UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
| [X] | Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
| For the quarterly period endedJune 30, 2012 | |
| [ ] | Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934 |
| For the transition period from __________ to__________ | |
| Commission File Number:333-170155 |
Thompson Designs, Inc.
(Exact name of registrant as specified in its charter)
| Nevada | 59-3843182 |
| (State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) |
| 3315 East Russell Road, Ste. A-4 129, Las Vegas, Nevada 89120 |
| (Address of principal executive offices) |
| (702) 499-3209 |
| (Registrant’s telephone number) |
___________________________ |
| (Former name, former address and former fiscal year, if changed since last report) |
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 [X] Yes [ ] 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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). [ ] Yes [X] No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
| [ ] Large accelerated filer Accelerated filer | [ ] Non-accelerated filer |
| [X] Smaller reporting company |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [X] Yes [ ] No
State the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 9,000,000 common shares as of August 10, 2012.
| 1 |
| TABLE OF CONTENTS | ||
| Page | ||
PART I – FINANCIAL INFORMATION | ||
| Item 1: | Financial Statements | 3 |
| Item 2: | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 4 |
| Item 3: | Quantitative and Qualitative Disclosures About Market Risk | 5 |
| Item 4: | Controls and Procedures | 5 |
PART II – OTHER INFORMATION
| ||
| Item 1: | Legal Proceedings | 6 |
| Item 1A: | Risk Factors | 6 |
| Item 2: | Unregistered Sales of Equity Securities and Use of Proceeds | 6 |
| Item 3: | Defaults Upon Senior Securities | 6 |
| Item 4: | Mine Safety Disclosures | 6 |
| Item 5: | Other Information | 6 |
| Item 6: | Exhibits | 6 |
| 2 |
PART I - FINANCIAL INFORMATION
Our financial statements included in this Form 10-Q are as follows:
These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the SEC instructions to Form 10-Q. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the interim period ended June 30, 2012 are not necessarily indicative of the results that can be expected for the full year.
| 3 |
THOMPSON DESIGNS, INC.
(A DEVELOPMENT STAGE COMPANY)
As of June 30, 2012 and September 30, 2011
| ASSETS | June 30, 2012 | September 30, 2011 | ||||||
| Current assets | ||||||||
| Cash and equivalents | $ | 4,641 | $ | 15,589 | ||||
| Total current assets | 4,641 | 15,589 | ||||||
| Property and equipment, net of accumulated depreciation of $361 ( September 30- $207) | 259 | 413 | ||||||
| Total assets | $ | 4,900 | $ | 16,002 | ||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| LIABILITIES | ||||||||
| Current Liabilities | ||||||||
| Accrued expenses | $ | 55,704 | $ | 58,652 | ||||
| STOCKHOLDERS’ DEFICIT | ||||||||
| Preferred Stock, $.001 par value, 10,000,000 shares authorized, -0- shares issued and outstanding | ||||||||
| Common stock, $.001 par value, 90,000,000 shares authorized, 9,000,000 (September 30,2011 9,000,000) shares issued and outstanding | 9,000 | 9,000 | ||||||
| Additional paid in capital | 13,000 | 13,000 | ||||||
| Deficit accumulated during the development stage | (72,804 | ) | (64,650 | ) | ||||
| Total stockholders’ deficit | (50,804 | ) | (42,650 | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | 4,900 | $ | 16,002 | ||||
See accompanying notes to financial statements.
| F-1 |
THOMPSON DESIGNS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS (unaudited)
For the three months ended June 30, 2012 and 2011
For the nine months ended June 30, 2012 and 2011
For the period from August 30, 2010 (Date of Inception) through June 30, 2012
| Three months ended June 30, 2012 | Three months ended June 30, 2011 | Nine months ended June 30, 2012 | Nine months ended June 30, 2011 | Inception (August 30, 2010) through June 30, 2012 | ||||||||||||||||
| REVENUES | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||
| OPERATING EXPENSES | ||||||||||||||||||||
| Professional fees | 1,500 | 1,000 | 8,000 | $ | 3,500 | $ | 69,452 | |||||||||||||
| General and administrative | 52 | 54 | 154 | 2,437 | 3,352 | |||||||||||||||
| TOTAL OPERATING EXPENSES | 1,552 | 1,054 | 8,154 | 5,937 | 72,804 | |||||||||||||||
| Net loss and comprehensive loss | $ | (1,552 | ) | $ | (1,054 | ) | $ | (8,154 | ) | $ | (5,937 | ) | $ | (72,804 | ) | |||||
| Net loss per share: | ||||||||||||||||||||
| Basic and diluted | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | ||||||||
| Weighted average shares outstanding: | ||||||||||||||||||||
| Basic and diluted | 9,000,000 | 9,000,000 | 9,000,000 | 7,888,888 | ||||||||||||||||
See accompanying notes to financial statements.
| F-2 |
THOMPSON DESIGNS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS (unaudited)
For the nine months ended June 30, 2012 and 2011
For the period from August 30, 2010 (Date of Inception) through June 30, 2012
| Nine months ended June 30, 2012 | Nine months ended June 30, 2011 | Inception (August 30, 2010) through June 30, 2012 | ||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||
| Net loss and comprehensive loss | $ | (8,154 | ) | $ | (5,937 | ) | $ | (72,804 | ) | |||
| Adjustments to reconcile net income to net cash provided by operations | ||||||||||||
| Depreciation | 154 | 155 | 361 | |||||||||
| Change in non-cash working capital items | ||||||||||||
| Increase (decrease) in accrued expenses | (2,948 | ) | 0 | 55,704 | ||||||||
| CASH FLOWS USED IN OPERATING ACTIVITIES | (10,948 | ) | (5,782 | ) | (16,739 | ) | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||||
| Purchase of property and equipment | 0 | (620 | ) | (620 | ) | |||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||
| Proceeds from sale of common stock | 0 | 15,000 | 22,000 | |||||||||
| NET INCREASE (DECREASE) IN CASH | (10,948 | ) | 8,598 | 4,641 | ||||||||
| Cash, beginning of period | 15,589 | 7,000 | — | |||||||||
| Cash, end of period | $ | 4,641 | $ | 15,598 | $ | 4,641 | ||||||
| SUPPLEMENTAL CASH FLOW INFORMATION | ||||||||||||
| Interest paid | $ | — | $ | — | ||||||||
| Income taxes paid | $ | — | $ | — | ||||||||
See accompanying notes to financial statements.
| F-3 |
THOMPSON DESIGNS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS (unaudited)
June 30, 2012
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited interim financial statements have been prepared by Thompson Designs, Inc. (“Thompson” and the “Company”) pursuant to the rules and regulations of the United States Securities and Exchange Commission. Certain information and disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments and disclosures necessary for a fair presentation of these financial statements have been included. Such adjustments consist of normal recurring adjustments. These interim financial statements should be read in conjunction with the audited financial statements of the Company for the fiscal year ended September 30, 2011. The results of operations for the nine months ended June 30, 2012 are not indicative of the results that may be expected for the full year.
Thompson Designs, Inc. was incorporated in Nevada on August 30, 2010. Thompson is a development stage company and has not yet realized any revenues from its planned operations. Thompson is currently in the business of designing and building custom signs for residential and commercial properties.
Development Stage Company
The accompanying financial statements have been prepared in accordance with generally accepted accounting principles related to accounting and reporting by development-stage companies. A development-stage company is one in which planned principal operations have not commenced or if its operations have commenced, there has been no significant revenues there from.
Fair Value of Financial Instruments
Thompson Designs’ financial instruments consist of cash and accrued professional fees. The carrying amount of these financial instruments approximates fair value due to either length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements.
Concentrations of Credit Risk
The Company maintains its cash in bank deposit accounts, the balances of which at times may exceed federally insured limits. The Company continually monitors its banking relationships and consequently has not experienced any losses in such accounts. The Company believes it is not exposed to any significant credit risk on cash and cash equivalents.
| F-4 |
THOMPSON DESIGNS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS (unaudited)
June 30, 2012
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the balance sheet. Actual results could differ from those estimates.
Basic Income (Loss) Per Share
Basic income (loss) per share is calculated by dividing the Company’s net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing the Company’s net income available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. There are no such common stock equivalents outstanding as of June 30, 2012.
Stock-Based Compensation
The Company accounts for employee stock-based compensation in accordance with the guidance of FASB ASC Topic 718,Compensation – Stock Compensationwhich requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. The fair value of the equity instrument is charged directly to compensation expense and credited to additional paid-in capital over the period during which services are rendered. There has been no stock-based compensation issued to employees.
The Company follows ASC Topic 505-50, formerly EITF 96-18, “Accounting for Equity Instruments that are Issued to Other than Employees for Acquiring, or in Conjunction with Selling Goods and Services,” for stock options and warrants issued to consultants and other non-employees. In accordance with ASC Topic 505-50, these stock options and warrants issued as compensation for services provided to the Company are accounted for based upon the fair value of the services provided or the estimated fair market value of the option or warrant, whichever can be more clearly determined. There has been no stock-based compensation issued to non-employees.
Property and Equipment
Capital assets are recorded at cost and depreciated over their estimated useful life on a straight line basis over a three year period.
Cash and CashEquivalents
TheCompanyconsidersallhighlyliquidinvestmentswiththeoriginalmaturitiesofthreemonthsorlesstobe cashequivalents. At June 30, 2012 and September 30, 2011, the Company had $4,641 and $15,589 of unrestricted cash to be used for future business operations.
| F-5 |
THOMPSON DESIGNS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS (unaudited)
June 30, 2012
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Income Taxes
Income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized. It is the Company’s policy to classify interest and penalties on income taxes as interest expense or penalties expense. As of June 30, 2012, there have been no interest or penalties incurred on income taxes.
Recent Accounting Pronouncements
Thompson does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position or cash flow.
NOTE 2 – COMMON STOCK
The Company has 90,000,000 shares of $0.001 par value common stock authorized.
On September 17, 2010, the Company sold 7,000,000 common shares, par value $0.001 to the founder for cash proceeds of $7,000.
On February 22, 2011, the Company closed a public offering in which it sold 2,000,000 common shares for proceeds of $15,000.
The Company has 10,000,000 shares of $ 0.001 par value preferred stock authorized. There are no preferred shares issued and outstanding as of June 30, 2012.
As of June 30, 2012, the Company has no warrants or options outstanding.
NOTE 3 – INCOME TAXES
The provision for Federal income tax consists of the following:
| June 30, 2012 | June 30, 2011 | |||||||
| Federal income tax attributable to: | ||||||||
| Current Operations | $ | 2,773 | $ | 2,020 | ||||
| Less: valuation allowance | (2,773 | ) | (2,020 | ) | ||||
| Net provision for Federal income taxes | $ | — | $ | — | ||||
| F-6 |
THOMPSON DESIGNS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS (unaudited)
June 30, 2012
NOTE 3 – INCOME TAXES (continued)
The cumulative tax effect at the expected rate of 34% of significant items comprising our net deferred tax amount is as follows:
| June 30, 2012 | September 30, 2011 | |||||||
| Deferred tax asset attributable to: | ||||||||
| Net operating loss carryover | $ | 24,750 | $ | 21,981 | ||||
| Less: valuation allowance | (24,750 | ) | (21,981 | ) | ||||
| Net deferred tax asset | $ | — | $ | — | ||||
At June 30, 2012, Thompson had an unused net operating loss carryover approximating $73,000 that is available to offset future taxable income; it expires beginning in 2030.
NOTE 4 – COMMITMENTS
Thompson neither owns nor leases any real or personal property. An officer has provided office services without charge. There is no obligation for the officer to continue this arrangement. Such costs are immaterial to the financial statements and accordingly are not reflected herein. The officers and directors are involved in other business activities and most likely will become involved in other business activities in the future.
NOTE 5- LIQUIDITY AND GOING CONCERN
Thompson Designs has not generated any revenues, has limited working capital and has suffered a loss from operations. These factors create substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustment that might be necessary if the Company is unable to continue as a going concern.
The ability of Thompson Designs to continue as a going concern is dependent on the Company generating cash from the sale of its common stock and/or obtaining debt financing and attaining future profitable operations or acquiring or merging with a profitable company. Management’s plans include selling its equity securities and obtaining debt financing to fund its capital requirements; however, there can be no assurance the Company will be successful in these efforts
NOTE 6 – SUBSEQUENT EVENTS
The Company has analyzed its operations subsequent to June 30, 2012 through the date these financial statements were issued, and has determined that it does not have any material subsequent events to disclose.
| F-7 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements.” These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements.Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse affect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
We were incorporated as Thompson Designs, Inc. on August 30, 2010 in the State of Nevada for the purpose of designing, producing, and installing custom-made property signage for residential and commercial customers. We are in the development stage of our business and we have not generated any sales revenue to date. The development budget for our business consists of planned expenditures for certain materials and equipment, for marketing of our products, for contract labor on as as-needed basis, and for legal and accounting expenses. Due to certain demands on the business time of our sole officer and director, Kade Thompson, implementation of our business plan has been delayed. Pending Mr. Thompson’s greater availability, we intend to pursue the active marketing and development of our planned signage business in late 2012.
Results of operations for the three and nine months ended June 30, 2012 and 2011, and for the period from August 30, 2010 (date of inception) through June 30, 2012.
We have not earned any revenues since the inception of our current business operations. We incurred expenses and a net loss in the amount of $1,552 for the three months ended June 30, 2012, compared to expenses and a net loss of $1,054 for the three months ended June 30, 2011. We incurred expenses and a net loss in the amount of $8,154 for the nine months ended June 30, 2012, compared to expenses and a net loss of $5,937 for the nine months ended June 30, 2011. We have incurred total expenses and a net loss of $72,804 from inception on August 30, 2010 through June 30, 2012.
Our losses are attributable to operating expenses together with a lack of any revenues. We anticipate our operating expenses will increase as we continue with our plan of operations.
Liquidity and Capital Resources
As of June 30, 2012, we had current assets in the amount of $4,641, consisting entirely of cash. Our current liabilities as of June 30, 2012 were $55,704. Thus, we had a working capital deficit of $51,063 as of June 30, 2012.
We have not attained profitable operations and may be dependent upon obtaining financing in order to pursue significant promotion and development of our planned signage business. There can be no assurance that additional financing will be available to us when needed or on terms that are acceptable.
| 4 |
Off Balance Sheet Arrangements
As ofJune 30, 2012, there were no off balance sheet arrangements.
Going Concern
As discussed in the notes to our financial statements, we have no established source of revenue. This has raised substantial doubt for our auditors about our ability to continue as a going concern. Without realization of additional capital, it would be unlikely for us to continue as a going concern.
Our activities to date have been supported by equity financing. Management continues to seek funding from its shareholders and other qualified investors to pursue its business plan.
Critical Accounting Policies
In December 2001, the SEC requested that all registrants list their most “critical accounting polices” in the Management Discussion and Analysis. The SEC indicated that a “critical accounting policy” is one which is both important to the portrayal of a company’s financial condition and results, and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Currently, we do not believe that any accounting policies fit this definition.
Recently Issued Accounting Pronouncements
We do not expect the adoption of recently issued accounting pronouncements to have a significant impact on our results of operations, financial position or cash flow.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
A smaller reporting company is not required to provide the information required by this Item.
Item 4. Controls and Procedures
We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of June 30, 2012. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer, Kade Thompson. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, 2012, our disclosure controls and procedures are not effective. There have been no changes in our internal controls over financial reporting during the quarter ended June 30, 2012.
Management determined that the material weaknesses that resulted in controls being ineffective are primarily due to lack of resources and number of employees. Material weaknesses exist in the segregation of duties required for effective controls and various reconciliation and control procedures not regularly performed due to the lack of staff and resources.
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act are recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
| 5 |
Limitations on the Effectiveness of Internal Controls
Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material error. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the internal control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.
PART II – OTHER INFORMATION
We are not a party to any pending legal proceeding. We are not aware of any pending legal proceeding to which any of our officers, directors, or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse to us.
A smaller reporting company is not required to provide the information required by this Item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None
Item 3. Defaults upon Senior Securities
None
Item 4. Mine Safety Disclosures
N/A
None
| Exhibit Number | Description of Exhibit |
| 31.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| 31.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| 32.1 | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
| 101** | The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 formatted in Extensible Business Reporting Language (XBRL). |
**Provided herewith
| 6 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Thompson Designs, Inc. | |
| Date: | August 13, 2012 |
By:/s/ Kade Thompson Kade Thompson Title: Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer and Director |
| 7 |