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ROSEWIND CORP – 10-K – MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
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Forward-looking statements
The following discussion should be read in conjunction with the financial statements ofRosewind Corporation (the "Company"), which are included elsewhere in this Form 10-K. This Annual Report on Form 10-K contains forward-looking information. Forward-looking information includes statements relating to future actions, future performance, costs and expenses, interest rates, outcome of contingencies, financial condition, results of operations, liquidity, business strategies, cost savings, objectives of management, and other such matters of the Company. The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking information to encourage companies to provide prospective information about themselves without fear of litigation so long as that information is identified as forward-looking and is accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those projected in the information. Forward-looking information may be included in this Annual Report on Form 10-K or may be incorporated by reference from other documents filed with theSecurities and Exchange Commission (the "SEC") by the Company. You can find many of these statements by looking for words including, for example, "believes", "expects", "anticipates", "estimates" or similar expressions in this Annual Report on Form 10-K or in documents incorporated by reference in this Annual Report on Form 10-K. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information or future events. 14
-------------------------------------------------------------------------------- We have based the forward-looking statements relating to our operations on our management's current expectations, estimates and projections about our Company and the industry in which we operate. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that we cannot predict. In particular, we have based many of these forward-looking statements on assumptions about future events that may prove to be inaccurate. Accordingly, our actual results may differ materially from those contemplated by these forward-looking statements. Any differences could result from a variety of factors, including, but not limited to general economic and business conditions, competition, and other factors.
Plan of Operation
We set sail on our first student training voyage in lateMay 2008 . Our vessel, captained byMichael Wiegand , sailed fromNew Zealand toNew Caledonia with one student aboard. The voyage required just over two weeks and was completed inJune 2008 . The student was a non-related third party voyaging on a "share expense" basis. While no net revenue was generated we gained valuable experience and written student feedback. We conducted our second student training voyage inApril 2009 . Net revenue of$1,750 was earned for the one week voyage. The student was a non-related third party.
Subject to local weather conditions we plan to generate revenue as soon as more students can be located and booked. From
The typhoon season imposes seasonal limitations for the operation of small sailing vessels offshore. Cyclone activity, which occurs seasonally, will have an adverse effect on bookings and revenues. In northern latitudes, the increased frequency of gales and generally uncomfortable conditions will cause our bookings to decline significantly.We evaluate the seasonal relocation of our vessel as a potential strategy to partially offset loss of revenue caused by weather and cyclone restrictions. To date we have been unable to benefit from relocation efforts. Additionally, we may complete significantly less than the six one week training voyages each quarter because we may not be able to book 100% of available voyage dates and there may be cancellations or other events that are beyond our control. Therefore, we are unable to predict the annual cash flow and profitability of the sailing school once sailing school operations are commenced. We have found our vessel to be sound and seaworthy during the 2005-2006 voyage fromFlorida toEcuador . After minor modifications to the deck planMichael Wiegand single-handed our vessel fromEcuador toAustralia and has thus demonstrated that our vessel can be sailed with no assistance from student crew. We believe this is key to our business plan in that the clients we are training will not need to contribute to the operation of the vessel should they become incapacitated during a voyage. Our target client will likely be a novice sailing enthusiast looking to crew or who is shopping for, or has just purchased a cruising sailboat. The training conducted by our sailing school will help the student select and equip a sailing vessel and prepare for crossing an ocean safely and confidently. We will admit less experienced sailors than those who can qualify themselves as experienced crew. In return for the higher cost, our week of training at sea delivered to our students at sea will be more personalized and structured than the typical "share expenses" crew opportunity. Potential crew and novice yacht owners use classified advertisements as one method to locate a sailboat with plans for a specific voyage where they may gain experience. Generally, this is arranged by paying a portion of the expenses of the voyage. We may reject the applications of prospective students who are not, in our opinion, physically and mentally prepared for the challenge of ocean voyaging. We have initiated marketing efforts with advertisements designed to attract students to our sailing school As of the date of this report, we have seen only very limited results from our advertising. We anticipate that by continuing to advertise we can locate and book students and thereafter begin generating revenue from training voyages. Marketing expenses are budgeted at$250 per month, maximum. We believe we can reach an enthusiastic and qualified group of prospective clients through classified advertising in sailing magazines that cater to people who dream of someday crossing oceans in their own cruising boat. We believe this is a cost effective way to reach adventurous boaters who have serious sailing ambitions. We believe that we will be most successful by advertising consistently each month. This was done during the periods preceding our training voyages. Our advertisements contain our office phone number and the address of our website. Callers either reachJames Wiegand or a recorded message with an opportunity to leave a name and phone number for a return call. As of the date of this report, our advertising program has produced only disappointing results. We have received very few calls from prospective students. The two students we have trained to date located us through our classified advertisement. We plan to continue monthly advertising and have, on occasion, added a photo of our vessel to run with the copy. We have also solicited editorial coverage for our sailing school. One editorial has been written and published in theNovember 2008 edition of "Cruising World" magazine. Improved response to our advertising was noted. Significant improvement in our revenues has not materialized to date. Vessel Upgrades. We conducted an IPO by management and completed the minimum offering onNovember 9, 2007 raising over$56,000 . This money has been used in our sailing school where expenses for vessel upgrades and maintenance, operations and public company costs are substantial. We are making efforts to keep costs to a minimum consistent with the requirements of safety at sea and good seamanship. 15
-------------------------------------------------------------------------------- We believe that while our cost of operating as a public company is higher than for a similar private company, our cost of capital as a public company will be less than it would be for a similar private company and further, as our business grows a smaller portion of our annual expenses will ultimately be composed of public company expense. We estimate that our quarterly cash flow, without allowances for extraordinary events or ongoing maintenance and miscellaneous costs will be positive once we average six training voyages per quarter. In view of the disappointing results of our marketing program to date, there can be no assurance that we will be able to book and complete additional training voyages or generate any revenue in the future. The survey done on our vessel in 2005 states that the design and construction of our vessel is sound. The survey also states that our vessel needs proper ongoing maintenance to safely undertake ocean voyages. Consistent with the surveyor's recommendations we undertook a two month refit prior to the voyage fromFlorida toAustralia . This included the replacement of all standing rigging, installation of a new diesel auxiliary engine and many additional upgrades needed for eventual use of the vessel for student training. Our current maintenance strategy is to perform a major haul out on an as needed basis. Our vessel is presently hauled out inPort Townsend Washington for minor repair. Based upon past experience with our vessel, we anticipate further maintenance and upgrade expenses will be required to ready our vessel for future training voyages. Vessel maintenance costs will likely increase as level of use and age increases. This could have a material adverse effect on our cash flow. Our business model indicates we can achieve a positive cash flow as a public company if we can successfully sell and deliver, each quarter, six one week voyages with two students training on each voyage. Our vessel has three usable berths (beds) while at sea. As of the date of this report we have failed to generate significant revenue. We continue our efforts to book students for our planned voyages.
Financial Condition and Results of Operation
We are a development stage company. We have relocated and significantly prepared our vessel for operation as a sailing school, but, as ofAugust 31, 2011 and the date of this report we have completed the training of only one regular paying student. During June of 2008 we completed a two week training voyage with a student on a "share expense" basis. This voyage was forNelson, New Zealand to Noumea,New Caledonia . No net revenue was generated. We confirmed the viability of our curriculum and we received a positively worded testimonial letter from the non-related third party student. We conducted our second student training voyage inApril 2009 . Net revenue of$1,750 was earned for the one week voyage. The student was a non-related third party. We have had operating revenues of$1,750 since inception,March 1, 2005 throughAugust 31, 2011 and the date of this report. We have incurred operating expenses totaling$436,262 as ofAugust 31, 2011 . Such expenses consisted primarily of general and administrative, professional fees and services in connection with our Registration Statement and costs incurred to refurbish and relocate our sailing vessel. We have generated an accumulated deficit of$ 451,211 as ofAugust 31, 2011 . As of the date of this report our losses continue to mount. Our net loss increased by$76,532 or 127% to$136,802 from$60,270 for the year endedAugust 31, 2011 compared with the prior year endedAugust 31, 2010 . This was primarily attributed the net effect of the following three factors:
1. General and administrative expenses increased by
to$84,682 for the year endedAugust 31, 2011 from$29,971 for the prior year endedAugust 31, 2010 . This is attributable to two factors: increase in costs incurred to maintain and upgrade our training vessel; issuance of common stock for services provided, valued at$37,500 in the current year.
2. Professional fees increased by
year ended
stock for consulting services valued at
3. Revenue remained at
$-0 - for the year endedAugust 31, 2010 . There was no revenue from sailing school operations during each of the last two years. We believe student revenue was negatively impacted by the impaired US economy. 16
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Liquidity and Capital Resources
Management completed an Initial Public Offering of our common stock and proceeds of the offering were transferred from escrow to our bank on
OnJanuary 22, 2009 management initiated sale of a Regulation D Private Placement of up to 125,000 shares of its common stock at a price of$0.20 per share. The offering was completed duringJune 2010 with 125,000 restricted shares issued in consideration of$25,000 in offering proceeds. All proceeds have been deposited into the company's bank and utilized for operations. During July of 2010 management initiated sale of a Regulation D Private Placement of up to 133,334 shares of its common stock at a price of$0.15 per share. AtAugust 31, 2010 , 33,334 restricted shares had been issued in consideration of$5,000 in offering proceeds. All proceeds were deposited into the company's bank and utilized for operations. During February of 2011 management initiated sale of a Regulation D Private Placement of its common stock at a price of$0.15 per share. AtAugust 31, 2010 , 290,003 restricted shares had been issued in consideration of$ 43,500 in offering proceeds. This private placement is open and the company anticipates receiving the additional investments as necessary to sustain future operations. All proceeds have been deposited into the company's bank and utilized for operations.
At
FINANCIAL STATEMENTS.
The financial statements and supplementary data required by this item are submitted on page 18 of this report.
17 -------------------------------------------------------------------------------- Index to Financial Statements
Report of Independent Registered Public Accounting Firm 19
Balance Sheets 20 Statements of Operations. 21 Statements of Stockholders' Equity (Deficit) 22 Statements of Cash Flows 23 Notes to the Financial Statements. 24 18 -------------------------------------------------------------------------------- REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of
We have audited the accompanying balance sheets ofRosewind Corporation (a development stage company) as ofAugust 31, 2011 and 2010, and the related statements of operations, stockholders' equity (deficit), and cash flows for the years then ended, and from inception onMarch 1, 2005 throughAugust 31, 2011 . These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of thePublic Company Accounting Oversight Board (United States ). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position ofRosewind Corporation (a development stage company) as ofAugust 31, 2011 and 2010, and the results of its operations and its cash flows for the years then ended, and from inception onMarch 1, 2005 throughAugust 31, 2011 , in conformity with U.S. generally accepted accounting principles. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 4 to the financial statements, the Company has incurred significant losses since inception, raising substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 4. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.HJ & Associates, LLC Salt Lake City, Utah November 29, 2011 19
-------------------------------------------------------------------------------- ROSEWIND CORPORATION (A Development Stage Company) Balance Sheets August 31, August 31, 2011 2010 Assets Current Assets: Cash $ 3,993 $ 1,545 Prepaid asset 234 172 Total current assets 4,227 1,717 Property and equipment, net 18,611 25,374 Total assets $ 22,838 $ 27,091 Liabilities and Shareholders' Equity (Deficit) Current liabilities: Accounts payable $ 330 $ 477 Accrued interest payable, related party 5,803
4,623
Loans payable to related party 52,300 77,599 Total current liabilities 58,433 82,699
Shareholders' equity (deficit): Preferred stock, no par value; 5,000,000 shares authorized, no shares issued and outstanding
- - Common stock, no par value; 300,000,000 shares authorized, 4,734,658 and 3,547,334 shares issued and outstanding, respectively 388,815 235,250 Additional paid-in capital 27,301 23,051 Common stock subscription - 1,000 Accumulated deficit (500 ) (500 ) Deficit accumulated during development stage (451,211 ) (314,409 ) Total shareholders' equity (deficit) (35,595
) (55,608 )
Total liabilities and shareholders' equity (deficit) $ 22,838 $ 27,091 See accompanying notes to financial statements 20
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ROSEWIND CORPORATION (A Development Stage Company) Statements of Operations March 1, 2005 (Inception) For the Year Ended Through August 31, August 31, 2011 2010 2011 Revenue $ - $ - $ 1,750 Operating expenses: Professional fees 44,687 24,190 132,518 Contributed services, related party (Note 2) 4,250 2,580 22,811 General and administrative 84,682 29,971 280,933 Total operating expenses 133,619 56,741 436,262 Loss from operations (133,619 ) (56,741 ) (434,512 ) Other Income (Expense) Other income - 274 274 Interest expense (3,183 ) (3,803 ) (16,973 ) Total other expenses (3,183 ) (3,529 ) (16,699 ) Net loss (136,802 ) (60,270 ) (451,211 )
Other Comprehensive Income (Loss)
Gain (loss) on foreign currency exchange - 765 - Total Comprehensive Loss $ (136,802 ) $ (59,505 ) $ (451,211 ) Basic and diluted loss per share $ (0.03 ) $
(0.02 )
Basic and diluted weighted average common shares outstanding 4,079,469 3,489,885 See accompanying notes to financial statements 21
-------------------------------------------------------------------------------- ROSEWIND CORPORATION (A Development Stage Company) Statements of Shareholders' Equity (Deficit) Deficit Accumulated Accumulated Additional Other Common During Common Stock Paid-in Comprehensive Stock Accumulated Development Total Shares Amount Capital Loss Subscription Deficit Stage Equity Balance at March 1, 2005 (inception) 100,000 $ 500 $ 100 $ - $ - $ (500 ) $ - $ 100 Common stock issued in exchange for a Sailing vessel at$0.034 per share on March 4, 2005 1,150,000 39,000 - - - - - 39,000 Net loss, period ended August 31, 2005 - - - - - - (18,677 ) (18,677 ) Balance at August 31, 2005 1,250,000 39,500 100 - - (500 ) (18,677 ) 20,423 Common stock issued for services onSeptember 20, 2005 at $0.04 per share 700,000 28,000 - - - - - 28,000 Common stock issued for services onSeptember 20, 2005 to arelated party at $0.04 per share 700,000 28,000 - - - - - 28,000 Various common stock issuances for cash at $0.10 per share 500,000 50,000 - - - - - 50,000 Contributed capital - - 1,965 - - - - 1,965 Net loss, year ended August 31, 2006 - - - - - - (70,441 ) (70,441 ) Balance at August 31, 2006 3,150,000 145,500 2,065 - - (500 ) (89,118 ) 57,947 Contributed capital - - 925 - - - - 925 Office space contributed by an officer - - 1,200 - - - - 1,200 Services contributed by an officer - - 7,271 - - - - 7,271 Foreign currency exchange gain - - - 417 - - - 417 Net loss, year ended August 31, 2007 - - - - - - (48,954 ) (48,954 ) Balance at August 31, 2007 3,150,000 145,500 11,461 417 - (500 ) (138,072 ) 18,806 Common stock issued for cash on November16, 2007 at $0.25 per share 239,000 59,750 - - - - - 59,750 Contributed capital - - 669 - - - - 669 Office space contributed by an officer - - 1,200 - - - - 1,200 Services contributed by an officer - - 2,674 - - - - 2,674 Foreign currency exchange gain - - - 32 - - - 32 Net loss, year ended August 31, 2008 - - - - - - (57,173 ) (57,173 ) Balance at August 31, 2008 3,389,000 205,250 16,004 449 - (500 ) (195,245 ) 25,958 Contributed capital - - 1,757 - - - - 1,757 Office space contributed by an officer - - 1,200 - - - - 1,200 Services contributed by an officer - - 1,510 - - - - 1,510 Foreign currency exchange loss - - - (1,214 ) - - - (1,214 ) Various Common stock issuances for cash at $0.20 per share 80,500 16,100 - - - - - 16,100 Net loss, year ended August 31, 2009 - - - - - - (58,894 ) (58,894 ) Balance at August 31, 2009 3,469,500 221,350 20,471 (765 ) - (500 ) (254,139 ) (13,583 ) Office space contributed by an officer - - 1,200 - - - - 1,200 Services contributed by an officer - - 1,380 - - - - 1,380 Various common stock issuances for cash at $0.20 per share 44,500 8,900 - - - - - 8,900 Common stock issued for cash onJuly 24, 2010 at $0.15 per share 33,334 5,000 - - - - - 5,000 Foreign currency exchange gain - - - 765 - - - 765 Common stock subscribed on June 2, 2010 - - - - 1,000 - - 1,000 Net loss, year ended August 31, 2010 - - - - - (60,270 ) (60,270 ) Balance at August 31, 2010 3,547,334 235,250 23,051 - 1,000 (500 ) (314,409 ) (55,608 ) Office space contributed by an officer - - 1,200 - - - - 1,200 Services contributed by an officer - - 3,050 - - - - 3,050 Various common stock issuances for cash at $0.15 per share 290,003 43,500 - - - - - 43,500 Common stock subscribed on November 30, 2010 6,667 1,000 - - (1,000) - - - Conversion of related party note into common stock at $0.10 per share on December 10, 2011 490,654 49,065 - - - - - 49,065 Common stock issued for services onAugust 3, 2011 to a related party at $0.15 per share 250,000 37,500 - - - - - 37,500 Common stock issued for services on August 4, 2011 at $0.15 per share 150,000 22,500 - - - - - 22,500 Net Loss year ended August 31, 2011 - - - - - - (136,802 ) (136,802 ) Balance at August 31, 2011 4,734,658 $ 388,815 $ 27,301 $ - $ - $ (500 ) $ (451,211 ) $ (35,595 ) See accompanying notes to financial statements 22 --------------------------------------------------------------------------------
ROSEWIND CORPORATION (A Development Stage Company) Statements of Cash Flows March 1, 2005 (Inception) For the Year Ended Through August 31, August 31, 2011 2010 2011 Cash flows from operating activities: Net loss $ (136,802 ) $ (60,270 ) $ (451,211 ) Adjustments to reconcile net loss to net cash used by operating activities: Depreciation expense 6,763 9,185 47,260 Contributed capital to fund expenses 4,250 2,580 27,201 Common stock issued for services 60,000 - 116,000 Changes in operating assets and liabilities: (Increase) decrease in prepaid services (62 ) 85 (234 ) Increase (decrease) in accounts payable and accrued liabilities 1,033 5,045 13,047 Net cash used in operating activities (64,818 ) (43,375 ) (247,937 ) Cash flows from investing activities: Cash paid for fixed assets - (6,576 ) (26,870 ) Net cash used in investing activities - (6,576 ) (26,870 ) Cash flows from financing activities: Common stock issued for cash 43,500 14,900 184,250 Proceeds from related party loans 35,766 22,984 106,450 Payments on related party loans (12,000 ) - (12,000 ) Net cash provided by financing activities 67,266 37,884 278,700 Net change in cash 2,448 (12,067 ) 3,893 Cash, beginning of period 1,545 13,612 100 Cash, end of period $ 3,993 $ 1,545 $ 3,993 Supplemental disclosure of cash flow information: Cash paid during the period for: Income taxes $ - $ - $ - Interest $ 2,003 $ - $ 4,254 NON CASH FINANCING ACTIVITIES: Common stock issued for services $ 60,000 $ - $ 116,000 See accompanying notes to financial statements 23
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ROSEWIND CORPORATION (A Development Stage Company) Notes to the Financial StatementsAugust 31, 2011 and 2010 NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Organization
Rosewind Corporation (the "Company") was initially incorporated onAugust 9, 2002 in theState of Colorado . OnAugust 13, 2005 , the Company issued its sole officer and director 100,000 shares of its no par common stock as payment for$500 in fees and expenses incurred as part of organizing the Company. DuringOctober 2002 , the sole officer and director contributed$100 to the Company in order to open a bank account in the Company's name. Following the cash contribution, the Company remained inactive throughJune 1, 2004 when the corporation was dissolved. InMarch 2005 , the sole officer and director decided to reinstate the Company and develop an offshore sailing school near the Australian Great Barrier Reef. Although the Company was officially reinstated with theState of Colorado onApril 21, 2005 , the accompanying financial statements reportMarch 1, 2005 as the date of inception for accounting purposes, which was the date the Company commenced its operating activities.
b. Accounting Method
The Company's financial statements are prepared using the accrual method of accounting. The Company has elected an
c. Estimates
The preparation of financial statements in conformity with generally accepted accounting principles inthe United States of America 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.
d. Income Taxes
Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. 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. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. 24 --------------------------------------------------------------------------------
ROSEWIND CORPORATION (A Development Stage Company) Notes to the Financial StatementsAugust 31, 2011 and 2010
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
d. Income Taxes (Continued) Net deferred tax assets consist of the following components as ofAugust 31 : 2011 2010 Deferred tax assets: NOL Carryover $ 107,800 $ 90,100 Related Party Accruals 1,700 1,400 Valuation allowance (109,500 ) (91,500 ) Net deferred tax asset $ - $ - The income tax provision differs from the amount of income tax determined by applying the U.S. income tax rate to pretax income from continuing operations for the years endedAugust 31, 2011 and 2010 due to the following: 2011 2010 Book Loss $ (41,041 ) $ (18,081 ) Foreign Currency - 230 Contributed Services 1,275 - Stock Issued for Services 18,000 - Valuation allowance 21,766 17,851 $ - $ - AtAugust 31, 2011 , the Company had net operating loss carryforwards of approximately$359,400 , which expires in 2032, that may be offset against future taxable income as long as the "continuity of ownership" test is met. No tax benefit has been reported in theAugust 31, 2011 financial statements since the potential tax benefit is offset by a valuation allowance of the same amount. Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carryforwards for Federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carryforwards may be limited as to use in future years. 25 --------------------------------------------------------------------------------
ROSEWIND CORPORATION (A Development Stage Company) Notes to the Financial StatementsAugust 31, 2011 and 2010
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
d. Income Taxes (Continued) The Company has analyzed filing positions in all of the federal and state jurisdictions where it is required to file income tax returns, as well as all open tax years in these jurisdictions. The Company has identified its federal tax return and its state tax return inColorado as "major" tax jurisdictions, as defined. No reserves for uncertain tax positions have been recorded. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2008.
e. Loss per Common Share
The Company reports net loss per share using a dual presentation of basic and diluted loss per share. Basic net loss per share excludes the impact of common stock equivalents. Diluted net loss per share utilizes the average market price per share when applying the treasury stock method in determining common stock equivalents. AtAugust 31, 2011 there were no variances between the basic and diluted loss per share as there were no potentially dilutive securities outstanding.
f. Development Stage
The Company is in the development stage in accordance with ASC Topic 915 "Development Stage Entities". As of
g. Property and Equipment
The Company's capital assets consist of one sailing vessel, a 1982/86 Jason 35 Cutter rig, and an inflatable boat which are stated at the lower of cost or market. Depreciation is calculated using the straight-line method over the estimated useful life of the vessel and related improvements, ranging from five to ten years. Expenditures for additions and improvements are capitalized, while repairs and maintenance costs are expensed as incurred. The cost and related accumulated depreciation of any capital assets that are sold or otherwise disposed of are removed from the accounts and any gain or loss is recorded in the year of disposal. Fixed assets and related depreciation for the years endedAugust 31 are as follows: 2011 2010 Sailing vessel $ 65,870 $ 65,870 Accumulated depreciation (47,259 ) (40,496 ) Total fixed assets $ 18,611 $ 25,374
Depreciation expense was
26 --------------------------------------------------------------------------------
ROSEWIND CORPORATION (A Development Stage Company) Notes to the Financial StatementsAugust 31, 2011 and 2010
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
h. Revenue Recognition
Revenue will be recognized when the services are provided and collection is reasonably assured.
i. Foreign Currency Translation
Expenses incurred and paid in foreign currency have been translated to U.S. currency for reporting purposes.
j. Advertising
The Company follows the policy of charging the costs of advertising to expense as incurred. The Company recognized
k. Newly Adopted Accounting Pronouncements
The Company has reviewed all recently issued, but not yet adopted, accounting standards in order to determine their effects, if any, on its consolidated results of operation, financial position or cash flows. Based on that review, the Company believes that none of these pronouncements will have a significant effect on its current or future earnings or operations.
l. Cash and Cash Equivalents
The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.
m. Risks and Uncertainties
The Company has not insured the yacht in the past. EffectiveOctober 14, 2011 , the Company has obtained a liability only policy which provides$100,000 watercraft liability and$1,000 in watercraft medical payments per person. The Company has no insurance on the yacht itself, and the limits on the current policy may leave the Company open to further liabilities. 27 --------------------------------------------------------------------------------
ROSEWIND CORPORATION (A Development Stage Company) Notes to the Financial StatementsAugust 31, 2011 and 2010 NOTE 2 - RELATED PARTY TRANSACTIONS As ofAugust 31, 2011 , the Company has a secured promissory note to the sole officer and director for$52,300 for working capital. The loan carries a 6% interest rate and is due on demand and is secured by the sailing vessel. Accrued interest payable on the loan totaled$5,803 and$2,609 as ofAugust 31, 2011 and 2010, respectively. During the year endedAugust 31, 2011 , the Company converted the 6% interest unsecured promissory note to the sole officer and director into common stock at$0.10 per share. The note was converted into 490,654 shares of common stock. Accrued interest payable on the note totaled$653 and$2,013 as ofAugust 31, 2011 and 2010, respectively. EffectiveJune 8, 2010 , the Company resolved that upon written notice from the sole officer and director, the Company will agree to convert all, or any portion of the principal and accrued interest due and payable on either promissory note, into the Company's common shares at a fixed conversion rate of$0.10 per share. There is no beneficial conversion as$0.10 per share was the closing stock price at the date of the agreement. For the years endedAugust 31, 2011 and 2010 the sole officer of the Company contributed services and rent valued at$4,250 and$2,580 , respectively. This amount has been booked to additional paid in capital. NOTE 3 - COMMON STOCK TRANSACTIONS During the year endedAugust 31, 2011 , the Company issued 290,003 shares of common stock for cash of$43,500 . The Company also issued 400,000 shares of common stock in exchange for services provided to the Company. The shares were valued at$0.15 per share, a value determined by a Consent of Directors, for a total value of$60,000 . Also during the year, the Company converted the unsecured promissory note as discussed in Note 2 above. The note was converted into 490,654 shares of common stock.
Effective
EffectiveJune 18, 2010 The Company's Articles of Incorporation were amended to increase the aggregate number of shares authorized from 20,000,000 to 50,000,000 shares of common stock having no par value per share. 28 --------------------------------------------------------------------------------
ROSEWIND CORPORATION (A Development Stage Company) Notes to the Financial StatementsAugust 31, 2011 and 2010 NOTE 3 - COMMON STOCK TRANSACTIONS (continued) During the year endedAugust 31, 2010 , the Company received$1,000 to be used as subscription to purchase 5,000 shares of common stock at$0.20 per share. The shares were issued during the year endedAugust 31, 2011 .
During the year ended
NOTE 4 - GOING CONCERN The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the accompanying financial statements, the Company is a development stage enterprise with losses since inception and a limited operating history. These factors, among others, may indicate that the Company will be unable to continue as a going concern for a reasonable period of time.
The financial statements do not include any adjustments relating to the recoverability and classification of assets and liabilities that might be necessary should the Company be unable to continue as a going concern. The Company's continuation as a going concern is dependent upon its ability to generate sufficient cash flow to meet its obligations on a timely basis and ultimately to attain profitability. The Company intends to seek additional funding through equity offerings to fund its business plan. There is no assurance that the Company will be successful in raising additional funds.
NOTE 5 - SUBSEQUENT EVENT Subsequent to year end, the Company issued 39,910 shares of common stock for cash of$5,986 . The Company has evaluated all subsequent events from the balance sheet date through the date the financials were issued, and has determined there are no additional events that would require disclosure herein. 29
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DIGI INTERNATIONAL INC – 10-K – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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