REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
Board of Directors
Thompson Designs, Inc.
Las Vegas, Nevada
We have audited the accompanying
balance sheets of Thompson Designs, Inc. (a development stage company) as of September 30, 2012 and 2011 and the related
statements of operations, stockholders’ equity (deficit) and cash flows for the years ended September 30, 2012 and
2011, and the period from August 30, 2010 (date of inception) to September 30, 2012. 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 has determined that it is not required to have, nor were we engaged to perform, an audit of its internal control
over financial reporting. Our audits 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 includes examining
on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes 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 of Thompson Designs, Inc. as of September 30,
2012 and 2011, and the results of its operations and its cash flows for the years ended September 30, 2012 and 2011, and the period
from August 30, 2010 (date of inception) to September 30, 2012 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 6 to the financial statements, the
Company has not yet received revenue from sales of products or services, has negative working capital, and has incurred losses
from operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s
plans with regard to these matters are described in Note 6. The accompanying financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
/s/ Silberstein Ungar PLLC
Silberstein Ungar, PLLC
Bingham Farms, Michigan
December 27, 2012
THOMPSON
DESIGNS, INC.
(A Development Stage
Company)
BALANCE SHEETS
AS OF SEPTEMBER 30, 2012 and 2011
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2012
NOTE 1 – SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Nature of Business
Thompson Designs, Inc. (‘Thompson
Designs” and the “Company”) was incorporated in Nevada on August 30, 2010 for the purpose of designing, building,
and installing custom property signage for residential and commercial customers. The Company is in the development stage and has
not yet realized any revenues from its planned operations.
Development Stage Company
The accompanying financial statements have
been prepared in accordance with generally accepted accounting principles related to accounting and reporting by development-stage
companies. A development-stage company is one in which planned principal operations have not commenced or if its operations have
commenced, there has been no significant revenues there from.
Basis of Presentation
The financial statements of the Company
have been prepared in accordance with generally accepted accounting principles in the United States of America and are presented
in US dollars.
Accounting Basis
The Company uses the accrual basis of accounting
and accounting principles generally accepted in the United States of America (“GAAP” accounting). The Company
has adopted a September 30 fiscal year end.
Cash and Cash Equivalents
The Company considers all highly liquid
investments with maturities of three months or less to be cash equivalents. At September 30, 2012 and 2011, respectively, the Company
had $4,641 and $15,589 of unrestricted cash to be used for future business operations.
Fair Value of Financial Instruments
Thompson Designs’ financial instruments
consist of cash and accrued professional fees. The carrying amount of these financial instruments approximates fair value due to
either length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial
statements.
Concentrations
of Credit Risk
The Company maintains its cash in bank
deposit accounts, the balances of which at times may exceed federally insured limits. The Company continually monitors its banking
relationships and consequently has not experienced any losses in such accounts. The Company believes it is not exposed to any significant
credit risk on cash and cash equivalents.
Income Taxes
Income taxes are computed using the asset
and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on
the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted
tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence,
are not expected to be realized. It is the Company’s policy to classify interest and penalties on income taxes as interest
expense or penalties expense. As of September 30, 2012, there have been no interest or penalties incurred on income taxes.
THOMPSON
DESIGNS, INC.
(A Development
Stage Company)
NOTES TO FINANCIAL
STATEMENTS
SEPTEMBER 30, 2012
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
Property and Equipment and Depreciation
Property and equipment are stated at cost
less accumulated depreciation. Depreciation is computed using the straight-line method over an estimated useful life of three (3)
years.
Expenditures for repairs and maintenance
are charged to expense as incurred whereas expenditures for renewals and improvements that extend the useful life of the assets
are capitalized. Upon the sale or retirement, the cost and the related accumulated depreciation are eliminated from the respective
accounts and any resulting gain or loss is reported within the Statements of Operations in the period of disposal.
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.
Revenue Recognition
The Company is in the development stage
and has yet to realize revenues from operations. Once the Company has commenced operations, it will recognize revenues
when delivery of goods or completion of services has occurred provided there is persuasive evidence of an agreement, acceptance
has been approved by its customers, the fee is fixed or determinable based on the completion of stated terms and conditions, and
collection of any related receivable is probable.
Basic Income (Loss) Per Share
Basic income (loss) per share is calculated
by dividing the Company’s net loss applicable to common shareholders by the weighted average number of common shares during
the period. Diluted earnings per share is calculated by dividing the Company’s net income available to common shareholders
by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding
is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. There are no such common stock equivalents
outstanding as of September 30, 2012.
Stock-Based Compensation
The Company accounts for employee stock-based
compensation in accordance with the guidance of FASB ASC Topic 718,
Compensation – Stock Compensation
which requires
all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements
based on their fair values. The fair value of the equity instrument is charged directly to compensation expense and
credited to additional paid-in capital over the period during which services are rendered. There has been no stock-based compensation
issued to employees.
The Company follows ASC Topic 505-50, formerly
EITF 96-18, “Accounting for Equity Instruments that are Issued to Other than Employees for Acquiring, or in Conjunction with
Selling Goods and Services,” for stock options and warrants issued to consultants and other non-employees. In
accordance with ASC Topic 505-50, these stock options and warrants issued as compensation for services provided to the Company
are accounted for based upon the fair value of the services provided or the estimated fair market value of the option or warrant,
whichever can be more clearly determined. There has been no stock-based compensation issued to non-employees.
THOMPSON
DESIGNS, INC.
(A Development
Stage Company)
NOTES TO FINANCIAL
STATEMENTS
SEPTEMBER 30, 2012
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
Recent Accounting Pronouncements
Thompson Designs does not expect the adoption
of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial
position or cash flows.
NOTE 2 – STOCKHOLDER’S EQUITY
The Company has 90,000,000 shares of $0.001
par value common stock authorized.
On September 17, 2010, the Company sold
7,000,000 common shares, par value $.001, to the founder for cash proceeds of $7,000.
On February 22, 2011, the Company closed
a private placement in which it sold 2,000,000 common shares for proceeds of $15,000.
The Company has 10,000,000 shares of $0.001
par value preferred stock authorized. There are no preferred shares issued and outstanding as of September 30, 2012.
As of September 30, 2012, the Company had
no warrants or options outstanding.
NOTE 3 – INCOME TAXES
Through the period ended September 30,
2012, the Company has incurred net losses and, therefore, has no tax liability. The net deferred tax asset generated by the loss
carry-forward has been fully reserved. The cumulative net operating loss carry-forward is $92,607 at September 30, 2012, and will
begin to expire in the year 2030.
The provision for Federal income tax consists of the following:
|
|
2012
|
|
2011
|
Income tax expense (benefit) attributable to:
|
|
|
|
|
|
|
|
|
Current operations
|
|
$
|
(9,505
|
)
|
|
$
|
(20,096
|
)
|
Less: valuation allowance
|
|
|
9,505
|
|
|
|
20,096
|
|
Net provision for income tax
|
|
$
|
0
|
|
|
$
|
0
|
|
The cumulative tax effect at the expected
rate of 34% of significant items comprising our net deferred tax amount is as follows:
|
|
2012
|
|
2011
|
Deferred tax asset attributable to:
|
|
|
|
|
|
|
|
|
Net operating loss carryover
|
|
$
|
31,486
|
|
|
$
|
21,981
|
|
Valuation allowance
|
|
|
(31,486
|
)
|
|
|
(21,981
|
)
|
Net deferred tax asset
|
|
$
|
0
|
|
|
$
|
0
|
|
THOMPSON
DESIGNS, INC.
(A Development
Stage Company)
NOTES TO FINANCIAL
STATEMENTS
SEPTEMBER 30, 2012
NOTE 4 – PROPERTY AND EQUIPMENT
Property and equipment are being depreciated
over their estimated useful lives using the straight-line method of depreciation.
|
|
September 30, 2012
|
|
September 30, 2011
|
Tools and equipment
|
|
$
|
620
|
|
|
$
|
620
|
|
Less: accumulated depreciation
|
|
|
(413
|
)
|
|
|
(207
|
)
|
Property and equipment, net
|
|
$
|
207
|
|
|
$
|
413
|
|
Depreciation expense totaled $206 for the year ended September
30, 2012, and $207 for the year ended September 30, 2011.
NOTE 5 – COMMITMENTS AND CONTINGENCIES
The Company neither owns nor leases
any real or personal property. An officer has provided office services without charge. There is no obligation for the officer to
continue this arrangement. Such costs are immaterial to the financial statements and accordingly are not reflected herein. The
officers and directors are involved in other business activities and most likely will become involved in other business activities
in the future.
NOTE 6 – LIQUIDITY AND GOING CONCERN
Thompson Designs has not generated any
revenues, has negative working capital, and has suffered losses from operations. These factors create substantial doubt about the
Company’s ability to continue as a going concern. The financial statements do not include any adjustment that might be necessary
if the Company is unable to continue as a going concern.
The ability of Thompson Designs to continue
as a going concern is dependent on the Company generating cash from the sale of its common stock and/or obtaining debt financing
and attaining future profitable operations or acquiring or merging with a profitable company. Management’s plans include
selling its equity securities and obtaining debt financing to fund its capital requirements; however, there can be no assurance
the Company will be successful in these efforts.
NOTE 7 – SUBSEQUENT EVENTS
Subsequent
to the reporting period, on December 21, 2012, the Company borrowed the sum of $3,000 from its sole officer and director, Kade
Thompson, under the terms of a Promissory Note. The Note bears interest at an annual rate of 5%, and all principal and interest
is due on or before December 21, 2014.
In accordance with ASC Topic 855-10,
the Company has analyzed its operations to the date these financial statements were issued, and has determined that it does not
have any other material subsequent events to disclose in these financial statements.