UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2013
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.) |
6204 Beaver Run | ||
Jamesville, NY | 13078 | |
(Address of principal executive offices) | (Zip Code) |
Registrant's telephone number including area code (315) 451-4889
100 Research Drive, Suite 16 Stamford ,CT 06906 |
(Former Name or Former Address, if changed since last report) |
Securities registered pursuant to Section 12(b) of the Exchange Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.001 par value
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act
[ ] Yes [X] No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
[ ] Yes [X] No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). [ ] Yes [X] No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
[X] Yes [ ] 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 [ ] | Accelerated filer [ ] |
|
|
Non-accelerated filer [ ] (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 Act). Yes [X] No [ ]
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter.
APPLICABLE ONLY TO REGISTRANTS 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 Section 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. Yes [ ] No [ ]
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. 18,591,466 as of April 14 , 2014.
DOCUMENTS INCORPORATED BY REFERENCE
None
CLASSIC RULES JUDO CHAMPIONSHIPS, INC.
FORM 10-K
TABLE OF CONTENTS
Item # | Description | Page Numbers | ||
PART I | 4 | |||
ITEM 1 | BUSINESS | 4 | ||
ITEM 1A | RISK FACTORS | 15 | ||
ITEM 1B | UNRESOLVED STAFF COMMENTS | 15 | ||
ITEM 2 | PROPERTIES | 15 | ||
ITEM 3 | LEGAL PROCEEDINGS | 15 | ||
ITEM 4 | MINE SAFETY DISCLOSURES | 15 | ||
PART II | 16 | |||
ITEM 5 | MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES | 16 | ||
ITEM 6 | SELECTED FINANCIAL DATA | 16 | ||
ITEM 7 | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 16 | ||
ITEM 7A | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 20 | ||
ITEM 8 | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA | 21 | ||
ITEM 9 | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE | 22 | ||
ITEM 9A | CONTROLS AND PROCEDURES | 22 | ||
ITEM 9B | OTHER INFORMATION | 23 | ||
PART III | 24 | |||
ITEM 10 | DIRECTORS, EXECUTIVE OFFICERS, CORPORATE GOVERNANCE | 24 | ||
ITEM 11 | EXECUTIVE COMPENSATION | 25 | ||
ITEM 12 | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS | 25 | ||
ITEM 13 | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE | 26 |
ITEM 14 | PRINCIPAL ACCOUNTANT FEES AND SERVICES | 27 | ||
PART IV | 27 | |||
ITEM 15 | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES | 27 | ||
| SIGNATURES | 28 | ||
EXHIBIT 31 | SECTION 302 CERTIFICATION OF CHIEF EXECUTIVE OFFICER ANDCHIEF FINANCIAL OFFICER | |||
EXHIBIT 32 | SECTION 906 CERTIFICATION OF CHIEF EXECUTIVE OFFICER ANDCHIEF FINANCIAL OFFICER |
PART I
ITEM 1. BUSINESS
FORWARD-LOOKING STATEMENTS; This annual report contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that involve risks and uncertainties. In addition, Classic Rules Judo Championships, Inc., (formerly Blue Ribbon Pyrocool, Inc.) (the “Company” or “Classic Rules”), may from time to time make oral forward-looking statements. Actual results are uncertain and may be impacted by many factors. In particular, certain risks and uncertainties that may impact the accuracy of the forward-looking statements with respect to revenues, expenses and operating results include without limitation; cycles of customer orders, general economic and competitive conditions and changing customer trends, technological advances and the number and timing of new product introductions, shipments of products and components from foreign suppliers, and changes in the mix of products ordered by customers. As a result, the actual results may differ materially from those projected in the forward-looking statements.
Because of these and other factors that may affect the Company’s operating results, past financial performance should not be considered an indicator of future performance, and investors should not use historical trends to anticipate results or trends in future periods.
History
Blue Ribbon Pyrocool, Inc. was incorporated on the 16th day of November 2005 as a wholly owned subsidiary of Puritan Financial Group, Inc. (which was formerly Blue Ribbon International, Inc.) On March 24, 2008 a special meeting of the Shareholders of Puritan Financial Group, Inc. was held. A quorum representing 90.2% of the issued common shares were present and the Broad of Directors stated that a special meeting of the Board of Directors held earlier that day approved the spinout of Blue Ribbon Pyrocool, Inc.
March 26, 2008 was also set as the record date to establish those Blue Ribbon shareholders who are eligible to participate in the distribution. Classic Rules did not issue shares to anyone other than our stockholders as of March 26, 2008. The special meeting of shareholders was held as scheduled and the distribution was approved by unanimous vote of Blue Ribbon shares represented at the meeting which consisted of approximately 90.2% of the then outstanding stock of Blue Ribbon.
A stock dividend payable in shares of Blue Ribbon Pyrocool (now, Classic Rules) common stock to the shareholders of Puritan Financial has been authorized by Classic Rules and approved by its shareholders. In March 2008, upon approval of its shareholders, Puritan Financial notified its stock transfer agent, Corporate Stock Transfer, that a spin-out company (Blue Ribbon Pyrocool) would be created and that there would be a distribution of 10,449,250 shares of Blue Ribbon common stock, representing all of the issued and outstanding stock of Blue Ribbon, for the benefit of the Puritan Financial shareholders with no action on the part of the shareholders and will be a book entry.
On July 15, 2008 the Board of Directors of Blue Ribbon executed a Corporate Resolution changing the name of Blue Ribbon to Classic Rules Judo Championships, Inc.
On July 15, 2008 the Board of Directors of Classic Rules declared a 10 to 1 reverse split reducing the total number of outstanding shares from 10,449,250 to 1,044,925; but with the effect of rounding up by the transfer agent another 127 shares were added and the total became 1,045,052.
Also on July 15, 2008, the ad hoc committee comprising a quorum of approximately 90.2% of the voting shares executed a Waiver of Notice for a Special Stockholders Meeting to be held on July 15, 2008 for the purpose of approving the distribution of Classic Rules stock to the Eligible Shareholders and to resolve the issuance of 8,705,084 shares to be distributed to the founding investors of Classic Rules.
Classic Rules World Judo Championships, Inc., a wholly owned subsidiary of the Company was incorporated pursuant to the laws of the State of Connecticut on August 13, 2008. The subsidiary was incorporated to act as the accounting and administrative arm of the tournament, named “ Classic Rules World Judo Championships” which held its first tournament on March 21, 2010 in New Rochelle, New York. The second tournament was held on May 7, 2011. The Company did not host a tournament during 2012 or 2013.
Our Business
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 and $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.
The Company did not host a Classic Rules tournament during 2012 or 2013.
Background Information of the Business Plan
The evolution of the extent to establish The Classic Rules Judo Championship series is the following:
Preliminary Background Information
The idea that there exists an opportunity to develop new tournaments in the sport of judo comes in part from the observation of the progress of the Mixed Martial Arts Industry. It occurred to the originator of the idea, our former director and CEO, Chris Angle, that there exists a niche in the sport of judo world whereby a new type of tournament could be developed.
As such, Mr. Angle approached the directors of Blue Ribbon Pyrocool to seek their support and ask for their participation.
Blue Ribbon's management thought that the business concept of Classic Rules had merit and also thought it a noble idea, and consequently, the management of Blue Ribbon deemed that Blue Ribbon would participate.
The Board of Directors of Blue Ribbon Pyrocool, Inc. having resolved that, there exists a market for a new type of international judo tournament; accordingly, the Board of Directors of Blue Ribbon resolved on July 15, 2008 to change its name to Classic Rules Judo Championships, Inc.
Thus, it was resolved by the Board of Directors and, subsequently, by a special meeting of the stockholders of Blue Ribbon to do a reverse 10 to 1 split reducing the number of outstanding shares to 1,044,925 and adding 127 shares for rounding up which resulted in 1,045,052 shares. The board, then, on July 15, 2008 changed the Company’s name to Classic Rules Judo Championships, Inc., and issued 8,705,084 shares of Blue Ribbon to the four founders making the total outstanding 9,750,136 shares. Subsequently, through a private placement memorandum, the Company sold 825,826 shares to an investor (G. Komarica) on March 29, 2010 and 185,079 shares to Chris Angle, the former president of the Company, on August 18, 2010. On March 17, 2011, the Company sold 161,415 shares to V. Stolere (investor and wife of C. Angle). On March 25, 2011, the Company sold 109,224 shares to an investor, G. Komarica. On November 15, 2011, the Company sold 430,107 common shares to K. Shilleh. On November 21, 2011, the Company sold 134,408 common shares to G. Komarica.
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 former 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 former 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 former president under a stock subscription agreement and received proceeds of $1,750.
On August 9, 2012, the Company sold 204,088 shares of common stock at $0.007 per share to the spouse of its former president under a stock subscription agreement and received proceeds of $1,500.
On August 9, 2012, the Company sold 340,147 shares of common stock at $0.007 per share to two investors under stock subscription agreements and received proceeds of $2,500.
On March 14, 2013 the Company entered into a stock subscription agreement with a company owned by the Company’s former CEO, Mr. Angle, for the issuance of 640,292 shares of the Company’s common stock at $0.007 per share or $4,525. Proceeds of $4,025 have been received. The advance from officer in the amount of $500 has been applied to the amount due leaving a stock subscription receivable of $0 at December 31, 2013.
On May 24, 2013 the Company entered into a stock subscription agreement with a company owned by Mr. Angle, the Company’s former CEO, for the issuance of 1,035,328 shares of the Company’s common stock at $0.007 per share or $7,000.
On August 7, 2013 the Company received $1,250 in payment pursuant to a stock subscription agreement with M. Timofejeva for the issuance of 197,822 shares of the Company’s common stock at $0.006 per share.
On August 7, 2013 the Company received $1,250 in payment pursuant to a stock subscription agreement with V. Stolere (the spouse of the Company’s former President) for the issuance of 197,822 shares of the Company’s common stock at $0.006 per share.
On September 10, 2013, the Company received $600 in payment pursuant to a stock subscription agreement with Stamford Learning Center (a company owned by the Company’s Former President) for the issuance of 100,164 shares of the Company’s common stock at $0.006 per share.
On September 10, 2013, the Company received $400 in payment pursuant to a stock subscription agreement with V. Stolere (the spouse of the Company’s former President) for the issuance of 66,776 shares of the Company’s common stock at $0.006 per share.
On November 12, 2013 the Company received $2,000 in payment pursuant to a stock subscription agreement with M. Timofejeva for the issuance of 327,766 shares of the Company's common stock at $0.006 per share.
On November 14, 2013 the Company sold 451,334 shares of common stock at $0.006 per share to a company owned by the Company's former President under a stock subscription agreement and received $2,700.
On November 14, 2013 the Company sold 51,502 shares of common stock at $0.006 per share to the Company's former President under a stock subscription agreement and received $300.
On December 6, 2013 the Company sold 602,662 shares of common stock at $0.006 per share to the spouse of its former President under a stock subscription agreement and received $3,500.
Upon further consideration of formulating the plan to develop the tournament to be called “Classic Rules World Judo Championships,” the realization that in order to facilitate the presentation of the concept of the tournament while inviting investors to participate and affording the Company the greatest financial latitude during its initial stages would be to make Classic Rules a public company.
Part 1 - An Introduction to Judo and the Judo Contest
Judo which is a sport that originated in Japan a little over 100 years ago has some similarities to wrestling and a convenient description would be to state that judo is similar to wrestling with clothes on. From the web site of the International Judo Federation (IJF), judo is described in the following manner. (This information, provided by the IJF, is publicly available at the following web address: go to http://www.intjudo.eu then go to the History Page then scroll to Judo Corner. Furthermore, this information was not prepared specifically for us (the Company) in any way in connection with this disclosure.)
“Judo is a tremendous and dynamic combat sport that demands both physical prowess and great mental discipline. From a standing position, it involves techniques that allow you to lift and throw your opponents onto their backs. On the ground, it includes techniques that allow you to pin your opponents down to the ground, control them, and apply various choke holds or joint locks until submission.
Judo originated in Japan as a derivative of the various martial arts developed and used by the samurai and feudal warrior class over hundreds of years. Although many of the techniques of judo originated from arts that were designed to hurt, maim, or kill opponents in actual field battle, the techniques of judo were modified so that judo students can practice and apply these techniques safely and without hurting opponents. Unlike karate, judo does not involve kicking, punching, or striking techniques of any kind. Unlike aikido, judo does not involve the application of pressure against the joints to throw an opponent. Unlike kendo, judo involves no equipment or weapons of any sort. Instead, judo simply involves two individuals who, by gripping the judo uniform or judogi, use the forces of balance, power, and movement to attempt to subdue each other. Thus, it is simple and basic. In its simplicity, however, lies its complexity, and mastery of even the most basic of judo techniques that often take considerable time, effort, and energy, involving rigorous physical and mental training.”
Part 2 - Judo as a Competitive Sport
Judo is an Olympic sport and its first appearance in the Olympics was in 1964. Furthermore, there is a world judo championships sanctioned by the International Judo Federation (“IJF,” http://www.intjudo.eu) which dates back to the late 1950's.
In a judo contest the contestant's objective is to out-score his opponent and there are several ways by which a contestant can accomplish this. The primary way to out-score the opponent is to score a full point which is known as an "ippon" and when attained, the match ends. (The word "ippon" is derived from the Japanese language and means "one point.")
There are several methods by which a contestant can achieve this full point which is awarded by a referee. The first method is to throw the opponent on his back or side with appreciable force; the second method is to hold an opponent on his back for 25 seconds; the third method is to force the opponent into submission by applying a strangulation hold using the clothing of the contestant or by the use of one's own bare hands and wrists or in conjunction with the use of the opponent's - or one's own - judo gi (uniform).
The fourth method is to apply an arm lock to the elbow which will cause the opponent to submit to the pressure being applied to the elbow acknowledging his defeat. The submitting or defeated opponent will make the acknowledgement by nimbly tapping twice on the ground or the opponent. The referee, upon seeing this signal, will announce the end of the match.
The fifth method in judo to win a match is to accumulate more points (or less penalties) than the opponent. If there is no one particular technique that a contestant employs to win by a full point as indicated above, a contestant may score a half point called a "waza-ari" in the Japanese language and it literally means "to have a technique". The referee awards a half point when the technique which will be either a throw (method no. 1 noted above) or to hold the opponent down on the mat for 20 seconds (method 2).
Further, pursuant to our scoring the opponent, the referee may also award the score of "yuko" which means "effect" in the Japanese language. Although this is a positive award and it can win a match, it does not have a numerical aspect to it. Therefrom, a participant can accumulate any number of yuko scores but they will not add up to a waza-ari (half point). Thus, if one opponent accumulates more yukos than the other, the contest will cease at the end of regulation time (which varies from tournament to tournament). The referee awards a yuko when there is significant force and speed of the ippon throw yet it lacks the effective execution of the waza-ari or the ippon.
The last positive scoring award is the "koka." It also means "effective" in the Japanese language, but in the scoring system of judo contests, it indicates the smallest exhibition of technique against an opponent. A referee will usually award this when an athlete upsets the opponent as exhibited by the opponent falling to the mat and being turned over on his back partially.
If there are no points scored of any kind in a match, there are two methods by which a match can be resolved depending on the contest rules decided in advance. The first method is that there will be two side judges who along with the referee, pick the winner deciding which of the opponents tried the hardest and which one exhibited the best attempts of the techniques. The second method is that the match continues for an appointed time period until one or the other of the contestants is awarded a score or receives a penalty at which time the match ends. If the match still does not produce a score, the referees revert to the first method and elect a winner.
In addition to the scoring awards noted above, there are also penalties that can accrue to a player for various infractions most of which are for delay of the match and for the employment of stalling tactics against an aggressive opponent. The second most frequent penalty is for stepping out of bounds. These penalties can accumulate to the extent that a player can forfeit a match altogether. The accumulation has a parallel coincidence to the positive scoring. To summarize this, the first penalty is a "shido" (literally meaning "guidance") which is equivalent to the positive award of the koka. If another penalty is administered, it accumulates to "chui" (literally, in Japanese, "caution") which is equivalent to the yuko. Hence, if one player has received a chui and the other has received a yuko, the match is tied.
At the next level, the penalty accumulates to "keikoku" which literally means "warning" and is the same as the half point award of the waza-ari. If there is an additional fourth penalty, then the contestant receives a "hansoku-make" which literally means "defeat by penalty" which is self-explanatory.
Part 3 - History of Relevant Information to Registration Statement
Up until the mid-1970's, the judo contest rule system was comprised only of the waza-ari (the half point) and the ippon (the full point) accompanied by very few penalties which were administered very sparingly.
From the mid-1970's until the present the IJF gradually added the above scoring and penalty system. In addition to the scoring changes, the IJF instituted another aspect which addresses the frequent transition of athletes when they do not attain the full point (ippon) score attempting to finish the match by going from the partial throw into grappling combat endeavoring to hold the opponent, whom he toppled to the mat, on his back for the necessary time to attain the ippon score which will end the match. Under a relatively recent IJF rule, there must be constant grappling activity that proceeds rapidly to the hold down and a score, or the referee will stop the grappling and the contestants will resume from the standing position.
Previous to the mid-1970's, before the advent of most of the rule and scoring changes, many of the contest matches exhibited the spectacular techniques that produced the ippon and waza-ari that made judo a famous sport, practiced throughout the world, and to be included in the Olympics. However, since the advent of the rules, the character of the contest scoring throws have retreated away from the ippon throws to the athletes attempting lesser effective levels of the judo techniques which have resulted in awards frequently at the level of the koka and the yuko score.
With such depreciation of the level of the throw, the phrase "koka judo" surfaced and is immediately understood in the judo world to mean this change of the content by the athletes toward the utilization of their competitive techniques directly to obtain the lesser scores of yuko and particularly the koka which enables them to win the match.
However, pre-1970 tournament judo, although it beheld many spectacular throws, it had some flaws. Predominately, matches were frequently slow without action. Contestants, often times, would use stalling and excessive defensive techniques against a superior opponent to avoid being thrown hoping that they could gain an advantage somewhere in the match and receive at the end of the match the judges and referees award for the decision producing at times unexciting, dull matches.
After the mid-1970's, three results evolved. First is that judo contests, due to the inactivity (stalling) penalties, did acquire greater activity and lost some of its tendency to bore the viewer or audience during interims of inactivity producing a positive aspect to tournament judo. However, secondly, the participating athletes began to attempt many more throws of a level of technique that would produce lesser awards of koka and yuko, and hence the term "koka judo" came into usage inducing the disappearance and frequency of the throws that produce the full point award. Thirdly, the activity for the grappling ("newaza" in judo terminology) almost ceased altogether. Although newaza (literally "lying down technique") is in itself not particularly spectacular due to its slow, methodical employment of grappling techniques, it is for the judo aficionado of great interest replete with its chokes and arm joint locks. In fact, this aspect of judo although almost completely devoid in modern judo contests is alive and well in the new arrival of Brazilian ju-jutsu (a.k.a. jiu-jitsu - an inadvertent corruption of the original word, ju-jutsu) which does employ joint locks and strangulation chokes often to spectacular effect.
Part 4 - More Changes Producing Complete Transmogrification
In recent years, the IJF has induced a further change that has produced a complete change in the character of contest judo. It has lessened the criteria of the technical level of the throw thus essentially downgrading the level of competence needed to effect the award of an ippon or a waza-ari. Presently, what used to be awarded a koka is now a waza-ari and what was needed to attain a yuko score is now awarded ippon totally changing the integrity of the judo throw. The IJF reasoning behind the new award appellations is to make judo more appealing to audiences by increasing the action of the sport and effect the conclusions of the matches quickly.
As an aside, because of the diminishment of the level of judo technique execution necessary to obtain the waza-ari or ippon scores, the IJF recognized that there is no further need of their "koka" score, and so, it has been dropped.
Part 5 - Unintended Consequences
In introducing the new rule changes, there have been some unintended consequences. These unintended consequences of the many rule changes have produced a different sport from the original previous to the mid 1970's, and it has divided the world of the adherents to the sport of judo into two camps. The major and controlling camp is the IJF controlled by the European judo community and the older generation of judo practitioners (let us call this group "judoka", literally in the Japanese language, "judo cognoscente").
The European group has changed the rules for two reasons: one is, as mentioned above, to quicken the action of judo and bring the matches to a faster conclusion. Secondly, the IJF intended to quantify, more clearly, to various degrees of action within the judo contest to assist in eliminating the vagaries of two judges and a referee calling the winner at the end of a match from the memory of the content of the matches which historically have produced a significant amount of inequitable decisions. The categories of yuko and koka have significantly assisted to rectify these wrong decisions.
The third reason is one that is perhaps a cynical prejudice among some judoka purists who feel that the Europeans have changed the rules to enhance the potential of the European player of attaining medal awards as finalists in the major contests such as the Olympics and the World Judo Championships as sponsored and sanctioned by the IJF. It is felt that the Europeans, as a whole - but not entirely - are behind the Japanese and Koreans in the ability to employ the techniques of the full point judo. As such, if proficiency is attained by being able to score with the utilization of lesser techniques, then they also will be able to participate at the awards dais more frequently and to a greater degree.
The judoka further feel that the rule changes have downgraded the beauty of the sport of judo.
Part 6 - Business Summary
The former officer of Classic Rules, Chris Angle, believes that the tendency of the IJF toward constant rule changes that deprecate the aesthetics of judo is contrary to a large portion of the judo world, and thus, seeks to create a new market for those judoka that are oriented toward the full point style of judo. To this end, Mr. Angle has created the Classic Rules Judo Championship series beginning with its Classic Rules Judo World Championships, the first two tournaments of which was performed in 2010 and 2011.
To enter the championships the contestant must first fill out an entry form and pay an entry fee to secure his spot in the tournament. The tournament will have the following characteristics: It will be held each year in the springtime; it will be an open contest allowing any entrant to participate. The cost of entry in 2014 will be $100.00.
- It will not use the yuko and koka scores;
- Will return to the ippon score of yore whereby the full point will be required to have dramatic force;
- No score for take down techniques employed to take an opponent into grappling mode (a.k.a. newaza);
- No quick stoppage of the transition to newaza;
- To allow newaza to continue until a deadlock whereby it is clear to the referee that the opponents in newaza are no longer able to make any advancement;
- To allow sufficient time for the opponents to vie for their starting grip.
Mr. Angle believes that there is a significant market for this type of championship contest. In addition, if the tournament becomes popular and enough revenue is accumulated then prize money of $1,000 for first place will add to the attractiveness of the tournament. Also, as newaza will have a greater opportunity, practitioners of ju-jutsu may seek to enter.
Part 7 - The Judo Background of Christopher Angle
Mr. Angle, since a child, has always had an interest in judo, but an opportunity to begin practicing judo did not present itself until 1969 during his studies at the University of Michigan where he began his judo training. After his graduation Mr. Angle continued his judo studies at a judo club in Stamford, Connecticut under the tutelage of Mr. K. Shiina. In 1974, Mr. Angle repaired to Tokyo, Japan to enhance his skills. In Japan at the Kodokan Judo Institute he trained vigorously, and to further the cultural experience he enrolled in the Japan Missionary Language Institute to study the Japanese language. After constant practice and study he returned from Japan in 1978 to enter competition whereby he traveled to various tournaments throughout the 80's. He is now the head coach of Stamford Judo (www.stamfordjudo.us) located in Stamford, Connecticut. Mr. Angle continues to travel to the major tournaments often coaching his students. In addition Mr. Angle has written four books on matters of philosophy. His books are available at Amazon or can be viewed at www.philosophypublishing.com.
Part 8 - Market Development of Classic Rules Judo Championships
Mr. Angle believes that the most effective way to market the tournament is through a web site which has all the details of the tournament. Presently, the tournament information is located at: www.stamfordjudo.us/. Further, Mr. Angle has scores of judo contacts throughout the world. He continues to notify them all of the future tournaments, its website address, and implore these contacts to bring participants to the yearly contest.
The new Classic Rules Judo Championships is significantly different from the present World Judo Championships as sponsored by the IJF in many aspects not just in the rules that govern participation. In the present IJF World Championships, each country sends a delegation of judo athletes to the tournament.
The Classic Rules tournament, on the other hand, is an open tournament inviting any and all. The present IJF Worlds is only for delegations of young men and women that win their country's championship tournaments. The Classic Rules Judo contest in addition to being an open tournament also contains a veteran's division whereby in addition to the open age category in which the young athletes participate, there are age divisions for the veterans over the age of 35 who would like to participate. Veteran tournaments (usually called "Masters") have become very popular and the World Masters Championship is the largest tournament in the world in terms of the sheer number of participants. Classic Rules seeks to capture some of the success and interest by the veterans to participate in tournaments with contestants of their own approximate age and weight. Categories are constructed each five years starting at age 40 (hence, 40 - 44 as an example) and going up to the 75 and over category. The weight classes are the same as those of the IJF. This division of the Classic Rules Judo Championships is called the Classic Rules Judo Masters Championships and is run concurrently to the Classic Rules Judo Championships which has the young athlete participants.
Marketing Existing Products
We are marketing the Classic Rules Judo Championships through establishing a website and by communicating with as many coaches of judo as we are familiar throughout the world.
In order to market and develop the product of the Company which is the tournament that it sponsored on March 21, 2010 and May 7, 2011, our former President, Mr. Angle, has put together a mailing list of several hundred judo clubs throughout the U.S. In addition, the company has begun compiling an international email mailing list through making notation of any clubs that make their information available on the international judo websites. The Company has started to and will continue to search for international clubs email addresses to expand the list overall. The Company believes that the most effective way to market the Company’s product is to directly contact judo clubs throughout the U.S. Canada, Europe, Asia, and the rest of the world.
The list of judo clubs that Mr. Angle has compiled contains the email addresses of each club. As email is an efficient way to market with very little cost associated with it, Mr. Angle will email the tournament information three times before the tournament. The first time will be five months in advance, then again three months in advance and finally one month prior to the tournament.
Expanding and Developing New Products
We intend to start other "Classic Rules" tournaments such as the Classic Rules Judo U.S. Open Championships, the Classic Rules Judo Pan-American Open Championships, and the Classic Rules European Open Judo Championships.
Our Competition
We face intense competition and our inability to successfully compete with our competitors who produce other judo tournaments will have a material adverse effect on our results of operation.
The martial arts industry is highly competitive. Our competition in the martial arts industry includes the contests sponsored by the International Judo Federation type of Judo, Ju-Jutsu, Karate, Brazilian Jiu-Jitsu, and Tae Kwon Do. Many of our competitors have longer operating histories, greater brand recognition, broader product lines, greater financial resources, and larger advertising budgets than we do. Many of our competitors offer similar tournaments or alternatives to our tournament. We intend to rely solely on concepts and other intellectual property developed by Chris Angle, our former officer and director. There can be no assurance that we will sufficiently procure an on-line retail market and tournament for the judoka that will be available to support the tournament site and website that we offer or allow us to seek expansion in producing other tournaments such as the Classic Rules Judo Pan-American Open Championships, the Classic Rules Judo U.S. Open Championships or the Classic Rules European Open Judo Championships. There can be no assurance that we will be able to compete effectively in this marketplace.
Proprietary Rights
We intend to rely on a combination of copyright and trademark, and third-party service providers to establish and protect the intellectual property rights that we have in the tournament. There can be no assurance that our competitors will not independently develop tournaments that are substantially equivalent or superior to ours. There also can be no assurance that the measures we adopt to protect our intellectual property rights will be adequate to do so. The ability of our competitors to develop services or other intellectual property rights equivalent or superior to ours or that our inability to enforce our intellectual property rights could have a material adverse affect on our results of operation.
Our main intellectual property right lies in the name of "Classic Rules Judo." This nomenclature denotes the type of judo and judo tournament that we are producing. As we are the first to use this brand name, we will become synonymous with this phrase. Since we see Classic Rules Judo as a phrase that will identify the Company's type of tournament, there may be some protection that that the Company could establish a Servicemark, Trademark, or other; but the Company is unsure if there are protections and if any are applicable to Classic Rules Judo. If there is no protection, this may further jeopardize our product. Chris Angle has assigned his right, if any, to the phrase Classic Rules Judo to the company. In addition, there are no non-disclosure agreements in place with anyone to establish or protect the intellectual property rights that we may have in the tournament.
Though we do not believe that any of the web designs will infringe on the intellectual property rights of third parties in any material respect, there can be no assurance that third parties will not claim infringement by us with respect to the designs. Any such claim, with or without merit, could be time-consuming, result in costly litigation, cause delays in the development of the tournament or require us to enter into royalty or licensing agreements. Such royalty or licensing agreements, if required, may not be available on terms acceptable to us or at all, which could have a material adverse effect on our business, results of operations, and financial condition.
The martial arts industry is highly competitive. Our competition in the martial arts industry includes not only the contests sponsored by the International Judo Federation type of Judo, but also those of Ju-Jutsu, Karate, Brazilian Jiu-Jitsu, and Tae Kwon Do. Many of our competitors have longer operating histories, greater brand recognition, broader product lines, greater financial resources, and larger advertising budgets than we do. Many of our competitors offer similar tournaments or alternatives to our tournament. We intend to rely solely on concepts and other intellectual property developed by Chris Angle, our former officer and director. There can be no assurance that we will procure sufficiently an on-line retail market and tournament for the judoka that will be available to support the tournament site and website we will offer or allow us to seek expansion in producing other tournaments such as the Classic Rules Judo Pan-American Open Championships, the Classic Rules U.S. Open Judo Championships or the Classic Rules European Open Judo Championships. There can be no assurance that we will be able to compete effectively in this marketplace.
Intellectual property claims against us can be costly and could impair our business. Other parties may assert infringement or unfair competition claims against us. We cannot predict whether third parties will assert claims of infringement against us, or whether any future assertions or prosecutions will harm our business. If we are forced to defend against any such claims, whether they are with or without merit or are determined in our favor, then we may face costly litigation, diversion of technical and management personnel, or product/service delays. As a result of such a dispute, we may have to develop non-infringing technology or enter into royalty or licensing agreements. Such royalty or licensing agreements, if required, may be unavailable on terms acceptable to us, or at all. If there is a successful claim of product infringement against us and we are unable to develop non-infringing technology or license the infringed or similar technology on a timely basis, it could impair our business.
If we do not sufficiently attract participants to our website on cost-effective terms, we will not make a profit, which ultimately will result in a cessation of operations.
Our Research and Development
We are not currently conducting any research and development activities. For all lines of websites we offer or will offer, we intend to rely on concepts and other intellectual property developed by Chris Angle our former officer and director. Mr. Angle is under no contractual obligation to the Company to continue to develop new lines of websites nor is he under any contractual obligation to assign his rights in any new lines of websites to the Company. We do not intend to use any other person other than Mr. Angle as a source for new lines of websites or designs. We intend to rely on third party service providers to continue the development of concepts developed by Mr. Angle for use by Classic Rules Judo Championships, Inc.
Government Regulation
The Company is, and will continue to be, subject to several and varying governmental regulations. In general, the Company is subject to environmental, public health and safety, land use, trade and other governmental regulations, and national, state, or local taxation or tariffs. The Company’s management will endeavor to ascertain and comply with all applicable to the business of the Company. However, it may not be possible to predict with any degree of accuracy all applicable regulations or the impact of government regulation, and, compliance with such regulation will require certain efforts and resources of the Company.
a) Penny Stock Regulations: Our shares are "penny stocks" covered by Section 15(g) of the Exchange Act, and Rules 15g-1 through 15g-6 and Rule 15g-9 promulgated thereunder. They impose additional sales practice requirements on broker/dealers who sell our securities to persons other than established customers and accredited investors (generally institutions with assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouses). While Section 15(g) and Rules 15g-1 through 15g-6 apply to brokers-dealers, they do not apply to us.
Rule 15g-1 exempts a number of specific transactions from the scope of the penny stock rules.
Rule 15g-2 declares unlawful broker/dealer transactions in penny stocks unless the broker/dealer has first provided to the customer a standardized disclosure document.
Rule 15g-3 provides that it is unlawful for a broker/dealer to engage in a penny stock transaction unless the broker/dealer first discloses and subsequently confirms to the customer current quotation prices or similar market information concerning the penny stock in question.
Rule 15g-4 prohibits broker/dealers from completing penny stock transactions for a customer unless the broker/dealer first discloses to the customer the amount of compensation or other remuneration received as a result of the penny stock transaction.
Rule 15g-5 requires that a broker/dealer executing a penny stock transaction, other than one exempt under Rule 15g-1, disclose to its customer, at the time of or prior to the transaction, information about the sales persons compensation.
Rule 15g-6 requires broker/dealers selling penny stocks to provide their customers with monthly account statements.
Rule 15g-9 requires broker/dealers to approve the transaction for the customer's account; obtain a written agreement from the customer setting forth the identity and quantity of the stock being purchased; obtain from the customer information regarding his investment experience; make a determination that the investment is suitable for the investor; deliver to the customer a written statement for the basis for the suitability determination; notify the customer of his rights and remedies in cases of fraud in penny stock transactions; and, the FINRA's toll free telephone number and the central number of the North American Administrators Association, for information on the disciplinary history of broker/dealers and their associated persons. The application of the penny stock rules may affect your ability to resell your shares.
The FINRA has adopted rules that require that in recommending an investment to a customer, a broker/dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer's financial status, tax status, investment objectives and other information. Under interpretations of these rules, the FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker/dealers to recommend that their customers buy our common stock, which may have the effect of reducing the level of trading activity and liquidity of our common stock. Further, many brokers charge higher transactional fees for penny stock transactions. As a result, fewer broker/dealers may be willing to make a market in our common stock, reducing a stockholder's ability to resell shares of our common stock.
Again, the foregoing rules apply to broker/dealers. They do not apply to us in any manner whatsoever. Since our shares are covered by Section 15(g) of the Exchange Act, which imposes additional sales practice requirements on broker/dealers, many broker/dealers may not want to make a market in our shares or conduct any transactions in our shares. As such, your ability to dispose of your shares may be adversely affected.
b) Blue Sky Restrictions on Resale: If a selling security holder wants to sell shares of our common stock under this registration statement in the United States, the selling security holders will also need to comply with state securities laws, also known as "Blue Sky laws," with regard to secondary sales. All states offer a variety of exemption from registration for secondary sales. Many states, for example, have an exemption for secondary trading of securities registered under Section 12(g) of the Securities Exchange Act of 1934 or for securities of issuers that publish continuous disclosure of financial and non-financial information in a recognized securities manual, such as Standard & Poor's. The broker for a selling security holder will be able to advise a selling security holder which states our common stock is exempt from registration with that state for secondary sales.
Any person who purchases shares of our common stock from a selling security holder under this registration statement who then wants to sell such shares will also have to comply with Blue Sky laws regarding secondary sales. When the registration statement becomes effective, and a selling security holder indicates in which state(s) he desires to sell his shares, we will be able to identify whether it will need to register or it will rely on an exemption there from.
Employees
The Company presently has no employees other than its officer. Management of the Company expects to use consultants, attorneys, and accountants as necessary, and does not anticipate a need to engage any full-time employees until absolutely necessary for the operations of the Company. The need for employees and their availability will be addressed in connection with the scope and requirements of the operations of the Company.
As of December 31, 2013, we had no employees other than our officer and director. We anticipate that we will not hire any employees in the next twelve months, unless we generate significant revenues.
Facilities
Our executive, administrative and operating offices are located at 6204 Beaver Run, Jamesville, NY 13078. This is also the office of our officer and director, Craig Burton, who makes this space available to the company free of charge. There is no written agreement documenting this arrangement.
We have no policies with respect to investments in real estate or interests in real estate, real estate mortgages, or securities of or interests in persons primarily engaged in real estate activities. The mailing address of Classic Rules Judo is 6204 Beaver Run, Jamesville, NY 13078.
Risk Factors
Financial position of the Company, working capital deficit; report of independent auditors. Due to the market downturn, the Company had no revenues in the fiscal year ended December 31, 2013, as no tournaments were held. The Company, which is to be considered as a startup Company is currently developing its business of the judo championship and hopes to generate sustainable revenues through tournament entrance fees through a wider knowledge and awareness of the Classic Rules Tournament in 2014. The Company makes no assurances that the Company will generate sufficient revenues through its operations and be able to continue as a going concern.
The independent accountant’s report on the Company’s financial statements for the year ended December 31, 2013, contains an explanatory paragraph regarding the Company’s ability to continue as a going concern. See “Item 8. Financial Statements and Supplementary Data,” herein.
Risks of Leverage. The Company has, and likely will continue to, incur substantial borrowings, notes, and/or other Company debt for the purpose of developing Company operations and for financing the expansion and growth of the Company, including the possible acquisition of other companies. Any amounts borrowed will depend among other things, on the condition of financial markets. Acquisitions of equipment, vehicles, or other companies purchased on a leveraged basis generally can be expected to be profitable only if they generate, at a minimum, sufficient cash revenues to pay interest on, and to amortize, the related debt, to cover operating expenses and to recover the equity investment. The use of leverage, under certain circumstances, may provide a higher return to the shareholders but will cause the risk of loss to the shareholders to be greater than if the Company did not borrow, because fixed payment obligations must be met on certain specified dates regardless of the amount of revenues derived by the Company. If debt service payments are not made when due, the Company may sustain the loss of its equity investment in the assets securing the debt as a result of foreclosure by the secured lender. Interest payable on Company borrowings, if any, may vary with the movement of the interest rates charged by banks to their prime commercial customers. An increase in borrowing costs due to a rise in the “prime” or “base” rates may reduce the amount of Company income and cash availability for dividends.
ITEM 1A. | RISK FACTORS |
Smaller reporting companies are not required to provide the information required by this item.
ITEM 1B. | UNRESOLVED STAFF COMMENTS |
None.
ITEM 2. | PROPERTIES |
Currently, our office space is located at the office of our Chief Executive Officer, Mr. Craig Burton at 6204 Beaver Run, Jamesville, NY 13078; our telephone number is (315) 457-4889.
ITEM 3. | 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 4. | MINE SAFETY DISCLOSURES |
Not applicable.
PART II
ITEM 5. | MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES |
Market Information
Our common stock is not currently quoted on any exchange. We intend to apply to have our common stock be quoted on the OTC Bulletin Board. If our securities are not quoted on the OTC Bulletin Board, a security holder may find it more difficult to dispose of, or to obtain accurate quotations as to the market value of our securities. The OTC Bulletin Board differs from national and regional stock exchanges in that it (1) is not situated in a single location but operates through communication of bids, offers and confirmations between broker-dealers, and (2) securities admitted to quotation are offered by one or more Broker-dealers rather than the "specialist" common to stock exchanges.
To qualify for quotation on the OTC Bulletin Board, an equity security must have one registered broker-dealer, known as the market maker, willing to list bid or sale quotations and to sponsor the company listing. If it meets the qualifications for trading securities on the OTC Bulletin Board our securities will trade on the OTC Bulletin Board. We may not now or ever qualify for quotation on the OTC Bulletin Board. We currently have no market maker who is willing to list quotations for our securities.
As of April 14, 2014, there were 18,591,466 shares of common stock of the Company issued and outstanding.
Dividends
It has been the policy of the Company to retain earnings, if any, to finance the development and growth of its business.
ITEM 6. | SELECTED FINANCIAL DATA |
Smaller reporting companies are not required to provide the information required by this item.
ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
When used in this report on Form 10-K, the words "may," "will," "expect," "anticipate," "continue," "estimate," "project," "intend," and similar expressions are intended to identify forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 regarding events, conditions, and financial trends that may affect the Company's future plans of operations, business strategy, operating results, and financial position. Persons reviewing this report are cautioned that any forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties and that actual results may differ materially from those included within the forward-looking statements as a result of various factors. Such factors are discussed under the headings "Item 1. Business" and "Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations," and also include general economic factors and conditions that may directly or indirectly impact the Company's financial condition or results of operations.
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.
The Company cautions readers not to place undue reliance on any forward-looking statements, which speak only as of the date made, are based on certain assumptions and expectations which may or may not be valid or actually occur, and which involve various risks and uncertainties, including but not limited to the risks set forth above. In addition, sales and other revenues may not commence and/or continue as anticipated due to delays or otherwise. As a result, the Company’s actual results for future periods could differ materially from those anticipated or projected.
Overview
Classic Rules Judo Championships, Inc. (“We” or the “Company”) was originally formed as Blue Ribbon Pyrocool, Inc. a Delaware corporation, on November 16, 2005, as a wholly owned subsidiary of Puritan Financial Group, Inc., a company traded on the Pink OTC Markets, Inc. On March 24, 2008 a majority of the shareholders approved the spin-off of the Company to the shareholders of record as of March, 26, 2008. Subsequent to its formation and prior to being renamed, the Company had no revenues or operations.
Our Company, Classic Rules Judo Championships, Inc. created a subsidiary which was incorporated in the state of Connecticut called Classic Rules World Judo Championships, Inc. There are no other subsidiaries. On July 15, 2008 the Company executed a Memorandum of Understanding entitled “Management's Global Agreement” (the “MOU”) with Classic Rules Judo Championships, Inc. and Mr. Chris Angle. Under such MOU the Company would change its name and pursue the business of Classic Rules Judo Championships, Inc.
We intend to establish and promote tournaments for the sport of classical judo and have, so far, done two tournaments, one in 2010 and one in 2011. The Company did not host a tournament in 2012 or 2013.
Contestants pay a fee to enter the contest and vie to become the winner of this yearly tournament which is known as the Classic Rules World Judo Championships. We plan to apply through a FINRA member broker dealer for OTC-Bulletin Board listing. Management believes that listing on the OTC-Bulletin will position the Company to find financing to progress its business plan forward. However, there is no assurance that the Company will find a market maker and no assurance that our shares will be approved for listing in the OTC Bulletin Board.
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, $296 for printing, totaling $2,397.
The Company did not host a tournament during 2012 or 2013.
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.
We have generated little revenues to date; we have minimal assets, and have incurred losses since inception. From November 16, 2005 (inception) through December 31, 2013 we experienced a net loss of $128,055. This net loss was attributed to the organizational expenses and professional fees. For the twelve months ended December 31, 2013 and 2012, we experienced net losses of $28,887 and $29,754, respectively. These losses are attributable to organizational expenses and professional fees. In our December 31, 2013 and 2012 year-end financial report, our auditor issued an opinion that our financial condition raises substantial doubt about the Company's ability to continue as a going concern. In 2012 and 2013 the Company did not host a tournament and did not take in any revenues.
Without a further injection of cash from our officer, director, shareholders or other investors, the Company may have to close. In addition, the yearly audit and review fees are estimated to be approximately $15,500; our accounts payable and accrued expenses are approximately $45,000, and the estimated costs for the 2014 tournament is $3,000 totaling about $63,500. We expect to only take in revenue from the 2014 tournament of $7,500 leaving an expected shortfall for the coming year of $56,000.
Critical Accounting Policies and Estimates
The Company's financial statements are prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP). The preparation of the financial statements requires the Company to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosures. Though the Company evaluates the estimates and assumptions on an ongoing basis, our actual results may differ from these estimates.
Certain of the Company's accounting policies that we believe are the most important to the portrayal of the Company's financial condition and results of operations and that require management's subjective judgments are described below to facilitate a better understanding of our business activities. Management bases its judgments on its experience and assumptions which it believes are reasonable and applicable under the circumstances.
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 intercompany balances and transactions have been eliminated in consolidation.
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.
Results of Operations
Comparison of the Years Ended December 31, 2013 and 2012
Revenues. The Company had no revenue during the years ended December 31, 2013 or 2012, because the Company did not host a tournament either year.
Cost of Revenues. The Company had no cost revenues of during the year ended December 31, 2013 as the Company did not hold a tournament during the year, as compared to negative $610 for the year ended December 31, 2012. The negative $610 in cost for the year ended December 31, 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 general, and administrative expenses of $41,437 during the year ended December 31, 2013 compared to $30,307 during the year ended December 31, 2012. Such increase was due primarily to the higher professional fees and stock transfer agent fees.
Operating loss. As a result of the Company's general and administrative expenses, the Company incurred an operating loss of $41,437 for the year ended December 31, 2013 as compared with $29,697 for the year ended December 31, 2012.
Other Income (Expenses). The Company had forgiveness of accounts payable of $12,550 relating to prior year audit fees, for the year ended December 31, 2013 as compared to $0 for the year ended December 31, 2012. The Company had no imputed interest expense for the year ended December 31, 2013 as compared to $57 of imputed interest on the convertible loan for the year ended December 31, 2012. On February 8, 2012, the holder of the convertible loan exercised his conversion right and converted the loan into 590,293 newly issued shares of common stock.
Net Loss. As a result, the Company incurred a net loss of $28,887 during the year ended December 31, 2013 compared to a net loss of $29,754 during the year ended December 31, 2012.
Comparison of the Years Ended December 31, 2012 and 2011
Revenues. The Company had no revenue during the year ended December 31, 2012, as compared to revenue generated during the year ended December 31, 2011 of $1,010, in which the Company hosted its second tournament. This is because the Company did not host a tournament this year versus the entrants into the second annual tournament held in year 2011.
Cost of Revenues. The Company incurred a negative $610 cost of revenues of during the year ended December 31, 2012, as compared to $2,397 for the year ended December 31, 2011. The negative $610 in cost for the year ended December 31, 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 general, and administrative expenses of $30,307 during the year ended December 31, 2012 compared to $20,393 during the year ended December 31, 2011. Such increase was due primarily to the higher professional fees and stock transfer agent fees as we are now a reporting company.
Operating loss. As a result of the Company's general and administrative expenses, the Company incurred an operating loss of $29,697 for the year ended December 31, 2012 as compared with $21,780 for the year ended December 31, 2011.
Other Expenses. The Company imputed interest of $57 on the convertible loan payable for the year ended December 31, 2012 as compared with $325 of interest expense for the year ended December 31, 2011. On February 8, 2012, the holder of the convertible loan exercised his conversion right and converted the loan into 590,293 newly issued shares of common stock.
Net Loss. As a result, the Company incurred a net loss of $29,754 during the year ended December 31, 2012 compared to a net loss of $22,105 during the year ended December 31, 2011.
Liquidity and Capital Resources
At December 31, 2013, we had a working capital deficit of $44,417.
Share Issuances
On March 14, 2013 the Company entered into a stock subscription agreement with a company owned by the Company’s former CEO, Mr. Angle, for the issuance of 640,292 shares of the Company’s common stock at $0.007 per share or $4,525. Proceeds of $4,025 have been received. The advance from officer in the amount of $500 has been applied to the amount due leaving a stock subscription receivable of $0 at December 31, 2013.
On May 24, 2013 the Company entered into a stock subscription agreement with a company owned by Mr. Angle, the Company’s former CEO, for the issuance of 1,035,328 shares of the Company’s common stock at $0.007 per share or $7,000.
On August 7, 2013 the Company received $1,250 in payment pursuant to a stock subscription agreement with M. Timofejeva for the issuance of 197,822 shares of the Company’s common stock at $0.006 per share.
On August 7, 2013 the Company received $1,250 in payment pursuant to a stock subscription agreement with V. Stolere (the spouse of the Company’s former President) for the issuance of 197,822 shares of the Company’s common stock at $0.006 per share.
On September 10, 2013, the Company received $600 in payment pursuant to a stock subscription agreement with the Stamford Learning Center (a company owned by the Company’s former President) for the issuance of 100,164 shares of the Company’s common stock at $0.006 per share.
On September 10, 2013, the Company received $400 in payment pursuant to a stock subscription agreement with V. Stolere (the spouse of the Company’s former President) for the issuance of 66,776 shares of the Company’s common stock at $0.006 per share.
On November 12, 2013 the Company received $2,000 in payment pursuant to a stock subscription agreement with M. Timofejeva for the issuance of 327,766 shares of the Company's common stock at $0.006 per share.
On November 14, 2013 the Company sold 451,334 shares of common stock at $0.006 per share to a company owned by the Company's former President under a stock subscription agreement and received $2,700.
On November 14, 2013 the Company sold 51,502 shares of common stock at $0.006 per share to the Company's former President under a stock subscription agreement and received $300.
On December 6, 2013 the Company sold 602,662 shares of common stock at $0.006 per share to the spouse of its former president under a stock subscription agreement and received $3,500.
Cash Flows
Net cash used in operating activities was $22,540 for the year ended December 31, 2013 and $15,303 for the year ended December 31, 2012. Use of cash was primarily due to the net loss which was partially offset by an increase in accounts payable and accrued expenses.
Net cash provided by financing activities was $23,233 and $15,310 for the years ended December 31, 2013 and 2012, respectively. The net cash provided by financing activities consisted primarily of proceeds from the issuance of common stock.
Our auditors have raised, in their current audit report, a substantial doubt about our ability to continue as a going concern. We will be unable to continue as a going concern if we are not able to raise capital and are unsuccessful in securing a business acquisition. Until such time as sufficient capital is raised, we intend to limit expenditures for capital assets and other expense categories.
The Company must currently rely on corporate officers, directors and outside investors in order to meet its budget. If the Company is unable to obtain financing from any of one of these aforementioned sources, the Company would not be able to satisfy its financial obligations. Limited commitments to provide additional funds have been made by management and other shareholders. We cannot provide any assurance that any additional funds will be made available on acceptable terms or at all.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on us.
ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
Smaller reporting companies are not required to provide the information required by this item.
ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
CONTENTS
Report of Independent Registered Public Accounting Firm | Page F-1 |
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Consolidated Balance Sheets | F-2 |
| |
Consolidated Statements of Operations | F-3 |
| |
| Consolidated Statement of Stockholders’ Deficit | F-4 |
Consolidated Statements of Cash Flows | F-5 |
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Notes to Consolidated Financial Statements | F-6 |
Report of Independent Registered Public Accounting Firm
To the Board of Directors and
Stockholders of
Classic Rules Judo Championships, Inc.
We have audited the accompanying consolidated balance sheets of Classic Rules Judo Championships, Inc. and Subsidiary (A Development Stage Company) as of December 31, 2013 and 2012, the related consolidated statements of operations, and cash flows for each of the years in the two-year period ended December 31, 2013, and for the period from November 16, 2005 (inception) to December 31, 2013, and the consolidated statement of stockholders’ deficit for the period from November 16, 2005 (inception) to December 31, 2013. Classic Rules Judo Championships, Inc.’s management is responsible for these consolidated financial statements. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Classic Rules Judo Championships, Inc. and Subsidiary (a Development Stage Company) as of December 31, 2013 and 2012, and the consolidated results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2013, and the period from November 16, 2005 (inception) to December 31, 2013, in conformity with accounting principles generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note B to the consolidated financial statements, the Company has minimal revenues, has incurred a net loss of $28,887 for the year ended December 31, 2013, has a deficit accumulated during the development stage of $128,055 at December 31, 2013, and has experienced negative cash flows from operations. These conditions raise substantial doubt about its ability to continue as a going concern. Management’s plans regarding these matters are also described in Note B. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Cowan, Gunteski & Co., P.A.
April 14, 2014
Tinton Falls, NJ
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Classic Rules Judo Championships, Inc. and Subsidiary
(A Development Stage Company)
Consolidated Balance Sheets
December 31, | December 31, | |||||||
2013 | 2012 | |||||||
ASSETS | ||||||||
Current Assets | ||||||||
Cash | $ | 700 | $ | 7 | ||||
Total Current Assets | 700 | 7 | ||||||
Total Assets | $ | 700 | $ | 7 | ||||
LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||
Current Liabilities | ||||||||
Accounts payable | 33,077 | 30,897 | ||||||
Accrued expenses | 11,167 | 8,000 | ||||||
Advance from officer | 873 | 165 | ||||||
Total Current Liabilities | 45,117 | 39,062 | ||||||
Total Liabilities | 45,117 | 39,062 | ||||||
Stockholders' Deficit | ||||||||
Preferred stock, $0.001 par value; 50,000,000 sharesauthorized; -0- and 1,250,000 issued and outstanding at December 31, 2013 and 2012, respectively | - | 1,250 | ||||||
Common stock, $0.001 par value 100,000,000 shares authorized;17,821,574 and 14,150,106 shares issued and outstanding onDecember 31, 2013 and 2012, respectively | 17,821 | 14,150 | ||||||
Additional paid-in capital | 65,817 | 44,713 | ||||||
Stock subscription receivable | - | - | ||||||
Deficit accumulated during development stage | (128,055 | ) | (99,168 | ) | ||||
Total Stockholders' Deficit | (44,417 | ) | (39,055 | ) | ||||
Total Liabilities and Stockholders' Deficit | $ | 700 | $ | 7 | ||||
The accompanying notes are an integral part of these consolidated financial statements.
Classic Rules Judo Championships, Inc. and Subsidiary
(A Development Stage Company)
Consolidated Statements of Operations
For The Years Ended | Period from November 16, 2005 (inception) | |||||||||||
| 2013 | 2012 | to December 31, 2013 | ||||||||||
Revenues | $ | - | $ | - | $ | 3,097 | ||||||
Operating Expenses | ||||||||||||
Cost of revenues | - | (610 | ) | 3,237 | ||||||||
General and administrative | 41,437 | 30,307 | 140,083 | |||||||||
Total Expenses | 41,437 | 29,697 | 143,320 | |||||||||
Operating Loss | (41,437 | ) | (29,697 | ) | (140,223 | ) | ||||||
Other Income (Expense) | ||||||||||||
Forgiveness of accounts payable | 12,550 | - | 12,550 | |||||||||
Interest expense | - | (57 | ) | (382 | ) | |||||||
Total Other Income (Expense) | 12,550 | (57 | ) | 12,168 | ||||||||
Net Loss | $ | (28,887 | ) | $ | (29,754 | ) | $ | (128,055 | ) | |||
Net Loss per Common Share | ||||||||||||
Basic and Diluted | $ | - | $ | - | $ | (0.02 | ) | |||||
Weighted Average Shares Outstanding | 15,658,780 | 13,541,638 | 8,343,353 | |||||||||
The accompanying notes are an integral part of these consolidated financial statements.
Classic Rules Judo Championships, Inc. and Subsidiary
(A Development Stage Company)
Consolidated Statement of Stockholders' Deficit
Period From November 16, 2005 (Inception) to December 31, 2013
Preferred Stock | Common Stock | Additional Paid-In | Stock Subscription | Deficit Accumulated During Development | Total Stockholders' | |||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Receivable | Stage | Deficit | |||||||||||||||||||||||||
Balance at November 16, 2005 (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 (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 Febryuary 8, 2012 | - | - | 209,671 | 210 | 1,590 | - | - | 1,800 | ||||||||||||||||||||||||
Shares issued for cash 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 | ||||||||||||||||||||||||
Shares issued for cash at $0.007 on August 9, 2012 | - | - | 204,088 | 204 | 1,296 | - | - | 1,500 | ||||||||||||||||||||||||
Shares issued for cash at $0.007 on August 9, 2012 | - | - | 204,088 | 204 | 1,296 | - | - | 1,500 | ||||||||||||||||||||||||
Shares issued for cash at $0.007 on August 9, 2012 | - | - | 136,059 | 136 | 864 | - | - | 1,000 | ||||||||||||||||||||||||
Imputed interest on convertible loan payable | - | - | - | - | 57 | - | - | 57 | ||||||||||||||||||||||||
Net loss for the year ended December 31, 2012 | - | - | - | - | - | (29,754 | ) | (29,754 | ) | |||||||||||||||||||||||
Balance at December 31, 2012 | 1,250,000 | 1,250 | 14,150,106 | 14,150 | 44,713 | - | (99,168 | ) | (39,055 | ) | ||||||||||||||||||||||
Shares issued for cash at $0.007 on March 14, 2013 | - | - | 640,292 | 640 | 3,885 | (235 | ) | - | 4,290 | |||||||||||||||||||||||
Preferred shares cancelled April 1, 2013 | (1,250,000 | ) | (1,250 | ) | - | - | 1,250 | - | - | - | ||||||||||||||||||||||
Shares issued for cash at $0.007 on May 24, 2013 | - | - | 1,035,328 | 1,036 | 5,964 | - | - | 7,000 | ||||||||||||||||||||||||
Settlement of stock subscription receivable | - | - | - | - | - | 235 | - | 235 | ||||||||||||||||||||||||
Shares issued for cash at $0.006 on August 7, 2013 | - | - | 395,644 | 396 | 2,104 | - | - | 2,500 | ||||||||||||||||||||||||
Shares issued for cash at $0.006 on September 10, 2013 | - | - | 166,940 | 166 | 834 | - | - | 1,000 | ||||||||||||||||||||||||
Shares issued for cash at $0.006 on November 12, 2013 | - | - | 327,766 | 328 | 1,672 | - | - | 2,000 | ||||||||||||||||||||||||
Shares issued for cash at $0.006 on November 14, 2013 | - | - | 502,836 | 503 | 2,497 | - | - | 3,000 | ||||||||||||||||||||||||
Shares issued for cash at $0.006 on December 6, 2013 | - | - | 602,662 | 602 | 2,898 | - | - | 3,500 | ||||||||||||||||||||||||
Net loss for the year ended December 31, 2013 | - | - | - | - | - | - | (28,887 | ) | (28,887 | ) | ||||||||||||||||||||||
Balance at December 31, 2013 | - | $ | - | 17,821,574 | $ | 17,821 | $ | 65,817 | $ | - | $ | (128,055 | ) | $ | (44,417 | ) | ||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
Classic Rules Judo Championships, Inc. and Subsidiary
(A Development Stage Company)
Consolidated Statements of Cash Flows
For the Years Ended December 31, | Period from November 16, 2005 (inception) to December 31, | |||||||||||
2013 | 2012 | 2013 | ||||||||||
Cash Flows from Operating Activities | ||||||||||||
Net loss | $ | (28,887 | ) | $ | (29,754 | ) | $ | (128,055 | ) | |||
Adjustments to reconcile net loss to net cashused in operating activities: | ||||||||||||
Shares issued for services | - | - | 11,805 | |||||||||
Shares issued for salaries | - | - | 1,161 | |||||||||
Expenses paid by shareholders | - | - | 6,412 | |||||||||
Forgiveness of accounts payable | (12,550 | ) | - | (12,550 | ) | |||||||
Donated services | - | - | 150 | |||||||||
Imputed interest | - | 57 | 382 | |||||||||
Changes in operating assets and liabilities- | ||||||||||||
Increase in accounts payable | 15,730 | 14,394 | 46,627 | |||||||||
Increase in accrued expenses | 3,167 | - | 11,167 | |||||||||
Net Cash Used in Operating Activities | (22,540 | ) | (15,303 | ) | (62,901 | ) | ||||||
Cash Flows from Financing Activities | ||||||||||||
Bank overdraft | - | (15 | ) | - | ||||||||
Proceeds from convertible loan payable | - | - | 5,000 | |||||||||
Proceeds from advance from officer | 208 | 25 | 373 | |||||||||
Cash contributions from related party | - | - | 30 | |||||||||
Proceeds from issuance of common stock | 23,025 | 15,300 | 58,198 | |||||||||
Net Cash Provided by Financing Activities | 23,233 | 15,310 | 63,601 | |||||||||
Net Increase in Cash | 693 | 7 | 700 | |||||||||
Cash, Beginning of Period | 7 | - | - | |||||||||
Cash, End of Period | $ | 700 | $ | 7 | $ | 700 | ||||||
Supplemental Cash Flow Information: | ||||||||||||
Cash paid for interest | $ | - | $ | - | $ | - | ||||||
Cash paid for taxes | $ | - | $ | - | $ | - | ||||||
Non-cash Financing Transactions: | ||||||||||||
Conversion of convertible loan payable into common stock | $ | - | $ | 5,000 | $ | 5,000 | ||||||
Stock subscription receivable on common stock issued | $ | 500 | $ | - | $ | 500 | ||||||
Settlement of advance from officer with subscription receivable | $ | 500 | $ | - | $ | 500 | ||||||
Cancellation of preferred stock into adjusted paid in capital | $ | 1,250 | $ | - | $ | 1,250 | ||||||
Accounts payable paid directly by officer | $ | 1,000 | $ | - | $ | 1,000 | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
Classic Rules Judo Championships, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
December 31, 2013
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 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, has incurred a net loss of $28,887 for the year ended December 31, 2013, has a deficit accumulated during the development stage of $128,055 at December 31, 2013, 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 sales 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 cash flows from operations.
NOTE C – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 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 effect 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.
Classic Rules Judo Championships, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
December 31, 2013
NOTE C – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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 December 31, 2013 and 2012.
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 December 31, 2013 and 2012 the carrying value of the Company’s cash, accounts payable, accrued expense, 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 FASB 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.
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.
Classic Rules Judo Championships, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
December 31, 2013
NOTE C – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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 FASB 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 December 31, 2013 and 2012, 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.
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 December 31, 2013 and 2012 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.
Classic Rules Judo Championships, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
December 31, 2013
NOTE C – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Subsequent Events
In accordance with Topic No. 855 “Subsequent Events” the Company evaluated subsequent events, which are events or transactions that occurred after December 31, 2013 through the date of the issuance of the accompanying consolidated financial statements.
Recently Issued Accounting Pronoucements
Management does not believe that any recently issued but not yet effective accounting pronoucements, if adopted, would have an effect on the accompanying consolidated financial statements.
Classic Rules Judo Championships, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
December 31, 2013
NOTE D – 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 issued 1,250,000 preferred shares to two former officers of the Company.
On April 1, 2013, the Company, Mr. Lapkin and Mr. Gruenbaum cancelled the 1,250,000 outstanding shares of preferred stock held by Mr. Lapkin and Mr. Gruenbaum, 625,000 shares held by each. No consideration was paid by the Company for the return and cancellation of the shares.
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 December 31, 2013 there are 17,821,574 shares of common stock issued and outstanding.
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.
On July 15, 2008, the Company issued 1,160,678 shares of common stock to its former 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.
Classic Rules Judo Championships, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
December 31, 2013
NOTE D – STOCKHOLDERS’ DEFICIT (Continued)
Common Stock (Continued)
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.
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 former 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 former 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.
On February 8, 2012, the Company sold 104,366 shares of common stock at $0.009 per share to the spouse of its former 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 former 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 former President under a stock subscription agreement and received proceeds of $1,750.
On August 9, 2012, the Company sold 204,088 shares of common stock at $0.007 per share to the spouse of its former President under a stock subscription agreement and received proceeds of $1,500.
Classic Rules Judo Championships, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
December 31, 2013
NOTE D – STOCKHOLDERS’ DEFICIT (Continued)
Common Stock (Continued)
On August 9, 2012, the Company sold 340,147 shares of common stock at $0.007 per share to two investors under stock subscription agreements and received proceeds of $2,500.
On March 14, 2013 the Company entered into a stock subscription agreement with a company owned by the Company’s former CEO, Mr. Angle, for the issuance of 640,292 shares of the Company’s common stock at $0.007 per share or $4,525. Proceeds of $4,025 have been received. The advance from officer in the amount of $500 has been applied to the amount due leaving a stock subscription receivable of $0 at December 31, 2013.
On May 24, 2013 the company entered into a stock subscription agreement with a company owned by Mr. Angle, the Company’s former CEO, for the issuance of 1,035,328 shares of the Company’s common stock at $0.007 per share or $7,000.
On August 7, 2013 the Company received $1,250 in payment pursuant to a stock subscription agreement with M. Timofejeva for the issuance of 197,822 shares of the Company’s common stock at $0.006 per share.
On August 7, 2013 the Company received $1,250 in payment pursuant to a stock subscription agreement with V. Stolere (the spouse of the Company’s former President) for the issuance of 197,822 shares of the Company’s common stock at $0.006 per share.
On September 10, 2013, the Company received $600 in payment pursuant to a stock subscription agreement with the Stamford Learning Center (a company owned by the Company’s former President) for the issuance of 100,164 shares of the Company’s common stock at $0.006 per share.
On September 10, 2013, the Company received $400 in payment pursuant to a stock subscription agreement with V. Stolere (the spouse of the Company’s former President) for the issuance of 66,776 shares of the Company’s common stock at $0.006 per share.
On November 12, 2013 the Company received $2,000 in payment pursuant to a stock subscription agreement with M. Timofejeva for the issuance of 327,766 shares of the Company's common stock at $0.006 per share.
On November 14, 2013 the Company sold 451,334 shares of common stock at $0.006 per share to a company owned by the Company's former President under a stock subscription agreement and received $2,700.
On November 14, 2013 the Company sold 51,502 shares of common stock at $0.006 per share to the Company's former President under a stock subscription agreement and received $300.
On December 6, 2013 the Company sold 602,662 shares of common stock at $0.006 per share to the spouse of its former President under a stock subscription agreement and received $3,500.
NOTE E – 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:
Years Ended December 31, | ||||||||
2013 | 2012 | |||||||
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 | - | % | - | % | ||||
Net deferred tax assets and liabilities consist of the following components:
December 31, 2013 | December 31 2012 | |||||||
Deferred tax assets: | ||||||||
Net operating loss carry-forward | $ | 52,342 | $ | 40,499 | ||||
Valuation Allowance | (52,342 | ) | (40,499 | ) | ||||
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 $11,843 and $12,200 in the years ended December 31, 2013 and 2012, respectively.
Classic Rules Judo Championships, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
December 31, 2013
NOTE E – INCOME TAXES (Continued)
The Company's net operating loss carry-forward amounting to $127,664 at December 31, 2013, expires as follows:
Year Ending December 31: | Amount | |||
2028 | $ | 9,201 | ||
2029 | 8,319 | |||
2030 | 16,432 | |||
2031 | 35,071 | |||
| 2032 | 29,754 | |||
2033 | 28,887 | |||
Total | $ | 127,664 | ||
NOTE F – 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 former 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 former 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 was non-interest bearing.
During 2012 Mr. Angle, advanced the Company $25 in cash for operating expenses. The advance has no stated terms of repayment and was non-interest bearing.
In January 2013, Mr. Angle, advanced the Company $100 in cash for operating expenses. The advance had no stated terms of repayment and was non-interest bearing.
On March 14, 2013 the Company entered into a stock subscription agreement with a company owned the Company’s former CEO, Mr. Angle, for the issuance of 640,292 shares of the Company’s common stock at $0.007 per share or $4,525. Proceeds of $4,025 have been received. The advance from officer in the amount of $500 has been applied to the amount due leaving a stock subscription receivable of $0 at December 31, 2013.
In March 2013, the $265 advance to the Company by Mr. Angle was used by Mr. Angle as partial payment on a stock subscription entered into by a company owned by Mr. Angle.
In April 2013, Mr. Angle, the Company’s former CEO, made a payment of $1,000 on behalf of the Company in payment of accounts payable.
In May 2013, the Company entered into a stock subscription agreement with a company owned by Mr. Angle, the Company’s former CEO, for the issuance of 1,035,328 shares of the Company’s common stock at $0.007 per share or $7,000.
In June 2013, Mr. Angle advanced the Company $60 in cash for operating expenses. The advance has no stated terms of repayment and was non-interest bearing.
In June 2013, $235 of the advance from officer was used as payment on the stock subscription receivable.
On August 7, 2013, the Company received $1,250 in payment pursuant to a stock subscription agreement with V. Stolere (the spouse of the Company’s former President) for the issuance of 197,822 shares of the Company’s common stock at $0.006 per share.
On September 10, 2013 the Company received $600 in payment pursuant to a stock subscription agreement with Stamford Learning Center (a company owned by the Company’s former President) for the issuance of 100,164 shares of the Company’s common stock at $0.006 per share.
On September 10, 2013 the Company received $400 in payment pursuant to a stock subscription agreement with V. Stolere (the spouse of the Company’s former President) for the issuance of 66,776 shares of the Company’s common stock at $0.006 per share.
In September 2013, Mr. Angle advanced the Company $40 in cash for operating expenses. The advance has no stated terms of repayment and was non-interest bearing
In November 2013, Mr. Angle advanced the Company $8 in cash for operating expenses. The advance has no stated terms of repayment and was non-interest bearing.
On November 14, 2013 the Company sold 451,334 shares of common stock at $0.006 per share to a company owned by the Company's former President under a stock subscription agreement and received $2,700.
On November 14, 2013 the Company sold 51,502 shares of common stock at $0.006 per share to the Company's former President under a stock subscription agreement and received $300.
On December 6, 2013 the Company sold 602,662 shares of common stock at $0.006 per share to the spouse of its former President under a stock subscription agreement and received $3,500.
NOTE G – SUBSEQUENT EVENTS
On January 7, 2014, the Company entered into a stock subscription agreement with a company owned by Mr. Angle, the Company’s former CEO, for the issuance of 769,892 shares of the Company’s common stock at $0.006 per share or $4,320.
On March 6, 2014, a Letter of Intent was entered into between the restricted shareholders of the Company in a private transaction with Procap Funding, Inc. for $200,000. Although the transaction has not offically closed, on April 8, 2014, all the directors resigned as well as the sole officer of the Company and a new director and chief executive officer was appointed.
ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
None.
ITEM 9A. | CONTROLS AND PROCEDURES |
Evaluation of Disclosure Controls and Procedures
The Securities and Exchange Commission defines the term "disclosure controls and procedures" to mean a company's controls and other procedures of an issuer that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to the issuer's management, including its chief executive and chief financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. The Company maintains such a system of controls and procedures in an effort to ensure that all information which it is required to disclose in the reports it files under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified under the SEC's rules and forms and that information required to be disclosed is accumulated and communicated to its chief executive and chief financial officers to allow timely decisions regarding disclosure.
As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company's disclosure controls and procedures were not effective as of such date.
Management's Annual Report on Internal Control over Financial Reporting
The management of the Company is responsible for the preparation of the financial statements and related financial information appearing in this Annual Report on Form 10-K. The financial statements and notes have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP"). The management of the Company is also responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and l5d-15(f) under the Exchange Act. A company's internal control over financial reporting is defined as a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that:
● | Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and dispositions of our assets; |
● | Provide reasonable assurance that our transactions are recorded as necessary to permit preparation of our financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and |
● | Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements. |
Management, including the Chief Executive Officer and Chief Financial Officer, does not expect that the Company's disclosure controls and internal controls will prevent all error and all fraud. Because of its inherent limitations, a system of internal control over financial reporting can provide only reasonable, not absolute, assurance that the objectives of the control system are met and may not prevent or detect misstatements. Further, over time, control may become inadequate because of changes in conditions or the degree of compliance with the policies or procedures may deteriorate.
With the participation of the Chief Executive Officer and Chief Financial Officer, our management evaluated the effectiveness of the Company's internal control over financial reporting as of December 31, 2013 based upon the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on that evaluation, our management has concluded that, as of December 31, 2013, the Company had material weaknesses in its internal control over financial reporting. Specifically management identified the following material weaknesses at December 31, 2013:
● | As of December 31, 2013, 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 December 31, 2013, there were insufficient written policies and procedures to insure the correct application of accounting and financial reporting with respect to the current requirements of GAAP and SEC disclosure requirements. |
● | As of December 31, 2013, there was a lack of segregation of duties, in that we only had one person performing all accounting-related duties. |
● | As of December 31, 2013, there were no independent directors and no independent audit committee. |
As a result of the material weakness described above, management has concluded that, as of December 31, 2013, the Company’s internal control over financial reporting, involving the preparation and reporting of our financial statements presented in conformity with GAAP, were not effective.
We understand that remediation of material weaknesses and deficiencies in internal controls is a continuing work in progress due to the issuance of new standards and promulgations. However, remediation of any known deficiency is among our highest priorities. Our management will periodically assess the progress and sufficiency of our ongoing initiatives and make adjustments as and when practical and necessary.
This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by our registered public accounting firm pursuant to the rules of the SEC that permit us to provide only management's report in this annual report.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. | OTHER INFORMATION |
On July 15, 2008 the Company entered into a Management Agreement with Mr. Chris Angle whereby the Company engaged Mr. Angle to become the president and chief executive officer. As president of the Company, Mr. Angle was charged with developing the concept of Classic Rules Judo Championships, Inc. Mr. Angle was issued 1,160,678 shares of common stock.
On July 15, 2008 Mr. Angle, through his investment partnership, Desmond Capital, had agreed to invest an initial amount to fund the first year proposed budget of $5,373, for which it received 5,223,050 shares of common stock.
On July 15, 2008 Mr. Nathan Lapkin and Mr. Jerry Gruenbaum, Esq. agreed to use their respective background and experience to file a registration statement for the Company. Mr. Lapkin with his finance and accounting experience and Mr. Gruenbaum with his general counsel and public company compliance experience, each received 1,160,678 common shares and resigned all their positions as officers and directors of the Company.
PART III
ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE |
Our directors hold office until the annual meeting of shareholders next held after their election. Our officers and directors are as follows:
Name | Age | With Company Since | Director/Position | |||
| Craig Burton (1) | 52 | 04/2014 | Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer and Sole Director | |||
Chris Angle (2) | 62 | 07/2008 | Former Chief Executive Officer, Chairman of the Board of Directors |
(1)Craig Burton – President, CEO, CFO, Secretary and Sole Director
Craig H. Burton attended University of South Carolina-Coastal and was a duly licensed Real Estate agent in the State of New York. Craig has run a communcations business the last 5 years. He is in charge of all company matters at P Laser Company.
(2) Mr. Chris Angle – President, Chief Executive Officer, Chief Financial Officer, Secretary, and Chairman of the Board of Directors resigned on April 8, 2014.
Mr. Chris Angle was appointed to his position in May 2008. His educational background includes attending from 1967 to 1971 the University of Michigan where he obtained a B.A. in Biological Anthropology, and from 1975 to 1977, he was a student in Tokyo, Japan, at the Japan Missionary Language Institute.
An outline of Mr. Angle’s business history is as follows:
● | 1979 to 1981: He worked for Dai Nippon Printing Co. in the machinery sales department. |
● | 1982 to 1984: Worked for East Coast Management Corp. as a market researcher for Japanese importers/exporters and investors in the U.S. |
● | 1984 to 1997: Worked for Corona USA Corporation as the national sales manager. Corona is a manufacturer of kerosene heating and air conditioning products. |
● | 1998 to 1999: Was a MetLife insurance salesman |
● | 1999 to 2000: Was in the Paine Webber Financial Advisor Training Program |
● | 2001 to 2005: Gemini Financial as a Financial Advisor |
● | 2005 to 2007: Owner of L.A. Limousine of Greenwich |
● | 2008 to 9/2011: First Union Securities, Inc as a Registered Representative |
● | 2009 to Present: Editor of the RITE Report (http://www.stock-market-direction.net) |
His judo background and history includes:
● | 2000 to Present: Coach of Stamford Judo, Stamford, CT (www.stamfordjudo.us): |
● | 2010: Coach Angle received 6th Dan Rank Certification from the USJF. |
● | Chris Angle competed in over 80 local, regional, national, and international judo tournaments throughout the 70’s and 80’s. |
Mr. Angle did not devote all of his time to our operations. He was involved in other activities. Mr. Angle devoted approximately 1 hour per week to company matters.
Mr. Angle’s other activities include being editor of the RITE Report which prognosticates the direction of the stock market; owner of Stamford Learning Center, LLC d/b/a Stamford Judo; and president of Desmond Capital, Inc which invests in venture capital opportunities.
Audit Committee
The Board of Directors does not have a Compensation, Audit, or Nominating Committee. The usual functions of such committees are performed by the entire Board of Directors. The Board of Directors has determined that at present we do not have an independent audit committee financial expert. The Board believes that the members of the Board of Directors are collectively capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting. In addition, we have been seeking and continue to seek an appropriate individual to serve on the Board of Directors and the Audit Committee who will meet the requirements necessary to be an independent financial expert.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our executive officers, directors and beneficial owners of more than ten percent (10%) to report their beneficial ownership of equity interests in the company to the SEC. Their initial reports are required to be filed using the SEC's Form 3, and they are required to report subsequent purchases, sales, and other changes using the SEC's Form 4, which must be filed within two business days of most transactions. Officers, directors, and persons owning more than 10% of our capital shares are required by SEC regulations to furnish us with copies of all of reports they file pursuant to Section 16(a).
Code of Ethics
In 2008, the Company adopted a “Code of Ethics” that applies to the Company’s Chief Executive Officer, Chief Financial Officer, principal accounting officer or controller, and persons performing similar such functions.
ITEM 11. | EXECUTIVE COMPENSATION |
The following table provides summary information for the fiscal years ended December 31, 2013 and 2012 concerning cash and non-cash compensation paid or accrued by us for our executive officers in excess of $60,000.
Name/ Position |
| Year |
| Salary |
|
| Bonus |
|
| Stock |
|
| Other |
|
| Total |
| |||||
Chris Angle |
| 2013 |
| $ | 0 |
|
| $ | 0 |
|
| $ | 0 |
|
| $ | 0 |
|
| $ | 0 |
|
Chief Executive Officer |
| 2012 |
| $ | 0 |
|
| $ | 0 |
|
| $ | 0 |
|
| $ | 0 |
|
| $ | 0 |
|
Nathan Lapkin |
| 2013 |
| $ | 0 |
|
| $ | 0 |
|
| $ | 0 |
|
| $ | 0 |
|
| $ | 0 |
|
| Director | ||||||||||||||||||||||
Employment Contracts
The Company currently has no employees on the payroll. The Company entered into a Management Agreement with the executive officer of the Company. The Management Agreement is indefinite and commenced on July 15, 2008.
Family Relationships
There are no family relationships among the Company’s current directors, executive officers, or other persons nominated or chosen to become officers or executive officers.
ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENTAND RELATED STOCKHOLDER MATTERS |
The following table sets forth information regarding the beneficial ownership of our common stock as of December 31, 2013. The information in this table provides the ownership information for:
| ● | each person known by us to be the beneficial owner of more than 5% of our common stock; |
| ● | each of our directors; |
| ● | each of our executive officers; and |
| ● | our executive officers and directors as a group. |
Beneficial ownership has been determined in accordance with the rules and regulations of the SEC and includes voting or investment power with respect to the shares. Unless otherwise indicated, the persons named in the table below have sole voting and investment power with respect to the number of shares indicated as beneficially owned by them.
Title of Class | Name and Address | Number of Shares | Percent of Class | ||||||||||||||
Preferred | Common | Preferred | Common | ||||||||||||||
| Common Stock | Chris Angle (1)(2)(3)(4) 100 Research Drive, Suite 16 Stamford, CT 06906 | 6,539,412 | 37 | % | |||||||||||||
Common Stock | Desmond Capital 7065 W. Ann Road #130-448 Las Vegas, NV 89130 | 5,223,050 | 29 | % | |||||||||||||
Common Stock | Goran Komarica 44 Fairview Avenue Glen Rock, NJ 07452 | 1,336,934 | 8 | % | |||||||||||||
| Common Stock | Marina Timofejeva 174 Gerdes Road New Canaan, CT 06840 | 1,379,980 | 8 | % | |||||||||||||
Common Stock | Nathan Lapkin 116 Court Street, Suite 707 New Haven, CT 06511 | 1,160,678 | 7 | % | |||||||||||||
Common Stock | Jerry Gruenbaum, Esq. 116 Court Street, Suite 707 New Haven, CT 06511 | 1,160,678 | 7 | % | |||||||||||||
Officers and Directors as a group (one person)(1)(2)(3)(4) | 7,700,090 | 43 | % | ||||||||||||||
(1) | Mr. Angles’ share ownership consists of a total 6,539,412 shares of common stock, 1,397,259 held personally, 1,870,425 held by V. Stolere (Mr. Angle's spouse), and 1,044,610 shares of common stock held by Desmond Capital., of which Mr. Angle is a 20% owner, and 2,227,118 shares of common stock held by Stamford Learning Center, of which Mr. Angle is 100% owner. |
(2) | No director, named executive officer, or persons owning 5% our more of Classic Rules Judo Championships' stock has any rights to acquire any shares from options, warrants, rights, conversion privileges or similar obligations. |
(3) | 20% of the shares of Desmond Capital, Inc. are held by Chris Angle. The remaining shares are held by H. Nishiyama, N. Negishi, and C. Yamamoto. |
(4) | Mr. Angle is the sole officer and a director of the Company at December 31, 2013. Shares include shares owned by V. Stolere, his wife. |
ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE |
Since January 1, 2013, we have had no reportable transactions with related parties and none are currently proposed.
ITEM 14. | PRINCIPAL ACCOUNTANTS FEES AND SERVICES |
The following table sets forth fees billed to us by our auditors during the fiscal years ended December 31, 2013 and 2012 for: (i) services rendered for the audit of our annual financial statements and the review of our quarterly financial statements, (ii) services by our auditor that are reasonably related to the performance of the audit or review of our financial statements and that are not reported as Audit Fees, (iii) services rendered in connection with tax compliance, tax advice and tax planning, and (iv) all other fees for services rendered.
FIRM | FISCAL YEAR 2013 | FISCAL YEAR 2012 | ||||||
(i), (ii) Audit Related Fees: | ||||||||
| Cowan, Gunteski & Co, P.A. | $ | 22,100 | $ | 8,000 | ||||
| Meyler & Company, LLC | $ | - | $ | 9,575 | ||||
(iii) Tax Fees | $ | - | ||||||
(iv) All Other Fees | $ | - | $ | - | ||||
TOTAL FEES | $ | 22,100 | $ | 17,575 | ||||
The Company’s board of directors, acting as our audit committee pre-approved each engagement of our independent registered public accounting firm.
PART IV
ITEM 15. | EXHIBITS, FINANCIAL STATEMENT SCHEDULES |
(a) Exhibits:
| Exhibit Number | Document Description |
3.1 | Corporate Charter of Blue Ribbon Pyrocool, Inc. as filed with the Delaware Secretary of State on April 6, 1998, incorporated by reference from the Company’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on June 11, 2010. |
3.2 | Amendment to the Company’s Articles of Incorporation as filed with the Delaware Secretary of State on March 31, 2000, changing the authorized number of shares of the Company, incorporated by reference from the Company’s Form S-1 filed with the Securities and Exchange Commission on June 11, 2010. |
3.3 | Bylaws of Classic Rule Judo Championship, Inc., incorporated by reference from the Company’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on June 11, 2010. |
10.1 | Management Agreement between Mr. Chris Angle, Desmond Capital and Nathan Lapkin and Jerry Gruenbaum, Esq., whereby Mr. Angle will become President and Chief Executive Office and sole director and develop the concept of Classic Rules Judo Championship, incorporated by reference from the Company’s Form S-1 filed with the Securities and Exchange Commission on June 11, 2010. |
14.1 | Code of Ethics, incorporated by reference from the Company’s Form S-1 filed with the Securities and Exchange Commission on June 11, 2010. |
31 | Certification of Principal Executive Officer and Principal Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended. |
32 | Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted Pursuant to Section 906 of the Sarbanes Oxley Act of 2002. |
101.INS | XBRL Instance |
101.SCH | XBRL Taxonomy Extension Schema |
101.CAL | XBRL Taxonomy Extension Calculation |
101.DEF | XBRL Taxonomy Extension Definition |
101.LAB | XBRL Taxonomy Extension Labels |
101.PRE | XBRL Taxonomy Extension Presentation |
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, there unto duly authorized.
Classic Rules Judo Championships, Inc. | |
(Registrant) | |
April 14, 2014 | By: /s/ Craig Burton |
Craig Burton, Principal Executive Officer, Principal Financial Officer, and Principal Accounting Officer |
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