10-Q 1 promap093010.txt PROMAP CORP 09-30-10 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q [X] Quarterly report pursuant section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 2010 [ ] Transition report pursuant section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from ____________ to ____________ Commission File Number: 333-163342 PROMAP CORPORATION (Exact name of registrant as specified in its charter) Colorado 20-8096131 (State or Other Jurisdiction (I.R.S. Employer Identification No.) of Incorporation) 7060B South Tucson Way, Centennial, Colorado 80112 (Address of Principal Executive Offices) (720) 889-0510 (Registrant's Telephone Number, Including Area Code) Not Applicable (Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] Yes [ ] No Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filed" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [X] Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X] APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the issuer has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. NOT APPLICABLE APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. On November 15, 2010, there were 9,500,000 shares of Common Stock issued and outstanding. PROMAP CORPORATION FORM 10-Q TABLE OF CONTENTS Page PART I. FINANCIAL INFORMATION Item 1. Financial Statements Balance sheets ............................................ 3 Statements of operations................................... 4 Statements of cash flows................................... 5 Notes to consolidated financial statements................. 6-7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations .................................. 8 Item 3. Quantitative and Qualitative Disclosures about Market Risk.. 10 Item 4. Controls and Procedures .................................... 10 PART II. OTHER INFORMATION Item 1. Legal Proceedings .......................................... 11 Item 1A. Risk Factors................................................ 11 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds ................................................... 11 Item 3. Defaults Upon Senior Securities ............................ 11 Item 4. Submission of Matters to a Vote of Security Holders ........ 11 Item 5. Other Information .......................................... 11 Item 6. Exhibits ................................................... 11 Signatures ................................................. 12 2 PROMAP CORPORATION BALANCE SHEETS Sept. 30, 2010 Dec. 31, 2009 (Unaudited) ------------- -------------- ASSETS Current assets Cash $ 28,131 $ 20,004 Accounts receivable - related party 4,050 33,792 -------- -------- Total current assets 32,181 53,796 Total Assets $ 32,181 $ 53,796 LIABILITIES & STOCKHOLDERS' EQUITY Current liabilities Income tax payable - $ 4,485 -------- -------- Total current liabilities - 4,485 -------- -------- Total Liabilities $ - $ 4,485 -------- -------- Stockholders' Equity Preferred stock, no par value; 5,000,000 shares authorized; no shares issued & outstanding - - Common stock, no par value; 100,000,000 shares authorized; 9,500,000 shares issued and outstanding 20,000 20,000 Additional paid in capital 18,000 22,500 Retained earnings (5,819) 6,811 -------- -------- Total Stockholders' Equity 32,181 49,311 -------- -------- Total Liabilities and Stockholders' Equity $ 32,181 $ 53,796 ======== ======== The accompanying notes are an integral part of the financial statements. 3 PROMAP CORPORATION STATEMENTS OF OPERATIONS (Unaudited)
Three Months Three Months Nine Months Nine Months Ended Ended Ended Ended Sept. 30, 2009 Sept. 30, 2010 Sept. 30, 2009 Sept. 30, 2010 -------------- -------------- -------------- -------------- Sales (net of returns) - related party $ 10,066 $ 30,886 $ 28,382 $ 57,334 Cost of goods sold - - 7,132 - -------- -------- -------- -------- Gross profit 10,066 30,886 21,250 57,334 -------- -------- -------- -------- Operating expenses: General and administrative 24,378 28,474 57,371 40,438 -------- -------- -------- -------- 24,378 28,474 57,371 40,438 -------- -------- -------- -------- Income (loss) from operations (14,312) 2,412 (36,121) 16,896 -------- -------- -------- -------- Other income (expense): Interest income 2 5 85 16 Other income - - - - -------- -------- -------- -------- 2 5 85 16 -------- -------- -------- -------- Income (loss) before provision for income taxes (14,310) 2,417 (36,036) 16,912 Provision for income tax - 783 - 4,282 -------- -------- -------- -------- Net income (loss) $(14,310) $ 1,634 $(36,036) $ 12,630 ======== ======== ======== ======== Net income (loss) per share (Basic and fully diluted) $ (0.00) $ 0.00 $ (0.00) $ 0.00 ======== ======== ======== ======== Weighted average number of common shares outstanding 8,000,000 9,500,000 8,000,000 9,500,000 ========= ========= ========= =========
The accompanying notes are an integral part of the financial statements. 4 PROMAP CORPORATION STATEMENTS OF CASH FLOWS (Unaudited) Nine Months Nine Months Ended Ended Sept. 30, 2009 Sept. 30, 2010 -------------- -------------- Cash Flows From Operating Activities: Net income (loss) $ (36,036) $ 12,630 Adjustments to reconcile net loss to net cash provided by (used for) operating activities: Donated services 4,500 4,500 Accounts receivable - related party (12,786) (29,742) Accrued payables 833 4,485 --------- -------- Net cash provided by (used for) operating activities (43,489) (8,127) Cash Flows From Investing Activities: - - --------- -------- Net cash provided by (used for) investing activities - - Cash Flows From Financing Activities: Sales of common stock 15,000 Distributions --------- -------- Net cash provided by (used for) financing activities 15,000 - --------- -------- Net Increase (Decrease) In Cash (28,489) (8,127) Cash At The Beginning Of The Period 40,651 28,131 Cash At The End Of The Period $ 12,162 $ 20,004 ======== ======== Schedule Of Non-Cash Investing And Financing Activities None Supplemental Disclosure Cash paid for interest $ - $ - Cash paid for income taxes $ - $ - The accompanying notes are an integral part of the financial statements. 5 PROMAP CORPORATION NOTES TO FINANCIAL STATEMENTS (Unaudited) NOTE 1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Promap Corporation (the "Company"), was incorporated in the State of Colorado on November 12, 1989. The Company sells oil and gas maps to oil and gas industry businesses. Basis of Presentation The accompanying unaudited financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and disclosures required by generally accepted accounting principles for complete financial statements. All adjustments which are, in the opinion of management, necessary for a fair presentation of the results of operations for the interim periods have been made and are of a recurring nature unless otherwise disclosed herein. The results of operations for such interim periods are not necessarily indicative of operations for a full year. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and 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. Cash and cash equivalents The Company considers all highly liquid investments with an original maturity of three months or less as cash equivalents. Accounts receivable The Company reviews accounts receivable periodically for collectability and establishes an allowance for doubtful accounts and records bad debt expense when deemed necessary. Property and equipment Property and equipment are recorded at cost and depreciated under accelerated or straight line methods over each item's estimated useful life. Revenue recognition Revenue is recognized on an accrual basis as earned under contract terms. Specifically, revenue from product sales is recognized subsequent to a customer ordering a product at an agreed upon price, delivery has occurred, and collectability is reasonably assured. Income tax The Company accounts for income taxes pursuant to ASC 740. Under ASC 740 deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss 6 carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. Net income (loss) per share The net income (loss) per share is computed by dividing the net income (loss) by the weighted average number of shares of common outstanding. Warrants, stock options, and common stock issuable upon the conversion of the Company's preferred stock (if any), are not included in the computation if the effect would be anti-dilutive and would increase the earnings or decrease loss per share. Financial Instruments The carrying value of the Company's financial instruments, as reported in the accompanying balance sheets, approximates fair value. Long-Lived Assets In accordance with ASC 350, the Company regularly reviews the carrying value of intangible and other long-lived assets for the existence of facts or circumstances, both internally and externally, that suggest impairment. If impairment testing indicates a lack of recoverability, an impairment loss is recognized by the Company if the carrying amount of a long-lived asset exceeds its fair value. 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The following discussion and analysis should be read in conjunction with the Financial Statements (unaudited) and Notes to Financial Statements (unaudited) filed herein and with the Company's Prospectus dated July 25, 2010: BUSINESS OVERVIEW Promap Corporation was incorporated in the State of Colorado on November 12, 1987. We are an independent GIS and custom draft energy mapping company for the oil and gas industry in the United States and Canada. We provide hard copy and digital format oil and gas production maps which cover various geologic basins in numerous areas including: Denver Basin, Powder River Basin, Michigan Basin, Williston Basin, Arkoma Basin, Illinois Basin, Cincinnati Arch, Uintah - Piceance Basins and The Nevada Basin. We also provide maps of the North American Coal Basin and Coal Bed Methane Activity and North American Devonian - Mississippian Shale Map with detailed pipeline locations. RESULTS OF OPERATION FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2010 AS COMPARED TO THE THREE MONTHS ENDED SEPTEMBER 30, 2009. Revenues for the three months ended September 30, 2010 were $30,886 as compared to the revenues of $10,066 for the three months ended September 30, 2009. This increase in revenues in the three months ended September 30, 2010 was due to an increase in new oil and gas drilling activity during the quarter. The only operating expenses during these periods consisted of general and administrative expenses which were $28,474 in the three months ended September 30, 2010 as compared to $24,378 for the three months ended September 30, 2009. The $4,096 increase was due to the increased level of activity during the most recent three months. The net income for the three months ended September 30, 2010 was $1,634 as compared to a net loss of $14,310 for the three months ended September 30, 2009. The reason for the improvement from a loss of $14,310 to income of $1,634 was the significant increase in sales. RESULTS OF OPERATION FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010 AS COMPARED TO THE NINE MONTHS ENDED SEPTEMBER 30, 2009. Revenues for the nine months ended September 30, 2010 were $57,334 as compared to the revenues of $28,382 for the nine months ended September 30, 2009. This $28,952 increase in revenues in the nine months ended September 30, 2010 was due to an increase in new oil and gas drilling activity during the latest nine month period. The cost of goods sold for the nine months ended September 30, 2010 was zero as compared to $7,132 for the nine months ended September 30, 2009. This small decrease in cost of goods sold was due to an unusually high amount in the nine months ended September 30, 2009. The only operating expenses during these periods consisted of general and administrative expenses which were $40,438 in the nine months ended September 30, 2010 as compared to $57,371 for the nine months ended 8 September 30, 2009. The amount for 2010 was approximately in line with historical expenses whereas the amount for 2009 was unusually high because of the timing of when certain charges were booked in 2009. The net income for the nine months ended September 30, 2010 was $12,630 as compared to a net loss of $36,036 for the nine months ended September 30, 2009. The reason for the improvement from a loss of $36,036 to income of $12,630 was the improvement in sales during the most recent nine months and a drop in general and administrative expenses. We plan to make every effort to keep operating expenses relatively constant except for the addition of one or two part-time salesmen. If and when they are able to increase sales, we will increase the amount of time they work. If their efforts are unsuccessful or if the oil and gas drilling activity slows down significantly, we will cut expenses as much as possible and wait out the downturn. If we are able to increase sales significantly we may decide to raise additional financing to help finance the growth. We cannot assure that additional financing will be available when needed on favorable terms, or at all. We cannot guarantee that we will be successful in generating sufficient revenues or other funds in the future to cover our operating costs. Failure to generate sufficient revenues or additional financing when needed could cause us to go out of business. LIQUIDITY AND CAPITAL RESOURCES As of September 30, 2010, we had $49,311 of working capital compared to $32,181 of working capital as of December 31, 2009. Net cash used for operating activities was $8,127 during the nine months ended September 30, 2010 as compared to net cash used for operating activities of $43,489 during the nine months ended September 30, 2009. There was no cash flow provided by or used for financing activities during the nine months ended September 30, 2010, or the nine months ended September 30, 2009. We believe that our initial public offering will provide sufficient capital in the short term for our current level of operations. This is because we believe that we can generate sufficient sales and services within our present organizational structure and resources to become profitable in our operations. Additional resources will be needed to increase our sales staff and to otherwise increase advertising and marketing. Otherwise, we do not anticipate needing to raise additional capital resources in the next twelve months. Until the offering is complete, our President may be willing to fund the operations on a limited basis in order to continue the business. Our principle source of liquidity will be our operations. We expect variation in revenues to account for the difference between a profit and a loss. Our business activity is closely tied to the oil and gas business. A slow down in the oil and gas business would have a negative impact to our business. In any case, we try to operate with minimal overhead. Our primary activity will be to seek to find new customers. If we succeed in expanding our client base and generating sufficient sales, we will become profitable. We cannot guarantee that this will ever occur. Our plan is to build our Company in any manner which will be successful. 9 CONTRACTUAL OBLIGATIONS None. OFF-BALANCE SHEET ARRANGEMENTS We do not have any off-balance sheet arrangements (as that term is defined in Item 303 of Regulation S-K) that are reasonably likely to have a current or future material effect on our financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. Not Applicable. ITEM 4. CONTROLS AND PROCEDURES. (a) Evaluation of Disclosure Controls and Procedures. Our Chief Executive Officer and Principal Financial Officer have evaluated the effectiveness of the design and operations of our disclosure controls and procedures as of the end of the period covered by this quarterly report, and have concluded that our disclosure controls and procedures are adequate. (b) Changes in Internal Control over Financial Reporting. No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. 10 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. None ITEM 1A. RISK FACTORS. Not Applicable. ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES. Not Applicable. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. Not applicable. ITEM 5. OTHER INFORMATION. Not Applicable ITEM 6. EXHIBITS. Exhibit No. Description 31.1 Certification of CEO and Principal Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) - Filed herewith electronically 31.2 Certification of CFO and Principal Financial and Accounting Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) - Filed herewith electronically 32.1 Certification of CEO and Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Filed herewith electronically 32.2 Certification of CFO and Principal Financial and Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Filed herewith electronically 11 SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. PROMAP CORPORATION Date: November 17, 2010 By:/s/ Steven A. Tedesco Steven A. Tedesco, President and CEO (Principal Executive Officer) Date: November 17, 2010 By:/s/ Robert W. Carington, Jr. Robert W. Carington, Jr., CFO (Principal Financial Officer and Principal Accounting Officer) 12