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 March 31, 2012
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 000-54426
PIVOTAL GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 45-1876246
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3145 Green Valley Road
Birmingham, Alabama 35243
(Address of principal executive offices) (zip code)
205-977-7755
(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
March 31, 2012
Common Stock, par value $0.0001 6,950,000
Documents incorporated by reference: None
FINANCIAL STATEMENTS
Balance Sheets as of March 31, 2012 (unaudited) and December 31, 2011 1
Statements of Operations for the Three Months ended March 31, 2012
and the period from April 20, 2011 (Inception) to March 31, 2012
(unaudited) 2
Statements of Cash Flows for the Three Months ended March 31, 2012
and the period from April 20, 2011 (Inception) to March 31, 2012
(unaudited) 3
Notes to Financial Statements (unaudited) 4-6
Pivotal Group, Inc.
(formerly known as DRIFTWOOD ACQUISITION CORPORATION)
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
ASSETS
March 31, December 31,
2012 2011
---------- -----------
(Unaudited)
Current Assets
Cash $ 4,500 $ 2,000
--------- ---------
Total Assets $ 4,500 2,000
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accrued liabilities $ - $ 400
--------- ---------
Total liabilities $ - $ 400
--------- ---------
Stockholders' Equity
Preferred stock, $0.0001 par value,
20,000,000 shares authorized;
None issued and outstanding $ - $ -
Common Stock, $0.0001 par value,
100,000,000 shares authorized;
6,950,000 shares issued and
outstanding 695 2,000
Additional paid-in capital 5,898 943
Accumulated deficit (2,093) (1,343)
--------- ---------
Total Stockholders' Equity $ 4,500 $ 1,600
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 4,500 $ 2,000
========= =========
The accompanying notes are an integral part of these financial statements.
1
Pivotal Group, Inc.
(formerly known as DRIFTWOOD ACQUISITION CORPORATION)
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
(unaudited)
For the three For the period from
months ended April 20, 2011
March 31, (inception) to
2012 March 31, 2012
------------- -----------------
Operating expenses 750 2,093
------------ ------------
Net loss $ (750) $ (2,093)
============ ============
Loss per share -
basic and diluted $ -
------------
Weighted average shares - 11,275,275
basic and diluted ==============
The accompanying notes are an integral part of these financial statements.
2
Pivotal Group, Inc.
(formerly known as DRIFTWOOD ACQUISITION CORPORATION)
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
(unaudited)
For the Period from
For the Three April 20, 2011
Months ended (inception) to
March 31, 2012 March 31, 2012
-------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (750) $ (2,093)
---------- -----------
changes in operating assets and liabilites
Accrued liabilities (400) -
---------- -----------
Net Cash Used in Operating Activities (1,150) (2,093)
---------- -----------
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from the issuance of common stock 5,100 7,100
Cash paid for redeemed shares (1,950) (1,950)
Proceeds from stockholders' additional
paid-in capital 500 1,443
---------- -----------
Net Cash Provided by Financing Activities 3,650 6,593
---------- -----------
Net increase in cash 2,500 4,500
Cash at Beginning of Period 2,000 -
---------- -----------
Cash at End of Period $ 4,500 $ 4,500
========== ===========
The accompanying notes are an integral part of these financial statements.
3
Pivotal Group, Inc.
(formerly known as DRIFTWOOD ACQUISITION CORPORATION)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
NATURE OF OPERATIONS
Pivotal Group, Inc. ("Pivotal" or "the Company"), formerly known as
Driftwood Acquisition Corporation ("Driftwood'), 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. The Company has been in the developmental
stage since inception and its operations to date have been limited to
issuing shares to its original shareholders. The Company will attempt to
locate and negotiate with a business entity for the combination of that
target company with Pivotal. The combination normally will 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
the Company will be successful in locating or negotiating with any
target company. The Company was 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.
On January 30, 2012, the shareholders of the Company and the Board
of Directors unanimously approved the change of the Company's name
to Pivotal Group, Inc. and filed such change with the State of Delaware.
On February 1, 2012, new officers and directors were appointed and
elected and the prior officers and directors resigned, resulting in the
change of control of the Company.
BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared
pursuant to the rules and regulations of the Securities and Exchange
Commission (SEC) for interim financial information. Accordingly, they
do not include all of the information and notes required by U.S. GAAP
for complete financial statements. The accompanying unaudited
financial statements include all adjustments, composed of normal
recurring adjustments, considered necessary by management to fairly
state our results of operations, financial position and cash flows. The
operating results for interim periods are not necessarily indicative of
results that may be expected for any other interim period or for the full
year. These unaudited financial statements should be read in
conjunction with the financial statements and notes thereto included in
our Annual Report on Form 10-K for the year ended December 31,
2011 (2011 Form 10-K) as filed with the SEC.
USE OF ESTIMATES
The preparation of financial statements in conformity with GAAP
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 revenues and expenses during the reporting
periods. Actual results could differ from those estimates.
CONCENTRATION OF RISK
Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of cash. The Company
places its cash with high quality banking institutions. The Company did
not have cash balances in excess of the Federal Deposit Insurance
Corporation limit as of March 31, 2012 and December 31, 2011.
4
<PABE>
Pivotal Group, Inc.
(formerly known as DRIFTWOOD ACQUISITION CORPORATION)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)
INCOME TAXES
Under ASC 740, "Income Taxes", deferred tax assets and liabilities are
recognized for the future tax consequences attributable to temporary
differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. Deferred
tax assets and liabilities are measured using enacted tax rates expected
to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Valuation
allowances are established when it is more likely than not that some or
all of the deferred tax assets will not be realized. As of March 31, 2012
and December 31, 2011, there were no deferred taxes.
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 March 31, 2012, there are no outstanding dilutive
securities.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company follows guidance for accounting for fair value
measurements of financial assets and financial liabilities and for fair
value measurements of nonfinancial items that are recognized or
disclosed at fair value in the financial statements on a recurring basis.
Additionally, the Company adopted guidance for fair value
measurement related to nonfinancial items that are recognized and
disclosed at fair value in the financial statements on a nonrecurring
basis. The guidance establishes a fair value hierarchy that prioritizes the
inputs to valuation techniques used to measure fair value. The hierarchy
gives the highest priority to unadjusted quoted prices in active markets
for identical assets or liabilities (Level 1 measurements) and the lowest
priority to measurements involving significant unobservable inputs
(Level 3 measurements). The three levels of the fair value hierarchy are
as follows:
Level 1 inputs are quoted prices (unadjusted) in active markets for
identical assets or liabilities that the Company has the ability to access
at the measurement date.
Level 2 inputs are inputs other than quoted prices included within
Level 1 that are observable for the asset or liability, either directly or
indirectly.
Level 3 inputs are unobservable inputs for the asset or liability.
The level in the fair value hierarchy within which a fair measurement in
its entirety falls is based on the lowest level input that is significant
to the fair value measurement in its entirety.
5
Pivotal Group, Inc.
(formerly known as DRIFTWOOD ACQUISITION CORPORATION)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)
NOTE 2 - GOING CONCERN
The Company sustained losses from its inception on April 20, 2011 to
March 31, 2012. The Company had a net loss of $750 for the three
months ended March 31, 2012 and has an accumulated deficit of $2,093
as of March 31, 2012. 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.
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
negotiate with a business entity for the combination of that target
company with the Company.
The Company's management plans to pay for all expenses incurred by
the Company in 2012. 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
Adopted
In May 2011, the FASB issued ASU 2011-04, "Amendments to
Achieve Common Fair Value Measurement and Disclosure
Requirements in U.S. GAAP and International Financial Reporting
Standards (IFRS) of Fair Value Measurement Topic 820." ASU
2011-04 is intended to provide a consistent definition of fair value
and improve the comparability of fair value measurements presented and
disclosed in financial statements prepared in accordance with U.S.
GAAP and IFRS. The amendments include those that clarify the
FASB's intent about the application of existing fair value measurement
and disclosure requirements, as well as those that change a particular
principle or requirement for measuring fair value or for disclosing
information about fair value measurements. This update is effective for
annual and interim periods beginning after December 15, 2011. This
ASU did not have a material impact on the Company's financial
statements.
NOTE 4 STOCKHOLDERS' EQUITY
The Company is authorized to issue 100,000,000 shares of common
stock and 20,000,000 shares of preferred stock. As of March 31, 2012,
6,950,000 shares of common stock were issued and outstanding and no
preferred stock was issued and outstanding.
On April 25, 2011, the Company issued 20,000,000 common shares to
two directors and officers for $2,000 in cash.
On February 1, 2012, the Company redeemed an aggregate of
19,500,000 of the then 20,000,000 shares of outstanding stock at a
redemption price of $.0001 per share for an aggregate redemption price
of $1,950.
On February 2, 2012, the Company issued 6,000,000 shares of its
common stock at par for an aggregate of $600.
On March 12, 2012, the Company issued 450,000 shares of its common
stock at $0.01 per share for an aggregate of $4,500 to various investors.
6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Pivotal Group Inc. (formerly Driftwood Acquisition Corporation
("Pivotal" 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.
Pivotal has been in the developmental stage since inception and its
operations to date have been limited to filing a registration statement
and issuing shares of its common stock to the original shareholders and
to the subsequent shareholders to whom control of the Company was
transferred. Pivotal 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 registered its common stock on a Form 10
registration statement filed pursuant to the Securities Exchange
Act of 1934 (the "Exchange Act") and Rule 12(g) thereof. The
Company files with the Securities and Exchange Commission periodic
and current reports under Rule 13(a) of the Exchange Act, including
quarterly reports on Form 10-Q and annual reports Form 10-K.
Tiber Creek Corporation, a shareholder of the Company, entered into
an agreement to assist the Company in locating a target company with which
to enter into a business combination and assist it in the preparation and
filing of a registration statement for its securities and the introduction
to brokers and market makers.
On February 1, 2012, the Company effected a change in its control
with the following actions:
1. The Company redeemed an aggregate of 19,500,000 of the then
20,000,000 shares of outstanding stock at a redemption price of $.0001 per
share for an aggregate redemption price of $1,950.
On February 1, 2012, James M. Cassidy resigned as the Pivotal's
president, secretary and director.
On February 1, 2012, James McKillop resigned as the Pivotal's vice
president and director.
On February 1, 2012, the following persons were elected to the board of
directors of the Pivotal:
M. Duane Lewis
Tom Moore
Robert Ritch
P. K. Smartt
and the following persons were appointed to the offices appearing next
to their name:
M. Duane Lewis President
Tom Moore Vice President
Robert Ritch Treasurer
P. K. Smartt Secretary
On February 2, 2012, the Company issued 6,000,000 shares of its
common stock. The Company filed a Form 8-K with the Securities and
Exchange Commission noticing the change of control and change of
company name.
On March 12, 2012 the Company issued 450,000 shares of its common
stock.
As of March 31, 2012, Pivotal had not generated revenues and had
no income or cash flows from operations since inception and had
accumulated a deficit of $2,093.
Pivotal has no operations nor does it currently engage in any
business activities generating revenues. Pivotal's principal
business objective is to achieve a business combination with a target
company.
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.
Pivotal is in discussions with PKCCR, LLC, a limited liability company
organized on December 19, 2011 under the laws of the State of Florida.
PKCCR has been in the developmental stage since inception. PKCCR intends
to participate in the development of a conference center and resort in
Perdido Key, Florida. PKCCR, LLC intends to acquire and manage all goods
and services pertaining to this project. PKCCR plans to partner with travel
agencies to help promote and schedule tour groups, align with local
convention and visitors bureaus to assist in targeting new and existing
business travel opportunities and work closely with meeting and event
planners to attract conferences, tradeshows, association meetings,
tournaments and special events.
No agreement has been executed at the time of this Report, but the
parties are in discussion of an exchange of all the membership interests
in PKCCR for stock of the Company thereby making the Company the sole
member interest in PKCCR, LLC.
The members of PKCCR are also the officers of the Company and the
transaction would not be considered an arms--length transaction.
The Company's independent auditors have issued a report raising
substantial doubt about the Company's ability to continue as a going
concern. At present, the Company has no operations and the continuation
of Pivotal as a going concern is dependent upon financial support from
its stockholders, its ability to obtain necessary equity financing to
continue operations and/or to successfully locate and negotiate with a
business entity for the combination of that target company with Pivotal.
No assurances can be given that Pivotal will be successful in
concluding the transaction with the target company or if that transaction
is successful that the Company will be successful in developing the
business plan.
It is anticipated that any securities issued in any such
business combination would be issued in reliance upon exemption
from registration under applicable federal and state securities
laws. In some circumstances, however, as a negotiated element of
its transaction, the Company may agree to register all or a part of
such securities immediately after the transaction is consummated or
at specified times thereafter. If such registration occurs, it
will be undertaken by the surviving entity after the Company has
entered into an agreement for a business combination or has
consummated a business combination. The issuance of additional
securities and their potential sale into any trading market which
may develop in the Company's securities may depress the market
value of the Company's securities in the future if such a market
develops, of which there is no assurance.
The Company has received no income, has had no operations
nor expenses, other than Delaware state fees and accounting fees
as required for incorporation and for the preparation of the
Company's financial statements.
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 and principal
financial officer.
Based upon that evaluation, they believe 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
Notwithstanding the change in control 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, Pivotal has issued common shares
pursuant to Section 4(2) of the Securities Act of 1933 as follows:
NUMBER OF
DATE NAME SHARES CONSIDERATION
April 25, 2011 Tiber Creek 10,000,000 $1,000
Corporation (1) (9,750,000 of which redeemed)
April 25, 2011 MB Americus LLC (2) 10,000,000 $1,000
(9,750,000 of which redeemed)
February 2, 2012 M. Duane Lewis 1,500,000 $150
February 2, 2012 Tom Moore 1,500,000 $150
Feruary 2, 2012 Robert Ritch 1,500,000 $150
February 2, 2012 P. K. Smartt 1,500,000 $150
March 12, 2012 450,000 $4,500
(1) James M. Cassidy is the sole shareholder and director of Tiber Creek
Corporation, a Delaware corporation, and Mr. Cassidy may be deemed to be
the beneficial owner of the shares of stock owned by Tiber Creek
Corporation.
(2) James McKillop is the sole principal of MB Americus LLC, a
California limited liability corporation. Mr. McKillop is deemed to
be the beneficial owner of the shares of stock owned by MB Americus LLC.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
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
31.1 Certification of the Chief Executive Officer pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002
31.2 Certification of the Chief Financial Officer pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 Certification of the Chief Executive Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
32.2 Certification of the 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.
PIVOTAL GROUP, INC.
By: /s/ M. Duane Lewis
President
Dated: May 15, 2012