ITEM 1. DESCRIPTION OF BUSINESS
OVERVIEW
eDoorways Corporation, Inc. (the “Company”, “eDoorways,” “we” or “us”) was originally incorporated in the state of Delaware on February 26, 1988 under the name Technicraft Financial Ltd. In October 1991, the name was changed to LBM-US, Inc. In a reverse merger in August of 1994, the company acquired GK Intelligent Systems, Inc. and the Company adopted such name. In 2006, the Company changed its name to eDoorways Corporation, Inc.
We are a web-based service provider aimed at America’s “net-generation” computer users. As a web based “Town Square”, we aim to provide businesses and consumers with a platform for exchanging ideas, services and products within a highly technologically sophisticated social networking environment. eDoorways intends to offer a way to identify, locate and engage a varying array of resources (both locally and globally) that will provide for advanced problem solving, enhanced learning, conceptualizing and taking ideas to completion, intelligent searches resulting in finding hard-to-get information, or buying and selling items through sophisticated ecommerce networks.
We intend to capitalize on current Web 2.0 community democratic Internet service offerings like MySpace
, Craig’s List
, and Wikipedia
. We are also incorporating emerging Web 3.0 software technologies. Through Web 3.0, we believe that we will possess a global reach and commerce potential that exceeds current service offerings on the Internet. We intend to offer today’s generation of web users a highly collaborative personal and work space that fosters new levels of achievement and creativity.
PRODUCTS AND SERVICES
As part of our initial service offering, we are creating a web-based consumer problem solving gateway, lifestyle information source and online business-to-consumer marketplace designed to save the consumer valuable time and money by uniting him/her with the global consumer community, retailers, and manufacturers in an effective new way. The service offering, or “doorway”, is called “SOLVE.” The SOLVE doorway will serve as a central forum for new media e-commerce business-to-consumer product marketing, customer support and distribution. We are targeting SOLVE to become a resource for anyone who is actively engaged in pursuing a lifestyle - whether it’s home improvement, gardening, rebuilding old cars, or sports. SOLVE will assist the general public in solving daily problems. It also will assist the general public in buying those things that are most important and relevant to its needs and interests.
SOLVE could offer a wide range of businesses a unique opportunity to present their products and services to a broader market. The “storefronts” that businesses establish on SOLVE will be predicated on the concept that they are bringing relevant expert assistance to consumers at their critical moment of need. This will give our business clients a chance to build clientele and strengthen their brand by engaging consumers through service and support. In doing so, such businesses will have a new way to not only retain current customers, but also reach potential new customers, close the sale, and build a long-standing relationship.
Example of a Typical “SOLVE” Transaction
Imagine that your hot water heater in your home is not working correctly. Unfortunately, troubleshooting malfunctioning hot water heaters is not your area of expertise. To garner the information you need, you enter the eDoorways gateway on your laptop computer. Inside eDoorways, you’re escorted to the Home Improvement lifestyle area where you’re able to review in-depth and comprehensive information about your problem supplied and maintained by others in the democratic community who have relevant expertise. Next, you choose to speak with subject matter experts representing home improvement products and service vendors who offer to lend a hand. You select a local vendor who introduces John, the hot water heater troubleshooting expert. With John’s knowledgeable guidance and support, you gain the expertise necessary to diagnose the nature of the problem - a worn out coil. John offers to have a new one sent over immediately from their store down the street, or they can have it waiting for you to pick up. However, you decide that maybe its time for a new and larger 75 gallon heater. John points you to their water heater manufacturer’s representative, who assists you in making a purchase choice. Shortly thereafter, the new heater is on its way to your home.
The example above narrowly describes how the “SOLVE” doorway of eDoorways can be of service. However, we believe that SOLVE’s capabilities are far greater than described above, offering real-time group problem solving and collaborative capabilities and many other features.
We will offer two synergistic service components to drive the SOLVE sub-brand:
1.
A performance support feature that assists consumers in resolving current lifestyle problems and issues on a real-time collaborative basis; and
2.
An e-marketplace where vendors are allowed to establish “storefronts” where they can communicate directly with consumers.
These two service elements will be uniquely combined into a single, seamless interface to provide an environment designed to foster collaborative teamwork between the consumer, other members of the broader consumer community, retailers, and manufacturers.
SOLVE will be first and foremost a problem solver, allowing “lifestyle consumers” to quickly research and assess their problem (like installing brake pads on the car, or planting the right landscape at home) with the aid and valuable knowledge of thousands of others who have a solution at hand that they’re willing to share. The idea is to put the consumer in a unique problem-solving environment that can effectively assist him/her in obtaining the right solution and acquiring the resources (i.e., products and services) necessary to put the solution in motion. To do this, we make the consumer, relevant retailers and manufacturers, and the consuming public as a whole (who have contextual experience potentially valuable to the person with the problem) part of a single goal-oriented team.
With its second service component of the SOLVE, eDoorways will be an e-commerce business-to-consumer marketplace. Once the consumer has a solution at hand, retailers/manufacturers can help him/her acquire necessary products/services quickly and conveniently. Manufacturers also can assist the consumer by offering context-relevant information, guidance and support, promotional offers and the business-to-consumer tools geared to solve the consumer’s problem.
Today, eDoorways is prepared to launch with the introduction of SOLVE. The soft launch date for SOLVE has been announced as October 1, 2009. We are continuing our software development activities to accomplish this objective. We are also engaged in service pre-marketing activities. Between the soft and beta launches, we will actively market SOLVE to small businesses and consumers in the Austin regional area. We will take the initial feedback we receive from the soft launch via focus group testing and testimonials to make any necessary modifications before the beta launch. The beta launch of SOLVE is scheduled to occur before the end of 2009. At that time, we will “go live”, making the SOLVE service offering available for the Austin marketplace.
Features & Benefits
Key differentiators of the SOLVE service offering will be increased consumer empowerment through a higher level of engagement with retailers, manufacturers and other consumers, and a stronger orientation toward customer service and improved ways for retailers to identify prospects and close the sale. These can be explained as follows.
·
Offers new perspectives about lifestyles they would never have thought to ask about;
·
Provides consumers with context-specific expertise for solving practical daily problems related to health, the home, family, etc.;
·
Serves as a source for lifestyle education and personal improvement;
·
Offers unprecedented consumer access to lifestyle/entertainment and information resources (products and services);
·
Offers consumers a unique forum for lifestyle community; allows them to engage in social interaction with peers who share similar interests and priorities;
·
Engages consumers by inviting them to participate in solutions to lifestyle issues and problems, and;
·
Minimizes time and money wasted when consumers are forced to resort to trial-and-error solutions.
SOLVE will also benefit vendors because it:
·
Serves as a new platform for business commerce, delivering targeted “gold nugget” prospects (consumers) to vendors. Offers vendors a forum for demonstrating credibility and an avenue for closing the prospective customer;
·
Provides a robust environment for CRM and targeted marketing. Creates an avenue for personalized engagement and relationship building;
·
Allows businesses of all types and sizes to engage in the global market and compete with much larger, established entities;
·
Offers emerging companies an opportunity to compete with the market-share leaders in their industry, and grow their revenues without an enormous investment in physical infrastructure;
·
Offers market-share leaders a unique, affordable opportunity to attract additional new customers and more importantly, an avenue to cement a long-term relationship with existing customers by making services available 24/7/365;
·
Offers businesses a way to drive consumer traffic to brick-and-mortar facilities, and;
·
Reinforces the concept that businesses can offer true customer service and genuine solutions.
Technologies Used to Provide Services
We believe that the initial SOLVE service offering will be accomplished through the integration of the following software technologies:
·
“Targeting” software - used to pinpoint consumers’ physical location and market availability; available from numerous vendors.
·
“Push” software - used to drive “permission” marketing campaigns of our partners; available from numerous vendors.
·
Systems integration software - used to “manage” all of the above; available from numerous vendors.
Intelligent search software - used to assist consumers in obtaining timely and relevant solutions to their problems, both within the context of the moment and over a long period of time.
·
“Intelligent” teaching software - our proprietary expert systems based educational software; to be updated and revised to accommodate recent advances in presentation and transmission capabilities.
eDOORWAYS’ “Intelligent” Teaching Technology
We developed our “intelligent” teaching technology in a previous incarnation of the company approximately 10 years ago. At that time, the teaching technology established itself as an internationally known brand that received numerous awards for technical and marketing excellence. It is our intent to use the technology as part of our SOLVE service offering. In addition, we are exploring other opportunities for the teaching technology in the marketplace.
A key aspect of the first SOLVE service element is the fact that eDoorways brings additional resources to bear in solving the consumer’s problem. One important resource is that of training and education on relevant lifestyle topics and issues, which is supported by our “intelligent” instructional technology. We have developed a highly advanced and internationally accredited teaching technology known as the “intelligent” instructional technology.
Our advanced software is an intuitive learning technology that creates a customized user profile by assessing the knowledge and skill level, and the strengths and weaknesses of the user through a sophisticated, yet easy to use Q&A format. As the user interacts with the learning environment, his/her profile and progress are benchmarked against an already stored “expert profile” of the demonstrated knowledge and skill that an expert in the field would have. Using the “expert profile” as a comparison, the program gauges the users progress and modifies the level of support accordingly, giving the less skilled user prompts and menus that are not provided to the more experienced user.
The Other “Doorways” of the eDOORWAYS Brand
We also intend to create six additional “doorways” to our platform and service offering. Each doorway will be given a unique name, such as the initial SOLVE doorway, and will be established in the marketplace as a distinct sub-brand. Although these doorways have yet to be named, each is unique in their service offerings, as follows:
Doorway II
Enter a world of enhanced personal participation where there are no hindrances due to your lack of knowledge. Obtain a more rich and thorough experience of any lifestyle activity with the help of an environment that brings you all relevant aspects of the lifestyle. If you like to tinker and explore, this doorway will be for you.
Doorway III
This doorway will offer an opportunity for anyone wishing to create a training experience for others or to further their own education to achieve their objective. It will offer a feature new to learning - the ability to tap into the skill and knowledge of others in a real-time venue to create a learning experience.
Doorway IV
This doorway brings technology, tolerance, and talent together to create new ideas, products, and possibilities. Imagine being able to go to a special place where you can air your creative thinking, run it by others of a similar mind, and turn it into a tangible, productive project using the unlimited human and information resources of the web.
Doorway V
This doorway connects those who want to help with those who need it. This extraordinary doorway will give those who wish to serve others the opportunity to bring tremendous focus and impact to their charitable action. You will be able to make your action known to those who care so that they may assist you in bringing your unique capabilities to a world in need.
Doorway VI
With this doorway, consumers will be able to bring and apply focus to their mind. It will offer tools and a supportive environment for self-help and analysis. If you are interested in enhancing your personal ability, this doorway will bring you the resources you need to move forward.
Doorway VII
The Cardinal Doorway that leads to and orchestrates all others. It is the source of the technology and horsepower that drives the other six doorways. Doorway VII is the all-seeing, all-knowing personal assistant. No matter which doorway you’re in, Doorway VII will be standing at your side as your personal guide, assistant and mentor. It can tell you the questions you should be asking to accomplish your goal. And it is the ultimate provider of resources. Doorway VII will be the constant observer of both your actions and those of the world, reaching out to the world at the proper moment to bring you the exact knowledge and resources you need. Doorway VII will be constantly observing and learning, thereby enhancing the nature of the services it can offer.
We anticipate, although no assurance can be given, that we will complete the branding plan on or before the end of December,2009. Until such time, we will not be able to make a final determination of the technologies we will require to offer the services contemplated above.
COMPETITION
eDOORWAYS will be an open website with typical HTML interactivity that people can access through internet searches as well as from a variety of partner/client websites. eDOORWAYS’ first doorway, SOLVE, will compete either directly or indirectly with the following web-based entities: GenieTown, LooBoo, The Local Guru, Local, Yub, Slide, Facebook, LinkedIn, Yahoo Answers, MySpace, and Fatdoor. However, we believe that these competitors do not have a collaboratively-based contextual (real time) service offering of the type contemplated by our business plan.
Below is a brief description of each of the businesses that we believe may be deemed to compete, either directly or indirectly, with our business.
Based on SOLVE’s design, we believe that none of the primary competitors we have identified above can or has attempted to offer an intensive problem solving service of the nature that we’ve developed. Moreover, although websites such as Google and Ask.com offer their search capabilities as a problem solving tool, the searches that can be performed on such websites do not approximate the kind of collaborative problem solving service we are contemplating and as such, these sites are not deemed by us to be competitors of the Company. The eDoorways search function is combined with context-relevant information and other useful functions such as placing consumers in contact with retailers and manufacturers in real-time. This will enable consistent and continuous product/service status reports along with all other availabile information, guidance and support. It will also provide valuable context-relevant “community chat” solutions offered by other consumers familiar with the problem faced by the searching consumer.
Moreover, SOLVE will also provide a dedicated e-commerce marketplace with an extensive collaborative component. While companies like Craigslist and eBay compete in the buy-sell arena, neither offer a service that would allow retailers and manufacturers to collaborate with the consumer on a real-time basis.
The combination of the services and components of the SOLVE doorway, along with other proprietary functions of the platform yield an Interactive Intelligent search system that lies at the heart of our Web 3.0 consumer model.
Our “SOLVE” branding strategy is based in a large part on our perception that the Internet services market is moving toward a new phase. We foresee a major push in the direction of aggregating both static and contextual information of potential interest to consumers and rendering that information to consumers in a form that is easier to understand and relate to. It can be safely assumed that the larger, more dominant players in the market will take the lead in this effort. Our plan is to move quickly and effectively in an attempt to assume a dominant role in the niche before the larger players are able to act.
In view of the above, eDOORWAYS’ competitive advantage for SOLVE and its value-add may be summarized as follows:
- End-user benefits of SOLVE: On the same web page, we will provide our users the solution to a problem, validated by millions of experts, as well as the enabler who can provide the “tools” needed to arrive at that solution, whether that is actual products or services.
- Partner Benefits: Our partners will have the opportunity to attract new customers, get closer to existing customers, learn about real-life business trends earlier and more efficiently than they do today, and grow sales while leveraging their existing infrastructure (i.e., they are already invested in web selling.)
DEPENDENCE ON ONE OR A FEW MAJOR CUSTOMERS
We presently do not have any customers for our services as we are still a development stage company.
PATENTS, TRADEMARKS, LICENSES, FRANCHISES, CONCESSIONS, ROYALTY AGREEMENTS OR LABOR CONTRACTS, INCLUDING DURATION:
In 2009, the Company filed applications for three Service Marks for the names “iDoorways”, “Consumer 3.0” and “eDOORWAYS”. As of December 31, 2009, these applications were still pending.
NEED FOR ANY GOVERNMENT APPROVAL OF PRINCIPAL PRODUCTS OR SERVICES
Not applicable.
EFFECTS OF EXISTING OR PROBABLE GOVERNMENT REGULATIONS ON OUR BUSINESS
As Internet commerce continues to evolve, increasing regulation by federal, state or foreign agencies may become more likely and our business may be subject to increase regulation in the area of data privacy, and laws and regulations applying to the solicitation, collection, processing or use of personal or consumer information. Any such laws could result in a decline in the use of the Internet and the viability of Internet-based products and services, which could harm our business and operating results.
COSTS AND EFFECTS OF COMPLIANCE WITH ENVIRONMENTAL LAWS
We do not expect any environmental laws to give rise to additional costs to our business.
EMPLOYEES
As of the reporting date and thereafter, we had one (1) employee. During 2009, to lower operating costs, we relied on consultants rather than employment contracts.
ITEM 2.
ITEM 2. DESCRIPTION OF PROPERTY
Our current headquarters is located in Austin, Texas and consists of a small office we rented beginning in October of 2007 This space is targeted to become our base of operations for launching the Company in the Austin, Texas market beginning in the fourth quarter of 2009. Upon the leases expiry, the Company anticipates, although no assurance can be given, that such lease will be renewed on a monthly basis at a cost of $3,595 per month.
We believe that our existing facilities are adequate to meet current requirements, and that suitable additional or substitute space will be available as needed to accommodate any further physical expansion of operations and for relocation of the headquarters to Austin.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
On February 10, 2000, the Texas Workforce Commission placed an administrative lien on us in the amount of $109,024 in connection with a claim for unpaid compensation by our former employees.
A default judgment was taken against us in favor of Marathon Oil Company on August 31, 1999 in the amount of $326,943 representing past and future rentals under a lease agreement, together with $7,500 in attorney’s fees and post judgment interest at 10% per annum until paid, credit towards the judgment was ordered for sale of personal property by the Sheriff or Constable. We believe the personal property sold for approximately $28,000. To the extent that the property was leased during the unexpired term, it is possible that there would be a mitigation of the damages claim in our favor. We believe that some or all of the space was subsequently rented approximately 90 days later. The remaining $306,443 has been accrued in our financial statements under the heading Judgments payable.
On August 31, 2006, Deanna S. Slater, an independent contractor formerly with M Power Entertainment, Inc., brought suit in County Civil Court at Law Number Four in Harris County, Texas, Docket Number 872,560, alleging breach of contract, quantum meruit, promissory estoppel and for attorney’s fees. Ms Slater did not claim any specific dollar amount in damages but the court on December 29, 2006 granted our Special Exceptions and she amended her petition alleging the amount she sought in damages along with certain other pleading requirements. The pre-lawsuit demand was for payment of $15,785. Trial was held on this matter in November 2007. On December 31, 2007 the court awarded Deanna S. Slater the sum of $3,400 and $5,000 to her attorneys. We recorded the amount of $8,400 in our Financial Statements as of December 31, 2008 and 2007.
The amount of accrued interest on all these unpaid judgments totaled $384,667 as of December 31, 2009.
We are not aware of any other claims or assessments, other than as described above, which may have a material adverse impact on our financial position or results of operations.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of securities holders during the fiscal year ended December 31, 2009.
PART II
ITEM 5.
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Our common stock is presently traded in the over-the-counter market and quoted on the National Association of Securities Dealers’ OTC Bulletin Board System under the ticker symbol “EDWY.OB.”
Holders
There were approximately 140 holders of record of our Common Stock as of December 31, 2009.
Transfer Agent
Our registrar and transfer agent is American Registrar and Transfer Co. 342 East 900 South, Salt Lake City, Utah 84111.
Dividends
We have not declared any cash dividends with respect to our common stock, and we do not intend to declare dividends in the foreseeable future. We anticipate that any earnings generated from our operations will be used to finance our ongoing operations and growth.
Recent Sales of Unregistered Securities
Debt Securities
We issued 31,906,738 shares in 2008 to retire mostly short term notes payable. The notes bear 0% interest and mature on various short term periods and are convertible into shares of common stock. In 2008, the Company borrowed $36,400 through these types of notes. Many of those outstanding at the end of 2007 and most of those originated in 2008 were retired by the issuance of the earlier stated shares.
During October and November 2007, we borrowed a total of $91,100 under various short-term convertible notes payable. The notes bear interest at 0%, matured within 10 days, and were convertible into shares of common stock at between $0.075 and $0.09 per share (50% of the market price of the common stock on the date of issuance of the notes). Subsequent to September 30, 2007, all of these convertible notes in the amount of $91,100 were converted into 1,575,776 shares of common stock. Upon conversion we recognized a $54,000 loss on extinguishment of debt due to the conversion price being greater than the amount owed on two loans. Under the terms of the warrants issued in connection with the 6% convertible debentures, if the Company issues common stock at a discount to the exercise price of the warrants, the exercise price of the warrants to purchase shares of common stock is adjusted downward in proportion to the discount given in the new equity issuance. The outstanding warrants affected by this change are 749 warrants with an exercise price of $3.20 expiring March 30, 2014 and 14,999 warrants with an exercise price of $200.00 which expired unexercised on April 18, 2009.
On October 25, 2007, the Company completed a financing agreement with private investors and received cash proceeds of $250,000. We issued the investors secured convertible debentures totaling $250,000 with an 8% interest rate and a maturity date of October 25, 2010. The debentures are convertible into common shares at a discount of 50% of the average of the lowest three (3) trading prices during the twenty (20) trading day period prior to conversion. We simultaneously issued to the private investors seven year warrants to purchase 10,000,000 common shares at an exercise price of $0.0001.
On March 30, 2007 (the “Closing”), we entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with New Millennium Capital Partners II, LLC, AJW Qualified Partners, LLC, AJW Offshore, Ltd. and AJW Partners, LLC (collectively, the “Investors”). Under the terms of the Securities Purchase Agreement, on March 30, 2007, the Investors purchased an aggregate of (i) $165,000 in callable convertible secured notes (the “Notes”) and (ii) warrants to purchase 1,500,000 shares of our common stock (the “Warrants”). After the effect of our reverse common stock split of 2000 to 1 in 2007 the warrants were reduced to 750 shares.
During the year 2009, we issued 863,465,000 shares to cover several expenses, Common stock issued for services amounted to 252,151,000 valued at $252,151 and 302,369,000 shares valued at $302,369 to cover compensation and the balance of the Common stock issued was for Converting debt to equity.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
Not required.
ITEM 7.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
FORWARD-LOOKING STATEMENTS
Much of the discussion in this Item is “forward-looking” as that term is used in Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended. Actual operations and results may materially differ from present plans and projections due to changes in economic conditions, new business opportunities, changed business conditions, and other developments. Other factors that could cause results to differ materially are described in our filings with the Securities and Exchange Commission. There are several factors that could cause actual results or events to differ materially from those anticipated, and include, but are not limited to general economic, financial and business conditions, changes in and compliance with governmental laws and regulations, including various state and federal environmental regulations, our ability to obtain additional financing from outside investors and/or bank and mezzanine lenders and our ability to generate sufficient revenues to cover operating losses and position us to achieve positive cash flow. Readers are cautioned not to place undue reliance on the forward-looking statements contained herein, which speak only as of a certain date. We undertake no obligation to update any forward-looking statements.
Plan of Operation
During the next 12 months, we will direct our resources to the development, branding, and launch of our web service offering. This includes both the SOLVE doorway and Doorway II. We intend to enter into strategic alliances, form joint ventures and acquire interests in companies whose products and services integrate into the eDOORWAYS platform, however, no assurance can be given that we will be successful in forming such strategic alliances. The Company plans on completing its soft and beta launches of Solve by the end of 2010. In the first and second quarter of 2011, the Company will undertake the soft and beta launch of Doorway II.
The Company is currently negotiating a line of credit agreement with an independent third party for a major portion of the funding we require. However, no assurance can be given that the Company will be successful in obtaining such line of credit, or that if such line of credit is made available, that such will be on terms favorable to us.
Liquidity and Capital Resources
As reflected in the accompanying financial statements for the fiscal year ending December 31, 2009, the Company had general and administrative expenses in the amount of $1,262,204, payment of compensation to our directors and officers in the amount of $602,369, which is a result of the increased company activity relating to the completion of development of the launch of our first doorway. This increased activity resulted in a loss from operations of 5,431,984; negative cash flows from operations of $5,697,060; This raises substantial doubt about its ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital and implement its business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
Management believes that actions presently being taken to obtain additional funding and implement its strategic plans provide the opportunity for the Company to continue as a going concern.
Off-Balance Sheet Arrangements
None.
Critical Accounting Policies
A critical accounting policy is defined as one that is both material to the presentation of our financial statements and requires management to make difficult, subjective or complex judgments that could have a material effect on our financial condition and results of operations. Specifically, critical accounting estimates have the following attributes: 1) we are required to make assumptions about matters that are highly uncertain at the time of the estimate; and 2) different estimates we could reasonably have used, or changes in the estimate that are reasonably likely to occur, would have a material effect on our financial condition or results of operations.
Estimates and assumptions about future events and their effects cannot be determined with certainty. We base our estimates on historical experience and on various other assumptions believed to be applicable and reasonable under the circumstances. These estimates may change as new events occur, as additional information is obtained and as our operating environment changes. These changes have historically been minor and have been included in the financial statements as soon as they became known. Based on a critical assessment of our accounting policies and the underlying judgments and uncertainties affecting the application of those policies, management believes that our financial statements are fairly stated in accordance with accounting principles generally accepted in the United States, and present a meaningful presentation of our financial condition and results of operations. We believe the following critical accounting policies reflect our more significant estimates and assumptions used in the preparation of our financial statements:
Use of Estimates
-These financial statements have been prepared in accordance with accounting principles generally accepted in the United States and, accordingly, require management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Specifically, our management has estimated variables used to calculate the Black Scholes and binomial lattice model calculations used to value derivative instruments discussed below under “Valuation of Derivative Instruments”. In addition, management has estimated the expected economic life and value of our licensed technology, our net operating loss for tax purposes, share-based payments for compensation to employees, directors, consultants and investment banks, and the useful lives of our fixed assets. Actual results could differ from those estimates.
Deferred Financing Costs
-Payments, either in cash or share-based payments, made in connection with the sale of debentures are recorded as deferred debt issuance costs and amortized using the effective interest method over the lives of the related debentures.
Fair Value of Financial Instruments
-For certain of our financial instruments, including accounts receivable, accounts payable, accrued expenses, interest payable, bank overdraft, advances payable and notes payable, the carrying amounts approximate fair value due to their relatively short maturities.
Valuation of Derivative Instruments
-FAS 133, “Accounting for Derivative Instruments and Hedging Activities” requires bifurcation of embedded derivative instruments and measurement of fair value for accounting purposes. In addition, FAS 155, “Accounting for Certain Hybrid Financial Instruments” requires measurement of fair values of hybrid financial instruments for accounting purposes. In determining the appropriate fair value, the Company uses a variety of valuation techniques including Black Scholes models, Binomial Option Pricing models, Standard Put Option Binomial models and the net present value of certain penalty amounts. Derivative liabilities are adjusted to reflect fair value at each period end, with any increase or decrease in the fair value being recorded in results of operations as Adjustments to Fair Value of Derivatives. The effects of interactions between embedded derivatives are calculated and accounted for in arriving at the overall fair value of the financial instruments. In addition, the fair values of freestanding derivative instruments such as warrant derivatives are valued using the Black Scholes model.
Stock Based Compensation
- The Company follows the fair value recognition provisions of FAS 123(R). Stock-based compensation expense is recognized in the financial statements for granted, modified, or settled stock options based on estimated fair values.
ITEM 7A.
ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not Required
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS
eDOORWAYS CORPORATION
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
The accompanying notes are an integral part of these financial statements.
eDOORWAYS CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008 AND FOR THE PERIOD FROM JANUARY 1, 2006
(INCEPTION OF DEVELOPMENT STAGE) TO DECEMBER 31, 2008
The accompanying notes are an integral part of these financial statements.
EDOORWAYS CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS’ DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008 AND FOR THE PERIOD FROM JANUARY 1, 2006
(INCEPTION OF DEVELOPMENT STAGE) TO DECEMBER 31, 2008
The accompanying notes are an integral part of these financial statements.
EDOORWAYS CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
The accompanying notes are an integral part of these financial statements.
eDOORWAYS CORPORATION
(A DEVELOPMENT STAGE COMPANY)
Notes to Financial Statements
Note 1 - Summary of Significant Accounting Policies
Nature of Business
The Company is a development stage entity incorporated in Delaware in 1988, under the name “Technicraft Financial, Ltd.” In August 1994, the Company acquired GK Intelligent Systems, Inc., a Texas corporation, and changed its name to GK Intelligent Systems, Inc. Through 1999, the Company was principally engaged in the development and marketing of software products capable of interaction with and adaptation to the needs of software users and interpretation of data. The Company changed its name in 2005 to M Power Entertainment, Inc. M Power planned to create a lifestyle information/entertainment platform. In 2006, M Power redesigned its platforms. Its new platforms were designed to offer an enhanced form of interactivity and support for today’s visually-oriented web surfing community. On August 20, 2007, the Company changed its name to eDOORWAYS Corporation.
eDOORWAYS
is a web-based personal lifestyle information enhancement and problem solving gateway, lifestyle information source, and business-to-consumer marketplace. Our business strategy is to obtain revenue from lifestyle product and service purchases made while consumers visit our marketplace.
Basis of Presentation
The financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America. The Company is a Development Stage Company, as defined by Statement of Financial Accounting Standards No.7 “Accounting and Reporting for Development Stage Enterprises.” The Company re-entered the development stage on January 1, 2006 after disposing of its operations in M Power.
Reclassifications
Certain amounts in the financial statements of the prior year have been reclassified to conform to the presentation of the current year for comparative purposes.
Use of Estimates
In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheet and revenue and expenses in the statement of operations. Examples include estimates of loss contingencies, including legal risks and exposures, valuation of stock-based compensation; the potential outcome of future tax consequences of events that have been recognized in our financial statements or tax returns; and valuation of derivative instruments. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. These accounts may at times exceed federally insured limits. The Company has not experienced any losses on such accounts. As of December 31, 2008, there were no cash balances in excess of federally insured limits.
Fair Value of Financial Instruments
For certain of our financial instruments, including accounts receivable, accounts payable, accrued expenses, interest payable, bank overdraft, advances payable and notes payable, the carrying amounts approximate fair value due to their relatively short maturities.
Deferred Financing Costs
Payments, either in cash or share-based payments, made in connection with the sale of debentures are recorded as deferred debt issuance costs and amortized using the effective interest method over the lives of the related debentures.
Property, Plant & Equipment
Property and equipment are carried at cost and as of December 31, 2009 and consists solely of computer equipment. Depreciation is provided using the straight-line method for financial reporting purposes based on estimated useful lives of three years.
The cost of asset additions and improvements that extend the useful lives of property and equipment are capitalized. Routine maintenance and repair items are charged to current operations. The original cost and accumulated depreciation of asset dispositions are removed from the accounts and any gain or loss is reflected in the statement of operations in the period of disposition.
Valuation of Derivative Instruments
FAS 133, “Accounting for Derivative Instruments and Hedging Activities” requires bifurcation of embedded derivative instruments and measurement of fair value for accounting purposes. In addition, FAS 155, “Accounting for Certain Hybrid Financial Instruments” requires measurement of fair values of hybrid financial instruments for accounting purposes. In determining the appropriate fair value, the Company uses a variety of valuation techniques including Black Scholes models, Binomial Option Pricing models, Standard Put Option Binomial models and the net present value of certain penalty amounts. Derivative liabilities are adjusted to reflect fair value at each period end, with any increase or decrease in the fair value being recorded in results of operations as Adjustments to Fair Value of Derivatives. The effects of interactions between embedded derivatives are calculated and accounted for in arriving at the overall fair value of the financial instruments. In addition, the fair values of freestanding derivative instruments such as warrant derivatives are valued using the Black Scholes model.
Income Taxes
An asset and liability approach is used for financial accounting and reporting for income taxes. Deferred income taxes arise from temporary differences between income tax and financial reporting and principally relate to recognition of revenue and expenses in different periods for financial and tax accounting purposes and are measured using currently enacted tax rates and laws. In addition, a deferred tax asset can be generated by net operating loss carryforwards (“NOLs”). If it is more likely than not that some portion or all of a deferred tax asset will not be realized, a valuation allowance is recognized.
Revenue Recognition
The Company recognizes revenues when services have been performed, collections are reasonably assured and no further obligations exist. eDOORWAYS had no revenues from continuing operations in 2009 or 2008.
Stock-Based Compensation
Stock-based compensation expense includes the estimated fair value of equity awards vested during the reporting period. The expense for equity awards during the reporting period is determined based upon the grant date fair value of the award and is recognized as expense on the grant date. All shares issued to date for stock-based compensation have vested on the grant date.
Loss Per Share
Basic and diluted net income (loss) per share calculations are presented in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 128, and are calculated on the basis of the weighted average number of common shares outstanding during the period. They include the dilutive effect of common stock equivalents in periods with net income.
Common stock equivalents represent the dilutive effect of the assumed conversion of convertible notes payable and Series C convertible preferred stock, using the “if converted” method, at either the beginning of the respective period presented or the date of issuance, whichever is later, and only if the common stock equivalents are considered dilutive based upon the Company’s net income (loss) position at the calculation date. Common stock equivalents also include the effect of the exercise of outstanding warrants using the treasury stock method, at either the beginning of the respective period presented or the date of issuance, whichever is later, and only if the warrants are considered dilutive based upon the exercise price of the warrants and the average trading price of the stock during the period. All common stock equivalents were considered anti-dilutive for the years ended December 31, 2009 and 2008.
Recently issued accounting pronouncements
eDOORWAYS does not expect that any recently issued accounting pronouncements will have a significant impact on the financial statements of the Company.
Note 2 - Going Concern
These financial statements have been prepared on a going concern basis. As of December 31, 2009, eDOORWAYS had an accumulated deficit of $78,995,844. The continuation of eDOORWAYS as a going concern is dependent upon financial support from its shareholders, the ability to obtain necessary equity or debt financing and the attainment of profitable operations. These factors raise substantial doubt regarding eDOORWAYS’ ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should eDOORWAYS be unable to continue as a going concern.
eDoorways is currently seeking debt or equity financing to fund its development plan although no financing arrangements are currently in place and the Company can provide no assurance that financing will be available on terms acceptable to the Company or at all. Management believes, however, that actions presently being taken to obtain additional funding and implement its strategic plans provide the opportunity for the Company to continue as a going concern.
Note 3 - Convertible Debentures
On March 30, 2007, the Company entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with New Millennium Capital Partners II, LLC, AJW Qualified Partners, LLC, AJW Offshore, Ltd. and AJW Partners, LLC (collectively, the “Investors”). Under the terms of the Securities Purchase Agreement, the Investors purchased an aggregate of (i) $165,000 in callable convertible secured notes (the “Notes”) and (ii) warrants to purchase 1,500,000 shares of our common stock (the “Warrants”). After the effect of the reverse common stock split of 2000 to 1 in 2007 the warrants were reduced to 750 shares.
The Notes carried an interest rate of 8% and a maturity date of March 30, 2010. The notes were convertible into our common shares at 50% of the average of the lowest three (3) trading prices for our shares of common stock during the twenty (20) trading day period prior to conversion.
In addition, the Company granted the investors a security interest in substantially all of its assets and intellectual property as well as registration rights.
The Company simultaneously issued to the Investors seven year warrants to purchase 1,500,000 shares of common stock at an exercise price of $.0016 per common share.
The Investors contractually agreed to restrict their ability to convert the Notes and exercise the Warrants and receive shares of the Company’s common stock such that the number of shares of the Company’s common stock held by them and their affiliates after such conversion or exercise does not exceed 4.99% of the then issued and outstanding shares of the Company’s common stock.
Note 4 - Notes payable and convertible notes payable
During October and November 2007, eDOORWAYS borrowed a total of $91,100 under various short-term convertible notes payable. The notes bear interest at 0%, matured within 10 days, and were convertible into shares of common stock at between $0.075 and $0.09 per share (50% of the market price of the common stock on the date of issuance of the notes). During the fourth quarter of 2007, all of these convertible notes in the amount of $91,100 were converted into 1,575,776 shares of common stock. Upon conversion we recognized a $54,000 loss on extinguishment of debt due to the conversion price being greater than the amount owed on two of the loans. Under the terms of the warrants issued in connection with the 6% convertible debentures, if the Company issues common stock at a discount to the exercise price of the warrants, the exercise price of the warrants to purchase shares of common stock is adjusted downward in proportion to the discount given in the new equity issuance. The outstanding warrants affected by this change are 750 warrants with an exercise price of $3.20 expiring March 30, 2014 and 15,000 warrants with an exercise price of $200 that expire April 18, 2013.
On October 25, 2007, the Company completed a financing agreement with private investors and received cash proceeds of $250,000. eDOORWAYS issued the investors secured convertible debentures totaling $250,000 with an 8% interest rate and a maturity date of October 25, 2010. The debentures are convertible into common shares at a discount of 50% of the average of the lowest three (3) trading prices during the twenty (20) trading day period prior to conversion. eDOORWAYS simultaneously issued to the private investors seven year warrants to purchase 10,000,000 common shares at an exercise price of $0.0001.
During the previous year, eDOORWAYS had various unsecured notes payable totaling $102,000 bearing imputed interest rates from 8% to 18% per annum, and accrued interest of $92,518 for a total of $194,518 as of December 31, 2009. These notes payable are due on demand. We are not making payments on any of these notes.
During the previous year, eDOORWAYS issued unsecured notes payable to various private investors for total cash proceeds of $36,400. The notes had a term of 10 days and were non-interest bearing. They were convertible into common stock of eDOORWAYS at a rate of between $0.001 and $0.033 per common share during the 10-day term of the note. Notes in the principal amount of $3,000 were converted into common stock of eDOORWAYS, the remaining $33,400 have passed the ten-day term in which conversion was allowed. These notes have not been repaid and are currently in default.
During the previous year,, the holder of a $3,000 promissory note converted the debt into 1,000,000 shares of common stock valued at $10,000. The shares were valued at the fair value on the date of settlement of $0.01 per share. As a result, eDOORWAYS recognized a loss on debt settlement of $7,000.
During the previous year,, eDOORWAYS issued promissory notes in the amount of $665,000 to various individuals and companies in exchange for services provided to the Company. The notes carried no interest and had a term of 10 days. They were convertible into common stock of eDOORWAYS at a rate of between $0.006 and $0.025 per common share during the 10 day term of the notes. The holders of each of these notes elected to convert them into a total of 28,500,000 shares of common stock. The shares were valued at fair value of the date of settlement of $822,500. As a result, eDOORWAYS recognized a loss on debt settlement of $157,500.
The aggregate maturities of notes payable for the five years subsequent to December 31, 2009 are as follows:
Note 5 - Federal Income Tax
During the year, eDOORWAYS had net operating loss carryforwards of approximately $4,800,000 that may be offset against future taxable income. All other losses incurred by eDOORWAYS in 2005 and previous years are not expected to be available. These net operating loss carryforwards will expire beginning in 2026.
Note 6 - Commitments and Contingencies
A) Litigation
Texas Workforce Commission.
On February 10, 2000, the Texas Workforce Commission placed an administrative lien on us in the amount of $109,024 in connection with a claim for unpaid compensation by our former employees. This amount is included in accrued expenses at December 31, 2008. The remaining $109,024 plus accrued interest at 8% has been accrued in our financial statements under the heading Judgments payable as of December 31, 2008.
Marathon Oil Company.
A default judgment was taken against us in favor of Marathon Oil Company accrued in our financial statements under the heading “accrued expenses” on August 31, 1999 in the amount of $326,943 representing past and future rentals under a lease agreement, together with $7,500 in attorney’s fees and post judgment interest at 10% per annum until paid. Credit towards the judgment was ordered for sale of personal property by the Sheriff or Constable. We believe the personal property sold for approximately $28,000. To the extent that the property was leased during the unexpired term, it is possible that there would be a mitigation of the damages claim in our favor. We believe that some or all of the space was subsequently rented approximately 90 days later. The remaining $306,443 plus accrued interest at 8% has been accrued in our financial statements under the heading Judgments payable as of December 31, 2008.
Deanna S. Slater.
On August 31, 2006, Deanna S. Slater, an independent contractor formerly with M Power Entertainment, Inc., brought suit in County Civil Court at Law Number Four in Harris County, Texas, Docket Number 872,560, alleging breach of contract, quantum meruit, promissory estoppel and for attorney’s fees. The pre-lawsuit demand was for payment of $15,785. Trial was held on this matter in November 2007. On December 31, 2007 the court awarded Deanna S. Slater the sum of $3,400 and $5,000 to her attorneys. $8,400 plus accrued interest at 8% has been accrued in our financial statements under the heading Judgments payable as of December 31, 2008.
The amount of accrued interest on all these unpaid judgments totaled $384,667 as of December 31, 2009 and is reflected in Judgments payable in our financial statements.
B) Consulting Agreements
Gary Kimmons.
On January 1, 2008, eDOORWAYS entered into a three year employment agreement with Gary Kimmons, to act as the CEO and President of the Corporation. The agreement will automatically extend at the end of the 3 year term, unless notification is given by either party to terminate. Compensation was set and authorized by the Board of Directors and agrees to compensate Mr. Kimmons in the following manner: a) Monthly salary of $25,000 (annual salary of $300,000); b) $60,000 annual cash bonus representing 20% of Executive’s annual base salary (executive may elect to receive bonus in the form of common stock rather than a cash payment); c) Company will issue 30,000,000 (thirty million) shares of restricted common stock to the Kimmons Family Partnership, LTD, as a reward for Mr. Kimmons’ retention and accomplishments related to the eDOORWAYS initiative in 2008; and, d) eDOORWAYS will issue 750,000 (seven hundred fifty thousand) shares of Series C convertible preferred stock (See Note 8 - STOCKHOLDER’S EQUITY) to be issued in the name of The Kimmons Family Partnership, LTD as a signing bonus to be given to Executive at the time the employment agreement was executed on January 1, 2008.
The 30,000,000 shares of restricted common stock were valued at $270,000, and the 750,000 shares of Series C convertible preferred stock were valued at $135,000, based on the market value of the common stock that it could be converted into on the date of issuance of $0.009 per common share. The Series C convertible preferred stock was valued using a market value equivalent of twenty shares of common stock. eDOORWAYS recorded the value of the common and preferred stock as general and administrative expense.
During the year ended December 31, 2008, Mr. G. Kimmons received an additional 4,062,500 shares of common stock and $36,563 in cash in partial settlement of amounts owed under this contract. As of December 31, 2008, accrued compensation and expense reimbursements of $318,243 were included in accrued expenses to related parties.
Lance Kimmons.
On January 1, 2008, eDOORWAYS entered into a one year consulting services agreement with Lance Kimmons (a director of eDOORWAYS) to assist with operations and business development of eDOORWAYS. Mr. L. Kimmons will also serve on the board of directors for the year 2008, and will receive the monthly director compensation of $2,500 per month, in addition to a $7,000 per month fee for consulting services in relation to the business development aspect of the contract. During the year ended December 31, 2008, Mr. L. Kimmons received 11,250,000 shares of common stock and $5,000 in cash in partial settlement of amounts owed under this contract. As of December 31, 2008, accrued compensation of $83,000 was included in accrued expenses to related parties.
Kathryn Kimmons.
On January 1, 2008, eDOORWAYS entered into a non-employee director agreement with Kathryn Kimmons (a related party) to serve on the Board of Directors for the year 2008 and receive monthly director compensation of $2,500. During the year ended December 31, 2008, Ms. Kimmons received 6,375,000 shares of common stock and $9,500 in cash in partial settlement of amounts owed under this contract. As of December 31, 2008, accrued director compensation of $1,800 was included in accrued expenses to related parties.
Ajene Watson.
On March 10, 2008, eDOORWAYS entered into a consulting agreement (“Watson Agreement”) with Ajene Watson, an individual consultant and a related party in New York, who is charged with establishing an entertainment vertical service offering as a component of eDOORWAYS. The agreement had an initial “trial” period of 90 days and converted to a month-to-month agreement thereafter. Ajene Watson and his affiliates received, upon execution of the agreement, a retainer of $155,000 in the form of a non-refundable cash retainer of $5,000; a non- refundable equity retainer of $105,000 in free trading common stock at a price of $0.0025 per common share or 42,000,000 share s and a non-refundable equity retainer of $45,000 in restricted common stock at a price of $0.005 per common share or 9,000,000 shares, according to the share values stipulated in the agreement. The agreement was executed on March 10, 2008 and approved by the Board on March 11, 2008.
eDOORWAYS valued those shares in accordance with generally accepted accounting principles at the then current fair value of the equity of $0.012 a share on March 10, 2008 or $612,000 in aggregate. This amount was recorded as general and administrative expense during 2008.
Under the terms of the contract beginning April 1, 2008, eDOORWAYS shall pay Ajene Watson a monthly compensation of $50,000 on the first business day of each month. The payment shall be made as follows:
1. 58% or $29,000 of the monthly compensation shall be paid in the form of Restricted Common Stock determined based on a 10% discount from the day’s prior closing bid price. Such compensation is not to exceed 5,800,000 shares or calculate lower than a per share price of $0.005. If the per share price of the Compensation equates to less than $0.005 per common share, the Company shall issue the maximum shares of 5,800,000 and pay the deficit in cash within 30 days. The first payment was due on April 1, 2008.
2. 39% or $19,500 of the monthly compensation shall be in the form of eDOORWAYS’common stock on the first business day of each month. Such compensation is not to exceed 2,785,714 shares or calculate lower than a per share price of $0.007 per common share. If the per share price of the compensation equates to less than $0.007 per share, eDOORWAYS shall issue the Maximum shares of 2,785,714 and pay the deficit in cash within 30 days.
3. 3% or $1,500 of the monthly compensation shall be paid in cash on the first business day of each month.
During the year 2008, eDOORWAYS issued a total of 69,341,855 shares of common stock in payment for services under the agreement. The shares were valued at $680,692 which was included in general and administrative expense.
As of August 31, 2009, an additional 30,000,000 shares of common stock valued at $60,000 have been issued under the Watson Agreement, as a retention bonus
Note 7 - Stock Options and Warrants
During 1998, eDOORWAYS established a stock option plan subsequently amended and now known as the “2004 Stock Option Plan” to promote its interests by attracting and retaining exceptional employees and directors. The Plan provides for the issuance of up to 2,000,000 shares of common stock. Any employee or consultant is eligible to be designated a participant. The Board has sole and complete authority to determine the employees to whom options shall be granted, the number of each grant and any additional conditions and limitations. The exercise price shall not be less than the fair market value of the underlying shares. In March 2009, the Company issued 2,000,000 shares under the stock incentive compensation program.
In addition, eDOORWAYS periodically issues warrants to purchase common stock in conjunction with debt issuances and; as incentive compensation for services or settlement of debt to officers, directors, employees, and consultants.
The following table is an analysis of warrants for the purchase of eDOORWAYS’ common stock for the year ended December 31, 2009 and 2008.
Note 8 - Stockholders Equity
Preferred Stock
On January 20, 2006, eDOORWAYS filed a Certificate of Designation to designate 1,000 shares of Series D preferred at a par value of one-tenth of one cent ($0.001). These shares were issued to CEO Gary Kimmons. The Series D Preferred shares have the same dividend rights as the common stock of eDOORWAYS and gives Mr. Kimmons the right to vote on all shareholder matters equal to 51 percent of the total vote. These shares of stock were issued for services and were valued at $762,976.
On November 30, 2007, eDOORWAYS amended its Articles of Incorporation to amend its authorized shares to the following:
The Board of Directors is vested with the authority to fix the voting powers and other designations of each class of stock. The Board has not made any such designations of the Series A and Series B Convertible Preferred Stock. On December 4, 2007, the Board of Directors designated that the Series C Convertible Preferred Stock would:
● Carry voting rights five times the number of common stock votes;
● Carry no dividends;
●Carry liquidating preference eight times the sum available for distribution to common shareholders;
●Can automatically convert after one year after issuance to 20 common shares; and
● Not be subject to reverse stock splits and other changes to the common stock of eDOORWAYS.
Common stock
During the year ended December 31, 2009, the holders of the Convertible Debentures elected to convert principal in the amount of $5,770 into 2,700,000 shares of common stock. This resulted in a decrease in the derivative liability of $4,489, which represented the fair value of the embedded derivative associated with converted principal on the date of conversion.
During the year ended December 31, 2009, the holders of notes payable in the amount of $670,000 elected to convert their notes into 31,906,738 shares of common stock valued at $842,127 at the date of conversion.
During the year ended December 31, 2009, eDOORWAYS issued 21,687,500 shares of common stock to directors and officers of eDOORWAYS and recognized general and administrative expense of $171,763. 10,437,500 shares are included in stock issued for compensation in the statement of stockholders’ deficit, with the value of $82,763. 11,250,000 shares are included in stock issued for services in the statement of stockholders’ deficit, with the value of $89,000.
During the year ended December 31, 2009, eDOORWAYS granted a total of 218,134,143 shares of common stock to various consultants for services performed. These shares were valued at $1,985,300 based on the market value of the shares issued. This amount is included in general and administrative expenses in the statement of operations and the shares are included in stock issued for services in the statement of stockholders’ deficit.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not Applicable.
ITEM 9A(T).
ITEM 9A(T). CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures.
Our management, principally our chief financial officer and chief executive officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, our management concluded that our disclosure controls and procedures as of the end of the period covered by this report were not effective to ensure that the information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding disclosure. It has been determined by our management that the Company has inadequate segregation of duties consistent with control objectives and has insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of GAAP and SEC requirements. T he Company has inadequate segregation of duties consistent with control objectives and further, has insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of GAAP and SEC disclosure requirements. The Company has ineffective controls over period end financial disclosure and reporting processes.
Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Our internal control system was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes, in accordance with generally accepted accounting principles. Because of inherent limitations, a system of internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate due to change in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our management conducted an evaluation of the effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on its evaluation, our management concluded that there is a material weakness in our internal control over financial reporting. A material weakness is a deficiency, or a combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.
The material weakness relates to the lack of segregation of duties in financial reporting, as our financial reporting and all accounting functions are performed by an external consultant with no oversight by a professional with accounting expertise. Our management does not possess accounting expertise. This weakness is due to the company’s lack of working capital to hire additional staff. To remedy this material weakness, we intend to engage another accountant to assist with financial reporting as soon as our finances will allow.
Other than the remediation steps described above, there have been no changes in our system of internal controls over financial reporting during the year ended December 31, 2008, that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to the attestation by the Company’s registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only management’s report in this annual report
ITEM 9B.
ITEM 9B. OTHER INFORMATION
None.
PART III
ITEM 10.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The following table sets forth the name, age and position of each of the members of our board of directors, executive officers and promoters as of December 31, 2009:
Our Board of Directors consists of only one class. All of the directors will serve until the next annual meeting of stockholders and until their successors are elected and qualified, or until their earlier death, retirement, resignation or removal. There are no family relationships among directors and executive officers. We also have provided a brief description of the business experience of each director and executive officer during the past five years and an indication of directorships held by each director in other companies subject to the reporting requirements under the Federal securities laws.
GARY F. KIMMONS
, has served as chairman of the board since August 1998, and from 1993 until April 1998. Mr. Kimmons has also served as president and chief executive officer since 1993 and secretary since September 1998. Mr. Kimmons has extensive experience in the design, development and implementation of business management and technical training systems. Mr. Kimmons received a Bachelor of Science degree in psychology, anthropology, and behavioral science from Rice University in 1973 and a masters degree in applied industrial psychology and management science from Stevens Institute of Technology in 1975.
DAMIAN LANCE KIMMONS
, rejoined the board on January 1, 2007. Mr. Kimmons originally held a position on the board in 2002. Mr. Kimmons has assisted his father, Gary Kimmons, with the development of our business development plan, with a key focus on the automotive vertical marketplace. He attended St. Thomas University from 1998 to 2002, where he majored in business.
KATHRYN KIMMONS
, currently serves as the Secretary and a Director and has held the position from June, 2002. Mrs. Kimmons has over 20 years of experience in the entertainment industry as well as 10 years in retail sales and operations. A business entrepreneur who has founded her own entertainment business as well as a retail business selling antiques and collectibles, Mrs. Kimmons is experienced merchandising presentation, interior and retail buying. Mrs. Kimmons has been a sole proprietor of Sophie’s Nest, a retail enterprise focused on home furnishings
Family Relationships
Gary Kimmons and Kathryn Kimmons are husband and wife. Lance Kimmons is the son of Gary and Kathryn Kimmons.
Section 16(a) Beneficial Ownership Compliance.
Section 16(a) of the Securities Exchange Act of 1934 requires our executive officers, directors and persons who own more than ten percent of our shares of common stock, to file initial reports of beneficial ownership on Form 3, changes in beneficial ownership on Form 4 and an annual statement of beneficial ownership on Form 5, with the SEC. Such executive officers, directors and greater than ten percent shareholders are required by SEC rules to furnish us with copies of all such forms that they have filed.
Based solely on our review of the copies of such forms filed with the SEC electronically, received by us and representations from certain reporting persons, for the fiscal year ended December 31, 2008, none of the officers, directors and more than 10% beneficial owners have filed Form 5’s with the SEC.
Code of Ethics
We have adopted a code of ethics for our principal executive officers, which is posted on our internet website at www.edoorways.com.
Director Independence
Our determination of independence of directors is made using the definition of “independent director” contained in Rule 4200(a)(15) of the Marketplace Rules of the NASDAQ Stock Market (“NASDAQ”), even though such definitions do not currently apply to us because we are not listed on NASDAQ. We have determined that none of the members of our Board of Directors as of December 31, 2009 were “independent” within the meaning of such rules.
ITEM 11
ITEM 11 . EXECUTIVE COMPENSATION
The following table sets forth the aggregate cash compensation paid by the Company for services rendered during the last two years to the Company’s executive officers.
Mr. Kimmons, the President and CEO of the Company is currently subject to an Employment Agreement with the Company. See “Employment Contracts” below.
Grants of Plan Based Awards
On March 31, 2004, the Board of Directors approved and adopted the Non Employee-Directors and Consultants Retainer Stock Plan for the Year 2004. The plan was established in order to provide a method whereby chosen directors and persons providing services to the Company may be offered incentives in addition to those presently available, and may be stimulated by increased personal involvement in the fortunes and success of the Company, thereby advancing the interests of the Company and its shareholders. The number of common shares authorized under the plan is two million (2,000,000).
Outstanding Equity Awards at Fiscal Year-End
The following table sets forth for each named executive officer certain information concerning the outstanding equity awards as of our latest fiscal year end December 31, 2009 .
Election of Officers
Each director is elected at the Company’s annual meeting of shareholders and holds office until the next annual meeting of stockholders or until the successors are qualified and elected. The bylaws permit the Board of Directors to fill any vacancy and such director may serve until the next annual meeting of shareholders or until his or her successor is elected and qualified.
Compensation of Directors
The following table sets forth the aggregate cash compensation paid by the Company for services rendered by its Directors during the last completed fiscal year.
Employment Agreements
Gary Kimmons.
On January 1, 2008, the Company entered into a three year employment agreement with Gary Kimmons, to act as the CEO and President of the Corporation. The agreement will automatically extend at the end of the 3 year term, unless notification is given by either party to terminate. Compensation was set and authorized by Board of Directors and agrees to compensate Mr. Kimmons in the following manner: a) Monthly salary of $25,000 (annual salary of $300,000); b) $60,000 annual cash bonus representing 20% of Executive’s annual base salary (executive may elect to receive bonus in the form of common stock rather than a cash payment); c) Company will issue 30,000,000 (thirty million) shares of restricted common stock to the Kimmons Family Partnership, LTD, as a reward for Mr. Kimmons’ accomplishments related to the EDOORWAYS initiative in 2007; and, d) The Company will issue 750,000 (seven hundred fifty thousand) shares of Series C convertible preferred stock (See Note 6 - Stockholder’s Equity) to be issued in the name of The Kimmons Family Partnership, LTD as a signing bonus to be given to Executive at the time the employment agreement was executed on January 1, 2008.
The 30,000,000 shares of restricted common stock were valued at $270,000, and the 750,000 shares of Series C convertible preferred stock were valued at $135,000, based on the market value of the stock on the date of issuance. The Series C convertible preferred stock was valued using market value of twenty shares of common stock. The company recorded the value of the common stock and preferred stock as general and administrative expense.
During the year ended December 31, 2008, Mr. G. Kimmons received an additional 4,062,500 shares of common stock and $36,563 in cash in partial settlement of amounts owed under this contract. As of December 31, 2008, accrued compensation and expense reimbursements of $318,243 were included in accrued expenses to related parties.
Lance Kimmons.
On January 1, 2008, we entered into a one year consulting services agreement with Lance Kimmons (a director of eDOORWAYS) to assist with operations and business development of DOORWAYS. Mr. L. Kimmons will also serve on the board of directors for the year 2008, and will receive the monthly director compensation of $2,500 per month, in addition to a $7,000 per month fee for consulting services in relation to the business development aspect of the contract. During the year ended December 31, 2008, Mr. L. Kimmons received 11,250,000 shares of common stock and $5,000 in cash in partial settlement of amounts owed under this contract. As of December 31, 2008, accrued compensation of $83,000 was included in accrued expenses to related parties.
Kathryn Kimmons.
On January 1, 2008, eDOORWAYS entered into a non-employee director agreement with Kathryn Kimmons (a related party) to serve on the Board of Directors for the year 2008 and receive monthly director compensation of $2,500. During the year ended December 31, 2008, Ms. Kimmons received 4,375,000 shares of common stock and $9,500 in cash in partial settlement of amounts owed under this contract. As of December 31, 2008, accrued director compensation of $1,800 was included in accrued expenses to related parties
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of Decemberr 31, 2009, the name and number of shares of the Company’s common stock, par value $0.001 per share, held of record by (i) each of the three highest paid persons who are officers and directors of the Company, (ii) beneficial owners of 5% or more of our common stock; and (iii) all the officers and directors as a group. Pursuant to the rules and regulations of the Securities and Exchange Commission, shares of common stock that an individual or group has a right to acquire within 60 days pursuant to the exercise of options or warrants are deemed to be outstanding for the purposes of computing the percentage ownership of such individual or group, but are not deemed to be outstanding for the purposes of computing the percentage ownership of any other person shown in the table.
1.
All amounts shown in this column include shares obtainable upon exercise of stock options or warrants currently exercisable or exercisable within 180 days of the date of this table and is based on 642,512,859 of common stock outstanding as December 31, 2009.
2.
Mr. Gary Kimmons is a general partner of the Kimmons Family Partnership, Ltd., and as such has the sole voting, investment and disposition power over the 34,375,000 shares of Common Stock owned by the partnership
3.
Mrs. Kimmons is deemed to have indirect beneficial ownership of these shares, as the spouse of Gary F. Kimmons.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There are no related party transactions in the fiscal year ending December 31, 2009.
ITEM 14.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Independent Public Accountants
Our independent accountants for the fiscal year ended December 31, 2008 was GBH CPAs, PC. We did not have audited financials for 2009.
EXHIBITS.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant has caused this report to be signed on its behalf by the undersigned, there unto duly authorized.
Dated: 15th Feb 2020
/s/ Saskya Bedoya
Saskya Bedoya, President
In accordance with the Exchange Act, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Dated: 15th Feb 2020
/s/ Saskya Bedoya
Saskya Bedoya, President
Dated: 15th Feb 2020
/s/ Murugan Venkat
Murugan Venkat, Secretary