Notes to Financial Statements
March 31, 2012
(Unaudited)
Note 1 - Nature and Description of Business
We had been originally incorporated under the laws of Canada on January 15,
1990, under the name "Creemore Star Printing, Inc." We changed our name on June
15, 2003 to "Smitten Press: Local Lore and Legends, Inc." We domesticated in the
State of Nevada by filing Articles of Incorporation in Nevada on May 8, 2007,
and we were incorporated in the State of Nevada on May 8, 2007, as Smitten
Press: Local Lore and Legends, Inc. On April 30, 2010, our Board of Directors
approved a change in our name to DataMill Media Corp., effective at the close of
business on June 30, 2010. In June 2011, we completed our initial public
offering of 5,000,000 shares of Common Stock and received $100,000 in proceeds
from the offering.
We were a management consulting firm that planned to educate and assist small
businesses to improve their management, corporate governance, regulatory
compliance and other business processes, with a focus on capital market
participation. However, after we completed our initial public offering, we
explored a couple of opportunities to acquire operating companies in order to
enhance shareholder value. On September 2, 2011, we entered into a Share
Exchange Agreement with Young Aviation, LLC. On September 19, 2011, we amended
our Articles of Incorporation to (i) increase our authorized capital stock to
500,000,000 shares of Common Stock and (ii) effect a 10 shares for one share
forward stock split. On October 3, 2011, we closed the Share Exchange Agreement,
which resulted in Young Aviation, LLC becoming a wholly-owned subsidiary. On
November 10, 2011, a majority of our shareholders approved a change in our name
to AvWorks Aviation Corp., effective November 30, 2011, to reflect our new
business focus.
Young Aviation, founded in 2004, is currently a diversified broker and supplier
of parts, components and products to the general aviation and aerospace markets
of the U.S., Europe and Asia. "General aviation" is defined as all aviation
other than military and scheduled commercial airlines. Over 20% of our sales
revenue has been derived from international sales for the period from January 1,
2009 to date.
Young Aviation services a broad range of clients such as aircraft leasing
companies, major airlines, repair stations, fixed-base operators, leasing
companies and after market suppliers.
As a result of the Share Exchange Agreement, the Company acquired Young Aviation
and Joel A. Young became the President, Chief Executive Officer and sole
Director of the Company on October 3, 2011, when our prior management officials
resigned. In addition, as a result of acquiring Young Aviation, we ceased being
a "shell company" as that term is defined in Section 12b-2 of the Securities
Exchange Act of 1934.
The acquisition of Young Aviation, considered a reverse merger, resulted in a
change in control at the Company and new management decided to abandon our
former business of management consulting and focus solely on the business of
Young Aviation.
The Company accounted for the share exchange transaction as a recapitalization
of Young Aviation, LLC, as the members of the LLC obtained a majority interest
and management control of the Company. As a recapitalization of Young Aviation,
LLC, it is considered the accounting acquirer.
The Company is carrying on the business of Young Aviation, LLC as its sole line
of business. Young Aviation is a diversified broker and supplier of parts,
products and services to the worldwide aviation, aerospace, government and
defense markets. Young Aviation services a broad range of clients such as
aircraft leasing companies, major airlines, repair stations, fixed-base
operators, leasing companies and after market suppliers.
AVWORKS AVIATION CORP.
(f/k/a DATAMILL MEDIA CORP.)
Notes to Financial Statements
March 31, 2012
(Unaudited)
Note 2 - Summary of Significant Accounting Policies
This summary of significant accounting policies is provided to assist the reader
in understanding the Company's financial statements. The financial statements
and notes thereto are representations of the Company's management. The Company's
management is responsible for their integrity and objectivity. These accounting
policies conform to accounting principles generally accepted in the United
States of America and have been consistently applied in the preparation of the
financial statements.
Basis of Presentation - The accompanying financial statements have been prepared
in accordance with accounting principles generally accepted in the United States
of America for complete financial statements.
Use of estimates - In preparing financial statements, management is required to
make estimates and assumptions that effect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the consolidated financial statements and revenues and expenses during the
periods presented. Actual results may differ from these estimates.
Significant estimates in the periods included in the accompanying consolidated
financial statements include an estimate of the deferred tax asset valuation
allowance, valuation of shares issued for services, and valuation of contributed
services.
Principles of Consolidation - The consolidated financial statements include the
accounts of AvWorks Aviation Corp. (f/k/a Datamill Media Corp.) as of the date
the Share Exchange Agreement closed, October 3, 2011, and its wholly-owned
subsidiary, Young Aviation, LLC. All material intercompany balances and
transactions have been eliminated in consolidation. All financial and related
data has been retroactively adjusted in the accompanying consolidated financial
statements and footnotes to reflect the effect of the recapitalization of Young
Aviation and the presentation of consolidated historical financial data.
The acquisition of Young Aviation, considered a reverse merger, resulted in a
change in control at the Company and new management decided to abandon our
former business of management consulting and focus solely on the business of
Young Aviation. The Company accounted for the share exchange transaction as a
recapitalization of Young Aviation, LLC, as the members of the LLC obtained a
majority interest and management control of the Company. As a recapitalization
of Young Aviation, LLC, it is considered the accounting acquirer.
Reclassifications - Certain reclassifications have been made to prior year
amounts to conform to the current year presentation.
As of March 31 2012, the Company's significant accounting policies and
estimates, which are detailed in the Company's Annual Report on Form 10-K for
the year ended December 31, 2011, have not changed materially.
Selling and Marketing Expenses - Selling and marketing expenses are expensed as
incurred. These expenses were $9,561 and $3,954, respectively, for the three
month periods ended March 31, 2012 and 2011.
General and Administrative Expenses - General and administrative expenses are
expensed as incurred. These expenses were $140,358 and $111,100, respectively,
for the three month periods ended March 31, 2012 and 2011.
AVWORKS AVIATION CORP.
(f/k/a DATAMILL MEDIA CORP.)
Notes to Financial Statements
March 31, 2012
(Unaudited)
Note 3 - Balance Sheet Information
Cash - Consisted of the following at March 31,
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2012
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2011
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Checking and money market accounts
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$
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6,945
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$
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4,123
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Accounts Receivable - The March 31, 2012 accounts receivable balance of $16,872
consists of the remaining 20% balance due from two customers. When products are
shipped to our large customers, the invoice amounts are normally factored with
our factoring agent, Paragon Financial Group, Inc. We are immediately advanced
80% of the amount of factored invoices with the remaining 20% paid to us when
collected by our agent.
Advances Receivable-Related Party - During the years ended December 31, 2011 and
2010, the Company's Chief Executive Officer was advanced funds under a verbal
arrangement in the aggregate amount of $25,000 by the Company. These advances
were paid back to the Company in full during the three month period ended March
31, 2012.
Other Current Assets - The amounts of $4,541 and $3,653 at March 31, 2012 and
2011, respectively, consist of a one month security deposit pursuant to the
terms of our lease agreement with our landlord, and a minor additional amount
representing the reserve amount held by our factoring agent on that date.
Property and equipment are stated at cost, net of accumulated depreciation.
Expenditures for maintenance and repairs are expensed as incurred; additions,
renewals and betterments are capitalized. Depreciation of property and equipment
is provided using the straight-line method with estimated lives ranging from 3
to 5 years as follows at March 31,
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2012
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2011
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Furniture and fixtures
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$
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147
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$
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147
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Office equipment
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165
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165
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Computer software
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2,675
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2,675
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Motor vehicle
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10,000
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10,000
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12,987
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12,987
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Accumulated depreciation
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8,487
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7,987
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Net property and equipment
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$
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4,500
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$
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5,000
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AVWORKS AVIATION CORP.
(f/k/a DATAMILL MEDIA CORP.)
Notes to Financial Statements
March 31, 2012
(Unaudited)
Note 3 - Balance Sheet Information (continued)
Depreciation expense for the three month periods ended March 31, 2012 and 2011
was $500 for each period, and was recorded as a general and administrative
expense. The use of our property and equipment determines if the depreciation is
recorded as cost of goods sold or as general and administrative expenses.
Notes Payable - The Company had notes payable totaling $118,500 at March 31
2012.
$20,000 Note: On August 15, 2011, an individual loaned the Company $20,000 in
exchange for a Promissory Note bearing interest at 5% for a term of six months.
As a result of the recapitalization and presentation of the Share Exchange
Agreement on the Company's financial statements, this note is presented at
December 31, 2011. In lieu of paying interest on the note, restricted shares of
the Company's common stock will be issued to the note-holder. The Note was paid
in full in April 2012.
$6,000 Note: On November 22, 2011, an individual loaned the Company $6,000 in
exchange for a Promissory Note bearing interest at 10% for a term of six months.
The accrued interest payable balance on this note was $216 at March 31, 2011,
included in the Other Current Liabilities section of the Company's balance
sheet.
$50,000 Note: On December 5, 2011, an individual loaned the Company $50,000 in
exchange for a Promissory Note bearing interest at 12% for a term of one month,
renewable each month if agreed upon by the parties. To date, the parties have
agreed to renew and extend the note each month. The accrued interest payable
balance on this note was $1933 at March 31, 2012, included in the Other Current
Liabilities section of the Company's balance sheet.
$42,500 Note: On February 2, 2012, an entity loaned the Company $42,500 in
exchange for a Promissory Note bearing interest at 8% for a term of nine months,
convertible after nine months at 50% of the market price of our shares. The
accrued interest payable balance on this note was $567 at March 31, 2012,
included in the Other Current Liabilities section of the Company's balance
sheet.
Other Current Liabilities - The Company had other current liabilities consisting
of the following at March 31,
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2012
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2011
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Accrued expenses
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$
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67,188
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$
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35,279
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Accrued interest payable
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6,769
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4,302
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Total Other Current Liabilities
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$
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73,957
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$
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39,581
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AVWORKS AVIATION CORP.
(f/k/a DATAMILL MEDIA CORP.)
Notes to Financial Statements
March 31, 2012
(Unaudited)
Note 4 - Stockholders' Deficit
Common stock
The Company is authorized to issue up to 500,000,000 shares of common stock with
a par value of $0.001, under terms and conditions established by the Board of
Directors.
The Company had 262,037,165 issued and outstanding common stock shares as of
March 31, 2012. Details of the issued and outstanding common stock shares are
shown below:
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Amount of
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Description
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shares issued
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Shares issued and outstanding prior to Share
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Exchange Agreement closing on October 3, 2011
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153,250,000
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Share Exchange Agreement activity:
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Cancellation of prior CEO's shares
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(67,000,000
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)
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Share issuance to Young Aviation members
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165,167,165
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Shares issued for conversion of notes payable
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620,000
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Shares issued pursuant to service agreements
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10,000,000
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Shares issued and outstanding as of March 31, 2012
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262,037,165
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Prior to the closing of the Share Exchange Agreement, AvWorks Aviation Corp.
(f/k/a Datamill Media Corp.) had 153,250,000 shares of common stock outstanding
on a post forward split basis. As a condition to the closing of the Share
Exchange Agreement, Vincent Beatty, Datamill's President, on October 3, 2011,
surrendered 67,000,000 (post forward split) shares of common stock held by Mr.
Beatty for cancellation and such shares were cancelled by their transfer agent.
On October 3, 2011, Datamill acquired 100% of Young Aviation's member's
interests, pursuant to the Share Exchange Agreement in exchange for the issuance
by Datamill of 165,167,165 shares of restricted common stock shares and the
issuance by Datamill of 620,000 shares of restricted common stock shares for the
conversion of notes payable. Following the closing of the Share Exchange
Agreement, Datamill had 252,037,165 shares of common stock issued and
outstanding. Young Aviation became a wholly-owned subsidiary of Datamill. The
Shares were issued to ten individuals with the majority share (165,000,000
shares) issued to Joel A. Young, who is now the President and Chief Executive
Officer and our sole Director of the surviving entity
On October 5, 2011, the Company issued an aggregate of 10,000,000 restricted
common stock shares pursuant to one year agreements with two individuals in
exchange for consulting and advisory services in relation to the Company's
accounting and compliance requirements and the provision of federal securities
advice to the Company and the preparation of required filings.
In addition, on October 5, 2011, the Company approved and adopted the
Corporation's 2011 Employee and Consultant Stock Incentive Plan ("Plan") and
reserved 12,000,000 shares of its common stock for issuance under the Plan.
Preferred stock
The Company is authorized to issue 10,000,000 shares of preferred stock, par
value $0.001 per share. Currently, there are no shares of preferred stock issued
and outstanding.
AVWORKS AVIATION CORP.
(f/k/a DATAMILL MEDIA CORP.)
Notes to Financial Statements
March 31, 2012
(Unaudited)
Note 5 - Going Concern
As reflected in the accompanying consolidated financial statements, the Company
had a net loss and net cash used in operations of $62,224 and $59,816,
respectively, for the three month period ended March 31, 2012. In addition, the
Company had a working capital deficit of $85,261 at March 31, 2012. These
matters raise substantial doubt about the Company's 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, further
implement its business plan and to generate additional revenues.
Management believes that the actions presently being taken provide the
opportunity for the Company to continue as a going concern. The consolidated
financial statements do not include any adjustments that might be necessary if
the Company is unable to continue as a going concern.
Note 6 - Commitments and Contingencies
Operating Leases - The Company has been leasing corporate offices and warehouse
facilities in Sunrise, Florida since 2006. Commencing May 23, 2011 the Company
began leasing additional warehouse space. The current lease, including the
additional warehouse space, is valid through January 31, 2013 at the monthly
charge of $1,493 and can be renewed by the parties prior to the termination.
On October 5, 2011, the Company entered into one year agreements with two
individuals for the provision of accounting, compliance and legal services. The
aggregate monthly cost for the services is $10,000 and the aggregate annual cost
for the services is $120,000.
Note 7 - Related Party Transactions
As described in Note 3, above, the Company advanced funds that were paid back by
the President and Chief Executive Officer of the Company, Joel Young.
Note 8 - Legal Matters
The Company is not aware of any pending or threatened legal matters that would
have a material impact on our financial condition.
Note 9 - Subsequent Events
Other than the events noted below, the Company is not aware of any subsequent
events which would require recognition or disclosure in the financial
statements.
On April 11, 2012, the Company issued a Promissory Note bearing interest at 12%,
convertible after one year at 50% of the market price of our shares, for a term
of one year in exchange for funds loaned to the Company in the amount of
$20,000.