Minnesota
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20-4709758
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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Large accelerated filer ¨
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Accelerated filer ¨
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Non-accelerated filer ¨ (Do not check if a smaller reporting company)
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Smaller reporting company x
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Page
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PART I. FINANCIAL INFORMATION
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Item 1. Financial Statements
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1
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
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8
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Item 4. Controls and Procedures
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14
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PART II. OTHER INFORMATION
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
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15
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Item 5. Other Information
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15
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Item 6. Exhibits
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15
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SIGNATURES
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16
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September 30, 2011
(unaudited)
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December 31, 2010
(audited)
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|||||||
ASSETS | ||||||||
Current Assets
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||||||||
Cash
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$ | 10,036 | $ | 3,081 | ||||
Total Current Assets
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10,036 | 3,081 | ||||||
Total Assets
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$ | 10,036 | $ | 3,081 | ||||
Liabilities and Shareholders’ Deficit
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||||||||
Current Liabilities
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||||||||
Accounts payable
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$ | 7,910 | $ | 8,823 | ||||
Accrued royalty
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270 | 270 | ||||||
Note payable related party – short-term
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183,502 | 94,800 | ||||||
Interest payable
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- | 4,027 | ||||||
Total Current Liabilities
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191,682 | 107,920 | ||||||
Long-Term Liabilities
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||||||||
Notes payable related party – long-term
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- | 11,200 | ||||||
Total Long-Term Liabilities
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- | 11,200 | ||||||
Total Liabilities
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191,682 | 119,120 | ||||||
Commitments and contingencies
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||||||||
Shareholders’ Deficit
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||||||||
Common Stock, $.001 par value: Authorized 250,000,000 shares:
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||||||||
Issued and outstanding 11,180,224 and 11,008,224 shares on September 30, 2011 and December 31, 2010, respectively.
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11,180 | 11,008 | ||||||
Additional paid-in capital
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750,160 | 714,332 | ||||||
Deficit accumulated during the development stage
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(942,986 | ) | (841,379 | ) | ||||
Total Shareholders’ Deficit
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(181,646 | ) | (116,039 | ) | ||||
Total Liabilities and Shareholders’ Deficit
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$ | 10,036 | $ | 3,081 |
Three months ended
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Three months ended
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Nine months ended
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Nine months ended
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Period from
January 10, 2006
(inception)
through
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||||||||||||||||
September 30, 2011
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September 30, 2010
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September 30, 2011
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September 30, 2010
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September 30, 2011
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||||||||||||||||
Revenues
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$ | - | $ | 600 | $ | - | $ | 2,400 | $ | 12,375 | ||||||||||
Cost of Revenues
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- | 2,098 | - | 6,324 | 61,800 | |||||||||||||||
Gross Loss
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- | (1,498 | ) | - | (3,924 | ) | (49,425 | ) | ||||||||||||
Operating Expenses:
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||||||||||||||||||||
Selling, General and Administrative
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23,952 | 23,202 | 88,131 | 85,532 | 872,261 | |||||||||||||||
Operating Loss
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(23,952 | ) | (24,700 | ) | (88,131 | ) | (89,456 | ) | (921,686 | ) | ||||||||||
Other Income (Expense)
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||||||||||||||||||||
Interest income
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- | - | - | - | 2,203 | |||||||||||||||
Interest expense
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(5,190 | ) | (2,624 | ) | (13,476 | ) | (6,257 | ) | (23,503 | ) | ||||||||||
Total Other Income (Expense)
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(5,190 | ) | (2,624 | ) | (13,476 | ) | (6,257 | ) | (21,300 | ) | ||||||||||
Net Loss
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$ | (29,142 | ) | $ | (27,324 | ) | $ | (101,607 | ) | $ | (95,713 | ) | $ | (942,986 | ) | |||||
Basic and diluted net loss per common share
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$ | (0.00 | ) | $ | (0.00 | ) | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.11 | ) | |||||
Weighted-average number of common shares outstanding
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11,132,224 | 10,233,224 | 11,058,012 | 10,094,213 | 8,562,066 |
Nine Months
Ended
September 30,
2011
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Nine Months
Ended
September 30,
2010
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Period from
January 10, 2006
(inception) to
September 30,
2011
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||||||||||
Cash flows from operating activities:
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||||||||||||
Net loss
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$ | (101,607 | ) | (95,713 | ) | (942,986 | ) | |||||
Adjustments to reconcile net loss to net cash used in operating activities:
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||||||||||||
Amortization of intangible asset
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- | 6,204 | 38,599 | |||||||||
Impairment of inventory and intangible assets
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- | - | 4,379 | |||||||||
Common stock issued for services
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- | - | 6,500 | |||||||||
Consulting service expense paid in stock
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- | - | 134,341 | |||||||||
Officers compensation expense paid in stock
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36,000 | 36,000 | 194,000 | |||||||||
Officers compensation expense as contributed capital
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- | 50,000 | ||||||||||
Changes in operating assets and liabilities:
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||||||||||||
Inventory
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- | - | (871 | ) | ||||||||
Prepaid expense
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- | - | 5,434 | |||||||||
Accounts payable
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(913 | ) | (2,751 | ) | 7,910 | |||||||
Accrued royalty
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- | 120 | 270 | |||||||||
Interest payable
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13,475 | 6,257 | 23,502 | |||||||||
Deferred revenue
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- | (975 | ) | - | ||||||||
Net cash used in operating activities
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(53,045 | ) | (50,858 | ) | (478,922 | ) | ||||||
Cash flows from investing activities:
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||||||||||||
Acquisition of Select Video assets
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- | - | (17,000 | ) | ||||||||
Net cash used in investing activities
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- | - | (17,000 | ) | ||||||||
Cash flows from financing activities:
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||||||||||||
Proceeds from subscription receivable
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- | - | 14,000 | |||||||||
Proceeds from issuance of common stock
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- | - | 426,000 | |||||||||
Redemption of common stock
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- | - | (91,667 | ) | ||||||||
Proceeds from note payable related party
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60,000 | 50,000 | 160,000 | |||||||||
Payment of short-term debt
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- | - | (2,375 | ) | ||||||||
Net cash provided by financing activities
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60,000 | 50,000 | 505,958 | |||||||||
Net increase (decrease) in cash
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6,955 | (858 | ) | 10,036 | ||||||||
Cash, beginning of the period
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3,081 | 5,464 | - | |||||||||
Cash, end of the period
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$ | 10,036 | 4,606 | $ | 10,036 | |||||||
Non-cash investing and financing activities:
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||||||||||||
Acquisition of certain assets and liabilities of Select Video in exchange for common stock
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||||||||||||
Inventory
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$ | - | $ | - | $ | 750 | ||||||
Intangible Asset
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- | - | 24,357 | |||||||||
Accounts Payable
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- | - | (32,000 | ) | ||||||||
Note Payable
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- | - | (7,084 | ) | ||||||||
Accrued interest converted into note payable
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17,502 | 1,200 | 23,502 | |||||||||
Stock issued in lieu of cash for note payable
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- | - | 19,709 | |||||||||
Stock issued in lieu of cash for prepaid services
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- | - | 175,400 | |||||||||
Stock subscriptions received for common stock
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- | - | 14,000 |
Three Months
Ended
September 30, 2011
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Three Months
Ended
September 30, 2010
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|||||||
Numerator: Net Loss
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$ | (29,142 | ) | (27,324 | ) | |||
Denominator: Weighted-average number of common shares outstanding
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11,132,224 | 10,233,224 | ||||||
Basic and diluted net loss per common share
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$ | (0.00 | ) | (0.00 | ) |
Nine Months Ended
September 30, 2011
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Nine Months Ended
September 30, 2010
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Period from
January 10, 2006
(inception) to
September 30, 2011
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||||||||||
Numerator: Net Loss
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$ | (101,607 | ) | $ | (95,713 | ) | $ | (942,986 | ) | |||
Denominator: Weighted-average number of
common shares outstanding
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11,058,012 | 10,094,213 | 8,562,066 | |||||||||
Basic and diluted net loss per common share
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$ | (0.01 | ) | $ | (0.01 | ) | $ | (0.11 | ) |
Item 2.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations.
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·
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Our lack of a significant prior operating history to provide our management with a basis to better evaluate certain likelihoods
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·
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Our need for additional financing
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·
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The significant risk that our game may not be accepted by casinos or gaming establishments or, ultimately, by gaming consumers and enthusiasts
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·
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Our inability to obtain required registrations, licenses and approvals with or from appropriate state gaming authorities
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·
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Changes in legal and regulatory regimes applicable to our business or our games
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·
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Our inability to effectively protect our intellectual property, or
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·
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Our inability, for any reason, to retain our executive management personnel.
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Three Months Ended
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||||||||||||||||||||
Item
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9/30/11
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9/30/10
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% Change
(Year Over Year)
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% of 2011
Net Loss
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% of 2010
Net Loss
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|||||||||||||||
Revenues
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$ | - | $ | 600 | N/A | - | % | (2.2 | )% | |||||||||||
Cost of Revenues
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- | 2,098 | N/A | - | % | 7.7 | % | |||||||||||||
Operating Expenses:
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||||||||||||||||||||
General Operating Expenses
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617 | 951 | (35.0 | )% | 2.1 | % | 3.5 | % | ||||||||||||
Legal and Accounting Expenses
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11,335 | 10,251 | 10.6 | % | 38.9 | % | 37.5 | % | ||||||||||||
Executive Management Compensation in Stock
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12,000 | 12,000 | - | % | 41.2 | % | 43.9 | % | ||||||||||||
Other Income (Expense)
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(5,190 | ) | (2,624 | ) | 97.8 | % | 17.8 | % | 9.6 | % | ||||||||||
Net Loss
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$ | (29,142 | ) | $ | (27,324 | ) | 6.7 | % | 100 | % | 100 | % |
Nine Months Ended
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||||||||||||||||||||
Item
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9/30/11
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9/30/10
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% Change
(Year Over Year)
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% of 2011
Net Loss
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% of 2010
Net Loss
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|||||||||||||||
Revenues
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$ | - | $ | 2,400 | N/A | - | % | (2.5 | )% | |||||||||||
Cost of Revenues
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- | 6,324 | N/A | - | % | 6.6 | % | |||||||||||||
Operating Expenses:
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||||||||||||||||||||
General Operating Expenses
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1,524 | 2,189 | (30.4 | )% | 1.5 | % | 2.3 | % | ||||||||||||
Legal and Accounting Expenses
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50,607 | 47,343 | 6.9 | % | 49.8 | % | 49.5 | % | ||||||||||||
Executive Management Compensation in Stock
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36,000 | 36,000 | - | % | 35.4 | % | 37.6 | % | ||||||||||||
Other Income (Expense)
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(13,476 | ) | (6,257 | ) | 115.4 | % | 13.3 | % | 6.5 | % | ||||||||||
Net Loss
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$ | (101,607 | ) | $ | (95,713 | ) | 6.2 | % | 100 | % | 100 | % |
Nine Months Ended September 30,
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||||||||
2011
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2010
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|||||||
Cash flows provided (used) by :
|
||||||||
Operating activities
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$ | (53,045 | ) | $ | (50,858 | ) | ||
Investing activities
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- | - | ||||||
Financing activities
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60,000 | 50,000 | ||||||
Net increase (decrease) in cash
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6,955 | (858 | ) | |||||
Cash, beginning of period
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3,081 | 5,464 | ||||||
Cash, end of period
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$ | 10,036 | $ | 4,606 |
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·
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Casino service industry (CSI) supplier license issued by the New Jersey Casino Control Commission (expired in January 2011)
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·
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Distribution licenses permitting us to distribute Winner’s Pot Poker game units (i.e., table layouts) to casinos and gaming establishments in Nevada, issued by the Nevada State Gaming Control Board
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·
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Registration with the Nevada Gaming Commission as a publicly traded company
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·
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Distribution licenses permitting us to distribute Winner’s Pot Poker game units to casinos and gaming establishments in Minnesota
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·
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Approval from the applicable Tribal Councils permitting us to distribute Winner’s Pot Poker game units to casinos and gaming establishments located in tribal lands in Minnesota; and
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·
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Approval from the applicable Tribal Councils permitting us to distribute Winner’s Pot Poker game units to casinos and gaming establishments located in tribal lands in Oklahoma.
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Exhibit No.
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Description
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10.1
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Promissory Note with Lantern Advisers, LLC, dated September 30, 2011
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10.2
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Promissory Note with Joseph A. Geraci, II, dated September 30, 2011
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10.3
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Promissory Note with Douglas Polinsky, dated September 30, 2011
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31.1
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Certification of Chief Executive Officer
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31.2
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Certification of Chief Financial Officer
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32
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Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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POKER MAGIC, INC.
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/s/ Douglas Polinsky
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Douglas Polinsky
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Chief Executive Officer
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Dated: November 9, 2011
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/s/ Joseph A. Geraci, II
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Joseph A. Geraci, II
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Chief Financial Officer
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Dated: November 9, 2011
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$172,364.00
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September 30, 2011
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·
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Interest payments shall be due on the last day of each month;
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·
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Principal shall be due on March 31, 2012.
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MAKER:
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/s/ Joseph A. Geraci, II
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Poker Magic, Inc.
|
||
By: Joseph A. Geraci, II
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||
PAYEE:
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/s/ Douglas Polinsky
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Lantern Advisers, LLC
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||
By: Douglas Polinsky
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$5,569.32
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September 30, 2011
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·
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Interest payments shall be due on the last day of each month;
|
·
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Principal shall be due on March 31, 2012.
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MAKER:
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/s/ Douglas Polinsky
|
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Poker Magic, Inc.
|
||
PAYEE:
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/s/ Joseph A. Geraci, II
|
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Joseph A. Geraci, II
|
$5,569.32
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September 30, 2011
|
·
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Interest payments shall be due on the last day of each month;
|
·
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Principal shall be due on March 31, 2012.
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MAKER:
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/s/ Joseph A. Geraci, II
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Poker Magic, Inc.
|
||
PAYEE:
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/s/ Douglas Polinsky
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Douglas Polinsky
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1.
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I have reviewed this Quarterly Report on Form 10-Q of Poker Magic, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for registrant and have:
|
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
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(c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting.
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Dated: November 9, 2011
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/s/ Douglas Polinsky
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Douglas Polinsky
|
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Chief Executive Officer
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1.
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I have reviewed this Quarterly Report on Form 10-Q of Poker Magic, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for registrant and have:
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting.
|
Dated: November 9, 2011
|
/s/ Joseph A. Geraci, II
|
Joseph A. Geraci, II
|
|
Chief Financial Officer
|
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
November 9, 2011
|
/s/ Douglas Polinsky
|
Douglas Polinsky
|
|
Chief Executive Officer
|
November 9, 2011
|
/s/ Joseph A. Geraci, II
|
Joseph A. Geraci, II
|
|
Chief Financial Officer
|
Balance Sheets (Parenthetical) (USD $) | Sep. 30, 2011 | Dec. 31, 2010 |
---|---|---|
Common Stock, par value | $ 0.001 | $ 0.001 |
Common Stock, Authorized | 250,000,000 | 250,000,000 |
Common Stock, Issued | 11,180,224 | 11,008,224 |
Common Stock, outstanding | 11,180,224 | 11,008,224 |
Statements of Operations (USD $) | 3 Months Ended | 9 Months Ended | 69 Months Ended | ||
---|---|---|---|---|---|
Sep. 30, 2011 | Sep. 30, 2010 | Sep. 30, 2011 | Sep. 30, 2010 | Sep. 30, 2011 | |
Revenues | $ 600 | $ 2,400 | $ 12,375 | ||
Cost of Revenues | 2,098 | 6,324 | 61,800 | ||
Gross Loss | (1,498) | (3,924) | (49,425) | ||
Operating Expenses: | |||||
Selling, General and Administrative | 23,952 | 23,202 | 88,131 | 85,532 | 872,261 |
Operating Loss | (23,952) | (24,700) | (88,131) | (89,456) | (921,686) |
Other Income (Expense) | |||||
Interest income | 2,203 | ||||
Interest expense | (5,190) | (2,624) | (13,476) | (6,257) | (23,503) |
Total Other Income (Expense) | (5,190) | (2,624) | (13,476) | (6,257) | (21,300) |
Net Loss | $ (29,142) | $ (27,324) | $ (101,607) | $ (95,713) | $ (942,986) |
Basic and diluted net loss per common share | $ 0.00 | $ 0.00 | $ (0.01) | $ (0.01) | $ (0.11) |
Weighted-average number of common shares outstanding | 11,132,224 | 10,233,224 | 11,058,012 | 10,094,213 | 8,562,066 |
Document and Entity Information | 9 Months Ended | |
---|---|---|
Sep. 30, 2011 | Nov. 09, 2011 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2011 | |
Document Fiscal Year Focus | 2011 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | POKR | |
Entity Registrant Name | POKER MAGIC INC | |
Entity Central Index Key | 0001425355 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 11,180,224 |
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COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
COMMITMENTS AND CONTINGENCIES |
NOTE 3—COMMITMENTS AND CONTINGENCIES
The asset
purchase agreement with Select Video dated March 10, 2006, provides
that when the Company receives any revenue generated by
Winner’s Pot Poker and other similar games, Select Video will
be entitled to receive an amount equal to five percent (5%) of all
gross proceeds generated by these games.
As
of both September 30, 2011 and December 31, 2010, $270 was owed to
Select Video under this agreement.
|
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Description of operations and basis of presentation
Poker
Magic, Inc. (the “Company”) is a development stage
company that was incorporated in the State of Minnesota on January
10, 2006. Our business consists primarily of marketing
and licensing a new form of poker-based table game to casinos and
on-line gaming facilities in the United States.
Interim financial information
The
following condensed balance sheet as of December 31, 2010, which
has been derived from audited financial statements, and the
unaudited interim condensed financial statements have been prepared
in accordance with accounting principles generally accepted in the
United States and pursuant to the rules and regulations of the
Securities and Exchange Commission (the “SEC”) for
interim financial information. Accordingly, certain information and
footnote disclosures normally included in financial statements
prepared in accordance with accounting principles generally
accepted in the United States have been omitted pursuant to such
rules and regulations. Operating results for the three and nine
months ended September 30, 2011 are not necessarily indicative of
the results that may be expected for the year ending December 31,
2011 or any other period. The accompanying financial statements and
related notes should be read in conjunction with the audited
Financial Statements of the Company, and notes thereto, contained
in this filing for the year ended December 31, 2010. The
financial information furnished in this report is unaudited and
reflects all adjustments which are normal recurring adjustments
and, which in the opinion of management, are necessary to fairly
present the results of the interim periods presented in order to
make the financial statements not misleading.
Liquidity
The
accompanying financial statements have been prepared assuming the
Company will continue as a going concern that contemplates the
realization of assets and satisfaction of liabilities in the normal
course of business. For the period from January 10, 2006
(inception) to September 30, 2011, the Company incurred a net loss
of $942,986. The Company's ability to continue as a going concern
is dependent on it ultimately achieving profitability, producing
revenues and/or raising additional capital. Management intends to
obtain additional debt or equity capital to meet all of its
existing cash obligations and to support the revenue generating
process; however, there can be no assurance that the sources will
be available or available on terms favorable to the Company, if at
all.
Fair value of financial instruments
The
carrying amounts of certain of the Company’s financial
instruments, including cash, accounts payable, and notes payable
approximate fair value due to their relatively short
maturities.
|
SHAREHOLDERS' DEFICIT | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
SHAREHOLDERS' DEFICIT |
NOTE 4—SHAREHOLDERS’ DEFICIT
Common stock
On
January 10, 2006, the founders of the Company purchased 2,500,000
shares of common stock for $2,500.
On
March 10, 2006, the Company purchased certain assets and assumed
certain liabilities of Select Video in exchange for 3,022,991
shares of common stock issued at the deemed fair market value of
$.001 per share or $3,023.
On
May 23, 2006, the Company issued 60,000 shares of common stock at
$0.25 per share in lieu of cash for liabilities
assumed.
During
2006, the Company raised additional cash of $87,500 at $0.25 per
share through the issuance of 350,000 shares of common
stock.
During
2006, the Company issued 22,000 shares to various consultants at
$0.25 per share for services rendered.
During
2006, the Company issued 100,000 shares valued at $4,000 (value of
the services to be provided) for services rendered and to be
rendered.
On
January 15, 2007, the Company issued 600,000 shares of common stock
to two consultants for services to be provided over a 12 month
period commencing on January 15, 2007. These services
were valued at $50,000.
On
January 15, 2007, the Company issued 500,000 shares of common stock
to the two founders for their services to be provided over a 12
month period commencing January 15, 2007. These services
were valued at $48,000.
On
July 26, 2007, the Company settled the note payable of $7,084 for a
cash payment of $2,375 and the issuance of 20,000 shares of common
stock valued at $4,709 for payment in full on the
note.
In
July 2007, the Company raised cash of $20,000 at $0.25 per share
through the issuance of 80,000 shares of common stock.
On
August 1, 2007, the Company issued 65,000 shares of common stock
for services to be provided over a 12 month period commencing
retroactively on June 1, 2007. These services were
valued at $5,000.
On
August 1, 2007, the Company issued 100,000 shares of common stock
to a consultant for services to be provided over a 12 month period
commencing on August 1, 2007. These services were valued
at $8,300.
On
August 1, 2007, the Company issued 25,000 shares of common stock
for services. These services were valued at $1,000.
On
November 26, 2007, the Company issued 50,000 shares of common stock
to a consultant for services to be provided over a 12 month period
commencing on November 26, 2007. These services were
valued at $12,500.
In
December 2007, the Company raised cash of $30,000 at $0.25 per
share through the issuance of 120,000 shares of common
stock.
In
January 2008, the Company raised cash of $25,000 at $0.25 per share
through the issuance of 100,000 shares of common
stock.
On
May 28, 2008, the Company raised cash of $250,000 at $0.25 per
share through the issuance of 1,000,000 shares of common stock
together with a warrant, classified as permanent equity, to
purchase up to 1,000,000 shares of common stock, which was
immediately exercisable. The warrants do not possess any
embedded derivative features. The exercise price was
$0.25 per share if purchased within six months of
issuance. The exercise price increased to $0.425 for
months seven through twelve (after the date of issuance) and to
$0.50 after twelve months. The warrant expired on May
27, 2010.
In
May 2008, the Company raised cash of $12,500 at $0.25 per share
through the issuance of 50,000 shares of common stock.
On
August 26, 2008, the Company issued 200,000 shares of common stock
to a consultant for services to be provided over a five month
period commencing on August 1, 2008. These services were
valued at $20,000.
On
August 26, 2008, the Company issued 60,000 shares of common stock
for services to be provided over a five month period commencing
retroactively on August 1, 2008. These services were
valued at $5,000.
On
August 26, 2008, the Company issued 60,000 shares of common stock
for services to be provided over a twelve month period commencing
retroactively on August 1, 2008. These services were
valued at $5,000.
On
August 26, 2008, the Company issued 10,000 shares of common stock
for services. These services were valued at
$2,500.
On
August 26, 2008, the Company issued 50,000 shares of common stock
for services. These services were valued at
$5,000.
On
December 16, 2008, the Company issued 40,400 shares of common stock
for services. These services were valued at
$10,100.
On
December 31, 2008, the Company issued 32,000 shares of common stock
for officer compensation. These services were valued at
$8,000.
On
February 25, 2009, the Company redeemed, at the request of a
non-affiliate shareholder, 366,667 shares of common stock held by a
single shareholder at a price of $.25 per share, for a total amount
of $91,667, which was the price originally paid for the redeemed
shares.
On
June 30, 2009, the Company issued 400,000 shares of common stock
for officer compensation with a fair value of $12,000.
On
June 30, 2009, the Company issued 200,000 shares of common stock
for officer bonus compensation with a fair value of
$6,000.
On
June 30, 2009, the Company issued 50,000 shares of common stock for
consultant service bonus with a fair value of $1,500.
On
June 30, 2009, the Company issued 5,000 shares of common stock for
services with a fair value of $150.
On
June 30, 2009, the Company issued 7,500 shares of common stock for
services with a fair value of $225.
On
September 30, 2009, the Company issued 200,000 shares of common
stock for officer compensation with a fair value of
$12,000.
On
December 31, 2009, the Company issued 200,000 shares of common
stock for officer compensation with a fair value of
$12,000.
On
March 31, 2010, the Company issued 120,000 shares of common stock
for officer compensation with a fair value of $12,000.
On
June 30, 2010, the Company issued 150,000 shares of common stock
for officer compensation with a fair value of $12,000.
On
September 30, 2010, the Company issued 200,000 shares of common
stock for officer compensation with a fair value of
$12,000.
On
December 31, 2010, the Company issued 200,000 shares of common
stock for officer compensation with a fair value of
$12,000.
On
December 31, 2010, the Company issued 200,000 shares of common
stock for officer bonus compensation with a fair value of
$12,000.
On
December 31, 2010, the Company issued 125,000 shares of common
stock as a bonus to a consultant for services with a fair value of
$7,500.
On
December 31, 2010, the Company issued 50,000 shares of common stock
for consultant services with a fair value of $3,000.
On
March 31, 2011, the Company issued 24,000 shares of common stock
for officer compensation with a fair value of $12,000.
On
June 30, 2011, the Company issued 100,000 shares of common stock
for officer compensation with a fair value of $12,000.
On
September 30, 2011, the Company issued 48,000 shares of common
stock for officer compensation with a fair value of
$12,000.
At
September 30, 2011, a total of 11,180,224 shares of common stock
were issued and outstanding.
|
INCOME TAXES | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
INCOME TAXES |
NOTE 5—INCOME TAXES
The
Company applies the guidance for accounting for uncertainty in
income tax provisions. As such, the Company is required
to recognize in the financial statements only those tax positions
determined to be more likely than not of being sustained upon
examination, based on the technical merits of the positions.
Interest and penalties are expensed as incurred as operating
expenses. There are no uncertain tax positions at
September 30, 2011 and December 31, 2010.
At
September 30, 2011, the Company had federal and state net operating
loss carryforward of approximately $898,000 available to offset
future taxable income. The Company’s federal and state net
operating loss carryforwards will begin to expire in 2027 if not
used before such time to offset future taxable income or tax
liabilities. Current and future changes in the stock ownership of
the Company may place limitations on the use of these net operating
loss carryforwards.
|
NOTES PAYABLE RELATED PARTY - SHORT-TERM | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
NOTES PAYABLE RELATED PARTY - SHORT-TERM |
NOTE 6—NOTES PAYABLE RELATED PARTY –
SHORT-TERM
On
July 15, 2011, Lantern Advisers, LLC, a Minnesota limited liability
company owned equally by Douglas Polinsky and Joseph A. Geraci, II
(each of whom is an officer and director of the Company), loaned
the Company $20,000 under terms and conditions set forth in an
unsecured term promissory note. The promissory note
provides for simple interest to accrue on the unpaid balance of the
promissory note at the rate of 12% per annum, and requires that
accrued interest be paid on a monthly basis until July 15, 2012, at
which time the promissory note becomes due.
On
October 19, 2010, Douglas Polinsky and Joseph A. Geraci, II, both
officers of the Company, each loaned the Company $5,000 under terms
and conditions set forth in a related unsecured term promissory
note. The promissory note provides for simple interest
to accrue on the unpaid principal balance of the promissory notes
at the rate of 12% per annum, and require that accrued interest be
paid on a monthly basis until October 18, 2011, at which time the
entire unpaid principal balance of $5,000 together with the unpaid
accrued interest of $569 (accrued at 12% per annum) became due and
payable. Messrs. Polinsky and Geraci both agreed to
renew the unsecured term promissory notes and interest payable of
$5,569 each on September 30, 2011 for a term of six
months. The promissory notes have the same terms as
those contained in the original promissory notes and have a
maturity date of March 31, 2011.
From
July 30, 2009 to July 15, 2011, Lantern Advisers, LLC, a Minnesota
limited liability company owned equally by Douglas Polinsky and
Joseph A. Geraci, II (each of whom is an officer and director of
the Company), loaned the Company a total of $150,000 under terms
and conditions set forth in unsecured term promissory notes.
The promissory notes provided for simple interest to accrue on the
unpaid principal balance of the promissory note at the rate of 12%
per annum, and required that accrued interest be paid on a monthly
basis until maturity, at which time the entire unpaid principal
balance of the promissory note became due. On September
30, 2011, Lantern Advisers and the Company consolidated these
promissory notes and the accrued but unpaid interest into a new
promissory note in the amount of $172,364. The new
promissory note has the same terms as those contained in the
original promissory notes and has a maturity date of March 31,
2012.
Total
short-term related party notes at September 30, 2011 and December
31, 2010 were $183,502 and $94,800, respectively, and provided
working capital for the Company. Total long-term related
party notes at September 30, 2011 and December 31, 2010 were $0 and
$11,200, respectively.
|
NET LOSS PER COMMON SHARE | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NET LOSS PER COMMON SHARE |
NOTE 2—NET LOSS PER COMMON SHARE
Basic
net loss per common share is computed by dividing net loss by the
weighted average number of vested common shares outstanding during
the period. A reconciliation of the numerator and denominator used
in the calculation of basic and diluted net loss per common share
follows:
The
1,000,000 outstanding warrants at March 31, 2010 were excluded from
the calculation of diluted loss per share as their effects were
anti-dilutive due to the Company’s net losses for that
period. These warrants expired on May 27,
2010.
|
Balance Sheets (USD $) | Sep. 30, 2011 | Dec. 31, 2010 |
---|---|---|
Current Assets | ||
Cash | $ 10,036 | $ 3,081 |
Total Current Assets | 10,036 | 3,081 |
Total Assets | 10,036 | 3,081 |
Current Liabilities | ||
Accounts payable | 7,910 | 8,823 |
Accrued royalty | 270 | 270 |
Note payable related party - short-term | 183,502 | 94,800 |
Interest payable | 4,027 | |
Total Current Liabilities | 191,682 | 107,920 |
Long-Term Liabilities | ||
Notes payable related party - long-term | 11,200 | |
Total Long-Term Liabilities | 11,200 | |
Total Liabilities | 191,682 | 119,120 |
Commitments and contingencies | ||
Common Stock, $.001 par value: Authorized 250,000,000 shares: | ||
Issued and outstanding 11,180,224 and 11,008,224 shares on September 30, 2011 and December 31, 2010, respectively. | 11,180 | 11,008 |
Additional paid-in capital | 750,160 | 714,332 |
Deficit accumulated during the development stage | (942,986) | (841,379) |
Total Shareholders' Deficit | (181,646) | (116,039) |
Total Liabilities and Shareholders' Deficit | $ 10,036 | $ 3,081 |