Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 10Q
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(Mark One)
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2010
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE
ACT
For the transition period from __________ to ___________
Commission file number: 000-53464
INTERNATIONAL PAINTBALL ASSOCIATION, INC.
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(Exact name of registrant as specified in its charter)
Colorado 20-1207864
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(State of Incorporation) (IRS Employer ID Number)
2600 E. Southlake Blvd, Ste 120-366, Southlake, TX 76092
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(Address of principal executive offices)
817-491-8611
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(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 of 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 [ ]
Smaller reporting company [X] (Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
Indicate the number of share outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
As of August 17, 2010, there were 10,449,166 shares of the registrant's common
stock outstanding.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited) Page
----
Balance Sheets - June 30, 2010 and December 31, 2009 F-1
Statements of Operations -
Three and Six months ended June 30, 2010 and 2009 and
From May 24, 2004 (Inception) to June 30, 2010 F-2
Statements of Changes in Shareholders' Deficit -
From May 24, 2004 (Inception) to June 30, 2010 F-3
Statements of Cash Flows -
Six months ended June 30, 2010 and 2009 and
From May 24, 2004 (Inception) to June 30, 2010 F-4
Notes to the Financial Statements F-5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 1
Item 3. Quantitative and Qualitative Disclosures About Market Risk
- Not Applicable 3
Item 4. Controls and Procedures 3
Item 4T. Controls and Procedures 4
PART II - OTHER INFORMATION
Item 1. Legal Proceedings -Not Applicable 4
Item 1A. Risk Factors - Not Applicable
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 4
-Not Applicable
Item 3. Defaults Upon Senior Securities - Not Applicable 5
Item 4. Submission of Matters to a Vote of Security Holders - Not Applicable 5
Item 5. Other Information - Not Applicable 5
Item 6. Exhibits 5
SIGNATURES 6
PART I
ITEM 1. FINANCIAL STATEMENTS
INTERNATIONAL PAINTBALL ASSOCIATION, INC.
(A Development Stage Company)
Balance Sheets
June 30, December 31,
--------------------
2010 2009
--------- ---------
(Audited)
ASSETS:
Current Assets:
Cash $ 7 $ 38
Accounts receivable 125
--------- ---------
Total Current Assets 132 38
Furniture & Fixtures (Net) - -
--------- ---------
Total Fixed Assets - -
--------- ---------
TOTAL ASSETS $ 132 $ 38
========= =========
LIABILITIES & STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts Payable $ 241,639 $ 176,834
Accounts Payable, related parties 44,582 40,833
Accrued liabilities 111,427 95,743
Note payable 478,500 478,500
Notes payable, convertible 200,534 200,534
--------- ---------
Total Current Liabilities 1,076,682 992,444
Stockholders' Deficit
Common Stock, no par value; 100,000,000 shares authorized
10,449,166 issued and outstanding at June 30,
2010 and December 31, 2009 respectively 930,358 930,358
Preferred Class A stock, no par value 240,000 shares
authorized
No shares issued and outstanding at June 30, 2010
and December 31, 2009 respectively - -
Preferred Class B stock, no par value 1,600,000 shares
authorized
No shares issued and outstanding at June 30, 2010
and December 31, 2009 respectively - -
Additional Paid-in Capital 124,371 124,371
Treasury Stock (40) (40)
Deficit accumulated during the development stage (2,131,239)(2,047,095)
--------- ---------
Total Stockholders' Deficit (1,076,550) (992,406)
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 132 $ 38
========= =========
The accompanying notes are an integral part of these financial statements.
F-1
INTERNATIONAL PAINTBALL ASSOCIATION, INC.
(A Development Stage Company)
Statements of Operations
(Unaudited)
May 24, 2004
For the Three Months Ended For the Six Months Ended (Inception) to
June 30, June 30, June 30,
2010 2009 2010 2009 2010
------------- ------------- -------------- -------------- ---------------
Revenue $ - $ 125 $ - $ 63,848
Cost of Goods Sold - - - - 36,479
------------- ------------- -------------- -------------- ---------------
Gross Profit - - 125 - 27,369
Amortization and Depreciation - - 60 8,364
Write offs - - - - 109,415
General and administrative 35,844 30,583 58,582 67,654 1,862,319
------------- ------------- -------------- -------------- ---------------
Total Expenses 35,844 30,583 58,582 67,714 1,980,098
------------- ------------- -------------- -------------- ---------------
Net Operating Loss (35,844) (30,583) (58,457) (67,714) (1,952,729)
------------- ------------- -------------- -------------- ---------------
Other Income (Expense)
Miscellaneous Income - - - - 4,052
Gain on debt settlement - - - 15,100
Interest (12,247) (12,586) (25,687) (22,058) (197,662)
------------- ------------- -------------- -------------- ---------------
Total Other Income (Expense) (12,247) (12,586) (25,687) (22,058) (178,510)
Net Loss $ (48,091) $ (43,169) $ (84,144) $ (89,772) $(2,131,239)
============= ============= ============== ============== ===============
Net Income/Loss per common share
equivalent $ (0.00) $ (0.00)) $ (0.01) $ (0.01))
============= ============= ============== ==============
Weighted average number of common
shares equivalent outstanding 10,449,166 10,449,166 10,449,166 10,449,166
============= ============= ============== ==============
* Less than ($0.01) per share.
The accompanying notes are an integral part of these financial statements.
F-2
INTERNATIONAL PAINTBALL ASSOCIATION, INC.
(A Development Stage Company)
Statement of Stockholders' Equity (Deficit)
From May 24, 2004 (Inception) through June 30, 2010
(Unaudited)
Additional Deferred
Common Stock Preferred A Stock Preferred B Stock Paid-in Offering
# of Shares Amount # of Shares Amount # of Shares Amount Capital Expense
----------- ---------- ---------- ---------- --------- --------- --------- ---------
Balances - May 24, 2004 - $ - - $ - - $ - $ - $ -
June 2004 Stock issued for assets 200,000 100,000
June 2004 Stock issued for cash 8,000 1,000
June 2004 Stock issued for cash 240,000 30,000 139,000 69,500
Aug 2004 H Hill accrued salary 166,666 20,833
settlement for stock
Deferred options 50,714 (3,720)
Net Loss for period
----------- ---------- ---------- ---------- --------- --------- --------- ---------
Balance - December 31, 2004 374,666 121,833 240,000 30,000 139,000 69,500 50,714 (3,720)
Stock for services, several @$.10-$.50 1,958,000 343,000
Stock for debt/settlement, several 235,000 117,500
@ $.50
Stock for interest, several @ $0.01 450,000 4,500
Treasury stock (200,000)
Deferred Offering Expense -
Vested Options 882
Vested options - Cancellations (2,722) 2,722
Paid-in Capital RP Debt Cancellation 76,379
Net Loss for period
----------- ---------- ---------- ---------- --------- --------- --------- ---------
Balance - December 31, 2005 2,817,666 586,833 240,000 30,000 139,000 69,500 124,371 (116)
Stock for services, several @ $.50 350,000 175,000
Stock for interest, several @ $various 2,382,500 23,825
Deferred Offering Expense -
Vested Options 116
Net Loss for period
----------- ---------- ---------- ---------- --------- --------- --------- ---------
Balance - December 31, 2006 5,550,166 785,658 240,000 30,000 139,000 69,500 124,371 -
Stock for interest, several @ $.01 2,060,000 20,600
Stock for services, several @ $.01 300,000 3,000
Net Loss for period
----------- ---------- ---------- ---------- --------- --------- --------- ---------
Balance - December 31, 2007 7,910,166 809,258 240,000 30,000 139,000 69,500 124,371 -
Stock for interest, several @ $.01
@3/31/08 200,000 2,000
Stock for interest, several @ $.01
@6/30/08 170,000 1,700
Stock for interest, several @ $.01
@9/30/08 640,000 6,400
Stock for interest, several @ $.01
@12/31/08 200,000 2,000
Stock for services, several @ $.01
@ 3/31/08 700,000 7,000
Stock for services, several @ $.01
@ 9/30/08 250,000 2,500
03/12/08 Conversion of Class A & B to
common by Directors Meeting, one
for one 379,000 99,500 (240,000) (30,000) (139,000) (69,500)
Net Loss for period
----------- ---------- ---------- ---------- --------- --------- --------- ---------
Balances - December 31, 2008 10,449,166 930,358 - - - - 124,371 -
Net Loss for period
----------- ---------- ---------- ---------- --------- --------- --------- ---------
Balances - December 31, 2009 10,449,166 930,358 - - - - 124,371 -
Net loss for the period - - - - - - - -
----------- ---------- ---------- ---------- --------- --------- --------- ---------
Balances - June 30, 2010 10,449,166 $930,358 - $ - - $ - $124,371 $ -
=========== ========== ========== ========== ========= ========= ========= =========
The accompanying notes are an integral part of these financial statements.
F-3
INTERNATIONAL PAINTBALL ASSOCIATION, INC.
(A Development Stage Company)
Statement of Stockholders' Equity (Deficit)
From May 24, 2004 (Inception) through June 30, 2010
(Unaudited)
(continued)
Deficit
Accum. During
Treasury the Development
Stock Stage Totals
--------- ----------- ------------
Balances - May 24, 2004 $ - $ - $ -
June 2004 Stock issued for assets 100,000
June 2004 Stock issued for cash 1,000
June 2004 Stock issued for cash 99,500
Aug 2004 H Hill accrued salary 20,833
settlement for stock -
Deferred options 46,994
-
Net Loss for period (326,910) (326,910)
--------- ----------- ------------
Balance - December 31, 2004 - (326,910) (58,583)
Stock for services, several @$.10-$.50 343,000
Stock for debt/settlement, several 117,500
@ $.50 -
Stock for interest, several @ $0.01 4,500
Treasury stock (40) (40)
Deferred Offering Expense -
Vested Options 882
Vested options - Cancellations -
Paid-in Capital RP Debt Cancellation 76,379
-
Net Loss for period (690,979) (690,979)
--------- ----------- ------------
Balance - December 31, 2005 (40) (1,017,889) (207,341)
Stock for services, several @ $.50 175,000
Stock for interest, several @ $various 23,825
Deferred Offering Expense -
Vested Options 116
Net Loss for period (363,762) (363,762)
--------- ----------- ------------
Balance - December 31, 2006 (40) (1,381,651) (372,162)
Stock for interest, several @ $.01 20,600
Stock for services, several @ $.01 3,000
Net Loss for period (310,999) (310,999)
--------- ----------- ------------
Balance - December 31, 2007 (40) (1,692,650) (659,561)
Stock for interest, several @ $.01
@3/31/08 2,000
Stock for interest, several @ $.01
@6/30/08 1,700
Stock for interest, several @ $.01
@9/30/08 6,400
Stock for interest, several @ $.01
@12/31/08 2,000
Stock for services, several @ $.01
@ 3/31/08 7,000
Stock for services, several @ $.01
@ 9/30/08 2,500
03/12/08 Conversion of Class A & B to
common by Directors Meeting, one
for one -
Net Loss for period (205,597) (205,597)
--------- ----------- ------------
Balances - December 31, 2008 (40) (1,898,247) (843,558)
Net Loss for period (148,848) (148,848)
--------- ----------- ------------
Balances - December 31, 2009 (40) (2,047,095) (992,406)
Net loss for the period - (84,144) (84,144)
--------- ----------- ------------
Balances - June 30, 2010 $ (40) $(2,131,239) $(1,076,550)
========= =========== ============
The accompanying notes are an integral part of these financial statements.
F-4
INTERNATIONAL PAINTBALL ASSOCIATION, INC.
(A Development Stage Company)
STATEMENTS OF CASHFLOWS
(Unaudited)
May 24, 2004
For the Six Months Ended (Inception) to
June 30, June 30,
2010 2009 2010
----------------- ----------------- -----------------
Cash Flows from Operating Activities
Net Profit (Loss) $ (84,144) $ (89,772) $ (2,131,239)
Depreciation - 60 8,364
Compensatory stock issuances - - 591,525
Option expense - 47,992
Write offs - 109,415
Adjustments to reconcile net loss to net cash used
by operating activities
Changes in operating assets and liabilities
Bank overdraft - 270 -
Increase in Accounts Payable - related party 3,749 3,749
Increase in Accounts Payable and accrued liabilities 80,489 89,442 709,807
(Increase) / Decrease receivables and accruals (125) - 46,798
----------------- ----------------- -----------------
Net Cash Flows Used by Operating Activities (31) - (613,589)
----------------- ----------------- -----------------
Cash Flows from Investing Activities
Acquisition of Fixed Assets - - (8,364)
Notes receivable - - 12,000
----------------- ----------------- -----------------
Net Cash Flows Provided (Used) by Investing Activities - - 3,636
----------------- ----------------- -----------------
Cash Flows from Financing Activities
Funds received from note payables - - 561,450
Payments of note payables - - (51,950)
Sales of common stock - - 100,500
Repurchase of treasury stock - - (40)
----------------- ----------------- -----------------
Net Cash Flows Provided by Financing Activities - - 609,960
----------------- ----------------- -----------------
Net Increase (Decrease) in Cash (31) - 7
----------------- ----------------- -----------------
Cash at Beginning of Period 38 - -
----------------- ----------------- -----------------
Cash at End of Period $ 7 $ - $ 7
================= ================= =================
Supplemental Disclosure of Cash Flow Information
Cash paid for interest $ - $ - $ 15,129
================= ================= =================
Cash paid for taxes $ - $ - $ -
================= ================= =================
Supplemental Disclosure of Non-Cash Investing and Financing
Activities:
Common stock issued for services $ - $ 9,500 $ 530,500
================= ================= =================
Common stock issued for interest $ - $ 16,100 $ 61,025
================= ================= =================
Common stock issued for assets $ - $ - $ 100,000
================= ================= =================
Debt converted to capital $ - $ - $ 214,712
================= ================= =================
Accounts payable transferred to
convertible note payable $ - $ - $ 200,534
================= ================= =================
The accompanying notes are an integral part of these financial statements.
F-5
INTERNATIONAL PAINTBALL ASSOCIATION, INC.
(A Development Stage Company)
Notes to the Financial Statements
For the Six Months Ended June 30, 2010
(Unaudited)
NOTE 1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
4-G Paintball, Inc. was incorporated in the State of Texas on May 24, 2004, and
on September 16, 2008 was redomiciled as a Colorado corporation through a one
for one share exchange with its wholly owned subsidiary International Paintball
Association, Inc., which was incorporated in the State of Colorado on June 19,
2008. 4-G Paintball, Inc. and International Paintball Association, Inc. are
referred to hereinafter as (the "Company"). The Company was organized to further
the interest and participation in the sport of paintball competition and to
operate paintball competition arenas. Also, the Company may pursue any other
lawful business opportunity as decided upon by the board of directors. The
Company's fiscal year end is December 31st.
Basis of presentation - development stage company
-------------------------------------------------
The Company has not earned significant revenues from limited operations.
Accordingly, the Company's activities have been accounted for as those of a
Development Stage Enterprise. Among the disclosures are that the Company's
financial statements be identified as those of a development stage company, and
that the statements of operations, stockholders' equity and cash flows disclose
activity since the date of the Company's inception.
Reclassification of prior year amounts
--------------------------------------
Certain prior year accounts have been reclassified to reflect current year's
presentation.
Interim Accounting
------------------
The accompanying unaudited condensed financial statements are presented in
accordance with generally accepted accounting principles for interim financial
information and the instructions to Form 10-Q and rules and regulations of the
Securities and Exchange Commission. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
(consisting only of normal occurring accruals) considered necessary in order to
make the financial statements not misleading, have been included. Operating
results for the six months ended June 30, 2010 are not necessarily indicative of
results that may be expected for the year ending December 31, 2010. The
condensed financial statements are presented on the accrual basis.
Use of Estimates
----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
F-6
Cash and cash equivalents
-------------------------
The Company considers all highly liquid investments with an original maturity of
three months or less as cash equivalents.
Accounts receivable
-------------------
The Company reviews accounts receivable periodically for collectability and
establishes an allowance for doubtful accounts and records bad debt expense when
deemed necessary. At June 30, 2010 and December 31, 2009, the Company had no
balance in its allowance for doubtful accounts.
Property and equipment
----------------------
Property and equipment are recorded at cost and depreciated under straight line
methods over each item's estimated useful life. The Company uses a five year
life for furniture and fixtures, and three years for computer equipment.
Revenue recognition
-------------------
Revenue is recognized on an accrual basis after services have been performed or
products sold under contract terms, the price to the client is fixed or
determinable, and collectability is reasonably assured.
Advertising costs
-----------------
Advertising costs are expensed as incurred. The Company did not record any
advertising costs during the three and six months ended June 30, 2010.
Net income (loss) per share
---------------------------
The net income (loss) per share is computed by dividing the net income (loss) by
the weighted average number of shares of common outstanding. Warrants, stock
options, and common stock issuable upon the conversion of the Company's
preferred stock (if any), are not included in the computation if the effect
would be anti-dilutive and would increase the earnings or decrease loss per
share.
Financial Instruments
---------------------
The carrying value of the Company's financial instruments, as reported in the
accompanying balance sheets, approximates fair value.
F-7
Long-Lived Assets
-----------------
In accordance with FASB ASC No.'s 350 and 360, the Company regularly reviews the
carrying value of intangible and other long-lived assets for the existence of
facts or circumstances, both internally and externally, that may suggest
impairment. If impairment testing indicates a lack of recoverability, an
impairment loss is recognized by the Company if the carrying amount of a
long-lived asset exceeds its fair value.
Segment information
-------------------
The Company is structured to operate primarily in a single operating segment,
namely the competition arena of paintball sports and the furthering of private
and commercial interests in the activity.
Stock based compensation
------------------------
The Company follows FASB Accounting Standards Codification No. 718 -
Compensation - Stock Compensation for share based payments to employees. The
Company follows FASB Accounting Standards Codification No. 505 for share based
payments to Non-Employees, whereby equity instruments issued to employees for
services are recorded based on the fair value of the instrument issued and those
issued to non-employees are recorded based on the fair value of the
consideration received or the fair value of the equity instrument, whichever is
more reliably measurable.
Recent Accounting Pronouncements
--------------------------------
In October 2009, the Financial Accounting Standards Board ("FASB") issued an
Accounting Standard Update ("ASU") No. 2009-13, which addresses the accounting
for multiple-deliverable arrangements to enable vendors to account for products
or services separately rather than as a combined unit and modifies the manner in
which the transaction consideration is allocated across the separately
identified deliverables. The ASU significantly expands the disclosure
requirements for multiple-deliverable revenue arrangements. The ASU will be
effective for the first annual reporting period beginning on or after June 15,
2010, and may be applied retrospectively for all periods presented or
prospectively to arrangements entered into or materially modified after the
adoption date. Early adoption is permitted, provided that the guidance is
retroactively applied to the beginning of the year of adoption. The Company does
not expect the adoption of ASU No. 2009-13 to have any effect on its financial
statements upon its required adoption on January 1, 2011.
There were various other accounting standards and interpretations issued, none
of which are expected to have a material impact on the Company's financial
position, operations or cash flows.
NOTE 2. GOING CONCERN
The Company has suffered recurring losses from operations and has a working
capital deficit and stockholders' deficit, and in all likelihood will be
required to make significant future expenditures in connection with continuing
marketing efforts along with general administrative expenses. These conditions
raise substantial doubt about the Company's ability to continue as a going
concern.
The Company may raise additional capital through the sale of its equity
securities, through an offering of debt securities, or through borrowings from
individuals and financial institutions. By doing so, the Company hopes through
increased marketing efforts to generate revenues from the operation of
competition paintball arenas and sales of related products. Management believes
that actions presently being taken to obtain additional funding provide the
opportunity for the Company to continue as a going concern.
F-8
NOTE 3. FIXED ASSETS
Fixed asset values recorded at cost are as follows:
June 30, December 31,
2010 2009
---- ----
Computer equipment $ 4,622 $ 4,622
Furniture and fixtures 3,742 3,742
----------- ------------
8,364 8,364
Less accumulated depreciation (8,634) (8,634)
------------ ------------
Total $ - $ -
============ ============
During the year ended December 31, 2009, the Company fully depreciated its fixed
assets.
NOTE 4. NOTES PAYABLE
At June 30, 2010 and December 31, 2009, the Company had $478,500 in outstanding
notes payable to various individuals, unsecured, bearing interest at 6% - 9% per
annum, due in full on term expiration, with all amounts at each date either
presently due or due within one year. The Company incurred interest expense
under the notes during the three and six months ended June 30, 2010 of $9,577
and $19,050, respectively. Accrued interest at June 30, 2010 and December 31,
2009 amounted to $105,700 and $86,651, respectively.
NOTE 5. NOTES PAYABLE, CONVERTIBLE
In April 2009, a related party owed $200,534 for accounts payable agreed to
convert the amount owed to it into a Convertible Promissory Note. The
Convertible Promissory note is unsecured, has an interest rate of 6% and a due
date of April 10, 2010. The promissory note provides the holder with the right
to convert part or all of the outstanding principal and/or interest into shares
of the Company's common stock at a rate of $0.50 per share. At June 30, 2010 and
December 31, 2009, $200,534 was outstanding. During the three and six months
ended June 30, 2010 interest expense was $2,670 and $5,636, respectively.
Accrued interest at June 30, 2010 and December 31, 2009 amounted to $8,736 and
$14,373 respectively.
NOTE 6. STOCKHOLDERS' EQUITY
Common stock
------------
The Company has 100,000,000 shares of authorized common stock, no par value,
with 10,449,166 shares issued and 10,249,166 shares outstanding as of June 30,
2010 and December 31, 2009 with 200,000 shares in treasury at each date.
Stock options
-------------
At June 30, 2010, the Company had stock options outstanding as described below.
F-9
Non-employee stock options
The Company accounts for non-employee stock options under FASB Accounting
Standards Codification No. 505 whereby option costs are recorded based on the
fair value of the consideration received or the fair value of the equity
instruments issued, whichever is more reliably measurable. Unless otherwise
provided for, the Company covers option exercises by issuing new shares. The
Company has no non-employee stock options outstanding.
Employee stock options
----------------------
The Company accounts for employee stock options under FASB Accounting Standards
Codification No. 718 - Compensation - Stock Compensation. Unless otherwise
provided for, the Company covers option exercises by issuing new shares. At the
beginning of 2010 the Company had 5,000 options outstanding and exercisable.
During the six months ended June 30, 2010, no options were granted, exercised or
cancelled, leaving a balance at June 30, 2010 of 5,000 outstanding employee
stock options.
NOTE 7. CONTINGENCIES
A law firm which has represented the Company on various matters, has asserted
that the Company owes the firm approximately $13,000 more in legal fees than the
Company has recorded. The Company and the law firm are currently in discussions
over what, if any additional fees are owed.
A former director claims the Company owes her an additional $24,425 over what
the Company has recorded. The Company disputes the assertion.
NOTE 8. SUBSEQUENT EVENTS
The Company evaluated events through August __, 2010 for subsequent events to be
included in its June 30, 2010 financial statements herein, and has determined
that there are no subsequent events that require disclosure.
F-10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with our unaudited
financial statements and notes thereto included herein. In connection with, and
because we desire to take advantage of, the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995, we caution readers regarding
certain forward looking statements in the following discussion and elsewhere in
this report and in any other statement made by, or on our behalf, whether or not
in future filings with the Securities and Exchange Commission. Forward-looking
statements are statements not based on historical information and which relate
to future operations, strategies, financial results or other developments.
Forward looking statements are necessarily based upon estimates and assumptions
that are inherently subject to significant business, economic and competitive
uncertainties and contingencies, many of which are beyond our control and many
of which, with respect to future business decisions, are subject to change.
These uncertainties and contingencies can affect actual results and could cause
actual results to differ materially from those expressed in any forward looking
statements made by, or on our behalf. We disclaim any obligation to update
forward-looking statements.
The independent registered public accounting firm's report on the Company's
financial statements as of December 31, 2009, and for each of the years in the
two-year period then ended, includes a "going concern" explanatory paragraph,
that describes substantial doubt about the Company's ability to continue as a
going concern.
OPERATIONS
Business Overview
International Paintball Association (the Company) was formed for the purpose of
providing services and products in connection with paintball sport activities.
Paintball sport activities are those activities by persons who are using
paintball equipment and accessories for entertainment in various interactions
with other paintball enthusiasts whether organized formally or in ad hoc
activities.
The Company's primary activities to date have consisted of organizing the
company, designing a business plan and obtaining public reporting status with
the Securities Exchange Commission (SEC). The Company has not engaged any
vendors, at the time of this filing.
The independent registered public accounting firm's report on the Company's
financial statements as of December 31, 2009, and for each of the years in the
two-year period then ended, includes a "going concern" explanatory paragraph,
that describes substantial doubt about the Company's ability to continue as a
going concern. The Company is dependent on raising additional equity and/or,
debt to fund any negotiated settlements with its outstanding creditors and meet
the Company's ongoing operating expenses. There is no assurance that
International Paintball will be able to raise the necessary equity and/or debt
that it will need to be able to negotiate acceptable settlements with its
outstanding creditors or fund its ongoing operating expenses. International
Paintball cannot make any assurances that it will be able to raise funds through
such activities.
RESULTS OF OPERATIONS
For the Three Months Ended June 30, 2010 Compared to the Three Months Ended June
30, 2009
1
During the three months ended June 30, 2010 and 2009, we did not recognize any
revenues from our operations.
During the three months ended June 30, 2010, we incurred an operational loss of
$35,844 compared to $30,583 during the three months ended June 30, 2009. The
increase of $5,261 was a result of the increase in general and administrative
expenses as a result of the Company's activities in maintaining its public
reporting status.
During the three months ended June 30, 2010, we incurred a net loss of $48,091
compared to $43,169 during the three months ended June 30, 2009. The increase of
$4,922 is a result of the $5,261 increase in operational expenses offset by a
$339 decrease in interest expense.
For the Six Months Ended June 30, 2010 Compared to the Six Months Ended June 30,
2009
During the six months ended June 30, 2010, we recognized revenue of $125 from
our operational activities. During the six months ended July 30, 2009, we did
not recognize any revenues from our operations.
During the six months ended June 30, 2010, we incurred an operational loss of
$58,457 compared to $67,714 during the six months ended June 30, 2009. The
decrease of $9,257 was a result of the $9,072 decrease in general and
administrative expenses as a result of the Company's limited operational
activities.
During the six months ended June 30, 2010, we incurred a net loss of $84,144
compared to $89,772 during the six months ended June 30, 2009. The decrease of
$5,628 is a result of the $9.072 decrease in operational expenses offset by a
$3,629 increase in interest expenses.
LIQUIDITY
At June 30, 2010, we had current assets of $132, consisting of cash $7 and
accounts receivable of $125, we had total current liabilities of $1,076,282,
consisting of accounts payable of $286,221, $111,427 in accrued expenses and
liabilities, $478,500 in promissory notes and $200,534 in convertible promissory
notes. Our current liabilities exceed our current assets by $1,076,150 and we
will be reliant upon shareholder loans or private placements of equity to fund
any kind of operations. We have secured no sources of loans or private
placements at this time.
During the six months ended June 30, 2010, we used $16 in operational
activities. During the six months ended June 30, 2010, we recognized a net loss
of $84,144, which was not adjusted for any non-cash expenses. During the six
months ended June 30, 2009, we did not use or receive funds from our operational
activities. During the six months ended June 30, 2009, we recognized a net loss
of $89,773, which was adjusted for depreciation of $61.
During the six months ended June 30, 2010 and 2009, we did not use or receive
any funds from investment activities.
During the six months ended June 30, 2010 and 2009, we did not receive or use
any funds from our financing activities.
2
At June 30, 2010 and December 31, 2009, the Company had $478,500 in outstanding
notes payable to various individuals, unsecured, bearing interest at 6% - 9% per
annum, due in full on term expiration, with all amounts at each date either
presently due or due within one year. The Company incurred interest expense
under the notes during the three and six months ended June 30, 2010 of $9,577
and $19,050, respectively. Accrued interest at June 30, 2010 and December 31,
2009 amounted to $105,700 and $86,651, respectively.
In April 2009, a related party owed $200,534 for accounts payable agreed to
convert the amount owed to it into a Convertible Promissory Note. The
Convertible Promissory note is unsecured, has an interest rate of 6% and a due
date of April 10, 2010. The promissory note provides the holder with the right
to convert part or all of the outstanding principal and/or interest into shares
of the Company's common stock at a rate of $0.50 per share. At June 30, 2010 and
December 31, 2009, $200,534 was outstanding. During the three and six months
ended June 30, 2010 interest expense was $2,670 and $5,636, respectively.
Accrued interest at June 30, 2010 and December 31, 2009 amounted to $8,736 and
$14,373 respectively.
Short Term.
On a short-term basis, we do not generate any revenue or revenues sufficient to
cover operations. Based on prior history, we will continue to have insufficient
revenue to satisfy current and recurring liabilities. For short term needs we
will be dependent on receipt, if any, of offering proceeds.
Capital Resources
We have only common stock as our capital resource.
We have no material commitments for capital expenditures within the next year,
however if operations are commenced, substantial capital will be needed to pay
for participation, investigation, exploration, acquisition and working capital.
Need for Additional Financing
We do not have capital sufficient to meet our cash needs. We will have to seek
loans or equity placements to cover such cash needs.
No commitments to provide additional funds have been made by our management or
other stockholders. Accordingly, there can be no assurance that any additional
funds will be available to us to allow it to cover our expenses as they may be
incurred.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not Applicable
ITEM 4. CONTROLS AND PROCEDURES
Disclosures Controls and Procedures
3
We have adopted and maintain disclosure controls and procedures (as such term is
defined in Rules 13a 15(e) and 15d-15(e) under the Securities Exchange Act of
1934, as amended (the "Exchange Act")) that are designed to ensure that
information required to be disclosed in our reports under the Exchange Act, is
recorded, processed, summarized and reported within the time periods required
under the SEC's rules and forms and that the information is gathered and
communicated to our management, including our Chief Executive Officer (Principal
Executive Officer) and Chief Financial Officer (Principal Financial Officer), as
appropriate, to allow for timely decisions regarding required disclosure.
As required by SEC Rule 15d-15(b), our Chief Executive Officer carried out an
evaluation under the supervision and with the participation of our management,
of the effectiveness of the design and operation of our disclosure controls and
procedures pursuant to Exchange Act Rule 15d-14 as of the end of the period
covered by this report. Based on the foregoing evaluation, our Chief Executive
Officer, has concluded that our disclosure controls and procedures are effective
in timely alerting them to material information required to be included in our
periodic SEC filings and to ensure that information required to be disclosed in
our periodic SEC filings is accumulated and communicated to our management,
including our Chief Executive Officer, to allow timely decisions regarding
required disclosure as a result of the deficiency in our internal control over
financial reporting discussed below.
ITEM 4T. CONTROLS AND PROCEDURES
Management's Quarterly Report on Internal Control over Financial Reporting.
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;
(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 on 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.
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.
Management's assessment of the effectiveness of the registrant's internal
control over financial reporting is as of the quarter ended June 30, 2010. In
making this assessment, Management used the criteria set forth by the Committee
of Sponsoring Organizations of the Treadway Commission (COSO) in Internal
Control--Integrated Framework. Management believes that internal control over
financial reporting is effective. The Company has not identified any, current
material weaknesses, considering the nature and extent of the Company's current
operations and any risks or errors in financial reporting under current
operations.
4
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
registered public accounting firm.
There was no change in our internal control over financial reporting that
occurred during the quarter ended June 30, 2010 that has materially affected, or
is reasonably likely to materially affect, our internal control over financial
reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
NONE.
ITEM 1A. RISK FACTORS
Not Applicable to Smaller Reporting Companies.
ITEM 2. CHANGES IN SECURITIES
NONE.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
NONE.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
NONE.
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
5
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.
INTERNATIONAL PAINTBALL ASSOCIATION, INC.
(Registrant)
Dated: November 16, 2010 By: /s/ Brenda Webb
---------------
Brenda Webb
(Acting Chief Executive Officer
and Acting Principal Accounting Officer)
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