Attached files
| file | filename |
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| EX-31.1 - ATOMIC PAINTBALL INC | atomic10ex311q063011.htm |
| EX-31.2 - ATOMIC PAINTBALL INC | atomic10qex312063011.htm |
| EX-31.1 - ATOMIC PAINTBALL INC | atomic10qex321063011.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
Form 10-Q
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[√]
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended June 30, 2011
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or
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[ ]
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TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from __________________ to __________________________
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Commission file number: 0-52856
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Atomic Paintball, Inc.
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(Name of registrant as specified in its charter)
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Texas
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75-2942917
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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2600 E. Southlake Blvd., Suite 120-366, Southlake, TX
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76092
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(Address of principal executive offices)
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(Zip Code)
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(817) 491-8611
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(Registrant's telephone number, including area code)
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not applicable
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(Former name, former address and former fiscal year, if changed since last report)
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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 preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes x No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§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).
o Yes o No
Indicate by check mark whether the registrant is a large accelerated filer, 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.
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Large accelerated filer
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o
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Accelerated filer
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o
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Non-accelerated filer
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o
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Smaller reporting company
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x
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)
Yes x No o
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. 4,278,549 shares of common stock are issued and outstanding as of August 16, 2011.
TABLE OF CONTENTS
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Page No.
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PART I - FINANCIAL INFORMATION
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Item 1.
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Financial Statements.
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3
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Item 2.
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Management's Discussion and Analysis of Financial Condition and Results of Operations.
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9
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Item 3.
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Quantative and Qualitative Disclosures About Market Risk.
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10
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Item 4.
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Controls and Procedures.
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10
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PART II - OTHER INFORMATION
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Item 1.
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Legal Proceedings.
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11
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Item 1A.
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Risk Factors.
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11
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Item 2.
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Unregistered Sales of Equity Securities and Use of Proceeds.
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11
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Item 3.
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Defaults Upon Senior Securities.
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11
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Item 4.
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(Removed and Reserved).
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11
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Item 5.
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Other Information.
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11
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Item 6.
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Exhibits.
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11
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This report contains forward-looking statements. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These forward-looking statements include, among others, the following:
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our ability to develop or acquire operations and exit shell status,
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our ability to raise sufficient working capital necessary to continue to implement our business plan and satisfy our obligations as they become due,
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our ability to continue as a going concern,
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our ability to develop revenue producing operations,
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our ability to establish our brand and effectively compete in our target market, and
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risks associated with the external factors that impact our operations, including economic and leisure trends.
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Forward-looking statements are typically identified by use of terms such as “may”, “could”, “should”, “expect”, “plan”, “project”, “intend”, “anticipate”, “believe”, “estimate”, “predict”, “potential”, “pursue”, “target” or “continue”, the negative of such terms or other comparable terminology, although some forward-looking statements may be expressed differently. The forward-looking statements contained in this report are largely based on our expectations, which reflect estimates and assumptions made by our management. These estimates and assumptions reflect our best judgment based on currently known market conditions and other factors. Although we believe such estimates and assumptions to be reasonable, they are inherently uncertain and involve a number of risks and uncertainties that are beyond our control. In addition, management’s assumptions about future events may prove to be inaccurate. Management cautions all readers that the forward-looking statements contained in this report are not guarantees of future performance, and we cannot assure any reader that such statements will be realized or the forward-looking events and circumstances will occur. Actual results may differ materially from those anticipated or implied in the forward-looking statements. You should consider the areas of risk described in connection with any forward-looking statements that may be made herein. You should also consider carefully the statements under Item 1A. Risk Factors appearing in our Annual Report on Form 10-K for the year ended December 31, 2010 which address additional factors that could cause our actual results to differ from those set forth in the forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements and readers should carefully review this report in its entirety, including the risks described in Item 1A. - Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2010. Except for our ongoing obligations to disclose material information under the Federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events. These forward-looking statements speak only as of the date of this report, and you should not rely on these statements without also considering the risks and uncertainties associated with these statements and our business.
OTHER PERTINENT INFORMATION
Unless specifically set forth to the contrary, when used in this report the terms “Atomic Paintball,” "we"", "our", the "Company" and similar terms refer to Atomic Paintball, Inc., a Texas corporation. In addition, when used herein and unless specifically set forth to the contrary, “Second Quarter 2011” refers to the three months ended June 30, 2011, “Second Quarter 2010” refers to the three months ended June 30, 2010, “2010” refers to the year ended December 31, 2010 and “2011” refers to the year ending December 31, 2011. The information which appears on our website at www.atomicpaintballparks.com is not part of this report.
2
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements.
ATOMIC PAINTBALL, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
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June 30,
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DECEMBER 31,
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2011
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2010
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(Unaudited)
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ASSETS
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Current Assets
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Cash & cash equivalents
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$ | 180 | $ | 85 | ||||
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Prepaid expenses
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- | 6,699 | ||||||
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TOTAL ASSETS
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$ | 180 | $ | 6,784 | ||||
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LIABILITIES AND STOCKHOLDERS' DEFICIT
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Current Liabilities
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Accounts Payable
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$ | 162,126 | $ | 134,156 | ||||
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Due to related party
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66,668 | 45,444 | ||||||
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Accrued Interest
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5,968 | 5,586 | ||||||
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Note payable - related party
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11,846 | 11,846 | ||||||
| Convertible note payable - related party | 143,733 | - | ||||||
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Total Current Liabilities
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390,341 | 197,032 | ||||||
| Convertible note payable - related party | - | 143,733 | ||||||
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Total Liabilities
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390,341 | 340,765 | ||||||
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COMMITMENTS AND CONTINGENCIES
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STOCKHOLDERS' DEFICIT
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Preferred Stock, no par value: 2,000,000 shares authorized
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- | - | ||||||
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Series A Convertible Preferred Stock, no par value; 400,000 shares authorized
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no shares issued and outstanding as at December 31, 2010 and 2009
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- | - | ||||||
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Common Stock, no par value: 10,000,000 shares authorized,
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4,278,549 and 4,178,549 shares issued and outstanding as at June 30, 2011
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and December 31, 2010, respectively
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566,790 | 526,790 | ||||||
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Additional paid in capital
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204,218 | 236,218 | ||||||
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Deficit accumulated during the development stage
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(1,161,169 | ) | (1,096,989 | ) | ||||
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Total Stockholders' Deficit
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(390,161 | ) | (333,981 | ) | ||||
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TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT
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$ | 180 | $ | 6,784 | ||||
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See accompanying Notes to Financial Statements.
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3
ATOMIC PAINTBALL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
(Unaudited)
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From Inception
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For the Three Months Ended
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For the Six Months Ended
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(May 8, 2001)
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June 30,
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June 30,
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Through June 30,
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2011
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2010
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2011
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2010
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2011
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(Restated)
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(Restated)
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OPERATING EXPENSES
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General and Administrative
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$ | 24,755 | $ | 97,005 | $ | 59,521 | $ | 233,956 | $ | 1,111,914 | ||||||||||
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Depreciation and amortization
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- | - | - | - | 6,835 | |||||||||||||||
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Total Operating Expenses
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24,755 | 97,005 | 59,521 | 233,956 | 1,118,749 | |||||||||||||||
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OPERATING LOSS
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(24,755 | ) | (97,005 | ) | (59,521 | ) | (233,956 | ) | (1,118,749 | ) | ||||||||||
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OTHER INCOME (EXPENSE)
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Interest Expense
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(2,342 | ) | (2,342 | ) | (4,659 | ) | (3,420 | ) | (42,420 | ) | ||||||||||
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Loss before Income Taxes
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(27,097 | ) | (99,347 | ) | (64,180 | ) | (237,376 | ) | (1,161,169 | ) | ||||||||||
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Income tax expense
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- | - | - | - | - | |||||||||||||||
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NET LOSS
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$ | (27,097 | ) | $ | (99,347 | ) | $ | (64,180 | ) | $ | (237,376 | ) | $ | (1,161,169 | ) | |||||
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NET LOSS PER COMMON SHARE
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Basic & Diluted
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$ | (0.01 | ) | $ | (0.02 | ) | $ | (0.02 | ) | $ | (0.05 | ) | ||||||||
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WEIGHTED AVERAGE NUMBER OF
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COMMON SHARES OUTSTANDING
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Basic & Diluted
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4,278,549 | 4,178,549 | 4,259,212 | 4,511,947 | ||||||||||||||||
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See accompanying Notes to Financial Statements.
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4
ATOMIC PAINTBALL, INC.
(A DEVELOPMEMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
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FROM INCEPTION
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For the Six Months Ended
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(May 8, 2001)
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| June 30, |
THROUGH
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2011
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2010
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June 30, 2011
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CASH FLOW FROM OPERATING ACTIVITIES
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(Restated)
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NET LOSS
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$ | (64,180 | ) | $ | (237,376 | ) | $ | (1,161,169 | ) | |||
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ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH
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PROVIDED BY (USED IN) OPERATING ACTIVITIES
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Depreciation
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- | - | 6,835 | |||||||||
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Loss on Disposal of Fixed Assets
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- | - | 3,464 | |||||||||
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Issuance of Common Stock For Services
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7,000 | 90,000 | 311,944 | |||||||||
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Capital contribution of services
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1,000 | 2,000 | 5,000 | |||||||||
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Gain on Settlement of Liabilities
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- | (13,600 | ) | |||||||||
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CHANGES IN OPERATING ASSETS & LIABILITIES
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Decrease in prepaid expenses
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6,699 | (1,250 | ) | 0 | ||||||||
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Increase (Decrease) in accounts payable
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27,970 | 129,147 | 334,459 | |||||||||
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Increase in accrued expenses
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382 | (13,578 | ) | 22,125 | ||||||||
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Total Cash Flow Used In Operating Activities
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(21,129 | ) | (31,057 | ) | (490,942 | ) | ||||||
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CASH FLOW FROM INVESTING ACTIVITIES
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Purchase of Fixed Assets
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- | - | (10,299 | ) | ||||||||
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Total Cash Flow Used In Investing Activities
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- | - | (10,299 | ) | ||||||||
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CASH FLOW FROM FINANCING ACTIVITIES
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Advances Under Loans From Shareholders
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21,224 | 31,157 | 320,421 | |||||||||
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Net Proceeds from Issuance of Common Stock
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- | - | 106,000 | |||||||||
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Net Proceeds from Issuance of Preferred Stock
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- | - | 75,000 | |||||||||
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Total Cash Flow Provided By Financing Activities
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21,224 | 31,157 | 501,421 | |||||||||
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NET (DECREASE) INCREASE IN CASH & CASH EQUIVALENTS
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$ | 95 | $ | 100 | $ | 180 | ||||||
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Cash and Cash Equivalents at the beginning of the period
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$ | 85 | $ | - | $ | - | ||||||
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Cash and Cash Equivalents at the end of the period
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$ | 180 | $ | 100 | $ | 180 | ||||||
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SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION
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Cash paid for interest
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$ | - | $ | - | $ | 207 | ||||||
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Cash paid for income tax
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$ | - | $ | - | $ | - | ||||||
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Conversion of accounts payable to long term debt
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$ | $ | 143,733 | $ | 143,733 | |||||||
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Forgivesness of amounts owed to related party
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$ | $ | 199,218 | $ | 199,218 | |||||||
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Conversion of preferred stock to common stock
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$ | - | $ | - | $ | 75,000 | ||||||
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See accompanying Notes to Financial Statements.
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5
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
June 30, 2011
NOTE 1. NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES.
NATURE OF OPERATIONS
Atomic Paintball, Inc. (the “Company”) is a development stage corporation incorporated on May 8, 2001 in the State of Texas which plans to own and operate paintball facilities and to provide services and products in connection with paintball sport activities at its to be established facilities and through a website. The Company has established a website at www.atomicpaintballparks.com.
During the six months ended June 30, 2011 and 2010, we focused on completing those actions necessary to the implement our business plan.
BASIS OF PRESENTATION
Interim Accounting
The accompanying unaudited financial statements 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 the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six month period ended June 30, 2011, are not necessarily indicative of the results that may be expected for the year ended December 31, 2011.
The Company's 10-K for the year ended December 31, 2010, filed on April 14, 2011, should be read in conjunction with this report.
Reclassifications
Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation. The prior period presentation of discontinued operations has been reclassified based on the dismissal of the Chapter 7 proceeding in January, 2010.
NOTE 2. RESTATEMENT TO PRIOR FINANCIAL STATEMENTS.
On November 10, 2010, the Company determined that the previously issued financial statements for the three months ended March 31, 2010, and June 30, 2010 contained in the Company’s Quarterly Reports on Form 10-Q, should be revised. The restatements to these financial statements reflect the appropriate recognition of amounts forgiven from a related party as a capital contribution.
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Previously Reported
as of March 31, 2010
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Effect of
Restatement
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Restated as of
March 31, 2010
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Changes to Balance Sheet
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Additional paid in capital
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$ | - | $ | 199,218 | $ | 199,218 | ||||||
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Accumulated deficit
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$ | (727,192 | ) | $ | (199,218 | ) | $ | (926,410 | ) | |||
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Changes to Statement of Income
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Gain on forgiveness of debt
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$ | 199,218 | $ | (199,218 | ) | $ | - | |||||
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Net income/(loss)
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$ | 61,221 | $ | (199,218 | ) | $ | (138,007 | ) | ||||
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Changes to Statement of Cash Flows
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Net loss
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$ | 61,221 | $ | (199,218 | ) | $ | (138,007 | ) | ||||
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Gain on Settlement of Liabilities
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$ | 199,218 | $ | - | $ | - | ||||||
6
ATOMIC PAINTBALL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
June 30, 2011
NOTE 2. RESTATEMENT TO PRIOR FINANCIAL STATEMENTS (continued).
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Previously Reported
as of June 30, 2010
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Effect of
Restatement
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Restated as of
June 30, 2010
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Changes to Balance Sheet
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Additional paid in capital
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$ | - | $ | 199,218 | $ | 199,218 | ||||||
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Accumulated deficit
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$ | (826,570 | ) | $ | (199,218 | ) | $ | (1,025,788 | ) | |||
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Changes to Statement of Income
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Gain on forgiveness of debt
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$ | 199,218 | $ | (199,218 | ) | $ | - | |||||
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Net income/(loss)
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$ | (38,158 | ) | $ | (199,218 | ) | $ | (237,376 | ) | |||
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Changes to Statement of Cash Flows
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Net loss
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$ | (38,158 | ) | $ | (199,218 | ) | $ | (237,376 | ) | |||
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Gain on Settlement of Liabilities
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$ | 199,218 | $ | - | $ | - | ||||||
NOTE 3. RELATED PARTY TRANSACTIONS.
On March 29, 2010, the Company entered into a $143,733 Convertible Promissory Note with J.H. Brech LLC, a related party. The Note accrues interest at 6% per annum and is due March 29, 2012. Under the terms of the Note, J.H. Brech LLC has the right to convert all or part of the principal balance and accrued interest due under the Note into shares of the Company’s common stock at a conversion price of $0.50 per share. At June 30, 2011 and December 31, 2010 accrued interest amounted to $10,821 and $6,545, and is included with the balance due to related party.
Two of our Directors each waived the director fees due them for the quarter ended June 30, 2011 and the Company recorded that amount as a capital contribution of $1,000 in services.
In February 2011 the Company issued a total of 100,000 shares of common stock valued at $40,000. The fair value was determined based on the quoted market price on the date of grant, February 2010. $33,000 of the associated expense was recognized in 2010, and the remaining $7,000 has been recognized in the quarter ended March 31, 2011. Because the Company’s common stock does not have a par value, the Company also reclassified the $33,000 recognized in 2010 from additional paid-in-capital upon actual issuance of the stock in 2011, so that the result of the issuance is an increase in common stock of $40,000.
NOTE 4. COMMITMENTS AND CONTINGENCIES.
At management’s option, the Company has the right to convert $94,362 of legal invoices included in accounts payable to common stock at the price of $.50 per share. As of June 30, 2011 management has not exercised the right.
Management is not aware of any pending or threatened litigation involving the Company.
NOTE 5. SUBSEQUENT EVENTS.
On July 13, 2011 Atomic Paintball, Inc. entered into a revolving line of credit with J.H. Brech LLC, a related party, to provide access to funding for its operations. J.H. Brech LLC has been providing us with working capital advances and at June 30, 2011 we owed it approximately $67,000. The purpose of the revolving credit line was to grant us access to additional funds and to memorialize the amounts we currently owe J.H. Brech LLC. Under the terms of the 8% revolving credit note, we have access of up to $500,000, which includes the amount we presently owe J.H. Brech LLC. Interest is payable at 8% per annum on the outstanding principal amount due under the revolving line of credit and is payable semi-annually on June 30 and December 31 of each year commencing June 30, 2011. The principal and any accrued but unpaid is due on July 13, 2014. At our sole discretion, we can pay the interest in shares of our common stock valued as follows:
• if our common stock is not listed for trading on an exchange or quoted for trading on the OTC Bulletin Board or the Pink Sheets, interest shares are valued at the greater of $0.50 per share or the fair market value as determined in good faith by us based upon the most recent arms-length transaction, or
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• if our common stock is listed for trading on an exchange or quoted for trading on the OTC Bulletin Board or the OTC Markets Group (formerly, the Pink Sheets), interest shares will be valued at the greater of (A) the closing price of our common stock on the trading day immediately preceding the date the interest payment is due and payable, or (B) the average closing price of the common stock for the five trading days immediately preceding the date the interest payment is due and payable.
We may prepay the note at any time without penalty. Upon an event of default, J.H. Brech LLC has the right to accelerate the note. Events of default include:
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•
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our failure to pay the interest and principal when due,
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a default by us under the terms of the note,
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appointment of a receiver, filing of a bankruptcy provision, a judgment or levy against our company exceeding $50,000 or a default under any other indebtedness exceeding $50,000,
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a liquidation of our company or a sale of all or substantially all of our assets, or
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a change of control of our company as defined in the note.
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We expect to use any additional proceeds we draw under the revolving line of credit for general working capital.
8
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion of our financial condition and results of operations for the three months and six months ended June 30, 2011 and 2010 should be read in conjunction with the financial statements and the notes to those statements that are included elsewhere in this report. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the Item 1A. Risk Factors and Cautionary Notice Regarding Forward-Looking Statements and Business sections of our Annual Report on Form 10-K for the year ended December 31, 2010. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements.
Overview
We are a development stage company formed in 2001. Our business model is to own and operate paintball facilities and to provide services and products in connection with paintball sport activities at our facilities and through a website. Our actions taken to date have consisted of organizing our company, designing our business plan, including interviews with industry participants, visits to paintball field and retail facilities, evaluating website development firms, architectural firms, trademark attorneys, and suppliers of paintball markers, paintballs, and equipment, as well as real estate brokers.
Going Concern
We reported a net loss of $64,180 for the six months ended June 30, 2011 and we have incurred net losses of approximately $1.2 million since inception through June 30, 2011. The report of our independent registered public accounting firm on our financial statements for the year ended December 31, 2010 contains an explanatory paragraph regarding our ability to continue as a going concern based upon our operating losses and need to raise additional capital. These factors, among others, raise substantial doubt about our ability to continue as a going concern. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty. There are no assurances we will be successful in our efforts to increase our revenues and report profitable operations or to continue as a going concern, in which event investors would lose their entire investment in our company.
Plan of Operations
To date, we have funded our activities through debt as well as through working capital advances from a related party. Although we have access to a $500,000 revolving line of credit provided to us by a related party, of which $55,845 was outstanding at June 30, 2011, this credit line is not sufficient to fund all costs necessary to implement the first phase of our business model. In order to fully organize our company and implement the first phase of our business model, we will need to raise approximately $500,000 in additional capital. Given the development stage nature of our company and the current status of the capital markets and our designation as a shell company under Federal securities laws, there are no assurances we will be able to raise the necessary capital. Even if we are ultimately able to raise the capital, there are no assurances that our business model will be successful or that we will ever develop any revenue generating operations. However, assuming we are able to raise the capital, we expect to begin the launch of phase one of operating plans within six to nine months of receiving the capital.
Results of Operations
Our general and administrative expenses primarily include legal and accounting fees, transfer agent fees and non-cash compensation expenses for our executive officer and independent director. General and administrative expenses decreased 75% for each of the Second Quarter 2011 and the six months ended June 30, 2011 from the comparable periods in 2010 primarily as a result of decreased legal fees. We expect that these expenses will continue to decrease during 2011 from the comparable periods in 2010 as a result of the one-time nature of certain of the expenses in 2010, however, we expect general and administrative expenses will increase significantly once we begin to further implement our business plan, although we are unable at this time to quantify the actual amount of this anticipated increase as it will be based upon our varying level of operations.
Interest expense represents a non-cash expense representing interest on a notes payable in the principal amount of $10,900 due to a former officer which is presently past due, as well as interest on a related party convertible note payable in the principal amount of $143,733 which matures in March 2012. The 36% increase in interest expense for the six months ended June 30, 2011 from the comparable period in 2010 is the result of increased borrowings during the 2011 period.
Liquidity and Capital Resources
Liquidity is the ability of a company to generate sufficient cash to satisfy its needs for cash. At June 30, 2011 we had a working capital deficit of $390,161as compared to a working capital deficit of $190,248 at December 31, 2010. Our current liabilities increased approximately 98% at June 30, 2011 from December 31, 2010 primarily related to amounts due a related party and our lack of sufficient working capital. Accounts payable increased approximately 21% and amounts due a related party for working capital advances increased 47% at June 30, 2011 from December 31, 2010. These amounts are non-interest bearing and due on demand.
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Net cash used by operating activities in the six months ended June 30, 2011 was $21,129 as compared to net cash used by operating activities of $31,057 in the six months ended June 30, 2010. During the 2011 period, net cash used in operating activities principally included a $7,000 non-cash expense for stock-based compensation and a $1,000 capital contribution representing directors’ fees that were waived, offset by a decrease in prepaid expense and an increase in accounts payable. During the 2010 period, net cash used by operating activities included $90,000 in non-cash expense for stock-based compensation and a $2,000 capital contribution representing directors’ fees that were waived during the period, and an increase in accounts payable, offset by decreases in prepaid expenses and accrued expenses. We did not generate or use any cash from investing activities in either the 2011 or the 2010 periods. During both the 2011 and the 2010 periods, net cash provided by financing activities represented working capital advances from a related party.
We do not currently have any revenue producing operations and we are dependent upon availability under a $500,000 revolving line of credit extended to us by J.H. Brech LLC, a related party, in July 2011 to provide funds for our ongoing general and administrative expenses and satisfy our current obligations. At June 30, 2011 we owed J.H. Brech LLC $66,668, of which $55,845 is now included in our advances under this credit line. This credit line is not sufficient for the development of our operations. We need to initially raise an additional $500,000 to fund the initial launch of our business plan. We do not have any agreements or understanding with any third party to provide this financing. Until we can raise the necessary funds, we will be unable to further implement our business plan. Given the development stage nature of our company and the thinly traded nature of the public market for our common stock and our status as a shell company under Federal securities laws, there are no assurances we will be able to raise the necessary capital. If we are unable to raise capital as necessary, our ability to continue as a going concern is in jeopardy and investors could lose their entire investment in our company.
Critical Accounting Policies
The discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
A summary of significant accounting policies is included in Note 1 to the financial statements included in this report. Our management believes that the application of these policies on a consistent basis enables us to provide useful and reliable financial information about our operating results and financial condition.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable for a smaller reporting company.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures. We maintain “disclosure controls and procedures” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934. In designing and evaluating our disclosure controls and procedures, our management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Based on his evaluation as of the end of the period covered by this report, our Chief Executive Officer who also serves as our principal financial and accounting officer, has concluded that our disclosure controls and procedures were not effective such that the information relating to our company, required to be disclosed in our Securities and Exchange Commission reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and (ii) is accumulated and communicated to our management, including our Chief Executive Officer, to allow timely decisions regarding required disclosure.
Subsequent to the end of the period covered by this report, but prior to the filing of the report, we failed to timely file a Current Report on Form 8-K disclosing the revolving credit line we entered into with J.H. Brech LLC, a related party, in July 2011. The failure to timely file this report constitutes a material weaknesses in our disclosure controls and procedures. We expect to implement enhanced policies and procedures during the third quarter of 2011 to ensure that our reports are filed on a timely basis with the Securities and Exchange Commission.
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Changes in Internal Control over Financial Reporting. There have been no changes in our internal control over financial reporting during our last fiscal quarter 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 for a smaller reporting company.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. (Removed and Reserved).
Item 5. Other Information.
None.
Item 6. Exhibits.
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No.
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Description
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31.1
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Rule 13a-14(a)/ 15d-14(a) Certification of Chief Executive Officer *
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31.2
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Rule 13a-14(a)/ 15d-14(a) Certification of principal financial and accounting officer *
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32.1
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Section 1350 Certification of Chief Executive Officer and principal financial and accounting officer *
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101
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Interactive Data Files *
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* filed herewith
** to be filed by within the earlier of 30 days from the due date or filing date of this report pursuant to the grace period provided for the filing of the first interactive data exhibit.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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Atomic Paintball, Inc.
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August 22, 2011
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By: /s/ Don Mark Dominey
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Don Mark Dominey, Chief Executive Officer
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