The Issuer's revenue for its most recent fiscal year: nil State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of a specified date within 60 days. As of July 28, 2008, the aggregate market value of the registrant's common stock held by non-affiliates of the registrant was approximately $22,227 based on approximately 11,113,428 shares held by non-affiliates at a price of $0.002. The number of shares of common stock outstanding as of July 28, 2008 was 25,926,247. Documents incorporated by reference: A description of "Documents Incorporated by Reference" is contained in Part III, Item 14. 2 Komodo, Inc. FORM 10-KSB ANNUAL REPORT TABLE OF CONTENTS Page No. -------- PART I Item 1. Description of Business..................................... 4 Item 2. Description of Property .................................... 8 Item 3. Legal Proceedings........................................... 8 Item 4. Submission of Matters to a Vote of Security Holders......... 8 PART II Item 5. Market for Common Equity and Related Stockholder Matters.... 8 Item 6. Management's Discussion and Analysis or Plan of Operations.. 10 Item 7. Financial Statements 12 Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.................................... 12 Item 8A. Controls and Procedures .................................... 12 Item 8B. Other Information .......................................... 13 PART III Item 9. Directors and Executive Officers, Promoters and Control Persons: Compliance with Section 16(a) of the Exchange Act........... 13 Item 10. Executive Compensation...................................... 14 Item 11. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.................. 15 Item 12. Certain Relationships and Related Transactions.............. 16 Item 14. Exhibits ................................................... 16 Signatures.................................................. 18 Certifications ............................................ 18 3 ITEM 1. DESCRIPTION OF BUSINESS Business Overview ----------------- Prior to March, 2007 Komodo was developing, selling and supporting personal internet privacy products. Due to the Company's inability to raise additional working capital to launch it's mass scale release in 2007 all further development and marketing of it's products including the SPC 1 secure private computing laptop were stopped and the company became a blank check company seeking to either (a) secure a financing to support a it's existing business or (b) seek a new business direction, effect a merger, capital stock exchange, asset acquisition or similar business combination. We are not presently engaged in, and we will not engage in, any substantive commercial business until we consummate a financing or a business acquisition. This could involve the acquisition of, or merger with, a company which desires to establish a public trading market for its shares. Business Development -------------------- The current activities conducted by the Company are to manage its limited assets and to seek out and secure a financing or investigate the acquisition of any viable business opportunity by purchase and exchange for securities of the Company or pursuant to a reorganization or merger through which securities of the Company will be issued or exchanged. Management will seek out and investigate a financing or business opportunities through every reasonable means, including personal contacts, through referrals from professionals, securities broker dealers, venture capital personnel, members of the financial community and others who may present unsolicited proposals. Other than seeking and investigating potential capital raising activities the Company has had no material business operations for the past four months. The Company has limited assets and conducts no material business, management anticipates that both a financing or an acquisition would require it to issue shares of its common stock. This would result in substantial dilution of the shares of current stockholders. The Company's Board of Directors shall make the final determination whether to complete any acquisition; the approval of stockholders will not be sought unless required by applicable laws, rules and regulations, its Articles of Incorporation or Bylaws, or contract. The Company makes no assurance that any future enterprise will be profitable or successful. In the event that the Company engages in any transaction resulting in a change of control of the Company and/or the acquisition of a business, the Company will be required to file with the Commission a Current Report on Form 8-K within 15 days of such transaction. A filing on Form 8-K also requires the filing of audited financial statements of the business acquired, as well as pro forma financial information consisting of a pro forma condensed balance sheet, pro forma statements of income and accompanying explanatory notes. Management intends to consider a number of factors prior to making any decision as to whether to participate in any specific business endeavor, none of which may be determinative or provide any assurance of success. These may include, but will not be limited to an analysis of the quality of the entity's management 4 personnel; the anticipated acceptability of any new products or marketing concepts; the merit of technological changes; its present financial condition, projected growth potential and available technical, financial and managerial resources; its working capital, history of operations and future prospects; the nature of its present and expected competition; the quality and experience of its management services and the depth of its management; its potential for further research, development or exploration; risk factors specifically related to its business operations; its potential for growth, expansion and profit; the perceived public recognition or acceptance of its products, services, trademarks and name identification; and numerous other factors which are difficult, if not impossible, to properly or accurately analyze, let alone describe or identify, without referring to specific objective criteria. Regardless, the results of operations of any specific entity may not necessarily be indicative of what may occur in the future, by reason of changing market strategies, plant or product expansion, changes in product emphasis, future management personnel and changes in innumerable other factors. Further, in the case of a new business venture or one that is in a research and development mode, the risks will be substantial, and there will be no objective criteria to examine the effectiveness or the abilities of its management or its business objectives. Also, a firm market for its products or services may yet need to be established, and with no past track record, the profitability of any such entity will be unproven and cannot be predicted with any certainty. Management will attempt to meet personally with directors, executive officers and key personnel of the entity sponsoring any business opportunity afforded to the Company, visit and inspect material facilities, obtain independent analysis or verification of information provided and gathered, check references of management and key personnel and conduct other reasonably prudent measures calculated to ensure a reasonably thorough review of any particular business opportunity; however, due to time constraints of management, these activities may be limited. The Company is unable to predict the time as to when and if it may actually participate in any specific business endeavor. The Company anticipates that proposed business ventures will be made available to it through personal contacts of directors, executive officers and principal stockholders, professional advisors, broker dealers in securities, venture capital personnel, members of the financial community and others who may present unsolicited proposals. In certain cases, the Company may agree to pay a finder's fee or to otherwise compensate the persons who submit a potential business endeavor in which the Company eventually participates. Such persons may include the Company's directors, executive officers, beneficial owners or their affiliates. In this event, such fees may become a factor in negotiations regarding a potential acquisition and, accordingly, may present a conflict of interest for such individuals. Further, substantial fees are often paid in connection with the completion of these types of acquisitions, reorganizations or mergers, ranging from a small amount to as much as $250,000. These fees are usually divided among promoters or founders, after deduction of legal, accounting and other related expenses, and it is not unusual for a portion of these fees to be paid to members of management or to principal stockholders as consideration for their agreement to retire a portion of the shares of common stock owned by them. In the event that 5 such fees are paid, they may become a factor in negotiations regarding any potential acquisition by the Company and, accordingly, may present a conflict of interest for such individuals. Competitors also include thousands of other publicly-held companies whose business operations have proven unsuccessful, and whose only viable business opportunity is that of providing a publicly-held vehicle through which a private entity may have access to the public capital markets. There is no reasonable way to predict the competitive position of the Company or any other entity in the strata of these endeavors; however, the Company, having limited assets and cash reserves, will no doubt be at a competitive disadvantage in competing with entities which have recently completed IPO's, have significant cash resources and have recent operating histories when compared with the complete lack of any substantive operations by the Company for the past several years. The integrated disclosure system for small business issuers adopted by the Commission in Release No. 34-30968 and effective as of August 13, 1992, substantially modified the information and financial requirements of a "Small Business Issuer," defined to be an issuer that has revenues of less than $25 million; is a U.S. or Canadian issuer; is not an investment company; and if a majority-owned subsidiary, the parent is also a small business issuer; provided, however, an entity is not a small business issuer if it has a public float (the aggregate market value of the issuer's outstanding securities held by non-affiliates) of $25 million or more. The Commission, state securities commissions and the North American Securities Administrators Association, Inc. ("NASAA") have expressed an interest in adopting policies that will streamline the registration process and make it easier for a small business issuer to have access to the public capital markets. The present laws, rules and regulations designed to promote availability to the small business issuer of these capital markets and similar laws, rules and regulations that may be adopted in the future will substantially limit the demand for companies like the Company, and may make the use of these companies obsolete. Environmental laws, rules and regulations may have an adverse effect on any business venture viewed by the Company as an attractive acquisition, reorganization or merger candidate, and these factors may further limit the number of potential candidates available to the Company for acquisition, reorganization or merger. Prior History ------------- Komodo, Inc. was originally incorporated in the State of Nevada on September 21, 1984 as Thermacor Technology Inc. The name was changed to Applied Technology, Inc. on May 16, 1994. The name was changed to Golden Panther Resources, Ltd. on March 17, 1997. The name was changed to Panther Resources Ltd. on March 10, 1998. The name was changed to PhantomFilm.com on June 15, 1999. The name was changed to Komodo, Inc. on October 2, 2001. The current share prices reflect the 1 for 10 reverse stock split that occurred on March 1, 1997, the 1 for 20 reverse stock split that occurred on March 22, 1997, the 1 for 10 reverse stock split that occurred in June, 1999, the 1 for 30 reverse stock split that occurred in September, 2001 and the 4 for 1 forward stock split that occurred in May, 2002. 6 From 2001 to March, 2007, Komodo was a development stage software company in the soft launch process of refining a secure email messaging and operating environment that would eliminate viruses, spam, and other potential online threats. From March, 2007 to date the company has not been engaged in any substantive business EMPLOYEES/CONSULTANTS We currently retain, through contracts with corporations, the services of two directors. The company has no employees at this time. RISK FACTORS Going concern issue Our independent auditors have expressed a going concern issue. Our ability to continue as a going concern is dependant upon our ability to attain profitable operations. We do not have an established source of funds sufficient to cover operating costs and accordingly there is substantial doubt about our ability to continue as a going concern. Our extremely limited operating history makes it difficult to evaluate our business and prospects. We commenced operations in September, 2003 and have conducted limited business operations since that time. As a result of our short operating history, we have only limited financial data and business information with which to evaluate our business strategies, past performance and an investment in our common stock. If we lose key personnel, we may be unable to successfully operate our business. We depend on the continued contributions of our executive officers to work effectively as a team, to execute our business strategy and to manage our business. The loss of key personnel or their failure to work effectively could have a material adverse effect on our business, financial condition and results of operations. Risks relating to ownership of our common stock The price of our common stock is extremely volatile and investors may not be able to sell their shares at or above their purchase price, or at all. Our stock is presently traded on the OTC Bulletin Board, although there is no assurance that a viable market will continue. The price of our common stock in the public market is highly volatile and may fluctuate substantially because of: * actual or anticipated fluctuations in our future business and operating results; * changes in or failure to meet market expectations; * fluctuations in stock market price and volume, which are particularly common among securities of technology companies, particularly new start-up companies. We do not intend to pay dividends To date, we have never declared or paid any cash dividends on shares of our common stock. We currently intend to retain our future earnings for growth and development of our business and, therefore, we do not anticipate paying any dividends in the foreseeable future. 7 Possible "Penny Stock" Regulation Trading of our common stock on the OTC Bulletin Board may be subject to certain provisions of the Securities Exchange Act of 1934, commonly referred to as the "penny stock" rule. A penny stock is generally defined to be any equity security that has a market price less than $5.00 per share, subject to certain exceptions. If our stock is deemed to be a penny stock, trading in our stock will be subject to additional sales practice requirements on broker-dealers. These may require a broker dealer to: * make a special suitability determination for purchasers of penny stocks; * receive the purchaser's written consent to the transaction prior to the purchase; and * deliver to a prospective purchaser of a penny stock, prior to the first transaction, a risk disclosure document relating to the penny stock market. Consequently, penny stock rules may restrict the ability of broker-dealers to trade and/or maintain a market in our common stock. Also, many prospective investors may not want to get involved with the additional administrative requirements, which may have a material adverse effect on the trading of our shares. ITEM 2. DESCRIPTION OF PROPERTY Our executive offices are located in North Vancouver, B.C., Canada in an 8,200 square foot facility. There is currently no monthly rent payable. We do not own any real estate. ITEM 3. LEGAL PROCEEDINGS None ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None PART II ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS. Market Information ------------------ Currently, our common stock is traded over-the-counter and quoted on the OTC Bulletin Board under the symbol "KMDO". The high and low bid prices for our shares are listed below for the periods depicted. The prices in the table reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions. 8 The reported bid prices reflect the 1 for 10 reverse stock split that occurred on March 1, 1997, the 1 for 20 reverse stock split that occurred on March 22, 1997, the 1 for 10 reverse stock split that occurred in June, 1999, the 1 for 30 reverse stock split that occurred in September, 2001 and the 4 for 1 forward stock split that occurred in May, 2002. PRICE RANGE YEAR ENDED MARCH 31, 2008: HIGH LOW 1st Quarter ...................... $ 0.08 $ 0.023 2nd Quarter ...................... 0.05 0.011 3rd Quarter ...................... 0.01 0.005 4th Quarter ...................... 0.01 0.002 YEAR ENDED MARCH 31, 2007: 1st Quarter ...................... $ 0.80 $ 0.44 2nd Quarter ...................... 0.24 0.10 3rd Quarter ...................... 0.10 0.06 4th Quarter ...................... 0.06 0.03 --------------- As of March 31, 2008 there were 771 stockholders of record of our common stock. This does not include an indeterminate number of shareholders who may hold their shares in "street name". Dividends --------- We have never declared any cash dividends and do not anticipate paying such dividends in the near future. We anticipate all earnings, if any, over the next 12 to 24 months will be retained for future investments in business. Any future determination to pay cash dividends will be at the discretion of the Board of Directors and will be dependent upon our results of operations, financial conditions, contractual restrictions, and other factors deemed relevant by the Board of Directors. We are under no contractual restrictions in declaring or paying dividends to our common or preferred shareholders. The future sale of presently outstanding "unregistered" and "restricted" common stock by present members of management and persons who own more than five percent of the outstanding voting securities may have an adverse effect on any market that may develop in our common shares. All common shares and preferred shares rank equally for the payment of dividends. If a dividend was to be paid all issued shares would be eligible. Recent Sales of "Unregistered" Securities ----------------------------------------- The following unregistered securities have been issued since April 1st, 2007 and are previously disclosed in our quarterly reports on Form 10-QSB's unless otherwise noted: 9 Valued Date No. of Shares Title At Reason ----- ------------- ------ ------ -------- None The above noted shares were issued without registration under the Securities Act in reliance on the exemption provided by Rule 506 and/or Section 4(2) of the Securities Act as a transaction by an issuer not involving a public offering. Proceeds from the sale of stock were used for development of the Company's product and for general working capital. ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS and PLAN OF OPERATION Results of Operations Year Ended March 31, 2008 Compared to Year Ended March 31, 2007 Revenues. We realized our first revenues of $10,724 during the fiscal year ended March 31, 2007. We were unsuccessful in securing additional financing to continue with the beta testing of our products and services and did not record additional revenues in the fiscal year ended March 31, 2008. General and administrative expenses. General and administrative expense decreased to $33,124 for the year ended March 31, 2008 from $896,772 for the year ended March 31, 2007. The decrease was primarily due to a reduction in marketing expense and consulting fees which were paid in shares of the Company's common stock as well as in common stock purchase options and warrants. The value of these shares, warrants and options was $881,492 in 2007 compared to $-0- in 2008. We also incurred approximately $231,761 in research and development costs in the year ended March 31, 2007 compared to $-0- in the current year. We incurred these research and development costs as we worked to prepare our product and service for beta testing. Management fees-related parties decreased from $480,000 in 2007 to $-0- in 2008. The contracts with our executive officers were terminated in 2008. Losses from Continuing Operations. Losses from continuing operations totaled $1,648,511 for the year ended March 31, 2007 as compared to losses of $170,067, for the year ended March 31, 2008. Losses from Discontinued Operations. In 1999 our Board of Directors voted to discontinue the mining operations due to a lack of funding and low precious metal prices. Losses from discontinued operations totaled $10,704,054. During the year ended March 31, 2006, the statute of limitations expired for $205,676 of debts incurred in connection with our discontinued operations. We recorded a gain on discharge of debt as a result of the statute of limitations expiration. For the years ended March 31, 2008 and 2007 we had no gains or losses from discontinued mining operations. Liquidity and Capital Resources During the year ended March 31, 2008 we used cash of $143,376 for our operations compared to $265,434 in the prior year. The decrease was due to our decision to begin the development of our new products and services. 10 We also used $-0- and $3,975 of our cash to purchase computer equipment to be used in developing and operating our new products and services, in 2008 and 2007 respectively. We raised the cash for these purposes by selling shares of our common stock in private placements. In 2008 we raised $4,991 through these private placements. No commission was paid to the individuals who raised the funds for us compared to $285,000 raised in private placements 2007 for which $16,000 in fees were paid. In 2008, we also received $137,800 in related party loans. Plan of Operations Going Concern Issue. Our independent auditors have expressed a going concern issue. Our ability to continue as a going concern is dependent upon our ability to successfully attain profitable operations or to locate financing for our continued maintenance and operations. We currently do not have an established source of funds sufficient to cover our operating costs and accordingly there is substantial doubt about our ability to continue as a going concern. We are in the process of developing new products and services which we believe will be profitable and allow us to continue as a going concern. The development of these products is expected to require approximately $4,000,000 after which we expect to need approximately $5,000,000 for infrastructure creation and market introduction. We have raised approximately $2,250,000 of these funds through March 31, 2008. We are in the process of seeking the additional capital needed to meet these needs. There is no assurance that such funds will be available to us or that if they are available will be under terms which we can accept. Certain Factors Affecting Future Operating Results This report on Form 10-KSB includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements may relate to such matters as anticipated financial performance, future revenues or earnings, business prospects, projected ventures, new products and services, anticipated market performance and similar matters. When used in this report, the words "may," "will," expect," anticipate," "continue," "estimate," "project," "intend," and similar expressions are intended to identify forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 regarding events, conditions, and financial trends that may affect our future plans of operations, business strategy, operating results, and financial position. We caution readers that a variety of factors could cause our actual results to differ materially from the anticipated results or other matters expressed in forward-looking statements. Recent Accounting Pronouncements During the year ended March 31, 2008, the Company adopted the following accounting pronouncements: In December 2007, the FASB issued SFAS 160, "Noncontrolling interests in Consolidated Financial Statements - an amendment of ARB No. 51". This Statement amends ARB 51 to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a 11 subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. This Statement is effective for fiscal years beginning on or after December 15, 2008. Early adoption is not permitted. Management is currently evaluating the effects of this statement, but it is not expected to have any impact on the Company's financial statements. In February 2007 , the FASB issued SFAS 159, "The Fair Value Option for Financial Assets and Financial Liabilities. SFAS 159 creates a fair value option allowing an entity to irrevocably elect fair value as the initial and subsequent measurement attribute for certain financial assets and financial liabilities, with changes in fair value recognized in earnings as they occur. SFAS 159 also requires an entity to report those financial assets and financial liabilities measured at fair value in a manner that separates those reported fair values from the carrying amounts of assets and liabilities measured using another measurement attribute on the face of the statement of financial position. Lastly, SFAS 159 requires an entity to provide information that would allow users to understand the effect on earnings of changes in the fair value on those instruments selected for the fair value election. SFAS 159 is effective for fiscal years beginning after November 15, 2007 with early adoption permitted. The Company is continuing to evaluate SFAS159 and to assess the impact on its results of operations and financial condition if an election is made to adopt the standard. In June 2007, the Financial Accounting Standards Board issued FAS No. 141R, Business Combinations - This Statement implements certain revisions to SFAS 141, including changes to the measurement of purchase consideration, measurement of goodwill, capitalization of in-process research and development, and definition of the acquisition date. This statement is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. The implementation of this pronouncement had no effect on the Company's consolidated financial statements. ITEM 7. FINANCIAL STATEMENTS Financial statements as of and for the fiscal year ended March 31, 2008 have been examined to the extent indicated in their report by Chisholm, Bierwolf & Nilson, LLC, independent certified public accountants, and has been prepared in accordance with generally accepted accounting principles and pursuant to Regulation S-B as promulgated by the SEC. The aforementioned financial statements are included herein under Item 14. ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None. ITEM 8A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures. Based on an evaluation under the supervision and with the participation of the our management as of a date within 90 days of the filing date of this Annual Report on Form 10-KSB, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934, are effective to ensure 12 that information required to be disclosed in 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. Changes in Internal Controls. There were no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation. There were no significant deficiencies or material weaknesses, and therefore there were no corrective actions taken. However, the design of any system of controls is based in part upon certain assumptions about the likelihood of future events and there is no certainty that any design will succeed in achieving its stated goal under all potential future considerations, regardless of how remote. ITEM 8B. OTHER INFORMATION None. PART III ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS The following table sets forth certain information regarding our executive officers and directors: Name Age Position Gordon Muir 55 Chief Executive Officer, Chairman of the Board, Director Penny Perfect* 55 President, Director * Member of the audit committee The Directors and Officers are elected and will serve until the next annual general meeting of the shareholders or until their death, resignation, retirement, removal, disqualification, or until their successors have been duly elected and qualified. All Officers serve at the will of the Board of Directors. GORDON MUIR is a founding Director and has served as Chief Executive Officer since January, 2002. Mr. Muir has over twenty years experience in upper level management in a variety of industries particularly in technology development and software design and implementation fields. He currently is the Chief Technology Officer of AlphaTrade.com PENNY PERFECT has served as a Director since June 27, 2003 and was appointed as President on May 1, 2005. Ms. Perfect has an established career in the financial industry. She is currently the CEO, President and Chairman of the Board of AlphaTrade.com. Compliance with Section 16 of the Exchange Act. Section 16(a) of the Exchange Act requires directors, officers and persons who own more than 5% of a registered class of our equity securities to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Directors, officers and greater than 5% shareholders are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file. Based solely upon our review of the copies of such forms that we received during the fiscal year ended March 31, 2006, we believe that each person who at any time during the fiscal year was a director, officer or beneficial owner of more than 5% of our common stock complied with all Section 16(a) filing requirements during such fiscal year. 13 ITEM 10. EXECUTIVE COMPENSATION The following table shows compensation earned during fiscal 2007 and 2008 by the Chief Executive Officer and President. Titles shown on the table are titles held at March 31, 2008. The information in the table includes salaries, bonuses, stock options granted, restricted stock awards granted and other miscellaneous compensation. We have no long term compensation benefits other than stock options. SUMMARY COMPENSATION TABLE Annual Compensation Long Term and Other ------------------- Compensation ----------------------- Number of Name and Securities All Other Principal Fiscal Other Annual Underlying Compensation Positions Year Salary(1)Bonus Compensation(3) Options (2) --------------- ------ -------- ----- --------------- ---------- ------------ Gordon J. Muir 2007 $240,000 ----- ----- 500,000 ----- Chief Executive 2008 nil Officer Penny Perfect 2007 $240,000 ----- ----- 500,000 President 2008 nil (1) Salaries for 2007 were accrued and paid in shares of the Company's common stock to companies in which the executive officers may have a residual interest. There were no salaries paid or accrued in 2008. Bonuses and Deferred Compensation None of the Directors or executive officers received a bonus or deferred compensation other than as noted above. Other compensation: none Other Director Compensation Directors receive no cash compensation for their services as directors, other than reimbursement for certain expenses in connection with attendance at board meetings. Stock Incentive Plans Stock Incentive Plans were adopted in 2004, 2005 and 2006 authorizing the issuance of the following shares to the Directors, Employees and Consultants of which the unexercised balances are as follows: Exercise Number Number Price Authorized Outstanding 2004 Plan $0.77 1,300,000 1,300,000 2005 Plan $0.72 2,200,000 2,200,000 2006 Plan $1.00 2,200,000 2,200,000 14 All directors, employees and consultants are eligible to participate in the above noted Stock Option Plans. The options vest over a five year period. The Plan is administered by the Board of Directors. ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The following table sets forth certain information concerning the stock ownership as of March 31, 2008, of: (i) each person who is known to us to be the beneficial owner of more than 5 percent of our common stock; and (ii) directly or indirectly by each director, by each person who was an executive officer during the fiscal year ending March 31, 2008 and by directors and executive officers as a group: Shares Beneficially Name of Beneficial Owner Owned(1)(2) Percent (2) ------------------------ ----------- ------- Gordon Muir 11,722,051(3) 39% Suite 116C 930 West 1st Street North Vancouver, B.C. Penny Perfect 11,840,768(4) 39% Suite 116C 930 West 1st Street North Vancouver, B.C. Ms. Perfect and Mr. Muir are spouses. Accordingly, each spouse's holdings may also be deemed to be beneficially owned by the other. All executive officers and directors as a group (two persons)(5) 23,562,819 78% Class A Preferred All executive officers and directors as a group 1,750,000 88% (1) The above noted disclosure should not be construed as an admission that each executive officer or director is the beneficial owner of these shares of common stock and is calculated separately for each person on the basis of the actual number of outstanding shares beneficially owed as of March 31, 2008 and assumes the conversion of preferred shares held by such person (but not by anyone else). (2) The percentages shown are calculated based upon 25,926,247 shares of common stock outstanding on March 31, 2008 plus that number of preferred shares that may be converted by a particular person or persons, but not anyone else. (3) Includes direct and indirect ownership and includes 4,375,000 shares to be issued upon the conversion of preferred shares. (4) Includes direct and indirect ownership and includes 4,375,000 shares to issued upon the conversion of preferred shares. (5) Includes 8,750,000 shares to be issued upon the conversion of preferred shares. 15 PREFERRED SHARES We have authorized 10,000,000 shares of preferred stock with a par value of $0.001 per share. 2,000,000 shares of the preferred stock have been issued as a Class "A" issuance. Each share is convertible into 5 shares of common stock at $0.01 per share. ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Transaction with Management and Others During the past two years, there have been no material transactions, series of similar transactions or currently proposed transactions, to which we or any of our subsidiaries were or are to be a party, in which the amount involved exceeds $60,000 and in which any director or executive officer, or any security holder who is known to us to own of record or beneficially more than five percent of the our common stock, or any member of the immediate family of any of the foregoing persons, had a material interest. Certain Business Relationships During the past two years, there have been no material transactions, series of similar transactions, currently proposed transactions, or series of similar transactions, currently proposed transactions, or series of similar transactions, to which we or any of our subsidiaries was or is to be a party, in which the amount involved exceeds $60,000 an in which any promoter or founder, or any member of the immediate family of any of the foregoing persons, had a material interest. ITEM 14. EXHIBITS The following exhibits are included herein, except for the exhibits marked with a footnote, which are incorporated herein by reference and can be found in the appropriate document referenced. (a) Exhibits Exhibit No. Exhibit Name ----------- ------------ 3.1(1) Initial Articles of Incorporation dated September 20, 1984 3.2(1) By-laws 3.3(1) Certificate of Amendment changing the name of the company to "Thermacor Technology Inc." (10/15/85) 3.4(1) Certificate of Amendment authorizing the number of shares to vote on an Amendment to the Articles of Incorporation as 891,000 (12/6/85) 3.5(1) Certificate of Amendment changing the name of the company to Applied Technology, Inc, effecting a one for fifty reverse split, and thereafter increasing the authorized capital to 15,000,000 shares of common stock (05/16/94) 3.6(1) Certificate of Amendment changing the name of the company to Golden Panther Resources, Ltd., and increasing the authorized capital to 50,000,000 shares of common stock (03/17/97) 3.7(1) Certificate of Amendment increasing the authorized capital to 100,000,000 shares of common stock, par value $0.001; 10,000,000 shares of preferred stock, par value $0.10 (11/19/97) 16 3.8(1) Certificate of Amendment changing the name of the company to "Panther Resources Ltd." (03/10/98) 3.9(1) Certificate of Amendment changing the name of the company to Applied Technology, Inc, effecting a one for ten reverse split, the authorized capital and preferred stock were not subject to the reverse split (06/15/99) 3.10(1) Certificate of Amendment changing the name of the company to "PhantomFilm.com" (06/15/99) 3.11(1) Certificate of Amendment changing the name of the company to "Komodo, Inc." (10/02/01) 31.1 Certification of C.E.O. and Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1 Certification of C.E.O. and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 ----------------------- (b) Reports on Form 8-K None Item 14. Principal Accountant Fees and Services The following is a summary of the fees billed to us by Chisholm, Bierwolf & Nilson, LLC, independent certified public accountants, for professional services rendered for the fiscal years ended March 31,2007 and March 31, 2008: Fee Category Fiscal 2008 Fees Fiscal 2007 Fees ------------------------- ---------------- ---------------- Audit Fees .............. $7,000.00 $13,250.00 Audit-Related Fees ...... -- -- Tax Fees ................ -- -- All Other Fees .......... -- -- ---------- ---------- Total Fees .............. $7,000.00 $13,250.00 Audit Fees. Consists of fees billed for professional services rendered for the audit of our financial statements and review of the interim financial statements included in quarterly reports and services that are normally provided by Chisholm, Bierwolf & Nilson, LLC, independent certified public accountants, in connection with statutory and regulatory filings or engagements. Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors The Audit Committee's policy is to pre-approve all audit and permissible non-audit services provided by the independent auditors. These services may include audit services, audit-related services, tax services, and other services. Pre-approval is generally provided for up to one year, and any pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. The independent auditors and management are required to periodically report to the Audit Committee regarding the extent of services provided by the independent auditors in accordance with this pre-approval and the fees for the services performed to date. The Audit Committee may also pre-approve particular services on a case-by-case basis. 17 KOMODO, INC. (A Development Stage Company) FINANCIAL STATEMENTS March 31, 2008 and 2007 1 C O N T E N T S Report of Independent Registered Public Accounting Firm.................. 3 Balance Sheets........................................................... 4 Statements of Operations................................................. 5 Statements of Stockholders' Deficit...................................... 6 Statements of Cash Flows................................................ 16 Notes to the Financial Statements....................................... 17 2 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ------------------------------------------------------- Board of Directors Komodo, Inc. We have audited the accompanying balance sheet of Komodo, Inc. (a development stage company), as of March 31, 2008 and 2007, and the related statements of operations, stockholders' deficit, and cash flows for the years ended March 31, 2008, 2007 and 2006 and the amounts included in the cumulative column in the statements of operations, stockholders' deficit equity and cash flows for the period from April 1, 2005 through March 31, 2008. 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 controls over financial reporting. Our audit includes 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 Komodo, Inc. (a development stage company) as of March 31, 2008 and 2007 and the results of operations and cash flows for the years ended March 31, 2008, 2007 and 2006 and the amounts included in the cumulative column in the statements of operations, stockholders' deficit and cash flows for the period from April 1, 2005 through March 31, 2008 in conformity with United States 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 3 to the financial statements, the Company is a development stage company with no significant operating results to date, a working capital deficiency and a stockholders' deficiency which raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. CHISHOLM, BIERWOLF & NILSON LLC Bountiful, Utah July 28, 2008 3 KOMODO, INC. (A Development Stage Company) Balance Sheets ASSETS ------ March 31, March 31, 2008 2007 ------------- ------------- CURRENT ASSETS Cash and cash equivalents $ 102 $ 687 ------------ ------------ Total Current Assets 102 687 ------------ ------------ EQUIPMENT, NET - 136,943 ------------ ------------ TOTAL ASSETS $ 102 $ 137,630 ============ ============ LIABILITIES AND STOCKHOLDERS' DEFICIT ------------------------------------- CURRENT LIABILITIES Accounts payable and accrued expenses $ 71,918 $ 182,170 Related party payable 200,695 62,895 ------------ ------------ Total Current Liabilities 272,613 245,065 ------------ ------------ STOCKHOLDERS' DEFICIT Preferred stock; 10,000,000 shares authorized at $0.001 par value, 2,000,000 shares issued and outstanding 2,000 2,000 Common stock; 100,000,000 shares authorized at $0.001 par value, 25,926,247 shares issued and outstanding 25,926 25,926 Additional paid-in capital 17,987,173 17,982,182 Deficit accumulated during the development stage (18,287,610) (18,117,543) ------------ ------------ Total Stockholders' Deficit (272,511) (107,435) ------------ ------------ TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 102 $ 137,630 ============ ============ The accompanying notes are an integral part of these financial statements. 4 KOMODO, INC. (A Development Stage Company) Statements of Operations <TABLE> <S> <C> <C> <C> <C> From Inception on November 10, For the For the For the 1995 Year Ended Year Ended Year Ended Through March 31, March 31, March 31, March 31, 2008 2007 2006 2008 ------------- ------------ ------------- ------------- REVENUES $ - $ 10,724 $ - $ 10,724 COST OF SALES - - - - GROSS MARGIN - 10,724 - 10,724 ------------ ----------- ------------ ------------ OPERATING EXPENSES Impairment of asset 136,943 - - 136,993 Research and development - 231,761 300,379 647,390 Depreciation and amortization - 50,702 46,689 290,323 Management fees-related parties - 480,000 480,000 1,297,500 General and administrative 33,124 896,772 1,637,984 5,216,610 ------------ ----------- ------------ ------------ Total Operating Expenses 170,067 1,659,235 2,465,052 7,588,816 ------------ ----------- ------------ ------------ INCOME FROM OPERATIONS (170,067) (1,648,511) (2,465,052) (7,578,092) OTHER INCOME (EXPENSE) Interest expense - - - (5,464) Total Other Income (Expense) - - - (5,464) LOSS BEFORE DISCONTINUED OPERATIONS (170,067) (1,648,511) (2,465,052) (7,583,556) GAIN (LOSS) FROM DISCONTINUED OPERATIONS - - 205,676 (10,704,054) ------------ NET LOSS $ (170,067) $(1,648,511) $ (2,259,376) $(18,287,610) ============ =========== ============ ============ BASIC AND DILUTED LOSS PER SHARE $ (0.01) $ (0.08) $ (0.16) ============ =========== ============ WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 25,926,247 21,145,495 14,355,741 ============ =========== ============ </TABLE> The accompanying notes are an integral part of these financial statements 5 KOMODO, INC. (A Development Stage Company) Statements of Stockholders' Deficit <TABLE> <S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> Deficit Accumulated Preferred Stock Common Stock Additional Stock Other During the Total ---------------- --------------- Paid-In Subscriptions Deferred Comprehensive Development Stockholders' Shares Amount Shares Amount Capital Receivable Compensation Income(Loss) Stage Deficit --------- -------- ------- ------ ----------- ---------- ------------ ------------ ------------ ------------ Balance at November 10, 1995- - - - - - $ - $ - $ - $ - $ - (inception) Issuance of common stock for cash at $0.00 per share - - - - - - - - - - Currency translation adjustment - - - - - - (1,230) - - (1,230) Net loss for the year ended March 31, 1996 - - - - - - - - (157,549) (157,549) --------- -------- ------- ------ ----------- --------- ----------- ---------- ----------- ----------- Balance, March 31, 1996 - - - - - - - (1,230) (157,549) (158,779) Issuance of common stock for cash at $28.32 per share - - 38,467 39 1,089,448 - - - - 1,089,487 Issuance of common stock for services at $57.08 per share - - 1,534 2 87,554 - - 8,542 - 96,098 Net loss for the year ended March 31, 1997 - - - - - - - - (157,549) (157,549) --------- -------- ------- ------ ----------- --------- ----------- ---------- ----------- ----------- Balance, March 31, 1997 - - 40,001 41 1,177,002 - - 7,312 (1,545,938) (361,583) Recapitalization (Note 1) - - 164,120 164 393,898 - - - - 394,062 </TABLE> The accompanying notes are an integral part of these financial statements. 6 KOMODO, INC. (A Development Stage Company) Statements of Stockholders' Deficit <TABLE> <S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> Deficit Accumulated Preferred Stock Common Stock Additional Stock Other During the Total ---------------- --------------- Paid-In Subscriptions Deferred Comprehensive Development Stockholders' Shares Amount Shares Amount Capital Receivable Compensation Income(Loss) Stage Deficit --------- -------- ------- ------ ----------- ---------- ------------ ------------ ------------ ------------ Issuance of common stock for cash at $34.65 per share - - 81,435 82 2,822,045 (100,000) - - - 2,722,127 Issuance of common stock for services at $26.28 per share - - 44,887 45 1,179,581 (154,281) - - - 1,025,345 Issuance of warrants - - - - 17,220 - - - - 17,220 Issuance of common stock for debt at $19.51 per share - - 51,040 51 995,668 - - - - 995,719 Issuance of common stock for properties at $74.99 per share - - 7,334 7 549,993 - - - - 550,000 Issuance of preferred stock for services at $0.18 per share 2,000,000 200,000 - - 160,000 - - - - 360,000 Currency translation adjustment - - - - - - 260,719 - - 260,719 Net loss for the year ended March 31, 1998 - - - - - - - - (3,332,577) (3,332,577) --------- ------- ------- ------ ----------- --------- ----------- ---------- ----------- ----------- Balance, March 31, 1998 2,000,000 200,000 388,817 390 7,295,407 (254,281) - 268,031 (4,878,515) 2,631,032 </TABLE> The accompanying notes are an integral part of these financial statements. 7 KOMODO, INC. (A Development Stage Company) Statements of Stockholders' Deficit <TABLE> <S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> Deficit Accumulated Preferred Stock Common Stock Additional Stock Other During the Total ---------------- --------------- Paid-In Subscriptions Deferred Comprehensive Development Stockholders' Shares Amount Shares Amount Capital Receivable Compensation Income(Loss) Stage Deficit --------- -------- ------- ------ ----------- ---------- ------------ ------------ ------------ ------------ Issuance of common stock for cash at $10.72 per share - - 114,178 114 1,224,166 - - - - 1,224,280 Issuance of common stock for services at $10.97 per share - - 136,363 137 1,495,085 - - - - 1,495,222 Receipt of subscriptions receivable - - - - 254,281 - - - - 254,281 Issuance of common stock for debt at $15.00 per share - - 1,600 2 23,998 - - - - 24,000 Currency translation adjustm-nt - - - - - - (268,031) - - (268,031) Net loss for the year ended March 31, 1999 - - - - - - - - (6,031,215) (6,031,215) --------- ------- ------- ------ ----------- --------- ----------- ---------- ------------ ----------- Balance, March 31, 1999 2,000,000 200,000 640,958 643 10,038,656 - - - (10,909,730) (670,431) Issuance of common stock for debt at $5.31 per share - - 98,160 98 520,848 - - - - 520,946 </TABLE> The accompanying notes are an integral part of these financial statements. 8 KOMODO, INC. (A Development Stage Company) Statements of Stockholders' Deficit <TABLE> <S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> Deficit Accumulated Preferred Stock Common Stock Additional Stock Other During the Total ---------------- --------------- Paid-In Subscriptions Deferred Comprehensive Development Stockholders' Shares Amount Shares Amount Capital Receivable Compensation Income(Loss) Stage Deficit --------- -------- ------- ------ ----------- ---------- ------------ ------------ ------------ ------------ Issuance of common stock for cash at $3.75 per share - 13,334 13 49,987 - - - - - 50,000 Issuance of common stock for services at $3.48 per share - 158,972 159 553,732 - - - - - 553,891 Issuance of common stock for license at $3.75 per share - 33,334 33 124,967 - - - - - 125,000 Cancellation of common stock - - (334) (1) (3,749) - - - - (3,750) Change in par value of preferred stock - (198,000) - - 198,000 - - - - - Net loss for the year ended March 31, 2000 - - - - - - - - (796,123) (796,123) --------- ------- ------- ------ ----------- ---------- ----------- ---------- ------------ ----------- Balance, March 31, 2000 2,000,000 $ 2,000 944,424 $ 945 $11,482,441 $ - $ - $ - $(11,705,853) $ (220,467) ========= ======= ======= ====== =========== ========== =========== ========== ============ =========== </TABLE> The accompanying notes are an integral part of these financial statements. 9 KOMODO, INC. (A Development Stage Company) Statements of Stockholders' Deficit <TABLE> <S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> Deficit Accumulated Preferred Stock Common Stock Additional Stock Other During the Total ---------------- -------------- Paid-In Subscriptions Deferred Comprehensive Development Stockholders' Shares Amount Shares Amount Capital Receivable Compensation Income(Loss) Stage Deficit --------- -------- ------- ------ ----------- ---------- ------------ ------------ ------------ ------------ Balance, March 31, 2000 2,000,000 2,000 944,424 945 11,482,441 - $ - - $(11,705,853) $ (220,467) Issuance of common stock for services at $0.60 per share - - 13,334 13 7,987 - - - - 8,000 Issuance of common stock for cash at $0.04 per share - - 649,233 649 23,697 (24,346) - - - - Additional expense through extension and revaluation of warrants - - - - 51,761 - - - - 51,761 Net loss for the year ended March 31, 2001 - - - - - - - - (75,091) (75,091) --------- ------- ------- ------ ----------- ---------- ----------- ---------- ------------ ----------- Balance, March 31, 2001 2,000,000 2,000 1,606,991 1,607 11,565,886 (24,346) - - (11,780,944) (235,797) Issuance of common stock for cash at $0.20 per share - - 1,206,668 1,207 236,543 (237,750) - - - - Payables for subscriptions receivable - - - - - 11,510 - - - 11,510 Receipt of subscriptions receivable - - - - - 3,575 - - - 3,575 Write off of subscriptions receivable - - - - - 250 - - - 250 Issuance of common stock for services at $0.07 per share - - 2,271,671 2,272 150,978 - - - - 153,250 Issuance of common stock for deferred services at $0.07 per share - - 1,359,000 1,359 338,391 - (339,750) - - - Receipt of deferred services - - - - - - 110,000 - - 110,000 Issuance of common stock for debt at $0.02 per share - - 469,333 469 8,331 - - - - 8,800 Issuance of common stock for technology at $0.00 per share - - 200,000 200 (150) - - - - 50 Additional expense through issuance of warrants - - - - 428,600 - - - - 428,600 </TABLE> The accompanying notes are an integral part of these financial statements. 10 KOMODO, INC. (A Development Stage Company) Statements of Stockholders' Deficit <TABLE> <S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> Deficit Accumulated Preferred Stock Common Stock Additional Stock Other During the Total ---------------- -------------- Paid-In Subscriptions Deferred Comprehensive Development Stockholders' Shares Amount Shares Amount Capital Receivable Compensation Income(Loss) Stage Deficit --------- -------- ------- ------ ----------- ---------- ------------ ------------ ------------ ------------ Fractional shares issued - - 7,937 8 (8) - - - - - Net loss for the year ended March 31, 2002 - - - - - - - - (720,206) (720,206) Balance, March 31, 2002 2,000,000 2,000 7,121,600 7,122 12,728,571 (246,761) (229,750) - (12,501,150 (239,968) Issuance of common stock for services at $0.60 per share - - 20,000 20 11,980 - - - - 12,000 Issuance of common stock for services at $0.21 per share - - 400,000 400 83,600 - - - - 84,000 Receipt of deferred services - - - - - - 229,750 - - 229,750 Fractional shares corrected - - (3,140) (3) 3 - - - - - Related party services received for stock subscription receivable - - - - - 10,250 - - - 10,250 Net loss for the year ended March 31, 2003 - - - - - - - - (362,640) (362,640) --------- ------- ------- ------ ----------- ---------- ----------- ---------- ------------ ----------- Balance, March 31, 2003 2,000,000 2,000 7,538,460 7,539 12,824,154 (236,511) - - (12,863,790) (266,608) Additional expense through issuance of options - - - - 15,750 - - - - 15,750 Issuance of common stock for cash at $0.01 per share - - 1,500,000 1,500 148,500 (150,000) - - - - Issuance of common stock for cash at $0.50 per share - - 450,000 450 224,550 - - - - 225,000 Issuance of common stock for cash at $0.75 per share - - 373,333 373 279,626 - - - - 279,999 Debt forgiven by a shareholder - - - - 90,705 - - - - 90,705 Receipt of deferred services - - - - - 49,011 - - - 49,011 Write off of subscriptions receivable - - - - - 187,500 - - - 187,500 </TABLE> The accompanying notes are an integral part of these financial statements. 11 KOMODO, INC. (A Development Stage Company) Statements of Stockholders' Deficit <TABLE> <S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> Deficit Accumulated Preferred Stock Common Stock Additional Stock Other During the Total ---------------- -------------- Paid-In Subscriptions Deferred Comprehensive Development Stockholders' Shares Amount Shares Amount Capital Receivable Compensation Income(Loss) Stage Deficit --------- -------- ------- ------ ----------- ---------- ------------ ------------ ------------ ------------ Stock offering costs - - - - (55,500) - - - - (55,500) Net loss for the year ended March 31, 2004 - - - - - - - - (533,608) (533,608) --------- ------- ------- ------ ----------- ---------- ----------- ---------- ------------ ----------- Balance, March 31, 2004 2,000,000 $ 2,000 9,861,793 $9,862 $13,527,785 $(150,000) $ - $ - $(13,397,398) $ (7,751) ========= ======= ======= ====== =========== ========== =========== ========== ============ =========== </TABLE> The accompanying notes are an integral part of these financial statements. 12 KOMODO, INC. (A Development Stage Company) Statements of Stockholders' Deficit <TABLE> <S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> Deficit Accumulated Preferred Stock Common Stock Additional Stock Other During the Total ---------------- -------------- Paid-In Subscriptions Deferred Comprehensive Development Stockholders' Shares Amount Shares Amount Capital Receivable Compensation Income(Loss) Stage Deficit --------- -------- ------- ------ ----------- ---------- ------------ ------------ ------------ ------------ Balance, March 31, 2004 2,000,000 $ 2,000 9,861,793 $9,862 $13,527,785 $(150,000) $ - $ - $(13,397,398) $ (7,751) Issuance of common stock for cash at $1.00 per share - - 147,000 147 146,853 - - - - 147,000 Issuance of common stock for cash at $1.50 per share - - 35,000 35 52,465 - - - - 52,500 Issuance of common stock for cash at $0.35 per share - - 500,000 500 174,500 (175,000) - - - - Issuance of common stock for cash at $0.78 per share - - 500,000 500 389,500 (390,000) - - - - Issuance of common stock for services at $1.10 per share - - 5,000 5 5,495 - - - - 5,500 Issuance of common stock for cash at $0.90 per share - - 375,000 375 337,125 - - - - 337,500 Issuance of common stock for cash at $1.00 per share - - 50,000 50 49,950 - - - - 50,000 Issuance of common stock for services at $0.83 per share - - 1,700,000 1,700 1,409,300 - - - - 1,411,000 Issuance of common stock for cash at $0.90 per share - - 750,000 750 674,250 - - - - 675,000 Receipt of subscriptions receivable - - - - - 150,000 - - - 150,000 Issuance of common stock for cash at $1.00 per share - - 170,000 170 169,830 - - - - 170,000 Stock offering costs - - - - (1,574,750) - - - - (1,574,750) Net loss for the year ended March 31, 2005 - - - - - - - - (812,258) (812,258) --------- ------- ------- ------ ----------- ---------- ----------- ---------- ------------ ----------- Balance, March 31, 2005 2,000,000 2,000 14,093,793 14,094 15,362,303 (565,000) - - (14,209,656) 603,741 </TABLE> The accompanying notes are an integral part of these financial statements. 13 KOMODO, INC. (A Development Stage Company) Statements of Stockholders' Deficit <TABLE> <S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> Deficit Accumulated Preferred Stock Common Stock Additional Stock Other During the Total ---------------- -------------- Paid-In Subscriptions Deferred Comprehensive Development Stockholders' Shares Amount Shares Amount Capital Receivable Compensation Income(Loss) Stage Deficit --------- -------- ------- ------ ----------- ---------- ------------ ------------ ------------ ------------ Issuance of common stock for cash at $0.88 per share - - 300,000 300 263,700 - - - - 264,000 Issuance of common stock for cash at $1.00 per share - - 25,000 25 24,975 - - - - 25,000 Issuance of common stock for cash at $1.00 per share - - 320,000 320 319,680 (40,000) - - - 280,000 Issuance of common stock for services at $0.71 per share - - 150,000 150 106,350 - - - - 106,500 Additional expense through issuance of warrants and options - - - - 808,719 - - - - 808,719 Receipt of subscriptions receivable - - - - - 109,500 - - - 109,500 Stock offering costs - - - - (23,000) - - - - (23,000) Net loss for the year ended March 31, 2006 - - - - - - - - (2,259,376) (2,259,376) --------- ------- ------- ------ ----------- ---------- ----------- ---------- ------------ ----------- Balance, March 31, 2006 2,000,000 2,000 14,888,793 14,889 16,862,727 (495,500) - - (16,469,032) (84,916) Issuance of common stock for services at $0.58 per share - - 171,000 171 99,009 - - - - 99,180 Issuance of common stock for cash at $0.80 per share - - 25,000 25 19,975 - - - - 20,000 Issuance of common stock for cash at $0.75 per share - - 13,333 13 9,987 - - - - 10,000 Issuance of common stock for cash at $0.50 per share - - 60,000 60 29,940 - - - - 30,000 Issuance of common stock for cash at $0.44 per share - - 50,000 50 21,950 - - - - 22,000 </TABLE> The accompanying notes are an integral part of these financial statements. 14 KOMODO, INC. (A Development Stage Company) Statements of Stockholders' Deficit <TABLE> <S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> Deficit Accumulated Preferred Stock Common Stock Additional Stock Other During the Total ---------------- -------------- Paid-In Subscriptions Deferred Comprehensive Development Stockholders' Shares Amount Shares Amount Capital Receivable Compensation Income(Loss) Stage Deficit --------- -------- ------- ------ ----------- ---------- ------------ ------------ ------------ ------------ Issuance of common stock for cash at $0.75 per share - - 313,333 313 234,687 - - - - 235,000 Issuance of common stock for cash at $0.50 per share - - 40,000 40 19,960 - - - - 20,000 Issuance of common stock for services at $0.40 per share - - 150,000 150 59,850 - - - - 60,000 Issuance of common stock for services at $0.33 per share - - 27,500 28 9,047 - - - - 9,075 Issuance of common stock for services at $0.15 per share - - 333,334 333 49,667 - - - - 50,000 Issuance of common stock for debt at $0.06 per share - - 9,853,954 9,854 581,383 - - - - 591,237 Receipt of subscriptions receivable - - - - - 495,500 - - - 495,500 Stock offering costs - - - - (16,000) - - - - (16,000) Net loss for the year ended March 31, 2007 - - - - - - - - (1,648,511) (1,648,511) Balance, March 31, 2007 2,000,000 2,000 25,926,247 25,926 17,982,182 - - - (18,117,543) (107,435) Contributed capital - - - - 4,991 - - - - 4,991 Net loss for the year ended March 31, 2008 - - - - - - - - (170,067) (170,067) --------- ------- ------- ------ ----------- ---------- ----------- ---------- ------------ ----------- Balance, March 31, 2008 2,000,000 $ 2,000 25,926,247 $25,926 $17,987,173 $ - $ - $ - $(18,287,610) $ (272,511) ========= ======= ======= ====== =========== ========== =========== ========== ============ =========== </TABLE> The accompanying notes are an integral part of these financial statements. 15 KOMODO, INC. (A Development Stage Company) Statements of Cash Flows <TABLE> <S> <C> <C> <C> <C> For the For the For the From Inception Year Ended Year Ended Year Ended Through March 31, March 31, March 31, March 31, 2008 2007 2006 2008 ------------- ------------- -------------- -------------- OPERATING ACTIVITIES Net loss $ (170,067) $ (1,648,511) $ (2,259,376) $ (18,287,610) Adjustments to reconcile net loss to net cash used by operating activities: Depreciation and amortization - 50,702 46,689 313,806 Stock issued for services - 765,755 106,500 5,240,039 Stock issued for accounts payable - 591,237 - 600,037 Bad debt expense - - - 224,941 Impairment of assets 136,943 - - 4,051,427 Warrants and options issued for services - - 808,719 1,322,050 Currency translation - - - (168,626) Forgiveness of debt by shareholder - - - 90,705 Changes in operating assets and liabilities: Change in accounts receivable - - 51,559 (213,312) Change in prepaid expenses - 9,160 60,840 (85,365) Change in reserve for discontinued operations - (205,676) 64,042 Change in accounts payable 7,838 (33,777) 198,476 438,041 ------------ ------------ ------------- ------------- Net Cash Used by Operating Activities (25,286) (265,434) (1,192,269) (6,409,825) ------------ ------------ ------------- ------------- INVESTING ACTIVITIES Purchase of property and equipment - (3,975) (45,744) (3,168,281) Net Cash Used by Investing Activities - (3,975) (45,744) (3,168,281) FINANCING ACTIVITIES Stock offering costs - (16,000) (23,000) (248,249) Contributed capital 4,991 - - 4,991 Proceeds from common stock issued - 285,000 678,500 8,392,184 Proceeds from notes payable 19,710 - - 1,429,282 Net Cash Used by Financing Activities 24,701 269,000 655,500 9,578,208 NET DECREASE IN CASH (585) (409) (582,513) 102 CASH AT BEGINNING OF PERIOD 687 1,096 583,609 - CASH AT END OF PERIOD $ 102 $ 687 $ 1,096 $ 102 ============ ============ ============= ============= SUPPLIMENTAL DISCLOSURES OF CASH FLOW INFORMATION CASH PAID FOR: Interest $ - $ - $ - $ 114 Income Taxes $ - $ - $ - $ - NON-CASH FINANCING ACTIVITIES: Common stock issued for acquisition $ - $ - $ - $ 394,062 Common stock issued for debt $ - $ 591,237 $ - $ 1,810,756 Common stock issued for assets $ - $ - $ - $ 675,000 Common stock issued for services $ - $ 765,755 $ 106,500 $ 5,240,039 </TABLE> The accompanying notes are an integral part of these financial statements. 16 KOMODO, INC. (A Development Stage Company) Notes to the Financial Statements March 31, 2008 and 2007 NOTE 1 - ORGANIZATION AND HISTORY The financial statements presented are those of Komodo, Inc. ("the Company"). The Company was originally incorporated as Thermacor Technology, Inc. on September 21, 1984 under the laws of the State of Nevada and as a result of a transaction with a British Columbia corporation, Golden Panther Resources Ltd. ("GPR") effectively became acquired by because the shareholders of GPR controlled the Company after the acquisition. All companies that had been merged into the Company have been dissolved and are no longer considered to be subsidiaries. The only surviving entity is Komodo, Inc. On March 31, 1999, the Board of Directors of the Company decided to discontinue its mining operations and to focus on software development. The Company is in the development stage and has generated no revenue. It has been funded primarily through stock sales and loans from officers and shareholders. The Company's prospects are subject to the risks, expenses, and uncertainties frequently encountered in the software development industry. During 2007, the Company was unsuccessful in raising additional capital for the development of its software and accordingly closed its office and abandoned its equipment. The Company is currently seeking new business opportunities. NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES a. Accounting Method The Company's financial statements are prepared using the accrual method of accounting. The Company has elected a March 31 year-end. b. Basic Loss Per Share Year Ended March 31, 2008 ------------------------------------------------------------------- Loss Shares Per Share (Numerator) (Denominator) Amount ----------------- ------------- ------------------ $ (170,067) 25,926,247 $ (0.01) ================= ================= ================ Year Ended March 31, 2007 ---------------------------------------------------------------- Loss Shares Per Share (Numerator) (Denominator) Amount ----------------- ------------- ------------------ $ (1,648,511) 21,145,495 $ (0.08) ================== ================= ================= 17 KOMODO, INC. (A Development Stage Company) Notes to the Financial Statements March 31, 2008 and 2007 NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Continued) Year Ended March 31, 2006 ---------------------------------------------------------------- Loss Shares Per Share (Numerator) (Denominator) Amount ----------------- ------------- ------------------ $ (2,259,376) 14,355,741 $ (0.16) ================== ================= ================= The computations of basic loss per share of common stock are based on the weighted average number of shares outstanding at the date of the financial statements. Common stock equivalents are not included in the computation of basic loss per share because they are anti-dilutive. The Company had 7,550,000 in warrants as common stock equivalents outstanding at March 31, 2008, 2007 and 2006, respectively. The Company also had 1,000,000, 1,805,000 and 2,805,000 in options as common stock equivalents outstanding at March 31, 2008, 2007 and 2006, respectively. c. Provision for 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 carry forwards 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 that 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. Net deferred tax assets consist of the following components as of March 31, 2008 and 2007: 2008 2007 --------------- --------------- Deferred tax assets NOL Carryover $ 2,619,117 $ 2,554,152 Related Party Liabilities - - Deferred tax liabilities: Depreciation (41,076) (41,076) Valuation allowance (2,578,041) (2,513,076) --------------- --------------- Net deferred tax asset $ - $ - =============== =============== 18 KOMODO, INC. (A Development Stage Company) Notes to the Financial Statements March 31, 2008 and 2007 NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Continued) The income tax provision differs from the amount of income tax determined by applying the U.S. federal income tax rate of 39% to pretax income from continuing operations for the years ended March 31, 2008, 2007 and 2006 due to the following: 2008 2007 2006 . ------------ ------------ ------------ Book loss $ (64,965) $ (642,919) $ (881,157) Related party services - (70,019) 70,019 Meals and entertainment - 2,567 3,568 Stock for services/options - 537,027 315,401 Valuation allowance 64,965 173,344 492,169 ----------- ----------- ----------- $ - $ - $ - =========== =========== =========== At March 31, 2008, the Company had net operating loss carryforwards of approximately $6,773,000 that may be offset against future taxable income from the year 2007 through 2028. No tax benefit has been reported in the March 31, 2008 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 the future. d. Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the 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. e. Preferred Stock The Company has authorized 10,000,000 shares of preferred stock, par value $0.001 per share. 2,000,000 shares of the Company's preferred stock have been designated as a Class A issuance. Each share is convertible into 5 shares of common stock at $0.01 per share. 19 KOMODO, INC. (A Development Stage Company) Notes to the Financial Statements March 31, 2008 and 2007 NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Continued) f. Foreign Currency Translation Monetary assets and liabilities denominated in foreign currencies are translated into United States dollars at the period and exchange rate. Non-monetary assets are translated at the historical exchange rate and all income and expenses are translated at the exchange rates prevailing during the period. Foreign exchange currency translation adjustments are included in the stockholders' equity section. g. Fair Value of Financial Instruments As at March 31, 2008, the fair value of cash and accounts and advances payable, including amounts due to and from related parties, approximate carrying values because of the short-term maturity of these instruments. h. Newly Issued Accounting Pronouncements During the year ended March 31, 2008, the Company adopted the following accounting pronouncements: In December 2007, the FASB issued SFAS 160, "Noncontrolling interests in Consolidated Financial Statements - an amendment of ARB No. 51". This Statement amends ARB 51 to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. This Statement is effective for fiscal years beginning on or after December 15, 2008. Early adoption is not permitted. Management is currently evaluating the effects of this statement, but it is not expected to have any impact on the Company's financial statements. In February 2007 , the FASB issued SFAS 159, "The Fair Value Option for Financial Assets and Financial Liabilities. SFAS 159 creates a fair value option allowing an entity to irrevocably elect fair value as the initial and subsequent measurement h. Newly Issued Accounting Pronouncements (Continued) attribute for certain financial assets and financial liabilities, with changes in fair value recognized in earnings as they occur. SFAS 159 also requires an entity to report those financial assets and financial liabilities measured at fair value in a manner that separates those reported fair values from the carrying amounts of assets and liabilities measured using another measurement attribute on the face of the statement of financial position. Lastly, SFAS 159 requires an entity to provide information that would allow users to understand the effect on earnings of changes in the fair value on those instruments selected for the fair 20 KOMODO, INC. (A Development Stage Company) Notes to the Financial Statements March 31, 2008 and 2007 NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Continued) value election. SFAS 159 is effective for fiscal years beginning after November 15, 2007 with early adoption permitted. The Company is continuing to evaluate SFAS159 and to assess the impact on its results of operations and financial condition if an election is made to adopt the standard. In June 2007, the Financial Accounting Standards Board issued FAS No. 141R, Business Combinations - This Statement implements certain revisions to SFAS 141, including changes to the measurement of purchase consideration, measurement of goodwill, capitalization of in-process research and development, and definition of the acquisition date. This statement is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. The implementation of this pronouncement had no effect on the Company's consolidated financial statements. In September 2006, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. Where applicable, SFAS No. 157 simplifies and codifies related guidance within GAAP and does not require any new fair value measurements. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. Earlier adoption is encouraged. The Company does not expect the adoption of SFAS No. 157 to have a significant effect on its financial position or results of operation. i. Fixed Assets Fixed assets are recorded as cost. Major additions and improvements are capitalized. Minor replacements, maintenance and repairs that do not extend the useful life of the assets are expensed as incurred. Depreciation of property and equipment is determined using the straight-line method over their useful lives, primarily 5 years. During the year ended March 31, 2008, the Company recorded an impairment of $136,943 for the remaining book value of the fixed assets due to the abandonment of its offices. Depreciation expense from continuing operations for the years ended March 31, 2008, 2007 and 2006 was $0, $50,702 and $46,689, respectively. j. Concentration of Risk Financial instruments which potentially subject the Company to credit risk consist primarily of cash in bank accounts. The Company maintains 21 KOMODO, INC. (A Development Stage Company) Notes to the Financial Statements March 31, 2008 and 2007 NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Continued) its cash in a bank deposit account insured by the Federal Deposit Insurance Corporation (FDIC) up to $100,000. The Company's accounts, at times, may exceed federally insured limits. k. Share Based Payments The Company has adopted the fair value based method of accounting for stock-based employee compensation in accordance with Statement of Financial Accounting Standards Number 123 (REVISED 2004), "Share-Based Payment" (SFAS 123[R]). In accordance with SFAS 123[R], option expense of $-0-, $756,755 and $915,219 was recognized for the years ended March 31, 2008, 2007 and 2006, respectively. The expense was calculated using the Black-Scholes valuation model. NOTE 3 - GOING CONCERN The Company's financial statements are prepared using United States generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company has not an established a reliable source of revenues sufficient to cover its operating costs and to allow it to continue as a going concern which raises substantial doubt about its ability to continue as a going concern. The Company has abandoned the development of its secure e-mail service and is seeking new business opportunities. In the interim the Company's management has committed to meeting its minimal operating costs. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plan described in the preceding paragraph and eventually attain profitable operations. The accompanying financial statements do not include any adjustments that may be necessary if the Company is unable to continue as a going concern. NOTE 4 - OPTIONS AND WARRANTS On September 27, 2002, the Company established the 2002 stock option plan. The Board of Directors of the Company has sole and complete authority to determine the employees to whom options shall be granted, the number of each grant and any additional conditions and limitations. The total number of shares of common stock subject to outstanding options shall be 1,000,000 shares. The exercise price shall not be less than the fair market value of the underlying shares. On August 8, 2003, the Company established the 2003 stock option plan. The Board of Directors of the Company has sole and complete authority to determine the employees and/or consultants to who options shall be 22 KOMODO, INC. (A Development Stage Company) Notes to the Financial Statements March 31, 2008 and 2007 NOTE 4 - OPTIONS AND WARRANTS (Continued) granted, the number of each grant and any additional conditions and limitations. The total number of shares of common stock subject to outstanding options shall be 1,150,000 shares. The exercise price shall not be less than the fair market value of the underlying shares. On February 12, 2004, the Company established the 2004 stock option plan. The Board of Directors of the Company has sole and complete authority to determine the employees and/or consultants to who options shall be granted, the number of each grant and any additional conditions and limitations. The total number of shares of common stock subject to outstanding options shall be 1,000,000 shares. The exercise price at the date of grant shall not be less than the fair market value of the underlying shares. On December 1, 2004, in connection with the private placement of its common stock, the Company granted options to purchase 500,000 shares of its common stock at $1.50 per share, 500,000 shares of its common stock at $3.00 per share and 500,000 shares of its common stock at $5.00 per share. On November 11, 2005, the Company established the 2005 stock option plan to promote the interests of the Company. The Board of Directors of the Company has sole and complete authority to determine the employees and/or consultants to who options shall be granted, the number of each grant and any additional conditions and limitations. The total number of shares of common stock subject to outstanding options shall be 2,200,000 shares. The exercise price is $0.72 per share. On the same date 2,200,000 options were granted to various consultants. The grantees vested for 25% of the options with additional vesting to be determined by the board of directors. The Company recognized an expense of $310,214 for the value of the options vested using the Black-Scholes formula and assumes a 10 year maturity, a risk free interest rate of 2.81% and a volatility of 73%. On December 9, 2005, the Company established the 2005 stock option plan to promote the interests of the Company. The Board of Directors of the Company has sole and complete authority to determine the employees and/or consultants to who options shall be granted, the number of each grant and any additional conditions and limitations. The total number of shares of common stock subject to outstanding options shall be 2,200,000 shares. The exercise price is $1.00 per share. On the same date 2,200,000 options were granted to various consultants. The grantees vested for 25% of the options with additional vesting to be determined by the board of directors. The Company recognized an expense of $406,205 for the value of the options vested using the Black-Scholes formula and assumes a 10 year maturity, a risk free interest rate of 4.54% and a volatility of 60%. 23 KOMODO, INC. (A Development Stage Company) Notes to the Financial Statements March 31, 2008 and 2007 NOTE 4 - OPTIONS AND WARRANTS (Continued) A summary of the status of the Company's outstanding stock options and warrants as of March 31, 2008 and 2007 and changes during the years ended March 31, 2008 and 2007 is presented below: OPTIONS ------- 2008 2007 ---------------- ------------------ Weighted Weighted Average Average Exercise Exercise Shares Price Shares Price --------- ------ --------- ------- Outstanding, beginning of year 7,550,000 $ 0.65 7,550,000 $ 0.65 Granted - - - - Expired/Cancelled - - - - Exercised - - - - --------- ------ --------- ------- Outstanding end of year 7,550,000 $ 0.65 7,550,000 $ 0.65 ========= ====== ========= ======= Exercisable 3,175,000 $ 0.51 3,175,000 $ 0.51 ========= ====== ========= ======= Outstanding Exercisable ------------------------------- -------------------- Number Weighted Number Outstanding Average Weighted Exercisable Weighted Range of at Remaining Average at Average Exercise March 31, Contractual Exercise March 31, Exercise Prices 2008/2007 Life Price 2008/2007 Price -------------- --------- ----------- -------- --------- ---------- $ 0.21 to 1.00 7,550,000 6.65 $ 0.65 3,175,000 $ 0.51 ============== ========= =========== ======== ========= ========== $ 0.21 to 1.00 7,550,000 7.65 $ 0.65 3,175,000 $ 0.51 ============== ========= =========== ======== ========= ========== 24 KOMODO, INC. (A Development Stage Company) Notes to the Financial Statements March 31, 2008 and 2007 NOTE 4 - OPTIONS AND WARRANTS (Continued) WARRANTS -------- 2008 2007 ---------------- ------------------ Weighted Weighted Average Average Exercise Exercise Shares Price Shares Price --------- ------ --------- ------- Outstanding, beginning of year 1,805,000 $ 2.07 2,805,000 $ 2.13 Granted - - - - Expired/Cancelled (805,000) 1.50 (1,000,000) 2.13 Exercised - - - - --------- ------ ---------- ------- Outstanding end of year 1,000,000 $ 0.77 1,805,000 $ 2.07 ========= ====== ========== ======= Exercisable 1,000,000 $ 0.77 1,805,000 $ 2.07 ========= ====== ========== ======= Outstanding Exercisable ------------------------------- -------------------- Number Weighted Number Outstanding Average Weighted Exercisable Weighted Range of at Remaining Average at Average Exercise March 31, Contractual Exercise March 31, Exercise Prices 2008/2007 Life Price 2008/2007 Price -------------- --------- ----------- ------------- --------- ---------- $ 0.77 to 1.50 1,000,000 5.87 $0.77 to 1.50 1,000,000 $ 0.77 ============== ========= =========== ============= ========= ====== $ 0.77 to 5.00 1,805,000 6.68 $0.77 to 1.50 1,805,000 $ 2.10 ============== ========= =========== ============= ========= ====== In December 2006, the Company issued 305,000 warrants in connection with the private placement of its common stock. Accordingly, a compensation expense $92,300 was recorded as per the Black-Scholes calculation and assumes a 10 year maturity, a risk free interest rate of 2.81% and a volatility of 73%. NOTE 5 - RELATED PARTIES TRANSACTIONS The Company contracts with a Canadian company, Real Time, to pay its expenses in Canada. At March 31, 2008, the Company had a payable to Real Time for funds advanced for costs incurred totaling $73,852. The Company also received a cash advance of $1,100 from a shareholder. The related party payables are non interest bearing, unsecured and due upon demand. The Company owes $125,743 in accrued compensation and expense reimbursements to its management. During the year ended March 31, 2008, shareholders of the Company contributed $4,991 to capital. 25 KOMODO, INC. (A Development Stage Company) Notes to the Financial Statements March 31, 2008 and 2007 NOTE 6 - COMMON STOCK On September 28, 2005, the Company authorized the issuance of 300,000 shares of common stock at $0.88 per share. The 1,500,000 shares were issued for advertising services of $264,000. In November 2005, the Company received payment of $2,000 related to the subscription receivable. On November 1, 2005, the Company authorized the issuance of 25,000 shares of common stock at $1.00 per share. The 25,000 shares were issued for cash. On December 31, 2005, the Company authorized the issuance of 320,000 shares of common stock at $1.00 per share. The 320,000 shares were issued for cash of $320,000. On February 28, 2006, the Company authorized the issuance of 150,000 shares of common stock at $0.71 per share. The 150,000 shares were issued for advertising services of $80,036. In March 2006, the Company received payment of $89,500 related to the subscription receivable. In April 2006, the Company authorized the issuance of 171,000 shares of common stock at $0.35 per share for services. The Company also issued 25,000 shares were issued for cash of $20,000. In June 2006, the Company authorized the issuance of 190,000 shares of common stock for services valued at $80,000. The Company also issued 326,666 shares for cash of $244,687. In July 2006, the Company authorized the issuance of 27,500 shares of common stock for services valued at $4,125. In August 2006, the Company authorized the issuance of 180,000 shares of common stock for services valued at $27,000. In September 2006, the Company authorized the issuance of 153,334 shares of common stock for services valued at $23,000. In November 2006, the Company authorized the issuance of 9,853,954 shares of common stock for related party debt of $591,237. 26 SIGNATURES In accordance with the Exchange Act, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. KOMODO, INC. Dated: July 31, 2008 By: /s/Gordon Muir ------------------ Gordon Muir President In accordance with the Exchange Act, this Report has been signed below by the following persons on behalf of the Registrant, in the capacities, and on the dates, indicated. Signature Title Date /s/ Gordon Muir Director July 31,2008 ------------------ Chief Executive Officer and Gordon J. Muir Principal Financial Officer /s/ Penny Perfect Director July 31,2008 ------------------- President Penny Perfect Certifications -------------- 17 </TEXT> </DOCUMENT>