SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the Quarter Ended December 31, 2007 | Commission File Number 0-9392 |
CLX INVESTMENT COMPANY, INC. (Exact Name of Registrant as Specified in Its Charter) | |
Colorado | 84-0749623 |
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification Number) |
29970 Technology Drive, Suite 203 Murrieta, CA | 92563 |
(Address of principal executive offices) | (Zip Code) |
(951) 677-6735 Issuer's telephone number, including area code N/A | |
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the last 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. Yesx No¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ Nox
Indicate the number of shares outstanding of each of the issuer's class of common stock, as of the last practicable date.
Class | Outstanding at February 11, 2008 |
Common Stock, $0.01 par value | 220,035,668 shares |
Transitional Small Business Disclosure Format (check one): Yesx No¨
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
CLX INVESTMENT COMPANY, INC.
FINANCIAL STATEMENTS
DECEMBER 31, 2007
2
CLX Investment Company, Inc. | |||
|
|
|
December 31, 2007 |
|
|
| (Unaudited) |
Current Assets |
|
| |
| Cash | $ | 14,703 |
| Accounts receivable |
| 7,132 |
| Inventory |
| 20,562 |
| Marketable securities |
| 10,933 |
Total Current Assets |
| 53,330 | |
|
|
|
|
Property and Equipment, net of depreciation |
| 1,871 | |
|
|
|
|
Other Assets |
|
| |
| Deposits |
| 6,520 |
| Total Other Assets |
| 6,520 |
| Total Assets | $ | 61,721 |
LIABILITIES AND STOCKHOLDERS' EQUITY
| |||
Current Liabilities |
|
| |
| Accounts payable | $ | 453,100 |
| Interest payable |
| 45,683 |
| Current portion of Notes Payable |
| 190,000 |
| Line of credit |
| 390,224 |
| Total Current Liabilities |
| 1,079,007 |
Minority Interest |
| 59,354 | |
| Total Liabilities |
| 1,138,361 |
Stockholders' Equity |
|
| |
| Common stock, authorized 1,980,000,000 shares, $0.01 par value, 214,785,668 shares issued and outstanding |
| 2,147,856 |
| Additional paid in capital |
| 401,315 |
| Comprehensive unrealized loss |
| (35,810) |
| Retained deficit |
| (3,590,001) |
Total Stockholders' Equity |
| (643,212) | |
| Total Liabilities and Stockholders' Equity | $ | 61,721 |
|
|
|
|
The accompanying notes are an integral part of these consolidated financial statements.
| |||
3
CLX Investment Company, Inc. | ||||
|
| For Three Months Ended | ||
|
| 2007 |
| 2006 |
Income |
|
|
|
|
Sales | $ | 9,975 | $ | 59,619 |
Interest income |
| - |
| 217 |
Total Income |
| 9,975 |
| 59,836 |
|
|
|
|
|
Cost of Sales |
| 1,214 |
| 19,563 |
|
|
|
|
|
Gross Income |
| 8,761 |
| 40,273 |
Expenses |
|
|
|
|
General & administrative |
| 35,741 |
| 18,663 |
Accounting fees |
| 36,685 |
| - |
Administrative fees |
| 37,500 |
| 37,500 |
Commission and fees |
| - |
| 5,659 |
Consulting |
| 41,514 |
| 15,000 |
Depreciation |
| 233 |
|
|
Investor relations |
| 11,643 |
| 7,643 |
Marketing and promotions |
| 9,931 |
| 6,862 |
Professional fees |
| 87,548 |
| 38,363 |
Rent expense |
| 10,400 |
| 6,000 |
Salaries and wages |
| 76,082 |
| 25,466 |
Total expenses |
| 347,277 |
| 161,156 |
Loss from Operations |
| (338,516) |
| (120,883) |
Other Income (Expense) |
|
|
|
|
Interest expense |
| (8,701) |
| (5,671) |
Loss on investments |
| - |
| (17,675) |
Gain on extinguishment of debt |
| 50,000 |
| - |
Total Other Income (Expense) |
| 41,299 |
| (23,346) |
Total Income (Loss) |
| (297,217) |
| (144,229) |
Minority Loss |
| 57,026 |
|
|
Net Income (Loss) | $ | (240,191) | $ | (144,229) |
Net Income (Loss) Per Share | $ | (0.001) | $ | (0.001) |
Weighted Average Shares Outstanding |
| 206,231,320 |
| 118,310,668 |
The accompanying notes are an integral part of these consolidated financial statements.
4
CLX Investment Company, Inc. | ||||
|
| For the Three Months Ended | ||
|
| 2007 |
| 2006 |
Cash Flows from Operating Activities: |
|
|
|
|
Net Loss | $ | (240,192) | $ | (144,229) |
Adjustments to Reconcile Net Loss to Net Cash Provided by Operations: |
|
|
|
|
Stock issued for compensation |
| 9,000 |
| - |
Decrease (increase) in Inventory |
| 1,213 |
| (8,174) |
Deposits |
| (2,520) |
| - |
Depreciation |
| 233 |
| - |
Minority loss |
| (57,026) |
| - |
Changes in Operating Assets and Liabilities: |
|
|
|
|
(Decrease) increase in accrued expense |
| 4,889 |
| (9,119) |
Decrease (increase) in accounts receivable |
| 1,988 |
| (5,232) |
(Decrease) increase in accounts payable |
| 59,483 |
| (47,127) |
Net Cash Provided by (Used in) Operating Activities |
| (222,932) |
| (213,881) |
Cash Flows from Investing Activities: |
|
|
|
|
Loss on securities |
| - |
| 17,675 |
Realized gain on marketable securities |
| 29,037 |
| - |
Proceeds from sale of investment |
| - |
| 251,016 |
Net Cash Used by Investing Activities |
| 29,037 |
| 268,691 |
Cash Flows from Financing Activities: |
|
|
|
|
Proceeds from credit line |
| 185,735 |
| - |
Proceeds from issuance of common stock |
| - |
| 2,000 |
Payments made on Notes Payable |
| - |
| (37,000) |
Net Cash (Used in) Provided by from Financing Activities |
| 185,735 |
| (35,000) |
Increase (decrease) in Cash |
| (8,160) |
| 19,810 |
Cash and Cash Equivalents at Beginning of Period |
| 22,862 |
| 29,918 |
Cash and Cash Equivalents at End of Period | $ | 14,702 | $ | 49,728 |
Cash Paid For: |
|
|
|
|
Interest | $ | 3,832 | $ | 14,767 |
Non-Cash Investing and Financing Activities: |
|
|
|
|
Unrealized comprehensive loss | $ | 40,278 | $ | - |
Stock issued for acquisition | $ | 100,000 | $ | - |
The accompanying notes are an integral part of these consolidated financial statements. | ||||
5
CLX INVESTMENT COMPANY, INC.
Notes to the Consolidated Financial Statements
December 31, 2007 and 2006
NOTE 1 - NATURE OF ORGANIZATION
This summary of significant accounting policies of CLX Investment Company, Inc. is presented to assist in understanding the Company's consolidated financial statements. The consolidated financial statements and notes are representations of the Company's management who are responsible for their integrity and objectivity. In the opinion of management, all adjustments which are necessary for a fair presentation of the consolidated financial statements have been included. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the consolidated financial statements.
a) Organization and Business Activities
The Company was incorporated on December 12, 1977 under the laws of the State of Colorado as Calvin Exploration Company, Inc. to engage in any lawful activity as shall be appropriate under laws of the State of Colorado. The Company was organized to engage in on-shore oil and gas exploration, development and production in the continental United States. In 1993 the name of the Company was changed to CLX Energy, Inc. Until 2004, the Company engaged solely in the acquisition, exploration, development and operation of oil and gas properties for its own account.
On September 13, 2004, the Company filed with the Securities and Exchange Commission to become a Business Development Corporation (“BDC”) as defined under the Investment Act of 1940. As a BDC, the Company made several investments into private companies including eStrategy Solutions, Inc., an online government training company, ActionView, Inc., an electronic billboard advertising company, and Zonda, Inc., a medical diagnostic company.
On October 2, 2006, the Company received repayment on credit line and accrued interest due from eStrategy Solutions, Inc. (“ESS”) which totaled $189,233. The Company also agreed to sell its stock position in ESS to John R. Matthews, President of ESS, in exchange for $62,080.
On April 2, 2007, the Board of Directors unanimously approved the proposal to withdraw the Company’s election to be treated as a business development company (“BDC”) as soon as practicable so that it could begin conducting business as an operating company rather than as a business development company subject to the Investment Company Act. On May 30, 2007, the holders of a majority of the outstanding shares of the Company’s common stock approved the proposal to withdraw the Company’s election to be treated as a BDC, and on May 30, 2007, a Notification of Withdrawal was filed with the Securities and Exchange Commission. The change in the Company’s status eliminated the Company’s ability to utilize the “fair value” method of accounting for subsidiaries that is required of investment companies (see below). In addition, certain financial statement disclosures such as the Statement of Changes in Net Assets and the Sc hedule of Investments are no longer required or applicable.
Significant change in method of accounting
The election to withdraw the Company’s election as a BDC under the Investment Company Act has resulted in a significant change in the Company’s required method of accounting. Investment company financial statement presentation and accounting utilizes the “fair value method of accounting” for recording ownership in portfolio or subsidiary companies. This treatment requires that BDCs value their investments at market value as opposed to historical cost. With the Company’s withdrawal from the Investment Company Act, the required financial statement presentation and accounting for securities held will be either the equity method or consolidation of accounting depending on the classification of the investment and the Company’s ownership percentage.
6
Effect
As an operating company, the Company must consolidate its financial statements with subsidiaries, thus eliminating the fair value reporting required by BDCs. As a result, in accordance with FAS 154, the accompanying financial statements have been presented on an operating and consolidated basis for all periods presented on a retrospective basis. As of
December 31, 2007, the Company operated as a holding company for a controlling interest in one company, Zonda, Inc., of which it owns 51%. Accordingly, the accompanying consolidated financial statements consolidate the operations of CLX and Zonda as a majority-owned subsidiary.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has incurred material operating losses, has continued operating cash flow deficiencies and has working capital deficit as of December 31, 2007. These factors raise substantial doubt about the Company’s ability to continue as a going concern
b)
Revenue Recognition
The Company recognizes income and expense on the accrual basis of accounting. The fair value of stock received as consideration for extending financing agreements was recognized as interest income at the time such shares were received. Subsequent fluctuations in the value of such shares are recorded as unrealized investment gains and losses. Revenues for the quarter ended December 31, 2007 include the result of operations for Zonda, Incorporated, a majority owned subsidiary of the Company. Zonda, Incorporated markets and distributes medical diagnostic devices and recognizes income as product is shipped on bona-fide purchase orders.
c)
Cash
The Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents. As of December 31, 2007 the company had $14,703 in cash.
NOTE 2 – RELATED PARTY TRANSACTIONS
The Company previously issued 20 million shares of restricted common stock to acquire 2,500,000 shares of Zonda, Inc. common stock from James Bickel and Patrick Edgerton, directors of the Company. As a result of the transaction, the Company controlled 46% of Zonda’s issued and outstanding common stock as of September 30, 2007. The Company’s directors approved the purchase of Mr. Bickel and Mr. Edgerton’s common shares of Zonda and determined that the purchase price was fair, equitable, and consistent with the price paid for additional Zonda shares acquired in an arm’s length transaction. In October 2007, the Company acquired an additional 5% of Zonda’s common stock from the majority shareholders of Zonda through the issuance of 10 million shares of the Company’s restricted common stock. As a result, as of December 31, 2007, the Company controls 51% of Zonda’s issued and outstanding common stock.
NOTE 3 – MARKETABLE SECURITIES
Marketable securities consist of 5,206,336 remaining shares of ActionView International, Inc. common stock received as settlement on a line of credit extended in prior years. The Company received a total of 9,082,852 shares valued at $90,829 based on ActionView share price of $.01 at the time of receipt. As of December 31, 2007 the shares had a market value of $.002 per share resulting in $10,933 in marketable securities. Fluctuations in the Actionview share price are recorded as comprehensive unrealized gains and losses on the balance sheet.
NOTE 4 – NOTES PAYABLE
During the year ended September 30, 2006, the Company eliminated all of its convertible debentures by restructuring $200,000 of its convertible debentures into a promissory note payable, of which $190,000 remains due and payable. The Promissory note was due December 19, 2007 and bears interest at the rate of eight percent (8%) per annum.
Line of Credit
As of December 31, 2007, the Company had received $390,244 under a credit line provided by Sequoia International, Inc. The line and accrued interest are due on April 1, 2009 and bear interest at the rate of eight percent (8%) per annum.
7
NOTE 5 - EQUITY TRANSACTIONS
During the quarter ended December 31, 2007, the Company issued 1,125,000 shares of restricted common stock for services valued at $11,250. The Company relied on section 4(2) of the Securities Act of 1933 in making the sales of securities.
In October 2007, the Company acquired an additional 5% of Zonda’s common stock from the majority shareholders of Zonda through the issuance of 10 million shares of the Company’s restricted common stock. As a result, as of December 31, 2007, the Company controls 51% of Zonda’s issued and outstanding common stock.
NOTE 6 - GOING CONCERN
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As of December 31, 2007, the Company’s current liabilities exceed current assets and the Company has been dependent upon financing to continue operations. The ability of the Company to continue as a going concern is dependent upon its ability to obtain sources of financing such that it may commence profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
NOTE 7 – SUBSEQUENT EVENTS
Subsequent to the quarter ended December 31, 2007, the Company issued 5,250,000 shares of restricted common stock for services valued at $15,750. The Company relied on section 4(2) of the Securities Act of 1933 in making the sales of securities.
8
FORWARD-LOOKING STATEMENTS
This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objections of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; any statements or belief; and any statements of assumptions underlying any of the foregoing.
Forward-looking statements may include the words “may,” “could,” “estimate,” “intend,” “continue,” “believe,” “expect” or “anticipate” or other similar words. These forward-looking statements present our estimates and assumptions only as of the date of this report. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the dates on which they are made. We do not undertake to update forward-looking statements to reflect the impact of circumstances or events that arise after the dates they are made. You should, however, consult further disclosures we make in future filings of our Annual Report on Form 10-KSB, Quarterly Reports on Form 10-QSB and Current Reports on Form 8-K.
Item 2. Management’s Discussion and Analysis or Plan of Operation
General
CLX Investment Company, Inc. (“the Company” or “CLXN”) was incorporated on December 12, 1977 under the laws of the State of Colorado as Calvin Exploration Company, Inc. to engage in any lawful activity as shall be appropriate under laws of the State of Colorado. The Company was organized to engage in on-shore oil and gas exploration, development and production in the continental United States. The Company's oil and gas activities concentrated primarily in Colorado, Kansas, Oklahoma and Wyoming. In 1993 the name of the Company was changed to CLX Energy, Inc. Up until September 1, 2004 the Company engaged in only one industry segment and line of business; the acquisition, exploration, development and operation of oil and gas properties for its own account.
On May 24, 2004 the Company appointed new management and moved its headquarters to Temecula, CA. At the same time the Company formed CLX Oil & GAS, LLC a wholly owned subsidiary of CLX Energy, Inc. and transferred all of the oil and gas operations of the Company (including the assets and liabilities pertaining to such operations) into CLX Oil & Gas, LLC. On September 1, 2004 the Company sold 100% of its interest in CLX Oil & Gas, LLC to certain shareholders of the Company in exchange for shares of CLX Energy, Inc. The shareholders returned 1,433,552 shares in exchange for 100% interest in CLX Oil & GAS, LLC. The Board of Directors approved the "Securities Purchase and Sale Agreement" and also obtained a fairness opinion from Lehrer Financial and Economic Advisory Service indicating that the Securities Purchase and Sale Agreement was a fair and equitable exchange. The sale of the subsidiary has been accounted for as an asset sale transaction and al l gas and oil operations are reported as discontinued operations on the financial records.
On September 13, 2004, the Company filed with the Securities and Exchange Commission to become a Business Development Corporation (“BDC”) as defined under the Investment Act of 1940. In anticipation of the election to become a BDC, the Company changed its name to CLX Investment Company, Inc. on September 1, 2004 to properly reflect the nature of its business. On April 2, 2007, the Board of Directors unanimously approved the proposal to withdraw the Company’s election to be treated as a BDC as soon as practicable so that it could begin conducting business as an operating company rather than as a business development company subject to the Investment Company Act. On May 30, 2007, the holders of a majority of the outstanding shares of the Company’s common stock approved the proposal to withdraw the Company’s election to be treated as a BDC, and on May 30, 2007, a Notification of Withdrawal was filed with the Securities and Exchange Commission.
On October 15, 2007, the Company entered into a Stock Purchase Agreement with the Oleksiewicz Family Trust (“Seller”), pursuant to which the Company purchased from the Seller one million two hundred fifty thousand (1,250,000) shares of common stock of Zonda, Incorporated, a Nevada Corporation. The purchase results in an increase in the Company’s total equity position in Zonda, Incorporated to fifty one percent (51%). The purchase price for the acquisition consisted of ten million (10,000,000) shares of the Company’s common stock.
9
During the quarter ended December 31, 2007, the Company accepted the resignation from Robert McCoy as the Company’s Interim Chief Executive Officer. Mr. McCoy will continue to serve as Secretary, Treasurer and a member of the Board of Directors. Effective on the same date to fill the vacancy created by Mr. McCoy’s resignation, the Company appointed Vera Leonard as the Company’s Chief Executive Officer and President. The Company and Ms. Leonard are currently in the processes of finalizing an employment agreement; however, as of the date hereof there is not a written employment agreement in place.
RESULTS OF OPERATIONS
Three months ended December 31, 2007 compared to three months ended December 31, 2006.
Revenues
During the three months ended December 31, 2007, the Company reported revenues of $9,975 for the three months ended December 31, 2007 compared to $59,836 for the three months ended December 31, 2006. The current period revenues were generated from the sale of the Zonda, Incorporated’s medical diagnostic testing product line. The decrease in sales is attributed to a halt in sales in the European market due to the compliance requirement of KEMA that all distributor product labels be approved before sales can be made.
Operating Expenses
Total operating expenses were $347,277 for the quarter ended December 31, 2007 compared to total operating expenses of $161,156 for the quarter ended December 31, 2006. Current period operating expenses consisted principally of $205,144 in consulting, professional fees and salaries and $109,926 in administrative and accounting fees.
Other Income / (Expense)
Other income/(expense) for the quarter ended December 31, 2007 was $41,299 as compared to ($23,346) for the quarter ended December 31, 2006. Current period other income consisted principally of $50,000 in gain on extinguishment of debt associated with the value of shares of common stock issued to satisfy delinquent payables.
Net Loss
During the quarter ended December 31, 2007, the Company experienced a net loss in the amount of $240,191 or approximately ($0.001) per share compared to a net loss of $144,229 or approximately ($0.001) per share for the same period in 2006.
Liquidity and Capital Resources
The accompanying financial statements have been prepared in conformity with principles of accounting applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has accumulated $3,590,001 in losses through December 31, 2007, which may be used to reduce taxes in future years through 2027.
As of December 31, 2007, the Company had total cash and current assets of $53,330 and current liabilities of $1,079,007. As of December 31, 2007, the Company has a promissory note in the amount of $190,000 payable on demand and bears interest at the rate of eight percent (8%) per annum. In addition, as of December 31, 2007, the Company has received $390,224 under a line of credit provided by Sequoia International, Inc. The line of credit bears interest at eight percent (8%) per annum. The line of credit and accrued interest are due on April 1, 2009. The Company requires additional capital to meet its operating requirements. The Company has not yet established revenues to cover its operating costs. The Company’s strategy during the year ending September 30, 2008 consist of remaining focused on the acquisition of innovative medical diagnostic technologies that are ideally suited for further development, regulatory approval and distribution in the Unite d States. Management believes the Company will soon be able to generate revenues to assist in covering its operating costs through the sale of Zonda, Incorporated’s medical diagnostic testing product line. In the event Zonda, Incorporated does not sustain cash flow positive operations and if suitable financing is unavailable, there is substantial doubt about the Company’s ability to continue as a going concern.
10
RISKS RELATED TO OUR BUSINESS
We Have Historically Lost Money and Losses May Continue in the Future
We have historically lost money. The loss for the 2007 fiscal year was $411,365 and future losses are likely to occur. Accordingly, we may experience significant liquidity and cash flow problems if we are not able to raise additional capital as needed and on acceptable terms. No assurances can be given we will be successful in reaching or maintaining profitable operations.
We Will Need to Raise Additional Capital to Finance Operations
Our operations have relied almost entirely on external financing to fund our operations. Such financing has historically come from a combination of borrowings and from the sale of common stock and assets to third parties. We will need to raise additional capital to fund our anticipated operating expenses and future expansion. Among other things, external financing will be required to cover our operating costs. We cannot assure you that financing whether from external sources or related parties will be available if needed or on favorable terms. The sale of our common stock to raise capital may cause dilution to our existing shareholders. Our inability to obtain adequate financing will result in the need to curtail business operations. Any of these events would be materially harmful to our business and may result in a lower stock price.
There is Substantial Doubt About Our Ability to Continue as a Going Concern Due to Recurring Losses and Working Capital Shortages, Which Means that We May Not Be Able to Continue Operations Unless We Obtain Additional Funding
The report of our independent accountants on our September 30, 2007 financial statements include an explanatory paragraph indicating that there is substantial doubt about our ability to continue as a going concern due to recurring losses and working capital shortages. Our ability to continue as a going concern will be determined by our ability to obtain additional funding. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Our Common Stock May Be Affected By Limited Trading Volume and May Fluctuate Significantly
There has been a limited public market for our common stock and there can be no assurance that an active trading market for our common stock will develop. As a result, this could adversely affect our shareholders' ability to sell our common stock in short time periods, or possibly at all. Our common stock has experienced, and is likely to experience in the future, significant price and volume fluctuations that could adversely affect the market price of our common stock without regard to our operating performance. In addition, we believe that factors such as quarterly fluctuations in our financial results and changes in the overall economy or the condition of the financial markets could cause the price of our common stock to fluctuate substantially. Substantial fluctuations in our stock price could significantly reduce the price of our stock.
There is no Assurance of Continued Public Trading Market and Being a Low Priced Security may Affect the Market Value of Our Stock
To date, there has been only a limited public market for our common stock. Our common stock is currently quoted on the OTCBB. As a result, an investor may find it difficult to dispose of, or to obtain accurate quotations as to the market value of our stock. Our stock is subject to the low-priced security or so called "penny stock" rules that impose additional sales practice requirements on broker-dealers who sell such securities. The Securities Enforcement and Penny Stock Reform Act of 1990 requires additional disclosure in connection with any trades involving a stock defined as a penny stock (generally, according to recent regulations adopted by the SEC, any equity security that has a market price of less than $5.00 per share, subject to certain exceptions that we no longer meet). For example, brokers/dealers selling such securities must, prior to effecting the transaction, provide their customers with a document that discloses the risks of investing in such securities. Included in this document are the following:
- the bid and offer price quotes in and for the "penny stock," and the number of shares to which the quoted prices apply,
- the brokerage firm's compensation for the trade, and
- the compensation received by the brokerage firm's sales person for the trade.
In addition, the brokerage firm must send the investor:
- a monthly account statement that gives an estimate of the value of each "penny stock" in the investor's account, and
- a written statement of the investor's financial situation and investment goals.
11
If the person purchasing the securities is someone other than an accredited investor or an established customer of the broker/dealer, the broker/dealer must also approve the potential customer's account by obtaining information concerning the customer's financial situation, investment experience and investment objectives. The broker/dealer must also make a determination whether the transaction is suitable for the customer and whether the customer has sufficient knowledge and experience in financial matters to be reasonably expected to be capable of evaluating the risk of transactions in such securities. Accordingly, the Commission's rules may limit the number of potential purchasers of the shares of our common stock.
Resale restrictions on transferring "penny stocks" are sometimes imposed by some states, which may make transaction in our stock more difficult and may reduce the value of the investment. Various state securities laws pose restrictions on transferring "penny stocks" and as a result, investors in our common stock may have the ability to sell their shares of our common stock impaired.
There can be no assurance we will have market makers in our stock. If the number of market makers in our stock should decline, the liquidity of our common stock could be impaired, not only in the number of shares of common stock which could be bought and sold, but also through possible delays in the timing of transactions, and lower prices for the common stock than might otherwise prevail. Furthermore, the lack of market makers could result in persons being unable to buy or sell shares of the common stock on any secondary market.
We Could Fail to Retain or Attract Key Personnel
Our future success depends in significant part on the continued services of Vera Leonard, our Chief Executive Officer. We cannot assure you we would be able to find an appropriate replacement for key personnel. Any loss or interruption of our key personnel's services could adversely affect our ability to develop our business plan. We have no employment agreements or life insurance on Ms. Leonard.
Colorado Law and Our Charter May Inhibit a Takeover of Our Company That Stockholders May Consider Favorable
Provisions of Colorado law, such as its business combination statute, may have the effect of delaying, deferring or preventing a change in control of our company. As a result, these provisions could limit the price some investors might be willing to pay in the future for shares of our common stock.
Item 3. Controls and Procedures
We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the specified time periods. As of the end of the period covered by this report, Vera Leonard, our chief executive officer and Robert McCoy, our treasurer evaluated the effectiveness of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15. Ms. Leonard and Mr. McCoy concluded that our disclosure controls and procedures are effective in timely alerting them to material information required to be included in our periodic SEC filings. There were no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
12
It should be noted, however, that no matter how well designed and operated, a control system can provide only reasonable, not absolute, assurance that the objectives of the control system are met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Because of these and other inherent limitations of control systems (including faulty judgments in decision making or breakdowns resulting from simple errors or mistakes), there can be no assurance that any design will succeed in achieving its stated goals under all potential conditions. Additionally, controls can be circumvented by individual acts, collusion or by management override of the controls in place.
PART II.
Other Information
Item 1.Legal Proceedings
None
Item 2. Unregistered Sale of Equity Securities and Use of Proceeds
During the quarter ended December 31, 2007, the Company acquired an additional 5% of Zonda’s common stock through the issuance of 10 million shares of the Company’s restricted common stock. As a result, the Company presently controls 51% of Zonda’s issued and outstanding common stock. The shares were issued based upon the exemption from registration found in Section 4(2) of the Securities Act and/or Regulation D of the Securities Act Rules.
During the quarter ended December 31, 2007, the Company issued 1,125,000 shares of restricted common stock for services valued at $11,250. The Company relied on section 4(2) of the Securities Act of 1933 in making the sales of securities.
Item 3.Defaults Upon Senior Securities
None
Item 4.Submission of Matters to Vote of Security Holders
None
Item 5.Other Information
None
Item 6.Exhibits
The following exhibits are filed as part of this statement:
Exhibit No. | Description | Location |
3.1 | Articles of Incorporation | * |
3.2 | Amendment to the articles of incorporation, dated December 15, 1977 | * |
3.3 | Amendment to the articles of incorporation, dated June 4, 1991 | * |
3.4 | Amendment to the articles of incorporation, dated March 26, 1993 | * |
3.5 | Amendment to the articles of incorporation, dated August 30, 2004 | * |
3.6 | By-laws | * |
14 | Code of Ethics | *** |
31.1 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | Filed herewith |
31.2 | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | Filed herewith |
32.1 | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | Filed herewith |
32.2 | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | Filed herewith |
99(i) | Audit Committee Charter adopted December 7, 2004 | ** |
* Incorporated by reference from CLX Investment Company’s Annual Report on Form 10-K/A for the Fiscal Year Ended September 30, 2005 filed on June 19, 2006.
** Incorporated by reference from CLX Investment Company’s Annual Report on Form 10-K for the Fiscal Year Ended September 30, 2005 filed on December 29, 2005.
*** Incorporated by reference from CLX Investment Company’s Annual Report on Form 10-QSB for the Quarter Ended June 30, 2007 filed on August 14, 2007.
13
SIGNATURE PAGE
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Dated: February 13, 2008 |
|
/s/ Vera Leonard |
|
Vera Leonard |
|
Chief Executive Officer |
|
14
EXHIBIT 31.1
SECTION 302
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, Vera Leonard, certify that:
(1) I have reviewed this quarterly report on Form 10-QSB of CLX Investment Company, Inc.;
(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
(4) The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
(5) The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: February 13, 2008 | By:/s/ Vera Leonard Vera Leonard, Chief Executive Officer |
EXHIBIT 31.2
SECTION 302
CERTIFICATION OF PRINCIPLE ACCOUNTING OFFICER
I, Robert McCoy, certify that:
(1) I have reviewed this quarterly report on Form 10-QSB of CLX Investment Company, Inc.;
(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
(4) The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
(5) The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: February 13, 2008 | By:/s/ Robert McCoy Robert McCoy, Treasurer (Principle Accounting Officer) |
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of CLX Investment Company, Inc. (the "Company") on Form 10-QSB for the period ending December 31, 2007, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Vera Leonard, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:
(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of the operation of the Company.
/s/ Vera Leonard Vera Leonard Chief Executive Officer February 13, 2008 |
EXHIBIT 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of CLX Investment Company, Inc. (the "Company") on Form 10-QSB for the period ending December 31, 2007, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Robert McCoy, Treasurer (Principle Accounting Officer) of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:
(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of the operation of the Company.
/s/ Robert McCoy Robert McCoy Treasurer (Principle Accounting Officer) February 13, 2008 |
