Washington, D.C. 20549
(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, 2004 |
| [_] | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT |
For the transition period from ________ to ________
Commission file number_______________________
TALLY-HO VENTURES, INC.
a Delaware corporation
518 Oak Street #2
Glendale, CA 91204
818-550-7886
I.R.S. Employer Identification #: 43-1988542
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. Yes [X] No [_]
Number of shares of common stock of Tally-Ho Ventures, Inc. outstanding, as of October 31, 2004: 45,915,875.
Transitional Small Business Disclosure Format (Check one): Yes [_] No [X]
TALLY-HO VENTURES, INC.
[a development stage corporation]
BALANCE SHEET
as of September 30, 2004
[unaudited]
| ASSETS | |||||
| Current Assets | |||||
| Cash - General Account | $ | 4,224 | |||
| Cash - Production Account | 20,000 | ||||
| Cash - Distribution & Exhibition Account | 6,500 | ||||
| Total Assets | 30,724 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||
| LIABILITIES | |||||
| Current Liabilities | |||||
| Notes Payable to Shareholders | $ | 6,468 | |||
| Total Liabilities | 6,468 | ||||
| STOCKHOLDERS' EQUITY | |||||
| Common stock, $0.001 par, 75,000,000 | |||||
| shares authorized, 45,915,875 shares | |||||
| issued and outstanding | 45,916 | ||||
| Additional paid-in capital | 63,688 | ||||
| Accumulated deficit | (85,348 | ) | |||
| Total Stockholders' Equity | 24,256 | ||||
| Total Liabilities and Stockholders' Equity | $ | 30,724 | |||
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TALLY-HO VENTURES, INC.
[a development stage corporation]
STATEMENT OF EXPENSES
Three months ended September 30, 2004,
Nine months ended September 30, 2004,
Three months ended September 30, 2003,
Nine months ended September 30, 2003,
and the period from November 21, 2002 (Inception) through September 30, 2004
| 7/1 - 9/30, 2004 | 1/1 - 9/30, 2004 | 7/1 - 9/30, 2003 | 1/1 - 9/30, 2003 | Inception through 9/30/2004 | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Administrative expenses | |||||||||||||||||
| - paid in cash | $ | 1,677 | 8,288 | 2,193 | 6,109 | 17,401 | |||||||||||
| - paid in stock | -- | -- | -- | -- | 67,200 | ||||||||||||
| - imputed interest | 130 | 354 | 114 | 241 | 747 | ||||||||||||
| Net loss | $ | (1,807 | ) | (8,642 | ) | (2,307 | ) | (6,350 | ) | (85,348 | ) | ||||||
| Net loss per share | (0.00 | ) | (0.00 | ) | (0.00 | ) | (0.00 | ) | |||||||||
| Weighted average common shares | |||||||||||||||||
| outstanding | 46,228,647 | 44,954,470 | 43,150,000 | 43,150,000 | |||||||||||||
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TALLY-HO VENTURES, INC.
[a development stage corporation]
STATEMENT OF CASH FLOWS
Nine months ended September 30, 2004,
Nine months ended September 30, 2003,
and period from November 21, 2002 (Inception) through September 30, 2004
| 1/1 - 9/30, 2004 | 1/1 - 9/30, 2003 | Inception through 9/30/2004 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||
| Net loss | $ | (8,642 | ) | (6,350 | ) | (85,348 | ) | ||||
| Adjustments to reconcile | |||||||||||
| net loss to cash used | |||||||||||
| in operating | |||||||||||
| activities: | |||||||||||
| Stock issued to founders | -- | -- | 41,050 | ||||||||
| Stock issued for services | -- | -- | 26,150 | ||||||||
| Imputed interest on notes | |||||||||||
| payable to shareholders | 354 | 241 | 747 | ||||||||
| Changes in Accounts Payable | (310 | ) | -- | -- | |||||||
| NET CASH USED IN OPERATING ACTIVITIES | (8,598 | ) | (6,109 | ) | (17,401 | ) | |||||
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||
| Loans to related party | -- | (1,300 | ) | (1,300 | ) | ||||||
| Proceeds from repayment of | |||||||||||
| loan to related party | -- | 1,300 | 1,300 | ||||||||
| NET CASH USED IN INVESTING ACTIVITIES | -- | 0 | 0 | ||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||
| Proceeds from notes payable | |||||||||||
| to shareholders | 1,650 | 3,918 | 9,064 | ||||||||
| Payments on notes payable | |||||||||||
| to shareholders | (2,596 | ) | -- | (2,596 | ) | ||||||
| Stock issued for cash | 42,500 | -- | 50,157 | ||||||||
| Stock returned and cancelled; | |||||||||||
| cash returned | (8,500 | ) | -- | (8,500 | ) | ||||||
| NET CASH PROVIDED BY FINANCING ACTIVITIES | 33,054 | 3,918 | 48,125 | ||||||||
| NET CHANGE IN CASH | 24,456 | (2,191 | ) | 30,724 | |||||||
| Cash balance, beginning | 6,268 | 2,450 | 0 | ||||||||
| Cash balance, ending | $ | 30,724 | 259 | 30,724 | |||||||
| CASH PAID FOR: | |||||||||||
| Interest | $ | -- | -- | -- | |||||||
| Income taxes | $ | -- | -- | -- | |||||||
| SCHEDULE OF NON-CASH | |||||||||||
| INVESTING AND FINANCING | |||||||||||
| Common stock issued for services | $ | -- | -- | 67,200 | |||||||
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TALLY-HO VENTURES, INC.,[a
development stage corporation]
NOTES TO FINANCIAL STATEMENTS
NOTE 1 — BASIS OF PRESENTATION
The accompanying unaudited interim financial statements of Tally-Ho Ventures, Inc. (“Tally-Ho”) have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”), and should be read in conjunction with the audited financial statements and notes thereto contained in Tally-Ho’s Form 10-KSB filed with the SEC. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for fiscal year 2003 as reported in the 10-KSB have been omitted.
NOTE 2 — SIGNIFICANT EVENTS
On June 12, 2004, the Board of Directors of Tally-Ho resolved to conduct a private placement offering of 3,000,000 of its common shares of stock at a price of $0.02 per share. The offering was conducted from June 12, 2004 — July 13, 2004 pursuant to an exemption from registration under Section 5 of the Securities Act of 1933, as amended.
2,125,000 shares were issued to 12 investors in the state of California. A total of $42,500 was raised, including $1,300 raised after June 30, 2004.
NOTE 3 — RELATED PARTY TRANSACTIONS
Treasurer Ariella Kapelner loaned the Company $900 in the nine months ended September 30, 2004. President and Chairman of the Board Tal L. Kapelner loaned the Company $375 in the nine months ended September 30, 2004, and Vice-President, Secretary and Director Cheney A. Shapiro loaned the Company $375 in the nine months ended September 30, 2004.
Additionally, imputed interest of $354 for the nine months ended September 30, 2004 was contributed to capital by holders of the notes, and was recorded as paid-in capital.
Further, Tal L. Kapelner purchased 137,500 shares of stock of the Company in the private placement offering described in Note 2 for $2,750, and Cheney A. Shapiro purchased 425,000 shares of stock of the Company in the private placement offering described in Note 2 for $8,500.
Further, on September 8, 2004, Cheney A. Shapiro returned to the Company the 425,000 shares of stock she purchased in the private placement offering described in Note 2 above. The Company cancelled the 425,000 shares and returned the purchase price of $8,500 to Ms. Shapiro.
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FORWARD-LOOKING STATEMENTS
This report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements relate to future events or the Company’s future financial performance. The Company intends the forward-looking statements throughout this quarterly report and the information incorporated by reference to be covered by the safe harbor provisions for forward-looking statements. All projections and statements regarding the Company’s expected financial position and operating results, its business strategy, its financing plans and the outcome of any contingencies are forward-looking statements. These statements can sometimes be identified by the use of forward-looking words such as “may,” “believe,” “plan,” “will,” “anticipate,” “estimate,” “expect,” “intend,” and other words and phrases of similar meaning. Known and unknown risks, uncertainties and other factors could cause the actual results to differ materially from those contemplated by the statements. The forward-looking information is based on information available as of the date of this report on Form 10-KSB and on numerous assumptions and developments that are not within our control. Although the Company believes these forward-looking statements are reasonable, the Company cannot assure you they will turn out to be correct.
The amount of cash we currently have on hand, as of October 31, 2004, is $30,003, and the amount of working capital we have — which is current assets minus current liabilities — is $23,535. As of the end of our last quarter, on September 30, 2004, we had $30,724 cash on hand. The amount of cash we will need to operate our business over the next 12 months is $10,200 for administrative expenses and approximately $60,000 for production and operating costs, for a total of $70,200. The amount of cash we have on hand is sufficient to satisfy our cash requirements for administrative expenses over the next year, but insufficient to pay for some of our operational and production costs. Without an infusion of cash from future money raises, we will only be able to produce approximately 40% of the entertainment products we have slated for production over the next 12 months.
Production Plans. Over the next 12 months, Tal Kapelner and Cheney Shapiro plan to a) complete the two major projects we have under way so far — the short film entitled “The G! True Tinseltown Tale: Dude, Where’s My Car?” and the rough television pilot “The Boiler Twins” — and b) produce a minimum of 7 super-short films (under ten minutes long) films and 3-4 short films (10-40 minutes long). Based upon our experience, we anticipate each of these products to have a completion timeframe of 2-4 months each, from pre-production to post-production, subject to additional, future financing.
G! Dude? Regarding the completion and marketing of our first entertainment product, a short film shot on digital video entitled “The G! True Tinseltown Tale: Dude, Where’s My Car?” (“G! Dude?”), the specific steps we still are taking to accomplish this are: a) have director, producers and editor work together to cut the footage together into a final film, adding any visual or sound effects, additional dialogue recording, narration, additional footage, etc.; b) produce copies of the finished film in whichever media is deemed suitable; and c) distribute and market the finished product.
The cost of these steps is likely to be approximately $3,000 and due to our successful money raise in June and July this year, we anticipate taking the month of November, 2004 to complete this project.
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Worst Car Parker Ever Following completion of the G! Dude? project, we shall begin the next project on our slate, a web-exclusive video vignette featuring two sets of teams, each with their own car, attempting to garner the most number of parking tickets in one day in the Greater Los Angeles Area. The steps we will need to take to accomplish this are:
a) complete a treatment and detailed outline of the vignette;
b) decide on a director and producers;
c) develop a budget and production schedule;
d) finance the project;
e) prepare paperwork for, and sign with, actors union;
f) sign with payroll company and prepare employer tax and workers’ compensation obligations;
g) decide on who will participate in the vignette, cast any roles as needed;
h) hire all needed crewmembers;
i) purchase or otherwise secure props, wardrobe and filmmaking equipment;
j) shoot the action of each of the two teams as they wander around L.A. in search of parking enforcement officers to ticket their cars;
k) complete final tax and union paperwork;
l) hire editor to catalogue all of the footage shot;
m) have director, producers and editor work together to cut the footage together into a final vignette, adding any visual or sound effects, additional dialogue recording, narration, additional footage, etc.; and
n) upload finished vignette to website.
We project a cost of $5,000 for this project from start to finish. Due to our successful money raise of $42,500 completed in July, 2004, we anticipate starting this project in November 2004, once we’ve completed the G! Dude? short film, and uploading the finished product in December 2004.
The Philosophy Behind Fart Jokes The largest project we have planned in the next 12 months is to produce and screen a pilot episode of our newest planned television show, “The Philosophy Behind Fart Jokes”, which we have designed to be a behind-the-scenes reality-based television show which will feature edited footage of three writing partners coming together at a table to write a comedy sketch of their choosing. The first two-thirds of the show will contain this footage showing the writers attempting to put funny material down on paper in the form of a five-minute comedy skit. The final 5-10 minutes of the program will feature professional actors actually performing the skit the writers just completed writing, as well as bonus behind-the-scenes footage showing the actors first reading their lines and rehearsing. The specific steps for completing this milestone will be:
a) write a detailed treatment and outline of the action in the episode;
b) decide on a director and producers;
c) develop a budget and production schedule;
d) finance the project;
e) prepare paperwork for, and sign with, actors union;
f) sign with payroll company and prepare employer tax and workers’ compensation obligations;
g) cast all roles;
h) find and secure studio sets for shooting;
i) hire all needed crewmembers;
j) purchase or otherwise secure props, wardrobe and filmmaking equipment;
k) prepare food and beverage service for the cast and crew on set and make other preparations before shooting;
l) shoot the documentary footage of the three writers writing a skit together;
m) shoot documentary footage of actors receiving the material the writers just wrote, rehearsing and then performing the skit;
n) complete final tax and union paperwork;
o) hire editor to catalogue all of the footage shot;
p) have director, producers and editor work together to cut the footage together into a final film, adding any visual or sound effects, additional dialogue recording, narration, additional footage, etc.;
q) produce copies of the finished film in whichever media is deemed suitable; and
r) distribute and market the finished product through the various methods discussed above in the section Business of Issuer.
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The timeframe for completing this project, because of our successful stock offering completed in July, 2004, is expected to be five months from writing the treatment to screening the finished pilot to members of the entertainment industry and others. We anticipate working on this project from December of 2004 to the end of May 2005, and spending $40,000 to produce and market it. We will likely need to conduct a future money raise in order to complete the financing of this project, or use funds from anticipated operations through our subcontracting contract with Viscount Productions beginning next year.
Delux Beauty Although we do not have as yet a firm placement in our production schedule for this project due to uncertainties with actors’ schedules, clearance of the project through all parties’ agents and managers, and other factors, the sitcom pilot “Delux Beauty,” a property developed by Jason Diola and Scott Caan and exclusively the right of Tally-Ho to produce, is being slated tentatively for production in the next six months, due to our successful money raise in June and July, 2004, which satisfied the requirements of the contract with Diola and Caan to trigger production.
In addition to the above-mentioned creative projects, we have many ideas in development for our short and super short films, including a spoof of Viacom’s basic cable channel MTV, tentatively titled “20 Things You Won’t See on MTV (Like Dignity)"; a parody of the television series “Inside the Actor’s Studio”; a parody of television shows featuring bloopers and practical jokes; a parody of the television show “The Love Boat” tentatively titled “The Like Boat”; and two short films: first, a comedy centering on new Hollywood writers in training as they write some of their first scripts, which we bring to life on screen to show the absurdity of the ideas; and second, a dramatic short film about a group of psychiatrists’ influence in the loss of individual liberty and freedom in a futuristic U.S., both of which short films we may use as a tool to develop funding from investors for shooting a feature-length version of the same film.
Marketing plans. We also plan to step up our marketing efforts, subject to future financing, of both our company as a whole as well as our indidividual projects.
We look forward to more screenings of our first short film, “The G! True Tinseltown Tale: Dude, Where’s My Car?". Tal Kapelner plans to approach sorority and fraternity houses on university campuses in the Los Angeles area, including University of California at Los Angeles, University of Southern California, and Pepperdine University, offering to pay the sorority or fraternity $30 per person they get to attend screenings of “G! Dude?", maximum of 100 persons. The idea is to get exposure of the project among young and hip persons who have a higher likelihood than the general population to be well-connected tot he entertainment industry, who may spread good word (“buzz”) about the film and bring attention to the company. Dates of this activity are expected to be around January 2005.
Tal Kapelner and Cheney Shapiro also as well as distributing DVD and/or VHS copies of the film to key entertainment industry players, as we detail in our prospectus and subsequent filings. We also plan to distribute copies of our television pilot “The Boiler Twins” in the hopes of gaining sufficient interest from television programmers. To publicize our company as a whole, and drive viewers to our website, we may place some of our written works — currently available through our websitewww.tallyhoventures.com — in the form of an ad placed in entertainment industry trade publications like Hollywood Reporter and Variety, and we may also advertise on-line in certain websites we feel may garner the greatest amount of exposure to our target demographic. Our marketing strategy in this area is to advertise counter-intuitively on sites that are not particularly known for their entertainment industry content, and are not widely advertised on at all, such as political weblogs like andrewsullivan.com, wonkette.com and instapundit.com, thereby reaching a powerful and affluent demographic without much competition from other advertisers, in particular those from the entertainment industry.
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Financing Plans. Our private stock offering in 2004 should see us through at least two or three of our major projects on our production slate.
For additional financing in the upcoming year, we have approached film and television producers and entertainment executives about contacting other persons in the entertainment industry for a possible second public offering in the next year. One producer and one executive have agreed to such a venture, should the Company decide to raise money in that manner.
Additionally, we have approached financing companies regarding both debt and equity financing. Offers have consisted so far mainly along the lines of an equity line of credit, contingent upon the registering of an additional number of shares through an additional SB-2. For example, according to one term sheet, the amount the Company shall be entitled to request from each of the purchase “Puts” shall be equal to the lower of $10,000 or 200% of the averaged daily volume (U.S market only) (“ADV”) multiplied by the average of the 3 daily closing prices immediately preceding the Put Date. Some offers have asked for cash up front from Tally Ho for attorney costs to pay for subscription agreements and other materials prior to the Company filing its SB-2. The Company is currently reviewing the different term sheets.
Plant and Significant Equipment .. We do not expect any purchase or sale of any plant or significant equipment assets in the next 12 months. We may lease additional office and studio space, depending upon the success of future money raises. Currently we use dedicated office and small studio space provided free of charge by our president, Tal L. Kapelner.
Number of Employees. Our current number of employees is zero. We do not expect a significant change in the number of employees in the next 12 months. If future money raises were to prove especially successful, we may hire our three officers as employees, for a total of three employees.
OFF-BALANCE SHEET ARRANGEMENTS
We have no off-balance sheet arrangements.
It is Management’s responsibility for establishing and maintaining adequate internal control over financial reporting for Tally Ho. It is the President’s and Treasurer’s ultimate responsibility to ensure the Company maintains disclosure controls and procedures designed to provide reasonable assurance that material information, both financial and non-financial, and other information required under the securities laws to be disclosed is identified and communicated to senior management on a timely basis. The Company’s disclosure controls and procedures include mandatory communication of material events, management review of monthly, quarterly and annual results and an established system of internal controls.
As of September 30, 2004, management of the Company, including the President and Treasurer, conducted an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures with respect to the information generated for use in this Quarterly Report. Based upon and as of the date of that evaluation, the President and Treasurer have concluded the Company’s disclosure controls were effective to provide reasonable assurance that information required to be disclosed in the reports that the Company files or submits under the relevant securities laws is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms. There have been no changes in the Company’s internal control over financial reporting during the period ended September 30, 2004, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
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It should be noted that while the Company’s management, including the President and Treasurer, believes the Company’s disclosure controls and procedures provide a reasonable level of assurance, they do not expect that the Company’s disclosure controls and procedures or internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance the objectives of the control system are met. Further, the design of a control system must reflect the fact there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to errors or fraud may occur and not be detected.
Index of Exhibits:
| 31.1 | Certification of President pursuant to Exchange Act Rules 13a-14(a) and 15(d)-14(a), adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| 31.2 | Certification of Treasurer pursuant to Exchange Act Rules 13a-14(a) and 15(d)-14(a), adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| 32.1 | Certification of President pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| 32.2 | Certification of Treasurer pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
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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.
| Date November 10, 2004 Date November 10, 2004 | TALLY-HO VENTURES, INC. (Registrant) /s/ Tal L. Kapelner Tal L. Kapelner President /s/ Ariella Kapelner Ariella Kapelner Treasurer |
