SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2011
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 000-54425
CREATIVE ENTERTAINMENT HOLDINGS, INC.
(Exact Name of Registrant as Specified in its Charter)
COTTONWOOD ACQUISITION CORPORATION
(Former Name of Registrant)
Delaware 45-1877140
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2031 West Peoria Avenue
Phoenix, Arizona 85029
(Address of Principal Executive Offices)(zip code)
602-680-7439
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No
Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of "large accelerated filer,"
"accelerated filer" and "smaller reporting company" in Rule 12b-2 of
the Exchange Act.
Large accelerated filer Accelerated Filer
Non-accelerated filer Smaller reporting company X
(do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act).
Yes X No
Indicate the number of shares outstanding of each of the issuer's
classes of stock, as of the latest practicable date.
Class Outstanding at
September 30, 2011
Common Stock, par value $0.0001 20,000,000
Documents incorporated by reference: None
FINANCIAL STATEMENTS
Balance Sheet as of September 30, 2011 F-1
Statements of Operations for the Period from April 20, 2011
(Inception) to September 30, 2011 F-2
Statements of Cash Flows for the Period from April 20, 2011
(Inception) to September 30, 2011 F-3
Notes to Financial Statements F4-F7
COTTONWOOD ACQUISITION CORPORATION
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
ASSETS
September 30,
2011
----------
(Unaudited)
Current Assets
Cash $ 2,000
--------
Total Assets $ 2,000
========
STOCKHOLDERS' EQUITY
Stockholders' Equity
Preferred stock, $0.0001 par value,
20,000,000 shares authorized;
None outstanding $ -
Common Stock, $0.0001 Par Value,
100,000,000 Shares Authorized;
20,000,000 Shares Issued and
Outstanding 2,000
Additional Paid-in Capital 750
Deficit accumulated during the
development stage (750)
---------
Total Stockholders' Equity $ 2,000
=========
See accompanying notes to financial statements
F-1
COTTONWOOD ACQUISITION CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
Three months For the period from
ended April 20, 2011
September 30, (inception) to
2011 September 30, 2011
(Unaudited) (Unaudited)
------------- -----------------
Operating expenses $ - $ 750
------------ ------------
Net loss $ - $ (750)
============ ============
Loss per share -
basic and diluted $ - $ (0.00)
------------ ------------
Weighted average shares - 20,000,000 20,000,000
basic and diluted ============== =============
See accompanying notes to financial statements
F-2
COTTONWOOD ACQUISITION CORPORATION
(A Development Stage Company)
STATEMENT OF CASH FLOWS
------------------------
For the Period from
April 20, 2011
(inception) to
September 30, 2011
(Unaudited)
------------------
OPERATING ACTIVITIES
Net loss $ (750)
--------------
Net cash used in operating activities (750)
--------------
FINANCING ACTIVITIES
Proceeds from the issuance of common stock 2,000
Proceeds from stockholders' additional
paid-in capital 750
--------------
Net Cash provided by financing activities 2,750
--------------
Net increase in cash 2,000
Cash,beginning of period -
-------------
Cash, end of period $ 2,000
=============
See accompanying notes to financial statements
F-3
Cottonwood Acquisition Corporation
(A Development Stage Company)
Notes to Financial Statements
NOTE 1 NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT POLICIES
NATURE OF OPERATIONS
Cottonwood Acquisition Corporation ("Cottonwood" or "the Company") was
incorporated on April 20, 2011 under the laws of the State of Delaware
to engage in any lawful corporate undertaking, including, but not
limited to, selected mergers and acquisitions. Cottonwood has been in
the developmental stage since inception and its operations to date
have been limited to issuing shares to its original shareholders
and filing a registration statement. Cottonwood will attempt to locate
and negotiate with a business entity for the combination of that target
company with Cottonwood. The combination will normally take the form of
a merger, stock-for-stock exchange or stock-for-assets exchange. In
most instances the target company will wish to structure the business
combination to be within the definition of a tax-free reorganization
under Section 351 or Section 368 of the Internal Revenue Code of 1986,
as amended. No assurances can be given that Cottonwood will be successful
in locating or negotiating with any target company. Cottonwood has been
formed to provide a method for a foreign or domestic private company to
become a reporting company with a class of securities registered under
the Securities Exchange Act of 1934. The Company selected December 31
as its fiscal year end.
BASIS OF PRESENTATION
The summary of significant accounting policies presented below is
designed to assist in understanding the Company's financial statements.
Such financial statements and accompanying notes are the
representations of the Company's management, who are responsible for
their integrity and objectivity. These accounting policies conform to
accounting principles generally accepted in the United States of
America ("GAAP") in all material respects, and have been consistently
applied in preparing the accompanying financial statements.
USE OF ESTIMATES
These unaudited condensed financial statements should be read in
conjunction with the audited financial statements and notes thereto in
the Company's Form 10 filed on June 2, 2011 with the SEC. In
preparing these condensed financial statements, management is required
to make estimates and assumptions that affect the reported amount of
asset as of the date of the condensed financial statements and the
reported amount of revenues and expenses during the reporting periods.
Actual results could differ from those estimates.
F-4
Cottonwood Acquisition Corporation
(A Development Stage Company)
Notes to Financial Statements
NOTE 1 NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT POLICIES
(CONTINUED)
LOSS PER COMMON SHARE
Basic loss per common share excludes dilution and is computed by
dividing net loss by the weighted average number of common shares
outstanding during the period. Diluted loss per common share reflects
the potential dilution that could occur if securities or other contracts
to issue common stock were exercised or converted into common stock or
resulted in the issuance of common stock that then shared in the loss
of the entity. As of September 30, 2011 there were no outstanding
dilutive securities.
FAIR VALUE OF FINANCIAL INSTRUMENTS
FASB ASC 820 "Fair Value Measurements and Disclosures" establishes a
three-tier fair value hierarchy, which prioritizes the inputs in
measuring fair value. The hierarchy prioritizes the inputs into three
levels based on the extent to which inputs used in measuring fair value
are observable in the market.
These tiers include:
Level 1: defined as observable inputs such as quoted prices in
active markets;
Level 2: defined as inputs other than quoted prices in active
markets that are either directly or indirectly observable;
and
Level 3: defined as unobservable inputs in which little or no
market data exists, therefore requiring an entity to develop
its own assumptions
NOTE 2 - GOING CONCERN
The Company has a sustained net loss of $750 since inception of the
Company on April 20, 2011. Additionally, the Company has an
accumulated deficit of $750 on September 30, 2011. The Company's
continuation as a going concern is dependent on its ability to generate
sufficient cash flows from operations to meet its obligations, which it
has not been able to accomplish to date, and /or obtain additional
financing from its stockholders and/or other third parties.
F-5
Cottonwood Acquisition Corporation
(A Development Stage Company)
Notes to Financial Statements
NOTE 2 - GOING CONCERN (CONTINUED)
These financial statements have been prepared on a going concern
basis, which implies the Company will continue to meet its obligations
and continue its operations for the next fiscal year. The continuation
of the Company as a going concern is dependent upon financial support
from its stockholders, the ability of the Company to obtain necessary
equity financing to continue operations, successfully locating and
negotiating with a business entity for the combination of that target
company with the Company.
Tiber Creek Corporation, a company affiliated with management, will
pay all expenses incurred by the Company until a business combination
is effected, without repayment. There is no assurance that the Company
will ever be profitable. The financial statements do not include any
adjustments to reflect the possible future effects on the recoverability
and classification of assets or the amounts and classifications of
liabilities that may result should the Company be unable to continue as
a going concern.
NOTE 3 - RECENT ACCOUNTING PRONOUNCEMENTS
In December 2010, the FASB issued ASU 2010-29, Disclosure of
Supplementary Pro Forma Information for Business Combinations. This
proposed ASU reflects the consensus-for-exposure in EITF Issue No.
10-G, "Disclosure of Supplementary Pro Forma Information for Business
Combinations." The Amendments in this proposed ASU specify that if a
public entity presents comparative financial statements, the entity
would disclose revenue and earnings of the combined entity as though
the business combination(s) that occurred during the current year
had occurred as of the beginning of the comparable prior annual
reporting period only. This ASU would also expand the supplemental
pro forma disclosures under Codification Topic 805, Business
Combinations, to include a description of the nature and amount of
material, nonrecurring pro forma adjustments directly attributable to
the business combination. This proposed ASU would be effective
prospectively for business combinations that are consummated on or
after the beginning of the first annual reporting period beginning on
or after December 15, 2010. Early adoption would be permitted. The
adoption of this ASU did not have a material impact to our financial
statements. The new disclosures and clarifications of existing
disclosures are effective now, except for the disclosures about
purchases, sales, issuances, and settlements in the roll forward of
activity in Level 3 fair value measurements. Those disclosures are
effective for fiscal years beginning after December 15, 2010, and for
interim periods within those fiscal years. The adoption of this
guidance did not have a material impact on the Company's financial
statements and related disclosures.
F-6
Cottonwood Acquisition Corporation
(A Development Stage Company)
Notes to Financial Statements
NOTE 3 - RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED)
In May 2011, the Financial Accounting Standards Board ("FASB")
issued a new accounting standard on fair value measurements that
clarifies the application of existing guidance and disclosure
requirements, changes certain fair value measurement principles and
requires additional disclosures about fair value measurements. The
standard is effective for interim and annual periods beginning after
December 15, 2011. Early adoption is not permitted. The Company
does not expect the adoption of this accounting guidance to have a
material impact on its financial statements and related disclosures.
NOTE 4 - RELATED PARTY TRANSACTIONS
On April 20, 2011, the Company issued 20,000,000 common shares to
two directors and officers for $2,000 in cash. The Company has not
issued any additional common shares as of September 30, 2011.
NOTE 5 SUBSEQUENT EVENTS
On October 28, 2011, the shareholders of the Company and the
Board of Directors unanimously approved the change of the Company's
name to Creative Entertainment Holdings, Inc. and filed such changes
with the State of Delaware.
On October 30, 2011, the Company redeemed an aggregate of
19,700,000 of the then 20,000,000 shares of outstanding stock at a
redemption price of $0.0001 per share for an aggregate redemption
price of $1,970.
On October 30, 2011, new officers and directors were appointed and
elected and the prior officers and directors resigned.
On October 31, 2011, the Company issued 19,700,000 shares of its common
stock at a par value $0.0001 for an aggregate of $1,970 to new unrelated
third party investors resulting in a change in ownership.
F-7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Cottonwood Acquisition Corporation ("Cottonwood") was incorporated
on April 20, 2011 under the laws of the State of Delaware to engage in any
lawful corporate undertaking, including, but not limited to, selected
mergers and acquisitions. Cottonwood has been in the developmental stage
since inception and its operations to date have been limited to issuing
shares to its original shareholders and filing a registration statement.
Cottonwood has been formed to provide a method for a foreign or domestic
private company to become a reporting company with a class of securities
registered under the Securities Exchange Act of 1934.
For the period covered by this report, the president of Cottonwood
was the president, director and shareholder of Tiber Creek Corporation.
Tiber Creek Corporation assists companies in becoming public reporting
companies and with introductions to the financial community. To become
a public company, Tiber Creek Corporation may recommend that a company file
a registration statement, most likely on Form S-1, or alternatively that
a company first effect a business combination with Cottonwood and then
subsequently file a registration statement. A company may choose to
effect a business combination with Cottonwood before filing a registration
statement as such method may be an effective way to obtain exposure to
the brokerage community.
Cottonwood anticipates that it may enter into a business
combination with an operating company located in Arizona. The
company intends to acquire, build, own and operate nightclubs and
gentlemen's clubs in Phoenix, Arizona and other major U.S. cities.
No contracts or agreements have been entered into as of the date
hereof and no physical property has been purchased, designed or
opened in regard to such clubs.
The most likely target companies are those seeking the perceived
benefits of a reporting corporation. Such perceived benefits may include
facilitating or improving the terms on which additional equity financing
may be sought, providing liquidity for incentive stock options or similar
benefits to key employees, increasing the opportunity to use securities
for acquisitions, providing liquidity for shareholders and other factors.
Business opportunities may be available in many different
industries and at various stages of development, all of which will
make the task of comparative investigation and analysis of such business
opportunities difficult and complex.
A combination will normally take the form of a merger, stock-for-stock
exchange or stock-for-assets exchange. In most instances the target
company will wish to structure the business combination to be within the
definition of a tax-free reorganization under Section 351 or Section 368
of the Internal Revenue Code of 1986, as amended.
Cottonwood has, and will continue to have, no capital with which to
provide the owners of business entities with any cash or other assets.
However, Cottonwood offers owners of acquisition candidates the
opportunity to acquire a controlling ownership interest in a reporting
company.
As of September 30, 2011, Cottonwood has not generated revenues and has
no income or cash flows from operations since inception. The continuation
of Cottonwood as a going concern is dependent upon financial support from
its stockholders, its ability to obtain necessary equity financing to
continue operations, to successfully locate and negotiate with a business
entity for the combination of that target company with Cottonwood.
In February 2010, the FASB issued ASU 2010-09, "Subsequent Events
(Topic 855): Amendments to Certain Recognition and Disclosure
Requirements." This update addresses both the interaction of the
requirements of Topic 855, Subsequent Events, with the SEC's reporting
requirements and the intended breadth of the reissuance disclosures
provision related to subsequent events (paragraph 855-10-50-4). The
amendments in this update have the potential to change reporting by both
private and public entities, however, the nature of the change may vary
depending on facts and circumstances. The adoption of ASU 2010-09
did not have a material impact on the Company's results of operations
or financial condition.
Subsequent Activities
Subsequent to the date covered by this report, the Company
effected the following events which resulted in a change of control
of the Company:
On October 30, 2011 the Company redeemed an aggregate of 19,700,000
of the then 20,000,000 shares of outstanding stock at a redemption price
of $.0001 per share for an aggregate redemption price of $1,970. The
then officers and directors of the Company resigned and Timothy P.
Herbst was elected to the board of directors.
The following persons were appointed to the offices appearing
next to their name:
Timothy P. Herbst President
Timothy Warbington Secretary, Chief Financial Officer
Kim A. Feddick Treasurer
On October 31, 2011, the Company issued 19,700,000 shares of
its common stock pursuant to Section 4(2) of the Securities Act of 1933
at par for an aggregate of $1,970 representing 98% of the total
outstanding 20,000,000 shares of common stock.
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk.
Information not required to be filed by Smaller reporting companies.
ITEM 4. Controls and Procedures.
Disclosures and Procedures
Pursuant to Rules adopted by the Securities and Exchange Commission,
the Company carried out an evaluation of the effectiveness of the design
and operation of its disclosure controls and procedures pursuant to
Exchange Act Rules. This evaluation was done as of the end of the
period covered by this report under the supervision and with the
participation of the Company's principal executive officer (who is
also the principal financial officer).
Based upon that evaluation, he believes that the Company's
disclosure controls and procedures are effective in gathering, analyzing
and disclosing information needed to ensure that the information
required to be disclosed by the Company in its periodic reports is
recorded, processed, summarized and reported, within the time periods
specified in the Commission's rules and forms. Disclosure controls and
procedures include, without limitation, controls and procedures designed
to ensure that information required to be disclosed by an issuer in the
reports that it files or submits under the Act is accumulated and
communicated to the issuer's management, including its principal executive
and principal financial officers, or persons performing similar functions,
as appropriate to allow timely decisions regarding required disclosure.
This Quarterly Report does not include an attestation report of
the Company's registered public accounting firm regarding internal
control over financial reporting. Management's report was not subject
to attestation by the Company's registered public accounting firm
pursuant to temporary rules of the Securities and Exchange
Commission that permit the Company to provide only management's
report in this Quarterly Report.
Changes in Internal Controls
There was no change in the Company's internal control over
financial reporting that was identified in connection with such
evaluation that occurred during the period covered by this report
that has materially affected, or is reasonably likely to materially
affect, the Company's internal control over financial reporting.
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no legal proceedings against the Company and the Company
is unaware of such proceedings contemplated against it.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
During the past three years, Cottonwood has issued the following
common shares:
On April 20, 2011 Cottonwood issued 20,000,000 shares to two
shareholders pursuant to Section 4(2) of the Securities Act of 1933
for an aggregate purchase price of $2,000.
On October 30, 2011 the Company redeemed an aggregate of 19,700,000
of the then 20,000,000 shares of outstanding stock at a redemption price
of $.0001 per share for an aggregate redemption price of $1,970.
On October 31, 2011, the Company issued 19,700,000 shares of
its common stock pursuant to Section 4(2) of the Securities Act of 1933
at par for an aggregate of $1,970 representing 98% of the total
outstanding 20,000,000 shares of common stock.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On October 28, 2011, the shareholders of the Company and the
Board of Directors unanimously approved the change of the Company's
name to Creative Entertainment Holdings, Inc. and filed such changes
with the State of Delaware.
ITEM 5. OTHER INFORMATION
(a) Not applicable.
(b) Item 407(c)(3) of Regulation S-K:
During the quarter covered by this Report, there have not been
any material changes to the procedures by which security holders
may recommend nominees to the Board of Directors.
ITEM 6. EXHIBITS
(a) Exhibits
31 Certification of the Chief Executive Officer and Chief
Financial Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002
32 Certification of the Chief Executive Officer and Chief
Financial Officer pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
Creative Entertainment Holdings, Inc.
By: /s/ Timothy P. Herbst
President
By: /s/ Timothy Warbington
Chief Financial Officer
Dated: November 9, 2011