LINGERIE FIGHTING CHAMPIONSHIPS, INC. - Quarter Report: 2014 November (Form 10-Q)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
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(Mark One)
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☒
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QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED November 30, 2014
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☐
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TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
FOR THE TRANSITION PERIOD FROM __________ TO __________
COMMISSION FILE NUMBER: 333-148005
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CALA ENERGY CORP.
(Exact name of registrant as specified in its charter)
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Nevada
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20-8009362
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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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777 South Post Oak Lane
One Riverway
Suite 1700, PMB #1554
Houston, TX 77056
(Address of principal executive offices, Zip Code)
(281) 667-9360
(Registrant's telephone number, including area code)
Copies to:
Mark Crone, Esq.
CKR Law LLP
1330 Avenue of the Americas
New York, New York 10019
(p) 212.400.6900
(f) 212.400.6901
Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ☒ Yes ☐ 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 definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
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Large accelerated filer ☐
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Accelerated filer ☐
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Non-accelerated filer ☐
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Smaller reporting company ☒
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☒ No ☐
The number of shares of registrant's common stock outstanding, as of November 30, 2014: 339,757,357
CALA ENERGY CORP.
Form 10-Q
For the Quarter Ended November 30, 2014
TABLE OF CONTENTS
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Page
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Item 1.
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3
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Item 2.
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Item 3.
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Item 4.
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Item 6.
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FORWARD LOOKING STATEMENTS
This report contains forward-looking statements regarding our business, financial condition, results of operations and prospects. Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates" and similar expressions or variations of such words are intended to identify forward-looking statements, but are not deemed to represent an all-inclusive means of identifying forward-looking statements as denoted in this report. Additionally, statements concerning future matters are forward-looking statements.
Although forward-looking statements in this report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks and uncertainties and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include, without limitation, those specifically addressed under the headings "Risks Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our report on Form 10-K for the year ended February 28, 2014, in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in this Form 10-Q and in other reports that we file with the SEC. You are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this report.
We file reports with the SEC. The SEC maintains a website (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including us. You can also read and copy any materials we file with the SEC at the SEC's Public Reference Room at 100 F Street, NE, Washington, DC 20549. You can obtain additional information about the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
We undertake no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this report, except as required by law. Readers are urged to carefully review and consider the various disclosures made throughout the entirety of this quarterly report, which are designed to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.
CALA ENERGY CORP.
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November 30,
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February 28,
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2014
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2014
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(Unaudited)
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ASSETS
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Current assets
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Cash
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$
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1,810
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$
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35,607
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Total Assets
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$
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1,810
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$
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35,607
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LIABILITIES AND STOCKHOLDERS' EQUITY
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Current liabilities
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Other current liabilities
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$
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8,100
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$
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215,400
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Total liabilities
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8,100
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215,400
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Stockholder's deficit
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Common stock, par value $.0001 per share, 400,000,000 shares authorized at November 30,2014
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and February 28, 2014, and 339,757,357 shares issued and outstanding.
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339,757
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339,757
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Additional paid in capital
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8,452,945
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8,182,945
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Accumulated deficit
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(8,798,992
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(8,702,495
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)
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Total stockholders' deficit
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(6,290
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(179,793
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Total liabilities and stockholders' deficit
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$
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1,810
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$
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35,607
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The accompanying notes are an integral part of the unaudited condensed financial statements.
3
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Nine months ended
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Three months ended
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| November 30, | November 30, | |||||||||||||||
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2014
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2013
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2014
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2013
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Selling, general and administrative expenses
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$
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(96,497
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)
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$
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(195,726
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$
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(9,477
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$
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(61,650
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)
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Net Loss
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$
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(96,497
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$
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(195,726
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$
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(9,477
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$
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(61,650
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Net loss per share - basic and diluted
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$
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(0.00)
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$
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(0.00)
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$
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(0.00)
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$
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(0.00)
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Weighted average shares - basic and diluted
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339,757,357
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339,757,357
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339,757,357
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339,757,357
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The accompanying notes are an integral part of the unaudited condensed financial statements.
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Nine months ended
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2014
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2013
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Cash Flows from operating activities:
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Net (loss)
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$
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(96,497
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$
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(195,726
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)
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Adjustments to reconcile net loss to net cash used in operating activities provided by (used in)
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operating activities:
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Increase/(decrease) in liabilities:
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Other current liabilities
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62,700
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76,052
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Net cash from/(used) in operating activities
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(33,797
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(119,674
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Cash flows from financing activities:
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Proceeds (Repayment) from related parties
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-
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(125,100
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)
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Proceeds from issuance of common stock
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-
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300,000
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Net cash provided by financing activities
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-
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174,900
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Net increase (decrease) in cash and cash equivalents
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(33,797
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55,226
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Cash, beginning of the period
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35,607
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5,960
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Cash, end of the period
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$
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1,810
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$
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61,186
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Supplemental disclosures of cash flow for non-cash transaction:
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Issuances of common stock due to conversion of preferred stock
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$
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5,000
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Contribution to capital of accrued salary by a related party
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$
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270,000
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The accompanying notes are an integral part of the unaudited condensed financial statements.
5
CALA ENERGY CORP. AND SUBSIDIARY
NOVEMBER 30, 2014
NOTE 1 – NATURE OF OPERATIONS AND BASIS OF PRESENTATION
Cala Energy Corp. (the "Company") is a Nevada corporation incorporated on November 29, 2006 under the name Sparking Events, Inc. The Company has experienced several corporate name changes: Xodtec Group USA, Inc. in June 2009, Xodtec LED, Inc. in May 2010 and Cala Energy Corp. in September 2013.
On July 10, 2013, the Company formed Cala Energy International Corp. (the Subsidiary), a wholly-owned subsidiary, under the laws of the Nevada. The Subsidiary's charter has been revoked and the entity was never funded.
During September 2013, the Company approved creating an Indonesian subsidiary under the laws of the Republic of Indonesia in which the Company will have a 95% interest. As of August 31, 2014, the Company had abandoned the application submitted to the Indonesian government due to inactivity and unusual length in application process time.
Basis of Presentation
The accompanying unaudited interim condensed financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and are presented in accordance with the requirements of Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, these interim financial statements do not include all of the information and notes required by GAAP for complete financial statements. These interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the fiscal year ended February 28, 2014 included in the Company's Form 10-K. In the opinion of management, the interim financial statements included herein contain all adjustments, including normal recurring adjustments, considered necessary to present fairly the Company's financial position, the results of operations and cash flows for the periods presented. The operating results and cash flows for the interim periods presented herein are not necessarily indicative of the results to be expected for any other interim period or the full year.
The accompanying financial statements have been prepared on a going concern basis which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the unaudited condensed financial statements, during the nine months ended November 30, 2014, the Company generated no revenue, incurred an operating loss and a net loss of approximately $96,497and had a negative cash flow in operating activities amounting to approximately $33,797. As of November 30, 2014, the Company's accumulated deficit was approximately ($8,798,992), substantially all of which was generated by operations which have been sold off. These factors raise substantial doubt about the Company's ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
NOTE 2 – CONTRIBUTION TO CAPITAL BY RELATED PARTY
During the quarter our chief executive officer decided to forgive the accumulated salary that had not been paid to him. This accumulated salary totaled $270,000 and the forgiveness of this amount is treated as a contribution to capital for the company as of November 30, 2014.
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The following discussion of the results of our operations and financial condition should be read in conjunction with our financial statements and the related notes, which appear elsewhere in this report. The following discussion includes forward-looking statements. For a discussion of important factors that could cause actual results to differ from results discussed in the forward-looking statements, see "Forward Looking Statements."
Overview
Prior to July 13, 2012, through our subsidiaries we were engaged in design, marketing and selling of advanced lighting solutions which are designed to use less energy and have a longer life than traditional incandescent, halogen, fluorescent light sources. We were not able to generate profits from this business and, for the several years prior to July 13, 2012, we financed our operations primarily through funds provided by our officers and directors.
On July 13, 2012, pursuant to agreements with one of our former directors, we transferred the stock in our subsidiaries and our 35% ownership in an inactive company to the former director in exchange for cancellation of debt totaling $100,000. As a result of the transfer of the subsidiaries, we were no longer engaged in the lighting solutions business. We transferred the stock of the subsidiaries because we felt that, as a result of our continuing losses and our inability to develop the business as we had planned, it was not in our best interest to continue in this business.
Following the sale of our subsidiaries in the lighting solutions business, we were not engaged in any business activity. We had initially planned to focus on providing an internet based security system to companies that would like to replace security guards with video cameras that are monitored 24/7. Through February 28, 2013, we did not generate any revenue from this new proposed business, and we discontinued our efforts with respect to that business.
Subsequent to February we planned to provide enhanced oil recovery services and supplying materials to existing operators of oil fields in Indonesia. In this connection, we approved creating an Indonesian subsidiary under the laws of Republic of Indonesia in which we would have a 95% interest. As of August 31, 2014, we abandoned the application submitted to Indonesia government, and we are evaluating other potential business opportunities. We cannot assure you that we will be able to engage in any business activities or that any business activities in which we may engage will be profitable.
The discussion and analysis of our financial condition and results of operations is based upon our financial statements that have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities. On an on-going basis, we evaluate our estimates including the allowance for doubtful accounts, the salability and recoverability of our products, income taxes and contingencies. We base our estimates on historical experience and on other assumptions that we believe to be reasonable under the circumstances, the results of which form our basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
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RESULTS OF OPERATIONS
Three and Nine months Ended November 30, 2014 and 2013
We had no revenue for the three and nine months ended November 30, 2014 or 2013. General and administrative expenses, which consisted primarily of professional fees and executive compensation, were approximately $9,477, for the quarter ended November 30, 2014, as compared with approximately $61,650 for the quarter ended November 30, 2013, a decrease of $52,173 or approximately 85%. Executive compensation was $0 for the quarter ended November 30, 2014 and $30,000 for the quarter ended November 30, 2013. For the nine months ended November 30,2014, general and administrative expenses, which consisted primarily of professional fees and executive compensation, including $60,000 of compensation for our chief executive officer, were approximately $96,497, as compared with approximately $195,000 for the nine months ended November 30, 2013, a decrease of approximately $98,500, or 51%.
As a result of the foregoing, our net loss for the three months ended November 30, 2014 was approximately $9,477, or $0.00 per share, as compared with a loss of approximately $62,000, or $0.00 per share, for the three months ended November 30, 2013. For the nine months ended November 30, 2014, our net loss was approximately $96,497, or $0.00 per share, as compared with a net loss of approximately $196,000, or $0.00 per share.
Liquidity and Capital Resources
Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations and otherwise operate on an ongoing basis. At November 30, 2014, we had a cash balance of approximately $1,810. We had a working capital deficiency of $6,290 at November 30, 2014, as compared with a working capital deficiency of approximately $180,000 at February 28, 2014.
During the nine months ended November 30, 2014, we used approximately $33,797 in our operations, which reflected our net loss of approximately $96,497, representing our general and administrative expenses, and an approximately $62,700 change in current liabilities. This decrease in current liabilities was due to a forgiveness of $270,000 related to executive compensation that the company and the executive agreed to reverse and is no longer a liability of the company and treated as a contribution to capital instead.
For the nine months ended November 30, 2013, we used approximately $120,000 in our operations, which reflected our net loss of approximately $196,000, representing our general and administrative expenses, and an approximately $76,000 decrease in current liabilities. Cash flow from financing activities was approximately $175,000, consisting of $300,000 proceeds from the sale of stock, net of a payment of the loan to the chief executive officer of $125,100.
We believe that, if we engage in any significant business activities, we will require significant financing for our operations. Because of the absence of both operating activities and an actively traded stock, we may have difficulty raising additional funds through the sale of our equity or debt securities.
The accompanying consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.
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Not required for smaller reporting companies.
Our management evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of November 30, 2014.
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures refer to controls and other procedures designed to ensure that information required to be disclosed in the reports we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to our management, including our chief executive and financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating and implementing possible controls and procedures.
Management conducted its evaluation of disclosure controls and procedures under the supervision of our chief executive and financial officer. Based on that evaluation, our chief executive and financial officer concluded that because of the material weaknesses in internal control over financial reporting described in our report on Form 10-K for the year ended February 28, 2014. Our disclosure controls and procedures were not effective as of November 30, 2014.
Changes in Internal Controls over Financial Reporting
There were no changes (including corrective actions with regard to significant deficiencies or material weaknesses) in our internal controls over financial reporting that occurred during the quarter ended November 30, 2014 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. We anticipate that, with our proposed entry into a new business, we will seek to implement effective controls over financial reporting, although we recognize that, in view of the small number of employees, segregation of duties may be difficult. As of the date of this report, we have one part-time employee.
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Exhibit
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Description of the Exhibit
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31.1
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32.1
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101.INS
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XBRL Instance Document
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101.SCH
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XBRL Taxonomy Schema
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101.CAL
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XBRL Taxonomy Calculation Linkbase
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101.DEF
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XBRL Taxonomy Definition Linkbase
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101.LAB
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XBRL Taxonomy Label Linkbase
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101.PRE
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XBRL Taxonomy Presentation Linkbase
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9
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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CALA ENERGY CORP.
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Date: January 14, 2015
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/s/ Terry Butler
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Terry Butler
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Chief Executive and Financial Officer
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10