ITEM 1. BUSINESS
Name, Incorporation and Principal Offices
We were incorporated under the laws of the State of Delaware on July 6, 2010 under the name “Advanced Ventures Corp.” and are a development stage company.
Our principal offices are located at No. 6 Houjiayu, Wangzuoxiang, Beijing, China 100000; our telephone number is +852-53872543.
Overview
On July 27, 2010, we entered into an exclusive worldwide patent sale agreement (the “Patent Transfer and Sales Agreement”) with Ilanit Appelfeld (the “Seller”), in relation to a patented technology, U.S. Patent Number: 6,743,209 (the “Patent”), for a catheter with a integral anchoring mechanism. The patented technology has the potential to be adopted as a standard in all medical facilities, making a decisive contribution towards significantly and reliably securing a urethral catheter to the outside of a patient’s body in order to prevent or restrict undesirable movement or displacement of the catheter. The invention concept is flexible enough that it can be applied to humans as well as to animals, thus further increasing the marketing potential for a product based on the Patent.
Based on the Patent, the Company believes that this apparatus will help prevent or restrict undesirable movement or displacement of a catheter. However, until the Company can successfully develop a prototype and test it, the Company cannot currently estimate the full extent of the benefits to be gained from this apparatus.
The patent and technology were transferred to Advanced Ventures Corp. in exchange of payment to Ilanit Appelfeld of $17,500 (seventeen thousand five hundred United States Dollars), according to the terms and conditions specified in the Patent Transfer and Sales Agreement related to U.S. Patent Number: 6,743,209.
The invention that is the subject of the Patent is for a catheter with an integral anchoring means which is secured to the outside of a human or other animal body by suturing, tying or taping to a tubular, depression-shaped anchor member that is integrally formed during manufacture with the forming of the catheter, resulting in a one-piece multipurpose combination construction unit.
We maintain our statutory registered agent’s office at Delaware Intercorp, Inc. 113 Barksdale Professional Center, Newark, DE, 19711 and our business office is located at No. 6 Houjiayu, Wangzuoxiang, Beijing, China, 100000. This is our mailing address as well.
Our Business
Advanced Ventures has acquired a catheter with an integral anchoring means which is secured to the outside of a human or other animal body by suturing, tying or taping to a tubular, depression-shaped anchor member that is integrally formed during manufacture with the forming of the catheter. To be effective a catheter with integral anchoring means must be easy to use and must be cost effective. Moreover, the Company believes that its catheter with integral anchoring means should greatly reduce bacterial growth and infection. With the foregoing in mind, it would be greatly advantageous to provide a catheter with an integral anchoring means that overcomes these costs and housekeeping problems associated with previous anchoring means, by operating with a standard catheter.
Advanced Ventures’ device is based on attaching urethral catheters to or at the outside of a human or other animal body by suturing, tying or taping to a tubular depression-shaped anchor member that is simultaneously and integrally constructively formed with the catheter tube proper during manufacture resulting in a single one-piece solitary tapered combination construction unit with no breaks or divisions. The Company believes it would be more advantageous that this tubular depression-shaped anchor member of the catheter be integrally formed during manufacture with the forming of the overall catheter resulting in a one-piece urethral catheter construction unit. The former construction requires the manufacture and assembly of multiple components in order to produce an equal unit. The Company believes its “built-in” tubular depression-shaped anchor member of this catheter requires less production material than that of other patents thereby significantly reducing manufacturing costs. Also there are no individual or additional anchoring components to inspect, test, sterilize, package or distribute. The Company intends to develop a fully operational valid working prototype, which can then be used to develop and manufacture the actual product. However, until the Company can successfully develop a prototype and test it, the Company cannot currently estimate the full extent of the benefits to be gained from this apparatus.
During the second quarter of 2011 the Company raised gross proceeds of $75,000 pursuant to its Form S-1 Registration Statement and issued 2,500,000 shares of common stock that were registered pursuant to the Form S-1 Registration Statement.
Third-Party Manufacturers
We intend to rely on third parties to develop a prototype and to work with us to manufacture the product. If our manufacturing and distribution agreements are not satisfactory, we may not be able to develop or commercialize our device as planned. In addition, we may not be able to contract with third parties to manufacture our device in an economical manner. Furthermore, third-party manufacturers may not adequately perform their obligations, which may impair our competitive position. If a manufacturer fails to perform, we could experience significant time delays or we may be unable to commercialize or continue to market our device. Finally, even if we succeed in approaching third-party manufacturers, it is currently unknown whether the additional cost of manufacturing via a third party will increase the overall cost of the device such that integration may not be cost-effective.
Intellectual Property
On July 27, 2010, we signed a Patent Transfer and Sales Agreement with Ilanit Appelfeld, in relation to a patented technology (U.S. Patent number: 6,743,209), wherein we purchased all rights, title and interest in, a receptacle catheter with integral anchoring means. The Patent was issued on June 1, 2004 and will expire on June 6, 2022.
Competition
There are several manufacturers of similar catheters with integral anchoring means. In order to accommodate the attachment of a suture to a urethral catheter tube or member thereof, many catheter designs use different types of suture retention means that are located on various mating components such as catheter wing members, catheter flange members, catheter collars, catheter hubs, slip on suture pads and grooved tube members.
For example U.S. Pat. No. 3,730,187 to Reynolds reflects a urethral catheter using a tube mounted securing collar that can be sutured to a patient’s body. U.S. Pat. No. 3,821,957 to Riley describes a utility catheter with a tube mounted retention slide whose lugs permit suturing to a patient’s body. The utility catheter of U.S. Pat. No. 4,230,110 to Beroff comprises a hub section that is suture pierceable allowing suture attachment to a patient’s body. The adapter body shown in U.S. Pat. No. 4,650,473 to Bartholomew is a device that fits on the proximal end of a blood vessel catheter and has suture holes at its wing tips and in addition a saddle for looping a suture across and then to a patient’s body. The “Tom Cat” urethral catheter made by Kendall Sovereign is supplied with a frictional fit slip-on winged suturing adapter with suture holes that permit suturing to a patient’s body. The “Jackson” urethral cat catheter made by Jorgensen Laboratories, Inc. is supplied with a button with holes that serves as an attachment for suture retention to a patient’s body. U.S. Pat. No. 4,906,233 to Moriuchi uses a sliding catheter tube sleeve with an annular groove for retaining sutures that will be attached to a patient’s body for intravenous use. Similar patents include: U.S. Pat. No. 5,423,763 to Helland and U.S. Pat. No. 5,584,874 to Rugland. These patents involve suture sleeves that slide over electrical lead catheters.
All of the aforementioned patents use suture type retention devices in order to anchor a catheter tube to a patient’s body. However, these suture retention devices are individually constructed components thereby associated with additional manufacturing costs beyond the cost of the catheter tube proper. While each of the foregoing examples provide an anchoring mechanism, none provide a simple, safe, convenient and economical method of attaching urethral catheters to or at the outside of a human or other animal body by suturing, tying or taping to a tubular depression-shaped anchor member that is simultaneously and integrally constructively formed with the catheter tube proper during manufacture resulting in a single one-piece solitary tapered combination construction unit with no breaks or divisions.
The Company believes its technology will provide a catheter device that will be constructed of plastic, rubber, glass, metal or other suitable materials. It is intended that this tubular depression-shaped anchor member of the catheter be integrally formed during manufacture with the forming of the overall catheter resulting in a one-piece urethral catheter construction unit. Similar patents require the manufacture and assembly of multiple components in order to produce an equal unit. The Company believes this “built-in” tubular depression-shaped anchor design of this catheter requires less production material than that of other inventions thereby reducing manufacturing costs. Lower cost is also anticipated because a single unified unit means there are no individual or additional anchoring components to inspect, test, sterilize, package or distribute.
Due to the simplistic design of the present invention, medical personnel will not find it necessary to assemble various parts, hunt for misplaced parts or replace dropped parts. Suturing, tying or taping can immediately begin after finalizing catheter placement. This tubular depression-shaped anchor member is in very limited contact with the patient’s body thus reducing the potential for bacterial growth and infection. The attachment site on or at the body remains visible and accessible at all times and can easily be observed or cleansed. The absence of suture pads, suture buttons and the like allow air circulation to flow around the tubular depression-shaped anchor member. Due to its high visibility medical personnel should be able to easily sever sutures, ties or tape for urethral catheter repositioning or removal. However, until the Company can successfully develop a prototype and test it, the Company cannot currently estimate the full extent of the benefits to be gained from this apparatus.
The present invention (covered by patent number 6,743,209) is a catheter with integral anchoring means. The device provides a simple, safe, convenient and economical method of attaching urethral catheters to or at the outside of a human or other animal body by suturing, tying or taping to a tubular depression-shaped anchor member that is simultaneously and integrally constructively formed with the catheter tube proper during manufacture resulting in a single one-piece solitary tapered combination construction unit with no breaks or divisions.
In effect, while there may be other devices that are designed with an integral anchoring means none currently available on the market, provide a simple, safe, convenient and economical method of attaching urethral catheters to or at the outside of a human or other animal body by suturing, tying or taping to a tubular depression-shaped anchor member that is simultaneously and integrally constructively formed with the catheter tube proper during manufacture resulting in a single one-piece solitary tapered combination construction unit with no breaks or divisions.
Patent, Trademark, License & Franchise Restrictions
Contractual Obligations & Concessions
On July 27, 2010, we entered into a Patent Transfer and Sales Agreement for the purchase of the technology on which our catheters with integral anchoring means will be based. U.S. Patent Number: 6,743,209 was issued on June 1, 2004 and will expire on June 6, 2022.
Employees
We currently do not have any full time or part time employees. Our officers, Mr. Christino Rio, our Chief Executive Officer, Mr. Benson Lim, our Chief Financial Officer, and Mr. Brandon Low, our Chief Operating Officer, are expected to work up to approximately five hours per week. If and when we develop a prototype for our catheter with integral anchoring means, and are able to begin manufacturing and marketing a product, we expect that our officers will devote substantially more than five hours per week to our operations, and we may need to hire additional employees for such operations. We do not foresee hiring employees or consultants over the next twelve months.
Transfer Agent
We have engaged Nevada Agency and Transfer Company as our stock transfer agent. Nevada Agency and Transfer Company is located at 50 West Liberty Street, Reno, Nevada 89501. Their telephone number is (775) 322-0626 and their fax number is (775) 322-5623. The transfer agent is responsible for all record-keeping and administrative functions in connection with our issued and outstanding common stock.
Existing or Probable Government Regulations
While the development of our proposed product is not subject to government approval, the testing, manufacture, and use of our proposed product will be subject to governmental regulations. In Israel, the Ministry of Health (“MOH”) regulates new medical device product approvals to establish the safety and efficacy of proposed products. The MOH also licenses and inspects medical device manufacturers, requiring manufacturers to meet internationally recognized GMP standards. Governments in other countries have similar requirements for the testing, manufacture, and use of new medical device products.
Our proposed product will require regulatory approval by governmental agencies prior to commercialization. In Israel, a unit of the MOH called the AMAR Division is responsible for registration and listing of medical device products prior to commercialization. The manufacturer of a medical device that has not been approved by the regulatory authorities in another country (e.g., the FDA) is required to provide the AMAR Division with the following information and documents in order to obtain MOH approval: (i) ISO 9000/EN 46000 certification, (ii) a summary of the clinical trial files, (iii) a summary of the manufacturing and safety procedures, (iv) a risk analysis, and (v) the medical opinion of doctors who used the proposed medical device. The AMAR Division does not automatically provide its approval. The AMAR Division itself, and not a panel, reviews the information and documents. The division may request additional information and documents as part of its review. Not all medical devices are subject to the same type of review process. For example, intrusive medical devices are subject to a different review than non-intrusive medical devices. In the best case scenario, the review process may take three months from the filing of the required information and documents, but the process may take up to a year. Various additional Israeli statutes and regulations also govern or influence the testing, manufacturing, safety, labeling, storage, record keeping, and marketing of medical device products. The process of obtaining these approvals and the subsequent compliance with applicable statutes and regulations will require the expenditure of substantial time and financial resources. We currently intend for our licensees and manufacturers to bear responsibility for obtaining the necessary approvals. Any delay or failure by us or our licensees and manufacturers to obtain regulatory approval could have a material adverse effect on our business in that failure to obtain approval will preclude commercialization of our proposed product.
Clinical Trials
Clinical trials are required to establish that proposed new medical devices are effective and improve the health of patients. All clinical trials are based on a protocol which is a study plan that describes the type of people who may participate in the trial, the schedule of tests and procedures, and the length of the study. All phases of clinical studies conducted in Israel must be conducted in accordance with the Public Health Regulations (Medical Experiments Involving Human Subjects, 1980, including amendments and addenda thereto) and the International Conference for Harmonization Good Clinical Practice Guidelines. The regulations stipulate that a medical trial on humans will only be approved after the Helsinki Committee at the hospital intending to perform the trial has approved the medical trial and notified the medical director at the hospital in writing. The Helsinki Committee will not approve the performance of the medical trial unless it is fully satisfied that it has advantages to the trial participants and society at large that justify the risk and inconvenience for the participants and that the medical and scientific information justifies the performance of the requested medical trial. The medical director also must be satisfied that the trial is not contrary to the Helsinki Declaration (the World Medical Association statement of ethical principles for medical research involving human subjects) or to other applicable regulations generally governing the hospital’s activities. The Helsinki Declaration includes the following principles: (i) the importance of the objective must outweigh the inherent risks and burdens to the patient; (ii) participation must be voluntary and based on informed consent; and (iii) every precaution must be taken to protect the privacy of the patient. We expect our licensees to bear responsibility for the performance of clinical trials.
If the applicable regulations are not followed, our proposed product will not receive MOH approval and we will not be permitted to commercialize our product. In addition, a doctor or hospital that utilizes a medical device that has not been approved by the MOH may by be subject to fines and/or license suspension or revocation, and, if the behavior were willful, criminal penalties.
Research and Development
We have incurred minimal research and development expenses to date and plan to undertake additional research and development activities during the next twelve months.
If we are able to raise additional funds, we may retain one or more third parties to design and manufacture a prototype of our catheter. We have not yet entered into any agreements, negotiations, or discussions with any third parties with respect to any such research and development activities.
Subsidiaries
We have one wholly owned subsidiary, Advanced Ventures (HK) Limited, a Hong Kong corporation, which was incorporated on March 27, 2012.
ITEM 1A.
ITEM 1A. RISK FACTORS
An investment in our common stock involves a number of very significant risks. You should carefully consider the following risks and uncertainties in addition to other information in this annual report in evaluating our company and its business before purchasing shares of our common stock. Our business, operating results and financial condition could be seriously harmed due to any of the following risks. The risks described below may not be all of the risks facing our company. Additional risks not presently known to us or that we currently consider immaterial may also impair our business operations. You could lose all or part of your investment due to any of these risks.
Risks Related to Our Business
We are a development stage company with no operating history and may never be able to carry out our business plan or achieve any revenues or profitability; at this stage of our business, even with our good faith efforts, potential investors have a high probability of losing their entire investment.
We are subject to all of the risks inherent in a development stage company. We were established on July 6, 2010, for the purpose of engaging in the development, manufacture, and sale of a catheter with an integral anchoring means. We have not generated any revenues nor have we realized a profit from our operations to date, and there is little likelihood that we will generate any revenues or realize any profits in the short term. Any profitability in the future from our business will be dependent upon the successful development of a catheter with an integral anchoring means, which itself is subject to numerous industry-related risk factors as set forth herein. We may not be able to successfully carry out our business. There can be no assurance that we will ever achieve any revenues or profitability. Accordingly, our prospects must be considered in light of the risks, expenses, and difficulties frequently encountered in establishing a new business in our industry, and our Company is a highly speculative venture involving significant financial risk.
We expect to incur operating losses in the next twelve months because we have no plan to generate revenues unless and until we successfully develop a valid prototype of our catheter with an integral anchoring mechanism.
We have never generated revenues. We intend to license the manufacture and distribution of a catheter with an integral anchoring means. We own the right to exploit the technology and patent for the new invention. However, our catheter with an integral anchoring means is not currently available for sale. We intend to develop a fully workable prototype, which can then be used to develop and manufacture the actual product. We intend to rely on third parties to develop workable prototypes and thereafter to manufacture and distribute products based on our technology. We expect to incur operating losses over the next twelve months because we have no source of revenues unless and until we are successful in developing a workable prototype of our catheter with an integral anchoring means. We cannot guarantee that we will ever be successful in developing a workable prototype or in generating revenues in the future. We recognize that if we are unable to generate revenues, we will not be able to earn profits or continue operations. We can provide investors with no assurance that we will generate any operating revenues or ever achieve profitable operations.
If we are unable to obtain funding for development of a valid prototype, we will have to delay development of our valid prototype and/or change our line of business, which could result in the loss of your total investment.
We currently have not completed development of our proposed product and we have no revenues. We will not be able to execute our business plan unless and until we are successful in raising additional funds. We hope to raise additional funds through public or private share offerings in order to continue operations and our planned activities over the next twelve months. There can be no assurance that we will be successful in our efforts to raise these required funds, or on terms satisfactory to us. If we are unable to raise additional funds, then we may have to delay the development of a workable prototype, change our line of business or cease operations altogether.
We do not have sufficient cash to fund our operating expenses for the next twelve months, and we will require additional funds through the sale of our common stock, which requires favorable market conditions and interest in our activities by investors. We may not be able to sell our common stock and funding may not be available for continued operations.
There is not enough cash on hand to fund our administrative expenses and operating expenses or our proposed research and development program for the next twelve months. In addition, we anticipate requiring substantial additional capital following the development of a valid workable prototype for our catheter with an integral anchoring means in order to arrange for the licensing of the manufacture, marketing and sale of products based on our technology. Because we do not expect to have any cash flow from operations within the next twelve months, we will need to raise additional capital, which may be in the form of loans from current stockholders and/or from public and private equity offerings. Our ability to access capital will depend on our success in implementing our business plan. It will also depend upon the status of the capital markets at the time such capital is sought. Should sufficient capital not be available, the implementation of our business plan could be delayed and, accordingly, the implementation of our business strategy would be adversely affected. If we are unable to raise additional funds in the future, we may have to cease all substantive operations. In such event it would not be likely that investors would obtain a profitable return on their investment or a return of their investment at all.
Our auditors have expressed substantial doubt about our ability to continue as a going concern, and if we do not raise additional funding, we may have to suspend or cease operations within twelve months.
Our audited financial statements for the fiscal years ended December 31, 2011 and 2010 were prepared using the assumption that we will continue our operations as a going concern. We were incorporated on July 6, 2010, and do not have a history of earnings. As a result, our independent accountants in their audit report have expressed substantial doubt about our ability to continue as a going concern. Continued operations are dependent on our ability to complete equity or debt financing activities or to generate profitable operations. Such capital formation activities may not be available or may not be available on reasonable terms. Our financial statements do not include any adjustments that may result from the outcome of this uncertainty. We believe that if we do not raise additional funding we may have to suspend or cease operations within twelve months. Therefore, we may be unable to continue operations in the future as a going concern. If we cannot continue as a viable entity, our stockholders may lose some or all of their investment in the Company.
We have no track record that would provide a basis for assessing our ability to conduct successful business activities. We may not be successful in carrying out our business objectives.
The revenue and income potential of our proposed business and operations are unproven as the lack of operating history makes it difficult to evaluate the future prospects of our business. There is nothing at this time on which to base an assumption that our business operations will prove to be successful or that we will ever be able to operate profitably. Accordingly, we have no track record of successful business activities, strategic decision-making by management, fund-raising ability, and other factors that would allow an investor to assess the likelihood that we will be successful in developing a valid workable prototype of our product and thereafter making it available for sale. There is a substantial risk that we will not be successful in implementing our business plan, or if initially successful, in thereafter generating any operating revenues or in achieving profitable operations.
In addition, when we purchased the patent underlying our technology from Ilanit Appelfeld, an attorney and representative of a patent attorney firm involved in the purchase and resale of patents to interested companies that then develop products or commercialize the purchased patents, we were not aware of any other patents sold by Ms. Appelfeld or of any other companies that purchased patents from Ms. Appelfeld. However, we have since learned that Ms. Appelfeld or her law firm has sold patents to several companies, including Crown Dynamics Corp., Dynamic Applications Corp., Dynamic Ventures Corp., and Global Dynamics Corp., and that Dynamic Ventures Corp. and Global Dynamics Corp. changed their business plans before the technology purchased had been commercialized. The business plan of these companies initially disclosed that they intended to commercialize the technology that they acquired from Ms. Appelfeld or her law firm. To our knowledge, none of these companies has yet to commercialize the technology that it acquired from Ms. Appelfeld or her law firm. There is a substantial risk that we too may be required to change our business plan before the technology we purchased is commercialized.
As a development stage company, we may experience substantial cost overruns in developing our prototype and creating a strategy for future stages such as manufacturing and marketing our product, and we may not have sufficient capital to successfully complete the development and marketing of our product .
We may experience substantial cost overruns in manufacturing and marketing our prototype and then in licensing the manufacture and marketing of the product itself, and may not have sufficient capital to successfully complete our project. We may not be able to manufacture or market our product because of industry conditions, general economic conditions, and/or competition from potential manufacturers and distributors. In addition, the commercial success of any product is often dependent upon factors beyond the control of the company attempting to market the product, including, but not limited to, market acceptance of the product, governmental restrictions, and whether or not third parties promote the products through prominent marketing channels and/or other methods of promotion. Even if we do succeed in raising the capital to develop a prototype and begin manufacturing our proposed product, we cannot ensure that the final cost addition, if any, for this device will be found to be warranted and reasonable and therefore we cannot ensure that the product, if developed, will actually find popularity and acceptance.
We intend to rely on third parties to develop a prototype and to manufacture our proposed product .
We intend to rely on third parties to develop a prototype and to work with us to manufacture the product. If we are unable to enter into manufacturing or distribution agreements, or if our manufacturing and distribution agreements are not satisfactory, we may not be able to develop or commercialize our product as planned. In addition, we may not be able to contract with third parties to manufacture our product in an economical manner. Furthermore, third-party manufacturers may not adequately perform their obligations, which may impair our competitive position. If a manufacturer fails to perform, we could experience significant time delays or we may be unable to commercialize or continue to market our device, which would result in losses of sales and goodwill.
We are a small company with limited resources compared to some of our current and potential competitors and we may not be able to compete effectively and increase market share.
Catheters, in general, are part of an industry that is competitive and although we believe our technology offers unique developments, we cannot guarantee that these unique features are enough to effectively capture a significant enough market share to successfully launch and sustain our product. Based on our company’s initial research through both the Internet and trade journals, as well as through an extensive search through existing patents, we believe there is no one in the industry that has successfully brought a product like ours to market, nonetheless, our current and potential competitors have longer operating histories, significantly greater resources and name recognition, and a larger base of distributors and customers than we have. As a result, these competitors have greater name credibility with our potential distributors and customers. Our competitors also may be able to adopt more aggressive pricing policies and devote greater resources to the development, promotion, and sale of their products and services than we can to ours. To be competitive, we must continue to invest significant resources in research and development, sales and marketing, and customer support. We may not have sufficient resources to make these investments or to develop the technological advances necessary to be competitive, which in turn will cause our business to suffer and restrict our profitability potential.
Our success will depend on third party distribution channels.
We intend to sell our proposed product ourselves and through a series of resellers and distributors. Our future revenue growth will depend in large part on sales of our product through these relationships. We may not be successful in developing distribution relationships. Entities that distribute our product may compete with us. In addition, these distributors may not dedicate sufficient resources or give sufficient priority to selling our product. Our failure to develop distribution channels, the loss of a distribution relationship, or a decline in the efforts of a material reseller or distributor could prevent us from generating sufficient revenues to become profitable.
Changing consumer preferences may negatively impact our business.
The Company’s success is dependent upon the ongoing need and appeal for a catheter with integral anchoring means. Consumer preferences with respect to such devices are continuously changing and are difficult to predict. As a result of changing consumer preferences, we cannot assure you that our proposed product will achieve customer acceptance, or that it will continue to be popular with consumers for any significant period of time, or that new products will achieve an acceptable degree of market acceptance, or that if such acceptance is achieved, it will be maintained for any significant period of time. Our success is dependent upon our ability to develop, introduce, and gain customer acceptance, willing to continue on a long term basis to adapt their standard use of catheters by including the use of the Company’s catheter with an integral anchoring means. The failure of our proposed product to achieve and sustain market acceptance and to produce acceptable margins could have a material adverse effect on our financial condition and results of operations.
Because our Directors and officers have no experience in running a company that sells catheters with an integral anchoring means, they may not be able to successfully operate such a business which could cause you to lose your investment.
We are a development stage company and we intend to manufacture, market, and sell catheters with an integral anchoring means. Our current management, which includes Messrs. Christino Rio, Benson Lim and Brandon Low, have effective control over all decisions regarding both policy and operations of our Company with oversight from our board of directors. Our success is contingent upon the ability of our management to make appropriate business decisions in these areas. However, our management team have no experience in operating a company that sells catheters with an integral anchoring means. It is possible that this lack of relevant operational experience could prevent us from becoming a profitable business and hinder an investor from obtaining a return on his investment in us.
Because our officers have other outside business activities and will only be devoting up to 10% of their time to our operations, our operations may be sporadic which may result in periodic interruptions or suspensions of our business activities.
Our officers are only engaged in our business activities on a limited basis. This could cause our officers to have a conflict of interest between the amount of time they devote to our business activities and the amount of time required to be devoted to their other activities. Our officers intend to devote only up to approximately 5 hours per week to our business activities. Upon raising additional funding, we intend to increase our business activities in terms of development, marketing and sales. This increase in business activities may require that our officers devote substantially more than five hours per week to our operations, and we may need to hire additional employees for such operations; however, at this time, we do not have sufficient funds to pursue either option.
One of our shareholders owns approximately 55% of the outstanding shares of our common stock, and may be able to influence control of the company or decision making by management of the Company.
One of our shareholders, a former director and officer, presently owns approximately 55% of our outstanding common stock and has a majority of the voting power for all business decisions, including the election of directors and approval of significant corporate transactions. The concentration of ownership of this shareholder may discourage, delay or prevent a change in control of the Company, which could deprive our shareholders of an opportunity to receive a premium for their shares as part of a sale of the Company and might reduce the price of our common shares.
If our intellectual property protection is inadequate, competitors may gain access to our technology and undermine our competitive position.
We regard our current and future intellectual property as important to our success, and we rely on patent law to protect our proprietary rights. Despite our precautions, unauthorized third parties may copy certain portions of our product or reverse engineer or obtain and use information that we regard as proprietary. We have been granted one patent in the United States and we may seek additional patents in the future. We do not know if any future patent application will be issued with the scope of the claims we seek, if at all, or whether any patents we receive will be challenged or invalidated. Thus, we cannot assure you that our intellectual property rights can be successfully asserted in the future or that they will not be invalidated, circumvented or challenged. In addition, the laws of some foreign countries do not protect proprietary rights to the same extent as do the laws of the United States. Our means of protecting our proprietary rights in the United States or abroad may not be adequate and competitors may independently develop a similar technology. Any failure to protect our proprietary information and any successful intellectual property challenges or infringement proceedings against us could have a material adverse affect on our business, financial condition, or results of operations.
We may be subject to intellectual property litigation, such as patent infringement claims, which could adversely affect our business.
Our success will also depend in part on our ability to develop a commercially viable product without infringing the proprietary rights of others. Although we have not been notified of any infringement claims, other patents could be filed which would prohibit or limit our ability to develop and market our catheter and integrating mechanism in the future. In the event of an intellectual property dispute, we may be forced to litigate. Intellectual property litigation would divert management’s attention from developing our product and would force us to incur substantial costs regardless of whether or not we are successful. An adverse outcome could subject us to significant liabilities to third parties, and force us to cease operations.
You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing original actions in Singapore or the PRC based on United States or other foreign laws against us, or our management.
Our officers and directors are non-residents of the United States, and all or a substantial portion of the assets of these non-residents are located outside of the United States. As a result, it may be difficult or not possible to effect service of process within the United States upon these non-residents, or to enforce against them judgments obtained in United States courts, including judgments based upon the civil liability provisions of the securities laws of the United States or any state.
There is uncertainty as to whether courts of Singapore or China would enforce:
Judgments of United States courts obtained against these non-residents based on the civil liability provisions of the securities laws of the United States or any state, or
In original actions brought in Singapore or China, liabilities against these non-residents predicated upon the securities laws of the United States or any state. Enforcement of a foreign judgment in Singapore or China also may be limited or otherwise affected by applicable bankruptcy, insolvency, liquidation, arrangement, moratorium or similar laws relating to or affecting creditors’ rights generally and will be subject to a statutory limitation of time within which proceedings may be brought.
If and when we sell our products, we may be liable for product liability claims and we presently do not maintain product liability insurance.
The catheters with integral anchoring means that we are developing may expose us to potential liability from personal injury or property damage claims by end-users of the product. We currently have no product liability insurance to protect us against the risk that in the future a product liability claim or product recall could materially and adversely affect our business. Inability to obtain sufficient insurance coverage at an acceptable cost or otherwise to protect against potential product liability claims could prevent or inhibit the commercialization of our product. We cannot assure you that if and when we commence distribution of our product that we will be able to obtain or maintain adequate coverage on acceptable terms, or that such insurance will provide adequate coverage against all potential claims. Moreover, even if we maintain adequate insurance, any successful claim could materially and adversely affect our reputation and prospects, and divert management’s time and attention. If we are sued for any injury allegedly caused by our future products our liability could exceed our total assets and our ability to pay the liability.
We did not conduct due diligence regarding the inventors’ experience nor regarding what was involved in designing and patenting the technology.
We did not conduct due diligence regarding the inventors’ experience nor regarding what was involved in designing and patenting the technology that underlies the Patent. We do not know whether the inventors had experience in the medical device field or whether they properly designed the technology. Neither can we assure you that we will be able to develop the patented technology into a product. Any failure in the design of the patented technology could have a material adverse affect on our business, financial condition, or results of operations.
Clinical trials are expensive, time consuming, and difficult to design and implement, and it is unclear whether the results of such clinical trials will be favorable.
We have not commenced clinical trials of our proposed product. Any clinical trials will be expensive and may be difficult to implement due to the number of patients and testing sites that may be required, and could be subject to delay or failure at any stage of the trials. We currently intend for the licensees of our proposed product to bear the responsibility and cost of conducting clinical trials and obtaining the necessary regulatory and governmental approvals. Any delay or failure of, or adverse results from, clinical trials will likely increase the costs associated with selling our product and may require us to obtain additional funding in order to address such delays or failures. And such delay, failure, or adverse results could make it much more difficult or expensive for us to obtain additional funding. Similarly, human clinical trials for our proposed product will be expensive and difficult to design and implement, in part because they will be subject to rigorous regulatory requirements. The clinical trial process is also time-consuming. We estimate that clinical trials of our proposed products will take at least several years to complete once initiated. Furthermore, we and our potential licensees may encounter problems that could cause us or our licensees to abandon or repeat clinical trials, further delaying or preventing the completion of such trials. The commencement and completion of clinical trials may be delayed by several factors, including:
unforeseen safety issues;
lack of effectiveness during clinical trials;
slower than expected rates of patient recruitment;
inability to monitor patients adequately during or after treatment; and
inability or unwillingness of medical investigators to follow required clinical protocols.
In addition, we or the applicable regulatory or governmental authority may suspend the clinical trials at any time if it appears that we are exposing participants to unacceptable health risks or if the regulatory or governmental authority finds deficiencies in our submissions or the conduct of these trials.
The results of clinical trials may not support our product claims.
Even if clinical trials are completed as planned, we cannot be certain that their results will support our product claims. Even if pre-clinical testing and early clinical trials for a product are successful, this does not ensure that later clinical trials will be successful, and we cannot be sure that the results of later clinical trials will replicate the results of prior clinical trials and pre-clinical testing or meet our expectations. The clinical trial process may fail to demonstrate that our product is safe for humans or effective for indicated uses. Any such failure would likely cause us to abandon the product. Any delay in, or termination of, clinical trials will delay, and, ultimately, may preclude our ability to commercialize our product and generate product revenues.
Our proposed product will be subject to government regulations and approvals which may delay or prevent its marketing and impose costly procedures upon our activities.
Applicable regulatory or governmental authorities will impose substantial requirements upon preclinical and clinical testing, manufacturing and marketing of medical device products. Lengthy and detailed preclinical and clinical testing, validation of manufacturing and quality control processes, and other costly and time-consuming procedures are required. Satisfaction of these requirements typically takes several years and the time needed to satisfy them may vary substantially, based on the type, complexity and novelty of the medical device product. The effect of government regulation may be to delay or to prevent marketing of potential products for a considerable period of time and to impose costly procedures upon our activities. The applicable regulatory or governmental authorities may not grant approval on a timely basis, or at all, for our proposed product. Success in preclinical or early stage clinical trials does not assure success in later stage clinical trials. Data obtained from preclinical and clinical activities are susceptible to varying interpretations that could delay, limit, or prevent regulatory approval. If regulatory approval of a product is granted, such approval may impose limitations on the indicated uses for which a product may be marketed. Further, even after we or our licensees have obtained regulatory approval, later discovery of previously unknown problems with a product may result in restrictions on the product, including withdrawal of the product from the market. Any delay in obtaining or failure to obtain regulatory approvals would make it difficult or impossible to market our products and would harm our business.
Management is inexperienced in running a U.S. public company.
We are managed by directors and officers that are relatively unfamiliar with the processes by which a U.S. public company should be managed and operated. Management is currently making efforts to familiarize itself with the relevant laws, rules and regulations and market practice, but there can be no assurance that it can master the relevant knowledge and skills and set up the required systems in time to prevent mistakes and to meet shareholder and market expectations.
Compliance with changing regulation of corporate governance and public disclosure will result in additional expenses and pose challenges for our new management team.
Changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act (the “SOX”) and SEC regulations, have significantly increased the costs and risks associated with accessing the public markets and public reporting. Our new management team, which has limited to nil prior experience operating a U.S. public company, will need to devote significant time and financial resources to comply with both existing and evolving standards for public companies, which will lead to increased general and administrative expenses and a diversion of management time and attention from revenue generating activities to compliance activities.
Our senior financial staff do not possess professional designations in U.S. GAAP, which may affect the effectiveness of our internal controls over financial reporting and may result in increased time and expense for preparation of our financial statements compared to other companies.
Our senior financial staff do not posses professional designations, in U.S. GAAP. This lack of formal training and designations in U.S. GAAP may result in our internal controls over financial reporting not being effective in the future due to the lack of experience in U.S. GAAP. Also, as a result of management’s lack of U.S. GAAP experience, it may take us longer and cost more to prepare our financial statements, which may result in an increase in expenses and reduce our profitability, and possibly cause delays in the timely filing of our periodic and annual reports with the SEC.
Risks Relating to our Common Stock
We may in the future issue additional shares of our common stock which would reduce investors’ ownership interests in the Company and which may dilute our share value. We do not need stockholder approval to issue additional shares.
Our certificate of incorporation authorizes the issuance of 3,000,000,000 shares of common stock, par value $0.0001 per share. The future issuance of all or part of our remaining authorized common stock may result in substantial dilution in the percentage of our common stock held by our then existing stockholders. We may value any common stock issued in the future on an arbitrary basis. The issuance of common stock for future services or acquisitions or other corporate actions may have the effect of diluting the value of the shares held by our investors, and might have an adverse effect on any trading market for our common stock.
Our common stock is subject to the “penny stock” rules of the SEC and the trading market in our securities is limited, which makes transactions in our stock cumbersome and may reduce the value of an investment in our stock.
The Securities and Exchange Commission has adopted Rule 15g-9 which establishes the definition of a “penny stock,” for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require: (i) that a broker or dealer approve a person’s account for transactions in penny stocks; and (ii) the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased. In order to approve a person’s account for transactions in penny stocks, the broker or dealer must: (i) obtain financial information and investment experience objectives of the person; and (ii) make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.
The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the Security and Exchange Commission relating to the penny stock market, which, in highlight form: (i) sets forth the basis on which the broker or dealer made the suitability determination; and (ii) that the broker or dealer received a signed, written agreement from the investor prior to the transaction.
Generally, brokers may be less willing to execute transactions in securities subject to the “penny stock” rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our stock.
Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.
FINRA sales practice requirements may also limit a stockholder’s ability to buy and sell our stock.
In addition to the “penny stock” rules promulgated by the Securities and Exchange Commission, the Financial Industry Regulatory Authority (FINRA) has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock.
We do not intend to pay cash dividends on our shares of common stock but rather, we intend to finance the development and expansion of our business, delaying or perhaps preventing investors from receiving a return on their shares.
Because we do not intend to pay any cash dividends on our shares of common stock, our stockholders will not be able to receive a return on their shares unless they sell them.
We intend to retain any future earnings to finance the development and expansion of our business. We do not anticipate paying any cash dividends on our common stock in the foreseeable future. Unless we pay dividends, our stockholders will not be able to receive a return on their shares unless they sell them at a price higher than that which they initially paid for such shares.
Shares eligible for future sale may adversely affect the market price of our common stock, as the future sale of a substantial amount of our restricted stock in the public marketplace could reduce the price, if any, of our common stock.
From time to time, certain of our stockholders may be eligible to sell all or some of their shares of common stock by means of ordinary brokerage transactions in the open market pursuant to Rule 144, promulgated under the Securities Act (“Rule 144”), subject to certain limitations. In general, pursuant to Rule 144, a stockholder (or stockholders whose shares are aggregated) who has satisfied the required holding period may, under certain circumstances, sell within any three-month period a number of securities which does not exceed the greater of 1% of the then outstanding shares of common stock. Rule 144 also permits, under certain circumstances, the sale of securities, without any limitations, by a non-affiliate of our company that has satisfied a one-year holding period. Any substantial sale of common stock pursuant to Rule 144 or pursuant to any resale prospectus may have an adverse effect on the market price, if any, of our securities.
ITEM 1B.
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable as we are not an accelerated or large accelerated filer.
ITEM 2.
ITEM 2. PROPERTIES
Our executive offices are located at No. 6 Houjiayu Wangzuoxiang, Beijing, China 100000.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
We are not a party to any pending legal proceeding. We are not aware of any pending legal proceeding to which any of our officers, directors, affiliates or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse to us.
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
Market Information
Shares of our common stock are posted for trading on the OTC Bulletin Board under the symbol “ANCV”. Our common stock has been posted for trading since approximately July 6, 2011 with basically no trading or volume. The following table sets forth the high and low prices relating to our common stock for the periods indicated, as provided by the OTC Bulletin Board. These quotations reflect inter-dealer prices without retail mark-up, mark-down, or commissions, and may not reflect actual transactions.
QUARTER ENDED HIGH LOW
December 31, 2012 $0.05 $0.05
September 30, 2012 $0.05 $0.05
June 30, 2012 $0.05 $0.05
March 31, 2012 $0.00 $0.00
December 31, 2012 N/A N/A
September 30, 2011 N/A N/A
Holders
As of December 31, 2011, we had 31 shareholders of record.
Dividend Policy
No dividends have been declared or paid on our common stock. We have incurred recurring losses and do not currently intend to pay any cash dividends in the foreseeable future.
Securities Authorized For Issuance Under Compensation Plans
We do not have any equity compensation plans.
Recent Sales of Unregistered Securities
We have not issued any unregistered securities during our fiscal year ended December 31, 2012.
No Repurchases
Neither we nor any affiliated purchaser has made any purchases of our equity securities during the fourth quarter of our fiscal year ended December 31, 2012.
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 required under this item.
ITEM 7.
ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of our financial condition, changes in financial condition, plan of operations and results of operations should be read in conjunction with (i) our audited financial statements as at December 31, 2012, December 31, 2011 and for the period from July 6, 2010 inception (inception) through December 31, 2012 and (ii) the section entitled “Business”, included in this annual report. The discussion contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including, but not limited to, those set forth under “Risk Factors” and elsewhere in this annual report.
Plan of Operations
We are a development stage company that has acquired the technology and received a patent for a catheter with an integral anchoring means.
We intended to develop a working prototype for the patented technology, however, at this time we are considering other business opportunities that may bring quicker and greater value to our shareholders.
The design and product development for a catheter with an integral anchoring means is divided into three individual stages:
Technical Concept/Definition (three months)
Engineering Specification (four months)
Engineering & Preparation for Production (six months)
Financial Condition
During the twelve-month period following the date of this annual report, we anticipate that we will not generate any revenue. Accordingly, we will be required to obtain additional financing in order to pursue our plan of operations during and beyond the next twelve months. We believe that debt financing will not be an alternative for funding as we do not have tangible assets to secure any debt financing. We anticipate that additional funding will be in the form of equity financing from the sale of our common stock or shareholder loans. However, we do not have any financing arranged and we cannot provide investors with any assurance that we will be able to raise sufficient funding from the sale of our common stock or shareholder loans to develop a working prototype for the patented technology. In the absence of such financing, we will not be able to continue moving forward with developing a working prototype of the catheter with an integral anchoring means and our business plan will fail.
Results of Operations
The following table sets forth our results of operations from inception on July 6, 2010 through December 31, 2012 as well as for the fiscal years ended December 31, 2012 and 2011:
Results of Operations for the Years Ended December 31, 2012 and 2011
During fiscal years ended December 31, 2012 and December 31, 2011, respectively, we did not generate any revenue.
During the fiscal year ended December 31, 2012, our operating expenses consisted of: (i) professional fees of $87,098 (2011: $59,821); (ii) patent expenses of $Nil (2011: $1,713); and (iii) general and administrative expenses of $549 (2011: $1,059).
This resulted in a net operating loss of ($87,647) during fiscal year ended December 31, 2012 compared to a net operating loss of ($62,593) during fiscal year ended December 31, 2011.
During fiscal year ended December 31, 2012, we recorded total other income in the amount of $703 compared to total other income recorded during fiscal year ended December 31, 2011 in the amount of $2,873. The other income received during fiscal year ended December 31, 2012 consisted of $703 in foreign currency transaction gains (2011: $2,873).
This resulted in a net loss for fiscal year ended December 31, 2012 of ($86,944) compared to a net loss for fiscal year ended December 31, 2011 of ($59,720).
The increase in net loss of ($27,224) during fiscal year ended December 31, 2012 compared to fiscal year ended December 31, 2011 is attributable primarily to the increase in professional fees.
Liquidity and Capital Resources
Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation.
As at December 31, 2012, our current assets were $342 and our current liabilities were $121,909, resulting in a working capital deficit of ($121,567). As at December 31, 2012, our total assets were $342 compared to total assets of $9,991 as at December 31, 2011. Total assets as at December 31, 2012 consisted of $342 in cash. Our current liabilities consisted of $15,315 in accrued expenses and $106,594 in advances from stockholders.
Stockholders’ deficit increased from ($34,624) as at December 31, 2011 to ($121,567) as at December 31, 2012.
Net Cash Used in Operating Activities
We have not generated positive cash flows from operating activities. For fiscal year ended December 31, 2012, net cash flow used in operating activities was ($88,039) compared to net cash flow used in operating activities of ($70,564) for fiscal year ended December 31, 2011. Net cash flow used in operating activities during fiscal year ended December 31, 2012 consisted of a net loss of ($86,944) and accrued expenses of ($1,095). Net cash flow used in operating activities during fiscal year ended December 31, 2011 consisted of a net loss of ($59,720) and accrued expenses of ($10,843).
Net Cash from Financing Activities
During fiscal year ended December 31, 2012, net cash flow provided from financing activities was $78,390 compared to net cash flow provided from financing activities of $80,254 for fiscal year ended December 31, 2011. Net cash flow provided from financing activities during fiscal year ended December 31, 2012 pertained primarily to $78,390 received as advances from stockholders. Net cash flow provided from financing activities during the fiscal year ended December 31, 2011 pertained primarily to $75,000 received as proceeds from the sale of common stock and $5,254 received as advanced from stockholders.
Going Concern
We have not attained profitable operations and are dependent upon obtaining financing to pursue the development of a working prototype of our patented technology. For these reasons our auditors stated in their report on our audited financial statements for the year ended December 31, 2012 that they have substantial doubt we will be able to continue as a going concern.
Future Financings
We anticipate continuing to rely on equity sales of our common shares and shareholder loans in order to continue to fund our business operations. Issuances of additional shares will result in dilution to our existing shareholders. There is no assurance that we will achieve any additional sales of our equity securities or arrange for debt or other financing to fund our plan of operations.
Subsequent Events
None
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 is material to stockholders.
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 required under this item.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS
Advanced Ventures Corp.
(A Development Stage Company)
December 31, 2012 and 2011
Index to the Consolidated Financial Statements
F - 1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Advanced Ventures Corp.
(A Development Stage Company)
Beijing, China
We have audited the accompanying consolidated balance sheet of Advanced Ventures Corp., a development stage company, (the “Company”) as of December 31, 2012 and the related consolidated statements of operations, stockholders’ equity (deficit) and cash flows for the year then ended and for the period from July 6, 2010 (inception) through December 31, 2012. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.
The Company’s financial statements as of December 31, 2011, for the year then ended and for the period from July 6, 2010 (inception) through December 31, 2011 was audited by other auditors whose reports dated February 28, 2012 included an explanatory paragraph as to an uncertainty with respect to the Company’s ability to continue as a going concern. The other auditors’ report has been furnished to us, and our opinion, insofar as it relates to amounts included for such prior periods, is based solely on the report of such other auditors.
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 consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our 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 consolidated 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 audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2012 and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the consolidated financial statements, the Company had a deficit accumulated during the development stage at December 31, 2012 and had a net loss and net cash used in operating activities for the year then ended. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regards to these matters are also described in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/Li and Company, PC
Li and Company, PC
Skillman, New Jersey
April 16, 2013
F - 2
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Advanced Ventures Corp.
(A Development Stage Company)
Beijing, China
We have audited the accompanying balance sheet of Advanced Ventures Corp., a development stage company, (the “Company”) as of December 31, 2011 and the related statements of operations and comprehensive income, stockholders’ equity (deficit) and cash flows for the year then ended and for the period from July 6, 2010 (inception) through December 31, 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 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. 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 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 the Company as of December 31, 2011 and the results of its operations and its cash flows for the year then ended and for the period from July 6, 2010 (inception) through December 31, 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. As discussed in Note 3 to the financial statements, the Company is in the development stage, and has not established any source of revenue to cover its operating costs. As such, it has incurred an operating loss since inception. Further, as of December 31, 2011, the cash resources of the Company were insufficient to meet its planned business objectives. These and other factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plan regarding these matters is also described in Note 3 to the financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Respectfully submitted,
/s/ Weinberg & Baer LLC
Weinberg & Baer LLC
Baltimore, Maryland
February 28, 2012
F - 3
Advanced Ventures Corp.
(A Development Stage Company)
Consolidated Balance Sheets
See accompanying notes to the consolidated financial statements.
Advanced Ventures Corp.
(A Development Stage Company)
Consolidated Statements of Operations
See accompanying notes to the consolidated financial statements.
Advanced Ventures Corp.
(A Development Stage Company)
Consolidated Statement of Stockholders' Equity (Deficit)
For the Period from July 6, 2010 (inception) through December 31, 2012
See accompanying notes to the consolidated financial statements.
Advanced Ventures Corp.
(A Development Stage Company)
Consolidated Statements of Cash Flows
See accompanying notes to the consolidated financial statements.
Advanced Ventures Corp.
(A Development Stage Company)
December 31, 2012 and 2011
Notes to the Consolidated Financial Statements
Note 1 - Organization and Operations
Advanced Ventures Corp.
Advanced Ventures Corp. (the “Company”) was incorporated under the laws of the State of Delaware on July 6, 2010. The business plan of the Company is to develop a commercial application of the design in a patent known as the “Catheter with integral anchoring means”. The Company also intends to enhance the existing prototype, and manufacture and market the product and/or seek third party entities interested in licensing the rights to manufacture and market the device.
Formation of Advanced Ventures (HK) Ltd.
On March 27, 2012, the Company formed a wholly-owned subsidiary, Advanced Ventures (HK) Ltd., under the laws of the Hong Kong Special Administrative Region (“HK SAR”) of the People’s Republic of China (“PRC”). Advanced Ventures (HK) Ltd. engages in same line of business as that of the Company.
The Certificate of Amendment of Certificate of Incorporation
On February 21, 2012, the Company filed a certificate of amendment of certificate of incorporation to increase the amount of authorized common shares from 200,000,000 to 3,000,000,000 and to effectuate a forward stock split of the issued and outstanding common shares of the Company on a basis of 15 for 1 effective as of March 7, 2012.
All shares and per share amounts in the consolidated financial statements have been adjusted to give retroactive effect to the Stock Split.
Note 2 - Summary of Significant Accounting Policies
Basis of Presentation
The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
Principles of Consolidation
The Company applies the guidance of Topic 810 “Consolidation” of the FASB Accounting Standards Codification to determine whether and how to consolidate another entity. Pursuant to ASC Paragraph 810-10-15-10 all majority-owned subsidiaries-all entities in which a parent has a controlling financial interest-shall be consolidated except (1) when control does not rest with the parent, the majority owner; (2) if the parent is a broker-dealer within the scope of Topic 940 and control is likely to be temporary; (3) consolidation by an investment company within the scope of Topic 946 of a non-investment-company investee. Pursuant to ASC Paragraph 810-10-15-8 the usual condition for a controlling financial interest is ownership of a majority voting interest, and, therefore, as a general rule ownership by one reporting entity, directly or indirectly, of more than 50 percent of the outstanding voting shares of another entity is a condition pointing toward consolidation. The power to control may also exist with a lesser percentage of ownership, for example, by contract, lease, agreement with other stockholders, or by court decree. The Company consolidates all less-than-majority-owned subsidiaries, if any, in which the parent’s power to control exists.
The Company's consolidated subsidiaries and/or entities are as follows:
The consolidated financial statements include all accounts of the Company as of December 31, 2012 and 2011 and for the years then ended, and all accounts of Advanced Ventures (HK) Ltd. as of December 31, 2012 and for the period from March 27, 2012 (inception) through December 31, 2012.
F - 8
All inter-company balances and transactions have been eliminated.
Development Stage Company
The Company was a development stage company as defined by section 915-10-20 of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification. The Company is still devoting substantially all of its efforts on establishing the business and, therefore, qualifies as a development stage company. All losses accumulated from July 6, 2010 (inception) have been considered as part of the Company’s development stage activities.
Use of Estimates and Assumptions
The preparation of financial statements in conformity with U.S. GAAP 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 reporting amounts of revenues and expenses during the reporting period.
The Company’s significant estimates and assumptions include the fair value of financial instruments; income tax rate, income tax provision, deferred tax assets and valuation allowance of deferred tax assets; reporting currency, functional currency of the Company's HK HAR subsidiary and foreign currency exchange rate and the assumption that the Company will continue as a going concern. Those significant accounting estimates or assumptions bear the risk of change due to the fact that there are uncertainties attached to those estimates or assumptions, and certain estimates or assumptions are difficult to measure or value.
Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable in relation to the financial statements taken as a whole under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
Management regularly evaluates the key factors and assumptions used to develop the estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such evaluations, if deemed appropriate, those estimates are adjusted accordingly.
Actual results could differ from those estimates.
Fair Value of Financial Instruments
The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and has adopted paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 of the FASB Accounting Standards Codification establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, paragraph 820-10-35-37 of the FASB Accounting Standards Codification establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by paragraph 820-10-35-37 of the FASB Accounting Standards Codification are described below:
Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.
The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.
F - 9
The carrying amounts of the Company’s financial assets and
liabilities, such as cash and accrued expenses, approximate their fair values because of the short maturity of these instruments.
Transactions involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated.
It is not, however, practical to determine the fair value of advances from stockholders, if any, due to their related party nature.
Cash Equivalents
The Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents.
Related Parties
The Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related party transactions.
Pursuant to section 850-10-20 the related parties include a) affiliates of the Company; b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of section 825-10-15, to be accounted for by the equity method by the investing entity; c) trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; d) principal owners of the Company; e) management of the Company; f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g. other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.
The financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: a) the nature of the relationship(s) involved; b) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c) the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d. amount due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.
Commitments and Contingencies
The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.
If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.
Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon information available at this time, that these matters will have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows.
F - 10
Revenue Recognition
The Company applies paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.
Income Tax Provision
The Company adopted the provisions of paragraph 740-10-25-13 of the FASB Accounting Standards Codification. Paragraph 740-10-25-13.addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under paragraph 740-10-25-13, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Paragraph 740-10-25-13 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. The Company had no material adjustments to its liabilities for unrecognized income tax benefits according to the provisions of paragraph 740-10-25-13.
The estimated future tax effects of temporary differences between the tax basis of assets and liabilities are reported in the accompanying consolidated balance sheets, as well as tax credit carry-backs and carry-forwards. The Company periodically reviews the recoverability of deferred tax assets recorded on its consolidated balance sheets and provides valuation allowances as management deems necessary.
Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In addition, the Company operates within multiple taxing jurisdictions and is subject to audit in these jurisdictions. In management’s opinion, adequate provisions for income taxes have been made for all years. If actual taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary.
Uncertain Tax Positions
The Company did not take any uncertain tax positions and had no adjustments to its income tax liabilities or benefits pursuant to the provisions of Section 740-10-25 for the year ended December 31, 2012 or 2011.
Net Income (Loss) per Common Share
Net income (loss) per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the period to reflect the potential dilution that could occur from common shares issuable through contingent shares issuance arrangement, stock options or warrants.
There were no potentially outstanding dilutive shares for the year ended December 31, 2012 or 2011.
Cash Flows Reporting
The Company adopted paragraph 230-10-45-24 of the FASB Accounting Standards Codification for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (“Indirect method”) as defined by paragraph 230-10-45-25 of the FASB Accounting Standards Codification to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments. The Company reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides information about investing and financing activities not resulting in cash receipts or payments in the period pursuant to paragraph 830-230-45-1 of the FASB Accounting Standards Codification.
F - 11
Subsequent Events
The Company follows the guidance in Section 855-10-50 of the FASB Accounting Standards Codification for the disclosure of subsequent events. The Company will evaluate subsequent events through the date when the financial statements were issued. Pursuant to ASU 2010-09 of the FASB Accounting Standards Codification, the Company as an SEC filer considers its financial statements issued when they are widely distributed to users, such as through filing them on EDGAR.
Recently Issued Accounting Pronouncements
FASB Accounting Standards Update No. 2011-08
In September 2011, the FASB issued the FASB Accounting Standards Update No. 2011-08 “Intangibles-Goodwill and Other: Testing Goodwill for Impairment” (“ASU 2011-08”). This Update is to simplify how public and nonpublic entities test goodwill for impairment. The amendments permit an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test described in Topic 350. Under the amendments in this Update, an entity is not required to calculate the fair value of a reporting unit unless the entity determines that it is more likely than not that its fair value is less than its carrying amount.
The guidance is effective for interim and annual periods beginning on or after December 15, 2011. Early adoption is permitted.
FASB Accounting Standards Update No. 2011-11
In December 2011, the FASB issued the FASB Accounting Standards Update No. 2011-11 “Balance Sheet: Disclosures about Offsetting Assets and Liabilities” (“ASU 2011-11”). This Update requires an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. The objective of this disclosure is to facilitate comparison between those entities that prepare their financial statements on the basis of U.S. GAAP and those entities that prepare their financial statements on the basis of IFRS.
The amended guidance is effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods.
FASB Accounting Standards Update No. 2012-02
In July 2012, the FASB issued the FASB Accounting Standards Update No. 2012-02 “Intangibles-Goodwill and Other (Topic 350) Testing Indefinite-Lived Intangible Assets for Impairment” (“ASU 2012-02”).
This Update is intended to reduce the cost and complexity of testing indefinite-lived intangible assets other than goodwill for impairment. This guidance builds upon the guidance in ASU 2011-08, entitled Testing Goodwill for Impairment. ASU 2011-08 was issued on September 15, 2011, and feedback from stakeholders during the exposure period related to the goodwill impairment testing guidance was that the guidance also would be helpful in impairment testing for intangible assets other than goodwill.
The revised standard allows an entity the option to first assess qualitatively whether it is more likely than not (that is, a likelihood of more than 50 percent) that an indefinite-lived intangible asset is impaired, thus necessitating that it perform the quantitative impairment test. An entity is not required to calculate the fair value of an indefinite-lived intangible asset and perform the quantitative impairment test unless the entity determines that it is more likely than not that the asset is impaired.
This Update is effective for annual and interim impairment tests performed in fiscal years beginning after September 15, 2012. Earlier implementation is permitted.
Other Recently Issued, but Not Yet Effective Accounting Pronouncements
Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying consolidated financial statements.
Note 3 - Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.
F - 12
As reflected in the accompanying consolidated financial statements, the Company had a deficit accumulated during the development stage at December 31, 2012, a net loss and net cash used in operating activities for the year then ended. These factors raise substantial doubt about the Company’s ability to continue as a going concern.
While the Company is attempting to commence explorations and generate sufficient revenues, the Company’s cash position may not be sufficient enough to support the Company’s daily operations. Management intends to raise additional funds by way of a public or private offering. Management believes that the actions presently being taken to further implement its business plan and generate sufficient revenues provide the opportunity for the Company to continue as a going concern. While the Company believes in the viability of its strategy to commence explorations and generate sufficient revenues and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and generate sufficient revenues.
The consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
Note 4 - Patent
On July 27, 2010, the Company entered into a Patent Transfer and Sale Agreement whereby the Company acquired all of the right, title and interest in the patent known as the “Catheter with integral anchoring means” for consideration of $17,500. The United States Patent number is 6,743,209. Under the terms of the Patent Transfer and Sale Agreement, the Company was assigned rights to the patent free of any liens, claims, royalties, licenses, security interests or other encumbrances. The cost of obtaining the patent was expensed. The patent was filed on June 1, 2004 and assigned to the Company on July 27, 2010.
Note 5 - Related Party Transactions
Advances from Stockholders
From time to time, stockholders of the Company advance funds to the Company for working capital purpose. Those advances are unsecured, non-interest bearing and due on demand.
Free Office Space from its Majority Stockholder and Chief Executive Officer
The Company has been provided office space by its majority stockholder and Chief Executive Officer at no cost. The management determined that such cost is nominal and did not recognize the rent expense in its financial statements.
Note 6 - Stockholders’ Deficit
Shares Authorized
Upon formation the total number of shares of common stock which the Company is authorized to issue is Two Hundred Million (200,000,000) shares, par value $.0001 per share.
The Certificate of Amendment of Certificate of Incorporation
On February 21, 2012, the Company filed a certificate of amendment of certificate of incorporation to increase the amount of authorized common shares from 200,000,000 to 3,000,000,000 and to effectuate a 15 for 1 forward stock split of the issued and outstanding common shares of the Company to be effective as of March 7, 2012.
All shares and per share amounts in the consolidated financial statements have been adjusted to give retroactive effect to the Stock Split.
Common Stock
Upon formation the Company issued 45,000,000 shares of its common stock to the Directors and Officers of the Company for $300 in cash.
F - 13
The Company commenced a capital formation activity by filing a Registration Statement on Form S-1 with the SEC to register and sell in a self-directed offering 37,500,000 shares of its common stock at an offering price of $0.002 per share for gross proceeds of up to $75,000. The Registration Statement was declared effective on May 10, 2011. On June 16, 2011, the Company issued 37,500,000 shares of its common stock pursuant to the Registration Statement for gross proceeds of $75,000. Offering costs of $20,000 related to this capital formation activity were charged against the capital raised.
Note 7 - Income Tax Provision
Advanced Ventures Corp. is subject to the United States of America income taxes. Advanced Ventures (HK) Limited, the Company’s Hong Kong subsidiary is subject to Hong Kong SAR income taxes.
United States Income Tax
Advanced Ventures Corp. is incorporated in the State of Delaware and is subjected to United States of America tax law.
Deferred Tax Assets
At December 31, 2012, the Company has available for federal income tax purposes a net operating loss (“NOL”) carry-forwards of $176,680 that may be used to offset future taxable income through the fiscal year ending December 31, 2032. No tax benefit has been reported with respect to these net operating loss carry-forwards in the accompanying financial statements since the Company believes that the realization of its net deferred tax asset of approximately $60,071 was not considered more likely than not and accordingly, the potential tax benefits of the net loss carry-forwards are offset by the full valuation allowance.
Deferred tax assets consist primarily of the tax effect of NOL carry-forwards. The Company has provided a full valuation allowance on the deferred tax assets because of the uncertainty regarding its realization. The valuation allowance increased approximately $29,497 and $20,305 for the year ended December 31, 2012 and 2011, respectively.
Components of deferred tax assets are as follows:
Income Tax Provision in the Consolidated Statements of Operations
A reconciliation of the federal statutory income tax rate and the effective income tax rate as a percentage of income before income taxes is as follows:
Hong Kong SAR Income Tax
Advanced Ventures (HK) Limited is registered and operates in the Hong Kong Special Administrative Region (“HK SAR”) of the People’s Republic of China (“PRC”) and is subject to HK SAR tax law. Advanced Ventures HK’s statutory income tax rate is 16.5% and there were no significant differences between the income (loss) reported for financial reporting purposes and the income (loss) reported for income tax purposes for the period from March 27, 2012 (inception) through December 31, 2012.
F - 14
Deferred Tax Assets
At December 31, 2012, Advanced Ventures HK has available for federal income tax purposes a net operating loss (“NOL”) carry-forwards of $187 that may be used to offset future taxable income through the fiscal year ending December 31, 2032. No tax benefit has been reported with respect to these net operating loss carry-forwards in the accompanying consolidated financial statements since the Company believes that the realization of its net deferred tax assets of approximately $31 was not considered more likely than not and accordingly, the potential tax benefits of the net loss carry-forwards are offset by the full valuation allowance.
Note 8 - Subsequent Events
The Company has evaluated all events that occurred after the balance sheet date through the date when the financial statements were issued to determine if they must be reported. The Management of the Company determined that there were no reportable subsequent events to be disclosed.
F - 15
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
On March 14, 2013, our Board of Directors approved and authorized the dismissal of Weinberg & Baer, LLC, (“W&B”), as our independent registered public accounting firm. On the same date, our Board of Directors approved and authorized the engagement of the accounting firm of Li and Company, PC, as our new independent registered public accounting firm.
W&B’s reports on our financial statements dated February 28, 2012, for the two most recent fiscal years ended December 31, 2011, and 2010, did not contain an adverse opinion or disclaimer of opinion, or qualification or modification as to uncertainty, audit scope, or accounting principles, except that W&B’s reports contained an explanatory paragraph in respect to the substantial doubt as to our ability to continue as a going concern.
In connection with the audit of our financial statements for the two most recent fiscal years ended December 31, 2011, and 2010, and in the subsequent interim periods through the effective date of dismissal on March 14, 2013, there were no disagreements, resolved or not, with W&B on any matters of accounting principles or practices, financial statement disclosure or auditing scope or procedures, which disagreements, if not resolved to the satisfaction of W&B would have caused them to make reference to the subject matter of the disagreements in connection with their reports on the financial statements for such years.
During our two most recent fiscal years ended December 31, 2011 and 2010 and in any subsequent interim periods through the effective date of dismissal of W&B on March 14, 2013, there were no reportable events as described in Item 304(a)(1)(v) of Regulation S-K.
During the two most recent fiscal years ended December 31, 2011 and 2010 and any subsequent interim periods through the effective date of appointment of Li and Company, PC on March 14, 2013, we had not, nor had any person on our behalf, consulted with Li and Company, PC regarding either the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on our financial statements, nor had Li and Company, PC provided to us a written report or oral advice regarding such principles or audit opinion on any matter that was the subject of a disagreement as set forth in Item 304(a)(1)(iv) of Regulation S-K or a reportable event as set forth in Item 304(a)(1)(v) of Regulation S-K with our former independent registered public accounting firm.
ITEM 9A.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) that is designed to ensure that information required to be disclosed by the Company in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time specified in the Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer's management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
As required by Rule 13a-15 under the Securities Exchange Act of 1934, as of the end of the period covered by this report, we have carried out an evaluation of the effectiveness of the design and operation of our company’s disclosure controls and procedures. Under the direction of our Chief Executive Officer and our Chief Financial Officer, we evaluated our disclosure controls and procedures and internal control over financial reporting and concluded that (i) there continue to be material weaknesses in the Company’s internal controls over financial reporting, that the weaknesses constitute a “deficiency” and that this deficiency could result in misstatements of the foregoing accounts and disclosures that could result in a material misstatement to the financial statements for the period covered by this report that would not be detected, and (ii) accordingly, our disclosure controls and procedures were not effective as of December 31, 2012.
Management's Annual Report On Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States. 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, 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 assets of the Company that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluations 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. Accordingly, even an effective system of internal control over financial reporting will provide only reasonable assurance with respect to financial statement preparation.
As of December 31, 2012 management, with the participation of our principal executive officer and principal financial officer, assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and SEC guidance on conducting such assessments. Based on that evaluation, our management concluded that, during the period covered by this report, such internal controls and procedures were not effective to detect the inappropriate application of US GAAP rules as more fully described below. This was due to deficiencies that existed in the design or operation of our internal controls over financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses.
The matters involving internal controls and procedures that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: (1) lack of a functioning audit committee due to a lack of a majority of independent members and a lack of a majority of outside directors on our Board of Directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; (2) inadequate segregation of duties consistent with control objectives; and (3) ineffective controls over period end financial disclosure and reporting processes. The aforementioned material weaknesses were identified by our Chief Executive Officer and Chief Financial Officer in connection with the review of our financial statements as of December 31, 2012.
Management believes that the material weaknesses set forth in items (2) and (3) above did not have an effect on our financial results. However, management believes that the lack of a functioning audit committee and the lack of a majority of outside directors on our Board of Directors results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods.
This Annual Report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by our registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the company to provide only management's report.
Changes in Internal Controls
There have been no changes in our internal control over financial reporting during our fourth fiscal quarter of our fiscal year ended December 31, 2012 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B.
ITEM 9B. OTHER INFORMATION
Not applicable.
ITEM 10.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Our executive officers and directors and their respective ages as of the date of this Annual Report are as follows:
The following describes the business experience of our directors and executive officers:
Mr. Christino Rio has been the Chief Executive Officer and a director of the Company since July 17, 2012. Mr. Rio has 30 years of experience in credit management and control processes. From 2000 to present, Mr. Rio has been the Regional Commercial Services Controller for Goltens Singapore Pte. Ltd. where he was responsible for credit control and sales support for the South East Asia region. From 1992 to 2000, Mr. Rio was the Asia Pacific Credit Controller for General Electric-Keppel Energy Services Pte. Ltd. where he was responsible for credit control for the Asia Pacific. Mr. Rio received a degree in Economics and Business (Honors) from the Luiss University in Rome and a MBA in Finance from the London Business School in 1996.
Mr. Benson Lim has been the Chief Financial Officer and a director of the Company since July 6, 2012. Mr. Lim has over 7 years of experience in various leadership positions. He received a Bachelor of Business (Banking and Finance, Honours) from Nanyang Technological University in Singapore. From Jun 2007 through June 2009, Mr. Lim worked as a management associate with Citigroup in Singapore. During his 2 years with Citigroup, Mr. Lim was involved mainly in the credit risk control department which is where he gained his professional grounding and development as a finance controller. From June 2008 to October 2010, Mr. Lim worked with HSR Property Group where he was involved in the real estate business where he built and led a team of over 30 realtors and created total sales up to US$500 million. From January 2010 to May 2012, Mr. Lim was the Managing Director and Vice President of Sales and Marketing of United Gene Healthcare, a Hong Kong based healthcare company, dealing with the distribution of biomedical equipment and products. Mr. Lim was mainly in charge of expanding the business portfolio and sales channel of the company in the Asia pacific region. Over his past 3 years with United Gene Healthcare, he managed to increase the company's turnover by multiple folds and generated an annual turnover of US$20 million. He also helped the United Gene Healthcare expand its service centers from Hong Kong to over 30 cities in China, Taiwan and the Southeast Asia region.
Mr. Brandon Low has been the Chief Operating Officer and a director of the Company since July 6, 2012. Mr. Low has nearly 10 years of experience in financial accounting and reporting. He received a Bachelor of Engineering, Mechanical and Production degree from Nanyang Technological University in Singapore. From 2006-2007, Mr. Low worked with Xango LLC where he was responsible for the company's market development in Malaysia and Indonesia. From February 2007 to July 2008, Mr. Low was the General Manager of Winalite International Pte. Ltd. and from July 2008 to July 2009 he was the Vice-President, Operations & Finance for Coslab Global Pte Ltd.
Mr. Jareth Goh has been a director of the Company since July 17, 2012. Mr. Goh has experience covering a variety of industries including banking, real estate and media. From June 2010 to present, Mr. Goh has been the Vice President of Operations and Business Development for United Gene Healthcare whereby he was responsible for its entire business development, operations and customer service teams and the setup of inter-department workflows. In addition, Mr. Goh managed to setup headquarters and branches in Hong Kong, Taiwan, Shanghai and a network of service centers over 30 cities in China. From May 2008 to October 2010, Mr. Goh was the Residential and Project Sales Division Director for HSR Property Group whereby he managed a division of over 120 realtors in Singapore, and worked with multiple developers to plan. launch and market both new and existing projects. From June 2007 to October 2009, Mr. Goh was a Graduate Program Specialist - Asset Services MLPFS Events Management Team for Merrill Lynch Global Services whereby he managed corporate action events for Asia Pacific private clients and spearheaded initiatives to revamp inefficient processes. In addition, Mr. Goh was a Specialist - Asset Services Risk & Control Team for Merrill Lynch Global Services whereby he managed and compiled reports and metrics for Asset Services, managed projects for Merrill Lynch's risk assessment exercise, and coordinated SOX exercise with team supervisors and auditors. Mr. Goh obtained his Bachelor of Business in Marketing (honors) with a minor in Communication Studies from the Nanyang Technology University, Singapore in 2007.
Mr. Vincent Kim has been a director of the Company since July 17, 2012. Mr. Kim has experience in sales and marketing as well as legal and human resources. From March 2009 to April 2012, Mr. Kim was the Regional Sales Director for Boehringer Ingelheim Singapore Pte. Ltd. whereby he managed and led a team of 100 sales managers and representatives for Singapore and Malaysia and achieved 120% over sales target for 2009 and 2011. From March 2007 to February 2009, Mr. Kim was the Head of Legal and Human Resources whereby he managed and lead a team of 30 human resource personnel and spearheaded and developed payroll workflows for complicated real estate commission payout process. From January 1996 to December 2006, Mr. Kim was a licensed aircraft engineer for the Republic of Singapore Air Force. Mr. Kim received his diploma in Mechanical Engineering from Singapore Polytechnic in 1995.
Term of Office
Our directors 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 described above.
Family Relationships
There are no family relationships among our directors or officers.
Involvement in Certain Legal Proceedings
To the best of our knowledge and belief, none of our directors or executive officers has been involved in any of the following events during the past ten years that is material to an evaluation of the ability of such person to serve as an executive officer or director of our Company:
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.
such person was convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);
3.
such person was 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.
such person was 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) above, or to be associated with persons engaged in any such activity;
5.
such person was found by a court of competent jurisdiction in a civil action or by the SEC to have violated any federal or state securities law, and the judgment in such civil action or finding by the SEC not been subsequently reversed, suspended, or vacated;
6.
such person 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.
such person 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;
(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.
such person 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), any registered entity (as defined in Section 1(a)(29) of the United States Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
We are not aware of any material legal proceedings in which any of the following persons is a party adverse to our Company or has a material interest adverse to our Company: (a) any current director, officer, or affiliate of the Company, or any owner of record or beneficial owner of more than five percent of any class of voting securities of the Company; (b) any person proposed for appointment or election as a director or officer of our Company; or (c) any associate of any such person.
Code of Ethics
We do not currently have a Code of Ethics applicable to our principal executive, financial and accounting officers; however, we plan to consider implementing such a code in the near future.
Audit Committee
We do not have a separately-designated standing audit committee. The entire Board of Directors performs the functions of an audit committee, but no written charter governs the actions of the Board when performing the functions of what would generally be performed by an audit committee. The Board approves the selection of our independent accountants and meets and interacts with the independent accountants to discuss issues related to financial reporting. In addition, the Board reviews the scope and results of the audit with the independent accountants, reviews with management and the independent accountants our annual operating results, considers the adequacy of our internal accounting procedures and considers other auditing and accounting matters including fees to be paid to the independent auditor and the performance of the independent auditor.
We intend to adopt an audit committee in the near future.
We do not have an audit committee financial expert serving on our Board of Directors/audit committee at this time and each financial transaction is viewed by our entire Board of Directors.
Nomination Committee
At the present time, we do not have a nomination committee. We intend to adopt a nomination committee in the future.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Exchange Act requires our directors and officers, and the persons who beneficially own more than ten percent of our common stock, to file reports of ownership and changes in ownership with the SEC. Copies of all filed reports are required to be furnished to us pursuant to Rule 16a-3 promulgated under the Exchange Act. Based solely on the reports received by us and on the representations of the reporting persons, we believe that these persons have complied with all applicable filing requirements during the fiscal year ended December 31, 2012, except as follows:
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
The table below summarizes all compensation awarded to, earned by or paid to our executive officers by any person for all services rendered in all capacities to us during our fiscal years ended December 31, 2011 and 2012.
Summary Compensation Table
(1)
Mr. Christino Rio was appointed as our Chief Executive Officer on July 17, 2012.
(2)
Mr. Benson Lim was appointed as our Chief Financial Officer on July 6, 2012.
(3)
Mr. Brandon Low was appointed as our Chief Operating Officer on July 6, 2012.
(4)
Mr. Xu Fei was appointed as our President, Chief Executive Officer, Chief Financial Officer, Secretary and Treasurer on September 26, 2011 and resigned as Chief Financial Officer on July 6, 2012 and from all other positions on July 17, 2012.
(5)
Mr. Jacky Shenker was appointed as our President and Chief Executive Officer on July 8, 2010 and resigned from such positions on September 26, 2011.
(6)
Ms. Rachel Feldstein was appointed as our Chief Financial Officer, Secretary and Treasurer on July 8, 2010 and resigned from such positions on September 26, 2011.
Outstanding Equity Awards
We do not have any equity compensation plans in effect.
Compensation of Directors
Except as disclosed below, we did not pay our directors any fees or other compensation for acting as directors during our fiscal year ended December 31, 2012. Certain of our current directors serve as officers of the Company, and any compensation they received due to their service as an officer is disclosed in the table above and is not included in the table below.
Director Compensation
(1) See summary compensation table above.
Employment Contracts, Termination of Employment, Change-in-Control Arrangements
There are currently no employment agreements or other contracts or arrangements with our Officers or Directors. There are no compensation plans or arrangements, including payments to be made by us, with respect to our Officers, Directors or consultants that would result from the resignation, retirement or any other termination of any of our Directors, officers or consultants. There are no arrangements for our Directors, Officers, Employees or consultants that would result from a change-in-control.
ITEM 12.
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth certain information concerning the number of shares of our common stock owned beneficially as of the date of this annual report by: (i) each person (including any group) known to us to own more than 5% of any class of our voting securities, (ii) each of our directors, (iii) each of our officers and (iv) our officers and directors as a group. Each stockholder listed possesses sole voting and investment power with respect to the shares shown.
1.
The address of our officers and directors is our Company’s address, which is No. 6 Houjiayu, Wangzuoxiang, Beijing, China 100000.
2.
Under Rule 13d-3 of the Exchange Act a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise has or shares: (i) voting power, which includes the power to vote or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights.
3.
Based on 82,500,000 shares of our common stock issued and outstanding as of April 1, 2013.
Changes in Control
We are unaware of any contract, or other arrangement or provision of our Articles, the operation of which may at any subsequent date result in a change in control of the Company.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
Other than as disclosed below, there are no transactions during our two most recent fiscal years ended December 31, 2011 and December 31, 2012, or any currently proposed transaction, in which our Company was or to be a participant and the amount exceeds the lesser of $120,000 or one percent of the average of our Company’s total assets at year end for our last two completed years, in which any of our directors, officers or principal stockholders, or any other related person as defined in Item 404 of Regulation S-K, had or have any direct or indirect material interest.
During the first and second quarter of the fiscal year end December 31, 2011, Mr. Jacky Shenker provided us with loans in the aggregate of $27,394. The loans were unsecured, non-interest bearing, and due on demand. No formal written agreements regarding these loans were signed; however, it is documented in the accounting records of the Company. These loans were repaid on September 15, 2011.
During the first and second quarter of the fiscal year end December 31, 2011, Ms. Rachel Feldstein provided us with loans in the aggregate of $27,394. The loans were unsecured, non-interest bearing, and due on demand. No formal written agreements regarding these loans were signed; however, it is documented in the accounting records of the Company. These loans were repaid on September 15, 2011.
On October 6, 2011, Mr. Xu Fei, our then President, CEO, CFO, Secretary, Treasurer and Director, provided us with a loan in the amount of $19,024 and made payment to various services providers on behalf of the Company in the amount of $9,181. These loans are unsecured, non-interest bearing and due on demand. No formal written agreements regarding these loans were signed; however, it is documented in the accounting records of the Company. To date, these loans have not been repaid.
On May 7, 2012, Mr. Xu Fei, our then President, CEO, CFO, Secretary, Treasurer and Director, provided us with a loan in the amount of $20,084. This loan is unsecured, non-interest bearing and due on demand. No formal written agreements regarding this loan was signed; however, it is documented in the accounting records of the Company. To date, this loan has not been repaid.
On May 16, 2012, Mr. Xu Fei, our then President, CEO, CFO, Secretary, Treasurer and Director, provided us with a loan in the amount of $1,288. This loan is unsecured, non-interest bearing and due on demand. No formal written agreements regarding this loan was signed; however, it is documented in the accounting records of the Company. To date, this loan has not been repaid.
On June 30, 2012, Mr. Xu Fei, our then President, CEO, CFO, Secretary, Treasurer and Director, provided us with a loan in the amount of $18,000. This loan is unsecured, non-interest bearing and due on demand. No formal written agreements regarding this loan was signed; however, it is documented in the accounting records of the Company. To date, this loan has not been repaid.
On November 9, 2012, Mr. Xu Fei, our former officer and director, provided us with a loan in the amount of $206,426. This loan is unsecured, non-interest bearing and due on demand. No formal written agreements regarding this loan was signed; however, it is documented in the accounting records of the Company. On November 20, 2012 we repaid $106,156 to Mr. Xu Fei. On December 7, 2012 we repaid $28,247 to Mr. Xu Fei. On December 17, 2012 we repaid $50,448 to Mr. Xu Fei. As of December 31, 2012 there was a balance owing to Mr. Xu Fei on this loan of $18,994.
Director Independence
As of the date of this Annual Report, our common stock is posted for trading on the OTC Bulletin Board (the “OTCBB”). The OTCBB does not impose on us standards relating to director independence or the makeup of committees with independent directors, or provide definitions of independence. However, under the definition of “Independent Director” as set forth in the NYSE MKT Company Guide Section 8.03A, we currently have two directors, Messrs. Jareth Goh and Vincent Kim, that would qualify as independent directors under the definition in the NYSE MKT Company Guide.
ITEM 14.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Weinberg & Baer LLC served as our independent registered public accounting firm to audit our financial statements for the fiscal year ended December 31, 2011 and review our financial statement in each of the three quarters for the fiscal year ended December 31, 2012, and Li and Company, PC has served as our independent registered public accounting firm from March 18, 2013 to audit our financial statement for the fiscal year ended December 31, 2012. Aggregate fees for professional services billed by our auditors are set forth below:
Audit Fees
Audit fees are the aggregate fees billed for professional services rendered by our independent auditors for the audit of our annual financial statements, the review of the financial statements included in each of our quarterly reports and services provided in connection with statutory and regulatory filings or engagements.
Audit Related Fees
Audit related fees are the aggregate fees billed by our independent auditors for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements and are not described in the preceding category.
Tax Fees
Tax fees are billed by our independent auditors for tax compliance, tax advice and tax planning.
All Other Fees
All other fees include fees billed by our independent auditors for products or services other than as described in the immediately preceding three categories.
Policy on Pre-Approval of Services Performed by Independent Auditors
It is our Board of Directors’ policy to pre-approve all audit and permissible non-audit services performed by the independent auditors. We approved all services that our independent accountants provided to us in the past two fiscal years.
ITEM 15.
ITEM 15. EXHIBITS
The following exhibits are filed with this Annual Report on Form 10-K:
(1)
Filed as an Exhibit to the Company’s Registration Statement on Form S-1 filed with the SEC on October 12, 2010 and incorporated herein by this reference.
(2)
Filed as an Exhibit to the Company’s Registration Statement of Form S-1/A (Amendment No. 3) filed with the SEC on February 28, 2011 and incorporated herein by this reference.
(3)
Filed as an Exhibit to the Company’s Current Report on Form 8-K filed with the SEC on March 7, 2012 and incorporated herein by this reference.
SIGNATURES
Pursuant to the requirements of Section 13 and 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.
ADVANCED VENTURES CORP.
Dated: April 16, 2013 By: /s/ Christino Rio
Christino Rio, Chief Executive Officer
(Principal Executive Officer)
Dated: April 16, 2013 By: /s/ Benson Lim
Benson Lim, Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons no behalf of the registrant and in the capacities and on the dates indicated.
Dated: April 16, 2013 By: /s/ Christino Rio
Christino Rio, Chief Executive Officer and a director
Dated: April 16, 2013 By: /s/ Benson Lim
Benson Lim, Chief Financial Officer and a director
Dated: April 16, 2013 By: /s/ Brandon Low
Brandon Low, Chief Operating Officer and a director
Dated: April 16, 2013 By: /s/ Jareth Goh
Jareth Goh, Director
Dated: April 16, 2013 By: /s/ Vincent Kim
Vincent Kim, Director
__________