Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2015
Commission file number: 000-31154
NEVADA CLASSIC THOROUGHBREDS, INC.
(Name of small business issuer in its charter)
NEVADA 86-1007952
--------------------------------- ---------------------------------
State or other jurisdiction of (IRS Employer Identification No.)
of incorporation or organization
6163 E. Greenway Street, #2, (480) 890-0678
Mesa, AZ 85205
--------------------------------- ------------------------
(Address of principal executive Issuer's telephone number
offices)
None
----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant: (1) has filed all reports
Required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the Registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
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 (Section 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 the definitions of "large accelerated filer,"
"accelerated filer" and "smaller reporting company" in Rule 12b-2 of the
Exchange Act (Check one):
Large accelerated filer Accelerated filer
Non-accelerated filer Smaller reporting company X
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act).
YES NO X
As of December 31, 2015, 1,900,000 shares of the Registrant's Common
Stock, par value .001; and 4,000,000 shares of Registrant's Preferred
Stock, par value .001, were outstanding.
~~PAGE 2~~
TABLE OF CONTENTS
PAGE NO.
PART I - FINANCIAL INFORMATION 4
Item 1: Financial Statements
Balance Sheet (unaudited) 4
Statement of Operations (unaudited) 5
Statement of Cash Flows (unaudited) 7
Notes to Financial Statements 9
Item 1A: Risk Factors 11
Item 2: Management's Discussion and Analysis of Financial
Condition and Results of Operations 12
Item 3: Quantitative and Qualitative Disclosures About
Market Risk 14
Item 4: Controls and Procedures 15
PART II - OTHER INFORMATION 15
Item 1: Legal Proceedings 15
Item 2: Unregistered Sales of Equity Securities and
Use of Proceeds 15
Item 3: Defaults Upon Senior Securities 15
Item 4: Mine Safety Disclosures 15
Item 5: Other Information 15
Item 6: Exhibits 16
SIGNATURES 16
~~PAGE 3~~
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
=============================
The following financial statements are attached to this report and filed
as a Part hereof.
NEVADA CLASSIC THOROUGHBREDS, INC.
(A DEVELOPMENT STAGE COMPANY)
UNAUDITED FINANCIAL STATEMENT
FOR PERIOD ENDING DECEMBER 31, 2015
BALANCE SHEET
ASSETS
CURRENT ASSETS
Cash
Corporate Checking $ 0
Corporate Savings 0
Real Estate Investment 13,954
-----------
$ 13,954
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable 0
Credit Line 0
STOCKHOLDERS' EQUITY
Horse and Ranch Preferred Stock, par value $.001 per share:
Authorized: 5,000,000 shares:
(2,500,000 Horse Preferred and
2,500,000 Ranch Preferred)
Issued and outstanding: 4,000,000 shares:
(2,000,000 Horse Preferred and
2,000,000 Ranch Preferred) 4,000
Common stock, par value $.001 per share:
Authorized 5,000,000 shares
1,900,000 shares issued & outstanding 1,900
Paid-In capital in excess of par
value of stock 480
Deficits accumulated during
developmental stage (134,520)
TOTAL STOCKHOLDERS' EQUITY $ 13,954
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$ 13,954
===========
See Accompanying Notes
~~PAGE 4~~
NEVADA CLASSIC THOROUGHBREDS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
FOR PERIOD ENDING DECEMBER 31, 2015
Dec 31, 2015 DEC 31, 2014
--------------- -------------
REVENUE $ 0 $ 0
EXPENSES
Development costs 0 0
Administrative 480 480
General 0 0
TOTAL EXPENSES $ 480 0
------------- -----------
NET (LOSS) $ ( 480) $ ( 480)
============== =============
NET (LOSS) PER COMMON SHARE
Basic and diluted $ ( .00) $ ( .00)
============== ==============
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING
Basic and diluted 1,900,000 1,900,000
=============== ==============
See Accompanying Notes
~~PAGE 5~~
NEVADA CLASSIC THOROUGHBREDS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS (continued)
FOR PERIOD ENDING DECEMBER 31, 2015
DEC 31, 2015 DEC 31, 2014
------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) $( 0) $( 0)
Adjustments to reconcile
net (loss) to net cash
provided by operating
activities 0 0
Fair market value of
services 0 0
Increase in paid in capital
in excess of par value
for payment of expenses
by stockholders 480 480
Changes in operating
assets and liabilities:
Accounts payable 0 0
----------- -----------
CASH PROVIDED BY LONG-TERM
NOTES PAYABLE $ 0 $ 0
NET CASH PROVIDED BY OPERATING
ACTIVITIES 0 0
CASH FLOWS FROM INVESTING
ACTIVITIES 0 0
CASH FLOWS FROM FINANCING
ACTIVITIES 0 0
---------- ------------
NET INCREASE (DECREASE)IN CASH AND
CASH BALANCE AT DEC 31 $ ( 480) $ ( 480)
========== ============
See Accompanying Notes
~~PAGE 6~~
NEVADA CLASSIC THOROUGHBREDS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR PERIOD ENDING DECEMBER 31, 2015
DEC 31, 2015 DEC 31, 2014
------------------ -------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net (loss) $ ( 0) $ ( 0)
Adjustments to reconcile
net (loss) to net cash
provided by operating
activities 0 0
Fair market value of
services 0 0
Increase in paid in capital
in excess of par value of
stock for payment of
expenses by stockholders 480 480
Changes in operating
assets and liabilities:
Accounts payable 0 0
-------------- -----------
NET CASH PROVIDED BY OPERATING
ACTIVITIES $ 0 $ 0
CASH FLOWS FROM LOANS BY PRINCIPAL
OFFICER AND OPERATIONS MGR $ 0 0
CASH FLOWS FROM INVESTING
ACTIVITIES 0 0
CASH FLOWS FROM FINANCING
ACTIVITIES 0 0
NET INCREASE (DECREASE) IN CASH
AND CASH BALANCE AT DEC 31, 2015
$ ( 480) $ ( 480)
See Accompanying Notes
~~PAGE 7~~
NEVADA CLASSIC THOROUGHBREDS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS (continued)
FOR PERIOD ENDING DECEMBER 31, 2015
DEC 31, 2015 DEC 31, 2014
------------------ --------------
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION
Cash paid for interest $ 0 $ 0
========= =========
Cash paid for taxes $ 0 $ 0
========= =========
SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Fair market value of services
donated by stockholders $ 0 $ 0
========= =========
Increase in paid in capital
in excess of par value of stock
for payment of expenses
paid by stockholders $ 480 $ 480
========= =========
See Accompanying Notes
~~PAGE 8~~
NEVADA CLASSIC THOROUGHBREDS, INC.
(A DEVELOPMENT STAGE COMPANY)
UNAUDITED FINANCIAL STATEMENT
FOR PERIOD ENDING DECEMBER 31, 2015
NOTES TO FINANCIAL STATEMENTS
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The company uses SOP 85-3, breeding horses under development. The horse
evaluation is adding in direct costs to the value of the horses under
development. The value is the lower of cost or established market value,
until breeding maturity, then the horses are depreciated through the life
of the breeding career. Pursuant to discussions with staff of the
Securities and Exchange Commission in January of 2006 and in keeping with
SOP 85-3 regarding evaluations of breeding stock, the following
accounting practices have been adopted and adjustments as of March 31,
2006.
Any financial statements prior to March 31, 2006 will be inaccurate, as
they do not reflect SOP 85-3, breeding horses under development, and
should not be relied upon for any meaningful representations of the
company's financial position.
Accounting Estimates
--------------------
Management uses estimates and assumptions in preparing financial
statements in accordance with accounting principles generally accepted in
the United States of America. Those estimates and assumptions affect the
reported amounts of assets and liabilities, the disclosure of contingent
assets and liabilities, and the reported revenues and expenses. Actual
results could vary from the estimates that were used.
Income Taxes
------------
Provisions for income taxes are based on taxes payable or refundable for
the current year and deferred taxes on temporary differences between the
amount of taxable income and pretax financial income and between the
basis of assets and liabilities and their reported amounts in the
financial statements. Deferred tax assets and liabilities are included in
the financial statements at currently enacted income tax rates applicable
to the period in which the deferred tax assets and liabilities are
expected to be realized or settled as prescribed in FASB Statement No.
109, "Accounting for Income Taxes." As changes in tax laws or rates are
enacted, deferred tax assets and liabilities are adjusted through the
provision for income taxes.
~~PAGE 9~~
Net (Loss) Per Share
--------------------
The Company adopted Statement of Financial Accounting Standards No. 144
that requires the reporting of both basic and diluted earnings (loss) per
share. Basic earnings (loss) per share is computed by dividing net income
(loss) available to common stockholders by the weighted average number of
common shares outstanding for the period. Diluted earnings (loss) per
share reflects the potential dilution that could occur if securities or
other contracts to issue common stock were exercised or converted into
common stock. In accordance with FASB 128, any anti-dilutive effects on
net loss per share are excluded.
Long-Lived Assets
-----------------
Statement of Financial Accounting Standards No. 144, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of," requires that long-lived assets be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of
the asset in question may not be recoverable.
Note 2: PREFERRED STOCK
No special rights or preferences have been assigned to the preferred
stock.
NOTE 3: DEVELOPMENT STAGE OPERATIONS
As of June 30, 2015 the Company was in the development stages of
operations. According to the Financial Accounting Standards Board of the
Financial Accounting Foundation, a development stage Company is defined
as a company that devotes most of its activities to establishing a new
business activity. In addition, planned principle activities have not yet
commenced.
The Company did not expense any development costs as per donation or gift
from the shareholders for the period from June 30, 2014 to June 30, 2015.
Note 4: FINANCIAL STATEMENT OF AN INACTIVE REGISTRANT
Under 17 CFR 210.3-11, the Company does not need to provide an audited or
reviewed quarterly report.
Reg. 17CFR210.3-11
(a) Gross Receipts from all sources for the fiscal year are not in
excess of $100,000;
(b) The registrant has not purchased or sold any of its own stock,
granted options therefore, or levied assessments upon outstanding stock;
~~PAGE 10~~
(c) Expenditures for all purposes for the fiscal year are not in
excess of $100,000;
(d) No material change in the business has occurred during the
fiscal year, including any bankruptcy, reorganization, readjustment or
succession or any material acquisition or disposition of plants, mines,
mining equipment, mine rights or leases; and
(e) No exchange upon which the shares are listed, or governmental
authority having jurisdiction, requires the furnishing to it or the
publication of audited financial statements.
Note 5: LONG TERM LIABILITIES - NOTES PAYABLE
In the minutes of the Company, the Company's officers and directors would
pay the expenses of the Company up to June 30, 2016, or until the Company
can pay its operation costs as determined by the Company's officers and
directors.
After June 30, 2016, the Company would reimburse the officers and
directors for any direct expenses paid into the Company.
The payback of the long-term liabilities will be within a five-year
period with a simple yearly interest rate of 5% on any outstanding
balance.
Note 6: SALARY - BY COMMON STOCK
In the corporate minutes the salary paid to the Chief Executive Officer
is donated to the company by the Chief Executive Officer until the
Company can pay its operation costs as determined by the Company's
officers and directors.
Item 1A: Risk Factors
======================
The Company is a high-risk/reward company. The risks are substantial and
varied. At the present time, the Company's only shareholders are
officers, directors, or sophisticated and accredited investors. The
following risk factors are only a sample of the problems and risks the
Company faces.
1. The Skill or Art of Horse Racing
-----------------------------------
The Company's business is an art or skill, each horse being unique and
non-duplicable. The costs of training, developing, and racing horses is
the same whether the horse is a great money-earner or a complete loss.
The trainers, groomers, and all those employed in handling of the race
horses is solely a skill and unique to each individual horse. Each end
product is a unique creation of art through the skill of all those
~~PAGE 11~~
participating in its development. As such any one of the many individuals
failing to do their job at its utmost could result in a horse being
completely worthless.
2. Research and Development Implementation
-------------------------------------------
The Company has, through its research and development as of June 30,
2015, developed criteria that gives the Company an advantage, and if such
criteria is met, the horse has a 80% chance of earnings over $1 million.
The Company did a random sample of stallions in the Blood Horse magazine
that had earnings less than $100,000, and found that none of these horses
met the Company's criteria for purchase. The Company randomly selected 30
horses that met the Company's criteria, 25 of which had earnings over $1
million. The problem the Company faces is that the Company will only be
able to purchase or breed one race horse, given its financial restraints.
Thus, there is a good probability that the chosen horse will not run as
expected and will be a part of the 17% of horses meeting the Company's
criteria, but that did not race well.
3. Perfect Combinations
------------------------
Unfortunately, for any horse earning over $1 million, it must have a
perfect combination of breeding, training, health, grooming, safety
during transport, and numerous other factors relating to that one horse.
Any one phase of the horse's development that is not perfect, could
result in the horse being completely worthless as a race horse.
Item 2: Management's Discussion and Analysis of Financial Condition and
Results of Operations.
=========================================================================
This report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended, that are based on
beliefs of the Company's management as well as assumptions made by and
information currently available to the Company's management. When used in
this report, the words "estimate," "project," "believe," "anticipate,"
"intend," "expect," "plan," "predict," "may," "should," "will," the
negatives thereof or other variations thereon or comparable terminology
are intended to identify forward-looking statements. Such statements
reflect the current views of the Company with respect to future events
based on currently available information and are subject to risks and
uncertainties that could cause actual results to differ materially from
those contemplated in those forward-looking statements. Factors that
could cause actual results to differ materially from the Company's
expectations are set forth in the Company's Annual Report on Form 10-K/A
for the fiscal year ended June 30, 2015.
The following discussion and analysis should be read in conjunction with
the financial statements, including the notes thereto, appearing
elsewhere in this report.
~~PAGE 12~~
The company in its developmental stage is now revising its analysis of
the prospective stallions for purchase.
The company has elected to purchase racing colts and develop them into
breeding stallions, as its primary function. This function is the heart
of the thoroughbred industry, where the most expensive horses are bought
and sold, and thus, the most important sector of the thoroughbred
industry for profit to the company. If the analysis of the prospective
stallions is reasonably accurate, then the company believes that it has
the ability to purchase top breeding and racing stallion prospects at a
fraction of the cost of producing and maintaining breeding stock to
potentially accomplish the same purpose. It appears obvious that, as long
as the company enjoys its PGMRN advantage, that of identifying potential
top breeding and racing stallions, it can purchase these stallion
prospects at a much lower price than it can produce them at this point in
time. Therefore, the company is going to specialize in selecting these
prospects until such time as it is more economical to produce such
stallions. Having the ability to purchase breeding and racing stallion
prospects at a substantially lower price than it would cost to produce
them, is a substantial benefit to the company and eliminates the high
risk of breeding and maintaining broodmares.
The company's future plan of operation is to dispose of its marketing of
its horse products division of Internet horse product marketing. This
disposal could come by advertising, outright sale, spin-off, merger, or
any other means the company has in its arsenal to liquidate this asset
to, instead, specialize in only the purchase and sale of breeding and
racing stallion prospects, as noted above.
In general, any other assets not specifically used for this purpose will
be eliminated. Furthermore, these assets have been used and will more
than likely be sold at a substantial loss to the company. None of the
officers or directors of the company will purchase such assets for their
own interests; rather, these assets will strictly be advertised and sold
to others outside the company at current market prices.
RESULT OF OPERATION
Power Genetics Mathematical Racing Numbers(tm) (PGMRN)
------------------------------------------------------
The minimum objective of the racing and breeding of stallion prospects is
to produce race horses that win graded-stakes races. The maximum the
company is hoping for is that the horses can compete and win in the
classic races.
The company's PGMRN is the company's tool used to evaluate the potential
of the racing and breeding ability of its race horses. This is the
company's proprietary information. These indexes are, as far as the
company understands, on the cutting edge of the horse industry, and very
little data can be found elsewhere in the industry. Therefore, there are
~~PAGE 13~~
uncertainties involved in these Power Numbers. Specifically, will the
company's colts' Power Numbers as the colts reach maturity and racing age
stay the same, increase or decrease? And exactly how accurate are the
company's Power Numbers which will need further analysis of a controlled
and uncontrolled class of horses further than the company has been able
to develop at the present.
MARKET MAKING
The company is in the process of obtaining a market maker for its stock,
and anticipates being on the Pink Sheets until the company meets the
requirements of the OTC Bulletin Board. While the company is in the
process of securing a market maker, there can be no guarantees that a
market maker will be available, or that the company will meet their
requirements in order to make a market for the company's securities.
FINANCIAL CONDITION AND LIQUIDITY
The Company expects to remain inactive. The Board of Directors intends to
pay A substantial portion of the company's expenses, as determined on an
on-going basis by the Board of Directors, until such time as the company
is able to produce a profit.
The company is in solid financial condition at the present time. The
officers and directors have paid the majority of the company's expenses,
and the company enjoys a substantial cash basis in savings and in horse
syndications.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
====================================================================
The competition is catching up to the company in one aspect of NCT's
Proprietary PGMRN Number Indexes, specifically Index 6. For example, Lost
In The Fog, a horse-of-the-year candidate in 2005, won ten straight races
before being defeated in the Breeders Cup Championship Series Sprint
race. Lost In The Fog was analyzed by a company that analyzes efficiency
of stride. According to the Breeders Cup announcers, they analyzed length
of stride and time in the air, and he was selected for this quality. This
would imply that some individuals are beginning to understand and apply
the relationship of Index 6 to a quality of the race horse.
The competition is still behind the company in using the total Power
Numbers in selecting horses for breeding and racing. The indicators are
that some owners and trainers are willing to go through the expense of
analyzing Index indicator Number 6 to help in their selection process,
especially the select Kentucky sales, where horses are sold for millions
of dollars. However, the other indicators seem to be unnoticed at the
present time in comparing horses that have good indicators to those that
do not. Their price seems to be relatively the same, and no
correspondence seems to exist between the poor and good indicators and
~~PAGE 14~~
the prices at which they are sold. The thoroughbred sales in auction
prices. This gives the company a big advantage. The company can
see the horses a day before the sale, analyze hundreds of horses using
the complete Power Index Numbers rather than just Index 6, and purchase
or bid on horses that have the complete package.
Item 4. Controls and Procedures
================================
Evaluation of Disclosure Controls and Procedures
------------------------------------------------
Our management has evaluated, with the participation of our Chief
Executive Officer and Chief Financial Officer, the effectiveness of our
disclosure Controls and procedures (as defined in rules 13a-15(e) and
15d-15(e) of the Securities Exchange Act of 1934, as amended) as of
December 31, 2015. Based on that evaluation, our Chief Executive Officer
and Chief Financial Officer have Concluded that our disclosure controls
and procedures were effective as of December 31, 2015.
Changes in Internal Controls over Financial Reporting
-----------------------------------------------------
There were no changes in the Company's internal control over financial
reporting during the fiscal quarter ended December 31, 2015 that have
materially affected, or are reasonably likely to materially affect, the
Company's internal control over financial reporting.
PART II - OTHER INFORMATION
Item I: Legal Proceedings
None
Item 2: Unregistered Sales of Equity Securities and Use of Proceeds
None
Item 3: Defaults Upon Senior Securities
None
Item 4: Mine Safety Disclosures
Not Applicable
Item 5: Other Information
None
~~PAGE 15~~
Item 6: Exhibits and Reports on Form 8-K
Exhibit 31.1 - Certification of the Chief Executive
Officer pursuant to Rule 13A-14 or 15D-14
of the Securities Exchange Act of 1934,
as adopted pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.
Exhibit 31.2 - Certification of the Acting Chief Financial
Officer pursuant to Rule 13A-14 or 15D-14
of the Securities Exchange Act of 1934, as
adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
Exhibit 32.1 - Certification of the Chief Executive Officer
pursuant to 18 U.S.C. Section 1350 as adopted
pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
Exhibit 32.2 - Certification of the Acting Chief Financial
Officer pursuant to 18 U.S.C. Section 1350
as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
and the Financial Statements of an Inactive Registrant pursuant to
Regulation 17CFR210-3-11, the Registrant has duly caused this Report to
be signed on its behalf by the undersigned thereunder duly authorized.
Nevada Classic Thoroughbreds, Inc.
Dated: February 12, 2016 By: /s/ Brad Brimhall
----------------------------------
Brad Brimhall
Chief Accounting Officer
and Acting Chief Financial Officer
By: /s/ Brad Brimhall
----------------------------------
Brad Brimhall
Chief Executive Officer
~~PAGE 16~
