ZANN CORP

UNAUDITED INTERIM FINANCIAL STATEMENTS

AUGUST 10, 2012

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ZANN CORP

 

 

 

 

 

 

 

(A DEVELOPMENT STAGE COMPANY)

 

 

 

 

 

BALANCE SHEET

 

 

 

 

 

 

 

AS AT AUGUST 10, 2012

 

 

 

 

 

 

(UNAUDITED)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

Total Current Assets

 

 

 

 

 

 

 $                    -   

 

 

 

 

 

 

 

 

 

TOTAL ASSETS

 

 

 

 

 

 

 $                    -   

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDER EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

Accounts payable

 

 

 

 

 

 

 $             25,000

Note payable

 

 

 

 

 

 

                  1,000

Payable to preferred stockholders

 

 

 

 

 

                     222

 

 

 

 

 

 

 

 

 

Total Liabilities

 

 

 

 

 

 

                26,222

 

 

 

 

 

 

 

 

 

STOCKHOLDER EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock - authorized, 4,000,000,000, par value $0.001

 

 

 

 

   - issued and fully paid - 33,945,359

 

 

 

 

 

                33,945

 

 

 

 

 

 

 

 

 

Additional paid in capital

 

 

 

 

 

 

              (34,167)

 

 

 

 

 

 

 

 

 

Accumulated deficit since quasi reorganization

 

 

 

 

              (26,000)

 

 

 

 

 

 

 

 

 

Total Stockholders' Equity

 

 

 

 

 

              (26,222)

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 $                    -   

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these financial statements.

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ZANN CORP

 

 

 

 

 

 

 

(A DEVELOPMENT STAGE COMPANY)

 

 

 

 

 

INTERIM STATEMENT OF OPERATIONS

 

 

 

 

 

FOR THE PERIOD FROM JULY 9, 2012 TO AUGUST 10, 2012

 

 

 

(UNAUDITED)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

REVENUE

 

 

 

 

 

 

 

 $                  -   

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

General and administrative

 

 

 

 

 

             26,000

 

 

 

 

 

 

 

 

 

Total Operating Expenses

 

 

 

 

 

             26,000

 

 

 

 

 

 

 

 

 

NET LOSS

 

 

 

 

 

 

 $         (26,000)

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING

 

 

      33,945,359

 

 

 

 

 

 

 

 

 

NET LOSS PER SHARE

 

 

 

 

 

 $           (0.001)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these financial statements.

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ZANN CORP

 

 

 

 

 

 

 

(A DEVELOPMENT STAGE COMPANY)

 

 

 

 

 

 

INTERIM STATEMENT OF STOCKHOLDER EQUITY

 

 

 

 

 

FOR THE PERIOD FROM JULY 9, 2012 TO AUGUST 10, 2012

 

 

 

 

(UNAUDITED)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COMMON STOCK

PREFERRED STOCK

PAID IN

 

 

 

 

SHARES

AMOUNT

SHARES

AMOUNT

CAPITAL

DEFICIT

TOTALS

 

 

 

 

 

 

 

 

 

Balance - July 9, 2012

 33,945,359

 $      33,945

   22,219,711

 $     22,220

 $ 37,606,709

 $ (39,451,140)

 $ (1,788,266)

 

 

 

 

 

 

 

 

 

Adjustment resulting from

 

 

 

 

 

 

 

  quasi-reorganization

                 -   

                 -   

                  -   

               -   

  (39,451,140)

     39,451,140

                  -   

 

 

 

 

 

 

 

 

 

Reduction in liabilities resulting

 

 

 

 

 

 

 

  from the quasi-reorganization

                 -   

                 -   

                  -   

               -   

      1,788,266

                    -   

     1,788,266

 

 

 

 

 

 

 

 

 

Redemption of preferred stock

                 -   

                 -   

  (22,219,711)

      (22,220)

           21,998

                    -   

              (222)

 

 

 

 

 

 

 

 

 

Net loss for the period

                 -   

                 -   

                  -   

               -   

                   -   

           (26,000)

         (26,000)

 

 

 

 

 

 

 

 

 

Balance - August 10, 2012

33,945,359

 $      33,945

                  -   

 $            -   

 $      (34,167)

 $        (26,000)

 $      (26,222)

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these financial statements.

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ZANN CORP

 

 

 

 

 

 

 

(A DEVELOPMENT STAGE COMPANY)

 

 

 

 

 

INTERIM STATEMENT OF CASH FLOWS

 

 

 

 

 

FOR THE PERIOD FROM JULY 9, 2012 TO AUGUST 10, 2012

 

 

 

(UNAUDITED)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH FLOW FROM OPERATING ACTIVITIES

 

 

 

 

  Net loss

 

 

 

 

 

 

 

 $           (26,000)

 

 

 

 

 

 

 

 

 

  Changes in assets and liabilities

 

 

 

 

 

 

     - Accounts payable

 

 

 

 

 

 

                25,000

 

 

 

 

 

 

 

 

 

NET CASH USED IN OPERATING ACTIVITIES

 

 

 

                (1,000)

 

 

 

 

 

 

 

 

 

CASH FLOW FROM FINANCING ACTIVITIES

 

 

 

 

  Note payable

 

 

 

 

 

 

                  1,000

 

 

 

 

 

 

 

 

 

NET CASH PROVIDED BY FINANCING ACTIVITIES

 

 

 

                  1,000

 

 

 

 

 

 

 

 

 

NET CHANGE IN CASH

 

 

 

 

 

                       -   

 

 

 

 

 

 

 

 

 

CASH AND EQUIVALENTS - BEGINNING OF PERIOD

 

 

 

                       -   

 

 

 

 

 

 

 

 

 

CASH AND EQUIVALENTS - END OF PERIOD

 

 

 

 $                    -   

 

 

 

 

 

 

 

 

 

SUPPLEMENTARY INFORMATION

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Reduction in liabilities and equity as result of quasi-reorganization

 

 

 

  and resulting adjustments to paid in capital

 

 

 

 $             34,167

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these financial statements.

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ZANN CORPORATION

NOTES TO INTERIM FINANCIAL STATEMENTS

August 10, 2012

(UNAUDITED)

Note 1 - Organization and Summary of Significant Accounting Policies:

 

The Company

 

Organizational Background: The Company was incorporated in Florida on March 4,
1999 as Investra Enterprises Inc. On March 6, 2000, we completed a Share
Purchase Agreement in which Pathobiotek Diagnostics, Inc. a Texas Corporation,
acquired all of our issued and outstanding shares for the purpose of completing
a merger of Pathobiotek Diagnostics, Inc. and Investra Enterprises. Pathobiotek
Diagnostics, Inc., a Texas corporation, was the surviving entity. On October 16,
2001, we completed the Plan and Agreement of Reorganization by and between
Pathobiotek Diagnostics Inc., ATNG Acquisition, Inc., a Texas corporation, and
ATNG, Inc., a Nevada corporation under which Pathobiotek Diagnostics Inc. issued
27,836,186 shares of its common stock as consideration for its wholly owned
subsidiary, ATNG Acquisition, Inc. to acquire 100 percent of the issued and
outstanding stock of ATNG, Inc., a Nevada corporation.

Following the October 16, 2001 reorganization, ATNG Acquisition, Inc. and ATNG,
Inc. merged. On October 17, 2001, we changed our name to ATNG, Inc. On September
6, 2003 we changed our domicile from Texas to Nevada. In November 2004, the
shareholders and directors of the Company approved a change in the name of the
Company from ATNG, Inc. to Zann Corp., amended its Articles of Incorporation,
increasing the number of authorized shares to 4,000,000,000.

 Gensee County Court, Michigan Proceedings: On July 9, 2012, the Circuit Court
in Genesse County Michigan granted the application of  Peter Klamka to become
the receiver of the corporation with the power to conduct any restructuring as
necessary. In the order,  Peter Klamka shall has authority to exercise the
powers of the Defendant, Zann Corp. that are necessary to manage the affairs of
the Defendant, Zann Corp., and which are in the best interests of the
corporation, its shareholders, and its creditors, including any necessary
restructuring or resource reallocation deemed to be in the best interest of the
corporation.

 

Basis of Presentation: Effective  July 31, 2012, the Company approved and
authorized a plan of quasi reorganization and restatement of accounts to
eliminate the accumulated deficit and related capital accounts on the Company’s
balance sheet. The Company concluded its period of reorganization after reaching
a settlement agreement with all of its significant creditors. The Company, as
approved by its Board of Directors, elected to state its , balance sheet as a
“quasi reorganization”, pursuant to ARB 43. These rules require the revaluation
of all assets and liabilities to their current values through a current charge
to earnings and the elimination of any deficit in retained earnings by charging
paid-in capital. From August 1, 2012 forward, the

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Company has recorded net income (and net losses) to retained earnings and (and
net losses) to retained earnings and (accumulated deficit).

 

The accounts of any former subsidiaries were not included and have not been
carried forward.

The Company has not earned any revenues from limited principal operations.
 Accordingly, the Company’s activities have been accounted for as those of a
“Development Stage Enterprise” as set forth in Financial Accounting Standards
Board Statement No. 7 (“SFAS 7”).  Among the disclosures required by SFAS 7 are
that the Company’s financial statements be identified as those of a development
stage company, and that the statements of operations, stockholders’ equity
(deficit) and cash flows disclose activity since the date of the Company’s
inception.

   

Use of Estimates The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statement and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from the estimates.

 

Cash and Cash Equivalents: For financial statement presentation purposes, the
Company considers those short-term, highly liquid investments with original
maturities of three months or less to be cash or cash equivalents.

 

Stock Based Compensation: Stock-based awards are accounted for using the fair
value method in accordance with ASC 718, Share-Based Payments. Our primary type
of share-based compensation consists of stock options. We use the Black-Scholes
option pricing model in valuing options. The inputs for the valuation analysis
of the options include the market value of the Company’s common stock, the
estimated volatility of the Company’s common stock, the exercise price of the
warrants and the risk free interest rate.

 

Accounting For Obligations And Instruments Potentially To Be Settled In The
Company’s Own Stock: We account for obligations and instruments potentially to
be settled in the Company’s stock in accordance with FASB ASC 815, Accounting
for Derivative Financial Instruments. This issue addresses the initial balance
sheet classification and measurement of contracts that are indexed to, and
potentially settled in, the Company’s own stock.

 

Fair Value of Financial Instruments: FASB ASC 825, “Financial Instruments,”
requires entities to disclose the fair value of financial instruments, both
assets and liabilities recognized and not recognized on the balance sheet, for
which it is practicable to estimate fair value. FASB ASC 825 defines fair value
of a financial instrument as the amount at which the instrument could be
exchanged in a current transaction between willing parties. At August 1, 2012,
the carrying value of certain financial instruments (cash and cash equivalents,
accounts payable and accrued expenses.) approximates fair value due to the
short-term nature of the instruments or interest rates, which are comparable
with current rates.

 

Earnings per Common Share: We compute net income (loss) per share in accordance
with ASC 260, Earning per Share. 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 income

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(loss) available to common shareholders (numerator) by the weighted average
number of shares outstanding (denominator) during the period. Diluted EPS gives
effect to all dilutive potential common shares outstanding during the period
using the treasury stock method and convertible preferred stock using the
if-converted method. In computing Diluted EPS, the average stock price for the
period is used in determining the number of shares assumed to be purchased from
the exercise of stock options or warrants. Diluted EPS excludes all dilutive
potential shares if their effect is anti dilutive.

 

All per share disclosures retroactively reflect shares outstanding after the
reverse split.

 

Income Taxes: We have adopted ASC 740, Accounting for Income Taxes. Pursuant to
ASC 740, we are required to compute tax asset benefits for net operating losses
carried forward. The potential benefits of net operating losses have not been
recognized in these financial statements because the Company cannot be assured
it is more likely than not it will utilize the net operating losses carried
forward in future years.

 

We must make certain estimates and judgments in determining income tax expense
for financial statement purposes. These estimates and judgments occur in the
calculation of certain tax assets and liabilities, which arise from differences
in the timing of recognition of revenue and expense for tax and financial
statement purposes.

 

Deferred tax assets and liabilities are determined based on the differences
between financial reporting and the tax basis of assets and liabilities using
the tax rates and laws in effect when the differences are expected to reverse.
ASC 740 provides for the recognition of deferred tax assets if realization of
such assets is more likely than not to occur. Realization of our net deferred
tax assets is dependent upon our generating sufficient taxable income in future
years in appropriate tax jurisdictions to realize benefit from the reversal of
temporary differences and from net operating loss, or NOL, carryforwards. We
have determined it more likely than not that these timing differences will not
materialize and have provided a valuation allowance against substantially all of
our net deferred tax asset. Management will continue to evaluate the
realizability of the deferred tax asset and its related valuation allowance. If
our assessment of the deferred tax assets or the corresponding valuation
allowance were to change, we would record the related adjustment to income
during the period in which we make the determination. Our tax rate may also vary
based on our results and the mix of income or loss in domestic and foreign tax
jurisdictions in which we operate.

 

In addition, the calculation of our tax liabilities involves dealing with
uncertainties in the application of complex tax regulations. We recognize
liabilities for anticipated tax audit issues in the U.S. and other tax
jurisdictions based on our estimate of whether, and to the extent to which,
additional taxes will be due. If we ultimately determine that payment of these
amounts is unnecessary, we will reverse the liability and recognize a tax
benefit during the period in which we determine that the liability is no longer
necessary. We will record an additional charge in our provision for taxes in the
period in which we determine that the recorded tax liability is less than we
expect the ultimate assessment to be.

 

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ASC 740 which requires recognition of estimated income taxes payable or
refundable on income tax returns for the current year and for the estimated
future tax effect attributable to temporary differences and carry-forwards.
Measurement of deferred income tax is based on enacted tax laws including tax
rates, with the measurement of deferred income tax assets being reduced by
available tax benefits not expected to be realized.

 

Note 2 - Recent Accounting Pronouncements

 

In May 2011, the FASB issued ASC update No. 2011-04, Fair Value Measurement
(Topic 820), Amendments to Achieve Common Fair Value Measurement and Disclosure
Requirements in U.S. GAAP and IFRSs. The amendments in this update result in
common fair value measurement and disclosure requirements in US generally
accepted accounting principles ("U.S. GAAP") and International Financial
Reporting Standards ("IFRS"). Consequently, the amendments converge the fair
value measurement guidance in U.S. GAAP and IFRS. Some of the amendments clarify
the application of existing fair value measurement requirements, while other
amendments change a particular principle in ASC 820. The amendments in this
update that change a particular principle or requirement for measuring fair
value or disclosing information about fair value measurements include the
following:

 

1)

measuring the fair value of financial instruments that are managed within a
portfolio,

 

2)

application of premiums and discounts in a fair value measurement, and

 

3)

additional disclosures about fair value measurements. The amendments in this
update are to be applied prospectively and are effective during interim and
annual periods beginning after December 15, 2011.

 

In June 2011, the FASB issued ASC update No. 2011-05, Comprehensive Income
(Topic 220), Presentation of Comprehensive Income. The FASB decided to eliminate
the option to present components of other comprehensive income as part of the
statement of changes in stockholders’ equity, among other amendments in this
update. The amendments require that all non-owner changes in stockholder’s
equity be presented in a single continuous statement of comprehensive income or
in two separate but consecutive statements. In both choices, the Company is
required to present each component of net income along with total net income,
each component of other comprehensive income along with a total for other
comprehensive income, and a total amount for comprehensive income. The statement
of other comprehensive income should immediately follow the statement of net
income and include the components of other comprehensive income and total for
other comprehensive income, along with a total for comprehensive income.

 

In September 2011, the FASB issued ASU 2011-08, “Intangibles – Goodwill and
Other (Topic 350), Testing Goodwill for Impairment.” which gives entities
testing goodwill for impairment the option of performing a qualitative
assessment before calculating the fair value of a reporting unit for the
goodwill impairment test. The amendment is effective for fiscal years, and
interim periods within those years, beginning after December 15, 2011. The
Company does not expect the adoption of this accounting guidance to have a
material impact on its financial statements and related disclosures.

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The entity is also required to present on the face of the financial statements
reclassification adjustments for items that are reclassified from other
comprehensive income to net income in the statement(s) where the components of
net income and the components of comprehensive income are presented. The
amendments in this update should be applied retrospectively, and are effective
for fiscal years, and interim periods within those years, beginning after
December 15, 2011.

 

In December 2011, the Financial Accounting Standards Board ("FASB") issued
authoritative guidance related to balance sheet offsetting. The new guidance
requires disclosures about assets and liabilities that are offset or have the
potential to be offset. These disclosures are intended to address differences in
the asset and liability offsetting requirements under U.S. GAAP and
International Financial Reporting Standards. This new guidance will be effective
for us for interim and annual reporting periods beginning January 1, 2013, with
retrospective application required. The adoption of this guidance is not
expected to have a material impact on the Company’s results of operations or
financial position.

Other accounting standards that have been issued or proposed by the FASB or
other standards-setting bodies that do not require adoption until a future date
are not expected to have a material impact on the Company’s financial statements
upon adoption.

Note 3 - Stockholders; Equity

Common Stock

 

We are currently authorized to issue up to 4,000,000,000 shares of $ 0.001 par
value common stock. All issued shares of common stock are entitled to vote on a
1 share/1 vote basis. There are currently 33,945,359 shares of common stock
outstanding.

 

Preferred Stock

 

We are currently authorized to issue up to 10,000,000 shares of $ 0.001
preferred stock. Effective July 9, 2012  the board of directors approved the
redemption of all previously issued preferred shares and approved the
cancellation and extinguishment of all common and preferred share conversion
rights of any kind, including without limitation, warrants, options, convertible
debt instruments and convertible preferred stock of every series and
accompanying conversion rights of any kind. As a result, the Company has
redeemed all of the outstanding preferred shares and will pay out funds as the
preferred shares are collected from the preferred stockholders and as such is
shown as liability on the balance sheet.

 

Stock Options

 

There are no employee or non-employee option grants.

 

 Note 4 - Significant Events

 

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On July 9, 2012 in its Court Order, the Circuit Court for Genesse County,
Michigan (Case #12- 97709-CR) granted the application of Peter Klamka to become
the receiver for the corporation.

 

In connection with the Order, Peter Klamka dismissed the previous management who
could not be located and became the acting sole director and sole officer.