Attached files
file | filename |
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EX-31 - Orpheum Property Inc | ex31ty.htm |
EX-32 - Orpheum Property Inc | ex32ty.htm |
EX-32 - Orpheum Property Inc | ex32hales.htm |
EX-31 - Orpheum Property Inc | ex31hales.htm |
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[ x ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2009
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 for the transition period from
____________ to ______________
Commission File Number 0-30595
PACIFIC LAND & COFFEE CORPORATION
(Exact Name of small business issuer as specified in the charter)
Delaware 33-0619256
(State or other Jurisdiction of ( IRS Employer Identification No.)
Incorporation or Organization)
1818 Kahai St., Honolulu, HI 96819
(Address of Principal Executive Offices)
(808) 478-9894
(Issuer’s Telephone Number, including Area Code)
Indicate by check mark whether the Registrant (i) 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 shorter period that the Registrant was required to file such reports) and (ii) has been
Subject to such filing requirements for the past 90 days.
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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting Company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer ¨ Accelerated Filer ¨
Non-Accelerated Filer ¨ Smaller reporting Company x
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).
Yes [ ] No [X]
Indicate the number of shares outstanding of each of the issuer’s classes of common equity, as of
the latest practicable date.
Common Stock, $.001 par value 12,744,888
Title of Class Number of Shares outstanding
at September 30, 2009
______________________________________________________________________________________________________________________________________
PACIFIC LAND & COFFEE CORPORATION
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET
ASSETS
September 30,
March 31,
2009
2009
Current Assets
Unaudited
Audited
Cash in Bank
$
4,328
$
10,313
Accounts allowance for doubtful accounts
of $4,835 and $6,188
22,979
26,518
Other Receivable
0
1,064
Income Tax Receivable
0
30,494
Total Current Assets
$
27,307
$
68,389
Fixed Assets
Equipment
$
189,157
$
189,158
Less: Accumulated Depreciation
(143,920)
(130,559)
Total Fixed Assets
45,237
58,599
Other Assets
Rent Deposit
5,408
5,408
Total Other Assets
5,408
5,408
TOTAL ASSETS
$
77,952
$
132,396
LIABILITIES & STOCKHOLDERS’ DEFICIT
Current Liabilities
Accounts Payable
$
137,848
$
152,165
Credit Line
24,690
24,690
Payroll & Excise Taxes Payable
15,519
15,657
Payable – Jones Day
552,505
552,505
Current Portion of Long Term Debt – Note 5
14,538
13,832
Shareholder Advances
302,462
227,150
Total Current Liabilities
1,047,562
985,999
Long Term Liabilities
Note Payable – net of current portion – Note 5
1,278
8,728
Total Long Term Liabilities
1,278
8,728
Stockholders’ Deficit
Preferred Stock – 1,000,000 shares authorized;
par value of $.001 per share, 900,000 shares
issued and outstanding
900
900
Common Stock – 50,000,000 shares authorized;
par value of $.001 per share; 12,774,888 shares
issued and outstanding
12,775
12,775
Capital in excess of par value
631,067
631,067
Deficit accumulated during the development stage
(1,502,139)
(1,400,034)
Total Pacific Land and Coffee Stockholders’ Equity (Deficit)
(857,397)
(755,292)
Non-Controlling Interest
(113,491)
(107,039)
Total Stockholders’ Deficit
(970,888
(862,331)
TOTAL LIABILITIES & STOCKHOLDERS’ DEFICIT
$
77,952
$
132,296
The accompanying notes are an integral part of the financial statements.
2
________________________________________________________________________________________________________________________
PACIFIC LAND & COFFEE CORPORATION
(A Development Stage Company)
CONSOLIDATED STATEMENT OF OPERATIONS
For the Three and Six Months Ended September 30, 2009 and 2008
and for the Period from Inception (February 14,2003) Through September 30, 2009
February 14,
For the Three Months Ended
For the Six Months Ended
2003, Through
September 30,
September 30,
September 30,
Revenues
2009
2008
2009
2008
2009
Sales
$
104,385
$
70,189
$
200,001
$
148,194
$
999,067
Total Revenues
104,385
70,189
200,001
148,194
999,067
Cost of Sales
63,423
47,312
135,718
91,873
651,296
Gross Profit
40,962
22,877
64,283
56,321
347,771
General & Administrative Expenses
79,246
198,540
170,583
360,902
1,552,126
Definitive-lived Intangible Impairment
Charges
0
0
0
0
640,893
Total Operating Expenses
79,246
198,540
170,583
360,902
2,193,019
Net Loss from Operationgs
(38,284)
(175,663)
(106,300)
(304,581)
(1,845,248)
Other Income (Expense):
Interest Expense
(1,678)
(649)
(2,257)
(1,479)
(39,390)
Total Other Income (Expense)
(1,678)
(649)
(2,257)
(1,479)
(39,390)
Net Loss before Income Taxes
(39,962)
(176,312)
(108,557)
(306,060)
(1,884,638)
Provision for Income Tax (Benefit)
0
0
0
0
(75,374)
Net Income (Loss)
(39,692)
(176,312)
(108,557)
(306,060)
(1,809,264)
Net Income Attributable to
Non-Controlling Interest
787
25,290
6,452
47,461
307,125
Net Loss
$
(39,175)
$
(151,022)
$
(102,105)
$
(258,599)
$
(1,502,139)
Net Loss per Share
$
(0.003)
$
(.012)
$
(0.008)
$
(0.020)
$
(0.258)
Weighted Average Shares Outstanding
12,774,888
12,760,420
12,774,888
12,677,540
5,833,305
The accompanying notes are an integral part of the financial statements.
3
________________________________________________________________________________________________________________
PACIFIC LAND & COFFEE CORPORATION
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Six Months Ended September 30, 2009 and 2008
and for the Period from Inception (February 14,2003) Through September 30, 2009
February 14,
For the Six Months Ended
2003, Through
September 30,
September 30,
Cash Flows from Operating Activities
2009
2008
2009
Net Loss
$
(102,105)
$
(258,599)
$
(1,502,139)
Adjustments to reconcile net loss to net cash provided by operating activities
Depreciation & Amortization
13,361
60,651
182,829
Net loss (gain) on disposal of leasehold improvements
--
--
809
Definite-lived intangible impairment charges
--
--
640,893
Non-controlling interest adjustment
(6,452)
(47,461)
(307,125)
Common Stock Issued for payment of fees
--
--
128,783
Contribution of interest on advances by officer
--
--
6,796
Contributed Capital – noncash fair market value of start-up
and organization services and costs
--
--
1,000
Change in operating assets and liabilities
Accounts receivable, net
3,539
3,616
8,521
Related party receivables
--
--
1,039
Other receivable
1,064
--
29,600
Income tax receivables
309,494
44,880
0
Rent Deposit
--
--
5,248
Accounts payable
(14,317)
48,751
(93,479)
Jones-Day payable
--
--
82,266
Payroll and excise tax payable
(137)
4,778
15,242
Accrued interest
--
--
4,649
Net Cash Used by Operating Activities
(74,533)
(143,384)
(795,339)
Cash Flow from Investing Activities
0
0
0
Net Cash Used by Investing Activities
0
0
0
Cash Flow from Financing Activities
Net proceeds from credit line
--
4,737
221
Proceeds from the sale of stock/contributed cash
--
--
471,480
Proceeds from notes payable – related party
--
--
49.700
Proceeds from advances from officer (net)
75,312
141,500
337,002
Repayments of long term note payable
(6,744)
(7,391)
(34,998)
Repayments of note payable – related party
--
--
(328,278)
Net Cash Provided (Used) by Financing Activities
68,568
138,846
495,127
Net Increase (Decrease) in Cash
(5,985)
(4,538)
(300,212)
Beginning Cash Balance
10,313
18,542
0
Cash acquired in merger with Coscina Brothers Coffee Co.
0
0
1,418
Cash acquired in merger with Integrated Coffee Technologies
0
0
303,122
Ending Cash Balance
$
4,328
$
14,004
$
4,328
Supplemental Disclosure of Cash Flow Information
Cash paid during the year for interest
1,677
3,573
Cash paid during the year for income taxes
Business Acquisitions
Fair value of assets acquired
$
--
$
--
$
1,275,343
Issuance of debt/assumption of liabilities
--
--
(1,170,013)
Common Stock issued at Acquisition
--
--
(76,441)
Non-Controlling Interest
--
--
(28,889)
The accompanying notes are an integral part of the financial statements.
4
____________________________________________________________________________________________________________________
Pacific Land and Coffee Corporation
(A Development Stage Company)
Notes to Condensed Financial Statements
September 30, 2009
Note 1 Interim Financial Statements
The accompanying financial statements have been prepared by the Company without audit. In the opinion
of management, all adjustments (which include normal recurring adjustments) necessary to present fairly the
financial position as of September 30, 2009, and the results of operations and cash flows for the six months
ended September 30, 2009 and for the period from inception thru September 30, 2009.
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 March 31, 2009 audited financial statements. The results of operations for the six months ended September 30, 2009, are not necessarily indicative of the results of operations to be expected for the full fiscal year.
Note 2 Going Concern
The Company has limited operating capital with limited revenue from operations. Realization of a major portion of the assets is dependent upon the Company’s ability to meet its future financing requirements, and the success of future operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustment that might result from the outcome of this uncertainty.
Note 3 Property and Equipment
Property and equipment is carried at cost and summarized as follows:
Accumulated
Cost
Depreciation
Net
Equipment
$
189,157
$
(143,920)
$ 45,237
Total
$ 189,157
$
(143,920)
$
45,237
For the six months ended September 30, 2009, depreciation expense is $ 13,361. Of the $189,157 property and equipment account $60,557 has been capitalized under a capital lease discussed below. As of September 30, 2009 the total accumulated depreciation associated with the capital lease was $ 51,573.
Note 4 Payable – Jones Day
Jones Day, our attorneys who have been lead counsel on obtaining, registering and maintaining our patents, have accumulated billings of $552,505, including some that were converted to a note payable and accrued interest through December 18, 2007:
Accounts Payables through September 30, 2009 $ 343,267
Note Payable 145,980
Accrued Interest 63,258
------------
$ 552,505
=======
Note 5 Long Term Debt
The Company has a capital lease due to a finance company with interest at 10% due in monthly installments of $1,289, through October, 2010. This note is secured by the Company’s equipment.
Maturities of long- term debt are as follows:
Year Ending
September 30,
2010 $ 14,538
2011 1,278
------------
Total $ 15,816
=======
5
______________________________________________________________________
Note 6 Related Party Transactions
One officer of the Company has advanced personal funds to the Company to assist in
meeting operating cash needs. There are no stated terms for these advances, and it is anticipated at a future date that the advances will be converted to shares of common stock, though the timing and amount of such conversion is indeterminable at this time. At September 30, 2009, the Company owed him $ 302,462.
Note 7 Recent Accounting Pronouncements
In June 2009, the FASB issued SFAS No. 168, “The FASB Accounting Standards Codification TM and the Hierarchy of Generally Accepted Accounting Principles – a replacement of FASB Statement No. 162” (“SFAS 168”). The FASB Accounting Standards Codification TM, (“Codification”) became the source of authoritative GAAP recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. On the effective date of SFAS 168, the Codification superseded all then-existing non-SEC accounting and reporting standards. All other non-grandfathered non-SEC accounting literature not included in the Codification became non-authoritative.
Following SFAS 168, the FASB will no longer issue new standards in the form of Statements, FASB Staff Positions, or Emerging Issues Task Force Abstracts; instead, it will issue Accounting Standards Updates (ASU’s). The FASB will not consider ASU’s as authoritative in their own right; rather these updates will serve only to update the Codification, provide background information about the guidance, and provide the bases for conclusions on the change(s) in the Codification. SFAS No. 168 is incorporated in ASC Topic 105, Generally Accepted Accounting Principles. The Company adopted SFAS No. 168 in its financial statements for the quarter ended September 30, 2009, and the Company will provide reference to both the Codification topic reference and the previously authoritative references related to Codification topics and subtopics, as appropriate.
In May 2009, the FASB issued FASB ASC 855-10-25 (Prior authoritative literature: FASB Statement 165, Subsequent Events). FASB ASC 855-10-25 provides guidance on management’s assessment of subsequent events and incorporates this guidance into accounting literature. FASB ASC 855-10-25 is effective prospectively for interim and annual periods ending after June 15, 2009. The implementation of this standard did not have a material impact on the Company’s financial position and results of operations. The Company has evaluated subsequent events through November 16, 2009, the date of issuance of the Company’s financial position and results of operations.
Certain amounts for the six months ended September 30, 2009, and at March 31, 2009, have been revised. The Company adopted FASB Statement No. 160, “Noncontrolling Interests in Consolidated Financial Statements – an amendment of ARB No. 51” (“FAS 160”), which requires that the noncontrolling interests to be classified as a separate component of net income and stockholder’s equity. FAS 160 is effective for the Company’s fiscal year beginning April 1, 2009.
6
Item 2 MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
We did not receive revenues from operations in our specialty coffee segment until the quarter ended September 30, 2003. We sell roasted blends to various customers and we broker green bean orders as well. With respect to coffee brokerage orders, we do not take ownership of the green beans, but only receive a commission on the sale. This contrasts with the sales of roasted blend, in which we purchase the materials and resell to the purchaser.
Management’s experience in the coffee industry is that as typical of coffee brokerage and small specialty coffee operations, we do not have long term sales contracts. We do not have any written contracts for the sale of our product. We produce and ship as purchase orders are received. We must wait for future purchase orders to make sales in the future. Because coffee prices are variable and demand can also be variable, we believe that selling under long term contracts would not be practicable in our industry. Our invoices are due net 30 days, but currently we are receiving payment immediately on shipment. The sales in the quarter and for the six months ended September 30, 2009 were $ 104,385 and $ 200,001, respectively, compared to $ 70,189 and $ 148,194 for the same periods in 2008. The gross margin as a percentage of sales increased from 38% to 39% due to better purchasing efficiency. Our general and administrative expenses primarily consisted of legal and professional fees related to our status as a public company.
Our tropical plant segment has not yet realized significant revenues. Our
nematode resistant variety is ready for sales but the genetically modified coffee
plants will not be ready for sale during the next 12 months. We anticipate the
need for about $2 million in funding to complete development of the tropical
plant varieties and to increase marketing of our coffee blends.
We are seeking $2 million in funding for 12 months of our business plan as follows:
Marketing $ 200,000
General and Administration $ 400,000
Research and Development $ 1,400,000
We do not have any agreements or understandings with respect to sources of capital. We have not identified any potential sources. Investors cannot expect that we will be able to raise any funds whatsoever. Even if we are able to find one or more sources of capital, it is likely that we will not be able to raise the entire amount required initially, in which case our development time will be extended until such full amount can be obtained. Even if we are successful in obtaining the required funding, we probably will need to raise additional funds at the end of 12 months.
Information included in this report includes forward looking statements, which can be identified by the use of forward-looking terminology such as may, will, expect, anticipate, believe, estimate, or continue, or the negative thereof or other variations thereon or comparable terminology. The statements in "Risk Factors" and other statements and disclaimers in this report constitute cautionary statements identifying important factors, including risks and uncertainties, relating to the forward-looking statements that could cause actual results to differ materially from those reflected in the forward-looking statements.
Since we have not yet generated significant and consistent revenues, we are a development stage company as that term is defined in paragraphs 8 and 9 of SFAS No. 7. Our activities to date have been limited to seeking capital; seeking supply contracts and development of a business plan. Our auditors have included an explanatory paragraph in their report on our audited financial statements as of March 31, 2009, relating to the uncertainty of our business as a going concern, due to our lack of operating history or current revenues, its nature as a start up business, management's limited experience and limited funds. We do not believe that conventional financing, such as bank loans, is available to us due to these factors. Management believes that it will be able to raise the required funds for operations from one or more future offerings, in order to effect our business plan. No terms have been discussed, and we cannot predict the price or terms of any offering nor the amount of dilution existing shareholders may experience as a result of such offering.
7
________________________________________________________________________________________________________________
Forward looking information
Our future operating results are subject to many factors, including:
œ our ability to complete development of our tropical plant varieties;
œ the impact of rapid and persistent fluctuations in the price of coffee beans;
œ general economic conditions and conditions which affect the market for coffee and coffee producers;
œ our success in implementing our business strategy or introducing new products;
œ our ability to attract and retain customers;
œ the effects of competition from other coffee manufacturers and other beverage alternatives;
œ changes in tastes and preferences for, or the consumption of, coffee;
œ our ability to obtain additional financing; and
œ other risks which we identify in future filings with the SEC.
In some cases, you can identify forward-looking statements by terminology such as "may," "should," "could," "predict," "potential," "continue," "expect," "anticipate," "future," "intend," "plan," "believe," "estimate" and similar expressions (or the negative of such expressions). Any or all of our forward looking statements in this annual report and in any other public statements we make may turn out to be wrong. They can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties. Consequently, no forward looking statement can be guaranteed. In addition, we undertake no responsibility to update any forward-looking statement to reflect events or circumstances which occur after the date of this report.
Critical Accounting Policies
Our discussion and analysis of results of operations and financial condition are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We evaluate our estimates on an ongoing basis, including those related to provisions for uncollectible accounts receivable, inventories, valuation of intangible assets and contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the 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.
The accounting policies that we follow are set forth in Note 1 to our financial statements. These accounting policies conform to accounting principles generally accepted in the United States, and have been consistently applied in the preparation of the financial statements.
Off-Balance Sheet Arrangements
We have no off balance sheet arrangements.
Effect of Inflation and Foreign Currency Exchange
The Company has not experienced any effect of inflation in the price of its products. Nor has it experienced unfavorable profit reductions due to currency exchange fluctuations or inflation with its foreign customers. All sales transactions to date have been denominated in U.S. Dollars.
Accounts Receivable and Allowance for Doubtful Accounts
Trade and other accounts receivable are reported at face value less any provisions for uncollectible accounts considered necessary. The Company estimates doubtful accounts on an item-to-item basis and includes over-aged accounts for any trade receivable as part of allowance for doubtful accounts, which are generally accounts that are ninety-days or more overdue. When accounts are deemed uncollectible, the account receivable is charged off and the allowance account is reduced accordingly.
Revenue Recognition
The Company recognizes revenues in accordance with the Securities and Exchange Commission, Staff Accounting Bulletin (SAB) number 104, Revenue Recognition. SAB 104 clarifies application of U.S. generally accepted accounting principles to revenue transactions.
Revenue on coffee and accessory sales is recognized as products are delivered to the customer or retailer. That is, the arrangements of the sale are documented, the product is delivered to the customer or retailer, the pricing becomes final, and collectability is reasonably assured. The Company may also recognize revenue from brokered coffee sales. This revenue is recognized when the transaction is completed based on the contract terms. Brokered coffee sales shall be recorded as the net commission recognizable to the Company.
8
_____________________________________________________________________________________________________________________
Item 3. Quantitative and Qualitative Disclosures About Market Risk. As a "smaller reporting company" as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.
Item 4T. Controls and Procedures. Disclosure Controls and Procedures Evaluation of disclosure controls and procedures.
The Company's principal executive officer and its principal financial officer, based on their evaluation of the Company's disclosure controls and procedures (as defined in Exchange Act Rules 13a-14(c) and 15d -14 (c)) as of June 30, 2008. , Based on this evaluation, our principal executive officer and principal financial officer concluded as of the Evaluation Date that our disclosure controls and procedures were effective such that the information relating to the Company, including our consolidated subsidiaries, required to be disclosed in our SEC reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and (ii) is accumulated and communicated to management, including our principal executive officer/principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. Our management, including our chief executive officer and chief financial officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.
Changes in internal controls. There were no significant changes in the Company's internal controls or in other factors that could significantly affect the Company's internal controls subsequent to the date of their evaluation.
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS - None
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS - None
Item 3. DEFAULTS UPON SENIOR SECURITIES - None
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - None
Item 5. OTHER INFORMATION - None
Item 6. EXHIBITS
Exhibits
31. Certifications, Dennis Nielsen and Tyrus C. Young, Chairman of
the Board and CFO respectively.
32. Certification pursuant to 18 U.S.C. Section 1350 of Dennis Nielsen and Tyrus C. Young
9
____________________________________________________________________________________________________
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
PACIFIC LAND AND
COFFEE CORPORATION
Date: November 16, 2009 By:/s/ Tyrus C. Young
Tyrus C. Young
Chief Financial Officer
(chief financial officer
and accounting officer and
duly authorized officer)
6