UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 2006
[] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File No. 000-25809
Siclone Industries, Inc.
(Exact name of Registrant as specified in its charter)
State or other jurisdiction of incorporation or organization: Delaware
IRS Employer Identification No: 87-0426999
378 North Main, #124; Layton, UT 84041
--------------------------------------
(Address and zip code of principal executive offices)
Registrant's telephone number, including area code: (801) 497-9075
--------------
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock, par
value $.001.
Indicate by check mark whether the issuer: (1) filed all reports required to be
filed by Section 12 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for past 90 days. [ X ] Yes
[ ] No
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ ]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act ). [ X ]
Revenue for the year ended December 31, 2006: $0
State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the common equity was sold, or the
average bid and asked prices of such common equity, as of a specified date
within the past 60 days: As of February 12, 2007 it is unclear as to the
aggregate market value of the voting stock held by non-affiliates of the
Registrant. This is due to the low or almost non-existing trading of the
Registrant's Securities. The Registrant does not have an active trading market
and it is, therefore, difficult, if not impossible, to determine the market
value of the stock. Based on the bid price for the Registrant's Common Stock at
March 15, 2007, of $0.0001 per share, the market value of shares held by
nonaffiliates would be $2,381.
As of February 12, 2007, the number of shares outstanding of the Registrant's
Common Stock was 23,810,000.
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the following documents if incorporated by reference and
the part of the Form 10-KSB (e.g., part I, part II, etc.) into which the
document is incorporated: (1) Any annual report to security holders; (2) Any
proxy or other information statement; and (3) Any prospectus filed pursuant to
rule 424(b) or (c) under the Securities Act of 1933: NONE
Transitional Small Business Disclosure Format (Check One) Yes []; No [X]
TABLE OF CONTENTS
PART I
Item 1. Description of Business
Item 2. Description of Property
Item 3. Legal Proceedings
Item 4. Submission of Matters to a Vote of Security-Holders
PART II
Item 5. Market for Common Equity and Related Stockholder Matters
Item 6. Management's Discussion and Analysis or Plan of Operation
Item 7. Financial Statements
Item 8. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
Item 8A. Controls and Procedures
Item 8B. Other Events
PART III
Item 9. Directors and Executive Officers
Item 10. Executive Compensation
Item 11. Security Ownership of Certain Beneficial Owners and Management
Item 12. Certain Relationships and Related Transactions
Item 13. Exhibits and Reports on Form 8-K
Item 14. Principle Accountant Fees and Services
FORWARD-LOOKING STATEMENTS
When used in this report, the words "may," "will," "expect," "anticipate,"
"continue," "estimate," "project," "intend," and similar expressions are
intended to identify forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934 regarding events, conditions, and financial trends that may affect the
Company's future plans of operations, business strategy, operating results, and
financial position. Persons reviewing this report are cautioned that any
forward-looking statements are not guarantees of future performance and are
subject to risks and uncertainties and that actual results may differ materially
from those included within the forward-looking statements as a result of various
factors.
PART I
ITEM 1. DESCRIPTION OF BUSINESS
Corporate History
Siclone Industries, Inc., ("the Company") originally incorporated in
Delaware on November 1, 1985 as McKinnely Investments, Inc. The Company changed
its name to Accoline Industries, Inc. on November 5, 1986 and again changed its
name to Siclone Industries, Inc. on May 24, 1988.
The Company currently has no active business operations and is
considered a development stage company.
The Company intends to seek, investigate, and if warranted, acquire an
interest in a business opportunity. It will not restrict its search to
any particular industry or geographical area and may, therefore, engage in
essentially any business in any industry. The Company's management has
unrestricted discretion in seeking and participating in a business opportunity,
subject to the availability of such opportunities, economic conditions and other
factors.
The selection of a business opportunity in which to participate is
complex and extremely risky and will be made by management in the exercise of
its business judgment. There is no assurance that the Company will be
able to identify and acquire any business opportunity which will ultimately
prove to be beneficial to the Company and its shareholders.
The Company's activities are subject to several significant risks which
arise primarily as a result of the fact that it has no specific business and may
acquire or participate in a business opportunity based on the decision of
management which will, in all probability, act without the consent, vote, or
approval of the Company's shareholders.
Sources of Opportunities
The Company anticipates that business opportunities may arise from
various sources, including its officers and directors, professional advisers,
securities broker-dealers, venture capitalists, members of the financial
community, and others who may present unsolicited proposals.
The Company will seek potential business opportunities from all known
sources, but will rely principally on the personal contacts of its officers and
directors as well as indirect associations between them and other business and
professional people. Although, the Company does not anticipate engaging
professional firms specializing in business acquisitions or reorganizations,
such firms may be retained if management deems it in the Company's best
interests. In some instances, the Company may publish notices or
advertisements seeking a potential business opportunity in financial or trade
publications.
Criteria
The Company will not restrict its search to any particular business,
industry or geographical location. The Company may acquire or enter into a
business in any industry and in any stage of development. This may include a
business or opportunity involving a "start up" or new company. In seeking a
business venture, management's decision will not be controlled by an attempt to
take advantage of an anticipated or perceived appeal of a specific industry,
management group, or product or industry, but will be based upon the business
objective of seeking long-term capital appreciation in the real value of the
Company.
In analyzing prospective business opportunities, management will
consider such matters as the available technical, financial and managerial
resources; working capital and other financial requirements; the history of
operations, if any; prospects for the future; the nature of present and expected
competition; the quality and experience of management services which may be
available and the depth of the management; the potential for further research,
development or exploration; the potential for growth and expansion; the
potential for profit; the perceived public recognition or acceptance of
products, services, trade or service marks, name identification; and other
relevant factors.
Generally, management will analyze all available factors in the
circumstances and make a determination based upon a composite of available
facts, without reliance upon any single factor as controlling.
Methods of Participation of Acquisition
Specific business opportunities will be reviewed and, on the basis of
that review, the legal structure or method of participation deemed by management
to be suitable will be selected. Such structures and methods may
include, but are not limited to, leases, purchase and sale agreements, licenses,
joint ventures, other contractual arrangements, and may involve a
reorganization, merger or consolidation transaction. The Company may act
directly or indirectly through an interest in a partnership, corporation, or
other form of organization.
Procedures
As part of the ongoing investigation of business opportunities,
officers and directors may meet personally with management and key personnel of
the firm sponsoring the business opportunity, visit and inspect material
facilities, obtain independent analysis or verification of certain information
provided, check references of management and key personnel, and conduct other
reasonable measures.
Management will generally request that it be provided with written
materials regarding the business opportunity containing such items as a
description of product, service and company history; management resumes;
financial information; available projections with related assumptions upon which
they are based; an explanation of proprietary products and services; evidence of
existing patents, trademarks or service marks or rights thereto; present and
proposed forms of compensation to management; a description of transactions
between the prospective entity and its affiliates; relevant analysis of risks
and competitive conditions; a financial plan of operation and estimated capital
requirements; and other information deemed relevant.
Competition
The Company expects to encounter substantial competition in its efforts
to acquire a business opportunity. The primary competition is from other
companies organized and funded for similar purposes, small venture capital
partnerships and corporations, small business investment companies and wealthy
individuals.
Employees
The Company does not currently have any employees. It relies upon the
efforts of its officers and directors to conduct its business.
ITEM 2. DESCRIPTION OF PROPERTY
The Company currently operates from the office of the Company's legal
counsel and pays no rent or expenses.
ITEM 3. LEGAL PROCEEDINGS
To the best of management's knowledge no legal proceedings are
threatened or pending against the Company or any of its officers or directors.
Further, none of its officers, directors or affiliates are parties
against the Company or have any material interests in actions that are adverse
to its interests.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
No matters were submitted during the fourth quarter of the fiscal year
covered by this report to a vote of security holders.
PART II
ITEM 5. MARKET PRICE FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The Company's common stock is quoted on the OTC Bulletin Board of the
National Association of Securities Dealers, Inc. (the "NASD") under the symbol
"SICI". As of February 14, 2007, the Company had approximately 281 shareholders
of record.
The following table represents the range of the high and low bid prices
of the Company's stock as reported by the OTC Bulletin Board Historical Data
Service. These quotations represent prices between dealers and may not include
retail markups, markdowns, or commissions and may not necessarily represent
actual transactions. The Company cannot ensure that an active public market will
develop in its common stock or that a shareholder may be able to liquidate his
investment without considerable delay, if at all.
On March 15, 2007 the current bid price was $0.0001, which does not
take into account any retail markups, markdowns, or commissions and may not
necessarily represent actual transactions.
Year Quarter Ended High Low
----
2005 March 31 $0.0001 $0.0001
June 30 .0001 .0001
September 30 .0001 .0001
December 31 .0001 .0001
2006 March 31 $0.0001 $0.0001
June 30 .0001 .0001
September 30 .0001 .0001
December 31 .0001 .0001
The Company's shares are subject to section 15(g) and rule 15g-9 of the
Securities and Exchange Act, commonly referred to as the "penny stock" rule. The
rule defines penny stock to be any equity security that has a market price less
than $5.00 per share, subject to certain exceptions. The rule provides that any
equity security is considered to be a penny stock unless that security is;
registered and traded on a national securities exchange meeting specified
criteria set by the SEC; authorized for quotation from the NASDAQ stock market;
issued by a registered investment company; excluded from the definition on the
basis of price at least $5.00 per share or the issuer's net tangible assets. The
Company's shares are deemed to be penny stock, trading in the shares will be
subject to additional sales practice requirements on broker-dealers who sell
penny stocks to persons other than established customers and accredited
investors. Accredited investors, in general, include individuals with assets in
excess of $1,000,000 or annual income exceeding $200,000 or $300,000 together
with their spouse, and certain institutional investors.
For transactions covered by these rules, broker-dealers must make a
special suitability determination for the purchase of such security and must
have received the purchaser's written consent to the transaction prior to the
purchase. Additionally, for the transaction involving a penny stock, other rules
apply. Consequently, these rules may restrict the ability of broker-dealers to
trade or maintain a market in our common stock and may affect the ability of
shareholders to sell their shares.
Dividends.
There has not been an active market for the Company's stock since 1990.
The Company has not declared any cash dividends with respect to its common
stock, and does not intend to declare dividends in the foreseeable future. The
present intention of management is to utilize all available funds for the
development of the Company's business. The Company's ability to pay
dividends is subject to limitations imposed by Delaware law. Under
Delaware law, dividends may be paid to the extent that a corporation's assets
exceed its liabilities and it is able to pay its debts as they become due in the
usual course of business.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion highlights the Company's performance and it
should be read in conjunction with the financial statements (including related
notes) accompanying this Report. Certain statements contained herein may
constitute forward looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements are based on
management's current expectations and are subject to uncertainty and changes in
circumstances. Actual results may differ materially from those expectations due
to changes in global politics, economics, business, competitors, competition,
markets and regulatory factors. More information about these factors has been or
will be contained in the Company's filings with the Security and Exchange
Commission.
Results of Operations
Years Ended December 31, 2006 and 2005
The Company did not generate any revenues for the years ending December
31, 2006 and 2005. General and administrative expenses for the year ended
December 31, 2006 were $23,392 compared to expenses of $9,891 during 2005.
Expenses during both years consisted mainly of professional, legal and
accounting costs related to its public filings. Interest expense for the years
ended December 31, 2006 and 2005 was $4,092 and $3,448, respectively.
The Company incurred a net loss for the fiscal year ended December 31,
2006 of $27,484 as compared to a net loss of $13,339 for the fiscal year ended
December 31, 2005. At December 31, 2006, the Company had a deficit of $689,593
and negative working capital of $82,090. These factors create substantial doubt
about the Company's ability to continue as a going concern.
Liquidity and Capital Resources
At December 31, 2006 our total assets consisted of $12 in cash. Total
liabilities at December 31, 2006 were $82,102 consisting of $3,000 in accounts
payable, $9,000 in accrued expenses, and $55,223 in convertible note payables,
and $14,879 in accrued interest payable.
Need for Additional Financing for Growth
The Company has a negative working capital and has to rely on loans
from management and shareholders to fund ongoing expenses. There is no assurance
the Company will be able to obtain additional financing. Future financing will
likely dilute current shareholders. In addition, the Company's pursuit of
additional capital could result in the incurrence of additional debt or
potentially dilutive issuances of additional equity securities.
The Company's ability to meet any future debt service obligations will
be dependent upon the Company's future performance, which will be subject to its
future acquisitions and/or mergers, the Company's level of production, general
economic conditions and financial, business and other factors affecting the
operations of the Company, many of which are beyond its control.
Plan of Operation
Management intends to actively seek business opportunities during the
next twelve months. If management identifies a suitable business opportunity
during the next year the Company's need for capital may change dramatically.
Should it require additional capital, it may seek additional advances
from officers, sell common stock or find other forms of debt financing. The
Company has not identified any business opportunities and there can be no
assurance that it will identify a business venture suitable for acquisition in
the future. In addition, the Company cannot assure that it will be
successful in consummating any acquisition on favorable terms or that it will be
able to profitably manage any business venture it acquires.
Management's current operating plan is to continue searching for
potential businesses, products, technologies and companies for acquisition and
to handle the administrative and reporting requirements of a public company.
To demonstrate the Company's commitment to maintaining ethical reporting
and business practices, it has recently filed a Code of Ethics and Business
Conduct.
ITEM 7. FINANCIAL STATEMENTS
The financial statements of the Company and related financial notes,
together with the report from Child, Van Wagoner and Bradshaw, PLLC are set
forth immediately following the signature page to this report. See Item 13 for a
list of the financial statements and financial statement schedules included.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
For the fiscal year ended December 31, 2006, the Company has no changes
or disagreements on the accounting and financial disclosures.
ITEM 8A. CONTROLS AND PROCEDURES
(a) Evaluation of disclosure controls and procedures. The Company's
principal executive officer and its principal financial officer, based on their
evaluation of the Company's disclosure controls over financial reporting and
procedures (as defined in Exchange Act Rules 13a-14c)) as of a date within 90
days prior to the filing of this Annual Report on Form 10-KSB, have concluded
that the Company's disclosure controls over financial reporting and procedures
are adequate and effective for the purposes set forth in the definition in
Exchange Act rules.
(b) Changes in internal controls over financial reporting. There were
no significant changes in the Company's internal controls over financial
reporting or in other factors that could significantly affect the Company's
internal controls subsequent to the date of their evaluation.
ITEM 8B. OTHER INFORMATION
None.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE
GOVERNANCE; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.
The following information is furnished with respect to the Company's
Board of Directors and executive officers. There are no family relationships
between or among any of the Company's directors or executive officers.
Directors and Executive Officers
Age Director
Name (2006) Since Position with the Company
---- ------ ----- -------------------------
Paul Adams 48 May 2005 President, CEO and Director
378 North Main Street, Suite 124
Layton, Utah 84041
All directors serve until the next annual stockholders meeting or until
their successors are duly elected and qualified. All officers serve at the
discretion of the Board of Directors.
The Company has no audit committee financial expert, as defined under
Section 228.401, serving on its audit committee because it has no audit
committee and is not required to have an audit committee because it is not a
listed security as defined in Section 240.10A-3
Paul Adams, Director. From approximately 1992 to present, Mr. Adams has
primarily been involved in manufacturing and retail sales in the sports fishing
industry as the owner of his own business. Since 2000, he has owned and operated
CocoMotive Candy Company, a business specializing in the "corporate gift"
market.
Mr. Adams is not a director of any other public company at this time.
There is no employment contract between Mr. Adams and the Company at this time.
To the knowledge of management, one Form 3 has been filed late by the
director and CEO of the Company.
Compliance with Section 16(a) Beneficial Ownership Reporting.
Section 16(a) of the Securities Exchange Act of 1934 requires our
directors, executive officers and persons who own more than five percent of a
registered class of our equity securities to file with the Securities and
Exchange Commission initial reports of ownership and reports of changes in
ownership of our common stock. Officers, directors and ten-percent or more
beneficial owners of our common stock are required by SEC regulations to furnish
Siclone Industries, Inc. with copies of all Section 16(a) reports they file and
provide written representation that no Form 5 is required.
ITEM 10. EXECUTIVE COMPENSATION
The Company's officers and directors do not receive any compensation
for services rendered, and have not received such compensation in the past. The
current President is accruing compensation which is reflected on the books of
the Company. Its officers and directors will not receive any finder's
fee as a result of their efforts to implement the business plan outlined herein.
The Company has not adopted any retirement, pension, profit sharing,
stock options, insurance programs or other similar programs for the benefit of
its employees.
Employment Contracts and Termination of Employment and Change in
Control Arrangement.
There are no compensatory plans or arrangements with respect to any
officer, director, manager or other executive which would in any way result in
payments to any such person because of his resignation, retirement, or other
termination of employment with the Company, or any change in control of the
Company, or a change in the person's responsibilities following a change of
control of the Company.
SUMMARY COMPENSATION TABLE
The following table sets forth certain summary information concerning
the compensation paid or accrued for each of the Company's last three completed
fiscal years to the Company's or its principal subsidiaries chief executive
officer and each of its other executive officers that received compensation in
excess of $100,000 during such period (as determined at December 31, 2006, the
end of the Company's last completed fiscal year):
Summary Compensation Table
Annual Compensation Awards Payouts
Name and Year Salary Bonus Stock Option Non-Equity All Other Total
Principal ($) ($) Awards Awards Incentive Plan Compens ($)
Position ($) ($) Compensatio ation
n ($)
($)
Paul 2006 9,000 -0- -0- -0- -0- -0- 9,000
Adams,
Pres
2005 -0- -0- -0- -0- -0- -0- -0-
Paul
Adams,
Pres
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS.
The following table sets forth certain information regarding the beneficial
ownership of the Company's outstanding Common Stock as of December 31, 2006, by
(i) each director of the Company, (ii) each named executive officer in the
Summary Compensation Table, (iii) each person known or believed by the Company
to own beneficially five percent or more of the Common Stock and (iv) all
directors and executive officers as a group. Unless indicated otherwise, each
person has sole voting and dispositive power with respect to such shares.
Title of Class Name and Address Amount and Nature of Percent of
Of Beneficial Owner Beneficial Class
Ownership
Common Bradley S. Shepherd 10,200,000 42.84%
6269 Jamestown Court
Salt Lake City, UT
84121
Common Officers and Directors 0 0%
As a Group (one)
Paul Adams
378 North Main Street,
Suite 124
Layton, UT 84041
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, DIRECTOR INDEPENDENCE.
During the reported year the Company did not enter into any other
transactions with management which are to be reported under this Item.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits. The following exhibits follow the signature page of this
report.
Exhibit Page Description
No. No.
3(i) * Articles of Incorporation
3(ii) * Bylaws 14 ** Code of Ethics
31.1 *** Written Statement of Chief Executive Officer and Chief
Financial Officer with respect to compliance with
Section 302 of the Sarbanes-Oxley Act of 2002.
32.2 *** Written Statement of Chief Executive Officer and Chief
Financial Officer with respect to compliance with
Section 13(a) or 15(d) of the Securities Exchange
Act of 1934 and pursuant to 18 U.S.C. ss.1350, as
adopted pursuant to ss. 906 of the Sarbanes-Oxley Act
of 2002
* Incorporated by reference. Filed as exhibit to Form 10SB12G filed April 19,
1999.
** Incorporated by reference. Filed as exhibit to Form 10KSB December 31, 2005
and shall not be deemed "filed" for purposes of Section 18 of the Securities and
Exchange Act of 1934 (the "Exchange Act") or otherwise subject to liability
under that section, nor shall it be deemed incorporated by reference in any
filing under the Securities Act of 1933, as amended, or the Exchange Act, except
as expressly set forth by specific reference in such filing.
*** Filed as exhibits to this filing.
ITEM 14. PRINCIPLE ACCOUNTANT FEES AND SERVICES.
Audit Fees
The aggregate fees billed for professional services rendered by the
Company's principal accountant for the audit of the annual financial statements
included in the quarterly reports and other fees that are normally provided by
the accountant in connection with statutory and regulatory filings or
engagements for the fiscal years ended December 31, 2006 and 2005 were $9,858
and $6,750 respectively.
Audit-Related Fees
The aggregate fees billed for assurance and related services by the
Company's principal accountant that are reasonably related to the performance of
the audit or review of the financial statements, other than those previously
reported in this Item 14, for the fiscal years ended December 31, 2006 and 2005
were $0 and $0, respectively.
Tax Fees
The aggregate fees billed for assurance and related services by the
principal accountant for tax compliance, tax advice and tax planning for the
fiscal years ended December 31, 2006 and 2005 were $0 and $0, respectively.
All Other Fees
The Company's Board of Directors functions as its audit committee. All
of the services described above in this Item 14 were approved in advance by the
Board of Directors.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Dated: March 30, 2007 Siclone Industries, Inc.
By: /s/ Paul Adams
Paul Adams
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ Paul Adams President and Director
Paul Adams (Principal Executive and
Financial Officer) March 30, 2007
ITEM 7. FINANCIAL STATEMENTS
The following financial statements of the Company have been filed as part of
this report:
Report of Independent Registered Public Accounting Firm
Balance Sheets as of December 31, 2006 and 2005
Statements of Operations for the Years ended December 31, 2006 and 2005 and for
the Period from Inception on November 1, 1985 through December 31, 2006.
Statements of Stockholders' (Deficit) for the years ended December 31, 2006 and
2005 and for the Period from Inception on November 1, 1985 through December 31,
2006.
Statements of Cash Flows for the years ended December 31, 2006 and 2005 and for
the Period from Inception on November 1, 1985 through December 31, 2006.
Notes to Financial Statements
Child, Van Wagoner & Bradshaw, PLLC
5296 South Commerce Drive, Suite 300
Salt Lake City, Utah 84107-5370
Telephone: (801)281-4700
Facsimile: (801)281-4701
Report of Independent Registered Public Accounting Firm
Board of Directors
Siclone Industries, Inc.
(A Development Stage Company)
Layton, Utah
We have audited the accompany balance sheet of Siclone Industries, Inc. (a
development stage company) as of December 31, 2006, and the related statements
of operations, stockholders' (deficit) and cash flows for the year ended
December 31, 2006. 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. The financial statements for the year
ended December 31, 2005 and from inception on November 1, 1985 through December
31, 2005 were audited by other auditors whose report dated March 30, 2006
expressed an unqualified opinion on those financial statements and included an
explanatory paragraph expressing concern about the Company's ability to continue
as a going concern.
We conducted our audit in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. The company is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audit included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Siclone Industries,
Inc. (a development stage company) as of December 31, 2006, and the
results of its operations and its cash flows for the year ended December 31,
2006, in conformity with U.S. generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 3 to the
financial statements, the Company has suffered recurring losses from operations
and has no operating capital, which together raise substantial doubt about its
ability to continue as a going concern. Management's plans in regard to these
matters are described in Note 3. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ Child, Van Wagoner & Bradshaw, PLLC
Certified Public Accountants
Salt Lake City, Utah
February 13, 2007
SICLONE INDUSTRIES, INC.
(A Development Stage Company)
BALANCE SHEETS
December 31, December 31,
2006 2005
------------------- ------------------
Current Assets
Cash $ 12 $ 9
------------------- ------------------
Total Current Assets $ 12 $ 9
=================== ==================
Liabilities and Stockholders' (Deficit)
Current Liabilities
Accounts Payable $ 3,000 $ 4,568
Accounts Payable - Related Party 9,000 -
Accrued Interest 14,879 10,787
Notes Payable - Note 2 55,223 39,260
------------------- ------------------
Total Current Liabilities 82,102 54,615
------------------- ------------------
Stockholders' (Deficit)
Preferred Stock: 5,000,000 shares authorized at $0.001
par value, 0 shares issued and outstanding
Common Stock; $.001 Par Value; 30,000,000 Shares
Authorized; 23,810,000 Shares Issued and Outstanding
as of December 31, 2006 and 2005, respectively 23,810 23,810
Additional Paid-In Capital 583,693 583,693
Deficit Accumulated during the Development Stage (689,593) (662,109)
------------------- ------------------
Total Stockholders'(Deficit) (82,090) (54,606)
------------------- ------------------
Total Liabilities & Stockholders' (Deficit) $ 12 $ 9
=================== ==================
The accompanying notes are an integral part of these
financial statements.
SICLONE INDUSTRIES, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
From Inception
November 1,
1985 through
December 31, December 31,
2006 2005 2006
------------- ------------- ----------------
REVENUES $ - $ - $ -
EXPENSES (27,484) (13,339) (689,593)
------------- ------------- ----------------
NET LOSS $ (27,484) $ (13,339) $ (689,593)
============= ============= ================
NET (LOSS) PER SHARE: $ (0.00) $ (0.00)
============= =============
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 23,810,000 23,810,000
============= =============
The accompanying notes are an integral part of these
financial statements.
SICLONE INDUSTRIES, INC.
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' (DEFICIT)
For the Period From Inception (November 1, 1985) to December 31, 2006
Deficit
Accumulated
Additional During
Common Stock Paid-In Development
Shares Amount Capital Stage
--------------- --------------- --------------- ----------------
BALANCE, November 1, 1985 - $ - $ - $ -
Issuance of 500,000 shares of
common stock to Officers and
Directors for cash on November 1,
1985 at $0.02 per share 500,000 500 9,500 -
Cancellation of 140,000 shares on
February 7, 1985 (140,000) (140) 140 -
Cancellation of 300,000 shares on
October 1, 1986 (300,000) (300) 300 -
Issuance of 1,000,000 shares of
common stock to the public offered
March 26, 1986 at $0.10 per share 1,000,000 1,000 99,000 -
Deferred offering costs offset
against additional paid-in capital - - (18,678) -
Issuance of 10,700,000 shares of
common stock October 10, 1986 at
$0.05 per share 10,700,000 10,700 483,251 -
Issuance of 50,000 shares for
promotional services at $0.001 per
share 50,000 50 - -
Accumulated losses from formation
on November 1, 1985 through
December 31, 1987 - - - (502,196)
--------------- --------------- --------------- ----------------
BALANCE, December 31, 1987 11,810,000 11,810 573,513 (502,196)
Net loss for the year ended
December 31, 1988 - - - (92,783)
--------------- --------------- --------------- ----------------
BALANCE, December 31, 1988 11,810,000 11,810 573,513 (594,979)
Cash contributed to additional paid-
in capital - - 10,180 -
Net loss for the year ended
December 31, 1989 - - - (524)
--------------- --------------- --------------- ----------------
BALANCE, December 31, 1989 11,810,000 11,810 583,693 (595,503)
Net loss for the year ended
December 31, 1990 - - - -
--------------- --------------- --------------- ----------------
BALANCE, December 31, 1990 11,810,000 11,810 583,693 (595,503)
Net loss for the year ended
December 31, 1991 - - - (758)
--------------- --------------- --------------- ----------------
BALANCE, December 31, 1991 11,810,000 11,810 583,693 (596,261)
Net loss for the year ended
December 31, 1992 - - - (651)
--------------- --------------- --------------- ----------------
BALANCE, December 31, 1992 11,810,000 11,810 583,693 (596,912)
Issuance of 1,000,000 shares of
common stock to officer for cash
June 7, 1993 at $0.001 per share 1,000,000 1,000 - -
Net loss for the year ended
December 31, 1993 - - - (2,513)
--------------- --------------- --------------- ----------------
BALANCE, December 31, 1993 12,810,000 12,810 583,693 (599,425)
Net loss for the year ended
December 31, 1994 - - - -
--------------- --------------- --------------- ----------------
BALANCE, December 31, 1994 12,810,000 12,810 583,693 (599,425)
The accompanying notes are an integral part of these financial statements.
SICLONE INDUSTRIES, INC.
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' (DEFICIT) (continued)
For the Period From Inception (November 1, 1985) to December 31, 2006
Deficit
Accumulated
Additional During
Common Stock Paid-In Development
Shares Amount Capital Stage
--------------- --------------- --------------- ----------------
BALANCE, December 31, 1994 12,810,000 $ 12,810 $ 583,693 $ (599,425)
Issuance of 11,000,000 shares of
common stock to officer for cash at
$0.001 per share 11,000,000 11,000 - -
Net loss for the year ended
December 31, 1995 - - - (438)
--------------- --------------- --------------- ----------------
BALANCE, December 31, 1995 23,810,000 23,810 583,693 (599,863)
Net loss for the year ended
December 31, 1996 - - - (1,256)
--------------- --------------- --------------- ----------------
BALANCE, December 31, 1996 23,810,000 23,810 583,693 (601,119)
Net loss for the year ended
December 31, 1997 - - - (1,373)
--------------- --------------- --------------- ----------------
BALANCE, December 31, 1997 23,810,000 23,810 583,693 (602,492)
Net loss for the year ended
December 31, 1998 - - - (770)
--------------- --------------- --------------- ----------------
BALANCE, December 31, 1998 23,810,000 23,810 583,693 (603,262)
Net loss for the year ended
December 31, 1999 - - - (9,343)
--------------- --------------- --------------- ----------------
BALANCE, December 31, 1999 23,810,000 23,810 583,693 (612,605)
Net loss for the year ended
December 31, 2000 - - - (5,451)
--------------- --------------- --------------- ----------------
BALANCE, December 31, 2000 23,810,000 23,810 583,693 (618,056)
Net Loss for Year Ended
December 31, 2001 - - - (4,959)
--------------- --------------- --------------- ----------------
BALANCE, December 31, 2001 23,810,000 23,810 583,693 (623,015)
Net Loss for Year Ended
December 31, 2002 - - - (7,862)
--------------- --------------- --------------- ----------------
BALANCE, December 31, 2002 23,810,000 23,810 583,693 (630,877)
Net Loss for Year Ended
December 31, 2003 - - - (7,804)
--------------- --------------- --------------- ----------------
BALANCE, December 31, 2003 23,810,000 23,810 583,693 (638,681)
Net Loss for Year Ended
December 31, 2004 - - - (10,089)
--------------- --------------- --------------- ----------------
BALANCE, December 31, 2004 23,810,000 23,810 583,693 (648,770)
Net Loss for Year Ended
December 31, 2005 - - - (13,339)
--------------- --------------- --------------- ----------------
BALANCE, December 31, 2005 23,810,000 23,810 583,693 (662,109)
Net Loss for Year Ended
December 31, 2006 - - - (27,484)
--------------- --------------- --------------- ----------------
BALANCE, December 31, 2006 23,810,000 $ 23,810 $ 583,693 $ (689,593)
=============== =============== =============== ================
The accompanying notes are an integral part of these financial statements.
SICLONE INDUSTRIES, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
From
Inception
November 1,
For the Years Ended 1985 through
December 31, December 31,
2006 2005 2006
--------------- ---------------- ----------------
Cash Flows from Operating Activities:
Net (Loss) $ (27,484) $ (13,339) $ (689,593)
Adjustments to Reconcile Net (Loss) to Net Cash Used
By Operating Activities:
Common stock issued for services - - 50
Changes in Operating Assets and Liabilities:
Increase (decrease) in accounts payable and payable 7,432 3,728 12,000
to related party
Increase (decrease) in accrued interest related party - (7,339) -
Increase in accrued interest unrelated party 4,092 10,787 14,879
--------------- ---------------- ----------------
Net Cash (Used) by Operating Activities (15,960) (6,163) (662,664)
--------------- ---------------- ----------------
Cash Flows from Investing Activities - - -
--------------- ---------------- ----------------
Cash Flows from Financing Activities
Proceeds from unrelated parties 15,963 6,048 22,011
Proceeds from related parties - - 33,212
Additional capital contributed - - 10,180
Stock offering costs - - (18,678)
Issuance of common stock for cash - - 615,951
--------------- ---------------- ----------------
Net Cash Provided By Financing Activities 15,963 6,048 662,676
--------------- ---------------- ----------------
Increase (Decrease) in Cash 3 (115) 12
Cash, Beginning of Period 9 124 -
--------------- ---------------- ----------------
Cash, End of Period $ 12 $ 9 $ 12
=============== ================ ================
Cash Paid For:
Interest $ - $ - $ -
Income taxes $ - $ - $ -
Supplemental Disclosures of Non-cash
Financing Activities:
Common stock issued for services $ - $ - $ 50
The accompanying notes are an integral part of these financial statements.
SICLONE INDUSTRIES INC.
(A Development Stage Company)
Notes to the Financial Statements
December 31, 2006 and 2005
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Siclone Industries, Inc., ("the Company") was originally incorporated in
Delaware on November 1, 1985 as McKinnely Investments, Inc. The Company changed
its name to Accoline Industries, Inc. on November 5, 1986, and again changed its
name to Siclone Industries, Inc. on May 24, 1988.
The Company has not had active business operations since inception and is
considered a development stage company.
The Company intends to seek, investigate, and if warranted, acquire an interest
in a business opportunity. It will not restrict its search to any
particular industry or geographical area and may, therefore, engage in
essentially any business in any industry. The Company's management has
unrestricted discretion in seeking and participating in a business opportunity,
subject to the availability of such opportunities, economic conditions and other
factors.
Accounting Method
The Company's financial statements are prepared using the accrual method of
accounting. The Company has elected a calendar year end.
Cash and Cash Equivalents
Cash Equivalents include short term, highly liquid investments with maturities
of three months or less at the time of acqusition.
Net Loss Per Share of Common Stock
Per share amounts have been computed based on the weighted average number of
common shares outstanding during the period. Potential common stock has been
excluded from the computation of earnings per share since the inclusion of
options and warrants would be anti-dilutive.
SICLONE INDUSTRIES INC.
(A Development Stage Company)
Notes to the Financial Statements (continued)
December 31, 2006 and 2005
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Provision for Taxes
Deferred taxes are provided on a liability method whereby deferred tax assets
are recognized for deductible temporary differences and operating loss and tax
credit carryforwards and deferred tax liabilities are recognized for taxable
temporary differences. Temporary differences are the differences between the
reported amounts of assets and liabilities and their tax bases. Deferred tax
assets are reduced by a valuation allowance when, in the opinion of management,
it is more likely than not that some portion or all of the deferred tax assets
will not be realized. Deferred tax assets and liabilities are adjusted for the
effects of changes in tax laws and rates on the date of enactment.
Net deferred tax assets consist of the following components as of December 31,
2006 and 2005.
2006 2005
--------------- ---------------
Deferred Tax Assets:
NOL Carryover $ 59,280 $ 52,560
Deferred Tax Liabilities:
Valuation Allowance (59,280) (52,560)
--------------- ---------------
Net Deferred Tax Asset $ - $ -
=============== ===============
The income tax provision differs from the amount of income tax determined by
applying the U.S. federal and state income tax rates of 39% to pretax income
from continuing operations for the years ended December 31, 2006 and 2005 due to
the following:
2006 2005
--------------- ---------------
Book Income $ (10,700) $ (5,205)
Other - -
Valuation Allowance 10,700 5,205
--------------- ---------------
$ - $ -
=============== ===============
SICLONE INDUSTRIES, INC.
(A Development Stage Company)
Notes to the Financial Statements (continued)
December 31, 2006 and 2005
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Provision for Taxes (continued)
At December 31, 2006, the Company had net operating loss carryforwards of
approximately $152,000 that may be offset against future taxable income from the
year 2006 through 2026.
Due to the change in ownership provisions of the Tax Reform Act of 1986, net
operating loss carryforwards for Federal income tax reporting purposes are
subject to annual limitations. Should a change in ownership occur, net operating
loss carryforwards may be limited as to use in future years.
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 amount 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 date. Actual
results could differ from those estimates.
Recent Accounting Pronouncements
In May 2005, the Financial Accounting Standards Board ("FASB") issued SFAS No.
154 "Accounting Changes and Error corrections" (SFAS NO. 154"), which replaces
APB Opinion No. 20, "Accounting Changes, and SFAS No. 3, "Reporting Accounting
Changes in Interim Financial Statements", which requires that a voluntary change
in accounting principle be applied retrospectively to all prior period financial
statements presented, unless it is impractical to do so. SFAS No. 154 also
provides that a change in method of depreciating or amortizing a long-lived
non-financial asset be accounted for as a change in estimate effected by a
change in accounting principle, and also provides that correction of errors in
previously issued financial statements should be termed a "restatement". SFAS
No. 154 is effective for fiscal years beginning after December 15, 2006.
Management of the Company does not believe the adoption of SFAS No. 154 will
have a material impact on its financial statements.
SICLONE INDUSTRIES, INC.
(A Development Stage Company)
Notes to the Financial Statements (continued)
December 31, 2006 and 2005
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Recent Accounting Pronouncements (continued)
In December 2004, the FASB issued SFAS No. 123R, "Share-Based Payment" ("SFAS
No. 123R"). SFAS No. 123R requires all share-based payments to employees,
including grants of employee stock options and purchase under employee stock
purchase plans, to be recognized as operating expense in the income statement.
The cost is recognized over the requisite service period based on fair valued
measured on grant dates, and the new standard may be adopted using either the
modified prospective transition method or the modified retrospective transition
method. In April 2005, the SEC approved a change in the effective date of SFAS
No. 123R for public companies to be effective in the annual, rather than
interim, periods beginning after June 14, 2005. SFAS No. 123R is effective for
the Company beginning July 1, 2005. In March 2005, the SEC issued Staff
Accounting Bulletin No. 107 ("SAB No. 107") "Share-Based Payment", which
expressed views of the SEC regarding the interaction between SFAS No. 123R and
certain SEC rules and regulations. SAB No. 107 also provides the SEC's views
regarding the valuation of share-based payment arrangements for public
companies. Management of the Company does not believe the adoption of SFAS No.
123R will have a material impact on its financial statements.
NOTE 2: NOTES PAYABLE
Notes payable at December 31, 2006 and 2005 consist of the following:
2006 2005
------------ -------------
Notes Payable $ 55,223 $ 39,260
------------ -------------
Total $ 55,223 $ 39,260
============ =============
Prior to May 2005, Bradley Shepherd, the former president, had advanced the
Company approximately $36,412. During May 2005, Mr. Shepherd assigned that debt
which was owed to him to an unrelated third party and executed a convertible
promissory note. Interest in the amount of $3,639 has been accrued for the year
ended December 31, 2006. The entire balance plus
SICLONE INDUSTRIES, INC.
(A Development Stage Company)
Notes to the Financial Statements (continued)
December 31, 2006 and 2005
NOTE 2: NOTES PAYABLE (continued)
accrued interest is due on demand. During 2005, the Company issued a second
convertible promissory note to an unrelated third party in the amount of $2,848.
Interest in the amount of $285 has been accrued for the year ended December 31,
2006.
During 2006, the Company issued to an unrelated third party convertible
promissory notes in the following amounts: $2,000, $650, and $2,100 to the same
party as the note in 2005. The Company also issued notes in the amount of $6,013
and $5,200 to another unrelated third party. Interest of approximately $168 on
these notes has been accrued for the year ended December 31, 2006.
All notes are ten percent (10%) convertible promissory notes, convertible into
shares of the Company's common stock at the conversion price of par value per
share, provided such conversion does not result in the issuance of control to
any one person. All notes are due on demand.
NOTE 3: GOING CONCERN
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As of December 31, 2006, the Company has a
working capital deficit, of $82,090 and an accumulated deficit of $689,593.
Based upon the Company's plan of operation, the Company estimates that existing
resources will not be sufficient to fund the Company's working capital deficit.
The Company is actively seeking additional equity financing. There can be no
assurances that sufficient financing will be available on terms acceptable to
the Company or at all. If the Company is unable to obtain such financing, the
Company will be forced to further scale back operations, which would have an
adverse effect on the Company's financial condition and results of operations.