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EX-31.1 - EXHIBIT 31.1 - NZCH Corp | c23437exv31w1.htm |
EXCEL - IDEA: XBRL DOCUMENT - NZCH Corp | Financial_Report.xls |
EX-32.2 - EXHIBIT 32.2 - NZCH Corp | c23437exv32w2.htm |
EX-32.1 - EXHIBIT 32.1 - NZCH Corp | c23437exv32w1.htm |
EX-31.2 - EXHIBIT 31.2 - NZCH Corp | c23437exv31w2.htm |
Table of Contents
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2011
OR
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number: 000-27729
Zap.Com Corporation
(Exact name of registrant as specified in its charter)
Nevada | 76-0571159 | |
(State or other jurisdiction of | (I.R.S. Employer | |
incorporation or organization) | Identification No.) | |
450 Park Avenue, 27th Floor | ||
New York, NY | 10022 | |
(Address of principal executive offices) | (Zip Code) |
(212) 906-8555
(Registrants telephone number, including area code)
(Registrants telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
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 þ or No o.
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 (section 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 þ or No o.
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. (Check one):
Large accelerated filer o
|
Accelerated filer o | Non-accelerated filer þ | Smaller reporting company o | |||
(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 þ or o
There were 50,004,474 shares of the registrants common stock outstanding as of October 31,
2011.
ZAP.COM CORPORATION
TABLE OF CONTENTS
2
Table of Contents
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
ZAP.COM CORPORATION
CONDENSED BALANCE SHEETS
September 30, | December 31, | |||||||
2011 | 2010 | |||||||
(Unaudited) | ||||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 418,849 | $ | 546,407 | ||||
Short-term investments |
748,941 | 749,450 | ||||||
Interest receivable |
433 | 175 | ||||||
Total assets |
$ | 1,168,223 | $ | 1,296,032 | ||||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | 2,043 | $ | 886 | ||||
Accrued liabilities |
1,350 | | ||||||
Total liabilities |
3,393 | 886 | ||||||
Commitments and contingencies |
||||||||
Stockholders equity: |
||||||||
Common stock |
50,004 | 50,004 | ||||||
Additional paid in capital |
10,964,421 | 10,941,471 | ||||||
Accumulated deficit |
(9,849,595 | ) | (9,696,329 | ) | ||||
Total stockholders equity |
1,164,830 | 1,295,146 | ||||||
Total liabilities and stockholders equity |
$ | 1,168,223 | $ | 1,296,032 | ||||
See accompanying notes to condensed financial statements.
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Table of Contents
ZAP.COM CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||
Revenues |
$ | | $ | | $ | | $ | | ||||||||
Cost of revenues |
| | | |||||||||||||
Gross profit |
| | | | ||||||||||||
Operating expenses: |
||||||||||||||||
General and administrative |
42,507 | 25,980 | 154,074 | 126,046 | ||||||||||||
Total operating expenses |
42,507 | 25,980 | 154,074 | 126,046 | ||||||||||||
Operating loss |
(42,507 | ) | (25,980 | ) | (154,074 | ) | (126,046 | ) | ||||||||
Interest income |
267 | | 808 | 48 | ||||||||||||
Loss before income taxes |
(42,240 | ) | (25,980 | ) | (153,266 | ) | (125,998 | ) | ||||||||
Benefit from income taxes |
| | | | ||||||||||||
Net loss |
$ | (42,240 | ) | $ | (25,980 | ) | $ | (153,266 | ) | $ | (125,998 | ) | ||||
Net loss per common share basic and diluted |
$ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | ||||
Weighted average common shares outstanding |
50,004,474 | 50,004,474 | 50,004,474 | 50,004,474 | ||||||||||||
See accompanying notes to condensed financial statements.
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Table of Contents
ZAP.COM CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
Nine Months Ended | ||||||||
September 30, | ||||||||
2011 | 2010 | |||||||
(Unaudited) | ||||||||
Cash flows from operating activities: |
||||||||
Net loss |
$ | (153,266 | ) | $ | (125,998 | ) | ||
Adjustments to reconcile net loss to net cash used in operating
activities: |
||||||||
Contributed capital from Harbinger Group Inc. for
unreimbursed management services and rent |
22,950 | 12,250 | ||||||
Changes in assets and liabilities: |
||||||||
Interest receivable |
(258 | ) | | |||||
Accounts payable |
1,157 | (4,371 | ) | |||||
Accrued liabilities |
1,350 | (9,849 | ) | |||||
Net cash used in operating activities |
(128,067 | ) | (127,968 | ) | ||||
Cash flows from investing activities: |
||||||||
Purchase of investment |
(748,941 | ) | | |||||
Maturity of investment |
749,450 | | ||||||
Net cash provided by investing activities |
509 | | ||||||
Net decrease in cash and cash equivalents |
(127,558 | ) | (127,968 | ) | ||||
Cash and cash equivalents at beginning of period |
546,407 | 1,441,166 | ||||||
Cash and cash equivalents at end of period |
$ | 418,849 | $ | 1,313,198 | ||||
See accompanying notes to condensed financial statements.
5
Table of Contents
ZAP.COM CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
(Unaudited)
Note 1. Basis of Presentation
The unaudited condensed financial statements included herein have been prepared by Zap.Com
Corporation (Zap.Com or the Company) pursuant to the rules and regulations of the Securities
and Exchange Commission. The financial statements reflect all adjustments that are, in the opinion
of management, necessary for a fair statement of such information. All such adjustments are of a
normal recurring nature. Although the Company believes that the disclosures are adequate to make
the information presented not misleading, certain information and footnote disclosures, including a
description of significant accounting policies normally included in financial statements prepared
in accordance with accounting principles generally accepted in the United States of America
(GAAP), have been condensed or omitted pursuant to such rules and regulations. The year-end
condensed balance sheet data was derived and condensed from audited financial statements, but does
not include all disclosures required by GAAP. These interim financial statements should be read in
conjunction with the financial statements and the notes thereto included in the Companys Annual
Report on Form 10-K for the year ended December 31, 2010 filed with the Securities and Exchange
Commission on March 11, 2011. The results of operations for the three and nine month periods ended
September 30, 2011 are not necessarily indicative of the results for any subsequent periods or the
entire fiscal year ending December 31, 2011.
Note 2. Fair Value of Financial Instruments
The carrying amounts and estimated fair values of the Companys financial instruments for which the
disclosure of fair value is required were as follows:
September 30, 2011 | December 31, 2010 | |||||||||||||||
Carrying | Carrying | |||||||||||||||
Amount | Fair Value | Amount | Fair Value | |||||||||||||
Cash and cash equivalents |
$ | 418,849 | $ | 418,849 | $ | 546,407 | $ | 546,407 | ||||||||
Short-term investments (including
related interest receivable) |
$ | 749,374 | $ | 749,700 | $ | 749,625 | $ | 749,625 |
The carrying amounts of accounts payable approximate fair value and, accordingly, they are not
presented in the table above. The fair values of short-term investments, which consist entirely of
U.S. Treasury instruments classified as held-to-maturity, are based on observed market prices.
As of September 30, 2011, the Companys short-term investments consisted of a U.S Treasury Bill,
which had a remaining maturity of approximately seven months with an interest rate of 0.14%. As of
December 31, 2010, the Companys short-term investments consisted of a U.S. Treasury Bill with a
remaining maturity of approximately five months with an interest rate of 0.15%.
Note 3. Related Party Transactions
Since its inception, the Company has utilized the services of the management and staff of Harbinger
Group Inc., the Companys principal stockholder (the
Principal Stockholder), under a shared
services agreement that allocated these costs on a percentage of time basis. The Company also
shares office space with its Principal Stockholder under such
agreement. Through September 30, 2011, the Principal Stockholder
has waived its rights under the shared services agreement to be reimbursed for these costs. The
Company recorded approximately $23,000 and $12,000 as contributed capital for such services and
office space for the nine months ended September 30, 2011 and September 30, 2010, respectively. The
Company believes these allocations were made on a reasonable basis; however, they do not
necessarily represent the costs that would have been incurred by the Company on a stand-alone
basis.
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Table of Contents
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
This Managements Discussion and Analysis of Financial Condition and Results of Operations of
Zap.Com Corporation (the Company, Zap.Com, we, us, or our) should be read in conjunction
with our unaudited condensed financial statements included elsewhere in this report and Item 7.
Managements Discussion and Analysis of Financial Condition and Results of Operations in our
Annual Report on Form 10-K for the fiscal year ended December 31, 2010 (the Form 10-K) filed with
the Securities and Exchange Commission (the Commission) on March 11, 2011. Certain statements we
make under this Item 2 constitute forward-looking statements under the Private Securities
Litigation Reform Act of 1995. See Special Note Regarding Forward-Looking Statements and
Projections in Part II Other Information of this report. You should consider our
forward-looking statements in light of our unaudited condensed financial statements, related notes,
and other financial information appearing elsewhere in this report, our Form 10-K and our other
filings with the Commission.
Overview
The Company was incorporated in Nevada in 1999 for the purpose of creating and operating a global
network of independently owned web sites. Harbinger Group Inc., our
principal stockholder (the
Principal Stockholder) owns approximately 98% of our outstanding common stock. Currently, we have
no business operations, other than complying with our reporting requirements under the Securities
Exchange Act of 1934 (the Exchange Act). We may search for assets or businesses to acquire so
that we may in the future become an operating company.
We have broad discretion in identifying and selecting both the industries and the possible
acquisition or business combination opportunities. We have not identified a specific industry to
focus on and have no present plans, proposals, arrangements or understandings with respect to a
business combination or acquisition of any specific business. There can be no assurance that we
will, or will be able to, identify or successfully complete any such transactions. As of the date of this
report, we are not a party to any agreements providing for a business combination or other
acquisition of assets. If we enter into any such transaction we may pay acquisition consideration in the form of cash, debt or equity
securities or a combination thereof. In addition, as a part of any
such transaction we may
consider raising additional capital through the issuance of equity or debt securities, including
the issuance of preferred stock.
Results of Operations
For the three and nine months ended September 30, 2011 and 2010, our operations consisted of the
following:
Revenues. We had no revenues for the three months and nine months ended September 30, 2011 and
2010, and we do not presently have any revenue-generating business.
Cost of revenues. We had no cost of revenues for the three and nine months ended September 30,
2011 and 2010.
General and administrative expenses. General and administrative expenses consist primarily of
legal and accounting professional services, printing and filing costs, expenses allocated by our
Principal Stockholder under a shared services agreement, and various other costs. General and
administrative expenses increased by $17,000 to $43,000 for the three months ended September 30,
2011 from $26,000 for the three months ended September 30, 2010. This increase is principally due
to the timing of professional fees related to our annual meeting of Stockholders in the second
quarter of 2010 versus a shareholder action in lieu of a meeting (Shareholder Action) in the
third quarter of 2011. In the third quarter of 2011, we incurred $17,000 in costs related to the
required communications relating to the Shareholder Action. General and administrative expenses
increased by $28,000 to $154,000 for the nine months ended September 30, 2011 from $126,000 for the
nine months ended September 30, 2010. This increase was principally due to an increase in
professional fees associated with the transition of our legal counsel and auditors, an increase in
outside services related to our required implementation of eXtensible Business Reporting Language
(XBRL) for filings with the Commission, as well as an increase in non-cash expenses under the
shared services agreement with our Principal Stockholder.
Interest Income. Interest income was insignificant for the three and nine months ended September
30, 2011 and September 30, 2010. Our interest income will continue to be negligible while our cash
is maintained in bank accounts or invested in U.S. Government instruments with nominal interest
rates.
7
Table of Contents
Liquidity and Capital Resources
We have not generated any significant revenue since our inception. As a result, our primary source
of liquidity has been from our initial capitalization and, to a lesser extent, the interest income
generated on our cash equivalents and short-term investments. As we limit our investments
principally to U.S. Government instruments, we do not expect to earn significant interest income in
the near term. As of September 30, 2011, our cash and cash equivalents were $419,000 and we held
$749,000 in short-term investments.
Since our inception, we have utilized services of the management and staff and occupied office
space of our Principal Stockholder under a shared services agreement that allocated these costs.
Our Principal Stockholder has waived its rights under the shared services agreement to be
reimbursed these costs through September 30, 2011. For the nine months ended September 30, 2011 and September 30, 2010, we
recorded approximately $23,000 and $12,000, respectively, as contributed capital for these
services.
We believe that we have sufficient resources to satisfy our existing liabilities and our
anticipated operating expenses for the next twelve months. Until such time as we actively pursue a
business combination or asset acquisition, we expect these expenses to consist mainly of general
and administrative expenses incurred in connection with maintaining our status as a publicly
reporting company. We have no commitments for capital expenditures and foresee none, except for
possible future business combinations or asset acquisitions. In order to effect a business
combination or asset acquisition, however, we may need additional financing. There is no assurance
that any such financing will be available or available on terms favorable or acceptable to us.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements as of September 30, 2011 that have or are
reasonably likely to have a current or future material effect on our financial position, results of
operations or cash flows.
Summary of Cash Flows
Cash used in operating activities was $128,000 for the nine months ended September 30, 2011 and
2010. Although our net loss for the nine months ended September 30, 2011 was $27,000 greater than
that of the nine months ended September 30, 2010, our payments for general and administrative
expenses were about the same due to the timing of payments in 2010 previously accrued in 2009 and
the fact that part of the increase in the net loss represents higher non-cash expenses under the
shared services agreement with our Principal Stockholder.
Cash provided by investing activities was $500 for the nine months ended September 30, 2011
compared to none for the nine months ended September 30, 2010. The increase in cash provided by
investing activities is the result of the purchase and maturity of short-term investments.
We had no cash flows from financing activities for the nine months ended September 30, 2011 and
September 30, 2010.
Recent Accounting Pronouncements Not Yet Adopted
As of the date of this report, there are no recent accounting pronouncements that have not yet been
adopted that we believe would have a material impact on our financial statements.
Critical Accounting Policies and Estimates
As of September 30, 2011, our critical accounting policies and estimates have not changed
materially from those set forth in our Form 10-K.
Contractual Obligations
We do not have any long-term debt obligations, capital leases obligations, operating lease
obligations or purchase obligations at September 30, 2011.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
We do not have any market risk exposure to changes in interest rates, foreign currency exchange
rates, equity prices or commodity prices at September 30, 2011. At that date, our investments
consist entirely of a U.S Treasury security with a maturity of less than one year that is being
held to maturity. We had no outstanding derivative instruments or long-term debt at September 30,
2011.
8
Table of Contents
Item 4. Controls and Procedures
Evaluation of disclosure controls and procedures
An evaluation was performed under the supervision of the Companys management, including the Chief
Executive Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of the design
and operation of the Companys disclosure controls and procedures (as defined in Rules 13a-15(e)
and 15d-15(e) of the Securities Exchange Act of 1934, as amended, the Exchange Act) as of the end
of the period covered by this report. Based on that evaluation, the Companys management, including
the CEO and CFO, concluded that, as of September 30, 2011, the Companys disclosure controls and
procedures were effective to ensure that information we are required to disclose in reports that we
file or submit under the Exchange Act is recorded, processed, summarized and reported within the
time periods specified in the Commissions rules and forms, and is accumulated and communicated to
the Companys management, including the Companys CEO and CFO, as appropriate to allow timely
decisions regarding required disclosure.
Notwithstanding the foregoing, there can be no assurance that the Companys disclosure controls and
procedures will detect or uncover all failures of persons within the Company to disclose material
information otherwise required to be set forth in the Companys periodic reports. There are
inherent limitations to the effectiveness of any system of disclosure controls and procedures,
including the possibility of human error and the circumvention or overriding of the controls and
procedures. Accordingly, even effective disclosure controls and procedures can only provide
reasonable, not absolute, assurance of achieving their control objectives.
Changes in Internal Controls Over Financial Reporting
An evaluation was performed under the supervision of the Companys management, including the CEO
and CFO, of whether any change in the Companys internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) occurred during the quarter ended September
30, 2011. Based on that evaluation, the Companys management, including the CEO and CFO, concluded
that no significant changes in the Companys internal controls over financial reporting occurred
during the quarter ended September 30, 2011 that has materially affected, or is reasonably likely
to materially affect, the Companys internal control over financial reporting.
9
Table of Contents
PART II: OTHER INFORMATION
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Zap.Com Corporation (referred to as the Company, we, us, or our) has made forward-looking
statements in this Quarterly Report on Form 10-Q that are subject to risks and uncertainties. These
statements are based on the beliefs and assumptions of our management. Generally, forward-looking
statements include information concerning possible or assumed future actions, events or results of
operations of our Company. Forward-looking statements include, without limitation, the information
regarding our assets and operations and managements plans for the Company.
Forward-looking statements may be preceded by, followed by or include the words may, will,
believe, expect, anticipate, intend, plan, estimate, could, might, or continue or
the negative or other variations thereof or comparable terminology. We claim the protection of the
safe harbor for forward-looking statements contained in the Private Securities Litigation Reform
Act of 1995 for all forward-looking statements.
Forward-looking statements are not guarantees of performance. You should understand that the
following important factors, in addition to those discussed in Part I-Item 1A. Risk Factors of
our Annual Report on Form 10-K for the fiscal year ended December 31, 2010 filed with the
Securities and Exchange Commission (the Commission) on March 11, 2011 (the Form 10-K), could
affect our future results and could cause those results or other outcomes to differ materially from
those expressed or implied in the forward-looking statements.
Important factors that could affect our future results include, without limitation, the following:
| The impact of our limited assets and no source of revenue; |
||
| The controlling effect of Harbinger Group Inc., our Principal Stockholder (the
Principal Stockholder), whose interests may conflict with interests of our other
stockholders; |
||
| The impact of a determination that we are an investment company; |
||
| The impact of not, or not
being able to, identify or successfully complete any business
combination, acquisition or similar transaction; |
||
| The impact of our not selecting a specific industry or industries in which to acquire or
develop a business; |
||
| The impact of insubstantial disclosure relating to prospective new businesses; |
||
| The impact of the structure of an acquisition or business combination on our
stockholders; |
||
| The impact of management devoting insignificant time to our activities; |
||
| The impact of significant competition for acquisition candidates; |
||
| The impact of our categorization as a shell company as that term is used in the
Commissions rules; |
||
| The effect of a limited public market for our common stock on the trading activity and
market value of our stock; |
||
| The potential liabilities from being a member of our Principal Stockholders
consolidated tax group; |
||
| The effect of our intention not to pay any cash dividends on our common stock; |
||
| The effect of the anti-takeover provisions in our corporate documents on the market
price of our common stock; |
||
| The effect of a substantial amount of our common stock being eligible for sale into the
market on our stock price; and |
||
| The impact of delays or difficulty in satisfying the requirements or Section 404 of the
Sarbanes-Oxley Act of 2002 or negative reports concerning our internal controls. |
10
Table of Contents
Item 1. Legal Proceedings
None.
Item 1A. Risk Factors
As of September 30, 2011, the Companys risk factors have not changed materially from the risk
factors previously disclosed in the Form 10-K.
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
Submission of Matters to a Vote of Security Holders
As previously
disclosed, on July 18, 2011 the holders of a majority of our common stock consented in
writing to (1) re-elect our Class II director, Mr. Keith M. Hladek, (2) ratify the appointment
of our independent registered public accounting firm, (3) approve the compensation received by
our named executive officers and (4) recommend that an advisory vote on executive compensation be
held every three years. The Company has determined that, in accordance with the stockholder
recommendation, it will hold an advisory vote on executive compensation every three years until
the Company's Board of Directors determines that a different frequency for such advisory vote is
in the Companys best interest or the next required vote on the frequency of such vote.
Item 6. Exhibits
31.1*
|
Certification of CEO Pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
31.2*
|
Certification of CFO Pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
32.1**
|
Certification of CEO Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
32.2**
|
Certification of CFO Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
101.INS**
|
XBRL Instance Document | |
101.SCH**
|
XBRL Taxonomy Extension Schema Document | |
101.CAL**
|
XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF**
|
XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB**
|
XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE**
|
XBRL Taxonomy Extension Presentation Linkbase Document |
* | Filed herewith. |
|
** | Furnished herewith. |
11
Table of Contents
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.
ZAP.COM CORPORATION (Registrant) |
||||
Dated: November 7, 2011 | By: | /s/ FRANCIS T. McCARRON | ||
Executive Vice President and Chief Financial Officer | ||||
(on behalf of the Registrant and as Principal Financial Officer) | ||||
12