Securities registered pursuant to Section 12(g)
of the Act: Common stock, $0.001 par value
Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities Act.
o
Yes
x
No
Indicate by check mark if the registrant is not required
to file reports pursuant to Section 13 or Section 15(d) of the Act.
o
Yes
x
No
Indicate by check mark whether the Registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days.
x
Yes
o
No
Indicate by checkmark whether the registrant has submitted
electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant
to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period
that the registrant was required to submit and post such files).
x
Yes
o
No
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulations S-K (§229.405 of this chapter) is not contained herein, and will not be contained,
to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K.
x
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company in Rule 12b-2 of the Exchange
Act.
Indicate by check mark whether the registrant is a shell
company (as defined in Rule 12b-2 of the Exchange Act).
o
Yes
x
No
The aggregate market value of the voting and non-voting common
equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and
asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal
quarter of June 30, 2013 was $429,642.
On March 26, 2014, the Company had 221,252,555 outstanding
shares of Common Stock, $.001 par value per share.
From time to time, we make oral and written
statements that may constitute “forward-looking statements” (rather than historical facts) as defined by the Securities
and Exchange Commission (the “SEC”) in its rules, regulations and releases, including Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
All statements in this Annual Report,
including under the captions “Business” and “Management’s Discussion and Analysis of Financial Condition
and Results of Operations,” other than statements of historical fact, are forward-looking statements for purposes of these
provisions, including statements of our current views with respect to our business strategy, business plan and research and development
activities, our future financial results, and other future events. These statements include forward-looking statements both with
respect to us, specifically, and the technology industry, in general. In some cases, forward-looking statements can be identified
by the use of terminology such as “may,” “will,” “expects,” “plans,” “anticipates,”
“estimates,” “potential” or “could” or the negative thereof or other comparable terminology.
Although we believe that the expectations reflected in the forward-looking statements contained herein are reasonable, there can
be no assurance that such expectations or any of the forward-looking statements will prove to be correct, and actual results could
differ materially from those projected or assumed in the forward-looking statements.
All forward-looking statements involve
inherent risks and uncertainties, and there are or will be important factors that could cause actual results to differ materially
from those indicated in these statements. Such risk factors include, among others: whether the Company can successfully execute
its operating plan, including the Company’s ability to integrate acquired companies and technology; the Company’s ability
to retain key employees; general market conditions; and other factors discussed under the captions “Business” and “Management’s
Discussion and Analysis of Financial Condition and Results of Operations,” all of which you should review carefully. If one
or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results
may vary materially from what we anticipate. Please consider our forward-looking statements in light of those risks as you read
this Annual Report. Actual results may differ materially from those contained in the forward-looking statements in this Annual
Report. The Company does not undertake any obligation to update or revise forward-looking statements to reflect changed assumptions,
the occurrence of unanticipated events or changes to future operating results. We undertake no obligation to publicly update or
review any forward-looking statement, whether as a result of new information, future developments or otherwise.
PART
I
History
Gepco, Ltd. (“Gepco,
Ltd.” or the “Company”) was incorporated on June 27, 2008 in the State of Nevada as Kensington Leasing, Ltd.
The Company’s
initial business plan was to specialize in leasing equipment to a select clientele. Because it took longer than anticipated to
launch the Company’s leasing business, the Company elected to investigate additional lines of business. The leasing
business generated minimal revenues since inception and has been discontinued.
On June 4, 2010,
the Company, through its newly formed wholly-owned subsidiary Allianex Corp., purchased substantially all of the assets of Allianex,
LLC (the “Allianex acquisition”). The Company’s primary business after the Allianex acquisition until the acquisition
of Wikifamilies SA, as discussed below, was the production, marketing and distribution of a retail line of prepaid stored value
cards for the purchase of technology support and security services for electronic devices. Allianex Corp. generated nominal revenues
since the acquisition and the assets were disposed of on December 22, 2011.
On May 20, 2011,
the Company acquired all of the outstanding equity securities of Wikifamilies SA (the “Wikifamilies acquisition”),
making Wikifamilies SA a wholly owned subsidiary of Kensington Leasing, Ltd. For accounting purposes, the Wikifamilies acquisition
was treated as a reverse acquisition with Wikifamilies SA treated as the acquirer and Kensington Leasing, Ltd. as the acquired
party. As a result, the business and financial information included in previous reports was the business and financial information
of Wikifamilies SA prior to May 20, 2011 and the combined entity after May 20, 2011.
On October 27, 2011,
the Company changed its name to Wikifamilies, Inc. through a short-form merger with its newly formed wholly owned subsidiary of
the same name.
As
of May 20, 2011, the Company’s business plan as Wikifamilies was to design, develop and operate an Internet-based social
media website, Wikifamilies.com, with a unique emphasis on families and new technologies which web-based platform was intended
to enhance the ability of families to communicate and share family history and events while providing a secure location to transact
family-related business matters. Then, on September 7, 2012, our business plan changed to the development and marketing of an Internet
search engine through the licensing from Clairnet, Ltd. of their
process enabling online
and mobile viewers to search, index, watch and personalize web-based videos while facilitating the monetizing of investments by
video content providers, advertisers and marketers.
On September 7,
2012, Wikifamilies, Inc. entered into a Share Exchange Agreement with ClairNET Ltd., a Hong Kong entity and their shareholders
by which all of the issued and outstanding shares of ClairNET were to be exchanged for 36,504,056 shares in Wikifamilies Inc, representing
75% of the company’s common stock. Additionally, ClairNET Ltd was to receive 2,500,000 shares of Voting Only Preferred Stock
in Wikifamilies, with 100:1 voting rights. On the same date, the parties also signed a License Agreement by which Wikifamilies
was to acquire exclusive global licensing rights to ClairNET’s products, with an end goal of ClairNET becoming a subsidiary
of Wikifamilies, Inc.
On September 8,
2012 the Company and the founders of Wikifamilies SA entered into a Rescission Agreement, whereby the share consideration originally
tendered by the corporation for the acquisition of the Wikifamilies SA assets, was rescinded by mutual agreement. This Rescission
unwound the March 23, 2011, Exchange Agreement between Wikifamilies Inc. and Wikifamilies SA, and Wikifamilies SA agreed to return
the remaining 26,925,000 shares to Wikifamilies treasury, being the full balance of the original 31,500,000 shares tendered as
part of the original Exchange Agreement and the Company returned its interest in Wikifamilies SA to the Wikifamilies SA founders.
The Wikifamilies SA founders retained all assets and liabilities of Wikifamilies SA. Additionally, Wikifamilies, Inc forgave the
intercompany loans from Wikifamilies Inc. to Wikifamilies SA in full compensation for non-payment of salaries, fees and expenses
to the founders.
On September 10,
2012 the full Board of Directors of the Company elected John Karlsson, Dan Clayton and Vincent Qi as Members of the Board of Directors.
On September 10,
2012, following the appointment of the new Board Members, Robert Coleridge, Chris Dengler, Steve Brown, William Hogan and Thomas
Hudson resigned from their positions on the Board. Trisha Malone resigned her position as Board Member and Chief Financial Officer
effective September 13, 2012, and Malcolm Hutchinson resigned his position as Board Member and Chief Executive Officer effective
September 13, 2012.
The three members
of the Board of Directors elected on September 10, 2012 changed the Company’s name in the State of Nevada to ClairNET, Ltd.
but failed to complete the ClairNET, Ltd. merger, which left the Company with no operating entity, and failed to file any and all
required filings with the Securities and Exchange Commission (the “SEC”), in effect abandoning the Company. After repeated
attempts at contact with the Board of Directors with no response, certain creditors of the Company petitioned the Eighth Judicial
District Court in Clark County Nevada to receive custodianship of the Company.
On April 8, 2013, the Eighth
District Court of the State of Nevada appointed Trisha Malone as Custodian of Wikifamilies, Inc. pursuant to section 78.347 of
the Nevada Revised Statutes, and authorized her to appoint a new Board of Directors, to continue the business of the Company, and
to bring current the Company’s filings with the SEC. The appointment was made pursuant to a petition filed by Trisha Malone
with the Court on February 27, 2013, to become Custodian of the Company due to former management’s malfeasance and nonfeasance
in allowing the filings with the SEC to become delinquent, exposing the Company to potential revocation of registration proceedings
under Section 12j of the Securities Exchange Act of 1934 and a potential trading suspension under Section 12k of the Securities
Exchange Act, and in failing to maintain the business of the Company.
The Court also nullified
the issuance of shares of Company Common Stock issued as a result of the Exchange Agreement entered into between the Company and
Clairnet, Ltd., a Hong Kong corporation, dated September 7, 2012 and the Technology License Agreement between the Company and Clairnet,
Ltd., a Hong Kong corporation. Among the nonfeasance of the prior management was the failure to effect the change of the Company's
name from Wikifamilies, Inc. to Clairnet, Ltd. in the marketplace, by notification to FINRA. Prior to being known as Clairnet,
Ltd., the Company was known as Wikifamilies, Inc., to reflect the business plan of operations of its foreign subsidiary, Wikifamilies,
S.A. However, Wikifamilies, S.A. was returned to its founders by reason of a Rescission Agreement executed between the founders
and the Company on September 8, 2012.
The Court further
ordered that all stocks issued as a result of the September 7, 2012 Share Exchange Agreement between the Company and ClairNET
Ltd., a Hong Kong entity and their shareholders, are declared null and void and ordered to be returned to the Company or its transfer
agent for cancellation. The Court further ordered that the License Agreement between the Company and ClairNET, Ltd. a Hong Kong
entity, is declared null and void.
Finally, the Court ordered
the cancellation of an aggregate of 26,925,000 shares of Common Stock to effectuate the Company's September 8, 2012 Rescission
agreement with the founders of Wikifamilies SA.
On April 9, 2013
the duly appointed Custodian of the Company appointed Trisha Malone and Larry A. Zielke as Members of the Board of Directors.
Ms. Malone was also appointed as Chief Executive Officer, Chief Financial Officer and Secretary of the Company and Mr. Zielke
was appointed Vice President and Corporate Counsel.
On August 27, 2013,
the Company held a Special Meeting of Shareholders. At the Special Meeting, the Shareholders of the Company approved
the change in the Corporation’s name from Wikifamilies, Inc. to Gepco, Ltd. On September 11, 2013, the Company filed an amendment
to its Articles of Incorporation to, inter alia, change its name to Gepco, Ltd. from Clairnet, Ltd. (Wikifamilies, Inc.) In conjunction
with the amendment, the Company filed with FINRA to change its name and ticker symbol. Effective October 8, 2013, the Company’s
common stock, which was previously traded under the ticker symbol “WFAM” on the OTCQB market, began trading under the
new ticker symbol “GEPC”.
On October 15, 2013, Gepco,
Ltd. (the “Company”) entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) with GemVest,
Ltd. pursuant to which the Company shall purchase (the “Acquisition”)100% of the issued and outstanding capital stock
(“GemVest Shares”) of GemVest, Ltd., a Nevada corporation (“GemVest”). The purchase price for the Shares
set forth therein is 150,000,000 shares of the Company’s restricted Common Stock.
The parties arrived at
the purchase price as follows:
The 10 day average closing price from September 30, 2013 through
October 14, 2013 (the 10 trading days prior to signing the agreement) was $0.0326 which attaches a value of the 150,000,000 shares
at $4,890,000.
Immediately prior to Closing
(as defined below), the parties to the Stock Purchase Agreement and the stockholders of GemVest entered into an amendment to the
Stock Purchase Agreement whereby the stockholders of GemVest affirmed all of the obligations and representations of GemVest under
the Stock Purchase Agreement and agreed to convey 100% of the issued and outstanding GemVest Shares to the Company in consideration
for the Purchased Company Shares in a transaction exempt from registration under Section 4(2) of the Securities Act of 1933.
The Acquisition was consummated
(the “Closing”) on December 6, 2013, in a transaction exempt from registration under Section 4(2) of the Securities
Act of 1933, as amended. Pursuant to the Stock Purchase Agreement, GemVest and the Company agreed to the following covenants regarding
management of the Company for a period of five years from the date of Closing:
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Angelique de Maison shall serve as Executive Chairman of the Company and of GemVest, Peter Voutsas shall serve as Chief
Executive Officer and Chief Investment Officer of the Company and of GemVest, Trisha Malone shall serve as President, Chief Financial
Officer and Secretary of the Company and Chief Financial Officer, Chief Operating Officer and Secretary of GemVest, Nicholas Marlin
shall serve as Chief Marketing Officer the Company and President and Chief Marketing Officer of GemVest and Ronald Loshin shall
serve as Chief Creative Officer of the Company and of GemVest.
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The Board of the Company shall consist of six directors: Angelique de Maison, Peter Voutsas, Trisha Malone, Larry Zielke,
Ronald Loshin and Nicholas Marlin. The Board of GemVest shall consist of five directors: Angelique de Maison, Peter Voutsas, Trisha
Malone, Ronald Loshin and Nicholas Marlin.
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If the Company’s EBITDA (as defined in GAAP) is not at least $750,000 for the fiscal year ended December 31, 2014,
then on a pro rata basis, based on percentage of ownership of Gepco immediately prior to Closing, the shareholders of Gepco shall
return to the Company one million shares of the Company’s Common Stock for each $10,000 increment by which EBITDA is less
than $750,000.
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Subsequent to closing of
the Acquisition, GemVest became a wholly owned subsidiary of Gepco. For accounting purposes, GemVest is deemed the accounting acquirer.
Unless the context
otherwise requires, references to the “Company” mean the Company and its subsidiary GemVest, Ltd. In the context of
Common Stock, notes and other securities, references to the “Company” mean Gepco, Ltd. unless otherwise stated.
Business of Gepco, Ltd.
The Company’s business
is now the business of GemVest. GemVest, Ltd. was incorporated on October 2, 2013 in the State of Nevada. GemVest is a start-up
development stage company that has had no revenue or expenses since its inception. As the Company was a shell company prior to
the acquisition of GemVest, GemVest is the acquirer for accounting purposes, and future financial reporting shall be set forth
as if GemVest acquired the Company.
The Company intends
to sell and broker high end rare investment grade diamonds that are obtained from wholesale diamond cutters all over the world
with which our Chief Executive Officer, Peter Voutsas, has long, outstanding relationships and from individuals and estates seeking
liquidity who possess investment grade diamonds and heirloom quality jewelry.
GemVest Business Description:
Peter Voutsas (“Peter”)
has also established a worldwide reputation as a purveyor of exquisite, extraordinary fine quality precious stones and jewelry
pieces that are retailed in an elegant but friendly environment and sold at competitively reasonable prices. Peter has an international
clientele that includes individuals from every continent who are known to be seekers of investment grade stones and exquisite rare
heirloom jewelry items. The placing of such exquisite jewelry and gemstones is one of Peter’s most noted talents and helps
enable Peter to gain top dollar and quick turnover for virtually each such item.
Through Peter’s reputation
and long standing close business ties to the diamond wholesale market, the Company will have direct access to acquiring an unsurpassed
collection of the highest investment grade diamonds that are released each year on a wholesale basis. This enables the Company
to wholesale these gems to investors, other jewelry retailers throughout the country, and to other wholesalers who need to supplement
their own inventory at attractive margins with high turnover. Management anticipates that each wholesale diamond order will carry
a ticket value of $300,000 to $5,000,000 and gross margins of approximately 30%-40% that can be expected from their sales with
an average sales turn rate of 90-120 days.
Increasingly, Peter has taken
advantage of his retail store’s location and his reputation for integrity, fairness, and expertise by becoming “the
place to go” to dispose of precious diamonds and other investment grade stones and heirloom jewelry for those desiring to
convert highly valued holdings into cash. Because of the high worth of some of these items, some valued in excess of $35 million,
Peter has, until now, relied on taking such goods on a consignment basis and earning a modest consignment fee. This has restricted
his earnings while impairing his serving his customers to the fullest extent because of their preference for immediate cash. GemVest
plans to purchase such items outright, often at very discounted prices, providing the seller immediate cash and providing the Company
with gross margins typically anywhere between 30%-70%.
Rare and highly valued precious
stones and jewelry are normally sold within 90-120 days giving the Company 3-4 turns of inventory per year. The Company will hire
certified gemologists to ensure that each diamond and gemstone is precisely categorized, given a proper serial number, and provided
a proper documentation trail.
Overview of Investment
Grade Diamonds
The allure of diamonds is,
like gold, they are easily authenticated, eternal lasting and an excellent store of value and safe haven from inflation. Unlike
gold or oil, diamonds have exhibited stable pricing and avoided the high price volatility and instability seen in other commodity
based stores of value. To date, diamonds have not been touched very much by large inflows and outflows of speculative money. This
could change if the new efforts succeed and large speculative inflows materialize into precious “investment grade”
diamonds, as may well be underway. Gold investments, rather than jewelry, have long been the primary choice of investors looking
for a commodity based asset that preserves value. Gold investments have become the primary driver of the price increase and corresponding
growth in the gold industry, pushing annual production to record levels of around $205 billion in 2011 according to the World Gold
Council. By comparison, the annual production of polished diamonds has remained modest is still only about $18 billion (source:
Bain & Co.).
Furthermore, the sometimes
need to sell high-end jewelry and precious stones for cash is an all but universal one. Once GemVest and Peter Voutsas demonstrate
the “proof of concept” in the Beverly Hills store and extend the GemVest brand to the acquisition of landmark jewelry
and precious stones for cash, we envision a roll out of this business into other major markets in the US and cities throughout
the world that are known for their strong jewelry heritage. Those areas plagued by current economic hardships and instability that
have a strong jewelry heritage are particularly attractive target markets for our growth.
GemVest has entered into an
exclusive and perpetual agreement with Peter Voutsas for his services to develop and manage this business. All purchase and resale
business by Peter Marco Jewelers will now be done under the GemVest name. We expect that the proof of concept and a corresponding
codification of operating procedures and business practices will have been accomplished within the first six months of operations.
Several highly visible appearances of Peter Marco jewelry in conjunction with the entertainment industry will be utilized as well
to further enhance the branding and establish Peter as a celebrity to facilitate our rollout into other world center cities.
In addition to securing inventory
for resale by purchasing investment grade estate items from individuals and estates, Peter Voutsas also has direct access to diamonds
directly from diamond cutters located around the world. This direct source of mined diamonds is available to Peter and GemVest
at deep wholesale prices which then enables GemVest to distribute the diamonds and gemstones to other jewelers and investors of
investment grade diamonds and gemstones at competitive prices while still earning significant returns. This business too has vast
opportunities for international expansion given the availability of sizeable capital that the GemVest venture will provide.
Primary Objectives
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To establish GemVest as an international branded investment diamond jewelry merchant
business under
the well-established Peter Marco Extraordinary Jewels of Beverly Hills, Rodeo Drive store front for the acquisitions of
exclusive high
end jewelry and investment grade precious stones that are acquired from individuals and estates and sold through private
transactions to investors and consumers interested in obtaining such rare jewelry and precious stones.
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To complete a proof of concept in demonstrating that the income and
profit margins now present in the consignment based acquisition of merchandise and resale structure would be very
significantly increased by a multitude of many times by converting to outright purchase and resale of “treasure
chest” collector jewelry and other merchandise. To codify all procedures, risk management controls, advertising and
merchandising, inventory controls, promotion, valuation and assessment, purchase and sales techniques, etc. so as to enable
prudent but timely expansion into other primary domestic and international targeted cities that are noted for populations
having exclusive luxury jewelry collections an appreciation for investment grade stones, and an ample number of estates and
people seeking to liquidate such exclusive holdings and others who wish to purchase such treasure goods.
*
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To prepare a master national and international target city list, perform
site reviews and selections and prepare for such future expansion inclusive of operating manuals, plans for executive recruitment
and training, and an initial promotional and public relations campaign that would be used as we enter new markets. Expansion could
then take place under GemVest’s direct ownership of satellite stores or, depending on the particular circumstances, through
franchising with the “best in class” independent jewelers in selected cites who would operate under a franchise arrangement,
inclusive of capital being provided for purchase of conforming merchandise.
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To provide investors with a rare opportunity to participate in this extremely
attractive high end of the jewelry and rare precious stone sectors with the prospects of high returns, relatively low risks, and
exclusive entertainment event opportunities where Peter Marco jewelry is featured.
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To establish the first international brand for the liquidation and purchase
of rare and timeless treasured heirloom jewelry and precious stones.
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Instill the highest level of cordiality and friendliness in customer service
in what is an exclusive and elegant setting.
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*
With the reach of the
Peter Marco’s brand across the world, it is not essential that local markets have an active core of buyers. Such merchandise
can be sold on the international market
Mission
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Make GemVest the most trusted, esteemed, and successful trader of pre-owned
rare jewelry and precious stones in the international market.
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Establish and implement an international highly recognizable brand known
by the international elite for heirloom jewelry and high-end investment grade precious stones.
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To identify additional business opportunities where access to capital,
expert knowledge of rare jewelry and precious stones, and reputation are paramount to success.
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Establish GemVest as the preferred place to purchase, sell and exchange
investment grade precious stones and fine jewelry.
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Establish a wholesale marketplace for investment grade diamonds that can
be sold directly to jewelers, wholesalers, and pre-approved investors over the Internet.
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To select an esteemed investment bank partner interested in pursuing the
regulatory filing and sale of bundled $100MM investment grade diamonds to high net worth investors
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To link with expert local jewelers through an Internet supported distribution
system such that affiliate jewelers will be able to retail precious diamonds and other investment grade stones on their premises
through Internet enabled displays and advanced secured distribution system.
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Keys to Success
Some of the key factors that will help GemVest expand
its operations include:
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Timely
access to capital and debt financing sufficient to support increasing capital requirements in order for GemVest to avail itself
of expansion opportunities and respond to new business opportunities.
†
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Creating a world-class brand supported by retail storefronts for the acquisition
and sale of legacy holdings.
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Establishing proper risk and internal controls to assure that all assets
are assessed correctly, properly secured and safeguarded to assure and protect inventory.
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Establishing a high volume “Diamond Exchange” wholesale marketplace
for investment grade diamonds.
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Securing adequate umbrella insurance coverage to cover the purchase, sale,
transportation of all high valued inventory.
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Developing
a customized website for promoting the Company’s business and evaluate whether it is desirable to make it transactional,
such that sellers could submit detailed information about what they wish to sell to the Company (or, if we so choose to other
prospect buyers as well) and buyers, be they limited to affiliate jewelers or to the public could submit offers on listed merchandise.
‡
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Maintaining the highest business integrity such that all sellers and buyers
can have comfort that they are being treated fairly and with the utmost of respect, that there is transparency, and that there
is a consistency in practices across transactions.
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Expanding our visibility and access to sellers of rare jewelry and precious
stones such that we will be able to secure a sufficient volume of high worth artifacts to support the buyer base and business overhead.
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Becoming more visible to diamond investors and speculators across the U.S.
and globally and to the international investment banking community when we are ready for such relationships.
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Identifying attractive locations in other US cities and worldwide for setting
expansion priorities.
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Improving our logistic/supply chain to enable quicker, secured deliveries
and returns.
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Developing a state of the art information system, inclusive of inventory
data base, historical purchase and sale prices, number of days in inventory by item and category, any item specific special circumstances,
seller and buyer and respective locations, demographics, product interests, etc. that will give us an added competitive advantage
and improve our internal controls and IT.
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Implementing a public relations and marketing program that will introduce
and reinforce our branding.
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[†]
We anticipate linking with an international investment bank that wishes to help develop a securitized asset backed portfolio of
precious stones.
[‡]
This could be restricted to invited parties, e.g., past clients.
Company Startup
Summary
GemVest is now poised to purchase
and resell investment grade diamonds, precious stones and heirloom top of the line jewelry on a volume basis from both the world’s
top diamond mining companies and from individuals and estates seeking timely access to liquidity. Included in the company’s
attributes are:
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A world-class acclaimed (prestigious) retail jewelry nameplate with an
aura that connotes exclusivity and exquisiteness. We enter this field with an already very meaningful presence in Peter Voutsas,
our CEO and Chief Investment Officer, and an experience and expertise that any new entrant could only wish for.
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The CEO and Chief Investment Officer, Peter Voutsas, is an internationally
renowned jeweler with a reputation for integrity, honesty, and high customer satisfaction. We will have the benefit of Peter’s
experience, expertise and leadership from the very beginning of our enterprise. There is no need for a learning curve. We are expanding
on proven business practices, principles and activities that have made Peter one of the most respected and successful independent
jewelers in the world. Few businesses can ever start with such advantages out of the gate.
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The Company is layering strong financial resources on top of proven business
practices so that the present and past success can be magnified and most all the risks are very much minimized.
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The access to rare gems including diamonds paves the way for an international
expansion at an accelerated pace.
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Few products, even other luxury goods makers, are so dependent on reputation
as purveyors of luxury jewelry. This is perhaps even more important in the retail arena by our being able to attract owners of
rare jewelry and precious stones by the feel of an absolute comfortable and cordial environment that customers experience inside
a Peter Marcos store.
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Start-up expenses are relatively modest since the first store front, the
buying and selling infrastructure and business relationships to the world wholesale markets are already in place. In addition,
the brand is already well established. Nor will there be need to expand current sales staffing until we start adding an Internet
based sales channel and expanded beyond the Beverly Hills store.
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Products and Services
GemVest seeks to become a
world-wide destination for the purchase and resale of rare investment grade precious stones and jewelry by focusing on becoming:
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An international wholesale of high end investment grade precious stones
including featured diamonds that would be marketed directly to collectors, investors, other wholesalers who are looking to supplement
their own inventory and that of individual jewelry stores operating in high end of local markets.
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Heirloom and keepsake “collector and investor” grade diamond
and other precious stone jewelry through the highest grade museum and collector pieces that will be marketed to an international
clientele, high net worth shoppers, collectors, and investors.
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Market Segmentation
The diamond and jewelry distribution
and sales industry is one of the United States’ most concentrated and exclusive industries characterized by a relatively
small number of suppliers supplying diamonds to the entire market. As of the last economic census, there were approximately only
9,000 businesses that deal specifically with the sale of diamonds and jewelry on both a wholesale and retail level. Presumably,
some of these did so in volumes that were virtually inconsequential. For each of the last five years, the industry has generated
more than $54 billion dollars a year of revenue and has provided jobs to more than 70,000 people. Each year, approximately $7 billion
dollars of payrolls are disbursed to these employees. Approximately half of the diamond distribution firms in the country are located
in New York, California, and Texas.
Size of U.S. Diamond
Market
Reflecting its scarcity, by
world trade standards, diamond trade is still a modest niche market. Polished diamond imports to the U.S. has risen from $4 billion
in Q1 of 2010 to about $6.4 billion in Q1 of 2013 (see U.S. Polished Diamond Export - Import Volume, 2010Q1- 2013Q1 graph below).
During this same period, U.S. exports rose from $3.1 billion to $5.6 billion, making us a net imported by about $0.75 billion a
quarter.
* Source: U.S. Polished Diamond Export - Import
Volume, 2010Q1-2013Q1:
Target Market
Segment Strategy
As the Company does not intend
to market its investment diamond inventories directly to the general public, the marketing campaign required to support this business
is quite limited. Foremost, the Company must immediately expand its relationships with other i). diamond distributors, ii). jewelry
retailers, and iii). jewelry manufacturers that will continuously supply the business with purchase orders. At the onset of operations,
Mr. Voutsas intends to directly approach regional premium jewelry stores to become an ongoing major supplier of such premium stock
diamonds. Additionally, the Company will implement an interactive online website for the wholesale sector so that the Company’s
target market can easily locate the Company’s contact information and easily find information related to making bulk purchases.
Once registered and approved (verified as a qualified customer or business (jeweler)), registered users will be given access to
all current inventories of investor diamonds in inventory and available for immediate delivery. All such affiliate jewelers will
also be given a special code whereby they can quickly access any diamond that have interest in and show it on their own WEB site
through an Internet Link. All such displays by the affiliate jewelers will show their logo and name above such “reserved”
diamonds, which makes for an impressive presentation to their customers. Planning for the Internet capability described above is
already in the planning and development stage. The Company also plans to hire a specialist marketing firm to place the Company’s
inventory in trade directories serving the jewelry industry. In addition, the Management of GemVest, will regularly attend industry
events that will allow them to network among potential clients that will regularly purchase diamonds from the business. Mr. Voutsas
will also attend selected Christies and Sotheby’s auctions to showcase the Company’s higher-end diamonds.
Currently, total annual diamond
sales in the U.S. have reached $5.5 billion, out of total jewelry sales of an estimated $40 billion, which represents approximately
18% of total jewelry sales. This includes everything from engagement rings, anniversary jewelry, ornamental items, watches, etc.
The Company’s opportunity is establishing itself as a source of exquisite investment grade diamonds that are desired for
speculation and asset protection in addition to demand from consumers seeking exquisite, eye catching beauty.
The diamond market itself
is fragmented and characterized mostly by vendors targeting "mass" market demand with ordinary diamonds. It is also highly
seasonal with year-end gifts and purchases accounting for a very significant portion of annual sales. The market is divided into
three echelons: premium end, middle end, and low end. Online diamond retail also has different categories, parallel to the brick-and-mortar
stores. BlueNile is typical of the upper-echelon vendors for high-end online diamonds, while Best Gem targets mostly middle end
customers.
GemVest will target only in
the upper echelon of high quality diamonds, with an average sale expected to be in the hundreds of thousands of dollars. The Company’s
initial target is the top 25% of the diamond market, including the top ten percent of upper-echelon buyers. First year sales volume
is targeted at $15-45 million.
Technology
GemVest intends to build a
state of the art custom website that enables the Company to conduct e-commerce throughout the world. We will utilize existing technology
solutions when appropriate and efficient and, when necessary, invest in developing proprietary software to support our business.
GemVest will invest in the creation of an Internet platform for attracting both collectors and investors in fine jewelry and investment
grade stones for purchase. We wish to establish a platform that offers fair prices, immediate cash, and great convenience and confidentiality.
The website will emphasize these features and allow sellers to receive a binding quote subject to all descriptions and ratings
of gems being verified at time of receipt. In addition to supporting this commerce, the site will also promote our brand.
In addition, the business
will seek or build an overall CRM solution for overseeing and managing satellite locations, available inventories, evaluating performances
on a live basis, and live consolidation of results.
Competitive Edge
GemVest shall utilize its
Management who are highly skilled at purchasing diamonds and have longstanding relationships with wholesale sources for investment
grade diamonds at between 40% and 70% discounts to Rapaport Prices through its well established trade connections. Discount levels
for select qualities of diamonds vary rather significantly and are based on a broad range of factors including the specific physical
and technical characteristics of a particular diamond, type of market, location, state of market liquidity, and terms of sale.
GemVest will have the benefit of robust funding which will enable the Company to become a repeat buyer of the highest grade precious
diamonds and sustain a comprehensive and diverse inventory, sell, through the Rapaport Exchange supplemented by sales to trade
sources in the wholesale exchange. With normal turnover, we expect to be able to turnover inventory at 3 to 4 times per year.
Marketing Strategy
GemVest’s Management
has extensive, pre-existing relationships with jewelers and industry participants and will extend those relationships electronically
through networks like RapNet. The BUY-SIDE will focus on finding distressed sales of estate jewelry and pawnshop situations. The
SELL-SIDE will attempt to attain full prices or near full prices as quoted on the Rapaport Price List. Spreads of 30% and higher
are quite common under this strategy.
Employees
The
Company has five part-time consultants. Our employees consist of Mr. Voutsas who serves as the Chief Executive Officer
and Chief Investment Officer of Gepco, Ltd. and GemVest, Ltd.; Ms. Malone who serves as President, Chief Financial Officer
and Secretary of Gepco, Ltd. and as the Chief Operating Officer, Chief Financial Officer and Secretary of GemVest, Ltd.;
Mr. Marlin who serves as the Chief Marketing Officer of Gepco, Ltd. and the President and Chief Marketing Officer of
GemVest, Ltd., Mr. Loshin who serves as Chief Creative Officer of Gepco, Ltd. and GemVest, Ltd. and Mr. Zielke who serves as
Vice President and Corporate Counsel of Gepco Ltd., all of whom provide services to us on a part-time basis.
To
the best of its knowledge, the Company is compliant with local prevailing wage, contractor licensing and insurance regulations,
and has good relations with its employees.
An investment in the Company’s common
stock involves a high degree of risk. In determining whether to purchase the Company’s common stock, an investor should carefully
consider all of the material risks described below, together with the other information contained in this report before making
a decision to purchase the Company’s securities. An investor should only purchase the Company’s securities if he or
she can afford to suffer the loss of his or her entire investment.
Risks Related to our Business
A decline in the price of diamonds could
adversely affect the market price of our stocks, and our financial results and condition, may in the future be materially adversely
affected by declines in the price of rough and polished diamonds.
As prices decline, this
may prove to be a less attractive commodity to our investors thus decreasing demand and lowering the market price for our diamonds.
If we have diamonds for which we have paid a higher price, and the market declines, we may be forced to sell at a lower price than
expected, thus decreasing our profit margin or forcing us to less at a price less than the price which we paid for inventory.
Due to the international nature of the
diamond industry, we bear significant foreign currency risk.
The diamond market is international
with pricing generally determined by large participants in the global diamond trading centers and exchanges, which prices may be
denominated in foreign currency. Thus if purchases are denominated in foreign currency, thus we will become exposed to foreign
currency fluctuations relative to the U.S. dollar which may affect our financial results.
Because our auditors have issued
a going concern opinion, there is substantial uncertainty we will continue operations in which case you could lose your investment.
Our auditors have issued
a going concern opinion. This means that there is substantial doubt that we can continue as an ongoing business for the next twelve
months. The financial statements do not include any adjustments that might result from the uncertainty about our ability to continue
in business. As such we may have to cease operations and you could lose your investment. Further, we have not considered and will
not consider any activity beyond our current exploration program until we have completed our exploration program.
Because we may still not have sufficient
capital to fund our business plan, we may have to sell additional securities and raise additional capital which could dilute your
investment.
We may not have the capital
to fund our business plan. As a result we may have to raise additional capital to maintain operations. There is no assurance that
we will be able to secure enough capital to maintain operations and if we cannot raise the capital needed we may have to suspend
operations.
We have no operating history upon which
an evaluation of our prospects can be made.
We have had no operations
in the diamond industry since our inception upon which to evaluate our business prospects. As a result, investors do not have access
to the same type of information in assessing their proposed investment as would be available to purchasers in a company with a
history of prior substantial operations. We face all the risks inherent in an early stage business, including the expenses, lack
of adequate capital and other resources, difficulties, complications and delays frequently encountered in connection with conducting
operations, including capital requirements and management’s potential underestimation of initial and ongoing costs. We also
face the risk that we may not be able to effectively implement our business plan. If we are not effective in addressing these risks,
we will not operate profitably and we may not have adequate working capital to meet our obligations as they become due.
We may be unable to successfully execute
any of our identified business opportunities or other business opportunities that we determine to pursue.
We currently have a limited
corporate infrastructure. In order to pursue business opportunities, we will need to continue to build our infrastructure and operational
capabilities. Our ability to do any of these successfully could be affected by any one or more of the following factors:
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our ability to raise substantial additional capital to fund the implementation of our business
plan;
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our ability to execute our business strategy;
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the ability of our products to achieve market acceptance;
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our ability to manage the expansion of our operations and any acquisitions we may make, which could
result in increased costs;
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our ability to attract and retain qualified personnel;
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our ability to manage our third party relationships effectively; and
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our ability to accurately predict and respond to the rapid changes in our industry and the evolving
demands of the markets we serve.
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Our failure to adequately
address any one or more of the above factors could have a significant impact on our ability to implement our business plan with
respect to marketing and selling our nutritional supplement products and our ability to pursue any related opportunities that
arise.
We have a history since inception of
losses, and we may not be able to cover our costs of operation or achieve profitability in the future.
For the year ended December
31, 2013, Gepco, Ltd. incurred net losses of $23,107. There can be no assurances that we will generate sufficient revenues
in the future to cover our costs of operation or that we will be profitable. If we cannot cover our costs of operation, either
through profits or otherwise securing sufficient capital to fund our costs of operation, it would be very unlikely that we would
achieve profitability, and we may be required to cease our operations.
We may not be able to effectively control
and manage our proposed business plan, which would negatively impact our operations.
If our business and markets
grow and develop (and there are there are no assurances what growth and development will occur, if any), it will be necessary for
us to finance and manage expansion in an orderly fashion. We may face challenges in managing expanding product offerings and in
integrating any acquired businesses with our own. Such occurrences will increase demands on our existing management, workforce
and facilities. Failure to satisfy increased demands could interrupt or adversely affect our operations and cause administrative
inefficiencies.
Economic declines may have a material
adverse effect on our sales, and a slow recovery could prevent us from achieving our financial goals.
We cannot predict the extent
to which economic conditions will change and many economists predict that the economic decline will be prolonged, that any recovery
may be weak, and that conditions may deteriorate further before there is any improvement or even after some improvement has occurred.
Continuing weak economic conditions in the United States or abroad as a result of the current global economic downturn, lower consumer
spending (especially discretionary items), lower consumer confidence, continued high or higher levels of unemployment, higher inflation
or even deflation, higher commodity prices, such as the price of oil, political conditions, natural disaster, labor strikes or
other factors could negatively impact our sales or ability to achieve profitability.
Natural disasters, armed hostilities,
terrorism, labor strikes or public health issues could have a material adverse effect on our business.
Armed hostilities, terrorism,
natural disasters, or public health issues, whether in the United States or abroad could cause damage and disruption to our company,
our suppliers, our manufacturers, or our customers or could create political or economic instability, any of which could have a
material adverse impact on our business. Although it is impossible to predict the consequences of any such events, they could result
in a decrease in demand for our product or create delay or inefficiencies in our supply chain by making it difficult or impossible
for us to deliver products to our customers, or for our manufacturers to deliver products to us, or suppliers to provide component
parts.
We rely on key personnel and, if we are
unable to retain or motivate key personnel or hire qualified personnel, we may not be able to grow effectively.
Our success depends in
large part upon the abilities and continued service of Peter Voutsas, our chief executive officer. There can be no assurance that
we will be able to retain the services of Peter Voutsas. Our failure to retain the services of our key personnel could have
a material adverse effect on the Company. In order to support our projected growth, we will be required to effectively
recruit, hire, train and retain additional qualified management personnel. Our inability to attract and retain the necessary
personnel could have a material adverse effect on the Company.
Risks Related to the Company’s Common
Stock
There is not an active liquid trading
market for the Company’s common stock.
The Company files reports
under the Securities Exchange Act of 1934, as amended, and its common stock is eligible for quotation on the OTCQB. However, there
is no regular active trading market in the Company’s common stock, and we cannot give an assurance that an active trading
market will develop. If an active market for the Company’s common stock develops, there is a significant risk that the Company’s
stock price may fluctuate dramatically in the future in response to any of the following factors, some of which are beyond our
control:
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variations in our quarterly operating results;
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announcements that our revenue or income are below analysts’ expectations;
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general economic slowdowns;
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sales of large blocks of the Company’s common stock;
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announcements by us or our competitors of significant contracts, acquisitions, strategic partnerships,
joint ventures or capital commitments; and
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fluctuations in stock market prices and volumes, which are particularly common among highly volatile
securities of early stage technology companies.
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The ownership of our common stock is
highly concentrated among a few shareholders.
Our executive officers
and directors currently beneficially own approximately 151,319,548 shares of our outstanding common stock (68.39%). As a result,
they have the ability to exercise control over our business by, among other items, their voting power with respect to the election
of directors and all other matters requiring action by stockholders. Such concentration of share ownership may have the effect
of discouraging, delaying or preventing, among other items, a change in control of the Company.
The Company’s common stock will
be subject to the “penny stock” rules of the SEC, which may make it more difficult for stockholders to sell the Company’s
common stock.
The Securities and Exchange
Commission has adopted Rule 15g-9 which establishes the definition of a "penny stock," for the purposes relevant to us,
as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share,
subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require:
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that a broker or dealer approve a person's account for transactions in penny stocks; and
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the broker or dealer receive from the investor a written agreement to the transaction, setting
forth the identity and quantity of the penny stock to be purchased.
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In order to approve a person's
account for transactions in penny stocks, the broker or dealer must:
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obtain financial information and investment experience objectives of the person; and
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make a reasonable determination that the transactions in penny stocks are suitable for that person
and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions
in penny stocks.
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The broker or dealer must
also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the Commission relating to the penny
stock market, which, in highlight form:
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sets forth the basis on which the broker or dealer made the suitability determination; and
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that the broker or dealer received a signed, written agreement from the investor prior to the transaction.
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Disclosure also has to
be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions
payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies
available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing
recent price information for the penny stock held in the account and information on the limited market in penny stocks.
The regulations applicable
to penny stocks may severely affect the market liquidity for the Company’s common stock and could limit an investor’s
ability to sell the Company’s common stock in the secondary market.
As an issuer of “penny stock,”
the protection provided by the federal securities laws relating to forward-looking statements does not apply to the Company.
Although federal securities
laws provide a safe harbor for forward-looking statements made by a public company that files reports under the federal securities
laws, this safe harbor is not available to issuers of penny stocks. As a result, the Company will not have the benefit of this
safe harbor protection in the event of any legal action based upon a claim that the material provided by the Company contained
a material misstatement of fact or was misleading in any material respect because of the Company’s failure to include any
statements necessary to make the statements not misleading. Such an action could hurt our financial condition.
The Company has not paid dividends in
the past and does not expect to pay dividends in the foreseeable future. Any return on investment may be limited to
the value of the Company’s common stock.
No cash dividends have
been paid on the Company’s common stock. We expect that any income received from operations will be devoted to our future
operations and growth. The Company does not expect to pay cash dividends in the near future. Payment of dividends would depend
upon our profitability at the time, cash available for those dividends, and other factors as the Company’s board of directors
may consider relevant. If the Company does not pay dividends, the Company’s common stock may be less valuable because a return
on an investor’s investment will only occur if the Company’s stock price appreciates.
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Item
1B.
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UNRESOLVED STAFF COMMENTS
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Not Applicable.
Gepco, Ltd. has use of
an administrative office in San Diego, CA, that is provided to us without charge by our President, Chief Financial Officer and
Secretary.
GemVest has use of retail
space in Beverly Hills, CA that is provided without charge by our Chief Executive Officer and Chief Investment Officer.
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Item
3.
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LEGAL PROCEEDINGS
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On April 8, 2013, former
Chief Financial Officer and Director and present shareholder Trisha Malone was appointed as Custodian of the Company, by the Eighth
Judicial District Court of Clark County, Nevada, pursuant to Nevada Revised Statutes 78.347. The Court further ordered that Ms.
Malone is authorized to appoint new officers and directors of the Company, to send notice to all stockholders of record noticing
a meeting of shareholders, to pay all fees owed to the SEC and to bring current all the Company's SEC filings.
The Court further ordered
that all stocks issued as a result of the September 7, 2012 Share Exchange Agreement between the Company and ClairNET Ltd., a Hong
Kong entity and their shareholders, are declared null and void and ordered to be returned to the Company or its transfer agent
for cancellation. The Court further ordered that the License Agreement between the Company and ClairNET, Ltd. a Hong Kong entity,
is declared null and void.
Finally, the Court ordered
the cancellation of an aggregate of 26,925,000 shares of Common Stock to effectuate the Company's September 8, 2012 Rescission
agreement with the founders of Wikifamilies SA.
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Item
4.
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Mining
and Safety Disclosures.
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Not applicable.
PART
III
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Item
10.
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DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
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Name
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Age
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Position with Company
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Angelique de Maison
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43
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Executive Chairman, Gepco, Ltd. and Gemvest, Ltd.
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Peter Voutsas
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52
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Chief Executive Officer, Chief Investment Officer and Director, Gepco, Ltd. and Gemvest, Ltd.
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Trisha Malone
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39
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President, Chief Financial Officer, Secretary, Director Gepco, Ltd.; Chief Operating Officer, Chief Financial Officer, Secretary, Director Gemvest, Ltd.
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Nic Marlin
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30
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Chief Marketing Officer, Gepco, Ltd.; President and Chief Marketing Officer, Gemvest, Ltd.
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Ronald Loshin
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71
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Chief Creative Officer, Gepco, Ltd. and Gemvest, Ltd.
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Larry A. Zielke
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65
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Vice President, Corporate Counsel and Director, Gepco, Ltd.
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Officers and Directors of Gepco,
Ltd. prior to the Acquisition:
Trisha Malone.
Ms.
Malone is the Chief Financial Officer and Secretary of Lustros Inc. since April 18, 2012. Ms. Malone has more than 20 years of
experience in finance and accounting including experience in corporate governance, securities regulation, financial controls requirements,
and financial management. From 2000 to 2006, Ms. Malone served as Corporate Controller for Xsilogy, Inc., a leading wireless sensor
network company, and as the division controller after Xsilogy’s acquisition by SYS Technologies, Inc., a public company engaged
in government contracting. From 2006 to 2008, Ms. Malone was the Corporate Controller for Satellite Security Corporation, a developer
of satellite tracking systems. Since 2008, Ms. Malone has been self-employed as an independent accounting consultant and is presently
consulting as Corporate Controller for several private companies. From 2007 to 2009, Ms. Malone served as the Corporate Controller
for Lenco Mobile Inc., which operates in the high growth mobile marketing and Internet sectors, and served as Corporate Secretary
for Lenco until June 2010. From June 2010 to September 2012 Ms. Malone served as Chief Financial Officer and a Director of Wikifamilies,
Inc., a public company that operated in the technology services industry. Ms. Malone was also a Director of Casablanca Mining,
Ltd. from its inception on June 27, 2008 until August 30, 2012 and was the Chief Executive Officer of Casablanca from inception
until January 2009 and the Chief Financial Officer from inception through December 2011. Ms. Malone has a degree in Business Administration
from Grossmont College. She has also pursued extended studies in corporate law, benefits administration, and human resources. Ms.
Malone’s extensive experience in finance, accounting, corporate governance, and securities regulation led to the conclusion
that she should serve as a director of the Company.
Larry A. Zielke.
Mr. Zielke has maintained a commercial law practice in Damascus, Ohio since 2001. Mr. Zielke served as director, Senior Vice-President
and General Counsel of Lustros, Inc. in 2012 during the company’s startup in Chile. From 1994 to 2000, Mr. Zielke was General
Counsel and Corporate Secretary of Sakhalin Energy Investment Company Ltd., resident first in Moscow and subsequently on Sakhalin
Island. During this period, Mr. Zielke was a member of Sakhalin Energy’s Executive Management team that achieved the first
export of oil from Russia by a non-Russian company, was the company’s lead negotiator for project financing from EBRD, OPIC
and JEXIM, and was responsible for risk management and corporate compliance. From 1979 to 1994, he served as in-house counsel to
Babcock & Wilcox and various other affiliates of McDermott International, Inc., which included experience from Cairo to Jakarta
while residing in Dubai, United Arab Emirates. Mr. Zielke holds a Juris Doctor degree from the University of Akron, a B.S. in engineering
physics and a Mechanical Engineer degree from Ohio State University. His engineering background included research for nuclear reactor
core heat transfer design. In addition to being a licensed attorney, he was previously a licensed professional engineer. Mr. Zielke’s
extensive experience in business and the law led to the conclusion that he should serve as a director of the Company.
Officers and Directors Added in the Acquisition:
Angelique De Maison
– Founder and Executive Chairman.
Ms. de Maison is responsible for the financing, vision and strategic direction of the
Company. She is an accomplished investor, business strategist, capital formation expert and expert business advisor. Founder and
CEO of Kensington & Royce, Ltd., a private investment company since 2006. Kensington & Royce has already successfully funded
four companies from inception to public market, including Lustros, Inc. (LSTS).
Peter Voutsas –
Founder, Chief Executive Officer, Chief Investment Officer and Director.
With 38 years of experience in the jewelry business
and great relationships all over the world in the industry, Peter Voutsas has been extremely successful. Mr. Voutsas grew
up in a single parent household in a poor family and poor neighborhood in New York. At the age of 14 he had an opportunity over
the summer to work at Albithel Jewelry Manufacturing Company in Manhattan, one of the finest jewelry manufacturing company in the
United States at the time. He was hired to clean the lavatories and office and as a messenger boy. He was allowed to watch the
jewelers and learn when his regular work was completed. After six months he became a jeweler then polisher and eventually a diamond
setter. At 16 years of age his mother remarried and his family relocated to Europe while Mr. Voutsas stayed on his own in New York
During the end of his traveling
career Mr. Voutsas had a partnership opportunity to open and run a retail jewelry store in Beverly Hills California called James
Elliot/Bez Ambar. Originally there were four partners, however, in 2009 he had an opportunity to buy his partners out and
take over the store. He renamed the store Peter Marco Extraordinary Jewels of Beverly Hills after his two sons Peter and
Marco. He has been in this location for approximately twelve years. Peter Marco Extraordinary Jewels of Beverly Hills’ location
at 252 North Rodeo Drive 90210 is on one of the finest shopping streets in the world with 25 feet of window space on the famous
Via Rodeo.
Nicholas Marlin –
President, Chief Marketing Officer and Director.
Nicholas Marlin is a highly successful entrepreneur with expertise in management,
marketing and the Internet. He Co-Founded a leading online dating website, OneGoodLove.com. Mr. Marlin founded his own marketing
company in 2008, Marlin Marketing, specializing in online marketing and advertising. Mr. Marlin earned his B.S. in Business Admin
from Chapman University and an MBA in General Management from Cal Poly. He is also a former Olympic-level gymnast and US National
Champion in the sport.
Ronald S. Loshin –
Chief Visionary Officer and Director.
Mr. Loshin has served as an expert consultant to the consumer banking and automobile
industries since Founding Bank Lease consultant, Inc, in 1981. He is noted as one of the nation’s leading authorities in
automobile leasing and finance. During his career, Mr. Loshin has consulted with virtually every major national and regional bank,
auto manufacturer and their captive finance companies, investment banks, and service companies to the auto finance industry. More
recently, Mr. Loshin has specialized in venture capital, business development, the Internet and the entertainment industry. Mr.
Loshin has held the post of Post-Doctoral Fellow at UC Berkeley following his education at New York University, The London School
of Economics and UC, Berkeley. Mr. Loshin is the Co-Author of The Auto Lending and Leasing Manual published by Warren, Gorham and
Lamont and Founded and serves as the Co-Managing Director of The Association Of Consumer Vehicle Lessors (ACVL.net) whose member
account for over 85% of all consumer automobile leasing in the US. He is Co-Founder of First Wives World, Inc. (firstwivesworld.com),
the leading Internet resource center for women experiencing divorce. Mr. Loshin has served as Board member of The New York Ballet
Theater and is actively working on funding for both Broadway musicals and a movie for a leading Broadway Producer. He continues
to serve as a scholar consultant for The Gerson Lehrman Group (GLG).
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange
Act requires the Company’s executive officers and directors, and persons who own more than ten percent of our Common Stock
to file reports of ownership and changes in ownership with the SEC. Executive officers, directors and greater than ten percent
beneficial owners are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file.
During the 2013 fiscal
year, the following persons were directors, officers or 10% or more beneficial owners who failed to timely file reports required
by Section 16(a) of the Exchange Act during the most recent fiscal year or prior fiscal years. For each such person, the number
of late reports, the number of transactions that were not reported on a timely basis, and any known failure to file a required
Form are set forth by their name.
Trisha Malone: 2 transactions
for which no form has been filed
Larry Zielke: 1 transaction
for which no form has been filed
Walker River Investments
Corp.: 1 transaction for which no form has been filed
Code of Ethics
Our Board of Directors
has adopted a code of ethics covering all of our executive officers and key employees. A copy of our code of ethics is included
as an Exhibit under Item 15 and will be furnished without charge to any person upon written request. Requests should be sent to:
Gepco, Ltd. c/o Trisha Malone, 9025 Carlton Hills Blvd, Ste. B, Santee, CA 92071.
Committees
Our current Board
held no meetings during the fiscal year ended December 31, 2013. The Company does not have standing nominating, audit or compensation
committees. The Board of Directors believes that it is not necessary to have a standing audit, nominating or compensation committee
at this time because, given the Company’s size, the functions of such committees are adequately performed by the Board of
Directors. Ms. Malone has been designated by the Board of Directors as the “audit committee financial expert.”
Ms. Malone is not considered “independent” as defined by the Nasdaq Marketplace Rules. Further, none of our directors
qualifies as “independent” or provides any independent oversight of our audit or compensation processes.
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Item
11.
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EXECUTIVE COMPENSATION
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The following table
provides information as to compensation of all named executive officers of the Company, as defined under Item 402 of Regulation
S-K, for each of the Company’s last two fiscal years, or the last fiscal year if the named executive officer was not a named
executive officer in the previous fiscal year.
|
Name and principal position
|
|
Year
|
|
Salary
|
|
All Other Compensation
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
Trisha Malone,
Chief Financial Officer, President and Director (1)(3)
|
|
2013
2012
|
|
n/a
$45,000
|
|
$19,800 (5)
$25,000 (4)
|
|
$19,800
$70,000
|
|
Larry A. Zielke,
Vice President, Corporate Counsel and Director (2)
|
|
2013
2012
|
|
n/a
n/a
|
|
$9,900(5)
n/a
|
|
$9,900
n/a
|
|
Angelique de Maison
Executive Chairman (3)
|
|
2013
2012
|
|
n/a
n/a
|
|
n/a
n/a
|
|
n/a
n/a
|
|
Peter Voutsas
Chief Executive Officer Chief Investment Officer and Director (3)
|
|
2013
2012
|
|
n/a
n/a
|
|
n/a
n/a
|
|
n/a
n/a
|
|
Nicholas Marlin
Chief Marketing Officer and Director(3)
|
|
2013
2012
|
|
n/a
n/a
|
|
n/a
n/a
|
|
n/a
n/a
|
|
Ronald Loshin
Chief Creative Officer and Director (3)
|
|
2013
2012
|
|
n/a
n/a
|
|
n/a
n/a
|
|
n/a
n/a
|
(1) Ms. Malone
served as a director from November 5, 2010, and Chief Financial Officer from June 23, 2010 through her resignation
on September 13, 2012. Ms. Malone was appointed as Custodian of the Company on April 2, 2013 by the Eighth Judicial District
Court of Clark County, Nevada pursuant to Nevada Revised Statutes 78.347. On April 9, 2013 the duly appointed Custodian of
the Company appointed Trisha Malone as a Member of the Board of Directors as well as Chief Executive Officer, Chief Financial
Officer and Secretary of the Company.
(2) On April
9, 2013 the duly appointed Custodian of the Company appointed Larry A. Zielke as a Member of the Board of Directors as well as
Vice President and Corporate Counsel of the Company.
(3) The
Acquisition was consummated (the “Closing”) on December 6, 2013, in a transaction exempt from registration under Section
4(2) of the Securities Act of 1933, as amended. Pursuant to the Agreement, GemVest and the Company agreed to the following covenants
regarding management of the Company for a period of five years from the date of Closing:
|
|
·
|
Angelique de Maison shall serve as Executive Chairman of the Company and
of GemVest, Peter Voutsas shall serve as Chief Executive Officer and Chief Investment Officer of the Company and of GemVest, Trisha
Malone shall serve as President, Chief Financial Officer and Secretary of the Company and Chief Financial Officer, Chief Operating
Officer and Secretary of GemVest, Nicholas Marlin shall serve as Chief Marketing Officer the Company and President and Chief Marketing
Officer of GemVest and Ronald Loshin shall serve as Chief Creative Officer of the Company and of GemVest.
|
|
|
·
|
The Board of the Company shall consist of six directors: Angelique de Maison,
Peter Voutsas, Trisha Malone, Larry Zielke, Ronald Loshin and Nicholas Marlin. The Board of GemVest shall consist of five directors:
Angelique de Maison, Peter Voutsas, Trisha Malone, Ronald Loshin and Nicholas Marlin.
|
(4) The “All Other Compensation”
paid to Ms. Malone in 2012 consisted of 250,000 restricted shares of Common Stock the Board of Directors of the Company elected
to issue on July 10, 2012 as equity awards in lieu of partial payment to director and Chief Financial Officer Trisha Malone. The
five day market value on the day of the grants was $0.10 per share. The value of these shares at the market price was recorded
as legal and professional fee expense.
(5) On
April 16, 2013 the Board of Directors granted Trisha Malone 2,000,000 shares of Common Stock valued at $19,800 as advance payment
for services to be performed as Chief Executive Officer, Chief Financial Officer and Secretary of the corporation and granted Larry
A. Zielke 1,000,000 shares of Common Stock valued at $9,900 as advance payment for services to be performed as Vice President of
the Corporation.
No executive officer received compensation
during the fiscal year ended December 31, 2013 in excess of $100,000. There are no outstanding equity awards or options to any
executive officer issued or outstanding for services to the Company.
Employment Agreements
The Company has not entered into any
employment contracts.
DIRECTOR COMPENSATION
The Company has
not historically paid any compensation to our current directors.
|
Item
12.
|
|
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
|
The following
table sets forth information regarding the beneficial ownership of our common stock as of March 26, 2014 for: (i) each person
known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock; (ii) each of our named executive
officers and directors; and (iii) all of our current named executive officers and directors as a group. Unless otherwise noted,
we believe that each beneficial owner named in the table has sole voting and investment power with respect to the shares shown,
subject to community property laws where applicable. An asterisk (*) denotes beneficial ownership of less than one percent.
|
|
|
Beneficial Ownership
|
|
|
Name (1)
|
|
Number of Shares
|
|
|
Percent of Class (2)
|
|
|
Gil-Galad Foundation
|
|
|
14,000,000
|
|
|
|
6.33%
|
|
|
Total 5% Owners as a group
|
|
|
14,000,000
|
|
|
|
6.33%
|
|
|
|
|
|
|
|
|
|
|
|
|
Angelique de Maison (3)
|
|
|
88,701,872
|
|
|
|
40.09%
|
|
|
Peter Voutsas
|
|
|
37,771,176
|
|
|
|
17.07%
|
|
|
Trisha Malone
|
|
|
10,265,000
|
|
|
|
4.64%
|
|
|
Ronald Loshin
|
|
|
10,581,500
|
|
|
|
4.78%
|
|
|
Nicholas Marlin
|
|
|
3,000,000
|
|
|
|
1.36%
|
|
|
Larry A. Zielke
|
|
|
1,000,000
|
|
|
|
0.45%
|
|
|
All executive officers and directors as a group (four persons)
|
|
|
151,319,548
|
|
|
|
68.39%
|
|
|
(1)
|
|
The address for each of the
above noted individuals is c/o 9025 Carlton Hills Blvd., Ste. B, Santee, CA 92071.
|
|
(2)
|
|
The percentage ownership reflected
in the table is based on 221,252,555 shares of Common Stock outstanding as of March 26, 2014.
|
|
(3)
|
|
Includes 18,500,000 shares
owned by Kensington & Royce, Ltd. of which Ms. De Maison is an Officer and Majority Shareholder.
|
The Company is not
aware of any person who owns of record, or is known to own beneficially, five percent or more of the outstanding securities of
any class of the issuer, other than as set forth above.
Changes in Control
On September 7,
2012, Wikifamilies, Inc., entered into a Share Exchange Agreement with ClairNET Ltd., a Hong Kong entity and their shareholders
by which all of the issued and outstanding shares of ClairNET were to be exchanged for 36,504,056 shares in Wikifamilies Inc, representing
75% of the company’s common stock. Additionally, ClairNET Ltd was to receive 2,500,000 shares of Voting Only Preferred Stock
in Wikifamilies, with 100:1 voting rights. On the same date, the parties also signed a License Agreement by which Wikifamilies
was to acquire exclusive global licensing rights to ClairNET’s products, with an end goal of ClairNET becoming a subsidiary
of Wikifamilies, Inc.
On September 8,
2012 the Company and the founders of Wikifamilies SA entered into a Rescission Agreement, whereby the share consideration originally
tendered by the corporation for the acquisition of the Wikifamilies SA assets, was Rescinded by Mutual agreement. This Rescission
unwound the March 23, 2011, Exchange Agreement between the two parties, and Wikifamilies SA agreed to return the remaining 26,925,000
shares to Wikifamilies treasury, being the full balance of the original 31,500,000 shares tendered as part of the original Exchange
Agreement and the Company returned its interest in Wikifamilies SA to the Wikifamilies SA founders. The Wikifamilies SA founders
retained all assets and liabilities of Wikifamilies SA. Additionally, Wikifamilies, Inc forgave the intercompany loans from Wikifamilies
Inc. to Wikifamilies SA in full compensation for non-payment of salaries, fees and expenses to the founders.
On September 10,
2012 the full Board of Directors of the Company elected John Karlsson, Dan Clayton and Vincent Qi as Members of the Board of Directors.
On September 10,
2012, following the appointment of the new Board Members, Robert Coleridge, Chris Dengler, Steve Brown, William Hogan and Thomas
Hudson resigned from their positions on the Board. Trisha Malone resigned her position as Board Member and Chief Financial Officer
effective September 13, 2012 and Malcolm Hutchinson resigned his position as Board Member and Chief Executive Officer effective
September 13, 2012.
The three members
of the Board of Directors elected on September 10, 2012 changed the Company’s name in the state of Nevada to ClairNET, Ltd.
but failed to complete the ClairNET, Ltd. merger, which left the Company with no operating entity, and failed to file any and all
required filings with the Securities and Exchange Commission (the “SEC”), in effect abandoning the Company. After repeated
attempts at contact with the Board of Directors with no response, creditors of the Company petitioned the Eighth Judicial District
Court in Clark County Nevada to receive custodianship of the Company.
On April 2, 2013
the State of Nevada granted custodianship of the Company to Trisha Malone, the former Chief Financial Officer and a former Director
of the Company, giving her the authority to appoint new officers and directors, to send notice to all stockholders of record noticing
a meeting on at least ten (10) days notice, to pay all fees owed to the SEC and make all necessary filings with the SEC to bring
the Company's filings current. The court also ordered that all common stocks issued as a result of the Exchange Agreement entered
into between the Company and ClairNET, Ltd., a Hong Kong corporation, dated September 7, 2012, were declared null and void and
should be immediately returned to the Company or its transfer agent for cancellation and that the Technology Licensing Agreement
between the Company and ClairNET, Limited, a Hong Kong corporation, dated September 7, 2012, was declared null and void. With no
current operating entity and nominal assets, the Company is currently a “shell” corporation as defined under Rule 12b-2
of the Securities Exchange Act of 1934, as amended.
On April 17, 2013,
the Company issued an aggregate of 10,000,000 shares of its Common Stock, representing approximately 24.07% of the issued and outstanding
Common Stock of the Company, to our Chief Executive Officer, Chief Financial Officer, Secretary and director, Trisha Malone, to
extinguish debt owed by the Company to Ms. Malone, and to retain her services as an officer of the Company. In addition, the Company
issued 1,000,000 shares of Common Stock, representing 2.4% of the issued and outstanding Common Stock of the Company to our Vice
President and Corporate Counsel, Larry A. Zielke to retain his services as an officer of the Company. In addition, the Company
issued 8,835,580 shares of Common Stock, representing 21.25% of the issued and outstanding Common Stock to Walker River Investments
Corp. to extinguish debt owed to Walker River. As a result, Ms. Malone and Walker River became control stockholders of the Company,
holding an aggregate of 19,100,480 shares of Common Stock, representing approximately 46% of the voting control of the Company.
On October 15, 2013, Gepco,
Ltd. (the “Company”) entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) with GemVest,
Ltd. pursuant to which the Company purchased (the “Acquisition”)100% of the issued and outstanding capital stock (“GemVest
Shares”) of GemVest, Ltd., a Nevada corporation (“GemVest”). The purchase price for the Shares set forth therein
is 150,000,000 shares of the Company’s restricted Common Stock. As a result, the shareholders of GemVest, Ltd. became
control stockholders of the Company, holding an aggregate of 150,000,000 shares of Common Stock, representing approximately 77%
of the voting control of the Company at closing on December 6, 2013.
|
Item
13.
|
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
Transactions
with Related Persons
Common Stock Issuances
On February 7,
2012 the Board of Directors of the Company elected to issue equity awards to directors Thomas Hudson and Stephen Brown.
150,000 restricted shares of Common Stock were issued to Mr. Hudson and 100,000 shares of Common Stock were issued to Mr.
Brown. Market value on the day of the grants was $0.35 per share. The value of these shares at the market price was recorded
as compensation expense.
On July 10, 2012
the Board of Directors of the Company elected to issue equity awards in lieu of partial payment to director and Chief
Financial Officer Trisha Malone, and Corporate Counsel, David Price. 250,000 restricted shares of Common Stock were issued to
both Ms. Malone and Mr. Price. The five day market value on the day of the grants was $0.10 per share. The value of these
shares at the market price was recorded as legal and professional fee expense.
On September 8,
2012 the Company and the founders of Wikifamilies SA entered into a Rescission Agreement, whereby the share consideration originally
tendered by the corporation for the acquisition of the Wikifamilies SA assets, was Rescinded by Mutual agreement. This Rescission
unwound the March 23, 2011, Exchange Agreement between the two parties, and Wikifamilies SA agreed to return the remaining 26,925,000
shares to Wikifamilies treasury, being the full balance of the original 31,500,000 shares tendered as part of the original Exchange
Agreement and the Company returned its interest in Wikifamilies SA to the Wikifamilies SA founders.
On April 17, 2013,
the Company issued an aggregate of 10,000,000 shares of its Common Stock to our then Chief Executive Officer, Chief Financial Officer,
Secretary and director, Trisha Malone, to extinguish debt owed by the Company to Ms. Malone, and to retain her services as an officer
of the Company. In addition, the Company issued 1,000,000 shares of Common Stock to our Vice President and Corporate Counsel, Larry
A. Zielke to retain his services as an officer of the Company.
Loans from Thomas Hudson
On February 14,
2012, then Director Thomas Hudson loaned the Company a total of $50,000 for working capital needs. The loan was originally
due on June 30, 2012. On August 17, 2012 Mr. Hudson agreed to extend the due date to September 30, 2012. The loan is
currently in default. Should the Company, at its sole discretion, decide that it is not in a financial position to repay said
funds in currency, both parties mutually agree that said amount repayable may be converted into common shares of the Company
calculated at a rate per share of twenty five cents per share or at eighty percent (80%) of the previous week’s
averaged closing price, whichever is the lesser. If the Company does not repay the loan in cash, as a penalty it shall
provide Lender with one hundred thousand (100,000) options enabling him to purchase one hundred thousand (100,000) shares of
Common Stock at a redemption price of twenty five cents ($.25) per share. Redemption of such options in entirety or in part
is at the sole discretion of Lender. By way of interest on such loan, Lender shall be provided with two hundred thousand
(200,000) options enabling him to purchase two hundred thousand (200,000) shares
of Common
Stock at a redemption price of twenty cents ($.20) per share being a total of forty thousand dollars ($40,000). Redemption of
such options in entirety or in part is at the sole discretion of Lender. The options shall remain valid for a period of three
years from the date of this Agreement, after which they shall become null and void. The loan was not repaid as of December
31, 2013. As the options were in lieu of interest, we recorded an interest expense at December 31, 2012 of $37,487, the fair
value of the options.
Director Independence
The Company’s
common stock is traded on the OTCQB, which does not maintain any standards regarding the independence of the directors on its Board
of Directors. In absence of such requirements, we have elected to use the definition for “director independence”
under the NYSE MKT Rules.
Currently, we have six
Directors, Angelique de Maison, Peter Voutsas, Trisha Malone, Nicholas Marlin, Ronald Loshin and Larry Zielke. None are considered
“independent” as defined by the NYSE MKT Rules.
|
Item
14.
|
|
PRINCIPAL ACCOUNTING FEES AND SERVICES
|
M&K CPAS, PLLC
audited our financial statements for the fiscal year ended December 31, 2012 and performed the quarterly reviews for the fiscal
year ended December 31, 2013. Aggregate fees billed to us by M&K CPAS, PLLC for professional services rendered with respect
to the fiscal years ended December 31, 2012 and December 31, 2013 were as follows:
|
|
|
2012
|
|
|
Audit Fees
|
|
$
|
24,000
|
|
|
Audit-Related Fees
|
|
|
0
|
|
|
Tax Fees
|
|
|
0
|
|
|
All Other Fees
|
|
|
0
|
|
|
|
|
$
|
24,000
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
|
Audit Fees
|
|
$
|
14,700
|
|
|
Audit-Related Fees
|
|
|
0
|
|
|
Tax Fees
|
|
|
0
|
|
|
All Other Fees
|
|
|
0
|
|
|
|
|
$
|
14,700
|
|
De Joya Griffith audited
our financial statements for the fiscal year ended December 31, 2013. Aggregate fees billed to us by De Joya Griffith for professional
services rendered with respect to the fiscal year ended December 31, 2013 were as follows:
|
|
|
2013
|
|
|
Audit Fees
|
|
$
|
6,500
|
|
|
Audit-Related Fees
|
|
|
0
|
|
|
Tax Fees
|
|
|
0
|
|
|
All Other Fees
|
|
|
0
|
|
|
|
|
$
|
6,500
|
|
In the above table,
in accordance with the SEC’s definitions and rules, “audit fees” are fees we paid for professional services for
the audit of our consolidated financial statements included in our Form 10-K and the review of financial statements included
in Form 10-Qs, and for services that are normally provided by the accountants in connection with statutory and regulatory
filings or engagements; “audit-related fees” are fees for assurance and related services that are reasonably related
to the performance of the audit or review of our financial statements; and “tax fees” are fees for tax compliance,
tax advice and tax planning.
All audit related
services, tax services and other services rendered by the Company’s principal accountant were pre-approved by the Company’s
Board of Directors at the time. The Board of Directors has adopted a pre-approval policy that provides for the pre-approval of
all of the services that were performed for the Company by its principal accountant.
Notes to Audited Consolidated Financial Statements
NOTE 1: HISTORY OF OPERATIONS
Gepco, Ltd. (“Gepco, Ltd.” or the
“Company”) was incorporated on June 27, 2008 in the State of Nevada as Kensington Leasing, Ltd. The Company’s
initial business plan was to specialize in leasing equipment to a select clientele. Because it took longer than anticipated to
launch the Company’s leasing business, the Company elected to investigate additional lines of business. The leasing
business generated minimal revenues since inception and has been discontinued.
On June 4, 2010, the Company, through its newly
formed wholly-owned subsidiary Allianex Corp., purchased substantially all of the assets of Allianex, LLC (the “Allianex
acquisition”). The Company’s primary business after the Allianex acquisition until the acquisition of Wikifamilies
SA, as discussed below, was the production, marketing and distribution of a retail line of prepaid stored value cards for the purchase
of technology support and security services for electronic devices. Allianex Corp. generated nominal revenues since the acquisition
and the assets were disposed of on December 22, 2011.
On May 20, 2011, the Company acquired all of
the outstanding equity securities of Wikifamilies SA (the “Wikifamilies acquisition”), making Wikifamilies SA a wholly
owned subsidiary of Kensington Leasing, Ltd. For accounting purposes, the Wikifamilies acquisition was treated as a reverse acquisition
with Wikifamilies SA treated as the acquirer and Kensington Leasing, Ltd. as the acquired party. As a result, the business and
financial information included in previous reports was the business and financial information of Wikifamilies SA prior to May 20,
2011 and the combined entity after May 20, 2011.
On October 27, 2011, the Company changed its
name to Wikifamilies, Inc. through a short-form merger with its newly formed wholly owned subsidiary of the same name.
As of May 20, 2011, the Company’s business
plan as Wikifamilies was to design, develop and operate an Internet-based social media website, Wikifamilies.com, with a unique
emphasis on families and new technologies which web-based platform was intended to enhance the ability of families to communicate
and share family history and events while providing a secure location to transact family-related business matters. Then, on September
7, 2012, our business plan changed to the development and marketing of an Internet search engine through the licensing from Clairnet,
Ltd. of their process enabling online and mobile viewers to search, index, watch and personalize web-based videos while facilitating
the monetizing of investments by video content providers, advertisers and marketers.
On September 7, 2012, Wikifamilies, Inc. entered
into a Share Exchange Agreement with ClairNET Ltd., a Hong Kong entity and their shareholders by which all of the issued and outstanding
shares of ClairNET were to be exchanged for 36,504,056 shares in Wikifamilies Inc, representing 75% of the company’s common
stock. Additionally, ClairNET Ltd was to receive 2,500,000 shares of Voting Only Preferred Stock in Wikifamilies, with 100:1 voting
rights. On the same date, the parties also signed a License Agreement by which Wikifamilies was to acquire exclusive global licensing
rights to ClairNET’s products, with an end goal of ClairNET becoming a subsidiary of Wikifamilies, Inc.
On September 8, 2012, the Company and the founders
of Wikifamilies SA entered into a Rescission Agreement, whereby the share consideration originally tendered by the corporation
for the acquisition of the Wikifamilies SA assets, was rescinded by mutual agreement. This Rescission unwound the March 23, 2011,
Exchange Agreement between Wikifamilies Inc. and Wikifamilies SA, and Wikifamilies SA agreed to return the remaining 26,925,000
shares to Wikifamilies treasury, being the full balance of the original 31,500,000 shares tendered as part of the original Exchange
Agreement and the Company returned its interest in Wikifamilies SA to the Wikifamilies SA founders. The Wikifamilies SA founders
retained all assets and liabilities of Wikifamilies SA. Additionally, Wikifamilies, Inc forgave the intercompany loans from Wikifamilies
Inc. to Wikifamilies SA in full compensation for non-payment of salaries, fees and expenses to the founders.
On September 10, 2012, the full Board of Directors
of the Company elected John Karlsson, Dan Clayton and Vincent Qi as Members of the Board of Directors.
On September 10, 2012, following the appointment
of the new Board Members, Robert Coleridge, Chris Dengler, Steve Brown, William Hogan and Thomas Hudson resigned from their positions
on the Board. Trisha Malone resigned her position as Board Member and Chief Financial Officer effective September 13, 2012, and
Malcolm Hutchinson resigned his position as Board Member and Chief Executive Officer effective September 13, 2012.
The three members of the Board of Directors
elected on September 10, 2012 changed the Company’s name in the State of Nevada to ClairNET, Ltd. but failed to complete
the ClairNET, Ltd. merger, which left the Company with no operating entity, and failed to file any and all required filings with
the Securities and Exchange Commission (the “SEC”), in effect abandoning the Company. After repeated attempts at contact
with the Board of Directors with no response, certain creditors of the Company petitioned the Eighth Judicial District Court in
Clark County Nevada to receive custodianship of the Company.
On April 8, 2013, the Eighth District Court
of the State of Nevada appointed Trisha Malone as Custodian of Wikifamilies, Inc. pursuant to section 78.347 of the Nevada Revised
Statutes, and authorized her to appoint a new Board of Directors, to continue the business of the Company, and to bring current
the Company’s filings with the SEC. The appointment was made pursuant to a petition filed by Trisha Malone with the Court
on February 27, 2013, to become Custodian of the Company due to former management’s malfeasance and nonfeasance in allowing
the filings with the SEC to become delinquent, exposing the Company to potential revocation of registration proceedings under Section
12j of the Securities Exchange Act of 1934 and a potential trading suspension under Section 12k of the Securities Exchange Act,
and in failing to maintain the business of the Company.
The Court also nullified the issuance of shares
of Company Common Stock issued as a result of the Exchange Agreement entered into between the Company and Clairnet, Ltd., a Hong
Kong corporation, dated September 7, 2012 and the Technology License Agreement between the Company and Clairnet, Ltd., a Hong
Kong corporation. Among the nonfeasance of the prior management was the failure to effect the change of the Company's name from
Wikifamilies, Inc. to Clairnet, Ltd. in the marketplace, by notification to FINRA. Prior to being known as Clairnet, Ltd., the
Company was known as Wikifamilies, Inc., to reflect the business plan of operations of its foreign subsidiary, Wikifamilies, S.A.
However, Wikifamilies, S.A. was returned to its founders by reason of a Rescission Agreement executed between the founders and
the Company on September 8, 2012.
The Court further ordered that all stocks issued
as a result of the September 7, 2012 Share Exchange Agreement between the Company and ClairNET Ltd., a Hong Kong entity and their
shareholders, are declared null and void and ordered to be returned to the Company or its transfer agent for cancellation. The
Court further ordered that the License Agreement between the Company and ClairNET, Ltd. a Hong Kong entity, is declared null and
void.
Finally, the Court ordered the cancellation
of an aggregate of 26,925,000 shares of Common Stock to effectuate the Company's September 8, 2012 Rescission agreement with the
founders of Wikifamilies SA.
On April 9, 2013 the duly appointed Custodian
of the Company appointed Trisha Malone and Larry A. Zielke as Members of the Board of Directors. Ms. Malone was also appointed
as Chief Executive Officer, Chief Financial Officer and Secretary of the Company and Mr. Zielke was appointed Vice President and
Corporate Counsel.
On August 27, 2013, the Company held a Special
Meeting of Shareholders. At the Special Meeting, the Shareholders of the Company approved the change in the Corporation’s
name from Wikifamilies, Inc. to Gepco, Ltd. On September 11, 2013, the Company filed an amendment to its Articles of Incorporation
to, inter alia, change its name to Gepco, Ltd. from Clairnet, Ltd. (Wikifamilies, Inc.) In conjunction with the amendment, the
Company filed with FINRA to change its name and ticker symbol. Effective October 8, 2013, the Company’s common stock, which
was previously traded under the ticker symbol “WFAM” on the OTCQB market, began trading under the new ticker symbol
“GEPC”.
On October 15, 2013, Gepco, Ltd. (the “Company”)
entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) with GemVest, Ltd. pursuant to which the Company
agreed to purchase (the “Acquisition”) 100% of the issued and outstanding capital stock (“GemVest Shares”)
of GemVest, Ltd., a Nevada corporation (“GemVest”) in exchange for 150,000,000 shares of the Company’s restricted
Common Stock. The Acquisition was consummated (the “Closing”) on December 6, 2013, in a transaction exempt from registration
under Section 4(2) of the Securities Act of 1933, as amended and resulted in a change in control of the Company. Pursuant to the
Agreement, GemVest and the Company agreed to the following covenants regarding management of the Company for a period of five years
from the date of Closing:
|
|
·
|
Angelique de Maison shall serve as Executive Chairman of the Company and of GemVest, Peter Voutsas
shall serve as Chief Executive Officer and Chief Investment Officer of the Company and of GemVest, Trisha Malone shall serve as
President, Chief Financial Officer and Secretary of the Company and Chief Financial Officer, Chief Operating Officer and Secretary
of GemVest, Nicholas Marlin shall serve as Chief Marketing Officer the Company and President and Chief Marketing Officer of GemVest
and Ronald Loshin shall serve as Chief Creative Officer of the Company and of GemVest.
|
|
|
·
|
The Board of the Company shall consist of six directors: Angelique de Maison, Peter Voutsas, Trisha
Malone, Larry Zielke, Ronald Loshin and Nicholas Marlin. The Board of GemVest shall consist of five directors: Angelique de Maison,
Peter Voutsas, Trisha Malone, Ronald Loshin and Nicholas Marlin.
|
|
|
·
|
If the Company’s EBITDA (as defined in GAAP) is not at least $750,000 for the fiscal year
ended December 31, 2014, then on a pro rata basis, based on percentage of ownership of Gepco immediately prior to Closing, the
shareholders of Gepco shall return to the Company one million shares of the Company’s Common Stock for each $10,000 increment
by which EBITDA is less than $750,000.
|
Subsequent to the Closing of the Acquisition,
GemVest became a wholly owned subsidiary of Gepco. For accounting purposes, GemVest is deemed the accounting acquirer.
For accounting purposes, the acquisition of
GemVest by Gepco has been recorded as a reverse merger of a public company, with the exception that no goodwill is generated. Consequently,
the historical financial information in the accompanying consolidated financial statements is that of Gemvest from its date of
inception, October 2, 2013 and that of the combined entity from December 6, 2013 through December 31, 2013. GemVest is a
start-up development stage company that has had no revenue or expenses from its inception through December 31, 2013. As the Company
was a shell company prior to the acquisition of GemVest, GemVest is the acquirer for accounting purposes, and future financial
reporting shall be set forth as if GemVest acquired the Company. As a result of the Merger, Gepco now owns all of the assets, liabilities
and operations of GemVest and ownership to all intellectual property rights for GemVest in the future.
Unless the context otherwise requires, references
to the “Company” mean the Company and its subsidiary GemVest, Ltd. In the context of Common Stock, notes and other
securities, references to the “Company” mean Gepco, Ltd. unless otherwise stated.
NOTE 2: GOING CONCERN
The Company has not generated any revenue since
inception and has funded its operations primarily through the issuance of equity. As shown in the accompanying consolidated financial
statements, the Company has a limited operating history and limited funds and has an accumulated deficit during development stage
of $391,882 at December 31, 2013. Accordingly, the Company’s ability to identify and accomplish a business strategy and to
ultimately achieve profitable operations is dependent upon its ability to obtain additional debt or equity financing.
These conditions raise substantial doubt about
the Company’s ability to continue as a going concern. The financial statements do not include any adjustments to reflect
the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities
that may result from the outcome of this uncertainty.
NOTE 3: SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statements have
been prepared in conformity with accounting principles generally accepted in the United States of America. The accompanying consolidated
financial statements include the accounts of Gepco, Ltd. and its 100% wholly-owned subsidiary, GemVest, Ltd. All intercompany balances
and transactions have been eliminated in consolidation. As the Company was a shell company prior to the acquisition of GemVest,
GemVest is the acquirer for accounting purposes, and future financial reporting shall be set forth as if GemVest acquired the Company.
GemVest, Ltd. was incorporated on October 2, 2013 in the State of Nevada. GemVest is a start-up development stage company
that began selling and brokering high end rare investment grade diamonds in the first quarter of 2014, but had no revenue or significant
expenses from its inception through December 31, 2013.
Estimates
The presentation of financial statements in
conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosures 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 these estimates.
Revenue Recognition
Revenue is recognized net of indirect taxes,
rebates and trade discounts and consists primarily of the sale of products, and services rendered.
Revenue is recognized in accordance with Accounting
Standards Codification Topic No. 605-10-S99 “Revenue Recognition” (ASC 605-10-S99) when the following criteria are
met:
|
|
·
|
evidence of an arrangement exists;
|
|
|
·
|
delivery has occurred or services have been rendered and the significant risks and rewards of ownership have been transferred
to the purchaser;
|
|
|
·
|
transaction costs can be reliably measured;
|
|
|
·
|
the selling price is fixed or determinable; and
|
|
|
·
|
collectability is reasonably assured.
|
Property and Equipment
Property and equipment is stated at cost less
accumulated depreciation and impairment. Land is not depreciated. Repairs and maintenance are charged to operations as incurred.
Property and equipment is depreciated on a
straight-line basis over its expected useful life. The depreciation methods, and estimated remaining useful lives are reviewed
at least annually.
Upon classification of property and equipment
as held for sale it is reviewed for impairment. The impairment charged to the income statement is the excess of the carrying value
of the property and equipment over its expected fair value less costs to sell.
Fair Value of Financial Instruments
The carrying amounts for the Company’s
cash, investments, accounts payable, accrued liabilities and current portion of long term debt approximate fair value due to the
short-term maturity of these instruments.
Beneficial Conversion Feature of Convertible Notes Payable
The convertible feature of certain of our convertible
notes payable provides for a rate of conversion that was at market value at the time of issuance but below market value at market
close on the same day. Such feature is normally characterized as a “Beneficial Conversion Feature” (“BCF”).
Pursuant to Accounting Standards Codification Topic 470-20-25 “Debt” (ASC 470-20-25), the estimated fair value of the
BCF is recorded in the consolidated financial statements as a discount from the face amount of the notes. Such discounts are amortized
to accretion of convertible debt discount over the term of the notes (or conversion of the notes, if sooner).
At the issuance of a series of convertible
notes in 2013 the Company recorded a debt discount of $265,335. During the twelve months ended December 31, 2013, the Company recorded
amortization of the BCF in connection with these convertible notes with a principal value of $310,788 in the amount of $155,837.
This amortization has been reported after the Acquisition as a component of interest expense in the amount of $6,535 in the consolidated
statement of operations and prior to the Acquisition as a component of retained earnings in the amount of $149,302 on the consolidated
balance sheet. The debt discount balance at December 31, 2013 was $109,498 net of amortization.
Income Taxes
Accounting Standards Codification Topic No.
740 “Income Taxes” (ASC 740) requires the asset and liability method of accounting be used for income taxes. Under
the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable
to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.
Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change
in tax rates is recognized in income in the period that includes the enactment date.
Earnings (Loss) Per Share
Per Accounting Standards Codification Topic
260 “Earnings Per Share” (ASC 260), basic EPS is determined using net income divided by the weighted average shares
outstanding during the period. Diluted EPS is computed by dividing net income by the weighted average shares outstanding, assuming
all dilutive potential shares of Common Stock were issued.
NOTE 4: GEMVEST, LTD. ACQUISITION
On October 15, 2013, the Company entered into
a Stock Purchase Agreement with GemVest pursuant to which the Company purchased 100% of the issued and outstanding capital stock
of GemVest, a Nevada corporation in exchange for 150,000,000 shares of the Company’s restricted Common Stock which at
closing represented approximately 77.49% of the Company’s outstanding Common Stock.
Subsequent to closing of the Acquisition, GemVest
became a wholly owned subsidiary of Gepco. For accounting purposes, GemVest is deemed the accounting acquirer. As a result, the
business and financial information included in the report is the business and financial information of GemVest prior to December
6, 2013 and the combined entity after December 6, 2013. The assets and liabilities of both companies were retained as of December
6, 2013 while the stockholder’s equity of Gepco prior to the acquisition was eliminated with the exception of accumulated
deficit that exceeded the additional paid in capital balance. Such retained losses in the amount of $368,775 are included as a
deficit assumed at merger.
NOTE 5: FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company follows paragraph 825-10-50-10
of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37
of the FASB Accounting Standards Codification (Paragraph 820-10-35-37”) to measure the fair value of its financial instruments.
Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United
States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability
in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes
the inputs to valuation techniques used to measure fair value into three broad levels. The fair value hierarchy gives the highest
priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable
inputs. The three levels of fair value hierarchy defined by Paragraph 820-10 35-37 are described below:
Level 1 Quoted market prices available in active
markets for identical assets or liabilities as of the reporting date.
Level 2 Pricing inputs other than quoted prices
in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
Level 3 Pricing inputs that are generally observable
inputs and not corroborated by market data.
The carrying amounts of the Company’s
financial assets and liabilities, such as cash and accrued expenses, approximate their fair values because of the short maturity
of these instruments. The Company’s note payable approximates the fair value of such instrument based upon management’s
best estimate of interest rates that would be available to the Company for similar financial arrangement at December 31, 2013.
In accordance with ASC 820, the following table
presents the Company’s fair value hierarchy for its financial assets (investments) as of December 31, 2013:
|
|
Level
|
|
|
|
12/31/2013
|
|
|
|
Level 1
|
|
|
|
–
|
|
|
|
Level 2
|
|
|
|
–
|
|
|
|
Level 3
|
|
|
|
–
|
|
NOTE 6: CONVERTIBLE NOTES
The following table sets forth the outstanding
Convertible Note indebtedness of the Company at the date indicated:
|
|
|
|
Principal at
December 31,
2013
|
|
|
|
Accrued
Interest
|
|
|
|
Balance at
December 31,
2013
|
|
|
|
Unamortized
Debt
Discount
|
|
|
|
Convertible
Note Balance
at
December 31,
2013
|
|
|
Suprafin, Ltd.
|
|
$
|
131,461
|
|
|
$
|
10,317
|
|
|
$
|
141,778
|
|
|
$
|
(67,942
|
)
|
|
$
|
73,836
|
|
|
Sunatco, Ltd.
|
|
|
85,150
|
|
|
|
2,520
|
|
|
|
87,670
|
|
|
|
(41,556
|
)
|
|
|
46,114
|
|
|
Total convertible notes
|
|
$
|
216,611
|
|
|
$
|
12,838
|
|
|
$
|
229,449
|
|
|
$
|
(109,498
|
)
|
|
$
|
119,951
|
|
On April 16, 2013 the Board of Directors elected
to issue Convertible Notes to Trisha Malone in the amount of $40,000 for past services rendered which had been previously been
recorded as accrued salaries, see Note 8: RELATED PARTY TRANSACTIONS, to Walker River Investments Corp. for costs paid for the
custodianship proceeding in the amount of $44,177, and to Suprafin, Ltd. in the amount of $141,461 for past expenses paid on behalf
of the Company which had previously been recorded as note payable, see Note 7: NOTES PAYABLE. These Convertible Notes are convertible
into shares of the Company’s Common Stock at $.005 per share.
On April 16, 2013 Trisha Malone requested that
her $40,000 Convertible Note be converted to 8,000,000 shares of Common Stock, and Walker River Investments Corp. requested that
their $44,177 Convertible Note be converted to 8,835,480 shares of Common Stock. As these Convertible Notes were converted within
the conversion term, there was no gain or loss on the conversion.
The Company accrued interest at 10% per annum
on the Convertible Note for Suprafin, Ltd. Accrued interest in the amount of $10,317 is included in Suprafin, Ltd.’s note
balance as of December 31, 2013. On October 15, 2013 Suprafin, Ltd. elected to convert $10,000 of their Note with the Company into
2,000,000 shares of the Company’s Common Stock.
On August 21, 2013 the Board of Directors elected
to issue a Convertible Note to Sunatco, Ltd. up to $100,000 for loans for expenses paid on behalf of the Company. Through December
31, 2013, Sunatco, Ltd. loaned the Company a total of $85,150 for working capital needs including $37,601 in past expenses paid
on behalf of the Company which had previously been recorded as note payable, see Note 7: NOTES PAYABLE. These Convertible Notes
are convertible into shares of the Company’s Common Stock at $.01 per share. The Company accrued interest at 10% per annum
on the Convertible Note for Sunatco, Ltd. Accrued interest in the amount of $2,520 is included in Sunatco, Ltd.’s note balance
as of December 31, 2013.
The Company evaluated beneficial conversion
feature as of issuance date of the Convertible Notes and recorded debt discount in the amount of $265,335. Debt discount is amortized
over term of the Convertible Notes or at conversion of the note if earlier. As of December 31, 2013 $155,837 of the debt discount
had been amortized leaving a balance of $109,498 unamortized.
NOTE 7: NOTES PAYABLE
The following table sets forth the outstanding
advances and notes payable indebtedness of the Company at the date indicated:
|
|
|
|
Balance at
December 31,
2013
|
|
|
Advances payable:
|
|
|
|
|
|
Suprafin, Ltd.
|
|
$
|
1,261
|
|
|
|
|
|
|
|
|
Notes payable:
|
|
|
|
|
|
Thomas Hudson
|
|
|
50,000
|
|
|
Total notes payable
|
|
$
|
51,261
|
|
Through December 31, 2012 Suprafin, Ltd. had
loaned the Company a total of $103,944 for working capital needs and assumed $38,565 in loans due for a total loan balance of $142,509
as of December 31, 2012. These loans were provided at no interest, payable on demand. On April 16, 2013 the Board of Directors
elected to issue a Convertible Note to Suprafin, Ltd. for past expenses paid totaling $141,461, the total amount due to Suprafin,
Ltd. as of April 16, 2013. This note is convertible into shares of the Company’s Common Stock at $.005 per share. The balance
due to Suprafin, Ltd. under the original loan not replaced by the Convertible Note is $1,261. See NOTE 6: CONVERTIBLE NOTES.
Through August 21, 2013 Sunatco, Ltd. had loaned
the Company a total of $37,601 for working capital needs. These loans were provided at no interest, payable on demand. On August
21, 2013 the Board of Directors elected to issue a Convertible Note to Sunatco, Ltd. up to $100,000 for expenses paid on behalf
of the Company. This note is convertible into shares of the Company’s Common Stock at $.01 per share. See NOTE 6: CONVERTIBLE
NOTES.
On February 14, 2012, former Director Thomas
Hudson loaned the Company a total of $50,000 for working capital needs. The loan was originally due on September 30, 2012. On August
17, 2012 Mr. Hudson agreed to extend the due date to September 30, 2012. The loan is currently in default. Should the Company,
at its sole discretion, decide that it is not in a financial position to repay said funds in currency, both parties mutually agree
that said amount repayable may be converted into common shares of the Company calculated at a rate per share of twenty five cents
per share or at eighty percent (80%) of the previous week’s averaged closing price, whichever is the lesser. If the Company
does not repay the loan in cash, as a penalty it shall provide Lender with one hundred thousand (100,000) warrants enabling him
to purchase one hundred thousand (100,000) shares of Common Stock at a redemption price of twenty five cents ($.25) per share.
Redemption of such warrants in entirety or in part is at the sole discretion of Lender. By way of interest on such loan, Lender
shall be provided with two hundred thousand (200,000) warrants enabling him to purchase two hundred thousand (200,000) shares of
Common Stock at a redemption price of twenty cents ($.20) per share being a total of forty thousand dollars ($40,000). Redemption
of such warrants in entirety or in part is at the sole discretion of Lender. The options shall remain valid for a period of three
years from the date of this Agreement, after which they shall become null and void. As the warrants were in lieu of interest, we
recorded an interest expense as of December 31, 2012 of $37,487. The fair value of the warrants in lieu of interest expenses is
valued using Black-Sholes option-pricing model. The loan was not repaid as of December 31, 2013.
NOTE 8: RELATED PARTY TRANSACTIONS
Common Stock Issuances
On April 16, 2013 the Board of Directors elected
to issue Convertible Notes to Trisha Malone in the amount of $40,000 for past services rendered, Suprafin, Ltd. for past expenses
paid totaling $141,461, and to Walker River Investments Corp. for costs paid for the custodianship proceeding in the amount of
$44,177. These notes are convertible into shares of the Company’s Common Stock at $.005 per share. Trisha Malone requested
that her $40,000 note be converted to 8,000,000 shares of Common Stock, and Walker River Investments Corp. requested that their
$44,177 note be converted to 8,835,480 shares of Common Stock. On October 15, 2013 Suprafin, Ltd. elected to convert $10,000 of
their Note with the Company into 2,000,000 shares of the Company’s Common Stock. Ms. Malone is an officer and director of
the Company and is therefore a related party. Walker River Investments Corp. owned more than 10% of the Company following the conversion
of their note into common stock and may therefore be considered a related party. Zirk de Maison is the husband of Angelique de
Maison, our Executive Chairman and therefore may be considered a related party to the Company although Mr. and Mrs. de Maison individually
disclaim beneficial ownership of the other’s property and investments. Mr. de Maison is the sole officer and shareholder
of Suprafin, Ltd.
Also on April 16, 2013 the Board of Directors
granted Trisha Malone 2,000,000 shares of Common Stock valued at $19,800 as advance payment for services to be performed as Chief
Executive Officer, Chief Financial Officer and Secretary of the corporation and granted Larry A. Zielke 1,000,000 shares of Common
Stock valued at $9,900 as advance payment for services to be performed as Vice President of the Corporation.
Notes and Loans
On February 14, 2012, former Director Thomas
Hudson loaned the Company a total of $50,000 for working capital needs. The loan was due on September 30, 2012 and is currently
in default. See Note 7: NOTES PAYABLE. Mr. Hudson is no longer a director of the Company.
On April 16, 2013 the Board of Directors elected
to issue a Convertible Note to Suprafin, Ltd. for loans for past expenses paid totaling $141,461, the total amount due to Suprafin,
Ltd. as of April 16, 2013. This note is convertible into shares of the Company’s Common Stock at $.005 per share. On October
15, 2013 Suprafin, Ltd. elected to convert $10,000 of their Note with the Company into 2,000,000 shares of the Company’s
Common Stock leaving a principal balance due of $131,461 as of December 31, 2013. In addition the balance due to Suprafin, Ltd.
under the original loan not replaced by the Convertible Note is $1,261 which remains due as of December 31, 2013. See NOTE 6: CONVERTIBLE
NOTES and See Note 7: NOTES PAYABLE.
On August 21, 2013 the Board of Directors elected
to issue a Convertible Note to Sunatco, Ltd. for up to $100,000 for loans for expenses paid on behalf of the Company. This note
is convertible in to shares of the Company’s Common Stock at the rate of $0.01 per share. $85,150 had been borrowed under
this note as of December 31, 2013. See Note 7: NOTES PAYABLE. Mr. de Maison is the sole officer and shareholder of Sunatco, Ltd.
Accrued Salaries
On April 16, 2013 the Board of Directors elected
to issue a Convertible Note to Trisha Malone in the amount of $40,000 for accrued salaries for past services rendered and on the
same day Trisha Malone requested that her Convertible Note be converted to shares of Common Stock. As of December 31, 2013 there
were no accrued salaries due.
NOTE 9: INCOME TAXES
FASB ASC 740 requires the use of an asset and
liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between
the financial statement and tax bases of assets and liabilities and the tax rates in effect currently.
FASB ASC 740 requires the reduction of deferred
tax assets by a valuation allowance, if, based on the weight of available evidence, it is more likely than not that some or all
of the deferred tax assets will not be realized. In the Company’s opinion, it is uncertain whether they will generate sufficient
taxable income in the future to fully utilize the net deferred tax asset. Accordingly, a valuation allowance equal to the deferred
tax asset has been recorded.
The total deferred tax asset is $8,087 which
is calculated by multiplying a 35% estimated tax rate by the cumulative net operating loss (NOL) adjusted for the following items:
|
For the period ended December 31,
|
|
2013
|
|
|
Book loss for the year
|
|
$
|
(23,107
|
)
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
–
|
|
|
Tax loss for the year
|
|
$
|
(23,107
|
)
|
|
Estimated effective tax rate
|
|
|
35%
|
|
|
Deferred tax asset
|
|
$
|
(8,087
|
)
|
The total valuation allowance is $8,087. Details
for the year ended December 31, 2013 is as follows:
|
For the period ended December 31,
|
|
2013
|
|
|
Deferred tax asset
|
|
$
|
8,087
|
|
|
Valuation allowance
|
|
|
(8,087
|
)
|
|
Current taxes payable
|
|
|
–
|
|
|
Income tax expense
|
|
$
|
–
|
|
The cumulative net loss carry forward of approximately
$8,087 as of December 31, 2013 will expire beginning in the year 2029.
NOTE 10: COMMON STOCK
The authorized
capital stock of Gepco, Ltd. consists of 250,000,000 shares of Common Stock, $0.001 par value per share, and 15,000,000 shares
of Preferred Stock, par value of $0.001 per share. At December 31, 2013, there were outstanding 193,582,555 shares of Common Stock
and no shares of Preferred Stock.
On February 14, 2012, the Company issued 200,000
warrants for the purchase of 200,000 shares of Common Stock at a redemption price of twenty cents ($.20) per share in connection
with a loan agreement. Redemption of such warrants in entirety or in part is at the sole discretion of warrant holder. The warrants
shall remain valid for a period of three years from the date of the loan or February 14, 2015, after which they shall become null
and void. See NOTE 7: NOTES PAYABLE.
The following is a summary of warrant activity
for the year ended December 31, 2013:
|
|
|
|
Number of
Shares
|
|
|
|
Weighted
Average
Exercise
Price
|
|
|
|
Weighted Average
Remaining
Life
|
|
|
Outstanding - December 6, 3013:
|
|
|
200,000
|
|
|
$
|
0.20
|
|
|
|
14.5 months
|
|
|
Warrants Issued
|
|
|
–
|
|
|
|
–
|
|
|
|
|
|
|
Warrants Exercised
|
|
|
–
|
|
|
|
–
|
|
|
|
|
|
|
Outstanding - December 31, 2013:
|
|
|
200,000
|
|
|
$
|
0.20
|
|
|
|
13.7 months
|
|
On December 6, 2013, the Company issued 150,000,000
shares of Common Stock to the shareholders of GemVest, Ltd. upon closing of the Stock Purchase Agreement with GemVest, Ltd. as
described in NOTE 4: GEMVEST ACQUISITION.
NOTE 11: NEW ACCOUNTING PRONOUNCEMENTS
In January 2014, the Financial Accounting Standards
Board ("FASB") issued Accounting Standards Update ("ASU") 2014-05,
Service Concession Arrangements (Topic
853), a consensus of the FASB Emerging Issues Task Force
. The objective of the update is to specify that an operating entity
should not account for a service concession arrangement within the scope of this update as a lease in accordance with Topic 840,
Leases. It is effective for fiscal years beginning after December 15, 2014. The Company does not expect ASU 2014-05 to have a material
effect on its financial condition, results of operation, or cash flows.
In February 2013, the Financial Accounting
Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2013-02,
Comprehensive Income (Topic 220): Reporting of
Amounts Reclassified Out of Accumulated Other Comprehensive Income
, to improve the transparency of reporting these reclassifications.
Other comprehensive income includes gains and losses that are initially excluded from net income for an accounting period. Those
gains and losses are later reclassified out of accumulated other comprehensive income into net income. The amendments in the ASU
do not change the current requirements for reporting net income or other comprehensive income in financial statements. All of the
information that this ASU requires already is required to be disclosed elsewhere in the financial statements under U.S. GAAP. The
new amendments will require an organization to:
|
-
|
|
Present (either on the face of the statement where net income is presented or in the
notes) the effects on the line items of net income of significant amounts reclassified out of accumulated other comprehensive
income - but only if the item reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the
same reporting period; and
|
|
-
|
|
Cross-reference to other disclosures currently required under U.S. GAAP for other
reclassification items (that are not required under U.S. GAAP) to be reclassified directly to net income in their entirety in
the same reporting period. This would be the case when a portion of the amount reclassified out of accumulated other comprehensive
income is initially transferred to a balance sheet account (e.g., inventory for pension-related amounts) instead of directly to
income or expense.
|
The amendments apply to all public and private
companies that report items of other comprehensive income. Public companies are required to comply with these amendments for all
reporting periods (interim and annual). The amendments are effective for reporting periods beginning after December 15, 2012, for
public companies. Early adoption is permitted. The adoption of ASU No. 2013-02 is not expected to have a material impact on our
financial position or results of operations.
In January 2013, the FASB issued ASU No. 2013-01,
Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities
, which clarifies
which instruments and transactions are subject to the offsetting disclosure requirements originally established by ASU 2011-11.
The new ASU addresses preparer concerns that the scope of the disclosure requirements under ASU 2011-11 was overly broad and imposed
unintended costs that were not commensurate with estimated benefits to financial statement users. In choosing to narrow the scope
of the offsetting disclosures, the Board determined that it could make them more operable and cost effective for preparers while
still giving financial statement users sufficient information to analyze the most significant presentation differences between
financial statements prepared in accordance with U.S. GAAP and those prepared under IFRSs. Like ASU 2011-11, the amendments in
this update will be effective for fiscal periods beginning on, or after January 1, 2013. The adoption of ASU 2013-01 is not expected
to have a material impact on our financial position or results of operations.
NOTE 12: SUBSEQUENT EVENTS
New Share Issuances
On January 13, 2014 Suprafin, Ltd. elected to convert $15,000 of
their Convertible Note with the Company into 3,000,000 shares of the Company’s Common Stock.
On February 5, 2014 Suprafin, Ltd. elected to convert $113,350 of
their Convertible Note with the Company into 22,670,000 shares of the Company’s Common Stock and Sunatco, Ltd. elected to
convert $10,000 of their Convertible Note with the Company into 1,000,000 shares of the Company’s Common Stock.
On March 18, 2014 Sunatco, Ltd. elected to convert $10,000 of their
Convertible Note with the Company into 1,000,000 shares of the Company’s Common Stock.
Other Events
On October 15, 2013 the Board of Directors approved the sale of
up to 15,000,000 shares of Common Stock at a price of $0.10 per share. The sale of such shares began in March of 2014 with 350,000
shares sold as of the date of this filing recorded as subscription payable.
On January 23, 2014 the Company
purchased a 10.76 carat, round cut, nearly colorless, Hearts and Arrows diamond for an undisclosed amount. This diamond was
independently graded as “G” in color, SI1 in clarity with no florescence, triple excellent cut (excellent polish,
cut and symmetry), and with perfect depth and table.
On March 19, 2014 the Company sold a 6.01 carat,
round cut, nearly colorless diamond. This diamond was independently GIA graded as “G” in color, SI1 in clarity. The
stone was taken in on consignment so GemVest had no exposure on the stone, which was sold on behalf of a third party for $195,000.
GemVest made a 21.875% profit on the sale.
On March 27, 2014 the Company signed
an Employment Agreement with Peter Voutsas in which the Company agreed to pay Mr. Voutsas a 2% commission on all sales in
lieu of a salary. Mr. Voutsas and the Company also agreed in part that Mr. Voutsas, as the owner of Peter Marco, LLC, will
continue to own and operate Peter Marco, LLC alongside his employment with the Company. As a substantial portion of the
Company’s inventory will be located inside of Peter Marco, LLC’s storefront in Beverly Hills, California (dba
Peter Marco Extraordinary Jewels of Beverly Hills); Mr. Voutsas agreed to devote all of Mr. Voutsas’s business time,
energy and efforts first to the business of the Company and to use his best efforts and abilities faithfully and diligently
to promote the Company’s business interests before the interests of Peter Marco, LLC. Mr. Voutsas agreed to display the
inventory of the Company in a prime location at the storefront and to promote the sale of the Company’s inventory
before the inventory of Peter Marco, LLC.