Attached files
| file | filename |
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| EX-31.1 - CERTIFICATION - CALA CORP | cala_ex31.htm |
| EX-32.2 - CERTIFICATION - CALA CORP | cala_ex32.htm |
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2010
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: 000-15109
CALA CORPORATION
(Exact name of Company as Specified in Its Charter)
| Oklahoma | 73-1251800 | |
| (State or Other Jurisdiction of Incorporation) | (I.R.S. Employer or Organization Identification No.) | |
| 1314 Texas Street, Suite 400, Houston, TX | 77002 | |
| (Address of Principal Executive Offices) | (Zip Code) |
Company’s telephone number: (713) 302-8689
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.005 Par Value
Indicate by check mark whether the Company (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 Company was required to file such reports), and (2) been subject to such filing requirements for the past 90 days. Yes o No x.
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Company’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K o.
Indicate by check mark whether the Company 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 |
Accelerated filed
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o |
| Non-accelerated filer | o | Smaller reporting company | x |
Indicate by check mark whether the Company is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yeso Nox.
The Company’s revenues for the fiscal year ended December 31, 2010 was zero. The aggregate market value of the voting stock held by non-affiliates of the Company as of September 14, 2012: $994,685. As of September 14, 2012, the Company had 320,866,147 shares of common stock issued and outstanding.
Transitional Small Business Disclosure Format (check one): Yes o No x.
TABLE OF CONTENTS
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PART I
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3 | |
| Item 1. |
Business
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3 |
| Item 1A. |
Risk Factors
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4 |
| Item 2. |
Property
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8 |
| Item 3. |
Legal Proceedings
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8 |
| Item 4. |
Mine Safety Disclosures
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8 |
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PART II
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9 | |
| Item 5. |
Market for Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities
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9 |
| Item 6. |
Selected Financial Data
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10 |
| Item 7. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations
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10 |
| Item 8. |
Financial Statements
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14 |
| Item 9. |
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
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14 |
| Item 9A.(T) |
Controls and Procedures
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14 |
| Item 9B. |
Other Information
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14 |
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PART III
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15 | |
| Item 10. |
Directors, Executive Officers, and Corporate Governance
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15 |
| Item 11. |
Executive Compensation
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16 |
| Item 12. |
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
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17 |
| Item 13. |
Certain Relationships and Related Transactions and Director Independence
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17 |
| Item 14. |
Principal Accountant Fees and Services
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18 |
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PART IV
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19 | |
| Item 15. |
Exhibits, Financial Statement Schedules
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19 |
| Signatures | 20 |
2
PART I.
ITEM 1. BUSINESS.
Cala Corporation (formerly Magnolia Foods, Inc.) was incorporated on September 13, 1985 under the laws of the State of Oklahoma. The Company's sole industry segment was the business of owning, operating, licensing and joint venturing restaurants. In addition, the Company operated restaurants under lease which were discontinued during the year. Currently, the Company is in the development stage of building an underwater resort and casino.
Business Development.
The Company has designed an undersea resort. The Company, through the expertise of Mr. Ray Francis has solved the naval engineering problems originally presented by the project. Mr. Francis brings to the table over 40 years of maritime experience that is second to none in the maritime industry. Mr. Francis talents allow for a design that benefits the customer’s safety, maximizes the openness and space of the facility, and maintains the primary focus of human contact with marine life. This coupled with Joseph Cala’s knowledge and experience in the hospitality industry, along with eight years of intensive study and seemingly endless trial and error, enabled the Company to finalize two naval engineered designs for the Undersea Resort and Residence. The Company engaged Mr. Clive Jones, a former senior executive with Economic Research Associates, to help with business development. Mr. Jones has over 40 years of experience in worldwide leisure travel and tourism development, and he was the visionary behind of many landmark resorts and theme parks. In addition, the Company is working with prestigious maritime companies such as Stodga of Poland and FinCantieri of Italy.
The Company plans to build the first UnderSea Resort & Casino, the first Undersea Residence, and the first Residence Fractional Ownership. The development will be the residence and the fractional ownership, and the project will be financed from pre-selling individual units. Management believes that the project has a great chance of success. The Company is in discussions with members of the timeshare and fractional unit industry to explore the possibility of a partnership or contractual arrangement with the Company. The undersea residences have the entire ocean available with no purchase costs, and without the limitations of land. According to the Future Timeshare Buyers 2004 Market Profile, 13.4 million adults are interested in purchasing some form of timeshare during the next two years. The next generation of owners is well educated and the highest concentration of interest in purchasing is among GenXers. In addition, the study documents that prospective owners are experienced and enthusiastic travelers.
The Company completed the design phase of development and is seeking financing to begin the construction phase of the project. Included in the financing stage is the concept of pre-selling the vessels prior to the beginning of construction. As of this date the Company does not have any commitments for financing or purchase of any units. The Company initiated a contract with a shipyard for building the units.
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Management believes that the project has a great chance of success however; there can be no assurance that (i) such individual unit or fractional ownership will be sold or significant revenue will be generated, and (ii) anticipated costs will not be significantly exceeded by actual costs incurred.
The Company owns no patents or trademarks, and has no employees.
ITEM 1A. RISK FACTORS
Risk Factors Connected with Plan of Operation.
(a) Limited Prior Operations, History of Operating Losses, and Accumulated Deficit May Affect Ability of Company to Survive.
The Company has had limited prior operations to date. Since the Company’s principal activities recently have been limited to seeking new business ventures, it has no recent record of any revenue-producing operations. Consequently, there is only a limited operating history upon which to base an assumption that the Company will be able to achieve its business plans. In addition, the Company has only limited assets. As a result, there can be no assurance that the Company will generate significant revenues in the future; and there can be no assurance that the Company will operate at a profitable level. Accordingly, the Company’s prospects must be considered in light of the risks, expenses and difficulties frequently encountered in connection with the establishment of a new business.
As a result of the fixed nature of many of the Company’s expenses, the Company may be unable to adjust spending in a timely manner to compensate for any unexpected delays in the development and marketing of the Company’s products or any capital raising or revenue shortfall. Any such delays or shortfalls will have an immediate adverse impact on the Company’s business, operations and financial condition.
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(b)
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Need for Additional Financing May Affect Operations and Plan of Business.
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The working capital requirements associated with any adopted plan of business of the Company may be significant. The Company anticipates, based on currently proposed assumptions relating to its operations (including with respect to costs and expenditures and projected cash flow from operations), that it must seek financing to continue its operations (an amount which is as yet to be determined). However, such financing, when needed, may not be available, or on terms acceptable to management. The ability of the Company to continue as a going concern is dependent on additional sources of capital and the success of the Company’s business plan. The Company’s independent accountant audit report included in this Form 10-K includes a substantial doubt paragraph regarding the Company’s ability to continue as a going concern.
4
If funding is insufficient at any time in the future, the Company may not be able to take advantage of business opportunities or respond to competitive pressures, or may be required to reduce the scope of its planned product development and marketing efforts, any of which could have a negative impact on its business, operating results and financial condition. In addition, insufficient funding may have a material adverse effect on the company’s financial condition, which could require the company to:
· curtail operations significantly;
· sell significant assets;
· seek arrangements with strategic partners or other parties that may require the company to relinquish significant rights to products, technologies or markets; or
· explore other strategic alternatives including a merger or sale of the company. To the extent that the Company raises additional capital through the sale of equity or convertible debt securities, the issuance of such securities will result in dilution to existing stockholders. If additional funds are raised through the issuance of debt securities, these securities may have rights, preferences and privileges senior to holders of common stock and the terms of such debt could impose restrictions on the Company’s operations. Regardless of whether the Company’s cash assets prove to be inadequate to meet the Company’s operational needs, the Company may seek to compensate providers of services by issuance of stock in lieu of cash, which will also result in dilution to existing shareholders.
(c) Loss of Current Management Could Have Adverse Impact on Business and Prospects for Company.
The Company’s success is dependent upon the hiring and retention of key personnel. None of the officers or directors has any employment or non-competition agreement with the Company. Therefore, there can be no assurance that these personnel will remain employed by the Company. Should any of these individuals cease to be affiliated with the Company for any reason before qualified replacements could be found, there could be material adverse effects on the Company’s business and prospects.
In addition, all decisions with respect to the management of the Company will be made exclusively by the officers and directors of the Company. Investors will only have rights associated with stockholders to make decisions which affect the Company. The success of the Company, to a large extent, will depend on the quality of the directors and officers of the Company. Accordingly, no person should invest in the shares unless he is willing to entrust all aspects of the management of the Company to the officers and directors.
5
(d) Potential Conflicts of Interest May Affect Ability of Officers and Directors to Make Decisions in the Best Interests of Company.
The officers and directors have other interests to which they devote time, either individually or through partnerships and corporations in which they have an interest, hold an office, or serve on boards of directors, and each will continue to do so notwithstanding the fact that management time may be necessary to the business of the Company. As a result, certain conflicts of interest may exist between the Company and its officers and/or directors which may not be susceptible to resolution.
In addition, conflicts of interest may arise in the area of corporate opportunities which cannot be resolved through arm’s length negotiations. All of the potential conflicts of interest will be resolved only through exercise by the directors of such judgment as is consistent with their fiduciary duties to the Company. It is the intention of management, so as to minimize any potential conflicts of interest, to present first to the board of directors to the Company, any proposed investments for its evaluation.
(e) Limitations on Liability, and Indemnification, of Directors and Officers May Result in Expenditures by Company.
The Company’s Certificate of Incorporation contain provisions to eliminate, to the fullest extent permitted by the Oklahoma Corporation Law, as in effect from time to time, the personal liability of directors of the Company for monetary damages arising from a breach of their fiduciary duties as directors. The Certificate of Incorporation and the Amended and Restated By-Laws of the Company include provisions to the effect that the Company may, to the maximum extent permitted from time to time under applicable law, indemnify any director, officer, or employee to the extent that such indemnification and advancement of expense is permitted under such law, as it may from time to time be in effect. Any limitation on the liability of any director, or indemnification of directors, officer, or employees, could result in substantial expenditures being made by the Company in covering any liability of such persons or in indemnifying them.
(f) Absence of Cash Dividends May Affect Investment Value of Company’s Stock.
The board of directors does not anticipate paying cash dividends on the common stock for the foreseeable future and intends to retain any future earnings to finance the growth of the Company’s business. Payment of dividends, if any, will depend, among other factors, on earnings, capital requirements and the general operating and financial conditions of the Company as well as legal limitations on the payment of dividends out of paid-in capital.
6
(g) Non-Cumulative Voting May Affect Ability of Some Shareholders to Influence Mangement of Company.
Holders of the shares of common stock of the Company are not entitled to accumulate their votes for the election of directors or otherwise. Accordingly, the holders of a majority of the shares present at a meeting of shareholders will be able to elect all of the directors of the Company, and the minority shareholders will not be able to elect a representative to the Company’s board of directors.
(h) No Assurance of Continued Public Trading Market and Risk of Low Priced Securities May Affect Market Value of Company’s Stock.
There has been only a limited public market for the common stock of the Company. The common stock of the Company is currently quoted on the Pink Sheets LLC. As a result, an investor may find it difficult to dispose of, or to obtain accurate quotations as to the market value of the Company’s securities. In addition, the common stock is subject to the low-priced security or so called “penny stock” rules that impose additional sales practice requirements on broker-dealers who sell such securities. The Securities Enforcement and Penny Stock Reform Act of 1990 requires additional disclosure in connection with any trades involving a stock defined as a penny stock (generally, according to recent regulations adopted by the U.S. Securities and Exchange Commission (“SEC”), any equity security that has a market price of less than $5.00 per share, subject to certain exceptions), including the delivery, prior to any penny stock transaction, of a disclosure schedule explaining the penny stock market and the risks associated therewith. The regulations governing low-priced or penny stocks sometimes limit the ability of broker-dealers to sell the Company’s common stock and thus, ultimately, the ability of the investors to sell their securities in the secondary market.
(i) Failure to Maintain Market Makers May Affect Value of Company’s Stock.
If the Company is unable to maintain a Financial Industry Regulatory Authority member broker/dealers as market makers, the liquidity of the common stock could be impaired, not only in the number of shares of common stock which could be bought and sold, but also through possible delays in the timing of transactions, and lower prices for the common stock than might otherwise prevail. Furthermore, the lack of market makers could result in persons being unable to buy or sell shares of the common stock on any secondary market. There can be no assurance the Company will be able to maintain such market makers.
(j) Sale of Shares Eligible For Future Sale Could Adversely Affect the Market Price.
All of the shares of common stock that are currently held, directly or indirectly, by significant shareholders of the Company as shown in the chart under Part III, Item 11 of this Form 10-K, have been issued in reliance on the private placement exemption under the Securities Act of 1933. Such shares will not be available for sale in the open market without separate registration except in reliance upon Rule 144 under the Securities Act of 1933. In general, under Rule 144 a person, or persons whose shares are aggregated, who has beneficially owned shares acquired in a non-public transaction for at least one year, including persons who may be deemed affiliates of the Company, as defined, would be entitled to sell within any three-month period a number of shares that does not exceed 1% of the then outstanding shares of common stock, provided that current public information is then available. If a substantial number of the shares owned by these shareholders were sold under Rule 144 or a registered offering, the market price of the common stock could be adversely affected.
7
ITEM 2. DESCRIPTION OF PROPERTY.
The Company maintains an office at 1314 Texas Street, Suite 400, Houston, TX 77002. It currently does not own any equipment at that location.
ITEM 3. LEGAL PROCEEDINGS.
On January 20, 2010, a complaint was filed against the Company in the Superior Court of California case # CIVWS09-0049 terminating the lease at 500 Bollinger Canyon Way, San Roman, CA due to subleasing the premises without consent of the landlord. A judgment was entered giving the landlord possession of the premises with no monetary amount awarded.
On February 18, 2009 the Company received a letter demanding payment on the deficiencies of 2 notes totaling $125,000 the Company had issued. Subsequent to this an action was originated in the District Court of Jefferson County Texas (case # A-183,766). The Plaintiff contends the Company had not paid the principal or interest on promissory notes issued in 2004. In 2005 the Company issued stock of 3,400,000 and 2,500,000 shares to the plaintiff in full payment of the outstanding notes and interest to the plaintiff. The Company and principal shareholder has agreed to a judgment of $176,666 plus attorney’s fees of $25,000. As of this date the judgment has not been entered or signed by the plaintiff’s attorney and the judge presiding in the case so the liability cannot yet be determined. Until entered the judgment is not in effect and could change.
The Company and its principal stockholder has agreed to a judgment in Harris Court Texas District Court (Cause# 2010-36988 with the plaintiff of the case to pay the plaintiff $115,000 plus legal costs of $5,000. The settlement calls for a $50,000 payment on January 12, 2012 plus payments of $2,000 per month thereafternone of which have been made. As of this date the judgment has not been signed by the plaintiff’s, attorney or the judge presiding over the case so actual liability can not yet be determine. Until the order is entered the judgment is not in effect and could change.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable
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PART II.
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
Market Information.
The Company’s common stock trades on the National Quotation Bureaus’ Pink Sheets (now known as Pink Sheets LLC), where it continues to trade under the symbol “CCAA”. The range of closing prices shown below is as reported by this market. The quotations shown reflect inter-dealer prices, without retail mark-up, markdown or commission and may not necessarily represent actual transactions.
Per Share Common Stock Bid Prices by Quarter
For the Fiscal Year Ended on December 31, 2010 (1)
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High
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Low
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Quarter Ended December 31, 2010
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0.0017 | 0.0004 | ||||||
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Quarter Ended September 30, 2010
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0.0022 | 0.0009 | ||||||
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Quarter Ended June 30, 2010
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0.0025 | 0.0007 | ||||||
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Quarter Ended March 31, 2010
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0.003 | 0.0011 | ||||||
(1) The Company’s common stock only traded sporadically during this fiscal year
Per Share Common Stock Bid Prices by Quarter
For the Fiscal Year Ended on December 31, 2009
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High
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Low
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Quarter Ended December 31, 2009
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0.008 | 0.0011 | ||||||
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Quarter Ended September 30, 2009
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0.005 | 0.0010 | ||||||
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Quarter Ended June 30, 2009
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0.003 | 0.0010 | ||||||
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Quarter Ended March 31, 2009
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0.004 | 0.0010 | ||||||
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Holders of Common Equity
As of December 31, 2010, the Company had approximately 515 shareholders of record.
Dividend Information
The Company has not declared or paid a cash dividend to stockholders since it was incorporated. The Board of Directors presently intends to retain any earnings to finance Company operations and does not expect to authorize cash dividends in the foreseeable future. Any payment of cash dividends in the future will depend upon the Company's earnings, capital requirements and other factors.
Sales of Unregistered Securities
The Company made no sales of unregistered securities (restricted stock) during the year which have not been reported in the 10 Q’s filed for the first three quarters for the year ending December 31, 2010.
ITEM 6: SELECTED FINANCIAL DATA
Not Applicable
ITEM 7: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
When used in this Form 10-K, the words “anticipated”, “estimate”, “expect”, and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks, uncertainties and assumptions including the possibility that the Company will fail to generate projected revenues. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected.
10
The following discussion of the financial condition, changes in financial condition and results of operations of the Company for the fiscal years ended December 31, 2010 and 2009 should be read in conjunction with the financial statements of the Company and related notes included therein.
The Company incurred General and Administrative expenses of $324,640 for the year ending 2010 and $326,182 for the year ending 2009. Stock for services consisted of zero and $22,000 of the total general and administrative expense for the years ending 2010 and 2009, respectively. Officers salary of $300,000 was the major components of G&A during the years ended 2010 and 2009.
Other expense totaled 331,656 for the period ended December 31, 2010 compared to $13,339 for the same period in 2009. The increase was ude to the accrual for 2 legal claims totaling $321,666 on 2010.
The Company has incurred net losses: $666,296 for the fiscal year ended December 31, 2010 and $356,116 for the fiscal year ended December 31, 2009. The Company’s current liabilities exceed its current assets by $1,280,531 as of December 31, 2010 and $614,235 as of December 31, 2009. At December 31, 2010, the Company had an aggregate accumulated deficit and accumulated deficit during the development stage of $14,745,003 ($11,886,789 and $2,858,214, respectively). This raises substantial doubt about the Company’s ability to continue as a going concern.
Liquidity and Capital Resources
Since inception, the Company’s most significant change in liquidity or capital resources has been receipts of proceeds from debt offerings. Further, there exist no agreements or understandings with regard to loan agreements by or with the Officers, Directors, principals, affiliates or shareholders of the Company.
The net cash used in operating activities was $11,295 for the year ended December 31, 2010 compared to net cash used of $18,560 for the year ended December 31, 2009. Net cash used in investing activities was zero for the year ending December 31, 2010 and zero for the same period ending December 31, 2009.
Net cash provided by financing activities was $11,295 for the year ended December 31, 2010 and the net cash provided was $18,560 for the same period ending December 31, 2009. Financing activities for the period ending December 31, 2009 were higher due advances of an officer.
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The Company will attempt to carry out its plan of business as discussed above. The Company cannot predict to what extent its lack of liquidity and capital resources will hinder its business plan. The Company will need additional capital to fund that proposed operation.
Need for Additional Financing
The Company’s existing capital may not be sufficient to meet the Company’s cash needs, including the costs of compliance with the continuing reporting requirements of the Securities Exchange Act of 1934, as amended.
Twelve-Month Plan of Operation
The Company intends to take advantage of any reasonable business proposal presented which management believes will provide the Company and its stockholders with a viable business opportunity. The board of directors will make the final approval in determining whether to complete any acquisition, and unless required by applicable law, the articles of incorporation or bylaws or by contract, stockholders' approval will not be sought.
The Company designed to build the first UnderSea Resort & Casino, the first Undersea Residence, and the first Residence Fractional Ownership. The first development will be the residence and the fractional ownership, and the project will be financed from pre-selling individual units. The Company estimates that the average residential development should generate approximately $600 million of revenue from the sale of the units while the total development cost should be approximately $460 million. This is based on initial estimates of unit costs and revenue generated in the sale of the vessels as it is the intent of the Company to build the vessels under the Company’s design for sale to prospective buyers. The Company does not initially intend to own any of the vessels being built. Therefore, the management believes that the project has a great chance of success however there can be no assurance that (i) such individual unit or fractional ownership will be sold or significant revenue will be generated, and (ii) anticipated costs will not be significantly exceeded by actual costs incurred. The possibilities in this industry are tremendous, because demand for oceanic properties is the highest it has ever been and the supply is scarce. The undersea residences have the ocean available with no purchase costs, and without the limitations of land.
The Company plans to finalize plans for securing the financing and construction of the resort. The beginning of construction is dependent on the Company completing its plan of financing and contracting for the construction, both of which will highly impact the Company’s ability to carry out its business plan.
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The investigation of business opportunities and the negotiation, drafting, and execution of relevant agreements, disclosure documents, and other instruments will require substantial management time and attention and will require the Company to incur costs for payment of accountants, attorneys, and others. If a decision is made not to participate in or complete the acquisition of a specific business opportunity, the costs incurred in a related investigation will not be recoverable. Further, even if an agreement is reached for the participation in a specific business opportunity by way of investment or otherwise, the failure to consummate the particular transaction may result in the loss to the Company of all related costs incurred.
Capital Expenditures
None
Critical Accounting Policies
The SEC has issued Financial Reporting Release No. 60, “Cautionary Advice Regarding Disclosure About Critical Accounting Policies” (“FRR 60”); suggesting companies provide additional disclosure and commentary on their most critical accounting policies. In FRR 60, the Commission has defined the most critical accounting policies as the ones that are most important to the portrayal of a company’s financial condition and operating results, and require management to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Based on this definition, the Company’s most critical accounting policies include the use of estimates in the preparation of financial statements. The methods, estimates and judgments the Company uses in applying these most critical accounting policies have a significant impact on the results the company reports in its financial statements.
The preparation of these financial statements requires the Company 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, the Company evaluates these estimates, including those related to revenue recognition and concentration of credit risk. The Company bases its estimates on historical experience and on various other assumptions that is 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.
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ITEM 8. FINANCIAL STATEMENTS.
Financial statements are audited and included herein beginning on Exhibit 1, page 1 and are incorporated herein by this reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
We have had no disagreements with our independent auditors on accounting or financial disclosures.
ITEM 9A. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures.
Within the 90 days prior to the end of the period covered by this report, the Company carried out an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, as amended (“Exchange Act”). This evaluation was done under the supervision and with the participation of the Company’s president. Based upon that evaluation, he concluded that the Company’s disclosure controls and procedures are not effective in gathering, analyzing and disclosing information needed to satisfy the Company’s disclosure obligations under the Exchange Act.
Changes in Disclosure Controls and Procedures.
There were no significant changes in the Company’s disclosure controls and procedures, or in factors that could significantly affect those controls and procedures since their most recent evaluation.
ITEM 9B. OTHER INFORMATION
None
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PART III.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
On February 28, 2006, John Del Fevro resigned as a director of the Company. On October 1, 2006, Larry Pfautsch was elected to the board of directors and Robert Mosley resigned. On November 1, 2006, Ray Francis was elected to the board of directors of the Company.
The name, age, and respective position of the directors and executive officer of the Company are set forth below. The director named below will serve until the next annual meeting of the Company’s stockholders or until his successors are duly elected and have qualified. Directors are elected for a term until the next annual stockholders’ meeting. Officers will hold their positions at the will of the board of directors, absent any employment agreement, of which none currently exist or are contemplated. There are no arrangements, agreements or understandings between non-management shareholders and management under which non-management shareholders may directly or indirectly participate in or influence the management of the Company’s affairs. There are no other promoters or control persons of the Company. There are no legal proceedings involving the directors of the Company.
Director and Executive Officer.
Mr. Cala has been an international business owner most of his professional life. He began his career at an early age rising to top management positions in some of the most prestigious and luxurious resorts in the world. Mr. Cala, as Chairman & CEO of Cala Corporation has been involved in various ventures such as: Fila Sportswear USA; Mondi Fashions, USA; L'Italiano Restaurants and Weddings in California, Hawaii and Japan, Cala Hotels, Inc. dba Undersea Resort; and Hydrogen Future, Inc.
Larry S. Pfautsch, 62, Director
Mr. Pfautsch is Vice President of Corporate Communications for American Century Investments, a $100 billion asset manager based in Kansas City, Mo. Previously, Mr. Pfautsch was a Partner and Senior Vice President with the international communications and public relations firm of Fleishman Hillard, Inc., where he was a member of the financial communications, investor relations, and corporate reputation management practice groups. He began his career as a newspaper reporter and editor and later worked in corporate communications for a major building materials retailer. He is a U.S. Army veteran and a longtime member of the International Association of Business Communicators.
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Mr. Ray Francis, 73, Director
Mr. Francis, President of UnderSea Resort Design, was elected to the Board of Directors of Cala Corporation. Having completed his undersea naval design to the strict maritime rules of Lloyds Register of Shipping, Mr. Francis conducts his day to day operational responsibilities at the UnderSea Resort Headquarters and will commence his role as a director and principal in the Company’s oceanic construction operations.
Compliance with Section 16(a) of the Securities Exchange Act.
Section 16(a) of the Securities Exchange Act of 1934 requires executive officers and directors, and persons who beneficially own more than 10% of any class of the Company’s equity securities to file initial reports of ownership and reports of changes in ownership with the Securities and Exchange Commission (“SEC”). Executive officers, directors and beneficial owners of more than 10% of any class of the Company’s equity securities are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file.
Based solely upon a review of Forms 3 and 4 and amendments thereto furnished to the Company under Rule 16a-3(d) during fiscal 2002, and certain written representations from executive officers and directors, the Company is unaware of any required reports that have not been timely filed.
ITEM 11. EXECUTIVE COMPENSATION.
Summary Compensation Table
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Annual compensation
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Long-term compensation
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Salary
($)
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Bonus
($)
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Other annual compensation
($)
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Awards
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Payouts
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All other
compen-
sation
($)
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Name and principal
position
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Year
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Restricted
stock award(s)
($)
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Securities
under-lying
options/SARs
(#)
|
LTIP
payouts
($)
|
||||||||||||||||||||||||||
|
Joseph Cala,(1)
|
2010
|
300,000 | (2) | - | - | - | - | - | - | |||||||||||||||||||||
| President | 2009 | 300,000 | (2) | - | - | - | - | - | - | |||||||||||||||||||||
| 2008 | 150,000 | (2) | - | - | - | - | - | - | ||||||||||||||||||||||
|
(1)
|
Mr Cala was appointed a director and president in 1999.
|
|
(2)
|
Accrued but not paid
|
16
There are no annuity, pension or retirement benefits proposed to be paid to officers, directors, or employees of the Company in the event of retirement at normal retirement date as there is no existing plan provided for or contributed to by the Company. In addition, no remuneration is proposed to be paid in the future, directly or indirectly, by the Company to any officer or director since there is no existing plan as of December 31, 2010 which provides for such payment.
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth information regarding the beneficial ownership of shares of the Company’s common stock as of May 31, 2010 (320,866,147 issued and outstanding) by (i) all stockholders known to the Company to be beneficial owners of more than 5% of the outstanding common stock; and (ii) all officers and directors of the Company, individually and as a group (each person has sole voting power and sole dispositive power as to all of the shares shown as beneficially owned by them):
|
Title of Class
|
Name and Address of Beneficial Owner
|
Amount and Nature of Beneficial Owner
|
Percent of Class
|
|
Common
Stock
|
Joseph Cala
1314 Texas Street
Houston, TX 77002
|
123,567,793
|
38.5%
|
|
Common
Stock
|
Larry Pfautsch
1314 Texas Street
Houston, TX 77002
|
15,500,000
|
4.8%
|
|
Common
Stock
|
Raymond Francis
1314 Texas Street
Houston, TX 77002
|
13,000,000
|
5.0%
|
|
Common
Stock
|
Shares of all directors and
executive officers as a group
(1 person)
|
152,067,793
|
48.3 %
|
|
(1)
|
None of these security holders has the right to acquire any amount of the shares within sixty days from options, warrants, rights, conversion privilege, or similar obligations.
|
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Other than as set forth below, during the last two fiscal years there have not been any transaction that have occurred between the Company and its officers, directors, and five percent or greater shareholders.
In 2005, the officer of the Company was issued 7,000,000 shares to reduce accrued salary of $112,500. On January 2006, an officer of the Company returned 300,000 shares of common stock and received $ 15,000 in cash. The shares were cancelled. On August 2006, an officer of the Company returned 7,166,425 shares to the Company for a note payable of $ 214,993. The shares were cancelled. On November 21, 2006, the Company issued an officer of the Company 16,611,111 shares of common stock valued at $ 352,986 for salary for the year ended 2006. On February 2, 2007, the Company issued 15,000,000 shares of common stock valued at $300,000 for salary for the year ended 2007. On January 28, 2009 the Company issued 8,000,000 shares of common stock valued at $16,000 to two directors of the Company and 5,000,000 shares of common stock with a value of $10,000 to reduce Note Payable- Officer by $10,000.
17
ITEM 14: PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Audit Fees.
The aggregate fees billed for each of the last two fiscal years for professional services rendered by De Joya Griffith and Company, LLC for audits and review of quarter reports for 2010 was $11,000 and was $4,000 for 2009.
Audit-Related Fee
The aggregate fees billed in each of the last two fiscal years for assurance and related services by De Joya Griffith: $0.
Tax Fees
The aggregate fees billed in each of the last two fiscal years for professional services rendered by De Joya Griffith: $0.
All Other Fees
The aggregate fees billed in each of the last two fiscal years for products and services provided by De Joya Griffith: $0.
Audit Committee.
The Company does not have an audit committee.
18
PART IV
ITEM 15. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits
Exhibits included or incorporated by reference herein are set forth under the Exhibit Index.
Reports on Form 8-K.
19
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Cala Corporation | |||
|
Dated: September 14, 2012
|
By:
|
/s/ Joseph Cala | |
| Joseph Cala, | |||
| President | |||
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Company and in the capacities and on the date indicated:
|
Signature
|
Title
|
Date
|
||
| /s/ Joseph Cala | President (principal financial and accounting officer)/Director | |||
|
Joseph Cala
|
September 14, 2012
|
|||
| /s/ Raymond Francis | Director | |||
|
Raymond Francis
|
September 14, 2012
|
|||
| /s/ Larry Pfautsch | Director | |||
|
Larry Pfautsch
|
September 14, 2012
|
20
CALA CORPORATION
FINANCIAL STATEMENTS AND ACCOMPANYING FOOTNOTES
TABLE OF CONTENTS
|
1.
|
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 22 |
|
2.
|
BALANCE SHEETS | 23 |
|
3.
|
STATEMENTS OF OPERATIONS | 24 |
|
4.
|
STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT) | 25 |
|
5.
|
STATEMENTS OF CASH FLOWS | 26 |
|
6.
|
NOTES TO FINANCIAL STATEMENTS | 27 |
21
CERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
Cala Corp
Houston, TX
We have audited the accompanying balance sheets of Cala Corp (A Development Stage Company) as of December 31, 2010 and 2009, and the related statements of operations, stockholders’ equity (deficit), and cash flows for the years then ended and from January 1, 2009 through December 31, 2010. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, based on our audit, the financial statements referred to above present fairly, in all material respects, the financial position of Cala Corp (A Development Stage Company) as of December 31, 2010 and 2009, and the results of its operations and cash flows for the years then ended and from January 1, 2009 through December 31, 2010 in conformity with accounting principles generally accepted in the United States.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 4 to the financial statements, the Company has suffered losses from operations and current liabilities exceed current assets, all of which raise substantial doubt about its ability to continue as a going concern. Management’s plans in regards to these matters are also described in Note 4. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ De Joya Griffith & Company, LLC
De Joya Griffith & Company, LLC
Henderson, NV
April 10, 2012
22
CALA CORPORATION
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
AS OF DECEMBER 31, 2010 AND 2009
(AUDITED)
| ASSETS | ||||||||
|
2010
|
2009
|
|||||||
|
Current assets
|
||||||||
|
Cash
|
$ | -- | $ | -- | ||||
|
Total current assets
|
-- | |||||||
|
Other assets
|
||||||||
|
Website development
|
3,877 | 13,877 | ||||||
|
Total assets
|
$ | 3,877 | $ | 13,877 | ||||
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
||||||||
| Current liabilities | ||||||||
|
Accounts payable and accrued expense
|
$ | 72,270 | $ | 48,935 | ||||
|
Notes payable - officer/stockholder
|
83,272 | 71,978 | ||||||
|
Officer salary payable
|
733,600 | 433,600 | ||||||
|
Taxes payable
|
11,599 | 11,599 | ||||||
|
Notes payable
|
62,000 | 62,000 | ||||||
|
Contingent liabilities
|
321,667 | -- | ||||||
|
Total liabilities
|
1,284,408 | 628,112 | ||||||
|
Stockholders’ deficit
|
||||||||
|
Common stock, $0.005 par value; 400,000,000 shares authorized issued and outstanding 320,866,147 and 320,866,147, respectively:
|
1,604,329 | 1,604,329 | ||||||
|
Additional paid-in capital
|
11,861,259 | 11,861,259 | ||||||
|
Accumulated deficit
|
(11,886,789 | ) | (11,886,789 | ) | ||||
|
Accumulated deficit during development stage
|
(2,858,214 | ) | (2,191,917 | ) | ||||
|
Treasury stock -56,533 shares @cost
|
(1,116 | ) | (1,116 | ) | ||||
|
Total stockholders’ deficit
|
(1,280,531 | ) | (614,235 | ) | ||||
|
Total liabilities and stockholders’ deficit
|
$ | 3,877 | $ | 13,877 | ||||
The accompanying notes are an integral part to the financial statements
23
CALA CORPORATION
(A DEVELOPMENT-STAGE COMPANY)
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009, AND FROM JANUARY 1, 2007 TO DECMBER 31, 2010
(AUDITED)
| 2010 | 2009 | January 1, 2007 to
December 31, 2010
|
||||||||||
|
Income
|
$ | -- | $ | -- | $ | -- | ||||||
|
General and administrative expense
|
324,640 | 326,182 | 1,580,289 | |||||||||
|
Depreciation and amortization
|
10,000 | 16,595 | 77,765 | |||||||||
|
Impairment loss on fixed asset
|
-- | -- | 711,817 | |||||||||
|
Loss on disposal of assets
|
-- | -- | 121,560 | |||||||||
|
Total operating expenses
|
334,640 | 342,777 | 2,491,431 | |||||||||
|
Loss from operations
|
(334,640 | ) | (342,777 | ) | (2,491,431 | ) | ||||||
|
Other income (expense)
|
||||||||||||
|
Interest expense
|
(9,990 | ) | (13,339 | ) | (102,471 | ) | ||||||
|
Other income
|
-- | -- | 74,007 | |||||||||
|
Other expense
|
-- | -- | (16,652 | ) | ||||||||
|
Legal claims
|
(321,667 | ) | (321,667 | ) | ||||||||
|
Total other income (expense)
|
(331,657 | ) | (13,339 | ) | (366,783 | ) | ||||||
|
Net loss
|
(666,297 | ) | $ | (356,116 | ) | $ | (2858,214 | ) | ||||
|
Earnings per share:
|
||||||||||||
|
Net loss per share-basic
|
$ | (0.00 | ) | $ | (0.00 | ) | ||||||
|
Weighted average number of shares outstanding-basic
|
320,866,147 | 319,638,750 | ||||||||||
The accompanying notes are an integral part to the financial statements
24
CALA CORPORATION
(A DEVELOPMENT-STAGE COMPANY)
STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009
(AUDITED)
|
Common Stock
|
Additional
|
Development Stage
|
Treasury |
Total
Stockholders'
|
||||||||||||||||||||||||||||||||
|
Number
|
$0.005 |
Paid in
|
Accumulated
|
Accumulative
|
Stock
|
Equity/ | ||||||||||||||||||||||||||||||
|
Shares
|
Amount
|
Capital
|
Deficit |
Deficit
|
Subscription |
Shares
|
Amount
|
(Deficit)
|
||||||||||||||||||||||||||||
|
Balance 12/31/2006
|
249,251,980 | 1,246,258 | 11,133,380 | (11,886,789 | ) | - | (50,000 | ) | (56,533 | ) | (1,116 | ) | 441,733 | |||||||||||||||||||||||
|
Shares issued for cash @ $0.01 -0.35 per share
|
13,814,167 | 69,071 | 133,379 | - | - | - | - | - | 202,450 | |||||||||||||||||||||||||||
|
Shares issued for services classified as a capitalized cost @ $0.02 per share
|
10,600,000 | 53,000 | 215,000 | - | - | - | - | - | 268,000 | |||||||||||||||||||||||||||
|
Shares issued for services @ $0.02 - 0.03 per share
|
1,250,000 | 6,250 | 25,750 | - | - | - | - | - | 32,000 | |||||||||||||||||||||||||||
| Shares issued for salaries @$0.02 per share | 15,000,000 | 75,000 | 225,000 | - | - | - | - | - | 300,000 | |||||||||||||||||||||||||||
| Shares issued in lieu of debt @$0.01 per share | 5,000,000 | 25,000 | 120,000 | - | - | - | - | - | 145,000 | |||||||||||||||||||||||||||
|
Allowance for outstanding receivable
|
- | - | - | - | - | 50,000 | - | - | 50,000 | |||||||||||||||||||||||||||
|
Net loss
|
- | - | - | - | (721,403 | ) | - | - | - | (721,403 | ) | |||||||||||||||||||||||||
|
Balance 12/31/07
|
294,916,147 | 1,474,579 | 11,852,509 | (11,886,789 | ) | (721,403 | ) | - | (56,533 | ) | (1,116 | ) | 717,780 | |||||||||||||||||||||||
|
Shares issued for cash $0.01 per share
|
6,950,000 | 34,750 | 41,750 | - | - | - | - | - | 76,500 | |||||||||||||||||||||||||||
|
Stock issued in lieu of Accounts payable
|
3,000,000 | 15,000 | 15,000 | - | - | - | - | - | 30,000 | |||||||||||||||||||||||||||
|
Net loss
|
- | - | - | - | (1,114,398 | ) | - | - | - | (1,114,398 | ) | |||||||||||||||||||||||||
|
Balance 12/31/08
|
304,866,147 | 1,524,329 | 11,909,259 | (11,886,789 | ) | (1,835,801 | ) | - | (56,533 | ) | (1,116 | ) | (290,118 | ) | ||||||||||||||||||||||
|
Shares issued for service
|
11,000,000 | 55,000 | (33,000 | ) | - | - | - | - | - | 22,000 | ||||||||||||||||||||||||||
|
Shares issued for reduction of advances- officer
|
5,000,000 | 25,000 | (15,000 | ) | - | - | - | - | - | 10,000 | ||||||||||||||||||||||||||
|
Net loss
|
- | - | - | - | (356,116 | ) | - | - | - | (356,116 | ) | |||||||||||||||||||||||||
|
Balance 12/31/09
|
320,866,147 | 1,604,329 | 11,861,259 | (11,886,789 | ) | (2,191,917 | ) | - | (56,533 | ) | (1,116 | ) | (614,234 | ) | ||||||||||||||||||||||
|
Net loss
|
- | - | - | - | (666,297 | ) | - | - | - | (666,297 | ) | |||||||||||||||||||||||||
|
Balance 12/31/10
|
320,866,147 | 1,604,329 | 11,861,259 | (11,886,789 | ) | (2,858,214 | ) | - | (56,533 | ) | (1,116 | ) | (1,280,531 | ) | ||||||||||||||||||||||
The accompanying notes are an integral part of the financial statements
25
CALA CORPORATION
(A DEVELOPMENT-STAGE COMPANY)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND FROM JANUARY 1, 2007 TO DECEMBER 31, 2010
(AUDITED)
| 2010 | 2009 |
From January 1, 2007
to December 31, 2010(Development Stage Period)
|
||||||||||
|
CASH FLOW FROM OPERATING ACTIVITIES
|
||||||||||||
|
Net loss
|
$ | (666,297 | ) | $ | (356,117 | ) | $ | (2,858,214 | ) | |||
|
Adjustments to reconcile net loss from continuing operations to net cash used in operating activity
|
||||||||||||
|
Depreciation and amortization
|
10,000 | 16,595 | 77,762 | |||||||||
|
Impairment on assets
|
-- | -- | 711,818 | |||||||||
|
Stock issued for services
|
-- | 22,000 | 354,000 | |||||||||
|
Loss on disposition of assets
|
-- | -- | 121,560 | |||||||||
|
Bad debt expense
|
-- | -- | 60,500 | |||||||||
|
Financing cost
|
-- | -- | 105,000 | |||||||||
|
Legal Claims
|
321,667 | 321,667 | ||||||||||
|
Change in operating assets and liabilities:
|
||||||||||||
|
(Increase) in accounts receivable
|
-- | -- | (10,500 | ) | ||||||||
|
Accounts payable and accrued liabilities
|
23,335 | (1,038 | ) | 66,882 | ||||||||
|
Officer salary payable
|
300,000 | 300,000 | 733,600 | |||||||||
|
Increase (decrease) in taxes payable
|
-- | (28 | ) | |||||||||
|
Net cash provided(used) in operating activities
|
(11,295 | ) | (18,560 | ) | (315,954 | ) | ||||||
|
CASH FLOW FROM INVESTING ACTIVITIES:
|
||||||||||||
|
Cash used on development costs
|
-- | -- | (70,001 | ) | ||||||||
|
Disposal of fixed asset
|
-- | -- | 4,832 | |||||||||
|
Net cash used in investing activities
|
-- | -- | (65,169 | ) | ||||||||
|
CASH FLOW FROM FINANCING ACTIVITIES:
|
||||||||||||
|
Proceed from note payable
|
-- | 2,000 | 62,000 | |||||||||
|
Proceeds on notes payable- related party
|
11,295 | 16,560 | 16,317 | |||||||||
|
Proceeds from issuance of common stock
|
-- | -- | 278,950 | |||||||||
|
Payments made on mortgage payable
|
-- | -- | (12,244 | ) | ||||||||
|
Net cash provided(used) by financing activities
|
11,295 | 18,560 | 345,023 | |||||||||
|
NET CHANGE IN CASH
|
-- | -- | (36,099 | ) | ||||||||
|
CASH AT BEGINNING OF YEAR
|
-- | --- | 36,099 | |||||||||
|
CASH AT END OF YEAR
|
-- | $ | -- | $ | -- | |||||||
|
Supplemental schedule of cash flow information:
|
||||||||||||
|
Interest paid
|
$ | -- | $ | 991 | $ | 53,495 | ||||||
|
Income tax
|
$ | - | $ | - | $ | - | ||||||
|
Supplemental schedule of non-monetary transactions
|
||||||||||||
|
Satisfaction of accounts payable with common stock
|
||||||||||||
|
3,000,000 shares @ $0.01 per share
|
$ | -- | $ | -- | $ | 30,000 | ||||||
|
Satisfaction of note payable with common stock
|
$ | -- | $ | -- | $ | 145,000 | ||||||
|
Shares issued for services classified as a capitalized cost
|
$ | -- | $ | -- | $ | 268,000 | ||||||
|
Satisfaction of notes payable- related party
|
$ | -- | $ | 10,000 | $ | 10,000 | ||||||
The accompanying notes are an integral part of the financial statements
26
CALA CORPORATION
(A DEVELOPMENT-STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(AUDITED)
NOTE 1: DESCRIPTION OF BUSINESS
Cala Corporation (formerly Magnolia Foods, Inc.) was incorporated on June 13, 1985 under the laws of the State of Oklahoma. The Company's sole industry segment was the business of owning, operating, licensing and joint venturing restaurants. The Company discontinued this line of business on December 31, 2006. The Company is in the development stage of building an underwater resort and casino. The Company became a Development-Stage Company as of January 1, 2007.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
A.
|
Basis - The accompanying financial statements included herein have been prepared in accordance with accounting principles generally accepted in the United States.
|
|
B.
|
Cash and cash equivalents - The Company considers all short term, highly liquid investments that are readily convertible within three months to known amounts as cash equivalents. Currently, it has no cash equivalents.
|
|
C.
|
Loss per share - Net loss per share is provided in accordance with FASB ASC 260"Earnings Per Share". Basic loss per share reflects the amount of losses for the period available to each share of common stock outstanding during the reporting period, while giving effect to all dilutive potential common shares that were outstanding during the period, such as stock options and convertible securities. As of December 31, 2010 and 2009, the Company had no issuable shares qualified as dilutive. Had there been dilutive securities they would be excluded from the loss per share calculation because their inclusion would be antidilutive.
|
|
D.
|
Estimates - The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
|
|
E.
|
Stock Based Compensation - The company adopted the provisions of ASC 718 requiring employee equity awards to be accounted for under the fair value method. Accordingly, share-based compensation is measured at grant date, based on the fair value of the award and is recognized as expense over the requisite employee service period. The Company estimates the fair value of share-based payments using the Black-Scholes option-pricing model for common stock options and the closing price of the company’s common stock for common share issuances.
|
|
F.
|
Shares Returned to Treasury- In 2006, 33,333 shares were repurchased to treasury for $ 1,000. In 2005, 23,200 shares were purchased for treasury at the cost of $ 116. The repurchased treasurer shares are carried at cost.
|
|
G.
|
Revenue Recognition- The Company’s revenue is recognized pursuant to ASC 605 “Revenue Recognition.” The Company recognizes its revenue from services as those services are performed. Revenue recognition is limited to the amount that is not contingent upon delivery of any future service or meeting other specified performance conditions. During both the years ending December 31. 2010 and 2009 the Company had no revenue.
|
27
|
H.
|
The Company accounts for the underwater sea resort and ship development costs in accordance with ASC Topic 360 for Property, Plant and Equipment. The Company reviews its long-lived assets for impairment on an annual basis or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used in measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceeds the fair value of the asset. Assets to be disposed of are reported at the lower of the carrying amount or fair market value less costs to sell.
|
|
I.
|
The accompanying consolidated financial statements have been prepared in accordance with the Statement FASB ASC 915-205 "Development-Stage Entities". A development-stage enterprise is one in which planned principal operations have not commenced or if its operations have commenced, there has been no significant revenue there from. Development-stage companies report cumulative costs from the enterprise's inception.
|
NOTE 3: RECENT ACCOUNTING PRONOUNCEMENTS
The Company evaluated all recent accounting pronouncements issued and determined that the adoption of these pronouncements would not have a material effect on the financial position, The Company evaluated all recent accounting pronouncements issued and determined that the adoption of these pronouncements would not have a material effect on the financial position, results of operations or cash flows of the Company.
NOTE 4: GOING CONCERN
The Company's financial statements are prepared using generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has an aggregate deficit and accumulated deficit during the development stage of $14,745,003 ($11,886,789 and $2,858,214, respectively) and has not established revenues sufficient to cover its operating costs. This uncertainty raises substantial doubt about the Company's ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on additional sources of capital and the success of the Company's plan. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.
NOTE 5: RELATED PARTY TRANSACTIONS
During the year ended December 2010, the Company accrued $300,000 for salary payable to an officer of the Company; resulting in an outstanding balance of $733,600 as of December 31, 2010.
On January 28, 2009, the Company issued 8,000,000 shares to two directors for a value of $16,000 and 5,000,000 with a value of $10,000to an officer for reduction of notes payable – officer.
During the year ended December 31, 2010, an officer advanced additional funds of $11,295 to the Company for debt reduction and operating expenses for an outstanding Notes payable-officer/stockholder balance of $83,272 as of December 31, 2010.
28
NOTE 6: COMMITMENTS & CONTINGENCIES
On January 9, 2006, the Company entered into a lease at 3160 Danville Blvd. Suite A, Alamo, CA consisting of 4,500 square feet for a restaurant. The duration of the lease is 10 years with a renewable option for 5 more years. The monthly rent on the space is $ 8,500 plus taxes and common area charges. Monthly rental may be adjusted on an annual basis. On August 1, 2006, the Company assigned the lease to a non-affiliated third party but the Company remains liable for the lease until it terminates on January 8, 2016.
Then following is a schedule by year of the future minimum rental payments required under operating leases that have non-cancelable lease terms in excess of one year as of December 31, 2010:
|
2011
|
102,000 | |||
|
2012
|
102,000 | |||
|
2013
|
102,000 | |||
|
2014
|
102,000 | |||
|
2015
|
102,000 | |||
|
2016
|
2,267 | |||
|
Total
|
512,267 |
On April 10, 2006 the Company entered into a lease consisting of approximately 2,450 square feet for a restaurant at 500 Bollinger Canyon Way, Roman CA. The duration of the lease is 10 years. On August 1, 2006, the Company discontinued its operations in the restaurant business. As a result, the Company assigned the lease to a non-affiliated third party on a sub-lease basis. The Company is still fully obligated to the terms of this lease. However, the nonaffiliated party will assume all payments. Under the terms of the agreement, the sub-lessee pays the monthly lease of $ 5,400 per month for the duration of the lease plus an additional 60 equal monthly installments of $1,500 to the Company. The subleasee terminated payment of the $ 1,500 in August 2008. (See Note 11 – Subsequent Events)
The following is a schedule by year of the future minimum rental payments required under operating leases that have non-cancelable lease terms in excess of one year as of December 31, 2010:
|
2011
|
74,574 | |||
|
2012
|
76,812 | |||
|
2013
|
79,113 | |||
|
2014
|
81,492 | |||
|
2015
|
83,937 | |||
|
2016
|
21,138 | |||
|
Total
|
$ | 417,066 |
29
NOTE 7: NOTE PAYABLE
In January 2007, the Company issued a note for $60,000 bearing interest at 10% on the principal and accrued interest compounding monthly. As of December 31, 2010 and December 31, 2009, the outstanding principle balance of the note was $60,000 and $60,000 and had accrued interest of $32,470 and $22,480, respectively. On November 1, 2009, the note holder made demand for payment by December 1, 2009. The note including principal and interest is in default and still outstanding.
On June 26, 2009 the Company issued a non-interest bearing demand note for $2,000.
NOTE 8: STOCKHOLDERS EQUITY
During the year ending December 31, 2007 the Company issued the following shares of common stock:
|
·
|
13,814,167 shares at $0.01-$0.35 per share with a value of $202,450 for cash.
|
|
·
|
11,850,000 shares at $0.02 - $0.03 per share with a value of $300,000 for service.
|
|
·
|
15,000,000 shares to a related party at $0.02 with a value of $300,000 for officer’s salary.
|
|
·
|
5,000,000 shares at $0..029 with a value of $145,000 for debt.
|
During the year ending December 31, 2008 the Company issued the following shares of common stock:
|
·
|
6,950,000 at $0.01-$0.02 with a value of $76,500 for cash.
|
|
·
|
3,000,000 shares at $0.01 with a value of 30,000 for accounts payable.
|
During the year ending December 31, 2009 the Company issued the following shares of common stock:
|
·
|
11,000,000 at $0.02 with a value of $22,000 for service.
|
|
·
|
5,000,000 shares at $0.02 with a value of 10,000 for reduction of advances from an officer.
|
NOTE 9: INCOME TAXES
The Company accounts for income taxes using the liability method, under which deferred tax liabilities and assets are determined based on the difference between the financial statement carrying amounts and the tax basis of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse.
30
As of December 31, 2010, the Company had net operating loss carryforward of approximately $14,745,003 which expire in varying amounts between 2010 and 2029. Realization of this potential future tax benefit is dependent on generating sufficient taxable income prior to expiration of the loss carryforward. The deferred tax asset related to this potential future tax benefit has been offset by a valuation allowance in the same amount. The amount of the deferred tax asset ultimately realizable could be increased in the near term if estimates of future taxable income during the carryforward period are revised.
Deferred income tax assets of $5,160,751 and $4,964,042 at December 31, 2010 and 2009, respectively were offset in full by a valuation allowance
The components of the Company’s net deferred tax assets, including a valuation allowance, are as follows:
|
As of
December 31,
2010
|
As of
December 31,
2009
|
|||||||
|
Deferred tax assets:
|
||||||||
|
Net operating loss carryforward
|
5,160,751 | 4,952,842 | ||||||
|
Stock based compensation
|
- | 11,200 | ||||||
|
Total deferred tax assets
|
5,160,751 | 4,964,042 | ||||||
|
Net deferred tax assets before valuation allowance
|
5,160,751 | 4,964,042 | ||||||
|
Less: Valuation allowance
|
(5,160,751 | ) | (4,964,042 | ) | ||||
|
Net deferred tax assets
|
0 | $ | ||||||
A reconciliation between the amounts of income tax benefit determined by applying the applicable U.S. and State statutory income tax rate to pre-tax loss is as follows:
|
As of
December 31,
2010
|
As of
December 31,
2009
|
|||||||
|
Statutory federal income tax
|
(35.0 | %) | (35.0 | %) | ||||
|
Statutory state income tax
|
(6.0 | %) | (6.0 | %) | ||||
|
Change in valuation allowance on deferred tax assets
|
41.0 | % | 41.0 | % | ||||
| Effective tax rate | 0.0 | % | 0.0 | % | ||||
31
NOTE 10: LEGAL MATTERS
On January 20, 2009, a complaint was filed against the Company in the Superior Court of California case # CIVWS09-0049 terminating the lease at 500 Bollinger Canyon Way, San Roman, CA due to subleasing the premises without consent of the landlord. A judgment was entered giving the landlord possession of the premises with no monetary amount awarded.
On February 18, 2009 the Company received a letter demanding payment on the deficiencies of 2 notes totaling $125,000 the Company had issued. Subsequent to this an action was originated in the District Court of Jefferson County Texas (case # A-183,766). The Plaintiff contends the Company had not paid the principal or interest on promissory notes issued in 2004. In 2005 the Company issued stock of 3,400,000 and 2,500,000 shares to the plaintiff in full payment of the outstanding notes and interest to the plaintiff. The Company and principal shareholder has agreed to a judgment of $176,667 plus attorney’s fees of $25,000. As of this date the judgment has not been entered or signed by the plaintiff and the judge presiding in the case so the liability cannot yet be determined. Until entered the judgment is not in effect and could change.
The Company and its principal stockholder has agreed to a judgment in Harris Court Texas District Court (Cause# 2010-36988 with the plaintiff of the case to pay the plaintiff $115,000 plus legal costs of $5,000. The settlement calls for a $50,000 payment on January 12, 2012 plus payments of $2,000 per month thereafter. No payments have been made to date. As of this date the judgment has not been signed by the plaintiff attorney or the judge presiding over the case so actual liability is hard to determine. Until the order is entered the judgment is not in effect and could change.
NOTE 11: SUBSEQUENT EVENTS
On July 26, 2012 the Company announced an agreement to purchase the trademark of Calcio Lecco 1912, a sports team. As of this date the transaction was not completed.
32
EXHIBIT INDEX
|
Number
|
Description
|
|
|
31
|
Rule 13a-14(a)/15d-14(a) Certification of Joseph Cala (filed herewith).
|
|
|
32
|
Section 1350 Certification of Joseph Cala (filed herewith).
|
33