SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2004
000-49707 |
Commission file number |
BELLACASA PRODUCTIONS, INC. |
(Exact name of small business issuer as specified in its charter) |
Nevada | 58-2412118 | |
(State of incorporation) | (IRS Employer Identification Number) |
914 E Lake Destiny Road |
Altamonte Springs, FL 32714 |
(Address of principal executive office) |
(407) 230-0616 |
(Issuer's telephone number) |
Check whether the issuer: |
(1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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. |
|
As of January 14, 2005 (the most recent practicable date), there were 8,212,167 shares of the issuer's Common Stock, $0.0001 par value per share, outstanding. |
|
BELLACASA PRODUCTIONS, INC. | ||
PART I | FINANCIAL INFORMATION | |
Item 1 | Financial Statements | |
Balance Sheets | ||
Statements of Operations | ||
Statements of Cash Flows | ||
Notes to Financial Statements | ||
Item 2 | Management's Discussion and Analysis and Plan of Operation | |
Item 3 | Controls and Procedures | |
PART II | OTHER INFORMATION | |
Item 1 | Legal Proceedings | |
Item 2 | Changes in Securities | |
Item 3 | Defaults Upon Senior Securities | |
Item 4 | Submission of Matters to a Vote of Security Holders | |
Item 5 | Other Information | |
Item 6 | Exhibits and Reports on Form 8-K | |
SIGNATURES | ||
PART I
ITEM 1 - FINANCIAL STATEMENTS
BELLACASA PRODUCTIONS, INC. | ||||||||
(a development stage company) | ||||||||
Balance Sheets | ||||||||
Assets | ||||||||
June 30, | December 31, | |||||||
Current assets: | ||||||||
Cash | $ | 0 | $ | 0 | ||||
Total current assets | 0 | 0 | ||||||
Investment in screenplays | 0 | 492 | ||||||
Office furniture and equipment, net | 228 | 602 | ||||||
$ | 228 | $ | 1,094 | |||||
Liabilities and Stockholders' Deficit | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued expenses | $ | 18,494 | $ | 16,994 | ||||
Accrued officer's salary under employment agreement | 0 | 169,000 | ||||||
Advances from stockholders | 50,000 | 216,052 | ||||||
Total current liabilities | 68,494 | 402,046 | ||||||
Stockholders' deficit: | ||||||||
Common stock, $.0001 par value, authorized | ||||||||
50,000,000 shares, issued and outstanding | ||||||||
8,082,167 shares | 809 | 809 | ||||||
Preferred stock, $.0001 par value, authorized | ||||||||
25,000,000 shares, no shares issued and outstanding | 0 | 0 | ||||||
Additional paid-in capital | 169,326 | 169,326 | ||||||
Deficit accumulated during the development stage | (238,401 | ) | (571,087 | ) | ||||
Total stockholders' deficit | (68,266 | ) | (400,952 | ) | ||||
$ | 228 | $ | 1,094 | |||||
See accompanying notes to financial statements. | ||||||||
BELLACASA PRODUCTIONS, INC. Statement of Operations | |||||||||||||||||||||||
Three months ended | Six months ended | July 28, 1998 | |||||||||||||||||||||
June 30, | June 30, | June 30, 2004 | June 30, | ||||||||||||||||||||
Revenue | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | |||||||||||||
Costs and expenses: | |||||||||||||||||||||||
Product development and marketing | 0 | 0 | 0 | 0 | 32,494 | ||||||||||||||||||
Interest Expense | 750 | 750 | 1,500 | 1,500 | 8,284 | ||||||||||||||||||
Prepaid offering expense charged-off | 0 | 0 | 0 | 0 | 23,171 | ||||||||||||||||||
General and administrative | 187 | 187 | 374 | 374 | 511,417 | ||||||||||||||||||
Total Costs and Expenses | 937 | 937 | 1,874 | 1,874 | 575,366 | ||||||||||||||||||
Interest income | 0 | 0 | 0 | 0 | 2,405 | ||||||||||||||||||
Settlement of Debts due Related Party | 334,560 | 0 | 334,560 | 0 | 334,560 | ||||||||||||||||||
Net Income (Loss) | $ | 333,623 | $ | (937 | ) | $ | 332,686 | $ | (1,874 | ) | $ | (238,401 | ) | ||||||||||
Basic and diluted Income (Loss) per Share | $ | 0.04 | $ | (NIL | ) | $ | 0.04 | $ | (NIL | ) | $ | (0.03 | ) | ||||||||||
Weighted Average Common Shares Outstanding | 8,082,167 | 8,082,167 | 8,082,167 | 8,082,167 | 7,899,012 | ||||||||||||||||||
See accompanying notes to financial statements. | |||||||||||||||||||||||
BELLACASA PRODUCTIONS, INC. | |||||||||||||
(a development stage company) | |||||||||||||
Statements of Cash Flows | |||||||||||||
Six Months | Six Months | Period from | |||||||||||
Cash flows from operating activities: | |||||||||||||
Net income (loss) | $ | 332,686 | $ | (1,874 | ) | $ | (238,401 | ) | |||||
Adjustments to reconcile net loss to net cash | |||||||||||||
used in operating activities: | |||||||||||||
Depreciation and amortization | 374 | 374 | 6,544 | ||||||||||
Common stock issued for services | 0 | 0 | 38,003 | ||||||||||
Gain on settlement of debts-related party | (334,560 | ) | 0 | (334,560 | ) | ||||||||
Change in operating assets and liabilities: | |||||||||||||
Increase in accounts payable and accrued expenses | 1,500 | 1,500 | 187,494 | ||||||||||
Net cash (used in) operating activities | 0 | 0 | (340,920 | ) | |||||||||
Cash flows from investing activities: | |||||||||||||
Purchase of property and equipment | 0 | 0 | (4,409 | ) | |||||||||
Net cash used in investing activities | 0 | 0 | (4,409 | ) | |||||||||
Cash flows from financing activities: | |||||||||||||
Proceeds from issuance of common stock | 0 | 0 | 129,277 | ||||||||||
Advances from stockholders | 0 | 0 | 216,052 | ||||||||||
Net cash provided by financing activities | 0 | 0 | 345,329 | ||||||||||
Net increase in cash | 0 | 0 | 0 | ||||||||||
Cash at beginning of period | 0 | 0 | 0 | ||||||||||
Cash at end of period | $ | 0 | $ | 0 | $ | 0 | |||||||
Supplementary disclosure of cash flow information: | |||||||||||||
Cash paid for interest | $ | 0 | $ | 0 | $ | 784 | |||||||
Cash paid for income taxes | $ | 0 | $ | 0 | $ | 0 | |||||||
| See accompanying notes to financial statements. | |||||||||||||
BELLACASA PRODUCTIONS, INC.
(a development stage company)
Notes to Interim Financial Statements
June 30, 2004
(1) Interim Financial Statements
The interim financial statements include all adjustments, which, in the opinion of management, are necessary in order to make the financial statements not misleading. The accompanying unaudited financial statements have been prepared in accordance with the instructions to Form 10-QSB and do not include all of the information and footnotes required by Generally Accepted Accounting Principles for complete financial statements.
(2) Summary of Significant Accounting Policies
(a) Nature of development stage operations
Bellacasa Productions, Inc., (Bellacasa or the Company) was formed on July 28, 1998 as a Nevada corporation. The Company has been organized with the intent to operate in the entertainment industry specifically in connection with the production and distribution of motion pictures.
The Company's activities to date have consisted primarily of organizational and equity fund raising activities.
(b) Property and equipment
Property and equipment are recorded at cost and depreciated over the estimated useful lives of the assets, which range from three to five years, using the straight-line method.
(c) Income taxes
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Changes in tax rates are recognized in the period that includes the enactment date.
Development stage operations, from inception through June 30, 2004, resulted in net operating losses. Management has determined that it more likely than not that the net operating loss carry-forwards will not be utilized; therefore a valuation allowance against the related deferred tax asset has been provided. Accordingly, no income tax provision or benefits have been recognized in the accompanying financial statements.
The net operating loss carry-forwards at June 30, 2004 available to offset taxable income in future periods amount to approximately $200,000, which will expire at various dates through 2023.
(d) Use of Estimates
Management of the Company has made certain estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these financial statements in conformity with generally accepted accounting principles. Actual results could differ from those estimates.
(e) Earnings per Common Share
Earnings per common share have been computed based upon the weighted average number of shares outstanding during the period presented.
(f) Stock-Based Compensation
In October 1995, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" (SFAS 123) which sets forth accounting and disclosure requirements for stock-based compensation arrangements. The new statement encourages but does not require, companies to measure stock-based compensation using a fair value method, rather than the intrinsic value method prescribed by Accounting Principles Board Opinion No. 25 ("APB No. 25"). The Company has adopted the disclosure requirements of SFAS 123 and has elected to continue to record stock-based compensation expense using the intrinsic value approach prescribed by APB No. 25. Accordingly, the Company computes compensation cost for each employee stock option granted as the amount by which the quoted market price of the Company's common stock on the date of grant exceeds the amount the employee must pay to acquire the stock. The amount of compensation cost, if any, will be charged to operations over the vesting period.
(g) Cash Flows
For purposes of cash flows, the Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents.
(3) Prepaid Offering Costs
Prepaid offering costs consist of expenses incurred that are directly related to a public offering of securities pursuant to a registration statement filed with the Securities and Exchange Commission, which became effective in December 2001. These costs were to be offset against stockholders' equity from funds raised from the offering. The offering was closed in June 2002 without any funds raised. The prepaid offering costs were charged to expense for the period ended March 31, 2002.
(4) Investment in Screenplays
During the years ended December 31, 2000 and 1999, the principal stockholder contributed to the Company two motion picture screenplays, identified as "Hands" and "The Giant," in exchange for 4,915,000 shares of common stock. The rights to the screenplays were subject to an agreement with an unrelated third party for the right to receive 5% of the total budget of one of the films, to a maximum of $750,000, if the film were ultimately produced.
On May 28, 2004, the Company and its former president and principal shareholder entered into an agreement whereby Bellacasa would transfer to him all of its interests in the screenplays in exchange for the waiver by him of all claims to accrued but unpaid salaries and to all shareholder advances made by him to Bellacasa. As of the date of the agreement, he was owed by the Company $169,000 for accrued salaries, and $166,052 for advances. See below, Note 5, Related Party Transactions.
(5) Related Party Transactions
Commencing in January 2000 through June 30, 2002, the principal stockholder advanced $166,052 to the Company. The advances were non-interest bearing, unsecured and due on demand. Also commencing October 1, 2000, the Company entered into an employment agreement with its principal stockholder and president. Terms of the agreement provided for an annual salary of $100,000. On July 17, 2002, the principal stockholder resigned from his position as president and terminated the employment agreement. The Company accrued $179,000 associated with this agreement through July 17, 2002, the date of termination, of which $10,000 had been paid and $169,000 had been included in accrued officer's salary. On May 28, 2004, the Company transferred its interests in the screenplays "The Giant" and "Hands" to its principal shareholder and former president in exchange for the waiver by him of all claims to accrued but unpaid salaries and all shareholder advances made by him to Bellacasa. The transaction resulted in the rec ording of a gain in the amount of $334,560, which represented the difference between the amount of the debt that was eliminated ($335,052) and the carrying value of the screenplays ($492). The transfer of the ownership of the screenplays took effect on May 28, 2004.
In December 2001, another stockholder advanced $50,000 to the Company, which bears interest at 6% and is due and payable on demand. As of June 30, 2004, interest in the amount of $7,500 has been accrued and is included in accounts payable and accrued expenses in the accompanying balance sheet.
(6) Property and Equipment
Property and equipment consists of the following:
June 30, 2004 | December 31, 2003 | |||
Production equipment | $ 4,409 | $ 4,409 | ||
Less accumulated depreciation | (4,181 | ) | (3,807 | ) |
$ 228 | $ 602 | |||
(7) Stock Option Plan
In July 1998, the Company adopted the Bellacasa Productions, Inc. 1998 Stock Option Plan (Plan). The Plan provides for the issuance of up to 1,000,000 shares for options over a ten-year period. Under provisions of the Plan, the purchase price for a share of stock subject to the options shall not be less then 100% of the fair market value of the stock at the date of grant. As of June 30, 2004 and December 31, 2003 no options had been granted under the Plan.
(8) Going Concern
The Company's financial statements have been presented on a going concern basis, which contemplates the realization and the satisfaction of liabilities in the normal course of business. The liquidity of the Company has been adversely affected by losses since inception and there is a stockholders' deficit of $68,266 at June 30, 2004. These conditions raise substantial doubt about the Company's ability to continue as a going concern without additional capital contributions and/or achieving profitable operations. Management's plans are to continue its equity funding efforts and/or seek an acquisition or a merger with a company engaged in the motion picture industry or an unrelated field. There can be no assurance, however, that the Company will be successful in accomplishing its objectives.
(9) Subsequent Events
On November 15, 2004, the Company entered into a Stock Purchase Agreement to acquire all of the issued and outstanding stock of Aquamer, Inc. ("Aquamer"), a development stage medical technology corporation organized under the laws of Delaware, in exchange for 28,185,648 shares of the Company's common stock which upon issuance will constitute approximately 77.4% of the Company's issued and outstanding common stock. The transaction is being structured as a reverse takeover, which means that the former shareholders of Aquamer shall obtain voting control over Bellacasa. The closing date has not been set and is subject to agreement on all material schedules to the Stock Purchase Agreement. Additionally, it is a condition precedent to the closing that the Company is furnished with audited financial statements and unaudited interim financial statements of both the Company and Aquamer and that the Company's quarterly and annual reports through the quarter ended September 30, 2004 have been filed with t he SEC. There is no assurance that the acquisition will be consummated and even if it is consummated, that it will be on the terms provided in the Stock Purchase Agreement.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION
General
Bellacasa Productions, Inc. was formed to operate as a motion picture studio. We planned to acquire, produce and market motion pictures for distribution to movie theaters and ancillary markets.
On December 7, 2001, our registration statement for the sale of 1,200,000 units consisting of common stock and warrants was deemed effective by the Securities and Exchange Commission. On June 18, 2002, we terminated the offering without selling any of the units.
Although we were unsuccessful in raising capital from our offering, as of June 30, 2002, we were still considering alternative financing in order to proceed with our business plan. After the resignation on July 17, 2002 of our president, Mr. Frank LaLoggia, we began considering the possibility of abandoning our business plan and exploring the possibility of merging with a company in an unrelated field.
On May 28, 2004, we transferred our interests in the screenplays "The Giant" and "Hands" to our principal shareholder and former president, Mr. Frank LaLoggia in exchange for the waiver by him of all claims to accrued but unpaid salaries and all shareholder advances made by him to our company. As of the date of the transaction, we were indebted to him in the total amount of $335,052, which consisted of accrued but unpaid salary; $169,000 and shareholder advance; $166,052. The transaction resulted in the recording of a gain on the transaction in the amount of $334,560, which represented the difference between the amount of the debt that was eliminated ($335,052) and the carrying value of the screenplays ($492).
On November 15, 2004, we entered into a Stock Purchase Agreement to acquire all of the issued and outstanding stock of Aquamer, Inc. ("Aquamer"), a development stage medical technology corporation organized under the laws of Delaware, in exchange for 28,185,648 shares of our common stock, which, upon issuance, will constitute approximately 77.4% of our issued and outstanding common stock. The Stock Purchase Agreement was included as Exhibit 2.1 to our Report on Form 8-K, which was filed on November 17, 2004.
The transaction is being structured as a reverse takeover, whereby former shareholders of Aquamer shall obtain voting control over Bellacasa upon issuance of the shares of Bellacasa common stock. Bellacasa has 8,212,167 shares of common stock issued and outstanding at the time of the instant filing.
Although, we expect the transaction to close in January 2005, the closing date has not yet been set and is subject to agreement on all material schedules to the Stock Purchase Agreement. Additionally, it is a condition precedent to the closing that we be furnished with audited financial statements and unaudited interim financial statements for both our company and Aquamer and that all of our quarterly and annual reports, including the quarter ended September 30, 2004, have been filed with the SEC.
There is no assurance that the acquisition will be consummated and even if it is consummated, that it will be on the terms provided in the Stock Purchase Agreement.
Results of Operations
The following discussion and analysis provides information our management believes is relevant to an assessment and understanding of our results of operations and financial condition. The discussion should be read in conjunction with the financial statements and footnotes that appear elsewhere in this report.
Three Months Ended June 30, 2004 and Three Months Ended June 30, 2003:
Sales - We did not have any sales during the three months ended June 30, 2004 or the three months ended June 30, 2003.
Costs and Expenses - Total costs and expenses for the three months ended June 30, 2004 were $937, which is the same as the costs and expenses for the three months ended June 30, 2003. The expenses for both periods include interest accrued on the $50,000 loan from shareholder, $750; and depreciation expense, $187.
Other Income - On May 28, 2004, we transferred ownership of screenplays to our former president in exchange for waiver of monies owed him for accrued salaries of $169,000 and shareholder advances of $166,052. The screenplays were carried on our books at $492; consequently, we recorded a gain of $334,560 from the debt settlement.
Net Income/Losses - Net income for the three months ended June 30, 2004 was $333,623, which is comprised of the gain from debt settlement of $334,560 less an operating loss of $937. In the comparable three-month period ending June 30, 2003, we had a loss of $937.
Income per share for the three-month period ended June 30, 2004 was $0.04 per share and our loss for the three months ended June 30, 2003 was $NIL. In both periods the weighted average of common shares outstanding was 8,082,167.
Six Months Ended June 30, 2004, Six Months Ended June 30, 2003, and from Inception, July 28, 1998, through June 30, 2004:
Sales - We did not have any sales during the six months ended June 30, 2004 or during the six months ended June 30, 2003 or since inception, July 28, 1998, through June 30, 2004.
Costs and Expenses - Total costs and expenses for the six months ended June 30, 2004 were $1,874, which is the same as the costs and expenses for the six months ended June 30, 2003. The expenses for both periods include interest accrued on the $50,000 shareholder loan of $1,500; and depreciation expense of $374. The total of our costs and expenses since our inception is $575,366.
Net Income/ Losses - Net income for the six months ended June 30, 2004 was $332,686, which is composed of the gain from debt settlement of $334,560 less an operating loss of $1,874. In the comparable six-month period ending June 30, 2003, we had a loss of $1,874. Since inception, our net loss has been $238,401.
Income per share for the six-month period ended June 30, 2004 was $0.04 per share and our loss for the six months ended June 30, 2003 was $NIL. In both periods the weighted average of common shares outstanding was 8,082,167.
Liquidity and Capital Resources
As of June 30, 2004, June 30, 2003 and December 31, 2003, we did not have any cash balances.
We have neither generated nor used cash in the six months ended June 30, 2004 or the six months ended June 30, 2003. Since inception, we have consumed cash of $181,500.
Our liabilities total $68,494, of which $50,000 is owed to Mr. Charles LaLoggia for advances made by him to our company and $7,500 for interest accrued on that debt and the balance for accounts payable.
Ability to Continue as a Going Concern and Plan of Operation
Our financial statements, which are a part of this Form 10-QSB, have been presented assuming that we will continue as a going concern and contemplates the realization and the satisfaction of liabilities in the normal course of business. Our liquidity has been adversely affected by losses from operations since inception. We reported a net loss from operations of $1,874 for the six months ended June 30, 2004 and net losses since inception of $238,401. Additionally, there is a stockholders' deficit of $68,266 at June 30, 2004. These conditions raise substantial doubt about our ability to continue as a going concern without additional capital contributions. Our plan is to seek an acquisition or a reverse merger with a company engaged in the motion picture industry or an unrelated field. There can be no assurance, however, that we will be successful in accomplishing our objectives.
If we are unable to complete a reverse merger-type transaction, we will be required to borrow or sell securities in private offerings to meet our cash needs over the next 12 months. If we are unable to raise funds, we may terminate our business. There is no assurance we will be able to raise sufficient funds to continue as a corporate entity.
Employees
Other than our president, Richard Gagne, who devotes such time as necessary to our operations, we do not have any employees. We may utilize independent contractors and consultants from time to time to assist us with our compliance requirements.
ITEM 3 - CONTROLS AND PROCEDURES
We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2004. This evaluation was accomplished under the supervision and with the participation of our chief executive officer, principal executive officer/ principal accounting officer who concluded that our disclosure controls and procedures are effective. As of December 31, 2004, and the date of this Report, Richard Gagne served as our Chief Executive Officer and Chief Financial Officer (which duties include that of principal accounting officer). There have been no significant or material changes in our internal controls or in other factors, which could significantly affect internal controls subsequent to the date we completed our evaluation and the date of filing of this Report on Form 10-QSB.
Disclosure controls and procedures are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
PART II
Item 1 - Legal Proceedings
None
Item 2 - Changes in Securities
During the period April 1, 2004 through June 30, 2004, we did not issue any securities.
As of June 30, 2004, we had 8,082,167 shares of common stock outstanding.
Item 3 - Defaults upon Senior Securities
Not applicable
Item 4 - Submission of Matters to a Vote of Security Holders
Not applicable
Item 5 - Other Information
Not applicable
Item 6 - Exhibits and Reports on Form 8-K
(a) | Exhibits Exhibit 31.1 - Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of the Principal Executive Officer and Principal Financial Officer and Principal Accounting Officer Exhibit 32.1 - Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of the Principal Executive Officer and Principal Financial Officer and Principal Accounting Officer | ||
(b) | Reports on Form 8-K No reports were filed on Form 8-K for the three months ended June 30, 2004 |
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
BELLACASA PRODUCTIONS, INC. | ||||
January 15, 2005 | By: | /s/ Richard Gagne | ||
Richard Gagne |
