UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
FORM 10-Q
____________________
| [X] QUARTERLY REPORT UNDER SECTION 13 OR 15 ( d ) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2009
| [ ] TRANSITION REPORT UNDER SECTION 13 OR 15 ( d ) OF THE EXCHANGE ACT |
For the transition period from ____________ to____________
Commission File No. 333-150883
(Exact name of Registrant as specified in its charter)
| | |
| Nevada | 88-0367706 |
| (State or Other Jurisdiction of | (I.R.S. Employer Identification No.) |
| incorporation or organization) | |
4950 Golden Springs Drive
Reno, Nevada 89509
(Address of Principal Executive Offices)
(775) 560-6659
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the Registrant has (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) 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 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 definition 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]
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes [ ] No [X ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
Not applicable.
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the Registrant’s classes of common stock, as of the latest practicable date: August 12, 2009 – 1,672,000 shares of common stock.
THERMAL TENNIS INC.
Table of Contents
| | Page |
| PART I – FINANCIAL INFORMATION | |
| Item 1 Financial Statements | 3 |
| Item 2 Management’s Discussion and analysis of Financial Condition and Results of Operations | 13 |
| Item 3 Quantitative and Qualitative Disclosures About Market Risk | 15 |
| Item 4 Controls and Procedures | 15 |
| PART II – OTHER INFORMATION | |
| Item 1 Legal Proceedings | 16 |
| Item 1A Risk Factors | 16 |
| Item 2 Recent Sales of Unregistered Securities and Use of Proceeds | 16 |
| Item 3 Defaults Upon Senior Securities | 16 |
| Item 4 Submission of Matters to a Vote of Security Holders | 16 |
| Item 5 Other Information | 16 |
| Item 6 Exhibits | 16 |
| SIGNATURES | 17 |
PART I
Item 1. Financial Statements
The Financial Statements of the Registrant required to be filed with this 10-Q Quarterly Report were prepared by management and commence below, together with related notes. In the opinion of management, the Financial Statements fairly present the financial condition of the Registrant.
| THERMAL TENNIS INC. | |
| | | | | | | |
| CONDENSED BALANCE SHEETS | |
| JUNE 30, 2009 AND DECEMBER 31, 2008 | |
| | | | | | | |
| | |
| | | | | | | |
| ASSETS | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | June 30, | | | December 31, | |
| | | 2009 | | | 2008 | |
| | | (Unaudited) | | | | |
| CURRENT ASSETS: | | | | | | |
| Cash | | $ | 15,123 | | | $ | 17,018 | |
| Accounts receivable | | | 3,902 | | | | - | |
| Prepaid insurance | | | 1,404 | | | | - | |
| Due from officer | | | 4,288 | | | | 6,020 | |
| | | | | | | | | |
| Total Current Assets | | | 24,717 | | | | 23,038 | |
| | | | | | | | | |
| TOTAL ASSETS | | $ | 24,717 | | | $ | 23,038 | |
| | | | | | | | | |
| | | | | | | | | |
| LIABILITIES AND STOCKHOLDERS' DEFICIT | |
| | | | | | | | | |
| CURRENT LIABILITIES: | | | | | | | | |
| Accounts payable and accrued expenses | | $ | 11,815 | | | $ | 20,335 | |
| Deposits | | | 1,884 | | | | - | |
| Notes payable | | | 40,000 | | | | 40,000 | |
| | | | | | | | | |
| Total Current Liabilities | | | 53,699 | | | | 60,335 | |
| | | | | | | | | |
| STOCKHOLDERS' DEFICIT: | | | | | | | | |
| Capital stock, $.001 par value; 50,000,000 shares authorized; | | | | | | | | |
| 1,654,000 and 1,579,000 shares issued and outstanding | | | | | | | | |
| at June 30, 2009 and December 31, 2008, respectively | | | 1,654 | | | | 1,579 | |
| Additional paid-in capital | | | 28,638 | | | | 9,963 | |
| Accumulated deficit | | | (59,274 | ) | | | (48,839 | ) |
| | | | | | | | | |
| Total Stockholders' Deficit | | | (28,982 | ) | | | (37,297 | ) |
| | | | | | | | | |
| TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | | $ | 24,717 | | | $ | 23,038 | |
The accompanying notes are an integral part of these financial statements.
| THERMAL TENNIS INC. | |
| | | | | | | | | | | | | |
| CONDENSED STATEMENTS OF OPERATIONS | |
| FOR THE SIX MONTHS ENDED JUNE 30, 2009 AND 2008 | |
| AND THE THREE MONTHS ENDED JUNE 30, 2009 AND 2008 | |
| | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | Six Months Ended | | | Three Months Ended | |
| | | June 30, | | | | | | June 30, | | | | |
| | | 2009 | | | 2008 | | | 2009 | | | 2008 | |
| | | (Unaudited) | | | (Unaudited) | | | (Unaudited) | | | (Unaudited) | |
| | | | | | | | | | | | | |
| SALES, Net of Returns, Allowances and Discounts | | $ | 42,748 | | | $ | - | | | $ | 39,151 | | | $ | - | |
| | | | | | | | | | | | | | | | | |
| EXPENSES: | | | | | | | | | | | | | | | | |
| General and administrative expenses | | | 51,267 | | | | 11,999 | | | | 38,890 | | | | 5,848 | |
| | | | | | | | | | | | | | | | | |
| TOTAL OPERATING EXPENSES | | | 51,267 | | | | 11,999 | | | | 38,890 | | | | 5,848 | |
| | | | | | | | | | | | | | | | | |
| (LOSS) BEFORE OTHER (EXPENSE) AND INCOME TAXES | | | (8,519 | ) | | | (11,999 | ) | | | 261 | | | | (5,848 | ) |
| | | | | | | | | | | | | | | | | |
| OTHER INCOME/(EXPENSE) | | | | | | | | | | | | | | | | |
| Interest income | | | 68 | | | | - | | | | 25 | | | | - | |
| Interest expense | | | (1,984 | ) | | | (1,500 | ) | | | (998 | ) | | | (750 | ) |
| | | | | | | | | | | | | | | | | |
| Total other income/(expense) | | | (1,916 | ) | | | (1,500 | ) | | | (973 | ) | | | (750 | ) |
| | | | | | | | | | | | | | | | | |
| PROVISIONS FOR INCOME TAXES | | | - | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | |
| NET LOSS | | $ | (10,435 | ) | | $ | (13,499 | ) | | $ | (712 | ) | | $ | (6,598 | ) |
| | | | | | | | | | | | | | | | | |
| (LOSS) PER SHARE-FULLY DILUTED | | $ | (0.01 | ) | | $ | (0.01 | ) | | $ | (0.00 | ) | | $ | (0.00 | ) |
| | | | | | | | | | | | | | | | | |
| WEIGHTED AVERAGE SHARES OUTSTANDING | | | 1,636,077 | | | | 1,500,000 | | | | 1,653,011 | | | | 1,500,000 | |
The accompanying notes are an integral part of these financial statements.
| THERMAL TENNIS INC. | |
| | | | | | | |
| CONDENSED STATEMENTS OF CASH FLOWS | |
| FOR THE SIX MONTHS ENDED JUNE 30, 2009 AND 2008 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | Six Months Ended | |
| | | June 30, | | | | |
| | | 2009 | | | 2008 | |
| | | (Unaudited) | | | (Unaudited) | |
| CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | |
| Net loss | | $ | (10,435 | ) | | $ | (13,499 | ) |
| Adjustments to reconcile net loss to net cash used | | | | | | | | |
| in operating activities: | | | | | | | | |
| Changes in assets and liabilities: | | | | | | | | |
| (Increase) in accounts receivable | | | (3,902 | ) | | | - | |
| (Increase) in prepaid insurance | | | (1,404 | ) | | | - | |
| Decrease in due from officer | | | 1,732 | | | | 1,500 | |
| (Increase) in deferred offering costs | | | - | | | | (5,857 | ) |
| Increase/(decrease) in accounts payable and accrued expenses | | | (8,520 | ) | | | 13,670 | |
| Increase in deposits | | | 1,884 | | | | - | |
| | | | | | | | | |
| Net cash (used) by operating activities | | | (20,645 | ) | | | (4,186 | ) |
| | | | | | | | | |
| CASH FLOWS FROM INVESTING ACTIVITIES: | | | - | | | | - | |
| | | | | | | | | |
| CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | |
| Proceeds from the sale of common stock | | | 18,750 | | | | - | |
| | | | | | | | | |
| Net cash provided by financing activities | | | 18,750 | | | | - | |
| | | | | | | | | |
| Net (Decrease) in cash | | | (1,895 | ) | | | (4,186 | ) |
| | | | | | | | | |
| CASH AT BEGINNING PERIOD | | | 17,018 | | | | 6,263 | |
| | | | | | | | | |
| CASH AT END OF PERIOD | | $ | 15,123 | | | $ | 2,077 | |
| | | | | | | | | |
| SUPPLEMENTAL CASH FLOW INFORMATION: | | | | | | | | |
| | | | | | | | | |
| Cash paid for income taxes | | $ | - | | | $ | - | |
| | | | | | | | | |
| Cash paid for interest expense | | $ | - | | | $ | - | |
The accompanying notes are an integral part of these financial statements.
THERMAL TENNIS INC.
CONDENSED NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE A - PRESENTATION
The balance sheets of the Company as of June 30, 2009 and December 31, 2008, the related statements of operations for the six months and three months ended June 30, 2009 and 2008 and the statements of cash flows for the six months ended June 30, 2009 and 2008, (the financial statements) include all adjustments (consisting of normal recurring adjustments) necessary to summarize fairly the Company's financial position and results of operations. The results of operations for the three months ended June 30, 2009 and 2008 are not necessarily indicative of the results of operations for the full year or any other interim period. The information included in this set of financial statements should be read in conjunction with Management's Discussion and Analysis and Financial Statements and notes thereto included in the Company's Form 10-K.
NOTE B - REVENUE RECOGNITION
The Company recognizes revenue in accordance with the Securities and Exchange Commission Staff Accounting Bulletin (SAB) number 104, which states that revenues are generally recognized when it is realized and earned. Specifically, the Company recognizes revenue when services are performed and projects are completed and accepted by the customer. Revenues are earned from tennis lessons, sales of ball machines and other related services.
NOTE C - GOING CONCERN
The Company’s financial statements have been presented on the basis that it is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company generated a net loss from its operations in 2008 and 2007 because the major source of its revenues was dropped as an account in 2006. However, the Company in February picked up its first contract in three years. This contract is seasonal and the Company expects a majority of its revenues will be earned in the current and following quarters. It also sustained operating losses in prior years before obtaining this account. Additionally, due to the current and prior year net operating loss, the Company currently has a deficit in its stockholders’ equity account. These factors raise substantial doubt as to its ability to obtain debt and/or equity financing and achieving future profitable operations.
Management intends to raise additional operating funds through equity and/or debt offerings. However, there can be no assurance management will be successful in its endeavors. Ultimately, the Company will need to achieve profitable operations in order to continue as a going concern.
There are no assurances that Thermal Tennis Inc. will be able to either (1) achieve a level of revenues adequate to generate sufficient cash flow from operations; or (2) obtain additional financing through either private placement, public offerings and/or bank financing necessary to support its working capital requirements. To the extent that funds generated from operations and any private placements, public offerings and/or bank financing are insufficient, the Company will have to raise additional working capital. No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to Thermal Tennis Inc.. If adequate working capital is not available Thermal Tennis Inc. may be required to curtail its operations.
NOTE D – NOTES PAYABLE
The Company’s notes payable consists of the following:
| | | June 30, 2009 | |
| Note payable, 10% interest, principle and interest due September 6, 2009(1) | | $ | 20,000 | |
| Note payable, 10% interest, principle and interest due September 6, 2009(1) | | | 20,000 | |
| | | | | |
| | | | | |
| | | $ | 40,000 | |
| (1) | The notes listed above both represent credit lines that allow the Company to borrow up to $25,000 on each note to pay the ongoing expenses of the company. |
NOTE E – RECENTLY ENACTED ACCOUNTING PRONOUNCEMENTS
In December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations (“SFAS 141R”) and SFAS No. 160, Non-controlling Interests in Consolidated Financial Statements, an amendment of Accounting Research Bulletin No. 51(“SFAS 160”). SFAS No. 141R requires an acquirer to measure the identifiable assets acquired, the liabilities assumed and any non-controlling interest in the acquiree at their fair values on the acquisition date, with goodwill being the excess value over the net identifiable assets acquired. SFAS No. 160 clarifies that a non-controlling interest in a subsidiary should be reported as equity in the consolidated financial statements. The calculation of earnings per share will continue to be based on income amounts attributable to the parent. SFAS No. 141R and SFAS No. 160 are effective for financial statements issued for fiscal years beginning after December 15, 2008. Early adoption is prohibited. The Company has not yet determined the effect on its financial statements, if any, upon adoption of SFAS No. 141R or SFAS No. 160.
In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133 (“SFAS 161”). SFAS 161 requires enhanced disclosures about an entity’s derivative instruments and hedging activities including: (1) how and why an entity uses derivative instruments; (2) how derivative instruments and related hedged items are accounted for under SFAS 133 and its related interpretations; and (3) how derivative instruments and related hedged items affect an entity’s financial position, financial performance and cash flows. SFAS 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with earlier application encouraged. The Company has no derivative instruments so the adoption of SFAS 161 is not expected to have any impact on the Company’s financial statements and it does not intend to adopt this standard early.
In May 2008, the FASB issued Statement of Financial Accounting Standards No. 162, “The Hierarchy of Generally Accepted Accounting Principles (“FAS 162”). The new standard is intended to improve financial reporting by identifying a consistent framework, or hierarchy, for selecting accounting principles to be used in preparing financial statements that are presented in conformity with generally accepted accounting principles (“GAAP”) for nongovernmental entities in the United States. FAS 162 is effective 60 days following SEC approval of the Public Company Accounting Oversight Board Auditing amendments to AU Section 411, “The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles.” The Company is currently evaluating the impact, if any, of adopting FAS 162, on its Financial Statements
In May 2008, the FASB issued SFAS No. 163, Accounting for Financial Guarantee Insurance Contracts – an Interpretation of FASB Statement No. 60 (“SFAS 163”). SFAS 163 clarifies how Statement 60 applies to financial guarantee insurance contracts, including the recognition and measurement of premium revenue and claim liabilities. This Statement also requires expanded disclosures about financial guarantee insurance contracts. SFAS 163 is effective for fiscal years beginning on or after December 15, 2008, and interim periods within those fiscal years. The Company does not expect that the adoption of SFAS 163 will have a material impact on its financial statements.
In April 2009, the FASB issued FSP No. FAS 141(R)-1, “Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies.” FSP No. FAS 141(R)-1 amends and clarifies FASB Statement No. 141(R), to address application issues raised on initial recognition and measurement, subsequent measurement and accounting and disclosure of assets and liabilities arising from contingencies in a business combination. FSP No. FAS 141(R)-1 is effective for the first annual reporting period on or after December 31, 2008. The Company does not anticipate adoption of this standard will have a material impact on its financial statements.
In December 2008, the FASB issued FSP No. FAS 132(R)-1, “Employers’ Disclosure about Postretirement Benefit Plan Assets.” FSP No. FAS 132(R)-1 expands annual disclosure about plan assets of a defined benefit pension or other postretirement plan. FSP No. FAS 132(R)-1 is effective for fiscal years ending after December 15, 2009. The Company does not anticipate adoption of this standard will have a material impact on its financial statements.
In November 2008, the Emerging Issues Task Force issued EITF No. 08-6, “Equity Method Investment Accounting Considerations,” which clarifies accounting for certain transactions and impairment considerations involving equity-method investments. EITF No. 08-6 is effective prospectively for fiscal years beginning on or after December 15, 2008 and interim periods within those fiscal years. The Company does not anticipate adoption of this standard will have a material impact on its financial statements.
In May 2009, Statement No. 165-Subsequent Events was issued. The objective of this Statement is to establish general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. In particular, this Statement sets forth:
The period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements, the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. In accordance with this Statement, an entity should apply the requirements to interim or annual financial periods ending after June 15, 2009.
In June 2009, Statement No. 166 Accounting for Transfers of Financial Assets—an amendment of FASB Statement No. 140 was issued. The Board’s objective in issuing this Statement is to improve the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial statements about a transfer of financial assets; the effects of a transfer on its financial position, financial performance, and cash flows; and a transferor’s continuing involvement, if any, in transferred financial assets. The Board undertook this project to address (1) practices that have developed since the issuance of FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, that are not consistent with the original intent and key requirements of that Statement and (2) concerns of financial statement users that many of the financial assets (and related obligations) that have been derecognized should continue to be reported in the financial statements of transferors.
This Statement must be applied as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period and for interim and annual reporting periods thereafter. Earlier application is prohibited. This Statement must be applied to transfers occurring on or after the effective date.
Additionally, on and after the effective date, the concept of a qualifying special-purpose entity is no longer relevant for accounting purposes. Therefore, formerly qualifying special-purpose entities (as defined under previous accounting standards) should be evaluated for consolidation by reporting entities on and after the effective date in accordance with the applicable consolidation guidance. If the evaluation on the effective date results in consolidation, the reporting entity should apply the transition guidance provided in the pronouncement that requires consolidation.
Additionally, the disclosure provisions of this Statement should be applied to transfers that occurred both before and after the effective date of this Statement.
In June 2009, Statement No. 167 was issued as Amendments to FASB Interpretation No. 46(R). The Board’s objective in issuing this Statement is to improve financial reporting by enterprises involved with variable interest entities. The Board undertook this project to address (1) the effects on certain provisions of FASB Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities, as a result of the elimination of the qualifying special-purpose entity concept in FASB Statement No. 166, Accounting for Transfers of Financial Assets, and (2) constituent concerns about the application of certain key provisions of Interpretation 46(R), including those in which the accounting and disclosures under the Interpretation do not always provide timely and useful information about an enterprise’s involvement in a variable interest entity.
This Statement shall be effective as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter. Earlier application is prohibited.
In June 2009, the Statement No. 168-The FASB Accounting Standards CodificationTM and the Hierarchy of Generally Accepted Accounting Principles—a replacement of FASB Statement No. 162 was issued.
The FASB Accounting Standards CodificationTM (Codification) will become the source of authoritative U.S. generally accepted accounting principles (GAAP) recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission (SEC) under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. On the effective date of this Statement, the Codification will supersede all then-existing non-SEC accounting and reporting standards. All other nongrandfathered non-SEC accounting literature not included in the Codification will become nonauthoritative. This Statement is effective for financial statements issued for interim and annual periods ending after September 15, 2009.
NOTE F – INCOME TAXES
Effective January 1, 2007, we adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (“FIN 48”). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in a company’s financial statements in accordance with FASB Statement No. 109, Accounting for Income Taxes. FIN 48 requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more-likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements. The application of income tax law is inherently complex. Laws and regulation in this area are voluminous and are often ambiguous. As such, we are required to make many subjective assumptions and judgments regarding the income tax exposures. Interpretations of and guidance surrounding income tax laws and regulations change over time. As such, changes in the subjective assumptions and judgments can materially affect amounts recognized in the balance sheets and statements of income.
At the adoption date of January 1, 2007, we had no unrecognized tax benefit, which would affect the effective tax rate if recognized. There has been no significant change in the unrecognized tax benefit during the three months ended June 30, 2009.
NOTE G – RELATED PARTY TRANSACTIONS
The Company has advanced the President $4,288 at June 30, 2009. This loan is non-interest bearing and due upon demand. The Company recognized $750 of expense in 2009 associated with this loan, which represented the value of the rent associated with the sole officer’s home office.
NOTE H – STOCK SUBSCRIPTIONS
As of June 30, 2009, the Company has received a total of $38,500 under its stock offering, representing 154,000 shares of its common stock subscribed at $.25 per share.
In the quarter ended June 30, 2009, the Company has received a total of $2,000 under its stock offering, representing 8,000 shares of its common stock subscribed at $.25 per share.
NOTE I – SUBSEQUENT EVENT
In accordance with the recently issued Statement of Financial Accounting Standards No. 165 “Subsequent Events” (SFAS165), the Company evaluated subsequent events after the balance sheet date of June 30, 2009 through August 12, 2009.
As of August 12, 2009, the Company received through an offering of its common stock $4,500 for the purchase of 18,000 shares.
Item 2. Management’s Discussions and Analysis of Financial Condition and Results of Operations.
Forward-looking Statements
Statements made in this Quarterly Report which are not purely historical are forward-looking statements with respect to the goals, plan objectives, intentions, expectations, financial condition, results of operations, future performance and our business, including, without limitation, (i) our ability to raise capital, and (ii) statements preceded by, followed by or that include the words “may,” “would,” “could,” “should,” “expects,” “projects,” “anticipates,” “believes,” “estimates,” “plans,” “intends,” “targets” or similar expressions.
Forward-looking statements involve inherent risks and uncertainties, and important factors (many of which are beyond our control) that could cause actual results to differ materially from those set forth in the forward-looking statements, including the following, general economic or industry conditions, nationally and/or in the communities in which we may conduct business, changes in the interest rate environment, legislation or regulatory requirements, conditions of the securities markets, our ability to raise capital, changes in accounting principles, policies or guidelines, financial or political instability, acts of war or terrorism, other economic, competitive, governmental, regulatory and technical factors affecting our current or potential business and related matters.
Accordingly, results actually achieved may differ materially from expected results in these statements. Forward-looking statements speak only as of the date they are made. We do not undertake, and specifically disclaim, any obligation to update any forward-looking statements to reflect events or circumstances occurring after the date of such statements.
Plan of Operations
Our business is to develop tennis management programs, tennis training programs, sales of tennis equipment and general services related to tennis. Thermal Tennis has devoted substantially all of their time and effort to organizational and financing matters during the last two years. Through the date hereof, we have not yet generated material service revenue during this period and we have realized a net loss from operations. We generated revenues during the three months ended June 30, 2009 in the amount of $39,151. During the year ended December 31, 2008, the Company had no revenues from commissions on the sale of the ball machines or operations. The Company’s net loss during the three months ended June 30, 2009 was $712 and for the six months ended June 30, 2009 the loss was $10,435. Until additional clients are obtained, the Company expects that it will continue to generate operating losses.
Operating expenses for the three months ended June 30, 2009 were $38,890. We filed an S-1 that became effective July 24, 2008 and expect that these offering proceeds will satisfy our cash requirements for at least for a year and that it will not be necessary, during that period, to raise additional funds to meet the expenditures required for operating our business. As of the date hereof, we have received stock subscriptions representing 154,000 shares of our common stock under our offering of 600,000 shares at a price of $.25 per share for gross proceeds of $38,500. However until the offering is completed, certain parties have lent a total of $40,000 to the Company. The parties lent $10,000 in 2008 and $30,000 to the company during 2007, and additional funds will be needed to continue on its limited operations. We do not anticipate the performance of any research and development during the next 12 months.
There can be no assurance that we will achieve commercial acceptance for any of our proposed tennis services in the future; that future service revenue will materialize or be significant; that any sales will be profitable; or that we will have sufficient funds available for further development of our proposed services. The likelihood of our success will also depend upon our ability to raise additional capital from equity and/or debt financing to overcome the problems and risks described herein; to absorb the expenses and delays frequently encountered in the operation of a new business; and to succeed in the competitive environment in which we will operate. Although management intends to explore all available alternatives for equity and/or debt financing, including, but not limited to, private and public securities offerings, there can be no assurance that we will be able to generate additional capital. Our continuation as a going concern is dependent on our ability to generate sufficient cash flow to meet our obligations on a timely basis and, ultimately, to achieve profitability.
Financial Condition, Capital Resources and Liquidity
As of June 30, 2009, we had total cash assets of $15,123, which was derived from the loans made to the company totaling $10,000 and $38,500 from proceeds by selling stock subscriptions of its common stock under the S-1 offering. We had total current liabilities of $53,699 and working deficit and stockholders' deficit of $28,982 as of June 30, 2009. Deficits accumulated during the history of the company have totaled $59,274. Our financial statements are presented on the basis that Thermal Tennis is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business over a reasonable length of time. However, our independent accountants have noted that the Company has accumulated losses from operations and has the need to raise additional financing in order to satisfy its vendors and other creditors and execute its business plan. These factors raise substantial doubt about our ability to continue as a going concern. Our future success will be dependent upon our ability to provide effective and competitive tennis services that meet customers' changing requirements. Should Thermal Tennis' efforts to raise additional capital through equity and/or debt financing fail, Robert Deller, our President/Secretary/Treasurer, is expected to provide the necessary working capital so as to permit Thermal Tennis to continue as a going concern.
At June 30, 2009 the Company has been generating revenues on its first contract to commence operations since 2006 and was still seeking capital through a stock offering or the obtaining of additional debt in order to resume operations. The contract the Company has obtained is seasonal and it expects a majority of the revenues and earnings to come in the next two quarters. The Company does not know if the revenues under this contract will provide sufficient earnings to cover the cost of its operations. At June 30, 2009 and through the date of this filing, the Company has yet to obtain any other commitments for additional funding. As of the date hereof, the Company has received a total of $38,500 of stock subscriptions under its offering, and it expects to raise an additional $111,500 under the offering. The Company expects that the gross proceeds from its offering will provide enough working capital to continue its operations during the next twelve months and to execute its business plan. In the year ended December 31, 2008, the Company received $10,000 in proceeds from debt and $30,000 in 2007. The Company expects it will have to borrow additional funds against its credit lines to sustain operations until the offering of its securities is completed.
Until the Company obtains the capital required to develop any properties or businesses and obtains the revenues needed from its future operations to meet its obligations, the Company will depend on sources other than operating revenues to meet its operating and capital needs. Operating revenues may never satisfy these needs.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not required.
Item 4T. Controls and Procedures.
Evaluation of disclosure controls and procedures
Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) under the Exchange Act as of the end of the period covered by this Quarterly Report on Form 10-Q. In designing and evaluating the disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Based on that evaluation, our chief executive officer and chief financial officer concluded that, as of June 30, 2009, our disclosure controls and procedures were, subject to the limitations noted above, effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules, regulations and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.
Changes in internal control over financial reporting
Our management, with the participation of the chief executive officer and chief financial officer, has concluded there were no significant changes in our internal controls over financial reporting that occurred during our last fiscal quarter 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; not applicable.
Item 1A. Risk Factors.
Not required.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None; not applicable.
Item 3. Defaults Upon Senior Securities.
None; not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
None; not applicable.
Item 5. Other Information.
None; not applicable.
Item 6. Exhibits.
Exhibit No. Identification of Exhibit
| | |
31 32 | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of Robert R. Deller. Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Robert R. Deller. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized
THERMAL TENNIS INC.
| | | | | |
| Date: | August 14, 2009 | | By: | /s/Robert R. Deller |
| | | | | Robert R. Deller, Principal Executive Officer, Principal Financial Officer |
| | | | | Principal Accounting Officer and Director |
