UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2012
oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
Commission File Number: 333-167451
| CLASSIC RULES JUDO CHAMPIONSHIPS, INC. |
| (Exact name of registrant as specified in its charter) |
| Delaware | 20-8424623 | |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| 100 Research Drive, Suite 16 | ||
| Stamford, CT | 06906 | |
| (Address of principal executive offices) | (Zip Code) |
Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the 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 x Yes oNo
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 (§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) x Yes o No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer o | Accelerated filer o | ||||
Non-accelerated filer o (Do not check if a smaller reporting company) | 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 o No x
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes o No o
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: 13,605,871 shares of common stock as of August15, 2012.
1
CLASSIC RULES JUDO CHAMPIONSHIPS, INC.
FORM 10-Q
| Item # | Description | Page Numbers | ||
| PART I | 4 | |||
| ITEM 1 | FINANCIAL STATEMENTS | 4 | ||
| ITEM 2 | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 17 | ||
| ITEM 3 | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 19 | ||
| ITEM 4 | CONTROLS AND PROCEDURES | 19 | ||
| PART II | 20 | |||
| ITEM 1 | LEGAL PROCEEDINGS | 20 | ||
| ITEM 1A | RISK FACTORS | 20 | ||
| ITEM 2 | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | 21 | ||
| ITEM 3 | DEFAULTS UPON SENIOR SECURITIES | 21 | ||
| ITEM 4 | MINE SAFETY DISCLOSURES | 21 | ||
| ITEM 5 | OTHER INFORMATION | 21 | ||
| ITEM 6 | EXHIBITS | 21 | ||
| SIGNATURES | 22 | |||
| EXHIBIT 31.1 | ||||
| EXHIBIT 31.2 | ||||
| EXHIBIT 32.1 | ||||
| EXHIBIT 32.2 |
2
INFORMATION REGARDING FORWARD-LOOKING DISCLOSURE
This quarterly report on Form 10-Q contains forward-looking statements. Statements in this report that are not historical facts, including statements about management’s beliefs and expectations, constitute forward-looking statements. These statements are based on current plans, estimates and projections, and are subject to change based on a number of factors, including those outlined under Item 1A, Risk Factors, in our most recent annual report on Form 10-K, and any updated risk factors we include in our quarterly reports on Form 10-Q and other filings with the SEC. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update publicly any of them in light of new information or future events.
Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Such factors include, but are not limited to, the following:
• risks arising from material weaknesses in our internal control over financial reporting, including material weaknesses in our control environment;
• our ability to attract new clients and retain existing clients;
• our ability to retain and attract key employees;
• risks associated with assumptions we make in connection with our critical accounting estimates;
• potential adverse effects if we are required to recognize impairment charges or other adverse accounting-related developments;
• potential downgrades in the credit ratings of our securities;
• risks associated with the effects of global, national and regional economic and political conditions, including fluctuations in economic growth rates, interest rates and currency exchange rates; and
• developments from changes in the regulatory and legal environment for advertising and marketing and communications services companies around the world.
Investors should carefully consider these factors and the additional risk factors outlined in more detail under Item 1A, Risk Factors, in our 2011 Annual Report on Form 10-K and other filings with the SEC.
3
PART I
CLASSIC RULES JUDO CHAMPIONSHIPS, INC.
FINANCIAL STATEMENTS
JUNE 30, 2012
CONTENTS
| Page | |
| Consolidated Balance Sheets as of June 30, 2012 (Unaudited) and December 31, 2011 | 5 |
| Consolidated Statements of Operations for the three and six months ended June 30, 2012 and 2011 and for the period from November 16, 2005 (date of Inception) to June 30, 2012 (unaudited) | 6 |
| Consolidated Statements of Cash Flows for the six months ended June 30, 2012 and 2011 and for the period from November 16, 2005 (date of inception) to June 30, 2012 (unaudited) | 7 |
| Consolidated Statement of Stockholders Deficit for the period from November 16, 2005 (date of inception) to June 30, 2012 (Unaudited) | 8 |
| Notes to Consolidated Financial Statements (Unaudited) | 9 |
4
Classic Rules Judo Championships, Inc. and Subsidiary
(A Development Stage Company)
Consolidated Balance Sheets
| June 30, | December 31, | |||||||
| 2012 | 2011 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash | $ | 55 | $ | - | ||||
| Total Current Assets | 55 | - | ||||||
| Total Assets | $ | 55 | $ | - | ||||
| LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||
| Current Liabilities | ||||||||
| Bank overdraft | $ | - | $ | 15 | ||||
| Convertible loan payable | - | 5,000 | ||||||
| Accounts payable | 25,550 | 16,503 | ||||||
| Accrued expense | 2,500 | 8,000 | ||||||
| Advance from officer | 165 | 140 | ||||||
| Total Current Liabilities | 28,215 | 29,658 | ||||||
| Total Liabilities | 28,215 | 29,658 | ||||||
| Commitments and contingencies | - | - | ||||||
| Stockholders' Deficit | ||||||||
| Preferred stock, $0.001 par value; 50,000,000 shares | ||||||||
| authorized; 1,250,000 shares issued and outstanding | 1,250 | 1,250 | ||||||
| Common stock, $0.001 par value 100,000,000 shares authorized | ||||||||
| 13,605,871 and 11,596,195 shares issued and outstanding | ||||||||
| at June 30, 2012 and December 31, 2011, respectively | 13,606 | 11,596 | ||||||
| Additional paid-in capital | 41,257 | 26,910 | ||||||
| Deficit accumulated during development stage | (84,273 | ) | (69,414 | ) | ||||
| Total Stockholders' Deficit | (28,160 | ) | (29,658 | ) | ||||
| Total Liabilities and Stockholders' Deficit | $ | 55 | $ | - | ||||
The accompanying notes are an integral part of these consolidated financial statements.
F-2
5
Classic Rules Judo Championships, Inc. and Subsidiary
(A Development Stage Company)
Consolidated Statements of Operations
(Unaudited)
| For the Three Months Ended | For the Six Months Ended | Period from November | ||||||||||||||||||
| June 30, | June 30, | 16, 2005 (Date of | ||||||||||||||||||
| 2012 | 2011 | 2012 | 2011 | Inception) to June 30, 2012 | ||||||||||||||||
| Revenues | $ | - | $ | 1,010 | $ | - | $ | 1,010 | $ | 3,097 | ||||||||||
| Operating Expenses | ||||||||||||||||||||
| Cost of revenues | - | 1,788 | (610 | ) | 1,788 | 3,237 | ||||||||||||||
| General and administrative | 3,491 | 4,650 | 15,412 | 5,000 | 83,751 | |||||||||||||||
| Total Expenses | 3,491 | 6,438 | 14,802 | 6,788 | 86,988 | |||||||||||||||
| Operating Loss | (3,491 | ) | (5,428 | ) | (14,802 | ) | (5,778 | ) | (83,891 | ) | ||||||||||
| Other Expense | ||||||||||||||||||||
| Interest Expense | - | (71 | ) | (57 | ) | (71 | ) | (382 | ) | |||||||||||
| Net Loss | $ | (3,491 | ) | $ | (5,499 | ) | $ | (14,859 | ) | $ | (5,849 | ) | $ | (84,273 | ) | |||||
| Net Loss per Common Share | ||||||||||||||||||||
| Basic and Diluted | $ | - | $ | - | $ | - | $ | - | $ | (0.01 | ) | |||||||||
| Weighted Average | ||||||||||||||||||||
| Shares Outstanding | 13,605,871 | 11,031,680 | 13,043,105 | 10,914,709 | 6,805,352 | |||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
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Classic Rules Judo Championships, Inc. and Subsidiary
(A Development Stage Company)
Consolidated Statements of Cash Flows
(Unaudited)
| For the Six Months Ended | Period from November 16, | |||||||||||
| June 30, | 2005 (Date of Inception) | |||||||||||
| 2012 | 2011 | to June 30, 2012 | ||||||||||
| Cash Flows from Operating Activities | ||||||||||||
| Net loss | $ | (14,859 | ) | $ | (5,849 | ) | $ | (84,273 | ) | |||
| Adjustments to reconcile net loss to net cash | ||||||||||||
| used in operating activities: | ||||||||||||
| Shares issued for services | - | - | 11,805 | |||||||||
| Shares issued for salaries | - | - | 1,161 | |||||||||
| Expenses paid by shareholders | - | - | 6,412 | |||||||||
| Donated services | - | - | 150 | |||||||||
| Imputed interest | 57 | 71 | 382 | |||||||||
| Changes in operating assets and liabilities- | ||||||||||||
| Increase (decrease) in accounts payable | 9,047 | (5,771 | ) | 25,550 | ||||||||
| Increase (decrease) in accrued expenses | (5,500 | ) | 4,100 | 2,500 | ||||||||
| Net Cash Used in Operating Activities | (11,255 | ) | (7,449 | ) | (36,313 | ) | ||||||
| Cash Flows from Financing Activities | ||||||||||||
| Bank overdraft | (15 | ) | - | - | ||||||||
| Proceeds from convertible loan payable | - | 5,000 | 5,000 | |||||||||
| Proceeds from advance from officer | 25 | - | 165 | |||||||||
| Cash contributions from related party | - | - | 30 | |||||||||
| Proceeds from issuance of common stock | 11,300 | 2,500 | 31,173 | |||||||||
| Net Cash Provided by Financing Activities | 11,310 | 7,500 | 36,368 | |||||||||
| Net Increase in Cash | 55 | 51 | 55 | |||||||||
| Cash, Beginning of Period | - | 25 | - | |||||||||
| Cash, End of Period | $ | 55 | $ | 76 | $ | 55 | ||||||
| Supplemental Cash Flow Information: | ||||||||||||
| Cash paid for interest | $ | - | $ | - | $ | - | ||||||
| Cash paid for taxes | $ | - | $ | - | $ | - | ||||||
| Non-Cash Financing Transaction: | ||||||||||||
| Conversion of convertible loan payable into common stock | $ | 5,000 | $ | - | $ | 5,000 | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
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Classic Rules Judo Championships, Inc. and Subsidiary
(A Development Stage Company)
Consolidated Statement of Stockholders' Deficit
Period From November 16, 2005 (Date of Inception) to June 30, 2012
(Unaudited)
| Deficit | ||||||||||||||||||||||||||||
| Accumulated | ||||||||||||||||||||||||||||
| Additional | During | Total | ||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Paid-In | Development | Stockholders' | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Stage | Deficit | ||||||||||||||||||||||
| Balance at November 16, 2005(Date of Inception ) | - | $ | - | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||||||
| Shares issued in spinout on November 18, 2005 | 1,250,000 | 1,250 | 1,045,052 | 1,045 | (2,295 | ) | - | - | ||||||||||||||||||||
| Contributed capital | - | - | - | - | 342 | - | 342 | |||||||||||||||||||||
| Net loss for the period from November 16, 2005 (Date of inception) to December 31, 2005 | - | - | - | - | - | (342 | ) | (342 | ) | |||||||||||||||||||
| Balance at December 31, 2005 | 1,250,000 | 1,250 | 1,045,052 | 1,045 | (1,953 | ) | (342 | ) | - | |||||||||||||||||||
| Net loss for the year ended December 31, 2006 | - | - | - | - | - | - | - | |||||||||||||||||||||
| Balance at December 31, 2006 | 1,250,000 | 1,250 | 1,045,052 | 1,045 | (1,953 | ) | (342 | ) | - | |||||||||||||||||||
| Net loss for the year ended December 31, 2007 | - | - | - | - | - | - | - | |||||||||||||||||||||
| Balance at December 31, 2007 | 1,250,000 | 1,250 | 1,045,052 | 1,045 | (1,953 | ) | (342 | ) | - | |||||||||||||||||||
| Shares issued for cash at $0.001 on July 15, 2008 | - | - | 5,223,050 | 5,223 | 150 | - | 5,373 | |||||||||||||||||||||
| Shares issued as compensation at $0.001 on July 15, 2008 | - | - | 1,160,678 | 1,161 | - | - | 1,161 | |||||||||||||||||||||
| Shares issued for services at $0.005 on July 15, 2008 | - | - | 2,321,356 | 2,321 | 9,484 | - | 11,805 | |||||||||||||||||||||
| Contributed capital | - | - | - | - | 5,526 | - | 5,526 | |||||||||||||||||||||
| Net loss for the year ended December 31, 2008 | - | - | - | - | - | (22,167 | ) | (22,167 | ) | |||||||||||||||||||
| Balance at December 31, 2008 | 1,250,000 | 1,250 | 9,750,136 | 9,750 | 13,207 | (22,509 | ) | 1,698 | ||||||||||||||||||||
| Contributed capital | - | - | - | - | 544 | - | 544 | |||||||||||||||||||||
| Net loss for the year ended December 31, 2009 | - | - | - | - | - | (8,319 | ) | (8,319 | ) | |||||||||||||||||||
| Balance at December 31, 2009 | 1,250,000 | 1,250 | 9,750,136 | 9,750 | 13,751 | (30,828 | ) | (6,077 | ) | |||||||||||||||||||
| Shares issued for cash at $0.006 on March 29, 2010 | - | - | 825,826 | 826 | 4,174 | - | 5,000 | |||||||||||||||||||||
| Shares issued for cash at $0.009 on August 18, 2010 | - | - | 185,079 | 185 | 1,565 | - | 1,750 | |||||||||||||||||||||
| Contributed capital | - | - | - | - | 30 | - | 30 | |||||||||||||||||||||
| Net loss for the year ended December 31, 2010 | - | - | - | - | - | (16,481 | ) | (16,481 | ) | |||||||||||||||||||
| Balance at December 31, 2010 | 1,250,000 | 1,250 | 10,761,041 | 10,761 | 19,520 | (47,309 | ) | (15,778 | ) | |||||||||||||||||||
| Shares issued for cash at $0.009 on March 17, 2011 | - | - | 161,415 | 162 | 1,338 | - | 1,500 | |||||||||||||||||||||
| Shares issued for cash at $0.009 on March 25, 2011 | - | - | 109,224 | 109 | 891 | - | 1,000 | |||||||||||||||||||||
| Shares issued for cash at $0.009 on November 15, 2011 | - | - | 430,107 | 430 | 3,570 | - | 4,000 | |||||||||||||||||||||
| Shares issued for cash at $0.009 on November 21, 2011 | - | - | 134,408 | 134 | 1,116 | - | 1,250 | |||||||||||||||||||||
| Services donated by referees | - | - | - | - | 150 | - | 150 | |||||||||||||||||||||
| Imputed interest on convertible loan payable | - | - | - | - | 325 | - | 325 | |||||||||||||||||||||
| Net loss for the year ended December 31, 2011 | - | - | - | - | - | (22,105 | ) | (22,105 | ) | |||||||||||||||||||
| Balance at December 31, 2011 | 1,250,000 | 1,250 | 11,596,195 | 11,596 | 26,910 | (69,414 | ) | (29,658 | ) | |||||||||||||||||||
| Shares issued for cash at $0.009 on February 8, 2012 | - | - | 209,671 | 210 | 1,590 | 1,800 | ||||||||||||||||||||||
| Shares issued for conversion of loan payable at $0.008 on February 8, 2012 | - | - | 590,293 | 590 | 4,410 | - | 5,000 | |||||||||||||||||||||
| Shares issued for cash at $0.008 on February 14, 2012 | - | - | 622,289 | 622 | 4,378 | - | 5,000 | |||||||||||||||||||||
| Shares issued for cash at $0.008 on March 17, 2012 | - | - | 587,423 | 588 | 3,912 | - | 4,500 | |||||||||||||||||||||
| Imputed interest on convertible loan payable | - | - | - | - | 57 | - | 57 | |||||||||||||||||||||
| Net loss for the six months ended June 30, 2012 | - | - | - | - | - | (14,859 | ) | (14,859 | ) | |||||||||||||||||||
| Balance at June 30, 2012 (Unaudited) | 1,250,000 | $ | 1,250 | 13,605,871 | $ | 13,606 | $ | 41,257 | $ | (84,273 | ) | $ | (28,160 | ) | ||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-5
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Classic Rules Judo Championships, Inc.
A Development Stage Company)
Notes to Consolidated Financial Statements
June 30, 2012
(Unaudited)
NOTE A – ORGANIZATION AND NATURE OF BUSINESS
Classic Rules Judo Championships, Inc. was incorporated in the State of Delaware on November 16, 2005 under the name Blue Ribbon Pyrocool, Inc. (“Blue Ribbon”). Blue Ribbon changed its name to Classic Rules Judo Championships, Inc. ("Classic Rules") on July 15, 2008. Classic Rules formed a subsidiary in the State of Connecticut on August 13, 2008 named Classic Rules World Judo Championships, Inc. to develop an annual judo championship tournament. Clients pay a fee and the Company posts their entry on the Company’s website. The Company prepares an historical competition evaluation of the participant and places that participant to an appropriate position on the elimination chart in order to allow the highest probability of the most renowned athletes to meet late in the competition preferably in the quarter-finals, the semi-finals, or finals. To date, the Company has held two tournaments.
NOTE B – GOING CONCERN
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has minimal revenues since inception, has incurred a net loss of $14,859 for the six months ended June 30, 2012, has a deficit accumulated during the development stage of $84,273, and has experienced negative cash flows from operations. These circumstances raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Management plans to specialize in utilizing internet media and word of mouth to market and generate its leads for its future business of conducting tournaments. The Company needs to raise additional capital in order to fully develop its business plan. Failure to raise adequate capital and generate adequate revenues could result in the Company having to curtail or cease operations. Additionally, even if the Company does raise sufficient capital to support its operating expenses and generate adequate revenues, there can be no assurance that the revenue will be sufficient to enable it to develop business to a level where it will generate profits and adequate cash flows from operations.
NOTE C – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Unaudited Interim Financial Statements
The accompanying unaudited interim consolidated financial statements as of June 30, 2012, and for the three and six month periods ended June 30, 2012 and 2011 have been prepared in accordance with accounting principles generally accepted for interim financial statement presentation and in accordance with the instructions to Form 10-Q. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statement presentation. They should be read in conjunction with the Company’s annual report on Form 10-K for the year ended December 31, 2011. In the opinion of management, the financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to fairly present the financial position as of June 30, 2012 and the results of operations and cash flows for the three and six month periods ended June 30, 2012 and 2011. The results of operations for the six months ended June 30, 2012 are not necessarily indicative of the results to be expected for the full year.
F-6
9
Classic Rules Judo Championships, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
June 30, 2012
(Unaudited)
NOTE C – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Principles of Consolidation
The consolidated financial statements include the accounts of Classic Rules Judo Championships, Inc. and its wholly owned subsidiary Classic Rules World Judo Championships, Inc. All significant inter-company balances and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. The company had no cash equivalents at June 30, 2012 or December 31, 2011.
Fair Value of Financial Instruments:
Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic No. 825, “Financial Instruments” (“Topic No. 825”) requires entities to disclose the fair value of financial instruments, both assets and liabilities recognized and not recognized on the balance sheet, for which it is practicable to estimate fair value. Topic No. 825 defines fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties. At June 30, 2012 and December 31, 2011 the carrying value of the Company’s cash, bank overdraft, accounts payable, accrued expense, convertible loan payable and advance from officer approximates fair value due to the short-term nature of these financial instruments.
Revenue Recognition
The Company recognizes revenue from participant entry fees and spectator fees upon collection since it is the Company’s policy to not issue refunds.
Equity-Based Compensation
The Company accounts for equity-based compensation transactions with employees under the provisions of ASC Topic No. 718, “Compensation, Stock Compensation” (“Topic No. 718”). Topic No. 718 requires the recognition of the fair value of equity-based compensation in net earnings. The fair value of common stock issued for compensation is measured at the market price on the date of grant. The fair value of the Company’s equity instruments, other than common stock, is estimated using a Black-Scholes option valuation model. This model requires the input of highly subjective assumptions and elections including expected stock price volatility and the estimated life of each award. In addition, the calculation of equity-based compensation costs requires that we estimate the number of awards that will be forfeited during the vesting period. The fair value of equity-based awards granted to employees is amortized over the vesting period of the award and the Company elects to use the straight-line method for awards granted after adoption of Topic No. 718.
F-7
10
Classic Rules Judo Championships, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
June 30, 2012
(Unaudited)
NOTE C – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Equity-Based Compensation (Continued)
The Company accounts for equity-based transactions with non-employees under provisions of ASC Topic No. 505-50, “Equity-Based Payments to Non-Employees” (“Topic No. 505-50”). Topic No. 505-50 establishes that equity-based payment transactions with non-employees shall be measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The fair value of common stock issued for payments to non-employees is measured at the market price on the date of grant. The fair value of equity instruments, other than common stock, is estimated using the Black-Scholes option valuation model. In general, the Company recognizes an asset or expense in the same manner as if it was to pay cash for the goods or services instead of paying with or using the equity instrument.
Advertising Expense
The Company expenses advertising costs as incurred.
Net Loss Per Common Share
The Company computes basic loss per common share by dividing net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding for the period. Diluted loss per share is computed using the weighted average number of shares of common stock and dilutive common equivalent shares outstanding during the year. Common equivalent shares from stock options and other common stock equivalents are excluded from the computation when their effect is anti-dilutive. The Company was in a loss position for all periods presented and, accordingly, there is no difference between basic loss per share and diluted loss per share.
Reverse Stock Split
At the Board of Directors meeting on July 15, 2008, the Company approved a resolution to affect a 10 for 1 reverse stock split. All share and per share information were retroactively adjusted to reflect the reverse stock split.
Income Taxes
The Company accounts for income taxes in accordance with ASC Topic No. 740, Income Taxes (“Topic No. 740”) which requires the use of the liability method of accounting for income taxes. The liability method measures deferred income taxes by applying enacted statutory rates in effect at the balance sheet date to the differences between the tax basis of assets and liabilities and their reported amounts on the financial statements. The resulting deferred tax assets or liabilities are adjusted to reflect changes in tax laws as they occur. A valuation allowance is provided when it is more likely than not that a deferred tax asset will not be realized. At June 30, 2012 and December 31, 2011, the entire deferred tax asset, which arises from our net operating losses, has been fully reserved because management has determined that it is not more likely than not that the net operating loss carry forwards will be realized in the future.
F-8
11
Classic Rules Judo Championships, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
June 30, 2012
(Unaudited)
NOTE C – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Income Taxes (Continued)
The Company recognizes and measures uncertain tax positions and records tax benefits when it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The Company recognizes interest and penalties as a component of income tax expense. At June 30, 2012 and 2011 the Company did not have any unrecognized tax benefits and has not accrued any liability for the payment of tax related interest or penalties. The Company currently has no federal or state tax examinations in progress nor has it had any federal or state tax examinations since inception.
Development Stage Enterprise
The Company is a development stage enterprise, as defined in ASC Topic No. 915 “Development Stage Entities”. To date, the Company’s planned principal operations have not fully commenced.
Subsequent Events
In accordance with Topic No. 855 “Subsequent Events” the Company evaluated subsequent events, which are events or transactions that occurred after June 30, 2012 through the date of the issuance of the accompanying consolidated financial statements.
Recently Issued Accounting Pronouncements
On May 12, 2011, the FASB issued Accounting Standards Update (“ASU”) 2011-04 (“ASU 2011-04”). ASU 2011-04 is the result of joint efforts by the FASB and the International Accounting Standards Board (“IASB”) to develop a single, converged fair value framework. Thus, there are few differences between ASU 2011-04 and its international counterpart, International Financial Reporting Standards (“IFRS”) 13. ASU 2011-04 is largely consistent with existing fair value measurement principles in U.S. GAAP; however it expands ASC Topic No 820’s existing disclosure requirements for fair value measurements and makes other amendments. ASU 2011-04 is effective for interim and annual periods beginning after December 15, 2011. The adoption of ASU 2011-04 did not have a material effect on the financial position, results of operations or cash flows of the Company.
On June 16, 2011, the FASB issued ASU 2011-05, which revises the manner in which entities present comprehensive income in their financial statements. The new guidance removes the presentation options in ASC Topic No. 220 and requires entities to report components of comprehensive income in either (1) a continuous statement of comprehensive income or (2) two separate but consecutive statements. ASU 2011-05 does not change the items that must be reported in other comprehensive income. The amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. The adoption of ASU 2011-05 did not have a material effect on the financial position, results of operations or cash flows of the Company.
Management does not believe that any other recently issued but not yet effective accounting pronouncements, if adopted, would have an effect on the accompanying consolidated financial statements.
F-9
12
Classic Rules Judo Championships, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
June 30, 2012
(Unaudited)
NOTE D – CONVERTIBLE LOAN PAYABLE
On May 9, 2011 the Company received a $5,000 loan from an individual. The loan was convertible into 5% of the common stock of the Company if converted during the four-month conversion period beginning on the signing date. If the loan was not converted to common stock during the conversion period the loan becomes payable in full with 10% simple interest. Failure to pay back the loan in full with interest by the payment date will result in a penalty of 15% compounded daily of the remaining amount due until paid. The individual has the right to buy an additional 10.3% of the common stock of the Company for $10,300 during the conversion period. The loan is guaranteed by the sole officer and director of the Company.
The parties have agreed that no interest or penalties will be paid. Interest at a rate of 10% amounting to $57 for the three and six month periods ended June 30, 2012 and $71 for the three and six month periods ended June 30, 2011, has been imputed on the loan, and has been credited to additional paid-in capital.
On February 8, 2012 the holder of the convertible loan exercised his option to convert the loan into 590,293 newly issued shares of common stock of the Company at $0.008 per share.
NOTE E – STOCKHOLDERS’ DEFICIT
Preferred Stock
The Company is authorized to issue 50,000,000 shares of preferred stock with a par value of $0.001 per share. The Company has designated that these shares of preferred stock have five times voting capacity of the common stock but do not have any conversion or other rights or privileges. The Company does not have any additional Series of preferred stock. The Company has issued 1,250,000 preferred shares to the two former officers of the Company.
Common Stock
The Company is authorized to issue 100,000,000 shares of common stock with a par value of $0.001 per share. At June 30, 2012 there are 13,605,871 shares of common stock issued and outstanding, which includes 3,855,735 subscribed and fully paid for shares, which have been authorized for issuance, but have yet to be issued.
In July 2008, the Company undertook a private offering of approximately 6,000,000 shares of common stock. The stock was offered with a price of $0.001 per share. The private offering was made to Desmond Capital, Inc. (“Desmond”) through a subscription agreement. Desmond purchased 5,223,050 of the offered shares for a total of $5,373 in cash. Desmond’s shares were purchased with the intention of holding the securities for investment purposes, with no intention of dividing or allowing others to participate in this investment or to sell the securities for at least one year in the event that the company becomes registered with the Securities and Exchange Commission.
F-10
13
Classic Rules Judo Championships, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
June 30, 2012
(Unaudited)
NOTE E – STOCKHOLDERS’ DEFICIT (Continued)
Common Stock (Continued)
On July 15, 2008, the Company issued 1,160,678 shares of common stock to its officer and director, Chris Angle. The shares were issued to Mr. Angle as compensation for services rendered as the officer and director of the Company. As the Company had minimal assets and operations at the date of issuance, the shares were valued at their par value of $0.001 per share and $1,161 was recorded as stock-based compensation.
On July 15, 2008, the Company issued 1,160,678 shares of common stock to a consultant, Nathan Lapkin. The shares were issued to Mr. Lapkin as compensation for his accounting services rendered to the company.
On July 15, 2008, the Company issued 1,160,678 shares of common stock to a consultant, Jerry Gruenbaum, Esq. The shares were issued to Mr. Gruenbaum as compensation for his legal services rendered to the company.
The shares issued to Messrs. Gruenbaum and Lapkin were for consulting services and were valued at the fair value of the services provided. Due to the lack of assets and operations of the Company and the lack of a market for the Company’s stock, the Company determined that the fair value of the services provided were more reliably measurable. The Company obtained invoices from Messrs. Gruenbaum and Lapkin for the services provided. Mr. Gruenbaum provided legal services valued at $5,805 and Mr. Lapkin provided accounting and consulting services valued at $6,000. The Company issued both individuals the same number of shares for the services rendered. After reviewing the services provided, the Company noted that there was a $195 difference in the value of the services provided by these two individuals. The Company concluded that this difference was insignificant and did not require any adjustment. See Note G.
On March 29, 2010, the Company sold 825,826 shares of common stock at $0.006 per share to an investor under a stock subscription agreement and received proceeds of $5,000.
On August 18, 2010, the Company sold 185,079 shares of common stock at $0.009 per share to its President under a stock subscription agreement and received proceeds of $1,750.
On March 17, 2011 the Company sold 161,415 shares of common stock at $0.009 per share to the spouse of its president under a stock subscription agreement and received proceeds of $1,500.
On March 25, 2011 the Company sold 109,224 shares of common stock at $0.009 per share to an investor under a stock subscription agreement and received proceeds of $1,000.
On November 15, 2011 the Company sold 430,107 shares of common stock at $0.009 per share to an investor under a stock subscription agreement and received proceeds of $4,000.
On November 21, 2011 the Company sold 134,408 shares of common stock at $0.009 per share to an investor under a stock subscription agreement and received proceeds of $1,250.
On February 8, 2012 the Company sold 105,305 shares of common stock at $0.009 per share to an investor under a stock subscription agreement and received proceeds of $900.
F-11
14
Classic Rules Judo Championships, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
June 30, 2012
(Unaudited)
NOTE E – STOCKHOLDERS’ DEFICIT (Continued)
Common Stock (Continued)
On February 8, 2012, the Company sold 104,366 shares of common stock at $0.009 per share to the spouse of its president under a stock subscription agreement and received proceeds of $900.
On February 8, 2012 the holder of the convertible loan payable converted his $5,000 loan into 590,293 newly issued shares of common stock in the Company at $0.008 per share.
On February 14, 2012 the Company sold 315,018 shares of common stock at $0.008 per share to an investor under a stock subscription agreement and received proceeds of $2,500.
On February 14, 2012, the Company sold 307,271 shares of common stock at $0.008 per share to the spouse of its president under a stock subscription agreement and received proceeds of $2,500.
On March 17, 2012, the Company sold 361,398 shares of common stock at $0.008 per share to two investors under stock subscription agreements and received proceeds of $2,750.
On March 17, 2012, the Company sold 226,025 shares of common stock at $0.008 per share to the spouse of its president under a stock subscription agreement and received proceeds of $1,750.
NOTE F – INCOME TAXES
The income tax provision differs from the amount computed by applying the U.S. federal and state statutory corporate income tax rates as follows:
| Quarter Ended | ||||||||
| June 30, | ||||||||
| 2012 | 2011 | |||||||
| U.S Statutory Corporate Income Tax Rate | (34.0 | )% | (34.0 | )% | ||||
| State Income Tax | (7.0 | )% | (7.0 | %) | ||||
| Change in Valuation Allowance on Deferred Tax Asset | 41.0 | % | 41.0 | % | ||||
| Effective Rate | - | % | - | % | ||||
F-12
15
Classic Rules Judo Championships, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
June 30, 2012
(Unaudited)
NOTE F – INCOME TAXES (Continued)
Net deferred tax assets and liabilities consist of the following components:
| June 30, | December 31, | |||||||
| 2012 | 2011 | |||||||
| Deferred tax assets: | ||||||||
| Net operating loss carry-forward | $ | 32,672 | $ | 30,405 | ||||
| Valuation Allowance | (32,672 | ) | (30,405 | ) | ||||
| Net Deferred tax assets | $ | -- | $ | -- | ||||
Based upon historical net losses and the Company being in the development stage, management believes that it is not more likely than not that the deferred tax assets will be realized and has provided a valuation allowance of 100% of the deferred tax asset. The valuation allowance increased by $2,267 and $13,487 in the six months ended June 30, 2012 and year ended December 31, 2011, respectively.
The Company's net operating loss carry-forward amounting to $69,023 at December 31, 2011, expires as follows:
| Year Ending December 31: | Amount | |||
| 2028 | $ | 9,201 | ||
| 2029 | 8,319 | |||
| 2030 | 16,432 | |||
| 2031 | 35,071 | |||
| Total | $ | 69,023 | ||
NOTE G – RELATED PARTY TRANSACTIONS
From inception prior to the appointment of Mr. Angle, in July 2008 the former management (Mr. Lapkin) of the Company contributed a total of $5,868 in cash into the company for operating expenses. In addition, in July 2008, former management, Mr. Lapkin & Mr. Gruenbaum, agreed to assist Mr. Angle to file a registration statement, for which they were paid a total of $11,805 ($6,000 to Mr. Lapkin and $5,805 to Mr. Gruenbaum) in company stock for accounting and legal services.
In July 2008, Desmond Capital, Inc. invested $5,373 in the Company in return for 5,223,050 newly issued shares. The president of Desmond Capital is Mr. Chris Angle who is also the president of the Company. Desmond Capital has two purposes: first is to provide consulting and advice to small start up companies and to invest in these companies to help bring capital for expansion. The Desmond Capital investment will be used for the on-going operations of the Company.
During 2010 Mr. Angle, the Company’s CEO, contributed to additional paid-in capital $30 in cash for operating expenses.
During 2011 Mr. Angle, advanced the Company $140 in cash for operating expenses. The advance has no stated terms of repayment and is non-interest bearing.
During the quarter ended June 30, 2012, Mr. Angle advanced the Company $25 in cash for operating expenses. The advance has no stated terms of repayment and is non-interest bearing.
F-13
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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Forward-looking Information
This Form 10-Q quarterly report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. All statements other than statements of historical facts, included in this Form 10-Q that address activities, events, or developments that we expect or anticipate will or may occur in the future, including such things as future capital expenditures (including the amount and nature thereof), business strategy and measures to implement strategy, competitive strength, goals, expansion and growth of our business and operations, plans, references to future success, reference to intentions as to future matters, and other such matters are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential," or "continue," or the negative of such terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially. These statements are based upon certain assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and expected future developments as well as other factors that we believe are appropriate in the circumstances. However, whether actual results and developments will conform to our expectations and predictions is subject to a number of risks, uncertainties, and other factors, many of which are beyond our control.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. Moreover, we do not assume responsibility for the accuracy and completeness of such forward-looking statements. We are under no duty to update any of the forward-looking statements after the date of this report to conform such statements to actual results.
General
The Company is a provider of judo tournaments. Our clients will pay a fee and post their entry. The Company will list the participants and provide the tournament facilities to perform the Classic Rules World Judo Championships.
Our business plan is to successfully produce, first, the Classic Rules World Judo Championships which we have started by performing two tournaments so far. Subsequent to this tournament becoming fully operational and generating a profit, we intend to start other "Classic Rules" tournaments such as the U.S. Classic Rules Open Judo Championships, the Pan American Classic Rules Open Judo Championships, and the European Classic Rules Open Judo Championships.
Our intention to build our business has two components: 1) marketing and expanding our existing products, and, 2) developing new products, such as the contests mentioned just above.
The first tournament was held in March of 2010, had 15 competitors each paying a $100 entry fee generating revenue of $1,500. With miscellaneous revenue such as from spectator entrance fees, total revenue was $2,087.
Expenses for the first contest were $500 for Trophies, $150 for Facilities Rental, $350 for the Facilities Custodial, $100 for Advertising, $150 for Supplies, $200 for Transportation of Tournament mats totaling $1,450.
The second tournament was held in May of 2011, but attendance of athletes dropped to only 11 competitors that paid either $60 or $100 except for one competitor who paid $50 totaling $850. With miscellaneous revenue, such as from spectator entrance fees, total revenue was $1,010.
Expenses for the second contest were $1,210 for Trophies, $150 for Referees, $350 for the Facility Custodial, $391 for Transportation of Tournament mats and $296 for printing, totaling $2,397.
In the judo contest world the results for the attendance at both of the Classic Rules tournaments would be considered small. We cannot predict if the Classic Rules type of tournament will become successful and attract athletes to a greater extent.
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Results of Operations
Comparison of the three months ended June 30, 2012 and 2011
Revenues. The Company had no revenue during the three months ended June 30, 2012 as compared to revenue of $1,010 during the comparable period in 2011. This is because the Company had planned its next tournament to be held the following quarter compared to having a tournament last year in the quarter ended June 30, 2011.
Cost of Revenues. The Company had no cost of revenue for the three months ended June 30, 2012 as compared to $1,788 for the three months ended June 30, 2011, as the Company did not hold a tournament in 2012.
General and Administrative expenses. The Company incurred $3,491 in general and administrative expenses during the three month period ended June 30, 2012 as compared to $4,650 in general and administrative expenses for the comparable period in 2011.
Operating Loss. As a result of the Company’s general and administrative expenses, the Company incurred an operating loss of $3,491 for the three month period ended June 30, 2012, as compared with $5,428 for the three month period ended June 30, 2011. The greater loss is based on the costs associated with hosting a tournament during the comparable period in 2011.
Other Expenses. The Company had no imputed interest expense on the convertible loan during the three month period ended June 30, 2012, as compared with $71 of interest expense for the three month period ended June 30, 2011. The holder of the convertible loan exercised his conversion right and converted the loan into 590,293 newly issued common shares of Company stock on February 8, 2012.
Net Loss. The Company incurred a net loss of $3,491 during the three month period ended June 30, 2012, as compared with a net loss of $5,499 for the three month period ended June 30, 2011.
Comparison of the six months ended June 30, 2011 and 2010
Revenues. The Company had no revenue during the six months ended June 30, 2012 as compared to revenue of $1,010 during the comparable period in 2011. This is because the Company has not held a tournament in 2012 compared to having a tournament last year in the quarter ended June 30, 2011.
Cost of Revenues. The Company had a negative $610 in cost of revenues for the six months ended June 30, 2012 as compared to $1,788 for the six months ended June 30, 2011, as the Company has not held a tournament in 2012. The negative $610 in costs for the six months ended June 30, 2012, is the result of a reduction in the cost of awards, which were recorded at December 31, 2011.
General and Administrative expenses. The Company incurred $15,412 in general and administrative expenses during the six month period ended June 30, 2012 as compared to $5,000 in general and administrative expenses for the comparable period in 2011.
Operating Loss. As a result of the Company’s general and administrative expenses, the Company incurred an operating loss of $14,802 for the six month period ended June 30, 2012, as compared with $5,778 for the six month period ended June 30, 2011.
Other Expenses. The Company imputed interest expense on the convertible loan during the six month period ended June 30, 2012 of $57, as compared with $71 of interest expense for the six month period ended June 30, 2011. The holder of the convertible loan exercised his conversion right and converted the loan into 590,293 newly issued common shares of Company stock on February 8, 2012.
Net Loss. The Company incurred a net loss of $14,859 during the six month period ended June 30, 2012, as compared with a net loss of $5,849 for the three month period ended June 30, 2011.
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Liquidity and Capital Resources
At June 30, 2012, the Company had a working capital deficit of $28,160.
Cash Flows
Net Cash used by operating activities amounted to $11,255 and $7,449 for the six months ended June 30, 2012 and 2011, respectively. Net cash decreased primarily from the net loss incurred for the six months ended June 30, 2012 in the amount of $14,859.
Net cash provided by financing activities amounted to $11,310 and $7,500 for the six months ended June 30, 2012 and 2011, respectively. In the six months ended June 30, 2012, the Company received proceed of $11,300 from the issuance of common stock.
At June 30, 2012, the Company had no revenues for its tournaments during the three months ended June 30, 2012 and had $1,010 during the comparable period in 2011, when the Company held its second tournament. As of June 30, 2012, the Company was primarily relying on its corporate officer, director, and outside investors for the funding needed for the implementation of its business plan. The Company’s management is currently looking for the capital needed to complete its corporate objectives. The Company cannot predict the extent to which its liquidity and capital resources will be available prior to executing its business plan or whether it will have sufficient capital to fund typical operating expenses.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Smaller reporting companies are not required to provide the information required by this item.
Item 4. Controls and Procedures
Evaluation of disclosure controls and procedures.
Management is responsible for establishing and maintaining adequate controls over financial reporting. The Company’s disclosure controls and procedures are designed to ensure (i) that information required to be disclosed by the Company in the reports the Company files or submits under the Exchange Act of 1934, as amended (the “Exchange Act”), are recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms; and (ii) that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives. Furthermore, smaller reporting companies face additional limitations. Smaller reporting companies employ fewer individuals and may find it difficult to properly segregate duties. Often, one or two individuals control every aspect of the company’s operation and are in a position to override any system of internal control. Additionally, smaller reporting companies tend to utilize general accounting software packages that lack a rigorous set of software controls.
Pursuant to rules adopted by the SEC as directed by Section 302 of the Sarbanes-Oxley Act of 2002, the Company’s management, with the participation of the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e)) as of June 30, 2012. In making this assessment, our Chief Executive Officer and Chief Financial Officer used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control – Integrated Framework.
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Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that, as of that date, the Company’s disclosure controls and procedures required by paragraph (b) of Exchange Act Rules 13a-15 or 15d-15, were not effective at a reasonable assurance level. Management’s assessment identified the following material weaknesses:
| · | As of June 30, 2012, there was a lack of accounting personnel with the requisite knowledge of Generally Accepted Accounting Principles (“GAAP”) in the US and the financial reporting requirements of the Securities and Exchange Commission. |
| · | As of June 30, 2012, there were insufficient written policies and procedures to insure the correct application of accounting and financial reporting with respect to current requirements of GAAP and SEC disclosure requirements. |
| · | As of June 30, 2012, there was a lack of segregation of duties, in that we had only one person performing all accounting-related duties. |
· As of June 30, 2012, there were no independent directors and no independent audit committee.
Notwithstanding the existence of these material weaknesses in our internal control over financial reporting, our management believes that the financial statements included in its reports fairly present in all material respects the Company’s financial condition, results of operations and cash flows for the periods presented. We continue to evaluate the effectiveness of internal controls and procedures on an on-going basis. We plan to further address these issues once we commence operations and are able to hire additional personnel in financial reporting.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended) during the quarter ended June 30, 2012 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, the Company may be a party to litigation or other legal proceedings that we consider to be part of the ordinary course of our business. At present, there are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company. The Company’s property is not the subject of any pending legal proceedings.
Item 1A. Risk Factors
An investment in our shares is speculative and involves a high degree of risk. Therefore, you should not invest in our shares unless you are able to bear a loss of your entire investment. You should carefully consider the following factors as well as those set forth in our annual report on Form 10-K for the year ended December 31, 2011 and the other information contained herein before deciding to invest in our shares. Factors that could cause actual results to differ from our expectations, statements or projections include the risks and uncertainties relating to our business described above. The fact that some of the risk factors may be the same or similar to our past filings, means only that the risks are present in multiple periods. We believe that many of the risks detailed here and in our SEC filings are part of doing business in our industry and will likely be present in all periods reported. The fact that certain risks are endemic to our industry does not lessen the significance of the risk. We urge you to carefully consider the following discussion of risks as well as other information regarding our common stock. This report and statements that we may make from time to time may contain forward-looking information. There can be no assurance that actual results will not differ materially from our expectations, statements or projections.
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Smaller reporting companies are not required to provide the information required by this item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
On February 8, 2012 the Company sold 105,305 shares of common stock at $0.009 per share to an investor under a stock subscription agreement and received proceeds of $900.
On February 8, 2012, the Company sold 104,366 shares of common stock at $0.009 per share to the spouse of its president under a stock subscription agreement and received proceeds of $900.
On February 8, 2012 the holder of the converted loan converted his $5,000 loan into 590,293 newly issued shares of common stock in the Company at $0.008 per share.
On February 14, 2012 the Company sold 315,018 shares of common stock at $0.008 per share to an investor under a stock subscription agreement and received proceeds of $2,500.
On February 14, 2012 the Company sold 307,271 shares of common stock at $0.008 per share to the spouse of its president under a stock subscription agreement and received proceeds of $2,500.
On March 17, 2012, the Company sold 361,398 shares of common stock at $0.008 per share to two investors under stock subscription agreements and received proceeds of $2,750.
On March 17, 2012, the Company sold 226,025 shares of common stock at $0.008 per share to the spouse of its president under a stock subscription agreement and received proceeds of $1,750.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
N/A
Item 5. Other Information
None
Item 6. Exhibits
| Exhibit | 31.1 | Certification of the Principal Executive Officer Pursuant to Rule 13A-14(a) 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 Principal Financial Officer Pursuant to Rule 13A-14(a) 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 Principal 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 Principal Financial Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
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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.
| Dated: August 15, 2012 | Classic Rules Judo Championships, Inc. |
| By: /s/ Chris Angle | |
| Chris Angle, Principal Executive Officer, Principal Financial Officer, and Principal Accounting Officer |
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