Attached files
file | filename |
---|---|
EX-31.2 - EXHIBIT 31.2 - Rotate Black, Inc. | rotateblack31-2.htm |
EX-31.1 - EXHIBIT 31.1 - Rotate Black, Inc. | rotateblack31-1.htm |
EX-32.1 - EXHIBIT 32.1 - Rotate Black, Inc. | rotateblack32-1.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
(Mark
One)
|
X
|
QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For
the quarterly period ended September 30, 2009
|
X |
TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE
ACT
|
For
the transition period from
to
Commission File
Number 333-44315
Rotate
Black, Inc.
(Exact
name of registrant as specified in its charter)
Nevada
|
75-3225181
|
|
(State
or other jurisdiction of
incorporation
or organization)
|
(IRS
Employer
Identification
No.)
|
932
Spring Street, Petoskey, Michigan 49770
(Address
of principal executive offices)
(231)
347-0777
(Registrant’s
telephone number, including area code)
Indicate by checkmark whether the
registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports) and (2) has been subject to such filing requirements
for the past 90 days. 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
(Do not check if a smaller reporting company)
|
Smaller reporting
company
X
|
Indicate by checkmark whether the
registrant is a shell company (as defined in Rule 126.2 of the Exchange
Act). Yes No X
The
number of shares of common stock outstanding as of November 11, 2009 was
74,287,325.
1
ROTATE
BLACK, INC. AND SUBSIDIARY
TABLE
OF CONTENTS
Page Number
PART
I. FINANCIAL INFORMATION
|
|
ITEM
1. Financial
Statements
|
3
|
ITEM
2. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
14
|
ITEM
3. Quantitative and Qualitative Disclosures About Market
Risk
|
16
|
ITEM
4T. Controls and
Procedures
|
16
|
PART
II. OTHER INFORMATION
|
|
ITEM
1. Legal
Proceedings
|
16
|
ITEM
1A. Risk
Factors
|
16
|
ITEM
2. Unregistered Sales of Equity Securities and Use of
Proceeds
|
17
|
ITEM
3. Defaults upon Senior
Securities
|
17
|
ITEM
4. Submission of Matters to a Vote of Security Holders
|
17
|
ITEM
5. Other
Information
|
17
|
ITEM
6.
Exhibits
|
17
|
SIGNATURES
|
17
|
2
Item
1.
Financial Statements
ROTATE BLACK, INC. AND SUBSIDIARY | |||||||||
(A Development Stage Company) | |||||||||
CONSOLIDATED BALANCE SHEET | |||||||||
September
30,
|
June
30,
|
||||||||
2009
|
2009
|
||||||||
(Unaudited)
|
|||||||||
ASSETS
|
|||||||||
Current
Assets
|
|||||||||
Cash
|
$
|
1,253
|
$
|
15,453
|
|||||
Prepaid
expenses
|
112,442
|
88,902
|
|||||||
Total
current assets
|
113,695
|
104,355
|
|||||||
Unbilled
development advances
|
2,169,759
|
2,069,499
|
|||||||
Fixed
assets - net
|
47,690
|
49,179
|
|||||||
Contract
rights
|
6,323,884
|
6,323,884
|
|||||||
Intangible
assets
|
374,265
|
374,265
|
|||||||
Investment
in joint venture
|
139,781
|
139,781
|
|||||||
Land
purchase deposit
|
7,049,142
|
7,049,142
|
|||||||
Security
deposit
|
3,600
|
3,600
|
|||||||
TOTAL
ASSETS
|
$
|
16,221,816
|
$
|
16,113,705
|
|||||
LIABILITIES
AND STOCKHOLDERS' EQUITY (DEFICIT)
|
|||||||||
Current
liabilities
|
|||||||||
Accounts
payable and accrued expenses
|
$
|
1,883,625
|
$
|
1,761,367
|
|||||
Note
payable
|
243,000
|
268,000
|
|||||||
Note
payable - truck - current portion
|
5,333
|
5,213
|
|||||||
Total
current liabilities
|
2,131,958
|
2,034,580
|
|||||||
Note
payable - truck
|
11,350
|
12,628
|
|||||||
Loan
payable - stockholder
|
1,707,600
|
1,675,932
|
|||||||
Deferred
revenues
|
48,321
|
47,078
|
|||||||
Shares
to be issued
|
3,995,467
|
3,995,467
|
|||||||
TOTAL
LIABILITIES
|
7,894,696
|
7,765,685
|
|||||||
MINORITY
INTEREST
|
1,125,038
|
1,130,114
|
|||||||
STOCKHOLDERS' EQUITY
(DEFICIT)
|
|||||||||
Common
stock, $0.01 par value, 100,000,000
|
|||||||||
shares
authorized; 67,696,858 and 67,321,858
|
|||||||||
shares
issued and outstanding as of
|
|||||||||
September
30, 2009 and June 30, 2009,
|
|||||||||
respectively
|
676,969
|
673,219
|
|||||||
Additional
paid-in capital
|
8,705,435
|
8,334,185
|
|||||||
Accumulated
deficit
|
(2,180,322)
|
(1,789,498)
|
|||||||
TOTAL
STOCKHOLDERS' EQUITY (DEFICIT)
|
7,202,082
|
7,217,906
|
|||||||
TOTAL
LIABILITIES AND
|
|||||||||
STOCKHOLDERS'
EQUITY (DEFICIT)
|
$
|
16,221,816
|
$
|
16,113,705
|
|||||
See
notes to financial statements
|
3
ROTATE
BLACK, INC. AND SUBSIDIARY
|
|||||||
(A
Development Stage Company)
|
|||||||
CONSOLIDATED
STATEMENT OF OPERATIONS
|
|||||||
(UNAUDITED)
|
|||||||
August
2, 2006
|
|||||||
Three
Months Ended
|
(Inception)
|
||||||
September 30,
|
Through
|
||||||
2009
|
2008
|
September
30, 2009
|
|||||
Operating
expenses
|
|||||||
Salary
expense
|
$ 51,450
|
$ 82,409
|
$ 163,688
|
||||
Stock
based compensation
|
75,000
|
735,870
|
841,570
|
||||
General
and administrative expenses
|
256,875
|
100,522
|
962,962
|
||||
Write-off
deferred expenses
|
-
|
-
|
233,960
|
||||
Interest
expense
|
12,575
|
-
|
52,119
|
||||
Total
expenses
|
395,900
|
918,801
|
2,254,299
|
||||
Loss
from operations
|
(395,900)
|
(918,801)
|
(2,254,299)
|
||||
Minority
interest
|
5,076
|
-
|
|
73,977
|
|||
Net
loss
|
$ (390,824)
|
$ (918,801)
|
$ (2,180,322)
|
||||
Basic
and diluted net loss per common share
|
$ (0.01)
|
$ (0.09)
|
|||||
Basic
and diluted average
|
|||||||
common
shares outstanding
|
67,451,528
|
10,425,714
|
|||||
See
notes to financial statements
|
4
ROTATE
BLACK, INC. AND SUBSIDIARY
|
||||||||||||||||||
(A
Development Stage Company)
|
||||||||||||||||||
CONSOLIDATED
STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
|
||||||||||||||||||
Common
Stock
|
Additional
|
Stock
|
||||||||||||||||
Number
of
|
Paid-in
|
Subscription
|
Accumulated
|
|||||||||||||||
Shares
|
Amount
|
Capital
|
Receivable
|
Deficit
|
Total
|
|||||||||||||
August
2, 2006 - Stock subscription receivable
|
100
|
$
|
1
|
$
|
99
|
$
|
(100)
|
$
|
-
|
$
|
-
|
|||||||
Net
loss - June 30, 2007
|
-
|
-
|
-
|
-
|
(3,433)
|
(3,433)
|
||||||||||||
Balance
- June 30, 2007
|
100
|
1
|
99
|
(100)
|
(3,433)
|
(3,433)
|
||||||||||||
Net
loss - June 30, 2008
|
-
|
-
|
-
|
-
|
(2,755)
|
(2,755)
|
||||||||||||
Balance
- June 30, 2008
|
100
|
1
|
99
|
(100)
|
(6,188)
|
(6,188)
|
||||||||||||
August
15, 2008 - Common stock issued in
|
||||||||||||||||||
connection
with the acquisition of BevSystems
|
1,000,000
|
10,000
|
47,009
|
-
|
-
|
57,009
|
||||||||||||
August
15, 2008 - Common stock issued in
|
||||||||||||||||||
payment
of due to stockholder
|
8,999,900
|
89,999
|
422,980
|
100
|
-
|
513,079
|
||||||||||||
August
21, 2008 - Common stock issued in
|
||||||||||||||||||
connection
with employment agreements
|
8,300,000
|
83,000
|
390,100
|
-
|
-
|
473,100
|
||||||||||||
August
27, 2008 - Common stock issued in
|
||||||||||||||||||
connection
with services rendered
|
4,610,000
|
46,100
|
216,670
|
-
|
-
|
262,770
|
||||||||||||
October
3, 2008 - Purchase of Rotate Black
|
||||||||||||||||||
Gaming,
Inc.
|
26,560,000
|
265,600
|
3,331,444
|
-
|
-
|
3,597,044
|
||||||||||||
October
7, 2008 - Purchase of Dayton assets
|
5,480,900
|
54,809
|
164,345
|
-
|
-
|
219,154
|
||||||||||||
October
7, 2008 - Purchase of interest in joint
|
||||||||||||||||||
venture
|
8,400,000
|
84,000
|
52,121
|
-
|
-
|
136,121
|
||||||||||||
November
16, 2008 - Common stock issued in
|
||||||||||||||||||
connection
with consulting agreement
|
100,000
|
1,000
|
4,700
|
-
|
-
|
5,700
|
||||||||||||
November
and December, 2008 - Common stock
|
||||||||||||||||||
sold
for cash
|
114,000
|
1,140
|
55,860
|
-
|
-
|
57,000
|
||||||||||||
December
23, 2008 - Common stock issued in
|
||||||||||||||||||
payment
of due to stockholder
|
48,283
|
483
|
2,269
|
-
|
-
|
2,752
|
||||||||||||
January,
February and March, 2009 - Common
|
||||||||||||||||||
stock
sold for cash
|
285,000
|
2,850
|
282,150
|
-
|
-
|
285,000
|
||||||||||||
January
2, 2009 - Common stock issued in
|
||||||||||||||||||
connection
with consulting agreement
|
50,000
|
500
|
24,500
|
-
|
-
|
25,000
|
||||||||||||
May
11, 2009 - Common stock issued in
|
||||||||||||||||||
connection
with land purchase
|
3,153,675
|
31,537
|
3,122,138
|
-
|
-
|
3,153,675
|
||||||||||||
April,
May and June, 2009 - Common
|
220,000
|
2,200
|
217,800
|
-
|
-
|
220,000
|
||||||||||||
stock
sold for cash
|
||||||||||||||||||
Net
loss - June 30, 2009
|
-
|
-
|
-
|
-
|
(1,783,310)
|
(1,783,310)
|
||||||||||||
Balance
at June 30, 2009
|
67,321,858
|
673,219
|
8,334,185
|
-
|
(1,789,498)
|
7,217,906
|
||||||||||||
September
15, 2009 - Common stock issued in
|
||||||||||||||||||
connection
with consulting agreement
|
75,000
|
750
|
74,250
|
-
|
-
|
75,000
|
||||||||||||
July,
August and September, 2009 - Common
|
||||||||||||||||||
stock
sold for cash
|
300,000
|
3,000
|
297,000
|
-
|
-
|
300,000
|
||||||||||||
Net
loss - September 30, 2009
|
-
|
-
|
-
|
-
|
(390,824)
|
(390,824)
|
||||||||||||
Balance
at September 30, 2009 (Unaudited)
|
67,696,858
|
$
|
676,969
|
$
|
8,705,435
|
$
|
-
|
$
|
(2,180,322)
|
$
|
7,202,082
|
|||||||
See
notes to financial
statements
|
5
ROTATE
BLACK, INC. AND SUBSIDIARY
|
|||||
(A
Development Stage Company)
|
|||||
CONSOLIDATED STATEMENT
OF CASH FLOWS
|
|||||
(UNAUDITED)
|
|||||
August
2, 2006
|
|||||
Three
Months Ended
|
(Inception)
|
||||
September
30,
|
Through
|
||||
2009
|
2008
|
September
30, 2009
|
|||
CASH
FLOWS FROM OPERATING ACTIVITIES
|
|||||
Net
loss
|
$ (390,824)
|
$ (918,801)
|
$ (2,180,322)
|
||
Adjustments
to reconcile net loss to net cash
|
|||||
used
in operating activities:
|
|||||
Stock-based
compensation
|
75,000
|
735,870
|
841,570
|
||
Write-off
of deferred expenses
|
-
|
-
|
233,960
|
||
Depreciation
and amortization
|
5,356
|
1,337
|
21,852
|
||
Minority
interest
|
(5,076)
|
-
|
(73,977)
|
||
Changes
in assets and liabilities:
|
|||||
Prepaid
expenses
|
(23,540)
|
(42,350)
|
(8,450)
|
||
Unbilled
development advances
|
(100,260)
|
-
|
(758,248)
|
||
Accounts
payable and accrued expenses
|
122,258
|
60,121
|
654,055
|
||
Deferred
revenues
|
1,243
|
-
|
14,504
|
||
Net
cash used in operating activities
|
(315,843)
|
(163,823)
|
(1,255,056)
|
||
CASH
FLOWS FROM INVESTING ACTIVITIES
|
|||||
Investment
in BevSystems and increase in
|
|||||
deferred
acquisition costs (net of
|
|||||
the
issuance of common stock of $57,009
|
-
|
(228,151)
|
(317,256)
|
||
Purchases
of fixed assets (net of note payable
|
|||||
of
$20,800 in 2008)
|
(3,867)
|
(43,165)
|
(48,742)
|
||
Security
deposit
|
-
|
(3,600)
|
(3,600)
|
||
Investment
in joint venture
|
-
|
-
|
(3,660)
|
||
Increase
in deferred expenses
|
-
|
-
|
(14,806)
|
||
Net
cash used in investing activities
|
(3,867)
|
(274,916)
|
(388,064)
|
||
CASH
FLOWS FROM FINANCING ACTIVITIES
|
|||||
Increase
in loan payable - stockholder
|
31,668
|
438,739
|
811,490
|
||
Proceeds
from sales of common stock
|
300,000
|
-
|
862,000
|
||
Decrease
in note payable
|
(25,000)
|
-
|
(25,000)
|
||
Payments
of note payable - truck
|
(1,158)
|
-
|
(4,117)
|
||
Net
cash provided by investing activities
|
305,510
|
438,739
|
1,644,373
|
||
Net
increase (decrease) in cash
|
(14,200)
|
-
|
1,253
|
||
Cash,
beginning of period
|
15,453
|
-
|
-
|
||
Cash,
end of period
|
$ 1,253
|
$ -
|
$ 1,253
|
||
Noncash
Transaction
|
|||||
Issuance
of common stock in payment of due to stockholder
|
$ 513,079
|
||||
See
notes to financial statements
|
6
Rotate Black, Inc. and Subsidiary
Notes to Consolidated Financial Statements
1.
ORGANIZATION AND OPERATIONS
Rotate
Black, Inc. (Company) was incorporated in Nevada on August 2, 2006 to be the
successor by merger of BevSystems International, Inc. and BevSystems
International Ltd. (BevSystems) under a plan of reorganization (Plan), effective
August 15, 2008, as approved by the United States Bankruptcy Court in Tampa,
Florida. Under the terms of the Plan, BevSystems merged into the Company with
the Company as the survivor.
On March 31, 2004, BevSystems filed
under Chapter 7 of the Bankruptcy Code and, on April 15, 2006, filed a plan
of
reorganization
under Chapter 11 of the Bankruptcy Code. The Plan provided for the Company to:
(1) purchase the intangible assets of
BevSystems
for $175,000, (2) pay creditors opting out of the common stock settlement an
aggregate of $10,000, (3) pay all legal and
other
cost of the Plan of $189,265 and (4) issue 1,000,000 shares of common stock of
the Company (10%) to the balance of the
creditors.
The shares issued to the creditors were valued at $.057, per share, the value of
the shares acquired by the 90% stockholder,
for an
aggregate purchase price of $513,079. All costs of the bankruptcy were paid by
the 90% stockholder, Rotate Black, LLC (RBL), an entity substantially owned by
an officer of the Company and family members. The Company was also required to
provide an escrow fund for future operations of $200,000. All outstanding equity
shares of BevSystems were cancelled. All requirements under the Plan have been
met.
The
Company recorded the purchase of BevSystems under the purchase method of
accounting and allocated the entire purchase price to intangible
assets.
On
August 15, 2008, the Company commenced operations and all activity prior thereto
has been charged to operations. The Company is in the development
stage.
Acquisitions
In
October 2008, the Company acquired: (1) 75% of the
outstanding common stock of Rotate Black-Gaming, Inc. (Gaming), (2) all of the
assets of a casino development in Dayton, Nevada (Dayton) and (3) a 50% joint
venture interest in Rotate Black India Pvt Ltd. (India) in exchange for
26,560,000, 5,480,900 and 8,400,000 shares of common stock of the Company,
respectively, from RBL. The acquisitions have been recorded on the purchase
method of accounting at the carrying amounts on RBL of the assets and
liabilities acquired as of the date of acquisition as RBL is under common
control with the Company.
Gaming
The
purchase price of Gaming of $3,597,044 has been allocated as
follows:
Development
advances
|
$
|
1,411,511
|
Other
current assets
|
3,992
|
|
Land
|
556,000
|
|
Contract
rights
|
5,767,884
|
|
Accounts
payable and accrued expenses
|
(1,229,570)
|
|
Loan
payable – stockholder
|
(1,411,941)
|
|
Note
payable
|
(268,000)
|
|
Deferred
revenue
|
(33,817)
|
|
4,796,059
|
||
Less: Minority
interest
|
(1,199,015)
|
|
$
|
3,597,044
|
Gaming is
under contract to develop and manage a world-class destination casino resort in
Sullivan County, New York. Gaming has acquired the property and completed all
design layouts.
Dayton
The
purchase price of Dayton of $219,154 has been allocated to deferred expenses and
included the predevelopment expenses as of the date acquired.
As of
September 30, 2009, the Dayton casino development project is on hold and as of
June 30, the Company has written-off the deferred expenses of
$233,960.
India
The
purchase price of India of $136,121 has been allocated to investment in joint
venture and includes all the investment of RBL as of the date acquired. The
Company has identified potential properties for acquisition, but does not
anticipate an acquisition until new Indian gaming laws are
solidified.
7
Rotate Black, Inc. and Subsidiary
Notes to Consolidated Financial Statements
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying interim
unaudited consolidated financial statements and related notes have been prepared
in accordance with accounting principles generally accepted in the United States
for interim financial information and with the rules and regulations set forth
in Regulation S-X of the Securities and Exchange Commission for Form 10-Q.
Accordingly, they do not include all of the information and footnotes required
by accounting principles generally accepted in the United States for complete
financial statement presentation. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary to present fairly
the financial position, results of operations and cash flows for the interim
periods have been included. These consolidated financial statements should be
read in conjunction with the financial statements of Rotate Black, Inc. and
Subsidiary together with Management’s Discussion and Analysis of Financial
Condition and Results of Operations in the Company's Form 10-K for the year
ended June 30, 2009. Interim results are not necessarily indicative of the
results for a full year.
Consolidated
Financial Statements
The
accompanying consolidated financial statements include all of the accounts of
the Company and the subsidiary.
Investments
in 50% or less owned entities are accounted for using the equity
method. Under the equity method, the Company includes the net income
or loss from the equity entity.
All
significant intercompany accounts and transactions have been eliminated in
consolidation.
Estimates
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
the disclosure of contingent assets and liabilities at the date of the financial
statements and revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Financial Instruments
The
Company considers the carrying amounts of financial instruments, including cash,
accounts payable and accrued expenses to approximate their fair values because
of their relatively short maturities.
Property and Equipment
Property
and equipment are recorded at cost and depreciated over their estimated useful
lives using the straight-line method.
Maintenance
and repairs are charged to operating expenses as they are
incurred. Improvements and betterments which extend the lives of the
assets are capitalized. The cost and accumulated depreciation of
assets retired or otherwise disposed of are relieved from the appropriate
accounts and any profit or loss on the sale or disposition of such assets is
credited or charged to income.
Contract Rights and Intangible
Assets
Contract
rights and intangible assets are valued at cost and will be amortized over their
estimated useful lives as determined by management. The Company will evaluate
the carrying value of the intangible assets for impairment at least annually or
upon the occurrence of an event which may indicate that the carrying amount may
be greater than its fair value. If impaired, the Company will write-down such
impairment.
Share-Based Compensation
The
Company recognizes compensation expense for all share-based payment awards made
to employees, directors and others based on the estimated fair values on the
date of the grant. Common stock equivalents are valued using the Black-Scholes
Option-Pricing Model using the market price of our common stock on the date of
valuation, an expected dividend yield of zero, the remaining period or maturity
date of the common stock equivalent and the expected volatility of our common
stock
Minority
Interest
The
Company records adjustments to minority interest for the allocable portion of
income or loss that the minority interest holders are entitled based upon their
portion of certain of the subsidiaries that they own. Distributions
to holders of minority interests are adjusted to the respective minority
interest holders' balance.
The
Company suspends allocation of losses to minority interest holders when the
minority interest balance for a particular minority interest holder is reduced
to zero. Any excess loss above the minority interest holders' balance
is not charged to minority interest as the minority interest holders have no
obligation to fund such losses.
Loss per Common Share
Basic
loss per share is calculated using the weighted-average number of common shares
outstanding during each period. Diluted loss per share includes potentially
dilutive securities such as outstanding options and warrants, using various
methods such as the treasury stock or modified treasury stock method in the
determination of dilutive shares outstanding during each period.
8
Rotate Black, Inc. and Subsidiary
Notes to Consolidated Financial Statements
Income
Taxes
Deferred
income taxes have been provided for temporary differences between financial
statement and income tax reporting under the liability method, using expected
tax rates and laws that are expected to be in effect when the differences are
expected to reverse. A valuation allowance is provided when realization is
not considered more likely than not.
The
Company’s policy is to classify income tax assessments, if any, for interest in
interest expense and for penalties in general and administrative
expenses.
Consideration of Subsequent
Events
The
Company evaluated all events and transactions occurring after September 30, 2009
through November 16, 2009, the date these financial statements were issued, to
identify subsequent events which may need to be recognized or non-recognizable
events which would need disclosure. No recognizable events were
identified. See Note 17 for non-recognizable events identified for
disclosure.
Recent Accounting Pronouncements
Management
does not believe that any other recently issued, but not yet effective
accounting pronouncements, if adopted, would have a material effect on the
accompanying consolidated financial statements.
3.
GOING CONCERN
The
financial statements have been prepared assuming the Company will continue as a
going concern. The Company has incurred losses since inception, resulting in an
accumulated deficit of $2,180,322 and negative working capital of
$2,018,263 as of September 30, 2009 and further losses are anticipated.
These factors raise doubt about the Company’s ability to continue as a going
concern. Its ability to continue as a going concern is dependent upon the
ability of the Company to generate profitable operations in the future and/or to
obtain the necessary financing to meet its obligations arising from normal
business operations when they come due. These financial statements do not
include any adjustments relating to the recoverability and classification of
recorded assets or the amounts of and classification of liabilities that might
be necessary in the event the Company cannot continue.
4. PROPERTY
AND EQUIPMENT
As of September 30, 2009, property and
equipment consisted of the following:
Truck
|
$
|
39,761
|
Furniture
and fixtures
|
8,490
|
|
Office
equipment
|
21,291
|
|
69,542
|
||
Less
accumulated depreciation
|
(21,852)
|
|
$
|
47,690
|
For the
three months ended September 30, 2009 and 2008, depreciation expense was
$5,356 and $1,337, respectively.
5.
INTANGIBLE ASSETS
The
intangible assets acquired under the Plan consisted of a license of patents,
pending patents, trade secrets, know-how and other intangibles of Life O2
Oxygenated Water (Life O2) which were assigned to the Company under the Plan.
The license grants the Company the exclusive worldwide (as defined),
irrevocable, perpetual, royalty-free right to all the intangible assets for use
in the production, marketing, distribution, sublicensing and sale of Life O2,
subject to certain previously granted licenses, and only for human consumption.
The Company has the right to assign the rights under the license to any
corporate successor by way of merger, etc. The Company is entitled to
sublicense, exclusively or not, or to subcontract the manufacture of products
under the license.
The
existing License and Trademark Bottling Agreement has been cancelled and the
Company is currently arranging another similar license and bottling
arrangements.
As of the
September 30, 2009, management has determined no impairment of the intangible
assets has occurred.
6.
CONTRACT RIGHTS
Contract rights consisted of the
various rights acquired under the Development and Management Agreements acquired
from RBL.
Development
Agreement
On June
22, 2007, Gaming entered into a Development Agreement with the Seneca Nation of
Indians (Nation), a Federally recognized Indian tribal government, to act as the
Developer to provide managerial expertise and financial resources to assist the
Nation in acquiring land and developing and constructing a gaming facility
(Facility). The purpose of the Facility for the Nation is to provide employment
and improve the social, economic, education, and health needs of its members; to
increase its revenues and to enhance the Nation’s economic
self-sufficiency.
9
Rotate Black, Inc. and Subsidiary
Notes to Consolidated Financial Statements
The
Development Agreement commenced upon execution and continues through the date
the Facility is open to the public and operational, until all obligations of the
parties have expired, as defined, or until all obligations owed to the Company
by the Nation have been satisfied, whichever is later; provided the agreement is
not terminated by mutual agreement.
Under the
terms of the Development Agreement, the Company is responsible for arranging a
limited recourse loan or other arrangements to finance the Facility in an
aggregate principal amount of up to $350,000,000. The proceeds of the loan are
to be used exclusively for the development, design, construction, furnishing and
equipping of the Facility, for start-up and working capital and reimbursing the
Company for development advances. Development advances are the funds
advanced by the Company for necessary costs in advance of the facility loan
which include expenses for legal, engineering and architectural
fees. A development fee of 2.5% of total development costs will be
paid to the Company for services rendered pursuant to the Development Agreement
and are in addition to the amounts advanced to cover the development
costs.
The
Company is committed under an agreement between a financial advisor and the
Nation through December 31, 2009, under which the advisor will assist in certain
financings, etc. Upon closing of any such financings, the Company shall issue
warrants to purchase common stock of the Company to the advisor equal to 7% of
the Company's fully diluted shares outstanding.
As of
September 30, 2009, unbilled Development Advances were $2,169,759, including
$188,595 of interest and $48,321 of developer fees, which have been deferred.
The Development Advances will be billed upon the closing of the
financing.
In
October, 2007, as amended, Gaming acquired land in exchange for $556,000,
payable $288,000 in cash and the issuance of a note in the amount of $268,000,
payable on August 15, 2009, as extended, with interest payable at 18%, per
annum. In August 2009, the Company made a payment of $25,000 against the
note.
On
November 1, 2009, the Company issued 660,000 shares of common stock in full
repayment of the note payable of $243,000 and accrued interest thereon of
$87,000, $0.50, per share. The number of shares and price per share are subject
to adjustment for stock splits, dividends, exchanges and consideration received
by stockholders in the event of an acquisition of the Company by another entity,
and dependent on the performance of the stock prices, as defined. In addition,
for one year and under certain conditions, the Company is could be liable for
certain market loss on these shares, as defined.
On
December 23, 2008, under the terms of the Development Agreement, the land was
transferred to the Nation, without compensation, and the cost of the land has
been included in Contract Rights.
Management
Agreement
On June
14, 2008, Gaming entered into a Management Agreement with the Nation for an
exclusive right and obligation to manage, operate and maintain the gaming
facility to be developed in Sullivan County, New York, commencing on the
effective date, as defined, and continuing for a period of seven years after the
date on which gaming commences in the facility. The term will be
automatically extended for a period of seven years unless terminated under the
provisions of the agreement.
Under the
Management Agreement, the Nation will pay the Company a fee based on a percent
of gaming revenues, as defined. As manager, the Company will conduct
and direct all business and affairs in connection with the operation, management
and maintenance of the Facility, including all commercial gaming business, sale
of food, beverages, tobacco and gifts, hotels, parking, resorts, amusement or
accommodation operations.
Land
Purchase
On May
26, 2009, the Company entered into an agreement to acquire additional real
property in Sullivan County, New York. The purchase price for the property was
7,049,142 shares of common stock of the Company, $1,750,000 in cash on escrow
and $1,750,000 in cash upon closing. On May 11, 2009, the Company issued
3,153,675 shares of common stock and RBL transferred, on behalf of the Company,
3,895,467 shares of the Company’s common stock to the seller, both in escrow, as
a deposit under the agreement. The shares were valued at $7,049,142, $1.00, per
share.
In
October 2009, the Company issued 3,895,467 shares of common stock to
RBL.
As the
agreement is cancellable, the time requirements under the agreement have been
delayed until certain matters have been resolved.
7. CASINO
PROPERTIES
On August
15, 2009, the Company entered into an agreement to acquire the purchase
opportunities (Purchase Opportunities) of certain casino properties in exchange
for 5,000,000 shares of common stock of the Company, issuable 2,500,000 upon
transfer of the first purchase opportunity and the balance of 2,500,000 shares
to be held in escrow until agreements to manage casino property are
completed. The Purchase Opportunities include contact
information, work product and due diligence to date on these certain casino
properties.
10
Rotate Black, Inc. and Subsidiary
Notes to Consolidated Financial Statements
8.
INVESTMENT IN JOINT VENTURE
Investment in joint venture consists
of a 50% interest in India. The financial statements of India are as
follows:
As of
September 30, 2009, the balance sheet of India was as follows:
Total
Assets
|
NONE
|
|
Capital
Contribution
|
$272,242
|
|
Deficit
|
(272,242)
|
|
Total
assets and liabilities
|
NONE
|
For the
period October 7, 2008 through September 30, 2009, India was
inactive.
9.
LEASE
On August 8, 2008, the Company
entered into a lease for office space, commencing on September 1, 2008 through
August 31, 2011. Rent is payable in advance, in annual installments.
The initial year’s rent is $46,200, increasing as defined. As of September 30,
2009, $46,200 of the second year’s rent was included in accrued expenses. The
Company has an option to extend the lease for an additional three year
period.
10. LOAN
PAYABLE – STOCKHOLDER
As of
September 30, 2009, loan payable - stockholder primarily consisted of
Development Advances incurred by RBL on behalf of the Company and is payable on
demand, with interest at 12%, per annum.
11.
NOTE PAYABLE -TRUCK
On September 10, 2008, the
Company originally borrowed $20,800 to purchase a truck. The note is
payable in equal installments of $520, including interest at 9.19%, per annum,
through September 10, 2012.
As of September 30, 2009, minimum
annual payments under the loan are:
2010
|
$5,333
|
|||||||||
2011
|
5,415
|
|||||||||
2012
|
5,935
|
|||||||||
|
$16,683
|
12.
COMMON STOCK
On August
2, 2006, the Company issued 100 shares of common stock under a stock
subscription receivable for $100 which was paid in August 2008.
On August
2, 2006, the Company authorized 100,000,000, $0.01, par value, shares of common
stock.
On August
15, 2008, the Company issued 8,999,900 shares of common stock to RBL in payment
of due to stockholder of $513,079.
On August
21, 2008, the Company issued an aggregate of 8,300,000 shares common stock to
four officers and an employee of the Company as a one-time incentive in
connection with their employment agreements.The shares were valued at $473,100
($0.057, per share), the value of the shares issued on August 15, 2008, and were
charged to operations.
On August
27, 2008, the Company issued an aggregate of 4,610,000 shares of common stock to
three individuals for services. The shares were valued at $262,770 ($0.057, per
share), the value of the shares issued August 15, 2008, and were charged to
operations.
On
November 16, 2008 the Company entered into an agreement with a capital markets
consultant in exchange for a finder’s fee equal to 10% of the capital the
consultant may raise for the Company, payable 5% in cash and 5% in equity. In
addition, in March 2009, the Company issued 100,000 shares of common stock as a
commencement bonus, valued at $5,700.
On
December 23, 2008, the Company issued 48,283 shares of common stock to RBL in
payment of due to stockholder, valued at $2,752.
In
November and December 2008, the Company sold an aggregate of 114,000 shares of
common stock to investors for an aggregate of $57,000, $0.50, per
share.
11
Rotate Black, Inc. and Subsidiary
Notes to Consolidated Financial Statements
On
January 2, 2009, the Company issued 50,000 shares of common stock for legal
services, valued at $25,000, $0.50, per share. The Company is committed to issue
an additional 200,000 shares of common stock for future legal services, which
have been valued at $100,000, $0.50, per share, and are recorded as prepaid
expenses.
In
January, February and March 2009, the Company sold an aggregate of 285,000
shares of common stock to investors for $285,000, $1.00, per share.
In April,
May and June, 2009, the Company sold an aggregate of 220,000 shares of common
stock to investors for $220,000, $1.00, per share.
On
September 15, 2009, the Company issued 75,000 shares of common stock for
services rendered, valued at $75,000.
In July,
August and September, 2009, the Company sold an aggregate of 300,000 shares of
common stock to investors for $300,000, $1.00, per share.
13. MINORITY
INTEREST
The Company
records non-controlling interest which reflects the 25% portion of the earnings
or losses of Rotate Black Gaming, Inc. allocable to the holders of the minority
interest.
As of
September 30, 2009, minority interest was as follows:
Minority
interest upon acquisition of Gaming
|
$
|
(1,199,015)
|
Loss
allocable to minority interest
|
73,977
|
|
Minority
interest, September 30, 2009
|
$
|
(1,125,038)
|
14.
INCOME TAXES
As of
September 30, 2009, management has evaluated and concluded that there are no
significant uncertain tax positions requiring recognition in the Company’s
consolidated financial statements.
15. ADOPTION
OF ACCOUNTING POLICIES
During
the quarter ended September 30, 2009, the Company adopted the following
accounting pronouncements without a material impact on the financial
statements.
In September
2009, the Financial Accounting Standards Board (FASB) issued ASU No. 2009-08,
"Earnings Per Share - Amendments to Section 260-10-S99". This
Codification Update represents technical corrections to Topic 260-10-S99,
"Earnings Per Share", based on EITF Topic D-53, "Computation of Earnings Per
Share for a Period that Includes a Redemption or an Induced Conversion of a
Portion of a Class of Preferred Stock" and EITF Topic D-42, "The Effect of the
Calculation of Earnings Per Share For the Redemption or Induced Conversion of
Preferred Stock". The Codification Update provides guidance regarding the
definition of redemptions and conversions of equity-classified preferred stock
instruments in relation to the calculation of earnings per share.
In August
2009, the FASB issued ASU No. 2009-05, "Measuring Liabilities at Fair
Value". This ASU amends the "Fair Value Measurements and Disclosures"
Topic of the Codification to provide further guidance on how to measure the fair
value of a liability. AUS No. 2009-05 is effective for the first
reporting period beginning after issuance.
In June 2009,
the FASB issued Statement No. 168, “The FASB Accounting Standards Codification
and the Hierarchy of Generally Accepted Accounting Principles, a replacement of
FASB Statement No. 162” (“SFAS 168”). FAS 168 establishes the FASB
Accounting Standards Codification (“Codification”) as the source of
authoritative U.S. generally accepted accounting principles (“GAAP”) recognized
by the FASB to be applied to rules and interpretive releases of the Securities
and Exchange Commission (“SEC”) under federal securities laws as authoritative
GAAP for SEC registrants.
In April
2009, the FASB issued Staff Position No. 107-1 and APB 28-1, “Interim
Disclosures about Fair Value of Financial Instruments” (“FSP FAS 107-1 and APB
28-1”), FSP FAS 107-1 and APB 28-1 amends SFAS 107, “Disclosures about Fair
Value of Financial Instruments”, to require disclosures about fair value of
financial instruments for interim reporting periods of publicly traded companies
as well as in annual financial statements. This FSP also amends APB
Opinion No. 28, “Interim Financial Reporting”, to require those disclosures in
summarized financial information at interim reporting periods. FSP
FAS 107-1 and APB 28-1 is effective for interim reporting periods ending after
June 15, 2009 and does not require disclosures for earlier periods presented for
comparative purposes at initial adoption. In periods after initial
adoption, the FSP requires comparative disclosures only for periods ending after
initial adoption.
Statement of
Financial Accounting Standards No. 141(R), “Business Combinations” (“SFAS 141”),
which replaced SFAS No. 141, “Business Combinations”, establishes principles and
requirements for determining how an enterprise recognizes and measures the fair
value of certain assets and liabilities acquired in a business combination,
including non-controlling interests, contingent consideration and certain
acquired contingencies. SFAS 141(R) also requires acquisition-related
transaction expenses and restructuring costs be expensed as incurred rather
than capitalized as a component of the business combination.
Financial
Staff Position (“FSP”) 141(R)-1, “Accounting for Assets Acquired and Liabilities
Assumed in a Business Combination That Arise from Contingencies”, amended and
clarified SFAS 141R to address application issues associated with initial
recognition and measurement, subsequent measurement and accounting, and
disclosure of assets and liabilities arising from contingencies in a business
combination.
12
Rotate Black, Inc. and Subsidiary
Notes to Consolidated Financial
Statements
In April,
2008, the FASB issued Statement of Financial Accounting Standards Staff Position
142-3, “Determination of the Useful Life of Intangible Assets” (“FSP 142-3”).
FSP 142-3 amends the factors that should be considered in developing renewal or
extension assumptions used to determine the useful life of a recognized
intangible asset under FASB No. 142, “Goodwill and Other Intangible Assets”. FSP
SFAS 142-3 is effective for financial statements issued for fiscal years
beginning after December 31, 2008 and must be applied prospectively to
intangible assets acquired after the effective date.
FASB No. 160.
“Non-controlling Interest in Consolidated Financial Statements – An Amendment of
ARB No. 51” (“SFAS 160”), establishes accounting and reporting standards for the
non-controlling interest in a subsidiary (previously referred to as minority
interests). SFAS 160 also requires that a retained non-controlling
interest upon the deconsolidation of a subsidiary be initially measured at its
fair value. SFAS 160 also requires reporting any non-controlling
interests as a separate component of stockholders’ equity and presenting any net
income allocable to non-controlling interests and net income attributable to
stockholders of the Company separately in its consolidated statements of
income.
16.
COMMITMENTS AND CONTINGENCIES
On December 2, 2008, the Company
entered into an agreement with a consultant to provide lobbying and other
related services for $15,000, per month, through December 31, 2009.
On March 25, 2009, the Company entered
into an agreement for architectural services to construct a temporary casino in
Sullivan County, New York, for $25,000, not including reimbursable expenses,
payable monthly based upon the percentage of work completed.
On April 23, 2009, the Company entered
into an agreement with a consultant to provide public relations, advertising and
marketing services for $5,000, per month, through April 30, 2010.
From April 9, 2009, the Company has
agreed to pay a consultant for legislative and regulatory representation of
$10,000, per month, through April 9, 2010.
17.
SUBSEQUENT EVENTS
In
connection with the Purchase Opportunities, on October 26, 2009, the Company
entered into an agreement with a placement agent (Agent) for a
proposed offering by the Company of up to $12,500,000 of debt obligations
or other financings, on a best-efforts basis. The Company will pay fees to the
Agent, as follows:
-
|
nonrefundable
retainer of $25,000, payable $10,000 upon execution and $15,000 upon
completion of a term sheet, reimbursable against expenses due to
Agent;
|
-
|
6%
of the maximum amount of any debt securities, including the face value of
any committed line of credit, payable at
closing;
|
-
|
a
warrant to purchase common shares of the Company equal to 3% of the number
of shares issued of any maximum credit available in any debt obligations
or other financings, divided by the closing price of the Company's stock
price on the day of closing, as defined. The warrant will be
exercisable at the minimum exercise price of any warrants received by
investors in the financing or, in the absence of any warrant issuance, the
closing price for the common stock of the Company on the day of the
closing for five years.
|
On
November 9, 2009, the Company issued 1,500,000 shares of common stock to RBL
as repayment of loan payable – stockholder of $1,500,000, $1.00, per
share.
On
November 9, 2009, the Company issued 350,000 shares of common stock in
accordance with the anti-dilution rights clause of the land purchase
agreement.
In
November, 2009, the Company issued 100,000 shares of common stock for
professional services valued at $100,000, $1.00, per share.
In
November 2009, the Company sold 85,000 shares of common stock to an investor for
$85,000, $1.00, per share.
13
Management’s
Discussion and Analysis of Financial Condition and Results of
Operation
|
The
following discussion should be read in conjunction with, and is qualified in its
entirety by, the Unaudited Financial Statements and the Notes thereto included
in this report. This discussion contains certain forward-looking statements that
involve substantial risks and uncertainties. When used in this report, the words
"anticipate," "believe," "estimate," "expect” and similar expressions as they
relate to our management or us are intended to identify such forward-looking
statements. Our actual results, performance or achievements could differ
materially from those expressed in, or implied by, these forward-looking
statements. Historical operating results are not necessarily indicative of the
trends in operating results for any future period.
OVERVIEW
Rotate
Black, Inc. (Company) was incorporated in Nevada on August 2, 2006 to be the
successor by merger of BevSystems International, Inc. and BevSystems
International Ltd. (BevSystems) under a plan of reorganization (Plan), effective
August 15, 2008, as approved by the United States Bankruptcy Court in Tampa,
Florida. Under the terms of the Plan, BevSystems merged into the Company with
the Company as the survivor.
On March
31, 2004, BevSystems filed under Chapter 7 of the Bankruptcy Code and, on April
15, 2006, filed a plan of reorganization under Chapter 11 of the Bankruptcy
Code. The Plan provided for the Company to: (1) purchase the intangible assets
of BevSystems for $175,000, (2) pay creditors opting out of the common stock
settlement an aggregate of $10,000, (3) pay all legal and other cost of the Plan
of $189,265 and (4) issue 1,000,000 shares of common stock of the Company (10%)
to the balance of the creditors. The shares issued to the creditors were valued
at $.057, per share, the value of the shares acquired by the 90% stockholder,
for an aggregate purchase price of $513,079. All costs of the bankruptcy were
paid by the 90% stockholder, Rotate Black, LLC (RBL), an entity substantially
owned by an officer of the Company and family members. The Company was also
required to provide an escrow fund for future operations of $200,000. All
outstanding equity shares of BevSystems were cancelled. All requirements under
the Plan have been met. The Company recorded the purchase of BevSystems under
the purchase method of accounting and allocated the entire purchase price to
intangible assets.
On
August 15, 2008, the Company commenced operations and all activity prior thereto
has been charged to operations. The Company is in the development
stage.
On
October 7, 2008, the Company entered into certain agreements with Rotate Black,
LLC (“RBL”) a Michigan Limited Liability Company for the acquisition of three of
its business units, “Gaming” “Dayton” and “India” (as each is defined in the
preceding notes to the financial statements). Under the terms of the agreements,
we acquired land, receivables and contract rights for an aggregate of 40,440,900
shares of its common stock.
Transaction
Highlights are as follows:
Rotate
Black Gaming, Inc.
Under a
stock purchase agreement Rotate Black, Inc. acquired a seventy five percent
(75%) ownership in RBL’s wholly owned subsidiary Rotate Black Gaming, Inc., a
Nevada corporation. Rotate Black Gaming, Inc. is currently under contract with
the Seneca Nation of Indians for the exclusive development and management of a
world-class casino resort tentatively scheduled to be named “the Seneca
Catskills Resort and Casino”. Pursuant to these agreements, the Company has been
retained to develop and manage a $1.3 billion destination casino resort to be
constructed on 63 acres of land situated off exit 107 of Route 17 in the Town of
Thompson in Sullivan County, New York. The project will represent the building
of one of the nation’s first “Green” casinos as well as one of the
largest
developments in southern New York State. The development plan calls for
construction in three phases:
Phase 1 –
An interim sprung-structure facility housing a casino with 2,000 slots and 45
table games plus limited food & beverage facilities is planned for
completion in 2010.
Phase 2 –
Interim facility will remain open during construction of the two phased
permanent casino resort construction. The first phase of the permanent structure
will host an additional 3,000 slots, and 50 table games, 30 poker tables, plus
an expanded food court, feature bar and buffet. Projected completion is in late
2010.
Phase 3 –
completion of the world-class casino, resort and spa is planned for completion
in 2012. The completed facility will offer 1500 all-suite rooms with about 7,000
slots, 190 table games, 9 restaurants, 10 bars, an entertainment lounge, 10,000
sq. ft. nightclub, a 5,000 - seat event center, a 45,000 sq. ft. full service
Spa, 105,000 sq. ft. of banquet space, 30,000 sq. ft. of retail space and many
other amenities.
The plans
for the project have been designed by Friedmutter & Associates, a leading
design, architectural, and master planning firm specializing in casino resorts
and Perini Corporation, the leader in both traditional and Native American
casino resorts.
14
Rotate
Black India Pvt LTD
Under a
stock purchase agreement the Company acquired a fifty percent (50%) interest in
Rotate Black India Pvt. LTD (“RBIP”), which was formed and registered in
Ahmadabad, India. RBIP was created pursuant to a joint venture with Sandesh,
Ltd, one of India’s largest media groups, for the acquisition of a Five Star
casino resort in the GOA region of India. The Company plans to combine its
operating experience with Sandesh’s media and talent capabilities to create
India’s premier casino resort.
Results
of Operations
As of September 30, 2009, we have had
no revenues. Revenues, consisting of development fees, will commence upon the
closing of the financing. As of September 31, 2009, we have unbilled development
advances of $2,169,759
Operations
for the three months ended September 30, 2009 and 2008 are not comparable
because, during 2008, the Company was not operational inasmuch as management was
pursuing contracts and approvals but not expending capital or incurring expenses
while awaiting contracts and approvals.
Cash
flows from financing activities for the three months ended September 30, 2009,
included $300,000 from proceeds from sales of common stock and $31,668 from an
increase in loan payable – stockholder (RBL) as compared to $438,739 from an
increase in loan payable – stockholder (RBL) in 2008.
Liquidity
and Capital Resources
As of
September 30, 2009, we had negative working capital of $2,108,263 compared to
negative working capital of $95,293, an accumulated deficit of $2,180,322 and
further losses are anticipated.
We do not
have sufficient funds to continue our operating activities. Future operating
activities are expected to be funded by sales of common stock. Until then the
funding will be provided by loans from officers, directors, major stockholders
and others until such time that operations will generate sufficient
funds.
These
factors raise doubt about our ability to continue as a going concern. Our
ability to continue as a going concern is dependent upon our ability to generate
profitable operations in the future and/or to obtain the necessary financing to
meet its obligations arising from normal business operations when they come due.
These financial statements do not include any adjustments relating to the
recoverability and classification of recorded assets or the amounts of and
classification of liabilities that might be necessary in the event we cannot
continue.
Upon the
funding of the Facilities financing with CRT Capital, the deferred development
cost will be invoiced and we will recognized our deferred revenue.
On
October 26, 2009, we entered into an agreement with CapStone Investments to act
as placement agent (Agent) for a proposed offering by the Company of up to
$12,500,000 of debt obligations or other financings, on a best-efforts basis. We
will pay fees to the Agent, as follows:
-
|
nonrefundable
retainer of $25,000, payable $10,000 upon execution and $15,000 upon
completion of a term sheet, reimbursable against expenses due to
Agent;
|
-
|
6%
of the maximum amount of any debt securities, including the face value of
any committed line of credit, payable at
closing;
|
-
|
a
warrant to purchase shares of our common stock equal to 3% of the number
of shares issued of any equity financing and maximum credit available in
any debt obligations or other financings, divided by the closing price of
the our common stock price on the day of closing, as
defined. The warrant will be exercisable at the minimum
exercise price of any warrants received by investors in the financing or,
in the absence of any warrant issuance, the closing price of our common
stock on the day of the closing for five
years.
|
We plan
to utilize the proceeds of the CapStone financing to fund the assets and
operations under the Purchase Opportunities.
15
Contractual
Obligations
Not
applicable as we are a smaller reporting company.
Off-balance
Sheet Arrangements
The
Company has no off-balance sheet arrangements.
Impact
of Inflation
We
believe that inflation has not had a material impact on our results of
operations for the three months ended September 30, 2009. We cannot be assured
that future inflation will not have an adverse impact on our operating results
and financial condition.
Quantitative
and Qualitative Disclosures about Market
Risk
|
Not
applicable as we are a smaller reporting company.
Controls
and Procedures
|
We
carried out an evaluation, under the supervision and with the participation of
our management, including our Chief Executive Officer and our Chief Financial
Officer, of the effectiveness of the design and operation of our disclosure
controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under
the Exchange Act. Based upon that evaluation, our Chief Executive Officer and
the Chief Financial Officer, we have concluded that our disclosure controls and
procedures were not effective as of September 30, 2009, based on their
evaluation of these controls and procedures. Disclosure controls and procedures
include, without limitation, controls and procedures designed to ensure that
information required to be disclosed by an issuer in reports it files or submits
under the Exchange Act is accumulated and communicated to management, including
its principal executive officer or officers and principal financial officer or
officers, or persons performing similar functions, as appropriate to allow
timely decisions regarding required disclosure.
We have
identified certain matters that constitute deficiency (as defined under the
Public Company Accounting Oversight Board Auditing Standard No. 2) in our
internal controls over financial reporting. The deficiencies that we have
identified relate to the fact that that our overall financial reporting
structure, internal accounting information systems and current staffing levels
are not sufficient to support our financial reporting requirements. We are
working to remedy our deficiency.
Changes
in internal control over financial reporting
There
were no changes in our internal control over financial reporting that occurred
during the first quarter of fiscal 2009 that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.
PART
II. OTHER INFORMATION
Item 1. Legal
Proceedings
None.
Item 1A. Risk
Factors
Not applicable as we are a smaller reporting
company.
16
Item
2. Unregistered Sales of Equity Securities and Use
of Proceeds
On September 15, 2009, we issued
75,000 shares of common stock to Hold Fast Advisory, LLP for services rendered,
valued at $75,000.
In July, August and September, 2009, we sold an aggregate of 300,000 shares of
common stock, $0.01 par value, to investors for $300,000, $1.00, per
share.
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
Exhibit No.: Exhibit
31.1
|
Certification
of Principal Executive Officer pursuant to Rule 13a-15(a) and Rule 15d-
|
|
15(a),
promulgated under the Securities Exchange Act of 1934, as amended.
|
||
31.2
|
Certification
of Principal Financial Officer pursuant to Rule 13a-15(a) and Rule 15d-
|
|
15(a),
promulgated under the Securities Exchange Act of 1934, as amended.
|
||
32.1
|
Certification
of Chief Executive Officer and Chief Financial Officer Pursuant to 18
U.S.C.
Section
1350, as adopted pursuant to Section 302 of The Sarbanes-Oxley Act of
2002.
|
In
accordance with 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.
ROTATE
BLACK, INC.
(Registrant)
|
||||
November
16, 2009
|
By:
|
/s/
John Paulsen
|
||
John
Paulsen
|
||||
Chief
Executive Officer
(Authorized
Officer, Principal Executive Officer and Principal Financial
Officer)
|
17