10-Q 1 retro_10q-063008.txt FORM 10Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: June 30, 2008 [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT For the transition period from ____ to ________ RETROSPETTIVA, INC. ------------------- (Exact Name of Registrant as Specified in its Charter) CALIFORNIA 333-29295 95-4298051 --------------------------------- ----------- --------------- (State or other jurisdiction (Commission I.R.S. Employer of incorporation or organization) File No.) Identification Number 112 West 9th Street, Suite 518, Los Angeles, CA 90015 ----------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number including area code: (213) 623-9216 -------------------------------------------------- Former name, former address, and former fiscal year, if changed since last report Check whether the Registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceeding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [_] Indicate by checkmark whether the registrant is a large accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Large accelerated filer [_] Accelerated filer [_] Non-accelerated filer [_] Smaller reporting company [X] (Do not check if a smaller reporting company) Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [X] No [_] State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 14,425,903 shares of common stock outstanding as of July 31, 2008. RETROSPETTIVA, INC. Index Page Part I - FINANCIAL INFORMATION Item 1. Financial Statements Balance Sheets as of June 30, 2008 (unaudited) and December 31, 2007 3 Statements of Operations (unaudited) for the three months ended June 30, 2008 and 2007 4 Statements of Operations (unaudited) for the six months ended June 30, 2008 and 2007, and for the Development Period from October 11, 2006 to June 30, 2008 5 Statements of Cash Flows (unaudited) for the six months ended June 30, 2008 and 2007, and for the Development Period from October 11, 2006 to June 30, 2008 6 Notes to Financial Statements (unaudited) 7 Item 2. Management's Discussion and Analysis or Plan of Operation 10 Item 3. Quantitative and Qualitative Disclosures About Market Risk 12 Item 4T. Controls and Procedures 13 Part II - OTHER INFORMATION Item 1. Legal Proceedings 14 Item 1A. Risk Factors 14 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 14 Item 3. Defaults Upon Senior Securities 14 Item 4. Submission of Matters to a Vote of Security Holders 14 Item 5. Other Information 14 Item 6. Exhibits 14 SIGNATURES 15
RETROSPETTIVA, INC. (A Development Stage Company) BALANCE SHEETS June 30, December 31, 2008 2007 ----------- ----------- (Unaudited) (See Note 1) ASSETS Current assets: Cash and cash equivalents $ 9 $ 500 ----------- ----------- Total current assets $ 9 $ 500 =========== =========== LIABILITIES AND STOCKHOLDERS' (DEFICIT) Current liabilities: Accounts payable $ 8,830 $ 2,418 Accrued expenses 400 1,600 Advances payable - officer 5,253 5,613 Notes payable - stockholders 111,803 92,923 Accrued interest - stockholders 4,998 966 ----------- ----------- Total current liabilities 131,284 103,520 ----------- ----------- Stockholders' (deficit): Preferred stock - authorized 1,000,000 shares: No shares issued or outstanding -- -- Common stock - no par value, 15,000,000 shares authorized: 14,425,903 shares issued and outstanding 6,903,766 6,903,766 Additional paid-in capital 230,000 230,000 Accumulated deficit through October 11, 2006 (7,302,235) (7,302,235) Retained earnings (accumulated deficit) during development stage 37,194 65,449 ----------- ----------- Total stockholders' (deficit) (131,275) (103,020) ----------- ----------- Total liabilities and stockholders' (deficit) $ 9 $ 500 =========== ===========
The accompanying notes are an integral part of these financial statements. 3 RETROSPETTIVA, INC. (A Development Stage Company) STATEMENTS OF OPERATIONS for the three months ended June 30, 2008 and 2007 (Unaudited) 2008 2007 ------------ ------------ Revenues $ -- $ -- ------------ ------------ Expenses: General and administrative: Accounting and legal 2,330 1,570 Investor relations 1,754 -- ------------ ------------ Total expenses 4,084 1,570 ------------ ------------ Operating (loss) (4,084) (1,570) Interest (expense) (2,125) -- ------------ ------------ Income before taxes (6,209) (1,570) Provision for income taxes 190 -- ------------ ------------ Net (loss) $ (6,399) $ (1,570) ============ ============ Net (loss) per common share: Basic and Diluted $ (0.00) $ (0.00) ============ ============ Weighted average shares outstanding: Basic and Diluted 14,425,903 3,479,916 ============ ============ The accompanying notes are an integral part of these financial statements. 4
RETROSPETTIVA, INC. (A Development Stage Company) STATEMENTS OF OPERATIONS for the six months ended June 30, 2008 and 2007 and for the Development Period from October 11, 2006 to June 30, 2008 (Unaudited) Development Period October 11, 2006 to June 30, 2008 2007 2008 ------------ ------------ ------------ Revenues $ -- $ -- $ -- ------------ ------------ ------------ Expenses: General and administrative: Financing costs -- -- 2,917 Consulting fees -- -- 8,029 Accounting and legal 21,840 30,296 69,491 Investor relations 2,193 -- 12,891 ------------ ------------ ------------ Total expenses 24,033 30,296 93,328 ------------ ------------ ------------ Operating (loss) (24,033) (30,296) (93,328) ------------ ------------ ------------ Other income (expense): Gain from litigation settlement -- -- 137,310 Interest (expense) (4,032) -- (4,998) ------------ ------------ ------------ (4,032) -- 132,312 ------------ ------------ ------------ Income (loss) before income taxes (28,065) (30,296) 38,984 Provision for income taxes 190 -- 1,790 ------------ ------------ ------------ Net income (loss) $ (28,255) $ (30,296) $ 37,194 ============ ============ ============ Net (loss) per common share: Basic and Diluted $ (0.00) $ (0.01) $ 0.00 ============ ============ ============ Weighted average shares outstanding: Basic and Diluted 14,425,903 3,479,916 7,674,724 ============ ============ ============
The accompanying notes are an integral part of these financial statements. 5
RETROSPETTIVA, INC. (A Development Stage Company) STATEMENTS OF CASH FLOWS for the six months ended June 30, 2008 and 2007 and for the Development Period from October 11, 2006 to June 30, 2008 (Unaudited) Development Period October 11, 2006 to June 30, 2008 2007 2008 --------- --------- --------- Cash flows from operating activities: Net cash (used in) operating activities $ (19,011) $ (13,452) $(117,047) --------- --------- --------- Cash flows from investing activities: --------- --------- --------- Net cash (used in) investing activities -- -- -- --------- --------- --------- Cash flows from financing activities: Proceeds from notes payable - stockholders 18,880 -- 111,803 Advances from officer, net (360) 13,452 5,253 --------- --------- --------- Net cash provided by financing activities 18,520 13,452 117,056 --------- --------- --------- Net increase (decrease) in cash and equivalents (491) -- 9 Cash and equivalents at beginning of year 500 -- -- --------- --------- --------- Cash and equivalents at end of period $ 9 $ -- $ 9 ========= ========= ========= Supplemental Cash Flow Information Interest paid $ -- $ -- $ -- ========= ========= ========= Income taxes paid $ 1,390 $ 5,952 $ 7,342 ========= ========= =========
The accompanying notes are an integral part of these financial statements. 6 RETROSPETTIVA, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS June 30, 2008 (Unaudited) 1. Summary of Significant Accounting Policies Interim Financial Information: The interim financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") as promulgated in Item 210 of Regulation S-X. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP") have been condensed or omitted pursuant to such SEC rules and regulations. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of financial position as of June 30, 2008, results of operations for the three months and six months ended June 30, 2008 and 2007, and cash flows for the six months ended June 30, 2008 and 2007, as applicable, have been made. The results for these interim periods are not necessarily indicative of the results for the entire year. The accompanying financial statements should be read in conjunction with the financial statements and the notes thereto included in the Company's Form 10-KSB. Basis of Presentation: Retrospettiva, Inc. (the "Company") was organized under the laws of the State of California in November, 1990 to manufacture and import textile products, including finished garments and fabrics. The Company's manufacturing facilities and warehouses were located primarily in Europe. The Company ceased operations in 2001 and has been inactive since 2002. On August 2, 2004, the Company was terminated, by administrative action of the State of California as a result of non-filing of required documents with the State of California. Effective February 15, 2007, the Company reinstated its charter. Effective October 11, 2006 (date of entering the development stage), efforts commenced to revive the Company. Legal counsel was hired to address litigation involving the Company and activities were undertaken to prepare and file delinquent tax and financial reports. Furthermore, a financial judgment against the Company dating back to 2002 was addressed and a final settlement was reached in October 2007. The Company intends to evaluate, structure and complete a merger with, or acquisition of, prospects consisting of private companies, partnerships or sole proprietorships. The Company may seek to acquire a controlling interest in such entities in contemplation of later completing an acquisition. Development Stage Company: Based on the Company's business plan, it is a development stage company since planned principle operations have not yet commenced. Accordingly, the Company presents its financial statements in conformity with the accounting principles generally accepted in the United States of America that apply to developing enterprises. As a development stage enterprise, the Company discloses its retained earnings (or deficit accumulated) during the development stage and the cumulative statements of operations and cash flows from commencement of development stage to the current balance sheet date. The development stage began on October 11, 2006, when the Company commenced its efforts to revive its business. 7 Per Share Amounts: SFAS 128, "Earnings Per Share," provides for the calculation of "Basic" and "Diluted" earnings per share. Basic earnings per share includes no dilution and is computed by dividing net income (or loss) by the weighted-average number of shares outstanding during the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of the Company, similar to fully diluted earnings per share. During 2008 and 2007, the Company has not issued any potentially dilutive securities. Use of Estimates: The preparation of the Company's financial statements in conformity with generally accepted accounting principles requires the Company's management to make estimates and assumptions that affect the amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Recent Accounting Pronouncements: There were various accounting standards and interpretations issued during 2008, none of which are expected to a have a material impact on the Company's financial position, operations or cash flows. 2. Going Concern The Company's financial statements are prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of obligations in the normal course of business. However, the Company has no business operations and has negative working capital and has a total stockholders' deficit. These conditions raise substantial doubt about the ability of the Company to continue as a going concern. In view of these matters, continuation as a going concern is dependent upon continued operations of the Company, which in turn is dependent upon the Company's ability to meet its financial requirements, raise additional capital, and the success of its future operations. The financial statements do not include any adjustments to the amount and classification of assets and liabilities that may be necessary should the Company not continue as a going concern. Management has opted to file the Company's periodic financial reports with the SEC and then to raise funds through a private placement. Management believes that this plan provides an opportunity for the Company to continue as a going concern. 3. Related Party Transactions: Effective July 2, 2007, the Company entered into a note payable agreement with a stockholder that provides for borrowings up to the principal amount of $64,871. The note is uncollateralized and bears interest at an annual rate of 8%. The Company issued 945,987 shares of its common stock as additional consideration for the note payable. During 2007, the Company received proceeds of $64,871 under this borrowing arrangement. The stockholder has agreed to extend the due date of the note from June 30, 2008 to June 30, 2009. Effective November 14, 2007, the Company entered into a revolving convertible loan agreement with the President and a stockholder. The agreement provides for borrowings up to the principal amount of $133,333. As of June 30, 2008, outstanding borrowings under the agreement totaled $46,932, including $18,880 borrowed during 2008. The note is due on demand, is uncollateralized, bears interest at an annual rate of 8%, and is convertible into restricted common stock at $0.10 per share. The Company issued 10,000,000 shares of its common stock as additional consideration for the note payable. The stock was valued at $10,000 and the Company recorded the $10,000 expense as financing costs of $1,971 and consulting fees of $8,029. 8 The Company accrued interest expense of $4,032 on the two notes payable during the six months ended June 30, 2008. The Company's President periodically advances funds to the Company so that it can meet its financial obligations. During 2008, the President advanced an additional $150 to the Company and the Company repaid $510 to the President. As of June 30, 2008, the aggregate amounts advanced, including amounts advanced during previous periods, were $5,253. These advances are due on demand, uncollateralized and bear no interest. The Company uses the offices of its President for its minimal office facility needs for no consideration. No provision for these costs has been provided since it has been determined that they are immaterial 4. Income Taxes Deferred income taxes arise from temporary timing differences in the recognition of income and expenses for financial reporting and tax purposes. The Company's deferred tax assets consist entirely of the benefit from net operating loss (NOL) carry forwards. The net operating loss carry forward, if not used, will expire in various years through 2028, and is severely restricted as per the Internal Revenue code if there is a change in ownership. The Company's deferred tax assets are offset by a valuation allowance due to the uncertainty of the realization of the net operating loss carry forwards. Net operating loss carryforwards may be further limited by other provisions of the tax laws. The Company's deferred tax assets, valuation allowance, and change in valuation allowance are as follows:
Estimated Estimated Tax Change in NOL NOL Benefit from Valuation Valuation Net Tax Period Ending Carry-forward Expires NOL Allowance Allowance Benefit June 30, 2008 $528,000 2028 $120,000 $(120,000) (6,750) --
Income taxes at the statutory rate are reconciled to the Company's actual income taxes as follows: Income tax benefit at statutory rate resulting from net operating loss carryforward (15.00%) State tax (benefit) net of federal benefit (7.65%) Deferred income tax valuation allowance 22.65% --------- Actual tax rate 0% ========= 9 Item 2. Management's Discussion and Analysis or Plan of Operation Overview The following discussion updates our plan of operation for the next twelve months. It also analyzes our financial condition at June 30, 2008 and compares it to our financial condition at December 31, 2007. Finally, the discussion summarizes the results of our operations for the three months and six months ended June 30, 2008 and compares those results to the corresponding periods ended June 30, 2007. This discussion and analysis should be read in conjunction with our audited financial statements for the two years ended December 31, 2007, including footnotes, and the discussion and analysis included in our Form 10-KSB. Plan of Operation Retrospettiva, Inc. (the "Company") was organized under the laws of the State of California in November, 1990. Prior to 2002, our business was to manufacture and import textile products from Europe, including finished goods. Our European operations were based in and around Macedonia. On July 2, 2001, we announced that the civil war in Macedonia rendered it impossible to continue operations. We ceased operating and liquidated all of our assets. On August 2, 2004, the Company was terminated, by administrative action of the State of California as a result of non-filing of required documents with the State of California. Effective February 15, 2007, the Company reinstated its charter. On October 11, 2006, the Board of Directors decided to revive the Company. Since that date, we have undertaken various steps required to develop the Company. We updated our tax filings with the various taxing authorities and our financial statement filings with the Securities and Exchange Commission. During 2007, we negotiated a settlement with Emeryworld, a company which, on May 20, 2002, obtained a judgment against us in the amount of $165,060. On October 26, 2007, we reached a settlement agreement with them under which they agreed to accept a cash payment of $27,750. We have updated our affairs and become current in our various reporting obligations. We intend to combine the Company with another entity in a merger, acquisition, or similar transaction and are seeking potential candidates. Our plan is to evaluate prospects, structure a transaction, and ultimately combine with another entity. We are unable, at this time, to predict when, if ever, our objectives will be achieved. Liquidity and Capital Resources As of June 30, 2008, we had a working capital deficit of $(131,275). We had current assets of $9 and current liabilities of $131,284. This represents a $28,255 increase in the deficit from the working capital deficit of $(103,020) at December 31, 2007. During the six months ended June 30, 2008, our working capital deficit increased because of costs incurred to revive our business. To fund our operations, we entered into a loan agreement with one of our shareholders on July 2, 2007. The principal maximum amount of the loan that can be drawn is $64,871 bearing interest at 8% per annum. We borrowed $64,871 under the loan. We negotiated an extension of the due date from June 30, 2008 to June 30, 2009. We also issued 945,987 shares of our common stock as additional consideration for the loan agreement. 10 On November 14, 2007, we entered into a loan agreement with our President and a shareholder. The principal maximum amount that can be borrowed is $133,333. The note is due on demand, is uncollateralized, bears interest at an annual rate of 8%, and is convertible into restricted common stock at $0.10 per share. We issued 10,000,000 shares of common stock as additional consideration for the note payable. As of June 30, 2008, we had borrowed $46,932 under this arrangement and the amount available for future borrowings was $86,401. In addition, our President has periodically advanced funds to us to meet our working capital needs. As of June 30, 2008, we owe our President $5,253 for advances which are uncollateralized, non-interest bearing and due on demand. During the six months ended June 30, 2008, we incurred other obligations and liabilities which are reflected in the accompanying balance sheet as accounts payable and accrued expenses. We will need additional funding to achieve our ultimate goals. In the past we have relied on loans and advances from shareholders to fund our operations, however we have no written or firm agreement regarding financing. We used cash of $19,011 in operating activities during the first six months of 2008 compared to cash used of $13,452 during the first six months of 2007. All of our cash needs are currently being funded by related parties. Results of Operations - Three Months Ended June 30, 2008 Compared to the Three Months Ended June 30, 2007 We are considered a development stage company for accounting purposes, since we are working to revive the Company and to implement our plan of operations. We are unable to predict with any degree of accuracy when this classification will change. We expect to incur losses until such time, if ever, we begin generating revenue from operations. For the three months ended June 30, 2008, we recorded a net loss of $(6,399), or $ (0.00) per share, compared to a loss for the corresponding period of 2007 of $(1,570) or $(0.00) per share. In neither period did we report any revenue. Operating expenses increased to $4,084 for the three months ended June 30, 2008 compared to $1,570 during the comparable period of 2007. Operating expenses consisted primarily of legal and accounting expenses during both periods and increased because of our financial reporting obligations as a public company. During the three months ended June 30, 2008, we incurred interest expense of $2,125 related to the notes payable to stockholders. We incurred no interest expense during the comparable period of 2007. Results of Operations - Six Months Ended June 30, 2008 Compared to the Six Months Ended June 30, 2007 We are considered a development stage company for accounting purposes, since we are working to revive the Company and to implement our plan of operations. We are unable to predict with any degree of accuracy when this classification will change. We expect to incur losses until such time, if ever, we begin generating revenue from operations. 11 For the six months ended June 30, 2008, we recorded a net loss of $(28,255), or $ (0.00) per share, compared to a loss for the corresponding period of 2007 of $(30,296) or $(0.01) per share. In neither period did we report any revenue. Operating expenses decreased to $24,033 for the six months ended June 30, 2008 compared to $30,296 during the comparable period of 2007. The decrease is primarily attributed to a decrease in legal fees that were incurred during 2007 in defense of civil litigation that was dismissed. The decrease was partially offset by an increase in professional fees incurred to prepare and file our periodically reports required as a public reporting company. During the six months ended June 30, 2008, we incurred interest expense of $4,032 related to the notes payable to stockholders. We incurred no interest expense during the comparable period of 2007. Forward-Looking Statements This Form 10-Q contains or incorporates by reference "forward-looking statements," as that term is used in federal securities laws, about our financial condition, results of operations and business. These statements include, among others: - statements concerning the benefits that we expect will result from our business activities and results of exploration that we contemplate or have completed, such as increased revenues; and - statements of our expectations, beliefs, future plans and strategies, anticipated developments and other matters that are not historical facts. These statements may be made expressly in this document or may be incorporated by reference to other documents that we will file with the SEC. You can find many of these statements by looking for words such as "believes," "expects," "anticipates," "estimates" or similar expressions used in this report or incorporated by reference in this report. These forward-looking statements are subject to numerous assumptions, risks and uncertainties that may cause our actual results to be materially different from any future results expressed or implied in those statements. Because the statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied. We caution you not to put undue reliance on these statements, which speak only as of the date of this report. Further, the information contained in this document or incorporated herein by reference is a statement of our present intention and is based on present facts and assumptions, and may change at any time and without notice, based on changes in such facts or assumptions. Item 3. Quantitative and Qualitative Disclosures about Market Risk The important factors that could prevent us from achieving our stated goals and objectives include, but are not limited to, those set forth in our annual report on Form 10-KSB, other reports filed with the SEC and the following: o The worldwide economic situation; o Any change in interest rates or inflation; o The willingness and ability of third parties to honor their contractual commitments; 12 o Our ability to raise additional capital, as it may be affected by current conditions in the stock market and competition for risk capital; o Environmental and other regulations, as the same presently exist and may hereafter be amended. We undertake no responsibility or obligation to update publicly these forward-looking statements, but may do so in the future in written or oral statements. Investors should take note of any future statements made by or on our behalf. Item 4T. Controls and Procedures (a) We maintain a system of controls and procedures designed to ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported, within time periods specified in the SEC's rules and forms and to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to our management, including our Chief Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosure. As of June 30, 2008, under the supervision and with the participation of our Chief Executive Officer and Principal Financial Officer, management has evaluated the effectiveness of the design and operation of our disclosure controls and procedures. Based on that evaluation, the Chief Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were effective. (b) Changes in Internal Controls. There were no changes in our internal control over financial reporting during the quarter ended June 30, 2008 that materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting. 13 PART II - OTHER INFORMATION Item 1. Legal Proceedings. None Item 1A. Risk Factors. Not required for smaller reporting companies. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. None Item 3. Defaults Upon Senior Securities. None Item 4. Submission of Matters to a Vote of Security Holders. None Item 5. Other Information. None Item 6. Exhibits. a. Exhibits 31.1 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Borivoje Vukadinovic. 32.1 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Borivoje Vukadinovic. 14 SIGNATURES In accordance with Section 13 or 15(d) of the Exchange Act of 1934, the Company caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. RETROSPETTIVA, INC. Dated: August 8, 2008 By: Borivoje Vukadinovic, -------------------- President and Principal Executive Officer Dated: August 8, 2008 By: Borivoje Vukadinovic, -------------------- Principal Financial Officer 15