# Loop Industries, Inc.: Form 10-K for the period ended Sep 30, 2014 - Company: [Loop Industries, Inc.](/companies/loop.md) (CIK 1504678) - Form: 10-K - Filed: 2014-12-24 - Accepted by EDGAR: Dec 23, 2014, 22:38 ET - Period: 2014-09-30 - Accession: 0001477932-14-007265 - Inline XBRL: yes - Main document: https://www.sec.gov/Archives/edgar/data/1504678/000147793214007265/famg_10k.htm - All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1504678/000147793214007265/ ## Figures reported in this filing Standardized XBRL line items for the period ended 2014-09-30. | Line item | Period | Value | XBRL concept | | --- | --- | ---: | --- | | Net income | 12 months, 2013-10-01 to 2014-09-30 | −$19.1k | us-gaap:NetIncomeLoss | | Diluted EPS | 12 months, 2013-10-01 to 2014-09-30 | $0.00 | us-gaap:EarningsPerShareBasicAndDiluted | | Operating cash flow | 12 months, 2013-10-01 to 2014-09-30 | −$14.3k | us-gaap:NetCashProvidedByUsedInOperatingActivities | | Cash and equivalents | at 2014-09-30 | $2.7k | us-gaap:CashAndCashEquivalentsAtCarryingValue | | Current assets | at 2014-09-30 | $2.8k | us-gaap:AssetsCurrent | | Total assets | at 2014-09-30 | $2.8k | us-gaap:Assets | | Current liabilities | at 2014-09-30 | $27.5k | us-gaap:LiabilitiesCurrent | | Shareholders' equity | at 2014-09-30 | −$24.7k | us-gaap:StockholdersEquity | ## Business As filed, 27,174 characters. ### DESCRIPTION OF BUSINESS ### ORGANIZATION WITHIN THE LAST FIVE YEARS First American Group Inc. was incorporated on March 11, 2010 under the laws of the State of Nevada, under the name “Radikal Phones Inc.” We changed our name to “First American Group Inc.” on October 7, 2010. We are engaged in the development, sales and marketing of VoIP telephone services to enable end-users to place free phone calls over the Internet in return for viewing and listening to advertising. Mazen Kouta has served as President, Treasurer and Director, and Zeeshan Sajid has served as Secretary and Director of our company from April 27, 2010 to the current date. No person other than Messrs. Kouta and Sajid has acted as a promoter of First American Group Inc. since our inception. ### IN GENERAL We plan to develop software and infrastructure to enable customers to place free or subsidized calls via the Internet in exchange for watching or listening to advertising, from which we will earn revenues. We expect that calls to phone numbers where our cost is low (such as, the mainland USA or Canada) will be provided for free where the customer making the telephone call will watch or listen to advertising, from which we will earn revenues. Calls to countries where the cost of a call cannot be fully covered by advertising revenue, will be provided on a subsidized basis. Our product will consist of: (i) one or more telephony servers, (ii) a software phone which allow customers to place calls, view and/or listen to advertising, and (iii) a server to store customer information and to keep customer records, call, credits and payment history, and which server will also contains our web site, support center and customer account portal. ### TELEPHONY SERVER Our telephony server will contain the three main components for a customer to make a call over the Internet: \* software to process a call and send it to the correct destination; \* maintain registration of clients’ software phones and prevent unauthorized calling; and \* data management for customer credit to place calls. It is likely that we will use an open source telephony server. There are several of them available on the market. However we are leaning toward the use of Asterisk (http://www.asterisk.org/) because it is a free stable product and is supported by a large community of developers and because of the availability of open source add-on software (billing and software phones for example) which will simplify and accelerate the implementation of our product. 4 ### SOFTWARE PHONE APPLICATION Our software phone will be designed to be launched from the customer account or can be installed on a customer computer. The software phone will allow a customer to: \* make calls to other customers using our service; \* make calls to telephone numbers outside our network; and \* send instant text messages to other members of our network. We plan to deliver advertising to the customers in both audio and visual modes. We plan to design our software phone to enable customers to add friends from subscribers on our service and exchange instant messaging and determine who is online or the status of a friend. When a customer highlights a friend, the customer will be able to choose the method of communications: \* place an online call; \* simultaneously conference call with two other users; \* voicemail message; \* online instant message; \* text or SMS message; and\* Send e-mail ### WEBSITE A customer will find all necessary information about our service on our website www.radikalphones.com, the content of which we plan to develop as part of our plan of operation. In order to use our service, customers will register for an account which collects personal information about the customer such as name, address, email, age and income level, user name and password. Once the account is created, an e-mail will be sent to the customer for confirmation. To complete the registration the customer must agree to a “Term of Services” agreement that allow us to insert visual and audio advertising on the software phone they will be using to place the call. Once confirmation is received, the customer will be able to login and view the details of his or her account. Our web site will also include an information section for online advertising networks and marketing organization that may want to partner with us and place advertising for themselves or their clients. The customer will be able to download our customized soft phone or launch one from their account. The web site will also have a support center that will include: \* a knowledgebase section, which will include information about our service, cost, and general use; \* a troubleshooting section, which will include descriptions of common problems and steps to diagnose and resolve common problems \* a service ticketing system, which will allow customer to open a service request with us. A ticket could simply be a question about service, a request for support or report a bug in our service. \* online, live customer support, which will allow a customer or someone interested in our service to chat with a customer support agent in text via a portal on our website. We do not plan to provide phone support at this point in time. 5 ### CUSTOMER ACCOUNT Upon visiting our planned website, customers will find general information about our Company and about the products and services we provide. Interested parties will be able to register and create an online account with us at no cost. Our plans anticipate that once the registration process is complete, each subscriber will be directed to a dedicated web page created for each subscriber that registers with us. Each subscriber that chooses to register for our services will be able to access our products and service immediately. The customer account will be developed around a platform that provides each customer with an easy-to-use web interface. Information about the qualitative and quantitative nature of customer contacts will be managed from a single user’s interface. In a customer account, a customer will be able to view a record of all of his or her calls, the cost a call with and without the advertising subsidy. A customer will also able to load up their account with funds in order to make pay calls (or calls without or reduced visual or audio advertising). We will initially support only the online payment processor PayPal because of its reliability, popularity as well and ease of integration to our product. PayPal is a credit card merchant and a financial services company that accepts and clears all customer credit card payments on behalf of participating merchants, such as our company. In a customer account on our website, a customer will be able to receive calling credit that is applied toward his or her account to make free calls by taking a survey in lieu of a credit or watching a video advertising and responding to surveys. The customer will also able to launch a software phone from their account to make calls or to download a software phone to install on his or her computer. ### PRODUCT DEVELOPMENT TIMELINE EARLY-STAGE PRODUCT DEVELOPMENT: The company plans to begin work on its planned website as soon as we begin receiving funds from this offering. Putting an information-only web site as soon as possible will help to create brand name recognition. We will also register youtube.com, facebook.com and twitter.com accounts and link them to our web site. By doing so our plan is to be able to begin building interest in our Company during the development phase, and that this will encourage web site visitors to return at a later date. SOFTWARE DEVELOPMENT: The development of our product will be closely supervised by our Secretary and Director, Zeeshan Sajid. We expect to hire a software developer to develop the product we described above under the close supervision of Mr. Sajid. We expect that the development of our product will start in month 1 after we receive our funding with Mr. Sajid performing high level and system design. The interview process will also start in month 1 and expect to hire a developer by the middle of our second month of operation. All product development and limited trials will be completed by month 12 and all intellectual property rights by any independent contractors will be assigned to the Company. SOFTWARE EVALUATION: We intend to purchase two computers with monitors to be used by our software developers. Another computer will be purchased to serve as a local development server. We expect to purchase these computers in the second months of operation for $600 per computer system.We will evaluate several phone software platforms and determine which solution best serves our needs. We will develop a requirement list that will assist us in the selection of software. The selection will be based on: \* availability of needed functionality in the software; \* the ability to customize and add functionality to software; and \* the ability to integrate the telephony software to the server software 6 We anticipate that the process of evaluating telephony software will take approximately two months. TECHNOLOGY SELECTION AND HIGH-LEVEL DESIGN: We intend to develop the detailed specifications for our product. This part of our design work will include the specifications for the different modules to be developed or customized. The selection of the technology to be used and specifications of the product will drive the type of software developers we need to hire. This includes: \* The way the telephony and server software interact with each other; \* Adapting the server and VoIP software to work in a hosted environment; and \* Developing the graphical interfaces for the user as well as the back office administrative area It is anticipated that this process will take approximately one and a half months. SOFTWARE DEVELOPMENT ENGINEERS: We plan retain the services of two experienced software developers after three months of raising funding. One of the developers will have experience in the development of VoIP software phone and the other person experienced in the development of server based software. We anticipate the cost of hiring these two developers to be approximately $1,400 per month for both. We plan to begin the interview process immediately after the completion of the Technology and high level design task. We expect that this task will last for 1 month. We expect to sub-lease part of an office space for $200/month. This will include electricity and maintenance of the office. DEVELOPMENT AND DEPLOYMENT OF INFRASTRUCTURE: The selection of a data center which collocate servers, where we will host our servers, is essential to our success. Service quality and reliability are critical to our selection process. We intend to purchase two computers to be used by our software developers. Another computer will be purchased to serve as a local development server. We expect to purchase these computers in the second months of operation for $600 per computer system. As we move toward deployment, we will purchase a minimum of three servers: Two of these servers will be running the software for our service and the third one will be available in case one of these two servers fails. We expect to purchase two servers by month 6 for $2000 per server and a backup server in month 12. We will co-locate our servers with a wholesale VoIP provider or in the same data center as the provider. Since we are a start-up company, we expect that we will make deals with small VoIP providers on a pay per use basis and no minimum monthly commitments. We however expect to pay collocation fees for our server of $200 per month starting after six months of raising funding. INSTALLATION AND INTEGRATION: During this phase, our contractor will install the phone and server software and commence the integration of the two in order to make sure that each component works seamlessly with the other. It is anticipated that the installation and integration phase will take approximately two months. CUSTOMIZATION OF CUSTOMER INTERFACE(S): During this phase, we will modify each interface to include phone specific functions such as answering a call, making a call, recording a call, measuring the length of the call and the like, as required by each customer. We expect this phase to take approximately three months of development. INTEGRATION OF THE SOLUTION TO OUR WEBSITE: Our outside contractor will be responsible for the integration of the product into our web site. The integration process is intended to enable our customers to register for service from our web site, for the customer to login to their account page and to launch the software phone. Our site will also include a free demonstration which potential customers can subscribe to. We expect that this process will take approximately one month. 7 DEVELOPMENT OF SPECIAL WEBSITE MATERIAL AND CONTENT: Our officer, with the assistance of our contractor, will be responsible for the development of the knowledgebase, troubleshooting, and service ticketing sections of our website, for future customers’ use. BETA TRIAL: We intend to conduct a Beta trial with select customers prior to the formal launch of our product. The feedback of the trial will be used to affect future modifications and enhancement to our initial system. We expect that the Beta test period will last approximately three weeks and any necessary corrections or improvements to our system based on the Beta trial will take another three weeks. Non-critical feedback will be incorporated into the development schedule for our second year of operations. We plan to use industry-standard, 128-bit encryption for web pages containing private information and to encrypt our customers’ data on our system in order to secure their information. ### MARKETING AND SALES We plan to use a number of marketing tactics to develop brand name, using promotions, referral incentives, social marketing, online communities, search engine optimization, free online classified advertising postings. SOCIAL MARKETING: This includes the creation of Twitter, Facebook, MySpace and YouTube accounts. These sites will be updated regularly to keep us in the mind of subscribers to these pages and generate interest and excitement with our services. Additionally, our directors will use their own network of personal contacts in the small and medium business sector in order to generate business for us. This includes direct telephone contact, email correspondence and email newsletters. FORUMS AND FREE CLASSIFIED POSTINGS: We intend to target web sites, blogs, and discussion forums. WORD OF MOUTH: Word of mouth is very important to spread word about our service. In order to be recommended by users to their friends and families, we must deliver superior service and customer support. REFERRALS AND REFERRAL INCENTIVES: We will provide incentives for web sites, people and organizations to refer customers to us. Customers will get credit in their accounts that will go toward making free calls. Web sites and organizations will share revenue generated from customers they refer. SEARCH ENGINE OPTIMIZATION: Another facet of our marketing plan is to work on search engine optimization. Search engines are designed to search out keywords as online users look for the information they want. Meta-tags act as keywords that reside in the hidden infrastructure of a web page and help to highlight a web page when someone is using a search engine to find information. Relevant content is also essential to obtain higher ranking. For example, by including keywords such as “INTERNET CALL” on our web page, the search engines will identify our web pages as a match for the search request. The effect of this marketing tactic is to have our web page appear higher on the list of results for the online user looking for information about a free Internet telephone calls. UPDATING THE CONTENT ON THE HOME PAGE: Continuous updates to our web site will encourage web visitors to return over and over again. When web visitors can quickly find interesting content they will stay longer on each visit and tell their friends too. Our marketing campaign will monitor daily statistics and track favorite topics in order to quickly get in synch with our internet audience. Being able to regularly update the home page is an integral part of our branding strategy. We believe that the above strategies are necessary to attract the users to our phones services. We also need to attract advertisers and advertising agencies to advertise on our software phone, web site and the customer account portal. We will be developing a dedicated section on our web site for advertisers including how our program works and the benefits to them advertising with us. We will also include a flash video to emphasize the point. We will also develop electronic brochures and payback models that are sent to advertising companies under NDA. We also plan to retain advertising agencies in different parts of the world to market our advertising services to companies directly and to other agencies. 8 ### SALES REVENUE We anticipate that our revenue will come from three primary sources: first, from the placement of advertising on our website and phone software, second, from paid calls by our customers, and third from selling our software or service to entities that wants to offer a similar under their brand name. We anticipate that our operations will begin to generate revenue approximately 18 to 24 months following the date of filing of this Form 10-K. Our research has led us to conclude that the three most common ways in which online advertising is purchased are CPM, CPC, and CPA. We anticipate selling online advertising through all three medium, more particularly described as follows: \* CPM (COST PER MILLE), also known as “cost per thousand,” is when advertisers pay for exposure of their message to a specific audience. “Per mille” means per thousand impressions, or loads of an advertisement. However, some impressions may not be counted, such as a reload or internal user action. \* CPC (COST PER CLICK), also known as “pay per click,” is when advertisers pay each time a user clicks on their listing and is redirected to their website. They do not actually pay for the listing, but only when the listing is clicked on. \* CPA (COST PER ACTION), also known as “cost per acquisition” advertising, is performance based and is common in the affiliate marketing sector of the business. In this payment scheme, the publisher takes all the risk of running the ad, and the advertiser pays only for the amount of users who complete a transaction, such as a purchase or sign-up. There many types of advertising that can be incorporated into our soft phone or web site but we will focus on methods such as: \* BANNER ADVERTISING: This form of online advertising entails embedding an advertisement into a web page. It is intended to attract traffic to a website by linking to the website of the advertiser. The advertisement is constructed from an image (GIF, JPEG, PNG), JavaScript program or multimedia object employing technologies such as Java, Shockwave or Flash, often employing animation, sound, or video to maximize presence. \* FLOATING ADVERTISING: An ad which moves across the user’s screen or floats above the content. \* EXPANDING ADVERTISING: An ad which changes size and which may alter the contents of the webpage. \* POLITE ADVERTISING: A method by which a large ad will be downloaded in smaller pieces to minimize the disruption of the content being viewed \* WALLPAPER ADVERTISING: An ad which changes the background of the page being viewed. \* POP-UP ADVERTISING: A new window which opens in front of the current one, displaying an advertisement, or entire webpage. \* POP-UNDER ADVERTISING: Similar to a Pop-Up except that the window is loaded or sent behind the current window so that the user does not see it until they close one or more active windows. \* VIDEO ADVERTISING: similar to banner advertising, except that instead of a static or animated image, actual moving video clips are displayed. This is the kind of advertising most prominent in television, and many advertisers will use the same clips for both television and online advertising. \* INTERSTITIAL ADVERTISING: a full-page ad that appears before a user reaches their original destination. We anticipate that we will sell our advertising directly to advertisers or through advertising networks, such as Google Adwords, SpotXchange and Tremor Media. We believe that we will be able to have higher revenue for an advertisement while working directly with the advertisers rather than going through a network since the network keeps a percentage of revenue. When available, we anticipate we will be playing mostly Video advertising since Video advertising, according to our research (http://www.reelseo.com/ video-advertising-vs-banners-cpms/), currently earns $40-50 per CPM ($0.04-0.05 per impression) which, also according to our research, is up to 3 times that of a banner. We are estimating a $20 per CPM. 9 Our research (http://blog.efrontier.com/insights/2011/01/dec-2010-cpcs-robust- numbers-round-out-the-year.html) indicates that the CPC (cost per click) is estimated to be between $0.55-1.95 for December 2010 and $0.48 to $1.78 for December 2009. The lower amounts are associated with advertising to the retail sector. This is the cost incurred by an advertiser and we expect that will earn part of that. The management believes that average revenue of $0.3 per click is a reasonable estimate. We have no marketing information for the Cost Per Action (CPA) in support of what we can charge an advertiser for a CPA. We believe that what we can charge for a CPA will be variable depending on the type of action that a customer does (fill in a survey) or what type of products and services a customer purchases. We are estimating $1 of revenue to us from a customer action. However, we could not find studies to support such an estimate, and management’s estimates of $1 per action are not supported by reliable third-party data or empirical evidence. We may never achieve the revenues we are projecting because the basis upon which we are making our revenue projections is subjective, and our reliance on third-party data which is more than two years old may be unreliable because the veracity of the third-party data cannot be verified. To date, we have focused on product development and executing the initial stage of the marketing effort. We have not earned any sales revenue during this time. ### COMPETITION The Company’s product competes broadly with Internet phone services available to consumers. The Internet phone service market is highly competitive, and includes international, national, regional and local service providers, many of whom have greater resources than the Company, including but not limited to Internet phone services offered by Skype, Yahoo, Google, Phone Power, ITP, via:talk, Call Centric, VYLmedia, inTalk, aptela, nextiva, vocalocity, Jive, Improcom, amongst others. As for companies that offer free phone services via the Internet, there are Freephoneline, icall, voipbuster and mediaringtalk. While the Company believes that it competes favorably on differentiation because it offer of free service in exchange for the customer viewing and/or listening to audio or visual advertising, we are yet to see if we can compete in quality and we are weak with regards to, brand name recognition and, there can be no assurance that the Company and its products will not experience increasing competitive pressures from both established and new Internet phone service companies, many of whom have substantially greater marketing, cash, services and other resources than the Company. ### RESEARCH AND DEVELOPMENT EXPENDITURES We have not incurred any research expenditures since our incorporation. ### BANKRUPTCY OR SIMILAR PROCEEDINGS We have never been subject to bankruptcy, receivership or any similar proceeding. ### REORGANIZATIONS, PURCHASE OR SALE OF ASSETS There have been no material reclassifications, mergers, consolidations, or purchase or sale of a significant amount of assets not in the ordinary course of business. 10 ### COMPLIANCE WITH GOVERNMENT REGULATION We will be required to comply with all regulations, rules and directives of governmental authorities and agencies applicable to the construction and operation of any facility in any jurisdiction which we would conduct activities. We do not believe that government regulation will have a material impact on the way we conduct our business, however, any government regulation imposing greater fees for Internet use or restricting information exchange over the Internet could result in a decline in the use of the Internet and the viability of Internet-based services, which could harm our business and operating results. ### PATENTS, TRADEMARKS AND COPYRIGHTS We do not own, either legally or beneficially, any patents or trademarks. We intend to protect our website with copyright laws. Beyond our trade name, we do not hold any other intellectual property. ### RESEARCH AND DEVELOPMENT ACTIVITIES AND COSTS We have not incurred any research and development costs to date. We have plans to undertake certain research and development activities during the first 12 months following the date of filing of this Form 10-K related to the development of our website. ### FACILITIES We currently do not own any physical property or own any real or intangible property. Our current business address is 11037 Warner Ave, Suite 132, Fountain Valley, California 92708. Our telephone number is (714) 500-8919. Mazen Kouta, our President, Treasurer and Director, works on Company business from a home office. This location serves as our primary office for planning and implementing our business plan. We believe this space is sufficient for our current purposes and will be sufficient until we raise financing and hire our software contractor. The Company intends to lease its own offices at such time as it has sufficient financing to do so. Management believes the current premises are sufficient for its needs at this time. Zeeshan Sajid, our Secretary and Director, works on Company business from his current business office. ### EMPLOYEES AND EMPLOYMENT AGREEMENTS We have no employees as of the date of filing of this Form 10-K. Our President, Treasurer and Director, Mazen Kouta, is an independent contractor to the Company and currently devotes approximately 20 hours per week to company matters. Our Secretary and Director, Zeeshan Sajid, is an independent contractor to the Company and currently devotes approximately 10 hours per week to company matters. After receiving funding, Messrs. Kouta and Sajid plan to devote as much time as the Board of Directors determines is necessary for them to manage the affairs of the Company. As our business and operations increase, we will hire full time management and administrative support personnel. 11 ## Risk factors As filed, 151 characters. As a “smaller reporting company,” as defined in Rule 12b-2 of the Exchange Act, we are not required to provide the information called for by this Item. ## Properties As filed, 841 characters. We currently do not own any physical property or own any real or intangible property. Our current business address is 11037 Warner Ave, Suite 132, Fountain Valley, California 92708. Our telephone number is (714) 500-8919. Mazen Kouta, our President, Treasurer and Director, works on Company business from a home office. This location serves as our primary office for planning and implementing our business plan. We believe this space is sufficient for our current purposes and will be sufficient until we raise financing and hire our software contractor. The Company intends to lease its own offices at such time as it has sufficient financing to do so. Management believes the current premises are sufficient for its needs at this time. Zeeshan Sajid, our Secretary and Director, works on Company business from his current business office. ## Management's discussion and analysis As filed, 17,420 characters. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and related notes included elsewhere in this report. Our auditor’s report regarding our September 30, 2014 financial statements expresses an opinion that substantial doubt exists as to whether we can continue as an ongoing business. ### OVERVIEW We were incorporated in the state of Nevada on March 11, 2010, under the name “Radikal Phones Inc.” We changed our name to “First American Group Inc.” on October 7, 2010. Our offices are currently located at 11037 Warner Ave., Suite 132, Fountain Valley, California 92708. Our telephone number is (714) 500-8919. Our website, which is currently being developed, is www.radikalphones.com. During the fiscal year ended September 30, 2012, we sold shares of our common stock under a Registration Statement on Form S-1, as amended (File No. 333-171091; the “Form S-1”), in a public offering of 628,000 shares of common stock, at an offering price of $0.10 per share, for aggregate offering proceeds of $62,800. During the fiscal year ended September 30, 2012, we offered and sold 159,814 shares of common stock from the Form S-1 for aggregate proceeds of $15,981. During the fiscal year ended September 30, 2011, we offered and sold 361,450 shares of common stock from the Form S-1 for aggregate proceeds of $35,836. We did not offer any shares for sale during the fiscal year ended September 30, 2014. We have not generated any revenue and have had limited operations to date. From March 11, 2010 (inception) to September 30, 2014, we have incurred accumulated net losses of $92,549. As of September 30, 2014, we had total assets of $2,775, and total liabilities of $27,507, respectively. Based on our financial history since inception, our independent auditor has expressed substantial doubt as to our ability to continue as a going concern. We are a development stage company which is engaged in the development, sales and marketing of voice-over-Internet-protocol (“VoIP”) telephone services to enable end-users to place free phone calls over the Internet in return for viewing and listening to advertising. Our product is planned to consist of: (i) one or more telephony servers, (ii) a software phone which allow customers to place calls, view and/or listen to advertising, and (iii) a server to store customer information and to keep customer records, call, credits and payment history, and which server will also contains our web site, support center and customer account portal. We anticipate that our revenue will come from two primary sources: first, from the placement of advertising on our website and phone software, and second, from paid calls by our customers. We anticipate that our operations will begin to generate revenue approximately 18 to 24 months following the date of filing of this Form 10-K. Since we are presently in the development stage of our business, we can provide no assurance that we will successfully sell any products or services related to our planned activities. 14 To date, we have been in contact with professional advisors regarding legal compliance, accounting disclosure statements and financial reporting. We have also begun our planning for developing a website and searching for a contractor to develop that website. We will retain such a contractor only after we secure further funding. We intend to launch our “information only” web site during the first quarter of the 2014 calendar year. Our business activities during the next 12 months following will be focused on raising funds, the development of our website, the development of our product, the development of a network of resellers and the establishment of our brand name. We do not expect to earn any sales revenue during this time. We anticipate that our revenue will come from two primary sources: first, from the placement of advertising on our website and phone software, second, from paid calls by our customers, and third from licensing or selling our software. We anticipate that our operations will begin to generate revenue approximately 18 to 24 months following the date of filing of this Form 10-K. We are however running low on funding and our directors provided the company with a $15,243 loan to continue operation. ### RESULTS OF OPERATIONS ### YEARS ENDED SEPTEMBER 30, 2014 AND 2013 We did not earn any revenues during the years ended September 30, 2014 and 2013. We incurred operating expenses in the amount of $19,125 and $16,466 for the years ended September 30, 2014 and 2013, respectively. Operating expenses for the year ended September 30, 2014, were comprised of $15,727 in professional fees and $3,398 of general and administrative expenses. Operating expenses for the year ended September 30, 2013, were comprised primarily of $9,925 of professional fees and office and $6,541 of general and administrative expenses. Since inception we have incurred operating expenses of $92,549. From inception (March 11, 2010) through the year ended September 30, 2013 we had no revenues and a net loss of $92,549. The following table provides selected financial data about our company for the years ended September 30, 2014 and 2013. | Balance Sheet Data | September 30, 2013 | September 30, 2014 | | --- | ---: | ---: | | Cash and Cash Equivalents | $2,022 | $2,662 | | Total Assets | $2,135 | $2,775 | | Total Liabilities | $7,7423 | $27,507 | | Shareholders’ Equity (Deficit) | $(5,607) | $(24,732) | ### GOING CONCERN We currently have no operations. Our independent auditor has issued an audit opinion for First American Group Inc., which includes a statement raising substantial doubt as to our ability to continue as a going concern. 15 ### LIQUIDITY AND CAPITAL RESOURCES At September 30, 2014, we had a cash balance of $2,662. Management does not believe that this amount will satisfy our cash requirements for the next twelve months. The Directors of the company have been providing the company with shareholder loans in order to sustain the company. Management believes that if subsequent private placements are successful, we will be able to generate sales revenue within the following twelve months thereof. However, additional equity financing may not be available to us on acceptable terms or at all, and thus we could fail to satisfy our future cash requirements. If we are unsuccessful in raising the additional proceeds through a private placement offering we will then have to seek additional funds through debt financing, which would be highly difficult for a new development stage company to secure. Therefore, the Company is highly dependent upon the success of the anticipated private placement offering and failure thereof would result in the Company having to seek capital from other sources such as debt financing, which may not even be available to the Company. However, if such financing were available, because we are a development stage company with no operations to date, it would likely have to pay additional costs associated with high risk loans and be subject to an above market interest rate. At such time these funds are required, management would evaluate the terms of such debt financing and determine whether the business could sustain operations and growth and manage the debt load. If we cannot raise additional proceeds via a private placement of its common stock or secure debt financing it would be required to cease business operations. As a result, investors in our common stock would lose all of their investment. ### OFF-BALANCE SHEET ARRANGEMENTS The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. ### PLAN OF OPERATION FOR FOLLOWING 12 MONTHS Our business activities during the 12 to 18 months following the filing date of this Form 10-K will be focused on raising funds, the development of our website, the development of our product, the development of a network of resellers and the establishment of our brand name. We do not expect to earn any sales revenue during this time. We anticipate that our revenue will come from two primary sources: first, from the placement of advertising on our website and phone software, second, from paid calls by our customers, and third from licensing or selling our software. We anticipate that our operations will begin to generate revenue approximately 18 to 24 months following the date of filing of this Form 10-K. All of this assumes that we are able to raise the required financing which is suspect at this point. Our revenue estimates are based on current expectations, estimates and projections about our business based primarily on assumptions made by management. In making our revenue projections, we have assumed that we will be able to generate revenues from advertising based on our subjective view that our telephony services and products will be fully developed and that there will be a certain level of customer acceptance and demand for our telephony services and products. Therefore, actual revenue outcomes and results may differ materially from what is expressed or forecasted in our revenue estimates due primarily to factors that advertisers generally look to in deciding whether to advertise on a website. Some of these factors are: (i) monthly traffic and its repeat rate, (ii) the number of unique visitors, (iii) targeted marketing opportunities and demographics, (iv) how professionally designed the website is, and (v) how established the website is. We currently do not satisfy any of the aforementioned factors as they relate to our business, and the revenues we actually generate will depend primarily on our success in developing our business plan, and more specifically, our ability to attract potential advertisers based on potential advertisers’ views about the quality of our business based on these factors. 16 | | YEAR 1 | YEAR 2 | YEAR 3 | | --- | ---: | ---: | ---: | | # of Impressions | -- | 2,000,000 | 6,000,000 | | Average Revenue per impression | $-- | $0.02 | $0.02 | | # of Click | -- | 200,000 | 600,000 | | Average Revenue per Click | $-- | $0.30 | $0.30 | | # of Actions | -- | 50,000 | 150,000 | | Average Revenue per action | $-- | $1.00 | $1.00 | | # of chargeable minutes | -- | 750,000 | 2,000,000 | | Average per minute profit | $-- | $0.005 | $0.005 | | Impression Revenue | $-- | $40,000.00 | $120,000.00 | | Per click Revenue | $-- | $60,000.00 | $180,000.00 | | Per Action Revenue | $-- | $50,000.00 | $150,000.00 | | Long Distance net Revenue | $-- | $3,750.00 | $10,000.00 | | REVENUE SUBTOTAL | $-- | $153,750.00 | $460,000.00 | The revenue projections above contain a number of assumptions. Year 1 will be spent on developing our products and services, and we project zero revenue during that period. In year 2, we project that we will start generating revenue in the first month of year 2, assuming we have completed the offering of shares in the Form S-1. We expect that revenue will continue to increase and exceed expenses by month 7 of year 2. We project that we will sustain $15,105 in losses between the first month of year 2 and the last month of year 2. In year 3, we project revenues of $460,000 and a profit of $105,884 between months 25-36. We make the following assumptions in our projections above for year 2: \* We will earn $20 CPM ($0.02 every time a customer views an item of advertising). We are estimating approximately 2,000,000 impressions, or approximately 167,000 impression per month. \* We will earn $0.3 every time a customer clicks on advertising. We are projecting 200,000 clicks, or less than 16,700 click per month. \* When a customer fills in a form or take a survey or clicks through and purchases a product, we will earn revenue. We are estimating $1 per action. We expect that we will have approximately 50,000 completions per year, or approximately 4,200 completions per month. \* We estimate that many calls outside North America will incur cost to the customer. We are estimating approximately 750,000 minutes which translates to approximately 2000 customers making 300 chargeable minutes per month. Since we endeavor to provide this service as cheaply as possible to customers, we are only assuming $0.005 (half a cent) per minute profit. While going to make a phone call via our website, multiple advertisements will be posted to the same webpage the customer is using, which will include a combination of banners and videos on our website, their portal and the software phone. We have made our estimated projections ourselves. We believe that our estimates are reasonable. By way of comparison, according to http://www.reelseo.com/video- advertising-vs-banners-cpms/: \* The average ad network inventory is: $0.60 to $1.10 CPM; \* The publisher sold display advertising is: $10 to $20 CPM; and \* Video advertising is: $40 to $50 CPM 17 We may never achieve the revenues we are projecting because the basis upon which we are making our revenue projections is subjective, and our reliance on third-party data which is more than two years old may be unreliable because the veracity of the third-party data cannot be verified. While we will be focusing on video advertising, we may have display advertising and network inventory. Year 1 will be spent on developing our products and services and we expect zero revenue during that period. In Year 2, we anticipate revenues of $153,750. We anticipate that we will start generating revenue in month 13 after we have completed the share sale outline. We expect that revenue will continue to increase and exceed expenses by month 19. We anticipate that we will sustain $15,105 in losses between months 13-24. In Year 3, we anticipate revenues of $460,000 and a profit of $105,884 between months 25-36, and only at this point will our revenues exceed our costs. We make the following assumptions in our projections above for Year 2: \* We anticipate we will earn $20 CPM ($0.02 every time a customer views an advertising) on the basis of estimating 2 million impressions, which represents approximately 167,000 impression per month. \* We anticipate we will earn $0.3 every time a customer clicks on advertising, on the basis of estimating 200,000 clicks or approximately 16,700 clicks per month. \* When a customer fills in a form or takes a survey or clicks through and purchases a product, we will earn revenue. We are estimating a $1 per action and assuming that we will have 50,000 completions per year or approximately 4,200 completions per month. \* We anticipate that many calls outside North America will incur cost to the customer. We are estimating 750,000 minutes, which is approximately 2000 customers making 300 chargeable minutes per month. Since we are planning to provide this service as cheaply as possible to customers, we are only assuming $0.005 (half a cent) per minute profit. While going to make a phone call, a customer is likely to see multiple advertisements which will include a combination of banners and videos on the web site, the advertiser’s portal and our software phone. As well, people investigating our service, but not necessarily register, will earn us revenue because they will be viewing advertising. We can offer no assurance that we will be successful in developing and offering our products and services. Any number of factors may impact our ability to develop our products and services, including our ability to obtain financing if and when necessary; the availability of skilled personnel; market acceptance of our products, if they are developed; and our ability to gain market share. Our business will fail if we cannot successfully implement our business plan or if we cannot develop or successfully market our products and services. Since there is no minimum amount of shares that must be sold by the Company, we may receive no proceeds or very minimal proceeds from the offering and potential investors may end up holding shares in a company that: \* Has not received enough proceeds from the offering to begin operations; and \* Has no market for its shares. 18 Our independent registered public accountant has issued a going concern opinion. This means that there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills. This is because we have not generated revenues and no revenues are anticipated until we complete our initial business development. There is no assurance we will ever reach that stage. Our plan of operation for the twelve months following the date of filing of this Form 10-K will be focused on raising funds, the development of our website, the development of a software phone and the establishment of our brand name. We do not expect to earn any sales revenue during this time. Since we are a development stage company, any estimates by management are negligible at this time as actual project costs would likely exceed any such estimates. To date, we have not commenced with any activities or operations of any phase of our development program. ### SUBSEQUENT EVENTS None. ## Market risk As filed, 155 characters. As a “smaller reporting company,” as defined in Rule 12b-2 of the Exchange Act, we are not required to provide the information called for by this Item. 19 ## Controls and procedures As filed, 5,124 characters. ### DISCLOSURE CONTROLS AND PROCEDURES Under the supervision and with the participation of our management, including our principal executive officer and the principal financial officer, we are responsible for conducting an evaluation of the effectiveness of the design and operation of our internal controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as of the end of the fiscal year covered by this report. Disclosure controls and procedures means that the material information required to be included in our Securities and Exchange Commission (“SEC”) reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms relating to our company, including any consolidating subsidiaries, and was made known to us by others within those entities, particularly during the period when this report was being prepared. Based on this evaluation, our principal executive officer and principal financial officer concluded as of the evaluation date that our disclosure controls and procedures were effective as of September 30, 2014. ### MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING As of September 30, 2014, management assessed the effectiveness of our internal control over financial reporting. The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934, as amended, as a process designed by, or under the supervision of, the Company’s Chief Executive Officer and Chief Financial Officer and effected by the Company’s Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP in the United States of America and includes those policies and procedures that: - Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and dispositions of our assets; - Provide reasonable assurance our transactions are recorded as necessary to permit preparation of our financial statements in accordance with GAAP, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and - Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statement. In evaluating the effectiveness of our internal control over financial reporting, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control – Integrated Framework. Based on that evaluation, completed only by Mazen Kouta, our President, Secretary, Treasurer and Director, who also serves as our principal financial officer and principal accounting officer, Mr. Kouta concluded that, during the period covered by this report, such internal controls and procedures were not effective to detect the inappropriate application of US GAAP rules as more fully described below. 28 This was due to deficiencies that existed in the design or operation of our internal controls over financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses. The matters involving internal controls and procedures that our management considered to be material weaknesses were: (i) lack of a functioning audit committee due to a lack of a majority of independent members and a lack of a majority of outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; (ii) inadequate segregation of duties consistent with control objectives; and (iii) ineffective controls over period end financial disclosure and reporting processes. The aforementioned material weaknesses were identified by Mr. Kouta, our President, Secretary, Treasurer and Director, who also serves as our principal financial officer and principal accounting officer, in connection with the review of our financial statements as of September 30, 2014. Management believes that the lack of a functioning audit committee and the lack of a majority of outside directors on our board of directors results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods. ### CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING. There were no changes in the Company’s internal control over financial reporting that occurred during the fourth quarter of the year ended September 30, 2014 that have materially affected, or that are reasonably likely to materially affect, the Company’s internal control over financial reporting. Filed Dec 24, 2014. Source: SEC EDGAR, the filing index for accession 0001477932-14-007265. Last ingested by Listed: Oct 24, 2026, 15:12 ET. No prices; not investment advice.