Item 1. Business.
Overview and Recent History
We were incorporated October 4, 2007 as a subsidiary of Alma International, Inc. Our former parent company, Alma International, Inc. (Alma) was originally incorporated in Florida as R.A.B Capital on July 19, 1998. Prior to ceasing operations in 2002, Alma was in the business of designing, marketing and selling African Jewelry. On June 4, 1991, R.A.B Capital changed its name to Alma International, Inc. and Alma later re-domiciled to Oklahoma in September, 2007.
On September 21, 2007 we consummated a reorganization which we refer to collectively as the “2007 Reorganization”. Dynasty Energy Resources, Inc. (“Company”) was essentially spun-off of Alma pursuant to Section 1081(a) of the Oklahoma General Corporation Law, as a tax-free reorganization. Under the 2007 Reorganization all Alma shareholders became shareholders of Dynasty Energy Resources, Inc. (“Dynasty”) in the same proportion. As a result of the 2007 Reorganization, each shareholder holding shares of outstanding common stock of Alma received an equivalent number of shares of common stock of Dynasty with the same rights, privileges, and preferences, including as to liquidation. In conjunction with the 2007 Reorganization, Alma concluded a downstream merger into a second subsidiary. All of Alma’s operating assets, liabilities and tax attributes (including accumulated losses and net operating losses) carried forward to the second subsidiary. Alma’s second subsidiary is not a subsidiary of the Company. Accordingly, Alma is not considered a predecessor company for accounting or legal purposes of Dynasty. Following the 2007 Reorganization we re-domiciled to Delaware. Since 2002 and prior to consummation of the domiciliary merger in 2008, neither Alma nor Dynasty had any existing operations.
We are authorized to issue an aggregate amount of Five Hundred Million (500,000,000) shares of stock, of which Four Hundred Eighty Million (480,000,000) shares are designated as common stock with a $0.00001 par value, and twenty Million (20,000,000) shares are designated as preferred stock with a $0.00001 Par value. Each shareholder of common stock shall be entitled to one vote for each share of common stock held. As of June 30, 2010, there were 100,255,890 shares of common stock outstanding with no preferred shares of stock outstanding.
Since December 2002 until the present, the Company has been inactive and can be deemed to be a so-called “shell” company, whose only purpose at this time is to determine and implement a new business purpose. As of the date hereof, the Company can be defined as a “shell” company, an entity which is generally described as having no or nominal operations and with no or nominal assets or assets consisting solely of cash and cash equivalents. As a shell company, our sole purpose at this time is to locate and consummate a merger or acquisition with a private entity.
Our common stock is currently traded on the Pink Sheets under the symbol DYER. Prior to December 12, 2007, our stock was traded on the Pink Sheets under the symbol AINI.
Business
The Company voluntarily filed a Form 10 in order to make information concerning itself more readily available to the public. Management believes that being a reporting company under the Securities Exchange Act of 1934, (the “Exchange Act”), could provide a prospective merger or acquisition candidate with additional information concerning the Company. Management also believes that this could possibly make the Company more attractive to an operating business as a potential merger or acquisition candidate. As a result of filing the Form 10, the Company is now obligated to file with the SEC certain interim and periodic reports, including an annual report containing audited financial statements. The Company anticipates that it will continue to file such reports, notwithstanding the fact that, in the future, it may not otherwise be required to file such reports based on the criteria set forth under Section 12(g) of the Exchange Act. Any target acquisition or merger candidate will become subject to the same reporting requirements as the Company following finalization of an acquisition or merger. Thus, in the event the Company successfully completes the acquisition of or merger with an operating business, that business must provide audited financial statements for at least the two most recent fiscal years or, in the event it has been in business for less than two years, audited financial statements will be required from the period of inception. This could limit the Company’s potential target business opportunities due to the fact that many private businesses either do not have audited financial statements or are unable to produce audited statements without undo time and expense.
Management plans to investigate, research and, if justified, potentially acquire or merge with, one or more businesses or business opportunities. The Company has no commitment or arrangement, written or oral, to participate in any business opportunity and management cannot predict the nature of any potential business it may ultimately consider. Management will have broad discretion in its search for and negotiations with any potential business or business opportunity.
Source of Business Opportunities
Management intends to use various resources in its search for potential business opportunities including, but not limited to, the Company’s officers and directors, consultants, special advisors, securities broker-dealers, venture capitalists, members of the financial community and others who may present management with unsolicited proposals. Because of its lack of capital, the Company may not be able to retain, on a fee basis, professional firms specializing in business acquisitions and reorganizations. Rather, it will most likely have to rely on outside sources, not otherwise associated with the Company that will accept their compensation only after the Company has finalized a successful acquisition or merger. To date, the Company has not engaged or entered into any discussion, agreement or understanding with a particular consultant regarding its search for business opportunities. Presently, no final decision has been made nor is management in a position to identify any future prospective consultants. If the Company elects to engage an independent consultant, it will look only to consultants that have experience in working with small companies in search of an appropriate business opportunity. Also, the consultant must have experience in locating viable merger and/or acquisition candidates and have a proven track record of finalizing such business consolidations. Further, the Company would prefer to engage a consultant that will provide services for only nominal up-front consideration and is willing to be fully compensated only at the close of a business consolidation.
The Company does not intend to limit its search to any specific kind of industry or business. The Company may investigate and ultimately acquire a venture that is in its preliminary or development stage, is already in operation, or in various stages of its corporate existence and development. Management cannot predict at this time the status or nature of any venture in which the Company may participate. A potential venture might need additional capital or merely desire to have its shares publicly traded. The most likely scenario for a possible business arrangement would involve the acquisition of or merger with an operating business that does not need additional capital, but which merely desires to establish a public trading market for its shares. Management believes that the Company could provide a potential public vehicle for a private entity interested in becoming publicly held without the time and expense typically associated with an initial public offering.
Evaluation
Once the Company identifies a particular entity as a potential acquisition or merger candidate, management will seek to determine whether acquisition or merger is warranted, or whether further investigation is necessary. Such determination will generally be based on management’s knowledge and experience, or with the assistance of outside advisors and consultants evaluating the preliminary information available to them. Management may elect to engage outside independent consultants to perform preliminary analysis of potential business opportunities. However, because of its lack of capital, the Company may not have the necessary funds for a complete and exhaustive investigation of any particular opportunity.
In evaluating potential business opportunities, management will consider, to the extent relevant to the specific situation, several factors including:
· Potential benefits to the Company and stockholders;
· Working capital;
· Financial requirements and availability of additional financing;
· History of operations, if any;
· Nature of present and expected competition;
· Quality and experience of management;
· Need for further research, development or exploration;
· Potential for growth and expansion;
· Potential for profits; and
· Other factors deemed relevant to the specific opportunity
Because the Company has not yet located or identified any specific business opportunity, there are certain unidentified risks that cannot be adequately expressed prior to identifying a specific target. There can be no assurance following consummation of any acquisition or merger that the business venture will develop into a going concern or, if the business is already operating, that it will continue to operate successfully. Many potential business opportunities available to the Company may involve a new and untested technology, product, process or market strategy, which may not ultimately prove successful.
Going Concern
Through June 30, 2010, the Company has incurred accumulated losses of approximately $63,177, and there is substantial doubt about our ability to continue as a going concern. As of June 30, 2010, we had approximately $0 in cash. In order to continue to operate, we need to develop additional sources of capital and to ultimately achieve profitable operations. We do not have sufficient resources to fund our operations for the next twelve months.
Although we are actively seeking new sources of equity, there can be no assurance that we will be able to raise additional capital on terms that are acceptable to us or at all. Additionally, there can be no assurance that we will be able to find a suitable merger candidate.
Form of Potential Acquisition or Merger
The Company cannot predict the manner in which it might participate in a particular prospective business opportunity. Each separate potential opportunity will be reviewed and, upon the basis of that review, a suitable legal structure or method of participation will be chosen. The particular manner in which the Company participates in a specific opportunity will depend upon the nature of its business, the respective needs and desires of the Company and the opportunity’s management, and the relative negotiating strength of the parties involved. Actual participation in a business venture may take the form of an asset purchase, lease, joint venture, license, partnership, stock purchase, reorganization, merger or other form of consolidation. The Company may act directly or indirectly through an interest in a partnership, corporation, or other form of organization, however, it presently does not intend to participate in an opportunity through the purchase of a minority stock position.
Because it has no assets and a limited operating history, in the event the Company successfully acquires or merges with an operating business, it is likely that current stockholders will experience substantial dilution. It is also probable that there will be a change in control of the Company. The owners of a business that the Company acquires or mergers with will most likely effectively control the Company following such transaction. Management has not established any guidelines as to the amount of control it will offer to prospective target. Instead, management will attempt to negotiate the best possible agreement for the benefit of the stockholders.
Presently, management does not intend to borrow funds to compensate any person, consultant, promoter or affiliate in relation to the consummation of a potential merger or acquisition. However, if the Company engages any outside advisor or consultant in its search for business opportunities, it may be necessary to attempt to raise additional funds. As of the date hereof, the Company has not made any arrangements or definitive agreements to use outside advisors or consultants or to raise any capital. In the event the Company does need to raise capital, most likely the only method available would be the private sale of securities. These possible private sales would most likely have to be to persons known by the officers and directors or to venture capitalists that would be willing to accept the risks associated with investing in a business with limited operations. Because the Company is a development stage company, it is unlikely that it could make a public sale of securities or be able to borrow any significant sum from either a commercial or private lender.
Management will attempt to acquire funds on the best available terms. However, there can be no assurance that the Company will be able to obtain additional funding when and if needed, or that such funding, if available, can be obtained on reasonable and/or acceptable terms. Although not presently anticipated, there is a remote possibility that the Company could sell securities to its management or affiliates to raise funds.
There exists a possibility that the terms of any future acquisition or merger transaction might include the sale of shares presently held by the Company’s officers and/or directors to parties affiliated with or designated by the potential target. Presently, management has no plans to seek or actively negotiate such terms. However, if this situation does arise, management is obligated to follow the Company’s Articles of Incorporation and all applicable corporate laws in negotiating such an arrangement. Under this scenario of a possible sale by officers and directors, it is unlikely that similar terms and conditions would be offered to all other stockholders of the Company or that the stockholders would be given the opportunity to approve such a transaction. In the event of a successful acquisition or
merger, a finder’s fee, in the form of cash or securities, may be paid to a person or persons instrumental in facilitating the transaction. No criteria or limits have been established for the determination of an appropriate finder’s fee, although it is likely that any fee will be based upon negotiations by management, the business opportunity and the finder.
Management cannot at this time make an estimate as to the type or amount of a potential finder’s fee that might be paid. It is unlikely that a finder’s fee will be paid to an affiliate of the Company because of the potential conflict of interest that might result. However, if such a fee were paid to an affiliate, it would have to be in such a manner so as not to compromise the affiliate’s possible fiduciary duty to the Company or violate the doctrine of corporate opportunity.
The Company believes that it is highly unlikely that it will acquire or merge with a business in which the Company’s management, affiliates or promoters have an ownership interest. Any possible related party transaction of this type would have to be ratified by a disinterested Board and by the stockholders. Management does not anticipate an acquisition or merger with a related entity. Further, as of the date hereof, no officer, director, affiliate or associate has had any preliminary contact or discussions with any specific business opportunity, nor are there any present plans, proposals, arrangements or understandings regarding the possibility of an acquisition or merger with any specific business opportunity.
It is anticipated that any securities issued in any such reorganization would be issued in reliance upon exemption from registration under applicable federal and state securities laws. It is anticipated that it will also be a method of taking a private company public known as a “back door” 1934 Act registration procedure.
While the actual terms of a transaction to which the Company may be a party cannot be predicted, it may be expected that the parties to the business transaction will find it desirable to avoid the creation of a taxable event and thereby structure the acquisition as a so called “tax-free” reorganization under Sections 368(a)(1) or 351 of the Internal Revenue Code.
We will participate in a business opportunity only after the negotiation and execution of appropriate written agreements. Although the terms of such agreements cannot be predicted, generally such agreements will require some specific representations and warranties by all of the parties thereto, will specify certain events of default, will detail the terms of closing and the conditions which must be satisfied by each of the parties prior to and after such closing, will outline the manner of bearing costs, including costs associated with the Company’s attorneys and accountants, will set forth remedies on default and will include miscellaneous other terms.
Our present intent is that we will not acquire or merge with any entity which cannot provide independent audited financial statements at the time of closing of the proposed transaction and supply other information that is normally disclosed in filings with the Securities and Exchange Commission. We are subject to all of the reporting requirements included in the 1934 Act. These rules are intended to protect investors by deterring fraud and abuse in the securities markets through the use of shell companies. Included in these requirements is the affirmative duty of the Company to file independent audited financial statements as part of its Form 8-K to be filed with the Securities and Exchange Commission upon consummation of a merger or acquisition, as well as the Company’s audited financial statements included in its annual report on Form 10-K. In addition, in the filing of the Form 8-K that we file to report an event that causes us to cease being a shell company; we are required to include that information that is normally reported by a company in its original Form 10.
Investment Company Act of 1940
Although we will be subject to regulation under the Securities Act of 1933, as amended, and the 1934 Act, our management believes that we will not be subject to regulation under the Investment
Company Act of 1940 insofar as the Company will not be engaged in the business of investing or trading in securities. In the event we engage in business combinations that result in the Company holding passive investment interests in a number of entities, we could be subject to regulation under the Investment Company Act of 1940. In such event, we would be required to register as an investment company and could be expected to incur significant registration and compliance costs. We have obtained no formal determination from the Securities and Exchange Commission as to the status of the
Company under the Investment Company Act of 1940 and, consequently, any violation of such Act would subject the Company to material adverse consequences.
Employees
Management expects to use consultants, attorneys and accountants as necessary, and does not anticipate a need to engage any full-time employees so long as the Company is seeking and evaluating business opportunities. Except for the one executive officer, the company has no employees. The need for employees and their availability will be addressed in connection with the decision whether or not to acquire or participate in specific business opportunities.
Competition
Because no potential acquisition or merger candidate has been identified, the Company is unable to evaluate the type and extent of its likely competition. The Company is aware that there are several other public companies with only nominal assets that are also searching for operating businesses and other business opportunities as potential acquisition or merger candidates. The Company will be in direct competition with these other public companies in its search and, due to the Company’s lack of funds, it may be difficult to successfully compete with these other companies.
Item 1A.
Item 1A. Risk Factors.
Not applicable.
Item 2.
Item 2. Properties.
We do not own any properties. During fiscal year 2010, we occupied #2 Goldstreet, PH# 13, New York, New York 10038. This space is provided to the Company by our former President through his employment agreement at no additional charge. On April 28, 2010, pursuant to the share exchange agreement with Belmont Partners LLC, we moved our office space to 360 Main Street, Washington, Virginia 22747, at no charge or lease agreement.
Item 3.
Item 3. Legal Proceedings.
We are not currently not aware of any legal proceedings or claims that we believe will have a material adverse affect on our business, financial condition or operating results.
PART II
Item 5.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Market Information
The common stock is traded on the Pink Sheets under the symbol “DYER”; however it is very limited Public Market for the common stock. As of June 30, 2010, 100,255,890 shares of common stock were outstanding. We have been assigned the trading symbol “DYER” for trading on the “Pink sheets.”
There is no active trading market for our Common Stock at present and, according to the best information available to management, there has been no active trading activity for approximately four years.
Holders
As of June 30, 2010, there were 122 holders of record of the Company’s common stock
Dividends
We have never declared or paid any cash dividends on our common stock or other securities. We currently expect to retain future earnings for use in the operation and expansion of our business and do not anticipate paying cash dividends in the foreseeable future.
The Company’s authorized capital stock consists of 500,000,000 shares, of which 480,000,000 are common stock with a par value of $0.00001 per share, and of which 20,000,000 are preferred stock with a par value of $0.00001 per share. We have 100,255,890 Common Shares issued and outstanding as of the date, with no preferred shares being issued and outstanding.
Item 6.
Item 6. Selected Financial Data.
Not applicable.
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis should be read together with the factors discussed in Item 1A “Risk Factors” and with the financial statements, including the notes thereto, and the other financial information appearing elsewhere in this Report. Period-to-period comparisons of financial data are not necessarily indicative, and therefore should not be relied upon as indicators, of the Company’s future performance. Words or phrases such as “believes,” “does not believe,” “will,” “may,” “plan,” “estimate,” “anticipate,” “expect,” “intend” and similar expressions may identify “forward-looking statements.”
Company Overview
The Company is considered a shell company with no assets and/or capital and no material operations or income.
Ongoing expenses, including the costs associated with the preparation and filing of this report, have been paid for by advances from a stockholder, which are evidenced on the Company’s financial statements as accounts payable-related parties. It is anticipated that the Company will require only nominal capital to maintain its corporate viability. Additional necessary funds will most likely be provided by the Company’s officers and directors, although there is no agreement related to future funds and there is no assurance such funds will be available. However, unless the Company is able to facilitate an acquisition of or merger with an operating business or is able to obtain significant outside financing, there is substantial doubt about its ability to continue as a going concern.
Recent Developments
On September 20, 2010, the Company entered into a share purchase agreement between the Company, Belmont Partners, LLC (“Belmont”) and an accredited investor (the “Investor”), pursuant to which, the Company sold an aggregate of 135,301,552 shares of its common stock par value, $.00001 (the “Common Stock”) to the Investor for an aggregate purchase price of $290,000. Simultaneously with the closing of the share purchase agreement, the Company re-purchased 66,430,504 shares of common stock held by Belmont, for an aggregate purchase price of $290,000, net any outstanding liabilities of the Company as of the closing date, as contemplated by a repurchase agreement, dated September 20, 2010, by and between the Company and Belmont, and immediately cancelled the repurchased shares. As a result of the closing of the share purchase agreement and the repurchase agreement, the Investor, Mr. Shaoping Lu, now holds 80% of the Company’s outstanding capital stock resulting in a change in control of the Company.
In connection with the closing of the share purchase agreement, Mr. Joseph Meuse resigned from his position as the Company’s President, effective immediately, and from his position as the Company’s sole director, effective upon the tenth day following the Company’s mailing of an Information Statement on Schedule 14f-1 to its shareholders, which is expected to occur on or about September 30, 2010. On the same day, Mr. Lu was appointed as the Company’s President, Chief Executive Officer, Treasurer and Secretary effective immediately, and as its sole director, effective upon the effective date of Mr. Meuse’s resignation as sole director.
In connection with the closing of the change of control transaction discussed above, on September 20, 2010, the stockholders of the Company approved a one-for-twenty reverse split and an amendment of the Company’s Certificate of Incorporation to change the Company’s name to "Fifth Season International, Inc." For details regarding the name change see the Company’s Preliminary Information Statement on Schedule 14C filed on September 21, 2010.
Result of Operations
Year Ended June 30, 2010, compared to Year Ended June 30, 2009
No operating revenues were generated during the year ended June 30, 2010 or 2009. Operating expenses decreased to $19,150 for the year ended June 30, 2010, compared to $71,200 for the year ended June 30, 2009. The decrease in operating expenses resulted from the termination of Mr. Ditanna's employment agreement on April 28, 2010 and the fact that the Company has not transacted any business for the past year. The Company’s net income increased to 245,850 for the year ended June 30, 2010, compared to ($71,200) for the year ended June 30, 2009 due to the debt cancellation pursuant to the stock purchase agreement with Belmont Partners, LLC.
Liquidity and Capital Resources
As of June 30, 2010, the Company had a working capital deficiency of $125, compared to a working capital deficiency of $256,200 as of June 30, 2009. The Company does not have sufficient funds to continue its operating activities. Future operating activities are expected to be funded by loans from major stockholders. Expenses incurred and paid during 2010 and 2009 were paid by a stockholder. At June 30, 2010, the Company had current liabilities of $125 compared to $256,000 at June 30, 2009.
Because it has no cash reserves or source of revenues, the Company expects to continue to rely on the stockholder to pay expenses until such time as it can successfully complete an acquisition of or merger with an existing, operating company. There is no assurance that the Company will complete such an acquisition or merger or that the stockholder will continue indefinitely to pay expenses. In the opinion of management, inflation has not and will not have a material effect on the operations of the Company
until such time as the Company successfully completes an acquisition or merger. At that time, management will evaluate the possible effects of inflation on the Company related to it business and operations following a successful acquisition or merger.
Plan of Operations
During the next 12 months, the Company will actively seek out and investigate possible business opportunities with the intent to acquire or merge with one or more business ventures. The Company will not restrict its search to any specific business, industry, or geographical location and it may participate in a business venture of virtually any kind or nature.
Because the Company lacks funds, it may be necessary for officers and directors to advance funds to the Company and to accrue expenses until such time as a successful business consolidation can be accomplished. Management intends to hold expenses to a minimum and to obtain services on a contingency basis when possible. Further, directors will defer any compensation until such time as an acquisition or merger can be accomplished and will strive to have the business opportunity provide their remuneration. However, if the Company engages outside advisors or consultants in its search for business opportunities, it may be necessary to attempt to raise additional funds. As of the date hereof, the Company has not made an
If the Company needs to raise capital, most likely the only method available would be the private sale of securities. Because the Company is a development stage company, it is unlikely that it could make a public sale of securities or be able to borrow any significant sum from either a commercial or private lender. There can be no assurance that the Company will be able to obtain additional funding when and if needed, or that such funding, if available, can be obtained on acceptable terms.
The Company does not intend to use any employees, with the exception of our sole officer Mr. Meuse. Outside advisors or consultants will be used only if they can be obtained for minimal cost or on a deferred payment basis. Management is confident that it will be able to operate in this manner and to continue its search for business opportunities during the next twelve months. Also, the Company does not anticipate making any other significant capital expenditures until it can successfully complete an acquisition or merger.
Material Definitive Agreements
On April 28, 2010, Belmont Partners, LLC entered into a material definitive agreement with the majority shareholder of the Company to acquire sixty-six million four hundred thirty thousand five hundred and four (66,430,504) shares of the Company’s common stock. As a result of the transaction, Belmont Partners, LLC controls approximately 66.26% of the Company’s outstanding capital stock.
Pursuant to this transaction, on April 28, 2010, Joseph Meuse was appointed to the Board of Directors as well as President of the Company. On the same date, James Ditanna resigned from all positions held in the Company. The amount of $120,000 that is previously owed to Mr. Ditanna has been forgiven through a Debt Release Agreement.
Subsequent Events
On September 20, 2010, Dynasty Energy Resources, Inc. (the “Company”) entered into a share purchase agreement between the Company, Belmont Partners, LLC (“Belmont”) and an accredited investor (the “Investor”), pursuant to which, we sold an aggregate of 135,301,552 shares of our common stock par value, $.00001 (the “Common Stock”) to the Investor for an aggregate purchase price of $290,000. Simultaneously with the closing of the share purchase agreement, the Company re-purchased 66,430,504 shares of common stock held by Belmont, for an aggregate purchase price of $290,000, net any outstanding liabilities of the Company as of the closing date, as contemplated by a repurchase agreement, dated September 20, 2010, by and between the Company and Belmont.
Pursuant to the above share exchange agreement, the Company expects to cancel the repurchased shares from Belmont Partners, LLC.
Item 7A.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk.
Not applicable.
Item 8.
Item 8. Financial Statements and Supplementary Data
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and
Shareholders’ of Dynasty Energy Resources, Inc.
We have audited the accompanying balance sheet of Dynasty Energy Resources, Inc. as of June 30, 2010, and the related statements of operations, stockholders’ deficiency, and cash flows for the year ended June 30, 2010. 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.
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. We were not engaged to perform an audit of the Company’s 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 of the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit 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, and 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 Dynasty Energy Resources, Inc. as of June 30, 2010, and the results of their operations and their cash flows for the year ended June 30, 2010, in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company’s accumulated deficit and lack of capital raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.
/s/ Friedman LLP
Marlton, New Jersey
September 23, 2010
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Michael F. Cronin
Certified Public Accountant
Board of Directors and Shareholders
Dynasty Energy Resources, Inc.
Washington, VA
I have audited the accompanying balance sheet of Dynasty Energy Resources, Inc. as of June 30, 2009 and the related statements of operations, stockholders’ deficiency and cash flows for the year then ended. The financial statements are the responsibility of the directors. My responsibility is to express an opinion on these financial statements based on my audit.
I conducted my audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that I 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 was I engaged to perform, an audit of its internal control over financial reporting. My 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, I express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Dynasty Energy Resources, Inc. as of June 30, 2009 and the results of its operations, its cash flows and changes in stockholders’ deficiency for the year then ended in conformity with accounting principles generally accepted in the United States.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has incurred a loss from operations and has no cash. The Company may not have adequate readily available resources to fund operations through 2010. This raises substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
October 9, 2009
/s/ Michael F. Cronin
Michael F. Cronin
Certified Public Accountant
Orlando. FL
DYNASTY ENERGY RESOURCES, INC.
Notes to Financial Statements
June 30, 2010 and 2009
1. Organization and Operations:
The Company
Dynasty Energy Resources, Inc. ("Dynasty" or the "Company") was founded as an Oklahoma corporation on August 17, 2005. On October 5, 2007 the Company relocated its domicile to Delaware.
Since inception, the Company has been engaged in organizational efforts and obtaining initial financing. The business purpose of the Company is to seek the acquisition of or merger with, an existing company.
On April 28, 2010, Belmont Partners, LLC entered into a material definitive agreement with the majority shareholder of the Company to acquire sixty-six million four hundred thirty thousand five hundred and four (66,430,504) shares of the Company’s common stock. As a result of the transaction, Belmont Partners, LLC controls approximately 66.26% of the Company’s outstanding capital stock.
Basis of Presentation and going concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. This basis of accounting contemplates the recovery of the Company’s assets and the satisfaction of its liabilities. Since inception, the Company has been engaged in organizational activities, sales and marketing activities to create market awareness of its products, and obtaining financing.
Through June 30, 2010, the Company has incurred accumulated losses of approximately $63,177. The Company’s ability to continue as a going concern is dependent upon its ability to develop additional sources of capital and to ultimately achieve profitable operations through the acquisition of revenue producing company or one with technology assets that can be developed.
The Company’s financial statements do not include any adjustments that might result from the outcome of these uncertainties. At June 30, 2010, the Company had not yet commenced any revenue-generating operations. All activity through June 30, 2010 has been related to the Company’s formation, capital raising efforts and sales and marketing activities. As such, the Company has yet to generate any cash flows from operations, and is dependent on equity funding from both related and unrelated parties to finance its operations.
The Company does not have sufficient resources to fund its operations for the next twelve months. Accordingly, the Company needs to raise additional funds in order to satisfy its future working capital requirements. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
Summary of Significant 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 revenues and expenses during the reporting period. Actual results could differ from those estimates.
Earnings per Common Share: Basic net income (loss) per share is computed using the weighted average number of common shares outstanding during the period. Diluted net income (loss) per common share is computed using the weighted average number of common and dilutive equivalent shares outstanding during the period. There were no potentially dilutive instruments outstanding during 2010 or 2009.
There were no common equivalent shares required to be added to the basic weighted average shares outstanding to arrive at diluted weighted average shares outstanding.
Income Taxes: The Company accounts for income taxes pursuant to the provisions of the Accounting Standards Codification 740. Accounting for Income Taxes, which requires an asset and liability approach to calculate deferred income taxes. The asset and liability approach requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of temporary difference between the carrying amounts and the tax basis of assets and liabilities.
We file a federal and state income tax return. Management of the Company is not aware of any liability for unrecognized tax benefits at June 30, 2010 and June 30, 2009.
Fair Value of Financial Instruments: The carrying amount of cash, accounts payable and accrued expenses approximate fair value because of the short maturity of those instruments.
DYNASTY ENERGY RESOURCES, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 2010
2. Stockholders’ Equity:
Description of Securities
Common Stock: Our certificate of incorporation authorizes the issuance of 480,000,000 shares of $0.00001 par value common stock. In general, the holders of our common stock are entitled to one vote for each share held of record on all matters to be voted on by stockholders. There is no cumulative voting with respect to the election of directors, with the result that the holders of more than 50% of the shares voted for the election of directors can elect all of the directors. Holders of common stock are entitled to receive dividends when, and if declared by our board out of funds legally available. In the event of our liquidation, dissolution or winding up, our stockholders are entitled to share ratably in all assets remaining available for distribution to them after payment of liabilities and after provision has been made for each class of stock, if any, having preference over the common stock. Our stockholders have no conversion, preemptive or other subscription rights and there are no redemption provisions applicable to the common stock. All of the outstanding shares of common stock are fully paid and non-assessable.
Preferred Stock: Our certificate of incorporation authorizes the issuance of 20,000,000 shares of $0.00001 par value of a blank check preferred stock. Our board of directors will have the power to establish the designation, rights and preferences of any preferred stock we issue in the future. Accordingly, our board of directors has the power, without stockholder approval, to issue preferred stock with dividend, liquidation, conversion, voting or other rights that could adversely affect the voting power or other rights of the holders of common stock.
3. Forgiveness of Debt:
On April 28, 2010, pursuant to the share purchase agreement with Belmont Partners, LLC, all outstanding debt owed to our former Officer and Director Mr. Ditanna as well as to the service providers totaling $265,000 were cancelled according to debt cancellation agreements.
4. Contingency:
In 1999 the Company issued convertible securities entitling the holders to convert to a maximum of 7.5 million shares of common stock. The transfer agent records do not provide appropriate detail sufficient to conclude that all such convertible securities have been converted to common nor that any convertible securities remain outstanding. A review of filings with appropriate state regulatory authorities granting the Company’s charter and discussions with the staff of FINRA indicate no such securities remain outstanding.
Accordingly, the Company has concluded all common shares issuable and potentially issuable have been issued and there is no further obligation to issue common shares.
5. Subsequent Events:
On September 20, 2010, the Company entered into a share purchase agreement between the Company, Belmont Partners, LLC (“Belmont”) and an accredited investor (the “Investor”), pursuant to which, the Company sold an aggregate of 135,301,552 shares of its common stock par value, $.00001 (the “Common Stock”) to the Investor for an aggregate purchase price of $290,000. Simultaneously with the closing of the share purchase agreement, the Company re-purchased 66,430,504 shares of common stock held by Belmont, for an aggregate purchase price of $290,000, net any outstanding liabilities of the Company as of the closing date, as contemplated by a repurchase agreement, dated September 20, 2010,
by and between the Company and Belmont, and immediately cancelled the repurchased shares. As a result of the closing of the share purchase agreement and the repurchase agreement, the Investor, Mr. Shaoping Lu, now holds 80% of the Company’s outstanding capital stock resulting in a change in control of the Company.
In connection with the closing of the share purchase agreement, Mr. Joseph Meuse resigned from his position as the Company’s President, effective immediately, and from his position as the Company’s sole director, effective upon the tenth day following the Company’s mailing of an Information Statement on Schedule 14f-1 to its shareholders, which is expected to occur on or about September 30, 2010. On the same day, Mr. Lu was appointed as the Company’s President, Chief Executive Officer, Treasurer and Secretary effective immediately, and as its sole director, effective upon the effective date of Mr. Meuse’s resignation as sole director.
In connection with the closing of the change of control transaction discussed above, on September 20, 2010, the stockholders of the Company approved a one-for-twenty reverse split and an amendment of the Company’s Certificate of Incorporation to change the Company’s name to "Fifth Season International, Inc." These financial statements do not reflect the effect of the reverse split.
Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
Not applicable.
Item 9A.
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management has conducted an evaluation of the effectiveness of disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Disclosure controls and procedures are controls and other procedures that are designed to ensure that the information we are required to disclose in our periodic reports filed or submitted under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (ii) accumulated and communicated to management, as appropriate, to allow timely decisions regarding required disclosure.
Based on the results of this evaluation, and the material weaknesses in our internal control over financial reporting discussed below, our management has concluded that our disclosure controls and procedures were not effective at the reasonable assurance level as of June 30, 2010.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate control over financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with existing policies or procedures may deteriorate.
Our management conducted an assessment of our internal control over financial reporting as of June 30, 2010. A material weakness is a deficiency or a combination of deficiencies in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected. Based upon that assessment, we have identified the following material weaknesses:
Lack of documented internal control system We have a material weakness due to the lack of a documented and reviewed system of internal controls. We have determined that to perform the processes and remediate this internal control deficiency, we will either need to engage an internal control consultant or reassign existing personnel. During fiscal 2010, we began to enhance some of our internal control systems and began to document those changes; however, this process is on-going and the implementation of policies and procedures may take several quarters.
Lack of segregation of duties. We have limited staff in our corporate offices and, as such, there is a lack of segregation of duties. Many functions, including, purchasing, accounts payable, bank reconciliations and month end closings, are not adequately segregated. The lack of a proper segregation of duties can lead to individuals performing incompatible functions. Due to our limited number of personnel, until such time as we have additional employees we may require additional oversight from our board of directors in addressing certain weaknesses related to a proper segregation of duties.
Inadequate disaster recovery program. We do not currently have a comprehensive disaster recovery program.
As a result of the material weaknesses described above, management concluded that, as of June 30, 2010, we did not maintain effective control over financial reporting based on the criteria established in Internal Control - Integrated Framework.
Changes in Internal Control, Over Financial Reporting
There was no change in our internal control over financial reporting that occurred during the fiscal year ended June 30, 2010, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART III
Item 10.
Item 10. Directors, Executive Officers, and Corporate Governance.
Directors and Executive Officers
The following table provides information concerning our officers and directors. All directors hold office until the next annual meeting of stockholders or until their successors have been elected and qualified.
NAME
AGE
POSITION
Joseph J. Meuse
Director and President
The above listed officers and directors will serve until the next annual meeting of the shareholders or until their death, resignation, retirement, removal, or disqualification, or until their successors have been duly elected and qualified. Vacancies in the existing Board of Directors are filled by majority vote of the remaining Directors. Officers of the Company serve at the will of the Board of Directors.
There are no agreements or understandings for any officer or director to resign at the request of another person and no officer or director is acting on behalf of or will act at the direction of any other person.
Joseph J. Meuse: age 40, resides in Warrenton, VA. Mr. Meuse has been involved with corporate restructuring since 1995. He is the Managing Member of Belmont Partners, LLC and was previously a Managing Partner of Castle Capital Partners. Additionally, Mr. Meuse maintains a position as a Board Member of numerous public companies. Mr. Meuse attended the College of William and Mary.
Item 11.
Item 11. Executive Compensation.
Director Compensation
At present, the Company is operated by its sole executive officer and director without compensation and the Company is currently not a party to any employment agreements. The Company was obligated to pay its former President and Director James A Ditanna $5,000.00 monthly as base compensation through December 31, 2009. Pursuant to the share exchange agreement with Belmont Partners, LLC on April 28, 2009, Mr. Ditanna resigned from all his positions in the Company and waived his rights to any severance payments
Stock Option Grants
As of the date of this Prospectus the Company has not granted any stock options..
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
Section 16(a) Beneficial Ownership Reporting Compliance.
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our officers and directors and those persons who beneficially own more than 10% of the Company’s outstanding shares of common stock to file reports of securities ownership and changes in such ownership with the Securities and Exchange Commission. Officers, directors, and greater than 10% beneficial owners are also required by rules promulgated by the SEC to furnish us with copies of all Section 16(a) forms they file.
Based solely upon a review of the copies of such forms furnished to the Company, except for Forms 3 that were omitted to be filed, we believe that during the year ended June 30, 2010, all Section 16(a) filing requirements applicable to our officers, directors and greater than 10% beneficial owners were complied with.
The following table sets forth certain information regarding the beneficial ownership of our common stock as of June 30, 2010 by (i) each person who is known by us to own beneficially more than 10% of our outstanding common stock; (ii) each of our officers and directors; and (iii) all of our directors and officers as a group. None of the current shareholders have received or will receive any extra or special benefits that were not shared equally (pro-rata) by all holders of shares of our stock.
(1) Mr. Meuse is the sole Managing Member of Belmont Partners, LLC, which owns 66,430,504 shares of common stock. The shares owned by Belmont Partners, LLC are included in the beneficial ownership totals.
Item 13.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
There are certain conflicts of interest between the Company and our officers and directors. Mr. Ditanna has other business interests to which he currently devotes attention, and may be expected to do so although management time should be devoted to our business. As a result, conflicts of interest may arise that can be resolved only through their exercise of judgment in a manner which is consistent with their fiduciary duties to the company.
Item 14.
Item 14. Principal Accountant Fees and Services
Audit and non-audit fees
Audit Fees: The aggregate fees billed by Mike Cronin, CPA, our former independent auditor, for the audit of our quarterly and 2009 annual consolidated financial statements billed during the year was $20,000.
The aggregate annual audit fee for this annual consolidated financial statements billed by our independent auditor Friedman LLP is anticipated to be approximately $20,000.
Audit-Related Fees: None
Tax Fees: None.
All Other Fees: None.
PART IV
Item 15.
Item 15. Exhibits and Financial Statement Schedules
Included herein under Item 8.
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.
Date: September 23 2010
By: /s/ Joseph J. Meuse
President, Chief Executive Officer and Sole Director