UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended October 31, 2013
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission File No. 333-185891
CERULEAN GROUP, INC.
(Exact name of registrant as specified in its charter)
Nevada
(State or Other Jurisdiction of Incorporation or Organization)
99-0376434 IRS Employer Identification Number | 7200 Primary Standard Industrial Classification Code Number |
Krizikova 22 Prague 8, 18600, Czech Republic Tel. (702) 723-6890 Email: ceruleangroup@gmail.com
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(Address and telephone number of registrant's executive office)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
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Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [X]
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X]
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for shorter period that the registrant as required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Yes [ ] No [X]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act) Yes [X] No [ ]
As of January 29, 2014, the registrant had 6,190,000 shares of common stock issued and outstanding. No market value has been computed based upon the fact that no active trading market has been established as of January 29, 2014.
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TABLE OF CONTENTS
Part 1 |
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Item 1 | Description of Business | 4 |
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Item 1A | Risk Factors | 6 |
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Item 1B | Unresolved Staff Comments | 6 |
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Item 2 | Properties | 6 |
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Item 3 | Legal Proceedings | 6 |
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Item 4 | Submission of Matters to a Vote of Security Holders | 6 |
Part II |
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Item 5 | Market for Common Equity and Related Stockholder Matters | 6 |
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Item 6 | Selected Financial Data | 7 |
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Item 7 | Management's Discussion and Analysis or Results of Operations | 7 |
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Item 7A | Quantitative and Qualitative Disclosures about Market Risk | 9 |
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Item 8 | Financial Statements and Supplementary Data | 9 |
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Item 9 | Changes In and Disagreements with Accountants on Accounting and Financial Disclosure | 18 |
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Item 9A (T) | Controls and Procedures | 18 |
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Item 9B | Other Information | 19 |
PART III |
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Item 10 | Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act | 19 |
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Item 11 | Executive Compensation | 21 |
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Item 12 | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 22 |
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Item 13 | Certain Relationships, Related Transactions and Director Independence | 22 |
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Item 14 | Principal Accountant Fees and Services | 23 |
PART IV |
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Item 15 | Exhibits and Financial Statement Schedules | 23 |
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
FORWARD-LOOKING STATEMENTS
This annual report contains forward-looking statements. These statements relate to future events or our future financial performance. These statements often can be identified by the use of terms such as "may," "will," "expect," "believe," "anticipate," "estimate," "approximate" or "continue," or the negative thereof. We intend that such forward-looking statements be subject to the safe harbors for such statements. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management's best judgment as to what may occur in the future. However, forward-looking statements are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.
As used in this annual report, the terms "we", "us", "our", "the Company", mean CERULEAN GROUP, INC., unless otherwise indicated.
All dollar amounts refer to US dollars unless otherwise indicated.
GENERAL
Cerulean Group, Inc. was incorporated in the State of Nevada on February 27, 2012 and established a fiscal year end of October 31. We do not have revenues, have minimal assets and have incurred losses since inception. We are a development-stage company formed to develop and operate a website for self-travelers and backpackers. We have recently started our operation. As of today, we have developed our business plan, and executed an Independent contractor agreement, dated December 20, 2012.
Cerulean Group, Inc. hopes to position itself to take full advantage of the fast growing Internet and mobile application industry. We plan to develop and operate a website for self-travelers and backpackers. Our concept would allow anyone who has a mobile devise or computer and access to the Internet to build a trip. The website will be for people who prefer independent traveling and unorganized tourism. We believe they will share information, experience and impression about their trips on our website. Regular guidebooks do not have such unique information, facts and details as other people experience. We plan that our website will allow to build a detailed travel plan and to book everything needed for the entire route: a flight or a train, hotel, concert tickets, restaurant reservations, and so on.
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Description of property
We do not have an ownership or leasehold interest in any property. We have no plans to hold inventory of cars in the United States or in Russia, and we have no plans to obtain the space necessary to hold such inventory.
Insurance
We do not maintain any insurance and do not intend to maintain insurance in the future. Because we do not have any insurance, if we are made a party of a products liability action, we may not have sufficient funds to defend the litigation. If that occurs a judgment could be rendered against us that could cause us to cease operations.
Employees. Identification of Certain Significant Employees
We are a development stage company and currently have no employees, other than our sole officer and director Ms. Olesya Didenko. We intend to hire additional employees on an as needed basis.
Research and Development Expenditures
We have not incurred any other research or development expenditures since our incorporation.
Government Regulation
We will be required to comply with all regulations, rules and directives of governmental authorities and agencies applicable to export and import of used car and operation of any facility in any jurisdiction which we would conduct activities. We do not believe that regulation will have a material impact on the way we conduct our business. We do not need to receive any government approvals necessary to conduct our business, however we will have to comply with all applicable export and import regulations.
Subsidiaries
We do not have any subsidiaries.
Patents and Trademarks
We do not own, either legally or beneficially, any patents or trademarks.
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ITEM 1A. RISK FACTORS
Not applicable.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
We do not own any property.
ITEM 3. LEGAL PROCEEDINGS
We are not currently involved in any legal proceedings and we are not aware of any pending or potential legal actions.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No report required.
PART II
ITEM 5. MARKET FOR EQUITY SECURITIES AND OTHER SHAREHOLDER MATTERS
MARKET INFORMATION
Our shares of common stock are quoted for trading on the OTC Bulletin Board under the symbol “CEUL”. As of the date of this Annual report we had 27 shareholders of record.
DIVIDENDS
We have never paid or declared any dividends on our common stock and do not anticipate paying cash dividends in the foreseeable future.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
We currently do not have any equity compensation plans.
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ITEM 6. SELECTED FINANCIAL DATA
Not Applicable.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF OPERATIONS
The following discussion should be read in conjunction with our financial statements, including the notes thereto, appearing elsewhere in this annual report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Factors that could cause or contribute to such differences include, but are not limited to those discussed below and elsewhere in this Annual Report, particularly in the section entitled "Risk Factors". Our audited financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.
RESULTS OF OPERATIONS
We have incurred recurring losses to date. Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation. As of October 31, 2013, we have am accumulated deficit of $19,689.
We expect we will require additional capital to meet our long term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities.
FISCAL YEAR ENDED OCTOBER 31, 2013 COMPARED TO FISCAL YEAR ENDED OCTOBER 31, 2012.
Our net loss for the fiscal year ended October 31, 2013 was $19,406 compared to a net loss of $283 during the fiscal year ended October 31, 2012. During fiscal year ended October 31, 2013 and 2012, we haven’t generated any revenue.
During the fiscal year ended October 31, 2013, we incurred expenses of $19,406 compared to $283 incurred during fiscal year ended October 31, 2012. These expenses incurred during the fiscal year ended October 31, 2013 consisted of: bank charges and interest of $694 (2012: $116); transfer agent fees of $3,948 (2012: $0); professional fees of $12,570 (2012: $0) ;) and miscellaneous charges of $2,194 (2012: $167)
The weighted average number of shares outstanding was 5,450,247 for the fiscal years ended October 31, 2013 compared to 60,484 for the fiscal years ended October 31, 2012.
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LIQUIDITY AND CAPITAL RESOURCES
FISCAL YEAR ENDED OCTOBER 31, 2013
As of October 31, 2013, our current assets were $23,728 and our total liabilities were $14,617. As of October 31, 2013, current assets were comprised of $17,902 in cash and $5,826 in prepaid expenses. Total liabilities were comprised of $2,000 in accounts payables and accrued liabilities and of $12,617 in loans from shareholders.
As of October 31, 2013, our total assets were $23,728 comprised entirely of current assets. As of October 31, 2013 and 2012, stockholders’ equity is $9,111 and $4,717, respectively.
Cash Flows from Operating Activities
We have not generated positive cash flows from operating activities. For the fiscal year ended October 31, 2013, net cash flows used in operating activities was ($23,232) consisting of a net loss of ($19,406), accounts payables and accrued liabilities of $2,000 and prepaid expenses of ($5,826). For the fiscal year ended October 31, 2012 net cash flows used in operating activities was ($283) consisting of a net loss of ($283) . Net cash flows used in operating activities was ($23,515) for the period from inception (February 27, 2012) to October 31, 2013.
Cash Flows from Financing Activities
We have financed our operations primarily from either advancements or the issuance of equity and debt instruments. For the fiscal year ended October 31, 2013, net cash from financing activities was $36,050, consisting of $12,250 in advances from a director and $23,800 in proceeds received from issuances of common stock. For the fiscal year ended October 31, 2012, net cash from financing activities was $5,367, consisting of $367 in advances from a director and $5,000 proceeds received from issuances of common stock. For the period from inception (February 27, 2012 ) to October 31, 2013, net cash provided by financing activities was $41,417 consisting of $28,800 proceeds received from issuances of common stock and $12,617 in advances from a director.
PLAN OF OPERATION AND FUNDING
We expect that working capital requirements will continue to be funded through a combination of our existing funds and further issuances of securities. Our working capital requirements are expected to increase in line with the growth of our business.
Existing working capital, further advances and debt instruments, and anticipated cash flow are expected to be adequate to fund our operations over the next six months. We have no lines of credit or other bank financing arrangements. Generally, we have financed operations to date through the proceeds of the private placement of equity and debt instruments. In connection with our business plan, management anticipates additional increases in operating expenses and capital expenditures relating to: (i) acquisition of inventory; (ii) developmental expenses associated with a start-up business; and (iii) marketing expenses. We intend to finance these expenses with further issuances of securities, and debt issuances. Thereafter, we expect we will need to raise additional capital and generate revenues to meet long-term operating requirements. Additional issuances of equity or convertible debt securities will result in dilution to our current shareholders. Further, such securities might have rights, preferences or privileges senior to our common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to take advantage of prospective new business endeavors or opportunities, which could significantly and materially restrict our business operations.
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MATERIAL COMMITMENTS
As of the date of this Annual Report, we do not have any material commitments.
PURCHASE OF SIGNIFICANT EQUIPMENT
We do not intend to purchase any significant equipment during the next twelve months.
OFF-BALANCE SHEET ARRANGEMENTS
As of the date of this Annual Report, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
GOING CONCERN
The independent auditors' report accompanying our October 31, 2013 and October 31, 2012 financial statements contains an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. The financial statements have been prepared "assuming that we will continue as a going concern," which contemplates that we will realize our assets and satisfy our liabilities and commitments in the ordinary course of business.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm | F-1 |
Balance Sheets | F-2 |
Statements of Operations | F-3 |
Statement of Stockholder's Equity | F-4 |
Statements of Cash Flows | F-5 |
Notes to Financial Statements | F-6 |
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![[f10k_ceruleanrevised002.gif]](f10k_ceruleanrevised002.gif)
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders
Cerulean Group, Inc.
(A Development Stage Company)
We have audited the accompanying balance sheets of Cerulean Group, Inc. (a development stage company) as of October 31, 2013 and 2012 and the related statements of operations, stockholders’ equity and cash flows for each of the years in the two-years period then ended and the period from inception through to October 31, 2013. 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 the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits 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 provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Cerulean Group, Inc. (a development stage company) as of October 31, 2013 and 2012, and the results of its operations and its cash flows for each of the years in the two-years period then ended and the period from inception through to October 31, 2013 in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has incurred a loss since inception, had a net accumulated deficit and may be unable to raise further equity. These factors raise substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Anton & Chia, LLP
Newport Beach, California
January 29, 2014
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CERULEAN GROUP, INC. (A DEVELOPMENT STAGE COMPANY) BALANCE SHEETS | |||
| October 31, 2013 | October 31, 2012 | |
ASSETS |
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Current Assets |
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| Cash | $ 17,902 | $ 5,084 |
| Prepaid expenses | 5,826 | - |
Total assets | $ 23,728 | $ 5,084 | |
LIABILITIES AND STOCKHOLDER’S EQUITY | |||
Current Liabilities | |||
| Accounts payable | $ 2,000 | $ - |
| Loan from shareholder | 12,617 | 367 |
Total liabilities | 14,617 | 367 | |
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Stockholder’s Equity | |||
| Common stock, $0.001 par value, 75,000,000 shares authorized; |
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| 6,190,000 and 5,000,000 shares issued and outstanding as at October 31, 2013 and 2012, respectively | 6,190 | 5,000 |
| Additional paid-in-capital | 22,610 | - |
| Deficit accumulated | (19,689) | (283) |
Total stockholder’s equity | 9,111 | 4,717 | |
Total liabilities and stockholder’s equity | $ 23,728 | $ 5,084 | |
The accompanying notes are an integral part of these financial statements.
F-2
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CERULEAN GROUP, INC. (A DEVELOPMENT STAGE COMPANY) STATEMENTS OF OPERATIONS | |||||
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| Year ended October 31, 2013 |
| Year ended October 31, 2012 | For the period from inception (February 27, 2012) to October 31, 2013 |
Revenue |
| $ - |
| $ - | $ - |
Operating expenses |
| 19,406 |
| 283 | 19,689 |
Loss before income taxes |
| (19,406) |
| (283) | (19,689) |
Net loss |
| $ (19,406) |
| $ (283) | $ (19,689) |
Net Loss per share – Basic and Diluted |
| (0.00) |
| (0.00) |
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Weighted Average Shares outstanding-Basic and Diluted |
| 5,450,247 |
| 60,484 |
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The accompanying notes are an integral part of these financial statements.
F-3
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CERULEAN GROUP, INC. (A DEVELOPMENT STAGE COMPANY) STATEMENT OF CHANGES IN STOCKHOLDER’S EQUITY | |||||
| Common Shares | Amount | Additional Paid-in- Capital | Deficit accumulated during development stage | Total |
Balance at inception | - | $ - | $ - | $ - | $ - |
Common shares issued for cash at $0.001 | 5,000,000 | 5,000 | - | - | 5,000 |
Net loss |
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| (283) | (283) |
Balance as of October 31, 2012 | 5,000,000 | 5,000 | - | (283) | 4,717 |
Common shares issued for cash at $0.02 | 1,190,000 | 1,190 | 22,610 | - | 23,800 |
Net Loss |
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| (19,406) | (19,406) |
Balance as of October 31, 2013 | 6,190,000 | $ 6,190 | $ 22,610 | $ (19,689) | $ 9,111 |
The accompanying notes are an integral part of these financial statements.
F-4
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CERULEAN GROUP, INC. (A DEVELOPMENT STAGE COMPANY) STATEMENTS OF CASH FLOWS | ||||
| Year ended October 31, 2013 | Year Ended October 31, 2012 | For the period from inception (February 27, 2012) to October 31, 2013 | |
Operating Activities: |
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| Net loss | $ (19,406) | $ (283) | $ (19,689) |
| Adjustments to reconcile net loss to net cash flows used in operating activities Accounts payable | 2,000 | - | 2,000 |
| Prepaid expenses | (5,826) | - | (5,826) |
| Net cash used in operating activities | (23,232) | (283) | (23,515) |
Financing Activities: |
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| Proceeds from issuance of common stock | 23,800 | 5,000 | 28,800 |
| Proceeds from loan from shareholder | 12,250 | 367 | 12,617 |
| Net cash provided by financing activities | 36,050 | 5,367 | 41,417 |
Net increase in cash | 12,818 | 5,084 | 17,902 | |
Cash at beginning of the period | 5,084 | - | - | |
Cash at end of the period | $ 17,902 | $ 5,084 | $ 17,902 | |
| Supplemental cash flow information: |
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| Cash paid for: |
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| Interest | $ - | $ - | $ - |
| Taxes | $ - | $ - | $ - |
The accompanying notes are an integral part of these financial statements.
F-5
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CERULEAN GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
October 31, 2013
NOTE 1 - ORGANIZATION AND BUSINESS OPERATIONS
Organization and Description of Business
CERULEAN GROUP, INC. (the “Company”) was incorporated under the laws of the State of Nevada on February 27, 2012 and intends to commence operations in website development. The Company is in the development stage as defined under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 915-205 "Development-Stage Entities.” Since inception through October 31, 2013 the Company has not generated any revenue and has accumulated losses of $19,689.
NOTE 2 – GOING CONCERN
The accompanying financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company has incurred a loss since inception resulting in an accumulated deficit of $19,689 as of October 31, 2013 and further losses are anticipated in the development of its business. Accordingly, there is substantial doubt about the Company’s ability to continue as a going concern.
The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management intends to finance operating costs over the next twelve months with existing cash on hand and loans from directors and/or private placement of common stock.
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) as promulgated in the United States of America.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.
F-6
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Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents. As of October 31, 2013 and 2012, the Company did not have cash equivalents.
The Company's bank accounts are deposited in insured institutions. The funds are insured up to $250,000. At October 31, 2013 the Company's bank deposits did not exceed the insured amounts.
Basic and Diluted Loss per Share
The Company computes loss per share in accordance with “ASC-260”, “Earnings per Share” which requires presentation of both basic and diluted loss per share on the face of the statement of operations. Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted loss per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive.
Income Taxes
The Company follows the liability method of accounting for income taxes. Under this method, deferred income tax assets and liabilities are recognized for the estimated tax consequences attributable to differences between the financial statement carrying values and their respective income tax basis (temporary differences). The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
Recent Accounting Pronouncements
In April 2013, the FASB issued ASU No. 2013-07, “Presentation of Financial Statements” (Topic 205): Liquidation Basis of Accounting. The objective of ASU No. 2013-07 is to clarify when an entity should apply the liquidation basis of accounting and to provide principles for the measurement of assets and liabilities under the liquidation basis of accounting, as well as any required disclosures. The amendments in this standard are effective prospectively for entities that determine liquidation is imminent during annual reporting periods beginning after December 15, 2013, and interim reporting periods therein. We are evaluating the effect, if any, adoption of ASU No. 2013-07 will have on our financial statements.
Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants, and the United States Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future financial statements.
F-7
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Fair Value of Financial Instruments
FASB ASC 820 "Fair Value Measurements and Disclosures" establishes a three-tier fair value hierarchy, which prioritizes the inputs in measuring fair value. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. The following summarizes the three levels of inputs required by the standard that the Company uses to measure fair value:
Level 1: defined as observable inputs such as quoted prices in active markets;
Level 2: defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and
Level 3: defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.
The carrying amounts of financial assets and liabilities, such as cash and accounts payable approximate their fair values because of the short maturity of these instruments.
Management believes it is not practical to estimate the fair value of loan from shareholder because the transactions cannot be assumed to have been consummated at arm’s length, the terms are not deemed to be market terms, there are no quoted values available for these instruments, and an independent valuation would not be practical due to the lack of data regarding similar instruments, if any, and the associated potential costs.
NOTE 4 – COMMON STOCK
The Company has 75,000,000 common shares authorized with a par value of $0.001 per share. On October 29, 2012, the Company issued 5,000,000 shares of its common stock at $0.001 per share for total proceeds of $5,000. In June and July 2013, the Company issued 1,190,000 shares of its common stock at $0.02 per share for total proceeds of $23,800.
As of October 31, 2013 and 2012, the Company had 6,190,000 and 5,000,000 shares of common stock issued and outstanding, respectively.
NOTE 5 – INCOME TAXES
As of October 31, 2013 the Company had net operating loss carry forwards of $19,689 that may be available to reduce future years’ taxable income through 2033. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-forwards.
As a result of the implementation of certain provisions of ASC 740, the Company performed an analysis of its previous tax filings and determined that there were no positions taken that it considered to be a material uncertainty. Therefore, there was no provision for uncertain tax positions for the periods ended October 31, 2013 and 2012. Future changes in uncertain tax positions are not expected to have an impact on the effective tax rate due to the existence of the valuation allowance.
NOTE 6 – RELATED PARTY TRANSACTIONS
Since inception through October 31, 2013, the Director loaned the Company $12,617. As of October 31, 2013 and 2012, the total loan amount was $12,617 and $367, respectively. The loan is non-interest bearing, due upon demand and unsecured.
NOTE 7 – COMMITMENTS
On December 20, 2012, we executed an agreement with an independent contractor, Alexey Ivanov, an unrelated third party. Ivanov will provide services in website development. We are obligated to pay a $2,000 retainer to commence services. Total costs are estimated to be $4,000.
As of October 31, 2013, the Company still owes Alexey Ivanov $2,000 based on the contract.
F-8
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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A(T). CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
An evaluation was conducted under the supervision and with the participation of our management, including Ms. Olesya Didenko , our Chief Executive Officer and our Chief Financial Officer of the effectiveness of the design and operation of our disclosure controls and procedures as of October 31, 2013. Based on that evaluation, Ms. Didenko concluded that our disclosure controls and procedures were effective as of such date to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. Such officer also confirmed that there was no change in our internal control over financial reporting during the year ended October 31, 2013 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
We maintain "disclosure controls and procedures," as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act"), that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer/Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. We conducted an evaluation (the "Evaluation"), under the supervision and with the participation of our Chief Executive Officer/Chief Financial Officer of the effectiveness of the design and operation of our disclosure controls and procedures ("Disclosure Controls") as of the end of the period covered by this report pursuant to Rule 13a-15 of the Exchange Act. The evaluation of our disclosure controls and procedures included a review of the disclosure controls' and procedures' objectives, design, implementation and the effect of the controls and procedures on the information generated for use in this report. In the course of our evaluation, we sought to identify data errors, control problems or acts of fraud and to confirm the appropriate corrective actions, if any, including process improvements, were being undertaken. Our Chief Executive Officer/Chief Financial Officer concluded that, as of the end of the period covered by this Annual report, our disclosure controls and procedures were effective and were operating at the reasonable assurance level.
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ITEM 9B. OTHER INFORMATION
None.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS OF THE COMPANY
DIRECTORS AND EXECUTIVE OFFICERS
The name and position of our present officers and directors are set forth below:
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Name and Address | Position(s) |
Olesya Didenko | President, Principal Executive Officer, Secretary, Treasurer, Principal Financial Officer, Principal Accounting Officer and member of the Board of Directors. |
Krizikova 22, Prague 8, 18600, Czech Republic |
Olesya Didenko has acted as our President, Treasurer, Secretary and sole Director since our incorporation on February 27, 2012. In 1998, Ms. Didenko graduated with bachelor degree from Baykalsky State University of Economics and Law, from the financial and economic department. Since 2007 Ms. Didenko has been self-employed and operates business of providing a variety of services in the area of individual and group tourism in Prague. Ms. Didenko owns 100% of the outstanding shares of our common stock. Ms. Didenko intends to devote 20 hours a week of her time to planning and organizing activities of Cerulean Group, Inc. Once we expand operations, and are able to attract more customers to purchase our product, Ms. Didenko has agreed to commit more time as required. Because Ms. Didenko will only be devoting limited time to our operations, our operations may be sporadic and occur at times which are convenient to her. As a result, operations may be periodically interrupted or suspended which could result in a lack of revenues and a cessation of operations.
During the past ten years, Ms. Didenko has not been the subject to any of the following events:
1.
Any bankruptcy petition filed by or against any business of which Ms. Didenko was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time.
2.
Any conviction in a criminal proceeding or being subject to a pending criminal proceeding.
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3.
An order, judgment, or decree, not subsequently reversed, suspended or vacated, or any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting Ms. Didenko’s involvement in any type of business, securities or banking activities.
4.
Found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodity Future Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.
5.
Was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right to engage in any activity described in paragraph (f)(3)(i) of this section, or to be associated with persons engaged in any such activity;
6.
Was found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated;
7.
Was the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of:
·
Any Federal or State securities or commodities law or regulation; or
·
Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or
·
Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
1.
Was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
AUDIT COMMITTEE
We do not have an audit committee financial expert. We do not have an audit committee financial expert because we believe the cost related to retaining a financial expert at this time is prohibitive. Further, because we have no operations, at the present time, we believe the services of a financial expert are not warranted.
SIGNIFICANT EMPLOYEES
Other than our directors, we do not expect any other individuals to make a significant contribution to our business.
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FAMILY RELATIONSHIPS
There are no family relationships among our officers or directors.
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth the compensation paid by us for the last two fiscal years ending October 31, 2013 for each of our officers. This information includes the dollar value of base salaries, bonus awards and number of stock options granted, and certain other compensation, if any. The compensation discussed addresses all compensation awarded to, earned by, or paid to named executive officers.
EXECUTIVE OFFICER COMPENSATION TABLE
SUMMARY COMPENSATION TABLE | |||||||||
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| Change in |
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Olesya Didenko President, CEO, CFO,Treasurer, Chief Accounting Officer, Sole Director and Secretary | 2012 2013 | None None | None None | None None | None None | None None | None None | None None | None None |
We have no employment agreements with any of our officers. We do not contemplate entering into any employment agreements until such time as we begin profitable operations.
The compensation discussed herein addresses all compensation awarded to, earned by, or paid to our named executive officers.
There are no stock option plans, retirement, pension, or profit sharing plans for the benefit of our officers and directors.
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Compensation of Directors
The member of our board of directors is not compensated for his services as a director. The board has not implemented a plan to award options to any directors. There are no contractual arrangements with any member of the board of directors. We have no director's service contracts.
CHANGE OF CONTROL
As of October 31, 2013, we had no pension plans or compensatory plans or other arrangements which provide compensation in the event of a termination of employment or a change in our control.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth information as of October 31, 2013 regarding the ownership of our common stock by each shareholder known by us to be the beneficial owner of more than five percent of our outstanding shares of common stock, each director and all executive officers and directors as a group. Except as otherwise indicated, each of the shareholders has sole voting and investment power with respect to the shares of common stock beneficially owned.
Title of | Name and address | Amount of beneficial | Percent |
Class | of beneficial owner | ownership | of class |
Common | Olesya Didenko | 5,000,000 | 80.77% |
Stock | President, Chief Executive Officer, Chief Financial Officer, Treasurer, Chief Accounting Officer, |
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| Sole Director and Secretary |
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| Krizikova 22, Prague 8, 18600, Czech Republic |
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Common | Officer and Director as a | 5,000,000 | 80.77% |
Stock | group that consists of one person | shares |
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The percent of class is based on 6,190,000 shares of common stock issued and outstanding as of the date of this annual report.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the year ended October 31, 2013, we had not entered into any transactions with our sole officer or director, or persons nominated for these positions, beneficial owners of 5% or more of our common stock, or family members of these persons wherein the amount involved in the transaction or a series of similar transactions exceeded the lesser of $120,000 or 1% of the average of our total assets for the last three fiscal years.
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ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
During fiscal year ended October 31, 2013, we incurred approximately $9,880 in fees to our principal independent accountants for professional services rendered in connection with the audit of our financial statements for the fiscal year ended October 31, 2013 and for the reviews of our financial statements for the quarters ended January 31, 2013, April 30, 2013 and July 31, 2013.
ITEM 15. EXHIBITS
The following exhibits are filed as part of this Annual Report.
31.1 Certification of Chief Executive Officer and Chief Financial Officer pursuant to Securities Exchange Act of 1934 Rule 13a-14(a) or 15d-14(a).
32.1 Certifications pursuant to Securities Exchange Act of 1934 Rule 13a-14(b) or 15d-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002.
101 Interactive data files pursuant to Rule 405 of Regulation S-T.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
CERULEAN GROUP, INC. | |
Dated: January 29, 2014 | By: /s/ Olesya Didenko |
| Olesya Didenko , President and Chief Executive Officer and Chief Financial Officer |
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