[X]
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2010
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Securities registered pursuant to Section 12(b) of the Act:
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Securities registered pursuant to section 12(g) of the Act:
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NONE
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NONE
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Large Accelerated Filer
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[ ]
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Accelerated Filer
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[ ]
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Non-accelerated Filer
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[ ]
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Smaller Reporting Company
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[X]
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(Do not check if a smaller reporting company)
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Page
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Business.
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3
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Risk Factors.
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9
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Unresolved Staff Comments.
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9
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Properties.
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10
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Legal Proceedings.
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10
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Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
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10
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Selected Financial Data.
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11
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Management’s Discussion and Analysis of Financial Condition and Results of Operation.
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11
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Quantitative and Qualitative Disclosures About Market Risk.
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14
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Financial Statements and Supplementary Data.
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14
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Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
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22
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Controls and Procedures.
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22
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Other Information.
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24
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Directors, Executive Officers and Corporate Governance.
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24
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Executive Compensation.
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28
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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
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29
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Certain Relationships and Related Transactions, and Director Independence.
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30
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Principal Accountant Fees and Services.
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30
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Exhibits and Financial Statement Schedules.
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31
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32
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33
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-
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Revenues will be generated from the direct sale of products to customers. We will order products on behalf of our customers directly from our suppliers. At the time we are receiving an order from a customer, we will order the product from the supplier. That way we avoid having to carry any inventory that can be costly and become obsolete. We would earn revenue based on the difference between our negotiated price for the product with our suppliers and the price that the customer pays;
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-
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Revenues will be generated by fees received for sales that originate from our website and are linked to those manufacturers that we will negotiate relationships with. Our customers would link to the manufacturer’s website directly from our site and we would be paid a fee for directing the traffic that results in sales;
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-
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We plan to offer banner advertising on our website for all sporting goods suppliers and manufacturers; and,
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-
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Finally, we plan to earn revenues for special promotions to enable manufacturers to launch new products - we would sell “premium shelf space” on our website. Premium shelf space will be eye appealing advertising space which will appear on the initial webpage of our Internet site.
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MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
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Website development
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$
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0
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Database
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$
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0
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Marketing and advertising
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$
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0
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Establishing an office
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$
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2,419
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Salaries
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$
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0
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Working capital
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$
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34,578
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TOTAL
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$
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36,997
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ITEM 7.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION.
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1.
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We completed our public offering which occurred on December 20, 2010. Now that we have completed it, we intend to spend the funds as described in the Use of Proceeds section of our prospectus.
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2.
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Now that our offering is complete we intend to acquire the equipment and suppliers we need to begin operations. Our office has been established. Our officers and sole director will handle our administrative duties.
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3.
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We have spent nominal time designing the website. We plan to retain a website developer to create a state of the art website to promote our products. We expect to spend $5,000 to $10,000 for the website which will include graphics and links from our site. We intend to locate smaller, new manufacturers or distributors to offer their products on a more exclusive basis.
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4.
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Marketing and advertising will be focused on promoting our website and products. The advertising campaign may also include the design and printing of various sales materials. We intend to market our website through traditional sources such as advertising in magazines, billboards, telephone directories and preparing and sending out flyers and mailers both through the regular mail and via email. Advertising and promotion will be an ongoing effort but the initial cost of developing the campaign is estimated to cost between $15,000 to $35,000.
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5.
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Once the website is fully functional and we have located and negotiated agreements with a suitable number of suppliers to offer their products for sale, we intend to hire 1 or 2 part-time salesperson(s) to fill Internet orders from customers.
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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
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FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
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Index
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F-1
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FINANCIAL STATEMENTS
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F-2
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F-3
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F-4
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F-5
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F-6
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EASTERN WORLD SOLUTIONS INC.
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||||||||||||||||||
(A DEVELOPMENT STAGE ENTERPRISE)
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||||||||||||||||||
Additional
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Total
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|||||||||||||||||
Common Stock
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Paid-in
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Accumulated
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Stockholder's
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|||||||||||||||
Shares
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Amount
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Capital
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Deficit
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Equity
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||||||||||||||
Balance, December 18, 2009
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- | $ | - | $ | - | $ | - | $ | - | |||||||||
Common Stock issued in private placement
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||||||||||||||||||
for cash at $.00001 per share
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10,000,000 | 100 | - | - | 100 | |||||||||||||
Net Loss for the period ended December 31, 2009
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(125 | ) | (125 | ) | ||||||||||||||
Balance, December 31, 2009
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10,000,000 | 100 | - | (125 | ) | (25 | ) | |||||||||||
Common stock issued in placement
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||||||||||||||||||
for cash at $0.05
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1,500,000 | 15 | 74,985 | - | 75,000 | |||||||||||||
- | ||||||||||||||||||
Net loss for the year ended December 31, 2010
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(38,223 | ) | (38,223 | ) | ||||||||||||||
Balance, December 31, 2010
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11,500,000 | $ | 115 | $ | 74,985 | $ | (38,348 | ) | $ | 36,752 |
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
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Name and Address
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Age
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Position(s)
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Bradley Miller
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42
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president, principal executive officer, treasurer,
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1716 South Gary Avenue
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principal financial officer, principal accounting
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Tulsa, OK 74104
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officer and member of the board of directors
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Nicole M. Stacy
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27
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secretary
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3330 East 36
th
Street, Apt. 18
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Tulsa, OK
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1.
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A petition under the Federal bankruptcy laws or any state insolvency law was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing;
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2.
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Convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);
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3.
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The subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities;
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i)
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Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an
associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;
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ii)
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Engaging in any type of business practice; or
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iii)
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Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws;
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4.
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The subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph 3.i in the preceding paragraph or to be associated with persons engaged in any such activity;
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5.
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Was found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated;
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6.
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Was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated;
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7.
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Was the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of:
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i)
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Any Federal or State securities or commodities law or regulation; or
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ii)
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Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or
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iii)
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Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
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8.
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Was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26)), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29)), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
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Non-
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Nonqualified
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||||||||
Equity
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Deferred
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All
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|||||||
Name
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Incentive
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Compensa-
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Other
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||||||
and
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Stock
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Option
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Plan
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tion
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Compen-
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||||
Principal
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Salary
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Bonus
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Awards
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Awards
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Compensation
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Earnings
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sation
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Total
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Position
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Year
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(US$)
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(US$)
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(US$)
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(US$)
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(US$)
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(US$)
|
(US$)
|
(US$)
|
(a)
|
(b)
|
(c)
|
(d)
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(e)
|
(f)
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(g)
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(h)
|
(i)
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(j)
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Bradley Miller
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2010
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
President
|
2009
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
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2008
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0
|
0
|
0
|
0
|
0
|
0
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0
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0
|
|
Nicole M. Stacy
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2010
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0
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0
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0
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0
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0
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0
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0
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0
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Secretary
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2009
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0
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0
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0
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0
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0
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0
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0
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0
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2008
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0
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0
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0
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0
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0
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0
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0
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0
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Fees
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Nonqualified
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||||||
Earned
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Non-Equity
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Deferred
|
|||||
or Paid in
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Stock
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Option
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Incentive Plan
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Compensation
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All Other
|
||
Cash
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Awards
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Awards
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Compensation
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Earnings
|
Compensation
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Total
|
|
Name
|
(US$)
|
(US$)
|
(US$)
|
(US$)
|
(US$)
|
(US$)
|
(US$)
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
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(h)
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Bradley Miller
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0
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0
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0
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0
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0
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0
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0
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
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Name and Address
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Number of
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Percentage of
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Beneficial Owner [1]
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Shares
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Ownership
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Bradley Miller
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11,500,000
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86.95%
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1716 S. Gary Ave
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||
Tulsa, OK 74104
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[1]
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The person named above may be deemed to be a “parent” and “promoter” of our company, within the meaning of such terms under the Securities Act of 1933, as amended, by virtue of his direct and indirect stock holdings. Mr. Miller is the only “promoter” of our Company.
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CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE.
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2010
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$
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7,900
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MaloneBailey, LLP
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2009
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$
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5,200
|
MaloneBailey, LLP
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Incorporated by reference
|
|||||
Exhibit
|
Document Description
|
Form
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Date
|
Number
|
Filed herewith
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3.1
|
Articles of Incorporation.
|
S-1
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1/25/10
|
3.1
|
|
3.2
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Bylaws.
|
S-1
|
1/25/10
|
3.2
|
|
4.1
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Specimen Stock Certificate.
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S-1
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1/25/10
|
4.1
|
|
14.1
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Code of Ethics.
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X
|
|||
31.1
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Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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X
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|||
32.1
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Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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X
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|||
99.2
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Audit Committee Charter.
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X
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|||
99.3
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Disclosure Committee Charter.
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X
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EASTERN WORLD SOLUTIONS INC.
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||
(Registrant)
|
||
BY:
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BRADLEY MILLER
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Bradley Miller
|
||
President, Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer, Treasurer and sole member of the Board of Directors
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Signature
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Title
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Date
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BRADLEY MILLER
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President, Principal Executive Officer, Principal
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February 14, 2011
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Bradley Miller
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Financial Officer, Principal Accounting Officer,
|
|
Treasurer and sole member of the Board of
|
||
Directors
|
Incorporated by reference
|
|||||
Exhibit
|
Document Description
|
Form
|
Date
|
Number
|
Filed herewith
|
3.1
|
Articles of Incorporation.
|
S-1
|
1/25/10
|
3.1
|
|
3.2
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Bylaws.
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S-1
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1/25/10
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3.2
|
|
4.1
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Specimen Stock Certificate.
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S-1
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1/25/10
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4.1
|
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14.1
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Code of Ethics.
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X
|
|||
31.1
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Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
X
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|||
32.1
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Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
X
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|||
99.2
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Audit Committee Charter.
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X
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|||
99.3
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Disclosure Committee Charter.
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X
|
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The Company has adopted eight Corporate Values (Focus, Respect, Excellence, Accountability, Teamwork, Integrity, Very Open Communications and Enjoying Our Work) to provide a framework for all employees in conducting ourselves in our jobs. These policies are not intended to substitute for those Values, but will serve as guidelines in helping you to conduct the Company’s business in accordance with our Values. Compliance requires meeting the spirit, as well as the literal meaning, of the law, the policies and the Values. It is expected that you will use common sense, good judgment, high ethical standards and integrity in all your business dealings.
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If you encounter a situation you are not able to resolve by reference to these policies, ask for help. Contact Bradley Miller, Chief Executive Officer, who has been identified as responsible for overseeing compliance with these policies.
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Violations of the law or the Company’s policies will subject employees to disciplinary action, up to and including termination of employment. In addition, individuals involved may subject themselves and the Company to severe penalties including fines and possible imprisonment. Compliance with the law and high ethical standards in the conduct of Company business should be a top priority for each employee, officer and director.
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Bradley Miller, our Chief Executive Officer, has been appointed as Compliance Officer of the Company, responsible for overseeing compliance with, and enforcement of, all Company policies.
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Employees are expected to be familiar with these policies as they apply to their duties. They should consult with their managers if they need assistance in understanding or interpreting these policies. Each employee is required to follow these policies and to comply with their terms. A refusal by any employee to agree to be bound by these policies shall be grounds for discipline up to and including dismissal.
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Any employee who, in good faith, has reason to believe a Company operation or activity is in violation of the law or of these policies must call the matter to the attention of Bradley Miller, our Chief Executive Officer. All reports will be reviewed and investigated and as necessary under the circumstances, and the reporting employee should provide sufficient information to enable a complete investigation to be undertaken.
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Any employee who makes an allegation in good faith reasonably believing that a person has violated these policies or the law, will be protected against retaliation.
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The Company’s policy is to comply fully with competition and antitrust laws throughout the world. These laws generally prohibit companies from using illegal means to maintain, obtain or attempt to obtain a monopoly in a market. They also prohibit companies from engaging in unfair trade practices.
“Unfair trade practices
” include fixing prices, dividing markets, agreeing with competitors not to compete, or agreeing to boycott certain customers. It is advised that you consult with the Bradley Miller before attending a meeting with a party who may be viewed as a competitor.
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Securities laws prohibit anyone who is in possession of material, non-public information (“Insider Information”) about a company from purchasing or selling stock of that company, or communicating the information to others. Information is considered “material” if a reasonable investor would consider it to be important in making a decision to buy or sell that stock. Some examples include financial results and projections, new products, acquisitions, major new contracts or alliances prior to the time that they are publicly announced. Employees who become aware of such Inside Information about the Company must refrain from trading in the shares of the Company until the Inside Information is publicly announced.
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Employees must also refrain from disclosing that information to persons who do not have a Company need to know, whether they are inside the Company or outside, such as spouses, relatives or friends.
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The Company makes regular formal disclosures of its financial performance and results of operations to the investment community. We also regularly issue press releases. Other than those public statements, which go through official Company channels, employees are prohibited from communicating outside the Company about the Company’s business, financial performance or future prospects. Such communications include questions from securities analysts, reporters or other news media, but also include seemingly innocent discussions with family, friends, neighbors or acquaintances.
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The Company is required to maintain a variety of records for purposes of reporting to the government. The Company requires all employees to maintain full compliance with applicable laws and regulations requiring that its books of account and records be accurately maintained. Specifics of these requirements are available from Bradley Miller.
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The Company is committed to providing a work environment that is free from unlawful harassment and discrimination, and respects the dignity of its employees. The Company has policies covering various aspects of its relationship with its employees, as well as employees’ relationships with each other. For more detailed information, you should consult Bradley Miller. Each employee is expected to be familiar with these policies and to abide by them.
|
|
The Company is committed to protecting the health and safety of our employees, as well as the environment in general. The Company expects employees to obey all laws and regulations designed to protect the environment, and the health and safety of our employees, and to obtain and fully observe all permits necessary to do business.
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|
At the very least, all employees should be familiar with and comply with safety regulations applicable to their work areas. The Company will make, to the extent possible, reasonable accommodations for the known physical or mental limitations of our employees. Employees who require an accommodation should contact Bradley Miller. The Company will then engage in an interactive process to determine what reasonable accommodations may exist.
|
|
Each employee is expected to avoid any activity, investment or association that interferes with the independent exercise of his or her judgment in the Company’s best interests (“Conflicts of Interest”). Conflicts of Interest can arise in many situations. They occur most often in cases where the employee or the employee’s family obtains some personal benefit at the expense of the Company’s best interests.
|
|
No employee, or any member of employee’s immediate family, shall accept money, gifts of other than nominal value, unusual entertainment, loans, or any other preferential treatment from any customer or supplier of the Company where any obligation may be incurred or implied on the giver or the receiver or where the intent is to prejudice the recipient in favor of the provider. Likewise, no employee shall give money, gifts of other than nominal value, unusual entertainment or preferential treatment to any customer or supplier of the Company, or any employee or family members thereof, where any obligation might be incurred or implied, or where the intent is to prejudice the recipient in favor of the Company. No such persons shall solicit or accept kickbacks, whether in the form of money, goods, services or otherwise, as a means of influencing or rewarding any decision or action taken by a foreign or domestic vendor, customer, business partner, government employee or other person whose position may affect the Company’s business.
|
|
No employee shall use Company property, services, equipment or business for personal gain or benefit.
|
|
Employees may not: (1) act on behalf of, or own a substantial interest in, any company or firm that does business, or competes, with the Company; (2) conduct business on behalf of the Company with any company or firm in which the employee or a family member has a substantial interest or affiliation. Exceptions require advance written approval from the Legal Department.
|
|
Employees should not create the appearance that they are personally benefitting in any outside endeavor as a result of their employment by the Company, or that the Company is benefitting by reason of their outside interests. Any employee who is not sure whether a proposed action would present a conflict of interest or appear unethical should consult with Bradley Miller.
|
|
The Company must comply with a variety of laws around the world regarding its activities. In some cases, the law prohibits the disclosure of information, whether the disclosure occurs within the U.S. or elsewhere, and whether or not the disclosure is in writing.
|
|
Payments or gifts to non-U.S. government officials are prohibited by law and by Company policy. The Foreign Corrupt Practices Act precludes payments to non-U.S. government officials for the purpose of obtaining or retaining business, even if the payment is customary in that country. This law applies anywhere in the world to U.S. citizens, nationals, residents, businesses or employees of U.S. businesses. Because Eastern World Solutions Inc. is a U.S. company, this law applies to the Company and all of its subsidiaries. Any questions on this policy should be directed to Bradley Miller.
|
|
The Company is prohibited by law from making any contributions or expenditures in connection with any U.S. national election. This includes virtually any activity that furnishes something of value to an election campaign for a federal office. Use of the Company’s name in supporting any political position or ballot measure, or in seeking the assistance of any elected representative, requires the specific approval of the Chairman and Chief Executive Officer of the Company. Political contributions or expenditures are not to be made out of Company funds in any foreign country, even if permitted by local law, without the consent of the Company’s Chairman and Chief Executive Officer.
|
|
U.S. law also prohibits giving, offering, or promising anything of value to any public official in the U.S. or any foreign country to influence any official act, or to cause an official to commit or omit any act in violation of his or her lawful duty. Company employees are expected to comply with these laws.
|
|
Vendors, contractors, consultants or temporary workers who are acting on the Company’s behalf, or on Company property, are expected to follow the law, Company policies and honor Company Values. Violations will subject the person or firm to sanctions up to and including loss of the contract, contracting or consulting agreement, or discharge from temporary assignment.
|
|
This Code of Ethics is not intended to cover every possible situation in which you may find yourself. It is meant to give you the boundaries within which the Company expects you to conduct yourself while representing Eastern World Solutions Inc. You may find yourself in a situation where there is no clear guidance given by this Code of Ethics. If that occurs, return to the foundations stated earlier: common sense, good judgment, high ethical standards and integrity. And refer to the Company’s Values. In addition, there are many resources upon which you may rely: your management chain, Human Resources, Legal or other Eastern World Solutions Inc. departments, and the CEO. Together we can continue to make Eastern World Solutions Inc. a company that sets a standard for managing real estate companies.
|
______________________________________
|
|
Employee
|
1.
|
I have reviewed this
Form 10-K for the period ended December 31, 2010
of
Eastern World Solutions Inc.
;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b.
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c.
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and,
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d.
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant
=
s most recent fiscal quarter (the registrant
=
s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant
=
s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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|
a.
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant
=
s ability to record, process, summarize and report financial information; and
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b.
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant
=
s internal control over financial reporting.
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Date: February 14, 2011
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BRADLEY MILLER
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Bradley Miller
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Principal Executive Officer and Principal Financial Officer
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(1)
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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The information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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BRADLEY MILLER
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Bradley Miller
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|
Chief Executive Officer and Chief Financial Officer
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(1)
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Communications - The chairperson and others on the committee shall, to the extent appropriate, have contact throughout the year with senior management, other committee chairpersons, and other key committee advisors, external and internal auditors, etc., as applicable, to strengthen the committee's knowledge of relevant current and prospective business issues.
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(2)
|
Committee Education/Orientation - The committee, with management, shall develop and participate in a process for review of important financial and operating topics that present potential significant risk to the company. Additionally, individual committee members are encouraged to participate in relevant and appropriate self-study education to assure understanding of the business and environment in which the company operates.
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(3)
|
Annual Plan - The committee, with input from management and other key committee advisors, shall develop an annual plan responsive to the "primary committee responsibilities" detailed herein. The annual plan shall be reviewed and approved by the full board.
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(4)
|
Meeting Agenda - Committee meeting agendas shall be the responsibility of the committee chairperson, with input from committee members. It is expected that the chairperson would also ask for management and key committee advisors, and perhaps others, to participate in this process.
|
(5)
|
Committee Expectations and Information Needs - The committee shall communicate committee expectations and the nature, timing, and extent of committee information needs to management, internal audit, and external parties, including external auditors. Written materials, including key performance indicators and measures related to key business and financial risks, shall be received from management, auditors, and others at least one week in advance of meeting dates. Meeting conduct will assume board members have reviewed written materials in sufficient depth to participate in committee/board dialogue.
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(6)
|
External Resources -The committee shall be authorized to access internal and external resources, as the committee requires, to carry out its responsibilities.
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(7)
|
Committee Meeting Attendees - The committee shall request members of management, counsel, internal audit, and external auditors, as applicable, to participate in committee meetings, as necessary, to carry out the committee responsibilities. Periodically and at least annually, the committee shall meet in private session with only the committee members. It shall be understood that either internal or external auditors, or counsel, may, at any time, request a meeting with the audit committee or committee chairperson with or without management attendance. In any case, the committee shall meet in executive session separately with internal and external auditors, at least annually.
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(8)
|
Reporting to the Board of Directors - The committee, through the committee chairperson, shall report periodically, as deemed necessary, but at least semi-annually, to the full board. In addition, summarized minutes from committee meetings, separately identifying monitoring activities from approvals, shall be available to each board member at least one week prior to the subsequent board of directors meeting.
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(9)
|
Committee Self Assessment - The committee shall review, discuss, and assess its own performance as well as the committee role and responsibilities, seeking input from senior management, the full board, and others. Changes in role and/or responsibilities, if any, shall be recommended to the full board for approval.
|
(1)
|
The external auditors, in their capacity as independent public accountants, shall be responsible to the board of directors and the audit committee as representatives of the shareholders.
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(2)
|
As the external auditors review financial reports, they will be reporting to the audit committee. They shall report all relevant issues to the committee responsive to agreed-on committee expectations. In executing its oversight role, the board or committee should review the work of external auditors.
|
(3)
|
The committee shall annually review the performance (effectiveness, objectivity, and independence) of the external and internal auditors. The committee shall ensure receipt of a formal written statement from the external auditors consistent with standards set by the Independent Standards Board and the Securities and Exchange Commission. Additionally, the committee shall discuss with the auditor relationships or services that may affect auditor objectivity or independence. If the committee is not satisfied with the auditors' assurances of independence, it shall take or recommend to the full board appropriate action to ensure the independence of the external auditor.
|
(4)
|
The internal audit function shall be responsible to the board of directors through the committee.
|
(5)
|
If either the internal or the external auditors identify significant issues relative to the overall board responsibility that have been communicated to management but, in their judgment, have not been adequately addressed, they should communicate these issues to the committee chairperson.
|
(6)
|
Changes in the directors of internal audit or corporate compliance shall be subject to committee approval.
|
(1)
|
Risk Management - The company's business risk management process, including the adequacy of the company's overall control environment and controls in selected areas representing significant financial and business risk.
|
(2)
|
Annual Reports and Other Major Regulatory Filings - All major financial reports in advance of filings or distribution.
|
(3)
|
Internal Controls and Regulatory Compliance - The company's system of internal controls for detecting accounting and reporting financial errors, fraud and defalcations, legal violations, and noncompliance with the corporate code of conduct.
|
(4)
|
Internal Audit Responsibilities - The annual audit plan and the process used to develop the plan. Status of activities, significant findings, recommendations, and management's response.
|
(5)
|
Regulatory Examinations - SEC inquiries and the results of examinations by other regulatory authorities in terms of important findings, recommendations, and management's response.
|
(6)
|
External Audit Responsibilities - Auditor independence and the overall scope and focus of the annual/interim audit, including the scope and level of involvement with unaudited quarterly or other interim-period information.
|
(7)
|
Financial Reporting and Controls - Key financial statement issues and risks, their impact or potential effect on reported financial information, the processes used by management to address such matters, related auditor views, and the basis for audit conclusions. Important conclusions on interim and/or year-end audit work in advance of the public release of financials.
|
(8)
|
Auditor Recommendations - Important internal and external auditor recommendations on financial reporting, controls, other matters, and management's response. The views of management and auditors on the overall quality of annual and interim financial reporting.
|
(1)
|
The code of ethical conduct.
|
(2)
|
Changes in important accounting principles and the application thereof in both interim in and annual financial reports.
|
(3)
|
Significant conflicts of interest and related-party transactions.
|
(4)
|
External auditor performance and changes in external audit firm (subject to ratification by the full board).
|
(5)
|
Internal auditor performance and changes in internal audit leadership and/or key financial management.
|
(6)
|
Procedures for whistle blowers.
|
(7)
|
Pre-approve allowable services to be provided by the auditor.
|
(8)
|
Retention of complaints.
|
Subject to the supervision and oversight of Senior Officers, the Committee shall be responsible for the following tasks:
|
||
|
-
|
Review and, as necessary, help revise the Corporation’s controls and other procedures (“Disclosure Controls and Procedures”) to ensure that (i) information required by the Corporation to be disclosed to the Securities and Exchange Commission (the “SEC”), and other written information that the Corporation will disclose to the public is recorded, processed, summarized and reported accurately and on a timely basis, and (ii) such information is accumulated and communicated to management, including the Senior Officers, as appropriate to allow timely decisions regarding required disclosure.
|
|
-
|
Assist in documenting, and monitoring the integrity and evaluating the effectiveness of, the Disclosure Controls and Procedures.
|
|
-
|
Review the Corporation’s (i) Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, proxy statement, material registration statements, and any other information filed with the SEC (collectively, the “Reports”), (ii) press releases containing financial information, earnings guidance, forward-looking statements, information about material transactions, or other information material to the Corporation’s security holders, (iii) correspondence broadly disseminated to shareholders, and (iv) other relevant communications or presentations (collectively, the “Disclosure Statements”).
|
-
|
Discuss information relative to the Committee’s responsibilities and proceedings, including (i) the preparation of the Disclosure Statements and (ii) the evaluation of the effectiveness of the Disclosure Controls and Procedures.
|
-
|
Control Environment:
The directives of the Board and Audit Committee; the integrity and ethical values of the Corporation’s officers and employees, including the “tone at the top”; the Corporation’s Code of Conduct; and the philosophy and operating style of management, including how employees are organized and how authority is delegated.
|
|
|
-
|
Risk Assessment:
The identification and analysis of relevant risks to achieving the goal of accurate and timely disclosure, forming a basis for determining how the risks should be managed.
|
|
-
|
Control Activities:
The procedures to ensure that necessary actions are taken to address and handle risks to achievement of objectives.
|
|
-
|
Information and Communication:
The accumulation, delivery and communication of financial information throughout (i.e., up, down and across) the organization.
|
|
-
|
Monitoring:
The assessment of the quality of the financial reporting systems over time through ongoing monitoring and separate evaluations, including through regular management supervision and reporting of deficiencies upstream.
|