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| GTVI.OB > SEC Filings for GTVI.OB > Form 10-K/A on 10-Nov-2009 | All Recent SEC Filings |
10-Nov-2009
Annual Report
Cautionary Notice Regarding Forward Looking Statements
We desire to take advantage of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. This Report contains a number of forward-looking statements that reflect management's current views and expectations with respect to our business, strategies, products, future results and events and financial performance. All statements made in this Report other than statements of historical fact, including statements that address operating performance, events or developments that management expects or anticipates will or may occur in the future, statement related to distributor channels, volume growth, revenues, profitability, new products, adequacy of funds from operations, statements expressing general optimism about future operating results and non-historical information, are forward looking statements. In particular, the words "believe," "expect," "intend," "anticipate," "estimate," "may," "will," variations of such words, and similar expressions identify forward-looking statements, but are not the exclusive means of identifying such statements and their absence does not mean that the statement is not forward-looking. These forward-looking statements are subject to certain risks and uncertainties, including those discussed below. Our actual results, performance or
Readers should not place undue reliance on these forward-looking statements, which are based on management's current expectations and projections about future events, are not guarantees of future performance, are subject to risks, uncertainties and assumptions (including those described below) and apply only as of the date of this Report. Our actual results, performance or achievements could differ materially from the results expressed in, or implied by, these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in "Risk Factors" herein as well as those discussed elsewhere in this Report, and the risks to be discussed in our next Annual Report on Form 10-KSB and in the press releases and other communications to shareholders issued by us from time to time which attempt to advise interested parties of the risks and factors that may affect our business. We undertake no obligation to publicly update or revise any forward-looking statements, whether because of new information, future events, or otherwise.
Overview
G2 Ventures, Inc. (the "Company") was formed as a Texas corporation on March 21, 2003. We were formed to acquire most of the assets and certain liabilities of and succeed the business of G2 Companies, Inc., (formerly Hartland Investment, Inc.) as an independent recording company and artist management company.
On April 1, 2003, we acquired the business, most of the assets and assumed liabilities of G2 Companies, Inc., a music recording and production company. At the time of such acquisition, Gust Kepler, our principal shareholder, sole officer, director and employee, also served as an officer, director and was the sole shareholder of G2 Companies, Inc., the seller. The acquisition of assets and the assumption of liabilities from G2 Companies, Inc. were not conducted at "arm's length" due to Mr. Kepler's interest in both companies.
We are currently a development stage music recording, production and artist management company that has had limited operations to date, primarily due to our inability to raise sufficient capital. We have primarily relied upon financing provided by Gust Kepler, our principal shareholder, sole officer, director and employee, to conduct such limited operations.
We are a thinly capitalized independent record label that has entered into Exclusive Recording Artist Agreements ("Recording Agreements") with two musical artists, Jeremiah Donnelly and Nick Brisco. We plan to continue the pursuit of our business plan to (i) produce and create master recordings of the artists' work we have under contract and (ii) either sell or license the recordings to established record labels for distribution. If we are successful in marketing our artists' master recordings, we intend to produce and create additional master recordings for them and use this accomplishment to entice additional artists to enter into similar recording agreements.
We have a limited operating history and to date have not produced any master recordings. All revenues to date have consisted of artist management fees (i.e., securing live performances for performing artists), loans from Gust Kepler (our principal shareholder, sole officer, director and employee), and proceeds derived from a private offering of our Company's common stock. Our ability to achieve and maintain profitability and positive cash flow is dependent upon our ability to attract new artists, our artists' ability to write lyrics and music which is popular with the public, our ability to record and sell our artist's music, and our ability to book artists for live performances.
We expect to fulfill our business plan and generate revenues pursuant to our
recording agreements from royalties derived from licensing or distribution
agreements covering the reproduction, marketing and sale of the master
recordings we produce. We also expect to generate revenues from management fees
based on payments received by each artist for (i) live performances,
(ii) derivative uses of their work, including soundtracks and music videos,
(iii) the sale or license of their original music to other artists, and
(iv) advertisements.
Critical Accounting Policies and Estimates
Our financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make significant estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosure of contingent assets and liabilities. We evaluate our estimates, including those related to contingencies, on an ongoing basis. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
We believe the following critical accounting policy among others involve the more significant judgments and estimates used in the preparation of our consolidated financial statements.
Revenue from product sales is recognized when the product has been shipped and collectibility is reasonably assured. Revenue recognized from these sales is net of applicable provisions for refunds, discounts and allowances.
The Company accounts for compensation associated with stock options warrants issued to non-employees using the fair and -value based method prescribed by Financial Accounting Standard 123 - Accounting for Stock-Based Compensation. The Company uses the Black-Scholes options-pricing model to determine the fair value of these instruments.
In December 2004, the Financial Accounting Standards Board ("FASB") issued Statement No. 123R ("SFAS 123R") "Share based Payment" a revision of Statement No. 123, "Accounting for Stock Based Compensation." This standard requires the Company to measure the cost of employee services received in exchange for equity awards based on grant date fair value of the awards. The Company adopted 123R. The standard provides for a prospective application. Under this method, the Company will begin recognizing compensation costs for equity based compensation of or all new or modified grants after the date of adoption.
Recently Issued Accounting Pronouncements
During the year ended December 31, 2008, there were several new accounting pronouncements issued by the Financial Accounting Standards Board (FASB) the most recent of which was Statements on Financial Accounting Standards (SFAS) No. 163, Accounting for Financial guarantee Insurance Contracts-an interpretation of FASB Statement No. 60. Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe the adoption of any of these accounting pronouncements has had or will have a material impact on the Company's financial position or operating results. In the opinion of management, this statement will have no material effect on the financial statements of the Company.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the Financial Statements and the related notes. This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Our actual results and the timing of certain events could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth under "Risks Relating to Our Business," "Description of Business" and elsewhere in this document. See "Forward-Looking Statements."
Results of Operations - Comparison of Years Ending December 31, 2008 and 2007
For the years ending December 31, 2008 and 2007, the Company had no revenue. For the year ending December 31, 2008, the Company had an operating loss totaling $72,908 compared to an operating loss of $46,707 for the same period in 2007, an increase of $26,201. During the year ending December 31, 2008, general and administration costs totaled $72,908 compared to $46,707 for the same period in 2007. This increase of $26,201 is primarily a result of increased activity related to the administration of the business as it related to its operations and to being a public entity.
Liquidity and Capital Resources
G2 Ventures began its current operations in 2003, and has not as yet attained a level of operations which allows it to meet its current overhead. We do not contemplate attaining profitable operations until year end 2009, nor is there any assurance that such an operating level can ever be achieved. We will be dependent upon obtaining additional financing in order to adequately fund working capital, infrastructure, production expenses and significant marketing related expenditures to gain market recognition, so that we can achieve a level of revenue adequate to support our cost structure, none of which can be assured. While G2 Ventures has funded its initial operations with private placements of equity and bridge loans, there can be no assurance that adequate financing will continue to be available to us and, if available, on terms that are favorable to us. These factors raise substantial doubt about our ability to continue as a going concern and the accompanying consolidated financial statements do not include any adjustments related to the recoverability or classification of asset carrying amounts or the amounts and classification of liabilities that may result should we be unable to continue as a going concern.
As of December 31, 2008, the Company's cash balance was $85,039. Outstanding debt as of December 31, 2008 totaled $141,666. The Company's working capital deficit as of December 31, 2008 was approximately $46,627.
Recent Events
On June 30, 2008, Mr. Kepler and the Company entered into an Amended Agreement
pursuant to which (i) it was acknowledged that the Company owed Mr. Kepler
$120,042 for loans to the Company through the date of the Amended Agreement, and
(ii) Mr. Kepler agreed that once 1,500,000 shares of the Company's Common Stock
had been sold pursuant to the IPO, he would only receive a partial payment of
$15,000 toward the outstanding loan balance, with the remaining balance to be
repaid through revenues as they become available.
In conjunction with an offering of its shares of Common Stock, the Company received $128,457 in gross proceeds from the sale of 1,284,574 shares of its Common Stock at $0.10 per share.
Management does not believe that the net proceeds from the Offering will provide us with sufficient funds to meet our operating requirements for the subsequent twelve-month period.
Off Balance Sheet Arrangements
We do not have any off balance sheet arrangements.
Disclosure of Commission Position on Indemnification for Securities Act Liabilities
Our Articles of Incorporation provide that we must indemnify and hold harmless directors, officers, employees, and agents of G2 Ventures, Inc., as and to the extent permitted by the Texas Business Corporation Act. One of our officers or directors could take the position that this duty on our behalf to indemnify the director or officer may include the duty to indemnify the officer or director for the violation of securities laws.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to our Articles of Incorporation, Bylaws, Texas laws or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by us of expenses incurred or paid by one of our directors, officers, or control persons, and the successful defense of any action, suit or proceeding) is asserted by such director, officer or control person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by a controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
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