UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10Q
(Mark One)
[ X ][X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31,JUNE 30, 2009
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from __________ to ___________
Commission file number: 000-27055
CONCORD VENTURES, INC.
(Exact name of registrant as specified in its charter)
COLORADO 84-1472763
(State of Incorporation) (IRS Employer ID Number)
2460 WEST 26TH AVENUE, SUITE 380-C, DENVER, COLORADO 80211
(Address of principal executive offices)
303-380-8280
(Registrant's Telephone number)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the past 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to the filing requirements for
the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 foof Regulation S-T (ss.232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files).
Yes [ ] No [ ]
Indicate by check mark whether the registrant is a large accelerated file, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] (Do not check if a smaller reporting company)
Smaller reporting company [X]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [X] No [ ]
Indicate the number of share outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
As of May 11,July 31, 2009, there were 2,359,407 shares of the registrant's common
stock, $0.0001 par value, issued and outstanding.
CONCORD VENTURES, INC.
INDEX
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited) Page
----
Balance Sheet - March 31, 2009 and December 31, 2008 3
Statement of Operations - Three months ended March 31, 2009 and 2008 4
Statement of Cash Flows - Three months ended March 31, 2009 and 2008 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 18
Item 3. Quantitative and Qualitative Disclosures About Market Risk 24
Item 4. Controls and Procedures 24
Item 4T. Controls and Procedures 24
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 24
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 25
Item 3. Defaults Upon Senior Securities 25
Item 4. Submission of Matters to a Vote of Security Holders 25
Item 5. Other Information 26
Item 6. Exhibits 26
SIGNATURES 27
CONCORD VENTURES, INC.
INDEX
PART I - FINANCIAL INFORMATION Page
----
Item 1. Financial Statements (Unaudited).............................................................3
Balance Sheet - June 30, 2009 and December 31, 2008 .........................................3
Statement of Operations - Three and six months ended June 30, 2009 and 2008................4
Statement of Cash Flows - Six months ended June 30, 2009 and 2008............................5
Notes to Financial Statements ...............................................................6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations...................................................................15
Item 3. Quantitative and Qualitative Disclosures About Market Risk .................................22
Item 4. Controls and Procedures.....................................................................22
Item 4T. Controls and Procedures.....................................................................22
PART II - OTHER INFORMATION
Item 1. Legal Proceedings ..........................................................................23
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds ................................23
Item 3. Defaults Upon Senior Securities.............................................................23
Item 4. Submission of Matters to a Vote of Security Holders ........................................23
Item 5. Other Information...........................................................................24
Item 6. Exhibits....................................................................................25
SIGNATURES ..............................................................................................26
2
PART I
ITEM 1. FINANCIAL STATEMENTS
CONCORD VENTURES, INC.
BALANCE SHEETS
MARCH 31,JUNE 30, DECEMBER 31,
2009 2008
(Unaudited) (Unaudited)Unaudited Audited
ASSETS
TOTAL ASSETS $ 0- $ 0-
=============== ===============
LIABILITIES & STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts Payable $ 169,203173,623 $ 150,390
Accrued Expenses 97,64498,741 96,915
Capital Leases 210,960 210,960
Operating Leases 196,216 196,216
Other Loans 49,250- Relared Parties 65,809 30,686
Convertible Subordinated Notes 0 0
--------------- ---------------
Total Current Liabilities 723,274745,350 685,167
LONG TERM LIABILITIES 0 0- -
COMMITMENTS AND CONTINGENCIES (Note. 8)9)
STOCKHOLDERS' DEFICIT
Class A Common Stock; $0.0001 par value, 100,000,000, 1,148 1,148
shares authorized as at March 31,June 30, 2009 and December 31, 2008,
2,359,407 shares issued and outstanding as at March 31,June 30, 2009 and
December 31, 2008
Additional Paid In Capital 16,872,734 16,872,733
Accumulated Deficit (17,597,155)(17,619,231) (17,559,048)
--------------- ---------------
Total Stockholders' Deficit (723,274)(745,350) (685,167)
--------------- ---------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ (0)- $ (0)-
=============== ===============
See accompanying Notes to Financial Statements.
3
CONCORD VENTURES, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)UNAUDITED
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED MARCH 31,ENDED
JUNE 30, JUNE 30,
2009 2008 2009 2008
------------- -------------- ---------------------------- -------------
OPERATING EXPENSES / (INCOME)
Gain on Statute Barred Liabilities $ - $ - $ - $ -
General & Administrative Expenses 37,378 45,18520,979 23,731 58,356 68,915
------------- -------------- ---------------------------- -------------
Total Operating Expenses / (Income) 37,378 45,18520,979 23,731 58,356 68,915
OPERATING PROFIT / (LOSS) (37,378) (45,185)(20,979) (23,731) (58,356) (68,915)
Interest and Other Income / (Expenses) Net (730) (55)(1,097) (334) (1,827) (389)
------------- -------------- ---------------------------- -------------
Profit / (Loss) before Income Taxes (38,107) (45,239)(22,076) (24,064) (60,183) (69,304)
Provision for Income Taxes - - - -
------------- -------------- ---------------------------- -------------
NET PROFIT / (LOSS) $ (38,107)(22,076) $ (45,239)(24,064) $ (60,183) $ (69,304)
============= ============== ============================ =============
NET PROFIT / (LOSS) PER COMMON SHARE
Basic & Diluted ($0.02)0.01) ($0.02)0.01) ($0.03) ($0.03)
============= ============== ============================ =============
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic & Diluted 2,359,407 2,257,986 2,359,407 2,257,986
============= ============== ============================ =============
See accompanying Notes to Financial Statements.
4
CONCORD VENTURES, INC.
STATEMENT OF CASH FLOWS
(Unaudited)UNAUDITED
FOR THE THREESIX MONTHS ENDED
MARCH 31,
2008JUNE 30,
2009 2008
------------ -------------
CASH FLOW PROVIDED BY / (USED IN) OPERATING ACTIVITIES
NET PROFIT / (LOSS) $ (38,107)(60,183) $ (45,239)(69,304)
ADJUSTMENTS TO RECONCILE NET PROFIT / (LOSS) TO NET CASH
PROVIDED BY / (USED IN) OPERATING ACTIVITIES
0 0
CHANGES IN OPERATING ASSETS & LIABILITIES
(Increase) / decrease in Prepaid Expenses - 208
Increase / (decrease) in Accounts Payable 18,814 28,75623,233 30,455
Increase / (decrease) in Accrued Expenses 729 5261,827 7,388
-------------- -------------
Total Cash Flow provided by / (used in) Operating Activities 18,564 (15,958)(35,123) (31,253)
CASH FLOW FROM INVESTING ACTIVITIES 0 0- -
-------------- -------------
Total Cash Flow provided by / (used in) Investing Activities 0 0- -
CASH FLOW FROM FINANCING ACTIVITIES
Increase in Other Loans 18,564 13,15435,123 25,449
Issue of Stock - -
-------------- -------------
Total Cash Flow provided by / (used in) Financing Activities 18,564 13,15435,123 25,449
INCREASE / (DECREASE) IN CASH & CASH EQUIVALENTS $ 0- $ (2,804)(5,804)
============== =============
Cash and Cash Equivalents at the beginning of the period $ 0- $ 5,979
============== =============
Cash and Cash Equivalents at the end of the period $ 0- $ 3,175175
============== =============
SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION
Cash paid for interest $ 0- $ 0-
-------------- -------------
Cash paid for income tax $ 0- $ 0-
-------------- -------------
No corporate bank account was maintained during the three months ended March 31, 2007.
No corporate bank account was maintained during the six months ended June 30,
2009.
See accompanying Notes to Financial Statements.
5
CONCORD VENTURES, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31,JUNE 30, 2009
(UNAUDITED)
1. NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES:POLICIES
Nature of Operations
Concord Ventures, Inc. was incorporated in August 1998 in the State of Colorado.
On February 16, 2001, we sold our entire business, and all of our assets, for
the benefit of our creditors under a Chapter 11 reorganization. We were
subsequently dismissed from the Chapter 11 reorganization, effective March 13,
2001, at which time the last of our remaining directors resigned. On March 13,
2001, we had no business or other source of income, no assets, no employees or
directors, outstanding liabilities of approximately $8.4 million and had
terminated our duty to file reports under securities law.
In March 2006, we appointed a new board of directors and are now focused on
reaching satisfactory negotiated settlements with our outstanding creditors,
bringing our financial records up to date, seeking a listing on the over the
counter bulletin board, raising debt and/or equity to fund negotiated
settlements with our creditors and to meet our ongoing operating expenses and
attempting to merge with another entity with experienced management and
opportunities for growth in return for shares of our common stock to create
value for our shareholders. There can be no assurance that this series of events
will be successfully completed.
Our business activities induring the threesix months ended March 31,June 30, 2009 and 2008 were
focused on the settlement of our outstanding liabilities and the renewal of and
maintaining our SEC reporting status.
On July 25, 2007, we filed a Form 10-SB12G with the SEC seeking to become a
fully reporting company pursuant to Section 12 (g) of the Securities Exchange
Act of 1934. The filing became effective September 23, 2007, at which time we
succeeded in becoming a fully reporting company pursuant to Section 12 (g) of
the Securities Exchange Act of 1934.
In February 2008, we were re-listed on the OTC Bulletin Board and so are now
listed on both the Pink Sheets and the OTC Bulletin Board and trade under the
symbol "CCVR""CCVR."
On April 29, 2008, we held our annual meeting of stockholders at which meeting
the majority of stockholders approved resolutions to re-elect Messrs. Cutler,
Whiting and Green as our directors, reincorporate the Company in Delaware,
authorize an up to 3 for 1 reverse split of our shares of common stock, change
our name to a name to be chosen at the discretion of the Board of directors and
to ratify the appointment of our auditor, Larry O'Donnell, CPA, PC.
On August 22, 2008, we issued 75,000 of restricted common stock, valued at
$75,000, to three consultants (25,000 shares each) as compensation for services
they had provided to us One of the consultants is an existing shareholder of
ours. We further issued 26,421 shares of restricted common stock to David
Cutler, our President and a director of ours, in full settlement of the our debt
to Mr. Cutler as at June 30, 2008 of $26,421.
6
On January 6, 2009, Mr. Wesley Whiting resigned as a director of ours for
personal reasons. We are actively seeking to appoint a replacement for Mr.
Whiting as a non-executive director.
6
Basis of Presentation:
The accompanying unaudited financial statements of Concord Ventures, Inc. have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Article
10 of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. In our opinion the financial statements include all
adjustments (consisting of normal recurring accruals) necessary in order to make
the financial statements not misleading. Operating results for the three and six
ended March 31,June 30, 2009 are not necessarily indicative of the results that may be
expected for the year ended December 31, 2009. For more complete financial
information, these unaudited financial statements should be read in conjunction
with the audited financial statements for the year ended December 31, 2008
included in our Form 10-K filed with the SEC.
Significant Accounting Policies:
Cash and Cash Equivalents -- Cash and cash equivalents consist of cash and
highly liquid debt instruments with original maturities of less than three
months.
Impairment of Long-Lived and Intangible Assets -- In the event that facts and
circumstances indicated that the cost of long-lived and intangible assets may be
impaired, an evaluation of recoverability was performed. If an evaluation was
required, the estimated future undiscounted cash flows associated with the asset
were compared to the asset's carrying amount to determine if a write-down to
market value or discounted cash flow value was required.
Financial Instruments -- The estimated fair values for financial instruments was
determined at discrete points in time based on relevant market information.
These estimates involved uncertainties and could not be determined with
precision. The carrying amounts of notes receivable, accounts receivable,
accounts payable and accrued liabilities approximated fair value because of the
short-term maturities of these instruments. The fair value of notes payable
approximated to their carrying value as generally their interest rates reflected
our effective annual borrowing rate.
Income Taxes -- We account for income taxes under the liability method, which
requires recognition of deferred tax assets and liabilities for the expected
future tax consequences of events that have been included in the financial
statements or tax returns. Under this method, deferred tax assets and
liabilities are determined based on the difference between the financial
statements and tax bases of assets and liabilities using enacted tax rates in
effect for the year in which the differences are expected to reverse.
Comprehensive Income (Loss) -- Comprehensive income is defined as all changes in
stockholders' equity (deficit), exclusive of transactions with owners, such as
capital investments. Comprehensive income includes net income or loss, changes
in certain assets and liabilities that are reported directly in equity such as
translation adjustments on investments in foreign subsidiaries and unrealized
7
gains (losses) on available-for-sale securities. From our inception there were
no differences between our comprehensive loss and net loss.
7
Our comprehensive loss was identical to our net loss for the three and six
months ended March 31,June 30, 2009 and 2008.
Income (Loss) Per Share -- The income (loss) per share is presented in
accordance with the provisions of Statement of Financial Accounting Standards
(SFAS) No. 128, Earnings Per Share. SFAS No. 128 replaced the presentation of
primary and fully diluted earnings (loss) per share (EPS) with a presentation of
basic EPS and diluted EPS. Basic EPS is calculated by dividing the income or
loss available to common stockholders by the weighted average number of common
stock outstanding for the period. Diluted EPS reflects the potential dilution
that could occur if securities or other contracts to issue common stock were
exercised or converted into common stock. Diluted EPS was the same as Basic EPS
for the three and six months ended March 31,June 30, 2009 and 2008 as the exercise price
of our outstanding stock options was substantially in excess of our share price
throughout these periods.
Stock-Based Compensation -- As permitted under the SFAS No. 123, Accounting for
Stock-Based Compensation, we account for our stock-based compensation in
accordance with the provisions of Accounting Principles Board (APB) Opinion No.
25, Accounting for Stock Issued to Employees. As such, compensation expense is
recorded on the date of grant if the current market price of the underlying
stock exceeds the exercise price. Certain pro forma net income and EPS
disclosures for employee stock option grants are also included in the notes to
the financial statements as if the fair value method as defined in SFAS No. 123
had been applied. Transactions in equity instruments with non-employees for
goods or services are accounted for by the fair value method.
Use of Estimates -- The preparation of our consolidated financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported in these
financial statements and accompanying notes. Actual results could differ from
those estimates. Due to uncertainties inherent in the estimation process, it is
possible that these estimates could be materially revised within the next year.
Business Segments -- We believe that our activities during the three and six
months ended March 31,June 30, 2009 and 2008 comprised a single segment.
Recently Issued Accounting Pronouncements-- In December 2007, the FASB issued
SFAS No. 141 (Revised 2007), Business Combinations, or SFAS No. 141R. SFAS No.
141R will change the accounting for business combinations. Under SFAS No. 141R,
an acquiring entity will be required to recognize all the assets acquired and
liabilities assumed in a transaction at the acquisition-date fair value with
limited exceptions. SFAS No. 141R will change the accounting treatment and
disclosure for certain specific items in a business combination. SFASNo. 141R
applies prospectively to business combinations for which the acquisition date is
on or after the beginning of the first annual reporting period beginning on or
after December 15, 2008. Accordingly, any business combinations we engage in
will be recorded and disclosed following existing GAAP until January 1, 2009. We
expect SFAS No. 141R will have an impact on accounting for business combinations
once adopted but the effect is dependent upon acquisitions at that time. We are
still assessing the impact of this pronouncement.
8
In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements--An Amendment of ARB No. 51, or SFAS No. 160.
SFAS No. 160 establishes new accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the deconsolidation of a
subsidiary. SFAS No. 160 is effective for fiscal years beginning on or after
December 15, 2008. We believe that SFAS 160 should not have a material impact on
our financial position or results of operations.
In December 2007, the SEC issued Staff Accounting Bulletin (SAB) No. 110
regarding the use of a "simplified" method, as discussed in SAB No. 107 (SAB
107), in developing an estimate of expected term of "plain vanilla" share
options in accordance with SFAS No. 123 (R), Share-Based Payment. In particular,
the staff indicated in SAB 107 that it will accept a company's election to use
the simplified method, regardless of whether the company has sufficient
information to make more refined estimates of expected term. At the time SAB 107
was issued, the staff believed that more detailed external information about
employee exercise behavior (e.g., employee exercise patterns by industry and/or
other categories of companies) would, over time, become readily available to
companies. Therefore, the staff stated in SAB 107 that it would not expect a
company to use the simplified method for share option grants after December 31,
2007. The staff understands that such detailed information about employee
exercise behavior may not be widely available by December 31, 2007. Accordingly,
the staff will continue to accept, under certain circumstances, the use of the
simplified method beyond December 31, 2007. The Company currently uses the
simplified method for "plain vanilla" share options and warrants, and will
assess the impact of SAB 110 for fiscal year 2009. It is not believed that this
will have an impact on the Company's consolidated financial position, results of
operations or cash flows
In December 2007, the Emerging Issues Task Force issued EITF No. 07-1,
Accounting for Collaborative Arrangements. EITFNo.EITF No. 07-1 requires that
transactions with third parties (i.e., revenue generated and costs incurred by
the partners) should be reported in the appropriate line item in each company's
financial statement and includes enhanced disclosure requirements regarding the
nature and purpose of the arrangement, rights and obligations under the
arrangement, accounting policy, amount and income statement classification of
collaboration transactions between the parties. EITFNo.EITF No. 07-1 is effective
January 1, 2009 and shall be applied retrospectively to all prior periods
presented for all collaborative arrangements existing as of the effective date.
The Company does not expect that the adoption of EITF No. 07-1 will have a
material effect on its consolidated results of operations or financial condition.
In March 2008, the FASB issued FAS No. 161, Disclosures about Derivative
Instruments and Hedging Activities, an amendment of FASB Statement No. 133. FAS
No. 161 changes the disclosure requirements for derivative instruments and
hedging activities. Entities are required to provide disclosures about (a) how
and why derivative instruments are used, (b) how derivative instruments and
related hedged items are accounted for under FAS No. 133, Accounting for
Derivative Instruments and Hedging Activities, and its related interpretations,
and (c) how derivative instruments and related hedged items affect the entity's
financial position, financial performance, and cash flows. FAS No. 161 is
effective January 1, 2009. The Company does not expect that the adoption of FAS
No. 161 will have a material effect on its consolidated results of operations or financial
condition.
9
In April 2008, the FASB issued FSP FAS 142-3, "Determination of the Useful Life
of Intangible Assets" ("FSP FAS 142-3"). FSP FAS 142-3 amends the factors that
should be considered in developing renewal or extension assumptions used to
determine the useful life of a recognized intangible asset under FASB Statement
No. 142, "Goodwill and Other Intangible Assets". FSP FAS 142-3 also requires
expanded disclosure related to the determination of intangible asset useful
lives. FSP FAS 142-3 is effective for financial statements issued for fiscal
9
years beginning after December 15, 2008, and interim periods within those fiscal
years. The Company does not expect that the adoption of FSP FAS 142-3 will have
a material effect on its consolidated results of operations or financial
condition.
In May 2008, the FASB issued FASB Staff Position (FSP) No. APB 14-1 "Accounting
for Convertible Debt Instruments That May Be Settled in Cash upon Conversion
(Including Partial Cash Settlement)" (FSP APB 14-1). FSP APB 14-1 requires the
issuer of certain convertible debt instruments that may be settled in cash (or
other assets) on conversion to separately account for the liability (debt) and
equity (conversion option) components of the instrument in a manner that
reflects the issuer's non-convertible debt borrowing rate. FSP APB 14-1 is
effective for fiscal years beginning after December 15, 2008 on a retroactive
basis and will be adopted by the Company in the first quarter of fiscal 2009.
The Company does not expect the adoption of FSP APB 14-1 to have a material
effect on its results of operations and financial condition.
In May 2008, the Financial Accounting Standards Board ("FASB") issued SFAS No.
162, "The Hierarchy of Generally Accepted Accounting Principles". SFAS No. 162
sets forth the level of authority to a given accounting pronouncement or
document by category. Where there might be conflicting guidance between two
categories, the more authoritative category will prevail. SFAS No. 162 will
become effective 60 days after the SEC approves the PCAOB's amendments to AU
Section 411 of the AICPA Professional Standards. SFAS No. 162 has no effect on
the Company's financial position, statements of operations, or cash flows at
this time.
In June 2008, the Financial Accounting Standards Board ("FASB") issued FASB
Staff Position ("FSP") EITF 03-6-1, "Determining Whether Instruments Granted in
Share-Based Payment Transactions are Participating Securities." This FSP
provides that unvested share-based payment awards that contain nonforfeitable
rights to dividends or dividend equivalents (whether paid or unpaid) are
participating securities and shall be included in the computation of earnings
per share pursuant to the two-class method. The FSP is effective for financial
statements issued for fiscal years beginning after December 15, 2008, and
interim periods within those fiscal years. Upon adoption, companies are required
to retrospectively adjust earnings per share data (including any amounts related
to interim periods, summaries of earnings and selected financial data) to
conform to provisions of this FSP. The Company does not anticipate the adoption
of FSP EITF 03-6-1 will have a material impact on its results of operations,
cash flows or financial condition.
In September 2008, the FASB issued exposure drafts that eliminate qualifying
special purpose entities from the guidance of SFAS No. 140, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,"
and FASB Interpretation 46 (revised December 2003), "Consolidation of Variable
Interest Entities - an interpretation of ARB No. 51," as well as other
modifications. While the proposed revised pronouncements have not been finalized
and the proposals are subject to further public comment, the Company anticipates
the changes will not have a significant impact on the Company's financial
statements. The changes would be effective March 1, 2010, on a prospective
basis.
In October 2008, the FASB issued FSP No. FAS 157-3, "Determining the Fair Value
of a Financial Asset When the Market for That Asset is Not Active," ("FSP FAS
157-3"), which clarifies application of SFAS 157 in a market that is not active.
FSP FAS 157-3 was effective upon issuance, including prior periods for which
10
financial statements have not been issued. The adoption of FSP FAS 157-3 had no
impact on the Company's results of operations, financial condition or cash
flows.
10
In December 2008, the FASB issued FSP No. FAS 132(R)-1, "Employers' Disclosures
about Postretirement Benefit Plan Assets" ("FSP FAS 132(R)-1"). FSP FAS 132(R)-1
requires additional fair value disclosures about employers' pension and
postretirement benefit plan assets consistent with guidance contained in SFAS
157. Specifically, employers will be required to disclose information about how
investment allocation decisions are made, the fair value of each major category
of plan assets and information about the inputs and valuation techniques used to
develop the fair value measurements of plan assets. This FSP is effective for
fiscal years ending after December 15, 2009. The Company does not expect the
adoption of FSP FAS 132(R)-1 will have a material impact on its financial
condition or results of operation.
In December 2008, the FASB issued FSP No. FAS 140-4 and FIN 46(R)-8,
"Disclosures by Public Entities (Enterprises) about Transfers of Financial
Assets and Interests in Variable Interest Entities." This disclosure-only FSP
improves the transparency of transfers of financial assets and an enterprise's
involvement with variable interest entities, including qualifying
special-purpose entities. This FSP is effective for the first reporting period
(interim or annual) ending after December 15, 2008, with earlier application
encouraged. The Company adopted this FSP effective January 1, 2009. The adoption
of the FSP had no impact on the Company's results of operations, financial
condition or cash flows.
In April 2009, the FASB issued FSP No. FAS 157-4, "Determining Fair Value When
the Volume and Level of Activity for the Asset or Liability Have Significantly
Decreased and Identifying Transactions That Are Not Orderly" ("FSP FAS 157-4").
FSP FAS 157-4 provides guidance on estimating fair value when market activity
has decreased and on identifying transactions that are not orderly.
Additionally, entities are required to disclose in interim and annual periods
the inputs and valuation techniques used to measure fair value. This FSP is
effective for interim and annual periods ending after June 15, 2009. The Company
does not expect the adoption of FSP FAS 157-4 will have a material impact on its
financial condition or results of operation.
In April 2009, the FASB issued two related Staff Positions: (1) FSP SFAS 115-2
and SFAS 124-2, "Recognition and Presentation of Other-Than-Temporary
Impairments", ("FSP SFAS 115-2 and SFAS 124-2") and (2) FSP SFAS 107-1 and
Accounting Principles Board (APB) 28-1, "Interim Disclosures about Fair Value of
Financial Instruments", ("FSP SFAS 107-1 and APB 28-1"), each of which will be
effective for interim and annual periods ending after June 15, 2009. FSP SFAS
115-2 and SFAS 124-2 modify the requirements for recognizing
other-than-temporarily impaired debt securities and revise the existing
impairment model for such securities by modifying the current intent and ability
indicator in determining whether a debt security is other-than-temporarily
impaired. FSP SFAS 107-1 and APB 28-1 enhance the disclosure of instruments
under the scope of SFAS 157 for both interim and annual periods. The Company is
currently evaluating the impact of the adoption of these Staff Positions will
have on its financial condition or results of operation.
In April 2009, the FASB issued FSP No. 141R-1 "Accounting for Assets Acquired
and Liabilities Assumed in a Business Combination That Arise from Contingencies"
("FSP 141R-1"). FSP 141R-1 amends the provisions in FASB Statement 141R for the
initial recognition and measurement, subsequent measurement and accounting, and
disclosures for assets and liabilities arising from contingencies in business
combinations. FSP 141R-1 eliminates the distinction between contractual and
11
non-contractual contingencies, including the initial recognition and measurement
criteria in Statement 141R and instead carries forward most of the provisions in
SFAS 141 for acquired contingencies. FSP 141R-1 is effective for contingent
assets and contingent liabilities acquired in evaluating the impact of SFAS
141(R). The Company is currently evaluating the impact of the adoption of FSP
141R-1 will have on its financial condition or results of operation.
In May 2009, the FASB issued SFAS No. 165 "Subsequent Events" ("SFAS 165"). SFAS
165 establishes general standards of accounting for and disclosure of events
that occur after the balance sheet date but before financial statements are
issued or are available to be issued. SFAS 165 sets forth (1) The period after
the balance sheet date during which management of a reporting entity should
evaluate events or transactions that may occur for potential recognition or
disclosure in the financial statements, (2) The circumstances under which an
entity should recognize events or transactions occurring after the balance sheet
date in its financial statements and (3) The disclosures that an entity should
make about events or transactions that occurred after the balance sheet date.
SFAS 165 is effective for interim or annual financial periods ending after June
15, 2009. The Company is evaluating the impact the adoption of SFAS 165 will
have on its financial condition or results of operation.
In June 2009, the FASB issued SFAS No. 166 "Accounting for Transfers of
Financial Assets--an amendment of FASB Statement No. 140" ("SFAS 166"). SFAS 166
improves the relevance, representational faithfulness, and comparability of the
information that a reporting entity provides in its financial statements about a
transfer of financial assets; the effects of a transfer on its financial
position, financial performance, and cash flows; and a transferor's continuing
involvement, if any, in transferred financial assets. SFAS 166 is effective as
of the beginning of each reporting entity's first annual reporting period that
begins after November 15, 2009, for interim periods within that first annual
reporting period and for interim and annual reporting periods thereafter. The
Company is evaluating the impact the adoption of SFAS 166 will have on its
financial condition or results of operation.
In June 2009, the FASB issued SFAS No. 167 "Amendments to FASB Interpretation
No. 46(R)" ("SFAS 167"). SFAS 167 improves financial reporting by enterprises
involved with variable interest entities and to address (1) the effects on
certain provisions of FASB Interpretation No. 46 (revised December 2003),
"Consolidation of Variable Interest Entities", as a result of the elimination of
the qualifying special-purpose entity concept in SFAS 166 and (2) constituent
concerns about the application of certain key provisions of Interpretation
46(R), including those in which the accounting and disclosures under the
Interpretation do not always provide timely and useful information about an
enterprise's involvement in a variable interest entity. SFAS 167 is effective as
of the beginning of each reporting entity's first annual reporting period that
begins after November 15, 2009, for interim periods within that first annual
reporting period, and for interim and annual reporting periods thereafter. The
Company is evaluating the impact the adoption of SFAS 167 will have on its
financial condition or results of operation.
In June 2009, the FASB issued SFAS No. 168 "The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting Principles--a
replacement of FASB Statement No. 162". The FASB Accounting Standards
Codification ("Codification") will be the single source of authoritative
nongovernmental U.S. generally accepted accounting principles. Rules and
12
interpretive releases of the SEC under authority of federal securities laws are
also sources of authoritative GAAP for SEC registrants. SFAS 168 is effective
for interim and annual periods ending after September 15, 2009. All existing
accounting standards are superseded as described in SFAS 168. All other
accounting literature not included in the Codification is nonauthoritative. The
Codification is not expected to have a significant impact on the Company's
financial condition or results of operation.
2. GOING CONCERN AND LIQUIDITY:LIQUIDITY
At March 31,June 30, 2009, we had no assets, no operating business or other source of
income, outstanding liabilities totaling $723,274 and a stockholder' deficit of $723,274.$745,350.
In our financial statements for the fiscal years ended December 31, 2008 and
2007, the Report of the Independent Registered Public Accounting Firm includes
an explanatory paragraph that describes substantial doubt about our ability to
continue as a going concern. Our financial statements for the fiscal years ended
December 31, 2008 and 2007 have been prepared on a going concern basis, which
contemplates the realization of assets and the settlement of liabilities and
commitments in the normal course of business. We had a working capital deficit
of $685,167 and reported an accumulated deficit of $17,559,048 as at December
31, 2008.
It is our current intention to seek to reach satisfactory negotiated settlements
with our outstanding creditors, raise debt and/or equity financing to fund the
negotiated settlements with our creditors and to meet ongoing operating expenses
and attempt to merge with another entity with experienced management and
11
opportunities for growth in return for shares of our common stock to create
value for our shareholders. There is no assurance that this series of events
will be satisfactorily completed.
33. ASSETS
We had no assets during the three and six months ended March 31,June 30, 2009
4. ACCOUNTS PAYABLE
The increase in accounts payable during the three and six months ended March 31,June 30,
2009 reflects the legal and professional fees incurred implementing the actions
approved in our shareholders meeting of April 2008.
5. ACCRUED EXPENSES
Accrued expenses related to accrued employee costs outstanding at the date we
filed bankruptcy and accrued interest expenses in respect of our outstanding
liabilities. As a result of the impact of the statute of limitation, our
outstanding liability for accrued liabilities was reduced to $89,000.
Interest is accrued at 8% on the loan made to us by Mr. David J. Cutler, an
officer and a director of the Company.
13
6. CAPITAL AND OPERATING LEASES
Effective December 2000, when we filed for bankruptcy, we recognized in full the
outstanding liabilities under all our capital and operating leases. As a result
of the impact of the statute of limitation, our outstanding liabilities under
capital and operating leases had been reduced to approximately $407,000.
7. OTHER LOANS Other loans- RELATED PARTIES
Loans -Related Parties represent the loan made to us by one of our directors,
Mr. David J Cutler. Interest is accrued on the loan at 8%.
In the period from his appointment in March 2006 through September 2006, Mr.
David J Cutler, one of our directors and our Chief Executive Officer and Chief
Financial Officer, incurred more than $50,000 on our behalf in bringing our
affairs up to date, principally on settling certain of our outstanding
liabilities, legal and accounting fees and directors' remuneration. In September
2006, Mr. Cutler agreed to convert $50,000 of this loan to us into equity on a
basis to be determined by an independent third party valuation. In September
2006, our independent directors authorized an initial issue of 510,000 shares of
our common stock, representing 50.3% of our total issued and outstanding shares
of our common stock, to Mr. Cutler, pending the completion of the independent
third party valuation. In November 2006, the independent third party valuation
of our shares of common stock was completed and on the basis of this third party
valuation our independent directors authorized the issue of an additional
897,644 shares of our common stock to Mr. Cutler as the balance of the equity to
which he was entitled on the conversion of his $50,000 loan to us into equity.
Following this second issue of equity to Mr. Cutler, Mr. Cutler owned a total of
1,407,644 shares of our common stock representing 70% of our total issued and
outstanding shares of our common stock at that time.
12
On August 22, 2008, we further issued 26,421 shares of restricted common stock
to David Cutler, in full settlement of the our debt to Mr. Cutler as at June 30,
2008 of $26,421. The share issuance was authorized by the independent members of
our Board of Directors.
At March 31,June 30, 2009, we owed Mr. Cutler $50,678$68,511 including accrued interest of
$1,428.$2,701.
8. COMMITMENTS:COMMITMENTS
Capital and Operating Leases
As a result of the impact of the statute of limitation, our outstanding
liabilities under capital and operating leases had been reduced to approximately
$407,000.
9. RELATED PARTY TRANSACTIONS
In the period from his appointment in March 2006 through September 2006, Mr.
David J Cutler, one of our directors and our Chief Executive Officer and Chief
Financial Officer, incurred more than $50,000 on our behalf in bringing our
affairs up to date, principally on settling certain of our outstanding
liabilities, legal and accounting fees and directors' remuneration. In September
2006, Mr. Cutler agreed to convert $50,000 of this loan to us into equity on a
basis to be determined by an independent third party valuation. In September
2006, our independent directors authorized an initial issue of 510,000 shares of
our common stock, representing 50.3% of our total issued and outstanding shares
of our common stock, to Mr. Cutler, pending the completion of the independent
third party valuation. In November 2006, the independent third party valuation
of our shares of common stock was completed and on the basis of this third party
valuation our independent directors authorized the issue of an additional
897,644 shares of our common stock to Mr. Cutler as the balance of the equity to
which he was entitled on the conversion of his $50,000 loan to us into equity.
Following this second issue of equity to Mr. Cutler, Mr. Cutler owned a total of
1,407,644 shares of our common stock representing 70% of our total issued and
outstanding shares of our common stock at that time.
On December 3, 2007, we issued 87,055 shares of our restricted common stock to
David J Cutler, one of our directors, in full and final settlement of the
$87,055 loan Mr. Cutler had outstanding with, including accrued interest of
$5,634, in respect of services and funding he has provided to the us in the
period October 2006 through November 2007. The share issuance was authorized by
the independent members of our Board of Directors
On August 22, 2008, we issued 25,000 of restricted common stock, valued at
$25,000, to a consultant, who is an existing shareholder of ours, as
compensation for services he had provided to us.
On August 22, 2008, we furtherissuedfurther issued 26,421 shares of restricted common stock
to David Cutler, our President and a director of ours, in full settlement of the
our debt to Mr. Cutler as at June 30, 2008 of $26,421. The share issuance was
authorized by the independent members of our Board of Directors.
As at March 31,At June 30, 2009, we owed Mr. Cutler $50,678$68,511 including accrued interest of
$1,428.
13
$2,701.
During the threesix months ended March 31,June 30, 2009, we paid $15,000 (2008$30,000 (six months ended
June 30, 2008 - $15,000)$30,000) of Mr. Cutler's remuneration to Burlingham Corporate
Finance, Inc. ("Burlingham') in the form of consulting fees. Mr. Cutler is the
principal shareholder of Burlingham.
14
10. STOCKHOLDERS' DEFICIT:DEFICIT
Preferred Stock
We were authorized, without further action by the shareholders, to issue
10,000,000 shares of one or more series of preferred stock at a par value of
$0.0001, all of which is nonvoting. The Board of Directors may, without
shareholder approval, determine the dividend rates, redemption prices,
preferences on liquidation or dissolution, conversion rights, voting rights and
any other preferences.
No shares of preferred stock were issued or outstanding during the threesix months
ended March 31,June 30, 2009 and 2008.
Common Stock
We were authorized to issue 100,000,000 shares of common stock, par value
$0.0001 per share.
On April 29, 2008, we held our annual meeting of stockholders at which meeting
the majority of stockholders approved, an up to 3 for 1 reverse split of our
shares of common stock. No such reverse split has been effected as yet.
RECENT ISSUANCES
On August 22, 2008, we issued 75,000 of restricted common stock, valued at
$75,000, to three consultants (25,000 shares each) as compensation for services
they had provided to usus. One of the consultants is an existing shareholder of
ours. We further issued 26,421 shares of restricted common stock to David
Cutler, our President and a director of ours, in full settlement of the our debt
to Mr. Cutler as at June 30, 2008 of $26,421.
Warrants
No warrants were issued or outstanding during the threesix months ended March 31,June 30, 2009
and 2008.
Stock Options
Effective March 19, 1999, we adopted a stock option plan (the "Plan"). The Plan
provides for grants of incentive stock options, nonqualified stock options and
restricted stock to designated employees, officers, directors, advisors and
independent contractors. The Plan authorized the issuance of up to 75,000 shares
of Class A Common Stock. Under the Plan, the exercise price per share of a
non-qualified stock option must be equal to at least 50% of the fair market
value of the common stock at the grant date, and the exercise price per share of
an incentive stock option must equal the fair market value of the common stock
at the grant date.
1415
The following table summarizes stock option activity under the Plan:
Under the Stock Option Plan:Plan Other Grants:
------------------------------------------- ----------------------------------------------- -------------
Granted to Granted to
Non- Employees Non-Employees Non-Employees
-------------------- -------------------
Weighted Weighted
Average Average
Exercise Exercise
Shares Price SharesShare Price
------- -------- -------- --------
Outstanding at December 31, 20072008 2,000 $45.00 - ------- ------
Granted - - - ------- ------ ------ ------
Exercised - - - ------- ------ ------ ------
Canceled - - - -
--------- --------- ----------- ---------------- ------ ------ ------
Outstanding at March 31,June 30, 2009 2,000 $45.00 - -
========= ========= =========== ==========------ ------
===== ====== ====== ======
Exercisable at March 31,June 30, 2009 2,000 $45.00 - -
========= ========= =========== ==========------ ------
===== ====== ====== ======
Exercisable at March 31, 2009June 30, 2008 2,000 $45.00 - -
========= ========= =========== ==========------ ------
===== ====== ====== ======
11. INCOME TAXES
We had losses since our Inception, and therefore were not subject to federal or
state income taxes. We have accumulated tax losses available for carryforward in
excess $17 million. The carryforward is subject to examination by the tax
authorities and expires at various dates through the year 2064. The Tax Reform
Act of 1986 contains provisions that may limit the NOL carryforwards available
for use in any given year upon the occurrence of certain events, including
significant changes in ownership interest. Consequently, following the issue
more than 50% of our total authorized and issued share capital in September 2006
to Mr. Cutler, one of our directors, our ability to use these losses is
substantially restricted by the impact of sectionSection 382 of the Internal Revenue
Code.
12. SUBSEQUENT EVENTS
None.
1516
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with the consolidated
financial statements and notes thereto and the other financial information
included elsewhere in this report. This discussion contains forward-looking
statements that involve risks and uncertainties. We believe that our
expectations are based on reasonable assumptions within the bounds of our
knowledge of our business and operations: there can be no assurance that actual
results will not differ materially from our expectations. Such forward-looking
statements are subject to risks and uncertainties that could cause actual
results to differ materially from those anticipated, including but not limited
to, our ability to reach satisfactorily negotiated settlements with our
outstanding creditors, raise debt and/or equity to fund negotiated settlements
with our creditors and to meet our ongoing operating expenses and merge with
another entity with experienced management and opportunities for growth in
return for shares of our common stock to create value for our shareholders. You
are urged to carefully consider these factors, as well as other information
contained in this Annual Report on Form 10-K and in our other periodic reports
and documents filed with the SEC.
OVERVIEW
On February 16, 2001, we sold our entire business, and all of our assets, for
the benefit of our creditors under a Chapter 11 reorganization. We were
subsequently dismissed from the Chapter 11 reorganization, effective March 13,
2001, at which time the last of our remaining directors resigned. On March 13,
2001, we had no business or other source of income, no assets, no employees or
directors, outstanding liabilities of approximately $8.4 million and had
terminated our duty to file reports under securities law.
Our business activities over the threesix months ended March 31,June 30, 2009 and 2008 were
focused on the settlement of our outstanding liabilities and the renewal of and
maintaining our SEC reporting status.
In February 2008, we were re-listed on the OTC Bulletin Board and so are now
listed on both the Pink Sheets and the OTC Bulletin Board and trade under the
symbol "CCVR"
On April 29, 2008, we held our annual meeting of stockholders at which meeting
the majority of stockholders approved resolutions to re-elect Messrs. Cutler,
Whiting and Green as our directors, reincorporate the Company in Delaware,
authorize an up to 3 for 1 reverse split of our shares of common stock, change
our name to a name to be chosen at the discretion of the Board of directors and
to ratify the appointment of our auditor, Larry O'Donnell, CPA, PC.
On August 22, 2008, we issued 75,000 of restricted common stock, valued at
$75,000, to three consultants (25,000 shares each) as compensation for services
they had provided to us One of the consultants is an existing shareholder of
ours. We further issued 26,421 shares of restricted common stock to David
Cutler, our President and a director of ours, in full settlement of the our debt
to Mr. Cutler as at June 30, 2008 of $26,421.
17
On January 6, 2009, Mr. Wesley Whiting resigned as a director of ours for
personal reasons. We are actively seeking to appoint a replacement for Mr.
Whiting as a non-executive director.
16
PLAN OF OPERATIONS
Our plan of operation is to reach satisfactory negotiated settlements with our
outstanding creditors, obtain debt or equity finance to fund negotiated
settlements with our creditors and to meet our ongoing operating expenses, seek
a listing on the over the counter bulletin board and attempt to merge with
another entity with experienced management and opportunities for growth in
return for shares of our common stock to create value for our shareholders.
There is can be no assurance that this series of events can be successfully
completed, that any such business will be identified or that any stockholder
will realize any return on their shares after such a transaction has been
completed. In particular there is no assurance that any such business will be
located or that any stockholder will realize any return on their shares after
such a transaction. Any merger or acquisition completed by us can be expected to
have a significant dilutive effect on the percentage of shares held by our
current stockholders. We believe we are an insignificant participant among the
firms which engage in the acquisition of business opportunities. There are many
established venture capital and financial concerns that have significantly
greater financial and personnel resources and technical expertise than we have.
In view of our limited financial resources and limited management availability,
we will continue to be at a significant competitive disadvantage compared to our
competitors.
General Business Plan
We intend to seek, investigate and, if such investigation warrants, acquire an
interest in business opportunities presented to us by persons or firms which
desire to seek the advantages of an issuer who has complied with the Securities
Act of 1934 (the "1934 Act"). We will not restrict our search to any specific
business, industry or geographical location, and we may participate in business
ventures of virtually any nature. This discussion of our proposed business is
purposefully general and is not meant to be restrictive of our unlimited
discretion to search for and enter into potential business opportunities. We
anticipate that we may be able to participate in only one potential business
venture because of our lack of financial resources.
We may seek a business opportunity with entities which have recently commenced
operations, or that desire to utilize the public marketplace in order to raise
additional capital in order to expand into new products or markets, to develop a
new product or service, or for other corporate purposes. We may acquire assets
and establish wholly owned subsidiaries in various businesses or acquire
existing businesses as subsidiaries.
We expect that the selection of a business opportunity will be complex. Due to
general economic conditions, rapid technological advances being made in some
industries and shortages of available capital, we believe that there are
numerous firms seeking the benefits of an issuer who has complied with the 1934
Act. Such benefits may include facilitating or improving the terms on which
additional equity financing may be sought, providing liquidity for incentive
stock options or similar benefits to key employees, providing liquidity (subject
to restrictions of applicable statutes) for all stockholders and other factors.
Potentially, available business opportunities may occur in many different
industries and at various stages of development, all of which will make the task
of comparative investigation and analysis of such business opportunities
18
extremely difficult and complex. We have, and will continue to have, essentially
no assets to provide the owners of business opportunities. However, we will be
able to offer owners of acquisition candidates the opportunity to acquire a
17
controlling ownership interest in an issuer who has complied with the 1934 Act
without incurring the cost and time required to conduct an initial public
offering.
The analysis of new business opportunities will be undertaken by, or under the
supervision of, our Board of Directors. We intend to concentrate on identifying
preliminary prospective business opportunities which may be brought to our
attention through present associations of our director, professional advisors or
by our stockholders. In analyzing prospective business opportunities, we will
consider such matters as (i) available technical, financial and managerial
resources; (ii) working capital and other financial requirements; (iii) history
of operations, if any, and prospects for the future; (iv) nature of present and
expected competition; (v) quality, experience and depth of management services;
(vi) potential for further research, development or exploration; (vii) specific
risk factors not now foreseeable but that may be anticipated to impact the
proposed activities of the company; (viii) potential for growth or expansion;
(ix) potential for profit; (x) public recognition and acceptance of products,
services or trades; (xi) name identification; and (xii) other factors that we
consider relevant. As part of our investigation of the business opportunity, we
expect to meet personally with management and key personnel. To the extent
possible, we intend to utilize written reports and personal investigation to
evaluate the above factors.
We will not acquire or merge with any company for which audited financial
statements cannot be obtained within a reasonable period of time after closing
of the proposed transaction.
Acquisition Opportunities
In implementing a structure for a particular business acquisition, we may become
a party to a merger, consolidation, reorganization, joint venture, or licensing
agreement with another company or entity. We may also acquire stock or assets of
an existing business. Upon consummation of a transaction, it is probable that
our present management and stockholders will no longer be in control of us. In
addition, our sole director may, as part of the terms of the acquisition
transaction, resign and be replaced by new directors without a vote of our
stockholders, or sell his stock in us. Any such sale will only be made in
compliance with the securities laws of the United States and any applicable
state.
It is anticipated that any securities issued in any such reorganization would be
issued in reliance upon exemption from registration under application federal
and state securities laws. In some circumstances, as a negotiated element of the
transaction, we may agree to register all or a part of such securities
immediately after the transaction is consummated or at specified times
thereafter. If such registration occurs, it will be undertaken by the surviving
entity after it has successfully consummated a merger or acquisition and is no
longer considered an inactive company. The issuance of substantial additional
securities and their potential sale into any trading market which may develop in
our securities may have a depressive effect on the value of our securities in
the future. There is no assurance that such a trading market will develop.
19
While the actual terms of a transaction cannot be predicted, it is expected that
the parties to any business transaction will find it desirable to avoid the
creation of a taxable event and thereby structure the business transaction in a
so-called "tax-free" reorganization under Sections 368(a)(1) or 351 of the
Internal Revenue Code (the "Code"). In order to obtain tax-free treatment under
the Code, it may be necessary for the owner of the acquired business to own 80%
or more of the voting stock of the surviving entity. In such event, our
stockholders would retain less than 20% of the issued and outstanding shares of
the surviving entity. This would result in significant dilution in the equity of
our stockholders.
18
As part of our investigation, we expect to meet personally with management and
key personnel, visit and inspect material facilities, obtain independent
analysis of verification of certain information provided, check references of
management and key personnel, and take other reasonable investigative measures,
to the extent of our limited financial resources and management expertise. The
manner in which we participate in an opportunity will depend on the nature of
the opportunity, the respective needs and desires of both parties, and the
management of the opportunity.
With respect to any merger or acquisition, and depending upon, among other
things, the target company's assets and liabilities, our stockholders will in
all likelihood hold a substantially lesser percentage ownership interest in us
following any merger or acquisition. The percentage ownership may be subject to
significant reduction in the event we acquire a target company with assets and
expectations of growth. Any merger or acquisition can be expected to have a
significant dilutive effect on the percentage of shares held by our
stockholders.
We will participate in a business opportunity only after the negotiation and
execution of appropriate written business agreements. Although the terms of such
agreements cannot be predicted, generally we anticipate that such agreements
will (i) require specific representations and warranties by all of the parties;
(ii) specify certain events of default; (iii) detail the terms of closing and
the conditions which must be satisfied by each of the parties prior to and after
such closing; (iv) outline the manner of bearing costs, including costs
associated with the Company's attorneys and accountants; (v) set forth remedies
on defaults; and (vi) include miscellaneous other terms.
As stated above, we will not acquire or merge with any entity which cannot
provide independent audited financial statements within a reasonable period of
time after closing of the proposed transaction. If such audited financial
statements are not available at closing, or within time parameters necessary to
insure our compliance within the requirements of the 1934 Act, or if the audited
financial statements provided do not conform to the representations made by that
business to be acquired, the definitive closing documents will provide that the
proposed transaction will be voidable, at the discretion of our present
management. If such transaction is voided, the definitive closing documents will
also contain a provision providing for reimbursement for our costs associated
with the proposed transaction.
Competition
We believe we are an insignificant participant among the firms which engage in
the acquisition of business opportunities. There are many established venture
capital and financial concerns that have significantly greater financial and
20
personnel resources and technical expertise than we have. In view of our limited
financial resources and limited management availability, we will continue to be
at a significant competitive disadvantage compared to our competitors.
Investment Company Act 1940
Although we will be subject to regulation under the Securities Act of 1933, as
amended, and the 1934 Act, we believe we will not be subject to regulation under
the Investment Company Act of 1940 (the "1940 Act") insofar as we will not be
engaged in the business of investing or trading in securities. In the event we
engage in business combinations that result in us holding passive investment
interests in a number of entities, we could be subject to regulation under the
1940 Act. In such event, we would be required to register as an investment
company and incur significant registration and compliance costs. We have
obtained no formal determination from the SEC as to our status under the 1940
Act and, consequently, any violation of the 1940 Act would subject us to
material adverse consequences. We believe that, currently, we are exempt under
Regulation 3a-2 of the 1940 Act.
19
Liquidity and Capital Resources
At March 31,June 30, 2009, we had no assets, no operating business or other source of
income, outstanding liabilities totaling $723,274 and a stockholder' deficit of $723,274.$745,350.
In our financial statements for the fiscal years ended December 31, 2008 and
2007, the Report of the Independent Registered Public Accounting Firm includes
an explanatory paragraph that describes substantial doubt about our ability to
continue as a going concern. Our financial statements for the fiscal years ended
December 31, 2008 and 2007 have been prepared on a going concern basis, which
contemplates the realization of assets and the settlement of liabilities and
commitments in the normal course of business. We had a working capital deficit
of $685,167 and reported an accumulated deficit of $17,559,048 at December 31,
2008.
It is our current intention to seek to reach satisfactory negotiated settlements
with our outstanding creditors, raise debt and/or equity financing to fund the
negotiated settlements with our creditors and to meet ongoing operating expenses
and attempt to merge with another entity with experienced management and
opportunities for growth in return for shares of our common stock to create
value for our shareholders. There is no assurance that this series of events
will be satisfactorily completed.
In addition, the United States is experiencing severe instability in the commercial and
investment banking systems which is likely to continue to have far-reaching
effects on the economic activity in the country for an indeterminable period.
The long-term impact on the United States economy and the Company's operating
activities and ability to raise capital cannot be predicted at this time, but
may be substantial.
21
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31,JUNE 30, 2009 COMPARED TO THE THREE MONTHS ENDED MARCH 31,JUNE 30,
2008
General and Administrative Expenses
During the three months ended March 31,June 30, 2009, we incurred $37,378$20,979 in general and
administrative expenses compared to $45,185$23,731 in the three months ended March 31,June 30,
2008, a decrease of $7,807.$2,752. The decrease was largely due increased legal fees
incurred during the three months ended March 31,June 30, 2008 in connection with our
effort to become a fully reporting company pursuant to Section 12 (g) of the
Securities Exchange Act of 1934 and being re-listed on the OTC Bulletin Board.
No such
legal fees were incurred in then three months ended March 31, 2009.
20
Interest Expense
We recognized an interest expense of $730$1,097 during the three months ended March
31,June
30, 2009, compared to $55$334 during the three months ended March 31,June 30, 2008, an
increase of $675.$763. This interest expense relates to the interest accrued on the
loans made to us by certain of our officers and shareholders. The increase in
the amount of interest between the two periods reflects the increase in the
average principal balance of the loans made to us by our officers and
shareholders between the two periods .
Profit / (Loss) before Income Tax
In the three months ended March 31,June 30, 2009, we recognized a loss before income tax
of $38,107$22,076 compared to a loss before income tax of $45,239$24,064 in the three months
ended March 31,June 30, 2008, a decrease of $7,132$1,988 due to the factors discussed above.
Provision for Income Taxes
No provision for income taxes was required in the three months ended March 31,June 30,
2009 or 2008 as we generated tax losses both periods.
Net Profit / (Loss) and Comprehensive Profit / (Loss)
In the three months ended March 31,June 30, 2009, we recognized a net loss of $38,107$22,076
compared to a net loss of $45,239$24,064 in the three months ended March 31, 2009,June 30, 2008, a
decrease of $7,132$1,988 due to the factors discussed above.
The comprehensive loss was identical to the net loss in both the three months
ended March 31,June 30, 2009 and 2008.
22
SIX MONTHS ENDED JUNE 30, 2009 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 2008
General and Administrative Expenses
During the six months ended June 30, 2009, we incurred $58,356 in general and
administrative expenses compared to $68,915 in the six months ended June 30,
2008, a decrease of $10,559. The decrease was due to a decrease in legal fees
incurred during the six months ended June 30, 2008 in connection with our effort
to become a fully reporting company pursuant to Section 12 (g) of the Securities
Exchange Act of 1934 and being re-listed on the OTC Bulletin Board.
Interest Expense
We recognized an interest expense of $1,827 during the six months ended June 30,
2009, compared to $389 during the six months ended June 30, 2008, an increase of
$1,438. This interest expense relates to the interest accrued on the loans made
to us by certain of our officers and shareholders. The increase in the amount of
interest between the two periods reflects the increase in the average principal
balance of the loans made to us by our officers and shareholders between the two
periods .
Profit / (Loss) before Income Tax
In the six months ended June 30, 2009, we recognized a loss before income tax of
$60,183 compared to a loss before income tax of $69,304 in the six months ended
June 30, 2008, a decrease of $9,121 due to the factors discussed above.
Provision for Income Taxes
No provision for income taxes was required in the six months ended June 30, 2009
or 2008, as we generated tax losses both periods.
Net Profit / (Loss) and Comprehensive Profit / (Loss)
In the six months ended June 30, 2009, we recognized a net loss of $60,183
compared to a net loss of $69,304 in the six months ended June 30, 2008, a
decrease of $9,121 due to the factors discussed above.
The comprehensive loss was identical to the net loss in both the six months
ended June 30, 2009 and 2008.
CASH FLOW INFORMATION FOR THE THREESIX MONTHS ENDED MARCH 31,JUNE 30, 2009 COMPARED TO THE THREESIX
MONTHS ENDED MARCH 31,JUNE 30, 2008
At March 31,June 30, 2009, we had no assets, no operating business or other source of
income, outstanding liabilities totaling $723,274 and a stockholder' deficit of $723,274.$745,350.
23
In our financial statements for the fiscal years ended December 31, 2008 and
2007, the Report of the Independent Registered Public Accounting Firm includes
an explanatory paragraph that describes substantial doubt about our ability to
continue as a going concern. Our financial statements for the fiscal years ended
December 31, 2008 and 2007 have been prepared on a going concern basis, which
contemplates the realization of assets and the settlement of liabilities and
commitments in the normal course of business. We had a working capital deficit
of $685,167 and reported an accumulated deficit of $17,559,048 as at December
31, 2008.
It is our current intention to seek to reach satisfactory negotiated settlements
with our outstanding creditors, raise debt and/or equity financing to fund the
negotiated settlements with our creditors and to meet ongoing operating expenses
and attempt to merge with another entity with experienced management and
opportunities for growth in return for shares of our common stock to create
value for our shareholders. There is no assurance that this series of events
will be satisfactorily completed.
21
During the threesix months ended March 31,June 30, 2009, we did not have a bank account and
consequently, there were no movements in cash flow in the threesix months ended March 31,June
30, 2009. All our costs we paid for directly by Mr. Cutler, an officer and
director of the Company.
Net cash used in operations in the threesix months ended March 31,June 30, 2009, was $18,564.$35,123.
This sum was a result of the increasesfunded by an increase in accounts payable and accrued expenses and does
not represent an actual outflow of cash on our part. Our net losses at March 31,for the six
months ended June 30, 2009 of $38,107 were$60,183 did not adjustedrequire any adjustment for any
non-cash items.
Net cash used in operations in the threesix months ended March 31,June 30, 2008 was $15,958.$31,253.
Our net loss, without any need for adjustment for non-cash items, resulted in a
negative cash flow of $45,239,$69,304, which was partially offset by a positive cash
flow of $29,281generated$38,051 generated from the net movement in our operating assets and
liabilities.
No cash was provided by or used in investing activities during the threesix months
ended March 31,June 30, 2009 and 2008.
During the threesix months ended March 31,June 30, 2009, the Company received $18,564$35,123 from its
financing activities from otherrelated party loans. This increase in otherrelated party
loans was a result of the payment of liabilities and expenses on our behalf by
officers, directors and shareholders. Net cash provided by financing activities
during the threesix months ended March 31,June 30, 2008 was $13,154 provided$25,449 arising from loans to us by loans
from our shareholders.
ITEM 3. QUANTATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
As a "smaller reporting company" as defined by Item 10 of Regulation S-K, the
Company is not required to provide information required by this Item.
24
ITEM 4. CONTROLS AND PROCEDURES
As of the quarter ended March 31,June 30, 2009, we conducted an evaluation, under the
supervision and with the participation of our Chief Executive Officer and Chief
Financial Officer, of our disclosure controls and procedures (as defined in
Rules 13a-15(e) and 15d-15(e) under the 1934 Act). Based on this evaluation, the
Chief Executive Officer and Chief Financial Officer concluded that our
disclosure controls and procedures are effective to ensure that information
required to be disclosed by us in reports that we file or submit under the 1934
Act is recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission rules and forms.
ITEM 4T. CONTROLS AND PROCEDURES
Our management is responsible for establishing and maintaining adequate internal
control over financial reporting for the company in accordance with as defined
in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control
over financial reporting is designed 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. Our internal control over financial reporting includes
those policies and procedures that:
(i) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of our
assets;
22
(ii) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that our receipts
and expenditures are being made only in accordance with authorizations
of our management and directors; and
(iii)provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use or disposition of our assets that
could have a material effect on our financial statements.
Management's assessment of the effectiveness of the small business issuer's
internal control over financial reporting is as of the three months ended March
31,June
30, 2009. We believe that internal control over financial reporting is
effective. We have not identified any, current material weaknesses considering
the nature and extent of our current operations and any risks or errors in
financial reporting under current operations.
Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
This quarterly report does not include an attestation report of the Company's
registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by the Company's
25
registered public accounting firm pursuant to temporary rules of the Securities
and Exchange Commission that permit the Company to provide only management's
report in this annual report.
There have been no changes in the issuer's internal control over financial
reporting identified in connection with the evaluation required by paragraph (d)
of Rule 240.15d-15 that occurred during the issuer's last fiscal quarter that
has materially affected, or is reasonable likely to materially affect, the
issuer's internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We were not subject to any legal proceedings during the three and six months
ended March
31,June 30, 2009 and 2008 and, to the best of our knowledge, no legal
proceedings are pending or threatened.
ITEM 2. CHANGES IN SECURITIES
Changes in our securities are described in Note 10. Stockholders' Deficit in the
Notes to Financial Statements above.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
We are in default under the terms of certain capital and operating leases as
described in Note 6. Capital and Operating Leases in the Notes to Financial
Statements above.
23
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the year ended December 31, 2007, we did not hold any shareholders
meetings or submit any matters to our shareholders for approval.
We held an Annual Meeting of Stockholders on April 29, 2008 and the results of
the stockholder voting was as follows:
Resolution 1: To elect three (3) directors to hold office until the next annual
meeting of stockholders or until their respective successors have been elected
and qualified: Nominees David Cutler, Wesley Whiting and Redgie Green:
David Cutler Wesley Whiting Redgie Green
FOR 1,673,753 1,807,553 1,795,053
WITHHOLD 146,300 12,500 12,500
Resolution 2: To consider and act upon a proposal to authorize the Company to
reincorporate in the State of Delaware:
FOR 1,820,053
AGAINST 0
ABSTAIN 0
26
Resolution 3: To authorize a reverse split of the common stock issued and
outstanding on an up to one new share for three old share basis:
FOR 1,581,090
AGAINST 146,652
ABSTAIN 92,311
Resolution 4: To authorize a change in the name of the Company to a new name to
be chosen in the discretion of the Board of Directors:
FOR 1,819,921
AGAINST 12
ABSTAIN 120
Resolution 5: To ratify the appointment of our auditors, Larry O'Donnell, CPA,
PC.
FOR 1,807,553
AGAINST 0
ABSTAIN 12,500
24
ITEM 5. OTHER INFORMATION
NONE.
ITEM 6. EXHIBITS
Exhibits. The following is a complete list of exhibits filed as part of this
Form 10-Q. Exhibit numbers correspond to the numbers in the Exhibit Table of
Item 601 of Regulation S-K.
Exhibit 31.1 Certification of Chief Executive Officer pursuant to Section 302 of
the Sarbanes-Oxley Act
Exhibit 32.1 Certification of Principal Executive Officer pursuant to Section
906 of the Sarbanes-Oxley Act
2527
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities and Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
CONCORD VENTURES, INC.
Date: May 12,August 8, 2009 By: /s/ DAVID J. CUTLER
---------------------------
David J Cutler
Chief Executive Officer &
Chief Financial Officer
26