:
We take
the hard
work out
of probably
the most
difficult
job in a
project.
A good
System
Design
is crucial
to the success of the
job.
At
Southern ITS,
we believe
in making
the design
as simple
as we
can, to
allow you
the business owner
to evaluate
the viability
of what
the integrator
is doing.
We also
want to make sure that all
levels of the project
understand
what is going on. So, we use simple language
and explain
what connects
to where
using latest technology
in design techniques
to complete the task.
80%
of a good job is the design,
so why compromise?
Regardless
of the complexity
or how much integration,
Southern ITS
can ensure
an easy
transition via:
| · | Simple line Drawings
so you
can understand. |
| · | Migration
between
systems
explained. |
| · | Final
drawings
as complex
as you
need. |
| · | Future
expansion
explained
easier using
latest techniques
in drawings. |
Project
Management:
Southern ITS
has
become
a market
leader
in Project
Management
to specific
target
markets
in recent
years.
The casino
industry for
instance
is just one market
that has recognized
that Southern ITS’ experience
with their needs is essential to the
successful migration
from Analog
to Digital
Technology for Video Recording
and Surveillance.
Regardless
of what industry you are
in, we have the talented
staff to assist you
in ensuring
your project
meets its target.
| · | Many
years
of providing
Casino Services
across the world |
| · | Experience
in a vast
range of
institutional provisions
covering Airports,
Correctional
facilities and
Law
Enforcement
in addition to Casino
projects. |
| · | Saving
of vital
resources
within your
business by
letting our
staff do all
the hard work for you. |
Facilities
Management:
What
do you
do if something
malfunctions?
Who
do you
call? Let
your staff
or tenants call
us and we will
coordinate the
service
call through to
it’s completion.
One
single point of
contact,
one phone
number and one
account every
month – there
is no easier way!
| · | No confusion for
your tenants
to whom do they call |
| · | You
get one account every
month for everything |
| · | No need
to search
for someone
to repair
your services,
we do all
the work |
| · | If
you want to upgrade,
all the hassles
are handled
by Southern
ITS to save you
the confusion of inviting
new vendors
pedaling
their products |
| · | Need
to add a new
building or office
area, one
phone call,
you tell us what
you want
and we do the
rest. |
| · | Detailed
report
available
on existing
systems, so that
you know exactly
what is wrong
and can take appropriate
action to rectify
any
problems before
they occur. |
| · | Simply
put, “Southern ITS
can fix your
problems
with no hassles and no bias to a particular
product”. |
Emerging Growth Company
We are an emerging growth company under the
JOBS Act. We shall continue to be deemed an emerging growth company until the earliest of:
| · |
(a) the last day of the fiscal year of the issuer during which it had total annual gross revenues of $1,000,000,000 (as such amount is indexed for inflation every 5 years by the Commission to reflect the change in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics, setting the threshold to the nearest 1,000,000) or more; |
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(b) the last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities of the issuer pursuant to an effective IPO registration statement; |
| · |
(c) the date on which such issuer has, during the previous 3-year period, issued more than $1,000,000,000 in non-convertible debt; or |
| · |
(d) the date on which such issuer is deemed to be a ‘large accelerated filer’, as defined in section 240.12b-2 of title 17, Code of Federal Regulations, or any successor thereto.’. |
As an emerging growth
company we are exempt from Section 404(b) of Sarbanes Oxley. Section 404(a) requires Issuers to publish information in their annual
reports concerning the scope and adequacy of the internal control structure and procedures for financial reporting. This statement
shall also assess the effectiveness of such internal controls and procedures. Section 404(b) requires that the registered accounting
firm shall, in the same report, attest to and report on the assessment on the effectiveness of the internal control structure and
procedures for financial reporting.
As an emerging growth
company we are also exempt from Section 14A (a) and (b) of the Securities Exchange Act of 1934 which require the shareholder approval
of executive compensation and golden parachutes.
We have elected to use
the extended transition period for complying with new or revised accounting standards under Section 102(b)(2) of the Jobs Act,
that allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and
private companies until those standards apply to private companies. As a result of this election, our financial statements may
not be comparable to companies that comply with public company effective dates.
ITEM 1A: RISK FACTORS
An investment in our
common stock involves a high degree of risk. You should carefully consider the following risk factors and other information included
in this Form 10. If any of the following risks actually occur, our business, financial condition or results of operations could
be materially and adversely affected and you may lose some or all of your investment. The trading price of our common stock could
decline due to any of these risks, and you could lose all or a part of your investment. We cannot assure any investor that we will
successfully address these risks. Prospective investors should carefully consider the following risk factors:
Risk Factors
The following factors
are the most significant factors that can impact year-to-year comparisons and may affect the future performance of our businesses.
New risks may emerge, and management cannot predict those risks or estimate the extent to which they may affect our financial performance.
We are an "emerging growth company,"
and we cannot be certain if the reduced reporting requirements applicable to emerging growth companies will make our common stock
less attractive to investors.
We are an "emerging growth company,"
as defined in the Jumpstart Our Business Startups Act, or the JOBS Act. For as long as we continue to be an emerging growth company,
we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are
not emerging growth companies, including not being required to comply with the auditor attestation requirements of Section 404
of the Sarbanes-Oxley Act, delay compliance with new or revised accounting standards that have different effective dates for public
and private companies until they are made applicable to private companies, reduced disclosure obligations regarding executive compensation
in our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive
compensation and shareholder approval of any golden parachute payments not previously approved. We could be an emerging growth
company for up to five years, although we could lose that status sooner if our revenues exceed $1 billion, if we issue more
than $1 billion in non-convertible debt in a three year period, or if the market value of our common stock held by non-affiliates
exceeds $700 million as of any June 30 before that time, in which case we would no longer be an emerging growth company
as of the following December 31. We cannot predict if investors will find our common stock less attractive because we may
rely on these exemptions. We have decided to take advantage of the exemptions provided to emerging growth companies and as a result
our financial statements may not be comparable to companies that comply with public company effective dates. In addition, some
investors might find our common stock less attractive as a result, there may be a less active trading market for our common stock
and our stock price may be more volatile.
The Company has generated revenues, but
limited profits, to date.
The Company has generated limited profits to
date. The business model of the Company involves significant costs of services, resulting in a low margin on revenues. Coupling
this fact with operating expenses incurred by the Company, the Company has only generated a small amount of total profits in the
past. The Company hopes that as its business expands that the scale of the enterprise would result in a higher operating margin
and net margin.
We have a history of operating losses and
there can be no assurance we will be profitable in the future. There is substantial doubt about the Company’s ability to
continue as a going concern.
The Company may be dependent on sales of our
equity securities and debt financing to meet our cash requirements for the future proposed expansion of operations. The Company
had losses from operations totaling $470,583 for the fiscal year ended December 31, 2014. As of December 31, 2014, we had an accumulated
deficit of $8,150,905. The Company needs to maintain a steady operating structure, ensuring that expenses are contained such that
profits are consistently achieved. In order to expand the Company’s business, the Company would likely require additional
financing. Management of the Company must continually develop and refine its strategies and goals in order to execute the business
plan of the Company on a broad scale and expand the business.
One of the biggest challenges facing the Company
will be in securing adequate capital to continue to expand its business and increase operations. Secondarily, an ongoing challenge
remains the maintenance of an efficient operating structure and business model. The Company must keep its expenses and the costs
of employees at a minimum in order to generate a profit from the revenues that it receives from its clients. Third, in order to
expand, the Company will need to continue implementing effective sales and marketing strategies to reach and forge new business
relationships. The Company has devised its initial sales, marketing and advertising strategies, however, the Company will need
to continue refinement of these strategies and also skillfully implement these plans in order to achieve ongoing and long-term
success in its business. Fourth, the Company must continuously identify, attract, solicit and manage employee talent, which requires
the Company to consistently recruit, incent and monitor various employees. High employee turnover or attrition is a significant
risk for the Company, as it requires expending substantial resources to locate and train new personnel and also to replace personnel
for clients. These tasks require significant time and attention from the Company’s management, and employees may nevertheless
become dissatisfied with their respective tenure with the Company.
Due to financial constraints, the Company has
to date conducted limited advertising and marketing to reach customers. In addition, the Company has not yet located the sources
of funding to develop the Company on a broader scale through acquisitions or other major partnerships. If the Company were unable
to locate such financing and/or later develop strong and reliable sources of potential new business relationships and a means to
efficiently reach new business partners and customers, it is unlikely that the Company will be able to develop its proposed expanded
operations and business plan. Moreover, the above assumes that the Company’s services are consistently met with client satisfaction
in the marketplace and exhibit steady success amongst the potential customer base, neither of which is reasonably predictable or
guaranteed.
Our auditors have questioned our ability to
continue operations as a “going concern.” Investors may lose all of their investment if we are unable to continue operations
and generate revenues. We hope to obtain significant revenues from future product sales. In the absence of significant
sales and profits, we may seek to raise additional funds to meet our working capital needs, principally through the additional
sales of our securities. However, we cannot guarantee that we will be able to obtain sufficient additional funds when
needed, or that such funds, if available, will be obtainable on terms satisfactory to us. As a result, substantial doubt exists
about our ability to continue as a going concern.
The Company's Business Plan is Substantially
Dependent on Raising the Maximum Amount in Offering
The Company business plan is described
above. The Company’s business plan is substantially dependent on raising the maximum amount in this public offering. If
we do not sell the maximum number of shares offered, the Company may possibly fund the operations with officer loans and any
bank loans that may be available. However, we have not yet entered into any written agreements with any parties, with regards
to the financing of our plan of operations. Moreover, due to the early stage of the Company’s life, the Company has not
yet located the sources of funding to develop the Company on a broader scale through acquisitions or other major
partnerships. If the Company were unable to raise the maximum amount in this public offering or locate other financing, it is
unlikely that the Company will be able to develop its proposed expanded operations and business plan.
No assurance of continued market acceptance.
There is no assurance that the Company’s
services or solutions will continued to meet with market acceptance. Moreover, there is no assurance that these services and solutions
will continue to have any competitive advantages. Also, there is no assurance that the market reception will be positive.
Our business is sensitive to reductions
in discretionary consumer spending.
Our business may be adversely affected by weak
economic conditions experienced in the United States as we will be highly dependent on discretionary spending by our guests. We
are not able to predict the length or severity of any economic climate. Changes in discretionary consumer spending or consumer
preferences brought about by factors such as increased or continuing high unemployment, continuing high energy and automobile fuel
prices, perceived or actual deterioration in general economic conditions, the protracted disruption in the housing markets, the
availability of credit, perceived or actual decline in disposable consumer income and wealth (including declines resulting from
increases in various tax rates) and changes in consumer confidence in the economy may continue to reduce customer demand for the
leisure activities we offer and adversely affect our revenues and cash flow.
The Company is an early-stage company with a limited operating
history, and as such, any prospective investor may have difficulty in assessing the Company’s profitability or performance.
Because the Company is an early-stage company
with a limited operating history, it could be difficult for any investor to assess the performance of the Company or to determine
whether the Company will meet its projected business plan. The Company has limited financial results upon which an investor may
judge its potential. As a company still in the early stages of its life, the Company may in the future experience under-capitalization,
shortages, setbacks and many of the problems, delays and expenses encountered by any early-stage business. An investor will be
required to make an investment decision based solely on the Company management’s history, its projected operations in light
of the risks, the limited operations and financial results of the Company to date, and any expenses and uncertainties that may
be encountered by one engaging in the Company’s industry.
The Company is an early-stage organization
and has a correspondingly small financial and accounting organization. Being a public company may strain the Company's resources,
divert management’s attention and affect its ability to attract and retain qualified officers and directors.
The Company is an early-stage company with
no developed finance and accounting organization and the rigorous demands of being a public company require a structured and developed
finance and accounting group. As a reporting company, the Company is already subject to the reporting requirements of the Securities
Exchange Act of 1934. However, the requirements of these laws and the rules and regulations promulgated there under entail significant
accounting, legal and financial compliance costs which may be prohibitive to the Company as it develops its business plan, services
and scope. These costs have made, and will continue to make, some activities more difficult, time consuming or costly and may place
significant strain on its personnel, systems and resources.
The Securities Exchange Act requires, among
other things, that companies maintain effective disclosure controls and procedures and internal control over financial reporting.
In order to maintain the requisite disclosure controls and procedures and internal control over financial reporting, significant
resources and management oversight are required. As a result, management’s attention may be diverted from other business
concerns, which could have a material adverse effect on the development of the Company's business, financial condition and results
of operations.
These rules and regulations may also make it
difficult and expensive for the Company to obtain director and officer liability insurance. If the Company is unable to obtain
adequate director and officer insurance, its ability to recruit and retain qualified officers and directors, especially those directors
who may be deemed independent, will be significantly curtailed.
The Company is an early-stage company and
has little experience in being a public company.
The Company is an early-stage company and as
such has little experience in managing a public company. Such lack of experience may result in the Company experiencing difficulty
in adequately operating and growing its business. Further, the Company may be hampered by lack of experience in addressing the
issues and considerations which are common to growing companies. If the Company’s operating or management abilities consistently
perform below expectations, the Company’s business is unlikely to thrive.
The failure or inability to perform under
client contracts could result in damage to the Company’s reputation and give rise to legal claims against the Company.
If clients are not satisfied with the level
of performance, the reputation of the Company in the industry may suffer, which could have a material adverse effect on the business,
financial condition, results of operations, and cash flows of the Company.
Reliance on third party agreements and relationships
is necessary for development of the Company's business.
Our operations will depend on a number of third
parties and contractual relationships therewith. We will have limited control over these third parties. We will probably not have
many long-term agreements with many of them. We rely upon a number of third parties to carry our business operations in Nevada,
and we will need to expand in the future the number of third parties doing this on our behalf. There can be no assurance that existing
such agreements will not be terminated or that they will be renewed in the future on terms acceptable to us, or that we will be
able to enter into additional such agreements. Our inability to preserve and expand the necessary contractual relations with third
parties would likely materially adversely affect our business, results of operations and financial condition. We also will rely
on a variety of technology that we will license from third parties. Our loss of or inability to maintain or obtain upgrades to
any of these technology licenses could result in delays. These delays could materially adversely affect our business, results of
operations and financial condition, until equivalent technology could be identified, licensed or developed and integrated. Moreover,
we may occasionally use third parties in connection with our work on the Internet site. In addition, we do not own a gateway onto
the Internet. Instead, we now and presumably always will rely on a network operating center to connect our Web site to the Internet.
Overall, our inability to maintain satisfactory relationships with the requisite third parties on acceptable commercial terms,
or the failure of such third parties to maintain the quality of services they provide at a satisfactory standard, could materially
adversely affect our business, results of operations and financial condition. The uncertain factors relating to the Company’s
reliance on third party agreements and outside service providers increases the risk to potential investors in this Company. The
Company will need strong third party relationships and partnerships in order to develop and grow its business. The Company will
be substantially dependent on these strategic partners and third party relationships.
The Company expects to incur additional
expenses and may ultimately never be profitable.
The Company is an early-stage company and has
a limited history of its operations. The Company will need to continue generating revenue in order to maintain sustained profitability.
Ultimately, in spite of the Company’s best or reasonable efforts, the Company may have difficulty in generating revenues
or remaining profitable.
The Company depends on its management team
to manage its business effectively.
The Company's future success is dependent in
large part upon its ability to understand and develop the business plan and to attract and retain highly skilled management, operational
and executive personnel. In particular, due to the relatively early stage of the Company's business, its future success is highly
dependent on its officers, to provide the necessary experience and background to execute the Company's business plan. The loss
of any officer’s services could impede, particularly initially as the Company builds a record and reputation, its ability
to develop its objectives, and as such would negatively impact the Company's possible overall development.
Government regulation could negatively impact
the business.
The Company’s business segments may be
subject to various government regulations in the jurisdictions in which they operate. Due to the potential wide scope of the Company’s
operations, the Company could be subject to regulation by various political and regulatory entities, including various local and
municipal agencies and government sub-divisions. The Company may incur increased costs necessary to comply with existing and newly
adopted laws and regulations or penalties for any failure to comply. The Company’s operations could be adversely affected,
directly or indirectly, by existing or future laws and regulations relating to its business or industry.
The Company does not intend to pay dividends to its stockholders,
so investors will not receive any return on investment in the Company prior to selling their interest in it.
The Company does not project paying dividends
but anticipates that it will retain future earnings for funding the Company’s growth and development. Therefore, investors
should not expect the Company to pay dividends in the foreseeable future. As a result, investors will not receive any return on
their investment prior to selling their Shares in the Company, if and when a market for such Shares develops. Furthermore, even
if a market for the Company’s securities does develop, there is no guarantee that the market price for the shares would be
equal to or more than the initial per share investment price paid by any investor. There is a possibility that the Shares could
lose all or a significant portion of their value from the initial price paid in this offering.
The recently enacted JOBS Act will also
allow the Company to postpone the date by which it must comply with certain laws and regulations intended to protect investors
and to reduce the amount of information provided in reports filed with the SEC.
The recently enacted JOBS Act is intended to
reduce the regulatory burden on “emerging growth companies. The Company meets the definition of an emerging growth company
and so long as it qualifies as an “emerging growth company,” it will, among other things:
| · | be exempt from the provisions of Section 404(b) of the Sarbanes-Oxley
Act requiring that its independent registered public accounting firm provide an attestation report on the effectiveness of its
internal control over financial reporting; |
| · | be exempt from the “say on pay” provisions (requiring
a non-binding shareholder vote to approve compensation of certain executive officers) and the “say on golden parachute”
provisions (requiring a non-binding shareholder vote to approve golden parachute arrangements for certain executive officers in
connection with mergers and certain other business combinations) of the Dodd-Frank Act and certain disclosure requirements of the
Dodd-Frank Act relating to compensation of its chief executive officer; |
| · | be permitted to omit the detailed compensation discussion and analysis
from proxy statements and reports filed under the Securities Exchange Act of 1934 and instead provide a reduced level of disclosure
concerning executive compensation; and |
| · | be exempt from any rules that may be adopted by the Public Company
Accounting Oversight Board requiring mandatory audit firm rotation or a supplement to the auditor’s report on the financial
statements. |
The Company intends to take advantage of
some or all of the reduced regulatory and reporting requirements that will be available to it so long as it qualifies as an
“emerging growth company”. The Company has elected not to opt out of the extension of time to comply with new or
revised financial accounting standards available under Section 102(b) of the JOBS Act. Among other things, this means that
the Company's independent registered public accounting firm will not be required to provide an attestation report on the
effectiveness of the Company's internal control over financial reporting so long as it qualifies as an emerging growth
company, which may increase the risk that weaknesses or deficiencies in the internal control over financial reporting go
undetected. Likewise, so long as it qualifies as an emerging growth company, the Company may elect not to provide certain
information, including certain financial information and certain information regarding compensation of executive officers
that would otherwise have been required to provide in filings with the SEC, which may make it more difficult for investors
and securities analysts to evaluate the Company. As a result, investor confidence in the Company and the market price of its
common stock may be adversely affected.
The Company may face significant competition
from companies that serve its industries.
The Company may face competition from other
companies that offer similar services. Some of these potential competitors may have longer operating histories, greater brand recognition,
larger client bases and significantly greater financial, technical and marketing resources than the Company possesses. These advantages
may enable such competitors to respond more quickly to new or emerging trends and changes in customer preferences. These advantages
may also allow them to engage in more extensive market research and development, undertake extensive far-reaching marketing campaigns,
adopt more aggressive pricing policies and make more attractive offers to potential customers, employees and strategic partners.
The Company believes that its current and anticipated solutions are, and will be, sufficiently different from existing competition,
and that there is limited to no competition in its local area. However, it is nevertheless possible that potential competitors
may have or may rapidly acquire significant market share. Increased competition may result in price reductions, reduced gross margin
and loss of market share. The Company may not be able to compete successfully, and competitive pressures may adversely affect its
business, results of operations and financial condition.
No formal market survey has been conducted.
No independent marketing survey has been performed
to determine the potential demand for the Company’s services over the longer term. The Company has conducted no marketing
studies regarding whether its business would continue to be marketable. No assurances can be given that upon marketing, sufficient
customer markets and business segments can be developed to sustain the Company's operations on a continued basis.
The Company has authorized the issuance
of preferred stock with certain preferences.
The board of
directors of the Company is authorized to issue up to 10,000,000 shares of $0.001 par value preferred stock. The board of directors
has the power to establish the dividend rates, liquidation preferences, and voting rights of any series of preferred stock, and
these rights may be superior to the rights of holders of the Shares. The board of directors may also establish redemption and conversion
terms and privileges with respect to any shares of preferred stock. Any such preferences may operate to the detriment of the rights
of the holders of the Shares, and further, could be used by the board of directors as a device to prevent a change in control of
the Company. As of the date of this report the Company has 10,0000,000 shares of Series A Preferred Stock designated and 5,000,000
issued and outstanding. The Series A Preferred Stock has a voting right of 500:1. Every One (1) share of Preferred Series A Stock
has the voting power of 500 common shares. Except as otherwise required by law, each share of outstanding Series A Preferred Stock
shall entitle the holder thereof to vote on each matter submitted to a vote of the stockholders of the Corporation.
The Company does not maintain certain insurance,
including errors and omissions and indemnification insurance.
The Company has limited capital and, therefore,
does not currently have a policy of insurance against liabilities arising out of the negligence of its officers and directors and/or
deficiencies in any of its business operations. Even assuming that the Company obtained insurance, there is no assurance that such
insurance coverage would be adequate to satisfy any potential claims made against the Company, its officers and directors, or its
business operations. Any such liability which might arise could be substantial and may exceed the assets of the Company. The certificate
of incorporation and by-laws of the Company provide for indemnification of officers and directors to the fullest extent permitted
under Nevada law. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers
and controlling persons, it is the opinion of the Securities and Exchange Commission that such indemnification is against public
policy, as expressed in the Act, and is therefore, unenforceable.
Intellectual property and/or trade secret
protection may be inadequate.
The Company has applied for intellectual property
or trade secret protection on some aspects of its business. The Company has plans to obtain additional patents, copyright, trademarks
and/or service marks on some of its solutions and services. Regardless, there can be no assurance that the Company can obtain effective
protection against unauthorized duplication or the introduction of substantially similar solutions and services.
The Company is subject to the potential
factors of market and customer changes.
The business of the Company is susceptible
to rapidly changing preferences of the marketplace and its customers. The needs of customers are subject to constant change. Although
the Company intends to continue to develop and improve its services to meet changing customer needs of the marketplace, there can
be no assurance that funds for such expenditures will be available or that the Company's competition will not develop similar or
superior capabilities or that the Company will be successful in its internal efforts. The future success of the Company will depend
in part on its ability to respond effectively to rapidly changing trends, industry standards and customer requirements by adapting
and improving the features and functions of its services.
Our Officers and Directors Have the
Ability to Exercise Significant Influence over Matters Submitted for Stockholder Approval and Their Interests May Differ From Other
Stockholders
Our executive officers
and directors, whether acting alone or together, may have significant influence in determining the outcome of any corporate transaction
or other matter submitted to our stockholders for approval, including mergers, acquisitions, consolidations and the sale of all
or substantially all of our assets, and also the power to prevent or cause a change in control. The interests of these executive
officers and directors may differ from the interests of the other stockholders.
ITEM 2. FINANCIAL INFORMATION
CAUTIONARY STATEMENT
REGARDING FORWARD-LOOKING STATEMENTS
This report on Form
10 contains "forward-looking statements" that involve risks and uncertainties. You should not place undue reliance on
these forward-looking statements. Our actual results could differ materially from those anticipated in the forward-looking statements
for many reasons, including the risks described in this Form 10 and other filings we make with the Securities and Exchange Commission.
Although we believe the expectations reflected in the forward-looking statements are reasonable, they relate only to events as
of the date on which the statements are made. We do not intend to update any of the forward-looking statements after the date of
this report to conform these statements to actual results or to changes in our expectations, except as required by law.
The following discussion
and analysis of financial condition and results of operations is based upon, and should be read in conjunction with our audited
financial statements and related notes thereto included elsewhere in this Form 10.
We have incurred losses since our inception and cannot
assure you that we will achieve profitability.
The Company has an accumulated deficit
of $8,150,905 and $7,680,322 as of December 31, 2014 and 2013, respectively. The extent of our future operating losses and
the timing of profitability are highly uncertain and we may never achieve or sustain profitability. We cannot assure you that we
will ever generate sufficient revenues from our operations to achieve profitability. If revenues grow slower than we anticipate,
or if operating expenses exceed our expectations or cannot be adjusted accordingly, we may not ever achieve profitability and the
value of your investment could decline significantly.
These factors create a substantial doubt
about our ability to continue as a going concern and our auditors have included a going concern qualification in their report on
our audited financial statements.
Management’s Discussion and Analysis
of Financial Condition and Results of Operation.
Revenues
In 2014 our revenue was $508,035 compared
to $1,775,697 in 2013 or a reduction of $1,267,662. The main reason for the decline was the loss of various clients.
Cost of Sales
In 2014 our cost of sales as a percentage
of revenues was 56.6% as compares to 68.5% in the previous year. Our costs decreased as we had fewer jobs and we were able to maintain
a slightly higher profitablilty.
Operating Expenses
In 2014 our expenses were $518,329 compared
to $535,602 or a reduction of $17,239 The main area of reduction of expenses was in general and administrative as with less revenue
we incurred less overhead.The electronic security integration business is cyclical and requires a long sales cycle.
With the launch of Greeniosk secure payment, SITS will be able to build a monthly recurrent revenue base.
Liquidity and Capital Resources
At December 31, 2014 we had a negative
working capital of $2,032,102 and cash used in operations of $162,300. Net cash provided by financial sources was $83,324.
Going Concern
As of the date of this registration
statement, there is doubt about our ability to continue as a going concern as we have not generated sufficient cash flow to fund
our business operations. The financial statements included in this registration statement have been prepared on the going
concern basis, which assumes that we will be able to realize our assets and discharge our obligations in the normal course of business.
If we are not to continue as a going concern, we would likely not be able to realize our assets at values comparable to the carrying
value or the fair value estimates reflected in the balances set out in our financial statements.
Our future success and viability, therefore,
are dependent upon our ability to generate capital financing. The failure to generate sufficient revenues or raise additional capital
may have a material and adverse effect upon us and our stockholders.
Because we have incurred losses from
operations since inception, in their report on our audited financial statements for the latest fiscal year, our independent auditors
included an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern.
Critical Accounting
Policies
Use of estimates
The preparation of financial
statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Accordingly, actual results could differ
from those estimates. Such estimates include management’s assessments of the carrying value of certain assets, useful lives
of assets, and related depreciation and amortization methods applied.
Accounts Receivable
and Allowance for Doubtful Accounts
Accounts receivable
related to the products and services sold are recorded at the time revenue is recognized, and are presented on the balance sheet
net of allowance for doubtful accounts. The ultimate collection of the receivable may not be known for several months after services
have been provided and billed.
The Company has
established an allowance for doubtful accounts based upon factors pertaining to the credit risk of specific customers,
analyses of current and historical cash collections, and the aging of receivables. Delinquent accounts are written-off when
the likelihood for collection is remote and/or when the Company believes collection efforts have been fully exhausted and the
Company does not intend to devote any additional efforts in an attempt to collect the receivable. The Company adjusts their
allowance for doubtful accounts balance on a quarterly basis.
Furniture Fixtures
& Equipment
Furniture fixtures and
equipment are recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged
to operations as incurred. Depreciation of furniture fixtures and equipment is computed by the straight-line method (after taking
into account their respective estimated residual values) over the assets estimated useful life of five (3) years for equipment,
(5) years for automobile, and (7) years for furniture and fixtures. Upon sale or retirement of computer equipment, the related
cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in statements of operations.
Automobiles
Automobiles are recorded
at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged to operations as
incurred. Depreciation of automobiles is computed by the straight-line method (after taking into account their respective estimated
residual values) over the assets estimated useful life of five (5) years. Upon sale or retirement of automobiles, the related cost
and accumulated depreciation are removed from the accounts and any gain or loss is reflected in statements of operations.
Revenue Recognition
The Company follows
paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company will recognize revenue
when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following
criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been
rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured. In addition,
the Company records allowances for accounts receivable that are estimated to not be collected.
Impairment of
long-lived assets
The Company follows
paragraph 360-10-05-4 of the FASB Accounting Standards Codification for its long-lived assets.
The Company assesses
the recoverability of its long-lived assets by comparing the projected undiscounted net cash flows associated with the related
long-lived asset or group of long-lived assets over their remaining estimated useful lives against their respective carrying amounts.
Impairment, if any, is based on the excess of the carrying amount over the fair value of those assets. Fair value is generally
determined using the asset’s expected future discounted cash flows or market value, if readily determinable. If long-lived
assets are determined to be recoverable, but the newly determined remaining estimated useful lives are shorter than originally
estimated, the net book values of the long-lived assets are depreciated over the newly determined remaining estimated useful lives.
The Company determined
that there were no impairments of long-lived assets as of December 31, 2014 and 2013.
Commitments and
contingencies
The Company follows
subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Liabilities for
loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is
probable that a liability has been incurred and the amount of the assessment can be reasonably estimated.
Income taxes
The Company follows Section
740-10-30 of the FASB Accounting Standards Codification, which requires recognition of deferred tax assets and liabilities
for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under
this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases
of assets and liabilities using enacted tax rates in effect for the fiscal year in which the temporary differences are
expected to be recovered or settled. Deferred tax assets are reduced by a valuation allowance to the extent management
concludes it is more likely than not that the assets will not be realized. The effect on deferred tax assets and liabilities
of a change in tax rates is recognized in income in the period that includes the enactment date.
The Company adopted
section 740-10-25 of the FASB Accounting Standards Codification (“Section 740-10-25”) with regards to uncertainty in
income taxes. Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax
return should be recorded in the financial statements. Under Section 740-10-25, the Company may recognize the tax benefit from
an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing
authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a
position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized
upon ultimate settlement. Section 740-10-25 also provides guidance on de-recognition, classification, interest and penalties on
income taxes, accounting in interim periods and requires increased disclosures. The Company had no material adjustments to its
assets and/or liabilities for unrecognized income tax benefits according to the provisions of Section 740-10-25.
Net income (loss)
per share
The Company computes
basic and diluted earnings per share amounts pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic
earnings per share is computed by dividing net income (loss) available to common shareholders, by the weighted average number of
shares of common stock outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted earnings
per share is computed by dividing net income (loss) available to common shareholders by the diluted weighted average number of
shares of common stock during the period. The diluted weighted average number of common shares outstanding is the basic weighted
number of shares adjusted as of the first day of the year for any potentially diluted debt or equity.
There were no potentially
dilutive shares outstanding as of December 31, 2014 and December 31, 2013, respectively.
Recently Issued Accounting Pronouncements
We do not expect the adoption of any recently issued accounting
pronouncements to have a significant effect on our financial position or results of operations.
Quantitative and Qualitative Disclosures
About Market Risk.
We have not utilized
any derivative financial instruments such as futures contracts, options and swaps, forward foreign exchange contracts or interest
rate swaps and futures. We believe that adequate controls are in place to monitor any hedging activities. We do not have any borrowings
and, consequently, we are not affected by changes in market interest rates. We do not currently have any sales or own assets and
operate facilities in countries outside the United States and, consequently, we are not affected by foreign currency fluctuations
or exchange rate changes. Overall, we believe that our exposure to interest rate risk and foreign currency exchange
rate changes is not material to our financial condition or results of operations.
Off-Balance Sheet Arrangements
We have not entered
into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial
condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital
resources and would be considered material to investors.
ITEM 3. PROPERTIES
At
present,
time we
have
2 offices,
one in D'Iberville,
Mississippi with office
space
and a large
warehouse.
Our headquarters'
office
is in Las
Vegas,
Nevada
and consists
solely of office
space.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth
certain information, as of April 13, 2015, with respect to the beneficial ownership (1) of the Company’s outstanding
Common Stock by (i) any holder of more than five (5%) percent; (ii) the Company’s executive officer and directors; and
(iii) the Company’s directors and executive officer as a group. Except as otherwise indicated, each of the stockholders
listed below has sole voting and investment power over the shares beneficially owned. Unless otherwise indicated, the address
of each stockholder listed in the table is correct. As of the date of this Registration Statement, there are 19,134,708
shares of common stock issued and outstanding.
| |
Number of Shares Beneficially Owned |
|
Percentage of Class (2) |
| Name and Address(1) |
Class |
Sylvain Desrosiers
Chief Executive Officer and Chairman |
10,413,788
5,000,000 |
Common
Series A Preferred(3) |
54%
100% |
William Noll
Chief Financial Officer |
2,000,000 |
Common |
10% |
|
All directors and executive
Officers (2 persons) |
12,413,788
5,000,000 |
Common
Series A Preferred(3) |
64%
100% |
1) Unless
noted otherwise, the address for all persons listed is c/o the Company at 7935 W. Sahara Ave Suite 103, Las Vegas,
NV 89117.
2) The
above percentages are based on 19,134,708 shares of common
stock, 5,000,000 shares of Series A Preferred Stock outstanding as April 13, 2015.
3)
Series A Preferred Stock has a voting right of 500:1. Every One (1) share of Preferred Series A Stock has the voting power of 500
common shares. Except as otherwise required by law, each share of outstanding Series A Preferred Stock shall entitle the holder
thereof to vote on each matter submitted to a vote of the stockholders of the Corporation.
This table is based
upon information derived from our stock records. We believe that each of the shareholders named in this table has sole or shared
voting and investment power with respect to the shares indicated as beneficially owned; except as set forth above, applicable percentages
are based upon 19,134,708 shares of common stock outstanding as of the date of this registration statement on Form 10.
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the name,
age, and position of each executive officer and director of the Company:
| Name |
|
Age |
|
Position(s) |
| |
|
|
|
|
| Sylvain Desrosiers |
|
50 |
|
Chief Executive Officer and Chairman of the Board of Directors |
| William Noll |
|
68 |
|
Chief Financial Officer/Treasurer |
Sylvain Desrosiers, Chief Executive Officer
and Chairman of the Board of Directors
Mr. Desrosiers has specialized in
technology, electronic security, compliance and auditing for the gaming industry for almost three decades. Mr. Desrosiers
founded and led several very successful businesses during his career; including Imaging Technologies Systems, Inc. one of the
first companies to specialize in identification cards. He also co-founded AXS Technologies; an access control company.
That technology was sold to Integral Technologies, Inc. Mr. Desrosiers also founded Port Scanning Services, Inc., Emap, Inc.
and Gaming Entertainment International, Inc. Currently Mr. Desrosiers is leading SITS.
William W. Noll, Chief Financial Officer / Treasurer
Mr. Noll has an MBA in Finance, having attended
Boston University and Bridgeport University. He was a regional manager in the international public accounting firm of Laventhol
& Horwath. Laventhol & Horwath included clients many of the large hotels, real estate developers and hospitals in Southern
California, including the Ritz Carlton and other brand names. After Laventhol closed, he was controller and acting CFO for a large
500 bed hospital in Los Angeles. Following that, he became senior vice president of operations of Medical Capital Management, Inc.,
a large commercial financing firm in Southern California for fifteen years. He was responsible for underwriting loans, managing
and performing due diligence audits of prospective clients and filing securities reports with federal and state securities divisions.
He also was on the board of directors of Medical Capital Management, Inc. When that firm closed in 2009, he subsequently became
chief financial officer of Port Scanning Services and Gaming Entertainment International.
Mr. Noll has developed and helped place many
public offerings in the U.S. and Asian markets. He also managed and monitored the sale of securities in many Asian markets. Through
these public offerings, he helped his last firm raise billions of dollars. He was a major contributor in helping his last firm
increase their portfolio size by 500% within seven years. He is well versed in U.S. and International financial reporting and financial
modeling. He is also experienced with the governmental reporting and record keeping requirements related to international trade
and transactions.
Mr. Noll has over thirty years of executive
level financial and business operational experience. He was V.P. of Financial Operations for Medical Capital Corporation from 1996
until the end of 2009. From 2010 to the present, Mr. Noll has worked as the CFO of Port Scanning Services, Inc. This experience
will be of great benefit to Gaming Entertainment International. He will be a driving force in ensuring the growth and superior
profit performance. In consideration of Mr. Noll’s wealth of experience, the Company appointed him a member of the Board
of Directors.
Employees
We
currently have no employees but use 4 consultants. Mr. Desrosiers
is the Chief Executive Officer of the Company.
Significant Employees: None.
Family Relationships: None.
Involvement in Certain Legal Proceedings:
No officer, director,
or persons nominated for such positions, promoter or significant employee has been involved in the last ten years in any of the
following:
| • |
Any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; |
| |
|
| • |
Any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); |
| |
|
| • |
Being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; and |
| |
|
| • |
Being found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated. |
The Board of Directors
acts as the Audit Committee and the Board has no separate committees. The Company has no qualified financial expert at this time
because it has not been able to hire a qualified candidate. Further, the Company believes that it has inadequate financial resources
at this time to hire such an expert. The Company intends to continue to search for a qualified individual for hire.
Code of Ethics: We do not currently have
a code of ethics.
ITEM 6. EXECUTIVE COMPENSATION
The following table
provides information as to cash compensation of all officers of the Company, for each of the Company’s last two fiscal years.
SUMMARY COMPENSATION TABLE
| Name and principal position |
Year |
Salary |
Stock Awards |
Option Awards |
Non-Equity Incentive Plan Compensation Earnings |
Nonqualified
Deferred Compensation Earnings |
All Other Compensation |
Total |
|
Sylvain Desrosiers
Chief Executive Officer and Chairman of the
Board of Directors |
2014 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
| |
2013 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
|
William W. Noll
Chief Financial Officer |
2014 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
| |
2013 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Related Party Transactions
Except as otherwise indicated herein, there
have been no related party transactions, or any other transactions or relationships required to be disclosed pursuant to Item 404
of Regulation S-K.
Director Independence
At this time the
Company does not have a policy that it’s directors or a majority be independent of management as the Company has at
this time only one director. It is the intention of the Company to implement a policy that a majority of the Board member be
independent of the Company’s management as the members of the board of director’s increases. A Director is
considered independent if the Board affirmatively determines that the Director (or an immediate family member) does not have
any direct or indirect material relationship with the Company or its affiliates or any member of senior management of the
Company or his or her affiliates. The term “affiliate” means any corporation or other entity that controls, is
controlled by, or under common control with the Company, evidenced by the power to elect a majority of the Board of Directors
or comparable governing body of such entity. The term “immediate family member” means spouse, parents, children,
siblings, mothers- and fathers-in-law, sons- and daughters-in law, brothers- and sisters-in-laws and anyone (other than
domestic employees) sharing the Director’s home.
Committees: Audit Committee Financial
Expert.
The Company does not currently have an Audit Committee.
ITEM 8. LEGAL PROCEEDINGS
There are presently
no material, pending legal proceedings to which the Company is a party or as to which any of its property is subject, and no such
proceedings are known to the Company to be threatened or contemplated against it.
ITEM 9. MARKET PRICE OF AND DIVIDENDS
ON THE COMPANY’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
(a) Market Information
The Company’s
Common Stock is quoted on the OTC Pink Sheets under the under the symbol “SITS.” The following table sets forth the
quarterly high and low sale prices for our common shares for the last two completed fiscal years. Quotations on the OTC Pink Sheets
reflect bid and ask quotations, may reflect inter-dealer prices, without retail markup, markdown or commission, and may not represent
actual transactions.
| |
|
High |
|
Low |
| December 31, 2014 |
$ |
0.09 |
$ |
0.08 |
| September 30, 2014 |
$ |
0.21 |
$ |
0.18 |
| June 30, 2014 |
$ |
0.61 |
$ |
0.51 |
| March 31, 2014 |
$ |
0.30 |
$ |
0.25 |
| |
|
|
|
|
| December 31, 2013 |
$ |
0.18 |
$ |
0.15 |
| September 30, 2013 |
$ |
0.15 |
$ |
0.12 |
| June 30, 2013 |
$ |
0.09 |
$ |
0.08 |
| March 31, 2013 |
$ |
0.17 |
$ |
0.12 |
Holders
As of April 13,
2015, there were approximately 68 shareholders of record of our common stock. The common stock figure does not take into
account those shareholders whose certificates are held in the name of broker-dealers or other nominees.
Dividends.
The Company has not
paid any cash dividends to date and does not anticipate or contemplate paying dividends in the foreseeable future. It is the present
intention of management to utilize all available funds for the development of the Company’s business.
Securities Authorized for Issuance
under Equity Compensation Plans.
None.
Reverse Stock
Splits
On
July
17, 2014,
the Company
enacted
a 1-for-50
reverse
stock
split. The Company
has adjusted
all periods
presented for
the effects
of the stock
split.
ITEM 10. RECENT SALES OF UNREGISTERED
SECURITIES
None.
ITEM 11. DESCRIPTION OF REGISTRANT’S
SECURITIES TO BE REGISTERED
Authorized Capital Stock
The authorized capital
stock of the Company consists of 50,000,000 shares of Common Stock, par value $.001 per share, (the "Common Stock"),
of which there are 19,134,708 issued and outstanding. There are also 10,000,000 shares of Preferred Stock, (the “Preferred
Stock”) par value $.001 per share, which have been designated as Series A Preferred Stock, of which there are 5,000,000 issued
and outstanding. The following summarized the important provisions of the Company’s capital stock.
Common Stock
Holders of shares of
common stock are entitled to one vote for each share on all matters to be voted on by the stockholders. Holders of common stock
do not have cumulative voting rights. Holders of common stock are entitled to share ratably in dividends, if any, as may be declared
from time to time by the Board of Directors in its discretion from funds legally available. In the event of a liquidation, dissolution
or winding up of the company, the holders of common stock are entitled to share pro rata all assets remaining after payment in
full of all liabilities. All of the outstanding shares of common stock are fully paid and non-assessable.
Holders of common stock have no preemptive
rights to purchase the Company’s common stock. There are no conversion or redemption rights or sinking fund provisions with
respect to the common stock.
Preferred Stock
The board of
directors of the Company is authorized to issue up to10,000,000 shares of $0.001 par value preferred stock. The board of directors
has the power to establish the dividend rates, liquidation preferences, and voting rights of any series of preferred stock, and
these rights may be superior to the rights of holders of the Shares. The board of directors may also establish redemption and conversion
terms and privileges with respect to any shares of preferred stock. Any such preferences may operate to the detriment of the rights
of the holders of the Shares, and further, could be used by the board of directors as a device to prevent a change in control of
the Company. As of the date of this report the Company has 10,0000,000 shares of Series A Preferred Stock designated and 5,000,000
Series A Preferred Stock issued and outstanding. The Series A Preferred Stock has a voting right of 500:1. Every One (1) share
of Preferred Series A Stock has the voting power of 500 common shares. Except as otherwise required by law, each share of outstanding
Series A Preferred Stock shall entitle the holder thereof to vote on each matter submitted to a vote of the stockholders of the
Corporation.
Dividends
We have not paid any
dividends on our common stock and do not presently intend to pay cash dividends prior to the consummation of a business combination.
The payment of cash dividends in the future, if any, will be contingent upon our revenues and earnings, if any, capital requirements
and general financial condition subsequent to consummation of a business combination, if any. The payment of any dividends subsequent
to a business combination, if any, will be within the discretion of our then existing board of directors. It is the present intention
of our board of directors to retain all earnings, if any, for use in our business operations and, accordingly, the board of directors
does not anticipate paying any cash dividends in the foreseeable future.
Transfer Agent
| |
Pacific Stock Transfer Company
4045 South Spencer Street, Suite 403
Las Vegas, NV 89119
Tel: 702-361-3033
Fax: 702-433-1979 |
Debt Securities.
Other Securities to be Registered: None.
ITEM 12. INDEMNIFICATION OF DIRECTORS
AND OFFICERS
Section 78.7502 of the
Nevada Revised Statutes permits a corporation to indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, except
an action by or in the right of the corporation, by reason of the fact that he is or was a director, officer, employee or agent
of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against expenses, including attorneys’ fees, judgments,
fines and amounts paid in settlement actually and reasonably incurred by him in connection with the action, suit or proceeding
if he:
(a) is not liable pursuant
to Nevada Revised Statute 78.138, or
(b) acted in good faith
and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful.
In addition, Section
78.7502 permits a corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact
that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against
expenses, including amounts paid in settlement and attorneys’ fees actually and reasonably incurred by him in connection
with the defense or settlement of the action or suit if he:
(a) is not liable pursuant
to Nevada Revised Statute 78.138; or
(b) acted in good faith
and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation.
To the extent that a
director, officer, employee or agent of a corporation has been successful on the merits or otherwise in defense of any action,
suit or proceeding referred to above, or in defense of any claim, issue or matter, the corporation is required to indemnify him
against expenses, including attorneys’ fees, actually and reasonably incurred by him in connection with the defense.
Section 78.752 of the
Nevada Revised Statutes allows a corporation to purchase and maintain insurance or make other financial arrangements on behalf
of any person who is or was a director, officer, employee or agent of the corporation or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise
for any liability asserted against him and liability and expenses incurred by him in his capacity as a director, officer, employee
or agent, or arising out of his status as such, whether or not the corporation has the authority to indemnify him against such
liability and expenses.
Other financial arrangements made by a corporation
pursuant to Section 78.752 may include the following:
(a) the creation of
a trust fund;
(b) the establishment
of a program of self-insurance;
(c) the securing of
its obligation of indemnification by granting a security interest or other lien on any assets of the corporation; and
(d) the establishment
of a letter of credit, guaranty or surety.
No financial arrangement
made pursuant to Section 78.752 may provide protection for a person adjudged by a court of competent jurisdiction, after exhaustion
of all appeals, to be liable for intentional misconduct, fraud or a knowing violation of law, except with respect to the advancement
of expenses or indemnification ordered by a court.
Any discretionary indemnification
pursuant to NRS 78.7502, unless ordered by a court or advanced pursuant to an undertaking to repay the amount if it is determined
by a court that the indemnified party is not entitled to be indemnified by the corporation, may be made by the corporation only
as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper
in the circumstances. The determination must be made:
(a) by the stockholders;
(b) by the board of
directors by majority vote of a quorum consisting of directors who were not parties to the action, suit or proceeding;
(c) if a majority vote
of a quorum consisting of directors who were not parties to the action, suit or proceeding so orders, by independent legal counsel
in a written opinion, or
(d) if a quorum consisting
of directors who were not parties to the action, suit or proceeding cannot be obtained, by independent legal counsel in a written
opinion.
Under our Articles of
Incorporation, our directors are not liable for monetary damages for breach of fiduciary duty, except in connection with (i) acts
or omissions that involve intentional misconduct by the director or a knowing violation of law by the director, (ii) conduct violating
the Nevada Revised Statutes, or (iii) any transaction from which the director will personally receive a benefit in money, property
or services to which the director is not legally entitled
Our Articles of Incorporation
and Bylaws require us to indemnify our directors against reasonable expenses incurred by the individual in advance of final disposition
of the proceeding, without regard to the limitations in Nevada Revised Statute 78.7502, or any other limitation that may hereafter
be enacted, to the extent such limitation may be disregarded if authorized by the Articles of Incorporation, to the full extent
and under all circumstances permitted by applicable law.
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA
We set forth below a list of our audited
financial statements included in this Registration Statement on Form 10. *
*The financial statements follows page 25
to this Registration Statement on Form 10.
ITEM 14. CHANGES IN AND DISAGREEMENTS
WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
On December 16, 2014,
the Company’s Board of Directors approved the engagement of Terry L. Johnson, CPA, as the Company's independent accountant
effective immediately to audit the Company’s financial statements and to perform reviews of interim financial statements.
During the fiscal years ended December 31, 2013 and 2014, through December 16, 2014, neither the Company nor anyone acting on its
behalf consulted with Terry L. Johnson, CPA regarding: (i) either the application of any accounting principles to a specific completed
or contemplated transaction of the Company, or the type of audit opinion that might be rendered by Terry L. Johnson, CPA on the
Company's financial statements; or (ii) any matter that was either the subject of a disagreement with Terry L. Johnson, CPA or
a reportable event with respect to Terry L. Johnson, CPA.
There are not and have not been any disagreements
between the Company and its accountants on any matter of accounting principles, practices or financial statement disclosure.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements.
The financial statements and related notes are included
as part of this Form 10 registration statement is indexed in the appendix on page F-1 through F-15.
(b) Exhibits.
| Exhibit Number |
Description of Exhibits |
|
| 3.1 |
Articles of Incorporation |
Filed herewith |
| 3.2 |
By-laws |
Filed herewith |
| 3.3 |
Amendment to Articles |
Filed herewith |
| 3.4 |
Certificate of Designation |
Filed herewith |
SIGNATURES
Pursuant to the requirements
of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized.
| |
|
| Date: April 13, 2015 |
Southern ITS International, Inc. |
| |
|
| |
By: /s/ Sylvain Desrosiers |
| |
Sylvain Desrosiers, Chief Executive Officer (Principal Executive Officer) |
INDEX
TO FINANCIAL STATEMENTS
| Report of Independent Registered Public Accounting Firm |
F-1 |
| |
|
|
Balance Sheets
As of December 31, 2014 and December 31, 2013 |
F-2 |
| |
|
|
Statements of Operations
For the years ended December 31, 2014 and December 31, 2013 |
F-3 |
| |
|
|
Statement of Stockholders’ Equity
From inception (March 26, 2008) to December 31, 2014 |
F-4 |
| |
|
|
Statements of Cash Flows
For the years ended December 31, 2014 and December 31, 2013 |
F-5 |
| |
|
| Notes to Financial Statements |
F-6 - F-15 |
Southern ITS International, Inc.
Consolidated Financial Statements
December 31, 2014 and December 31,
2013
(Audited)
Terry L. Johnson, CPA
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors
Southern ITS International, Inc.
We have audited the accompanying balance
sheets of Southern ITS International, Inc.. as of December 31, 2014 and 2013 and the statements of operations, stockholders’
equity, and cash flows for the years ended December 31, 2014 and 2013. These financial statements are the responsibility of the
Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
Management’s
Responsibility for Financial Statements
Management is
responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting
principles generally accepted in the United State of America; this includes the design, implementation and maintenance of internal
control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether
due to fraud or error.
Auditor’s
Responsibility
Our responsibility
is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance
with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement.
The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.
Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test
basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial
statement presentation. We believe that our audits provide a reasonable basis for our opinion.
Opinion
In our opinion, the financial statements
referred to above present fairly, in all material respects, the financial position of Southern ITS International, Inc. as of December
31, 2014 and 2013 and the results of its operations and its cash flows for the years ended December 31, 2014 and 2013 in conformity
with accounting principles generally accepted in the United States.
Emphasis of
Matter
The accompanying financial statements
have been prepared assuming the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the
Company has a minimum cash balance available for payment of ongoing operating expenses, has experienced losses from operations
since inception, and it does not have a source of revenue sufficient to cover its operating costs. These factors raise substantial
doubt about the Company’s ability to continue as a going concern. Management’s plans in this regard are described in
Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Terry L. Johnson, CPA
Casselberry, Florida
March 23, 2015
| SOUTHERN ITS INTERNATIONAL, INC. |
| CONSOLIDATED BALANCE SHEETS |
| (Audited) |
| | |
| |
|
| | |
| December
31, | | |
| December
31, | |
| | |
| 2014 | | |
| 2013 | |
| Assets: | |
| | | |
| | |
| Current Assets | |
| | | |
| | |
| Cash and Cash Equivalents | |
$ | 20,994 | | |
$ | 99,970 | |
| Accounts Receivable, net | |
| — | | |
| 20,386 | |
| Advances to Non-Related Parties | |
| 10,000 | | |
| 10,000 | |
| Prepaids | |
| 673,150 | | |
| — | |
| Total Current Assets | |
| 704,144 | | |
| 130,356 | |
| | |
| | | |
| | |
| Fixed Assets: | |
| | | |
| | |
| Furniture and Equipment | |
| 5,808 | | |
| 5,808 | |
| Accumulated Depreciation | |
| (2,360 | ) | |
| (1,531 | ) |
| Total Fixed Assets | |
| 3,448 | | |
| 4,277 | |
| | |
| | | |
| | |
| Total Assets | |
$ | 707,592 | | |
$ | 134,633 | |
| | |
| | | |
| | |
| Liabilities and Stockholders' Deficit: | |
| | | |
| | |
| | |
| | | |
| | |
| Current Liabilities | |
| | | |
| | |
| Accounts Payable & Accrued Expenses | |
$ | 128,829 | | |
$ | 32,424 | |
| Accrued Interest | |
| 387,882 | | |
| 325,557 | |
| Convertible Notes Payable- Related Party | |
| 294,712 | | |
| 262,320 | |
| Convertible Notes Payable | |
| 155,000 | | |
| 155,000 | |
| Notes Payable- Related Party | |
| 96,205 | | |
| 105,752 | |
| Notes Payable | |
| 220,000 | | |
| 150,000 | |
| Derivative Liability | |
| 1,453,618 | | |
| 1,376,358 | |
| Total Current Liabilities | |
| 2,736,246 | | |
| 2,407,411 | |
| | |
| | | |
| | |
| Non-Current Liabilities: | |
| | | |
| | |
| Convertible Notes Payable- Related Party | |
| — | | |
| 33,392 | |
| Total Non-Current Liabilities | |
| — | | |
| 33,392 | |
| | |
| | | |
| | |
| Total Liabilities | |
| 2,736,246 | | |
| 2,440,803 | |
| | |
| | | |
| | |
| Stockholders' Equity: | |
| | | |
| | |
| Preferred Stock, Par value $0.001, Authorized 10,000,000 shares | |
| | | |
| | |
| Issued 5,000,000 shares respectively | |
| 5,000 | | |
| 5,000 | |
| Common Stock, Par value $0.001, Authorized 50,000,000 shares | |
| | | |
| | |
| Issued 19,134,708 and 3,764,348 respectively | |
| 19,135 | | |
| 3,764 | |
| Paid-In Capital | |
| 6,098,117 | | |
| 5,365,388 | |
| Deficit Accumulated During Development Stage | |
| (8,150,905 | ) | |
| (7,680,322 | ) |
| Total Stockholders' Equity | |
| (2,028,653 | ) | |
| (2,306,170 | ) |
| | |
| | | |
| | |
| Total Liabilities and Stockholders' Equity | |
$ | 707,592 | | |
$ | 134,633 | |
| | |
| | | |
| | |
| The accompanying notes are an integral part of these financial statements. | |
| SOUTHERN ITS INTERNATIONAL, INC. |
| CONSOLIDATED STATEMENTS OF OPERATIONS |
| (Audited) |
| | |
| |
|
| | |
For the Years Ended |
| | |
December 31, |
| | |
2014 | |
2013 |
| Revenues | |
$ | 508,035 | | |
$ | 1,775,697 | |
| Costs of Services | |
| 287,653 | | |
| 1,216,236 | |
| | |
| | | |
| | |
| Gross Margin | |
| 220,382 | | |
| 559,461 | |
| | |
| | | |
| | |
| Operating Expenses: | |
| | | |
| | |
| Consulting | |
| 141,693 | | |
| 106,353 | |
| Professional Fees | |
| 39,511 | | |
| 48,327 | |
| Wages | |
| 82,679 | | |
| 79,679 | |
| General and Administrative | |
| 254,446 | | |
| 301,243 | |
| Total Operating Expenses | |
| 518,329 | | |
| 535,602 | |
| | |
| | | |
| | |
| Operating Income (Loss) | |
| (297,947 | ) | |
| 23,859 | |
| | |
| | | |
| | |
| Other Income (Expense): | |
| | | |
| | |
| Interest Expense | |
| (95,396 | ) | |
| (90,132 | ) |
| Derivative Expense | |
| (77,260 | ) | |
| (1,376,358 | ) |
| Interest Income | |
| 20 | | |
| — | |
| Total Other Income (Expense) | |
| (172,636 | ) | |
| (1,466,490 | ) |
| | |
| | | |
| | |
| Net Income (Loss) Before Taxes | |
| (470,583 | ) | |
| (1,442,631 | ) |
| | |
| | | |
| | |
| Income Tax Provision | |
| — | | |
| — | |
| | |
| | | |
| | |
| Net Income (Loss) | |
$ | (470,583 | ) | |
$ | (1,442,631 | ) |
| | |
| | | |
| | |
| Loss per Share, Basic & | |
| | | |
| | |
| Diluted | |
$ | (0.02 | ) | |
$ | (0.24 | ) |
| | |
| | | |
| | |
| Weighted Average Shares | |
| | | |
| | |
| Outstanding | |
| 19,134,708 | | |
| 5,918,194 | |
The accompanying notes are an integral
part of these financial statements.
| SOUTHERN ITS INTERNATIONAL, INC. |
| CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT) |
| (Audited) |
| | |
| | | |
| | | |
| | | |
| | | |
| Common | | |
| Additional | | |
| | | |
| Total | |
| | |
| Preferred | | |
| Preferred | | |
| Common | | |
| Common | | |
| Stock | | |
| Paid in | | |
| Accumulated | | |
| Stockholders' | |
| | |
| Shares | | |
| Stock | | |
| Shares | | |
| Stock | | |
| Issuable | | |
| Capital | | |
| Deficit | | |
| Equity (Deficit) | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net Loss Inception (March 26, 2008) to | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| 12/31/2008 | |
| — | | |
$ | — | | |
| — | | |
$ | — | | |
| — | | |
$ | — | | |
$ | (282,194 | ) | |
$ | (282,194 | ) |
| Stock issued at inception | |
| — | | |
| — | | |
| 5,771.44 | | |
| 6 | | |
| — | | |
| 93,515 | | |
| — | | |
| 93,521 | |
| Net Loss for year ended December 31, 2009 | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (457,774 | ) | |
| (457,774 | ) |
| Balance December 31, 2009 | |
| — | | |
| — | | |
| 5,771 | | |
| 6 | | |
| — | | |
| 93,515 | | |
| (739,968 | ) | |
| (646,447 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Stock issued for services | |
| — | | |
| — | | |
| 133.33 | | |
| 0 | | |
| — | | |
| 13,000 | | |
| — | | |
| 13,000 | |
| Stock issued for debt reduction | |
| — | | |
| — | | |
| 400 | | |
| 0 | | |
| — | | |
| 22,748 | | |
| — | | |
| 22,748 | |
| Net Loss for year ended December 31, 2010 | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (211,081 | ) | |
| (211,081 | ) |
| Balance December 31, 2010 | |
| — | | |
| — | | |
| 6,305 | | |
| 6 | | |
| — | | |
| 129,263 | | |
| (951,049 | ) | |
| (821,780 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Stock issued for services | |
| — | | |
| — | | |
| 26,666.67 | | |
| 27 | | |
| — | | |
| 2,999,973 | | |
| — | | |
| 3,000,000 | |
| Stock issued for debt reduction | |
| — | | |
| — | | |
| 10,406.67 | | |
| 10 | | |
| — | | |
| 19,990 | | |
| — | | |
| 20,000 | |
| Net loss for year ended December 31, 2011 | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (3,137,881 | ) | |
| (3,137,881 | ) |
| Balance December 31, 2011 | |
| — | | |
| — | | |
| 43,378 | | |
| 43 | | |
| — | | |
| 3,149,226 | | |
| (4,088,930 | ) | |
| (939,661 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Stock issued pursuant to share exchange- addendum was | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| later executed on April 30, 2013 | |
| — | | |
| — | | |
| 4,000,000 | | |
| 4,000 | | |
| — | | |
| (4,000 | ) | |
| — | | |
| — | |
| Stock issuable pursuant to addendum to share
exchange agreement | |
| — | | |
| — | | |
| — | | |
| — | | |
| 20,000 | | |
| 2,080,000 | | |
| — | | |
| 2,100,000 | |
| Stock issued for debt reduction | |
| — | | |
| — | | |
| 2,920,000 | | |
| 2,920 | | |
| — | | |
| 70,080 | | |
| — | | |
| 73,000 | |
| Stock issued for services | |
| — | | |
| — | | |
| 969.52 | | |
| 1 | | |
| — | | |
| 2,882 | | |
| — | | |
| 2,883 | |
| Net loss for year ended December 31, 2012 | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (2,148,761 | ) | |
| (2,148,761 | ) |
| Balance December 31, 2012 | |
| — | | |
| — | | |
| 6,964,348 | | |
| 6,964 | | |
| 20,000 | | |
| 5,298,188 | | |
| (6,237,691 | ) | |
| (912,539 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Stock cancelled per addendum to share exchange
agreement | |
| — | | |
| — | | |
| (4,000,000 | ) | |
| (4,000 | ) | |
| — | | |
| 4,000 | | |
| — | | |
| — | |
| Stock issued per addendum to share exchange | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| agreement | |
| — | | |
| — | | |
| 400,000 | | |
| 400 | | |
| (20,000 | ) | |
| 19,600 | | |
| — | | |
| — | |
| Preferred stock for services | |
| 5,000,000 | | |
| 5,000 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 5,000 | |
| Stock for services | |
| — | | |
| — | | |
| 400,000 | | |
| 400 | | |
| — | | |
| 43,600 | | |
| — | | |
| 44,000 | |
| Net loss for year ended December 31, 2013 | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (1,442,631 | ) | |
| (1,442,631 | ) |
| Balance December 31, 2013 | |
| 5,000,000 | | |
| 5,000 | | |
| 3,764,348 | | |
| 3,764 | | |
| — | | |
| 5,365,388 | | |
| (7,680,322 | ) | |
| (2,306,170 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Stock cancelled J. Bell per agreement | |
| — | | |
| — | | |
| (400,000 | ) | |
| (400 | ) | |
| — | | |
| (19,600 | ) | |
| — | | |
| (20,000 | ) |
| Reverse split (50 to 1) adjustment | |
| — | | |
| — | | |
| (79,640 | ) | |
| (79 | ) | |
| — | | |
| 79 | | |
| — | | |
| — | |
| Stock issued for debt reduction | |
| — | | |
| — | | |
| 3,100,000 | | |
| 3,100 | | |
| — | | |
| — | | |
| — | | |
| 3,100 | |
| Stock issued for services | |
| — | | |
| — | | |
| 12,750,000 | | |
| 12,750 | | |
| — | | |
| 752,250 | | |
| — | | |
| 765,000 | |
| Net loss for year ended December 31, 2014 | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (470,583 | ) | |
| (470,583 | ) |
| Balances December 31, 2014 | |
| 5,000,000 | | |
| $ 5 ,000 | | |
| 19,134,708 | | |
$ | 19,135 | | |
| — | | |
$ | 6,098,117 | | |
$ | (8,150,905 | ) | |
$ | (2,028,653 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| The accompanying notes are an integral part of these financial statements. |
| SOUTHERN ITS INTERNATIONAL, INC. |
| CONSOLIDATED STATEMENTS OF CASH FLOWS |
| (Audited) |
| | |
For the Year Ended |
| | |
December 31, |
| | |
2014 | |
2013 |
| CASH FLOWS FROM OPERATING ACTIVITIES: | |
| | | |
| | |
| Net Income (Loss) for the Period | |
$ | (470,583 | ) | |
$ | (1,442,631 | ) |
| Adjustments to reconcile net loss to net cash | |
| | | |
| | |
| provided by operating activities: | |
| | | |
| | |
| Depreciation and amortization | |
| 829 | | |
| 830 | |
| Stock issued for services | |
| 93,000 | | |
| 49,000 | |
| Changes in Operating Assets and Liabilities | |
| | | |
| | |
| Increase in accounts payable & accrued expenses | |
| 96,405 | | |
| 9,935 | |
| Increase in accrued interest | |
| 62,325 | | |
| 70,103 | |
| Increase (decrease) in accounts receivable, net | |
| (20,386 | ) | |
| 15,164 | |
| Prepaid expenses | |
| (1,150 | ) | |
| — | |
| Derivative expense | |
| 77,260 | | |
| 1,376,358 | |
| Net Cash Used in Operating Activities | |
| (162,300 | ) | |
| 78,759 | |
| | |
| | | |
| | |
| CASH FLOWS FROM FINANCING ACTIVITIES: | |
| | | |
| | |
| Proceeds from convertible notes to related party | |
| 22,871 | | |
| 2,100 | |
| Payments on note payable to related party | |
| (9,547 | ) | |
| (2,100 | ) |
| Proceeds from note payable | |
| 70,000 | | |
| — | |
| Net Cash Provided by Financing Activities | |
| 83,324 | | |
| — | |
| | |
| | | |
| | |
| Net (Decrease) Increase in Cash | |
| (78,976 | ) | |
| 78,759 | |
| Cash at Beginning of Period | |
| 99,970 | | |
| 21,211 | |
| Cash at End of Period | |
$ | 20,994 | | |
$ | 99,970 | |
| | |
| | | |
| | |
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |
| Cash paid during the year for: | |
| | | |
| | |
| Interest | |
$ | — | | |
$ | 20,000 | |
| Franchise and Income Taxes | |
$ | — | | |
$ | — | |
| | |
| | | |
| | |
| SUPPLEMENTAL
DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | |
| | | |
| | |
| Accounts Payable Satisfied through Contributed Capital | |
| | | |
| | |
| and Property and Equipment | |
$ | — | | |
$ | — | |
| The accompanying notes are an integral part of these financial statements. |
|
|
SOUTHERN ITS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2014 AND DECEMBER 31,
2013
(Audited)
NOTE 1 – NATURE AND DESCRIPTION OF BUSINESS
Southern ITS International, Inc. (formerly
Alco Advanced Technologies, Inc.) (“Company”) was incorporated in the State of Nevada on September 27, 1984. On March
21, 2012, the Company changed its name from Alco Advanced Technologies, Inc. to Southern ITS International, Inc.
The Company executed a share exchange
with Southern ITS Corporation (“SIC”) (“the Subsidiary”) in which the result was SIC becoming a wholly-owned
subsidiary of the Company. Refer to Note 9 for more information.
The Company's operations consist of providing
turnkey integration of electronic security systems for various types of industries, such as transportation, gaming and other secure
operations in both government and private sectors. The integration includes surveillance, access control, network infrastructure,
data communications and fire and burglar alarm systems. Today, security technologies are evolving rapidly and require remote access
through various networks, firewalls and internet security. Surveillance systems and access control are all network-dependent and
work best for the end user when they are completely integrated. The Company's mission is to provide a complete integration of the
various electronic security systems with the computer networks that they are dependent upon and ensuring that the systems will
remain secure from potential cyber attack.
On July 17, 2014, the Company enacted
a 1-for-50 reverse stock split. The Company has adjusted all periods presented for the effects of the stock split.
On August 15, 2014, the Company amended its articles of incorporation
to decrease its authorized shares of common stock from Two Hundred Fifty Million (250,000,000) shares to Fifty Million (50,000,000)
shares, with a par value of $0.001. The Company remains to have Ten Million (10,000,000) preferred shares with par value of $0.001
authorized. The Company designated 10,000,000 Series A Preferred Stock which have preferred voting rights equal to 500 votes for
each 1 preferred share.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The Company’s financial statements
have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
The accompanying audited financial statements
have been prepared in accordance with accounting principles generally accepted in The United States of America and the rules and
regulations of the Securities and Exchange Commission for interim financial information. Accordingly, they do not include
all the information necessary for a comprehensive presentation of financial position and results of operations.
It is management's opinion, however,
that all material adjustments (consisting of normal and recurring adjustments) have been made which are necessary for a fair financial
statements presentation. The results for the interim period are not necessarily indicative of the results to be expected
for the year.
Restatement of Financial Statements
Certain amounts in the prior
period financial statements have been adjusted to conform to the current period presentation pursuant to a 1 for 50 reverse stock
split on, see Note 14.
Basis of Consolidation
The accompanying consolidated financial
statements include all of the accounts of the Company and SIC as of December 31, 2014 and December 31, 2013 for the periods then
ended. All intercompany balances and transactions have been eliminated.
Use of estimates
The preparation of financial statements
in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period.
Such estimates and assumptions impact,
among others, the valuation allowance for deferred tax assets, due to continuing and expected future losses, and share-based payments.
Making estimates requires management
to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation
or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate
could change in the near term due to one or
more future confirming events. Accordingly,
the actual results could differ significantly from estimates.
Cash and cash equivalents
The Company considers all highly liquid
instruments purchased with a maturity of three months or less to be cash equivalents.
The Company minimizes its credit risk
associated with cash by periodically evaluating the credit quality of its primary financial institution. The balance at times may
exceed federally insured limits.
Allowance for Doubtful Accounts
The Company evaluates the collectability
of its accounts receivable based on a combination of factors. In circumstances where it is aware of a specific customers ability
to meet its financial obligations, it records a specific reserve to reduce the amounts recorded to what it believes will be collected.
For all other customers, it recognizes reserves for bad debts based on historical experience. The company had an allowance for
doubtful account balance of $0 and $158,695 at December 31, 2014 and December 31, 2013.
Fair Value of Financial Instruments
The Company follows paragraph 825-10-50-10
of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37
of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial
instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted
in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and
comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which
prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy
gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority
to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:
| |
|
|
| Level 1 |
|
Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. |
| |
|
|
| Level 2 |
|
Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. |
| |
|
|
| Level 3 |
|
Pricing inputs that are generally observable inputs and not corroborated by market data. |
The carrying amount of the Company’s
financial assets and liabilities, such as cash, prepaid expenses and accrued expenses approximate their fair value because of the
short maturity of those instruments.
The Company does not have any
assets or liabilities measured at fair value on a recurring or a non-recurring basis, consequently, the Company did not have any
fair value adjustments for assets and liabilities measured at fair value at December 31, 2014 and December 31, 2013; no gains or
losses are reported in the consolidated statements of operations that are attributable to the change in unrealized gains or losses
relating to those assets and liabilities still held at the reporting date ended December 31, 2014 and December 31,2013.
Property and Equipment
Property and equipment is stated at
cost, less accumulated depreciation on a straight line basis over the estimated useful lives of 5 to 7 years. Maintenance and repairs
are charged to operations when incurred. Betterment and renewals are capitalized when deemed material. When property and equipment
are sold or otherwise disposed of, the asset account and related accumulated depreciation account are relieved, and any gain or
loss is included in operations.
Intangible Assets
Valuation of intangible assets include
significant estimates and assumptions such as estimating future cash flows from product sales, developing appropriate discount
rates, estimating probability rates for the successful completion of projects, continuation of customer relationships and renewal
of customer contracts, and approximating the useful lives of the intangible assets acquired.
Long Lived Assets
The Company reviews the recover-ability
of the carrying value of identified intangibles and other long-lived assets, including fixed assets, whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be recoverable. Recover-ability of these assets is determined
based upon the forecasted undiscounted future net cash flows expected to result from the use of such asset and its eventual disposition.
The Company’s estimate of future cash flows is based upon, among other things, certain assumptions about expected future
operating performance, growth rates and other factors. The actual cash flows realized from these assets may vary significantly
from its estimates due to increased competition, changes in technology, fluctuations in demand, consolidation of its customers
and reductions in average selling prices. If the carrying value of an asset is determined not to be recoverable from future operating
cash flows, the asset is deemed impaired and an impairment loss is recognized to the extent the carrying value exceeds the estimated
fair market value of the asset.
Revenue recognition
The Company follows paragraph 605-10-S99-1
of the FASB Accounting Standards Codification for revenue recognition. The Company will recognize revenue when it is realized or
realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met:
(i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer,
(iii) the sales price is fixed or determinable, and (iv) the collectability is reasonably assured. There are no price incentives
and the product can only be returned if defective. As the Company does not believe defective merchandise is likely an allowance
has not been recognized. Revenue is recognized on a gross basis with corresponding costs of goods as a reduction to revenue in
cost of sales. The Company’s subsidiary earned the majority of the Company’s revenues in 2012 from installing network
surveillance systems. The Company applies the percentage-of-completion revenue recognition principles of accounting when recording
revenues for ongoing projects.
Risks and uncertainties
The Company operates in an industry
that is subject to rapid change. The Company's operations are subject to significant risk and uncertainties including financial
and operational risks including the potential risk of business failure. Also, see Note 3 regarding going concern matters.
Segment information
During 2014 & 2013, the Company
only operated in one segment; therefore, segment information has not been presented.
Share based payments
Generally, all forms of share-based
payments, including stock option grants, restricted stock grants and stock appreciation rights, are measured at their fair value
on the awards’ grant date, and based on the estimated number of awards that are ultimately expected to vest. Share-based
payment awards issued to non-employees for services rendered are recorded at either the fair value of the services rendered or
the fair value of the share-based payment, whichever is more readily determinable. The expense resulting from share-based payments
are recorded as a component of general and administrative expense.
Earnings per share
In accordance with accounting guidance
now codified as FASB ASC Topic 260, “Earnings per Share,” Basic earnings per share (“EPS”) is computed
by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the period,
excluding the effects of any potentially dilutive securities. Diluted EPS gives effect to all dilutive potential of shares of common
stock outstanding during the period including stock options or warrants, using the treasury stock method (by using the average
stock price for the period to determine the number of shares assumed to be purchased from the exercise of stock options or warrants),
and convertible debt or convertible preferred stock, using the if-converted method. Diluted EPS excludes all dilutive potential
of shares of common stock if their effect is anti-dilutive. At September 30, 2014, there were 30,166,314 potential dilutive shares
outstanding which relate to the outstanding warrants with exercise prices below the closing trading price of the Company’s
stock as of December 31, 2014.
Income Taxes
The Company accounts for income taxes
in accordance with accounting guidance now codified as FASB ASC Topic 740, “Income Taxes,” which requires that
the Company recognize deferred tax liabilities and assets based on the differences between the financial statement carrying amounts
and the tax bases of assets and liabilities, using enacted tax rates in effect in the years the differences are expected to reverse.
Deferred income tax benefit (expense) results from the change in net deferred tax assets or deferred tax liabilities. A valuation
allowance is recorded when it is more likely than not that some or all deferred tax assets will not be realized.
Accounting guidance now codified as
FASB ASC Topic 740-20, “Income Taxes – Intra-period Tax Allocation,” clarifies the accounting for uncertainties
in income taxes recognized in accordance with FASB ASC Topic 740-20 by prescribing guidance for the recognition, de-recognition
and measurement in financial statements of income tax positions taken in previously filed tax returns or tax positions expected
to be taken in tax returns, including a decision whether to file or not to file in a Particular jurisdiction. FASB ASC Topic 740-20
requires that any liability created for unrecognized tax benefits is disclosed. The application of FASB ASC Topic 740-20 may also
affect the tax bases of assets and liabilities and therefore may change or create deferred tax liabilities or assets.
Subsequent events
The Company follows the guidance in
Section 855-10-50 of the FASB Accounting Standards Codification for the disclosure of subsequent events. The Company will evaluate
subsequent events through the date when the financial statements were issued. Pursuant to ASU 2010-09 of the FASB
Accounting Standards Codification, the Company as an SEC filer considers its financial statements issued when they are widely distributed
to users, such as through filing them on EDGAR.
Recent accounting pronouncements
On
January 15, 2014—The Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2011-08, Intangibles—Accounting
for Goodwill (Topic 350):. The Update simplifies the accounting
alternative, if elected, to goodwill existing as of the beginning of the period of adoption and any new goodwill recognized in
annual periods beginning after December 15, 2014.
In April 2013, the FASB issued ASU No.
2010-17, "Revenue Recognition – Milestone Method (Topic 605): Milestone Method of Revenue Recognition" (codified
within ASC 605 - Revenue Recognition). ASU 2013-45 provides guidance on defining a milestone and determining when it may be
appropriate to apply the milestone method of revenue recognition for construction contracts.
Company management does not believe
that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the
accompanying financial statements.
NOTE 3 - GOING CONCERN
The Company’s financial statements
are prepared using generally accepted accounting principles applicable to a going concern which contemplates the realization of
assets and liquidation of liabilities in the normal course of business. As reflected in the accompanying financial statements,
the Company has an accumulated deficit of $8,150,905 from inception (September 27, 1984) to December 31, 2014. Its ability to continue
as a going concern is dependent upon the ability of the Company to generate profitable operations in the future and/or to obtain
the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come
due. Management intends to address the going concern issue by funding future operations through the sale of equity capital and
by director loans, if needed.
The Company is in the development stage
and anticipates that it will be able to have profitable operations in the near future. The Company believes its current available
cash, along with anticipated revenues, will be sufficient to meet its cash needs for the near future. There can be no assurance
that future financing will be available in amounts or terms acceptable to the Company, if at all.
These conditions raise substantial doubt
about the Company’s ability to continue as a going concern. The ability of the Company to continue its operations is dependent
on Management's plans, which include the raising of capital through debt and/or equity markets with some additional funding from
other traditional financing sources, including term notes, until such time that funds provided by operations are sufficient to
fund working capital requirements.
The Company may need to incur additional
liabilities with certain related parties to sustain the Company’s existence.
These financial statements do not include
any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary
should the Company be unable to continue as a going concern.
In response to these problems, management
has taken the following actions:
seeking
additional debt and/or equity financing,
continue
with development and implementation of the business plan,
assess
business markets and related opportunities so that more significant revenues can be generated, and
allocation
of sufficient resources to continue with sales representation and marketing efforts.
NOTE 4 – REVERSE STOCK SPLIT
On August 4, 2014, the Company executed a reverse stock split
whereby the holders of stock in the Company, Southern ITS International, Inc., received one (1) post reverse stock-split
share of common stock, $0.001 par value per share, in exchange for every fifty (50) shares of common stock (in effect, a 1
for 50 reverse split). Prior to the reverse stock split the Company had 168,217,400 shares of common stock outstanding. As a
result of the 1 for 50 reverse stock-split, the Company had 3,284,708 post reverse-split common shares issued and
outstanding. The Company has adjusted the equity statement and equity portion of the balance sheet to retroactively account
for the reverse stock split as if it occurred at inception.
NOTE 5 – PREPAIDS
The prepaid asset recorded at December 31, 2014, was the
result of the following employment agreements, plus prepaid rent of $1,150.
Employment agreement with CFO
On August 30, 2014, the Company executed
an employment agreement with its CFO and Treasurer, William Noll whereby the Company issued Mr. Noll 2,000,000 post reverse-split
shares of common stock for five (5) years services. As of the date of the executed employment agreement, the value of the 2,000,000
post reverse-split shares of common stock were valued at $0.06 per share which resulted in a valuation of $120,000. The Company
recorded the unearned portion of the employment contract value as a prepaid expense which as of September 30, 2014 was $110,000.
Employment agreement with CEO
On August 30, 2014, the Company executed
an employment agreement with its CEO, Sylvain Desrosiers, whereby the Company issued Mr. Desrosiers 10,000,000 post reverse-split
shares of common stock for five (5) years services. As of the date of the executed employment agreement, the value of the 10,000,000
post reverse-split shares of common stock were valued at $0.06 per share which resulted in a valuation of $600,000. The Company
recorded the unearned portion of the employment contract value as a prepaid expense which as of September 30, 2014 was $560,000.
As of December 31, 2014, and December 31, 2013, the registrant
had a prepaid balance of $673,150 and $-0- which are derived from the uncompleted portion of the consulting agreements with the
Company.
NOTE 6 – ACCOUNTS RECEIVABLE
The Company had the following accounts receivable balances
as of December 31, 2014 and December 31, 2013
| | |
December
31,
2014 | |
December 31,
2013 |
| | |
| | | |
| | |
Accounts Receivable
| |
$ | 0 | | |
$ | 167,671 | |
| Less: Allowance for Doubtful Accounts | |
| — | | |
| (147,285 | ) |
| Total | |
$ | 31,197 | | |
$ | 20,386 | |
| | |
| | | |
| | |
In the year ended December 31, 2014,
the Company recorded $-0- of bad debt expense. In the year ended December 31, 2013 the Company recorded $8,103 of bad debt expense.
As of December 31, 2014, the Company had fully reduced the accounts receivable balance with the allowance for doubtful account
balance due to the certainty of non-collection of receivables. Therefor the Company wrote off the accounts receivable and allowance
for doubtful accounts balances to zero.
NOTE 7 – FIXED ASSETS
At December 31, 2014 and December 31,
2013 the Company has the following fixed assets:
| | |
| |
|
| | |
December 31, 2014 | |
December 31, 2013 |
| Furniture and Equipment | |
$ | 5,808 | | |
$ | 5,808 | |
| Less Accumulated Depreciation | |
| (2,360 | ) | |
| (1,531 | ) |
| Fixed Assets, net | |
$ | 3,448 | | |
$ | 4,277 | |
Depreciation expense for the year ended
December 31, 2014 was $829. Depreciation expense for the year ended December 31, 2013 was $830.
NOTE 8 – NOTES PAYABLE
The company has unsecured notes payable and convertible notes
payable to related parties and non-related parties at December 31, 2014 and December 31, 2013 under the following general terms:
Convertible notes payable to related parties
Between May 12, 2008 and December 29,
2011, the Company entered into multiple convertible promissory notes, all of which have identical terms, with Bonavel Development,
S.A. for a total amount of $130,820. The notes bear 10% interest per annum and have a maturity date two years subsequent to the
executed loan date. The convertible note’s principle and accrued interest may at any time be converted into shares of the
Company’s stock at a conversion rate fixed at $0.025 per share. As of December 31, 2014, there is a principle balance outstanding
in the amount of $37,820 with accrued interest of $44,102. Of the total amount of $130,820 in principle, $93,000 was converted
into stock of the Company, all of which occurred prior to January 1, 2013. As of December 31, 2014 and 2013, the Company recorded
a derivative liability of $164,005 which was calculated using the Black Scholes Model.
Between November 2, 2009 and December
21, 2012, the Company entered into multiple convertible promissory notes, all of which have identical terms, with Alco Scanning
Services, Inc. for a total amount of $348,643. The notes bear 10% interest per annum and have a maturity date three years subsequent
to the executed loan date. The convertible note’s principle and accrued interest may at any time be converted into shares
of the Company’s stock at a conversion rate fixed at $0.025 per share. As of December 31, 2014, there is a principle balance
outstanding in the amount of $257,892 with accrued interest of $113,993. Of the total amount of $348,643 in principle, $90,751
was repaid with cash, all of which occurred prior to January 1, 2013. As of December 31, 2014, no principle has been converted
into shares of stock in the Company. As of December 31, 2014 and 2013, the Company recorded a derivative liability of $744,500
which was calculated using the Black Scholes Model.
Convertible notes payable to non-related parties
On April 20, 2009, the Company entered
into a convertible promissory note with Katherine Loren Armagnac in the amount of $30,000 with interest of 10% per annum, unsecured,
and due April 20, 2010. The note is convertible into common shares of the Company at a fixed conversion price of $2.50 per share.
The note is in default. As of December 31, 2014, no principle has been converted into shares of stock in the Company. The Company
did not record derivative liability pertaining to this note because the conversion price is greater than the fair market stock
price as of December 31, 2014.
On February 11, 2009, the Company entered
into a convertible promissory note with Charles P. Garrison in the amount of $50,000 with interest of 10% per annum, unsecured,
and due February 11, 2010. The note is convertible into common shares of the Company at a fixed conversion price of $2.50 per share.
The note is in default. As of December 31, 2014, no principle has been converted into shares of stock in the Company. The Company
did not record derivative liability pertaining to this note because the conversion price is greater than the fair market stock
price as of December 31, 2014.
On June 8, 2009, the Company entered
into a convertible promissory note with Steven R. Hammond in the amount of $75,000 with interest of 10% per annum, unsecured, and
due June 8, 2009. The note is convertible into common shares of the Company at a fixed conversion price of $2.50 per share. The
note is in default. As of December 31, 2014, no principle has been converted into shares of stock in the Company. The Company did
not record derivative liability pertaining to this note because the conversion price is greater than the fair market stock price
as of December 31, 2014.
On December 12, 2014, the Company entered
into a convertible promissory note with Erik Miller in the amount of $50,000 with interest of 10% per annum, unsecured,
and due December 12, 2015. The convertible note’s principle and accrued interest may at any time be converted into shares
of the Company’s stock at a conversion rate equal to 50% of the closing bid price on the date of the conversion notice. As
of December 31, 2014, no principle has been converted into shares of stock in the Company. As of December 31, 2014 and 2013, the
Company recorded a derivative liability of $77,260 which was calculated using the Black Scholes Model.
On June 3, 2009, the Company entered
into a convertible promissory note with Marflu S.A. for a total amount of $150,000. The note bears 10% interest per annum and has
a maturity date of June 3, 2014. The convertible note’s principle and accrued interest may at any time be converted into
shares of the Company’s stock at a conversion rate fixed at $0.025 per share. As of December 31, 2014, there is a principle
balance outstanding in the amount of $150,000 with accrued interest of $83,697. As of December 31, 2014, no principle has been
converted into shares of stock in the Company. As of December 31, 2014 and 2013, the Company recorded a derivative liability of
$467,853 which was calculated using the Black Scholes Model.
Notes payable to related parties
On December 31, 2008, the Company entered into a loan with
Alberto Surijon for a total amount of $108,205. The note bears 10% interest per annum and has a maturity date of December 31, 2011.
As of December 31, 2014, there is a principle balance outstanding in the amount of $96,205 with accrued interest of $52,342. Of
the total amount of $108,205 in principle, $12,000 was repaid with cash, all of which occurred prior to January 1, 2013.
Notes payable to non-related parties
On August 29, 2014, the Company entered into a security and
promissory note agreement with Infinity International Holdings, LLC in the amount of $20,000 with a fixed interest payment of $20,000
interest due within 60 days and incremental additional interest of $5,000 due every 30 days. The proceeds were used to complete
the Rocky Gap Project. As of December 31, 2014, the Company has paid $37,750 in interest.
The following table summarized the Company’s notes
payable and convertible notes payable balances as of December 31, 2014 and 2013;
| | |
December
31,
2014 | |
December 31, 2013 |
| 1. Convertible notes payable to related parties bearing | |
| | | |
| | |
| interest at 10%, payable on demand. Note is in default. | |
$ | 294,711 | | |
$ | 295,712 | |
| 2. Convertible notes payable to non-related parties | |
| | | |
| | |
| bearing 10% payable in two years. Note is in default. | |
| 155,000 | | |
| 155,000 | |
| 3. Notes payable to related parties bearing interest | |
| | | |
| | |
| at 10% payable upon demand. Note is in default. | |
| 96,205 | | |
| 105,752 | |
| 4. Notes payable to non-related parties bearing interest | |
| | | |
| | |
| at 10% payable on demand. Note is in default. | |
| 220,001 | | |
| 150,000 | |
| Total | |
| 765,917 | | |
| 706,464 | |
| |
| | | |
| | |
| Less current portion | |
| (765,917 | ) | |
| (673,072 | ) |
| Due after one year | |
$ | — | | |
$ | 33,392 | |
The Company had an accrued interest balance on the notes
payable in the amount of $387,882 and $325,557 as of December 31, 2014 and December 31, 2013.
The convertible note holders may convert at any time to common
shares at a fixed price of $.001 per share. The Company did not reflect bifurcation in the financials as the terms of all the convertible
notes issued expired as of December 31, 2012.
Conversion of Notes Payable
In the year ended December 31, 2014, two non-related party
note holders converted a total of $16,000 of principle debt and $1,500 of accrued interest on said debt into 3,100,000 post reverse-split
shares of common stock. There were no conversions of debt in the year ended December 31, 2013.
Notes in Default
Possible events constituting default are as follows:
- Failure to pay upon demand
- If we make an assignment for the benefit of creditors
- Bankruptcy or Insolvency
- Any merger, liquidation, dissolution or winding up of business
unless any successor expressly assumes the obligation
- Effectuate a reverse split of common stock prior to the
consent of the note holders
The Company has $155,000 of convertible notes payable to
three non-related parties which are in default. The Company has $148,400 in notes payable to non-related parties which are in default.
The Company has $105,752 of notes payable to related parties which are in default. Of the $271,670 outstanding in convertible notes
payable to related parties, $216,200 is in default. In the event of default, the note holder at any time can declare the entire
principle and accrued interest immediately due and payable.
NOTE 9 – SHARE EXCHANGE AGREEMENT
On April 17, 2012, the Company issued
200,000,000 post reverse-split shares of common stock to the sole equity owner of Southern ITS Corporation (SIC) for 100% of the
issued and outstanding shares of capital stock in SIC. This executed share exchange agreement resulted in SIC becoming a wholly-owned
subsidiary of the Company.
Addendum to Share Exchange Agreement
On April 30, 2013, the Company entered
into an addendum with SIC to amend its previously executed share exchange agreement on April 17, 2012. The addendum includes a
mutually agreed upon revaluation of the consideration paid to acquire SIC whereby the new valuation will be 400,000 post reverse-split
shares instead of 4,000,000 post reverse-split shares of common stock. The Company was returned the initial 400,000 post reverse-split
shares from SIC which they then canceled. The Company then issued a new certificate for 400,000 post reverse-split to the president
of SIC in September of 2013. The Company has restated its prior year comparative financial information to account for this revaluation.
On March 18, 2014, the company entered
into an addendum with SIC to amend its previous agreement and SIC returned 400,000 post reverse-split shares of common stock to
the treasury.
Goodwill
On April 17, 2012, SIC had assets of
$126,450, liabilities of $0, and retained earnings of $168,376. The share exchange agreement resulted in the Company recording
goodwill of $1,973,550. This was calculated from taking the closing reverse-split stock price on the date of the share exchange
agreement, $5.25 on April 17, 2013, times the amended consideration paid of 400,000 post reverse-split shares, minus assets received
of $126,450. The Company later impaired the goodwill asset which is described in Note 9.
NOTE 10 – IMPAIRMENT OF GOODWILL
The Company’s stock exchange with
SIC resulted in the recording a goodwill in the amount of $1,973,550. At December 31, 2012 the Company’s test of goodwill
resulted in the write off of $1,973,550 which was recorded in the statements of operations.
NOTE 11 – RELATED PARTY TRANSACTIONS
Employment agreements with CFO/Treasurer
On August 31, 2014, the Company executed
an employment agreement with its CFO and Treasurer, William Noll whereby the Company issued Mr. Noll 2,000,000 post reverse-split
shares of common stock for five (5) years services. As of the date of the executed employment agreement, the value of the 2,000,000
post reverse-split shares of common stock were valued at $0.06 per share which resulted in a valuation of $120,000. The Company
recorded the unearned portion of the employment contract value as a prepaid expense which as of December 31, 2014 was $110,000.
Employment agreement with CEO
On August 31, 2014, the Company executed
an employment agreement with its CEO, Sylvain Desrosiers, whereby the Company issued Mr. Desrosiers 10,000,000 post reverse-split
shares of common stock for five (5) years services. As of the date of the executed employment agreement, the value of the 10,000,000
post reverse-split shares of common stock were valued at $0.06 per share which resulted in a valuation of $600,000. The Company
recorded the unearned portion of the employment contract value as a prepaid expense which as of December 31, 2014 was $550,000.
Convertible Notes Payable- Related
Parties
As of December 31, 2014 and 2013, the
Company has convertible notes payable with one related party company which is 100% owned by our chief executive officer. The notes
bear interest of 10% and are convertible into shares of the Company at a fixed conversion rate of $0.025 per share. The convertible
notes payable to related parties balance at December 31, 2014 and December 31, 2013 are $294,712 and $295,712. Of the balances
as of December 31, 2014 and 2013, $294,712 and $216,200 is in default. The note holder may convert to common shares at a fixed
price of $.025 per share.
Notes Payable to Related Parties
As of December 31, 2014 and 2013, the
Company has two notes payable with two companies that share an officer of the Company. The notes bear interest of 10% and are currently
in default. The notes payable to related parties balance at December 31, 2014 and December 31, 2013 are $96,205 and $105,752.
Stock issued to Officers
In September of 2013, the Company issued 400,000 post reverse-split
common shares and 5,000,000 preferred shares to Sylvain Desrosiers for services completed by December 31, 2013. Mr. Sylvain is
a Director of the Company.
In September of 2014, the Company issued 12,000,000 post
reverse-split shares of common stock - 2,000,000 to our CFO and 10,000,000 to our CEO, pursuant to separate five (5) year employment
agreements for executive services to be provided.
Addendum to Share Exchange Agreement
On April 30, 2013, the Company entered into an addendum with
SIC to amend its previously executed share exchange agreement. The addendum includes a mutually agreed upon revaluation of the
consideration paid to acquire SIC whereby the new valuation will be 400,000 post reverse-split shares. The Company was returned
the initial 400,000 post reverse-split shares from Jason Bell whom is the President of the Company and previous sole shareholder
of SIC. The 400,000 post reverse-split shares were then canceled and Mr. Bell was issued a new certificate for 400,000 post reverse-split
common shares. This agreement was reversed on March 18, 2014 and Mr. Bell returned the 400,000 post reverse-split common shares
to the treasury.
Cancelled Shares
In the year ended December 31, 2014,
the Company cancelled 400,000 post reverse-split outstanding common shares to an officer of the Company for failing to provide
contracted services.
NOTE 12 - STOCKHOLDERS’ EQUITY
Common and preferred stock authorized
On April 15, 2014, the Company amended
its articles of incorporation to decrease its authorized shares of common stock from Five Hundred Million (500,000,000) shares
to Two Hundred Fifty Million (250,000,000) shares with par value of $0.001. On August 15, 2014, the Company amended its articles
of incorporation to decrease its authorized shares of common stock from Two Hundred Fifty Million (250,000,000) shares to Fifty
Million (50,000,000) shares, with a par value of $0.001.
The Company remains to have Ten Million
(10,000,000) preferred shares with par value of $0.001 authorized. The Company designated 10,000,000 Series A Preferred Stock which
have preferred voting rights equal to 500 votes for each 1 preferred share.
Common and preferred stock issued
On August 4, 2014, the Company enacted
a 1-for-50 reverse stock split. The Company has adjusted all periods presented for the effects of the stock split.
For the year ended December 31, 2013,
the Company issued 5,000,000 preferred shares and 400,000 post reverse-split common shares to a director of the Company for services
completed prior to December 31, 2013. The Company valued the preferred shares at par $0.001, which resulted in an expense of $5,000.
The Company valued the 400,000 post reverse-split common shares at the closing stock price on the date of issuance, September 3,
2013 at $0.11, which resulted in an expense of $44,000. The Company also issued 400,000 post reverse-split common shares to Jason
Bell, the President of Company, pursuant to the addendum to the Share Exchange Agreement described in Note 10.
At December 31, 2013, the Company had
3,764,348 post reverse-split common shares outstanding and had 5,000,000 preferred shares outstanding.
In the year ended December 31, 2014,
the Company cancelled 400,000 post reverse-split shares of common stock to an officer of the Company for failing to provide contracted
services. The Company also issued 3,100,000 post reverse-split shares of common stock for the reduction of $1,600 of notes payable
and $1,600 of accrued interest on convertible notes payable. The Company also issued 12,000,000 post reverse-split shares of common
stock, 2,000,000 to our CFO and 10,000,000 to our CEO, pursuant to separate five (5) year employment agreements for executive services
to be provided. The 12,000,000 post reverse-split shares were valued at the date of the agreement, $0.06, which resulted in an
expense of $720,000 being recognized over the life of the employment agreements with the unearned portion recorded as a prepaid
expense.
Stock Warrants
Included in two of our outstanding convertible
notes payable are warrants to purchase our stock. They are as follows,
Warrant 1: 1,000,000 warrants
to purchase our stock at an exercise price of $0.05 per share with a 10 year life from May 1, 2010, expiring May 1, 2020.
Warrant 2: 300,000 warrants to
purchase our stock at an exercise price of $0.10 per share with a 5 year life from January 30, 2010, expiring on January 30, 2015.
| | |
| |
Weighted | |
| |
|
| Warrants | |
| |
Average | |
| |
Warrants |
| Exercisable | |
Exercise | |
Remaining | |
| |
Exercisable |
| December 31, | |
Price ($) per | |
Contractual | |
Exercised | |
December 31, |
| 2013 | |
Share | |
Life | |
Warrants | |
2014 |
| | | | |
| | | |
| | | |
| | | |
| | |
| | 1,300,000 | | |
| ($0.05 - $0.10) | | |
| 4.75 years | | |
| — | | |
| 1,300,000 | |
NOTE 13 - CONTINGENCIES
From time to time, the Company may become
involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject
to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm its business.
Alco has no pending or threatened legal proceedings or administrative actions either by or against
the issuer that could have a material effect on the issuer's
business, financial condition, or operations and any current,
past or pending trading suspensions by a securities regulator.
NOTE 14 – SUBSEQUENT EVENTS
Management has evaluated subsequent
events pursuant to the requirements of ASC Topic 855 and has determined that no material subsequent events exist.
BYLAWS
Bylaws
for the regulation, except as otherwise provided by statute or its Articles of Incorporation of
SOUTHERN
ITS INTERNATIONAL, INC
a
Nevada corporation
ARTICLE
I. OFFICES
Section
1. PRINCIPAL EXECUTIVE OFFICE. The principal executive office of the corporation shall be fixed and located at: 9510
W. Sahara Ave., Suite 120 , Las Vegas, Nevada 89117, (702) 755-3745. The Board of Directors
(hereinafter the"Board") is granted full power and authority to change said principal executive office from one location
to another within or without the State of Nevada. Any such change shall be noted in the Bylaws opposite this Section or this Section
may be amended to state the new location.
Section
2. OTHER OFFICES. Branch or subordinate offices may be established at any time by the Board at any place or places.
ARTICLE
II. STOCKHOLDERS
Section
1. PLACE OF MEETINGS. Meetings of stockholders shall be held either at the principal executive office of the corporation
or at any other place within or without the State of Nevada which may be designated by the Board.
Section
2. ANNUAL MEETINGS. The annual meetings of stockholders shall be held on such date and at such time as may be fixed
by the Board. At such meetings; directors shall be elected and any other proper business may be transacted.
Section
3. SPECIAL MEETINGS. Special meetings of the stockholders may be called at any time by the Board, the Chairman of the
Board or the President. Upon request in writing to the Chairman of the Board, the President, any Vice President or the Secretary
by any person (other than the Board) entitled to call a special meeting of stockholders, the officer forthwith shall cause notice
to be given to the stockholders entitled to vote that a meeting will be held at a time requested by the person or persons calling
the meeting, not less than thirty-five (35) nor more than sixty (60) days after the receipt of the request. If the notice is not
given within twenty (20) days after receipt of the request, the persons entitled to call the meeting may give the notice.
Section
4. NOTICE OF ANNUAL OR SPECIAL MEETING. Written notice of each annual or special meeting of stockholders shall be given
not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to vote thereat.
Such notice shall state the place, date and hour of the meeting and in the case of a special meeting, the purpose or purposes
for which the meeting is called. Such written notice must be signed by the President, or any Vice-President, Secretary or any
Assistant Secretary. Except as otherwise expressly required by law, notice of any adjourned meeting of the stockholders need not
be given if the time and place thereof are announced at the meeting at which the adjournment is taken.
Notice
of a stockholders' meeting shall be given either personally or by mail or by other means of written communication, addressed to
the stockholder at the address of such stockholder appearing on the books of the corporation or given by the stockholder to the
corporation for the purpose of notice. Notice by mail shall be deemed to have been given at the time a written notice is deposited
in the United States' mail, postage prepaid. Any other written notice shall be deemed to have been given at the time it is personally
delivered to the recipient or is delivered to a common carrier for transmission, or actually transmitted by the person giving
the notice by electronic means, to the recipient.
Section
5. NOTICE OF BUSINESS. At any meeting of stockholders, only such business shall be conducted as shall have been brought
before the meeting (a) by or at the direction of the Board, or (b) by a stockholder of record entitled to vote at such meeting
who complies with the notice procedures set forth in this Section. For business to be properly brought before a meeting by such
a stockholder, the stockholder shall have given timely notice thereof in writing to the Secretary of the corporation. To be timely,
such notice shall be delivered to or mailed and received at the principal executive office of the corporation not less than thirty
(30) days nor more than ninety (90)days prior to the meeting; provided, however, that in the event that less than forty (40) days'
notice of the date of the meeting is given by the corporation, notice by the stockholder to be timely must be so received not
later than the close of business on the tenth (10th) day following the day on which such notice of the date of the
meeting was mailed or otherwise given. Such stockholder's notice to the Secretary shall set forth as to each matter the stockholder
proposes to bring before the meeting (a) a brief description of the business desired to be brought before the meeting, and in
the event that such business includes a proposal to amend either the Articles of Incorporation or the Bylaws of the corporation,
the language of the proposed amendment, (b) the name and address of the stockholder proposing such business, (c) the class and
number of shares of stock of the corporation which are owned by such stockholder, and (d) any material personal interest of such
stockholder in such business. If notice has not been given pursuant to this Section, the Chairman of the meeting shall, if the
facts warrant, determine and declare to the meeting that the proposed business was not properly brought before the meeting, and
such business may not be transacted at the meeting.
Section
6. NOTICE OF BOARD CANDIDATE. At any meeting of stockholders, a person may be a candidate for election to the Board
only if such person is nominated (a) by or at the direction of the Board, (b) by any nominating committee or person appointed
by the Board, or (c) by a stockholder of record entitled to vote at such meeting who complies with the notice procedures set forth
in this Section. To properly nominate a candidate, a stockholder shall give timely notice of such nomination in writing to the
Secretary of the corporation. To be timely, such notice shall be delivered to or mailed and received at the principal executive
office of the corporation not less than thirty days nor more than ninety days prior to the meeting; provided, however, that in
the event that less than forty days' notice of the date of the meeting is given by the corporation, notice of such nomination
to be timely must be so received not later than the close of business on the tenth (10th) day following the day on
which such notice of the date of the meeting was mailed or otherwise given. Such stockholder's notice to the Secretary shall set
forth (a) as to each person whom the stockholder proposes to nominate (i) the name, age, business address and residence address
of the person, (ii) the principal occupation or employment of the person, (iii) the class and number of shares of stock of the
corporation which are owned by the person, and (iv) any other information relating to the person that would be required to be
disclosed in a solicitation of proxies for election of directors pursuant to Regulation 14A under the Securities Exchange Act
of 1934; and (b) as to the stockholder giving the notice (i) the name and address of such stockholder and (ii) the class and number
of shares of stock of the corporation owned by such stockholder. The corporation may require such other information to be furnished
respecting any proposed nominee as may be reasonably necessary to determine the eligibility of such proposed nominee to serve
as a director of the corporation. No person shall be eligible for election by the stockholders as a director at any meeting unless
nominated in accordance with this Section.
Section
7. QUORUM AND ADJOURNMENT. The holders of a majority of the stock issued and outstanding and entitled to vote thereat,
present in person or represented by proxy, shall constitute a quorum for holding all meetings of stockholders, except as otherwise
provided by applicable law or by the Articles of Incorporation; provided, however, that the stockholders present at a duly called
or held meeting at which a quorum is present may continue to transact business until adjournment notwithstanding the withdrawal
of enough stockholders to leave less than a quorum, if any action taken (other than adjournment) is approved by at least a majority
of the shares required to constitute a quorum. If it shall appear that such quorum is not present or represented at any meeting
of stockholders, the Chairman of the meeting shall have power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall
be present or represented, any business may be transacted which might have been transacted at the meeting as originally noticed.
If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting,
a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. The Chairman of
the meeting may determine that a quorum is present based upon any reasonable evidence of the presence in person or by proxy of
stockholders holding a majority of the outstanding votes, including without limitation, evidence from any record of stockholders
who have signed a register indicating their presence at the meeting.
Section
8. VOTING. In all matters except the election of Directors, when a quorum is present at any meeting, the vote of the
holders of a majority of the capital stock having voting power present in person or represented by proxy shall decide any question
brought before such meeting, unless the question is one upon which by express provision of applicable law or of the Articles of
Incorporation, a different vote is required in which case such express provision shall govern and control the decision of such
question. Such vote may be viva vote or by written ballot; provided, however, that the Board may, in its discretion, require a
written ballot for any vote, and further provided that all elections for directors must be by written ballot upon demand made
by a stockholder at any election and before the voting begins.
Unless
otherwise provided in the Articles of Incorporation, each stockholder shall at every meeting of the stockholders be entitled to
one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder.
Notwithstanding
the foregoing, at all elections of Directors of the corporation, each stockholder shall be entitled to as many votes as shall
be equal to the number of such stockholder shares of capital stock entitled to vote multiplied by the number of Directors to be
elected, and such stockholder, in his, her, or its sole discretion, may cast all or such votes for a single Director or may cast
such votes among several Directors.
Section
9. RECORD DATE. The Board may fix, in advance, a record date for the determination of the stockholders entitled to
notice of any meeting or to vote or entitled to receive payment of any dividend or other distribution, or any allotment of rights,
or to exercise rights in respect of any other lawful actions. The record date so fixed shall be not more than sixty (60) days
nor less than ten (10) days prior to the date of the meeting nor more than sixty (60) days prior to any other action.
Section
10. CONSENT OF ABSENTEES; WAIVER OF NOTICE. The transactions of any meeting of stockholders, however called and noticed,
and wherever held, are as valid as though a meeting had been duly held after regular call and notice, if a quorum is present either
in person or by proxy, and if, either before or after the meeting, each of the persons entitled to vote, not present in person
or by proxy, signs a written waiver of notice, or a consent to the holding of the meeting or an approval of the minutes thereof.
All such waivers, consents or approvals shall be filed with the corporate records or made a part of the minutes of the meeting.
Neither the business to be transacted at nor the purpose of any regular or special meeting of stockholders need be specified in
any written waiver of notice.
Section
11. PROXIES. Every person entitled to vote shares has the right to do so either in person or by one or more persons
authorized by a written proxy executed by such stockholder and filed with the Secretary. Any proxy duly executed is not revoked
and continues in full force and effect until revoked by the person executing it prior to the vote pursuant thereto by a writing
delivered to the corporation stating that the proxy is revoked or by a subsequent proxy executed by, or by attendance at the meeting;
provided, however, that no proxy shall be valid after expiration of three (3) years from the date of its execution unless otherwise
provided in the proxy.
Section
12. JUDGES OF ELECTION. The Board may appoint a Judge or Judges of Election for any meeting of stockholders. Such Judges
shall decide upon the qualification of the voters and report the number of shares represented at the meeting and entitled to vote,
shall conduct the voting and accept the votes and when the voting is completed shall ascertain and report the number of shares
voted respectively for and against each position upon which a vote is taken by ballot. The Judges need not be stockholders, and
any officer of the corporation may be a Judge on any position other than a vote for or against a proposal in which such person
shall have a material interest.
Section
13. STOCKHOLDER LISTS. The officer who has charge of the stock ledger of the corporation shall prepare and make, at
least ten days before every meeting of stockholders, a complete list of stockholders entitled to vote at the meeting, arranged
in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting or at the place of the meeting, and the list shall also be available
at the meeting during the whole time thereof, and may be inspected by any stockholder who is present.
ARTICLE III.
DIRECTORS
Section
1. POWERS. Subject to the limitations of the Articles of Incorporation or these Bylaws or the Nevada Revised Statutes,
Chapter 78, relating to action required to be approved by the stockholders or by the outstanding shares, the business and affairs
of the corporation shall be managed and all corporate powers shall be exercised by or under the direction of the Board. The Board
may delegate the management of the day-to-day operation of the business of the corporation to management or other persons provided
that the business and affairs of the corporation shall be managed and all corporate powers shall be exercised under the ultimate
direction of the Board. Without prejudice to such general powers, but subject to the same limitations, it is hereby expressly
declared that the Board shall have the following powers in addition to the other powers enumerated in these Bylaws:
| 1. | To
select and remove all the other officers, agents and employees of the corporation, prescribe
the powers and duties for them as may not be inconsistent with law, with the Articles
of Incorporation or these Bylaws and fix their compensation. |
| 2. | To
conduct, manage and control the affairs and business of the corporation and to make such
rules and regulations therefor not inconsistent with law, or with the Articles of Incorporation
or these Bylaws, as they may deem best. |
| 3. | To
adopt, make and use a corporate seal, and to prescribe the forms of certificates of stock,
and to alter the form of such seal and such certificates from time to time as in their
judgment they may deem best. |
| 4. | To
authorize the issuance of shares of stock of the corporation from time to time, upon
such terms and for such consideration as may be lawful. |
| 5. | To
borrow money and incur indebtedness for the purposes of the corporation, and to cause
to be executed and delivered therefor, in the corporate name, promissory notes, bonds,
debentures, deeds of trust, mortgages, pledges, hypothecations or other evidences of
debt and securities therefor. |
Section
2. NUMBER OF DIRECTORS. The authorized number of directors of the corporation shall be fixed from time to time by resolution
adopted by the Board.
Section
3. ELECTION AND TERM OF OFFICE. Directors shall be elected at the annual meeting of stockholders and each director
shall hold office until his successor is elected and qualified or until his death, retirement, earlier resignation or removal.
Section
4. VACANCIES. Any director may resign effective upon giving written notice to the Chairman of the Board, the President,
Secretary or the Board, unless the notice specifies a later time for the effectiveness of such resignation. Vacancies in the Board
may be filled by the remaining directors, though less than a quorum, or by a sole remaining director, and each director so elected
shall hold office until his or her successor is elected at an annual or special meeting of the stockholders.
Section
5. PLACE OF MEETING. Regular or special meetings of the Board shall be held at any place designated from time to time
by the Board. In the absence of such designation, regular meetings shall be held at the principal executive office of the corporation.
Section
6. REGULAR MEETINGS. Regular meetings of the Board shall be held without call at such dates, times and places as the
Board may establish from time to time. Call and notice of all regular meetings of the Board are hereby dispensed with.
Section
7. SPECIAL MEETINGS. Special meetings of the Board for any purpose or purposes may be called at any time by the Chairman
of the Board, the President or the Secretary or by any two (2) directors.
Special
meetings of the Board shall be held upon four (4) days' written notice or forty-eight (48) hours' notice given personally or by
telephone, telegraph, telex or other similar means of communication. Any such notice shall be addressed or delivered to each director
at such director's address as it is shown upon the records of the corporation or as may have been given to the corporation by
the director for purposes of notice or, if such address is not shown on such records or is not readily ascertainable, at the place
in which the meetings of the directors are regularly held.
Notice
by mail shall be deemed to have been given at the time a written notice is deposited in the United States mail, postage prepaid.
Any other written notice shall be deemed to have been given at the time it is personally delivered to the recipient or is delivered
to a common carrier for transmission or actually transmitted by the person giving the notice by electronic means to the recipient.
Oral notice shall be deemed to have been given at the time it is communicated, in person or by telephone or wireless, to the recipient
or to a person at the office of the recipient who the person giving the notice has reason to believe will promptly communicate
it to the recipient.
Section
8. QUORUM. A majority of the whole Board shall constitute a quorum except when a vacancy or vacancies prevents such
majority, whereupon a majority of the directors in office shall constitute a quorum, provided, that such majority shall constitute
at least one-third of the whole Board. Every act or decision done or made by a majority of the directors present at a meeting
duly held at which a quorum is present shall be regarded as the act of the Board, unless a greater number be required by law or
by the Articles of Incorporation. A meeting at which a quorum is initially present may continue to transact business notwithstanding
the withdrawal of directors, if any action is approved by at least a majority of the required quorum for such meeting.
Section
9 . PARTICIPATION IN MEETINGS BY CONFERENCE TELEPHONE Members of the Board may participate in a meeting through use of conference
telephone or similar communications equipment, so long as all members participating in such meeting can hear one another.
Section
10. WAIVER OF NOTICE. The transactions of any meeting of the Board, however called and noticed, and wherever held,
are as valid as though a meeting had been duly held after regular call and notice if a quorum be present and if, either before
or after the meeting, each of the directors not present signs a written waiver of notice, a consent to holding such meeting or
an approval of the minutes thereof. All such waivers, consents or approvals shall be filed with the corporate records or made
a part of the minutes of the meeting.
Section
11. ADJOURNMENT. A majority of the directors present, whether or not a quorum is present, may adjourn any directors
meeting to another time and place. Notice of the time and place of holding an adjourned meeting need not be given to absent directors
if the time and place be fixed at the meeting adjourned. If the meeting is adjourned for more than twenty-four (24) hours, notice
of any adjournment to another time or place shall be given prior to the time of the adjourned meeting to the directors who were
not present at the time of the adjournment.
Section
12. FEES AND COMPENSATION. Directors and members of committees may receive such compensation, if any, for their services,
and such reimbursement for expenses, as may be fixed or determined by the Board.
Section
13. ACTION WITHOUT MEETING. Any action required or permitted to be taken by the Board or committee thereof may be taken
without a meeting if all members of the Board or committee shall individually or collectively consent in writing to such action.
Such consent or consents shall have the same effect as a unanimous vote of the Board or committee and shall be filed with the
minutes of the proceedings of the Board or committee.
Section
14. COMMITTEES. The Board may appoint one (1) or more committees, each consisting of two (2) or more directors, and
delegate to such committees any of the authority of the Board except with respect to:
| 1. | The
approval of any action for which the Nevada Revised Statutes,Chapter 78, also requires
stockholders approval or approval of the outstanding shares; |
| 2. | The
filling of vacancies on the Board or in any committee; |
| 3. | The
fixing of compensation of the directors for serving on the Board or on any committee;
|
| 4. | The
amendment or repeal of Bylaws or the adoption of new Bylaws; |
| 5. | The
amendment or repeal of any resolution of the Board which by its express terms is not
so amendable or repealable; |
| 6. | The
appointment of other committees of the Board or the members thereof. |
Any
such committee must be appointed by resolution adopted by a majority of the whole board of directors and may be designated an
Executive Committee or by such other name as the Board shall specify. The Board shall have the power to prescribe the manner in
which the proceedings of any such committee shall be conducted. In the absence of any such prescription, such committee shall
have the power to prescribe the manner in which its proceedings shall be conducted. Unless the Board or such committee shall otherwise
provide, the regular and special meetings and other actions of any such committee shall be governed by the provisions of this
Article applicable to meetings and actions of the Board. Minutes shall be kept of each meeting of each committee.
Section
15. RIGHTS OF INSPECTION. Every director shall have the absolute right at any reasonable time to inspect and copy all
the books, records and documents of every kind and to inspect physical properties of the corporation and also of its subsidiary
corporations, domestic or foreign. Such inspection by a director may be made in person or by agent or attorney and includes the
right. to copy and obtain extracts.
Section
16. ADVISORY .DIRECTORS. The Board of Directors may appoint such additional advisory directors (by whatever name designated)
to advise the Board on such matters and in such fashion as the Board may from time to time request. Such advisory directors shall
be entitled to notice of, and to attend, regular and special meetings of the Board, but shall not be entitled to vote at such
meetings and may be appointed or removed at the pleasure of the Board. Such advisory directors shall not be deemed to be regular
members of the Board of Directors or employees of the corporation for any purpose whatsoever.
ARTICLE IV.
OFFICERS
Section
1. OFFICERS. The officers of the corporation shall be a Chairman of the Board, President, a Secretary, and a Treasurer.
The corporation may also have, at the discretion of the Board, one or more Vice Presidents, one or more Assistant Secretaries,
one or more Executive and/or Financial Officers, and such other officers as may be elected or appointed in accordance with the
provisions of Section 2 of this Article.
Section
2. APPOINTMENT OF OFFICERS. The officers of the corporation shall be appointed by the Board of Directors. Each
of these officers shall hold office for such period and shall have such authority and perform such duties as are prescribed by
these Bylaws or determined from time to time by the Board of Directors.
Section
3. REMOVAL AND RESIGNATION. Any officer may be removed, with or without cause, by the Board of Directors at any time
or, except in the case of an officer chosen by the Board, by any officer upon whom such power of removal may be conferred by the
Board. Any such removal shall be without prejudice to the rights, if any, of the officer under any contract of employment of the
officer.
Any
officer may resign at any time by giving written notice to the corporation, but without prejudice to the rights, if any, of the
corporation under any contract to which the officer is a party. Any such resignation shall take effect at the date of the receipt
of such notice or at any later time specified therein and, unless otherwise specified therein, the acceptance of such resignation
shall not be necessary to make it effective.
Section
4. VACANCIES. A vacancy in any office because of death, resignation, removal, disqualification or any other cause shall
be filled in the manner prescribed in these Bylaws for regular election or appointment to such office.
Section
5. CHAIRMAN OF THE BOARD. The Chairman of the Board shall preside at all meetings of the stockholders and at all meetings
of the Board and shall have such other powers and duties as may from time to time be assigned by the Board.
Section
6. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer, subject to the control of the Board, the committees of the
Board and the Chairman of the Board, is the general manager of the corporation. The Chief Executive Officer shall have supervising
authority over and may exercise general executive power concerning the supervision, direction and control of the business and
officers of the corporation, with the authority from time to time to delegate to the President and other officers such executive
powers and duties as the Chief Executive Officer may deem advisable. In the absence of the Chairman of the Board, the Chief Executive
Officer shall preside at all meetings of the Board and the stockholders.
Section
7. PRESIDENT. The President is the chief operating officer of the corporation and, subject to the control of
the Board, the committees of the Board, the Chairman of the Board and the Chief Executive Officer, has supervisory authority over
and may exercise general executive powers concerning the operations, business and subordinate officers of the corporation, with
the authority from time to time to delegate to other officers such executive powers and duties as the President may deem advisable.
In the absence of the Chairman of the Board and the Chief Executive Officer, the President shall preside at all meetings of the
stockholders and at all meetings of the Board. The President has the general powers and duties of management usually vested in
the office of President of a corporation and such other powers and duties as may be prescribed by the Board.
Section
8. VICE PRESIDENTS. In the absence or disability of the President, the Vice Presidents in order of their rank as fixed
by the Board or, if not ranked, the Vice President designated by the Board, shall perform all duties of the President and, when
so acting, shall have all the powers of, and be subject to all the restrictions upon, the President. The Vice Presidents shall
have such other powers and perform such other duties as from time to time may be prescribed for them respectively by the Board.
Section
9. SECRETARY. The Secretary shall keep or cause to be kept, at the principal executive office and such other place as the
Board may order, a book of minutes of all meetings of stockholders, the Board and its committees, with the time and place of holding,
whether regular or special, and if special, how authorized, the notice thereof given, the names of those present at Board and
committee meetings, and the number of shares present or represented at stockholders' meetings, and the proceedings thereof. The
Secretary shall keep, or cause to be kept, a copy of the Bylaws of the corporation at the principal executive office or business
office.
The
Secretary shall keep, or cause to be kept, at the principal executive office a share register, or a duplicate share register,
showing the name of the stockholders and their addresses, the number and classes of shares held by each, the number and date of
certificates issued for the same, and the number and date of cancellation of every certificate surrendered for cancellation.
The
Secretary shall give, or cause to be given, notice of all meetings of the stockholders and of the Board and of any committees
thereof required by these Bylaws or by law to be given, shall keep the seal of the corporation in safe custody, and shall have
such other powers and perform such other duties as may be prescribed by the Board.
Section
10. CHIEF FINANCIAL OFFICER. The Chief Financial Officer shall keep and maintain, or cause to be kept and maintained,
adequate and correct accounts of the properties and business transactions of the corporation. The books of account shall at all
times be open to inspection by any director.
The
Chief Financial Officer shall deposit all moneys and other valuables in the name and to the credit of the corporation with such
depositories as may be designated by the Board. The Chief Financial Officer shall disburse the funds of the corporation as may
be ordered by the Board, shall render to the Chief Executive Officer, the President and directors, whenever they request it, an
account of all transactions as Chief Financial Officer and of the financial condition of the corporation, and shall have such
other powers and perform such other duties as may be prescribed by the Board.
The
Financial Officer or Officers, who are subordinate to the Chief Financial Officer, if any, shall, in the absence or disability
of the Chief Financial Officer, or at his request, perform his duties and exercise his powers and authority, and shall perform
such other duties and have such other powers as the Board of Directors may from time to time prescribe.
Section
11. CONTROLLER. The Controller shall keep and maintain, or cause to be kept and maintained, adequate and correct accounts
of the properties and business transactions of the corporation, including accounts of its assets, liabilities, receipts, disbursements,
gains, losses, capital, surplus and surplus shares. The Controller is responsible for the formulation of the corporation's accounting
policies, procedures and practices, and the preparation of the corporation's financial reports. The Controller shall establish
and administer a plan for the financial control of the corporation and compare performance with that plan. The Controller shall
have such other powers and duties as the Board of Directors may from time to time prescribe.
Section
12. TREASURER. The Treasurer shall deposit all moneys and other valuables in the name and to the credit of the corporation
with such depositories as may be designated by the Board. The Treasurer shall disburse the funds of the corporation as may be
ordered by the Board, shall render to the Chief Executive Officer, the President and directors, whenever they request it, an account
of all transaction as Treasurer and of the financial condition of the corporation, and shall have such other powers and perform
such other duties as may be prescribed by the Board.
ARTICLE V.
STOCK
Section
1. FORM OF STOCK CERTIFICATE. Every holder of stock in the corporation shall be entitled to have a certificate signed
by, or in the name of, the corporation by the Chairman or Vice-Chairman of the Board of Directors, if any, and by the President
or a Vice President, or by the Chief Financial Officer or a subordinate Financial Officer, or the Secretary or an Assistant Secretary
certifying the number of shares owned in the corporation. Any or all of the signatures on the certificate may be a facsimile signature.
If any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall
have ceased to be such officer, transfer agent or registrar before such certificate is issued, it maybe issued by the corporation
with the same effect as if such person were such officer, transfer agent or registrar at the date of the issuance.
If
the corporation shall be authorized to issue more than one class of stock or more than one series of any class, the powers, designations,
preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualification,
limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of
the certificate that the corporation shall issue to represent such class or series of stock. Except as otherwise provided in Section
78.195 of Nevada Revised Statutes, Chapter 78, in lieu of the foregoing requirements, there may be set forth on the face or back
of the certificate a statement that the corporation will furnish without charge to each stockholder who so requests the powers,
designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof
and the qualifications, limitations or restrictions of such preferences and/or rights.
Section
2. TRANSFERS OF STOCK. Upon surrender of a certificate for shares duly endorsed or accompanied by proper evidence
of succession, assignment or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the
person entitled thereto, cancel the old certificate and record the transaction upon its books.
Section
3. LOST, STOLEN OR DESTROYED CERTIFICATES. The Board may direct a new certificate or certificates be issued in place
of any certificate theretofore issued alleged to have been lost, stolen or destroyed, upon the making of an affidavit of the fact
by the person claiming the certificate to be lost, stolen or destroyed. When authorizing such issue of a new certificate, the
Board may, in its discretion and as a condition precedent to the issuance, require the owner of such certificate or certificates,
or such person's legal representative, to give the corporation a bond in such sum as it may direct as indemnity against any claim
that may be made against the corporation with respect to the lost, stolen or destroyed certificate.
Section
4. REGISTERED STOCKHOLDERS. The corporation shall be entitled to treat the holder of record of any share or shares
of stock of the corporation as the holder in fact thereof and shall not be bound to recognize any equitable or other claim to
or interest in such share on the part of any other person, whether or not it shall have express or other notice thereof, except
as expressly provided by applicable law.
ARTICLE VI.
OTHER PROVISIONS
Section
1. ENDORSEMENT OF DOCUMENTS; CONTRACTS. Subject to the provisions of applicable law, any note, mortgage, evidence of
indebtedness, contract, share certificate, conveyance or other instrument in writing and any assignment or endorsements thereof
executed or entered into between the corporation and any other person, when signed by the Chairman of the Board, the President
or any Vice President and the Secretary, any Assistant Secretary, the Chief Financial Officer or any Assistant Chief Financial
Officer of the corporation shall be valid and binding on the corporation in the absence of actual knowledge on the part of the
other person that the signing officers had no authority to execute the same. Any such instruments may be signed by any other person
or persons and in such manner as from time to time shall be determined by the Board, and, unless so authorized by the Board, no
officer, agent or employee shall have any power or authority to bind the corporation by any contract or engagement or to pledge
its credit or to render it liable for any purpose or amount.
Section 2. REPRESENTATION
OF SHARES OF OTHER CORPORATIONS.
The
Chairman, the Chief Executive Officer, the President, any Vice President, Secretary or any other officer or officers authorized
by the Board or the Chairman are each authorized to vote, represent and exercise on behalf of the corporation all rights incident
to any and all shares of any other corporation or corporations standing in the name of the corporation. The authority herein granted
may be exercised either by any such officer or by any other person authorized so to do by proxy or power of attorney duly executed
by said officer.
Section
3. SEAL. It shall not be necessary to the validity of any instrument executed by any authorized officer or officers
of the corporation that the execution of such instrument be evidenced by the corporate seal, and all documents, instruments, contracts
and writings of all kinds signed on behalf of the corporation by any authorized officer or officers shall be as effectual and
binding on the corporation without the corporate seal, as if the execution of the same had been evidenced by affixing the corporate
seal thereto. The Board may give general authority to any officer to affix the seal of the corporation and to attest the affixing
by signature.
Section
4. FISCAL YEAR. The fiscal year of the corporation shall be fixed by resolution of the Board.
Section
5. DIVIDENDS. Dividends on the capital stock of the corporation, subject to the provisions of the Articles of Incorporation,
if any, may be declared by the Board at any regular or special meeting, pursuant to law, and may be paid in cash, in property
or in shares of capital stock.
Before
payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sums as the directors
from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the directors shall determine
to be in the best interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which
it was created.
ARTICLE VII.
INDEMNIFICATION
Section
1. RIGHT TO INDEMNIFICATION. Each person who was or is a party or is threatened to be made a party to or is involved
in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a "proceeding"),
by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was a director or officer
of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another
corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit
plans, whether the basis of such proceeding is alleged action in an official capacity or in any other capacity while serving as
a director, officer, employee or agent, shall be indemnified and held harmless by the corporation to the fullest extent permitted
by the laws of Nevada as the same exist or may hereafter be amended (but in the case of such amendment, only to the extent that
such amendment permits the corporation to provide broader indemnification rights than said laws permitted the corporation to provide
prior to such amendment) against all costs, charges, expenses, liabilities and losses (including attorneys' fees, judgments, fines,
ERISA excise taxes or penalties and amounts paid or to be paid in settlement and amounts expended in seeking indemnification granted
to such person under applicable law, this bylaw or any agreement with the corporation) reasonably incurred or suffered by such
person in connection therewith and such indemnification shall continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of his or her heirs, executors and administrators; provided, however, that, except
as provided in Section 2 of this Article, the corporation shall indemnify any such person seeking indemnification in connection
with a proceeding (or part thereof) initiated by such person only if such proceeding (or part thereof) was initiated or authorized
by one or more members of the Board of Directors of the corporation. The right to indemnification conferred in this Section shall
be a contract right and shall include the right to be paid by the corporation the expenses incurred in defending any such proceeding
in advance of its final disposition; provided, however, that, if the Nevada Revised Statutes, Chapter 78, so requires, the payment
of such expenses incurred by a director or officer in his or her capacity as a director or officer (and not in any other capacity
in which service was or is rendered by such person while a director or officer, including, without limitation, service to an employee
benefit plan) in advance of the final disposition of a proceeding shall be made only upon delivery to the corporation of an undertaking,
by or on behalf of such director or officer, to repay all amounts so advanced if it shall ultimately be determined that such director
or officer is not entitled to be indemnified under this Section or otherwise. In no event shall anything herein contained be so
construed as to permit the Board to authorize payment of, or the corporation to pay, any amounts for any purpose where the director
or officer was engaged in any action or activity known to him or her while so engaged to be unlawful, nor any action or activity
constituting willful misfeasance, bad faith, gross negligence, or reckless disregard of his or her duties and obligations to the
corporation and the stockholders. The rights set forth herein shall not be exclusive of other right to which any director or officer
may be entitled as a matter of law. The corporation may, by action of its Board of Directors, provide indemnification to employees
and agents of the corporation with the same scope and effect as the foregoing indemnification of directors and officers.
Section
2. RIGHT OF CLAIMANT TO BRING SUIT. If a claim under Section 1 of this Article is not paid in full by the corporation
within thirty days after a written claim has been received by the corporation, the claimant may at any time thereafter bring suit
against the corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be
entitled to be paid also the expense of prosecuting such claim. It shall be a defense to any such action (other than an action
brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required
undertaking, if any is required, has been tendered to the corporation) that the claimant has failed to meet a standard of conduct
which makes it permissible under Nevada law for the corporation to indemnify the claimant for the amount claimed. Neither the
failure of the corporation (including its Board of Directors, independent legal counsel, or its stockholders) to have made a determination
prior to the commencement of such action that indemnification of the claimant is permissible in the circumstances because he or
she has met such standard of conduct, nor an actual determination by the corporation (including its Board of Directors, independent
legal counsel, or its stockholders) that the claimant has not met such standard of conduct, shall be a defense to the action or
create a presumption that the claimant has failed to meet such standard of conduct.
Section
3. NON-EXCLUSIVITY OF RIGHTS. The right to indemnification and the payment of expenses incurred in defending a proceeding
in advance of its final disposition conferred in this Article shall not be exclusive of any other right which any person may have
or hereafter acquire under any statute, provision of the Articles of Incorporation, Bylaw, agreement, vote of stockholders or
disinterested directors or otherwise.
Section
4. INSURANCE. The corporation may maintain insurance, at its expense, to protect itself and any director, officer,
employee or agent of the corporation or another corporation, partnership, joint venture, trust or other enterprise against any
such expense, liability or loss, whether or not the corporation would have the power to indemnify such person against such expense,
liability or loss under Nevada law.
Section
5. EXPENSES AS A WITNESS. To the extent that any director, officer, employee or agent of the corporation is
by reason of such position, or a position with another entity at the request of the corporation, a witness in any action, suit
or proceeding, he or she shall be indemnified against all costs and expenses actually and reasonably incurred by him or her or
on his or her behalf in connection therewith.
Section
6. INDEMNITY AGREEMENTS. The corporation may enter into indemnity agreements with the persons who are members of its
Board of Directors from time to time, and with such officers, employees and agents as the Board may designate, such indemnity
agreements to provide in substance that the corporation will indemnify such persons to the full extent contemplated by this Article.
Section
7. EFFECT OF AMENDMENT. Any amendment, repeal or modification of any provision of this Article VII by the stockholders
and the directors of the corporation shall not adversely affect any right or protection of a director or other of the corporation
existing at the time of the amendment, repeal or modification.
ARTICLE VIII.
AMENDMENTS
These
Bylaws may be altered, amended, or repealed at any regular meeting of the stockholders (or at any special meeting thereof duly
called for the purpose) by a majority vote of the shares represented and entitled to vote at such meeting; provided that in the
notice of such special meeting, notice of such purpose shall be given. Subject to the laws of the State of Nevada, the Board of
Directors may, by majority vote of those present at any meeting at which a quorum is present, amend these Bylaws, or enact such
other Bylaws as in their judgment may be advisable for the regulation of the conduct of the affairs of the Corporation.
END OF DOCUMENT
CERTIFICATE
OF SECRETARY of
SOUTHERN
ITS INTERNATIONAL, INC.,
a
Nevada corporation
I hereby certify that I am
the duly elected and acting Secretary of SOUTHERN ITS INTERNATIONAL, INC., a Nevada corporation, and that the foregoing Bylaws
constitute the Bylaws of said corporation as duly adopted by the Board of Directors on the 7th day of April, 2012.
/s/ Sylvain Desrosiers
Sylvain Desrosiers
(Secretary)
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