ITEM 1. BUSINESS
Business Development
Deltron, Inc. was incorporated in the State of Nevada on September 14, 2005. We were formed as a land development company that intended to construct rental housing units in Costa Rica. In March of 2006, Deltron, Inc. purchased a property in San Isidro de Heredia, Costa Rica, which we intended to develop.
As of the date of this filing, we have taken the following steps in execution of our original business plan: We incorporated Deltron Holdings Corporation S.A. (“Deltron S.A.”) on November 17, 2005 in San Jose, Costa Rica, a company in which Deltron, Inc. owns 100% of the shares. Deltron S.A. was used to purchase the property that we had available for our development plans. We intended to construct a minimum of two (2) three-bedroom apartments with the goal of renting them to middle-income families in order to generate revenue. We hired the services of Tropical Design Group S.A., an architectural firm, who has completed the design and aforementioned plans for two rental units to be built on the site owned by us. From July 2006 through February 2007, we spent $12,514 on building plans and permits. The architectural designs have been completed and were approved by the College of Architects and Engineers of Costa Rica (a requirement before plans can be submitted to the city engineering department for approval and issuance of the construction permits) and we have received the construction permits from the city of San Isidro de Heredia. However, these construction permits were never used and they expired in December of 2007. We were required to suspend the construction of the two apartments/housing units due to lack of funds, as the cost of construction has significantly increased since our original estimate in 2005. We subsequently have cancelled our contract with Tropical Design Group S.A.
We decided prior to the end of our fiscal year ended September 30, 2009, to redirect our business focus towards identifying and pursuing options regarding the development of a new business plan and direction. We are currently looking for ventures of merit for corporate participation as a means of enhancing stockholder value. This may involve sales of our equity or debt securities in merger or acquisition transactions.
On October 22, 2009, the Company entered into a Letter of Intent with Blu Vu Deep Oil & Gas Exploration (“Blu Vu”). The companies plan to enter into a definitive agreement under which Deltron will acquire Blu Vu in exchange for stock of Deltron in the form of a merger.
As of September 30, 2009, we had generated no revenues. We have been issued an opinion by our auditor that raises substantial doubt about our ability to continue as a going concern based on our current financial position, please refer to note 7 of our financial statements.
We have a total of 100,000,000 authorized common shares with a par value of $0.001 per share and 5,545,000 common shares issued and outstanding as of September 30, 2009.
Patents, Trademarks and Licenses, Franchises, Concessions, Royalty Agreements or Labor Contracts
We presently utilize no patents, licenses, franchises, concessions, royalty agreements or labor contracts in connection with our business.
Research and Development
During the fiscal years ended September 30, 2009 and 2008, we made no expenditures on research and development.
Employees
As of December 15, 2009, our only employees are our two executive officers.
Bankruptcy or Similar Proceedings
The Company has not been involved in any bankruptcy, receivership or similar proceedings.
ITEM 1A.
ITEM 1A.
RISK FACTORS
Because we are a “smaller reporting company” as that term is defined by the SEC, we are not required to present risk factors at this time.
ITEM 1B.
ITEM 1B.
UNRESOLVED STAFF COMMENTS
None.
ITEM 2.
ITEM 2.
PROPERTIES
Deltron’s principal place of business and corporate offices is located at Sabana Oeste, Restuarante Princessa Marina, 200 Metros Oeste, 100 Norte, Porton Verde, Frente SBC Computadoras, San Jose, Republic of Costa Rica, the telephone number is (702) 987-1847. The office space is a 3,000 square foot shared-office building in which Deltron has use of a 150 square foot office. We have no intention of finding office space to rent during the development stage of the company and we will operate from these premises for the time being. Since we have been given access to office space free of charge, no rental agreement is in place and we are subject to eviction without notice at any time.
Deltron currently owns a 592 square meter lot in San Isidro de Heredia, Costa Rica. This property was purchased for $40,657 on March 29, 2006, from an un-affiliated third party, through our wholly-owned subsidiary Deltron Holding Corporation S.A. The funds to purchase the property were loaned to Deltron Holdings by Shawn Phillips, a director of our company. The balance is non-interest bearing and there are no specific terms of repayment.
ITEM 3.
ITEM 3.
LEGAL PROCEEDINGS
Legal Proceedings
No legal or governmental proceedings are presently pending or, to our knowledge, threatened, to which we are a party.
ITEM 4.
ITEM 4.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders, through the solicitation of proxies or otherwise, during the fourth quarter of the fiscal year covered by this report.
PART II
ITEM 5.
ITEM 5.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
“Bid” and ”ask” prices for our common stock have been quoted on the Over-The-Counter Bulletin Board (the “OTCBB”) under the symbol “DTRO.OB” since December 20, 2006. However, our stock has never traded.
As of December 15, 2009, we had 34 shareholders of record of our common stock.
Dividends
There are no restrictions in our articles of incorporation or bylaws that prevent us from declaring dividends. The Nevada Revised Statutes, however, do prohibit us from declaring dividends where, after giving effect to the distribution of the dividend:
1.
we would not be able to pay our debts as they become due in the usual course of business; or
our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the rights of shareholders who have preferential rights superior to those receiving the distribution.
We have not declared any dividends, and we do not plan to declare any dividend in the foreseeable future.
Recent Sales of Unregistered Securities
During the fiscal year ended September 30, 2009, we issued no equity securities.
Securities Authorized For Issuance Under Equity Compensation Plans
We do not have any equity compensation plans and accordingly we have no securities authorized for issuance under any such plans.
ITEM 6.
ITEM 6.
SELECTED FINANCIAL DATA
Not applicable.
ITEM 7.
ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion highlights the principal factors that have affected our financial condition and results of operations as well as our liquidity and capital resources for the periods described. This discussion contains forward-looking statements. Please see “Forward-Looking Statements” for a discussion of the uncertainties, risks and assumptions associated with these forward-looking statements.
The following discussion and analysis of the Company’s financial condition and results of operations are based on the preparation of our financial statements in accordance with U.S. generally accepted accounting principles. You should read the discussion and analysis together with such financial statements and the related notes thereto.
Results of Operations
We are a development stage corporation. We have generated no revenues from our business operations since inception and have incurred $97,851 in expenses through September 30, 2009.
The following table provides selected financial data about our company for the year ended September 30, 2009 and 2008.
Balance Sheet Data
September 30, 2009
September 30, 2008
Cash and cash equivalents
$
10.985
$
23,541
Total assets
$
51,642
$
76,712
Total liabilities
$
43,593
$
43,165
Shareholders’ equity
$
8,049
$
33,547
Net cash provided by financing activities since inception through September 30, 2009 was $148,165, consisting of $105,900 raised from the sale of our common stock and $42,265 advanced from a director and former officer of the company.
Plan of Operation
Our auditors have issued a going concern opinion on our September 30, 2009, audited financial statements, refer to note 7. This means that there is substantial doubt that we can continue as an ongoing business for the next twelve months unless we obtain additional capital to pay for our expenses. This is because we have not generated any revenues and there is no assurance we will ever reach this point. Accordingly, we must raise sufficient capital from other sources. Our only other source for cash at this time is investments by others. We must raise cash to stay in business.
We are a development stage company that has no operations, no revenue, no financial backing and limited assets. We had originally planned to develop our property in San Jose, Costa Rica, to rent two three-bedroom apartments to middle income families. Recently, the Company has decided to redirect its business focus towards identifying and pursuing options regarding the development of a new business plan and direction. The Company is currently seeking ventures of merit for corporate participation as a means of enhancing stockholder value. This may involve sales of equity or debt securities in merger or acquisition transactions.
On October 22, 2009, the Company entered into a Letter of Intent with Blu Vu Deep Oil & Gas Exploration (Blu Vu). The companies plan to enter into a definitive agreement under which Deltron will acquire Blu Vu in exchange for stock of Deltron in the form of a merger.
We do not currently engage in any product research and development and have no plans to do so in the foreseeable future. We have no present plans to purchase or sell any plant or significant equipment. We also have no present plans to add employees although we may do so in the future if we engage in any merger or acquisition transactions.
Liquidity and Capital Resources
Our cash and cash equivalents balance as of September 30, 2009 was $10,985.
We are a development stage company and currently have no operations.
We do not have sufficient funds on hand to pursue our business objectives for the near future or to commence operations without seeking additional funding. We currently do not have a specific plan of how we will obtain such funding.
Loans to the Company
We received $42,265 in loans from Mr. Phillips, a director and former officer of the company. This amount owed to Mr. Phillips is non-interest bearing, unsecured, and due on demand.
We have minimal operating costs and expenses at the present time due to our limited business activities. We will, however, be required to raise additional capital over the next twelve months to meet our current administrative expenses, and, additionally, we may do so in connection with or in anticipation of possible acquisition transactions. This financing may take the form of additional sales of our equity or debt securities to, or loans from, our majority stockholder, or from our sole officer and director. There is no assurance that additional financing will be available from these or other sources, or, if available, that it will be on terms favorable to us.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA
Our audited financial statements are included beginning immediately following the signature page to this report. See Item 15 for a list of the financial statements included herein.
ITEM 9.
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
On August 6, 2009, the Board of Directors appointed Seale & Beers, CPAs (“Seal & Beers”) as Deltron, Inc.’s independent auditors for the 2009 fiscal year, replacing Moore & Associates, Chartered (“Moore”).
On August 6, 2009, the Company received notice from Moore announcing their resignation as the Company’s independent auditor effective August 6, 2009. Furthermore, the Company has been advised that the PCAOB revoked the registration of Moore on August 27, 2009, because of violations of PCAOB rules and auditing standards in auditing the financial statements, PCAOB rules and quality controls standards, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and noncooperation with a Board investigation.
For the years ended September 30, 2008 and 2007, there were no disagreements with Moore on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements if not resolved to Moore’s satisfaction would have caused them to make reference to the subject matter of the disagreement in connection with their reports. For the years ended September 30, 2008 and 2007, there were no “reportable events” as that term is described in Item 304(a)(1)(v) of Regulation S-K.
ITEM 9A.
ITEM 9A.[T]
CONTROLS AND PROCEDURES
Evaluation of Our Disclosure Controls
Under the supervision and with the participation of our senior management, including our chief executive officer and chief financial officer, Randall Fernandez, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of
the period covered by this annual report (the “Evaluation Date”). Based on this evaluation, our chief executive officer and chief financial officer concluded as of the Evaluation Date that our disclosure controls and procedures were effective such that the information relating to us, including our consolidated subsidiaries, required to be disclosed in our Securities and Exchange Commission (“SEC”) reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.
Management’s Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes of accounting principles generally accepted in the United States. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives. With the participation of Randall Fernandez, our Chief Executive and Financial Officer, our management conducted an evaluation of the effectiveness of our internal control over financial reporting as of September 30, 2009, based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control - Integrated Framework. Based upon such evaluation, our management concluded that we did maintain effective internal control over financial reporting as of September 30, 2009, based on the COSO framework criteria.
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 temporary rules of the Securities and Exchange Commission that permit us to provide only management’s report in this annual report.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting that occurred during the quarter ended September 30, 2009 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.
Officers’ Certifications
Appearing as exhibits to this Annual Report are “Certifications” of our Chief Executive Officer and Chief Financial Officer. The Certifications are required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (the “Section 302 Certifications”). This section of the Annual Report contains information concerning the Controls Evaluation referred to in the Section 302 Certification. This information should be read in conjunction with the Section 302 Certifications for a more complete understanding of the topics presented.
ITEM 9B.
ITEM 9B.
OTHER INFORMATION
Not applicable.
PART III
ITEM 10.
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
Executive Officers, Directors and Key Employees
Directors serve until the next annual meeting of the stockholders; until their successors are elected or appointed and qualified, or until their prior resignation or removal. Officers serve for such terms as determined by our board of directors. Each officer holds office until such officer’s successor is elected or appointed and qualified or until such officer’s earlier resignation or removal. No family relationships exist between any of our present directors and officers.
The following table sets forth certain information, as of December 15, 2009, with respect to our directors and executive officers.
Name and Address
Age
Positions
Randall Fernandez
Sabana Oeste, Restaurante Princessa Marina,
200 Metros Oeste y 100 mts Norte, Portón Verde, Frente SBC Computadoras,
San José, República de Costa Rica
President, Chief Financial Officer, Treasurer and member of the Board of Directors
Hilda Rivera
Sabana Oeste, Restaurante Princessa Marina,
200 Metros Oeste y 100 mts Norte, Portón Verde, Frente SBC Computadoras,
San José, República de Costa Rica
Secretary and Member of the Board of Directors
Shawn Phillips
Sabana Oeste, Restaurante Princessa Marina,
200 Metros Oeste y 100 mts Norte, Portón Verde, Frente SBC Computadoras,
San José, República de Costa Rica
Member of the Board of Directors
Randall Fernandez has held the positions of President, CFO, Treasurer and a director since September 9, 2008. He is expected to hold said offices/positions until the next annual meeting of our stockholders.
Hilda Rivera has been a member of the Board of Directors since inception and was appointed to Secretary on September 9, 2008. She is expected to hold said Office/positions until the next annual meeting of our stockholders.
Shawn Phillips, as of September 9, 2008, has resigned from his positions of President, CEO, CFO, and Treasurer, positions he has held since inception and the position of Secretary since February 5, 2007. He has been a member of the Board of Directors since inception and he is expected to hold said position until the next annual meeting of our stockholders.
Mr. Fernandez, Mr. Phillips, and Ms. Rivera are our only officers, directors, promoters and control persons.
Certain biographical information of our directors and officers is set forth below.
Randall Fernandez
Mr. Fernandez graduated with a degree in Odontology from the Universidad Veritas de Costa Rica in March of 2005.
From January 2003 to March 2005, Mr. Fernandez has worked in the capacity as a dental Assistant in the clinic “Guevara y de la O” in San Jose, Costa Rica. Since being awarded his doctorate in dentistry in March of 2005, he has been working in the capacity of Senior Partner of the “Guevara y de la O” dental clinic. He also owns a business specializing in the refurbishing and renovating of damaged homes and properties in Costa Rica and then reselling them
Hilda Rivera
Ms. Rivera is a Land Developer and convenience store proprietor living in San Jose, Costa Rica.
In the last seven years Mrs. Rivera has developed six residential properties in Costa Rica which she currently rents to the public.
Shawn Phillips
Mr. Phillips has over 19 years experience in the direct marketing industry specializing in both business-to-business and direct to consumer mail-order sales.
He has sold millions of dollars worth of informational reports/booklets ranging from how to live a healthier and more prosperous life, to discount coupon books, financial services, semi-precious jewelry, travel information, and organic foods.
Mr. Phillips has spent the last six years as a mail-order consultant for numerous firms that market various information products. Mr. Phillips was a Director of Coronado Corp., which is quoted on the OTCBB (www.otcbb.com) under the symbol CRAO. Mr. Phillips served as a Director from January 9, 2006 until December 14, 2009.
Employment Agreements
We have no formal employment agreements with any of our employees.
Term of Office
Our directors are appointed for a period of one year or until such time as their replacements have been elected by our shareholders. The officers of the Company are appointed by our board of directors and hold office until their resignation or removal.
Audit Committee
We do not have a standing audit committee, an audit committee financial expert, or any committee or person performing a similar function. We currently have limited working capital and no revenues. Management does not believe that it would be in our best interests at this time to retain independent directors to sit on an audit committee. If we are able to raise sufficient financing in the future, then we will likely seek out and retain independent directors and form an audit, compensation committee and other applicable committees.
Board of Directors
We do not pay our Directors for attending board meetings. However, they are reimbursed for expenses, if any, for attendance at meetings of the Board of Directors. Our Board of Directors may designate from among its members an executive committee and one or more other committees but has not done so to date. We do not have a nominating committee or a nominating committee charter. Further, we do not have a policy with regard to the consideration of any director candidates recommended by security
holders. To date this has not been a problem as no security holders have made any such recommendations. Members of the Board of Directors perform all functions that would otherwise be performed by committees. Given the present size of our board it is not practical for us to have committees. If we are able to grow our business and increase our operations we intend to expand the size of our board and allocate responsibilities accordingly.
Compliance with Section 16(a) of the Exchange Act
Our common stock is not registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Accordingly, our officers, directors and principal shareholders are not subject to the beneficial ownership reporting requirements of Section 16(a) of the Exchange Act.
Code of Ethics
In 2006 we adopted a Code of Ethics that applies to all of our employees. A copy of our Code of Ethics will be provided to any person requesting same without charge. To request a copy of our Code of Ethics, please make written request to our President c/o Deltron, Inc. at Sabana Oeste, Restaurante Princessa Marina, 200 Metros Oeste y 100 mts Norte, Portón Verde, Frente SBC Computadoras, San José, República de Costa Rica.
ITEM 11.
ITEM 11.
EXECUTIVE COMPENSATION
The following table sets forth information concerning the total compensation paid or accrued by us during the two fiscal years ended September 30, 2009 and 2008 to (i) all individuals that served as our principal executive officer or acted in a similar capacity for us at any time during the fiscal year ended September 30, 2009; (ii) all individuals that served as our principal financial officer or acted in a similar capacity for us at any time during the fiscal year ended September 30, 2009; and (iii) all individuals that served as executive officers of ours at any time during the fiscal year ended September 30, 2009 that received annual compensation during the fiscal year ended September 30, 2009 in excess of $100,000.
Summary Compensation Table
Name and Principal Position
Year
Salary
($)
Bonus ($)
Stock Awards ($)
Option Awards ($)
Non-
Equity Incentive
Plan Compen-sation ($)
Non-
qualified
Deferred
Compen-sation
Earnings ($)
All
Other
Compen-sation ($)
Total ($)
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
Randall Fernandez,(2)
Chief Executive and Financial Officer
Hilda Rivera,(3)
Secretary
1,000
1,000
Shawn Phillips,(1) Chief Executive and Financial Officer
(1)
Shawn Phillips served as our President, Chief Executive Officer from inception until June 9, 2008 and served as our Chief Financial Officer, Secretary and Treasurer from October 18, 2007 to September 9, 2008.
(2)
Randall Fernandez has served as our President, Chief Executive Officer, Chief Financial Officer, Treasurer and as a Director from September 9, 2008, through the present.
(3)
Hilda Rivera has served as our Secretary from September 9, 2008, and as a Director from inception through the present.
We have not issued any stock options or maintained any stock option or other incentive plans since our inception. We have no plans in place and have never maintained any plans that provide for the payment of retirement benefits or benefits that will be paid primarily following retirement including, but not limited to, tax qualified deferred benefit plans, supplemental executive retirement plans, tax-qualified deferred contribution plans and nonqualified deferred contribution plans. Similarly, we have no contracts, agreements, plans or arrangements, whether written or unwritten, that provide for payments to the named executive officers or any other persons following, or in connection with the resignation, retirement or other termination of a named executive officer, or a change in control of us or a change in a named executive officer’s responsibilities following a change in control.
Compensation of Directors
During the fiscal years ended September 30, 2009 and 2008, there were no arrangements between us and our directors that resulted in our making any payments to our directors for any services provided to us by them as directors.
ITEM 12.
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth information with respect to the beneficial ownership of our common stock known by us as of December 15, 2009 by:
·
each person or entity known by us to be the beneficial owner of more than 5% of our common stock;
·
each of our directors;
·
each of our executive officers; and
·
all of our directors and executive officers as a group.
The percentages in the table have been calculated on the basis of treating as outstanding for a particular person, all shares of our common stock outstanding on such date and all shares of our common stock issuable to such holder in the event of exercise of outstanding options, warrants, rights or conversion privileges owned by such person at said date which are exercisable within 60 days of December 15, 2009. Except as otherwise indicated, the persons listed below have sole voting and investment power with respect to all shares of our common stock owned by them, except to the extent such power may be shared with a spouse.
Name and Address
of Beneficial Owner
Title of Class (1)
Shares of Common Stock Beneficially Owned(1)
Percentage
Ownership(2)
Randall Fernandez
Sabana Oeste, Restaurante Princessa Marina, 200 Metros Oeste y 100 mts Norte, Portón
Verde, Frente SBC Computadoras, San José,
República de Costa Rica
Common Stock, par value $0.001 per share
0%
Hilda Rivera
Sabana Oeste, Restaurante Princessa Marina, 200 Metros Oeste y 100 mts Norte, Portón Verde, Frente SBC Computadoras, San José,
República de Costa Rica
Common Stock, par value $0.001 per share
400,000
7.2%
Shawn Phillips
Sabana Oeste, Restaurante Princessa Marina, 200 Metros Oeste y 100 mts Norte, Portón Verde, Frente SBC Computadoras, San José,
República de Costa Rica
Common Stock, par value $0.001 per share
0%
All officers and directors as a group (3 people)
400,000
7.2%
Yoenia Proenza Sanfiel (3)
Sabana Oeste, Restaurante Princessa Marina, 200 Metros Oeste y 100 mts Norte, Portón Verde, Frente SBC Computadoras, San José,
República de Costa Rica
Common Stock, par value $0.001 per share
1,000,000
18%
(1)
As used herein, the term beneficial ownership with respect to a security is defined by Rule 13d-3 under the Securities Exchange Act of 1934 as consisting of sole or shared voting power (including the power to vote or direct the vote) and/or sole or shared investment power (including the power to dispose or direct the disposition of) with respect to the security through any contract, arrangement, understanding, relationship or otherwise, including a right to acquire such power(s) during the next 60 days.
(2)
Percentage based upon 5,545,000 shares of common stock issued and outstanding as of December 15, 2009.
(3)
Ms. Yoenia Proenza Sanfiel is the wife of our Director, Shawn Phillips.
Securities Authorized for Issuance Under Equity Compensation Plans
We have not adopted any equity compensation plans since our inception.
ITEM 13.
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
DIRECTOR INDEPENDENCE
As at September 30, 2009, the Company owed Shawn Phillips, a director and former officer of the company $42,265. This balance is non-interest bearing and is due on demand.
Director Independence
We are not currently subject to listing requirements of any national securities exchange or inter-dealer quotation system which has requirements that a majority of the board of directors be “independent” and, as a result, we are not at this time required to (and we do not) have our Board of Directors comprised of a majority of “Independent Directors.”
ITEM 14.
ITEM 14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
Audit Fees.
The aggregate fees billed to us by our principal accountant for services rendered during the fiscal years ended September 30, 2009 and 2008, are set forth in the table below:
Fee Category
Fiscal year ended
September 30, 2009
Fiscal year ended
September 30, 2008
Audit fees (1)
$ 6,500
$ 6,250
Audit-related fees (2)
Tax fees (3)
All other fees (4)
Total fees
$ 6,500
$ 6,750
(1)
Audit fees consist of fees incurred for professional services rendered for the audit of consolidated financial statements, for reviews of our interim consolidated financial statements included in our quarterly reports on Form 10-Q and for services that are normally provided in connection with statutory or regulatory filings or engagements.
(2)
Audit-related fees consist of fees billed for professional services that are reasonably related to the performance of the audit or review of our consolidated financial statements, but are not reported under “Audit fees.”
(3)
Tax fees consist of fees billed for professional services relating to tax compliance, tax planning, and tax advice.
(4)
All other fees consist of fees billed for all other services.
Audit Committee’s Pre-Approval Practice.
We do not have an audit committee. Our board of directors performs the function of an audit committee. Section 10A(i) of the Securities Exchange Act of 1934, as amended, prohibits our auditors from performing audit services for us as well as any services not considered to be audit services unless such services are pre-approved by our audit committee or, in cases where no such committee exists, by our board of directors (in lieu of an audit committee) or unless the services meet certain de minimis standards.
PART IV
ITEM 15.
ITEM 15.
EXHIBITS, FINANCIAL STATEMENT SCHEDULES
The following exhibits are included as part of this report:
Exhibit No.
Description
3.1
Articles of Incorporation of Registrant (1)
3.2
By-Laws of Registrant (1)
14.1
Code of Ethics (2)
List of Subsidiaries(*)
31.1/31.2
Certification of Principal Executive and Financial Officer, pursuant to SEC Rules 13a-14(a) and 15d-14(a), adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (*)
32.1/32.2
Certification of Chief Executive and Financial Officer, pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (*)
(1)
Filed with the Securities and Exchange Commission on December 8, 2005, as an exhibit, numbered as indicated above, to the Registrant’s registration statement on the Registrant’s Registration Statement on Form SB-2 (file no. 333-130197), which exhibit is incorporated herein by reference.
(2)
Filed with the Securities and Exchange Commission on December 28, 2006, as an exhibit, numbered as indicated above, to the Registrant’s Annual Report on Form 10-KSB for the year ended September 30, 2006, which exhibit is incorporated herein by reference.
* Filed herewith.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: January 4, 2010
DELTRON, INC.
By: /s/ Randall Fernandez
Name:
Randall Fernandez
Title:
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/ Randall Fernandez
Randall Fernandez
President (principal executive officer), Chief Financial Officer (principal financial officer), Treasurer, and member of the Board of Directors
January 4, 2010
/s/ Hilda Rivera
Hilda Rivera
Secretary and member of the Board of Directors
January 4, 2010
/s/ Shawn Phillips
Shawn Phillips
Member of the Board of Directors
January 4, 2010
PART IV - FINANCIAL INFORMATION
ITEM 15.
FINANCIAL STATEMENTS
Page
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of September 30, 2009 and 2008
Consolidated Statements of Operations for the years ended September 30, 2009 and 2008 and for the period from September 14, 2005 (inception) through September 30, 2009
Consolidated Statement of Stockholders’ Equity (Deficit) for the period from September 14, 2005 (inception) to September 30, 2009
Consolidated Statements of Cash Flows for the years ended September 30, 2009 and 2008 and for the period from September 14, 2005 (inception) through September 30, 2009
Notes to Consolidated Financial Statements -
SEALE AND BEERS, CPAs
PCAOB & CPAB REGISTERED AUDITORS
www.sealebeers.com
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Deltron, Inc.
(A Development Stage Company)
We have audited the accompanying consolidated balance sheets of Deltron, Inc. (A Development Stage Company) as of September 30, 2009 and 2008, and the related consolidated statements of operations, stockholders’ equity (deficit) and cash flows for the years ended September 30, 2009, 2008 and since inception on September 14, 2005 through September 30, 2009. 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 audits.
We conduct our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Deltron, Inc. (A Development Stage Company) as of September 30, 2009 and 2008, and the related consolidated statements of operations, stockholders’ equity (deficit) and cash flows for the years ended September 30, 2009, 2008 and since inception on September 14, 2005 through September 30, 2009, 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 7 to the consolidated financial statements, the Company has had a working capital deficiency of $32,608, and an accumulated deficit of $97,851, which raises substantial doubt about its ability to continue as a going concern. Management’s plans concerning these matters are also described in Note 7. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Seale and Beers, CPAs
Seale and Beers, CPAs
Las Vegas, Nevada
December 30, 2009
50 S. Jones Blvd. Suite 202 Las Vegas, NV 89107 Phone: (888)727-8251 Fax: (888)782-2351
Deltron, Inc.
(A Development Stage Company)
Consolidated Balance Sheets
As of September 30,
- The Accompanying Notes Are An Integral Part Of These Financial Statements -
Deltron, Inc.
(A Development Stage Company)
Consolidated Statements of Operations
- The Accompanying Notes Are An Integral Part Of These Financial Statements -
Deltron, Inc.
(A Development Stage Company)
Consolidated Statement of Stockholders' Equity (Deficit)
For the Period of Inception (September 14, 2005) to September 30,
- The Accompanying Notes Are An Integral Part Of These Financial Statements -
Deltron, Inc.
(A Development Stage Company)
Consolidated Statements of Cash Flows
- The Accompanying Notes Are An Integral Part Of These Financial Statements -
1.
Organization and Description of Business
Deltron, Inc. (the “Company”) is a Nevada corporation incorporated on September 14, 2005. It is based in San Jose, Costa Rica. The Company incorporated a wholly owned subsidiary, Deltron Holdings Corporation S.A., in San Jose, Costa Rica on November 17, 2005.
The Company is a development stage company that intended to engage principally in the acquisition and development of rental housing properties in the district of San Isidro de Heredia, Costa Rica. To date, the Company’s activities have been limited to its formation, the raising of equity capital and the acquisition and development of property (Note 4).
The Company recently decided to refocus its business strategy towards identifying and pursuing options regarding the development of a new business plan and direction. The Company entered into a Letter of Intent with Blu Vu Deep Oil & Gas Exploration (Blu Vu). The companies plan to enter into a definitive agreement under which Deltron will acquire Blu Vu in exchange for stock of Deltron in the form of a merger.
2.
Significant Accounting Policies
Basis of Consolidation
These consolidated financial statements presented are those of the Company and its wholly-owned subsidiary, Deltron Holdings Corporation S.A. All intercompany balances and transactions have been eliminated.
Basis of Presentation
The accounting and reporting policies of the Company conform to U.S. generally accepted accounting principles (US GAAP) applicable to development stage companies.
Use of Estimates
The preparation of financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company’s periodic filings with the Securities and Exchange Commission include, where applicable, disclosures of estimates, assumptions, uncertainties and markets that could affect the financial statements and future operations of the Company.
Cash and Cash Equivalents
Cash and cash equivalents include cash in banks, money market funds, and certificates of term deposits with maturities of less than three months from date of purchase, which are readily convertible to known amounts of cash and which, in the opinion of management, are subject to an insignificant risk of loss in value. The Company had $10,985 and $23,541 in cash and cash equivalents at September 30, 2009 and 2008, respectively.
2.
Significant Accounting Policies - Continued
Start-Up Costs
In accordance with FASC 720-15-20 “Start-up Activities,” the Company expenses all costs incurred in connection with the start-up and organization of the Company.
Risks and Uncertainties
The Company operates in the real estate development and property rental industry that is subject to significant risks and uncertainties, including financial, operational, technological and other risks associated with operating a real estate development and property rental business, including the potential risk of business failure.
Earning (Loss) Per Share of Common Stock
The Company has adopted FASC 260-10-20, “Earnings per Share,” (“EPS”) which requires presentation of basic and diluted EPS on the face of the income statement for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. In the accompanying financial statements, basic loss per common share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period.
The Company has no potentially dilutive securities, such as options or warrants, currently issued and outstanding.
Comprehensive Income (Loss)
FASC Topic No. 220, “Comprehensive Income”, establishes standards for reporting and display of comprehensive income and its components in a full set of general-purpose financial statements. From inception (September 14, 2005) to September 30, 2009, the Company had no items of other comprehensive income. Therefore, net loss equals comprehensive loss from inception (September 14, 2005) to September 30, 2009.
Concentrations of Credit Risk
The Company’s financial instruments that are exposed to concentrations of credit risk primarily consist of its cash and cash equivalents and related party payables. The Company places its cash and cash equivalents with financial institutions of high credit worthiness. At times, its cash and cash equivalents with a particular financial institution may exceed any applicable government insurance limits. The Company’s management plans to assess the financial strength and credit worthiness of any parties to which it extends funds, and as such, it believes that any associated credit risk exposures are limited.
Foreign Currency Translations
The Company’s functional currency is the Costa Rican Colon. The Company’s reporting currency is the U.S. dollar. All transactions initiated in Costa Rican Colones are translated into U.S. dollars in accordance with FASC 830-10-20, "Foreign Currency Translation" as follows:
i)
Monetary assets and liabilities at the rate of exchange in effect at the balance sheet date;
ii)
Equity at historical rates; and
iii)
Revenue and expense items at the average rate of exchange prevailing during the period.
2.
Significant Accounting Policies - Continued
Foreign Currency Translations - Continued
Adjustments arising from such translations are deferred until realization and are included as a separate component of stockholders’ equity (deficit) as a component of comprehensive income or (loss). Therefore, translation adjustments are not included in determining net income (loss) but reported as other comprehensive income (loss).
For foreign currency transactions, the Company translates these amounts to the Company’s functional currency at the exchange rate effective on the invoice date. If the exchange rate changes between the time of purchase and the time actual payment is made, a foreign exchange transaction gain or loss results which is included in determining net income (loss) for the period. No significant realized exchange gains or losses were recorded since September 14, 2005 (inception) to September 30, 2009
Revenue Recognition
The Company recognizes revenue from the sale of products and services in accordance with the Securities and Exchange Commission Staff Accounting Bulletin No. 104 (“SAB 104”), “Revenue Recognition in Financial Statements.” Revenue will consist of rental income and will be recognized only when all of the following criteria have been met:
i)
Persuasive evidence for an agreement exists;
ii)
Delivery has occurred;
iii)
The fee is fixed or determinable; and
iv)
Revenue is reasonably assured.
Recent Accounting Pronouncements
In June 2009 the FASB established the Accounting Standards Codification ("Codification" or "ASC") as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in accordance with generally accepted accounting principles in the United States ("GAAP"). Rules and interpretive releases of the Securities and Exchange Commission ("SEC") issued under authority of federal securities laws are also sources of GAAP for SEC registrants. Existing GAAP was not intended to be changed as a result of the Codification, and accordingly the change did not impact our financial statements. The ASC does change the way the guidance is organized and presented.
Statement of Financial Accounting Standards ("SFAS") SFAS No. 165 (ASC Topic 855), "Subsequent Events", SFAS No. 166 (ASC Topic 810), "Accounting for Transfers of Financial Assets-an Amendment of FASB Statement No. 140", SFAS No. 167 (ASC Topic 810), "Amendments to FASB
Interpretation No. 46(R)", and SFAS No. 168 (ASC Topic 105), "The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles-a replacement of FASB Statement No. 162" were recently issued. SFAS No. 165, 166, 167, and 168 have no current applicability to the Company or their effect on the financial statements would not have been significant.
2.
Significant Accounting Policies - Continued
Recent Accounting Pronouncements - Continued
Accounting Standards Update ("ASU") ASU No. 2009-05 (ASC Topic 820), which amends Fair Value Measurements and Disclosures - Overall, ASU No. 2009-13 (ASC Topic 605), Multiple-Deliverable Revenue Arrangements, ASU No. 2009-14 (ASC Topic 985), Certain Revenue Arrangements that include Software Elements, and various other ASU's No. 2009-2 through ASU No. 2009-15 which contain technical corrections to existing guidance or affect guidance to specialized industries or entities were recently issued. These updates have no current applicability to the Company or their effect on the financial statements would not have been significant.
3.
Capital Stock
Authorized Stock
The Company has authorized 100,000,000 common shares with a par value of $0.001 per share. Each common share entitles the holder to one vote, in person or proxy, on any matter on which action of the stockholder of the corporation is sought.
Share Issuances
From inception of the Company (September 14, 2005) to September 30, 2009, the Company has issued 500,000 common shares at $0.01 per share and 5,045,000 common shares at $0.02 per share, resulting in total proceeds of $105,900 and 5,545,000 common shares issued and outstanding at September 30, 2009 and 2008. Of these shares, 400,000 were issued to a director of the Company, 400,000 were issued to a former director and officer, 1,000,000 were issued to the spouse of a director of the Company, and 3,745,000 were issued to independent investors.
4.
Property Development
On March 29, 2006, through our wholly-owned subsidiary Deltron Holdings Corporation S.A., a property was purchased for $40,657. The funds to purchase the property were loaned to Deltron Holdings Corporation S.A., by a director of the Company. As at September 30, 2008, the Company had incurred development costs of $12,514, relating primarily to architecture and construction permit fees. During the quarter ended September 30, 2009, the Company wrote-off the development costs, due to management’s plans to pursue other business ventures.
5.
Related Party Balances and Transactions
As of September 30, 2009 and 2008, the Company was obligated to a director of the Company, for a non-interest bearing demand loan with a balance of $42,265. The Company plans to pay the loan back as cash flows become available.
6.
Provision for Income Taxes
The Company recognizes the tax effects of transactions in the year in which such transactions enter into the determination of net income, regardless of when reported for tax purposes. Deferred taxes are provided in the financial statements under FASC 718-740-20 to give effect to the resulting temporary differences which may arise from differences in the bases of fixed assets, depreciation methods, allowances, and start-up costs based on the income taxes expected to be payable in future years.
Development stage deferred tax assets arising as a result of net operating loss carryforwards have been offset completely by a valuation allowance due to the uncertainty of their utilization in future periods. Operating loss carryforwards generated during the period from September 14, 2005 (date of inception) through September 30, 2009 of approximately $97,851 will begin to expire in 2025. Accordingly, deferred tax assets of approximately $33,800 were offset by the valuation allowance that increased by approximately $8,500 and $4,700 during the year ended September 30, 2009 and 2008, respectively.
The Company follows the provisions of uncertain tax positions as addressed in FASC 740-10-65-1. The Company recognized approximately no increase in the liability for unrecognized tax benefits.
The Company has no tax position at September 30, 2009 for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. No such interest or penalties were recognized during the periods presented. The Company had no accruals for interest and penalties at September 30, 2009. The Company’s utilization of any net operating loss carry forward may be unlikely as a result of its intended development stage activities.
7.
Going Concern and Liquidity Considerations
The accompanying audited consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. As at September 30, 2009, the Company had a working capital deficiency of $32,608 and an accumulated deficit of $97,851. The Company intends to fund operations through equity financing arrangements, which may be insufficient to fund its capital expenditures, working capital and other cash requirements for the year ending September 30, 2010.
The ability of the Company to emerge from the development stage is dependent upon, among other things, obtaining additional financing to continue operations, and development of its business plan.
In response to these problems, management intends to raise additional funds through public or private placement offerings.
These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying audited consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
8.
Subsequent Events
On October 22, 2009, the Company entered into a Letter of Intent with Blu Vu Deep Oil & Gas Exploration (Blu Vu). The companies plan to enter into a definitive agreement under which Deltron will acquire Blu Vu in exchange for stock of Deltron in the form of a merger. Additional details will be provided as negotiations are completed.
The Company has evaluated subsequent events from the balance sheet date through December 30, 2009 and determined there are no other items to disclose.