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RIVULET INTERNATIONAL INC.
(A Development Stage Company)
Notes to Financial Statements
October 31, 2009
(Unaudited)
NOTE 1- NATURE OF OPERATIONS
AND BASIS OF PRESENTATION
RIVULET INTERNATIONAL INC. (“the Company”) was incorporated under the laws of the State of Nevada, U.S. on November 12, 2008. The Company is in the development stage as defined under FASB ASC 915-10, "Development Stage Entities" and its efforts are primarily devoted to exporting used cars from the United States. The Company has generated minimal revenue to date and consequently its operations are subject to all risks inherent in the establishment of a new business enterprise. For the period from inception (November 12, 2008) through October 31, 2009, the Company has accumulated losses of $8,979.
The financial information is unaudited. In the opinion of management, all adjustments necessary to present fairly the financial position as of October 31, 2009 and the results of operations, stockholders' equity and cash flows presented herein have been included in the financial statements.
The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions for Form 10-Q and Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All such adjustments are of a normal recurring nature. Operating results for the nine month period ended October 31, 2009, are not necessarily indicative of the results that may be expected for the fiscal year ending January 31, 2010. For further information refer to the financial statements and footnotes thereto included in the Company’s Registration Statement on Form S-1 for the year ended January 31, 2009.
The Company has evaluated subsequent events through December 8, 2009, the date which the financial statements were available to be issued. The Company has determined that there were no such events that warrant disclosure or recognition in the financial statements.
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The financial statements present the balance sheet, statement of operations and cash flows of the Company. The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America.
Fiscal Periods
The Company's fiscal year end is January 31.
Going Concern
The financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company has incurred losses since inception resulting in an accumulated deficit of $8,979 as of October 31, 2009 and further losses are anticipated in the development of its business raising substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management intends to finance operating costs over the next twelve months with existing cash on hand and loans from directors and/or private placement of common stock. The financials statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the company cannot continue in existence.
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RIVULET INTERNATIONAL INC.
(A Development Stage Company)
Notes to Financial Statements
October 31, 2009
(Unaudited)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Cash and Cash Equivalents
The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents.
Use of Estimates and Assumptions
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Foreign Currency Translation
The Company's functional currency and its reporting currency is the United States dollar.
Fair Value of Financial Instruments
The carrying value of the Company’s financial instruments approximates their fair value because of the short maturity of these instruments.
Stock-based Compensation
Stock-based compensation is accounted for at fair value in accordance with FASB ASC 718, “Compensation- Stock Compensation”. To date, the Company has not adopted a stock option plan and has not granted any stock options.
Income Taxes
The Company follows the liability method of accounting for income taxes in accordance with FASB ASC 740, “Income Taxes”. Under this 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 balances. Deferred tax assets and liabilities are measured using enacted or substantially enacted tax rates expected to apply to the taxable income in the years in which those differences are expected to be recovered or settled. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the date of enactment or substantive enactment.
Net Loss per Share
The Company computes net loss per share in accordance with FASB ASC 260,"Earnings per Share". FASB ASC 260 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net loss available to common stockholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all potentially dilutive common shares outstanding during the period. Diluted EPS excludes all potentially dilutive shares if their effect is anti-dilutive.
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RIVULET INTERNATIONAL INC.
(A Development Stage Company)
Notes to Financial Statements
October 31, 2009
(Unaudited)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Recent Accounting Pronouncements
In June 2009, the Financial Accounting Standards Board (“FASB”) issued FASB ASC 105, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles.” FASB ASC 105 sets forth the level of authority to a given accounting pronouncement or document by category. Where there might be conflicting guidance between two categories, the more authoritative category will prevail. FASB ASC 105 will be effective for financial statements issued for reporting periods that end after September 15, 2009.
In June 2009, the FASB issued FASB ASC 860, “Transfers and Servicing”
.
FASB ASC 860 amends the criteria for a transfer of a financial asset to be accounted for as a sale, redefines a participating interest for transfers of portions of financial assets, eliminates the qualifying special-purpose entity concept and provides for new disclosures. FASB ASC 860 is effective for the Company beginning in 2010. Should the Company’s accounts receivable securitization programs not qualify for sale treatment under the revised rules, future securitization transactions entered into would be classified as debt and the related cash flows would be reflected as a financing activity. The Company is currently assessing the impact of the standard on its securitization programs.
In May 2009, the FASB issued FASB ASC 855, “Subsequent
Events”, which provides authoritative accounting literature related to evaluating subsequent events that was previously addressed only in the auditing literature, and is largely similar to the current guidance in the auditing literature with some exceptions that are not intended to result in significant changes in practice. FASB ASC 855 defines subsequent events and also requires the disclosure of the date through which an entity has evaluated subsequent events and the basis for that date. FASB ASC 855 is effective on a prospective basis for interim or annual financial periods ending after June 15, 2009. We have adopted FASB ASC 855 in the current quarter.
NOTE 3- STOCKHOLDERS’ EQUITY
The authorized capital of the Company is 75,000,000 common shares with a par value of $ 0.001 per share. On January 30, 2009, the Company issued 3,000,000 shares of common stock to a director at a price of $0.001 per share for total cash proceeds of $3,000. For the period from May 6, 2009 to June 6, 2009, the Company issued 510,000 shares of the common stock at a price of $0.04 per share for total cash proceeds of $20,400. During the period November 12, 2008 (inception) to October 31, 2009, the Company sold a total of 3,510,000 shares of common stock for total cash proceeds of $23,400.
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RIVULET INTERNATIONAL INC.
(A Development Stage Company)
Notes to Financial Statements
October 31, 2009
(Unaudited)
NOTE 4 - INCOME TAXES
As of October 31, 2009, the Company had net operating loss carry forwards of $8,979 that may be available to reduce future years’ taxable income through 2029. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-forwards.
NOTE 5- RELATED PARTY TRANSACTIONS
On November 12, 2008, the Company received an advance from the sole Director in the amount of $489. The amount due to this party is non-interest bearing, due upon demand and unsecured.
On January 30, 2009, the sole director purchased 3,000,000 shares of common stock in the Company at $0.001 per share for $3,000 (See Note 3- Stockholders’ Equity).
On March 16, 2009, the Company received an advance from the sole Director in the amount of $700. The amount due to this party is non-interest bearing, due upon demand and unsecured.
FORWARD LOOKING STATEMENTS
Statements made in this Form 10-Q that are not historical or current facts are "forward-looking statements" made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 (the "Act") and Section 21E of the Securities Exchange Act of 1934. These statements often can be identified by the use of terms such as "may," "will," "expect," "believe," "anticipate," "estimate," "approximate" or "continue," or the negative thereof. We intend that such forward-looking statements be subject to the safe harbors for such statements. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management's best judgment as to what may occur in the future. However, forward-looking statements are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
GENERAL
RIVULET INTERNATIONAL INC. was incorporated under the laws of the State of Nevada on November 12, 2008. Our registration statement has been filed with the Securities and Exchange Commission on March 20, 2009 and has been declared effective on April 16, 2009.
Please note that throughout this Quarterly Report, and unless otherwise noted, the words "we," "our," "us," the "Company," or " Rivulet," refers to Rivulet International Inc
.
CURRENT BUSINESS OPERATIONS
We intend to export new and used cars (up to four years-old) from the U.S. and sell them in Russia or take orders from Russian customers to buy cars in the U.S. and import the cars to Russia for them. We are in the process of developing a website that will display a variety of new and used cars and their prices in the North American market, and will advertise our services and fees.
Our service will include, checking the condition of the car, shipment and customs clearing. We will display a variety of cars to which we have access to on our website. Our customers will be able to select a car from our website according to their budget and preferences. Our customers will also be able to order cars which are not displayed on our website for an additional fee.
We have only recently begun our current operations and generated first revenue of $726 in September 2009.
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RESULTS OF OPERATION
Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation.
We expect we will require additional capital to meet our long term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities.
Nine Month Period Ended October 31, 2009 Compared to the period from Inception (November 12, 2008) to October 31, 2009
Our net loss for the nine month period ended October 31, 2009 was ($8,453) compared to a net loss of ($8,979) during the period from inception (November 12, 2008) to October 31, 2009. During the nine month period ended October 31, 2009, we generated revenue of $726.
During the nine month period ended October 31, 2009, we incurred general and administrative expenses of $9,179 compared to $9,705 incurred during the period from inception (November 12, 2008) to October 31, 2009. General and administrative expenses incurred during the nine month period ended October 31, 2009 were generally related to corporate overhead, financial and administrative contracted services, such as legal and accounting, developmental costs, and marketing expenses.
The weighted average number of shares outstanding was 3,299,652 for the nine month period ended October 31, 2009.
LIQUIDITY AND CAPITAL RESOURCES
Nine Month Period Ended October 31, 2009
As at October 31, 2009, our current assets were $15,610 and our total liabilities were $1,189, which resulted in a working capital surplus of $14,421. As at October 31, 2009, current assets were comprised of $15,610 in cash compared to $2,963 in current assets at January 31, 2009. As at October 31, 2009, current liabilities were comprised entirely of $1,189 in advance from director.
Stockholders’ equity increased from $2,474 as of January 31, 2009 to $14,421 as of October 31, 2009.
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Cash Flows from Operating Activities
We have not generated positive cash flows from operating activities. For the nine month period ended October 31, 2009, net cash flows used in operating activities was ($8,453) consisting primarily of a net loss of ($8,453). Net cash flows used in operating activities was ($8,979) for the period from inception (November 12, 2008) to October 31, 2009.
Cash Flows from Financing Activities
We have financed our operations primarily from either advancements or the issuance of equity and debt instruments. For the nine month period ended October 31, 2009, net cash from financing activities was $21,100, consisting of $700 advance from director and $20,400 received from proceeds from issuance of common stock. For the period from inception (November 12, 2008) to October 31, 2009, net cash provided by financing activities was $24,589 received from proceeds from issuance of common stock and advance from director.
PLAN OF OPERATION AND FUNDING
We expect that working capital requirements will continue to be funded through a combination of our existing funds and further issuances of securities. Our working capital requirements are expected to increase in line with the growth of our business.
Existing working capital, further advances and debt instruments, and anticipated cash flow are expected to be adequate to fund our operations over the next twelve months. We have no lines of credit or other bank financing arrangements. Generally, we have financed operations to date through the proceeds of the private placement of equity and debt instruments. In connection with our business plan, management anticipates additional increases in operating expenses and capital expenditures relating to: (i) acquisition of inventory; (ii) developmental expenses associated with a start-up business; and (iii) marketing expenses. We intend to finance these expenses with further issuances of securities, and debt issuances. Thereafter, we expect we will need to raise additional capital and generate revenues to meet long-term operating requirements. Additional issuances of equity or convertible debt securities will result in dilution to our current shareholders. Further, such securities might have rights, preferences or privileges senior to our common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to take advantage of prospective new business endeavors or opportunities, which could significantly and materially restrict our business operations.
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MATERIAL COMMITMENTS
As of the date of this Quarterly Report, we have a material commitment. During the period from inception (November 12, 2008) to October 31, 2009, the Company received an advance from the sole director, Vladimir Vysochin, in the amount of $1,189. The amount due to this party is non-interest bearing, due upon demand and unsecured.
PURCHASE OF SIGNIFICANT EQUIPMENT
We do not intend to purchase any significant equipment during the next twelve months.
OFF-BALANCE SHEET ARRANGEMENTS
As of the date of this Quarterly Report, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
GOING CONCERN
The independent auditors' report accompanying our January 31, 2009 financial statements contained an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. The financial statements have been prepared "assuming that we will continue as a going concern," which contemplates that we will realize our assets and satisfy our liabilities and commitments in the ordinary course of business.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
No report required.
ITEM 4. CONTROLS AND PROCEDURES
Our management is responsible for establishing and maintaining a system of disclosure
controls and
procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) that is designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure
controls and
procedures include, without limitation,
controls and
procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
An evaluation was conducted under the supervision and with the participation of our management of the effectiveness of the design and operation of our disclosure controls and procedures as of October 31, 2009. Based on that evaluation, our management concluded that our disclosure controls and procedures were effective as of such date to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. Such officer also confirmed that there was no change in our internal control over financial reporting during the nine-month period ended October 31, 2009 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Management is not aware of any legal proceedings contemplated by any governmental authority or any other party involving us or our properties. As of the date of this Quarterly Report, no director, officer or affiliate is (i) a party adverse to us in any legal proceeding, or (ii) has an adverse interest to us in any legal proceedings. Management is not aware of any other legal proceedings pending or that have been threatened against us or our properties.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
No report required.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
No report required.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No report required.
ITEM 5. OTHER INFORMATION
On January 30, 2009, the Company issued 3,000,000 shares of common stock to a director at a price of $0.001 per share for total cash proceeds of $3,000. For the period from May 6 to June 6, 2009, the Company issued 510,000 shares of the common stock at a price of $0.04 per share for total cash proceeds of $20,400. During the period November 12, 2008 (inception) to October 31, 2009, the Company sold a total of 3,510,000 shares of common stock for total cash proceeds of $23,400.
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ITEM 6. EXHIBITS
Exhibits:
31.1 Certification of Chief Executive Officer pursuant to Securities Exchange Act of 1934
Rule 13a-14(a) or 15d-14(a).
31.2 Certification of Chief Financial Officer pursuant to Securities Exchange Act of 1934
Rule 13a-14(a) or 15d-14(a).
32.1 Certifications pursuant to Securities Exchange Act of 1934 Rule 13a-14(b) or 15d-
14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
RIVULET INTERNATIONAL INC.
Dated: December 10, 2009 By: /s/ Vladimir Vysochin
________________________________
Vladimir Vysochin, President and
Chief Executive Officer and Chief Financial Officer
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