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, 2017
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 000-55808
CALLA GROVE ACQUISITION CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 82-1859022
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9454 Wilshire Blvd. #612
Beverly Hills, CA 90212
(Address of principal executive offices) (zip code)
310-888-1870
(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
November 14, 2017
Common Stock, par value $0.0001 20,000,000
Documents incorporated by reference: None
__________________________________________________________________________
CONDENSED FINANCIAL STATEMENTS
Balance Sheet as of September 30, 2017
(unaudited) 2
Statement of Operations for the period from May 17,
2017 (inception) to September 30, 2017 (unaudited) 3
Statement of Cash Flows for the period from May 17,
2017 (inception) to September 30, 2017 (unaudited) 4
Notes to Financial Statements (unaudited) 5-8
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CALLA GROVE ACQUISITION CORPORATION
BALANCE SHEET
ASSETS
September 30,
2017
------------
(Unaudited)
Current assets
Cash $ -
------------
Total assets $ -
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accrued liabilities $ 1,250
------------
Total liabilities 1,250
------------
Stockholders' Equity
Preferred stock, $0.0001 par value
20,000,000 shares authorized;
none issued and outstanding at
September 30, 2017 -
Common Stock, $0.0001 par value,
100,000,000 shares authorized;
20,000,000 shares issued and
outstanding at September 30, 2017 2,000
Additional paid-in capital 312
Accumulated deficit (3,562)
------------
Total stockholders' deficit (1,250)
------------
Total liabilities and
stockholders' deficit $ -
============
The accompanying notes are an integral part of these unaudited
financial statements.
2
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CALLA GROVE ACQUISITION CORPORATION
STATEMENT OF OPERATIONS
(UNAUDITED)
For the period from
May 17, 2017 (Inception)
to September 30, 2017
-------------------
Revenue $ -
Cost of revenues -
-------------------
Gross profit -
-------------------
Operating expenses 3,562
-------------------
Loss before income taxes (3,562)
Income tax expense -
------------------
Net loss $ (3,562)
==================
Loss per share - basic and diluted $ (0.00)
==================
Weighted average shares - 20,000,000
basic and diluted ==================
The accompanying notes are an integral part of these unaudited
financial statements.
3
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CALLA GROVE ACQUISITION CORPORATION
STATEMENT OF CASH FLOWS
(UNAUDITED)
For the period from
May 17, 2017 (Inception)
to September 30, 2017
-------------------
OPERATING ACTIVITIES
Net loss $ (3,562)
Expenses paid by stockholder and contributed
as capital 312
Common stock issued for services 2,000
Changes in Operating Assets and Liabilities:
Accrued liability 1,250
----------------
Net cash (used in) operating activities -
----------------
Net increase in cash -
Cash, beginning of period -
----------------
Cash, end of period $ -
===============
SUPPLEMENTAL DISCLOSURES:
Cash paid during the period for:
Income tax $ -
===============
Interest $ -
===============
The accompanying notes are an integral part of these
unaudited financial statements.
4
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CALLA GROVE ACQUISITION CORPORATION
Notes to Unaudited Financial Statements
NOTE 1 NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS
Calla Grove Acquisition Corporation ("Calla Grove" or "the Company") was
incorporated on May 17, 2017 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 Calla Grove. 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 the Company will be successful
in locating or negotiating with any target company. The Company 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.
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.
The Company has not earned any revenue from operations since inception.
Accordingly, the Company's activities have been accounted for as those of
a "Development Stage Enterprise" as set forth in ASC 915, "Development
Stage Entities." Among the disclosures required by ASC 915, are that the
Company's financial statements be identified as those of a development stage
company, and that the statements of operations, stockholders' equity and cash
flows disclose activity since the date of the Company's inception. The Company
chose December 31 as its fiscal year end.
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.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash on hand and on deposit at banking
institutions as well as all highly liquid short-term investments with original
maturities of 90 days or less. The Company did not have cash equivalents as
of September 30, 2017.
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 September 30,
2017.
6
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CALLA GROVE ACQUISITION CORPORATION
Notes to Financial Statements
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 September 30, 2017 there were no deferred taxes due to the
uncertainty of the realization of net operating loss or carry forward prior
to expiration.
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 reflect 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, 2017, 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 carrying amounts of financial assets such as cash approximate their fair
values because of the short maturity of these instruments.
NOTE 2 - GOING CONCERN
The Company has not yet generated any revenue since inception to date and
has sustained operating loss of $3,562 during the period ended September 30,
2017. The Company had a working capital deficit of $1,250 and an accumulated
deficit of $3,562 as of September 30, 2017. The Company's continuation as
a going concern is dependent on its ability to generate sufficient cash
flows from operations to meet its obligations and/or obtaining additional
financing from its members or other sources, as may be required.
7
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CALLA GROVE ACQUISITION CORPORATION
Notes to Financial Statements
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern; however, the above condition
raises substantial doubt about the Company's ability to do so. 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.
In order to maintain its current level of operations, the Company will require
additional working capital from either cash flow from operations or from the
sale of its equity. However, the Company currently has no commitments
from any third parties for the purchase of its equity. If the Company is unable
to acquire additional working capital, it will be required to significantly
reduce its current level of operations.
NOTE 3 - RECENT ACCOUNTING PRONOUNCEMENTS
In November 2016, the FASB issued Accounting Standards Update No. 2016-18,
"Statement of Cash Flows (Topic 230): Restricted Cash" ("ASU 2016-18"). The
new guidance is intended to reduce diversity in practice by adding or
clarifying guidance on classification and presentation of changes in
restricted cash on the statement of cash flows. ASU 2016-18 is effective
for annual and interim periods beginning after December 15, 2017. Early
adoption is permitted. The amendments in this update should be applied
retrospectively to all periods presented. The Company is currently
evaluating the impact of adopting ASU 2016-18, which will only impact
the Company to the extent it has restricted cash in the future.
In August 2016, the FASB issued ASU No. 2016-15, "Statement of Cash Flows
(Topic 230): Classification of Certain Cash Receipts and Cash Payments,
to address diversity in how certain cash receipts and cash payments are
presented and classified in the statement of cash flows". The amendments
provide guidance on the following eight specific cash flow issues: (1) Debt
Prepayment or Debt Extinguishment Costs; (2) Settlement of Zero-Coupon Debt
Instruments or Other Debt Instruments with Coupon Interest Rates That Are
Insignificant in Relation to the Effective Interest Rate of the Borrowing;
(3) Contingent Consideration Payments Made after a Business Combination;
(4) Proceeds from the Settlement of Insurance Claims; (5) Proceeds from the
Settlement of Corporate-Owned Life Insurance Policies, including Bank-Owned;
(6) Life Insurance Policies; (7) Distributions Received from Equity Method
Investees; (8) Beneficial Interests in Securitization Transactions; and
Separately Identifiable Cash Flows and Application of the Predominance
Principle. The amendments are effective for public business entities for
fiscal years beginning after December 15, 2017, and interim periods within
those fiscal years. Early adoption is permitted, including adoption in an
interim period. The amendments should be applied using a retrospective
transition method to each period presented. If it is impracticable to apply
the amendments retrospectively for some of the issues, the amendments for
those issues would be applied prospectively as of the earliest date
practicable. The Company is currently evaluating the impact of this new
standard on its financial statements and related disclosures.
In August 2014, the FASB issued ASU No. 2014-15, "Presentation of Financial
Statements Going Concern (Subtopic 205-40): Disclosure of Uncertainties
about an Entity's Ability to Continue as a Going Concern". This standard is
intended to define management's responsibility to evaluate whether there is
substantial doubt about an organization's ability to continue as a going
concern and to provide related footnote disclosures. Under U.S. GAAP,
financial statements are prepared under the presumption that the reporting
organization will continue to operate as a going concern, except in limited
circumstances. Financial reporting under this presumption is commonly
referred to as the going concern basis of accounting. The going concern
basis of accounting is critical to financial reporting because it establishes
the fundamental basis for measuring and classifying assets and liabilities.
Currently, U.S. GAAP lacks guidance about management's responsibility to
evaluate whether there is substantial doubt about the organization's ability
to continue as a going concern or to provide related footnote disclosures.
This ASU provides guidance to an organization's management, with principles
and definitions that are intended to reduce diversity in the timing and
content of disclosures that are commonly provided by organizations today
in the financial statement footnotes. The amendments are effective for
annual periods ending after December 15, 2016, and interim periods within
annual periods beginning after December 15, 2016. Early application is
permitted for annual or interim reporting periods for which the financial
statements have not previously been issued. Management believes that the
impact of this ASU to the Company's financial statements would be
insignificant.
Other recent accounting pronouncements issued by the FASB (including its
Emerging Issues Task Force) and the United States Securities and Exchange
Commission did not or are not believed by management to have a material
impact on the Company's present or future financial statements.
NOTE 4 ACCRUED LIABILITIES
As of September 30, 2017 the Company had accrued professional fees
of $1,250.
NOTE 5 STOCKHOLDERS' DEFICIT
On May 17, 2017, the Company issued 20,000,000 founders common stock
to two directors and officers pro rata as founder shares for services
rendered to the Company, valued at $0.0001 par value per share, or a
total of $2,000. The Company is authorized to issue 100,000,000
shares of common stock and 20,000,000 shares of preferred stock.
As of September 30, 2017, 20,000,000 shares of common stock and no
preferred stock were issued and outstanding.
NOTE 6
Management has evaluated subsequent events through November
14, 2017, the date which the financial statements were available to
be issued. All subsequent events requiring recognition have been
incorporated into these financial statements and there are no subsequent
events that require disclosure in accordance with FASB ASC Topic 855,
"Subsequent Events".
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Calla Grove Acquisition Corporation (the "Company") was incorporated
on May 17, 2017 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 is a blank check company
and qualifies as an "emerging growth company" as defined in the Jumpstart
Our Business Startups Act which became law in April, 2012.
Since inception the Company's operations to the date of the period
covered by this report have been limited to issuing shares of common stock
to its original shareholders and filing a registration statement on Form 10
on July 7, 2017 with the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934 as amended to register its class of common
stock.
The Company has no operations nor does it currently engage in any
business activities generating revenues. The Company'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.
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.
As of September 30, 2017 the Company had not generated revenues and had
no income or cash flows from operations since inception. The Company had
sustained net loss of $3,562 and an accumulated deficit of $3,562 for the
period from May 17, 2017 (Inception) to September 30, 2017.
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 the
Company 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 the Company.
Management will pay all expenses incurred by the Company until a
change in control is effected. There is no expectation of repayment
for such expenses.
The president of the Company is 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.
Tiber Creek is in discussions with many clients some of which may
elect to use a change in control of a Form 10 reporting company to effect
reincorporation in Delaware. Although no such discussions directly address
the Company, the Company may used for such a change in control. When, and
if, such change in control is effected, the Company will file a Form 8-K
announcing it.
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.
Management is aware that certain current and prior blank check
companies of which Messrs. Cassidy and McKillop, the Company's current
officers and directors, were the officers and directors have received
subpoenas for documents in regard to a formal investigation by the
Securities and Exchange Commission requesting documentation regarding
the share ownership of those companies. Management has no independent
knowledge or information regarding these subpoenas but believes it is part
of a wider review by the SEC.
Management of the Company has also received subpoenas from the
Securities and Exchange Commission in regard to certain of the transactions
and filings for the past five years of certain of its blank check companies.
Management has no independent knowledge or information as to the intent or
purpose of such subpoenas but believes the SEC is investigating whether the
change in control transaction is considered a sale of a security and if so
whether a broker needs to be used to effect the transaction. Management
disagrees strongly with any such assessment if it were to be so determined.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Since May 17, 2017 (Inception), the Company has issued 20,000,000
common shares pursuant to Section 4(2) of the Securities Act of 1933
at par as follows:
On May 17, 2017, the Company issued the following shares of
its common stock:
Name Number of Shares
James Cassidy 10,000,000
James McKillop 10,000,000
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 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.
CALLA GROVE ACQUISITION CORPORATION
By: /s/ James M. Cassidy
President, Chief Financial Officer
Dated: November 20, 2017