STWC. Holdings, Inc. - Quarter Report: 2012 March (Form 10-Q)
Washington, D.C. 20549
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FORM 10-Q
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended March 31, 2012
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[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from ____________ to____________
Commission File No. 000-52825
4TH Grade Films, Inc.
(Exact name of the issuer as specified in its charter)
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Utah
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20-8980078
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(State or Other Jurisdiction of
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(I.R.S. Employer I.D. No.)
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incorporation or organization)
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1338 South Foothill Drive #163
Salt Lake City, UT 84108
(Address of Principal Executive Offices)
(801) 649-3519
(Issuer’s Telephone Number)
Check 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 (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 [X] 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 [X] 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 definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
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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 [X]
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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 [X]
1
APPLICABLE ONLY TO ISSUER INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the Registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act subsequent to the distribution of securities under a plan confirmed by a court. Yes [ ] No [ ]
Not applicable.
Indicate the number of shares outstanding of each of the Registrant’s classes of common equity, as of the latest practicable date.
The number of shares outstanding of each of the Registrant’s classes of common equity, as of the latest practicable date:
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Class
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Outstanding as of May 7, 2012
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Common Capital Voting Stock, $0.01 par value per share
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2,345,000 shares
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FORWARD LOOKING STATEMENTS
This Quarterly Report on Form 10-Q, Financial Statements and Notes to Financial Statements contains forward-looking statements that discuss, among other things, future expectations and projections regarding future developments, operations and financial conditions. All forward-looking statements are based on management’s existing beliefs about present and future events outside of management’s control and on assumptions that may prove to be incorrect. If any underlying assumptions prove incorrect, our actual results may vary materially from those anticipated, estimated, projected or intended.
PART I - FINANCIAL STATEMENTS
Item 1. Financial Statements.
March 31, 2012
C O N T E N T S
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Condensed Balance Sheets
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3
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Condensed Statements of Operations
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4
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Condensed Statements of Cash Flows
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5
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Notes to Condensed Financials Statements
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6
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2
4th Grade Films, Inc.
(A Development Stage Company)
Condensed Balance Sheets
March 31, 2012 and June 30, 2011
(Unaudited)
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3/31/2012
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6/30/2011
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ASSETS
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Assets
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Current Assets
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Cash
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$ | 508 | $ | 99 | ||||
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Accounts Receivable
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- | 1,019 | ||||||
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Total current assets
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508 | 1,118 | ||||||
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Film Costs
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12,307 | 12,412 | ||||||
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Total Assets
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$ | 12,815 | $ | 13,530 | ||||
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LIABILITIES AND STOCKHOLDERS' DEFICIT
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Liabilities
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Current Liabilities
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Accounts Payable
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$ | 3,000 | $ | 2,650 | ||||
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Accrued Liabilities - related party
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18,576 | 17,474 | ||||||
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Income Taxes Payable
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- | 100 | ||||||
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Total Current Liabilities
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21,576 | 20,224 | ||||||
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Long Term Liabilities
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Note Payable - Shareholder
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62,633 | 45,889 | ||||||
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Total Long Term Liabilities
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62,633 | 45,889 | ||||||
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Total Liabilities
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84,209 | 66,113 | ||||||
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Stockholders' Deficit
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Preferred Stock - 5,000,000 shares
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- | - | ||||||
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authorized at $0.01 par; 0 shares
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issued and outstanding (Series A
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Convertible)
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Common Stock - 50,000,000 shares
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authorized at $0.01 par; 2,345,000 and
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2,345,000 shares issued and outstanding, respectively
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23,450 | 23,450 | ||||||
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Additional Paid-in Capital
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123,762 | 123,762 | ||||||
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Deficit Accumulated during the development stage
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(218,606 | ) | (199,795 | ) | ||||
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Total Stockholders' Deficit
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(71,394 | ) | (52,583 | ) | ||||
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Total Liabilities and Stockholders' Deficit
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$ | 12,815 | $ | 13,530 | ||||
See accompanying notes to condensed financial statements.
3
4th Grade Films, Inc.
(A Development Stage Company)
Condensed Statements of Operations
For the Three and Nine Months Ended March 31, 2012 and 2011, and
For the Period from Inception [April 25, 2007] through March 31, 2012
(Unaudited)
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For the
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For the
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For the
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For the
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|||||||||||||||||
| Three | Three | Nine | Nine | Since | ||||||||||||||||
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Months
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Months
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Months
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Months
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Inception
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Ended
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Ended
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Ended
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Ended
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through
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3/31/2012
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3/31/2011
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3/31/2012
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3/31/2011
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3/31/2012
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Revenues
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$ | 106 | 250 | $ | 106 | 987 | $ | 1,125 | ||||||||||||
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Cost of Revenues
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106 | 250 | 106 | 987 | 1,125 | |||||||||||||||
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Gross Profit
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- | - | - | - | - | |||||||||||||||
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Operating Expenses
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Professional Expenses
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1,900 | 3,669 | 13,855 | 10,883 | 88,671 | |||||||||||||||
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SG&A
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218 | 8,502 | 883 | 10,810 | 31,390 | |||||||||||||||
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Impairment of unamortized film -
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development costs
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- | - | - | - | 86,717 | |||||||||||||||
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Total Operating Expenses
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2,118 | 12,171 | 14,738 | 21,693 | 206,778 | |||||||||||||||
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Net Loss from Operations
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(2,118 | ) | (12,171 | ) | (14,738 | ) | (21,693 | ) | (206,778 | ) | ||||||||||
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Interest Expense - Related Party
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(1,523 | ) | (986 | ) | (4,073 | ) | (2,356 | ) | (11,328 | ) | ||||||||||
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Net Loss Before Income Taxes
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(3,641 | ) | (13,157 | ) | (18,811 | ) | (24,049 | ) | (218,106 | ) | ||||||||||
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Provision for Income Taxes
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- | - | - | - | 500 | |||||||||||||||
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Net Loss
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$ | (3,641 | ) | $ | (13,157 | ) | $ | (18,811 | ) | $ | (24,049 | ) | $ | (218,606 | ) | |||||
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Loss Per Share - Basic and Diluted
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$ | (0.01 | ) | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.11 | ) | |||||
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Basic and Diluted Weighted
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Average Shares Outstanding
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2,345,000 | 2,345,000 | 2,345,000 | 2,345,000 | 1,973,556 | |||||||||||||||
See accompanying notes to condensed financial statements.
4
4th Grade Films, Inc.
(A Development Stage Company)
Condensed Statements of Cash Flows
For the Nine Months Ended March 31, 2012 and 2011, and
For the Period from Inception [April 25, 2007] through March 31, 2012
(Unaudited)
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For the
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For the
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Nine
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Nine
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Since
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Ended
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Ended
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through
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3/31/2012
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3/31/2011
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3/31/2012
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Cash Flows from Operating Activities
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Net Loss
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$ | (18,811 | ) | $ | (24,049 | ) | $ | (218,606 | ) | |||
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Adjustments to reconcile net loss to net cash
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Provided by/(Used in) by Operating Activities:
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Impairment of capitalized film development costs
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- | - | 86,717 | |||||||||
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Additions to Capitalized Film Costs
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- | - | (100,148 | ) | ||||||||
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Amortization of Film Costs
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106 | 987 | 1,125 | |||||||||
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(Increase)/Decrease in Accounts Receivable
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1,019 | (987 | ) | - | ||||||||
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(Increase)/Decrease in Prepaid Expenses
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- | 625 | - | |||||||||
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Increase/(Decrease) in Accounts Payable
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350 | 1,497 | 3,000 | |||||||||
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Increase/(Decrease) in Accrued Liabilities - related party
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1,102 | 675 | 18,576 | |||||||||
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Increase/(Decrease) in Income Taxes Payable
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(100 | ) | (100 | ) | - | |||||||
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Accrued Interest included in Notes Payable Balance
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4,073 | 2,356 | 11,327 | |||||||||
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Issued Common Stock in Exchange for Payment of Expenses
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- | - | 5,212 | |||||||||
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Net Cash Used in Operating Activities
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(12,261 | ) | (18,996 | ) | (192,797 | ) | ||||||
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Cash Flows from Financing Activities
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Proceeds from Loan from Shareholder
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12,670 | 18,181 | 71,305 | |||||||||
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Payments on Loan from Shareholder
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- | - | (20,000 | ) | ||||||||
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Issued Common Stock for Cash
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- | - | 52,000 | |||||||||
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Issued Preferred Stock for Cash
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- | - | 90,000 | |||||||||
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Net Cash from Financing Activities
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12,670 | 18,181 | 193,305 | |||||||||
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Net Increase (Decrease) in cash
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409 | (815 | ) | 508 | ||||||||
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Beginning Cash Balance
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99 | 830 | - | |||||||||
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Ending Cash Balance
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$ | 508 | $ | 15 | $ | 508 | ||||||
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Supplemental Schedule of Cash Flow Activities
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Cash paid for
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Interest
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$ | - | $ | - | $ | - | ||||||
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Income taxes
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$ | - | $ | - | $ | 500 | ||||||
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Common Stock Issued in Exchange for Payment of Expenses
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$ | - | $ | - | $ | 5,212 | ||||||
See accompanying notes to condensed financial statements.
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4th Grade Films, Inc.
(A Development Stage Company)
Notes to Condensed Financial Statements
March 31, 2012
(Unaudited)
NOTE 1 BASIS OF PRESENTATION
The accompanying financial statements have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. The interim financial statements reflect all adjustments, consisting of normal recurring adjustments which, in the opinion of management, are necessary to present a fair statement of the results for the period.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2011. The results of operations for the period ended March 31, 2012, are not necessarily indicative of the operating results for the full year.
NOTE 2 LIQUIDITY/GOING CONCERN
The Company has accumulated losses since inception, has minimal assets, and has a net loss of $3,641 for the three months ended March 31, 2012. Because the Company has accumulated losses since inception, has minimal liquid current assets, and has limited sales activity there is substantial doubt about the Company's ability to continue as a going concern. Management plans include continuing to develop, finance, produce, market and distribute films within the independent film community. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
NOTE 3 REVENUE RECOGNITION
The Company recognizes revenue from the distribution of its films when earned and reported to it by its distributor, Vanguard International Cinema. The Company recognizes revenues derived from its feature films net of reserves for returns, rebates and other incentives after the distributor has retained a distribution fee as a percentage of revenue.
Because a third party is the principal distributor of the Company’s films, the amount of revenue that is recognized from films in any given period is dependent on the timing, accuracy and sufficiency of the information received from the distributor. As is typical in the film industry, the distributor may make adjustments in future periods to information previously provided to the Company that could have a material impact on the Company’s operating results in later periods. Furthermore, management may, in its judgment, make material adjustments in future periods to the information reported by the distributor to ensure that revenues are accurately reflected in the Company’s financial statements. To date, the distributor has not made subsequent, nor has the Company made, material adjustments to information provided by the distributor and used in the preparation of the Company’s historical financial statements.
NOTE 4 DIRECTOR COMPENSATION EXPENSES / RELATED PARTY TRANSACTIONS
As of March 31, 2012, James Doolin, a shareholder of the Company and a former officer and director, loaned the Company an aggregate of $44,742 on an unsecured line of credit. The total funding available to the Company under the line of credit is $50,000. The line accrues interest at 10% per annum and matures on December 31, 2014. As of March 31, 2012, the outstanding balance owed to the shareholder was $54,474 including accrued interest. For the three months ended March 31, 2012 the Company accrued interest of $1,325 on the line.
6
As of March 31, 2012, Michael Doolin, a shareholder of the Company, loaned the Company an aggregate of $6,563 on an unsecured line of credit. The total funding available to the Company under the line of credit is $50,000. The line accrues interest at 10% per annum and matures on December 31, 2014. As of March 31, 2012, the outstanding balance owed to the shareholder was $8,159, including accrued interest. For the three months ended March 31, 2012 the Company has accrued interest of $198 on the line.
As of March 31, 2012, approximately 77.9% of the Company's issued and outstanding common stock is controlled by one family giving them effective power to control the vote on substantially all significant matters without the approval of other stockholders.
The Company rents office space from a shareholder of the Company at a cost of $75 per month. The Company has accrued $4,050 in unpaid rental fees from this arrangement.
NOTE 5 FILM COSTS
Film costs consisted of the following as of March 31, 2012 and June 30, 2011:
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March 31, 2012
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June 30, 2011
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Opening Balance
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$ | 12,412 | $ | 24,825 | ||||
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Additions
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- | - | ||||||
| $ | 12,412 | $ | 24,825 | |||||
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Amortization
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(106 | ) | (1,019 | ) | ||||
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Impairment
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- | (11,394 | ) | |||||
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Ending Balance
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$ | 12,307 . | $ | 12,412 . | ||||
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Development/Preproduction
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$ | - | $ | - | ||||
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Production
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- | - | ||||||
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Completed not released
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- | - | ||||||
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Completed released
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12,307 | 12,412 | ||||||
| $ | 12,307 | $ | 12,412 | |||||
The Company is unable to estimate the expected amortization over the next twelve months as international distribution is currently being evaluated.
NOTE 6 RECENT ACCOUNTING PRONOUNCEMENTS
The Company has reviewed all recently issued, but not yet adopted, accounting standards in order to determine their effects, if any, on its results of operation, financial position or cash flows. Based on that review, the Company believes that none of these pronouncements will have a significant effect on its financial statements.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Forward-looking Statements
Statements made in this Quarterly Report which are not purely historical are forward-looking statements with respect to the goals, plan objectives, intentions, expectations, financial condition, results of operations, future performance and our business, including, without limitation, (i) our ability to raise capital, and (ii) statements preceded by, followed by or that include the words “may,” “would,” “could,” “should,” “expects,” “projects,” “anticipates,” “believes,” “estimates,” “plans,” “intends,” “targets” or similar expressions.
Forward-looking statements involve inherent risks and uncertainties, and important factors (many of which are beyond our control) that could cause actual results to differ materially from those set forth in the forward-looking statements, including the following, general economic or industry conditions, nationally and/or in the communities in which we may conduct business, changes in the interest rate environment, legislation or regulatory requirements, conditions of the securities markets, our ability to raise capital, changes in accounting principles, policies or guidelines, financial or political instability, acts of war or terrorism, other economic, competitive, governmental, regulatory and technical factors affecting our current or potential business and related matters.
Accordingly, results actually achieved may differ materially from expected results in these statements. Forward-looking statements speak only as of the date they are made. We do not undertake, and specifically disclaim, any obligation to update any forward-looking statements to reflect events or circumstances occurring after the date of such statements.
Plan of Operation
The Company’s plan of operations for the next 12 months is to continue with its current efforts in the independent film production arena. 4th Grade has been involved in the film production primarily focused on developing, financing, producing, marketing and distributing film content within the independent film market.
The Company will continue to seek opportunities developing, financing, producing, marketing and distributing additional media content. During the quarter ended March 31, 2012, the Company continued it’s pre-production of two film projects. Both projects are feature length films, and the screenplays have been developed in-house by Shane Thueson, the Company’s President. The two screenplays are “Working Late” and “Devil Music” (working title). The Company’s Board of Directors have reviewed the scripts and believe that “Devil Music” needs continued revisions. To increase the screenplay’s potential as marketable film projects within the film industry the screenplay will be revised to improve dramatization, clarity, structure, characters, dialogue, and overall style. The Board anticipates that both screenplays will be finalized shortly and the Company will begin marketing both screenplays.
The Company plans to market the screenplays to contacts throughout the film community to procure interest in one or both of the projects. Over the past few years the Company’s management has developed a network and database of contacts within film studios, productions companies, literary agencies, and management companies, to whom it will concentrate its marketing efforts for these two screenplays. The Board of Directors recently reviewed its database of contacts and has begun work to revise and add contacts that the Company believes may be interested in representing, acquire or produce one or both of the Company’s current screenplay projects. Management will also use the Company’s film, Four Stories of St. Julian, to help promote its projects as a demonstration of the Company’s capabilities. The Company believes that using the completed screenplays and the completed film is the best resource at this time to obtain financing and ultimately to begin production of one or both of these future projects.
The Company does not currently have any projects in production or post-production, but as mentioned above, has commenced pre-production on two film projects. The Company’s management may advance the Company monies, not to exceed $100,000, to finance future projects or fund working capital requirements. The monies advanced from the Company’s management will be non-secured loans to the Company. The loan will be on terms no less favorable to the Company than would be available from a commercial lender in an arm’s length transaction. The Company is also seeking financing from outside sources to fund future projects. These funds may be raised as either debt or equity, but management does not have any plans or relationships currently in place and can provide no assurance that it will be able to obtain such funds.
8
The Company has accumulated losses since inception and has not been able to generate profits from operations. As mentioned above, the Company signed a distribution agreement with Vanguard Cinema to distribute St. Julian through various media channels throughout the United States, Puerto Rico and Canada. Effective February 1, 2011 the Company signed a foreign distribution agreement to distribute St. Julian to all other worldwide markets. The Company received $106 in revenue for the quarter ended March 31, 2012. The Company can provide no assurance that revenue generated will be sufficient to fund future operating activities. Operating capital, including the proceeds to finance the Film has been raised through the Company’s shareholders and management.
The Company’s plan of operation for the next twelve months will continue to be managed and operated solely by the Company’s officers and directors. Other than the Company officers and directors the Company does not have any employees nor does it anticipate hiring any employees over the next twelve months.
The Company has not been able to generate positive cash flow from operations since inception. This along with the above mentioned factors raise substantial doubt about the Company’s ability to continue as a going concern.
The Company’s common stock currently trades on the Over-the-Counter Bulletin Board (OTCBB) under the symbol FHGR.
Results of Operations
Three Months Ended March 31, 2012 compared to Three Months Ended March 31, 2011
Operating Results – Overview
The three month period ended March 31, 2012, resulted in a net loss of $3,641. The Basic Loss per Share for the three month period ended March 31, 2012 was ($0.01). Details of changes in revenues and expenses can be found below.
Operating Results – Revenue
In the quarter ended March 31, 2012 the Company generated $106 in revenue from the distribution agreement the Company has with its film St. Julian. The Company generated a net loss of $3,641 for the quarter ended March 31, 2012. For the quarter ended March 31, 2011 the Company generated $250 in revenue and a net loss of $13,157. The Company will not provide any forecasts of future earnings or profitability. The future success of the Company cannot be ascertained with any certainty. Through two different distribution agreements with Vanguard Cinema the Company has licensed the rights of St. Julian to be distributed through various media channels throughout the world. The Company has received nominal revenue from this distribution agreement, and can provide no assurance or forecast of revenue that will be generated from this agreement or any further productions in the future.
Operating Results – Cost of Goods Sold / Cost of Revenues
The Company generated $106 in revenue during the quarter ended March 31, 2012, and $106 in cost of revenue. The Company incurred $250 in revenue and cost of revenue for the quarter ended March 31, 2011.
Operating Results – Operating Expenses
Operating expense for the three month period ended March 31, 2012, was $2,118 compared with $12,171 for the three month period ended March 31, 2011. Operating expenses included professional fees, and general administrative expenses.
The Company's professional fees include accounting, legal fees and EDGAR filing fees.
Accounting expenses incurred in the three month period ended March 31, 2012 totaled $1,500 and $1,500 for the period ended March 31, 2011.
9
The Company incurred $0 in legal fees in the quarter ended March 31, 2012 compared to $2,169 in legal fees in the quarter ended March 31, 2011. The increase in legal fees for the quarter ended March 31, 2011 were due to legal opinions rendered regarding the Company’s DTC application and legal review of other documents. The Company incurred $400 in EDGAR filing fees in the quarter ended March 31, 2012 compared to $0 in the quarter ended March 31, 2011. The increase in EDGAR filing fees for the quarter ended March 31, 2012 can be attributed to the Company’s implementation of XBRL.
Operating Results – Interest Expenses
The Company incurred $1,523 in interest expense for the quarter ended March 31, 2012 and $986 in interest expense for the quarter ended March 31, 2011. The increase in interest expense for the quarter ended March 31, 2012, was attributed to an increase in the outstanding loan balance from James Doolin and Michael Doolin, shareholders of the Company.
Nine Months Ended March 31, 2012 compared to Nine Months Ended March 31, 2011
Operating Results – Overview
The nine month period ended March 31, 2012, resulted in a net loss of $18,811. The Basic Loss per Share for the nine month period ended March 31, 2012 was ($0.01). Details of changes in revenues and expenses can be found below.
Operating Results – Revenue
In the nine months ended March 31, 2012 the Company generated $106 in revenue from the distribution agreement the Company has with its film St. Julian. The Company generated a net loss of $18,811 for the nine months ended March 31, 2012. For the nine months ended March 31, 2011 the Company generated $987 in revenue and a net loss of $24,049. The Company will not provide any forecasts of future earnings or profitability. The future success of the Company cannot be ascertained with any certainty. Through two different distribution agreements with Vanguard Cinema the Company has licensed the rights of St. Julian to be distributed through various media channels throughout the world. The Company has received nominal revenue from this distribution agreement, and can provide no assurance or forecast of revenue that will be generated from this agreement or any further productions in the future.
Operating Results – Cost of Goods Sold / Cost of Revenues
The Company generated $106 in revenue during the nine months ended March 31, 2012, and incurred $106 in cost of revenue. The Company incurred $987 in revenue and cost of revenue for the nine months ended March 31, 2011.
Operating Results – Operating Expenses
Operating expense for the nine month period ended March 31, 2012, was $14,738 compared with $21,693 for the nine month period ended March 31, 2011. Operating expenses included professional fees, and general administrative expenses.
The Company's professional fees include accounting, legal fees and EDGAR filing fees.
Accounting expenses incurred in the nine month period ended March 31, 2012 totaled $10,885 and $8,288 for the period ended March 31, 2011. The increase in accounting fees can be attributed to increased oversight due to implementation of XBRL and higher rate charged by the accountant.
10
The Company incurred $427 in legal fees in the nine months ended March 31, 2012 compared to $2,596 in legal fees in the nine months ended March 31, 2011. The legal fees for the quarter ended March 31, 2011 were due to legal opinions rendered regarding the Company’s DTC application and legal review of other documents. The Company incurred $2,463 in EDGAR filing fees in the nine months ended March 31, 2012 compared to $0 in the nine months ended March 31, 2011. The increase in EDGAR filing fees for the nine months ended March 31, 2012 can be attributed to the Company’s implementation of XBRL.
The Company estimates annual accounting expenses to be approximately $11,000. Management estimates legal expenses for the fiscal year to be approximately $2,500.
Operating Results – Interest Expenses
The Company incurred $4,073 in interest expense for the nine months ended March 31, 2012 and $2,356 in interest expense for the nine months ended March 31, 2011. The increase in interest expense for the nine months ended March 31, 2012, was attributed to an increase in the outstanding loan balance from James Doolin and Michael Doolin, shareholders of the Company.
Liquidity and Capital Requirements
As of March 31, 2012, the Company had current assets of $508 and $21,576 in current liabilities. The Company had no inventory as of March 31, 2012, but has capitalized film development costs of $12,307.
The Company has a cash balance of $508 as of March 31, 2012. Management does not anticipate that the Company's existing cash balance will cover the Company's general expenses of operation for the next twelve months. However, the Company’s management will continue to advance the Company monies not to exceed $100,000, as loans to the Company. The loan will be on terms no less favorable to the Company than would be available from a commercial lender in an arm's length transaction. Currently two shareholders, James Doolin and Michael Doolin, have loaned the Company money. James Doolin has loaned the Company approximately $44,742 in principal. Michael Doolin has loaned the Company $6,563 in principal. If the Company needs funds in excess of $100,000, it will be up to the Company's management to raise such monies. These funds may be raised as either debt or equity, but management does not have any plans or relationships currently in place to raise such funds. The Company can provide no assurances that if additional funds are needed the Company will be able to obtain financing.
Off-balance Sheet Arrangements
None; not applicable
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not required.
Item 4. Controls and Procedures.
Disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in rules and forms adopted by the Securities and Exchange Commission, and that such information is accumulated and communicated to management, including the President and Vice President, to allow timely decisions regarding required disclosures.
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Under the supervision and with the participation of our management, including our President and Vice President, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). Based upon that evaluation, our President and Vice President concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective.
Changes in Internal Control Over Financial Reporting
During the most recent fiscal quarter covered by this Quarterly Report, there has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
None; not applicable.
Item 1A. Risk Factors
Not required.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None; not applicable.
None; not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
None; not applicable.
None; not applicable.
Item 6. Exhibits
(a) Exhibits
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Identification of Exhibit
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31.1
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Certification of Shane Thueson Pursuant to Section 302 of the Sarbanes-Oxley Act.
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31.2
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Certification of Nicholl Doolin Pursuant to Section 302 of the Sarbanes-Oxley Act.
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Certification of Shane Thueson and Nicholl Doolin Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act.
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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 Extension Schema*
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101.CAL
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XBRL Taxonomy Extension Calculation Linkbase*
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101.DEF
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XBRL Taxonomy Extension Definition Linkbase*
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101.LAB
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XBRL Taxonomy Extension Label Linkbase*
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101.PRE
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XBRL Taxonomy Extension Presentation Linkbase*
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* Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed “furnished” and not “filed” or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, or deemed “furnished” and not “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, and otherwise is not subject to liability under these sections.
(b) Reports on Form 8-K
Form 8-K – Current Report filed on or about March 6, 2012 regarding the resignation of James Doolin as a director and the President and the election of Nicholl Doolin to fill the vacancy on the Board of Directors and Shane Thueson, the Company’s Vice President and a director, appointment as President and Principal Executive Officer. Nicholl Doolin was appointed Vice President and Principal Financial Officer.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Issuer has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
4TH GRADE FILMS, INC.
(Issuer)
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Date:
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May 7, 2012
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By:
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/s/Shane Thueson
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Shane Thueson, Principal Executive Officer, President & Director
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Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Quarterly Report has also been signed below by the following person on behalf of the Registrant and in the capacities and on the dates indicated.
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Date:
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May 7, 2012
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By:
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/s/Nicholl Doolin
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Nicholl Doolin, Principal Financial Officer, Vice President & Director
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