ITEM 1. BUSINESS.
Our current business model has evolved to the aggregating and delivery of discounted services, products and deals that are supplied by our formidable merchant base. These discounted services are then packaged in the form of a savings certificate which offers substantial savings value to the end user or consumer, and are purchased in quantity by high volume retailers, and offered as an incentive to attract new customers and upgrade current customer sales.
Here is an example of how our savings certificates are used.
1)
An auto dealer buys 100 Savings Certificates for $15 each. Each certificate provides the end user $1,000 in discounts, deals, and coupon savings on everyday items such as groceries, travel and shopping consumables, by using all the benefits provided at the Net Savings Link exclusive website.
2)
The auto dealer advertises “Test Drive One of Our Auto’s & receive a $1,000 Grocery Savings Certificate at the Grocery Store of Your Choice.
3)
A person would visit the auto dealership, test drive a car and subsequently receive a $1,000 Savings Certificate from the auto dealer.
4)
The holder of the certificate may toss out the certificate, put it in their desk, give it to a friend or go online to www.thesavingssystem.com, sign up for FREE, and begin using their savings benefits.
5)
They might go to the Grocery Section, find the grocery store at which they shop and select from the items on sale at their grocery store for the upcoming week.
6)
For example, let’s say their grocery store has Hellman’s Mayonnaise on sale with a “buy one at $4 and get a second one free”. Their particular grocery store would never put out a coupon at the same time as the buy one - get one offer, nor would any of the other 139,000 grocery stores in the U.S.
7)
However, a recipient or holder of one of our savings certificates using our site could find a free Hellman’s mayonnaise coupon, or they could go to one of our recommended outside coupon clipping services and purchase coupons direct from the clipping service. Say, for example, they print two free 75 cent Hellman’s mayonnaise coupons.
8)
They would take the two coupons to their grocery store, buy the one jar of mayonnaise for $4, getting the second jar for free. They would then hand the cashier the two $0.75 cent coupons, which in this case their grocery store doubles to $1.50 each.
9)
The shopper walks out of the store paying $1 for $8 worth of Hellman’s mayonnaise.
10)
The math: $4 for the first one, $0 for the second, two 75 cent coupons doubled to $1.50 each = $4 + $0 -$1.50 - $1.50 = $1.00 total spent.
11)
The holder of the certificate just saved $7.00.
12)
We believe that the holder of our $1,000 savings certificate can save $1,000 and more, in a year, using our system.
- 3 -
It’s simple, works in all 139,000 grocery stores including every Walmart, Target, Walgreen & CVS nationwide.
Thus, we have positioned ourselves in the multi-billion dollar premium and incentive marketplace where retailers spend billions each year for products such as our savings certificates to attract customers.
General
We were incorporated in the State of Nevada on February 21, 2007 and began doing business as a mining and exploration company. During November 2010, we changed our business plan from mining and exploration to a membership based Internet Company that provides members with links to predominantly other 3rd party websites that offer savings and discount deals.
The membership model did not produce high volume sales, which led us to the development of a product that could be sold as a premium or incentive to large organizations who constantly require more customers and higher sales.
We have no plans to change our current business plan, combine with any other business entities, and are not currently aware of any conditions that might bring about a change in our current plans. We have no plans to be acquired, nor do we, or our shareholders, have plans to enter into a change of control or similar transaction or to change our management.
Our plan of operations is forward looking and there is no assurance that we will ever achieve profitability.
Offices
Our executive, marketing, customer service and administrative offices are located at 101 North Garden Avenue, Suite 240, Clearwater, Florida 33755. We currently lease an aggregate of approximately 1,567 square feet under a month to month lease. Although the current space is more than adequate for our current operational needs as well as in the foreseeable near term, there is additional space for expansion available within our current office building, as well as in multiple surrounding office buildings in the downtown Clearwater, Florida area.
Products
We offer premium and incentive certificates that provide denominations of $1,000 and $3,000 in aggregated savings, discounts and deals to the end user (see www.theperfectincentive.com for examples) and are sold as a premium incentive to businesses to promote their product or service.
The Savings Certificate can be employed as an incentive to generate additional prospects, a closing gift (gift with purchase), a referral gift (refer your friend and receive a membership free), and a value added gift to the club or union to justify payment or as an employee benefit (the employee saves money by using the membership that they received from their employer).
The price for the Savings Certificates average $15.00, depending on volume.
Customer Service
The redemption website for our Guaranteed Savings Certificates is located at www.thesavingssystem.com and customer service is offered at the website. We provide email access to our customer service department with a commitment of prompt response time, and a guaranteed satisfactory resolution to any customer issue. In addition, we provide a voice mail phone service 24/7 at 727-442-3200.
- 4 -
Revenue
Revenue is generated from selling our Savings Certificates to companies and organizations that use the membership as a premium or gift incentive. For example, a potential customer could receive a Savings Certificate valued at $1000 in savings for test driving a car or for purchasing $1,000 worth of carpeting. Or a Church or other organization wanting to raise money could offer a Savings Certificate for receiving a $30 donation. In each case, Net Savings Link would receive an average of $15 per Savings Certificate sold.
Competition
There are thousands of companies that sell promotional offers or fund raising products. The competition is intense.
Marketing
Net Savings Link calls known users of promotional incentives and or fund raising products and offers one or our Guaranteed Savings Certificates for the company or organization to try. Visit our marketing website at www.theperfectincentive.com to see complete information.
Our Strategy
To call existing users of promotional products or fundraising products and offer our Guaranteed Savings Certificates as an alternative that out performs what they are currently using. The potential customers know the market and they are completely educated on using gifts & incentives. Our job is to put our product in front of as many potential users as possible.
Operations
Customer Service - minimal customer service is needed because the redemption website at www.thesavingssystem.com is user friendly. Customer service can be reached via email 24 hours a day, 7 days a week or by leaving a voice mail.
Programming - Our websites are set up so that our President can make any changes and maintain the website completely using a customized Administrative panel.
Sales - Sales are coordinated by our President calling know users of incentives and fund raising products.
Employees
We have no employees. Our President handles all aspects of sales, programming and customer service.
ITEM 1A.
ITEM 1A. RISK FACTORS.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.
ITEM 1B.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
None.
ITEM 2.
ITEM 2. PROPERTIES.
We rent office spaces which consist of approximately 1,567 square feet in Clearwater, Florida.
We currently own minimal real property in the form of software and computers.
- 5 -
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS.
We are not a party to any material legal proceedings and, to our knowledge; no such proceedings are threatened or contemplated.
ITEM 4.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
PART II
ITEM 5.
ITEM 5.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
Our shares of common stock are quoted on the Bulletin Board operated by the Financial Industry Regulatory Authority (“FINRA”) under the symbol “NSAV”, the high and low bid information for our common stock has been as follows:
Quotations provided by the OTC Bulletin Board reflect inter-dealer prices, without retail mark-up, markdown or commission and may not represent actual transactions
Dividends
We have not declared any cash dividends on our common stock since our inception. There are no dividend restrictions that limit our ability to pay cash dividends on our common stock in our Articles of Incorporation or Bylaws. Our governing statute, Chapter 78 - “Private Corporations” of the Nevada Revised Statutes (the “NRS”), does provide limitations on our ability to declare cash dividends. Section 78.288 of Chapter 78 of the NRS prohibits us from declaring dividends where, after giving effect to the distribution of the dividend:
(a)
we would not be able to pay our debts as they become due in the usual course of business; or
(b)
our total assets would be less than the sum of our total liabilities plus the amount that would be needed, if we were to be dissolved at the time of distribution, to satisfy the preferential rights upon dissolution of stockholders who may have preferential rights and whose preferential rights are superior to those receiving the distribution (except as otherwise specifically allowed by our Articles of Incorporation).
On November 4, 2010, the Company and its Board of Directors approved a 1.4:1 dividend of all issued and outstanding common shares. The effect of the dividend increased the number of issued and outstanding common shares from 77,400,000 shares to 185,760,000 shares. As at November 30, 2012 and November 30, 2011, we have 428,333,637 and 199,839,513, respectively shares issued and outstanding.
- 6 -
Recent Sales of Unregistered Securities
On October 18, 2011, the Company entered into an agreement (the “Agreement”) with Mirador Consulting, Inc., a Florida corporation (“Mirador”) to (a) provide NSL with corporate consulting services in connection with introductions to other financial relations companies and other financial services; (b) contact existing NSL shareholders; and (c) use its best efforts to introduce NSL to various securities dealers, investment advisors, analysts, funding sources and other members of the financial community with whom Mirador has established relationships. The Agreement is in effect for a period of three months from October 18, 2011 and thereafter may be renewed upon the mutual written consent of the parties. As consideration for the foregoing services, Mirador was allowed to purchase 1,000,000 restricted shares of common stock at a purchase price of $200, well below quoted market value of $0.045 per share. As such, $44,800 was recognized as consulting expense upon grant.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.
ITEM 7.
ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION.
RESULTS OF OPERATIONS - NOVEMBER 30, 2012 COMPARED TO NOVEMBER 30, 2011
Working Capital
Cash Flows
Income Statement
- 7 -
Balance Sheet
As at November 30, 2012, the Company had total assets of $96,913 compared with total assets of $280,739 as at November 30, 2011. The assets are comprised of cash balances in the Company’s bank account, property and equipment and website development costs. The decrease is mainly attributed to a decrease in cash as a result of proceeds from debt financing received during the year ended November 30, 2011 being greater than proceeds from debt financing received during the year ended November 30, 2012.
The Company had total liabilities of $363,179 as at November 30, 2012 compared with $77,381 as at November 30, 2011. The increase in total liabilities is mainly attributed to the increase of accrued wages payable to the Company’s officers and an increase in in convertible notes payable at November 30, 2012 not converted to common stock compared to November 30, 2011.
During the year ended November 30, 2012, the Company issued 202,136,981 shares of common stock to the holders of convertible promissory notes payable, converting principal of $156,800 and interest of $6,468.
During the year ended November 30, 2012, the Company issued 26,357,143 shares of common stock to consultants for services valued at $446,571.
During the year ended November 30, 2012, the Company issued 1,500,000 shares of Series A preferred stock to two of its officers and directors for a total of $2,500 in accrued wages. Each share of Series A preferred stock has 1,000 votes. The Series A preferred stock and the common stock vote as a single class on all matters submitted to the stockholders.
Operating Revenues
During the year ended November 30, 2012, the Company received $101,968 in commissions revenue, compared to $5,032 in the same periods ended November 30, 2011.
Operating Expenses
During the year ended November 30, 2012, the Company incurred operating expenses totaling $1,062,835 compared with $687,698 for the year ended November 30, 2011. The increase in operating expenses is attributed to an increase in overall operating activity as the Company had minimal operations during the same period in fiscal 2011, inclusive of $446,571 in common stock issued for services in fiscal 2012, compared to $44,800 in fiscal 2011.
Net Loss
During the year ended November 30, 2012, the Company incurred a net loss of $1,252,883 compared with a net loss of $2,295,095 for the year ended November 30, 2011. The decrease in net loss was primarily due to a $3,704,814 mark-to-market loss on derivative in fiscal 2011, compared to a gain of $11,686 in fiscal 2012 and $981,112 in interest expense related to issuance of convertible debt at a discount in fiscal 2011 compared to $303,702 in fiscal 2012, partially offset by a $3,072,147 gain on extinguishment of debt in fiscal 2011 and an increase in common stock issued for services of $446,571 in fiscal 2012 compared to $44,800 in fiscal 2011 and an increase in revenues from $5,032 in fiscal 2011 compared to $101,968 in fiscal 2012.
- 8 -
Liquidity and Capital Resources
As at November 30, 2012, the Company had a cash balance of $18,131 and working capital deficit of $341,011 compared with a cash balance of $174,923 and a working capital surplus of $100,342 at November 30, 2011. The decrease in working capital is mainly due to the receipt of $949,932 in cash from convertible promissory notes in fiscal 2011 compared to $297,500 in fiscal 2012, which were then converted to common stock, partially offset by $393,792 net cash used from operating activities in fiscal 2012 compared to 720,338 in fiscal 2011.
Cash Flows from Operating Activities
During the year ended November 30, 2012, the Company used $393,792 of cash flow from operating activities compared with use of $720,338 of cash flow during the year ended November 30, 2011. The decrease in the use of cash flow from operating activities is mainly due to the increase in unpaid related party liabilities for the period as well as a decrease in overall operating expenses from fiscal 2011 when the Company expended more capital on start-up activities.
Cash Flows from Investing Activity
During the year ended November 30, 2012, the Company did not expend any money on capital purchases compared to $37,672 in the purchase of office equipment and $38,565 in development of its website during the same period in 2011.
Cash Flows from Financing Activities
During the year ended November 30, 2012, the Company received proceeds of $247,500 from six convertible promissory notes payable compared to $949,932 from the issuance of four convertible promissory notes payable in fiscal 2011.
RESULTS OF OPERATIONS - NOVEMBER 30, 2011 COMPARED TO NOVEMBER 30, 2010
Working Capital
Cash Flows
- 9 -
Balance Sheet
As at November 30, 2011, the Company had total assets of $280,739 compared with total assets of $61,366 as at November 30, 2010. The assets are comprised of cash balances in the Company’s bank account, property and equipment and website development costs. The increase is mainly attributed to proceeds from debt financing received during the year ended November 30, 2011.
The Company had total liabilities of $77,381 as at November 30, 2011 compared with $178,476 as at November 30, 2010. The decrease in total liabilities is mainly attributed to the reduction of accrued wages payable to the Company’s officers. Additionally, the Company received of $949,932 in cash in exchange for four convertible promissory notes payable during the year ended November 30, 2011, which were also converted to common stock during the year ended November 30, 2011.
During the year ended November 30, 2011, the Company issued 13,079,513 shares of common stock to the holders of four convertible promissory notes payable, converting all of the outstanding principal of $949,932 and interest of $31,032 at a rate of $0.075 per share.
On October 18, 2011, the Company entered into an agreement (the “Agreement”) with Mirador Consulting, Inc., a Florida corporation (“Mirador”) to (a) provide NSL with corporate consulting services in connection with introductions to other financial relations companies and other financial services; (b) contact existing NSL shareholders; and (c) use its best efforts to introduce NSL to various securities dealers, investment advisors, analysts, funding sources and other members of the financial community with whom Mirador has established relationships. The Agreement is in effect for a period of three months from October 18, 2011 and thereafter may be renewed upon the mutual written consent of the parties. As consideration for the foregoing services, Mirador was allowed to purchase 1,000,000 restricted shares of common stock at a purchase price of $200, well below quoted market value of $0.045 per share. As such, $44,800 was recognized as consulting expense upon grant.
Operating Revenues
During the year ended November 30, 2011, the Company received $5,032 in commissions revenue, compared to no revenue in the same periods ended November 30, 2010.
Operating Expenses
During the year ended November 30, 2011, the Company incurred operating expenses totaling $687,698 compared with $228,521 for the year ended November 30, 2010. The increase in operating expenses is attributed to an increase in overall operating activity as the Company had minimal operations during the same period in fiscal 2010.
Net Loss
During the year ended November 30, 2011, the Company incurred a net loss of $2,295,095 compared with a net loss of $115,068 for the year ended November 30, 2010. The increase in net loss was primarily due to a $3,704,814 mark-to-market loss on derivative and $981,112 in interest expense related to issuance of convertible debt at a discount, partially offset by a $3,072,147 gain on extinguishment of debt, as well as the fact that the Company commenced sales operations during the current fiscal year whereas, in the prior year, the Company only had minimal activity.
- 10 -
Liquidity and Capital Resources
As at November 30, 2011, the Company had a cash balance of $174,923 and working capital surplus of $100,342 compared with a cash balance of $21,366 and a working capital deficit of $157,110 at November 30, 2010. The increase in working capital is mainly due to the receipt of $949,932 in cash from convertible promissory notes, which were then converted to common stock, partially offset by $720,338 in net cash used from operating activities.
Cash Flows from Operating Activities
During the year ended November 30, 2011, the Company used $720,338 of cash flow from operating activities compared with use of $55,795 of cash flow during the year ended November 30, 2010. The increase in the use of cash flow for operating activities reflect the increase in operating activity for the period as the Company has raised additional financing in order to finance the repayment of existing and future obligations.
Cash Flows from Investing Activity
During the year ended November 30, 2011, the Company used $37,672 in the purchase of office equipment and $38,565 in development of its website, compared to $40,000 on website development costs during the same period in 2010.
Cash Flows from Financing Activities
During the year ended November 30, 2011, the Company received proceeds of $949,932 from four convertible promissory notes payable, which are unsecured, convertible into the common stock of the Company, due interest at 10% per annum, and due two years from the dates of issuance. During the year ended November 30, 2010, the Company received $113,453 from the issuance of a note payable.
Going Concern
We have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive acquisitions and activities. For these reasons, our auditors stated in their report on our audited financial statements that they have substantial doubt that we will be able to continue as a going concern without further financing.
Off-Balance Sheet Arrangements
We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.
Future Financings
We will continue to rely on equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund planned acquisitions and exploration activities.
- 11 -
Critical Accounting Policies
We have identified certain accounting policies, described below, that are most important to the portrayal of our current financial condition and results of operations. Our significant accounting policies are disclosed in the notes to the audited financial statements included in this Annual Report.
Revenue Recognition
We derive revenue principally from the marketing of memberships and subsequent generation of commissions. The timing of revenue recognition and the amount of revenue actually recognized in each case depends upon a variety of factors, including the specific terms of each arrangement and the nature of our deliverables and obligations. Determination of the appropriate amount of revenue recognized involves judgments and estimates that we believe are reasonable, but actual results may differ from our estimates. We record reductions to revenue for customer incentive programs, including special pricing agreements and other volume-related rebate programs. Certain reductions to revenue for customer incentives are based on estimates, including our assumptions related to historical and projected customer sales volumes, market share and inventory levels.
ITEM 7A.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
- 12 -
Index to Financials
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Net Savings Link, Inc
Clearwater Beach, FL
We have audited the accompanying balance sheets of Net Savings Link, Inc (the “Company”) as of November 30, 2012 and 2011 and the related statements of operations, stockholders’ equity (deficit), and cash flows for the years ended November 30, 2012 and 2011. 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 audits.
We conducted our audits in accordance with 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 misstatements. 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 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. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of November 30, 2012 and 2011 and the related results of its operations and its cash flows for the years ended November 30, 2012 and 2011 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. The Company has incurred losses from operation since inception. This factor raises substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to this matter are described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ MALONEBAILEY, LLP
www.malone-bailey.com
Houston, Texas
March 18, 2013
- 13 -
Index to Financials
NET SAVINGS LINK, INC.
Balance Sheets
The accompanying notes are an integral part of these audited financial statements.
- 14 -
Index to Financials
NET SAVINGS LINK, INC.
Statements of Operations
The accompanying notes are an integral part of these audited financial statements.
- 15 -
Index to Financials
NET SAVINGS LINK, INC.
Statements of Cash Flows
The accompanying notes are an integral part of these audited financial statements.
- 16 -
Index to Financials
NET SAVINGS LINK, INC.
Statements of Stockholders’ Equity (Deficit)
Years ended November 30, 2012 and 2011
The accompanying notes are an integral part of these audited financial statements.
- 17 -
Index to Financials
NET SAVINGS LINK, INC.
Notes to the Financial Statements
1. Nature of Operations and Continuance of Business
Net Savings Link, Inc. (“NSL”, “the Company”, or “Company”) formerly known as Calibert Explorations, Ltd. was incorporated under the laws of the State of Nevada on February 21, 2007. NSL was organized to explore mineral properties in Canada; however, the Company decided to change its business strategy during fiscal year 2010 and on November 11, 2010, changed its name to Net Savings Link, Inc from Calibert Explorations, Ltd. to reflect their business objectives of being an online provider of discount offers and savings opportunities to the mass consumer market. This was achieved by doing a reverse merger with “Net Savings Link, Inc”, and Calibert Explorations, Ltd being the surviving entity.
NSL was considered a development stage company until the fourth quarter of fiscal year 2012, when it was determined that after placing its website and business plan into service during fiscal year 2011, it had now generated more than minimal revenues from operations and planned principal operations had commenced.
Going Concern
NSL’s financial statements are prepared using Generally Accepted Accounting Principles applicable to a going concern that contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, NSL has generated minimal revenue and accumulated significant losses since inception. As of November 30, 2012, company has accumulated deficit of $3,742,820 and a working capital deficit of $341,011. All of these items raise substantial doubt about its ability to continue as a going concern. Management’s plans with respect to alleviating the adverse financial conditions that caused management to express substantial doubt about the NSL’s ability to continue as a going concern are as follows:
In order to fund the start-up of operations during the year ended November 30, 2012, NSL entered into several financing transactions (see Note 4). The continuation of NSL as a going concern is dependent upon its ability to generating profitable operations that produce positive cash flows. If NSL is not successful, it may be forced to raise additional debt or equity financing.
There can be no assurance that NSL will be able to achieve its business plans, raise any more required capital or secure the financing necessary to achieve its current operating plan. The ability of NSL to continue as a going concern is dependent upon its ability to successfully accomplish the plan described in the preceding paragraph and eventually attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
2. Summary of Significant Accounting Policies
a.
Basis of Presentation and Accounting Methods
The financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States using the accrual method of accounting. NSL’s fiscal year-end is November 30.
b.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. NSL regularly evaluates estimates and assumptions related to deferred income tax asset valuation allowances. NSL bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by NSL may differ materially and adversely from NSL’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
- 18 -
Index to Financials
NET SAVINGS LINK, INC.
Notes to the Financial Statements
c.
Reclassification
Certain prior year amounts have been reclassified to conform to the current year presentation.
d.
Cash and Cash Equivalents
NSL considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents. As of November 30, 2012 and 2011, NSL had no cash equivalents.
e.
Intangible Assets
Acquired intangible assets other than goodwill are amortized over their useful lives unless the lives are determined to be indefinite. Acquired intangible assets are carried at cost, less accumulated amortization. For intangible assets purchased in a business combination or received in a non-monetary exchange, the estimated fair values of the assets received (or, for non-monetary exchanges, the estimated fair values of the assets transferred if more clearly evident) are used to establish the cost bases, except when neither of the values of the assets received or the assets transferred in non-monetary exchanges are determinable within reasonable limits. Valuation techniques consistent with the market approach, income approach and/or cost approach are used to measure fair value. Amortization of finite-lived intangible assets is computed over the useful lives of the respective assets.
f.
Impairment of Intangible assets
Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. We evaluate intangible assets to determine potential impairment by comparing the carrying amount to the undiscounted estimated future cash flows of the related assets.
g.
Basic and Diluted Net Loss Per Share
NSL computes net loss per share in accordance with ASC 260, Earnings Per Share, which requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. NSL had net losses as of November 30, 2012 and 2011, so the diluted EPS excluded all dilutive potential shares in the diluted EPS because there effect is anti-dilutive.
h.
Financial Instruments
ASC 820, Fair Value Measurements (ASC 820) and ASC 825, Financial Instruments (ASC 825), requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. It establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. It prioritizes the inputs into three levels that may be used to measure fair value:
Level 1 - Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
Level 2 - Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
- 19 -
Index to Financials
NET SAVINGS LINK, INC.
Notes to the Financial Statements
Level 3 - Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
NSL’s financial instruments consist principally of cash, accounts payable, and accrued liabilities. Pursuant to ASC 820 and 825, the fair value of cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The recorded values of all other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.
The following table sets forth by level with the fair value hierarchy the Company’s financial assets and liabilities measured at fair value on November 30, 2012:
i.
Revenue Recognition
NSL recognizes revenue from the sale of discount offers and savings to consumers in accordance with ASC 605, Revenue Recognition. Revenue is recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service is provided, and collectability is assured. NSL’s contracts typically contain provisions for (1) sale of discount certificates (2) web-site design and (3) web-site maintenance. NSL considers the web-site design and web-site maintenance to be inconsequential and perfunctory to the total arrangement and therefore recognized revenue upon delivery of the discount certificates.
j.
Recent Accounting Pronouncements
NSL has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
k.
Income Taxes
The Company accounts for income taxes using the asset and liability approach. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amounts expected to be realized.
l.
Accounting for Derivative Instruments
NSL accounts for derivative instruments in accordance with ASC Topic 815, Derivatives and Hedging and all derivative instruments are reflected as either assets or liabilities at fair value in the balance sheet.
NSL uses estimates of fair value to value its derivative instruments. Fair value is defined as the price to sell an asset or transfer a liability in an orderly transaction between willing and able market participants. In general, NSL’s policy in estimating fair values is to first look at observable market prices for identical assets and liabilities in active markets, where available. When these are not available, other inputs are used to model fair value such as prices of similar instruments, yield curves, volatilities, prepayment speeds, default rates and credit spreads (including for NSL’s liabilities), relying first on observable data from active markets. Additional adjustments may be made for factors including liquidity, credit, bid/offer spreads, etc., depending on current market conditions. Transaction costs are not included in the determination of fair value. When possible, NSL seeks to validate the model’s output to market transactions. Depending on the availability of observable inputs and prices, different valuation models
- 20 -
Index to Financials
NET SAVINGS LINK, INC.
Notes to the Financial Statements
could produce materially different fair value estimates. The values presented may not represent future fair values and may not be realizable. NSL categorizes its fair value estimates in accordance with ASC 820 based on the hierarchical framework associated with the three levels of price transparency utilized in measuring financial instruments at fair value as discussed above. As at November 30, 2012 and 2011, company had a $54,062 and $0 derivative liability, respectively.
m.
Share-Based Compensation
The Company accounts for share-based compensation to employees in accordance with Accounting Standards Codification subtopic 718-10, Stock Compensation (“ASC 718-10”) and share-based compensation to non-employees in accordance with ASC 505. These require the measurement and recognition of compensation expense for all share-based payment awards, including stock options based on the estimated fair values.
3. Related Party Transactions
As of November 30, 2012, NSL owes $50,828 to the President and CEO of NSL for back due wages.
As of November 30, 2012, NSL owes $77,427 to the Vice President and director of NSL for back due wages.
4. Convertible Promissory Notes Payable
Convertible Promissory Notes Payable
During the year ended November 30, 2011, NSL issued four Unsecured Convertible Promissory Notes (the “2011 Convertible Promissory Notes”) to the same entity in increments of $100,000, $499,952, $249,980 and $100,000, or a total of $949,932. The 2011 Convertible Promissory Notes were unsecured, due two years from the date of issuance, accrued interest at 10% per annum and were convertible into shares of NSL’s common stock at any time at the option of the holder at fifty percent (50%) of the fair market value of one share of NSL’s common stock based on the lowest bid during the ten days prior to the conversion date.
During the year ended November 30, 2011, the holders of the Notes elected to convert all of the outstanding principal of $949,932 and interest of $31,032 on the Notes into 13,079,513 shares of common stock, or $0.07 per share. As the conversion price was greater than the contractually obligated conversion price of $0.03 per share, NSL recorded a gain on extinguishment of debt and an offsetting reduction in paid-in capital based on the difference of the contractually stated conversion shares required to be issued and the actual number of shares issued upon conversion at the conversion date fair market value of $0.12 per share, or $3,072,147.
During the year ended November 30, 2012, NSL issued four Unsecured Convertible Promissory Notes to Asher Enterprises, Inc., a Delaware corporation (“Asher”) (the “2012 Asher Convertible Promissory Notes”) in the amounts of $47,500, $37,500, $37,500 and $50,000, or a total of $172,500. The 2012 Asher Convertible Promissory Notes are unsecured, due approximately nine months from the dates of issuance, accrued interest at 8% per annum and are convertible, at the option of the holder, into shares of the Company’s common stock after 180 days from issuance at fifty eight percent (58%) of the fair market value of one share of NSL’s common stock based on the average of the three lowest bid prices of the Company’s common stock during the ten trading days prior to the conversion date.
During the year ended November 30, 2012, NSL issued two Unsecured Convertible Promissory Notes to Southridge Partners II, LP, a Delaware Limited Partnership (“Southridge”), a related party (the “2012 Southridge Convertible Promissory Notes”) in the amounts of $75,000 and $50,000, or a total of $125,000. The 2012 Southridge Convertible Promissory Notes are unsecured, due approximately three and nine months, respectively, from the dates of issuance, accrued interest at 8% per annum and are convertible, at the option of the holder, into shares of NSL’s common stock. The note in the amount of $75,000 is convertible into common shares at maturity and the note in the amount of $50,000 is convertible into common shares after 180 days from issuance at fifty five percent (55%) and seventy percent (70%), respectively, of the fair market value of one share of NSL’s common stock based on the average of the two lowest bid prices of NSL’s common stock during the five trading days prior to the conversion date. NSL paid $50,000 in legal fees associated with the funding of $75,000 convertible notes, these fees have been recorded as debt discount and have been amortized monthly through November 30, 2012.
- 21 -
Index to Financials
NET SAVINGS LINK, INC.
Notes to the Financial Statements
In addition to the $75,000 convertible note due to Southridge, NSL granted a stock warrant for 1,500,000 shares of its common stock with an exercise price of $0.05 per share on March 9, 2012. These warrants have a seven-year term and are fully vested on the grant date. On March 9, 2012, NSL determined the fair value of the warrants using the Black-Scholes pricing model for a total value of $86,100. The warrant has a relative fair market value of $19,405; this is accounted for as a discount on the convertible note. The discount was amortized over the life of loan (approx. 4 months) and was fully amortized as of November 30, 2012.
The fair value of the warrants was computed using the Black-Scholes pricing model with the following assumptions:
The warrants weighted average remaining contractual life for warrants outstanding as of November 30, 2012 is approximately 6.3 years; the weighted average exercise price is $0.05. The intrinsic value of the warrants is $0.00.
Due to their being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options embedded in the Convertible Promissory Notes, the conversion options are deemed and classified as derivative liabilities and recorded at fair value.
A summary of changes in the above referenced convertible promissory notes payable for the year ended November 30, 2012 is as follows:
5. Derivative Liabilities
NSL analyzed the conversion options embedded in the Convertible Promissory Notes for derivative accounting consideration under ASC 815, Derivatives and Hedging, and determined that the instruments embedded in the above referenced convertible promissory notes should be classified as liabilities and recorded at fair value due to their being no explicit limit to the number of shares to be delivered upon settlement of the conversion options. Additionally, the above referenced convertible promissory notes contain dilutive issuance clauses. Under these clauses, based on future issuances of NSL’s common stock or other convertible instruments, the conversion price of the above referenced convertible promissory notes can be adjusted downward. Because the number of shares to be issued upon settlement of the above referenced convertible promissory notes cannot be determined under this instrument, NSL cannot determine whether it will have sufficient authorized shares at a given date to settle any other future share instruments. The fair values of the instruments were determined using a Black-Scholes option-pricing model. Upon the issuance dates of the above referenced convertible promissory notes, $217,266 and $949,932 was recorded as debt discount and $44,356 and $2,548,259 was recorded as day one loss on derivative liability for the years ended November 30, 2012 and 2011, respectively.
During August 2011, the 2011 Convertible Promissory Notes were converted to common stock (see Note 5) and the related derivative liability was extinguished through a charge to paid-in capital. During the year ended November 30, 2011, NSL recognized a total loss on derivative liability of $3,704,814. During the year ended November 30, 2012, $156,800 of the 2012 Asher Convertible Promissory Notes and 2012 Southridge Convertible Promissory Notes were converted to common stock (see Note 5) and the related derivative liability was extinguished through a charge to paid-in capital. During the year ended November 30, 2012, NSL recognized a total gain on derivative liability of $11,686.
- 22 -
Index to Financials
NET SAVINGS LINK, INC.
Notes to the Financial Statements
NSL valued the 2011 conversion options derivatives using the Black-Scholes option-pricing model. Assumptions used include (1) risk-free interest rates between 0.07% to 0.73%, (2) lives of between 1.75 and 2.0 years, (3) expected volatility of between 628% to 688%, (4) zero expected dividends, (5) conversion prices as set forth in the Convertible Promissory notes, and (6) the common stock price of the underlying share on the valuation date.
NSL valued the 2012 conversion options derivatives using the Black-Scholes option-pricing model. Assumptions used include (1) risk-free interest rates between 0.09% to 1.10%, (2) lives of between 0.27 and 0 years, (3) expected volatility of between 182% to 688%, (4) zero expected dividends, (5) conversion prices as set forth in the Convertible Promissory notes, and (6) the common stock price of the underlying share on the valuation date.
The following table summarizes the derivative liabilities included in the balance sheet at November 30, 2012:
The following table summarizes the gain on derivative liabilities included in the statement of operations for the year ended November 30, 2012:
6. Property and Equipment
Property and equipment are carried at cost, less accumulated depreciation and includes expenditures that substantially increase the useful lives of existing assets. Maintenance and repairs are charged to current operations as incurred. Upon sale, retirement, or other disposition of these assets, the costs and related accumulated depreciation are removed from the respective accounts, and any gain or loss on the disposition is included in other income.
Depreciation expense is computed using the straight-line method over the following estimated useful lives:
Depreciation expense for the years ended November 30, 2012 and 2011 was $12,557 and $7,329, respectively.
7. Intangible Assets - Website Development Costs
NSL’s intangible website asset consist of licenses for the use of Internet domain names or Universal Resource Locators, capitalized website development costs, other information technology licenses and marketing and technology related intangibles. All such assets are capitalized at their original cost and amortized over their estimated useful of 5 years. The website was placed into service during July 2011.
Amortization expense for the years ended November 30, 2012 and 2011 was $15,713 and $5,892, respectively.
- 23 -
Index to Financials
NET SAVINGS LINK, INC.
Notes to the Financial Statements
8. Income Taxes
NSL files income tax returns in the U.S. federal jurisdiction, and the state of Florida. NSL’s policy is to recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. Company’s income tax rate is 34% given there are no significant temporary or permanent differences between the financial statements and the income tax basis.
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 November 30, 2012 and 2011:
NSL had net operating losses of approximately $1,447,000 that expire 20 years from when incurred. 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.
9. Lease Commitments
NSL has a lease agreement for office space which expired on October 31, 2011. During the year ending November 30, 2011, the Company paid $24,000 in rent expense. Per the lease agreement, NSL has 3 options to extend the lease for an additional six months. During November 2011, NSL exercised its option to extend the lease for six months terminating on April 30, 2012 and again in April 2012 for one more year through April 30, 2013, future contractual rent expense on the lease is as follows:
- 24 -
Index to Financials
NET SAVINGS LINK, INC.
Notes to the Financial Statements
10. Equity
Common Stock
During March 2011, Company’s president contributed $7,000 on behalf of company for unpaid bills.
During October 2011, company engaged into a consulting agreement with third party for the duration of three months and sold 1,000,000 shares of common stock for $200. Company accounted for the transaction under fair value and reported $45,000 in consulting expense at $0.045/share.
On January 17, 2012, the Company issued 2,000,000 shares of common stock to a consulting company for public relations services valued at $66,000, or $0.033 per share.
On March 29, 2012, the Company issued 2,857,143 shares of common stock to a consultant for services valued at $108,571, or $0.038 per share.
On May 12, 2012, the Company issued 5,000,000 shares of common stock to a consultant for services valued at $110,000, or $0.022 per share.
On June 29, 2012, the Company issued 6,500,000 shares of common stock to a consultant for services valued at $130,000, or $0.02 per share.
On July 20, 2012, the Company issued 1,111,111 shares of common stock for debt valued at $10,000, or $0.009 per share.
On July 31, 2012, the Company issued 2,400,000 shares of common stock for debt valued at $12,000, or $0.005 per share.
On August 9, 2012, the Company issued 6,000,000 shares of common stock for debt valued at $15,000, or $0.003 per share.
On August 23, 2012, the Company issued 10,000,000 shares of common stock to a consultant for services valued at $32,000, or $0.0032 per share.
On August 23, 2012, the Company issued 20,960,755 shares of common stock for debt valued at $27,668 or $0.00132 per share.
On August 27, 2012, the Company issued 8,266,667 shares of common stock for debt valued at $12,660, or $0.0015 per share.
On September 24, 2012, the Company issued 8,571,429 shares of common stock for debt valued at $12,000, or $0.0014 per share.
On September 27, 2012, the Company issued 26,202,658 shares of common stock for debt valued at $25,950 and accrued interest of $2,152, or $0.0024 per share.
On October 8, 2012, the Company issued 10,410,959 shares of common stock for debt valued at $7,600, or $0.0012 per share.
On October 23, 2012, the Company issued 13,125,000 shares of common stock for debt valued at $6,300, or $0.0005 per share.
- 25 -
Index to Financials
NET SAVINGS LINK, INC.
Notes to the Financial Statements
On November 5, 2012, the Company issued 21,234,388 shares of common stock for debt valued at $6,950 and accrued interest of $643, or $0.0004 per share.
On November 6, 2012, the Company issued 13,142,857 shares of common stock for debt valued at $4,600, or $0.0004 per share.
On November 12, 2012, the Company issued 13,103,448 shares of common stock for debt valued at $3,800, or $0.0003 per share.
On November 19, 2012, the Company issued 30,678,139 shares of common stock for debt valued at $9,050 and accrued interest of $230, or $0.0003 per share.
On November 27, 2012, the Company issued 26,929,570 shares of common stock for debt valued at $6,550 and accrued interest of $115, or $0.0002 per share.
During the year ended November 30, 2012, due to conversion of convertible notes payable into common stock, the company wrote-off $190,340 in derivative liability associated with these notes.
During the year ended November 30, 2012, the company recorded $38,825 in derivative liability due to the warrants issued in connection with convertible promissory note.
Series A Preferred Stock
During June 2012, NSL amended its articles of incorporation to include 100,000,000 shares of $0.0001 par value Series A Preferred Stock. The Series A Preferred Stock has no dividend rights and in the event of liquidation, holders of Series A Preferred Stock will be entitled to receive, before any payment or distribution on the common stock or any other class of stock junior to Series A Preferred Stock upon liquidation, a distribution per share in the amount of the liquidation preference, if any, fixed or determined in accordance with the terms of such preferred stock plus, if so provided in such terms, an amount per share equal to accumulated and unpaid dividends in respect of such preferred stock (whether or not earned or declared) to the date of such distribution. Neither the sale, lease, or exchange of all or substantially all of our property and assets, nor any consolidation or merger, shall be deemed to be a liquidation.
On June 19, 2012, the Company issued a total of 300,000 shares of preferred stock for past due wages valued at $500, or $0.0017 per share.
On August 30, 2012, the Company issued a total of 1,200,000 shares of preferred stock for past due wages valued at $2,000, or $0.0017 per share.
11. Subsequent Events
Subsequent to fiscal year ended November 30, 2012, NSL issued one promissory note for total proceeds of $42,500, accruing interest at 8% per annum, due November 4, 2013 and convertible after 180 days into NSL common stock at a discount of 41% of the then market price upon the date of conversion.
During December 2012, Southridge elected to convert $6,555 of principal and accrued interest of 2012 Southridge Convertible Promissory Notes into 39,726,443 shares of common stock at $0.00017 per share.
During January 2013, Southridge elected to convert $11,663 of principal and accrued interest of 2012 Southridge Convertible Promissory Notes into 42,301,121 shares of common stock at $0.0002 per share.
During January 2013, Southridge elected to convert $16,291 of principal and accrued interest of 2012 Southridge Convertible Promissory Notes into 53,853,730 shares of common stock at $0.0003 per share.
- 26 -
Index to Financials
NET SAVINGS LINK, INC.
Notes to the Financial Statements
During January 2013, Asher elected to convert $3,100 of 2012 Asher Convertible Promissory Notes into 10,689,655 shares of common stock at $0.0003 per share.
During January 2013, Asher elected to convert $100 principal and $1,500 accrued interest of 2012 Asher Convertible Promissory Notes into 5,517,241 shares of common stock at $0.0000 per share.
During January 2013, Asher elected to convert $5,100 of 2012 Asher Convertible Promissory Notes into 17,586,206 shares of common stock at $0.0002 per share.
During January 2013, Asher elected to convert $6,900 of 2012 Asher Convertible Promissory Notes into 23,793,103 shares of common stock at $0.0011 per share.
During January 2013, Asher elected to convert $5,400 of 2012 Asher Convertible Promissory Notes into 23,478,261 shares of common stock at $0.0009 per share.
During February 2013, Southridge elected to convert $11,857 of principal and accrued interest of 2012 Southridge Convertible Promissory Notes into 53,893,213 shares of common stock at $0.0002 per share.
During February 2013, Southridge elected to convert $7,249 of principal and accrued interest of 2012 Southridge Convertible Promissory Notes into 43,931,092 shares of common stock at $0.0002 per share.
During February 2013, Asher elected to convert $4,000 of 2012 Asher Convertible Promissory Notes into 23,529,412 shares of common stock at $0.0007 per share.
- 27 -
ITEM 9.
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
On April 14, 2011, we terminated Jewett, Schwartz, Wolfe & Associates at 200 South Park Road, Suite 150, Hollywood, Florida 33201, as our independent registered public accounting firm. The decision to dismiss Jewett, Schwartz, Wolfe & Associates as our independent registered public accounting firm was approved by our Board of Directors on April 14, 2011. Except as noted in the paragraph immediately below, the reports of Jewett, Schwartz, Wolfe & Associates’ financial statements for the years ended November 30, 2010 and 2009 did not contain an adverse opinion or disclaimer of opinion, and such reports were not qualified or modified as to uncertainty, audit scope, or accounting principle.
The reports of Jewett, Schwartz, Wolfe & Associates on our financial statements as of and for the years ended November 30, 2010 and 2009 contained an explanatory paragraph which noted that there was substantial doubt as to our ability to continue as a going concern. The continuation of our ability to continue as a going concern is dependent upon the continued financial support from our shareholders, the ability to raise equity or debt financing, and the attainment of profitable operations from our future business. These factors raise substantial doubt regarding our ability to continue as a going concern.
During the years ended November 30, 2010 and 2009 and through April 14, 2011 we have not had any disagreements with Jewett, Schwartz, Wolfe & Associates on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to Jewett, Schwartz, Wolfe & Associates ‘s satisfaction, would have caused it to make reference to the subject matter of the disagreements in its reports on our financial statements for such years or in connection with its reports in any subsequent interim period through the date of dismissal.
During the years ended November 30, 2010 and 2009 and through April 14, 2011, there were no reportable events, as defined in Item 304(a)(1)(v) of Regulation S-K.
On April 14, 2011, we delivered a copy of this report to Jewett, Schwartz, Wolfe & Associates. On May 6, 2011 Jewett, Schwartz, Wolfe & Associates issued its response. Its response is set forth in our amended Form 8-K filed with the SEC on May 9, 2011.
New independent registered public accounting firm
On April 14, 2011, we engaged MaloneBailey, LLP, 10350 Richmond Avenue, Suite 800, Houston, Texas 77042 an independent registered public accounting firm, as our principal independent accountant with the approval of our board of directors. We have not consulted with MaloneBailey, LLP on any accounting issues prior to engaging them as our new auditors.
During the two most recent fiscal years and through the date of engagement, we have not consulted MaloneBailey, LLP with regarding either:
1.
The application of accounting principles to any specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on our financial statements, and neither a written report was provided to us nor oral advice was provided that Malone & Bailey, P.C. concluded was an important factor considered by us in reaching a decision as to the accounting, auditing or financial reporting issue; or
2.
Any matter that was either subject of disagreement or event, as defined in Item 304(a)(1)(iv)(A) of Regulation S-K and the related instruction to Item 304 of Regulation S-K, or a reportable event, as that term is explained in Item 304(a)(1)(iv)(A) of Regulation S-K.
- 28 -
ITEM 9A.
ITEM 9A. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
We maintain “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. We conducted an evaluation (the “Evaluation”), under the supervision and with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of our disclosure controls and procedures (“Disclosure Controls”) as of the end of the period covered by this report pursuant to Rule 13a-15 of the Exchange Act. Based on this Evaluation, our CEO and CFO concluded that our Disclosure Controls were not effective as of the end of the period covered by this report in that procedures were not in place to provide for timely, complete, accurate reporting of events. The foregoing was a result of our president’s lack of experience with his reporting and disclosure obligations, lack of proper segregation of duties due to limited personnel, a lack of formal review process that includes multiple levels of review, resulting in audit adjustments related to derivative account, accounting of the Company’s convertible debt instruments and conversions and bad debt. Our president is committed to educating himself through seminars and consulting with attorneys to become fully knowledgeable with his obligations and becoming more involved in the formal review process of the calculation of derivatives from convertible debt instruments. In addition, currently there are no written policies or procedures that clearly define the roles in the disclosure and reporting process
Limitations on the Effectiveness of Controls
Our management, including our CEO and CFO, does not expect that our Disclosure Controls and internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management or board override of the control.
The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
- 29 -
CEO and CFO Certifications
Appearing immediately following the Signatures section of this report there are Certifications of the CEO and the CFO. The Certifications are required in accordance with Section 302 of the Sarbanes-Oxley Act of 2002 (the Section 302 Certifications). This Item of this report, which you are currently reading is the information concerning the Evaluation referred to in the Section 302 Certifications and this information should be read in conjunction with the Section 302 Certifications for a more complete understanding of the topics presented.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). The Company’s internal control over financial reporting is a process designed to provide reasonable assurance to our management and board of directors regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.
Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal controls over financial reporting may not prevent or detect misstatements. All internal control systems, no matter how well designed, have inherent limitations, including the possibility of human error and the circumvention of overriding controls. Accordingly, even effective internal control over financial reporting can provide only reasonable assurance with respect to financial statement preparation. 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 the policies or procedures may deteriorate.
Our management assessed the effectiveness of our internal control over financial reporting as of November 30, 2012. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on our assessment, we believe that, as of November 30, 2012, the Company’s internal control over financial reporting was not effective based on those criteria in that procedures were not in place to provide for timely, complete, accurate reporting of events. The major reason for the foregoing was our president’s lack of experience with his reporting and disclosure obligations. Our president is committed to educating himself through the seminars and consulting with attorneys to become fully knowledgeable with his obligations. In addition, currently there are no written policies or procedures that clearly define the roles in the disclosure and reporting process. We intend to define various roles and responsibilities related to this process.
- 30 -
Changes in Internal Controls
There were no changes in our internal control over financial reporting during the quarter ended November 30, 2012 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B.
ITEM 9B. OTHER INFORMATION.
None.
PART III
ITEM 10.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE.
Our executive officers and directors and his age and titles are as follows:
Set forth below is a brief description of the background and business experience of our officers and directors:
David Saltrelli: David Saltrelli holds a MBA from the Simon School of Business at the University of Rochester where he majored in Finance & Economics. Mr. Saltrelli has served with the Investment Firms of Merrill Lynch and Prudential Bache. Mr. Saltrelli later became a developer/marketer of Fractional Condominium Ownership as President of Pantra Investments. He went on to build direct marketing companies that provided marketing services for many companies including direct mail programs and premium/incentive programs. From August 2006 to January 2010 Mr. Saltrelli was in charge of sales at Awards & Incentives Inc., a web based marketing and sales company located in Clearwater Beach, Fl that developed and delivered electronic premiums and incentives to large commercial entities, organizations and affiliate groups requiring high volume lead generation and sales volume. From November 2009 to present day, Mr. Saltrelli has been the President of Net Savings Link, Inc. and he handles all aspects of business, sales & reporting at the company. Mr. Saltrelli has been a member of the Board of Directors since November 2009.
Peter Schuster: Peter Schuster holds a Master’s Degree from the State University of New York. From 2006 to 2010, Mr. Schuster served as President of Awards and Incentives Inc., a web based marketing and sales company located in Clearwater Beach, Fl that developed and delivered electronic premiums and incentives to large commercial entities, organizations and affiliate groups requiring high volume lead generation and sales volume. From 2002 to 2006, Mr. Schuster served as a Commercial Realtor focused specifically on the marketing, development, entitlement and sales of large commercial marina operations, commercial land sites targeted for high-rise mixed use development and conversion of existing hospitality properties to mixed and fractional commercial use. From February 2010 to present day Mr. Schuster has served as the Secretary / Treasurer for Net Savings Link, Inc. where he handles all accounting, filings and planning for the company. Mr. Schuster has been a member of the Board of Directors since February 2010.
- 31 -
Jon Wallen: Since June 2012, Jon Wallen has been a member of our board of directors. Since 2005, Mr. Wallen established and has been the sole owner of Wallen Web Services located in Defiance, Ohio, a provider of custom programming, Internet and web based development services to the business and IT community markets. From 1997 to 2005, Mr. Wallen was an Independent Web Developer and Provider of Web Hosting Services Author of a popular open-source shopping cart application CF Shopkart. From August 1993 to November 1997, he was in the United States Navy. His initial training in computer based skills and basic programming provided courtesy of the United States Navy. Mr. Wallen’s skills further developed with additional training and applied in various administrative staff support functions during four year tour of duty at the Naval Recruit Training Command Base, culminating in honorable discharge.
Involvement in Certain Legal Proceedings
During the past ten years, Mssrs. Saltrelli, Schuster and Wallen have not been the subject of the following events:
1.
A petition under the Federal bankruptcy laws or any state insolvency law was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing;
2.
Convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);
3.
The subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities;
i)
Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;
ii)
Engaging in any type of business practice; or
iii)
Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws;
4.
The subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph 3.i in the preceding paragraph or to be associated with persons engaged in any such activity;
5.
Was found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated;
- 32 -
6.
Was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated;
7.
Was the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of:
i)
Any Federal or State securities or commodities law or regulation; or
ii)
Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or
iii)
Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
8.
Was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
Term of Office
Our directors are appointed for a one-year term to hold office until the next annual general meeting of our stockholders or until removed from office in accordance with our Bylaws. Our officers are appointed by our board of directors and hold office until removed by the board.
Significant Employees
We have no significant employees other than our officers and directors.
Audit Committee
We are not a listed issuer and as such our Board of Directors is not required to maintain a separately-designated standing audit committee. As a result, our entire Board of Directors acts as our audit committee. Our sole director does not meet the definition of an “audit committee financial expert.” We believe that the cost related to appointing a financial expert to our Board of Directors at this time is prohibitive.
Compliance with Section 16 of the Securities Exchange Act
Section 16(a) of the Exchange Act requires our executive officers and directors, and persons who beneficially own more than 10% of our equity securities (collectively, the “reporting persons”), to file reports of ownership and changes in ownership with the SEC. Reporting persons are required by SEC regulation to furnish us with copies of all forms they file pursuant to Section 16(a). Based on our review of the copies of such forms received by us for the period ending November 30, 2012, other than as described below, no other reports were required for those persons other than Jon Wallen who was required to file a Form 3 when he was appointed to the board of directors on June 19, 2102. As of the date of this report Mr. Wallen has not filed a Form 3 and is delinquent with respect to such filing.
- 33 -
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION.
Summary Compensation Table
The following table sets forth total compensation paid to or earned by our named executive officers, for the last three fiscal years. Our fiscal year end is November 30.
Outstanding Equity Awards at Fiscal Year End
As at our year ended November 30, 2012, we did not have any outstanding equity awards and have not had any since our inception.
Equity Compensation Plans
We have no equity compensation plans (including individual compensation arrangements) under which our equity securities are authorized for issuance.
Employment Contracts
On February 25, 2010, the Company entered into an exclusive employment agreement with David Saltrelli as President, Principal Executive Officer and a member of the Board of Directors. The agreement is for a term of two years beginning February 25, 2010 and ending February 24, 2012. Mr. Saltrelli will be paid $96,000 per annum. In addition, Mr. Saltrelli will be entitled to two weeks paid vacation a year and will be reimbursed for business related expenses he incurs. In the event we establish a medical and dental plan, Mr. Saltrelli will be entitled to participate therein.
On February 25, 2010, the Company entered into an exclusive employment agreement with Peter Schuster as Vice President and a member of the Board of Directors. The agreement is for a term of two years beginning February 25, 2010 and ending February 24, 2012. Peter Schuster will be paid $96,000 per annum. In addition, Peter Schuster will be entitled to two weeks paid vacation a year and will be reimbursed for business related expenses he incurs. In the event we establish a medical and dental plan, Peter Schuster will be entitled to participate therein.
Directors Information
The following table sets forth information with respect to compensation paid by us to our directors during the 2012 completed fiscal year. Our fiscal year end is November 30.
- 34 -
Directors’ Compensation Table
All compensation received by our directors has been disclosed.
There are no stock option, retirement, pension, or profit sharing plans for the benefit of our officers and directors.
We have no plans to pay any salaries to anyone until sufficient financing is available.
Long-Term Incentive Plan Awards
We not have any long-term incentive plans that provide compensation intended to serve as incentive for performance.
As of the date hereof, we have not entered into employment contracts with our sole officer and do not intend to enter into any employment contracts until such time as it profitable to do so.
Indemnification
Under our Bylaws, we may indemnify an officer or director who is made a party to any proceeding, including a law suit, because of his position, if he acted in good faith and in a manner he reasonably believed to be in our best interest. We may advance expenses incurred in defending a proceeding. To the extent that the officer or director is successful on the merits in a proceeding as to which he is to be indemnified, we must indemnify him against all expenses incurred, including attorney’s fees. With respect to a derivative action, indemnity may be made only for expenses actually and reasonably incurred in defending the proceeding, and if the officer or director is judged liable, only by a court order. The indemnification is intended to be to the fullest extent permitted by the laws of the State of Nevada.
Regarding indemnification for liabilities arising under the Securities Act of 1933, which may be permitted to directors or officers under Nevada law, we are informed that, in the opinion of the Securities and Exchange Commission, indemnification is against public policy, as expressed in the Act and is, therefore, unenforceable.
- 35 -
ITEM 12.
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
Equity Compensation Plans
We have no equity compensation plans (including individual compensation arrangements) under which our equity securities are authorized for issuance.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth, as of the date of this report, the total number of shares owned beneficially by our officers, directors, both individually and as a group, and the beneficial owners of 5% or more of our total outstanding shares on February 28, 2013. The stockholder listed below has direct ownership of his/her shares and possess voting and dispositive power with respect to the shares.
On August 6, 2012, we filed a Certificate of Designation with the Nevada Secretary of State, which designated 100,000,000 shares of preferred stock as “Series A Preferred Stock”. Each share of Series A Preferred Stock has 1,000 votes. During August 2012, we issued a total of 1,500,000 shares of Series A Preferred Stock to Messrs. Saltrelli and Schuster. Accordingly, with 766,633,114 shares of common stock outstanding as of March 15, 2013, Messrs. Saltrelli and Schuster have 1,608,000,000 votes on any issued presented to the shareholders and accordingly have the ability to control the outcome of any issue presented to shareholders. The Company shall not, without the affirmative vote or written consent of the holders of at least a majority of the outstanding Series A Preferred Stock (i) authorize or create any additional series of stock ranking prior to or on a parity with the Series A Preferred Stock as to dividends, voting rights, or the distribution of assets upon liquidation, or (ii) change any of the rights, privileges or preferences of the Series A Preferred Stock. Further, the holders of the Series A Preferred Stock and the Company’s common stock shall vote as a single class on all matters submitted to stockholders, subject to the common shares having 1 vote per share and the Series A Preferred shares, each having 1,000 votes per share.
- 36 -
ITEM 13.
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
Except as described below, none of the following parties has, since our date of incorporation, had any material interest, direct or indirect, in any transaction with us or in any presently proposed transaction that has or will materially affect us, other than noted in this section:
(i)
Any of our directors or officers;
(ii)
Any person proposed as a nominee for election as a director;
(iii)
Any person who beneficially owns, directly or indirectly, shares carrying more than 10% of the voting rights attached to our outstanding shares of common stock;
(iv)
Any of our promoters; and
(v)
Any relative or spouse of any of the foregoing persons who has the same house as such person.
We have issued 108,000,000 total shares of common stock at a price of $0.001 per share to Andre Benard, who was our executive officer and director. Mr. Benard, for the sum of $3,000, transferred his position of 108,000,000 to incoming President and Director David Saltrelli, who subsequently distributed the total shares equally with incoming Secretary/Treasurer and Director, Peter Schuster.
The shares were issued pursuant to Section 4(2) of the Securities Act and are restricted shares as defined in the Securities Act.
Director Independence
Quotations for our common stock are entered on the OTC Bulletin Board inter-dealer quotation system, which does not have director independence requirements.
ITEM 14.
ITEM 14. PRINCIPAL AND ACCOUNTANT FEES AND SERVICES.
Audit Fees
The aggregate fees billed for the two most recently completed fiscal years ended November 30, 2011 and 2010 for professional services rendered by the principal accountant for the audit of our annual financial statements and review of the financial statements included our Quarterly Reports on Form 10-Q and services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for these fiscal periods were as follows:
- 37 -
PART IV
ITEM 15.
ITEM 15. EXHIBITS.
- 38 -
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing of this Form 10-K and has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on this 15th day of March, 2013.
NET SAVINGS LINK, INC.
BY:
DAVID SALTRELLI
David Saltrelli
President, Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer and a member of the Board of Directors
In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:
- 39 -
EXHIBIT INDEX
- 40 -