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U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
(MARK ONE)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended June 30, 2008
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number 333-59114
TIME LENDING, CALIFORNIA, INC.
(Name of small business issuer in its charter)
NEVADA 33-0730042
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1580 N. Batavia Street, Suite #2, Orange, California 92867
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number (including area code): (714) 288-5901
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered pursuant to Section 12(g) of the Exchange Act:
None
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(Title of Class)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes [X ]No [ ]
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B not contained in this form, and no disclosure will 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-KSB
or any amendment to this Form 10-KSB. [X]
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
The registrant's revenues for its most recent fiscal year were
$368,212.
The aggregate market value of the voting common equity held by non-affiliates of
the registrant computed by reference to the closing sale price of the common
stock at $0.05 per share as of September 15, 2008 was $166,606.
The number of shares outstanding of the registrant's only class of common stock,
$0.001 par value per share, was 24,398,040 as of September 15, 2008.
The registrant has no outstanding non-voting common equity.
DOCUMENTS INCORPORATED BY REFERENCE
None
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EXPLANATORY NOTE
We are filing this Amendment to our Form 10-K for the fiscal year ended
June 30, 2008 in response to certain comments made by the staff of the SEC. In
response to such comments, we have (i) amended Item 8A (Controls and Procedures)
and (ii) filed new Section 302 certifications of our chief executive officer and
chief financial officer (Exhibits 31.1 and 31.2, respectively) that include the
introductory language in paragraph 4 and paragraph 4(b). We have also corrected
certain minor grammatical or typographical errors throughout this Amendment.
Except as described above, the remainder of the Form 10-K is
unchanged and does not reflect events occurring after the original filing of the
Form 10-K with the SEC on October 14, 2008
TABLE OF CONTENTS
PART 1
Item 1. Description of Business 3
Item 2. Description of Property 6
Item 3. Legal Proceedings 6
Item 4. Submission of Matters to a Vote of Security Holders 6
PART II
Item 5. Market for Common Equity, Related Stockholder Matters and
Small Business Issuer Purchases of Equity Securities 7
Item 6. Management's Discussion and Analysis or Plan of Operation 7
Item 7. Financial Statements 10
Item 8. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure 22
Item 8A. Controls and Procedures 22
Item 8B. Other Information 22
PART III
Item 9. Directors, Executive Officers, Promoters, Control Persons
And Corporate Governance; Compliance with Section 16(a)
of the Exchange Act 23
Item 10. Executive Compensation 24
Item 11. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters 25
Item 12. Certain Relationships and Related Transactions, and Director
Independence 25
Item 13. Exhibits 25
Item 14. Principal Accountant Fees and Services 26
2
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
General
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We, Time Lending, California, Inc. ("we", "Time Lending" or the
"Company"), are engaged through our three divisions in the real estate sales and
loans (mortgages), management and direct mailing for mortgage companies and
similar real estate related businesses. Time Lending is a real estate and
mortgage company, which offers different products and services for each
business. The real estate business is primarily a service business where the
real estate broker or agent provides all of the services necessary to a home
buyer or seller to insure satisfactory completion of the intended real estate
transaction.
Time Lending's mortgage division provides many services to the mortgage
applicant, including how much the borrower may qualify for and afford in terms
of mortgage payment, insurance and taxes, providing loan programs agreeable to
the borrower and assisting with the mortgage application and all other
documentation to insure a timely close. We are a mortgage broker, not a lender.
Mr. Pope, our President, is the broker and officer for the Company, and he holds
a corporate officer broker license with the California Department of Real
Estate. This is the type of license the lending institutions require us to have
to submit loans as a broker.
Time Lending's direct mail marketing division is a full service direct
mail marketing service which prints and mails mortgage solicitations to
potential home borrowers on behalf of mortgage companies to generate mortgage
leads to help them increase their mortgage business.
Our principal executive offices are located at 1580 N. Batavia Street,
Suite #2, Orange, California 92867 and our phone number is (714)288-5901.
Organization
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Our Company was organized under the laws of the state of California on
November 5, 1996 as Renet Services, Inc. The name was changed to Time Lending,
California, Inc. on August 4, 1998 and we reincorporated in the state of Nevada
in December, 2000 by merging with Time Lending, California, Inc., a Nevada
corporation. Time Lending, California, Inc. was formerly the wholly-owned
subsidiary of Time Financial Services, Inc., a Nevada public company. A share
exchange agreement was signed between Time Financial Services, Inc. and
Interruption Television, Inc., a company which has a high growth potential as a
supplier of television content to the television markets of Asia, pursuant to
which the share exchange transaction was completed on July 20, 2000. As a part
of that transaction, Time Lending California, Inc. was sold to the management
(Messrs. Pope and La Puma) and all Time Financial Services, Inc. shares held by
Time Lending, California, Inc. were cancelled. Time Lending was the wholly owned
subsidiary of Time Financial. Time Lending was the operating company with all
income and operations occurring within Time Lending for Time Financial.
Mr. Pope was President and a Director and Mr. La Puma was the CFO and a
Director of Time Financial up to July 20, 2000 when they resigned. They held the
same positions in Time Lending and remain so.
SUBSIDIARIES OF TIME LENDING
Time Lending owns 50% of three subsidiaries. The remaining shares
Are owned equally by Mike Pope and Philip La Puma.
Time Management Inc. is our 50% owned subsidiary; incorporated on July
27, 2000 and located in Orange, California. Time Management is a real estate
management company with Mike Pope as a broker. It currently manages no
properties.
Tenth Street Inc. was incorporated in Nevada March 23, 1997 by Michael
Pope and was inactive until it was acquired by Time Lending and activated as a
subsidiary on December 20, 2000. The shares of common stock of Tenth Street,
Inc. were issued to us in consideration for payment of incorporation expenses.
Time Lending owns 50% of Tenth Street. Tenth Street is set up as the list
management company. Tenth Street plans to grow its data sales brokering business
as the Tenth Street has a minor role in the resale of data purchased from
address list companies. When there is revenue and expenses, it is included in
the direct mail segment and represents less than 1% of the total.
Time Marketing Associates Inc. was incorporated in Nevada on July 27,
2000. It is a 50% owned subsidiary of Time Lending. Its business is addressing
via computer printers, a mailing piece for mortgage lenders and brokers. Time
Marketing operates under the DBA of Signature Marketing. Through Signature
Marketing, we prepare and mail direct mail pieces for mortgage companies to
3
borrowers. The Time Marketing subsidiary offers direct mail product alternatives
to the primary two part snap out mailer of Time Lending under the its dba
Signature Marketing. These products must be outsourced and are rarely sold at
present. Any revenues and expense are included in the direct mail marketing
segment and represent less than 1% of the total.
Business Overview
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Time Lending is a real estate and mortgage company, which offers
different products and services for each business. The real estate business is
primarily a service business where the real estate broker or agent provides all
of the services necessary to a home buyer or seller to insure satisfactory
completion of the intended real estate transaction.
The services Time Lending provides to a home buyer include, an initial
consultation with the buyer to evaluate the financial aspects of the home
purchase to determine how much the buyer can afford in terms of home price,
mortgage payment, taxes, insurance, down payment and any other financial
requirements of the home purchase. Other services include showing the buyer
homes in his price range, negotiating a contract, with price and terms with the
seller, opening escrow, helping with the mortgage application process and
insuring a timely and satisfactory close of the home purchase.
When Time Lending represents a home seller, some of the main services
include an initial consultation to determine the home valuation, financial
structure of the transaction and length of escrow the seller will require. Time
Lending will list a property in a multiple listing service, advertise and
provide signage to expose the property to as many home buyers as possible. Time
Lending also negotiates the contract on the seller's behalf, participates in the
escrow process and works to insure a timely and satisfactory close of the home
sale.
Time Lending's mortgage division provides many services to the mortgage
applicant, including how much the borrower may qualify for and afford in terms
of mortgage payment, insurance and taxes, providing loan programs agreeable to
the borrower and assisting with the mortgage application and all other
documentation to insure a timely close.
Time Lending is a mortgage broker, not a lender. Time Lending does not
lend its own money or use bank warehouse facilities, but rather operates a
broker with various lending institutions, and does not act as an agent for these
lenders. The mortgage programs provided by the institutions are priced on a
wholesale system allowing the mortgage broker to add his fee or commission and
still offer very competitive interest rates and fees to the borrower. Time
Lending's broker approval with specific lenders is not an agency agreement. Time
Lending may submit loans to a lender for underwriting. The lender approves or
disapproves the loan. Time Lending has no ability to approve or disapprove a
loan for a lender.
Mr. Pope is the broker-officer for Time Lending and holds a corporate
officer broker license with the California Department of Real Estate. This is
the type of license the lending institutions require Time Lending to have to
submit loans as a broker. Mr. Pope has no personal relationship with these
companies and thus no conflict of interest exists.
Time Lending's direct marketing division (d.b.a.: Signature Marketing)
is a full service direct mail, and telemarketing service which prints and mails
mortgage solicitations to potential home borrowers on behalf of mortgage
companies to generate mortgage leads to help them increase their mortgage
business and tele-markets for commercial insurance agencies. We do not have any
agreements with mortgage companies to provide them with direct mail marketing.
Typically, a mortgage service company would order a mailing and pay for it upon
the order. The direct mail segment generates revenues on a per mailing or per
job basis. Each mailing is paid in advance and includes printing of the mailing
piece, imprinting an address and taking the batch to the post office for
mailing. All mailings are made out of the Orange, California post office and may
be sent to any state. Additional revenues are generated through the sale of
address list obtained from national list companies. Time Lending's mortgage
division also uses the direct mail division to increase its loan business. The
direct mail division consults with mortgage companies to determine how much mail
they need to send and what loan programs to offer, as well as what geographical
and demographic areas will provide the best results. The expanded marketing
requirements of our business plan will allow for seizing the opportunity in the
current market brought about by lower long term interest rates.
4
Time Lending operates as both a mortgage company and a real estate
company. In California, a real estate brokers license allows one to operate both
mortgage and real estate business under the same license. The California
Department of Real Estate regulates both mortgage and real estate brokers whose
business is solely in California. Time Lending operates exclusively in
California, therefore, a real estate brokers license is the only requirement.
Although Time Lending is not licensed by any federal agency, it must adhere to
all federal regulations including the federal fair housing law such as The Fair
Housing Amendments Act of 1988), Truth in Lending Act, Consumer Credit
Protection Act, National Housing Act, Real Estate Settlement Procedures Act, and
all other laws and regulations required by both the state and federal
government.
Michael Pope is the real estate broker and a corporate officer of Time
Lending. It is his responsibility to stay current with all new and ongoing
regulations and to insure that all employees are kept current on these
regulations through ongoing company training and supervision.
The real estate division has very experienced agents who are
responsible for generating their own leads. Most of this business is generated
by referrals and a limited amount of advertising.
The direct mail and list divisions maintain their competitive position
through referrals and an aggressive advertising program.
Time Lending's experienced management strives to maintain a low
overhead which allows it to be very cost competitive and always in the market.
Time Lending is able to keep fixed expenses and administrative expenses low,
because of shared use facilities including rent, equipment leases and use of
part time production employees available as needed. The major in process cost
for the lending segment is loan processing and Time Lending uses exclusively
contract processors who are paid for each loan as it closes.
Time Lending generates its loan business through the marketing efforts
of the direct mail marketing division which sends out mail pieces on behalf of
Time Lending under the DBA of Signature Marketing.
REGULATION
We will be subject to regulation by numerous federal and state
governmental authorities. In California we are regulated by the California
Department of Real Estate (DRE) and have been issued a corporate brokers license
with Michael Pope as the broker-officer. The only approval required in the State
of California to become a mortgage broker is the issuance of a real estate
brokers license. The same license is required to act as a real estate agent to
assist real estate buyers and sellers and to earn brokerage fees. California
does not issue a "mortgage broker" license. A majority of those engaged in
mortgage loan brokering do so with a real estate broker license. The license
that allows the listing and sale of real property (the traditional activities
associated with a real estate broker license) is the same license that allows
the solicitation of borrowers or lenders, the negotiation of loans secured by
real property and the collection of payments on notes secured by real property.
Most lending practices fall under Federal Department of Housing and
Urban Development (HUD) authority including the mailer prepared for our mortgage
clients. If regulations are not properly followed, these authorities have the
ability of stopping the business from operating. We may be audited for
compliance at any time by the California DRE or HUD, but it usually happens upon
a consumer complaint which we have had none to date. Compliance is an important
aspect of this business.
There is no government approval required for the direct mail business.
The list companies who provide addresses to us must conform to consumer
disclosure regulations and provide the ability for consumers to be dropped from
mailing lists. The list companies also will review mailing pieces before selling
addresses when credit information is sold to make sure that if a credit
disclosure is required that it is present.
5
COMPETITION
The competition in each segment is as always strong, yet, we are able
to remain competitive in price and service. Management with its combined fifty
years of real estate and mortgage experience is able to respond quickly to
market shifts and provide excellent service in all areas. There is no dependence
on a single customer or product/service line. The Company is dependent on the
mortgage and real estate markets, which are now in significant decline from
last year. Mortgage interest rates are around 6.5% and should increase to about
6.7% by year end. We believe that year 2008 will be a down mortgage refinance
year. Our opinion is based upon the Mortgage Banking Association publishes
statistics and forecasts of mortgage originations on a national basis on their
web site www.mbaa.org. The MBA charts show originations declining for the
remainder of the year and through 2009. In our opinion, in this type of market,
the major problem is competition for a smaller market. Many brokers have gone
out of business with the drop in real estate values and the lack of sub prime
lenders.
The mortgage brokerage industry is a large fragmented industry with
thousands of mortgage brokers nationally. This is similar to the real estate
market where no one broker has an advantage over another in any given regional
market. That is why advertising is important in generating sales and why direct
mail is effective in generating loan business. Because of losses, most brokers
have limited fund with which to advertise.
The direct mail business of Time Lending concentrates on providing
mailings for small to medium sized mortgage broker of which there are many
thousands across the country. There are many direct mailers that can service
this market, but we are one of a few that consistently advertise in the mortgage
trade magazines that cater to this market nationally. Our client base reaches to
most states in the country and will grow through continued advertising that we
currently do. We also maintain competitive prices and good service, but the
market has shrunk and the direct mail business will be down for this next year.
The brokering of real estate loans is highly competitive. There are
over 73,000 brokers nationally with over 14,000 brokers in California alone. The
use of its own direct mail marketing experience enables Time to compete for
loans by targeting potential borrowers. The Time Lending also faces competition
when attempting to acquire real estate, including competition from individuals,
other investors and brokers. The real estate industry tends to be highly
competitive and fragmented. Successful competitors rely on advertising to
generate business. This is the area of Time's expertise. The marketing segment
is very competitive with hundreds of companies nationally that offer brokers
leads for loans. Time Lending uses its experience in marketing to generate its
own leads and networks with data suppliers to obtain referrals of mortgage
brokers who need to advertise to compete. The Management segment does not
compete for outside business and is dependent on the real estate purchased by
Time Lending.
ITEM 2. DESCRIPTION OF PROPERTIES.
Our facility in Orange, California is 2300 square feet of office and
production Space which includes the workplace for the computers and printers
used for addressing and mailing the direct mail pieces. We maintain our
executive and administrative offices in the Orange, California facility. We
moved to this facility in December 2005. It provides increased space at a lower
rent. Our lease payments in fiscal 2008 were $27,975. The facility in Orange,
California is leased though December 2009.
We believe that our existing facilities are adequate to meet our
current needs and that suitable additional or alternative space will be
available after January 2009. We have no assurance that future terms would be as
favorable as our current terms.
The Company has not invested in any real property at this time nor does
the Company intend to do so. The Company has no formal policy with respect to
investments in real estate or investments with persons primarily engaged in real
estate activities.
ITEM 3. LEGAL PROCEEDINGS
We are not a party to any material pending legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF THE SECURITY HOLDERS.
During the year ended June 30, 2008, no matters were submitted to a
vote of our common stockholders.
6
PART II
ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL
BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES
PUBLIC MARKET
Our common stock trades on NASD's over-the-counter market, the Bulletin
Board under the symbol "TIML". Our common stock has been trading sporadically
since August, 2004. As of September 15, 2008 there were 85 holders of our common
stock. The closing price of our common stock as of September 15, 2007 was $0.05
per share. As of May 20, 2005, we effected a 4-for-1 forward stock split of our
common stock. All shares and per share amounts in the accompanying financial
statements of the Company have been retroactively adjusted to give the effects
of the forward stock split.
DIVIDENDS
The Company does not expect to pay any dividends at this time. The
payment of dividends, if any, will be contingent upon the Company's revenues and
earnings, if any, capital requirements, and general financial condition. The
payment of any dividends will be within the discretion of the Company's Board of
Directors and may be subject to restrictions under the terms of any debt or
other financing arrangements that the Company may enter into in the future. The
Company presently intends to retain all earnings, if any, for use in the
Company's business operations and accordingly, the Board does not anticipate
declaring any dividends in the foreseeable future.
RECENT SALES OF UNREGISTERED SECURITIES
None
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of the Securities Exchange Act
of 1934, as amended, (the "Exchange Act)". We intend that those forward-looking
statements be subject to the safe harbors created by those sections. These
forward-looking statements generally include the plans and objectives of
management for future operations, including plans and objectives relating to our
future economic performance, and can generally be identified by the use of the
words "believe," "intend," "plan," "expect," "forecast," "project," "may,"
"should," "could," "seek," "pro forma," "goal," "estimates," "continues,"
"anticipate" and similar words. The forward-looking statements and associated
risks may include, relate to, or be qualified by other important factors,
including, without limitation:
o our ability to achieve and maintain profitability and obtain
additional working capital, if required;
o our ability to successfully implement our business plans;
o our ability to attract and retain strategic partners and
alliances;
o our ability to hire and retain qualified personnel;
o the risks of uncertainty of real estate and mortgage markets;
o risks associated with existing and future governmental regulation
to which we are subject; and
o uncertainties relating to economic conditions in the markets in
which we currently operate and in which we intend to operate in
the future.
These forward-looking statements necessarily depend upon assumptions
and estimates that may prove to be incorrect. Although we believe that the
assumptions and estimates reflected in the forward-looking statements are
reasonable, we cannot guarantee that we will achieve our plans, intentions or
expectations. The forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause actual results to differ in
significant ways from any future results expressed or implied by the
forward-looking statements. We do not undertake to update, revise or correct any
forward-looking statements.
Results of Operations
Company Overview
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Time Lending is engaged in business as a mortgage broker to originate
first and second loans secured by real estate through deeds of trust and
mortgages. It's Signature Marketing Division does direct mail for mortgage
companies. This business has slowed significantly from prior years because of
the melt down of financial markets. Signature has turned to a new market,
tele-marketing for commercial insurance agencies. This insurance marketing was
initiated January 2008 and the results below reflect 6 months only.
7
RESULTS OF OPERATIONS
Fiscal Year Ended
June 30, 2006 June 30, 2007 June 30, 2008
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Total Revenues $ 4,728,311 $ 1,036,361 $ 392,673
Total Expenses $ 4,727,311 $ 1,077,643 $ 436,660
Net Income(Loss) $ 1,000 $ (41,282) $ (43,988)
Weighted Average Stock Outstanding 22,793,584 22,793,584 23,589,299
Earnings (Loss)per Share before Tax $ (*) $ (*) $ (*)
___________
*Less than $.01
Time Lending's Fiscal Year Ended June 30, 2008 compared to Fiscal Year Ended
June 30, 2007 - Audited.
- -------------------------------------------------------------------------------
Income. Total income decreased from $1,036,361 for the fiscal year ended June
30, 2007 to $392,673 for the fiscal year ended June 30, 2008 down ($643,688)
representing a (62.1%) decline. This decrease was due to decreases in revenue in
our Marketing segment.
Expenses. Expenses decreased from $1,077,643 for the fiscal year ended June 30,
2007 to $436,660 for the fiscal year ended June 30, 2008 down ($640,963)
representing a (59.5%) decrease. This increase in expenses was due to increase
operating expenses due to decreased direct mail production and decreased postage
expenses.
Net profit (loss) before tax. The net (loss) for the fiscal year ended June 30,
2008 was($43,988) a decrease of ($2,706) from the $($41,282) net loss for the
fiscal year ended June 30, 2007. The reason for the decrease was due to
decreased revenue.
Marketing Segment. The marketing segment is the preparation and mailing of
direct mail advertising for the mortgage industry and tele-marketing for
commercial insurance agencies. This segment dropped as the mortgage market
declined. Income for the marketing segment decreased ($476,535) or (56.4% to
$367,145 for the fiscal year ended June 30, 2008 from $843,680 for the fiscal
year ended June 30, 2007. This included insurance marketing revenue of $54,845.
The reason for the revenue decrease was decreased mailing and loss of existing
clients. This market decline will result in decreased revenue in the next fiscal
year.
Expenses for the marketing segment. Expenses decreased ($476,873) (56.3%) to
$370,414 for the fiscal year ended June 30, 2008 compared to $887,697 for the
fiscal year ended June 30, 2007. This decrease was due to decreased sales and
production costs. A slight increase was due to Insurance Marketing start up.
8
Profit (Loss)for the marketing segment. Profit (Loss) contribution from the
marketing segment was ($3,269) an decrease of ($388)or (9.4%)for the fiscal year
ended June 30, 2008 compared to the ($3.607) for the fiscal year ended June 30,
2007.
Lending segment. This segment is the origination and brokering of real estate
Loans and other real estate activities. This requires a real estate brokers
license in California. Time Lending is so licensed with Michael F. Pope as the
broker officer. Income for the lending segment was $25,528 for the fiscal year
ended June 30, 2008 a decrease of ($162,379), or (86.4%) compared $187,907 for
the fiscal year ended June 30, 2007. This was due to decreased activity by loan
agents.
Expenses for the lending segment were $66,246 an decrease of ($87,329) or(56,9%)
for the fiscal year ended June 30, 2008 compared to expenses of $153,575 for the
fiscal year ended June 30, 2007. This was due to decreased loan commissions
paid. And decreased marketing costs.
The lending segment has a profit of $34,332 for the fiscal year ended June 30,
2007 compared to a loss of ($40,718) for the fiscal year ended June 30, 2008.
..
Management segment. This segment is the revenue and expenses associated with
residential properties purchased and maintained for sale, and real estate broker
activities excluding real estate loans. Income was $4,774 for the fiscal year
ended June 30, 2007, there was no income in this segment for the
fiscal year ended June 30, 2008.
Expenses for this segment were $76,781 for the fiscal year ended June 30, 2007.
There was no expense allocated to this segment for this fiscal year.
The Management segment operating loss was ($72,007) for the fiscal year ended
June 30, 2007.
This segment no longer be reported.
LIQUIDITY AND CAPITAL RESOURCES
We had cash of $268,141 at June 30, 2008. We have funded our expenses from
operations.
All of our capital requirements will have to come from operations. There are no
significant capital expenditure required for the next 12 months.
We do not have any identified capital resources. Moreover, we do not have any
arrangements with investment banking firms or institutional lenders.
9
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
TIME LENDING CALIFORNIA, INC.
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED
JUNE 30, 2008
10
REPORT OF REGISTERED INDEPENDENT PUBLIC ACCOUNTING FIRM
To the Board of Directors of
Time Lending, California, Inc.
Orange, CA
We have audited the accompanying consolidated balance sheet of Time Lending,
California, Inc. and subsidiaries as of June 30, 2008, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
the period then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with 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. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Time Lending,
California, Inc., and subsidiaries as of June 30, 2008, and the results of it's
operations and cash flows for the years then ended in conformity with accounting
principles generally accepted in the United States.
/s/ Jaspers + Hall, PC
Denver, Colorado
October 14, 2008
11
TIME LENDING, CALIFORNIA, INC.
Consolidated Balance Sheets
June 30,
2008 2007
--------- ---------
ASSETS:
- -------
CURRENT ASSETS:
Cash and cash equivalents $ 268,141 $ 501,037
Accounts Receivable 10,161 -
--------- ---------
TOTAL CURRENT ASSETS 278,302 501,037
--------- ---------
PROPERTY AND EQUIPMENT:
Net of accumulated depreciation 15,933 20,733
--------- ---------
TOTAL FIXED ASSETS 15,933 20,733
--------- ---------
TOTAL ASSETS $ 294,235 $ 521,770
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY:
- -------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 27,942 $ 36,454
Accounts payable - related parties 258,095 447,386
Notes Payable - employee 25,000 -
Accrued expenses - 25,357
--------- ---------
TOTAL CURRENT LIABILITIES 311,037 509,197
--------- ---------
TOTAL LIABILITIES 311,037 509,197
--------- ---------
STOCKHOLDERS' EQUITY/(DEFICIT):
Preferred stock, $.001 par value; 20,000,000 shares
authorized, none issued and outstanding -- --
Common stock, $.001 par value; 200,000,000 shares
authorized, 22,817,040 issued and outstanding June 30,2007 24,398 22,817
and 2008. Additional Paid-in Capital 144,683 132,031
Retained earnings (deficit) (185,883) (142,275)
--------- ---------
TOTAL STOCKHOLDERS' EQUITY/(DEFICIT) (16,802) 12,573
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 294,235 $ 521,770
========= =========
The accompanying notes are an integral part of these financial statements.
12
TIME LENDING, CALIFORNIA, INC.
Consolidated Statements of Operations
For the Years Ended June 30,
2008 2007
----------- -----------
REVENUE:
Marketing income $ 342,684 $ 840,452
Loan Origination fees 10,440 187,907
Real Estate sales commissions 15,088 4,774
TOTAL REVENUE 368,212 1,033,133
----------- -----------
COSTS AND EXPENSES:
Loan officer commissions 515 109,937
Operating costs & marketing expenses 426,838 887,697
General and administrative 8,928 80,009
----------- -----------
TOTAL OPERATING EXPENSES 436,281 1,077,643
OTHER INCOME:
Interest Income 24,461 3,228
----------- -----------
NET INCOME (LOSS) $ (43,608) $ (41,282)
=========== ===========
BASIC PROFIT (LOSS) PER SHARE $ (*) $ (*)
=========== ===========
BASIC WEIGHTED AVERAGE SHARES OUTSTANDING 24,398,040 22,817,040
=========== ===========
*Less than $.01
The accompanying notes are an integral part of these financial statements.
13
TIME LENDING, CALIFORNIA, INC.
Consolidated Statements of Cash Flows
For the Years Ended June 30,
2008 2007
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (43,987) $(41,282)
Adjustments to reconcile net loss to net cash used
in operating activities
Depreciation and amortization 4,800 4,800
Issuance of stock for compensation 1,433 --
Changes in assets and liabilities:
(Increase in Accounts receivable) (10,161) -
(Increase) in Note receivable -- --
Increase (Decrease) in Accounts payable ( 8,512) ( 17,314)
(Decrease) in Accounts payable-related parties (189,291) -
(Increase) in Note Payable- employee 25,000 --
Increase (Decrease) in Accrued expenses (25,357) 25,225
--------- ---------
Net cash provided (used) by operating activities (232,896) ( 29,571)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Assets - (2,010)
--------- ---------
Net cash (provided) used by investing activities -- (2,010)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Issuance of Stock -- --
--------- ---------
Net cash provided by financing activities -- --
--------- ---------
Net Increase in Cash and Cash Equivalent (232,896) (31,581)
Cash and Cash Equivalents at Beginning of Year 501,037 532,618
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 268,141 $ 501,037
========= =========
SUPPLEMENTAL DISCLOSURE Cash paid during the year for:
Interest $ -- $ --
========= =========
Income Taxes $ -- $ --
========= =========
The accompanying notes are an integral part of these financial statements.
14
TIME LENDING, CALIFORNIA, INC.
Consolidated Statement of Stockholders' Equity (Deficit)
COMMON STOCK Additional Retained Total
----------------------- Paid-in Earnings Stockholders'
Shares Amount Capital (Deficit) Equity
---------- ---------- ---------- ---------- ----------
July 1, 2000 4,000,000 $ 4,000 $ (3,999) $ -- $ 1
Issuance for stock for Cash June 15, 2001 1,000,000 1,000 (750) -- 250
Net Loss for Year -- -- -- (7,508) (7,508)
---------- ---------- ---------- ---------- ----------
Balance - June 30, 2001 5,000,000 5,000 (4,749) (7,508) (7,257)
Net Profit for Year -- -- -- 2,252 2,252
---------- ---------- ---------- ---------- ----------
Balance - June 30, 2002 5,000,000 5,000 (4,749) (5,256) (5,005)
---------- ---------- ---------- ---------- ----------
Issuance of stock for services 5/03 4,800,000 4,800 (3,600) -- 1,200
Net Loss for Year -- -- -- (3,299) (3,299)
---------- ---------- ---------- ---------- ----------
Balance - June 30, 2003 9,800,000 $ 9,800 $ (8,349) $ (8,555) $ (7,104)
========== ========== ========== ========== ==========
Issuance of stock for compensation 200,000 200 (150) -- 50
Issuance of stock for cash 222,000 222 10,978 -- 11,200
Issuance of stock for compensation 828,000 828 7,452 -- 8,280
Issuance of stock for cash 116,000 116 5,684 -- 5,800
Issuance of stock for compensation 1,600,000 1,600 14,400 -- 16,000
Net Loss for Year -- -- -- (5,279) (5,279)
---------- ---------- ---------- ---------- ----------
Balance - June 30, 2004 12,766,000 $ 12,766 $ 30,015 $ (13,834) $ 28,947
---------- ---------- ---------- ---------- ----------
Issuance of stock for compensation 10,004,000 10,004 90,016 -- 100,020
Net Loss for Year -- -- -- (88,159) (88,159)
---------- ---------- ---------- ---------- ----------
Balance - June 30, 2005 22,770,000 22,770 120,031 (101,993) $ 40,808
---------- ---------- ---------- ---------- ----------
Issuance of stock for cash 47,040 47 12,000 -- 12,047
Net Profit for Year -- -- -- 1,000 1,000
Balance - June 30, 2006 22,817,040 $ 22,817 $ 132,031 $ (100,993) $ 53,855
---------- ---------- ---------- ---------- ----------
Net Profit for Year -- -- -- (41,282) (41,282)
---------- ---------- ---------- ---------- ----------
Balance - June 30, 2007 22,817,040 $ 22,817 $ 132,031 $ (142,275) $ 12,027
---------- ---------- ---------- ---------- ---------
Issuance of stock for compensation 1,581,000 1,581 12,652 - 14,233
Net Loss for Year - - - (43,987) (43,987)
---------- ---------- ---------- ----------- ---------
Balance June 30, 2008 24,398,040 24,398 144,683 (186,262) $ (17,727)
========== ========== ========== =========== =========
All stock has been adjusted for a 1/4
Forward split in May 2005.
The accompanying notes are an integral part of these financial statements.
15
TIME LENDING, CALIFORNIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2008
NOTE 1 - ORGANIZATION AND PRESENTATION:
------------------------------
On August 4, 2000, Time Lending, California, Inc., a Nevada corporation
(Time-Nevada) was created for the sole purpose of effecting a merger of Time
Lending, California, Inc., a California corporation (Time-California), with and
into Time - Nevada.
Time Lending, California, Inc. was incorporated under the laws of the State of
California on November 5th of 1996. Time Lending, California is a real estate
loan broker licensed under the California Department of Real Estate. A share
exchange agreement dated June 7, 2000 effective July 21, 2000 was entered into
between Time Financial Services, Inc. (TIMF) a Nevada corporation, Time Lending,
California, a wholly-owned subsidiary of TIMF, INTERRUPTION Television, Inc. a
Nevada corporation (ITV) and Interruption Television PTE LTD a wholly-owned
subsidiary of ITV. In this share exchange agreement and asset sale and purchase
contract, Time Financial Services, Inc. sold all shares of Time Lending,
California to Michael F. Pope and Philip C. La Puma, at the appraised value of
one dollar. This acquisition was done utilizing the purchase method. Time
Lending, California issued the total one thousand authorized shares of no par
value common stock evenly to the purchasers. Time Lending California
shareholders declared a 1,000 to 1 forward split of the common stock on December
29, 2000. Time Lending, California shall indemnify and hold harmless ITV and its
officers, directors, successors and assigns, from and against and in respect of
any and all losses, costs, liabilities, claims, penalties, damages and expenses
resulting from, in connection with or arising out of any breach of any
representation, warranty or covenant made by Time Financial Services, Inc.
On December 4, 2000, Time Lending, California, Inc., a California corporation
(Time - California) and Time Lending, California, Inc., a Nevada corporation
(Time - Nevada), entered into a merger agreement. Time-California and
Time-Nevada are referred to herein collectively as the "Constituent Corporation,
merged under a special agreement and plan of merger. The Agreement and Plan of
Merger entered into between the Constituent Corporations was approved,
certified, executed and acknowledged by each of the Constituent Corporations in
accordance with Section 1103 of the California Corporation Code and Section
78.475 of the Nevada Revised Status and in accordance with Section 368(a)(1)(f)
of the Internal Revenue Code of 1986 as amended in order to change the domicile
of the California Company to the State of Nevada. Time-Nevada is the surviving
corporation. The Articles of Incorporation and Bylaws of Time-Nevada shall be
the Articles of Incorporation and Bylaws of the surviving corporation.
Investments in subsidiaries are at cost and inter-company transactions are
eliminated. The subsidiaries (Time Management, Inc.) (Time Marketing Associates,
Inc.) (Tenth Street, Inc.), are owned, 50% by Time Lending California, Inc. and
50% by stockholders per agreement. The stockholders' of Time Lending are the
officer's and stockholders of the subsidiaries.
REVENUE RECOGNITION
- -------------------
Marketing Income is from direct mail marketing projects and is recorded when the
project is completed and shipped. Prices are agreed between the Company and its
customer at the time of the order. Shipment is usually within 3-5 days from
ordering.
Loan Fees are primarily mortgage origination fees for loans processed by the
Company for its clients and various mortgage lenders. Revenue is recorded at the
time of mortgage closing.
Real Estate Sales of income is fees for Company receiving fees as a Real Estate
Agent and are recorded at the time the sale is closed.
CASH AND CASH EQUIVALENTS
- -------------------------
The Company considers all highly liquid debt instruments, purchased with an
original maturity of three months or less, to be cash equivalents.
16
TIME LENDING, CALIFORNIA, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2008
NOTE 1 - ORGANIZATION AND PRESENTATION (CONT):
-------------------------------------
PROPERTY AND EQUIPMENT
- ----------------------
Property and equipment is stated at cost. The cost of ordinary maintenance and
repairs is charged to operations while renewals and replacements are
capitalized. Depreciation is computed on the straight-line method over the
following estimated useful lives:
Equipment - Printer & Bursters 5 years
Depreciation expense for 2008 was $4,800.
USE OF ESTIMATES:
- -----------------
The preparation of financial statements, in conformity with accounting
principles generally accepted in the United States, requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reporting period. Actual results could differ from those estimates.
OPERATING SEGMENTS:
- -------------------
The Company adopted SFAS No. 131, DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE
AND RELATED INFORMATION. This statement requires the disclosure of certain
information regarding the Company's operating segments. See Note 5 operating
segments and related information.
NET EARNING (LOSS) PER SHARE
- ----------------------------
Basic loss per share information is on the basis of the weighted average number
of common shares outstanding. For all periods, all of the Company's common stock
equivalents were excluded from the calculation of dilutive loss per common share
because they were none dilutive, due to the Company's net losses.
STOCK BASED COMPENSATION
The Company has adopted for footnote disclosure purposes SFAS No. 123, which
requires That companies disclose the cost of stock-based employee compensation
at the grant date based on the value of the award (the fair market value method)
and disclose this cost over the service period. The value of the stock-based
award is determined using a pricing model whereby compensation cost is the
excess of the fair value of the award as determined by the model at grant date
or other measurement date over the amount an employee must pay to acquire the
stock. Awards through June 30, 2008 have been fair value.
ACCOUNTING FOR IMPAIRMENTS IN LONG-LIVED ASSETS
- -----------------------------------------------
Long-lived assets and identifiable intangibles are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amounts
of assets may not be recoverable. Management periodically evaluates the carrying
value and the economic useful life of its long-lived assets based on the
Company's operating performance and the expected future undiscounted cash flows
and will adjust the carrying amount of assets which may not be recoverable.
17
TIME LENDING, CALIFORNIA, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2008
NOTE 1 - ORGANIZATION AND PRESENTATION (CONT):
-------------------------------------
FAIR VALUE OF FINANCIAL INSTRUMENTS:
- ------------------------------------
The Company's financial instruments include cash, cash equivalents and notes
payable. Estimates of fair value of these instruments are as follows:
Cash and cash equivalents - The carrying amount of cash and cash
equivalents approximates fair value due to the relatively short
maturity of these instruments.
NOTE 2 - PROPERTY AND EQUIPMENT:
-----------------------
Property and equipment consist of the following at June 30, 2008:
Equipment - Printers and Bursters $ 34,039
---------
Less: Accumulated depreciation (18,106)
---------
$ 15,933
=========
NOTE 3 - FEDERAL INCOME TAXES:
---------------------
The Financial Accounting Standards Board (FASB) has issued Statement of
Financial Accounting Standards Number 109 ("SFAS9"). "Accounting for Income
Taxes", which requires A change from the deferred method to the asset and
liability method of accounting for income taxes. Under the asset and liability
method, deferred income taxes are recognized for the tax consequences of
"temporary differences" by applying enacted statutory tax rates applicable to
future years to differences between financial statements carrying amounts and
the tax basis of existing assets and liability.
2008 2007
--------- ---------
Deferred Tax Assets $ 0 $ 0
========= =========
Deferred Tax Assets
Net Operating Loss Carry forwards $ 186,262 $ 142,275
Less Valuation Allowance (186,262) (142,275)
--------- ---------
Total Deferred Tax Assets $ 0 $ 0
========= =========
Net Deferred Tax Liability $ 0 $ 0
========= =========
NOTE 4 - OPERATING LEASES:
-----------------
The Company leases office space under an operating lease agreement, which
expires November 1,2008. Future minimum lease commitments as of June 30, 2008
are as follows:
2008 30,394
18
TIME LENDING, CALIFORNIA, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2008
NOTE 5 - OPERATING SEGMENTS AND RELATED INFORMATION:
-------------------------------------------
The Company has adopted SFAS No. 131, DISCLOSURES ABOUT SEGMENTS OF AN
ENTERPRISE AND RELATED INFORMATION. This statement requires the disclosure of
certain information regarding the Company's operating segments. The Company
operates principally in three industry segments. Management, direct mail
marketing, and mortgage loan origination, which are primarily rental income. The
Company has no single customer representing greater than 10% of its revenue. The
following table sets forth key operating information for each business segment:
Year Ended June 30, 2008
------------------------
Operating Revenue
Marketing $ 367,145
Lending 25,528
Management -
------------
$ 392,673
============
Operating Profit (Loss)
Marketing $ ( 3,269)
Lending (40,718)
Management -
------------
$ (43,987)
============
Identifiable Assets
Marketing $ 272,038
Lending 22,197
Management -
------------
$ 294,235
============
NOTE 6 - CAPITAL STOCK TRANSACTIONS:
--------------------------
The authorized common stock of the Company is 20,000,000 shares at $.001 par
value and 20,000 shares of preferred stock at $.001 par value. In May 2005 the
Company amended their Articles of Corporation to increase the authorized common
stock of the Company to be 200,000,000 and the preferred stock to be 20,000,000.
On May 20, 2005 the Company authorized a 4:1 forward split for the common stock.
All shares and per share amounts in the accompanying financial statements of the
Company have been retroactively adjusted to give the effects of the forward
stock split. In December 2005 the Company issued 47,040 shares of common stock
for cash of $12,000. No stocks were issued in 2008. In 2008,
NOTE 7 - FINANCIAL ACCOUNTING DEVELOPMENTS:
----------------------------------
Recently issued Accounting Pronouncements
In December 2004, the FASB issued SFAS No. 123R (revised 2004) "Share-Based
Payment" which amends FASB Statement No. 123 and will be effective for public
companies for interim or annual periods beginning June 15, 2005. The new
statement will require entities to expense employee stock options and other
share-based payments. The new standard may be adopted in one of three ways - the
modified prospective transition method, a variation of the modified transition
method or the modified retrospective transition method. The Company is to
evaluate how it will adopt the standard and the evaluation the effect that the
adoption of SFAS 123R will have on the financial position and results of
operations.
In November 2004, the FASB issued SFAS No. 151, "Inventory Costs, an amendment
of ARB No. 43, Chapter 4." The statement amends the guidance in ARB No. 43,
Chapter 4, Inventory Pricing, to clarify the accounting for abnormal amounts of
idle facility expense, freight, handling costs and wasted material (spoilage).
Paragraph 5 of ARB No. 43, Chapter 4 previously stated that "under some
circumstances, items such as idle facility expense, excessive spoilage, double
freight and rehandling costs may be so abnormal as to require treatment as
current period charges". SFAS No. 151 requires that those items be recognized as
current-period charges regardless of whether they meet the criterion of "so
abnormal". In addition, this statement requires that allocation of fixed
production overhead to the costs of conversion be based on the prospectively and
are effective for inventory costs incurred during fiscal years beginning after
June 15, 2005, with earlier application permitted for inventory costs incurred
during fiscal years beginning after the date this Statement is issued. The
adoption of SFAS No. 151 does not have an impact on the Company's financial
position and results of operations.
19
TIME LENDING, CALIFORNIA, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2008
In December 2004, the FASB issued SFAS No. 153, Exchange of Non-monetary Assets,
an amendment of APB Opinion No. 29. The guidance in APB opinion No. 29,
Accounting for Non-monetary Transactions, is based on the principle that
exchange of non-monetary assets should be measured on the fair value of the
assets exchanges. The guidance in that Opinion, however, included certain
exceptions to that principle. This Statement amends Opinion 29 to eliminate the
exception for non-monetary exchanges of similar productive assets that do not
have commercial substance. A non-monetary has commercial substance if the future
cash flows of the entity are expected to change significantly as a result of the
exchange. SFAS No. 153 is effective for non-monetary exchanges occurring in
fiscal periods beginning June 15, 2005. The adoption of SFAS No. 153 is not
expected to have an impact on the Company's financial position and results of
operations.
In March 2005, the FASB issued FASB Interpretation No. 47, "Accounting for
Conditional Asset Retirement Obligations" ("FIN 47"). FIN 47 provides guidance
relating to the identification of and financial reporting for legal obligations
to perform an asset retirement activity. The Interpretation requires recognition
of a liability for the fair value of a conditional asset retirement obligation
when incurred if the liability's fair value can be reasonably estimated. FIN 47
also defines when an entity would have sufficient information to reasonably
estimate the fair value of an asset retirement obligation. The provision is
effective no later than the end of fiscal years ending after December 15, 2005.
The Company will adopt FIN 47 beginning the first quarter of fiscal year 2006
and does not believe the adoption will have a material impact on its
consolidated financial position or results of operations or cash flows.
In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error
Corrections" ("SFAS 154") which replaces Accounting Principles Board Opinions
No. 20 "Accounting Changes" and SFAS No. 3, "Reporting Accounting Changes in
Interim Financial Statements-An Amendment of APB Opinion No. 28." SFAS 154
provides guidance on the accounting for and reporting of accounting changes and
error corrections. It establishes retrospective application, or the latest
practicable date, as the required method for reporting a change in accounting
principle and the reporting of a correction of an error. SFAS 154 is effective
for accounting changes and a correction of errors made in fiscal years beginning
after December 15, 2005 and is required to be adopted by the Company in the
first quarter of 2006. The Company is currently evaluating the effect that the
adoption of SFAS 154 will have on its results of operations and financial
condition but does not expect it to have a material impact.
In June 2005, the Emerging Issues Task Force, or EITF, reached a consensus on
Issue 05-6, Determining the Amortization Period for Leasehold Improvements,
which requires that leasehold improvements acquired in a business combination or
purchased subsequent to the inception of a lease be amortized over the lesser of
the useful life of the assets or a term that includes renewals that are
reasonably assured at the date of the business combination or purchase. EITF
05-6 is effective for periods beginning after July 1, 2005. We do not expect the
provisions of this consensus to have a material impact on the financial
position, results of operations or cash flows.
20
TIME LENDING, CALIFORNIA, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2008
NOTE 8. ACCOUNTS PAYABLE - RELATED PARTY
Accounts Payable to Michael Pope for commissions due
For May and June 2007 $ 225,477
Accounts Payable to Philip La Puma for commissions due
For May and June 2007 $ 32,618
----------
Total Related Party A/P $ 258,095
==========
In May and June 2008 both the officer's did not receive payment of their
commission Earned and have left them in the company for payment of expenses. The
holders of these accounts are considered to be related parties.
21
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
ITEM 8A. CONTROLS AND PROCEDURES.
Disclosure Controls and Procedures
Under the supervision and with the participation of management, including our
Chief Executive Officer and our Chief Financial Officer, we have evaluated the
effectiveness of the design and operation of our disclosure controls and
procedures, as defined in Rule 13a-15(e) promulgated under the Securities
Exchange Act of 1934 (the "Exchange Act"). Such disclosure controls and
procedures are designed to provide reasonable assurance that information, which
is required to be disclosed in our reports filed pursuant to the Exchange Act,
is recorded, processed, accumulated, and communicated to management within the
time periods specified in the SEC's rules and forms. Based on this evaluation,
our Chief Executive Officer and Chief Financial Officer have concluded that our
disclosure controls and procedures were effective as of the end of the period
covered by this annual report.
Management's Annual Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal
control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f)
under the Exchange Act. Under the supervision and with the participation of our
management, which consists of our Chief Executive Officer and our Chief
Financial Officer, we conducted an evaluation of the effectiveness of internal
control over financial reporting based on criteria established in the framework
in Internal Control - Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission ("COSO"), as supplemented by the COSO
publication Internal Control over Financial Reporting - Guidance for Smaller
Public Companies. Based on their evaluation, our Chief Executive Officer and
Chief Financial Officer concluded that our internal control over financial
reporting was effective as of June 30, 2008, based on these criteria.
Management is aware that there is a lack of segregation of duties at the Company
due to the fact that there are only two people dealing with financial and
accounting matters. However, at this time, management has decided that
considering the experience and abilities of the employees involved and the low
quantity of transactions processed, the risks associated with such lack of
segregation are low and the potential benefits of adding employees to clearly
segregate duties do not justify the substantial expenses associated with such
increases. Management will periodically reevaluate this situation.
Notwithstanding the above regarding the lack of segregation of duties,
management, including our Chief Executive Officer and Chief Financial Officer,
believes that the consolidated financial statements included in this annual
report present fairly, in all material respects, our financial condition,
results of operations and cash flows for the periods presented.
This annual report does not include an attestation report of our registered
independent auditors regarding internal control over financial reporting.
Management's report was not subject to attestation by our registered independent
auditors pursuant to temporary rules of the SEC that permit us to provide only
management's report in this annual report.
Changes in Internal Control Over Financial Reporting
During the quarter ended June 30, 2008, there were no changes in our internal
controls that have materially affected or are reasonably likely to have
materially affected our internal control over financial reporting.
Our management, including the Chief Executive Officer and Chief Financial
Officer, does not expect that our disclosure controls and procedures or our
internal control over financial reporting will prevent all errors and all
fraud. A control system, no matter how well designed and operated, can provide
only reasonable, not absolute, assurance that the objectives of the control
system are met. 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.
ITEM 8B. OTHER INFORMATION.
A letter of intent signed with Boomj.com to merge with Time Lending expired on
December 29, 2007. No further action was taken and the spin out of subsidiary
stocks were cancelled.
22
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
AND CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION 16(A) OF THE
EXCHANGE ACT
The present directors and executive officers of the Company, their ages,
positions held in the Company and duration of service are as follows:
Name Age Position Since
- ---- --- -------- -----
Michael F. Pope 59 Director March 1996
President August 1996
Philip C. La Puma 69 Director March 1996
Secretary August 1996
Treasurer August 1996
Victoria A. Pope 60 Director January 1997
The term of office of each director and executive officer ends at, or
immediately after, the next annual meeting of shareholders of the Company.
Except as otherwise indicated, no organization by which any director of officer
has been previously employed is an affiliate, parent, or subsidiary of the
Company.
Business Experience
The following is a brief account of the business experience during at least the
past five years of each director and executive officer, including the principal
occupation and employment during that period, and the name and principal
business of the organization in which such occupation and employment were
carried out.
Michael F. Pope, age 59, has been Director of the Company since March 1996, and
President since August 1996. Mr. Pope was one of the founders of Renet Financial
Corporation in 1988. He has a Bachelor of Arts degree in Economics from
22
California State University, Long Beach. He holds a real estate brokers license
in the State of California.
Philip C. La Puma, age 69, has been Director of the Company since March 1996 and
Secretary/Treasurer since August 1996. Mr. La Puma holds a Bachelors of Science
degree in Industrial Engineering from Stanford University and an MBA in General
Management from the University of Southern California. He also co-founded Renet.
He is a Registered Professional Engineer in the State of California.
Victoria Pope, age 60, has been a Director of the Company since January 1997.
She has been active in the mortgage industry the past ten years working in
various loan production positions from processing through administration at
Renet Financial Corporation. She is the spouse of Michael F. Pope and they have
two adult children. Mrs. Pope has many years of mortgage management experience.
LIMITATION ON DIRECTORS' LIABILITIES
Our certificate of incorporation limits, to the maximum extent permitted under
Nevada law, the personal liability of directors and officers for monetary
damages for breach of their fiduciary duties as directors and officers, except
in circumstances involving wrongful acts, such as a breach of the director's
duty of loyalty or acts of omission which involve intentional misconduct or a
knowing violation of law.
Nevada Law permits us to indemnify officers, directors or employees against
expenses, including attorney's fees, judgments, fines and amounts paid in
settlement in connection with legal proceedings if the officer, director or
employee acted in good faith and in a manner he reasonably believed to be in or
not opposed to our best interest, and, with respect to any criminal act or
proceeding, he had no reasonable cause to believe his conduct was unlawful.
Indemnification is not permitted as to any matter as to which the person is
adjudged to be liable unless, and only to the extent that, the court in which
such action or suit was brought upon application that, despite the adjudication
of liability, but in view of all the circumstances of the case, the person is
fairly and reasonably entitled to indemnity for such expenses as the court deems
proper. Individuals who successfully defend this type of action are entitled to
indemnification against expenses reasonably incurred in connection therewith.
Our by-laws require us to indemnify directors and officers against, to the
fullest extent permitted by law, liabilities which they may incur under the
circumstances described in the preceding paragraph.
The Company is not subject to the requirements of Section 16(a) of the
Securities Exchange Act of 1934, as amended.
23
CODE OF BUSINESS CONDUCT AND ETHICS
Our code of business conduct and ethics, as approved by our board of directors,
can be obtained from the Company by writing a request to our Time Lending,
California Inc. 1580 N. Batavia Street #2, Orange, CA 92867.
We intend to satisfy the disclosure requirement under Item 10 of Form 8-K
relating to amendments to or waivers from provisions of the code that relate to
one or more of the items set forth in Item 406(b) of Regulation S-B, by
describing on our Internet Website, within five business days following the date
of a waiver or a substantive amendment, the date of the waiver or amendment, the
nature of the amendment or waiver, and the name of the person to whom the waiver
was granted.
Information on our Internet website is not, and shall not be deemed to be, a
part of this report or incorporated into any other filings we make with the
Securities and Exchange Commission.
ITEM 10. EXECUTIVE COMPENSATION
The following table sets forth information concerning the annual and long-term
compensation for services rendered during the last three fiscal years to our
company in all capacities as an employee by our Chief Executive Officer and our
other executive officers whose aggregate cash compensation exceeded $100,000
(collectively, the "named executive officers") during fiscal 2008 shown below.
Name & Annual Compensation Long Term
Principal Position Period Salary Bonus Options
- ------------------ ------ ------ ----- -------
Michael F. Pope 6/30/2008 $60,000 0 0
Director 6/30/2007 $60,000 0 0
President 6/30/2006 $60,000* 0 0
Philip C. La Puma 6/30/2008 $60,000 0 0
Director 6/30/2007 $60,000 0 0
Sec.-Treasurer 6/30/2006 $60,000* 0 0
* In fiscal year 2005, the Company adopted its 2005 Equity Compensation Plan
(the "Plan") which was registered on the registration statement on Form S-8. The
Company registered 400,000 shares of its common stock. Pursuant to the Plan, the
Company issued 193,500 shares of its common stock to each of Messrs. Pope and
LaPuma for their respective services to the Company, valued at $7,740 for each
person.
CASH COMPENSATION SECURITY GRANTS
Number of
Annual Number of Securities
Retainer Meeting Consulting Shares (#) Underlying
NAME Fees ($) Fees ($) Fees/Other Fees ($)(1) Options/SAR
- ---- -------- -------- ---------- ---------- -----------
Michael F. Pope 0.00 0.00 0.00 0.00 0.00
Philip C. La Puma 0.00 0.00 0.00 0.00 0.00
Victoria A. Pope 0.00 0.00 0.00 0.00 0.00
24
COMPENSATION OF DIRECTORS
The Company reimburses each Director for reasonable expenses (such as travel and
out-of-pocket expenses) in attending meetings of the Board of Directors.
Directors are not separately compensated for their services as Directors.
EMPLOYMENT AGREEMENTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
There are no employment agreements with the Company's key employees at this
time.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The following table sets forth the beneficial ownership of our common stock by
all stockholders that hold 5% or more of the outstanding shares of our common
stock, each director and executive officer. Each stockholder named has sole
voting and investment power with respect to his or its shares. This table does
not include options not exercisable within 60 days of the date of this
prospectus. As of June 30, 2008, there were 22,817,040 shares of common stock
issued and outstanding.
Beneficial Ownership Percentage
of Common Stock (1) of Ownership
-------------------- ------------
Michael F. Pope 9,730,500 42.6%
907 E. Wilson Ave
Orange, CA 92867
Philip C. La Puma 9,730,500 42.6%
1786 N. Pheasant St
Anaheim, CA 92867
(1) Beneficial ownership is determined in accordance with rules and
regulations of the Securities and Exchange Commission. In computing the
number of shares beneficially owned by a person and the percentage
ownership of that person, shares of common stock subject to options or
warrants held by that person that are currently exercisable or
exercisable within 60 days after June 30, 2008 are deemed outstanding,
but are not deemed outstanding for computing the percentage of any
other person.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Other than disclosed in the Financial Statements, there were no transactions for
the fiscal year ended June 30, 2008, nor are there any current proposed
transactions, or series of the same, to which the Company is a party, in which
the amount exceeds $60,000 and in which, to the knowledge of the Company, any
director, executive officers, nominee, five percent shareholders of any member
of the immediate family of the foregoing person, have or will have a direct or
indirect material interest.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit No. Description of Document
- ----------- -----------------------
2.1 Agreement and Plan of Merger of Time Lending, California, Inc.*
3.1 Articles of Incorporation of Time Lending, California, Inc.*
3.2 Articles of Incorporation of Tenth Street, Inc.*
3.3 Articles of Incorporation of Time Marketing Associates, Inc.*
3.4 Articles of Incorporation of Time Management, Inc.*
3.5 Articles and Certificate of Merger of Registrant*
3.6 Bylaws of Registrant*
3.7 Amendment to the Articles of Incorporation dated August 2, 2005
3.8 Certificate of Designation
25
10.2 Lease Agreement*
10.3 Guaranty of Michael Pope*
10.4 Guaranty of Thomas Van Wagoner*
10.5 Demand Promissory Note (Michael Pope)*
10.6 Demand Promissory Note (Philip La Puma)*
10.7 Asset Sale and Purchase Agreement*
10.8 Share Exchange Agreement between Time Financial Services, Inc.
and Interruption Television, Inc.*
10.9 Voting Agreement (Tenth Street, Inc.)*
10.10 Voting Agreement (Time Management, Inc.)*
10.11 Voting Agreement (Time Marketing Associates, Inc.)*
10.12 Broker Agreement*
10.13 Letter of Intent with Nationwide Security Mortgage*
22. Subsidiaries of Registrant*
______________
* Previously filed with the Commission.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following table presents fees for professional audit services rendered by
Jaspers + Hall, PC for the years ended June 30, 2008.
2008
---------
Audit Fees: (1) $ 8,000
Audit-Related Fees (2) --
Tax Fees: (3) --
All Other Fees: (4) --
---------
Total $ 8,000
=========
(1) Audit Fees: Fees for professional services performed by Jaspers + Hall PC.
for the audit of our annual financial statements and review of financial
statements included in our 10-QSB filings, and services that are normally
provided in connection with statutory and regulatory filings or engagement, such
as the filing of Form S-8.
(2) Audit-Related Fees:. Jaspers + Hall PC. did not provide any audit-related
services.
(3) Tax Fees: Jaspers + Hall PC. did not provide any professional services with
respect to tax compliance, such as preparation and filing of original and
amended returns for us and our consolidated subsidiaries, refund claims, payment
planning, tax audit assistance and tax work stemming from "Audit-Related" items.
(4) All Other Fees: Jaspers + Hall PC. did not provide other permissible work
for us that does not meet the above category descriptions.
PRE-APPROVAL POLICY
Our Board of Directors is responsible for approving all Audit, Audit-Related,
Tax and Other Non-Audit Services. The Board of Directors approves all auditing
services and permitted non-audit services, including all fees and terms to be
performed for us by our independent auditor at the beginning of the fiscal year.
Non-audit services are reviewed and pre-approved by project at the beginning of
the fiscal year. Any additional non-audit services contemplated by the company
after the beginning of the fiscal year are submitted to the Audit Committee
chairman for pre-approval prior to engaging the independent auditor for such
services. Such interim pre-approvals are reviewed with the full Audit Committee
at its next meeting for ratification.
26
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Date: July 24, 2009 TIME LENDING, CALIFORNIA, INC.
By: /s/ Michael F. Pope
-------------------------------------
Michael F. Pope
President
By: /s/ Philip C. La Puma
-------------------------------------
Philip C. La Puma
Treasurer (Chief Financial Officer)
and Secretary
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Michael F. Pope President and Director July 24, 2009
Michael F. Pope (PRINCIPAL EXECUTIVE OFFICER)
/s/ Philip C. La Puma Treasurer (PRINCIPAL FINANCIAL July 24, 2009
Philip C. La Puma OFFICER AND PRINCIPAL ACCOUNTING
OFFICER), Secretary and Director
27