See Index to Financial Statements and Financial Statement Schedules
appearing on page F-1 through F-12 of this Form 10-K
The accompanying unaudited financial statements of Diamond Information
Institute Inc have been prepared by and are the responsibility of the current Company’s management. The 10-K for period ending
December 31, 2010 has been prepared by compiling Company’s filings of record with SEC and OTC from 2009 through 2012. The
last SEC filings included the audited 10-K file for period ending December 31, 2009. The last 10-Qs filed with the SEC were for
periods 3-31-2009, 6-30-2009, and 9-30-2009. The Company then filed on the OTC for period ending December 31, 2011 which included
the December 31, 2010 financial data. Company is voluntarily filing this (and other) missed filings to complete the filing history
in the SEC Edgar database for 2010 and 2011.
In accordance with National Instrument 51-102, the Company discloses
that its independent auditor has not performed a review of these financial statements.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2010
NOTE 1 – NATURE OF OPERATIONS AND BUSINESS CONTINUITY
Diamond Information Institute Inc., formerly doing business
as Designs by Bergio (the “Company”) was engaged in the design, manufacturing, distribution of fine jewelry throughout
the United States and is headquartered from its corporate office in Fairfield, New Jersey. Based on the nature of operations, the
Company’s sales cycle experienced significant seasonal volatility with the first two quarters of the year representing 15%
- 25% of annual sales and the remaining two quarters representing the remaining portion of annual sales.
Effective October 19, 2009, as approved at our shareholder meeting
on October 8, 2009, we entered into a Share Exchange Agreement with Alba Mineral Exploration, Inc. (“Alba”), a Delaware
Corporation (the “Agreement”). Pursuant to the Agreement, Alba agreed to issue our shareholders a total of 2,585,175
shares of common stock of Alba in exchange for all of the shares owned by the Company’s shareholders. Alba was able to successfully
acquire over 99% of the shares of the Company which it later sold to an unrelated third party in the first quarter of 2010. Following
the transaction described in the Agreement and other accompanying transactions, our former shareholders own 60% of the common stock
issued and outstanding in Alba. Also pursuant to the Agreement, Alba acquired all of the assets and liabilities related to our
jewelry business. As a result of the transaction, the Company became a wholly-owned subsidiary of Alba, and all of our operations
related to the jewelry business we were in were discontinued due to the subsequent sale in the first quarter of 2010 of 99% of
the Company stock to an unrelated third party and the retention of the jewelry business assets and liabilities with the shareholders
of Alba. See Note 8
The financial statements have been prepared on a going concern
basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business
for the foreseeable future. The Company has incurred losses since inception resulting in an accumulated deficit of $1,653,737.00
as of December 31, 2010 and has assets of $63,821.00, liabilities of $717,328.00 and limited operations, which raises substantial
doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent
upon the Company finding new management to develop a new business that generates profitable operations in the future and/or to
obtain the necessary capital to fund a new business plan.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The Company uses the accrual basis of accounting and accounting
principles generally accepted in the United States of America (“GAAP” accounting) to prepare the financial statements,
which are presented in US dollars. The Company has adopted a December 31 fiscal year end.
Use of Estimates and Assumptions
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Financial Instruments
The carrying value of the Company’s financial instruments
approximates their fair value because of the short maturity of these instruments.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Income Taxes
Income taxes are accounted for under the assets and liability
method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating
loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the
year in which those temporary differences are expected to be recovered or settled. Use of net operating loss carryforwards for
income tax purposes may be limited by Internal Revenue Code section 382 if a change of ownership occurs.
Basic Income (Loss) Per Share
Basic income (loss) per share is calculated by dividing the
Company’s net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted
earnings per share is calculated by dividing the Company’s net income available to common shareholders by the diluted weighted
average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted
number of shares adjusted for any potentially dilutive debt or equity.
Dividends
The Company has not adopted any policy regarding payment of
dividends. No dividends have been paid during any of the periods shown.
Impairment of Long-Lived Assets
The Company continually monitors events and changes in circumstances
that could indicate carrying amounts of long-lived assets may not be recoverable. When such events or changes in circumstances
are present, the Company assesses the recoverability of long-lived assets by determining whether the carrying value of such assets
will be recovered through undiscounted expected future cash flows. If the total of the future cash flows is less than the carrying
amount of those assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair value
of the assets. Assets to be disposed of are reported at the lower of the carrying amount or the fair value less costs to sell.
On June 30, 2010, the Company evaluated the carrying value of
its intangible assets, including goodwill. Due to the Company’s current net loss position and uncertainty of cash flow, the
Company impaired all intellectual property and goodwill. This resulted in an impairment expense of $138,738.
Advertising Costs
The Company’s policy regarding advertising is to expense
advertising when incurred.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Revenue Recognition
The Company recognizes revenue when products are fully delivered
or services have been provided and collection is reasonably assured.
Stock-Based Compensation
Stock-based compensation is accounted for at fair value in accordance
with SFAS No. 123 and 123 (R) (ASC 718). To date, the Company has not adopted a stock option plan and has not granted any stock
options.
New Authoritative Accounting Guidance
On July 1, 2009, the Accounting Standards Codification (“ACS”)
became the Financial Accounting Standards Board (“FASB”) officially recognized source of authoritative U.S. generally
accepted accounting principles applicable to all public and non-public non-governmental entities, superseding existing FASB, AICPA,
EITF and related literature. Rules and interpretive releases of the SEC under the authority of federal securities laws are also
sources of authoritative GAAP for SEC registrants. All other accounting literature is considered non-authoritative. The switch
to ASC affects the way companies refer to U.S. GAAP in financial statements and accounting policies. Citing particular content
in the ASC involves specifying the unique numeric path to the content through the Topic, Subtopic, Section and Paragraph structure.
FASB ASC Topic 260, “Earnings Per Share”. On
January 1, 2009, the Company adopted new authoritative accounting guidance under FASB ASC Topic 260, “Earnings Per Share”,
which provides that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents
(whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant
to the two-class method.
FASB ASC Topic 820, “Fair Value Measurements and Disclosures”.
New authoritative accounting guidance under ASC Topic 820, “Fair Value Measurements and Disclosures”, affirms that
the objective of fair value when the market for an asset is not active is the price what would be received to sell the asset in
an orderly transaction, and clarifies and includes additional factors for determining whether there has been a significant decrease
in market activity for an asset when the market for that asset is not active. The new accounting guidance amended prior guidance
to expand certain disclosure requirements. The Company adopted the new authoritative accounting guidance under ASC Topic 820 during
the first quarter of 2009. Adoption of the new guidance did not significantly impact the Company’s consolidated financial
statements.
Further new authoritative accounting guidance (Accounting Standards
Update No. 2009-5) under ASC Topic 820 provides guidance for measuring the fair value of a liability in circumstances in which
a quoted price in an active market for the identical liability is not available. In such instances, a reporting entity is required
to measure fair value utilizing a valuation technique that uses (i) the quoted price of the identical liability when traded as
an asset, (ii) quoted prices for similar liabilities or similar liabilities when traded as assets, or (iii) another valuation technique
that is consistent with the existing principles of ASC Topic 820, such as an income approach or market approach. The new authoritative
accounting guidance also clarifies that when estimating the fair value of a liability, a reporting entity is not required to include
a separate input or adjustment to other inputs relating to the existence of a restriction the prevents the transfer of the liability.
The foregoing new authoritative accounting guidance under ASC Topic 820 will be effective for the Company’s consolidated
financial statements beginning October 1, 2009 and is not expected to have s significant impact on the Company’s consolidated
financial statement.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
FASB ASC Topic 825 “Financial Instruments”.
New authoritative accounting guidance under ASC Topic 825, “Financial Instruments”, requires an entity to provide disclosures
about the fair value of financial instruments in interim financial information and amends prior guidance to require those disclosures
in summarized financial information at interim reporting periods.
FASB ASC Topic 855, “Subsequent Events”.
New authoritative accounting guidance under ASC Topic 855, “Subsequent Events”, establishes general standards of accounting
for and disclosure of events that occur after the balance sheet date but before financial statements are issued or available to
be issued. ASC Topic 855 defines (i) the period after the balance sheet date during which a reporting entity’s management
should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, (ii)
the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial
statements, and (iii) the disclosures an entity should make about events or transactions that occurred after the balance sheet
date. The new authoritative accounting guidance under ASC Topic 855 became effective for the Company’s financial statements
for periods ending after June 15, 2009. Effective, February 24, 2010, the FASB issued Accounting Standards Update (“ASU”)
No 2010-09, “Subsequent Events (Topic 855): Amendments to Certain Recognition and Disclosure Requirements” which revised
certain disclosure requirements. ASU No. 2010-09 did not have a significant impact on the Company’s consolidated financial
statements. The Company evaluated subsequent events, which are events or transactions that occurred after December 31, 2009 through
the issuance of the accompanying consolidated financial statements.
Management does not believe that any other recently issued by
not yet effective accounting pronouncements, if adopted, would affect the accompanying consolidated financial statements.
NOTE 3 – RELATED PARTY TRANSACTIONS
The Company received periodic advances from its principal stockholder
based on the Company’s cash flow needs. The Company has liabilities payable due to various related parties totaling $588,949
as of December 31, 2010. The liabilities are comprised of 1) short- term advances and trade payables bearing no interest, and 2)
convertible notes bearing interest at 10.0% per annum.
The Company has receivables due from various related parties
with a total balance of $29,505 as of December 31, 2010. The receivables do not accrue interest and are due upon demand and were
the result of services performed by the Company for the related parties.
NOTE 4 – COMMON STOCK
Articles of Incorporation Amendment and Stock Split -
The Company’s Certificate of Incorporation, as amended, authorizes the issuance of up to 25,000,000 shares of common stock
at a par value of $0.001 per share. On April 1, 2010, the Company’s Board of Directors ratified a reverse stock split of
1000 to 1.
This resulted in common stock outstanding decreasing from 11,863,100
to 11,814 which were owned by the Company’s 10 shareholders.
Effective April 12, 2010, the Company’s Certificate of
Incorporation was amended to authorize 3,000,000,000 shares consisting of 2,900,000,000 common stock at par value $0.001 and 100,000,000
Preferred stock at par value of $0.001. Further designating 1,000,000 shares as Series A Preferred, par value $0.001, 34,000,000
shares as Series B Preferred, par value $0.001, 30,000,000 shares as Series C Preferred, par value $0.001 and 35,000,000 shares
as Series D Preferred, par value $0.001.
NOTE 4 – COMMON STOCK (CONTINUED)
Effective May 18, 2010, the Company’s Certificate of Incorporation
was amended to reduce the par value from $0.001 to $0.0001 and to change the authorized 3,000,000,000 shares to consist of 2,900,000,000
common stock at par value $0.0001 and 100,000,000 Preferred stock at par value of $0.0001. Further designating 1,000,000 shares
as Series A Preferred, par value $0.0001, 50,000,000 shares as Series B Preferred, par value $0.0001, 30,000,000 shares as Series
C Preferred, par value $0.0001 and 5,000,000 shares as Series D Preferred, par value $0.0001.
On April 1, 2010, Company issued 10 Preferred A shares for $10,000
Cash.
On May 31, 2010, Company issued 1,000,000 (post-split) shares
of common stock at $0.15 per share, under employment agreements with its then three officers in advance of services totaling $150,000.
As of September 30, 2010, two of the officers have resigned and $116,667 has been recorded as compensation. (Form 10-Q/A2 filed
4-26-2011 for period 6-30-2010 ITEM 2 Unregistered Sales of Equity Securities and Use of Proceeds, Common Stock states: “On
May 31, 2010, the Company issued 1,500,000,054 shares of common stock at $0.0001 per share, in exchange for services totaling $150,010”.
Later, in the Company’s 10-Q filed 9-22-2011 for period 9-30-2010, under NOTE 9 – SUBSEQUENT EVENTS: ”On August
22, 2011 the Company effectuated a reverse-split of its common shares on a 1,500 shares for one basis. All references to common
stock in these financial statements have been retroactively restated to show the effect of this action”.).
Debt Conversions - In July 2010, Company converted $46,000.00
of note debt at $0.15 into 306,667 common shares. On November 19, 2010, Company converted $10,000 of note debt into 66,667 common
shares. On November 22, 2010, Company converted $20,000 of note debt into 133,333 common shares. (Note conversions adjusted to
post 1500:1 RS of August 22, 2011).
Restricted Share Issuances - In January 2009, the Company
agreed to issue its SEC counsel, 100,000 shares of restricted common stock with a fair value of $0.40 per share or $40,000 for
services in connection with the effective filing of Form 15c-211 and submittal to FINRA through a market maker. The Share-Based
Compensation expense for the three and nine months ended September 30, 2009 amounted to $0 and $40,000, respectively.
In February 2009, the Company issued to its CEO 50,000 shares
of restricted common stock with a fair value of $0.40 per share or $20,000 for services as a Board of Directors member throughout
2009. The Share-based Compensation expense for the three and nine months ended September 30, 2009 amounted to $5,000 and $15,000,
respectively.
In February 2009, the Company issued its SEC counsel 20,000
shares of restricted common stock with a fair value of $0.40 per share or $8,000 for legal services to be provided for the Company’s
SEC filings for the 2009 reporting year.
On April 10, 2010, the Company issued 134,000 shares of Preferred
B stock at $2.50 per share as compensation for $274,990 services and $60,000 cash.
On May 17, 2010, the Company issued 250,000 shares of Preferred
C stock (“Series C”) in exchange for all the shares issued and outstanding of Serengeti Consulting, Inc. valued at
$0.0001 per share.
NOTE 5 – COMMITMENTS AND CONTINGENCIES
Employment Agreement
On May 31, 2010, the Company entered into an employment agreement
(“Employment Agreement”) with its Chief Financial Officer (“CFO”), which requires that the CFO be paid
an annual base salary of $50,000 for one (1) year from the date of signing and the issuance of 500,000,000 shares of the Company’s
common stock. Either party may extend the Employment Agreement for additional one (1) year periods.
At December 31, 2010, the Company owned minimal property and
equipment with depreciated book value of $983
NOTE 6 – INCOME TAXES
At December 31, 2009, the Company had approximately $1,600,000
of federal net operating ta loss carryforwards expiring at various dates through 2029. The Tax Reform Act of 1986 enacted a complex
set of rules which limits a company’s ability to utilize net operating loss carryforwards and tax credit carryforwards in
periods following an ownership change. These rules define an ownership change as a greater than 50 percent point change in stock
ownership within a defined testing period which is generally a three-year period. As a result of stock which may be issued by us
from time to time and the conversion of warrants, options or the result of other changes in ownership of our outstanding stock,
the Company may experience an ownership change and consequently our utilization of net operating loss carryforwards could be significantly
limited.
Based upon the net losses historically incurred and, the prospective
global economic conditions, management believes that it is not more likely than not that the deferred tax asset will be realized
and has provided a valuation allowance of 100% of the deferred tax asset.
NOTE 7 – DISCONTINUED OPERATIONS
The Company’s former jewelry business, which was discontinued
on October 19, 2009 when all assets and liabilities related to this business were acquired by Bergio International, Inc. (formerly
known as Alba Mineral Exploration, Inc) has been accounted for as discontinued operations in accordance with FASB ASC Topic 205
“Discontinued Operations”. The results of operations of this business have been removed from the results of continuing
operations for all periods presented. The assets and liabilities of discontinued operations have been reclassified and are segregated
in the balance sheets.
NOTE 8 – SUBSEQUENT EVENTS
On February 2, 2010 Bergio International, Inc. (the “Seller”),
owner of 99% of the outstanding common shares of the Company, entered into a share purchases agreement (the “Agreement”)
with Macau Consultants and Advisory Services Inc. (the “Buyer”). In accordance with the terms and provisions of the
Agreement, the Seller sold and aggregate of 11,852,700 shares of common stock of the Company to Buyer in exchange for $225,000.
The closing and consummation of the Agreement occurred March 18, 2010. New officers and directors of the Company were appointed
and a change of control of the Company occurred.
In accordance with ASC 855-10, the Company has analyzed its
operations subsequent to December 31, 2009 and has determined that it does not have any other material subsequent events to disclose
in these financial statements.
NOTE 9 – ACQUISITION OF SUBSIDIARIES
On September 28, 2009 Diamond Information Institute Inc (“Diamond”)
entered into a Memorandum of Understanding (“MOU”) with Serengeti Consulting Inc. (“Serengeti”) to purchase
all of the capital stock of Serengeti. This agreement was approved by the Board on May 14, 2010 and completed on May 17, 2010.
Diamond issued 250,000 shares of Preferred C stock in a stock for stock transaction for all of the shares of Serengeti. Serengeti
is currently a wholly owned subsidiary of Diamond. As part of this transaction, the Company recognized a purchase price of $25,
which is comprised of the following components:
Property and equipment, net
|
|
$
|
277,279
|
|
Intangible assets
|
|
|
373,767
|
|
Net liabilities acquired
|
|
|
(651,021
|
)
|
Purchase Price
|
|
$
|
25
|
|
On June 30, 2010 the Company evaluated the carrying value of
its intangible assets, including goodwill. Due to the Company’s current net loss position and uncertainty of cash flow, the
Company impaired all intellectual property and goodwill. This resulted in an impairment expense of $373,767.